10-Q

                                           FORM 10-Q

                               SECURITIES AND EXCHANGE COMMISSION
                                     Washington, D.C.  20549


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 For the quarterly period ended December 31, 2003.


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


Commission file number:  1-12805



                                     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    

Indicate by check mark whether the  Registrant is an  accelerated  filer (as defined in
Rule 12b-2 of the Exchange Act). Yes X  No   

The number of shares of the Company's common stock outstanding as of February 9, 2004 was
35,527,942.







                                          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        9
         Results of Operations

Item 3.  Quantitative and Qualitative Disclosures About Market Risk            25

Item 4.  Controls and Procedures                                               26


                                      PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K






                                      PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
FRONTIER AIRLINES, INC.
Balance Sheets
(Unaudited)

                                                                 December 31,       March 31,
                                                                    2003              2003       
Assets
Current assets:
    Cash and cash equivalents                                  $ 184,323,539     $ 102,880,404
    Short-term investments                                         2,000,000         2,000,000
    Restricted investments                                        23,415,901        14,765,000
    Receivables, net of allowance for doubtful accounts
     of $298,000 and $237,000 at December 31, 2003 and
     March 31, 2003, respectively                                 26,998,522        25,856,692
    Income taxes receivable                                          389,192        24,625,616
    Security and other deposits                                      515,000           912,399
    Prepaid expenses and other assets                             11,271,500         9,050,671
    Inventories, net of allowance of $2,428,000 and
     $2,478,000 at December 31, 2003 and March 31,
     2003, respectively                                            6,206,370         5,958,836
    Deferred tax asset                                             7,669,732         4,788,831   
            Total current assets                                 262,789,756       190,838,449
Property and equipment, net                                      444,366,268       334,492,983
Security and other deposits                                       14,998,851         6,588,023
Aircraft pre-delivery payments                                    24,276,079        30,531,894
Restricted investments                                             8,161,000         9,324,066
Deferred loan fees and other assets, net                           5,494,202        16,068,361   
                                                               $ 760,086,156     $ 587,843,776
                                                              ================= =================
Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                           $  27,649,190     $  26,388,621
    Air traffic liability                                         72,991,948        58,875,623
    Other accrued expenses (note 4)                               40,866,829        22,913,659
    Current portion of long-term debt (note 6)                    16,042,842        10,473,446
    Deferred revenue and other liabilities                         1,330,000         1,396,143   
            Total current liabilities                            158,880,809       130,047,492
Long-term debt (note 6)                                          284,994,343       261,738,503
Deferred tax liability                                            32,221,473        20,017,787
Deferred revenue and other liabilities                            21,261,354        17,072,868   
            Total liabilities                                    497,357,979       428,876,650   

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 shares;
      35,229,768 and 29,674,050 shares issued and
      outstanding at December 31, 2003 and March
      31, 2003, respectively                                          35,230            29,674
    Additional paid-in capital                                   181,833,352        96,424,525
    Other comprehensive loss                                         (40,609)            -
    Retained earnings                                             80,900,204        62,512,927   
                                                                 262,728,177       158,967,126   
                                                                 760,086,156       587,843,776
                                                              ================= =================

See accompanying notes to financial statements.






FRONTIER AIRLINES, INC.
Statements of Operations
(Unaudited)
                                         Three Months Ended                    Nine Months Ended
                                   December 31,       December 31,       December 31,      December 31,
                                       2003               2002               2003              2002    
Revenues:
    Passenger                     $ 159,174,576      $ 117,752,421      $ 458,130,130     $ 343,753,943
    Cargo                             2,036,132          1,353,403          6,094,379         4,299,590
    Other                             2,349,767          1,147,464          7,322,528         3,366,686

        Total revenues              163,560,475        120,253,288        471,547,037       351,420,219

Operating expenses:
    Flight operations                26,097,278         22,100,419         75,417,872        62,819,816
    Aircraft fuel expense            27,486,807         21,709,633         75,988,127        60,437,755
    Aircraft lease expense           17,246,551         17,868,787         52,359,272        52,469,573
    Aircraft and traffic servicing   29,626,177         22,440,145         79,701,143        63,063,269
    Maintenance                      17,324,224         19,343,863         52,322,200        53,286,854
    Promotion and sales              17,322,739         11,664,781         48,312,687        39,889,202
    General and administrative        9,560,740          6,684,541         28,280,752        19,381,332
    Depreciation and amortization     6,295,489          4,558,342         17,352,987        12,489,981

        Total operating expenses    150,960,005        126,370,511        429,735,040       363,837,782

        Operating income (loss)      12,600,470         (6,117,223)        41,811,997       (12,417,563)

Nonoperating income (expense):
    Interest income                     590,206            328,303          1,528,037         1,523,063
    Interest expense                 (3,195,924)        (1,993,971)       (11,064,704)       (5,148,950)
    Emergency Wartime Supplemental
     Appropriations Act compensation      -                  -             15,024,188             -
    Early extinguishment of debt     (1,073,028)        (1,774,311)        (9,815,517)       (1,774,311)
    Aircraft lease and facility
     exit costs                         (26,446)             -             (5,371,799)            -
    Loss on sale-leaseback of aircraft  (85,376)             -             (1,323,094)            -
    Other, net                          (39,802)          (240,000)          (892,113)         (678,322)

        Total nonoperating expense,
         net                         (3,830,370)        (3,679,979)       (11,915,002)       (6,078,520)

Income (loss) before income tax
    expense (benefit) and cumulative
    effect of change in method of
    accounting for maintenance        8,770,100         (9,797,202)        29,896,995       (18,496,083)

Income tax expense (benefit)          3,314,236         (3,429,369)        11,509,718        (6,601,335)

Income (loss) before cumulative
    effect of change in method of
    accounting for maintenance        5,455,864         (6,367,833)        18,387,277       (11,894,748)

Cumulative effect of change in
    method of accounting for
    maintenance, net of tax               -                  -                  -             2,010,672

Net income (loss)                   $ 5,455,864       $ (6,367,833)      $ 18,387,277      $ (9,884,076)
                                  =============      ==============      =============     =============

(continued)

See accompanying notes to financial statements.






FRONTIER AIRLINES, INC.
Statements of Operations
(Unaudited)

                                         Three Months Ended                    Nine Months Ended
                                   December 31,       December 31,       December 31,      December 31,
                                       2003               2002               2003              2002    

Earnings (loss) per share:
  Basic:
    Income (loss) before cumulative
     effect of change in accounting
     principle                            $0.15             ($0.21)             $0.58            ($0.40)
    Cumulative effect of change in
     method of accounting for
     maintenance checks                     -                  -                  -                0.07

    Net income (loss)                     $0.15             ($0.21)             $0.58            ($0.33)
                                  =============      ==============      =============     =============

  Diluted:
    Income (loss) before cumulative
     effect of change in accounting
     principle                            $0.14             ($0.21)             $0.53            ($0.40)
    Cumulative effect of change in
     method of accounting for
     maintenance checks                     -                  -                  -                0.07

    Net income (loss)                     $0.14             ($0.21)             $0.53            ($0.33)
                                  =============      ==============      =============     =============

Weighted average shares of
  common stock outstanding:
            Basic                    35,203,458         29,648,077         31,829,010        29,605,350
                                  =============      ==============      =============     =============
            Diluted                  38,509,350         29,648,077         34,554,105        29,605,350
                                  =============      ==============      =============     =============


See accompanying notes to financial statements.








FRONTIER AIRLINES, INC.
Statements of Stockholders' Equity and Other Comprehensive Loss
For the Year Ended March 31, 2003 and the Nine Months Ended December 31, 2003

                                                                            Accumulated
                                             Additional       Unearned         other                        Total
                              Common          paid-in           ESOP       comprehensive    Retained     stockholders'
                              stock           capital          shares          loss         earnings        equity   

Balances, March 31, 2002    $ 29,422        85,867,486      (2,119,670)         -          85,356,055     169,133,293

Net loss                         -                -              -              -         (22,843,128)    (22,843,128)
Exercise of common
 stock options                  252            616,695           -              -                 -           616,947
Warrants issued in
 conjunction with
 debt agreement                  -           9,282,538           -              -                 -         9,282,538
Tax benefit from exercises
 of common stock options         -             657,806           -              -                 -           657,806
Amortization of employee
 stock compensation              -                -          2,119,670          -                 -         2,119,670
Balances, March 31, 2003      29,674        96,424,525           -              -          62,512,927     158,967,126

Net income                       -                -              -              -          18,387,277      18,387,277
Other comprehensive loss -
  Unrealized loss on
  derivative instruments         -                -              -            (40,609)            -           (40,609)
Total comprehensive income                                                                                 18,346,668 


Sale of common stock, net of
 offering costs of $257,000   5,050         81,072,096           -               -                -        81,077,146
Exercise of common
 stock options                  158            939,620           -               -                -           939,778
Tax benefit from exercises
 of common stock options         -             987,650           -               -                -           987,650
Equity adjustment for the
 repricing of warrants
 issued in conjunction
 with a debt agreement           -             116,701           -               -                -           116,701
Contribution of common stock
 to employees stock
 ownership plan                 348          2,292,760     (2,293,108)           -                -              -
Amortization of employee
 stock compensation              -               -          2,293,108           -                 -         2,293,108

Balances, December 31, 2003  $35,230      $181,833,352   $       -       $    (40,609     $80,900,204     $62,728,177
                            =========================================================================================


See accompanying notes to financial statements.








FRONTIER AIRLINES, INC.
Statements of Cash Flows
For the Nine Months Ended December 31, 2003 and 2002
(Unaudited)

                                                                  2003                    2002    

Cash flows from operating activities:
    Net income (loss)                                         $ 18,387,277          $ (9,884,076)
    Adjustments to reconcile net income to net cash and cash
        equivalents provided (used) by operating
        activities:
           Employee stock option plan compensation expense       1,771,156             2,119,670
           Depreciation and amortization                        17,352,987            12,489,981
           Loss on disposal of equipment                         1,631,405               234,797
           Accelerated amortization of deferred loan costs       9,815,517               177,924
           Unrealized derivative gain, net                        (580,005)             (237,933)
           Deferred tax expense                                  9,322,785             6,683,479
           Changes in operating assets and liabilities:
             Restricted investments                             (9,931,335)           (3,809,834)
             Receivables                                        (1,141,830)            2,416,697
             Income taxes receivable                            24,236,424            (6,495,325)
             Security and other deposits                        (2,556,741)           (3,924,364)
             Prepaid expenses and other assets                  (2,220,829)            2,816,232
             Inventories                                          (247,534)           (1,385,935)
             Deferred loan and other assets                      2,486,574              (174,209)
             Accounts payable                                    1,260,569            (1,570,274)
             Air traffic liability                              14,116,325           (10,238,143)
             Accrued maintenance expense                             -                (3,196,618)
             Other accrued expenses                             18,525,475              (484,470)
             Deferred stabilization act compensation                 -                (4,835,381)
             Deferred revenue and other liabilities              4,122,343             4,408,747  
               Net cash and cash equivalents provided
                 (used) by operating activities                106,350,563           (14,889,035) 

Cash flows from investing activities:
    Decrease in aircraft lease and purchase deposits, net          799,127             4,792,059
    Decrease in restricted investments                           2,443,500               617,700
    Proceeds from the sale of aircraft                               -                29,750,000
    Capital expenditures                                      (128,857,677)         (197,880,599) 
               Net cash and cash equivalents used by
                 investing activities                         (125,615,050)         (162,720,840)

Cash flows from financing activities:
    Net proceeds from issuance of common stock                  83,121,275             1,184,019
    Proceeds from long-term borrowings                          98,500,000           147,100,000
    Payment of financing fees                                   (1,238,889)           (1,786,064)
    Principal payments on long-term borrowings                 (79,674,764)          (26,941,612)
               Net cash and cash equivalents provided
                 by financing activities                       100,707,622           119,556,343

               Net increase (decrease) in cash and
                 cash equivalents                               81,443,135           (58,053,532)

Cash and cash equivalents, beginning of period                 102,880,404            87,555,189

Cash and cash equivalents, end of period                      $184,323,539          $ 29,501,657
                                                              =============         =============

See accompanying notes to financial statements.




FRONTIER AIRLINES, INC.
Notes to Financial Statements
December 31, 2003


(1)      Basis of Presentation

     The accompanying  unaudited financial  statements have been prepared in accordance with
     accounting  principles  generally accepted  in the United  States of America 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 accounting principles
     generally  accepted in the United States of America 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,  2003.  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 and nine  months  ended
     December  31,  2003 are not  necessarily indicative of the results that will be realized
     for the full year.

(2)      Summary of Significant Accounting Policies

     Stock-Based Compensation

     The Company follows  Accounting  Principles Board Opinion No. 25,  "Accounting for Stock
     Issued to Employees" ("APB 25"), and related  Interpretations  in  accounting  for its
     employee  stock  options and follows the  disclosure  provisions of Statement of Financial
     Accounting Standards No. 123 (SFAS 123). The Company applies APB 25 and related Interpretations
     in accounting for its plans.  Accordingly,  no  compensation  cost is recognized for options
     granted at a price equal to the fair market value of the common stock on the date of grant.
     Pro forma  information  regarding net income and earnings per share is required by SFAS 123,
     which also  requires  that the  information  be  determined  as if the  Company has accounted
     for its employee stock options under the fair value method of that Statement.  Had compensation
     cost for the Company's stock-based compensation plan been determined using the fair value of
     the options at the grant  date,  the Company's pro forma net income (loss) and earnings (loss)
     per share would be as follows:

                                         Three Months Ended                   Three Months Ended
                                   December 31,       December 31,       December 31,      December 31,
                                       2003               2002               2003              2002    

         Net income (loss):
           As Reported             $  5,455,864  $  (6,367,833)         $  18,387,277    $   (9,884,076)
           Pro Forma               $  4,970,766  $  (6,825,508)         $  16,830,293    $  (12,898,885)

         Earnings (loss) per share, basic:
           As Reported             $       0.15  $       (0.21)         $        0.58    $        (0.33)
           Pro Forma               $       0.14  $       (0.23)         $        0.53    $        (0.44)

         Earnings (loss) per share, diluted:
           As Reported             $       0.14  $       (0.21)         $        0.53    $        (0.33)
           Pro Forma               $       0.13  $       (0.23)         $        0.49    $        (0.44)




FRONTIER AIRLINES, INC.
Notes to Financial Statements
December 31, 2003


     Interest Rate Hedging Program

     During the nine months ending December 31, 2003, the Company  designated  certain  interest rate
     swaps as qualifying cash flow hedges.  Under these hedging arrangements,  the Company is hedging
     the interest payments  associated with a portion of its LIBOR-based  borrowings.  Under the swap
     agreements,  the Company  pays a fixed rate of interest on the notional amount of the contracts
     of $27,000,000,  and it receives a variable rate of interest based on the three month LIBOR rate,
     which is reset quarterly.  Interest expense for the three and nine months ended December 31, 2003
     includes  $90,000 and $263,000 of settlement amounts payable to the counter party for the period.
     Changes in the fair value of interest rate swaps  designated as hedging instruments are reported
     in accumulated  other comprehensive  income.  These amounts are subsequently  reclassified  into
     interest expense as a yield adjustment in the same period in which the related interest payments
     on the LIBOR-based  borrowings  affects  earnings.  Approximately  $41,000 of unrealized  losses
     are included in accumulated  other  comprehensive  loss for the nine months ended  December 31,
     2003 and are expected to be reclassified into interest expense as a yield adjustment of the hedged
     interest payments over the next 12 months.

(3)      Government Assistance

     The Emergency Wartime Supplemental  Appropriations Act (the "Appropriations  Act"), enacted in
     April 2003, made available approximately  $2.3 billion to U.S.  flag air carriers for expenses
     and revenue  foregone  related to aviation  security. The payment received by each carrier was
     for the  reimbursement of the TSA security fees, the September 11th Security Fee and/or the
     Aviation  Security  Infrastructure  Fee paid by the carrier as of the date of enactment of the
     Appropriations Act.  According  to the  Appropriations  Act,  an air carrier  may use the amount
     received  as the  carrier  determines. Pursuant to the Appropriations Act, the Company received
     $15,573,000 in May 2003, of which $549,000 was paid to Mesa Air Group for the revenue passengers
     Mesa carried as Frontier JetExpress.

     The  Appropriations  Act provides for additional  reimbursements  to be made to U.S. flag air
     carriers for costs incurred related to the FAA  requirements  for enhanced  flight deck door
     security  measures that were mandated as a result of the September 11 terrorist attacks.
     Pursuant to the Appropriations Act, the Company received $889,000 in September 2003 for expenses
     related to the  installation of enhanced flight deck doors on its aircraft,  $275,000 of which
     was recorded as a reduction to property and equipment, net, and $614,000 was recorded as a
     reduction to maintenance expense.

(4)      Other Accrued Expenses

     The December 31, 2003 and March 31, 2003 other accrued expenses are comprised of the following:


                                                          December 31,              March 31,
                                                             2003                     2003

     Accrued salaries and benefits                        $22,313,946             $14,103,103

     Federal excise and other passenger taxes payable       9,463,071               6,651,108

     Other                                                  9,089,812               2,159,448  

                                                          $40,866,829             $22,913,659
                                                     ==================      ==================



FRONTIER AIRLINES, INC.
Notes to Financial Statements
December 31, 2003


(5)      Stockholders' Equity

     Common Stock

     The Company  completed a secondary  public  offering of 5,050,000  shares of common stock
     in September 2003. The Company received $81,077,000, net of offering expenses,  from the
     sale of these  shares.  See note 6 for a  discussion  of the required  prepayment  of the
     Company's  government  guaranteed  loan as a  result  of this  issuance  of  common  stock.
     Additionally,  the government guaranteed loan includes certain anti-dilution  adjustments
     in the event of any sale of the Company's  common stock. As a result,  the exercise price
     of the warrants issued in connection with the loan was adjusted from $6.00 per share to
     $5.92 per share. The Company  recorded  $117,000 as additional debt issuance costs in
     conjunction with this repricing.  There are 3,833,945  warrants to purchase common stock
     outstanding at December 31, 2003, which were issued in connection with the loan.

(6)      Long-Term Debt

     Government Guaranteed Loan

     In July 2003, the Company  received a federal income tax refund totaling  $26,574,000
     from the Internal Revenue Service.  The Company prepaid  $10,000,000 on its government
     guaranteed loan upon receipt of this refund, as required by the terms of the loan agreement.

     The  government  guaranteed  loan also  required a prepayment  equal to 60% of the net
     proceeds  from any sales of common stock.  As a result of the sale of  common  stock in
     September  2003 (see note 5),  the  Company  prepaid  approximately $48,418,000 on the loan.
     In December 2003, the Company repaid the remaining loan balance of $11,582,000.

     Other Long-Term Debt

     During the nine months ended December 31, 2003,  the Company  borrowed  $98,500,000  for
     the purchase of four Airbus A318 aircraft. Each aircraft loan has a term of 12 years and
     is payable in monthly installments,  including interest,  payable in arrears,  with a
     floating  interest  rate  adjusted  quarterly  based on LIBOR plus a margin of 2.25% for
     three of the loans,  and  LIBOR  plus a margin  of 1.95%  for the  fourth.  At the end of
     the  term,  there is a  balloon  payment  of $3,060,000 each for three of the aircraft
     loans and $2,640,000 for the fourth.  The loans are secured by the 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. and the expectations of our company and management.  All statements,  other than statements
of historical facts, included in this report  that  address  activities,  events or developments
that we expect, believe, intend or anticipate will or may occur in the future, are forward-looking
statements. When used in this document,  the words "estimate,"  "anticipate,"  "project" and similar
expressions are intended to identify forward-looking  statements.  Forward-looking  statements are
inherently  subject to risks and  uncertainties,  many of which cannot be predicted  with accuracy
and some of which might not even be  anticipated.  These risks and  uncertainties  include, but
are not  limited to: the timing of, and expense associated with, expansion and modification of our
operations  in accordance  with our business  strategy or in response to competitive  pressures or
other  factors;  the  inability to obtain sufficient  gates at Denver  International  Airport to
accommodate the expansion of our operations;  general  economic factors and behavior of the
fare-paying public and its potential impact on our liquidity; terrorist  attacks or other incidents
that could cause the public to question the safety and/or efficiency of air travel;  operational
disruptions, including weather; industry consolidation;  the impact of labor disputes;  enhanced
security  requirements;  changes in the government's  policy regarding  relief or  assistance  to
the airline industry;  the economic  environment  of the airline  industry  generally; 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  and other actions  taken by United  Airlines
either in or out of  bankruptcy  protection;  the  availability  of suitable  aircraft,  which may
inhibit our ability to achieve  operating  economies and implement our business  strategy;  the
unavailability  of, or inability to secure upon  acceptable  terms,  financing  necessary  to
purchase  aircraft  that we have ordered or lease aircraft we anticipate  adding to our fleet
through lease financing; issues relating to our transition to an Airbus aircraft fleet;
uncertainties  regarding  aviation fuel prices;  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 available seat mile ("RASM") or cost per available
seat mile ("CASM") can  significantly  affect  operating  results.  See "Risk Factors" in our Form
10-K for the year ended March 31, 2003 and our Form 8-K filed September 19, 2003, which updates our
risk factors.

General

       We are a scheduled  passenger airline based in Denver, Colorado.  We are the second largest
jet service  carrier at Denver  International  Airport  ("DIA").  As of February 9, 2004,  we, in
conjunction  with Frontier  JetExpress  operated by Horizon Air  Industries,  Inc.  ("Horizon"),
operate  routes  linking our Denver hub to 37 cities in 22 states  spanning  the nation from coast
to coast and to five cities in Mexico.  We are a low cost, affordable fare airline operating
primarily in a hub and spoke fashion  connecting  points coast to coast  through our hub at DIA.
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 in service to 39 jets (26 of which we
lease and 13 of which we own), consisting of 12 Boeing 737-300s, 23 Airbus A319s, and 4 Airbus A318s.
In May 2001,  we began a fleet replacement plan to replace our Boeing  aircraft with new purchased
and leased  Airbus jet aircraft,  a transition  we expect to complete by  approximately  the end
of calendar year 2005. As of November 1, 2003, we no longer  operate Boeing 737-200  aircraft.
During the three and nine months ended December 31, 2003, we increased  capacity by 19.1% and
17.0% over the prior comparable periods, respectively.  In the three and nine months ended
December 31, 2003, we increased passenger traffic by 45.3% and 39.8% over the prior comparable
periods,  respectively,  outpacing our increase in capacity during the periods.

       We currently operate on 14 gates on Concourse A at DIA on a preferential basis.  Together
with our  regional  jet codeshare  partner,  Frontier Jet Express,  we use these 14 gates and
share use of up to seven common use regional jet parking positions to operate  approximately
188 daily system flight  departures and arrivals and 22 Frontier  JetExpress daily system flight
departures and arrivals.

         We began service to Orange County,  California  and Milwaukee,  Wisconsin on August 31,
2003 with two and three daily round-trips,  respectively,  and we added a third  round-trip to
Orange County,  California on October 1, 2003.  Additionally, on November 1, 2003 we began
service to St. Louis,  Missouri with two daily round-trip  flights,  resumed our seasonal service
to  Mazatlan,  Mexico with one weekly  round-trip  frequency,  that we increased to three  weekly
round-trip  frequencies  to Mazatlan,  Mexico on  November  22,  2003 and began  service to Cabo
San Lucas with one weekly  round-trip  frequency  that we increased to three weekly  round-trip
frequencies  on November 22,  2003.  On November 22, 2003,  we began  service to Puerto Vallarta,
Mexico with three weekly round-trip flights. We began service to Ixtapa/Zihuatanejo,  Mexico, on
January 31, 2004 with two  weekly  round-trip  frequencies.  On  February  8, we  replaced  our
service  between  DIA and El Paso,  Texas  via Albuquerque,  New Mexico,  with two direct daily
round-trip frequencies.  We intend to begin  service to Washington  Dulles International Airport
on April 11, 2004 with two daily round-trip frequencies from DIA and seasonal service to Anchorage,
Alaska on May 9, 2004 with one daily  round-trip  frequency  from DIA. We received  authority to
add a third frequency at New York's LaGuardia Airport, which we intend to begin on March 2, 2004.

       Beginning  April 11, 2004, we intend to begin our first significant point-to-point routes
outside of our DIA hub. We will begin service from Los Angeles  International  Airport with two
daily  round-trip  frequencies to  Minneapolis/St.  Paul, Minnesota, Kansas City, Missouri and
St. Louis, Missouri.


         In June 2003, we entered into an agreement with Kinetics,  Inc., a provider of enterprise
and self-service technology to the U.S. airline  industry,  to deploy its new automated  check-in
system.  The launch of "FlexCheck," our suite of airport and web-based automated check-in services,
utilizes  Kinetics'  TouchPort  self-service  terminals and associated  Kinetics software solutions
for airport and Internet  check-in.  FlexCheck became available via the Internet in early August
2003 with deployment of  self-service  kiosks at our hub at DIA in September 2003. The system
allows our customers to check in for their flights using a standard credit card for identification
purposes only, their  EarlyReturns  frequent flyer number,  E-ticket number or confirmation number.


       On September  18, 2003,  we signed a 12 year  agreement  with Horizon Air  Industries,  Inc.
("Horizon"),  under which Horizon will operate up to nine 70-seat CRJ 700 aircraft under our Frontier
JetExpress  brand.  The service began on January 1, 2004 with three  aircraft.  A fourth  aircraft
was put into the schedule effective January 31, 2004 and a fifth aircraft began service on February
8, 2004.  The  remaining  aircraft  will be added to service  periodically  through  May 2004.  We
control the scheduling of this service.  We reimburse Horizon for its expenses related to the operation
plus a margin.  The agreement  provides for  financial  incentives,  penalties and changes to the
margin based on  performance  of Horizon and our financial  performance.  As of February 9, 2004,
Frontier JetExpress  provides service to Ontario,  California,  Boise, Idaho, Tucson,  Arizona,
Oklahoma City, Oklahoma and supplements our mainline service to San Jose,  California, Albuquerque,
New Mexico,  Minneapolis/St. Paul, Minnesota and El Paso and Austin, Texas. This service replaced
our codeshare arrangement with Mesa Airlines, which terminated on December 31, 2003.


       In March 2003,  we entered  into an  agreement  with Juniper Bank  (www.juniperbank.com),
a  full-service  credit card issuer, to offer exclusively Frontier MasterCard products to consumers,
customers and Frontier's EarlyReturns frequent flyer members.  We launched the co-branded credit card
in May 2003. As of February 9, 2004,  Juniper Bank has issued  approximately 35,000 of these  credit
cards.  We  believe  that the  Frontier/Juniper  Bank  co-branded  MasterCard  offers one of the most
aggressive affinity card programs because free travel can be earned for as little as 15,000 miles.

       In October  2002,  we signed a purchase  and  long-term  services  agreement  with  LiveTV to
bring  DIRECTV  AIRBORNE(TM) satellite  programming to every seatback in our Airbus fleet.  In February
2003, we completed the  installation  of the LiveTV system on all Airbus A319  aircraft.  We are moving
forward with the  installation  of the LiveTV  systems in our Airbus A318 aircraft and  anticipate
these  systems will become  operational  by April 2004.  We have  implemented a $5 per segment usage
charge  for  access to the  system to offset the costs for the system  equipment,  programming  and
services.  We are also in discussions with film distributors to offer current-run  pay-per-view movies
on four additional  channels to be added to our basic  LiveTV  service.  We cannot  anticipate  with
any certainty whether or when this service will become  available.  We believe the DIRECTV(TM)product
represents a significant  value to our customers and offers a competitive advantage for our company.

       Effective July 9, 2001, we began a codeshare  agreement with Great Lakes Aviation Ltd.  ("Great
Lakes").  We added two additional markets under the codeshare  agreement:  Rapid City, South Dakota
on July 30, 2003 and to Grand Junction,  Colorado on August 1, 2003.  Additionally,  Great Lakes
replaced Frontier  JetExpress  service to Wichita,  Kansas on November 1, 2003.  Including these new
cities,  Great Lakes provides service to 35 regional markets located in Arizona, Colorado, Kansas,  New
Mexico, Nebraska, North Dakota, South Dakota, Texas, and Wyoming under this codeshare agreement.

       Our  filings   with  the   Securities   and   Exchange   Commission   are   available   at  no
cost  on  our  website, www.frontierairlines.com,  in the Investor  Relations folder contained in the
section titled "About  Frontier".  These reports include our annual report on Form 10-K, our quarterly
reports on Form 10-Q,  current reports on Form 8-K,  Section 16 reports on Forms 3, 4 and 5, and any
related  amendments  or other  documents,  and are typically  available  within two days after we
file the materials with the SEC.

       Our  corporate  headquarters  are  located at 7001 Tower  Road,  Denver,  Colorado  80249.
Our  administrative  office telephone number is 720-374-4200 and our reservations telephone number
is 800-432-1359.


Results of Operations

       We had net income of $5,456,000 or 14(cent)per diluted share for the three months ended
December 31, 2003 as compared to a net loss of $6,368,000, or 21(cent)per share for the three months
ended  December 31, 2002.  Included in our net income for the three months ended  December 31, 2003
on a pre-tax and profit  sharing  basis was a special item for the write-off of deferred loan costs
of $1,073,000 associated with the prepayment of the remaining  principal of the government guaranteed
loan. This item, net of income taxes and profit sharing, reduced net income by 2(cent)per diluted share.

       We had net income of  $18,387,000 or 53(cent)per diluted share for the nine months ended
December 31, 2003 as compared to a net loss of $11,895,000,  before  cumulative  effect of change in
accounting for maintenance  checks, or 40(cent)per share for the nine  months  ended  December  31,
2002.  Included  in our net income for the nine months  ended  December  31, 2003 were the following
special items on a pre-tax and profit sharing basis:  $15,024,000 of compensation  received under the
Appropriations Act; an unrealized  derivative gain of $539,000  offset by the write-off of deferred
loan costs of $9,816,000  associated with the  prepayment of all of the  government guaranteed loan;
a charge for Boeing  aircraft and facility lease exit costs of $5,372,000; and a loss of $1,806,000
on the sale of one Airbus aircraft in a sale-leaseback transaction and from the sale of a spare engine.
These items,  net of income taxes and profit sharing, reduced net income by 3(cent)per diluted share.
During the three and nine months ended December 31, 2002, we completed a  sale-leaseback transaction
of one of our  purchased aircraft and paid off the loan that was  collateralized  by this aircraft.
We incurred  $1,774,000 in costs  associated  with the early extinguishment of this debt. This item,
net of income taxes, reduced net income by 4(cent)per share.








       The following  table  provides  certain of our financial and operating  data for the three
month and nine month periods ended December 31, 2003 and 2002.

                                         Three Months Ended Dec. 31,           Nine Months Ended Dec. 31,
                                         2003                   2002           2003                  2002  
  Selected Operating Data:
  Passenger revenue (000s) (1)      $  159,175             $  117,752     $  458,130            $  343,754
  Revenue passengers carried (000s)      1,444                    999          4,127                 2,915
  Revenue passenger miles (RPMs)
    (000s) (2)                       1,317,227                906,801      3,760,480             2,689,222
  Available seat miles (ASMs)
    (000s) (3)                       1,815,751              1,524,638      5,212,198             4,453,916
  Passenger load factor (4)              72.5%                  59.5%          72.1%                 60.4%
  Break-even load factor (5)             68.5%                  64.4%          67.4%                 63.6%
  Block hours (6)                       36,304                 30,472        103,339                89,026
  Departures                            15,726                 13,522         45,414                39,289
  Average aircraft stage length            877                    852            864                   860
  Average passenger length of haul         912                    908            911                   923
  Average daily fleet block hour
    utilization (7)                       10.3                    9.5           10.2                   9.8
  Yield per RPM (cents) (8) (9)          12.01                  12.93          12.12                 12.74
  Yield per ASM (cents) (9) (10)          8.71                   7.69           8.75                  7.69
  Total yield per ASM (cents) (11)        9.01                   7.89           9.05                  7.89
  Cost per ASM (cents)                    8.31                   8.29           8.24                  8.17
  Fuel cost per ASM (cents)               1.51                   1.42           1.46                  1.36
  Cost per ASM excluding fuel (cents)
    (12)                                  6.80                   6.86           6.79                  6.81
  Average fare (13)                 $      104             $      111     $      104            $      109
  Average aircraft in fleet               38.2                   34.8           36.9                  33.1
  Aircraft in fleet at end of period      39.0                   37.0           39.0                  37.0
  Average age of aircraft at end of
    period                                 4.2                    7.9            4.2                   7.9

(1)  "Passenger revenue" includes revenues for non-revenue passengers, administrative fees, and revenue
     recognized for unused tickets that are greater than one year from issuance date.
(2)  "Revenue passenger miles," or RPMs, are determined by multiplying the number of fare-paying
     passengers carried by the distance flown.
(3)  "Available seat miles," or ASMs, are determined by multiplying the number of seats available for
     passengers by the number of miles flown.
(4)  "Passenger load factor" is determined by dividing revenue passenger miles by available seat miles.
(5)  "Break-even load factor" is the passenger load factor that will result in operating revenues being
     equal to operating expenses, assuming constant revenue per passenger mile and expenses.  The
     break-even load factor for the three months ended December 31, 2003 includes the write-off of
     deferred loan costs net of profit-sharing of $1,053,000 associated with the prepayment of the
     remaining principal of the government guaranteed loan.  The break-even load factor for the nine
     months ended December 31, 2003 includes the following special items net of profit-sharing:
     $13,842,000 of compensation received under the Appropriations Act; an unrealized derivative gain
     of $497,000 offset by the write-off of deferred loan costs of $9,677,000 associated with the
     prepayment of all of the government guaranteed loan; a charge for Boeing aircraft and facility
     lease exit costs of $4,949,000; and a loss of $1,664,000 on the sale of one Airbus aircraft in a
     sale-leaseback transaction and from the sale of a spare engine.  The break-even load factor for
     the three and nine months ended December 31, 2002 includes a special item of $1,774,000 associated
     with the early extinguishment of debt which we incurred when we paid off the loan that was
     collateralized by one our aircraft for which we had completed a sale-leaseback transaction during
     the period.
(6)  "Block hours" represent the time between aircraft gate departure and aircraft gate arrival.
(7)  "Average daily block hour utilization" represents the total block hours divided by the 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 operational spare
     aircraft, and excludes aircraft removed permanently from revenue service or new aircraft not yet
     placed in revenue service.
(8)  "Yield per RPM" is determined by dividing passenger revenues (excluding charter revenue) by
     revenue passenger miles.
(9)  For purposes of these yield calculations, charter revenue is excluded from passenger revenue.
     These figures may be deemed non-GAAP financial measures under regulations issued by the Securities
     and Exchange Commission.  We believe that presentation of yield excluding charter revenue is useful
     to investors because charter flights are not included in RPMs or ASMs.  Furthermore, in preparing
     operating plans and forecasts, we rely on an analysis of yield exclusive of charter revenue.  Our
     presentation of non-GAAP financial measures should not be viewed as a substitute for our financial or
     statistical results based on GAAP.  The calculation of passenger revenue excluding charter revenue
     is as follows:






                                         Three Months Ended             Nine Months Ended
                                               Dec 31,                       Dec. 31,
                                         2003          2002             2003         2002  
         Passenger revenues, as
           reported                 $  159,175    $  117,752       $  458,130   $  343,754
         Charter revenue                 1,023           471            2,217        1,249 
         Passenger revenues,
           excluding charter
           revenue                     158,152       117,281          455,913      342,505
                                    =======================================================

(10) "Yield per ASM" is determined by dividing passenger revenues (excluding charter revenue)
     by available seat miles.
(11) "Total yield per ASM" is determined by dividing passenger revenues by available seat miles.
(12) This may be deemed a non-GAAP financial measure under regulations issued by the Securities and
     Exchange Commission.  We believe the presentation of financial information excluding fuel
     expense is useful to investors because we believe that fuel expense tends to fluctuate more
     than other operating expenses, it facilitates comparison of results of operations between
     current and past periods and enables investors to better forecast future trends in our operations.
     Furthermore, in preparing operating plans and forecasts, we rely, in part, on trends in our
     historical results of operations excluding fuel expense.  However, our presentation of non-GAAP
     financial measures should not be viewed as a substitute for our financial results determined
     in accordance with GAAP.
(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.


       The following table provides our operating  revenues and expenses expressed as cents per total
ASMs and as a percentage of total operating revenues, for the three and nine month periods ended
December 31, 2003 and 2002.

                             Three Months Ended December 31,       Nine Months Ended December 31,
                                2003                2002                2003              2002         
                               Per       %         Per       %         Per       %       Per       %
                              Total     of        total     of        total     of      total     of
                               ASM    Revenue      ASM    Revenue      ASM    Revenue    ASM    Revenue
    Passenger                 8.77     97.3%      7.72     97.9%      8.79     97.2%    7.72     97.8%
    Cargo                     0.11      1.3%      0.09      1.1%      0.12      1.3%    0.10      1.2%
    Other                     0.13      1.4%      0.08      1.0%      0.14      1.6%    0.07      1.0% 
Total revenues                9.01    100.0%      7.89    100.0%      9.05    100.0%    7.89    100.0%
                             ===================================== =====================================

Operating expenses:
    Flight operations         1.44     16.0%      1.45     18.4%      1.45     16.0%    1.41     17.9%
    Aircraft fuel expense     1.51     16.8%      1.42     18.0%      1.46     16.1%    1.36     17.2%
    Aircraft lease expense    0.95     10.5%      1.17     14.9%      1.00     11.1%    1.18     14.9%
    Aircraft and
      traffic servicing       1.63     18.1%      1.47     18.7%      1.53     16.9%    1.42     17.9%
    Maintenance               0.95     10.6%      1.27     16.1%      1.00     11.1%    1.20     15.2%
    Promotion and sales       0.95     10.6%      0.77      9.7%      0.93     10.2%    0.89     11.3%
    General and
      administrative          0.53      5.8%      0.44      5.5%      0.54      6.0%    0.43      5.5%
    Depreciation and
      amortization            0.35      3.9%      0.30      3.8%      0.33      3.7%    0.28      3.6%
Total operating               8.31     92.3%      8.29    105.1%      8.24     91.1%    8.17    103.5%
                             ===================================== =====================================


         Our  passenger  yield  per RPM was  12.01(cent)and  12.93(cent)for the  three  months  ended
December  31,  2003 and 2002, respectively,  or a decrease of 7.1%.  Our length of haul was 912 and 908
miles for the three months  ended  December 31, 2003 and 2002,  respectively,  or an increase of .4%.
Our average  fare was $104 for the three  months  ended  December 31, 2003 as compared to $111 for the
three months ended December 31, 2002, a decrease of 6.3%.  Our passenger yield per RPM was 12.12(cent)
and 12.74(cent)for the nine months ended December 31, 2003 and 2002, respectively, or a decrease of 4.9%.
Our length of haul was 911 and 923 miles for the nine  months  ended  December  31,  2003 and 2002,
respectively,  or a  decrease  of 1.3%.  Our average fare was $104 for the nine months ended  December
31, 2003 as compared to $109 for the nine months ended  December 31, 2002,  a decrease of 4.6%.  As part
of our new fare  structure,  which we  implemented  in February  2003,  our  highest-level business fares
were initially reduced by 25 to 45 percent, and our lowest available walk-up fares were reduced by 38 to
77 percent.  The February 2003 fare  structure was  comprised of six fare  categories  and capped all
fares to and from Denver at $399 or $499 one-way, excluding passenger facility, security or segment fees,
depending on length of haul. In January 2004, we capped all fares to and from Denver at $309 one-way,
excluding  passenger  facility,  security or segment  fees,  with the exception of flights to Mexico
and Anchorage,  Alaska.  The $309 fare is a base fare of $299 plus a $10 fuel surcharge,  which is
temporarily  in place.  The new fare cap is a 25 to 50 percent  reduction  from the  February  2003 caps
of $399 and $499. Unlike some other airlines,  these fares can be booked each way, allowing  customers
to get the best price on both the inbound and outbound portion of their itinerary with no round-trip
purchase required.  Our new fare structure  reinstated some of the advance  purchase  requirements  of
past pricing  structures.  Although  this has created  downward  pressure on our passenger yield per
RPM and average  fare,  we believe the effect on our  revenues was offset by an increase in  passenger
traffic.  We also believe that the January 2004 fare structure adjustments will tend to slightly increase
our average fare. Our revenue per  available  seat mile ("RASM") for the three months ended  December 31,
2003 and 2002 was 8.71(cent)and 7.69(cent),  an increase of 13.3%.  Our RASM for the nine months ended
December  31,  2003 and 2002 was  8.75(cent)and  7.69(cent),  an  increase  of  13.8%. Additionally,
we believe that our average fare during the three and nine months ended December 31, 2003 was negatively
impacted  as a result of  intense  competition  from  United  Airlines,  a  carrier  operating  under
Chapter  11  bankruptcy protection, which is our principal competitor at DIA.


         Our cost per available  seat mile ("CASM") for the three months ended December 31, 2003 and
2002 was 8.31(cent)and 8.29(cent), respectively,  an increase of .02(cent)or .2%.  CASM  excluding
fuel for the three months ended December 31, 2003 and 2002 was 6.80(cent)and 6.86(cent), respectively,
a decrease of .06(cent)or .9%. Our CASM increased during the three months ended December 31, 2003 as a
result of an increase in the average  price of fuel per gallon from .96(cent)to $1.03 or an increase of
..09(cent)per ASM; an increase in aircraft and traffic servicing expenses combined with sales and
promotions  expenses of .35(cent)as a result of the increase in the number of passengers we serve and
general increases in DIA facility charges as well as related increases in sales and promotion expenses
for booking  fees  associated  with the increase in  passengers,  the ongoing  costs of LiveTV service
of .05(cent); and an increase in general and  administrative  expenses of .09(cent)as a result of the
bonus accrual associated with our return to profitability and an increase in health  insurance  costs.
These  increases were  partially  offset by a decrease of .32(cent)in maintenance  expense  primarily
as a result of the reduction in the number of aircraft in our Boeing fleet that were  replaced  with
new Airbus A319 and A318  aircraft.  Our CASM for the nine months  ended  December 31, 2003 and 2002
was 8.24(cent)and 8.17(cent),  respectively,  an increase of .07(cent)or .9%. CASM  excluding  fuel
for the nine months ended  December 31, 2003 and 2002 was 6.79(cent)and 6.81(cent), respectively, a
decrease of .02(cent)or .3%.

