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<SEC-DOCUMENT>0000950153-02-002178.txt : 20021223
<SEC-HEADER>0000950153-02-002178.hdr.sgml : 20021223
<ACCEPTANCE-DATETIME>20021223120649
ACCESSION NUMBER:		0000950153-02-002178
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		21
CONFORMED PERIOD OF REPORT:	20020930
FILED AS OF DATE:		20021223

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MESA AIR GROUP INC
		CENTRAL INDEX KEY:			0000810332
		STANDARD INDUSTRIAL CLASSIFICATION:	AIR TRANSPORTATION, SCHEDULED [4512]
		IRS NUMBER:				850302351
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-15495
		FILM NUMBER:		02866382

	BUSINESS ADDRESS:	
		STREET 1:		410 NORTH 44TH STREET
		STREET 2:		SUITE 700
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85008
		BUSINESS PHONE:		6026854000

	MAIL ADDRESS:	
		STREET 1:		410 NORTH 44TH STREET
		STREET 2:		SUITE 700
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85008

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MESA AIRLINES INC
		DATE OF NAME CHANGE:	19950426
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>p67334e10vk.htm
<DESCRIPTION>10-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vk</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
 <HR size="1" width="100%" align="center" noshade>
</DIV>

<DIV align="center">
<HR size="1" width="100%" align="center" noshade>
</DIV>

<P align="center">
<B><FONT size="4">UNITED STATES SECURITIES AND EXCHANGE
COMMISSION</FONT></B>

<DIV align="center">
<B>Washington, D.C. 20549</B>
</DIV>

<P align="center">
<HR size="1" width="26%" align="center" noshade>

<P align="center">
<B><FONT size="5">Form&nbsp;10-K</FONT></B>

<P align="center">
<B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)</B>

<DIV align="center">
<B>OF SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>

<P align="center">
<B><FONT size="2">For the Fiscal Year Ended September&nbsp;30,
2002</FONT></B>

<P align="center">
<B><FONT size="2">Commission File Number 0-15495</FONT></B>

<P align="center">
<B><FONT size="6">Mesa Air Group, Inc.</FONT></B>

<DIV align="center">
<I><FONT size="2">(Exact name of registrant as specified in its
charter)</FONT></I>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Nevada</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">85-0302351</FONT></B></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <I><FONT size="2">(State or other jurisdiction of<BR>
    incorporation or organization)</FONT></I></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(I.R.S. Employer<BR>
    Identification No.)</FONT></I></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">410 North 44th Street, Suite&nbsp;700,<BR>
    Phoenix, Arizona<BR>
     </FONT></B><I><FONT size="2">(Address of Principal Executive
    Offices)</FONT></I></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">85008<BR>
     </FONT></B><I><FONT size="2">(Zip Code)</FONT></I></TD>
</TR>

</TABLE>
</CENTER>

<P align="center">
<B><FONT size="2">Registrant&#146;s telephone number, including
area code:</FONT></B>

<DIV align="center">
<B><FONT size="2">(602)&nbsp;685-4000</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Securities registered pursuant to
Section&nbsp;12(b) of the Act:</FONT></B>

<DIV align="center">
<B><FONT size="2">None</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Securities registered pursuant to
Section&nbsp;12(g) of the Act:</FONT></B>

<P align="center">
<B><FONT size="2">Common Stock, No Par Value</FONT></B>

<DIV align="center">
<B><FONT size="2">(Title of Class)</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark whether the registrant
(1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12&nbsp;months (or for such shorter period
that the registrant was required to file such reports), and
(2)&nbsp;has been subject to such filing requirements for the
past
90&nbsp;days.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark if disclosure of
delinquent filers pursuant to Item&nbsp;405 of
Regulation&nbsp;S-K is not contained herein, and will not be
contained, to the best of registrant&#146;s knowledge, in
definitive proxy or information statements incorporated by
reference in Part&nbsp;III of this Form&nbsp;10-K or any
amendment to this
Form&nbsp;10-K.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;


<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule&nbsp;12b-2).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;</FONT>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The aggregate market value of the voting stock
held by non-affiliates of the Registrant as of December&nbsp;6,
2002: Common Stock, no par value: $154.2 million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;6, 2002, the Registrant had
outstanding 31,645,837 shares of Common Stock.
</FONT>

<P align="center">
<B><FONT size="2">Documents Incorporated by Reference</FONT></B>

<P align="center">
<B><FONT size="2">Portions of the registrant&#146;s proxy
statement for the 2003 annual meeting of stockholders</FONT></B>

<P align="center">
<HR size="1" width="100%" align="center" noshade>

<DIV align="center">
<HR size="1" width="100%" align="center" noshade>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PART I</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Item 1. Business</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Item 2. Properties</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item 3. Legal Proceedings</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Item 4. Submission of Matters to a Vote of Security Holders</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">PART II</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Item 5. Market for Registrant&#146;s Common Equity and Related Stockholder Matters</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Item 6. Selected Financial Data</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Item 7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">Item 7A -- Quantitative and Qualitative Disclosures About Market Risk</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Item 8. Financial Statements and Supplementary Data</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011">Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure</A></TD></TR>
<TR><TD colspan="9"><A HREF="#012">PART III</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#013">Item 10. Directors and Executive Officers of the Registrant</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">Item 11. Executive Compensation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">Item 13. Certain Relationships and Related Transactions</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">Item 14. Controls and Procedures</A></TD></TR>
<TR><TD colspan="9"><A HREF="#018">PART IV</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">Item 15. Exhibits, Schedules and Reports on Form 8-K</A></TD></TR>
<TR><TD colspan="9"><A HREF="#020">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#021">EXHIBIT INDEX</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv5w2.txt">EX-5.2</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w1.txt">EX-10.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w3.txt">