       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.  For
the three  months ended  December  31, 2003,  our break-even load factor was 68.5% compared to our
achieved  passenger load factor of 72.5%.  The break-even load factor for the three months ended
December 31, 2003 includes a special item net of  profit-sharing  for the write-off of deferred loan
costs of $1,053,000  associated with the prepayment of the remaining  principal of the government
guaranteed loan. These items, net of profit  sharing,  accounted  for .5 load factor  points of the
break-even  load factor  amount.  For the nine months ended December  31,  2003,  our  break-even
load factor was 67.4%  compared to our  achieved  passenger  load factor of 72.1%.  The break-even
load factor for the nine months ended December 31, 2003, net of profit-sharing, was negatively
affected by $13,842,000 of compensation  received under the Appropriations Act; write-off of
deferred loan costs of $9,677,000 associated with the prepayment of all of our government guaranteed
loan; a charge for Boeing aircraft and facility lease exit costs of $4,949,000; loss of $1,664,000
on the sale of one Airbus  aircraft in a  sale-leaseback  transaction  and from the sale of a spare
engine, and positively affected by an unrealized derivative gain of $497,000.  These items, net of
profit  sharing, accounted for .2 load factor points of the break-even load factor amount.

       Small  fluctuations  in our RASM or in our CASM 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.

       Our operations during the three and nine months ended December 31, 2003, are not necessarily
indicative of future operating results or comparable to the prior periods ended December 31, 2002.


Revenues

       Our revenues are highly sensitive to changes in fare levels. Competitive fare pricing policies
have a  significant impact on our revenues.  Because of the  elasticity  of passenger  demand,  we
believe that  increases in fares may at certain levels  result in a decrease in passenger  demand in
many markets.  We cannot  predict  future fare levels,  which depend to a substantial  degree on
competitive  factors  and the  economy.  When sale  prices or other price  changes  are  initiated  by
competitors in our markets,  we believe that we must, in most cases,  match those  competitive  fares
in order to maintain our market share.  Passenger revenues are seasonal in some markets.

       We believe that our new fare structure that was implemented in February 2003 has had a downward
effect on the average fare and  passenger  yield  offset by an increase in  passenger  traffic.  Our
load  factor  increased  to 72.5% for the three months  ended  December  31, 2003 from 59.5% for the
prior  comparable  period,  an increase of 13.0  points,  or 21.8%.  This represents a record load
factor for us as compared to prior  comparable  quarters.  We cannot predict  whether or for how long
these higher load factors will  continue.  In addition,  we recently  further  modified our fare
structure in January 2004 to reduce the cap on the highest fares charged,  as discussed  above.  Our
new fare structure also reinstated some of the advance purchase requirements of past pricing structures.
We also believe that the January 2004 fare  structure  adjustments  will tend to slightly  increase our
average fare. At this time it is to early to determine  whether our fare  reduction has had the desired
effect on increased  passenger traffic, and there is no certainty that short-term gains in passenger
traffic, if any, will continue into the future.

       Passenger  Revenues.  Passenger revenues totaled $159,175,000 for the three months ended
December 31, 2003 compared to $117,752,000  for the three months ended  December 31, 2002,  or an
increase of 35.2%, on increased ASMs of 291,113,000 or 19.1%.  Passenger revenues totaled $458,130,000
for the nine months ended December 31, 2003 compared to $343,754,000 for the nine months ended December
31, 2002, or an increase of 33.3%, on increased ASMs of 758,282,000 or 17.0%.  Passenger revenues
include revenues for reduced rate standby  passengers,  administrative  fees, and revenue  recognized
for tickets that are not used within one year from their issue dates. We carried  1,444,000  revenue
passengers during the three months ended December 31, 2003 compared to 999,000  revenue  passengers
during the three months ended  December 31, 2002, an increase of 44.5%.  We had an average of 38.2
aircraft in our fleet during the three months ended  December 31, 2003  compared to an average of 34.8
aircraft  during the three months ended  December 31, 2002, an increase of 9.8%.  RPMs for the three
months ended December 31, 2003 were  1,317,227,000  compared to  906,801,000  for the three months
ended  December 31, 2002,  an increase of 45.3%.  Our load factor  increased to 72.5% for the three
months ended December 31, 2003 from 59.5% for the prior  comparable  period,  an increase of 13.0
points, or 21.8%. We carried 4,127,000 revenue passengers during the nine months ended December 31,
2003 compared  to  2,915,000  during the nine months  ended  December  31,  2002,  an increase of
41.6%.  We had an average of 36.9 aircraft in our fleet during the nine months ended  December 31,
2003 compared to an average of 33.1 aircraft  during the nine months ended  December 31, 2002,  an
increase of 11.5%.  RPMs for the nine months ended  December 31, 2003 were  3,760,480,000 compared to
2,689,222,000  for the nine months ended  December 31, 2002, an increase of 39.8%.  Our load factor
increased to 72.1% for the nine months ended December 31, 2003 from 60.4% for the prior comparable
period,  an increase of 11.7 points, or 19.4%.

       Cargo revenues,  consisting of revenues from freight and mail service,  totaled $2,036,000
and $1,353,000 for the three months ended  December 31, 2003 and 2002,  respectively,  representing
1.3% and 1.1%,  respectively,  of total  revenues,  an increase of 50.5%.  Cargo  revenues  totaled
$6,094,000 and $4,300,000 for the nine months ended December 31, 2003 and 2002, respectively,
representing 1.3% and 1.2%, respectively, of total revenues, an increase of 41.7%.  Cargo revenues
increased over the prior  comparable  periods as a result of our new  contract  to carry mail under
the  United  States  Postal  Service Commercial  Air 2003 Air System  (CAIR-03)  program.  IN APRIL
2003, WE WERE SELECTED AS ONE OF ONLY 18 AIRLINES IN THE UNITED STATES AND THE CARIBBEAN TO BE
OFFERED A 3-YEAR  CONTRACT TO CARRY  PRODUCTS FOR THE UNITED STATES POSTAL SERVICE (USPS) UNDER THE
CAIR-03  PROGRAM.  THIS PROGRAM  ALLOWED THE USPS TO REQUEST BIDS FROM AIR CARRIERS THAT WOULD BE
ACCEPTED AND THEN LOCKED IN FOR THE 3-YEAR TERM. IN RETURN FOR PROVIDING  COMPETITIVE  BIDS, THE USPS
IS REQUIRED TO USE ONLY THOSE  CARRIERS  SELECTED FOR THE 3-YEAR TERM.  THE NEW PROGRAM  BEGAN ON
JUNE 28, 2003.  AS A LOW COST  CARRIER,  WE WERE ABLE TO  AGGRESSIVELY  BID ON THE  CONTRACT,  WHICH
ALLOWS US TO USE EXCESS CARGO SPACE ON OUR AIRCRAFT.  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, LiveTV sales,
 co-branded credit card revenue,  and excess baggage fees totaled  $2,350,000 and $1,147,000,  or 1.4%
and 1.0% of total revenues for the three months ended December 31, 2003 and 2002,  respectively,  an
increase of 104.9%.  Other revenues totaled  $7,323,000 and $3,367,000 or 1.6% and 1.0% of total
operating revenues for the nine months ended December 31, 2003 and 2002,  respectively,  an increase
of 117.5%.  Other revenues  increased over the prior comparable  period primarily due to the Mesa
codeshare  agreement and LiveTV sales.  The three and nine months ended  December 31, 2002 did not
include  these  revenues  from LiveTV,  which  commenced in the fourth fiscal quarter for the year
ended March 31, 2003.







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 for the three months ended December 31, 2003 and 2002
were  $150,960,000 and  $126,371,000,  an increase of 20.2%, and represented 92.3% and 105.1%
of revenue,  respectively.  Total operating expenses were $429,735,000 and $363,838,000 for the
nine months ended December 31, 2003 and  2002,  an  increase  of 18.1%,  and  represented  91.1%
and  103.5% of revenue, respectively.  Operating expenses decreased as a percentage of revenue
during the three and nine months ended  December 31, 2003 as a result of an increase in total
revenues as compared to the nine months ended December 31, 2002.

       Salaries, Wages and Benefits.  We record salaries, wages and benefits within the specific
expense category identified in our statements of operations to which they pertain.  Salaries, wages
and benefits totaled  $41,168,000 and $32,248,000 and were 25.2% and 26.8% of total  revenues
for the three months ended  December 31, 2003 and 2002,  respectively,  an increase of 27.7%.
Salaries,  wages and benefits totaled  $117,822,000 and $93,062,000 and were 25.0% and 26.5% of total
revenues for the nine months ended  December 31, 2003 and 2002,  respectively,  an increase of 26.6%.
Salaries,  wages and benefits  increased over the prior comparable  periods largely as a result of
our bonus accrual due to our return to  profitability,  overall wage increases,  and an  increase  in
the number of  employees  to support  our ASM growth of 17.0%  during the nine  months  ended December
31, 2003 as well as the ASM growth that we expect for 2004.  Our employees increased from approximately
3,000 in December 2002 to approximately 3,800 in December 31, 2003, an increase of 26.7%.

       Flight  Operations.  Flight  operations  expenses of $26,097,000 and $22,100,000  were 16.0%
and 18.4% of total revenue for the three months ended  December 31, 2003 and 2002,  respectively,  an
increase of 18.1%.  Flight  operations  expenses of $75,418,000  and  $62,820,000  were 16.0% and 17.9%
of total  revenue for the nine months  ended  December  31, 2003 and 2002, respectively,  an increase
of 20.0%.  Flight  operations  expenses  include all expenses  related directly to the operation of
the aircraft  including lease and insurance  expenses,  pilot and flight  attendant  compensation,
in-flight catering, crew overnight expenses, flight dispatch and flight operations administrative
expenses.

         Aircraft  insurance  expenses  totaled  $2,429,000  (1.5% of total  revenue) for the three
months ended  December 31, 2003.  Aircraft  insurance  expenses for the three months ended  December
31, 2002 were  $3,161,000  (2.6% of total  revenue). Aircraft  insurance  expenses were .18(cent)and
..35(cent)per RPM for the three months ended December 31, 2003 and 2002,  respectively. Aircraft
insurance  expenses  totaled  $7,433,000 (1.6% of total revenue) for the nine months ended December
31,  2003. Aircraft  insurance  expenses for the nine months ended December 31, 2002 were $8,327,000
(2.4% of total  revenue).  Aircraft insurance  expenses were .20(cent)and .31(cent)per RPM for the
nine months ended December 31, 2003 and 2002, respectively.  Aircraft insurance expenses decreased
per RPM as a result of less expensive war risk coverage that is presently provided by the FAA compared
to the coverage that was previously provided by commercial underwriters  combined with a 30% decrease
in our basic hull and  liability  insurance  rates  effective  June 7, 2003.  The current FAA war risk
policy is in effect until August 31, 2004.  We do not know  whether the  government  will extend the
coverage  beyond  August  2004,  and 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 or the coverage will not be available from reputable underwriters.

       Pilot and flight attendant  salaries before payroll taxes and benefits totaled  $13,596,000 and
$11,108,000 or 8.5% and 9.4% of  passenger  revenue for the three  months ended  December  31, 2003 and
2002,  an increase of 22.4%.  Pilot and flight attendant  salaries  before  payroll taxes and benefits
totaled  $38,760,000  and  $31,542,000  or 8.5% and 9.2% of passenger revenue for the nine months ended
December 31, 2003 and 2002, an increase of 22.9%.  Pilot and flight  attendant  compensation for the
three and nine months ended  December 31, 2003 also  increased as a result of a 9.8% and 11.5% increase
in the average number of aircraft in service,  respectively,  an increase of 19.1% and 16.1% in block
hours,  respectively,  a general  wage increase in flight  attendant and pilot 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  relative to the average  number of aircraft in service.  We expect  these  additional
costs to continue as we place additional aircraft into service and continue to retire Boeing equipment.

       Aircraft Fuel Expenses.  Aircraft fuel expenses  include both the direct cost of fuel,  including
taxes, as well as the cost of  delivering  fuel  into  the  aircraft.  Aircraft  fuel  expenses  of
$27,487,000  for  26,790,000  gallons  used and $21,710,000  for  22,577,000  gallons used resulted in an
average fuel expense $1.03 and 96.2(cent)per gallon for the three months ended December 31, 2003 and 2002,
respectively.  Aircraft fuel expenses  represented 16.8% and 18.0% of total revenue for the three months ended
December 31, 2003 and 2002,  respectively.  Aircraft fuel expenses of $75,988,000  for 76,745,000 gallons used
and $60,438,000  for 66,606,000  gallons used resulted in an average fuel cost of 99.0(cent)and 90.7(cent)per
gallon for the nine months ended December 31, 2003 and 2002, respectively.  Aircraft fuel expenses represented
16.1% and 17.2% of total revenue for the nine  months  ended  December  31,  2003 and 2002,  respectively.
Fuel  prices are  subject to change  weekly,  as we purchase a very small  portion in advance for  inventory.
We initiated a fuel hedging  program in late November  2002,  which decreased  fuel expense by $552,000 for
the three months ended  December 31, 2003 and decreased  fuel expense  $1,055,000  for the nine months ended
December 31, 2003.  Fuel  consumption for the three months ended December 31, 2003 and 2002 averaged 738 and
741 gallons per block hour, respectively, or a decrease of .4%.  Fuel consumption for the nine months ended
December 31, 2003 and 2002  averaged  743 and 748 gallons per block hour,  respectively,  or a decrease of
..7%.  Fuel  consumption  per block hour decreased  during the three and nine months ended December 31, 2003
from the prior  comparable  periods  because of the more  fuel-efficient  Airbus aircraft added to our fleet
coupled with the reduction in our Boeing fleet,  which had higher fuel burn rates, offset by the increase
in our load factors.

       Aircraft Lease Expenses.  Aircraft lease expenses totaled  $17,247,000  (10.5% of total revenue) and
$17,869,000 (14.9% of total  revenue) for the three months ended  December 31, 2003 and 2002,  respectively,
a decrease of 3.5%.  Aircraft lease expenses totaled  $52,359,000 (11.1% of total revenue) and $52,470,000
(14.9% of total revenue) for the nine months ended December  31, 2003 and 2002,  respectively,  a decrease of
..2%. The average  number of leased  aircraft  decreased  16.5% from 29.6 to 25.4 during the three  months
ended  December 31, 2003.  The average  number of leased  aircraft  decreased  7.4% from 28.3 to 26.2  during
the nine  months  ended  December  31,  2003.  The  marginal  decrease  in lease  expenses  is due to the
replacement  of leased  Boeing 737  aircraft  that had  unfavorable  lease rates with Airbus  A319 leased
aircraft  with more favorable lease rates.

       Aircraft and Traffic Servicing.  Aircraft and traffic servicing expenses were $29,626,000 and
$22,440,000,  an increase of 32.0%,  for the three  months ended  December 31, 2003 and 2002,  respectively,
and represented 18.1% and 18.7% of total revenue.  Aircraft and traffic servicing expenses were $79,701,000
and $63,063,000, an increase of 26.4%, for the nine months ended December 31, 2003 and 2002, respectively,
and  represented  16.9% and 17.9% of total  revenue.  Aircraft and traffic  servicing  expenses include all
expenses  incurred at airports  including landing fees,  facilities  rental,  station labor, ground handling
expenses  (passenger and cargo) and interrupted  trip expenses  associated with delayed or cancelled flights.
Interrupted  trip expenses are amounts paid to other  airlines to  reaccommodate  passengers as well as hotel,
meal and other incidental expenses.  Aircraft and traffic servicing  expenses will increase with the addition
of new cities to our route system.  During the three months ended December 31, 2003, our departures increased
to 15,726 from 13,522 for the three months ended  December 31, 2002, or 16.3%. Aircraft and traffic servicing
expenses were $1,884 per departure for the three months  ended  December 31, 2003 as compared to $1,660 per
departure  for the three  months  ended  December 31, 2002,  or an increase of $224 per  departure.  During
the nine months  ended  December 31, 2003,  our  departures  increased to 45,414 from 39,289 for the nine
months ended December 31, 2002, or 15.6%.  Aircraft and traffic servicing expenses were $1,755 per departure
for the nine months ended December 31, 2003 as compared to $1,605 per departure for the nine months ended
December 31, 2002, or an increase of $150 per departure.  Aircraft and traffic servicing  expenses  increased
per departure as a result of general  increases in airport rents and landing fees and a 44.5% and a 41.6%
increase in passengers for the three and nine months ended December 31, 2003,  respectively,  as compared to
the prior periods.  Certain  airport  facility rent charges are calculated using the numbers of originating
and departing passengers, as well as additional personnel required to handle the increased number of
passengers.  Additionally,  cargo  (including  mail) revenue  increased 50.4% and 41.7% for the three and nine
months ended December 31, 2003, respectively, as compared to prior  periods.  Aircraft and traffic servicing
expenses increase with  increases in passengers  and cargo  handling.  We also  experienced  higher  landing
fees  associated  with the Airbus aircraft, which have higher landing weights than the Boeing aircraft.

       Maintenance.  Maintenance  expenses of $17,324,000 and $19,344,000  were 10.6% and 16.1% of total
revenue for the three months  ended  December  31,  2003 and 2002,  respectively,  a decrease of 10.4%.
Maintenance  expenses  of  $52,322,000  and $53,287,000  were 11.1% and 15.2% of total  revenue for the nine
months  ended  December  31, 2003 and 2002,  respectively,  a decrease  of 1.8%.  These  expenses  include
all  labor,  parts and  supplies  expenses  related  to the  maintenance  of the aircraft.  Maintenance cost
per block hour for the three months ended  December  31,  2003 and 2002  were $477 and $635, respectively.
Maintenance cost per block hour for the nine months ended  December  31,  2003 and 2002 were $506 and $599,
respectively.  Maintenance  cost per block hour  decreased  as a result of a decrease  in our Boeing  fleet
coupled  with the additional new Airbus aircraft that are less costly to maintain than our older Boeing
aircraft.

       Promotion and Sales.  Promotion and sales expenses totaled $17,323,000 and $11,665,000, an increase
of 48.5%, and were 10.6% and 9.7% of total revenue for the three months ended December 31, 2003 and 2002,
respectively.  Promotion and sales expenses totaled $48,313,000 and $39,889,000, an increase of 21.1%, and
were 10.2% and 11.3% of total revenue for the nine months ended December 31, 2003 and 2002, respectively.
These include advertising expenses, telecommunications expenses, wages and benefits for reservationists as
well as marketing management and sales personnel, credit card fees, travel agency commissions and computer
reservations costs.  During the three months ended December 31, 2003, promotion and sales expenses per
passenger increased to $12.00 compared to $11.68 for the three months ended December 31, 2002.  During the
three months ended December 31, 2002, we reduced advertising expenditures in order to apply those funds toward
our new branding campaign that was scheduled to begin in March 2003.  Due to the commencement of the
hostilities in Iraq, we postponed the roll out of our branding campaign until May 2003.  Additionally,
during the three months ended December 31, 2003, we became heavily involved in sports team sponsorships as
part of our branding awareness initiative.  During the nine months ended December 31, 2003, promotion and sales
expenses per passenger decreased to $11.71 compared to $13.68 for the nine months ended December 31, 2002.
Promotion and sales expenses per passenger decreased as a result of variable expenses that are based on lower
average fares, the elimination of substantially all travel agency commissions effective on tickets sold after
May 31, 2002, and economies of scale associated with our growth.

       General and Administrative.  General and administrative  expenses for the three months ended December
31, 2003 and 2002 totaled $9,561,000 and $6,685,000,  an increase of 43.0%, and were 5.8% and 5.5% of total
revenue,  respectively.  General and administrative  expenses  for the nine months  ended  December  31, 2003
and 2002  totaled  $28,281,000  and  $19,381,000,  an increase  of 45.9%,  and were 6.0% and 5.5% of total
revenue for each of the nine months ended December 31, 2003 and 2002, respectively.  During the three months
ended December 31, 2003, we accrued $819,000 for employee  performance  bonuses, or .5%of total revenue.
During the nine months ended December 31, 2003, we accrued  $3,242,000  for employee  performance  bonuses,
or .7% of total  revenue.  Bonuses are based on  profitability.  As a result of our pre-tax loss for the three
and nine months ended December 31, 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.  Our employees increased  from  approximately  3,000 in December  2002 to  approximately  3,800 in
December 2003, or 26.7%. Accordingly, we experienced increases in our human resources, training, information
technology, and health  insurance  benefit  expenses.  General and  administrative  expenses also increased
with a general increase in the cost of providing health insurance.

       Depreciation and Amortization.  Depreciation and amortization  expenses of $6,295,000 and $4,558,000
were approximately 3.9% and 3.8% of total  revenue  the three  months  ended  December  31,  2003 and 2002,
respectively, an increase of 38.1%. Depreciation and amortization expenses of $17,353,000 and $12,490,000 were
approximately 3.7% and 3.6% of total revenue for the nine months ended December 31, 2003 and 2002,
respectively, an increase of 38.9%.  These expenses include depreciation of aircraft and aircraft components,
office  equipment,  ground  station  equipment  and other fixed  assets.  Depreciation expense  increased
over the prior year  largely as a result of an  increase  in the  average  number of Airbus  A318 and A319
aircraft  owned from an  average  of 7.2 during the  December  2002  quarter to an average of 12.8  during
the  December  2003 quarter, an increase of 77.8%.

       Nonoperating  Income  (Expense).  Net nonoperating  expense totaled  $11,915,000 for the nine months
ended December 31, 2003 compared to net nonoperating expense totaling $6,079,000 for the nine months ended
December 31, 2002.

       Interest income  increased  slightly to $1,528,000 from $1,523,000  during the nine months ended
December 31, 2003 from the prior  period  due to an  increase  in cash  offset by a  decrease  in  interest
rates.  Interest  expense  increased  to $11,065,000  for the nine months ended December 31, 2003 from
$5,149,000 as a result of interest expense associated with the financing of additional aircraft purchased
since  December  31, 2002 and the  government  guaranteed  loan we obtained in February 2003.

       During the nine months ended  December 31, 2003, we ceased using three of our Boeing 737-200  leased
aircraft,  two of which had lease  terminations  in October 2003 and one with a lease  termination  date in
October  2005.  In August  2003,  we closed our  maintenance  facility in El Paso Texas,  which had a lease
termination  date in August 2007. As a result of these transactions  we recorded a pre-tax  charge of
$5,372,000.  This amount  includes the  estimated  fair value of the remaining lease payments and the write
off of the unamortized leasehold improvements on the aircraft and the facility.

       We  completed  a public  offering  of  5,050,000  shares  of common  stock in  September  2003.  Under
the terms of our government  guaranteed  loan,  we were  required to make a prepayment  of the loan equal to
60% of the net  proceeds  from the offering.  As a result,  we prepaid  approximately  $48,418,000  on the
loan. In December  2003, we repaid the remaining  loan balance due of $11,582,000.  As a result of paying
off the government  guaranteed loan, we wrote off approximately $9,816,000 of deferred loan costs associated
with the prepayment  amount.  Of this amount,  approximately  $8,053,000  represented  the unamortized
portion of the value assigned to the warrants issued to the ATSB and to two other guarantors in connection
with the loan transaction.

       During the nine months ended  December 31, 2003,  we incurred a loss totaling  $1,323,000 on the
sale-leaseback of an Airbus A319 aircraft and a loss totaling $483,000 on the sale of an aircraft engine.

       Offsetting  these  nonoperating  expenses  during the nine months ended  December 31, 2003 is pre-tax
compensation  of $15,024,000  as a result of payments  under the  Appropriations  Act for  expenses and
foregone  revenue  related to aviation security.  We  received a total of  $15,573,000  in May 2003,  of
which we paid  $549,000  to Mesa  Airlines  for the  revenue passengers Mesa carried as Frontier JetExpress.

       Income Tax Expense.  Income tax expense totaled  $11,510,000  during the nine months ended December
31, 2003 at a 38.5% rate,  compared to an income tax benefit of  $6,601,000  for the nine months ended
December 31,  2002,  at a 35.7% rate.  The expected  benefit for the nine months ended  December  31, 2002
at a federal  rate of 35.7% plus the blended  state rate of 2.6% (net of federal tax benefit) is reduced by
the tax effect of permanent differences of 2.0%.


Liquidity and Capital Resources

       Our liquidity depends to a large extent on the number of passengers who fly with us, the fares we
charge,  our operating and capital expenditures, and our financing activities.  We depend on lease or
mortgage-style  financing  to acquire all of our  aircraft,  including 37 firm  additional  Airbus
aircraft as of December 31, 2003 scheduled for delivery through 2008.  We may seek to obtain additional
aircraft in connection with our fleet expansion.

       We had cash and cash equivalents and short-term investments of $186,324,000 at December 31,
2003 and  $104,880,000 at March 31, 2003,  respectively.  At December 31, 2003,  total current assets
were  $262,790,000  as compared to $158,881,000 of total  current  liabilities,  resulting in working
capital of  $103,909,000.  At March 31, 2003,  total  current  assets were $190,838,000  as compared to
$130,047,000 of total current liabilities, resulting in working  capital of $60,791,000.  The increase
in our cash and working  capital from March 31, 2003 is largely a result of cash provided by our net
income for the nine months ended December 31, 2003 adjusted for reconciling items to net cash and cash
equivalents totaling $47,886,000: the common stock offering in September 2003, which netted $81,077,000
after offering  expenses;  an income tax refund from the Internal Revenue Service totaling $26,574,000,
and the net proceeds from a sale-leaseback  transaction of one of our aircraft purchase  commitments.
These were offset by required  prepayments  of principal on our  government  guaranteed  loan totaling
$58,418,000  as a result of the income tax refund and a portion of the proceeds from the stock offering,
our decision to pay the remaining  balance due of $11,582,000 on the government  guaranteed loan after
the required  prepayments,  and an increase in restricted  investments totaling $9,931,000,  which was
largely a result of the increase in our collateral  requirements to our bankcard processor associated
with the increase in our air traffic liability

       Cash  provided  by  operating  activities  for the nine  months  ended  December  31,  2003 was
$106,351,000.  This is attributable to our net income  adjusted for reconciling  items to net cash and
cash  equivalents.  Our air traffic  liability increased  as a result in the growth of our  business
associated  with the  increase  in the number of  aircraft in our fleet coupled  with the  increase
in the  number of  passengers we carried in excess of our increased capacity.  Our accrued liabilities
increased as a result of increases in employee benefits associated with the increase in the number of
employees and increases in health care expenses,  the bonus accrual for our employees as a result of
our  profitability and increases in passenger  related taxes  associated with our increase in revenue
and passengers  carried.  Cash used by operating  activities for the nine  months  ended  December  31,
2002 was  $14,889,000.  This is  attributable  to a  decrease  in our air  traffic liability largely a
result of the decrease in the average fare during the period and seasonality, and a $4,835,000 repayment
of excess amounts received under the Stabilization Act.

       Cash used in investing activities for the nine months ended December 31, 2003 was $125,615,000.
Net aircraft lease and purchase deposits decreased by $799,000 during this period.  We used
$128,858,000  for the purchase of four additional Airbus aircraft,  aircraft leasehold improvements,
ground equipment to support increased below-wing operations,  and computer equipment,  including
scanning equipment for our new mail transportation requirements.  During the nine months ended December
31, 2003, we took delivery of four purchased  Airbus A318 aircraft and applied their respective  pre-
delivery  payments to the purchase of those aircraft.  Additionally,  we completed a  sale-leaseback
transaction on one of our purchased  aircraft that was delivered to us in September 2003,  generating
cash proceeds of approximately $4,374,000 from the sale and the return of the  pre-delivery  payments
relating to the purchase  commitment.  We agreed to lease the aircraft over a 12 year term.  Cash used
by investing activities for the nine months ended December 31, 2002 was $162,721,000.  We used
$197,881,000  for the purchase of six Airbus  aircraft  and to purchase  rotable  aircraft components,
leasehold  improvements  and other  general equipment  purchases.  Net aircraft lease and purchase
deposits and restricted  deposits  decreased by $4,792,000 during this period.

       Cash provided by financing activities for the nine months ended December  31, 2003 and 2002 was
$100,708,000  and $119,556,000,  respectively.  During the nine months  ended  December 31,  2003,  we
completed a public  offering of 5,050,000 shares of our common stock.  We received  $81,077,000,  net
of offering expenses, from the sale of these shares.  During the nine months ended  December 31, 2003
and 2002, we received  $940,000 and $578,000, respectively, from the exercise of common stock options.
During the nine months ended December 31, 2003 and 2002,  we  borrowed $98,500,000  and  $147,100,000,
respectively,  to finance the purchase of Airbus aircraft.  Principal  repayments were $79,675,000
and $26,942,000  during the respective  periods.  In July 2003, we received an income tax refund from
the Internal  Revenue Service  totaling  $26,574,000 and  prepaid  $10,000,000  on our  government
guaranteed  loan upon  receipt  of this  refund.  In  September  2003,  we used $48,418,000 of the
proceeds from the stock offering to prepay a portion of the government guaranteed loan. Both prepayments
were  required by the loan  agreement.  In  December  2003,  we repaid the remaining loan balance  due
of  $11,582,000.  In December 2002, we entered into a  sale-leaseback  transaction for one of our
purchased  aircraft.  We received net proceeds of approximately  $5,300,000 from the sale of this
aircraft,  net of repayment of debt that collateralized this aircraft totaling $22,772,000 and payment
of fees associated with the early extinguishments of the debt.

       We have been working  closely with DIA,  our primary hub for  operations,  and the offices of
the Mayor of the City and County of Denver,  in which DIA is located,  to develop plans for expanding
Concourse A where our aircraft  gates are located and also improving  efficient use of existing  gates,
in order to accommodate  our  anticipated  growth over the next several years.  At this time, DIA has
commenced construction of two  additional  gates to Concourse A for our  preferential  use. We expect
that these gates will become  available in late spring of 2004. We are  examining  other  expansion
options that could add up to an  additional  six gates and five  regional  jet parking  positions to
the west side of Concourse A. As new gates are  constructed,  we would enter into long-term lease
arrangements to use those gates on a preferential basis. On November 9, 2003, the City and County of
Denver and United Airlines announced that they had reached agreement with respect to the restructuring
of United's lease of gates and other facilities at DIA. The agreement will permit United to proceed
with the assumption of the restructured lease as part of its bankruptcy  reorganization  process.  As
part of that settlement,  United has agreed to relinquish to DIA one gate on Concourse A for immediate
lease to us on a permanent  basis.  In addition,  United would make  available two additional  gates
for use by us until the earlier of the  construction  of the two additional  gates for us on the west
end of Concourse A or October 31, 2005.  Plans for our expansion of Concourse A are still in development
and the final scope of the project,  if any, and a firm estimate of the project  costs is yet to be
determined.  It is impossible at this time to estimate  with any  certainty the increased  rates and
charges that we would incur as the result of the construction and leasing of newly constructed gates
on Concourse A.

       As part of the lease restructure between the City and County of Denver and United Airlines,  we
believe that United has been provided  certain  concessions  and reductions in the rents,  rates
and charges arising from their lease of facilities at DIA.  We have been  advised by the City and
County of Denver  that they will seek to prevent the reduced rates and  charges being paid by United
from  increasing  the rates and charges  being paid by other  airlines.  However,  the City and County
of Denver has also made it clear that in certain circumstances it will have no choice but to increase
rates and charges  being paid by other  airlines  in order to comply  with  their own cash  flow,
reserve account and bond financing requirements. Because we are the second largest airline operating
out of Denver,  we may incur a larger impact of any increase in rates and charges  imposed by DIA. At
this time,  it is  impossible  to quantify what the increase in our rates and charges would be, if
any, due to the concessions being provided to United.

       We have been assessing our liquidity  position in light of our aircraft  purchase  commitments
and other capital needs, the economy, our competition, and other uncertainties surrounding the airline
industry.  Prior to applying for a government guaranteed loan under the  Stabilization  Act, we filed
a shelf  registration  with the Securities and Exchange  Commission in April 2002 that  allows us to
sell equity or debt  securities  from time to time as market  conditions  permit.  In  September 2003,
we completed a public offering of 5,050,000 shares of our common stock.  Although the stock offering
has improved our liquidity,  we may need to continue  to explore  avenues to enhance  our  liquidity
if our current economic and operating environment changes.  As of  February  9,  2004,  $64,150,000
of the  shelf  registration  remains  available.  We intend to continue to examine domestic or foreign
bank aircraft financing, bank lines of credit and aircraft sale-leasebacks, the sale of equity or debt
securities,  and other transactions as necessary to support our capital and operating  needs.  For
further information  on  our  financing  plans  and  activities  and  commitments,   see  "Contractual
Obligations"  and  "Commercial Commitments" below.


Contractual Obligations

       The following table summarizes our contractual obligations as of December 31, 2003:

                                  Less than           1-3             4-5           After
                                    1 year           years           years         5 years             Tota     l
Long-term debt (1)             $ 16,043,000    $  34,801,000    $  38,779,000  $  211,414,000     $  301,037,000
Operating leases (2)             92,526,000      188,695,000      188,253,000     609,005,000      1,078,479,000
Unconditional purchase
  obligations (3) (4)           104,188,000      214,468,000      235,108,000                        553,764,000 
Total contractual cash
  obligations                   212,757,000      437,964,000      462,140,000     820,419,000      1,933,280,000
                               =================================================================================


(1)  During the year ended March 31, 2002, we entered into two loan agreements for two Airbus A319 aircraft.
     Each aircraft loan has a term of 10 years and is payable in equal monthly installments, including interest,
     payable in arrears.  The aircraft secure the loans.  The loans require  monthly  principal and interest
     payments of $215,000 and $218,110,  bears interest  with  rates of 6.71% and  6.54%, with maturities in
     May and August  2011,  at which  time a balloon  payment totaling  $10,200,000  is due with  respect  to
     each  loan.  During  the year  ended  March 31,  2003,  we  entered  into additional  loans to finance
     seven Airbus aircraft with interest rates based on LIBOR plus margins that adjust quarterly or semi-
     annually.  At December 31, 2003 interest rates for these loans ranged from 2.44% to 2.89%.  Each loan has
     a term of 12 years,  and each loan has balloon  payments ranging from $4,800,000 to $7,770,000 at the end
     of the term. The loans are secured by the aircraft.  During the nine months ended December 31, 2003, we
     borrowed an additional  $98,500,000  for the  purchase  of four  Airbus  A318  aircraft.  Each  aircraft
     loan has a term of 12 years and is  payable  in  monthly installments,  including  interest,  payable in
     arrears,  with a floating interest rate adjusted quarterly based on LIBOR plus a margin of 2.25% for
     three of the loans,  and LIBOR plus a margin of 1.95% for the fourth.  At the end of the term, there is
     a balloon  payment of $3,060,000 for three of the aircraft loans and $2,640,000 for the fourth.  At
     December 31, 2003, interest rates for these loans ranged from 3.12% to 3.42%.  The loans are secured by
     the aircraft.

 (2) As of December 31, 2003,  we lease 14 Airbus A319 type aircraft and 13 Boeing 737 type aircraft  under
     operating  leases with expiration dates ranging from 2004 to 2015.  One of the Boeing 737 type aircraft
     is no longer in service and is being stored until the lease return date of October 2005.  Under all of
     our leases,  we have made cash security  deposits or arranged for letters of credit representing
     approximately two months of lease payments per aircraft.  At December 31, 2003,  we had made cash
     security  deposits of $7,916,000 and had arranged for letters of credit of $4,962,000 collateralized
     by restricted cash balances.  Additionally,  we are required to make  supplemental rent payments to
     cover the cost of major scheduled  maintenance  overhauls of these aircraft.  These supplemental rent
     payments are based on the number of flight hours flown and/or flight departures and are not included
     as an obligation in the table above.

     As a complement to our Airbus purchase agreement, in April 2000 we signed an agreement, as subsequently
     amended,  to lease 15 new Airbus  aircraft  for a term of 12 years.  As of December  31,  2003,  we had
     taken  delivery of 11 of these aircraft and have letters of credit on the remaining  four aircraft to
     be delivered  totaling  $824,000,  to secure these leases, collateralized by restricted cash balances.

     During the nine months ended December 31, 2003, we entered into additional  aircraft lease agreements
     for two Airbus A318 aircraft and 16 Airbus A319 aircraft,  one of which we took delivery of in September
     2003 and the remaining are scheduled for  delivery  beginning  in  February  2004  through  February
     2007.  Two of the  aircraft  leases  were  a  result  of sale-leaseback  transactions  of two new Airbus
     aircraft.  As of December 31, 2003, we have made  $3,562,000 in security deposit payments for these
     aircraft.

     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 2004 to 2014. In
     addition,  we 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 table above.

(3)  We have adopted a fleet  replacement  plan to phase out our Boeing 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 32 Airbus  aircraft.  Included  in the  purchase  commitments
     are  amounts  for spare  aircraft components to support the aircraft.  We are not under any contractual
     obligations  with respect to spare parts.  As of December 31, 2003,  we had taken delivery of 16 of
     these aircraft, one of which we sold in December 2002.  Prior to the delivery of the aircraft we assigned
     two of the purchase  commitments  to two lessors in February 2003 and September 2003. We agreed to lease
     two of these aircraft over a five-year  term and the third for a 12 year term. Our purchase  agreement
     with Airbus also includes purchase rights for up to 23 additional  aircraft,  and allows us to purchase
     Airbus A318 or A320 aircraft in lieu of the A319 aircraft at our option.  Under the terms of the amended
     agreement,  we have rights to modify some or all of these additional  aircraft  into A320  aircraft by
     providing  Airbus  notice prior to December 31,  2004.  The  agreement  also requires us to lease at
     least three new Airbus A319 or A320 aircraft from operating  lessors for delivery in calendar year 2004.
     Including these three aircraft,  we intend to lease as many as 14 additional A318 or A319 aircraft from
     third party  lessors  over the next five years.  As of December 31, 2003,  we have  remaining  firm
     purchase  commitments  for sixteen  additional  aircraft that have scheduled  delivery dates beginning
     in calendar year 2004 and continuing  through 2008.  Under the terms of the purchase  agreement,  we are
     required to make scheduled pre-delivery payments for these aircraft.  These payments are non-refundable
     with certain  exceptions.  As of December 31, 2003, we had made pre-delivery payments on future
     deliveries totaling $24,276,000 to secure these aircraft.

     We signed a term  sheet  with a European  financial  institution  to  provide  debt  financing  for four
     of our five A318 aircraft  scheduled for delivery from Airbus in fiscal year 2004, which was subsequently
     amended to add the fifth A318 aircraft  scheduled for delivery in April 2004. As of December 31, 2003,
     four of these A318 aircraft were  purchased and financed under this facility.  The terms permit us to
     borrow  $22,000,000 per aircraft over a period of either 120 or 144 months at floating  interest rate
     with either a $6,600,000  balloon  payment due at maturity if we elect a 120 month term or  $2,640,000
     if we elect a 144 month term.  The  amendment to the term sheet  requires us to prepay  $1,200,000 on the
     loan for the A318  aircraft  that we financed  under this  agreement in September  2004.  At our option,
     we can elect to prepay  $2,500,000,  which  would  allow us to reduce the  interest  rate on the loan.
     In January  2004,  we executed an agreement for the  sale-leaseback  of two A319 aircraft  scheduled for
     delivery in June and July 2004. There are no other purchased  aircraft  scheduled  for  delivery  until
     June  2005.  The  inability  to close on the A318  financing  or the inability to obtain  financing or
     additional  sale-leaseback  transactions  on our purchase  commitments  could result in delays in or our
     inability to take delivery of Airbus  aircraft we have agreed to purchase,  which would have a material
     adverse effect on us.

(4)   In October 2002, we entered into a purchase and 12 year services agreement with LiveTV to bring DIRECTV
     AIRBORNE(TM)satellite programming to every seatback in our Airbus fleet.  We have agreed to the purchase
     of 46 units; however, we have the option to cancel up to a total of five units by providing written
     notice of cancellation at least 12 months in advance of installation.  As of December 31, 2003, we have
     purchased 24 units and have made deposits toward the purchase of eight units.  The table above includes
     the remaining purchase commitment amounts not yet paid for on the remaining firm nine units.

Commercial Commitments

       As we enter new markets,  increase the amount of space leased, or add leased aircraft, we are often
required to provide the airport authorities and lessors with a letter of credit, bond or cash security
deposits.  These generally  approximate up to three months of rent and fees.  As of December 31, 2003, we had
outstanding  letters of credit,  bonds,  and cash security deposits totaling  $10,614,000,  $4,267,000,  and
$15,514,000,  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, 2004, and another credit agreement with
a second financial institution for up to $20,000,000,  which expires December 1, 2004. These credit lines can
be used  solely for the  issuance  of standby  letters of credit.  Any amounts  drawn  under the credit
agreements are fully collateralized by certificates of deposit, which are carried as restricted investments
on our balance sheet. As of December 31, 2003, we have drawn  $10,614,000 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 have a contract with a bankcard  processor that requires us to pledge a certificate equal to a
certain percentage of our air traffic liability  associated with bankcard customers.  As of December 31, 2003
that amount totaled  $20,758,000.  The amount is adjusted  quarterly in arrears  based on our air traffic
liability  associated  with bankcard  transactions.  As of February 9, 2004, we will be required to increase
the amount by approximately $2,000,000.

       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 of December 31,  2003,  we met these
financial  tests and  presently  are only  obligated  to provide the  minimum  amount of $100,000 in coverage
to ARC. If we were to fail the minimum testing requirements, we would be required to increase our bonding
coverage to four  times the weekly agency net cash sales (sales net of refunds  and agency  commissions).
Based on net cash sales remitted to us for the week ended  February 6, 2004, the coverage would be increased
to  $8,787,000  if we failed the tests. If we were unable to increase  the bond amount as a result of our
financial  condition  at the time,  we could be required to issue a letter of credit that would restrict cash
in an amount equal to the letter of credit.

       In  November  2002,  we  initiated  a fuel hedging program comprised of swap and collar agreements.
Under a swap agreement,  we receive the difference  between a fixed swap price and a price based on an agreed
upon published spot price for jet fuel. If the index price is higher than the fixed price,  we receive the
difference  between the fixed price and the spot price.  If the index price is lower,  we pay the difference.
A collar  agreement has a cap price, a primary floor price,  and a secondary  floor  price.  When the U.S.
Gulf Coast  Pipeline  Jet index  price is above the cap, we receive the  difference between the index and the
cap.  When the index  price is below the primary  floor but above the secondary floor, we pay the difference
between  the index and the  primary  floor.  However,  when the price is below the  secondary  floor,  we are
only obligated  to pay the  difference  between the primary and  secondary  floor  prices.  When the price is
between the cap price and the primary floor, no payments are required.

       We entered into a three-way  collar in November 2002 with a notional volume of 385,000 gallons per
month for the period December  1, 2002 to  November  30,  2003.  The cap price for this  agreement  was 82
cents per gallon, and the primary and secondary floor prices were at 72 and 64.5 cents per gallon,
respectively.  This agreement  represented  approximately  5% of our fuel  purchases  for that period.  In
April 2003,  we entered into a swap  agreement  with a notional  volume of 1,260,000 gallons  per month for
the period from July 1, 2003 to  December  31, 2003.  The fixed price of the swap was 71.53 cents per gallon
and the agreement  represented  approximately  15% of our fuel purchases for that period. In September 2003,
we entered into a swap  agreement  with a notional  volume of 630,000  gallons per month for the period from
January 1, 2004 to June 30, 2004.  The fixed  price of the swap is 74.50 cents per gallon and the  agreement
is  estimated  to  represent  7% of our fuel purchases for that period.

       In March 2003, we entered into an interest rate swap agreement with a notional amount of  $27,000,000
to hedge a portion  of our LIBOR  based  borrowings.  Under the  interest rate swap agreement,  we are paying
a fixed rate of 2.45% and receive a variable  rate based on the three month LIBOR.  At December  31,  2003,
our  interest  rate swap  agreement  had an estimated  unrealized loss of $173,000,  $41,000 of which was
recorded as accumulated other comprehensive loss and is included in the balance  sheet.  We did not have any
interest rate swap  agreements  outstanding  during the nine months ended December 31, 2002.

      Effective January 1, 2003, we entered into an engine maintenance  agreement  with GE Engine Services,
Inc.  ("GE") covering the scheduled and unscheduled  repair of our aircraft engines used on most of our Airbus
aircraft.  The agreement is for a 12 year period from the effective date for our owned  aircraft or December
31, 2014, whichever comes first, and for each leased aircraft, the term coincides with the initial lease term
of 12 years.  This  agreement  precludes us from using another  third party for such  services  during the
term.  This agreement requires monthly payments at a  specified  rate multiplied  by the number of flight
hours flown on the aircraft  during that month.  The amounts due based on flight hours are not  included in
table above.  As of December  31, 2003,  the  agreement  covers 13  purchased  Airbus  aircraft and 11 leased
Airbus  aircraft.  The cost associated with this agreement for our purchased  aircraft for the three months
ended December 31, 2003 and December 31, 2002 were $492,000 and $0,  respectively.  For our leased aircraft,
the lessors pay GE directly for the repair of aircraft engines in conjunction with this agreement.  We pay
lessors  engine  maintenance  reserves on a monthly basis under the terms of our various lease agreements.


Critical Accounting Policies and Estimates

       The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to adopt accounting  policies and make estimates and
assumptions to develop amounts reported in our financial statements and accompanying  notes.  We believe
that our estimates and judgments are  reasonable; however,  actual  results and the timing of  recognition
of such  amounts  could  differ from those  estimates.  In addition, estimates routinely require adjustment
based on changing circumstances and the receipt of new or better information.

       Critical accounting  policies are defined as those that require management to exercise significant
judgments, and potentially result in materially different results under different assumptions and conditions.
Our most critical accounting policies and  estimates  are  described  briefly  below.  For  additional
information about these and our other significant accounting policies, see Note 1 of the Notes to Financial
Statements and our Form 10-K for the year ended March 31, 2003.

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 have been deferred are included in the accompanying  balance sheets as air
traffic  liability.  In limited  circumstances,  we grant  credit for tickets that have  expired.  We do not
recognize  as revenue the amount of credits  estimated to be granted after the date a ticket expires.  These
estimates are based upon the evaluation of historical ticket useage trends.

Impairment of Long-Lived Assets

         In accounting for long-lived assets, we make estimates about the expected useful lives, projected
residual values and the  potential  for  impairment.  In estimating useful lives and residual values of our
aircraft, we have relied upon actual industry experience with the same or similar aircraft types and our
anticipated  utilization  of the  aircraft. Changing market prices of new and used aircraft,  government
regulations and changes in our maintenance program or operations could  result  in  changes  to  these
estimates.  Our  long-lived  assets  are  evaluated for impairment when events and circumstances indicate
that the assets may be impaired.  We record  impairment losses on long-lived assets used in operations when
indicators of impairment are present and the undiscounted future cash flows estimated to be generated by those
assets are less than the carrying  amount of the assets.  If an impairment  occurs,  the loss is measured by
comparing the fair value of the asset to its carrying amount.

 Aircraft Maintenance

       We operate under an FAA-approved continuous inspection and maintenance program. We account for
maintenance  activities on the direct expense method. Under this method, major overhaul maintenance costs
are recognized as expense as maintenance services are performed, as flight hours are flown for nonrefundable
maintenance  payments required by lease agreements,  and as the  obligation is incurred for payments  made
under service  agreements.  Routine  maintenance  and repairs are charged to operations as incurred.  Prior
to fiscal 2003 we accrued for major  overhaul  costs on a  per-flight-hour  basis in advance of performing
the maintenance services.

       Effective  January 1, 2003,  we executed a 12-year  engine  services  agreement  with GE  covering
the  scheduled  and unscheduled  repair of most of our Airbus  engines.  Under the terms of this services
agreement,  we agreed to pay GE a fixed rate  per-engine-hour,  payable  monthly,  and GE assumed the
responsibility  to overhaul  our engines on Airbus  aircraft as required  during the term of the  services
agreement,  subject to certain  exclusions.  We believe the fixed rate  per-engine hour  approximates  the
periodic cost we would have incurred to service those engines.  Accordingly,  these  payments are expensed
as the obligation is incurred.

Fuel Derivative Instruments

       We have  entered into  derivative  instruments  that are intended to reduce our exposure to changes
in fuel prices.  We account for the derivative  instruments  entered into as trading  instruments  under
FASB Statement No. 133,  "Accounting  for Derivative  instruments  and Hedging  Activities"  and record
the fair value of the derivatives as an asset or liability as of each balance sheet date.  We record any
settlements received or paid as an adjustment to the cost of fuel.

Interest Rate Hedging Program

       During the nine months  ending  December 31, 2003, we designated  certain  interest rate swaps as
qualifying  cash flow hedges.  Under these hedging  arrangements,  we are hedging the interest payments
associated with a portion of our LIBOR-based borrowings.  Under the swap  agreements,  we pay a fixed rate
of  interest  on the  notional  amount of the  contracts  of $27 million,  and we receive a variable rate
if interest based on the three month LIBOR rate,  which is reset  quarterly.  Changes in the fair value of
interest rate swaps  designated as hedging  instruments are reported in accumulated  other  comprehensive
income.  These amounts are subsequently  reclassified  into interest expense as a yield adjustment in the
same period in which the related interest payments on the LIBOR-based borrowings affects earnings.

Customer Loyalty Programs

       We entered into a co-branded  credit card arrangement  with a Mastercard  issuing bank in March 2003.
The terms of this affinity  agreement provide that we will receive a fixed fee for each new account,  which
varies based on the type of account, and a percentage of the annual  renewal fees that the bank  receives.
We receive an increased fee for new accounts  solicited by us.  We also receive fees for the purchase of
frequent flier miles awarded to the credit card customers.

       During the year ended March 31, 2003, we received a  $10,000,000  advance from the issuing bank for
fees expected to be earned under the program.  This advance was recorded as deferred  revenue when it was
received.  For the year ended March 31, 2003,  we had not yet earned or  recognized  any revenue  from this
arrangement.  Fees  earned as credit  cards are issued or renewed, and as points are awarded to the credit
card customers are applied against this advance.

       We account for all fees received  under the  co-branded  credit card program by allocating the fees
between the portion that  represents  the  estimated  value of the  subsequent  travel  award to be provided,
and the portion  that  represents a marketing fee to cover  marketing and other related costs to administer
the program.  This latter portion  (referred to as the marketing  component) represents the residual  after
determination  of the value of the travel  component.  The  component representing  travel is determined by
reference to an equivalent  restricted  fare,  which is used as a proxy for the value of travel of a frequent
flyer  mileage  award.  The travel  component is deferred  and  recognized  as revenue  monthly over the
estimated usage period of the frequent flyer mileage awards of 20 months.  We record the marketing component
of the revenue earned under this agreement as a reduction of sales and promotion expenses in the month
received.

       Because of our limited  history with our frequent flier  program,  we have estimated the period over
which the frequent flier  mileage  awards will be used based on industry  averages  adjusted  downward to
take into account that most domestic airlines require 25,000 frequent flyer miles for a domestic round-trip
ticket while we require only 15,000  frequent flyer miles for a domestic round-trip ticket.

       For the nine months  ended  December 31, 2003,  we earned  total fees of  $2,581,000,  all of which
were applied to the original  $10,000,000  advance.  Of that amount,  $2,095,000  was deferred as the travel
award component, and the remaining marketing component of $486,000 was recognized in earnings.  Amortization
of deferred revenue  recognized in earnings in this period was $366,105.


Item 3:  Quantitative and Qualitative Disclosures About Market Risk

Aircraft Fuel

       Our earnings  are affected by changes in the price and  availability  of aircraft  fuel.  Market risk
is estimated as a hypothetical 10 percent change in the  average cost per gallon of fuel for the year ended
March 31,  2003.  Based on fiscal year 2003 actual fuel usage, such a change would have the effect of
increasing  or  decreasing  our aircraft fuel expense by approximately  $8,590,000 in fiscal year 2003.
Comparatively,  based on projected fiscal year 2004 fuel usage,  such a change would have the effect of
increasing or decreasing our aircraft fuel expense by approximately $9,890,000 in fiscal year 2004, excluding
the effects of our fuel hedging  arrangements.  The increase in exposure to fuel price  fluctuations  in
fiscal year 2004 is due to the increase of our average aircraft fleet size during the year ended March 31,
2004 and related  gallons purchased.

       In November 2002, we initiated a fuel hedging  program  comprised of swap,  calls and collar
agreements.  Under a swap agreement,  we receive the difference  between a fixed swap price and a price
based on an agreed upon published spot price for jet fuel. If the index price is higher than the fixed price,
we receive the  difference  between the fixed price and the spot price.  If the index price is lower,  we pay
the difference.  A collar  agreement has a cap price, a primary floor price,  and a secondary  floor  price.
When the U.S. Gulf Coast Pipeline Jet index price is above the cap, we receive the difference between the
index and the cap.  When the index  price is below the primary floor but above the secondary floor, we pay
the difference  between  the index and the  primary  floor.  However,  when the price is below the  secondary
floor,  we are only obligated  to pay the  difference  between the primary and  secondary floor prices.  When
the price is between the cap price and the primary floor, no payments are required.

       In September  2003, we entered into a swap agreement with a notional volume of 630,000 gallons per
month for the period from  January 1, 2003 to June 30, 2004.  The fixed price of the swap is 74.50 cents per
gallon and the  agreement is estimated to represent 7% of our fuel  purchases  for that period.  The results
of operations  for the quarter  ended  December 31, 2003 include an  unrealized  derivative  gain of $64,000
that is included in fuel expense and a realized gain of approximately $488,000 in cash settlements received
from a counter-party recorded as a decrease in fuel expense.

Interest

       We are susceptible to market risk associated with changes in variable interest rates on long-term debt
obligations we incurred and will incur to finance the purchases of our Airbus  aircraft.  Interest  expense
on seven of our owned Airbus A319 aircraft is subject to interest rate adjustments every three to six months
based upon changes in the applicable  LIBOR rate. A change in the base LIBOR rate of 100 basis  points (1.0
percent)  would have the effect of  increasing  or  decreasing  our annual  interest  expense by  $2,583,000
assuming the loans  outstanding  that are subject to interest rate adjustments at December 31, 2003 totaling
$258,296,000 are outstanding for the entire period. As of December 31, 2003,  approximately  85.8% of our
loans had variable interest rates.

       In March 2003, we entered into an interest rate swap agreement with a notional amount of $27,000,000
to hedge a portion  of our LIBOR  based  borrowings.  Under the  interest  rate swap  agreement,  we are
paying a fixed rate of 2.45% and receive a variable rate  based on the three  month LIBOR over the term of
the swap  that  expires  in March  2007.  As of December 31, 2003, we had hedged  approximately  10.5% of our
variable  interest rate loans. As of December 31, 2003, the fair value of the swap agreement is a liability
of $173,000.


Item 4.  Controls and Procedures

       As of the end of the period covered by this report, we conducted an evaluation, under the supervision
and with the participation of our management,  including our Chief Executive Officer and Chief Financial
Officer,  of the effectiveness of the design and operation of our  disclosure  controls and procedures
pursuant to Exchange Act Rules 13a-15 and 15d-15.  Based upon that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures are effective.  Disclosure
controls and  procedures are controls and procedures  that are designed to ensure that information  required
to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized
and completely and accurately reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.

       There have been no significant  changes in our internal  controls or in other factors that could
significantly  affect internal controls subsequent to the date we carried out this evaluation.








                                      PART II. OTHER INFORMATION





Item 6:       Exhibits and Reports on Form 8-K

(a)      Exhibits

     Exhibit
     Numbers

     Exhibit 10 -  Material Contracts

     10.24            Aircraft Lease Agreement dated as of December 5, 2003 between International Lease
                  Finance Corporation, Inc., and Frontier Airlines, Inc., Lessee, in respect of 1 Airbus A319
                  Aircraft.  Frontier has signed leases for 4 additional Airbus 319 aircraft with this Lessor
                  under Aircraft Lease Agreements that are substantially identical in all material respects to
                  this Exhibit.  Portions of this Exhibit have been omitted and filed separately with the
                  Securities and Exchange Commission in a confidential treatment request under Rule 24b-2 of
                  the Securities Exchange Act of 1934, as amended. (1)

     Exhibit 31 - Rule 13a-14(a)/15d-14(a) Certifications

     31.1         Section 302 certification of President and Chief Executive Officer, Jeffery S. Potter. (1)

     31.2         Section 302 certification of Chief Financial Officer, Paul H. Tate. (1)

     Exhibit 32 - Section 1350 Certifications

     32           Section 906 certification of President and Chief Executive  Officer,  Jeffery S. Potter,
                  and Chief Financial Officer, Paul H. Tate (1)

         (1)      Filed herewith.


(b)      Reports on Form 8-K

During the quarter ended December 31, 2003, the Company furnished the following reports on Form 8-K.

Date of Reports                     Item Numbers                   Financial Statements
                                                                      Required to be Filed
  October 30, 2003                       7 and 12                            None
  December 18, 2003                      7 and 9                             None
  December 22, 2003                      7 and 9                             None









                                             SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                                     FRONTIER AIRLINES, INC.


Date:  February 12, 2004                             By: /s/ Paul H. Tate
                                                     Paul H. Tate, Vice President and
                                                     Chief Financial Officer

Date:  February 12, 2004                             By: /s/ Elissa A. Potucek 
                                                     Elissa A. Potucek, Vice President, Controller,
                                                     Treasurer and Principal Accounting Officer

EX-10

                                     EXHIBIT 10.24

     PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
     AND EXCHANGE COMMISSION IN A CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE
     SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL "[Redacted]" IN THIS EXHIBIT
                        INDICATES THAT INFORMATION HAS BEEN OMITTED.



                                 AIRCRAFT LEASE AGREEMENT

                               Dated as of December 5, 2003

                                        BETWEEN

                                  FRONTIER AIRLINES, INC.

                                       as LESSEE

                                          and

                         INTERNATIONAL LEASE FINANCE CORPORATION

                                       as LESSOR





Aircraft Make and Model:                         New Airbus A319-111

Aircraft Manufacturer's Serial Number:           2198

Aircraft Registration Mark:                      Per Exhibit G

Make and Model of Engines:                       CFM56-5B5/P

Serial Numbers of Engines:                       Per Exhibit G


                                     NEW AIRCRAFT NO. 1





                                     TABLE OF CONTENTS


ARTICLE 1               SUMMARY OF TRANSACTION..................................2

ARTICLE 2               DEFINITIONS.............................................3
      2.1               General Definitions.....................................3
      2.2               Specific Definitions....................................9

ARTICLE 3               PLACE AND DATE OF DELIVERY.............................11
      3.1               Place of Delivery......................................11
      3.2               Scheduled Delivery Date................................11
      3.3               Delivery Subject to Manufacturer Delivery..............11
      3.4               No LESSOR Liability....................................11
      3.5               Total Loss of Aircraft Prior to Delivery...............11
      3.6               Cancellation for Delay.................................11
      3.7               Delay..................................................12

ARTICLE 4               LEASE TERM.............................................13
      4.1               Lease Term.............................................13
      4.2               "Expiration Date"......................................13
      4.3               "Termination Date".....................................13

ARTICLE 5               SECURITY DEPOSIT, TRANSACTION FEE, RENT, RESERVES
                        AND OTHER PAYMENTS.....................................14
      5.1               Security Deposit.......................................14
      5.2               [Redacted].............................................14
      5.3               Rent...................................................14
      5.4               Reserves...............................................14
      5.5               [Redacted].............................................15
      5.6               LESSOR's Bank Account..................................15
      5.7               Default Interest.......................................15
      5.8               No Deductions or Withholdings..........................15
      5.9               Value Added Taxes......................................16
      5.10              Wire Transfer Disbursement Report......................16
      5.11              Net Lease..............................................16
      5.12              LESSOR Performance of LESSEE Obligation................17
      5.13              Consideration for Rent and Other Amounts...............18

ARTICLE 6               INVOLVEMENT WITH AIRCRAFT MANUFACTURER.................19
      6.1               LESSEE Selection of Aircraft...........................19
      6.2               Participation Agreement................................19
      6.3               Procurement of BFE.....................................19
      6.4               LESSEE Inspection of Aircraft..........................19
      6.5               Aircraft at Delivery...................................19
      6.6               Delivery of the Aircraft to LESSEE.....................20
      6.7               LESSEE Acceptance of Aircraft..........................20

ARTICLE 7               PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY
                        AND OTHER REQUIREMENTS.................................21
      7.1               Pre-Delivery Requirements..............................21
      7.2               LESSOR's Pre-Delivery Requirements.....................21
      7.3               Delivery Requirements..................................22
      7.4               Post-Delivery Requirements.............................23

ARTICLE 8               DISCLAIMERS............................................24
      8.1               "As Is, Where Is"......................................24
      8.2               Waiver of Warranty of Description......................24
      8.3               LESSEE Waiver..........................................25
      8.4               Conclusive Proof.......................................25
      8.5               No LESSOR Liability for Losses.........................25
      8.6               No Liability to Repair or Replace......................25
      8.7               No Waiver..............................................26

ARTICLE 9               MANUFACTURERS' AND VENDORS' WARRANTIES.................27
      9.1               Warranties.............................................27
      9.2               Non-Assignable Warranties..............................27
      9.3               Reassignment...........................................27
      9.4               Warranty Claims........................................27

ARTICLE 10              OPERATION OF AIRCRAFT..................................28
      10.1              Costs of Operation.....................................28
      10.2              Compliance with Laws...................................28
      10.3              Training...............................................28
      10.4              No Violation of Insurance Policies.....................28
      10.5              Flight Charges.........................................28

ARTICLE 11              SUBLEASES..............................................30
      11.1              No Sublease without LESSOR Consent.....................30
      11.2              LESSOR Costs...........................................30
      11.3              Any Approved Sublease..................................30
      11.4              Assignment of Sublease.................................31
      11.5              Wet Leases.............................................31
      11.6              Continued Responsibility of LESSEE.....................31

ARTICLE 12              MAINTENANCE OF AIRCRAFT................................32
      12.1              General Obligation.....................................32
      12.2              Specific Obligations...................................33
      12.3              Replacement of Parts...................................34
      12.4              Removal of Engines.....................................35
      12.5              Pooling of Engines and Parts...........................35
      12.6              Installation of Engines on Other aircraft..............36
      12.7              Engine Thrust Rating...................................36
      12.8              Modifications..........................................37
      12.9              Performance of Work by Third Parties...................39
      12.10             Reporting Requirements.................................39
      12.11             Information Regarding Maintenance Program..............39
      12.12             LESSOR Rights to Inspect Aircraft......................40

ARTICLE 13              USE OF RESERVES........................................41
      13.1              Airframe Reserves......................................41
      13.2              Engine Performance Restoration Reserves................41
      13.3              Engine LLP Reserves....................................41
      13.4              Landing Gear Reserves..................................41
      13.5              Reimbursement..........................................42
      13.6              Reimbursement Adjustment...............................42
      13.7              Costs in Excess of Reserves............................43
      13.8              Reimbursement after Termination Date...................43

ARTICLE 14              TITLE AND REGISTRATION.................................44
      14.1              Title to the Aircraft during Lease Term................44
      14.2              Registration of Aircraft...............................44
      14.3              Filing of This Lease...................................44

ARTICLE 15              IDENTIFICATION PLATES..................................45
      15.1              Airframe Identification Plates.........................45
      15.2              Engine Identification Plates...........................46

ARTICLE 16              TAXES..................................................47
      16.1              General Obligation of LESSEE...........................47
      16.2              Exceptions to Indemnity................................47
      16.3              After-Tax Basis........................................48
      16.4              Timing of Payment......................................49
      16.5              Contests...............................................49
      16.6              Refunds................................................49
      16.7              Cooperation in Filing Tax Returns......................49
      16.8              Survival of Obligations................................49

ARTICLE 17              INDEMNITIES............................................50
      17.1              General Indemnity......................................50
      17.2              Exceptions to General Indemnities......................51
      17.3              After-Tax Basis........................................52
      17.4              Timing of Payment......................................52
      17.5              Subrogation............................................52
      17.6              Notice.................................................52
      17.7              Refunds................................................53
      17.8              Defense of Claims......................................53
      17.9              Survival of Obligation.................................53

ARTICLE 18              INSURANCE..............................................54
      18.1              Categories of Insurance................................54
      18.2              Third Party War Liability Insurance....................54
      18.3              Installation of Third Party Engine.....................54
      18.4              Insurance for Indemnities..............................54
      18.5              Renewal................................................54
      18.6              Assignment of Rights by LESSOR.........................55
      18.7              Deductibles............................................55
      18.8              Insurance for Wet Lease Operations.....................55
      18.9              Other Insurance........................................55
      18.10             Information............................................55
      18.11             Currency...............................................55
      18.12             Grounding of Aircraft..................................56
      18.13             Failure to Insure......................................56
      18.14             Reinsurance............................................56
      18.15             Limit on Hull in Favor of LESSEE.......................56

ARTICLE 19              LOSS, DAMAGE AND REQUISITION...........................58
      19.1              Definitions............................................58
      19.2              Notice of Total Loss...................................59
      19.3              Total Loss of Aircraft or Airframe.....................59
      19.4              Surviving Engine(s)....................................60
      19.5              Total Loss of Engine and Not Airframe..................60
      19.6              Other Loss or Damage...................................61
      19.7              Copy of Insurance Policy...............................62
      19.8              Government Requisition.................................62
      19.9              Return of Security Deposit and other Amounts...........62

ARTICLE 20              REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE....63
      20.1              Representations and Warranties.........................63
      20.2              Covenants..............................................64

ARTICLE 21              REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR....67
      21.1              Representations and Warranties.........................67
      21.2              Covenant of Quiet Enjoyment............................68
      21.3              Covenant of U.S. Citizenship...........................68

ARTICLE 22              FINANCIAL AND RELATED INFORMATION......................69

ARTICLE 23              RETURN OF AIRCRAFT.....................................70
      23.1              Date of Return.........................................70
      23.2              Technical Report.......................................70
      23.3              Return Location........................................70
      23.4              Full Aircraft Documentation Review.....................71
      23.5              Aircraft Inspection....................................71
      23.6              Certificate of Airworthiness Matters...................72
      23.7              General Condition of Aircraft at Return................73
      23.8              Checks Prior to Return.................................75
      23.9              Part Lives.............................................77
      23.10             Export and Deregistration of Aircraft..................78
      23.11             LESSEE's Continuing Obligations........................79
      23.12             Airport and Navigation Charges.........................79
      23.13             Return Acceptance Certificate..........................79
      23.14             Indemnities and Insurance..............................79
      23.15             Civil Reserve Air Fleet................................80

ARTICLE 24              ASSIGNMENT.............................................82
      24.1              No Assignment by LESSEE................................82
      24.2              Sale or Assignment by LESSOR...........................82
      24.3              LESSOR's Lender........................................82
      24.4              LESSEE Cooperation.....................................83
      24.5              Protections............................................83

ARTICLE 25              DEFAULT OF LESSEE......................................84
      25.1              LESSEE Notice to LESSOR................................84
      25.2              Events of Default......................................84
      25.3              LESSOR's General Rights................................84
      25.4              Deregistration and Export of Aircraft..................85
      25.5              LESSEE Liability for Damages...........................85
      25.6              Waiver of Default......................................86
      25.7              Present Value of Payments..............................86
      25.8              Use of "Termination Date"..............................86
      25.9              LESSEE's Remedies......................................86
      25.10             Waiver of Consequential Damages........................87

ARTICLE 26              NOTICES................................................87
      26.1              Manner of Sending Notices..............................87
      26.2              Notice Information.....................................87

ARTICLE 27              GOVERNING LAW AND JURISDICTION.........................89
      27.1              California Law.........................................89
      27.2              Non-Exclusive Jurisdiction in California...............89
      27.3              Service of Process.....................................89
      27.4              Prevailing Party in Dispute............................89
      27.5              Waiver.................................................89

ARTICLE 28              MISCELLANEOUS..........................................90
      28.1              [Redacted].............................................90
      28.2              Press Releases.........................................90
      28.3              LESSOR Performance for LESSEE..........................90
      28.4              LESSOR's Payment Obligations...........................90
      28.5              Application of Payments................................90
      28.6              Usury Laws.............................................90
      28.7              Delegation by LESSOR...................................90
      28.8              Rights of Parties......................................91
      28.9              Further Assurances.....................................91
      28.10             Use of Word "including"................................91
      28.11             Headings...............................................91
      28.12             Invalidity of Any Provision............................91
      28.13             Time Is of the Essence.................................91
      28.14             Amendments in Writing..................................91
      28.15             Counterparts...........................................92
      28.16             Delivery of Documents by Fax...........................92
      28.17             Entire Agreement.......................................92
      28.18             Expenses...............................................92

EXHIBIT A               AIRCRAFT DESCRIPTION...................................94

EXHIBIT B               SUMMARY OF TRANSACTION................................106

EXHIBIT C               COMMERCIAL TERMS......................................109

EXHIBIT D               PARTICIPATION AGREEMENT...............................121

EXHIBIT E               CERTIFICATE OF INSURANCE..............................141

EXHIBIT F               BROKERS' LETTER OF UNDERTAKING........................148

EXHIBIT G               ESTOPPEL AND ACCEPTANCE CERTIFICATE...................150

EXHIBIT H               OPINION OF COUNSEL....................................157

EXHIBIT I               ASSIGNMENT OF RIGHTS (AIRFRAME).......................158

EXHIBIT J               ASSIGNMENT OF RIGHTS (ENGINES)........................165

EXHIBIT K               RETURN ACCEPTANCE RECEIPT.............................168

EXHIBIT L               MONTHLY REPORT........................................172

EXHIBIT M               AIRCRAFT DOCUMENTATION................................175

EXHIBIT N               TECHNICAL EVALUATION REPORT...........................177






                                     AIRCRAFT LEASE AGREEMENT


         THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of December 5, 2003.

         BETWEEN:

         FRONTIER AIRLINES, INC., a Colorado corporation whose address and principal
place of business are at Frontier Center One, 7001 Tower Road, Denver, Colorado 80249
("LESSEE") and

         INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation whose address
and principal place of business are at 1999 Avenue of the Stars, 39th Floor, Los Angeles,
California 90067-6049, United States of America ("LESSOR").

         The subject matter of this Lease is one (1) new Airbus A319-111 aircraft as more
particularly described on Exhibit A attached hereto.  In consideration of and subject to
the mutual covenants, terms and conditions contained in this Lease, LESSOR hereby agrees
to lease to LESSEE and LESSEE hereby agrees to lease from LESSOR the aircraft and the parties
further agree as follows:






       ARTICLE 1             SUMMARY OF TRANSACTION


                                   SEE EXHIBIT B.






         ARTICLE 2             DEFINITIONS

         Except where the context otherwise requires, the following words have the following
meanings for all purposes of this Lease. The definitions are equally applicable to the
singular and plural forms of the words.  Any agreement defined below includes each amendment,
modification, supplement and waiver thereto in effect from time to time.

2.1             General Definitions.

                "Aircraft" means the Aircraft described on Exhibit A hereto, including the
Airframe, two (2) Engines, Parts and Aircraft Documentation, collectively.  As the context
requires, "Aircraft" may also mean the Airframe, any Engine, any Part, the Aircraft
Documentation or any part thereof individually.  For example, in the context of return to
LESSOR the term "Aircraft" means the Airframe, Engines, Parts and Aircraft Documentation
collectively, yet in the context of LESSEE not creating any Security Interests other than
Permitted Liens on the Aircraft, the term "Aircraft" means any of the Airframe, any Engine,
any Part or the Aircraft Documentation individually.

                "Aircraft Documentation" means all (a) log books, Aircraft records, manuals
and other documents provided to LESSEE in connection with the A3ircraft, as listed in Exhibit
G, (b) all documents listed in Exhibit M and (c) any other documents required to be maintained
during the Lease Term by the Aviation Authority, LESSEE's Maintenance Program and this Lease.

                "Airframe" means the airframe listed in the Estoppel and Acceptance Certificate
executed at Delivery together with all Parts relating thereto (except Engines or engines).

                "Airframe Warranty Assignment" means the Assignment of Rights (Airframe) to
be entered into between LESSOR and LESSEE in the form of Exhibit I.

                "Airworthiness Directives" or "ADs" means all airworthiness directives
(or equivalent) issued by the FAA applicable to the Aircraft.

                "APU" means the auxiliary power unit of the Aircraft.






                "Aviation Authority" means the FAA or any Government Entity which under the
Laws of U.S. from time to time has control over civil aviation or the registration, airworthiness
or operation of aircraft in U.S.  If the Aircraft is registered in a country other than the U.S.,
"Aviation Authority" means the agency which regulates civil aviation in such other country.

                "Aviation Documents" means any or all of the following which at any time may
be obtainable from the Aviation Authority: (a) LESSOR's application for registration of the
Aircraft with the appropriate authority in the State of Registration, (b) the certificate of
registration for the Aircraft issued by the State of Registration, (c) a certificate of
airworthiness for the Aircraft specifying transport category (passenger), (d) an air operator's
certificate, (e) such recordation of LESSOR's title to the Aircraft and interest in this Lease
as may be available in the State of Registration and (f) all such other authorizations, approvals,
consents and certificates in the State of Registration as may be required to enable LESSEE
lawfully to operate the Aircraft.

                "AVSA" means AVSA S.A.R.L., a societe a responsabilite limitee organized and
existing under the laws of the Republic of France.

                "Basic Engine" means those units and components of the Engine which are used
to induce and convert fuel/air mixture into thrust/power; to transmit power to the fan and
accessory drives; to supplement the function of other defined systems external to the Engine;
and to control and direct the flow of internal lubrication, plus all essential accessories as
supplied by Engine manufacturer.  The nacelle, installed components related to the Aircraft
systems, thrust reversers, QEC and the exhaust nozzle are excluded.

                "BFE" means any equipment which is to be provided by the purchaser of the
Aircraft (whether actually provided by LESSOR as buyer-furnished equipment or Manufacturer as
seller-purchased equipment).

                "Business Day" means a day other than a Saturday or Sunday on which the banks
in New York City and Denver, Colorado are open for the transaction of business of the type
required by this Lease.






                "Certificated Air Carrier" means any Person (except the U.S. Government) that
is a "citizen of the United States of America" (as defined in Section 40102 of Title 49 of U.S.C.)
and holding a Certificate of Public Convenience and Necessity issued under Section 41102 of Title
49 of U.S.C. by the Department of Transportation or any predecessor or successor agency thereto,
or, in the event such certificates shall no longer be applicable, any Person (except the U.S.
Government) that is a citizen of the U.S. (as defined in Section 40102 of Title 49 of the U.S.C.)
and legally engaged in the business of transporting for hire passengers or cargo by air
predominantly to, from or between points within the U.S., and, in either event, operating
commercial jet aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, which also is certificated.

                "Confidentiality Agreement" means that certain agreement between LESSOR and
LESSEE executed in September 2003, concerning the confidential treatment of certain information
with respect to the transaction contemplated by this Lease.

                "Creditor" means any lessor, owner, bank, lender, mortgagee or other Person
which is the owner of or has any interest in an aircraft engine or aircraft operated by LESSEE.

                "Creditor Agreement" means the applicable agreement between a Creditor and LESSEE
or between Creditors pursuant to which such Creditor owns, leases or has an interest in either an
aircraft operated by LESSEE on which an Engine may be installed or in an aircraft engine which
may be installed on the Airframe.

                "Default" means any event which, upon the giving of notice or the lapse of time
would constitute an Event of Default.

                "Delivery" has the meaning given to such term in Article 6.6.

                "Delivery Date" means the date on which Delivery takes place.

                "DGAC" means the French Direction Generale a l'Aviation Civile or any successor thereto.

                "Dollars" and "$" means the lawful currency of the U.S.

                "Engine" means (a) each of the engines listed on the Estoppel and Acceptance
Certificate; (b) any replacement engine to which title has been transferred to LESSOR pursuant
to Article 19.5 following a Total Loss of an Engine and which otherwise meets the requirements
of such Article; and (c) all Parts installed in or on any of such engines at Delivery (or
substituted, renewed or replacement Parts in accordance with this Lease) so long as title
thereto is or remains vested in LESSOR in accordance with the terms of Article 12.3.

                "Engine Refurbishment" means all scheduled and unscheduled off wing Engine
maintenance and repair accomplished for each module of the Basic Engine in accordance with the
performance restoration or full overhaul sections of the Engine manufacturer's workscope
planning guide.






                "Engine Warranty Assignment" means the Assignment of Rights (Engines) to be
entered into between LESSOR and LESSEE in the form of Exhibit J.

                "Estoppel and Acceptance Certificate" means that certain estoppel and acceptance
certificate in the form of Exhibit G pursuant to which LESSEE accepts Delivery of the Aircraft.

                "Event of Default" means any of the events referred to in Article 25.2.

                "FAA" means the Federal Aviation Administration of the Department of Transportation
or any successor thereto under the Laws of the U.S.

                "FAR" and "FARs" refer to the U.S. Federal Aviation Regulations embodied in Title
14 of the U.S. Code of Federal Regulations, as amended from time to time, or any successor
regulations thereto.

                "Geneva Convention" means the Convention on the International Recognition of
Rights in Aircraft signed in Geneva, Switzerland on June 19, 1948.

                "Government Entity" means any (a) national, state or local government, (b) board,
commission, department, division, instrumentality, court, agency or political subdivision thereof
and (c) association, organization or institution of which any of the entities listed in (a) or (b)
is a member or to whose jurisdiction any such entity is subject.

                "Landing Gear" means the installed main and nose landing gear, components and
their associated actuators, side braces and parts.

                "Law" means any (a) statute, decree, constitution, regulation, order or any
directive of any Government Entity, (b) treaty, pact, compact or other agreement to which any
Government Entity is a signatory or party and (c) judicial or administrative interpretation or
application of any of the foregoing.

                "Lease" means this Aircraft Lease Agreement, together with all Exhibits hereto.

                "LESSOR's Lien" means any Security Interest created by LESSOR or otherwise
arising solely as a result of any act or omission of LESSOR or any Person claiming by or
through LESSOR.

                "LESSOR's Taxes" means any Taxes referred to in Article 16.2.






                "Maintenance Program" means (a) LESSEE's maintenance program as approved by
the Aviation Authority, (b) if applicable, the maintenance program of any Permitted Sublessee,
during the term of any permitted sublease, or (c) such other maintenance program as LESSOR may,
in its reasonable discretion, accept in writing.

                "Manufacturer" means Airbus Industries, G.I.E.

                "MPD" means the Maintenance Planning Document published by Manufacturer and
applicable to the Aircraft.  With respect to the hour/cycle/calendar time limitation of Parts
and inspections, references to the MPD mean the most restrictive limitation set forth therein.

                "Operative Documents" means this Lease, the Participation Agreement, the Airframe
Warranty Assignment, the Engine Warranty Assignment, the Estoppel and Acceptance Certificate and
any Side Letter or other document or agreement signed by both LESSEE and LESSOR on or after the
date hereof relating to the leasing of the Aircraft hereunder or the transactions contemplated
hereby.

                "Overhaul" means the full reconditioning of an APU, Landing Gear, module or Part,
as the case may be, in which such equipment has been fully disassembled; cleaned; thoroughly
inspected; and returned to the standard specified by the applicable manufacturer's manual.  With
respect to Engines, "Overhaul" means Engine Refurbishment.

                "Part" means any part, component, appliance, system module, engine module,
accessory, material, instrument, communications equipment, furnishing, LESSEE-furnished or
LESSOR-purchased equipment, the APU, or other item of equipment (other than complete Engines
or engines) for the time being installed in or attached to the Airframe or any Engine, or
which, having been removed from the Airframe or any Engine, remains the property of LESSOR.

                "Participation Agreement" means the Participation Agreement to be entered into
by LESSEE, LESSOR and AVSA and the Manufacturer in the form of Exhibit D.






                "Permitted Lien" means (a) LESSOR's Liens; (b) Security Interests arising in
the ordinary course of LESSEE's business for Taxes either not yet assessed or, if assessed,
not yet due or being contested in good faith in accordance with Article 16.5 or (c) materialmen's,
mechanics', workmen's, repairmen's, employees' liens or similar Security Interests arising by
operation of Law after the Delivery Date in the ordinary course of LESSEE's business for amounts
which are either not yet due or are being contested in good faith by appropriate proceedings
(and for which adequate reserves have been made or, when required in order to pursue such
proceedings, an adequate bond has been provided) so long as such proceedings do not involve any
material danger of sale, forfeiture or loss of the Aircraft.

                "Permitted Sublessee" has the meaning ascribed thereto in Article 11.1.1.

                "Permitted Transferee" means any Person who:

                (a)    is a "citizen of the United States" as defined in Section 40102 of Title
                       49 of the U.S.C. with the requisite power and authority to enter into and
                       carry out the transactions contemplated by this Lease;

                (b)    is not, and is not affiliated with, a Certificated Air Carrier or other
                       commercial air carrier;

                (c)    enters into a binding agreement with LESSOR and LESSEE pursuant to which,
                       among other things, it agrees to be bound by the terms of this Lease and
                       agrees to perform all of the obligations of LESSOR hereunder; and

                (d)    is either (i) a U.S. bank, insurance company or other financial institution
                       with a consolidated net worth, prior to the date of transfer, of at least
                       $30,000,000, (ii) a corporation which has (or a general partnership whose
                       general partners have) a consolidated net worth, prior to the date of
                       transfer, of at least $30,000,000 and which is a sophisticated entity,
                       experienced in participating as an equity investor in commercial aircraft
                       leases, (iii) the trustee or agent of an aircraft income or similar fund;
                       provided that such trustee or agent has a consolidated net worth, prior
                       to the date of transfer, of at least $30,000,000, or (iv) such other Person
                       as LESSEE shall approve in writing, such approval not to be unreasonably
                       withheld or delayed.

                "Person" means any individual, firm, partnership, joint venture, trust, corporation,
Government Entity, committee, department, authority or any body, incorporated or unincorporated,
whether having distinct legal personality or not.

                "Prime Rate" means the rate of interest from time to time publicly quoted by
JPMorgan Chase Bank in New York, New York, or its successor, as its prime commercial lending rate.






                "Prohibited Country" means any country to which the export and/or use of an Airbus
A319-111 aircraft with CFM56-5B5/P engines attached thereto is not permitted under (a) any United
Nations sanctions, (b) the Council Regulation (EC) No. 149/2003 which updates and amends Council
Regulation (EC) 1334/2000, (c) the United States Export Administration Act 1979 (as amended) or
any successor legislation and/or the Export Administration Regulations promulgated thereunder, (d)
where applicable, the various regulations administered from time to time by the Office of Foreign
Assets Control of the U.S. Treasury Department, (e) any similar or corresponding legislation then
in effect in the U.S., the United Kingdom, France, Spain or Germany or (f) any subsequent United
Nations Sanctions Orders the effect of which prohibits or restricts the export and/or use of Airbus
A319-111 aircraft with CFM56-5B5/P engines attached thereto to such country.

                "Security Interest" means any encumbrance or security interest, however and
wherever created or arising including (without prejudice to the generality of the foregoing) any
right of ownership, security, mortgage, pledge, charge, encumbrance, lease, lien, statutory or other
right in rem, hypothecation, title retention, attachment, levy, claim or right of possession or
detention.

                "State of Registration" means (a) the U.S., (b) in the case of a sublease by
LESSEE to a Permitted Sublessee, the permitted state of registration of any aircraft leased by
LESSOR to such Permitted Sublessee, or (c) such other country or state of registration of the
Aircraft as LESSOR may, in its absolute discretion, approve in writing.

                "U.S." means the United States of America.

3.1             Specific Definitions.    The following terms are defined in the Articles
referenced below:
                        Terms                                       Article

                Accrued Engine Maintenance Cost                     23.9.2(A)
                Agreed Value                                        19.1
                Airframe Reserves                                   5.4.1
                CRAF                                                23.15.1
                CRAF Program Requisition Period                     23.15.1
                Default Interest                                    5.7
                Delivery Location                                   3.1
                Eligible Structural Check                           13.1
                Engine LLP Reserves                                 5.4.1
                Engine Performance Restoration Reserves             5.4.1
                Expenses                                            17.1
                Expiration Date                                     4.2
                Indemnitees                                         17.1
                Landing Gear Reserves                               5.4.1
                Lease Term                                          4.1
                LESSEE Customization Costs                          5.3.1
                LESSOR's Assignee                                   24.2.1
                LESSOR's Bank                                       5.6
                LESSOR's Lender                                     24.3
                Manufacturer's Escalation Rate                      5.3.1
                MCPH Agreement                                      12.1.5
                Modification                                        12.8.1
                Net Total Loss Proceeds                             19.1
                OEM Part                                            12.1.4
                Outside Delivery Date                               3.6
                Passenger Service Equipment                         12.8.1
                Payment Default                                     5.4.2
                Rent                                                5.3.1
                Reserves                                            5.4.1
                Scheduled Delivery Date                             3.2
                Security Deposit                                    5.1.1
                Taxes                                               16.1
                Termination Date                                    4.3
                Total Loss                                          19.1
                Total Loss Date                                     19.1
                Total Loss Proceeds                                 19.1





         ARTICLE 4             PLACE AND DATE OF DELIVERY

4.1             Place of Delivery.    LESSOR will deliver the Aircraft to LESSEE at Manufacturer's
facility at Hamburg, Germany or such other place as may be agreed in writing between the parties
(the "Delivery Location").

4.2             Scheduled Delivery Date.    As of the date of this Lease, Delivery of the Aircraft
from Manufacturer to LESSOR is scheduled to occur in the month of [SEE PARAGRAPH 1 OF EXHIBIT C.].
LESSOR will notify LESSEE from time to time and in a timely manner but no later than ninety (90)
days prior to the scheduled month of delivery of the scheduled week of delivery and no later than
thirty (30) days prior to the exact date on which LESSOR expects Delivery to take place (the
"Scheduled Delivery Date").

4.3             Delivery Subject to Manufacturer Delivery.    Subject to the provisions of this
Article 3, LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft to LESSEE is
subject to and conditioned upon delivery of the Aircraft by Manufacturer to LESSOR.

4.4             No LESSOR Liability.    LESSOR will not be liable for any loss or expense, or
any loss of profit, arising from any delay or failure in Delivery to LESSEE unless such delay or
failure arises as a direct consequence of the willful misconduct of LESSOR or the breach by
LESSOR of its obligations under the purchase agreement with respect to the Aircraft, and in no
event will LESSOR be liable for any delay or failure which is caused by any breach or delay on
the part of Manufacturer or any BFE supplier.

4.5             Total Loss of Aircraft Prior to Delivery.    If a Total Loss of the Aircraft
occurs prior to Delivery, neither party will have any further liability to the other except
that LESSOR will return to LESSEE the Security Deposit in accordance with ARTICLE 5.1.3 and
any prepaid Rent, whereupon this Lease shall terminate.

4.6             Cancellation for Delay.

4.6.1    Promptly after LESSOR becomes aware that in Manufacturer's opinion a delay will cause
                Delivery to be delayed beyond [SEE PARAGRAPH 2 OF EXHIBIT C.] (the "Outside
                Delivery Date"), LESSOR will notify LESSEE.  By written notice given within
                thirty (30) days after the first to occur of (i) LESSEE's receipt of such
                LESSOR notice or (ii) the Outside Delivery Date, either party may by written
                notice to the other party terminate this Lease and this Lease will terminate
                on the date of receipt of such notice, provided however that LESSOR shall not
                so terminate this Lease unless it has cancelled its purchase of the Aircraft
                from the Manufacturer.  If neither party gives notice of termination within
                such thirty (30) day period, then the period for termination shall be deemed
                to be extended for an additional one hundred and eighty (180) days after the
                expiration of such thirty (30) day period.  In the event that neither party
                gives a notice of termination within such one hundred and eighty (180) day
                period, the Lease will automatically terminate upon the expiration of such
                period, and LESSOR will return to LESSEE the Security Deposit and any prepaid
                Rent as provided above.

4.6.2    In the event that Delivery is delayed more than sixty (60) days beyond the Scheduled
                Delivery Date due to the gross negligence or willful misconduct of LESSOR,
                LESSEE shall have the right to terminate this Lease by written notice to LESSOR,
                and this Lease will terminate on the date that is thirty (30) days after LESSOR's
                receipt of such notice of termination.

4.6.3    In the event of any termination of this Lease pursuant to Article 3.6.1 or Article
                3.6.2, neither party will have any further liability to the other party except
                that LESSOR will return to LESSEE the Security Deposit in accordance with
                ARTICLE 5.1.3 and any prepaid Rent.

4.7             Delay.    In the event that the Delivery of the Aircraft is delayed beyond
the Scheduled Delivery Date, then LESSEE and LESSOR will meet to discuss the action that they
will take against Manufacturer or any vendor as a result of such delay and what compensation
they desire from the Manufacturer or such vendor.  In the event that LESSOR receives compensation
from Manufacturer as a result of any delay, LESSOR after deducting its costs and expenses
resulting from such delay will provide to LESSEE the balance of such compensation received from
Manufacturer.  In the event that LESSOR receives an abatement or other concession by Manufacturer
in respect of Manufacturer's Escalation Rate as a result of any delay, LESSOR will pass through
such abatement or concession to LESSEE.






         ARTICLE 5             LEASE TERM


5.1             Lease Term.    The term of leasing of the Aircraft will commence on the
Delivery Date and continue for a term of [SEE PARAGRAPH 3 OF EXHIBIT C.] ("Lease Term").

5.2             "Expiration Date.    "Expiration Date" means the date on which LESSEE is
required to redeliver the Aircraft to LESSOR in the condition required by this Lease on the
last day of the Lease Term.

5.3             "Termination Date.    If LESSEE returns the Aircraft to LESSOR on the
Expiration Date in the condition required by Article 23, then "Termination Date" has the same
meaning as "Expiration Date".  If LESSEE does not do so, then "Termination Date" means the date
on which the first of the following events occurs:

                (a)    there is a Total Loss of the Aircraft prior to Delivery pursuant to
                Article 3.5;

                (b)    cancellation of this Lease occurs pursuant to Article 3.6;

                (c)    there is a Total Loss of the Aircraft and payment is made to LESSOR in
                accordance with Article 19.3;

                (d)    an Event of Default occurs and LESSOR repossesses the Aircraft or
                otherwise terminates this Lease pursuant to Article 25.3 prior to the
                Expiration Date and recovers possession and control of the Aircraft;

                (e)    an Event of Default occurs hereunder due to LESSEE returning the
                Aircraft after the Expiration Date in the condition required by this Lease; or

                (f)    an Event of Default occurs and LESSOR repossesses the Aircraft or
                otherwise terminates this Lease pursuant to Article 25.3 after the Expiration
                Date and recovers possession and control of the Aircraft.





         ARTICLE 6     SECURITY DEPOSIT, TRANSACTION FEE, RENT, RESERVES AND OTHER PAYMENTS


6.1             Security Deposit.    SEE PARAGRAPH 4 OF EXHIBIT C.

6.1.1    SEE PARAGRAPH 4(a) OF EXHIBIT C.

6.1.2    SEE PARAGRAPH 4(b) OF EXHIBIT C.

6.1.3    SEE PARAGRAPH 4(c) OF EXHIBIT C.

6.2             [Redacted].    SEE PARAGRAPH 5 OF EXHIBIT C.

6.3             Rent.    SEE PARAGRAPH 6 OF EXHIBIT C.

6.3.1    SEE PARAGRAPH 6(a) OF EXHIBIT C.

6.3.2    SEE PARAGRAPH 6(b) OF EXHIBIT C.

6.4             Reserves.    SEE PARAGRAPH 7 OF EXHIBIT C.

6.4.1    SEE PARAGRAPH 7(a) OF EXHIBIT C.

6.4.2    SEE PARAGRAPH 7(b) OF EXHIBIT C.

6.4.3    SEE PARAGRAPH 7(c) OF EXHIBIT C.

6.4.4    SEE PARAGRAPH 7(d) OF EXHIBIT C.

                (a)    SEE PARAGRAPH 7(d)(i) OF EXHIBIT C.

                (b)    SEE PARAGRAPH 7(d)(ii) OF EXHIBIT C.

6.4.5    SEE PARAGRAPH 7(e) OF EXHIBIT C.

6.4.6    SEE PARAGRAPH 7(f) OF EXHIBIT C.






6.5             [Redacted].    SEE PARAGRAPH 8 OF EXHIBIT C.

6.6             LESSOR's Bank Account.    The Security Deposit, Transaction Fee, Rent,
Reserves and any other payment due under this Lease will be paid by wire transfer of
immediately available U.S. Dollar funds to LESSOR's bank account at:

                       International Lease Finance Corporation
                       Account No. 910-274-9067
                       JPMorgan Chase Bank
                       270 Park Avenue
                       New York, New York 10017
                       ABA# 021000021

or to such other bank account as LESSOR may from time to time designate by written notice
("LESSOR's Bank").  When it is stated in this Lease that an installment of the Security Deposit,
the monthly Rent, Reserves or any other payment is due or must be paid or made by LESSEE by a
specific date, then such payment actually must be received by LESSOR's Bank on or before such
specific date, even if, in order for such payment to be received by LESSOR's Bank by such
specific date, LESSEE must initiate the wire transfer prior to such specific date.

6.7             Default Interest.    If LESSOR's Bank does not receive the Rent or any other
amount on or before the specific date when due, LESSOR will suffer loss and damage the exact
nature and amount of which are difficult or impossible to ascertain.  LESSEE will pay LESSOR
as supplemental Rent (by way of agreed compensation and not as a penalty) interest on any due
and unpaid amounts payable by LESSEE under this Lease calculated at a per annum rate (based on
a 360 day year) equal to [SEE PARAGRAPH 9 OF EXHIBIT C.] plus the Prime Rate in effect on the
date on which the amount was originally due for the period from the date the amount originally
was due through the date the amount actually is received at LESSOR's Bank or, in the case of
LESSOR's performance of LESSEE's obligations hereunder, from the date of payment by LESSOR
through the date of LESSEE's repayment to LESSOR ("Default Interest"). Default Interest will
accrue on a day-to-day basis and be compounded monthly.

6.8             No Deductions or Withholdings.    Provided that LESSOR has not breached its
covenant of quiet enjoyment as set forth in Article 21.2, all payments by LESSEE under this
Lease, including the Security Deposit, Transaction Fee, Rent, Reserves, Default Interest, fees,
indemnities or any other item, will be made in full without any deduction or withholding whether
in respect of set-off, counterclaim, duties, or Taxes (as defined in Article 16) imposed in the
State of Registration or any jurisdiction from which such payments are made except to the extent
otherwise required by Law, in which event LESSEE will pay any additional amount such that the net
payment received by LESSOR after any required deduction or withholding equals the amount that
LESSOR would have received if such withholding had not been required; provided, however, that if
LESSEE pays any such additional amount to compensate for the withholding of any LESSOR Taxes,
LESSOR shall pay to LESSEE promptly after receipt of LESSEE's written request therefor (which
request shall include a description in reasonable detail of the LESSOR Taxes involved and the
calculation of the amounts to be paid) such amounts as are necessary so that the net additional
amounts received by LESSOR under this Article 5.8 do not exceed the amounts that LESSOR would
have received if no amounts in respect of LESSOR Taxes had been required to be withheld or
deducted by LESSEE.

6.9             Value Added Taxes.    The Rent and other amounts payable by LESSEE under this
Lease are exclusive of any value added tax, turnover tax or similar tax or duty.

6.10            Wire Transfer Disbursement Report.    At the time of each Rent or other payment,
LESSEE will advise LESSOR in writing of the amount of the payment being made by LESSEE and the
allocation of such payment to the Security Deposit, Rent, Reserves, Default Interest and other
charges.  Notwithstanding the allocation set forth in LESSEE's report, in the event an Event
of Default has occurred and is continuing under this Lease, LESSOR will have complete discretion
to allocate LESSEE's payments as LESSOR determines.

6.11            Net Lease.

6.11.1          This Lease is a net lease and LESSEE's obligation to pay Rent and make other
                payments in accordance with this Lease will be absolute and unconditional under
                any and all circumstances and regardless of other events, including the following:

                (a)    any right of set-off, counterclaim, recoupment, defense or other right
                (including any right of reimbursement) which LESSEE may have against LESSOR,
                Manufacturer, the Engine manufacturer or any other person for any reason,
                including any claim LESSEE may have for the foregoing;

                (b)    unavailability or interruption in use of the Aircraft for any reason,
                including a requisition thereof or any prohibition or interference with or other
                restriction against LESSEE's use, operation or possession of the Aircraft (whether
                by Law or otherwise), any defect in title, airworthiness, merchantability, fitness
                for any purpose, condition, design, specification or operation of any kind or
                nature of the Aircraft, the ineligibility of the Aircraft for any particular use
                or trade or for registration under the Laws of any jurisdiction or Total Loss
                of the Aircraft;

                (c)    insolvency, bankruptcy, reorganization, arrangement, readjustment of debt,
                dissolution, liquidation, receivership, administration or similar proceedings by
                or against LESSOR, LESSEE, Manufacturer, the Engine manufacturer or any other Person;

                (d)    invalidity or unenforceability or lack of due authorization of or other
                defect in this Lease;

                (e)    failure or delay on the part of any party to perform its obligations
                under this Lease; or

                (f)    any other circumstance which but for this provision would or might have
                the effect of terminating or in any other way affecting any obligation of LESSEE
                hereunder.

6.11.2          Nothing in Article 5.11 will be construed (a) to limit LESSEE's rights and
                remedies in the event of LESSOR's breach of its warranty of quiet enjoyment set
                forth in Article 21.2 or LESSOR's breach of its warranty of U.S. citizenship set
                forth in Article 21.3 or (b) to limit LESSEE's rights and remedies to institute
                legal or other proceedings or pursue any claim it may have against LESSOR or
                any other Person; provided, however, that LESSEE will have no obligation to pay
                Rent as aforesaid, except in respect of Rent accrued at the time, for the number
                of days that LESSEE is deprived of the possession and use of the Aircraft as the
                result of the breach by LESSOR of its warranty of quiet enjoyment obligations set
                forth Article 21.2.

6.12            LESSOR Performance of LESSEE Obligation.    If LESSEE fails to make any payment
due under this Lease to a third party in connection with the Aircraft or fails to perform any
other obligation required under this Lease, LESSOR may (but is not required to) at its election
and without waiver of its rights perform such obligation and/or pay such amount.

6.12.1          LESSEE's Right to Contest in Good Faith.    Notwithstanding the terms of Article
         5.12, if LESSEE reasonably contests its obligation to make a payment to a third party,
         LESSOR will not exercise its right to make such payment so long as (i) no other Event
         of Default under this Lease exists and is continuing, (ii) no Security Interest in the
         Aircraft (other than Permitted Liens) has arisen as a result of such non-payment, and
         (iii) there is no significant risk of prejudice to any of the rights or interests of
         LESSOR or any LESSOR's Lender with respect to the Aircraft or the Lease as a result
         of such non-payment.

6.12.2          LESSOR's Right to Repayment.     Within five (5) Business Days after written
         notice to LESSEE of the amount paid by LESSOR on behalf of LESSEE pursuant to Article
         5.12, LESSEE will repay such amount to LESSOR together with Default Interest. Such
         payment to LESSOR will constitute additional Rent payable by LESSEE to LESSOR hereunder.
         Any payment, performance or compliance by LESSOR of a LESSEE obligation hereunder will
         not affect the occurrence or continuance of an Event of Default.

6.13            Consideration for Rent and Other Amounts.    The amount of the Rent and other
         payments contained herein are in consideration of LESSEE's waiver of warranties and
         indemnities set forth in Articles 8 and 17, respectively, and the other provisions of
         this Lease.






         ARTICLE 7            INVOLVEMENT WITH AIRCRAFT MANUFACTURER


7.1             LESSEE Selection of Aircraft.    LESSEE ACKNOWLEDGES THAT THE DESCRIPTION OF THE
AIRCRAFT SET FORTH IN THIS LEASE IS BASED UPON INFORMATION SUPPLIED BY MANUFACTURER.  LESSEE
COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT IN SELECTING THE AIRCRAFT AND HAS DONE
SO BASED ON ITS SIZE, DESIGN AND TYPE.  LESSEE ACKNOWLEDGES THAT LESSOR IS NOT A MANUFACTURER,
REPAIRER OR SERVICING AGENT OF THE AIRCRAFT.

7.2             Participation Agreement.    LESSEE shall have the right to inspect the Aircraft
during the manufacture process and to attend and observe the acceptance tests of the Aircraft
pursuant to the terms of a Participation Agreement to be entered into between LESSEE and LESSOR
in the form set forth in Exhibit D.

7.3             Procurement of BFE.    LESSEE's and LESSOR's technical representatives will
meet and determine which of LESSEE or LESSOR will provide specific items of BFE.  Such BFE will
then be provided to Manufacturer by LESSEE or LESSOR, as applicable, within the time frames
required by Manufacturer.

7.4             LESSEE Inspection of Aircraft.    During the course of final assembly of the
Aircraft, and at Delivery, LESSEE may have its own representative present to inspect the Aircraft
and to ensure its conformity with LESSEE's needs and the terms of this Lease.  LESSEE will have
ground inspection and acceptance flight rights with respect to the Aircraft.  If LESSEE's
inspection reveals that the Aircraft does not comply in any respect with the terms of this Lease,
LESSOR will (for its own behalf and at LESSEE's request) promptly cause the Manufacturer to
correct any such defects and make the Aircraft available for reinspection to LESSEE, and to
conduct such further demonstration flights as may be necessary to verify compliance with the
requirements of this Lease, including but not limited to Exhibit A attached hereto.  LESSEE
acknowledges that, as between LESSEE and LESSOR, in accepting the Aircraft LESSEE is relying
on its own inspection and knowledge of the Aircraft in determining whether the Aircraft meets
the requirements of this Lease.

7.5             Aircraft at Delivery.    At Delivery, the Aircraft will be as set forth in
Exhibit A, as such description may be modified by any change requests agreed to among LESSEE,
LESSOR and Manufacturer (which will be reflected in amendment(s) to this Lease).  In the event
of any discrepancies, LESSEE and LESSOR will cooperate in good faith with one another and with
Manufacturer and Engine manufacturer, as applicable, in order to arrive at a mutually acceptable
resolution of any such discrepancies.

7.6             Delivery of the Aircraft to LESSEE.    Subject to LESSEE having performed all
of the conditions precedent to Delivery set forth herein, immediately following delivery of the
Aircraft from Manufacturer to LESSOR, LESSOR will tender the Aircraft to LESSEE at the Delivery
Location.  Provided that the Aircraft is in the condition required by Article 6.5 and provided
that LESSOR shall have performed all conditions precedent noted in Article 7.2 hereof, upon the
tender of the Aircraft by LESSOR to LESSEE, LESSEE will accept the Aircraft by executing and
delivering to LESSOR the Estoppel and Acceptance Certificate, whereupon Delivery will be deemed
to have occurred for all purposes under this Lease (hereinafter, "Delivery"), including, but not
limited to, the commencement of LESSEE's obligation to pay Rent hereunder.

7.7             LESSEE Acceptance of Aircraft.    If LESSEE fails to (a) comply with the
conditions contained in Articles 7.1 and 7.3 so as to allow Delivery to take place immediately
following delivery of the Aircraft by Manufacturer to LESSOR or (b) take delivery of the Aircraft
when properly tendered for delivery by LESSOR in the condition required hereunder, LESSEE will
indemnify LESSOR for all reasonable and documented costs and expenses incurred by LESSOR as a
direct result thereof including (but without limitation) any payments other than the purchase
price which LESSOR becomes obliged to make to Manufacturer.







         ARTICLE 8  PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY AND OTHER REQUIREMENTS


8.1             Pre-Delivery Requirements.    LESSEE will do each of the following prior to
the Scheduled Delivery Date of the Aircraft within the time frames set forth below:

8.1.1    Within one (1) month after execution of this Lease, LESSEE will deliver to LESSOR
                each of the following:

                (a)    copies of resolutions of the Board of Directors of LESSEE or other
                written evidence of appropriate corporate action, duly certifying and
                authorizing the lease of the Aircraft hereunder and the execution, delivery and
                performance of this Lease, together with an incumbency certificate as to the
                person or persons authorized to execute and deliver documents on behalf of
                LESSEE hereunder; and

                (b)    an opinion of LESSEE's in-house counsel in the form and substance of
                Exhibit H.

8.1.2    At least seven (7) days prior to the Scheduled Delivery Date, LESSEE will have
                delivered to LESSOR a Certificate of Insurance and Brokers' Letter of Undertaking
                substantially in the form of Exhibits E and F, respectively, from LESSEE's
                insurance brokers evidencing insurance of the Aircraft in accordance with this
                Lease from the Delivery Date.

8.1.3    At least three (3) Business Days prior to the Scheduled Delivery Date, LESSEE will do
                each of the following:

                (a)    provide LESSOR with a power of attorney evidencing the authority of LESSEE's
                representative, who may be an officer or employee of LESSEE, to accept the Aircraft
                on behalf of LESSEE; and

                (b)    provide LESSOR with such other documents as LESSOR may reasonably request.

8.2             LESSOR's Pre-Delivery Requirements.    LESSEE's obligation to accept delivery
of and lease the Aircraft hereunder is subject to satisfaction of the following conditions precedent:





                (a)    No later than sixty (60) days prior to the Scheduled Delivery Date, LESSOR
                will have entered into an agreement with the owner or financier of the Inflight
                Equipment as provided in Article 12.8.7(B).

                (b)    LESSOR shall tender the Aircraft including the Aircraft Documentation to
                LESSEE at the Delivery Location in accordance with Article 6.6;

                (c)    LESSOR shall have delivered to its special FAA counsel an executed original
                application for registration and will be prepared to advise such counsel to register
                the Aircraft in the U.S. in the name of LESSOR;

                (d)    The Aircraft shall have a valid Certificate of Airworthiness and shall be
                in the condition required in order to meet the operating requirements of FAR Part
                121;

                (e)    All Airworthiness Directives which are issued prior to the Delivery Date
                and which require compliance (either by means of repetitive inspections,
                modifications or terminating action) prior to Delivery or within one (1) year
                after Delivery will be complied with on a terminating action basis at LESSOR's
                cost; Airworthiness Directives which do not have a terminating action will be
                accomplished at the highest level of inspection or modification possible;

                (f)    LESSOR shall have executed and delivered to LESSEE the Airframe Warranty
                Assignment and the Engine Warranty Assignment, together with the consents of
                Seller and the Engine manufacturer, respectively, in the form set forth as
                Schedule 1 to each agreement, and a consent of Manufacturer to the Airframe
                Warranty Assignment in form and substance reasonably satisfactory to LESSEE; and

                (g)    LESSOR shall have taken delivery of the Aircraft from the Manufacturer
                and the Aircraft shall be in the condition required for Delivery to LESSEE in
                accordance with this Lease.

8.3             Delivery Requirements.    On the Delivery Date of the Aircraft, each of the
following will occur:

8.3.1    If not previously done, LESSEE will pay to LESSOR the first monthly installment of Rent
                in accordance with Article 5.3.2;

8.3.2    LESSEE will execute and deliver to LESSOR the Estoppel and Acceptance Certificate covering
                the Aircraft and dated the Delivery Date.

8.3.3    LESSEE will deliver a certificate signed by an officer of LESSEE stating all of the
                following:

                (a)    the representations and warranties contained in Article 20 are true and
                accurate on and as of the Delivery Date as though made on and as of such date
                (except to the extent that such representations and warranties relate solely to
                an earlier date); and

                (b)    no Default has occurred and is continuing or will result from LESSEE's
                lease of the Aircraft hereunder.

8.3.4    LESSEE's in-house counsel will deliver an opinion confirming the matters set forth in
                the opinion of counsel described in Article 7.1 and advising that all filing
                and other requirements described in the earlier opinion of counsel have been
                met.

8.4             Post-Delivery Requirements.

8.4.1    At or immediately following Delivery and with LESSEE's cooperation, LESSOR will, at
                its expense, procure registration of the Aircraft in the State of Registration
                and will have completed all necessary filings with the FAA.





         ARTICLE 9            DISCLAIMERS


                LESSOR HAS COMMITTED TO LESSEE THAT ON THE DELIVERY DATE THE AIRCRAFT WILL BE
IN THE CONDITION REQUIRED BY ARTICLE 6 SUCH COMMITMENT OR COVENANT ON THE PART OF LESSOR EXPIRES
AND THE DISCLAIMERS SET FORTH IN THIS ARTICLE 8 APPLY UPON LESSEE'S ACCEPTANCE OF THE AIRCRAFT
AND EXECUTION OF THE ESTOPPEL AND ACCEPTANCE CERTIFICATE.  AFTER SUCH TIME, THEN AS BETWEEN
LESSOR AND LESSEE:

9.1             "As Is, Where Is.    LESSEE AGREES THAT IT IS LEASING THE AIRCRAFT "AS IS,
WHERE IS".  LESSEE UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES HAVE MADE OR WILL BE DEEMED TO HAVE MADE ANY
TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR
OTHERWISE) AS TO (a) THE CAPACITY, AGE, AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONFORMITY
TO THE PROVISIONS OF THIS LEASE, DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE,
ANY PART THEREOF OR THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE,
CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY
PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE
THE AIRCRAFT DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY
PART THEREOF, OR THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR
UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b) THE ABSENCE OF ANY INFRINGEMENT OF
ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (c) ANY IMPLIED WARRANTY
ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF,
ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED EXCEPT AS EXPRESSLY PROVIDED IN
ARTICLE 21 HEREOF.

9.2             Waiver of Warranty of Description.    IN CONSIDERATION OF (a) LESSEE'S RIGHTS
HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S ASSIGNMENT TO LESSEE OF ANY EXISTING AND
ASSIGNABLE WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER, LESSEE HEREBY AGREES THAT
ITS ACCEPTANCE OF THE AIRCRAFT AT DELIVERY AND ITS EXECUTION AND DELIVERY OF THE ESTOPPEL AND
ACCEPTANCE CERTIFICATE CONSTITUTE LESSEE'S WAIVER OF THE WARRANTY OF DESCRIPTION, ANY CLAIMS
LESSEE MAY HAVE AGAINST LESSOR BASED UPON THE FAILURE OF THE AIRCRAFT TO CONFORM WITH SUCH
DESCRIPTION AND ANY AND ALL RIGHTS IT MAY HAVE TO THE REMEDIES SET FORTH IN SECTIONS 10508
THROUGH 10522 OF THE CALIFORNIA COMMERCIAL CODE.  EVEN IF AT ANY TIME THE FAILURE OF THE
AIRCRAFT TO CONFORM TO SUCH DESCRIPTION SUBSTANTIALLY IMPAIRS THE VALUE AND UTILITY OF THE
AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE AIRCRAFT BASED ON A REASONABLE ASSUMPTION THAT
THE NONCONFORMITY WOULD BE CURED AND IT WAS NOT SEASONABLY CURED OR (ii) LESSEE ACCEPTED THE
AIRCRAFT WITHOUT DISCOVERING THE NONCONFORMITY BUT LESSEE'S ACCEPTANCE OF THE AIRCRAFT WAS
REASONABLY INDUCED EITHER BY LESSOR'S ASSURANCES OR BY THE DIFFICULTY OF DISCOVERING ANY DEFECT
PRIOR TO ACCEPTANCE, LESSEE AGREES NOT TO LOOK TO LESSOR FOR DAMAGES OR RELIEF ARISING OUT OF
THE FAILURE OF THE AIRCRAFT TO CONFORM TO SUCH DESCRIPTION.

9.3             LESSEE Waiver.    LESSEE hereby waives as between itself and LESSOR and agrees
not to seek to establish or enforce any rights and remedies, express or implied (whether statutory
or otherwise) against LESSOR or the Aircraft relating to any of the matters mentioned in Articles
8.1 or 8.2 and the leasing thereof by LESSOR to LESSEE.

9.4             Conclusive Proof.    DELIVERY BY LESSEE TO LESSOR OF THE ESTOPPEL AND ACCEPTANCE
CERTIFICATE WILL BE CONCLUSIVE PROOF AS BETWEEN LESSOR AND LESSEE THAT LESSEE'S TECHNICAL EXPERTS
HAVE EXAMINED AND INVESTIGATED THE AIRCRAFT, INCLUDING THE ENGINES AND THE AIRCRAFT DOCUMENTATION
AND THAT EACH IS IN THE CONDITION REQUIRED HEREUNDER (EXCEPT AS SPECIFICALLY SET FORTH IN SUCH
CERTIFICATE), AND OTHERWISE IN EVERY WAY SATISFACTORY TO LESSEE.

9.5             No LESSOR Liability for Losses.    LESSEE agrees that LESSOR will not be liable
to LESSEE, any sublessee or any Person, whether in contract or tort and however arising, for
any cost, loss or damage (consequential or otherwise) arising out of the condition of the Aircraft,
whether or not due in whole or in part to an act or omission or the active or passive negligence
of LESSOR.

9.6             No Liability to Repair or Replace.    LESSOR will not be liable for any expense
in repairing or replacing any item of the Aircraft or be liable to supply another aircraft or
any item in lieu of the Aircraft or any Part thereof if the same is lost, confiscated, damaged,
destroyed or otherwise rendered unfit for use.

9.7             No Waiver.    Nothing in this Article 8 or elsewhere in this Lease will be deemed
to be a waiver by LESSEE of any rights it may have against Manufacturer, the Engine manufacturer
or any other Person.





         ARTICLE 10           MANUFACTURERS' AND VENDORS' WARRANTIES


10.1            Warranties.    Effective upon Delivery LESSOR will assign to LESSEE for the
duration of the Lease Term the benefit of all warranties and indemnities given to LESSOR by
Manufacturer and the Engine manufacturer pursuant to the Airframe Warranty Assignment and the
Engine Warranty Assignment, respectively.  Effective on the Delivery Date, all other assignable
vendor warranties with respect to the Aircraft are hereby assigned by LESSOR to LESSEE.

10.2            Non-Assignable Warranties.    To the extent that any warranty or indemnity given
to LESSOR by Manufacturer and others with respect to the Aircraft cannot be assigned, LESSEE
will be entitled to take such action to enforce such warranty or indemnity in the name of
LESSOR against Manufacturer and such other parties as LESSEE sees fit (and, notwithstanding
any provision to the contrary in Article 8.3, LESSOR will reasonably cooperate with LESSEE in
pursuit of the same), but subject to LESSEE first ensuring that LESSOR is indemnified and secured
to LESSOR's reasonable satisfaction against all losses, damage, costs, expenses and liabilities
thereby incurred or reasonably likely to be incurred.

10.3            Reassignment.    On the Termination Date, the benefit of any warranty assigned
by LESSOR to LESSEE will be reassigned automatically to LESSOR or its designee.  LESSEE's rights
to receive payment under any such warranties will revert to LESSOR during any period in which
an Event of Default is continuing.  LESSEE at its own cost and expense will do all such things
and execute such documents as may be reasonably required for this purpose.

10.4            Warranty Claims.    LESSEE will diligently and promptly pursue any valid claims
it may have against Manufacturer and others under such warranties with respect to the Aircraft.
If there are any outstanding warranty claims at the time of return, LESSEE will provide notice
of the same to LESSOR.





         ARTICLE 11           OPERATION OF AIRCRAFT


11.1            Costs of Operation.    LESSEE will pay all costs incurred in the operation of
the Aircraft during the Lease Term, for profit or otherwise, including the costs of flight crews,
cabin personnel, fuel, oil, lubricants, maintenance, insurance, storage, landing and navigation
fees, airport charges, passenger service and any and all other expenses of any kind or nature,
directly or indirectly, in connection with or related to the use, movement and operation of the
Aircraft.  The obligations, covenants and liabilities of LESSEE under this paragraph arising
prior to return of the Aircraft to LESSOR will continue in full force and effect, notwithstanding
the termination of this Lease or expiration of the Lease Term.

11.2            Compliance with Laws.    Except as expressly provided in this Lease, LESSEE
agrees throughout the Lease Term to maintain operational control of the Aircraft and use the
Aircraft in accordance with applicable Laws of the State of Registration and of any country,
state, territory or municipality into or over which LESSEE may operate the Aircraft.  LESSEE
will not employ, suffer or cause the Aircraft to be used in any business which is forbidden
by Law or in any manner which will render it liable to condemnation, destruction, seizure, or
confiscation by any authority.  Unless due to emergency, LESSEE will not permit the Aircraft
to fly to any airport or country if so doing would cause LESSEE to be in violation of any Law
applicable to LESSEE or the Aircraft.

11.3            Training.    LESSEE will not use the Aircraft for testing or for training of
flight crew members other than LESSEE crew members or as otherwise may be required by the
Aviation Authority and, from and after the date on which it obtains other A319 aircraft, it
will not use the Aircraft for training any more than it utilizes for training the other A319
aircraft in its fleet.

11.4            No Violation of Insurance Policies.    LESSEE will not use or permit the Aircraft
to be used in any manner or for any purpose which is not covered by the insurance policies LESSEE
is required to carry and maintain as set forth in this Lease.  LESSEE will not carry any goods of
any description excepted or exempted from such policies or do any other act or permit to be done
anything which could reasonably be expected by LESSEE to invalidate or limit any such insurance
policy.

11.5            Flight Charges.    LESSEE will pay promptly when due all en route navigation
charges, navigation service charges and all other charges payable by LESSEE for the use of or
for services provided at any airport, whether in respect of the Aircraft or any other aircraft
of LESSEE, and will indemnify and hold LESSOR harmless in respect of the same.  This indemnity
will continue in full force and effect notwithstanding the termination or expiration of the
Lease Term for any reason or the return of the Aircraft.





         ARTICLE 12           SUBLEASES


12.1            No Sublease without LESSOR Consent.    LESSEE WILL NOT SUBLEASE OR PART WITH
POSSESSION OF THE AIRCRAFT (EXCEPT FOR MAINTENANCE AND REPAIR) AT ANY TIME WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY WITHHELD OR DELAYED) EXCEPT FOR A SUBLEASE
TO A PERMITTED SUBLESSEE PRE-APPROVED IN ARTICLE 11.1.1 BELOW, AND IN ACCORDANCE WITH SUCH
REQUIREMENTS AS MAY FROM TIME TO TIME BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE.  The wet
leasing of the Aircraft during the Lease Term (in which LESSEE and its crews retain operational
control of the Aircraft) will not be considered a sublease of the Aircraft.

12.1.1          LESSEE may sublease the Aircraft without LESSOR's prior consent to any operator
                which is then currently a lessee of LESSOR ("Permitted Sublessee"), provided
                that such operator is not then in default and has not been in default at any
                time during the preceding ninety (90) days under any aircraft lease agreement
                between such operator and LESSOR.  Any such sublease will be subject to the
                provisions of this Article 11, including the provisions of Article 11.2 below.

12.2            LESSOR Costs.    LESSEE will indemnify LESSOR on demand for all reasonable and
actual out-of-pocket expenses (including legal fees) incurred in connection with LESSOR's
assessment of the subleasing proposal (whether or not LESSOR's consent to such sublease is
ultimately given), review of the sublease documentation and implementation of the sublease.

12.3            Any Approved Sublease.    Any sublease to a Permitted Sublessee, and any other
sublease approved by LESSOR will be for a term no greater than the remaining Lease Term and
contain provisions consistent with this Lease protecting LESSOR's title to the Aircraft,
providing appropriate LESSOR indemnities, regarding the maintenance and repair standards for
the Aircraft, concerning the insurances which will be carried by the sublessee and the
circumstances which constitute a Total Loss of the Aircraft.  Any such sublease will be subject
and subordinate to this Lease.  In its sole discretion, LESSOR may require an opinion of counsel
in connection with such sublease, including LESSOR's right to repossess the Aircraft in the event
of an Event of Default hereunder or under the sublease.  LESSEE will not amend the terms of any
approved sublease which, if so amended, would have a material adverse effect on LESSOR's right,
title or interest in the Aircraft or this Lease, without the prior written consent of LESSOR,
which will not be unreasonably withheld, conditioned or delayed.  Notwithstanding the foregoing,
LESSOR agrees that even if an Event of Default has occurred and is continuing hereunder, so long
as the approved sublessee fully performs all of the obligations of LESSEE hereunder and agrees
to do so on a going forward basis and there is no risk to LESSOR of an impairment to LESSOR's
unencumbered title to the Aircraft, LESSOR will not interfere with such sublessee's quiet use
and enjoyment of the Aircraft.

12.4            Assignment of Sublease.    Any approved sublease will be assigned to LESSOR as
security for LESSEE's obligations under this Lease.  LESSEE will deliver the original counterpart
of the sublease to LESSOR and make any filings necessary to protect LESSOR's security interest.

12.5            Wet Leases.    The wet leasing of the Aircraft during the Lease Term (in which
LESSEE and its crews retain operational control of the Aircraft) will not be considered a sublease
of the Aircraft and will be permitted without LESSOR's consent, provided that (a) the Aircraft
remains registered in the State of Registration, (b) the Aircraft will neither be based in nor
operated in or to a Prohibited Country, (c) LESSEE provides LESSOR with either (i) a certified
copy of the applicable provisions from the wet lease agreement, (ii) a certified copy or original
of an insurance certificate confirming the maintenance of insurance coverage as required by
Article 18 and Exhibit E, or (iii) an officer's certificate indicating whether LESSEE or the wet
lessee will be responsible for maintaining the primary passenger, baggage and cargo liability
insurance relating to operation under the wet lease, and (d) LESSEE complies with Article 18.8.

12.6            Continued Responsibility of LESSEE.    LESSEE will continue to be responsible
or performance of its obligations under this Lease during any period of sublease.






         ARTICLE 13           MAINTENANCE OF AIRCRAFT


13.1            General Obligation.

13.1.1          During the Lease Term and until the Aircraft is returned to LESSOR in the
                condition required by this Lease, LESSEE alone has the obligation, at its
                expense, to maintain and repair the Aircraft, Engines, and all of the Parts (a)
                in accordance with the Maintenance Program, (b) in accordance with the rules
                and regulations of the Aviation Authority, (c) in accordance with Manufacturer's
                type design, (d) in accordance with any other regulations or requirements
                necessary in order to maintain a valid Certificate of Airworthiness for the
                Aircraft and meet the requirements at all times during the Lease Term and upon
                return of the Aircraft to LESSOR for issuance of a Standard Certificate of
                Airworthiness for transport category aircraft issued by the FAA in accordance
                with FAR Part 21 (except during those periods when (i) the Aircraft is undergoing
                maintenance, Overhaul, modification, or repairs as required or permitted by this
                Lease and to the extent in conflict with the requirements of the Aviation Authority
                or (ii) the Aircraft type has been grounded by the FAA, the DGAC or other
                applicable Aviation Authority) and (e) in the same manner and with the same care
                as used by LESSEE with respect to similar aircraft and engines operated by LESSEE
                and without in any way discriminating against the Aircraft.

13.1.2          No Engine will remain in an unserviceable condition for more than three (3) months.

13.1.3          [SEE PARAGRAPH 10 OF EXHIBIT C.]

13.1.4          [SEE PARAGRAPH 11 OF EXHIBIT C.]

13.1.5          LESSEE will not enter into any Engine maintenance cost per flight hour, power-
                by-the-hour or similar agreement with respect to the Engines ("MCPH Agreement")
                with the Engine manufacturer or any other Engine maintenance facility or
                organization without LESSOR's prior written consent, which shall not be
                unreasonably withheld.  At a minimum, any MCPH Agreement must provide that the
                MCPH provider will not place or enforce any lien upon any Engine covered by the
                MCPH program for any amounts owed by LESSEE.  In all events, LESSEE will at its
                cost be responsible for performing all work necessary to meet the return conditions
                with respect to the Engines set forth in Article 23 even if such work is not
                covered by LESSEE's MCPH Agreement.

13.2            Specific Obligations.    Without limiting Article 12.1, LESSEE agrees that such
maintenance and repairs will include but will not be limited to each of the following specific
items:

                (a)    performance in accordance with the Maintenance Program of all routine
                and non-routine maintenance work;

                (b)    incorporation in the Aircraft of all Airworthiness Directives which are
                applicable to the Aircraft;

                (c)    incorporation in the Aircraft of all alert service bulletins of Manufacturer,
                Engine manufacturer and other vendors or manufacturers of Parts installed on the
                Aircraft which are applicable to the Aircraft and any service bulletins which
                must be performed in order to maintain the warranties on the Aircraft, Engines,
                and Parts;

                (d)    [SEE PARAGRAPH 12 OF EXHIBIT C.]

                (e)    compliance with a corrosion prevention and control program including the
                correction of any discrepancies in accordance with the Maintenance Program.  In
                addition, all inspected areas will be properly treated with corrosion inhibitor
                in accordance with the Maintenance Program;

                (f)    maintaining in English and keeping in an up-to-date status the records
                and historical documents set forth in Exhibit M;

                (g)    maintaining historical records as required by the FAA, in English, for
                on condition, condition-monitored, hard time and life-limited Parts (including
                tags from the manufacturer of such Part or a repair facility which evidence
                that such Part is new or overhauled and establish authenticity in accordance
                with FAA requirements, total time in service and time since overhaul for such
                Part), the hours and cycles the Aircraft and Engines operate and all maintenance
                and repairs performed on the Aircraft; and

                (h)    properly documenting all repairs, Modifications and alterations and the
                addition, removal or replacement of equipment, systems or components in accordance
                with the rules and regulations of the Aviation Authority and reflecting such items
                in the Aircraft Documentation.  In addition, all repairs to the Aircraft will be
                accomplished in accordance with either (i) Manufacturer's Structural Repair Manual
                (or DGAC-approved Repair Approval Sheets) or (ii) FAA-approved data (such as FAA
                Form 8110 or equivalent).  All Modifications and alterations will be accomplished
                in accordance with FAA-approved data (such as FAA Form 8110 or equivalent).

13.3            Replacement of Parts.

13.3.1          LESSEE, at its own cost and expense, will promptly replace all Parts which may
                from time to time become worn out, lost, stolen, destroyed, seized, confiscated,
                damaged beyond repair or rendered unfit or beyond economical repair (BER) for
                use for any reason.  In the ordinary course of maintenance, service, repair,
                overhaul or testing, LESSEE may remove any Part provided that LESSEE replaces
                such Part as promptly as practicable.  All replacement Parts will (a) be free
                and clear of all Security Interests (except Permitted Liens) of any kind or
                description, (b) be in condition approved for return to service and of at least
                equivalent model, service bulletin and modification status and have a value and
                utility at least equal to the Parts replaced, assuming such replaced Parts were
                in the condition and repair required to be maintained by the terms hereof and
               (c) have a current "serviceable tag" of the manufacturer or maintenance facility
                providing such items to LESSEE, indicating that such Parts are new, serviceable
                or Overhauled. So long as a substitution meets the requirements of the Maintenance
                Program and the Aviation Authority, LESSEE may substitute for any Part a part
                that does not meet the requirements of the foregoing sentence if a complying Part
                cannot be procured or installed within the available ground time of the Aircraft
                and as soon as practicable the noncomplying part is removed and replaced by a
                complying Part.  With respect to replacement modules in an Engine, (x) the life
                limited Part that is due to be removed earliest in such replacement module will
                have no less life remaining than the life limited Part that is due to be removed
                earliest in the replaced module and (y) the average life remaining for all life
                limited Parts in the replacement module will be no less than the average life
                remaining for the life limited Parts in the replaced module.

13.3.2          All Parts removed from the Airframe or any Engine will remain the property of
                LESSOR and subject to this Lease no matter where located, until such time as
                such Parts have been replaced by Parts (which have been incorporated or installed
                in or attached to the Airframe or such Engine) which meet the requirements for
                replacement Parts specified above and title to such replacement Parts has passed
                to LESSOR under the Laws of the State of Registration and lex situs.  To the
                extent permitted by the Laws of the State of Registration and the lex situs it
                is the intent of LESSOR and LESSEE that without further act and immediately upon
                any replacement Part becoming incorporated, installed or attached to the Airframe
                or an Engine as above provided, (a) title to the removed Part will thereupon vest
                in LESSEE, free and clear of all rights of LESSOR and LESSOR's Liens, (b) title
                to the replacement Part will thereupon vest in LESSOR free and clear of all rights
                of LESSEE (other than LESSEE's rights under this Lease) and (c) such replacement
                Part will become subject to this Lease and be deemed to be a Part hereunder to
                the same extent as the Parts originally incorporated or installed in or attached
                to the Airframe or such Engine.

13.4            Removal of Engines.

13.4.1          If an Engine is removed for testing, service, repair, maintenance, Overhaul work,
                alterations or modifications, title to such Engine will at all times remain
                vested in LESSOR.

13.4.2          LESSEE will be entitled to remove any of the Engines from the Aircraft and
                install another engine or engines on the Aircraft, provided that LESSEE complies
                with each of the following obligations:

                (a)    the insurance requirements set forth in Article 18 and Exhibit E are
                in place;

                (b)    LESSEE ensures that the identification plates referred to in Article 15
                are not removed from any Engine upon such Engine being detached from the Aircraft;
                and

                (c)    title to the Engine remains with LESSOR free from all Security Interests
                (except Permitted Liens) regardless of the location of the Engine or its
                attachment to or detachment from the Aircraft.

13.5            Pooling of Engines and Parts.    LESSEE may subject the Engines and Parts to
normal interchange or pooling agreements with responsible international scheduled commercial
air carriers customary in the airline industry and entered into by LESSEE in the ordinary
course of its business with respect to its entire Airbus narrow body (A318, A319, A320 and/or
A321) fleet so long as (a) in the case of pooling of an Engine, such Engine is returned to
LESSEE within four (4) months, (b) no transfer of title to the Engine occurs, (c) all other
terms of this Lease continue to be observed with respect to the Engines or Parts, including but
not limited to Articles 8, 10, 12, 14, 15, 16, 17, 18 and 19 and (d) LESSEE continues to be
fully responsible to LESSOR for the performance of all of its obligations hereunder.

13.6            Installation of Engines on Other aircraft.    Any Engine removed from the
Aircraft may be installed on another aircraft in LESSEE's fleet which utilizes engines of the
same type as the Engine only if one of the situations described in this Article 12.6 exists:

13.6.1          LESSEE or LESSOR has title to such other aircraft free and clear of all
                Security Interests (except Permitted Liens).

13.6.2          LESSEE, LESSOR and all of the Creditors of LESSEE of such aircraft enter into
                an engines cooperation agreement in form and substance reasonably acceptable to
                LESSOR in which each party agrees to recognize one another's rights in the engines.
                LESSEE will reimburse LESSOR and LESSOR's Lender for their reasonable attorneys'
                fees and costs in negotiating and finalizing engine cooperation agreement
                arrangements with LESSEE and its Creditors.

13.6.3          Such other aircraft is subject to a Creditor Agreement (but no other Security
                Interests except Permitted Liens) which by its terms expressly or effectively
                states that such Creditor and its successors and assigns will not acquire any
                right, title or interest in any Engine by reason of such Engine being installed
                on such aircraft.   LESSEE hereby agrees that if LESSOR's title to an Engine
                is in fact impaired under any such Creditor Agreement, such impairment will be
                deemed to be a Total Loss of such Engine and the provisions of Article 19.5 will
                apply unless, no later than thirty (30) days after the impairment arose, (a)
                the impairment has ceased to exist or (b) LESSEE has provided LESSOR with a bond,
                bank guarantee, or other form of protection acceptable to LESSOR in its sole
                discretion.  To the extent another Creditor Agreement contains such provisions,
                then LESSOR hereby agrees for the benefit of the Creditor of such Creditor
                Agreement that neither LESSOR nor its successors or assigns will acquire or
                claim any right, title or interest in any engine in which LESSEE or another
                Creditor has an interest as a result of such engine being installed on the
                Airframe.

13.7            Engine Thrust Rating.    No Engine shall be utilized at a thrust rating greater
than the thrust rating set forth in Exhibit A, absent LESSOR's express written consent.






13.8            Modifications.

13.8.1          No modification, alteration, addition, or removal to or from the Aircraft
                ("Modification") expected to cost over [SEE PARAGRAPH 13 OF EXHIBIT
                C.] or deviation from the Aircraft's original type design or configuration will
                be made without the prior written consent of LESSOR, which consent will not be
                unreasonably withheld or delayed. "Modification" does not include any modification,
                alteration, addition or removal (a) performed in accordance with Airworthiness
                Directives, (b) performed in accordance with recommended or alert service bulletins
                of the Manufacturer or the manufacturer of any Engine or other Part or (c) of any
                Parts which are owned by LESSEE, leased or conditionally sold to LESSEE (other
                than by LESSOR) including, without limitation, entertainment and passenger service
                equipment such as audio-visual equipment, personal computers, fax machines,
                telephones or other communications equipment (collectively, the "Passenger Service
                Equipment"), for which LESSOR's consent is not required.

13.8.2          LESSOR may review LESSEE's proposed designs, plans, engineering drawings and
                diagrams, and flight and maintenance manual revisions for any proposed Modification.
                If requested by LESSOR, LESSEE will furnish LESSOR (at LESSEE's expense) with
                such documents in final form and any other documents required by Law, relating to
                such Modification. All Modifications incorporated on the Aircraft will be properly
                documented in the Aircraft Documentation and be fully approved by the Aviation
                Authority.

13.8.3          Notwithstanding any other provision of this Lease, no Modification will be made
                which has the effect of decreasing the utility or value of the Aircraft or
                invalidating any warranty applicable to the Aircraft.

13.8.4          No Modification (except as permitted under Articles 12.8.1(A) and 12.8.1(B))
                will be made by LESSEE if an Event of Default exists and is continuing hereunder.

13.8.5          Unless otherwise agreed by LESSOR in writing, all permanent or structural
                Modifications will forthwith become a part of the Aircraft and LESSEE
                relinquishes to LESSOR all rights and title thereto.  However, all (i) temporary
                and non-structural Modifications and (ii) all Passenger Service Equipment so
                long as such equipment can be removed without causing material damage to the
                Aircraft, will remain the property of LESSEE and, at LESSOR's request and LESSEE's
                cost, will be removed from the Aircraft prior to return of the Aircraft, with
                LESSEE restoring the Aircraft to the condition and configuration it was in prior
                to the Modification or installation of Passenger Service Equipment in a manner
                cosmetically acceptable to LESSOR.  Notwithstanding the foregoing, no such removal
                will be permitted without LESSOR's permission during the occurrence of an Event
                of Default hereunder and immediately upon the occurrence of an Event of Default
                hereunder, without the requirement of any further act or notice, all right, title
                and interest in such Modifications and Passenger Service Equipment will immediately
                vest in LESSOR; provided however, that in the event of such an Event of Default,
                with respect to any Passenger Service Equipment, LESSOR will use commercially
                reasonable efforts to reach agreement with any vendors or suppliers holding title
                to the Passenger Service Equipment in order to protect the mutual interests of
                LESSOR and such parties.

13.8.6          LESSOR will bear no liability for the cost of Modifications of the Aircraft
                whether in the event of grounding or suspensions of certification, or for any
                other cause.

13.8.7          Inflight Equipment.    LESSOR acknowledges that LESSEE may at any time during
         the Lease Term install on the Aircraft a telephone system and/or a Live TV system or other
         severable equipment for passenger use (collectively, the "Inflight Equipment", which term
         shall not, for the avoidance of doubt, include the video system or any equipment installed
         on the seats at Delivery and purchased and paid for by LESSOR, which shall remain the
         property of LESSOR), which Inflight Equipment may be owned either by LESSEE or by a third
         party provided that:

                (a)    LESSEE shall give LESSOR notice of the installation of any Inflight
                Equipment on the Aircraft and the name and address of the owner of such Inflight
                Equipment (which may be LESSEE), and a copy of the supplementary type certificate
                relating to the installation thereof; and

                (b)    the owner of the Inflight Equipment and LESSOR will enter into an agreement,
                in form and substance reasonably acceptable to LESSEE, which agreement will provide:

                       (i)    that such owner shall not have any lien, security interest, claim
                       or other encumbrance on or against the Aircraft or any Part or Parts thereof,

                       (ii)   that such owner's only right with respect to the Aircraft shall be
                       to remove the Inflight Equipment from the aircraft not later than the earlier
                       of (A) thirty (30) days after notice from LESSOR that it has repossessed
                       the Aircraft because of the occurrence of an Event of Default, and (B)
                       the Lease Termination Date,

                       (iii)  that such right of removal is made subject to and conditional upon
                       such owner, at no expense to LESSOR or to any subsequent owner or operator
                       of the Aircraft, removing and repairing (or causing LESSEE to remove and
                       repair) all alterations made to the Aircraft in connection with the
                       installation of the Inflight Equipment so as to eliminate all evidence of
                       the installation of such Inflight Equipment and to restore the Aircraft to
                       its condition prior to the installation thereof (ordinary wear and tear
                       excepted) in accordance with an Airframe Manufacturer's service bulletin, and

                       (iv)   that such removal and repair shall be conducted at such times and in
                       such a manner as not to interfere in any way with the commercial operation
                       of the Aircraft and completed within the time period set forth in Article
                       12.8.7(B)(II).

13.9            Performance of Work by Third Parties.    Whenever maintenance and repair work on
the Aircraft or Engines will be regularly performed by a Person other than LESSEE, such Person will
be an FAA-authorized repair station.

13.10           Reporting Requirements.

13.10.1         Commencing with a report furnished ten (10) days after the end of the calendar
                month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly Report
                in English in the form attached hereto as Exhibit L.  Each Monthly Report will
                be furnished within ten (10) days after the end of each calendar month, except
                that the Monthly Report pertaining to the last month (or any portion thereof)
                of the Lease Term will be furnished to LESSOR on the Termination Date.

13.10.2         Commencing on the first anniversary of the Delivery Date and no more than once
                per each year of the Lease Term thereafter, upon LESSOR's request LESSEE will
                provide LESSOR with a Technical Evaluation Report for the Aircraft in the form
                and substance of Exhibit N, as revised.  Such Technical Evaluation Report will
                be furnished within thirty (30) Business Days after LESSOR's request.

13.11           Information Regarding Maintenance Program.    LESSEE will provide LESSOR with
such information regarding the Maintenance Program for the Aircraft as LESSOR may reasonably
request during the Lease Term.






13.12           LESSOR Rights to Inspect Aircraft.    On reasonable notice, LESSOR and/or its
authorized agents or representatives will have the right to inspect the Aircraft and Aircraft
Documentation.  LESSOR agrees that such requests will be coordinated with LESSEE so as to cause
the minimum practical disturbance to LESSEE's operation or its personnel; provided that at no
time will LESSEE be required to remove the Aircraft from active service.  LESSEE agrees to
cooperate with LESSOR in making the Aircraft and Aircraft Documentation available to such
authorized technical teams.  LESSOR will have no duty to make any such inspection and will not
incur any liability or obligation by reason of (and LESSEE's indemnity obligations pursuant to
Article 17 will apply notwithstanding) not making any such inspection or by reason of any
reports it receives or any reviews it may make of the Aircraft records.






         ARTICLE 14           USE OF RESERVES

14.1            Airframe Reserves.    Subject to the terms of Article 13.5, LESSOR will reimburse
LESSEE (or, at LESSEE's option, pay on behalf of LESSEE) from the Airframe Reserves for the actual
cost of any full and completed scheduled "4C/5Y" and "8C/10Y" check (or then-current equivalent
check) as described in the MPD or the Maintenance Program, as applicable (each such check, an "Eligible
Structural Check") and the rectification of any deficiencies resulting from such inspection, with
work performed for all other causes excluded, including those causes set forth in Article 13.6.
Subject to Article 16.1, reimbursement (including exchange fees and handling, packaging and shipping
charges) will be made up to the amount in the Airframe Reserves on the commencement date of the
structural check.

14.2            Engine Performance Restoration Reserves.

14.2.1          Subject to the terms of Article 13.5, LESSOR will reimburse LESSEE (or, at
                LESSEE's option, pay on behalf of LESSEE) from the Engine Performance Restoration
                Reserves for the actual cost associated with an Engine Refurbishment that meets
                the requirements of Article 12.1.3 (each such visit, an "Eligible Shop Visit"),
                with work performed for all other causes excluded, including those causes set
                forth in Article 13.6.  Subject to Article 16.1, reimbursement for an Engine
                Refurbishment (including exchange fees and handling, packaging and shipping
                charges) will be made up to the amount in the Engine Performance Restoration
                Reserves applicable to such Engine at the time of removal of such Engine.

14.3            Engine LLP Reserves.    Subject to the terms of Article 13.5, LESSOR will
reimburse LESSEE (or, at LESSEE's option, pay on behalf of LESSEE) from the Engine LLP Reserves
for an Engine for the actual out-of-pocket materials cost without overhead, mark-up or profit
factor associated with on or off-wing replacement of life-limited Parts in such Engine, with
work performed for all other causes excluded, including those causes set forth in Article 13.6.
Subject to Article 16.1, reimbursement for replacement of life-limited Parts in an Engine
(including exchange fees and handling, packaging and shipping charges) will be made up to the
amount in the Engine LLP Reserves applicable to such Engine at the time of replacement of such
life-limited Part.






14.4            Landing Gear Reserves.    Subject to the terms of Article 13.5, LESSOR will
reimburse LESSEE (or, at LESSEE's option, pay on behalf of LESSEE) from the Landing Gear
Reserves for the actual cost of an Overhaul of the Landing Gear (including exchange fees and
handling, packaging and shipping charges), up to the amount remaining in the Landing Gear
Reserves, with work performed for all other causes excluded, including those causes set forth
in Article 13.6.

14.5            Reimbursement.    LESSEE will be entitled to reimbursement from the Reserves
after the work is completed and the Airframe, Engine or Landing Gear has left the repair agency
(or after LESSOR has received from the repair agency written assurance, in form and substance
acceptable to LESSOR, that the repair agency will release the Airframe, Engine, or Landing Gear
upon receipt of LESSOR's payment of the amount required by this Article 13) by submitting invoices
and proper documentation within twelve (12) months after completion of the work.  LESSOR will
reimburse to LESSEE, no later than thirty (30) days after receipt of such proper documentation,
all, or all undisputed, amounts due to be reimbursed hereunder.  For the Airframe, proper
documentation includes a list of all routine and non-routine work cards and an itemized labor
and materials report.  For the Engine, proper documentation includes a description of the reason
for removal (if removed), a shop teardown report, a shop findings report if an Engine is removed
(or an equivalent report if an Engine is not removed), a full description of the workscope and
complete disk records for the Engine both prior to and after the repair.  Both the invoice
supplied by the Engine repair facility and that submitted by LESSEE to LESSOR with respect to
an Engine will state whether or not credits were provided due to life remaining on any removed
Engine Parts and the amount of any such credits will be itemized.  For the Landing Gear, proper
documentation includes the total calendar time, hours and cycles on the Landing Gear both prior
to and after the Overhaul, a copy of the complete Overhaul report which includes a life limited
component list and a description of all work performed on the Landing Gear assembly.

14.6            Reimbursement Adjustment.    By way of example, among the exclusions from
reimbursement are those items resulting from repairs covered by LESSEE's or a third party's
insurance (deductibles being for the account of LESSEE), or warranties or required as a result
of an Airworthiness Directive, manufacturer's service bulletin, faulty maintenance or installation,
improper operations, misuse, neglect, accident, incident, ingestion, or other accidental cause.
Reimbursement from the Reserves will not be available for the APU, quick engine change (QEC) Parts,
thrust reversers, or any of their associated components.  Notwithstanding the foregoing sentence,
if the Airframe, any Engine or any Landing Gear undergoes a repair or inspection that is otherwise
excluded from reimbursement pursuant to this Article 13.6, and if, in the course of such repair or
inspection, LESSEE performs additional work that (a) constitutes an Eligible Structural Check, an
Eligible Shop Visit, or an Overhaul of any Landing Gear or (b) results in an increase in the time
remaining until the next Eligible Structural Check, Eligible Shop Visit, or Overhaul of any Landing
Gear, then LESSEE shall be entitled to reimbursement for the cost of such additional work and the
same will not be excluded from reimbursement hereunder from the Airframe Reserves, Engine Performance
Restoration Reserves, Engine LLP Reserves or Landing Gear Reserves, as applicable.  All invoices
subject to reimbursement from LESSOR will be reduced (by adjustment between LESSEE and LESSOR
retroactively if necessary) by the actual amounts received by LESSEE on account of such work from
responsible third parties or other sources, such as insurance proceeds, manufacturer's warranties,
guarantees, concessions and credits actually received from such sources (including, with respect
to Engines, credits due to life remaining on any removed Engine Parts).

14.7            Costs in Excess of Reserves.    LESSEE will be responsible for payment of all
costs in excess of the amounts reimbursed hereunder.  If on any occasion the balance in the
Airframe Reserves, Engine Performance Restoration Reserves, Engine LLP Reserves or Landing Gear
Reserves for a particular Engine or Landing Gear (at the time of the structural check, in the
case of the Airframe, or at the time of removal, in the case of an Engine or the Landing Gear)
is insufficient to satisfy a claim for reimbursement in respect of the Airframe, such Engine
or the Landing Gear, as applicable, the shortfall may not be carried forward or made the
subject of any further claim for reimbursement.

14.8            Reimbursement after Termination Date.    LESSEE may not submit any invoice for
reimbursement from the Reserves after the Termination Date unless on or prior to such date LESSEE
has notified LESSOR in writing that such outstanding invoice will be submitted after the
Termination Date and the anticipated amount of such invoice.  So long as LESSEE has provided
such notice to LESSOR, LESSEE may then submit such outstanding invoice at any time within six
(6) months after the Termination Date.  In the event of the Total Loss of the Aircraft and
provided that no Event of Default has occurred and is continuing, the unreimbursed Reserves
held by LESSOR will be paid to LESSEE.






         ARTICLE 15           TITLE AND REGISTRATION


15.1            Title to the Aircraft during Lease Term.    Title to the Aircraft will be and
remain vested in LESSOR.  LESSOR and LESSEE intend this Lease to be a "true lease".  LESSEE
will have no right, title or interest in the Aircraft except as provided in this Lease.

15.2            Registration of Aircraft.    LESSOR at its sole cost and expense will register
and maintain registration of the Aircraft in the name of LESSOR at the register of aircraft in
the State of Registration, except that in the event of a permitted sublease, LESSEE at its sole
cost and expense will register and maintain registration of the Aircraft in the name of LESSOR
at the State of Registration.  LESSEE will cooperate with LESSOR and will from time to time take
all other steps then required by Law (including the Geneva Convention if applicable) or as
LESSOR may reasonably request to protect and perfect LESSOR's interest in the Aircraft and this
Lease in the State of Registration or in any other jurisdictions in or over which LESSEE may
operate the Aircraft.

15.3            Filing of This Lease.    To the extent permitted by Law and in accordance with
the requirements of the Law from time to time, LESSEE at its sole cost and expense will cause
this Lease to be kept, filed, recorded and refiled or rerecorded in the State of Registration
and in any other offices necessary to protect LESSOR's rights hereunder as reasonably requested
by LESSOR. Notwithstanding anything to the contrary in this Article 14, LESSOR will pay the
costs and fees of special FAA counsel, in making the initial filings and recordings with the FAA.






         ARTICLE 16           IDENTIFICATION PLATES


                LESSOR will affix and LESSEE will at all times maintain on the Airframe and each
Engine the identification plates containing the following legends or any other legend reasonably
requested by LESSOR in writing:

16.1            Airframe Identification Plates.

                Location:     One to be affixed to the Aircraft structure above the forward entry
                              door adjacent to and not less prominent than that of Manufacturer's
                              data plate and another in a prominent place on the flight deck.

                Size:         No smaller than 4" x 6".

                Legend:       "THIS AIRCRAFT IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION.
                              MANUFACTURER'S SERIAL NO:  2198

                              OWNER'S ADDRESS:

                              INTERNATIONAL LEASE FINANCE CORPORATION
                              [Until January 31, 2004]
                              1999 Avenue of the Stars, 39th Floor
                              Los Angeles, California 90067-6049
                              U.S.A.
                              [On and after February 1, 2004]
                              10250 Constellation Boulevard, 34th Floor
                              Los Angeles, California 90067-6234
                              U.S.A."

16.2            Engine Identification Plates.

                Location:     The legend on the plate must be no less prominent than the Engine
                              data plate and must be visible.

                Size:         No smaller than 2" x 6".

                              "THIS ENGINE IS OWNED BY INTERNATIONAL LEASE FINANCE CORPORATION,
                              LOS ANGELES, CALIFORNIA, USA."






         ARTICLE 17           TAXES


17.1            General Obligation of LESSEE.    Except as set forth in Article 16.2, LESSEE
agrees to pay promptly when due, and to indemnify and hold harmless LESSOR on a full indemnity
basis from, all license and registration fees and all taxes, fees, levies, imposts, duties,
charges, deductions or withholdings of any nature (including without limitation any value added,
franchise, transfer, sales, gross receipts, use, business, excise, turnover, personal property,
stamp or other tax) together with any assessments, penalties, fines, additions to tax or
interest thereon, however or wherever imposed (whether imposed upon LESSEE, LESSOR, on all or
part of the Aircraft, the Engines or otherwise), by any Government Entity or taxing authority
in the U.S. (including without limitation the City or County of Los Angeles), or any foreign
country or by any international taxing authority, upon or with respect to, based upon or
measured by any of the following (collectively, "Taxes"):

                (a)    the Aircraft, Engines or any Parts;

                (b)    the use, operation or maintenance of the Aircraft or carriage of
                       passengers or freight during the Lease Term;

                (c)    this Lease, the payments due hereunder and the terms and conditions
                       hereof; and

                (d)    the delivery under lease, import, export, or return of the Aircraft
                       or payment of Total Loss Proceeds.

17.2            Exceptions to Indemnity.    The indemnity provided for in Article 16.1 does
not extend to any of the following Taxes (hereinafter referred to as "LESSOR's Taxes"):

                (a)    Taxes imposed by the U.S. or by any Government Entity within the U.S.
                on the net income, profits or gains, accumulated or undistributed earnings or
                income, gross receipts, capital or net worth of LESSOR;

                (b)    Taxes attributable to the period, or an event occurring, prior to
                Delivery or after return of the Aircraft to LESSOR in accordance with this Lease;

                (c)    Taxes attributable to LESSOR's gross negligence, willful misconduct or
                breach of this Lease;

                (d)    Taxes which LESSEE is contesting in good faith in accordance with
                Article 16.5;

                (e)    Taxes imposed by any country other than the U.S. on the net income,
                gross receipts, capital or net worth of LESSOR but only to the extent that
               (i) such Taxes were not in any way connected with, due to or arising out of this
                Lease, LESSEE's business operations or office locations in any such country or
                LESSEE's use and operation of the Aircraft and (ii) such Taxes would be other-
                wise payable by LESSOR notwithstanding this Lease, LESSEE's business operations
                or office locations in any such country or LESSEE's use and operation of the
                Aircraft;

                (f)    Taxes imposed as a result of LESSOR's voluntary or involuntary transfer,
                pledge, assignment, financing, or other similar disposition of the Aircraft,
                Engines, any Parts, or this Lease or any interest in any of the foregoing
                (except a transfer or sale following LESSOR's exercise of any of its rights or
                remedies provided in Article 25.3) provided that LESSEE remains responsible for
                payment of any Taxes and the specific amount of such Taxes that it would have
                been required to indemnify for had such voluntary or involuntary transfer not
                occurred;

                (g)    Taxes consisting of any Taxes, interest, penalties or additions to Tax
                imposed on LESSOR as a result, in whole or in part, of a failure of LESSOR to
                file any Tax return or Tax-related registration properly and timely, unless such
                failure shall be caused by the failure of LESSEE to fulfill any obligations of
                LESSEE under Section 16.7 with respect to such Tax return; or

                (h)    Taxes resulting from, or that would not have been imposed but for, any
                LESSOR's Lien arising as a result of claims against, or acts or omissions of,
                or otherwise attributable to, LESSOR or any related party.

17.3            After-Tax Basis.    The amount which LESSEE is required to pay with respect to
any Taxes indemnified against under Article 16.1 is an amount sufficient to restore LESSOR on
an after-tax basis to the same position LESSOR would have been in had such Taxes not been
incurred.  If LESSOR determines in good faith that it has realized a Tax benefit (by way of
deduction, credit or otherwise) as a result of any payment for which LESSEE is liable under
Section 5.7 or 16.1 of this Lease, and such benefit was not previously taken into account in
calculating the amount of such payment on an after-tax basis in accordance with the immediately
preceding sentence of this Article 16.3, LESSOR will pay to LESSEE an amount that is reasonably
sufficient to ensure that LESSOR is in no better an after-tax position than it would have been
in if the event giving rise to LESSEE's liability for payment had not occurred.

17.4            Timing of Payment.    Any amount payable to LESSOR pursuant to this Article 16
will be paid within ten (10) days after receipt of a written demand therefor from LESSOR
accompanied by a written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable provided, however, that such amount need not be
paid by LESSEE prior to the earlier of (a) the date any Tax is payable to the appropriate
Government Entity or taxing authority or (b) in the case of amounts which are being contested
by LESSEE in good faith or by LESSOR pursuant to Article 16.5, the date such contest is finally
resolved.

17.5            Contests.    If claim is made against LESSOR for Taxes with respect to which
LESSEE is liable for a payment or indemnity under this Lease, LESSOR will promptly give LESSEE
notice in writing of such claim provided, however, that LESSOR's failure to give notice will
not relieve LESSEE of its obligations hereunder unless such failure materially impairs or
precludes LESSEE's ability to contest the claim.  So long as (a) a contest of such Taxes does
not involve any material risk of the sale, forfeiture or loss of the Aircraft or any interest
therein, (b) if LESSOR so requests, LESSEE has provided LESSOR with an opinion of independent
tax counsel that a reasonable basis exists for contesting such claim and (c) adequate reserves
have been made for such Taxes or, if required, an adequate bond has been posted, then LESSOR
at LESSEE's written request will in good faith, with due diligence and at LESSEE's expense,
contest (or permit LESSEE to contest in the name of LESSEE or LESSOR) the validity,
applicability or amount of such Taxes.

17.6            Refunds.    Upon receipt by LESSOR of a refund of all or any part of any Taxes
(including any deductions or withholdings referred to in Article 5.8) which LESSEE has paid,
LESSOR will promptly pay to LESSEE the amount of such Taxes refunded, to the extent that the
underlying Tax liability has been extinguished.

17.7            Cooperation in Filing Tax Returns.    LESSEE and LESSOR will cooperate with
one another in providing information which may be reasonably required to fulfill each party's
tax filing requirements and any audit information request arising from such filing.

17.8            Survival of Obligations.    The indemnity obligations and other agreements of
LESSEE as set forth in this Article 16 will survive the Termination Date.






         ARTICLE 18           INDEMNITIES


18.1            General Indemnity.    Except as set forth in Article 17.2 and Article 28.18,
LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors, employees,
agents and shareholders (individually an "Indemnitee" and collectively "Indemnitees") from
any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, disbursements and expenses (including legal fees, costs and related expenses) of every
kind and nature, whether or not any of the transactions contemplated by this Lease are
consummated (collectively "Expenses"), which are imposed on, incurred by or asserted against any
Indemnitee and which are in any way relating to, based on or arising out of any of the following:

                (a)    this Lease or any transactions contemplated hereby;

                (b)    the operation, possession, use, non-use, control, leasing, subleasing,
                maintenance, storage, overhaul, testing, inspections or acceptance flights at
                return of the Aircraft, any Engine, or any Part during the Lease Term by LESSEE,
                any sublessee or any other Person, whether or not the same is in compliance with
                the terms of this Lease, including without limitation claims for death, personal
                injury, property damage, other loss or harm to any Person and claims relating
                to any Laws, including without limitation environmental control, noise and
                pollution laws, rules or regulations;

                (c)    the manufacture, design, acceptance, rejection, delivery, return, import,
                export, condition, repair, modification, servicing, rebuilding, enforcement of
                warranties whether in LESSOR's or LESSEE's name, any sale of the Aircraft in
                connection with the exercise of any of LESSOR's remedies provided in Article
                25.3, customer and product support provided by Manufacturer and other vendors,
                airworthiness, registration, reregistration, performance, sublease, merchantability,
                fitness for use, substitution or replacement of the Aircraft, Engine, or any Part
                under this Lease or other transfer of use or possession of the Aircraft, Engine,
                or any Part, including under a pooling or interchange arrangement, including
                without limitation latent and other defects, whether or not discoverable and
                patent, trademark or copyright infringement;

                (d)    any non-compliance by LESSEE with any term of this Lease or the falsity
                or inaccuracy of any representation or warranty of LESSEE set forth herein;

                (e)    the prevention or attempt to prevent the lawful arrest, confiscation,
                seizure, taking in execution, impounding, forfeiture or detention of the Aircraft,
                or in securing the lawful release of the Aircraft; or

                (f)    as a consequence of any Default in payment by LESSEE of any sum to be
                paid by LESSEE when due under this Lease or any other Default by LESSEE in the
                due and punctual performance of its obligations under this Lease.

The foregoing indemnity by LESSEE is intended to include and cover any Expense to which an
Indemnitee may be subject (in contract, tort, strict liability or under any other theory)
regardless of the negligence, active or passive or any other type, of such Indemnitee, so
long as such Expense does not fall within any of the exceptions listed in Article 17.2.

18.2            Exceptions to General Indemnities.    The indemnity provided for in Article
17.1 will not extend to Expenses of any Indemnitee to the extent resulting from or arising out
of any of the following:

                (a)    Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement,
                are judicially determined to have resulted from the willful misconduct of such
                Indemnitee;

                (b)    Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement,
                are judicially determined to be attributable to incidents, accidents or occurrences
                prior to the Delivery Date, but only where both the act or omission which gave
                rise to the incident, accident or occurrence and the incident, accident or
                occurrence itself occurred prior to the Delivery Date;

                (c)    Expenses which LESSEE and LESSOR mutually agree or, absent mutual agreement,
                are judicially determined to be attributable to acts or events which occur after
                the Termination Date and return of the Aircraft to LESSOR in the condition required
                hereunder, but in any such case only to the extent not attributable to acts or
                omissions of LESSEE;

                (d)    Expenses representing Taxes, it being acknowledged that the terms of
                Article 16 apply exclusively to LESSEE's indemnity obligations with respect to
                Taxes;

                (e)    Expenses due to the breach by LESSOR of its covenant of quiet enjoyment
                pursuant to Article 21.2;

                (f)    Expenses arising directly from the willful misconduct of an Indemnitee;

                (g)    Expenses related to LESSOR Taxes or a LESSOR's Lien;

                (h)    Expenses that LESSOR has expressly agreed to pay under this Lease;

                (i)    Expenses which are attributable to the assignment, pledge, financing
                or other related activity of LESSOR or any Indemnitee with respect to the Aircraft
                or this Lease;

                (j)    Expenses of any Indemnitee which are ordinary and customary operating,
                overhead or administrative expenses;

                (k)    Expenses which are attributable to LESSOR'S failure to maintain U.S.
                citizenship as required by Article 21.3; and

                (l)    Expenses which are attributable to any Indemnitee's default or failure
                to perform under any financing or related agreement with respect to the Aircraft.

18.3            After-Tax Basis.    The amount which LESSEE will be required to pay with respect
to any Expense indemnified against under Article 17.1 will be an amount sufficient to restore
the Indemnitee, on an after-tax basis, to the same position such Indemnitee would have been in
had such Expense not been incurred.

18.4            Timing of Payment.    Subject to Article 17.8 and LESSEE's right to defend any
claims that are subject to this ARTICLE 17, it is the intent of the parties that each Indemnitee
will have the right to indemnification for Expenses hereunder as soon as a claim is made and
as soon as an Expense is incurred.  LESSEE will pay an Indemnitee for Expenses pursuant to this
Article 17 within ten (10) days after receipt of a written demand therefor from such Indemnitee
accompanied by a written statement describing in reasonable detail the basis for such indemnity,
the actual Expense which is claimed, and the computation of the amount payable.

18.5            Subrogation.    Upon the payment in full of any indemnity pursuant to this
Article 17 by LESSEE, LESSEE will be subrogated to any right of the Indemnitee in respect of
the matter against which such indemnity has been made.

18.6            Notice.    Each Indemnitee and LESSEE will give prompt written notice one to
the other of any liability of which such party has knowledge for which LESSEE is, or may be,
liable under Article 17.1 provided, however, that failure to give such notice will not terminate
any of the rights of Indemnitees under this Article 17 except to the extent that LESSEE has
been materially prejudiced by the failure to provide such notice.

18.7            Refunds.    If any Indemnitee obtains a recovery of all or any part of any
amount which LESSEE has paid to such indemnitee, such Indemnitee will promptly pay to LESSEE the
net amount recovered by such Indemnitee.

18.8            Defense of Claims.    Unless an Event of Default has occurred and is continuing,
LESSEE and its insurers will have the right (in each such case at LESSEE's sole expense) to
investigate or defend or compromise any claim covered by insurance for which indemnification is
sought pursuant to Article 17.1, provided that if LESSEE or its insurers have reserved the right
to dispute liability with respect to any insurance policies pursuant to which coverage is sought,
then LESSEE shall be obliged to ensure that its indemnity obligations are adequately secured to
the reasonable satisfaction of LESSOR.   Each Indemnitee will cooperate with LESSEE or its
insurers with respect to any such defense of claims.  If LESSEE or its insurers are retaining
attorneys to handle any such claim, such counsel must be reasonably satisfactory to the
Indemnitees.  If not, the Indemnitees will have the right to retain counsel of their choice at
LESSEE's expense.

18.9            Survival of Obligation.    Notwithstanding anything in this Lease to the
contrary, the provisions of this Article 17 will survive the Termination Date and continue in
full force and effect notwithstanding any breach by LESSOR or LESSEE of the terms of this Lease,
the termination of the lease of the Aircraft to LESSEE under this Lease or the repudiation by
LESSOR or LESSEE of this Lease.






         ARTICLE 19           INSURANCE


19.1            Categories of Insurance.    Throughout the Lease Term and until the Termination
Date, LESSEE will, at its own expense, effect and maintain in full force and effect the types
of insurance and amounts of insurance (including deductibles) described in Exhibit E through
brokers and insurers of recognized standing in the London or New York insurance markets or, in
the event of a sublease to a Permitted Sublessee, with such brokers and with such insurers in
the London or New York markets as may be approved by LESSOR, such approval not to be unreasonably
withheld.

19.2            Third Party War Liability Insurance.    LESSEE will provide evidence to LESSOR
that the U.S. government indemnity for third party (non-passenger) war liability covers LESSEE
and its operation of the Aircraft, up to the limits of coverage specified in Exhibit E for
Aircraft Third Party, Passenger, Baggage, Cargo and Mail Liability and Airline General Third
Party Liability.  For so long as such U.S. government indemnity is in effect and LESSEE is
covered thereby with respect to the Aircraft, LESSOR agrees that LESSEE may substitute such
indemnity for Extended Coverage Endorsement AVN 52D and the excess coverage required by Exhibit
E.  In the event that LESSEE is no longer covered by such U.S. government indemnity, LESSEE
will carry Extended Coverage Endorsement AVN 52D and excess third party war liability insurance
coverage in the amount required by Exhibit E.

19.3            Installation of Third Party Engine.    If LESSEE installs an engine not owned
by LESSOR on the Aircraft, either (a) LESSEE's hull insurance on the Aircraft will automatically
increase to such higher amount as is necessary in order to satisfy both LESSOR's requirement to
receive the Agreed Value in the event of a Total Loss and the amount required by the third party
engine owner or (b) separate additional insurance on such engine will attach in order to satisfy
separately the requirements of the LESSEE to such third party engine owner.

19.4            Insurance for Indemnities.    The insurance referred to in Article 18.1 will
in each case include and insure (to the extent of the risks covered by the policies) the
indemnity provisions of Article 17 and LESSEE will maintain such insurance of the indemnities
for a minimum of two (2) years following the Termination Date.

19.5            Renewal.    Not less than five (5) Business Days before the expiration or
termination date of any insurance required hereunder, LESSEE will provide LESSOR with fax
confirmation from LESSEE's insurance brokers that renewed certificates of insurance evidencing
the renewal or replacement of such insurance and complying with Exhibit E will be issued on
the termination date of the prior certificate.  Prior to such termination date, LESSEE's
insurance brokers will provide LESSOR with fax confirmation that such renewed certificates
have been issued.  Within seven (7) days after such renewal, LESSEE will furnish its brokers'
certificates of insurance to LESSOR.

19.6            Assignment of Rights by LESSOR.    If LESSOR assigns all or any of its rights
under this Lease as permitted by this Lease or otherwise disposes of any interest in the Aircraft
to any other Person, LESSEE will, upon request, procure that such Person hereunder be added as
loss payee and/or additional assured in the policies effected hereunder and enjoy the same
rights and insurance enjoyed by LESSOR under such policies.  LESSOR will nevertheless continue
to be covered by such policies.

19.7            Deductibles.    If there has been a Payment Default and there is a material
adverse change in the financial condition of LESSEE which LESSOR reasonably believes will cause
LESSEE to be unable to pay the deductible upon the occurrence of a partial loss of the Aircraft
or an Engine, then LESSOR may require LESSEE at LESSEE's expense to lower its deductibles on
the insurance maintained hereunder to a level which is available on commercially reasonable
terms in the insurance market.

19.8            Insurance for Wet Lease Operations.    In the event LESSEE is performing wet
lease operations with the Aircraft pursuant to Article 11.5 and the wet lessee is carrying
the primary passenger, baggage and cargo liability insurance with respect to the flights, then
such insurance must meet the requirements of Exhibit E, including with respect to the amounts
of coverage, naming of LESSOR as an additional insured and inclusion of the other endorsements
set forth in Exhibit E.  Moreover, LESSEE will at all times carry contingent passenger, baggage
and cargo liability insurances for such flights.  Prior to commencement of wet lease operations
for a particular wet lessee, LESSOR will receive certificates of insurance from the insurance
brokers for LESSEE and, if applicable, the wet lessee evidencing such coverages.

19.9            Other Insurance.    LESSOR may from time to time by notice to LESSEE require
LESSEE at LESSEE's expense to effect such other insurance or such variations to the terms of
the existing insurance as may then be customary in the airline industry for aircraft of the
same type as the Aircraft and at the time commonly available in the insurance market.

19.10           Information.    LESSEE will provide LESSOR with any information reasonably
requested by LESSOR from time to time concerning the insurance maintained with respect to the
Aircraft or in connection with any claim being made or proposed to be made thereunder.

19.11           Currency.    All proceeds of insurance pursuant to this Lease will be payable
in Dollars except as may be otherwise agreed by LESSOR.

19.12           Grounding of Aircraft.    If at any time any of the insurance required pursuant
to this Lease will cease to be in full force and effect, LESSEE will forthwith ground the
Aircraft and keep the Aircraft grounded until such time as such insurance is in full force
and effect again.

19.13           Failure to Insure.    If at any time LESSEE fails to maintain insurance in
compliance with this Article 18, LESSOR will be entitled but not bound to do any of the following
(without prejudice to any other rights which it may have under this Lease by reason of such
failure):

                (a)    to pay any premiums due or to effect or maintain insurance reasonably
                satisfactory to LESSOR or otherwise remedy such failure in such manner as
                LESSOR considers appropriate (and LESSEE will upon demand reimburse LESSOR in
                full for any amount so expended in that connection); or

                (b)    at any time while such failure is continuing, to require the Aircraft
                to remain at any airport or (as the case may be), proceed to and remain at any
                airport designated by LESSOR, until such failure is remedied to LESSOR's
                satisfaction.

19.14           Reinsurance.    In the event that the Aircraft is subleased to a Permitted
Sublessee located outside of the U.S., any reinsurance will be maintained with reinsurers and
brokers approved by LESSOR.  Such reinsurance will contain each of the following terms and
will in all other respects (including amount) be satisfactory to LESSOR:

                (a)    the same terms as the original insurance;

                (b)    a cut-through and assignment clause satisfactory to LESSOR; and

                (c)    payment will be made notwithstanding (i) any bankruptcy, insolvency,
                liquidation or dissolution of any of the original insurers and/or (ii) that
                the original insurers have made no payment under the original insurance policies.

                In the event that LESSEE and other, similarly situated commercial air carriers
in the U.S. change the structure of their insurance coverage with respect to reinsurance,
LESSEE and LESSOR will discuss in good faith whether the foregoing provisions relating to
reinsurance should apply to this Lease.

19.15           Limit on Hull in Favor of LESSEE.    LESSEE may carry hull all risks or hull
war and allied perils on the Aircraft in excess of the Agreed Value (which is payable to LESSOR)
only to the extent such excess insurance which would be payable to LESSEE in the event of a
Total Loss does not exceed one hundred ten percent (110%) of the Agreed Value and only to the
extent that such additional insurance will not prejudice the insurances required herein or the
recovery by LESSOR thereunder.  LESSEE agrees that it will not create or permit to exist any
liens or encumbrances over the insurances, or its interest therein, except as constituted by
this Lease.






         ARTICLE 20           LOSS, DAMAGE AND REQUISITION


                Throughout the Lease Term and until the Termination Date, LESSEE will bear all
risk of loss, theft, damage and destruction to the Aircraft.

20.1            Definitions.    In this Article 19 and throughout this Lease:

                "Agreed Value" has the meaning set forth in Paragraph 14 of Exhibit C.

                "Net Total Loss Proceeds" means the Total Loss Proceeds actually received by
LESSOR following a Total Loss, less any legal and other out-of-pocket expenses, taxes or duties
incurred by LESSOR in connection with the collection of such proceeds.

                "Total Loss" means any of the following in relation to the Aircraft, Airframe
or any Engine, and "Total Loss Date" means the date set forth in parenthesis after each Total Loss:

                (a)    destruction, damage beyond repair or being rendered permanently unfit for
                normal use for any reason (the date such event occurs or, if not known, the date
                on which the Aircraft, Airframe or Engine was last heard of);

                (b)    actual or constructive total loss (including any damage to the Aircraft
                which results in an insurance settlement on the basis of a total loss) (the
                earlier of the date on which the loss occurs or thirty (30) days after the
                date of notice to LESSEE's brokers or insurers claiming such total loss);

                (c)    requisition of title, confiscation, forfeiture or any compulsory
                acquisition or other similar event (the date on which the same takes effect);

                (d)    sequestration, detention, seizure or any similar event for more than
                sixty (60) consecutive days or one-hundred eighty (180) consecutive days if
                the Aircraft is located in the U.S. for such entire period (the earlier of the
                date on which insurers make payment on the basis of a total loss or the date
                of expiration of such period);

                (e)    requisition for use for more than one hundred eighty (180) consecutive
                days, except as set forth in ARTICLE 19.8 (the earlier of the date on which
                the insurers make payment on the basis of a total loss or the date of expiration
                of such period); or

                (f)    in the case of an Engine, the event described in Article 12.6.3 (the
                date on which the same takes effect).

                "Total Loss Proceeds" means the proceeds of any insurance or any compensation
or similar payment arising in respect of a Total Loss.

20.2            Notice of Total Loss.    LESSEE will notify LESSOR in writing within two (2)
Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine.

20.3            Total Loss of Aircraft or Airframe.    If the Total Loss of the Aircraft or
Airframe occurs during the Lease Term, the following will occur:

20.3.1          After the Total Loss Date and until receipt by LESSOR of the Agreed Value and
                all other amounts then due under this Lease, LESSEE will continue to pay Rent
                and the parties will perform, to the extent possible, all of their other
                obligations under this Lease.

20.3.2          On the date which is the earlier of the following dates:

                       (a)    the date on which the Total Loss Proceeds of the Aircraft or the
                       Airframe are paid by LESSEE's insurance underwriters or brokers and

                       (b)    the date which falls sixty (60) days after the Total Loss Date,

                LESSEE will pay to LESSOR an amount equal to the sum of:

                       (a)    the Agreed Value and

                       (b)    all other amounts then due under this Lease,

                less an amount equal to the Net Total Loss Proceeds received by LESSOR by such date.

20.3.3          LESSOR will apply the Net Total Loss Proceeds and any amounts received from
                LESSEE pursuant to Article 19.3.2 as follows:

                       (a)    first, in discharge of any unpaid Rent and any other amounts accrued
                       and unpaid up to the date of LESSOR's receipt of the Agreed Value;

                       (b)    second, in discharge of the Agreed Value; and

                       (c)    third, payment of the balance, if any, to LESSEE.

20.3.4          Upon receipt by LESSOR of all monies payable by LESSEE in Article 19.3, this
                Lease will terminate except for LESSEE's obligations under Articles 10.5, 16
                and 17 which survive the Termination Date, and LESSOR will relinquish title to
                the Aircraft to the insurance underwriters or LESSEE, as appropriate.

FOR AVOIDANCE OF DOUBT, THE AGREED VALUE OF THE AIRCRAFT WILL BE PAYABLE TO LESSOR PURSUANT TO
THIS ARTICLE 19.3 WHEN A TOTAL LOSS OF THE AIRFRAME OCCURS EVEN IF THERE HAS NOT BEEN A TOTAL
LOSS OF AN ENGINE OR ENGINES.

20.4            Surviving Engine(s).    If a Total Loss of the Airframe occurs and there has
not been a Total Loss of an Engine or Engines, then, provided no Default has occurred and is
continuing, at the request of LESSEE (subject to agreement of relevant insurers) and on receipt
of all monies due under Article 19.3 and payment by LESSEE of all airport, navigation and other
charges on the Aircraft, LESSOR will transfer all its right, title and interest in the surviving
Engine(s) to LESSEE, but without any responsibility, condition or warranty on the part of LESSOR
other than as to freedom from any LESSOR's Lien.

20.5            Total Loss of Engine and Not Airframe.

20.5.1          Upon a Total Loss of any Engine not installed on the Airframe or a Total Loss
                of an Engine installed on the Airframe not involving a Total Loss of the Airframe,
                LESSEE will replace such Engine as soon as reasonably possible by duly conveying
                to LESSOR title to another engine (a) free and clear of all Security Interests
                (except Permitted Liens) of any kind or description, (b) in airworthy condition
                and of the same or improved model, service bulletin and modification status and
                having a value and utility at least equal to the Engine which sustained the Total
                Loss, (c) in the same or better operating condition as the Engine which sustained
                a Total Loss, including time in service, hours and cycles since new and hours and
                cycles available to the next inspection, Overhaul or scheduled or anticipated
                removal.  In all circumstances, with respect to life limited Parts in any
                replacement engine, (x) the life limited Part that is due to be removed earliest
                in such replacement engine will have no less life remaining than the life limited
                Part that was due to be removed earliest in the Engine which sustained the Total
                Loss and (y) the average life remaining for all life limited Parts in the
                replacement engine will be no less than the average life remaining for the life
                limited Parts in the Engine which sustained the Total Loss.  Such replacement
                engine will be an Engine as defined herein and the Engine which sustained such
                Total Loss will cease to be an Engine; whereupon, subject to agreement of relevant
                insurers, LESSOR will transfer all of its right, title and interest in and to
                the Engine which sustained the Total Loss to LESSEE, but without any responsibility,
                condition or warranty on the part of LESSOR other than as to title and freedom
                from any LESSOR's Lien.

20.5.2          LESSEE agrees at its own expense to take such action as LESSOR may reasonably
                request in order that any such replacement Engine becomes the property of LESSOR
                and is leased hereunder on the same terms as the destroyed Engine. LESSEE's
                obligation to pay Rent will continue in full force and effect, but an amount
                equal to the Net Total Loss Proceeds received by LESSOR with respect to such
                destroyed Engine will, subject to LESSOR's right to deduct therefrom any amounts
                then due and payable by LESSEE under this Lease, be paid to LESSEE.

20.6            Other Loss or Damage.

20.6.1          If the Aircraft or any Part thereof suffers loss or damage not constituting a
                Total Loss of the Aircraft or the Airframe or any Engine, all the obligations
                of LESSEE under this Lease (including payment of Rent) will continue in full
                force.

20.6.2          In the event of any loss or damage to the Aircraft or Airframe which does not
                constitute a Total Loss of the Aircraft or the Airframe, or any loss or damage
                to an Engine which does not constitute a Total Loss of such Engine, LESSEE will
                at its sole cost and expense fully repair the Aircraft, Engine or APU in order
                that the Aircraft or Engine is placed in an airworthy condition and substantially
                the same condition as it was prior to such loss or damage.  All repairs will be
                performed in a manner which preserves and maintains, to the extent possible, all
                warranties and service life policies to the same extent as they existed prior
                to such loss or damage.  LESSEE will notify LESSOR forthwith of any loss, theft
                or damage to the Aircraft for which the cost of repairs is estimated to exceed
                [SEE PARAGRAPH 15 OF EXHIBIT C.], together with LESSEE's proposal for carrying
                out the repair.  In the event that LESSOR does not agree with LESSEE's proposals
                for repair, LESSOR will so notify LESSEE within two (2) Business Days after its
                receipt of such proposal.  Upon receipt of such notice from LESSOR, LESSEE and
                LESSOR will then consult with Manufacturer and LESSEE and LESSOR agree to accept
                as conclusive, and be bound by, Manufacturer's directions or recommendations as to
                the manner in which to carry out such repairs.  If Manufacturer declines to give
                directions or recommendations, LESSEE will carry out the repairs in accordance
                with the directions of LESSOR.

20.6.3          To the extent insurance proceeds received by LESSEE directly from its insurers
                do not cover the cost of such repair work on the Aircraft or Engine and LESSOR
                has received additional insurance proceeds from LESSEE's insurers with respect
                to such repair work, LESSOR will (subject to LESSOR's right to deduct therefrom
                any amounts then due and payable by LESSEE under this Lease and submission by
                LESSEE of reasonable documentation in support of such excess repair costs) pay
                to LESSEE insurance proceeds received by LESSOR as and when such repair work is
                performed on the Aircraft.

20.7            Copy of Insurance Policy.    Promptly after the occurrence of a partial loss or
Total Loss of the Aircraft or an Engine, at the request of LESSOR (and then only in the event
reasonably required by LESSOR in connection with insurance policies pursuant to which coverage
is sought) LESSEE will provide LESSOR with a copy of the relevant portions of LESSEE's insurance
policy. LESSEE's insurance policy will be confidential between LESSOR and LESSEE and will not
be disclosed by LESSOR to third parties other than LESSOR's professional advisors and except as
necessary in respect of proceedings relating to such insurance claim.

20.8            Government Requisition.    If the Aircraft, Airframe or any Engine is
requisitioned for use by any Government Entity, LESSEE will promptly notify LESSOR of such
requisition.  All of LESSEE's obligations hereunder will continue as if such requisition had
not occurred.  So long as no Event of Default has occurred and is continuing, all payments
received by LESSOR or LESSEE from such Government Entity will be paid over to or retained by
LESSEE.  If an Event of Default has occurred and is continuing, all payments received by LESSEE
or LESSOR from such Government Entity may be used by LESSOR to satisfy any obligations owing by
LESSEE.

20.9            Return of Security Deposit and other Amounts.    For avoidance of doubt, the
parties agree that in the event of the Total Loss of the Airframe, upon receipt by LESSOR of
all monies payable by LESSEE in accordance with Article 19.3, and subject always to the terms
of Articles 5.1.3 and 13.8, LESSOR will (a) return to LESSEE the amount of the Security Deposit
then held by LESSOR and any prepaid Rent and (b) pay to LESSEE an amount equal to one hundred
percent (100%) of the Reserves then held by LESSOR and which are not subject to a claim for
reimbursement pursuant to Article 13.5.








         ARTICLE 21           REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE


21.1            Representations and Warranties.    LESSEE represents and warrants the following
to LESSOR as of the date of execution of this Lease and as of the Delivery Date:

21.1.1          Corporate Status.    LESSEE is a corporation duly incorporated, validly existing
         and in good standing under the Laws of the State of Colorado.  It has the corporate power
         and authority to carry on its business as presently conducted and to perform its
         obligations hereunder.

21.1.2          Governmental Approvals.    No authorization, approval, consent, license or order
         of, or registration with, or the giving of notice to the Aviation Authority or any other
         Government Entity is required for the valid authorization, execution, delivery and
         performance by LESSEE of this Lease, except as will have been duly effected as of the
         Delivery Date.

21.1.3          Binding.    LESSEE's Board of Directors has authorized LESSEE to enter into
         this Lease and the other Operative Documents and to perform its obligations hereunder
         and thereunder.  This Lease and the other Operative Documents that have been executed
         and delivered by LESSEE as of the date of this Lease been duly executed and delivered
         by LESSEE and represent the valid, binding and enforceable obligations of LESSEE except
         as enforceability may be limited by bankruptcy, insolvency, reorganization or other
         similar Laws of general application affecting the enforcement of creditors' rights and
         by such principles of equity as a court having jurisdiction may impose.  When executed
         by LESSEE at Delivery, the same will apply to the Estoppel and Acceptance Certificate
         and the other Operative Documents.

21.1.4          No Breach.    The execution and delivery of the Operative Documents that have
         been executed and delivered by LESSEE as of the date of this Lease, the consummation
         by LESSEE of the transactions contemplated under the Operative Documents and compliance
         by LESSEE with the terms and provisions thereof do not and will not contravene any
         Law applicable to LESSEE, or result in any material breach of or constitute any material
         default under or result in the creation of any Security Interest upon any property of
         LESSEE, pursuant to any indenture, mortgage, chattel mortgage, deed of trust, conditional
         sales contract, bank loan or credit agreement, corporate charter, bylaw or other material
         agreement or instrument to which LESSEE is a party or by which LESSEE or its properties
         or assets may be bound or affected.  When executed by LESSEE at Delivery, the same will
         apply to the Estoppel and Acceptance Certificate and the other Operative Documents.

21.1.5          Licenses.    LESSEE holds all licenses, certificates and permits from applicable
         Government Entities in the U.S. necessary for the conduct of its business as a
         Certificated Air Carrier and performance of its obligations under this Lease.

21.1.6          No Suits.    There are no suits, arbitrations or other proceedings pending or
         threatened before any court or administrative agency against or affecting LESSEE which,
         if adversely determined, would have a material adverse effect on the business, assets
         or condition (financial or otherwise) of LESSEE or its ability to perform under this
         Lease, except as described in the filings provided to LESSOR pursuant to Article 22.

21.1.7          Tax Returns.    All necessary returns have been delivered by LESSEE to all
         relevant taxation authorities in the jurisdiction of its incorporation and LESSEE is
         not in default in the payment of any taxes due and payable.

21.1.8          No Material Adverse Effect.    LESSEE is not in default under any agreement to
         which it is a party or by which it may be bound which default if left uncured would have
         a material adverse effect on its business, assets or condition.

21.1.9          No Default under this Lease.    At the time of execution of this Lease, no Default
         has occurred and is continuing and the financial statements provided to LESSOR pursuant
         to Article 22 fairly present the financial condition of LESSEE.

21.2            Covenants.    LESSEE covenants to LESSOR that it will comply with the
         following throughout the entire Lease Term:

21.2.1          Licensing.    LESSEE will hold all licenses, certificates and permits from
         applicable Government Entities in the U.S. necessary for the conduct of its business
         as a Certificated Air Carrier and performance of its obligations under this Lease.
         LESSEE will advise LESSOR promptly in the event any such licenses, certificates or
         permits are cancelled, terminated, revoked or not renewed.

21.2.2          Information about Suits.    LESSEE will promptly give to LESSOR a notice in
         writing of any suit, arbitration or proceeding before any court, administrative agency
         or Government Entity which, if adversely determined, would materially adversely affect
         LESSEE's financial condition, affairs, operations or its ability to perform under this
         Lease provided, however, that compliance by LESSEE with the requirements of Article 22
         hereof will be deemed compliance with the provisions of this Article 20.2.2.

21.2.3          Restrictions on Mergers.    LESSEE will not consolidate with or merge into any
         other corporation or other Person, and will not convey, transfer, lease or otherwise
         dispose of all or substantially all of its assets to any corporation or other Person,
         unless:

                (i)    such transaction shall not have any material adverse effect on the rights
                       of LESSOR under or in respect of the Lease 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: (A) shall be
                       a corporation organized and existing under the laws of the U. S.  or any
                       State thereof or the District of Columbia; (B) immediately after giving
                       effect to such transaction, shall have acquired or succeeded to all or
                       substantially all of the assets of LESSEE (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 LESSEE's tangible
                       net worth (determined in accordance with GAAP) immediately prior to such
                       transaction; (C) shall be a "citizen of the United States" of America as
                       defined in Section 40102(a)(15)(c) of Title 49 of the U.S.C. and a
                       Certificated Air Carrier; and (D) shall executed and deliver to LESSOR
                       (1) such recordations and filings with any Government Entity and such
                       other documents as shall be reasonably necessary or advisable in connection
                       with such consolidation, merger, sale, lease, transfer or other disposition
                       (2) an agreement, in form and substance reasonably satisfactory to LESSOR,
                       assuming all of LESSEE's obligations under the Lease and the other
                       Operative Documents without amendment thereto and (3) an officer's
                       certificate to the effect that the requirements of this Section have been
                       satisfied; and

                 (iii) no Event of Default shall have occurred and be continuing or shall occur
                       as a result thereof.

21.2.4          Restriction on Relinquishment of Possession.    LESSEE will not, without the
         prior consent of LESSOR, deliver, transfer or relinquish possession of the Aircraft
         except in accordance with Articles 11 and 12.

21.2.5          No Security Interests.    LESSEE will not create or agree to or permit to arise
         any Security Interest (other than Permitted Liens) on or with respect to the Aircraft,
         title thereto or any interest therein.  LESSEE will forthwith, at its own expense,
         take all action as may be reasonably necessary to discharge or remove any such Security
         Interest if it exists at any time.

21.2.6          Representations to Other Parties.    LESSEE will not represent or hold out LESSOR
         as carrying goods or passengers on the Aircraft or as being in any way connected or
         associated with any operation of the Aircraft.






         ARTICLE 22           REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR


22.1            Representations and Warranties.    LESSOR represents and warrants the following
to LESSEE as of the date of execution of the Lease and as of the Delivery Date and ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED HAVE BEEN WAIVED IN ACCORDANCE WITH ARTICLE 8:

22.1.1          Corporate Status.    LESSOR is a corporation duly incorporated, validly existing
         and in good standing under the Laws of the State of California.  It has the corporate
         power and authority to carry on its business as presently conducted and to perform
         its obligations hereunder.

22.1.2          Governmental Approvals.    No authorization, approval, consent, license or order
         of, or registration with, or the giving of notice to any U.S. Government Entity is
         required for the valid authorization, execution, delivery and performance by LESSOR of
         this Lease.

22.1.3          Binding.    This Lease and the other Operative Documents that have been have
         been executed and delivered by LESSEE as of the date of this Lease have been duly
         authorized, executed and delivered by LESSOR and represent the valid, enforceable and
         binding obligations of LESSOR except as enforceability may be limited by bankruptcy,
         insolvency, reorganization or other similar Laws of general application affecting the
         enforcement of creditors' rights and by such principles of equity as a court having
         jurisdiction may impose.  When executed by LESSOR at Delivery, the same will apply to
         the other Operative Documents.

22.1.4          No Breach.    The execution and delivery of the Operative Documents that have
         been executed and delivered by LESSOR as of the date of this Lease, the consummation
         by LESSOR of the transactions contemplated therein and compliance by LESSOR with the
         terms and provisions thereof do not and will not contravene any Law applicable to LESSOR,
         or result in any material breach of or constitute any material default under any
         indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank
         loan or credit agreement, corporate charter, bylaw or other material agreement or
         instrument to which LESSOR is a party or by which LESSOR or its properties or assets
         may be bound or affected.  When executed by LESSOR at Delivery, the same will apply to
         the other Operative Documents.

22.1.5          Title to Aircraft.    On the Delivery Date LESSOR will have good and valid title
         to the Aircraft.

22.1.6          Citizen of the United States.    LESSOR is a "citizen of the United States of
         America" (as defined in Section 40102 of Title 49 of U.S.C.).

22.2            Covenant of Quiet Enjoyment.    So long as no Event of Default has occurred and
is continuing hereunder, LESSOR covenants that neither LESSOR nor any person lawfully claiming
through LESSOR will interfere with LESSEE's quiet, peaceful use and enjoyment of the Aircraft
during the Lease Term.

22.3            Covenant of U.S. Citizenship.    LESSOR hereby covenants that as of the date of
Delivery, the date of registration of the Aircraft with the Aviation Authority, and for the entire
duration of the Lease Term, it shall be a "citizen of the United States of America" (as defined
in Section 40102 of Title 49 of U.S.C.).






         ARTICLE 23           FINANCIAL AND RELATED INFORMATION


         LESSEE agrees to furnish each of the following to LESSOR:

                (a)    within forty-five (45) days after the end of each fiscal quarter of LESSEE,
                three (3) copies of the unaudited consolidated financial statements (including
                a balance sheet and profit and loss statement) prepared for such quarter in
                accordance with generally accepted accounting principles in the U.S.;

                (b)    within ninety (90) days after the end of each fiscal year of LESSEE, three
                (3) copies of the audited consolidated financial statements (including a balance
                sheet and profit and loss statement) prepared as of the close of such fiscal year
                in accordance with generally accepted accounting principles in the U.S.;

                (c)    promptly after distribution, three (3) copies of all reports and financial
                statements which LESSEE sends or makes available to its stockholders or creditors
                generally;

                (d)    Technical Evaluation Reports in conjunction with every second "C" check
                for the Aircraft and at other times reasonably requested by LESSOR in accordance
                with Article 12.10.2 hereof; and

                (e)    from time to time, such other reasonable information as LESSOR or LESSOR's
                Lender may reasonably request concerning the location, condition, use and operation
                of the Aircraft or the financial condition of LESSEE.





         ARTICLE 24           RETURN OF AIRCRAFT


24.1            Date of Return.    LESSEE is obligated to return the Aircraft, Engines, Parts
and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss of the Aircraft
occurred prior to the Expiration Date and this Lease was terminated early in accordance with
Article 19.3.  If LESSEE is in Default hereunder by failing to return the Aircraft on the
Expiration Date or if an Event of Default occurs prior to the Expiration Date and LESSOR
repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must
be met on the date the Aircraft is actually returned to LESSOR or repossessed by LESSOR.

24.2            Technical Report.    Six (6) months prior to the Expiration Date (and in an
updated form at return of the Aircraft), LESSEE will provide LESSOR with a Technical Evaluation
Report in the form and substance of Exhibit N, as revised, and, in addition upon LESSOR's request,
will make copies available of (a) drawings of the interior configuration of the Aircraft both
as it then exists and as it will exist at return, (b) an Airworthiness Directive status list,
(c) to the extent available, a service bulletin incorporation list (provided that if it does
not maintain such a list, LESSEE will provide any necessary information and such reasonable
assistance as LESSOR may require to prepare such a list), (d) rotable tracked, hard-time and
life-limited component listings, (e) to the extent available, a list of LESSEE-initiated
modifications and alterations (provided that if it does not maintain such a list, LESSEE will
provide any necessary information and such reasonable assistance as LESSOR may require to prepare
such a list), (f) interior material burn certificates, (g) the Aircraft Maintenance Program
(provided, however, that LESSEE's Aircraft Maintenance Program will be deemed "Confidential
Information" as provided in the Confidentiality Agreement, and provided further that LESSOR
shall have the right to disclose the contents of the Maintenance Program to any prospective
buyer or lessee of the Aircraft, or to any third party maintenance provider working on behalf
of such party, so long as such party and/or such third party maintenance provider have executed
an Acknowledgment and Agreement as provided in the Confidentiality Agreement), (h) the complete
workscope for the checks, inspections and other work to be performed prior to return, (i) a list
of all no-charge service bulletin kits with respect to the Aircraft which were ordered by LESSEE
from Manufacturer or the Engine manufacturer, (j) current Engine disk sheets and a description
of the last shop visit for each Engine and (k) any other data which is reasonably requested by
LESSOR.

24.3            Return Location.    LESSEE at its expense will return the Aircraft, Engines,
Parts and Aircraft Documentation to LESSOR at Denver, Colorado, or to such other airport on
LESSEE's route system as may be mutually agreed to by LESSEE and LESSOR.






24.4            Full Aircraft Documentation Review.    For the period commencing at least ten
(10) Business Days prior to the proposed redelivery date and continuing until the date on which
the Aircraft is returned to LESSOR in the condition required by this Lease, LESSEE will provide
for the review of LESSOR and/or its representative all of the Aircraft records and historical
documents described in Exhibit M in one central room at the Aircraft return location.

24.5            Aircraft Inspection.

24.5.1          During the maintenance checks performed immediately prior to the proposed
                redelivery ("Final Check") and at the actual return of the Aircraft, LESSOR
                and/or its representatives will have an opportunity to conduct a full systems
                functional and operational inspection of the Aircraft (and other types of
                reasonable inspections based upon the Aircraft type, age, use and other known
                factors with respect to the Aircraft; provided that LESSOR's access for
                inspection shall be limited to those areas of the Aircraft that are exposed on
                the Aircraft during the course of performance of the Final Check and without
                opening or removing panels, compartments or bays unless (a) such opening or
                removal is specified as part of the Final Check or (b) LESSOR has reasonable
                visual grounds to suspect corrosion and a full inspection of the Aircraft
                Documentation (including records and manuals), all to LESSOR's reasonable
                satisfaction.  Any deficiencies from the Aircraft return condition requirements
                set forth in this Article 23 will be corrected by LESSEE at its cost prior to
                the acceptance flight described in Article 23.5.2.

24.5.2          Immediately prior to the proposed redelivery of the Aircraft, LESSEE will carry
                out for LESSOR and/or LESSOR's representatives a reasonable, mutually agreed
                upon Aircraft acceptance flight in accordance with reasonable commercial
                airline acceptance flight procedures, which will be for a duration not to exceed
                two (2) hours.  Flight costs and fuel will be furnished by and at the expense
                of LESSEE.  Any deficiencies from the Aircraft return condition requirements
                set forth in this Article 23 will be corrected by LESSEE at its cost prior to
                return of the Aircraft.

24.5.3          To the extent that the ground inspection and acceptance flight extend beyond
                the Expiration Date, the Lease Term will be deemed to have been automatically
                extended and the obligations of LESSEE hereunder (including Article 23.11.3)
                will continue on a day-to-day basis until the Aircraft is accepted by LESSOR
                as being in the condition required hereunder, which acceptance shall be
                evidenced by LESSOR executing and delivering to LESSEE the Return Acceptance
                Receipt in the form of Exhibit K.


24.6            Certificate of Airworthiness Matters.

24.6.1          The Aircraft will possess a current Certificate of Airworthiness issued by the
                Aviation Authority (although this Certificate of Airworthiness may be
                substituted by an Export Certificate of Airworthiness or equivalent if requested
                by LESSOR pursuant to Article 23.6.3).  In addition, even if LESSEE must perform
                engineering, maintenance and repair work on the Aircraft beyond the requirements
                of Article 12, the Aircraft at return must be in the condition required in order
                to meet the requirements for issuance of a U.S. Standard Certificate of
                Airworthiness for transport category aircraft issued by the FAA in accordance
                with FAR Part 21 and, in addition, to meet the operating requirements of FAR
                Part 121.

24.6.2          If the Aircraft is registered in a country other than the U.S. at time of return,
                LESSEE at its cost will demonstrate that the Aircraft meets the requirements
                for issuance of the U.S. Standard Certificate of Airworthiness for transport
                category aircraft specified in Article 23.6.1 by delivering to LESSOR at its
                option either an actual U.S. Standard Certificate of Airworthiness (if the
                Aircraft is to be registered in the U.S.) or a letter reasonably acceptable to
                LESSOR signed by an FAA Designated Airworthiness Representative (DAR) or another
                Person reasonably acceptable to LESSOR stating that the DAR or such Person has
                inspected the Aircraft and Aircraft Documentation (including records and manuals)
                and has found that the Aircraft meets the requirements for issuance of a U.S.
                Standard Certificate of Airworthiness for transport category aircraft in
                accordance with FAR Part 21 and, in addition, meets the operating requirements
                of FAR Part 121.

24.6.3          If the Aircraft is to be registered in a country other than in the U.S. after
                return from LESSEE, LESSOR may in its sole discretion waive the requirements
                of Article 23.6.1 and instead require that LESSEE at its expense (to the extent
                such expense is no greater than that which LESSEE would have incurred pursuant
                to Article 23.6.1, with any additional expenses being for LESSOR's account):

                (a)    obtain an Export Certificate of Airworthiness from the State of
                Registration, and

                (b)    subject to LESSEE's capacity, resources, and technical capability, put
                the Aircraft in a condition to meet the requirements for issuance of a
                Certificate of Airworthiness of the Aviation Authority of the next country of
                register, provided that if solely as a result of such work the Aircraft is
                returned after the scheduled redelivery date, LESSEE will not be liable for
                payment of Rent in respect of the period following the date the Aircraft would
                have been returned following completion of the requirements of this Article 23,
                but for the provisions of this Article 23.6.3.

24.7            General Condition of Aircraft at Return.

24.7.1          The Aircraft, Engines, and Parts will have been maintained and repaired in
                accordance with the Maintenance Program, the rules and regulations of the
                Aviation Authority and this Lease.

24.7.2          Aircraft Documentation (including records and manuals) will have been maintained
                in an up-to-date status, in accordance with the rules and regulations of the
                Aviation Authority and the FAA and this Lease and in a form necessary in order
                to meet the requirements of Article 23.6.1.  The records and historical
                documents set forth in Exhibit M will be in English.

24.7.3          There will be no pilot discrepancies or deferred maintenance items.

24.7.4          The Aircraft will be airworthy (conform to type design and be in a condition
                for safe operation), with all Aircraft equipment, components and systems
                operating in accordance with their intended use and within limits approved by
                Manufacturer, Aviation Authority and FAA.

24.7.5          The Aircraft interior (including cabin and windows) and exterior will be clean
                in accordance with U.S. commercial airline standards and cosmetically acceptable
                to LESSOR in its reasonable discretion, with all compartments free of foreign
                objects, dirt, grease, fluids, stains, grime, cracks, tears and rips and ready
                to be placed into immediate commercial airline operations.

24.7.6          No special or unique Manufacturer, Engine manufacturer or Aviation Authority
                inspection or check requirements which are specific to the Aircraft or Engines
                (as opposed to a group of aircraft or engines of their types) will exist with
                respect to the Airframe, Engines and Aircraft equipment, components and systems.

24.7.7          All repairs, modifications and alterations to the Aircraft will have been
                accomplished in accordance with either (i) Manufacturer's Structural Repair
                Manual (or DGAC-approved Repair Approval Sheets) for the Aircraft or (ii) FAA-
                approved data (such as FAA Form 8110 or equivalent).

24.7.8          SEE PARAGRAPH 16(a) OF EXHIBIT C.

24.7.9          Subject to the terms of Article 23.7.10, the Aircraft will be returned with
                LESSOR's Engines installed and with the same equipment as at Delivery, subject
                only to those replacements, additions and Modifications permitted under this
                Lease.

24.7.10         Notwithstanding the terms of Article 23.7.9, at the time of return one or more
                engines other than the Engines may be installed on the Aircraft, provided that
                such engine or engines are owned or beneficially owned by the Person who is
                (a) the LESSOR of the Aircraft at the time of return or (b) the beneficial
                owner of the Aircraft at the time of return.

24.7.11         SEE PARAGRAPH 16(b) OF EXHIBIT C.

24.7.12         SEE PARAGRAPH 16(c) OF EXHIBIT C.

24.7.13         SEE PARAGRAPH 16(d) OF EXHIBIT C.

24.7.14         The Aircraft will be in compliance with Manufacturer's Corrosion Prevention
                and Control Program (CPCP) specified for the model type by Manufacturer.
                Where any evidence of corrosion exists, perform an internal and external
                corrosion inspection and correct any discrepancies in accordance with the
                recommendations of Manufacturer and the Structural Repair Manual.  In addition,
                all inspected areas will be properly treated with corrosion inhibitor if and as
                recommended by Manufacturer.

24.7.15         If any waivers, deviations, dispensations, alternate means of compliance,
                extensions or carry-overs with respect to maintenance or operating requirements,
                repairs or Airworthiness Directives are granted by the Aviation Authority or
                permitted by the Maintenance Program, LESSEE at its sole cost and expense will
                nonetheless perform such maintenance or operating requirements, repairs or
                Airworthiness Directives as if such waivers, deviations, dispensations, alternate
                means of compliance, or extensions or carry-overs did not exist, unless such
                waivers, deviations, dispensations, alternate means of compliance, extensions
                or carry-overs are applicable to all A319 aircraft and operators of such
                aircraft worldwide.

24.7.16         The Aircraft will be free from any Security Interest except LESSOR's Liens
                and no circumstance will have so arisen whereby the Aircraft is or could become
                subject to any Security Interest or right of detention or sale in favor of the
                Aviation Authority, any airport authority, or any other authority.

24.7.17         All no-charge vendor and Manufacturer's service bulletin kits received by
                LESSEE for the Aircraft but not installed thereon will be on board the Aircraft
                as cargo.  At LESSOR's request, any other service bulletin kit which LESSEE paid
                for will also be delivered to LESSOR on board the Aircraft, but LESSOR will
                reimburse LESSEE for its actual out-of-pocket costs for such kit, unless LESSEE
                purchased such kit as part of its implementation of a service bulletin on its
                fleet of aircraft of the same type as the Aircraft but had not yet installed
                such kit on the Aircraft, in which case such kit will be furnished free of
                charge to LESSOR.

24.7.18         The Aircraft will be free of any leaks and any damage resulting therefrom.  All
                repairs will have been performed on a permanent basis in accordance with the
                applicable manufacturer's instructions.

24.7.19         The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and water) will
                be serviced to full and the waste tank serviced in accordance with Manufacturer's
                instructions.  Fuel tanks will be at least as full as at Delivery.

24.8            Checks Prior to Return.    Immediately prior to return of the Aircraft to LESSOR,
                LESSEE at its expense will do each of the following:

24.8.1          Have performed, by LESSEE or any other FAA-approved repair station, the next
                due full and complete zonal, systems and structural check ("C" or its equivalent),
                the corresponding lower checks ("A" and "B" or equivalent) and any other
                maintenance and inspections tasks, all in accordance with the then-current MPD
                (save only for those MPD tasks which are (a) non-MRB tasks (as defined in the MPD)
                and (b) which arise from information service bulletins and/or service information
                letters that relate to service bulletins and/or modifications that have not been
                incorporated in the Aircraft), sufficient to clear the Aircraft for operation
                until the next-scheduled full and complete zonal, systems and structural check
                under the then-current MPD (which in any event will not be less than fifteen (15)
                months). LESSEE will also weigh the Aircraft.  Any discrepancies revealed during
                such inspection will be corrected in accordance with Manufacturer's maintenance
                and repair manuals or FAA-approved data.  Subject to LESSEE's capacity, resources,
                and technical capability, LESSEE agrees to perform during such check any other
                work reasonably required by LESSOR (and not otherwise required under this Lease)
                and LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates.

24.8.2          Remove LESSEE's exterior markings, including all exterior paint, by stripping (or,
                at LESSOR's option, pneumatically scuff/sanding) the paint from the fuselage,
                empennage, wings and Engine cowlings, and clean, reseal, refinish, prepare
                (including application of alodine or another corrosion inhibitor) and prime the
                surfaces to be painted, all in accordance with Manufacturer's and paint
                manufacturer's recommendations.  LESSEE will then repaint the fuselage, empennage,
                wings and Engine cowlings in the colors and logo specified by LESSOR provided,
                however, that if such colors and logo are substantially more complex than those
                of LESSEE, at LESSOR's discretion, LESSOR will either (i) pay to LESSEE an amount
                equal to the incremental cost of repainting the Aircraft in such complex colors
                and logo over and above the cost of repainting the Aircraft in LESSEE's colors
                and logo at such time or (ii) permit LESSEE to return the Aircraft repainted
                white and to pay LESSOR an amount equal to the incremental cost of painting the
                colors and logo required by LESSOR's next operator, up to an amount equal to
                the amount that would have been required to paint the Aircraft in LESSEE's livery.
                Such painting will be accomplished in such a manner as to result in a uniformly
                smooth and cosmetically acceptable aerodynamic surface.  All external placards,
                signs and markings will be properly attached, free from damage, clean and legible.

24.8.3          Clean the exterior and interior of the Aircraft.

24.8.4          If reasonably requested by LESSOR, repaint the flight deck and replace placards
                of the Aircraft.

24.8.5          In accordance with Article 23.7.7, permanently repair damage to the Aircraft
                that exceeds Manufacturer's limits and replace any non-flush structural patch
                repairs installed on the Aircraft with flush-type repairs unless Manufacturer
                does not recommend a flush-type repair.

24.8.6          With LESSOR or its representatives present, perform a full and complete hot
                and cold section videotape borescope on each Engine and its modules in accordance
                with the Engine manufacturer's maintenance manual.

24.8.7          If the Engine historical and technical records and/or condition trend monitoring
                data of any Engine (including the APU, if such data are available) indicate an
                acceleration in the rate of deterioration in performance, such that the Engine
                will not meet the requirements of Article 23.9.2 in light of the Engine
                manufacturer's data, LESSEE will correct, to LESSOR's reasonable satisfaction,
                such conditions which are determined to be causing such accelerated rate
                of deterioration.

24.8.8          With LESSOR or its representatives present, accomplish a power assurance run
                (if reasonably requested by LESSOR), acceleration and bleed valve scheduling
                checks on the Engines.  LESSEE will evaluate the Engine performance and record
                the Engine power assurance test conditions and results on the Return Acceptance
                Receipt.

24.8.9          If the Engine historical and technical records, borescope inspection, trend
                monitoring and other checks specified in Article 23.8.8 reveal any condition
                which would cause the Engines or any module to be unserviceable, beyond
                serviceable limits or serviceable with an increased frequency of inspection or
                with calendar time, flight hour or flight cycle restrictions under the Engine
                manufacturer's maintenance manual LESSEE will correct such discrepancies in
                accordance with the guidelines set out by the Engine manufacturer which may be
                discovered during such inspections.

24.8.10         In the event the Engine historical and technical records, borescope inspection,
                trend monitoring and other checks specified in Article 23.8.8 result in a dispute
                regarding the conformity of an Engine with the requirements of this Article 23,
                LESSEE and LESSOR will consult with Engine manufacturer and follow Engine
                manufacturer's recommendations (including the accomplishment of an Engine test
                cell operational check) with regard to determining if such Engine complies with
                the requirements of this Article 23 and the manner in which any discrepancies
                from the requirements of this Article 23 will be rectified.

24.9            Part Lives.    SEE PARAGRAPH 17 OF EXHIBIT C.

24.9.1          SEE PARAGRAPH 17(a) OF EXHIBIT C.

24.9.2          SEE PARAGRAPH 17(b) OF EXHIBIT C.

                (a)    SEE PARAGRAPH 17(b)(i) OF EXHIBIT C.

                (b)    SEE PARAGRAPH 17(b)(ii) OF EXHIBIT C.

                (c)    SEE PARAGRAPH 17(b)(iii) OF EXHIBIT C.

                (d)    SEE PARAGRAPH 17(b)(iv) OF EXHIBIT C.

                (e)    SEE PARAGRAPH 17(b)(v) OF EXHIBIT C.

24.9.3          SEE PARAGRAPH 17(c) OF EXHIBIT C.

24.9.4          SEE PARAGRAPH 17(d) OF EXHIBIT C.

24.9.5          SEE PARAGRAPH 17(e) OF EXHIBIT C.

                (a)    SEE PARAGRAPH 17(e)(i) OF EXHIBIT C.

                (b)    SEE PARAGRAPH 17(e)(ii) OF EXHIBIT C.

                (c)    SEE PARAGRAPH 17(e)(iii) OF EXHIBIT C.

24.9.6          SEE PARAGRAPH 17(f) OF EXHIBIT C.

                (a)    SEE PARAGRAPH 17(f)(i) OF EXHIBIT C.

                (b)    SEE PARAGRAPH 17(f)(ii) OF EXHIBIT C.

                (c)    SEE PARAGRAPH 17(f)(iii) OF EXHIBIT C.

24.9.7          SEE PARAGRAPH 17(g) OF EXHIBIT C.

24.9.8          SEE PARAGRAPH 17(h) OF EXHIBIT C.

24.9.9          SEE PARAGRAPH 17(i) OF EXHIBIT C.

24.10           Export and Deregistration of Aircraft.    At LESSOR's request by notice at
least fifteen (15) days prior to the Expiration Date, LESSEE will (a) pursuant to the terms of
Article 23.6.3, provide an Export Certificate of Airworthiness or its equivalent from the State
of Registration for the country designated by LESSOR, (b) assist with deregistration of the
Aircraft from the register of aircraft in the State of Registration, and (c) perform any other
acts reasonably required by LESSOR in connection with such deregistration.

24.11           LESSEE's Continuing Obligations.    In the event that LESSEE does not return
the Aircraft to LESSOR on the Expiration Date and in the condition required by this Article 23
for any reason (whether or not the reason is within LESSEE's control):

24.11.1         the obligations of LESSEE under this Lease will continue in full force and effect
                on a day-to-day basis until such return.  This will not be considered a waiver of
                LESSEE's Event of Default or any right of LESSOR hereunder.

24.11.2         Until such return, the Agreed Value will be an amount equal to the Agreed Value
                on the day the Aircraft should have been returned to LESSOR pursuant to this Lease.

24.11.3         SEE PARAGRAPH 18 OF EXHIBIT C.

24.11.4         LESSOR may elect, in its sole and absolute discretion, to accept the return of
                the Aircraft prior to the Aircraft being put in the condition required by this
                Article 23 and thereafter have any such non-conformance corrected at such time
                as LESSOR may deem appropriate (but within ninety (90) days following the return
                of the Aircraft) and at commercial rates then-charged by the Person selected by
                LESSOR to perform such correction.  Any direct and reasonable expenses incurred
                by LESSOR for such correction will become additional Rent payable by LESSEE
                within fifteen (15) days following the submission of a written statement by
                LESSOR to LESSEE, identifying the items corrected and setting forth the expense
                of such corrections in reasonable detail.  LESSEE's obligation to pay such
                supplemental Rent will survive the Termination Date.

24.12           Airport and Navigation Charges.    LESSEE will ensure that at return of the
Aircraft any and all airport, navigation and other charges which give rise or would if unpaid
give rise to any lien, right of detention, right of sale or other Security Interest in relation
to the Aircraft, Engine or any Part have been paid and discharged in full and will at LESSOR's
request produce evidence thereof reasonably satisfactory to LESSOR.

24.13           Return Acceptance Certificate.    Upon return of the Aircraft in accordance
with the terms of this Lease, LESSEE will promptly prepare and execute two (2) Return Acceptance
Certificates in the form and substance of Exhibit K and LESSOR will countersign and return one
such Return Acceptance Certificate to LESSEE.  In addition, LESSEE and LESSOR will execute a
Lease Termination for filing with the FAA evidencing termination of this Lease.

24.14           Indemnities and Insurance.    The indemnities and insurance requirements set
forth in Articles 17 and 18, respectively, will apply to Indemnitees and LESSOR's representatives
during return of the Aircraft, including the ground inspection and acceptance flight.  With
respect to the acceptance flight, LESSOR's representatives will receive the same protections as
LESSOR on LESSEE's Aviation and Airline General Third Party Liability Insurance.

24.15           Civil Reserve Air Fleet.

24.15.1         LESSEE may transfer possession of the Aircraft to the United States of America
                or any instrumentality or agency thereof as part of the Civil Reserve Air Fleet
                Program authorized under 10 U.S.C.ss.9511 et seq. (or any substantially similar
                program) ("CRAF Program") for a period which includes (collectively, the "CRAF
                Program Requisition Period")

                (a) the entire period of requisition under the CRAF Program and (b) an additional
                six (6) months after the expiration of the requisition under the CRAF Program.
                If the CRAF Program Requisition Period extends beyond the Expiration Date provided
                by this Lease, then the Lease will be deemed to continue until the end of the CRAF
                Program Requisition Period at a monthly rental rate equal to the monthly rental
                rate in effect at the end of the Lease Term and the Expiration Date will be deemed
                to be the end of the CRAF Program Requisition Period.  If the Aircraft is
                requisitioned under the CRAF Program for a period which extends beyond the Lease
                Term, then LESSEE will provide LESSOR with written notice of the proposed
                redelivery at least six (6) months prior to such redelivery date and LESSEE must
                return the Aircraft in the condition required by Article 23 on the redelivery
                date set forth in such written notice.

24.15.2         LESSEE will promptly notify LESSOR in writing in the event of the requisition
                for use of the Aircraft under CRAF activation by the U.S. Government.  All of
                LESSEE's obligations under this Lease will continue to the same extent as if
                such requisition had not occurred.

24.15.3         Any provisions of this Lease to the contrary notwithstanding, if there is a
                requisition for use of the Aircraft pursuant to the CRAF Program and/or CRAF
                activation, LESSOR agrees that LESSEE's insurances described in Exhibit E may
                be supplemented or replaced by insurances provided under Title XIII of the Act,
                and/or U.S. Government indemnification (which Title XIII insurances and
                indemnification will be, as to the Aircraft, in an amount not less than the Agreed
                Value and, as to all other insurances, in amounts not less than those established
                in Exhibit C); provided, however, that LESSEE will remain responsible for full
                compliance with all the provisions of this Lease, including Articles 17 and 19,
                to the extent Title XIII and/or the U.S. Government indemnification do not
                satisfy LESSEE's obligations under this Lease.






24.15.4         If there is a requisition for use of the Aircraft pursuant to the CRAF Program
                and/or CRAF activation, there will be no limitation on the geographic area in
                which the Aircraft may be operated so long as, taken as a whole, LESSEE's
                insurance, the Title XIII insurance and/or the indemnification provided by the
                U.S. Government fully cover (without any geographic exclusions) LESSEE's Exhibit
                E insurance requirements.

24.15.5         If an Event of Default occurs under this Lease and LESSOR elects to pursue its
                remedies under Article 25.3.5 to terminate this Lease and repossess the Aircraft,
                LESSOR will so notify the U.S. Government by sending a written communication with
                a copy to LESSEE as follows:

                       Headquarters Air Mobility Command
                       AMC Contracting Office-- XOKA
                       Scott Air Force Base, Illinois 62225-5007

                or such other location as may be directed from time to time during the Lease Term.

24.15.6         So long as no Event of Default has occurred and is continuing, all payments
                received by LESSOR or LESSEE from such Government Entity in connection with the
                requisition of the Aircraft under the CRAF Program (except payments on account
                of a Total Loss of the Aircraft) will be paid over to or retained by LESSEE.  If
                an Event of Default has occurred and is continuing, all payments received by
                LESSEE or LESSOR from such Government Entity in connection with the requisition
                of the Aircraft under the CRAF Program may be used by LESSOR to satisfy any
                obligations owing by LESSEE.






         ARTICLE 25           ASSIGNMENT


25.1            No Assignment by LESSEE.    EXCEPT AS EXPRESSLY PERMITTED BY ARTICLE 11 OR
ARTICLE 20.2.3, NO ASSIGNMENT, NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY BE MADE BY
LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE AIRCRAFT, ENGINE OR PART OR THIS LEASE.

25.2            Sale or Assignment by LESSOR.

25.2.1          Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time and
                without LESSEE's consent sell, assign or transfer its rights, interest and
                obligations hereunder, under any other Operative Document, or with respect to the
                Aircraft to a Permitted Transferee; provided, however, that no such transfer shall
               (a) cause any added expenses, costs or liabilities to LESSEE, (b) materially increase
                LESSEE's obligations hereunder (including but not limited to LESSEE's liabilities
                or obligations pursuant to Articles 16 or 17), or (c) materially adversely affect
                LESSEE's rights under this Lease.  For a period of two (2) years after such sale
                or assignment and at LESSEE's cost, LESSEE will continue to name LESSOR as an
                additional insured under the Aviation and Airline General Third Party Liability
                Insurance specified in Exhibit E.

25.2.2          The term "LESSOR" as used in this Lease means the lessor of the Aircraft at the
                time in question.  In the event of the sale of the Aircraft and transfer of
                LESSOR's rights and obligations under this Lease to a Permitted Transferee, such
                Permitted Transferee will become "LESSOR" of the Aircraft under this Lease and
                the transferring party (the prior "LESSOR") will be relieved of all liability to
                LESSEE under this Lease for obligations arising on and after the date the Aircraft
                is sold.  LESSEE will acknowledge and accept the Permitted Transferee as the new
                "LESSOR" under this Lease and will look solely to the Permitted Transferee for
                the performance of all LESSOR obligations and covenants under this Lease arising
                on and after the Aircraft sale date.

25.3            LESSOR's Lender.    Subject to LESSEE's rights pursuant to this Lease, LESSOR may
at any time and without LESSEE's consent grant security interests over the Aircraft and assign the
benefit of this Lease to a lender ("LESSOR's Lender") as security for LESSOR's obligations to
LESSOR's Lender.






25.4            LESSEE Cooperation.    On request by LESSOR, LESSEE will execute all such
documents (such as a consent to a lease assignment agreement) as LESSOR may reasonably require
to confirm LESSEE's obligations under this Lease and obtain LESSEE's acknowledgment that LESSOR
is not in breach of the Lease.  LESSEE will provide all other reasonable assistance and
cooperation to LESSOR in connection with any such sale or assignment or the perfection and
maintenance of any such security interest, including, at LESSOR's cost, making all necessary
filings and registrations in the State of Registration and providing all opinions of counsel
with respect to matters reasonably requested by LESSOR.  LESSOR will reimburse LESSEE for its
reasonable out-of-pocket costs and expenses (including reasonable legal fees) in reviewing
documents required by LESSOR and cooperating with a transfer pursuant to this ARTICLE 24.

25.5            Protections.

25.5.1          LESSOR will obtain for the benefit of LESSEE a written acknowledgment from any
                Permitted Transferee or LESSOR's Lender that, so long as no Event of Default
                has occurred and is continuing hereunder, neither such Person nor any Person
                claiming by, through or under such Person will not interfere with LESSEE's quiet,
                peaceful use and enjoyment of the Aircraft.

25.5.2          Wherever the term "LESSOR" is used in this Lease in relation to any of the
                provisions relating to disclaimer, title and registration, indemnity and insurance
                contained in Articles 8, 14, 17 and 18, respectively, or with respect to Article
                20.2.6, the term "LESSOR" will be deemed to include any Permitted Transferee and
                its lenders, if applicable. For avoidance of doubt, in the event of LESSOR's sale
                or financing of the Aircraft, the disclaimer and indemnity provisions contained
                in Articles 8 and 17 will continue to be applicable after the sale or assignment
                to International Lease Finance Corporation, as well as being applicable to any
                Permitted Transferee and its lenders.





         ARTICLE 26           DEFAULT OF LESSEE


26.1            LESSEE Notice to LESSOR.    LESSEE will promptly notify LESSOR if LESSEE becomes
aware of the occurrence of any Default.

26.2            Events of Default.    [SEE PARAGRAPH 19 OF EXHIBIT C]

26.3            LESSOR's General Rights.    Upon the occurrence and continuance of any Event of
Default, LESSOR may do all or any of the following at its option (in addition to such other rights
and remedies which LESSOR may have by statute or otherwise but subject to any requirements of
applicable Law):

26.3.1          terminate this Lease by giving written notice to LESSEE;

26.3.2          require that LESSEE immediately move the Aircraft to an airport or other location
                designated by LESSOR;

26.3.3          for LESSEE's account, do anything that may reasonably be required to cure any
                default and recover from LESSEE all reasonable costs, including legal fees and
                expenses incurred in doing so and Default Interest;

26.3.4          proceed as appropriate to enforce performance of this Lease and to recover any
                damages for the breach hereof, including the amounts specified in Article 25.5;

26.3.5          terminate this Lease by taking possession of the Aircraft or by serving notice
                requiring LESSEE to return the Aircraft to LESSOR at the location specified by
                LESSOR.  If LESSOR takes possession of the Aircraft, it may enter upon LESSEE's
                premises where the Aircraft is located as permitted by applicable law.  Upon
                repossession of the Aircraft, LESSOR will then be entitled to sell, lease or
                otherwise deal with the Aircraft as if this Lease had never been made.  LESSOR
                will be entitled to the full benefit of its bargain with LESSEE as permitted by
                applicable Law; or

26.3.6          apply all or any portion of the Security Deposit and any other security deposits
                held by LESSOR pursuant to any other agreements between LESSOR and LESSEE to
                any amounts due.






26.4            Deregistration and Export of Aircraft.    If an Event of Default has occurred
and is continuing, LESSOR may take all steps necessary to deregister the Aircraft in and export
the Aircraft from the State of Registration.

26.5            LESSEE Liability for Damages.    Upon the occurrence and during the continuance
of an Event of Default, in addition to all other remedies available at law or in equity, LESSOR
has the right to recover from LESSEE and LESSEE will pay LESSOR within two (2) Business Days
after LESSOR's written demand, all of the following:

                (a)    all amounts which are then due and unpaid hereunder and which become due
                prior to the earlier of LESSOR's recovery of possession of the Aircraft or
                LESSEE making an effective tender thereof;

                (b)    subject to LESSOR's obligations at Law to mitigate its damages, any
                losses suffered by LESSOR because of LESSOR's inability to place the Aircraft
                on lease with another lessee or to otherwise utilize the Aircraft on financial
                terms as favorable to LESSOR as the terms hereof or, if LESSOR elects to dispose
                of the Aircraft, the funds arising from a sale or other disposition of the
                Aircraft are not as profitable to LESSOR as leasing the Aircraft in accordance
                with the terms hereof would have been (and LESSOR will be entitled to accelerate
                any and all Rent which would have been due from the date of LESSOR's recovery or
                repossession of the Aircraft through the Expiration Date);

                (c)    all costs associated with LESSOR's exercise of its remedies hereunder,
                including but not limited to repossession costs, legal fees, Aircraft storage
                costs and Aircraft re-lease or sale costs;

                (d)    any amount of principal, interest, fees or other sums paid or payable on
                account of funds borrowed in order to carry any unpaid amount;

                (e)    any loss, premium, penalty or expense which may be incurred in repaying
                funds raised to finance the Aircraft or in unwinding any financial instrument
                relating in whole or in part to LESSOR's financing of the Aircraft;

                (f)    direct expenses incurred by LESSOR to correct non-conformance of the
                Aircraft with return conditions in accordance with Article 23.11.4; and

                (g)    an amount sufficient to fully compensate LESSOR for any loss of or damage
                to the Aircraft caused by LESSEE's default.






26.6            Waiver of Default.    By written notice to LESSEE, LESSOR may at its election
waive any Default or Event of Default and its consequences and rescind and annul any prior notice
of termination of this Lease.  The respective rights of the parties will then be as they would
have been had no Default or Event of Default occurred and no such notice been given.

26.7            Present Value of Payments.    In calculating LESSOR's damages hereunder, upon
an Event of Default all Rent and other amounts which would have been due hereunder during the
Lease Term if an Event of Default had not occurred will be calculated on a present value basis
using a discounting rate of six percent (6%) per annum discounted to the earlier of the date on
which LESSOR obtains possession of the Aircraft or LESSEE makes an effective tender thereof.

26.8            Use of "Termination Date.    For avoidance of doubt, it is agreed that if this
Lease terminates and the Aircraft is repossessed by LESSOR due to an Event of Default, then,
notwithstanding the use of the term "Termination Date" in this Lease, the period of the Lease
Term and the "Expiration Date" will be utilized in calculating the damages to which LESSOR is
entitled pursuant to Article 25.5.  For example, it is agreed and understood that LESSOR is
entitled to receive from LESSEE the Rent and the benefit of LESSEE's insurance and maintenance
of the Aircraft until expiration of the Lease Term.

26.9            LESSEE's Remedies.    Except as otherwise set forth in the Operative Documents,
upon a breach by LESSOR of any of the terms and conditions of this Lease, LESSEE shall have all
rights available at law or in equity.

26.10           Waiver of Consequential Damages.    LESSEE and LESSOR each agree that it shall
not be entitled to recover, and hereby disclaims and waives any right that it may otherwise have
to recover, any special, indirect, incidental or consequential damages as a result of any breach
or alleged breach by the other party of any of the agreements, representations or warranties
contained in this Lease or the other Operative Documents; provided, however, that nothing herein
shall be deemed to disclaim or waive any of LESSOR's remedies expressly set forth in Article 25.3.






         ARTICLE 27           NOTICES


27.1            Manner of Sending Notices.    Any notice, request or information required or
permissible under this Lease will be in writing and in English.  Notices will be delivered in
person or sent by fax, certified letter with return receipt requested, or by expedited delivery
addressed to the parties as set forth in Article 26.2.  In the case of a fax, notice will be
deemed received upon actual receipt (and the date of actual receipt will be deemed to be the
date set forth on the confirmation of receipt produced by the sender's fax machine immediately
after the fax is sent).  In the case of a certified letter, notice will be deemed received on the
date indicated on the return receipt.  In the case of a notice sent by expedited delivery, notice
will be deemed received on the date of delivery set forth in the records of the Person which
accomplished the delivery.  If any notice is sent by more than one of the above listed methods,
notice will be deemed received on the earliest possible date in accordance with the above provisions.

27.2            Notice Information.    Notices will be sent:

                If to LESSOR:       INTERNATIONAL LEASE FINANCE CORPORATION
                                    [Until January 31, 2004]
                                    1999 Avenue of the Stars, 39th Floor
                                    Los Angeles, California 90067-6049
                                    U.S.A.
                                    [On and after February 1, 2004]
                                    10250 Constellation Boulevard, 34th Floor
                                    Los Angeles, California 90067-6234
                                    U.S.A.

                                    Attention:      Legal Department

                                    Fax:            [SEE PARAGRAPH 20 OF EXHIBIT C.]
                                    Telephone:      [SEE PARAGRAPH 20 OF EXHIBIT C.]

                If to LESSEE:       FRONTIER AIRLINES, INC.
                                    Frontier Center One
                                    7001 Tower Road
                                    Denver, Colorado 80249

                                    Attention:      General Counsel

                                    Fax:            [SEE PARAGRAPH 20 OF EXHIBIT C.]
                                    Telephone:      [SEE PARAGRAPH 20 OF EXHIBIT C.]

or to such other places and numbers as either party directs in writing to the other party.






         ARTICLE 28           GOVERNING LAW AND JURISDICTION



28.1            California Law.    This Lease is being delivered in the State of California and
will in all respects be governed by and construed in accordance with the Laws of the State of
California (notwithstanding the conflict Laws of the State of California).

28.2            Non-Exclusive Jurisdiction in California.    As permitted by Section 410.40 of
the California Code of Civil Procedure, the parties hereby irrevocably submit to the non-exclusive
jurisdiction of the Federal District Court for the Central District of California and the State
of California Superior or Municipal Court in Los Angeles, California.  Nothing herein will prevent
either party from bringing suit in any other appropriate jurisdiction.

28.3            Service of Process.    The parties hereby consent to the service of process (a)
out of any of the courts referred to above, (b) by personal service in accordance with the California
Code of Civil Procedure, or (c) in accordance with the Hague Convention, if applicable.

28.4            Prevailing Party in Dispute.    If any legal action or other proceeding is brought
in connection with or arises out of any provisions in this Lease, the prevailing party will be
entitled to recover reasonable attorneys' fees and other actual and reasonable costs incurred
in such action or proceedings.  The prevailing party will also, to the extent permissible by Law,
be entitled to receive pre- and post-judgment Default Interest.

28.5            Waiver.    LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.  LESSEE
AND LESSOR HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS LEASE BROUGHT IN
ANY OF THE COURTS REFERRED TO IN ARTICLE 27.2, AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.






         ARTICLE 29           MISCELLANEOUS


29.1            [Redacted].    [SEE PARAGRAPH 21 OF EXHIBIT C.]

29.2            Press Releases.    The parties will give copies to one another, in advance if
possible, of all news, articles and other releases provided to the public media regarding this
Lease or the Aircraft.

29.3            LESSOR Performance for LESSEE.    The exercise by LESSOR of its remedy of
performing a LESSEE obligation hereunder is not a waiver of and will not relieve LESSEE from
the performance of such obligation at any subsequent time or from the performance of any of its
other obligations hereunder.

29.4            LESSOR's Payment Obligations.    Any obligation of LESSOR under this Lease to pay
or release any amount to LESSEE is conditioned upon and will be delayed until (a) all amounts then
due and payable by LESSEE to LESSOR under this Lease or under any other agreement between LESSOR
and LESSEE having been paid in full and (b) no payment or other material Default having occurred
and continuing hereunder at the time such payment or release of payment is payable to LESSEE.

29.5            Application of Payments.    Any amounts paid or recovered in respect of LESSEE
liabilities hereunder may be applied to Rent, Default Interest, fees or any other amount due
hereunder in such proportions, order and manner as LESSOR determines.

29.6            Usury Laws.    The parties intend to contract in strict compliance with the usury
Laws of the State of California and, to the extent applicable, the U.S.  Notwithstanding anything
to the contrary in the Operative Documents, LESSEE will not be obligated to pay Default Interest
or other interest in excess of the maximum non-usurious interest rate, as in effect from time to
time, which may by applicable Law be charged, contracted for, reserved, received or collected by
LESSOR in connection with the Operative Documents.  During any period of time in which the then-
applicable highest lawful rate is lower than the Default Interest rate, Default Interest will accrue
and be payable at such highest lawful rate; however, if at later times such highest lawful rate is
greater than the Default Interest rate, then LESSEE will pay Default Interest at the highest lawful
rate until the Default Interest which is paid by LESSEE equals the amount of interest that would
have been payable in accordance with the interest rate set forth in Article 5.7.






29.7            Delegation by LESSOR.    LESSOR may delegate to any Person(s) all or any of the
rights, powers or discretion vested in it by this Lease and any such delegation may be made upon
such terms and conditions as LESSOR in its absolute discretion thinks fit, provided that no such
delegation shall relieve LESSOR of any of its obligations hereunder.

29.8            Rights of Parties.    The rights of the parties hereunder are cumulative, not
exclusive, may be exercised as often as each party considers appropriate and are in addition to
its rights under general Law.  The rights of one party against the other party are not capable
of being waived or amended except by an express waiver or amendment in writing.  Any failure to
exercise or any delay in exercising any of such rights will not operate as a waiver or amendment
of that or any other such right any defective or partial exercise of any such rights will not
preclude any other or further exercise of that or any other such right and no act or course of
conduct or negotiation on a party's part or on its behalf will in any way preclude such party
from exercising any such right or constitute a suspension or any amendment of any such right.

29.9            Further Assurances.    Each party agrees from time to time to do and perform
such other and further acts and execute and deliver any and all such other instruments as may be
required by Law or reasonably requested by the other party to establish, maintain or protect the
rights and remedies of the requesting party or to carry out and effect the intent and purpose of
this Lease.

29.10           Use of Word "including".    The term "including" is used herein without limitation.

29.11           Headings.    All article and paragraph headings and captions are purely for
convenience and will not affect the interpretation of this Lease.  Any reference to a specific
article, paragraph or section will be interpreted as a reference to such article, paragraph or
section of this Lease.

29.12           Invalidity of Any Provision.    If any of the provisions of this Lease become
invalid, illegal or unenforceable in any respect under any Law, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or impaired.

29.13           Time Is of the Essence.    Time is of the essence in the performance of all
obligations of the parties under this Lease and, consequently, all time limitations set forth in
the provisions of this Lease will be strictly observed.

29.14           Amendments in Writing.    The provisions of this Lease may only be amended or
modified by a writing executed by LESSOR and LESSEE.






29.15           Counterparts.    This Lease may be executed in any number of identical counterparts,
each of which will be deemed to be an original, and all of which together will be deemed to be
one and the same instrument when each party has signed and delivered one such counterpart to the
other party.

29.16           Delivery of Documents by Fax.    Delivery of an executed counterpart of this Lease
or of any other documents in connection with this Lease by fax will be deemed as effective as
delivery of an originally executed counterpart.  Any party delivering an executed counterpart of
this Lease or other document by fax will also deliver an originally executed counterpart, but the
failure of any party to deliver an originally executed counterpart of this Lease or such other
document will not affect the validity or effectiveness of this Lease or such other document.

29.17           Entire Agreement.    The Operative Documents constitute the entire agreement
between the parties in relation to the leasing of the Aircraft by LESSOR to LESSEE and
supersede all previous proposals, agreements and other written and oral communications in relation
hereto.  The parties acknowledge that there have been no representations, warranties, promises,
guarantees or agreements, express or implied, except as set forth herein.


29.18           Expenses.    Each party shall be responsible for its own expenses in connection
with the drafting, negotiation, execution and delivery of this Lease and the other Operative
Documents.







                IN WITNESS WHEREOF, LESSEE and LESSOR have caused this Lease to be executed by
their respective officers as of December 5, 2003.

INTERNATIONAL LEASE FINANCE CORPORATION                      FRONTIER AIRLINES, INC.


By:                                                          By:

Its:                                                         Its:





         EXHIBIT A            AIRCRAFT DESCRIPTION

Aircraft Manufacturer and Model:           Airbus A319-111

Specification:                             Airframe:  Airbus A319, Standard Specification J 000
                                           01000, Issue 4.0, dated January 1998, as more fully
                                           described in Schedule 1 hereto

                                           Engine Manufacturer and Model: CFM56-5B5/P

Manufacturer's Serial Number:              2198

Registration Mark:                         N_____

Engine Serial Numbers:                     To be identified in the Estoppel and Acceptance Certificate

Engine Thrust Rating:                      22,000 pounds





                                               SCHEDULE 1 TO EXHIBIT A

     AIRLINE : Frontier A319-100
     MSN 2198, 2209 & 2241 and on
     STANDARD SPECIFICATION :  J 000 01000 , ISSUE : 4.0 , DATED : Jan 1998
     SCN LISTING:

           RFC        SCN OR RMO             TITLE                                ST
     ATA              02                  CERTIFICATION
     02J001A          02J1014901S1A       CERTIFICATION OF SEATS IN ACCORDANCE
                                          TO FAA/CAA REQUIREMENTS                 AC
     02J002A          02J4010101S1A       EXTERNAL LIVERY                         AC
     02J003A          02J1211701S2A       AIRCRAFT COMPLIANCE WITH FAR 121        AC
     02J004A          02J2010117S1A       EMERGENCY EQUIPMENT - CHANGE BFE
                                          INTO SFE (FFT*A)                        AC
     02J005A          02J1000102S2A       CABIN CONFIGURATION FOR NON-SMOKING
                                          FLIGHTS (ONLY CAM PROGRAMMING)          AC
                                          PROGRAMMING)
     02J006A          02J4016021S1A       EXTERNAL LIVERY - NOSE LANDING GEAR
                                          TOWING ANGLE MARKINGS                   AC
     02J008A          02J1214001S2A       COMPLIANCE WITH FAR 121.344             AC
     02J009A          02J4010917S1A       EXTERNAL LIVERY - NEW PHRASE FOR
                                          FRONTIER A318/A319                      AC
     02J1011101A      02J1011101S2A       FAA CERTIFICATION                       AC
     02J1012001A      02J1012001S1A       15 KNOTS TAILWIND CERTIFICATION
                                          AT TAKE-OFF                             AC
     02J001FY                             LOOSE EQUIPMENT LIST                    AC
     02J002FY                             AVIONICS CHANGE INTO BFE                AC

     ATA              03                  WEIGHTS
     03J2022008A      03J2022008S1A       INCREASED MTOW TO 70.0 T (ASSOCIATED
                                          WITH CFM 56-5B5/_P ENGINES)             AC

     ATA              11                  PLACARDS AND MARKINGS
     11J001A          11J3013001S1A       NO SMOKING PLACARDS AT SEATS AND
                                          WINDSCREENS                             AC
     11J002A                              INSTALLATION OF LEASING PLATES
                                          ON ENGINES AND DOOR FRAME               AC
     11J3011004A      11J3011004S1A       MONOLINGUAL PASSENGER PLACARDS AND
                                          SIGNS - ENGLISH ONLY                    AC
     11J001FY                             ALL IDENTIFICATION PLATES ON FWD
                                          LH UPPER PASSENGER/CREW/SERVICE
                                          DOOR FRAME                              AC
     11J002FY                             COCKPIT IDENTIFICATION PLATE ON
                                          LAVATORY PARTITION                      AC
     11J003FY                             LESSOR IDENTIFICATION PLATES ON
                                          COCKPIT REAR PARTITION AND ENGINES
                                          (SIZE 4" X 6")                          AC
     11J004FY                             ENGINE DANGER AREA DECALS - CFMI
                                          ENGINES                                 AC





     11J005FY                             ENGINE DANGER AREA DECALS - FEET AND
                                          METRIC DISTANCES                        AC
     11J006FY                             EMERGENCY EXIT "PUSH" MARKING
                                          PAINTING IN WHITE                       AC
     11J007FY                             OXYGEN SUPPLY SYSTEM LABEL CHANGE       AC
     11J3013601FY                         US AND METRIC UNITS FOR CARGO
                                          COMPARTMENT HEIGHT PLACARDS             AC

     ATA              21                  AIR CONDITIONING
     21J001A          21J2710801S1A       AVIONICS VENTILATION AIR FILTER
                                          ALTERNATE EQUIPMENT - PALL APME         AC
     21J2821001A      21J2821001S1A       INSTALLATION OF VENTILATION SYSTEM
                                          FOR COMPLETE AFT CARGO HOLD             AC
     21J4320401A      21J4320401S1A       INSTALLATION OF HEATING SYSTEM FOR
                                          COMPLETE AFT CARGO                      AC

     21J7010903A      21J7010903S1A       INSTALLATION OF OZONE CATALYTIC
                                          CONVERTERS - ENGELHARDT                 AC

     ATA              22                  AUTO FLIGHT
     22J7010003A      22J7010003S1A       FM KITS/MCDUS - SEXTANT/SMITHS
                                          ASSOCIATED WITH CFMI ENGINES            AC

     ATA              23                  COMMUNICATIONS
     23J0013212A      23J0013212S1A       AUTOMATIC PROGRAMMABLE ELT ASSOCIATED
                                          WITH REMOTE CONTROL PANEL IN COCKPIT
                                          - SEXTANT                               AC
     23J002A          23J3600100G1A       ENTERTAINMENT SYSTEM                    AC
     23J003A          23J7300100G1A       CIDS CHANGES                            AC
     23J007A          23J3611502S1A       INSTALLATION OF TV SYSTEM COMPONENTS
                                          IN PASSENGER SEATS - LIVE TV (FFT)      AC
     23J1213002A      23J1213002S1A       VHF DATA RADIO (VDR) ALTERNATE
                                          EQUIPMENT - ALLIEDSIGNAL                AC
     23J5113616A      23J5113616S1A       BOOMSETS ALTERNATE EQUIPMENT -
                                          TELEX AIRMAN 750                        AC

     ATA              24                  ELECTRICAL POWER

     24J002A          24J0010001S1A       INSTALLATION OF THE ENHANCED EPGS
                                          ON AIRCRAFT FITTED WITH CFMI ENGINES    AC
     24J0033501A      24J0033501S1A       INSTALLATION OF ADDITIONAL ELECTRICAL
                                          OUTLETS 115V/60HZ                       AC

     ATA              25                  CABIN & COCKPIT
     25J001A         25J2000100G2A        CABIN LAYOUT DEFINITION                 AC
     25J002A          25J2350001S1A       INTERIOR COLOR SCHEME DEFINITION        AC
     25J003A          25J6311002S1A       ADDITIONAL EVACUATION ALARM
                                          ACTIVATION FROM AFT CABIN ATTENDANT
                                          STATION                                 AC
     25J004A          25J2316102S1A       BUMPER PROFILE FOR SLIDE DECORATED
                                          COVER                                   AC
     25J005A          25J6550003S1A       CABIN EMERGENCY EQUIPMENT               AC
     25J006A          25J2212805S1A       ADDITIONAL BUMPER PROFILE ON SWIVEL
                                          CABIN ATTENDANT SEAT                    AC
     25J007A          25J2732101S1A       PROVISIONS FOR WALL-MOUNTED BABY
                                          BASSINET (OUTBOARD POSITION)            AC
     25J008A          25J2614006S1A       INSTALLATION OF CRANKED WINDSCREEN
                                          (SFE) LH                                AC
     25J009A          25J2614007S1A       INSTALLATION OF CRANKED WINDSCREEN
                                          (SFE) RH                                AC
     25J010A          25J2729907S1A       PROVISIONS FOR INSTALLATION OF A
                                          WHEELCHAIR AT AFT FACING WALL OF LAV E  AC
     25J012A          25J6514302S1A       INSTALLATION OF MEDICAL KIT IN
                                          COCKPIT - MAJESTIC AEROTECH             AC
     25J013A          25J2810111S1A       ALTERNATE NTF - LONSEAL (BFE)           AC
     25J015A          25J2034738S1A       PASSENGER COMPARTMENT RECONFIGURATION
                                          FOR FFT*A                               AC
     25J016A          25J2310214S1A       COLOR CHANGE OF LAVATORY FLOOR PAN
                                          AND PELMETS IN EXIT AREA                AC
     25J018A          25J5013701S1A       INSTALLATION OF RUBBER SEAL PROFILES
                                          FOR FLOOR PANELS IN FWD AND AFT CARGO
                                          HOLDS                                   AC
     25J019A          25J2062322S2A       REMOVAL OF WHEEL CHAIR PROVISIONS
                                          FROM LAVATORY E                         AC
     25J026A         25J5018902S1A        DECOMPRESSION PANEL PROTECTION FOR
                                          HEAVY BULK USAGE                        AC
     25J027A          25J2117559S1A       PASSENGER SEATS P/N CHANGE (LIFE TV)    AC
     25J030A          25J3510307S1A       INSTALLATION OF COFFEE MAKER - CSI      AC
     25J1120801A      25J1120801S1A       INSTALLATION OF FOURTH OCCUPANT SEAT
                                          IN COCKPIT - SOCEA                      AC
     25J5018401A      25J5018401S1A       REINFORCED FLOOR PANELS IN FWD & AFT
                                          CARGO HOLD ASSOCIATED WITH STD BULK
                                          CONFIGURATION                           AC
     25J001FY                             ADDITIONAL BUMPER STRIPS ON C/A SEATS
                                          AT FORWARD AND AFT PASSENGER/CREW/
                                          SERVICE DOOR                            AC
     25J002FY                             FROM DISPERSION-ADHESIVE TO DOUBLE-
                                          SIDED ADHESIVE TAPE                     AC
     25J004FY                             DISK STOWAGE RELOCATION IN COCKPIT
                                          COAT STOWAGE                            AC

     ATA              28                  FUEL SYSTEM
     28J2513001A      28J2513001S1A       RELOCATION OF THE REFUELING PANEL
                                          TO THE RIGHT WING ADJACENT TO THE
                                          REFUEL COUPLING                         AC

     ATA              31                  INDICATING/RECORDING
     31J0010701A      31J0010701S1A       DEFINTION OF UNITS - USE OF US UNITS
                                          IN PLACE OF METRIC UNITS                AC
     31J3320014A      31J3320014S1A       SSFDR ALTERNATE EQUIPMENT -
                                          ALLIEDSIGNAL (256 W/S)                  AC
     31J5210202A      31J5210202S1A       ECAM OEB REMINDER FUNCTION ACTIVATION   AC

     ATA              32                  LANDING GEAR
     32J001A         32J1010501S1A        SMALL BORE INFLATION VALVES WITH
                                          INDICATOR ON NLG & MLG BF GOODRICH
                                          WHEELS                                  AC
     32J4011315A     32J4011315S1A        WHEELS AND BRAKES ALTERNATE EQUIPMENT
                                          (TYPE SEPCARB III) - BF GOODRICH        AC

     ATA              33                  LIGHTS
     33J001A          33J2616601S1A       EVACUATION ALARM GUARDED SWITCHES
                                          (FWD AND AFT)                           AC
     33J5010011A      33J5010011S1A       SEAT-MOUNTED EEPMS - BRUCE WITH TWO
                                          BULBS PER LAMP MODULE                   AC

     ATA              34                  NAVIGATION
     34J001A         34J2020202S1A        INSTALLATION OF ISIS - SEXTANT          AC
     34J003A          34J4211009S1A       RADIO ALTITUDE AUTOMATIC CALL-OUT
                                          CHANGES FOR FFT*A                       AC
     34J004A         34J2020302S1A        ISIS OPTIONAL FUNCTION - BARO
                                          SETTING IN INHG                         AC
     34J1011701A      34J1011701S1A       ADIRS 4MCU ALTERNATE EQUIPMENT -
                                          HONEYWELL                               AC
     34J2110601A      34J2110601S2A       STANDBY ALTIMETER BARO SETTING -
                                          SEXTANT AVIONIQUE                       AC
     34J4120022A      34J4120022S1A       SINGLE WEATHER RADAR SYSTEM (ARINC
                                          708A) ALTERNATE EQUIPMENT -
                                          ALLIEDSIGNAL WITH PWS ACTIVATION        AC
     34J4210109A      34J4210109S1A       RADIO ALTIMETERS - ALLIEDSIGNAL
                                          QUANTUM LINE                            AC
     34J4320002A      34J4320002S1A       TCAS BFE SELECTION - TCAS COMPUTER
                                          ALLIEDSIGNAL CHANGE 7/ ATC -
                                          ALLIEDSIGNAL                            AC
     34J5110109A      34J5110109S1A       DME INTERROGATORS - ALLIEDSIGNAL
                                          QUANTUM LINE                            AC
     34J5311103A      34J5311103S1A       ADF RECEIVER ALTERNATE EQUIPMENT -
                                          ALLIEDSIGNAL QUANTUM LINE               AC
     34J5510203A      34J5510203S1A       VOR/MARKER RECEIVERS ALTERNATE
                                          EQUIPMENT - ALLIEDSIGNAL QUANTUM LINE   AC
     34J5831311A      34J5831311S1A       MMR ALTERNATE EQUIPMENT PROVIDING
                                          ILS (FM IMMUNITY) AND GPS C1
                                          FUNCTIONS - SEXTANT                     AC

     ATA              35                  OXYGEN
     35J001A          35J3110814S1A       COCKPIT PBE- ESSEX - PN MR-10049N       AC
     35J1120102A      35J1120102S1A       COCKPIT OXYGEN CYLINDER ALTERNATE
                                          EQUIPMENT 115 CU.FT   AC (STEEL) - EROS AC
     35J2001001A      35J2001001S1A       INSTALLATION OF 4 OXYGEN MASKS PER BOX  AC

     ATA              49                  APU
     49J0010504A      49J0010504S1A       APU ALTERNATE EQUIPMENT -
                                          ALLIEDSIGNAL (131-9>A!)                 AC

     ATA              51                  STRUCTURE
     51J001A          51J2230003S1A       LOW VOC PAINT SCHEME ON FUSELAGE,
                                          VERTICAL STABILIZER AND NACELLES)- PRC  AC
     51J0xxA          51J2226121S1A       LARGE DECORATIVE ADHESIVE FILM
                                          (DECALS BFE) ON VERTICAL STABILIZER -
                                          FINELINE FFT A319-921-XX                AC
     51J2225001A      51J2225001S1A       LARGE DECORATIVE ADHESIVE FILM (BFE)    AC
     51J001FY                             APPLICATION OF WATER REPELLENT FLUID
                                          ON LH & RH WING STRUT WELLS.            AC

     ATA              52                  DOORS
     MSCN                                 REINFORCED COCKPIT DOOR                 AC

     ATA              53                  FUSELAGE
     53J001FY                             BELLY FAIRING PANELS - ADD EXTRUSION    AC

     ATA              55                  STABILIZERS
     55J001A          55J3010101S1A       VERTICAL STABILIZERS LEADING EDGE
                                          EROSION PROTECTION - STAINLESS STEEL    AC

     ATA              57                  WINGS
     57J001FY                             WING LEADING EDGE ACCESS PANELS -
                                          REMOVAL OF SEALANT                      AC

     ATA              72                  ENGINES
     72J0011211A      72J0011211S1A       CFMI ENGINES ALTERNATE EQUIPMENT -
                                          CFM56-5B5/P (SAC) ON A319-100
                                          ( 22 000 LBF NOMINAL THRUST)            AC






MSCN LISTING*:


         [*NOTE:  The following is a list of the MSCN's that, to the best of LESSOR's information
         as of the date of execution of this Lease, Manufacturer intends to incorporate into the Aircraft.
         The actual MSCN's incorporated into the Aircraft may vary as a result of decisions made by the
         Manufacturer during the manufacturing process, provided that such decisions are consistent with
         the specification and SCN's described above.]


     MSCN reference    MSCN title                                        MSCN       Applicability  MOD/MP
                                                                         status
     I2L22J8110104M1FY Auto flight - Flight Control Unit (FCU) -         Accepted   2198, 2209,    32412
                       Introduce new hardware standard with revised                 2236
                       power supply
     I2L23J5112501M1FY Communications - Audio management - Introduce     ACCEPTED   2198, 2209,    32526
                       ACP with new front face design                               2237
     I2L23J5112701M1FY Communications - Audio management - Introduce     Accepted   2198, 2209,    31296
                       new standard of Audio Management Unit (AMU)                  2238
     I2L24J2200003M1FY Electrical power - AC main generation -           Accepted   2198, 2209,    32875
                       Introduce software standard 5.1 GCU                          2239
     I2L24J2300005M1FY Electrical power - AC auxiliary generation -      Accepted   2198, 2209,    32614/P7874
                       Introduce new standard of APU generator                      2240
     I2L25J1000302M1FY Equipment/Furnishings - Cockpit - Relocate        REJECTED   N/A            31863
                       floppy disk stowage from coat stowage to side
                       consoles
     I2L25J6210004M1FY Equipment/Furnishings - Escape facilities -       ACCEPTED   2198, 2209,    33429
                       Introduce a new slide with inflation hose                    2241
                       retainer
     I2L27J2601005M1FY Flight Controls - Yaw damper actuation -          Accepted   2198, 2209,    33293
                       Introduce new standard of yaw damper                         2242
     I2L28J4210001M1FY Fuel - Quantity indicating - Introduce new        ACCEPTED   2198, 2209,    32517
                       standard of Fuel Quatity Indication Computer                 2243
                       (FQIC)
     I2L30J4200101M1FY Ice and rain protection - Windshield anti-ice     ACCEPTED   2198, 2209,    32995
                       and defogging - Introduce new standard of WHC                2244
     I2L32J1100101M1FY Landing gear - Main gear - Introduce new          ACCEPTED   2198, 2209,    33091
                       standard with serial numbers on structural                   2245
                       elements
     I2L32J2110202M1FY Landing gear - Nose gear - Introduce new design   Accepted   2198, 2209,    28919
                                                                                    2246






     I2L32J4210504M1FY Landing gear - Normal braking - Introduce L4.5    ACCEPTED   2198, 2209,    33376
                       standard of BSCU                                             2247
     I2L34J4200101M1FY Electric and electronic common installation -     ACCEPTED   2198, 2209,    33377/K8537
                       Improve sealing of radio altimeter antennas                  2248
     I2L34J4800001M1FY Navigation - Ground Proximity Warning System      Accepted   2198, 2209,    21391
                       (GPWS) - Modify push buttons and warning logic               2249
     I2L34J4812808M1FY Navigation - Enhanced Ground Proximity Warning    ACCEPTED   2198, 2209,    31374
                       System (EGPWS) - Introduce new functions                     2250
     I2L34J5710001M1FY Navigation - Radio magnetic information           Accepted   2198, 2209,    32414
                       switching and indicating - Introduce new                     2251
                       standard of DDRMI
     I2L56J1100101M1FY Windows - Fixed windows - Introduce new standard  ACCEPTED   2198, 2209,    32876
                       of windshield                                                2252
     I2L73J2200201M1FY Engine fuel and control - FADEC system -          ACCEPTED   2198, 2209,    33239
                       Introduce 5BL standard Electronic Control Unit               2253
                       (ECU)
     I2L20J4500100M1FY Standard practices - Direct connection            Accepted   2198, 2209,    31608
                       components - Introduce LED lighted pushbutton                2254
                       elect. switches
     I2L21J2600100M1FY Air conditioning - Avionics equipment             Accepted   2198, 2209,    31678
                       ventilation - Introduce -V05 standard of AEVC                2255
     I2L21J3090400M1FY Air conditioning - Pressurization control -       Accepted   2198, 2209,    26229
                       Introduce modified cabin pressure controller PN              2256
                       20791
     I2L21J5300100M1FY Air conditioning system - Pack cooling air        Accepted   2198, 2209,    28412
                       control - Introduce modified air conditioning                2257
                       pack
     I2L21J5300200M1FY Air conditioning - Pack control and indicating -  Accepted   2198, 2209,    31709
                       Introduce new standard of air conditioning pack              2258
     I2L21J6100100M1FY Air conditioning - Pack temperature control -     Accepted   2198, 2209,    28488
                       Introduce modified pack temperature control                  2259
     I2L22J8000100M1FY Autoflight - FMGC - For A319/A320/A321 with CFM   Accepted   2198, 2209,    26968
                       engines (FM version FA8 and FG version C7)                   2260
     I2L22J8100300M1FY Auto flight - Flight Control Unit - Introduce     Accepted   2198, 2209,    30357
                       FCU EM2 STD 2                                                2261
     I2L22J8200100M1FY Auto flight-MCDU-Introduce improved HONEYWELL     Accepted   2198, 2209,    28829
                       MCDU resistant to blanking (A320 specific                    2262
                       keyboard)
     I2L22J8300200M1FY Autoflight - FMGC - Install FMGC PN B546CAM0103   Accepted   2198, 2209,    31365
                       (CFMI)                                                       2263
     I2L23J1200300M1FY Communications - VHF system - Activate VHF 8.33   Accepted   2198, 2209,    27214
                       kHz channel function                                         2264





     I2L23J1300100M1FY Communications - Radio Management Panel -         Accepted   2198, 2209,    31215
                       Introduce RMP standard CA01                                  2265
     I2L23J1390200M1FY Communications - Radio management - Introduce     Accepted   2198, 2209,    26729
                       radio management panel PN -AA01                              2266
     I2L23J5100100M1FY Audio management (Integrating/Flight              Accepted   2198, 2209,    25602
                       interphone/SELCAL/Call - Introduce new hand                  2267
                       microphone
     I2L23J7300200M1FY Communications-Cabin Intercommunication Data      Accepted   2198, 2209,    28704
                       System (CIDS)- Introduce a modified DEU-B (PN                2268
                       -000720A)
     I2L23J7300400M1FY Communications - Cabin intercommunication data -  Accepted   2198, 2209,    31011
                       Introduce CIDS directore software 520A                       2269
     I2L23J7300500M1FY CIDS - Introduce LED technology for Area Call     Accepted   2198, 2209,    31015
                       Panel (ACP) and Lavatory Call Light                          2270
     I2L23J7300600M1FY Communications - Cabin Intercommunication Data    Accepted   2198, 2209,    31535
                       System (CIDS) - Introduce a modified DEU B (PN               2271
                       -820A)
     I2L23J7300700M1FY Communications - Cabin Intercommunication Data    Accepted   2198, 2209,    32101
                       System (CIDS) - Introduce director with 521A                 2272
                       software
     I2L24J0000300M1FY Electrical power - Change IFE power supplies,     Accepted   2198, 2209,    31276
                       and introduce COMMERCIAL" switch in cockpit"                 2273
     I2L24J2100100M1FY Electrical power - IDG - Introduce IDG PN         Accepted   2198, 2209,    27999
                       740119H on CFM engines                                       2274
     I2L24J2100200M1FY Electrical power - Integrated drive generator     Accepted   2198, 2209,    32004
                       system - Introduce std 5.0, GCU and GAPCU                    2275
                       software
     I2L24J3200100M1FY Electrical power - DC main generation - Install   Accepted   2198, 2209,    30737
                       TRU with capacitors disconnected                             2276
     I2L25J1000100M1FY Equipment/Furnishings - Cockpit - Relocate        Accepted   2198, 2209,    28004
                       Landing gear pins stowage box                                2277
     I2L25J1100200M1FY Equipment/furnishings-Cockpit seats-Install       Accepted   2198, 2209,    30549
                       modified third occupant seat                                 2278
     I2L25J1100300M1FY Equipment/Furnishings - Cockpit seats -           Accepted   2198, 2209,    32109
                       Introduce new Captains' and First Officers' seats            2279
     I2L25J2500100M1FY E/F-PSIU-Introduce LED technology in PSU/PSIU.    Accepted   2198, 2209,    30424
                                                                                    2280
     I2L25J2800100M1FY Equipment/Furnishings - Floor covering -          REJECTED   N/A            26606
                       Introduce a dispersion-adhesive for carpet
                       installation
     I2L25J6000100M1FY Equipment/Furnishings-Emergency-Introduce         Accepted   2198, 2209,    28103
                       modified slides with frangible link in pack                  2281
                       D31516, D31517





     I2L25J6000200M1FY E/F-Emergency-Introduce off-wing slide enclosure  Accepted   2198, 2209,    30088
                       and off-wing slides with light emitting diode                2282
                       tech.
     I2L25J6090400M1FY Equipment/Furnishings-Emergency-Introduce         Accepted   2198, 2209,    27275
                       modified off-wing slide                                      2283
     I2L25J6200100M1FY Equipment/Furnishings - Escape facilities-cabin   Accepted   2198, 2209,    31060
                       - Introduce escape slide with new decorative                 2284
                       cover
     I2L25J6500200M1FY E/F-Miscellaneous emergency eqpt - Install        Accepted   2198, 2209,    26115
                       protection gloves BENNETT SAFETYWEAR LTD PN                  2285
                       FKK8-35KL
     I2L25J6500300M1FY Equipment/Furnishings - Miscellaneous emergency   Accepted   2198, 2209,    30351
                       equipment - Introduce modified ELT antenna                   2286
     I2L25J6500500M1FY E/F - Miscellaneous emergency equipment -         Accepted   2198, 2209,    30865
                       Introduce new flashlight in the cockpit                      2287
     I2L26J1000100M1FY Fire protection-Engine and APU fire and overheat  Accepted   2198, 2209,    30547
                       detect. syst.-Introduce new FDU with improved                2288
                       tech.
     I2L26J1600100M1FY FIRE PROTECTION-C/C SMOKE DETECTION-INSTALL       Accepted   2198, 2209,    24494
                       SYSTEM PROVISION FOR AFT CARGO COMPARTMENT SYSTEM            2289
     I2L26J1600200M1FY FIRE PROTECTION-C/C SMOKE DETECTION-INSTALL       Accepted   2198, 2209,    24492
                       SYSTEM PROVISION FOR FORWARD CARGO COMPARTMENT               2290
                       SYSTEM
     I2L26J1600400M1FY Fire protection - Cargo compartment smoke         Accepted   2198, 2209,    32319
                       detection - Introduce new standard of smoke                  2291
                       detector
     I2L26J1700200M1FY Fire protection - Lavatory smoke detection -      Accepted   2198, 2209,    32320
                       Introduce new standard of smoke detector                     2292
     I2L26J2500100M1FY Fire protection - Lavatory fire extinguishing -   Accepted   2198, 2209,    32229
                       Introduce new standard for lavatory waste bin                2293
     I2L27J2000100M1FY Flight controls - Rudder - Introduce Force        Accepted   2198, 2209,    32521
                       Transducer Unit (FTU) on flight control linkage              2294
     I2L27J4400100M1FY Flight controls - THS actuation - Introduce new   Accepted   2198, 2209,    32155
                       standard of THS actuator                                     2295
     I2L27J5100100M1FY Flight controls - Slat/Flap Control Computer      Accepted   2198, 2209,    28165
                       (SFCC) - Introduce standard SFCC PN 49-170-11                2296
     I2L27J9300200M1FY Flight controls - ELAC system - Introduce ELAC    Accepted   2198, 2209,    31395
                       STD L81                                                      2297
     I2L27J9392000M1FY Flight controls - General - ELAC system -         Accepted   2198, 2209,    26910
                       Introduce ELAC with enhanced relays                          2298







     I2L28J2100100M1FY Fuel-Main fuel pump system-Introduce              Accepted   2198, 2209,    28818
                       INTERTECHNIQUE fuel pump PN P99C38-605 on SA A/C             2299
     I2L28J2100200M1FY Fuel - Main fuel pump system - Change supplier    Accepted   2198, 2209,    31956
                       of fuel pumps and canisters                                  2300
     I2L28J2200100M1FY Fuel - APU fuel pump system - Introduce a         Accepted   2198, 2209,    30707
                       modified APU fuel pump                                       2301
     I2L28J2200200M1FY Fuel-APU fuel pump system-Introduce an improved   Accepted   2198, 2209,    31747
                       fuel pump                                                    2302
     I2L28J4300100M1FY Fuel - Manual magnetic indicators - Delete        Accepted   2198, 2209,    32115
                       attitude monitor                                             2303
     I2L29J0090000M1FY Hydraulic power - General -Introduce modified     Accepted   2198, 2209,    27730
                       VICKERS electrical driven hydraulic pump PN                  2304
                       974540
     I2L29J2290800M1FY Hydraulic power - Auxiliary hydraulic power -     Accepted   2198, 2209,    27014
                       Introduce modified SUNDSTRAND RAT                            2305
     I2L29J2300100M1FY Hydraulic power - Power transfer unit -           Accepted   2198, 2209,    30627
                       Introduce HONEYWELL PTU-11                                   2306
     I2L30J4200100M1FY Ice and rain protection - Windshield anti-icing   Accepted   2198, 2209,    31463
                       and defogging - Introduce a new standard of WHC              2307
     I2L30J4590700M1FY Ice and rain protection - Windshield rain         Accepted   2198, 2209,    26963
                       protection - Activation of  rain repellent system            2308
     I2L31J3000100M1FY Indicating/Recording systems - Introduce a        Accepted   2198, 2209,    27997
                       combined FDIU/DMU                                            2309
     I2L31J3300100M1FY Indicating/Recording systems-DFDRS-Introduce a    Accepted   2198, 2209,    28226
                       linear accelerometer from vendor MAGNETEK/GENISCO            2310
     I2L31J3300200M1FY Indicating/Recording systems - Introduce wiring   Accepted   2198, 2209,    27569
                       provision for combined FDIU/DMU computer                     2311
     I2L31J3300400M1FY Indicating/Recording systems - DFDRS -            Accepted   2198, 2209,    30655
                       Introduction of SAGEM FDIU PN ED43A1D6                       2312
     I2L31J3800100M1FY Indicating recording system - Data loading -      Accepted   2198, 2209,    28110
                       Introduce a multipurpose disk drive unit PN                  2313
                       AC68A200
     I2L31J5500100M1FY Indicating/Recording systems - SDAC- Introduce    Accepted   2198, 2209,    30365
                       standard SDAC PN 350E5500202                                 2314
     I2L31J6200100M1FY Indicating/Recording systems - DMC - Define DMC   Accepted   2198, 2209,    28308
                       V40 standard                                                 2315
     I2L32J0000100M1FY Main landing gear - General - Change from 3 coat  Accepted   2198, 2209,    28222
                       to 2 coat paint scheme for A319/A320 aircraft                2316
     I2L32J2100100M1FY Landing gear - Nose gear - Introduce reinforced   Accepted   2198, 2209,    31238
                       gear                                                         2317
     I2L32J4090600M1FY LANDING GEAR-WHEELS AND BRAKES-INTRODUCE COMMON   Accepted   2198, 2209,    26965
                       BSCU STD                                                     2318






     I2L32J4100200M1FY Landing gear-Wheels-Install radial tyres 46 x 17  Accepted   2198, 2209,    28346
                       R20 on main landing gear - MICHELIN PN M01103                2319
     I2L32J4100300M1FY Landing gear - Wheels - Introduce reinforced      Accepted   2198, 2209,    27853
                       nose landing gear wheels                                     2320
     I2L32J4200100M1FY Landing gear - Nose landing gear wheels - Remove  Accepted   2198, 2209,    28482
                       rubbing strips                                               2321
     I2L32J4200300M1FY Landing gear - Normal braking - Introduce std 9   Accepted   2198, 2209,    31106
                       BSCU (Twin version)                                          2322
     I2L33J5000100M1FY Lights - Emergency lighting - Introduce LED       Accepted   2198, 2209,    30792
                       technology for cabin EXIT signs and emergency                2323
                       lights
     I2L34J1000400M1FY Navigation - ADIRS - Introduce new hardware       Accepted   2198, 2209,    30941
                       standard of Honeywell 4MCU ADIRU                             2324
     I2L34J2200100M1FY Navigation - Standby data - Altitude heading -    Accepted   2198, 2209,    28216
                       Introduce SIRS standby compass PN PG0105W                    2325
     I2L34J4800100M1FY Installation of an enhanced ground proximity      Accepted   2198, 2209,    28244
                       warning system (ALLIED SIGNAL)                               2326
     I2L34J5290400M1FY Navigation - ATC modeS" - Introduce ATC/TCAS      Accepted   2198, 2209,    27285
                       control unit PN C124-04-AB02"                                2327
     I2L46J2100400M1FY Information system - ATIMS - Upgrade ATSU         Accepted   2198, 2209,    30625
                       hardware for new ARINC 429 I/O board                         2328
     I2L51J2300100M1FY Standard practices and structures - Protective    Accepted   2198, 2209,    32006/J2294
                       treatment - Introduce low VOC paint on wing                  2329
     I2L52J5100100M1FY Doors - Cockpit door - Installation of an         Accepted   2198, 2209,    32088
                       intrusion and penetration resistant cockpit door             2330
     I2L56J1100100M1FY Windows - Front cockpit windows - Change to PPG   Accepted   2198, 2209,    22094
                       windows                                                      2331








         EXHIBIT B            SUMMARY OF TRANSACTION

         The following is a summary of the lease transaction between LESSEE and LESSOR.  It is
set forth for the convenience of the parties only and will not be deemed in any way to amend,
detract from or simplify the other provisions of this Lease.

         1.     Description of Aircraft

                One new Airbus A319-111 aircraft with two (2) installed CFM56-5B5/P engines,
                all as more particularly described on Exhibit A hereto

         2.     Scheduled Delivery Date and Location

                In the month of  [Redacted] 2004 at Hamburg, Germany

         3.     Lease Term

                [Redacted]

         4.     Security Deposit

                [Redacted]


         5.     Transaction Fee

                [Redacted]

         6.     Rent during Lease Term

                [Redacted]

         7.     Reserves

                [Redacted]

         8.     Additional Rent for Excess Airframe and Engine Cycles

                [Redacted]

         9.     Country of Aircraft Registration

                United States

         10.    Maintenance Program

                LESSEE's Maintenance Program

         11.    Agreed Value of Aircraft

                [Redacted]

         12.    LESSOR's Bank Account

                [Redacted]





         EXHIBIT C            COMMERCIAL TERMS

         [Redacted]




         EXHIBIT D            PARTICIPATION AGREEMENT


         This Participation Agreement is made this ______ day of _______________, ______ (the
"Participation Agreement")

BETWEEN

(1)      INTERNATIONAL LEASE FINANCE CORPORATION, a corporation organized and existing under the
         laws of the State of California, United States of America, having its principal corporate
         offices located at 1999 Avenue of the Stars, 39th Floor, Los Angeles, California 90067-6049,
         U.S.A. ("ILFC"); and

(2)      FRONTIER AIRLINES, INC., a Colorado corporation whose address and principal place of
         business is at Frontier Center One, 7001 Tower Road, Denver, Colorado 80249, U.S.A. ("LESSEE")

RECITALS

(A)      Pursuant to the AirbusA319-100 Purchase Agreement between ILFC and AVSA, S.A.R.L. ("AVSA")
         dated as of August 29, 1997, as further amended (the "Purchase Agreement") and the General
         Terms Agreement between ILFC and AVSA dated as of November 10, 1988 (the "G.T.A."), ILFC
         has agreed to purchase from AVSA certain Airbus A319-100 model aircraft, including the aircraft
         bearing as of today production number 4157 and scheduled for delivery in the month of April
         2004 (the "Aircraft");

(B)      Pursuant to the Product Support Agreement (Exhibit E) applicable to the Purchase Agreement
         (the "Support Agreement"), AVSA has agreed to provide certain product support to ILFC;

(C)      Pursuant to the Aircraft Lease Agreement between ILFC and LESSEE dated as of December [__],
         2003 (the "Lease Agreement"), ILFC has agreed to lease the Aircraft to LESSEE;

(D)      ILFC and LESSEE have agreed to enter into this Participation Agreement:

IT IS NOW HEREBY AGREED AS FOLLOWS:

         1.     Authorization for LESSEE to Participate.    ILFC hereby authorizes LESSEE to
participate in the following activities in connection with the delivery of the Aircraft:

                (a)    to inspect, pursuant to Clause 7.1 of the G.T.A., the manufacture of the
         Aircraft and the materials and parts thereto; and

                (b)    to attend and observe the acceptance tests of the Aircraft referred to in
         Clause 8.1 of the G.T.A.; and

                (c)    to receive, pursuant to Clause 15 of the Support Agreement, the technical
         publications set forth in Appendix 3 hereto.

         2.     Effectivity of Participation Agreement.    This Participation Agreement shall be
effective from the date hereof until the earliest of:

                (a)    the occurrence of an Event of Default as defined in the Lease Agreement;

                (b)    notification by ILFC to LESSEE of the termination hereof due to LESSEE's
                       default hereunder; or

                (c)    transfer of Aircraft title by AVSA to ILFC or its designee.

         3.     Conditions of Participation.    This Participation Agreement is made subject to
the following conditions:

                (a)    LESSEE hereby agrees to be bound by and to comply with the following
         provisions of the G.T.A. and Support Agreement (copies of which are attached hereto) as
         if LESSEE had been named "Buyer" of the Aircraft under such agreements:

                       (i)  Clauses 7.2 and 8.5 of the G.T.A. to the extent of (aa) injury to or
                death of any LESSEE representative, (bb) loss or damage to property of any LESSEE
                representatives and (cc) liabilities, damages, losses, costs and expenses of Seller,
                Manufacturer and their associated subcontractors, officers, agents and employees
                arising out of or caused by the willful misconduct or gross negligence of LESSEE's
                representatives.

                (b)    So long as this Participation Agreement is in full force and effect, LESSEE
         and not ILFC will be responsible for the liabilities and obligations set forth in section
         3(a) above.

                (c)    For avoidance of doubt, even while this Participation Agreement is in full
         force and effect, ILFC will remain responsible for compliance with Clauses 7.2 and 8.5 of
         the G.T.A. to the extent of (aa) injury to or death of any ILFC representative, (bb) loss
         or damage to property of any ILFC representative and (cc) liabilities, damages, losses,
         costs and expenses of Seller, Manufacturer and their associated subcontractors, officers,
         agents and employees arising out of or caused by the willful misconduct or gross negligence
         of ILFC's representatives.

                (d)    Except with respect to events occurring prior to termination of the
         Participation Agreement, upon termination of this Participation Agreement, ILFC shall once
         again be bound by Clauses 7.2 and 8.5 of the G.T.A.

                (e)    Other than with respect to the obligations assumed by LESSEE under this
         Participation Agreement as set forth in section 3(a) above, ILFC shall remain fully bound
         by all provisions of the Purchase Agreement, G.T.A. and Support Agreement.

                (f)    Nothing contained herein shall subject AVSA to any liability or additional
         obligations whatsoever to which it would not otherwise be subject under the Purchase Agreement,
         the G.T.A. and the Support Agreement or, except to the extent set forth in sections 3(a) and
         (b) above, modify in any respect whatsoever its contractual rights under the said agreements.

                (g)    LESSEE shall not be appointed as ILFC's agent and shall not be permitted to act
         on behalf or in place of ILFC without the express written authorization of ILFC and nothing
         contained herein shall be construed as to give such authorization.

         4.     Notification


                (a)    This Participation Agreement shall be notified to AVSA by courier service
         immediately after the execution hereof.  AVSA shall not be deemed to have received notice
         of any of the provisions hereof prior to receipt of notice as provided in this section 4(a)
         in the form of Appendix 1 hereto.

                (b)    On termination of this Participation Agreement pursuant to either section 2(a)
         or (b) hereof, ILFC shall immediately notify AVSA by courier service of such termination.
         AVSA shall not be deemed to have received notice of such termination prior to receipt of
         notice as provided in this section 4(b) in the form of Appendix 2 hereto.

                (c)    All notices and requests required or authorized under this Participation
         Agreement shall be given in writing either by personal delivery to a responsible officer
         of the party to whom the same is given or by internationally recognized courier service
         or by telefax directed as set forth below:

                ILFC shall be addressed at:

                          [Until January 31, 2004]
                          1999 Avenue of the Stars, 39th Floor
                          Los Angeles, California 90067-6049
                          U.S.A.

                          [On and after February 1, 2004]
                          10250 Constellation Boulevard, 34th Floor
                          Los Angeles, California 90067-6234
                          U.S.A.

                          Attention:       Senior Vice President--Technical

                          Fax:             310-788-1990
                          Telephone:       310-788-1999

                LESSEE shall be addressed at:

                          7001 Tower Road
                          Denver, Colorado 80249
                          U.S.A.

                          Attention:       General Counsel

                          Fax:             303-371-7007
                          Telephone:       303-371-7400

                AVSA shall be addressed at:

                          2, rond-point Maurice Bellonte
                          31 700 Blagnac
                          France

                          Attention:       Director Contracts

                          Fax:             (33) 5.61.30.40.11
                          Telephone:       (33) 5.61.30.40.12

                or at such other address or to such other person as the party receiving the
                notice or request may designate from time to time.

                Such notice or request shall be deemed to be effective in the case of (aa)
         personal delivery, on the date upon which personally delivered, (bb) delivery by courier,
         on the date of receipt or (cc) telefax transmission, on the date of confirmation of
         successful transmission.

         5.     Survival of Obligations.    The obligations of LESSEE set forth in section 3(a)
with respect to events occurring prior to termination of this Participation Agreement will survive
termination of the Participation Agreement.

         6.     Assignment.    The rights and obligations under this Participation Agreement are
personal to the parties and shall not be assigned, transferred, sold or otherwise disposed of by
either of the parties hereto.

         7.     Applicable Law and Jurisdiction.    THIS PARTICIPATION AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CHOICE OF LAW, AND THE PARTIES AGREE THAT ANY COMPETENT FEDERAL COURT LOCATED IN NEW YORK, NEW
YORK SHALL HAVE JURISDICTION OVER ANY DISPUTE ARISING IN CONNECTION HEREWITH.  Nothing in this section
will prevent either party from making a claim in a court of competent jurisdiction in California or,
if AVSA is involved, France.

         8.     Confidentiality.    Subject to any legal or governmental requirements of disclosure,
ILFC and LESSEE shall keep confidential the terms and conditions of this Participation Agreement and
the clauses from the G.T.A. and Support Agreement provided to LESSEE pursuant to this Participation
Agreement.


         IN WITNESS WHEREOF, the parties have caused this Participation Agreement to be executed on
their behalf by their duly authorized officers.


INTERNATIONAL LEASE FINANCE CORPORATION                       FRONTIER AIRLINES, INC.

By:                                                           By:
Its:                                                          Its:





                                                     APPENDIX 1

[DATE]

BY COURIER
AVSA, S.A.R.L.
2, rond-point Maurice Bellonte
31700 Blagnac

         Attention:    Director-Contracts

Re:      ILFC/FRONTIER AIRLINES, INC.: PARTICIPATION AGREEMENT

Dear Sirs,

         Pursuant to Section 4(a) of the Participation Agreement between ILFC and FRONTIER
AIRLINES, INC. dated _______________ ___, ______, we advise you that pursuant to the
Participation Agreement (a copy of which is attached hereto), FRONTIER AIRLINES, INC. has
been authorized by ILFC to participate with respect to the Aircraft.  This authorization shall
be effective on acknowledgment of this letter by you.







         We confirm for your benefit the provisions of Sections 3(c), 3(d), 3(e) and
3(f) contained therein.
                                                                  Yours faithfully,



                                                                                  
                                                                  for and on behalf of
                                                                  INTERNATIONAL LEASE
                                                                  FINANCE CORPORATION

CC:      FRONTIER AIRLINES, INC.


AVSA, S.A.R.L. confirms receipt of this notice and agrees to the terms of Section 3
of the Participation Agreement.

         By:
         Its:
         Date:







                                                     APPENDIX 2

[DATE]

BY COURIER
AVSA, S.A.R.L.
2, rond-point Maurice Bellonte
31700 Blagnac

         Attention:    Director-Contracts

Re:      ILFC/FRONTIER AIRLINES, INC.: PARTICIPATION AGREEMENT
Dear Sirs,

         Pursuant to Section 4(b) of the Participation Agreement between ILFC and FRONTIER
AIRLINES, INC. dated _______________ ___, ______, we advise you that the authorization
provided therein for FRONTIER AIRLINES, INC. is terminated with immediate effect.

                                                                  Yours faithfully,




                                                                  for and on behalf of
                                                                  INTERNATIONAL LEASE
                                                                  FINANCE CORPORATION

CC:      FRONTIER AIRLINES, INC.







                                                     APPENDIX 3


1.       TECHNICAL PUBLICATIONS

         As selected by LESSEE from the Technical Data and Documentation Index attached to
         this Appendix 3









                                       TECHNICAL DATA AND DOCUMENTATION INDEX

The following index identifies the Technical Data and Documentation provided in support of the
Aircraft.  The explanation of the table is as follows:

NOMENCLATURE                                                Self explanatory.

ABBREVIATED DESIGNATION (Abbr)                              Self explanatory.

FORM

CD-A            CD-ROM: Advanced Consultation and Navigation System
CD-P            CD-ROM: in PDF - Portable Document Format
D               DISKETTE (Floppy Disk)
DD              DIGITAL DATA.  Stands generally for SGML format on CD-ROM.
                MICROFILM.  Refers to 16mm roll film in 3M type cartridges.
P1              PRINTED ONE SIDE.  Refers to manuals in paper with print on one (1) side of the sheets only.
P2              PRINTED BOTH SIDES.  Refers to manuals with print on both sides of the sheets.
AC              Aperture Cards








TYPE             C      CUSTOMIZED.  Refers to manuals which are applicable to an individual Airbus
                        customer/operator fleet or aircraft.

                 G      GENERIC.  Refers to manuals which are for all aircraft types/models/series.
                 E      ENVELOPE.  Refers to manuals which are applicable to a whole group of Airbus customers for
                        a specific aircraft type/model/series.
                 P      PRELIMINARY.  Refers to preliminary data or manuals which may consist of either:
                        -       one-time issue not maintained by revision service, or
                        -       preliminary issues maintained by revision service until final manual or data
                                delivery, or
                        -       supply of best available data under final format with progressive completion
                                through revision service.

ATA             Manuals established with reference to ATA specification 2200 (iSpec 2200). Information
                       Standards for Aviation Maintenance.


QUANTITY (Qty)                       Self explanatory.


DELIVERY (Deliv)                     Delivery refers to scheduled delivery dates and is expressed in
                                     either the number of corresponding days prior to first Aircraft
                                     delivery, or nil (0) corresponding to the first delivery day.

                                     The number of days indicated shall be rounded up to the next regular
                                     revision release date.









         NOMENCLATURE               Abbr   Form   Type   ATA  Qty  Deliv            Comments

OPERATIONAL MANUALS AND DATA

Cabin Attendant Operating Manual    CAOM    P2       C     NO   1    90     Only provided in existing customization
Flight Crew Operating Manual        FCOM    P2       C     NO   1    90     Plus one copy per Aircraft at delivery
                                    FCOM   CD-A      C     NO   1    90
                                    FCOM    DD       C     NO   1    90     SGML data for further processing by the Buyer
Flight Manual                        FM     P1       C     NO   1     0     Plus one copy per Aircraft at delivery
Master Minimum Equipment List       MMEL    P2       C     NO   1   180     Plus one copy per Aircraft at delivery
                                    MMEL    DD       C     NO   1   180     SGML data for further processing by the Buyer
Quick Reference Handbook             QRH    P2       C     NO   1    90     Plus one copy per Aircraft at delivery
Trim Sheet                           TS     P2       C     NO   1     0
Weight and Balance Manual            WBM    P1       C    YES   1     0     For the WBM the flight deck copy is an
                                                                            advance copy only of the customized manual,
                                                                            not subject to revision or updating.
                                                                            Weighing Equipment List delivered two
                                                                            weeks after Aircraft delivery.
Performance Engineer's Programs      PEP   CD-A      C     NO   1    90     One per operator and a/c type
Performance Programs Manual          PPM   CD-A      C     NO   1    90     Included in the PEP CD-Rom





         NOMENCLATURE               Abbr   Form   Type   ATA  Qty  Deliv            Comments

MAINTENANCE AND ASSOCIATED MANUALS

APU Build-up Manual                  ABM    P2       C     NO   1    90     Only for A300--A300-600/A310 (for other
                                                                            A/C types integrated into AMM).
                                                                            One per operator.
Aircraft Maintenance Manual          AMM   CD-A      C    YES   2    90     Contained on "ADRES" CD-ROM for SA and
                                                                            LR Aircraft
                                     AMM   CD-P      C    YES   2    90     Optional to CD-A
                                     AMM    DD       C    YES   1    90     SGML data for further processing by
                                                                            the Buyer
Aircraft Schematic Manual            ASM   CD-P      C    YES   2    90
                                     ASM    DD       C    YES   1    90     SGML data for further processing by
                                                                            the Buyer
Aircraft Wiring Lists                AWL   CD-P      C    YES   2    90
                                     AWL    DD       C    YES   1    90     SGML data for further processing by
                                                                            the Buyer
Aircraft Wiring Manual               AWM   CD-P      C    YES   2    90
                                     AWM    DD       C    YES   1    90     SGML data for further processing by the Buyer
Component Location Manual            CLM    P2       C     NO   1    90     For SA and LR Aircraft
Consumable Material List             CML   CD-P      G    YES   1   180
Duct Repair Manual                   DRM   CD-P      E     NO   1    90     Upon request
Electrical Load Analysis             ELA     D       C     NO   1     0
Electrical Standard Practice Manual ESPM   CD-P      G    YES   1    90
                                    ESPM    DD       G    YES   1    90     SGML data for further processing by the Buyer
Electrical Standard Practices
      booklet                        ESP    P2       G     NO   1    90
Fuel Pipe Repair Manual             FPRM    P2       G     NO   1    90     Upon request
Illustrated Parts Catalog
(Airframe)/Additional Cross
Reference Table                  IPC/ACRT  CD-A      C    YES   1    90     Contained on "ADRES" CD-ROM for SA and LR
                                                                            Aircraft
                                 IPC/ACRT  CD-P      C    YES   1    90     Optional to CD-A
Power Plant Build-Up Manual          PBM             C     NO   1    90     Supplied by power plant manufacturer --
                                                                            Only supplied by Airbus for A300.
                                                                            One per operator
Illustrated Parts Catalog
(Power Plant)                       PIPC             C     NO   1    90     Integrated in the Airframe IPC for SA and
                                                                            LR Aircraft for IAE engines (SA Aircraft)
                                                                            and Rolls-Royce engines (A340 Aircraft).
                                                                            For other Aircraft and engine types, supplied
                                                                            by Propulsion Systems Manufacturer concurrently
                                                                            with the Airframe IPC.
Maintenance Facility Planning        MFP   CD-P      E     NO   1   360     Grouped with AC on one single CD-ROM
Maintenance Planning Document        MPD   CD-P      E    YES   1   360
Maintenance Review Board             MRB    P2       E     NO   1   360     MRB Report includes the Certification
                                                                            Maintenance Requirements (CMR) and
                                                                            Airworthiness Limitation Items (ALI) documents.
                                                                            One per operator.
Support Equipment Summary            SES   CD-P      G     NO   1   360     Grouped with TEM, TEI on one single CD-ROM.
                                                                            One per operator.
Tool and Equipment Bulletins         TEB    P1       E     NO   1    -      One per operator
Tool and Equipment Drawings          TED    AC       E     NO   1   360     One per operator
Tool and Equipment Index             TEI   CD-P      E     NO   1   360     Grouped with TEM, SES on a single CD-ROM.
                                                                            One per operator.
Illustrated Tool and Equipment
      Manual                         TEM   CD-P      E    YES   1   360     Grouped with TEM, SES on a single CD-ROM.
                                                                            One per operator.
Technical Publications Combined
      Index                         TPCI   CD-A      C     NO   1    90     One per operator
Trouble Shooting Manual              TSM    DD       C    YES   1    90     SGML data for further processing by the Buyer
                                     TSM   CD-A      C    YES   2    90     Contained on "CAATS" CD-ROM for SA and LR Aircraft
                                     TSM   CD-P      C    YES   2    90     Optional to CD-A
                                  IPC/ACRT  DD       C    YES   1    90     Issue date to be coordinated with Initial
                                                                            Provisioning Data delivery included in EXHIBIT
                                                                            "E" Spare Parts Procurement.  Useful for SGML data
                                                                            processing only.









         NOMENCLATURE               Abbr   Form   Type   ATA  Qty  Deliv            Comments

STRUCTURAL MANUALS
Nondestructive Testing Manual        NTM   CD-P      E    YES   1    90     One per operator
Nacelle Structural Repair Manual    NSRM    P2       E    YES   1    90     Supplied by Propulsion System Manufacturer
                                    NSRM    F        E    YES   1    90     Supplied by Propulsion System Manufacturer
Structural Repair Manual             SRM   CD-P      E    YES   1    90







         NOMENCLATURE               Abbr   Form   Type   ATA  Qty  Deliv            Comments

OVERHAUL DATA
Component Evolution List             CEL   CD-P      G     NO   1     -     Delivered as follow-on for CDS
Component Maintenance Manual -
      Manufacturer                  CMMM   CD-P      E    YES   1    90
Component Maintenance Manual -
      Vendor
                                    CMMV    FC       E    YES   1    90     One per operator
Cable Fabrication Manual             CFM   CD-P      E     NO   1    90     One per operator




         NOMENCLATURE               Abbr   Form   Type   ATA  Qty  Deliv            Comments

ENGINEERING DOCUMENTS
Process and Material Specification   PMS     F       G     NO   1     0     One per operator
Standards Manual                      SM   CD-P      G     NO   1   180     One per operator








         NOMENCLATURE               Abbr   Form   Type   ATA  Qty  Deliv            Comments

MISCELLANEOUS PUBLICATIONS
Airplane Characteristics for
      Airport Planning                AC   CD-P      E     NO   1   360     Grouped with MFP on one single CD-ROM
ATA Breakdown Index                 ATBI    P1       E     NO   1   360     Optional
CADETS (Technical Publications
      Training)                     CADE   CD-A      G     NO   1   360
Aircraft Recovery Manual             ARM   CD-P      E    YES   1    90
Crash Crew Chart                     CCC    P1       E     NO   1   180
Cargo Loading System Manual          CLS    P2      E/C    NO   1   180     CLS is Envelope (E) for SA and LR Aircraft
                                                                            and Customized (C) for WB Aircraft.
Guidelines for Customer Originated
      Changes                       GCOC    P1       G     NO   1     0
List of Applicable Publications      LAP    P2       C     NO   1    90
List of Radioactive and Hazardous
      Elements                       LRE   CD-P      G     NO   1    90
Livestock Transportation Manual      LTM    P2       E     NO   1    90
Service Bulletins                     SB     D       C    YES   1     0     SGML data for further processing by the Buyer
Service Information Letters          SIL   CD-A      E    YES   1     0     On TPCI-CD-ROM
Supplier Product Support Agreements SPSA    P2       E     NO   1   360     Envelope (E) for SA and LR Aircraft.
                                                                            One per operator
Supplier Product Support Agreements
      2000                          SPSA   CD-P      G     NO   1   360     Based on General Conditions of Purchase (GCP)
                                                                            2000.  One per operator
Transportability Manual               TM    P1       G     NO   1   180     One per operator
Vendor Information Manual            VIM   CD-A      G     NO   1   360     One per operator
Vendor Information Manual GSE      VIM/GSE CD-A      G     NO   1   360     One per operator
Vendor Product Support Agreements   VPSA    P2       E     NO   1   360     Envelope (E) for WB Aircraft. One per operator.

WB = Wide Body: A310/A300-600
SA = Single Aisle: A318/A319/A320/A321
LR = Long Range: A330/A340




                                                     APPENDIX 4


[Copies of Clauses 7.2 and 8.5 of the General Terms Agreement]





         EXHIBIT E            CERTIFICATE OF INSURANCE


                                     [Redacted]






         EXHIBIT F            BROKERS' LETTER OF UNDERTAKING

                                     [Redacted]

         EXHIBIT G           ESTOPPEL AND ACCEPTANCE CERTIFICATE


                                     [Redacted]





         EXHIBIT H            OPINION OF COUNSEL

                                     [Redacted]





         EXHIBIT I            ASSIGNMENT OF RIGHTS (AIRFRAME)

                                     [Redacted]


         EXHIBIT J            ASSIGNMENT OF RIGHTS (ENGINES)

                                     [Redacted]

         EXHIBIT K            RETURN ACCEPTANCE RECEIPT

                                     [Redacted]

         EXHIBIT L            MONTHLY REPORT

                                     [Redacted]

         EXHIBIT M            AIRCRAFT DOCUMENTATION

                                     [Redacted]

         EXHIBIT N            TECHNICAL EVALUATION REPORT

                                     [Redacted]

EX-31

                                                                         Exhibit 31.1
                                            CERTIFICATION

I, Jeff  S. Potter, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of Frontier Airlines, Inc.;

     2.  Based on my knowledge, this report does not contain any untrue statement of a material
         fact or omit to state a material fact necessary to make the statements made, in light
         of the circumstances under which such statements were made, not misleading with respect
         to the period covered by this report;

     3.  Based on my knowledge, the financial statements, and other financial information included
         in this report, fairly present in all material respects the financial condition, results
         of operations and cash flows of the registrant as of, and for, the periods presented in
         this report;

     4.  The registrant's other certifying officer(s) and I are responsible for establishing and
         maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
         and 15d-15(e)) and have:

              (a) Designed such disclosure controls and procedures, or caused such disclosure controls
              and procedures to be designed under our supervision, to ensure that material information
              relating to the registrant, including its consolidated subsidiaries, is made known to us
              by others within those entities, particularly during the period in which this report is
              being prepared;

              (b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC
              Release 34-47986];

              (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures
              and presented in this report our conclusions about the effectiveness of the disclosure
              controls and procedures, as of the end of the period covered by this report based on
              such evaluation; and

              (d) Disclosed in this report any change in the registrant's internal control over
              financial reporting that occurred during the registrant's most recent fiscal quarter
              (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
              affected, or is reasonably likely to materially affect, the registrant's internal control
              over financial reporting; and

     5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent
         evaluation of internal control over financial reporting, to the registrant's auditors and the
         audit committee of the registrant's board of directors (or persons performing the equivalent
         functions):

              (a) All significant deficiencies and material weaknesses in the design or operation of
              internal control over financial reporting which are reasonably likely to adversely affect
              the registrant's ability to record, process, summarize and report financial information;
              and

              (b) Any fraud, whether or not material, that involves management or other employees who
              have a significant role in the registrant's internal control over financial reporting.

Date:   February 12, 2004
                                                       By:  /s/ Jeff  S. Potter
                                                          Jeff S. Potter
                                                          President and Chief Executive Officer

EX-31

                                                                         Exhibit 31. 2
                                        CERTIFICATION
I, Paul H. Tate, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of Frontier Airlines, Inc.;

     2.  Based on my knowledge, this report does not contain any untrue statement of a material
         fact or omit to state a material fact necessary to make the statements made, in light
         of the circumstances under which such statements were made, not misleading with respect
         to the period covered by this report;

     3.  Based on my knowledge, the financial statements, and other financial information included
         in this report, fairly present in all material respects the financial condition, results
         of operations and cash flows of the registrant as of, and for, the periods presented in
         this report;

     4.  The registrant's other certifying officer(s) and I are responsible for establishing and
         maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
         and 15d-15(e)) and have:

              (a) Designed such disclosure controls and procedures, or caused such disclosure controls
              and procedures to be designed under our supervision, to ensure that material information
              relating to the registrant, including its consolidated subsidiaries, is made known to us
              by others within those entities, particularly during the period in which this report is
              being prepared;

              (b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC
              Release 34-47986];

              (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures
              and presented in this report our conclusions about the effectiveness of the disclosure
              controls and procedures, as of the end of the period covered by this report based on
              such evaluation; and

              (d) Disclosed in this report any change in the registrant's internal control over
              financial reporting that occurred during the registrant's most recent fiscal quarter
              (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
              affected, or is reasonably likely to materially affect, the registrant's internal control
              over financial reporting; and

     5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent
         evaluation of internal control over financial reporting, to the registrant's auditors and the
         audit committee of the registrant's board of directors (or persons performing the equivalent
         functions):

              (a) All significant deficiencies and material weaknesses in the design or operation of
              internal control over financial reporting which are reasonably likely to adversely affect
              the registrant's ability to record, process, summarize and report financial information;
              and

              (b) Any fraud, whether or not material, that involves management or other employees who
              have a significant role in the registrant's internal control over financial reporting.

Date:   February 12, 2004.
                                                       By:  /s/ Paul H.Tate                                                                                                        Paul H. Tate
                                                          Chief Financial Officer

EX-32

                                                                         Exhibit 32

                                           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, 2003 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"),  the undersigned as the Company's  principal  executive
officer and principal  financial officer 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 13(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.

Date:   February 12, 2004

By:  /s/ Jeff  S. Potter
   Jeff S. Potter
   President and Chief Executive Officer


By: /s/ Paul H. Tate
   Paul H. Tate
   Senior Vice President and Chief Financial Officer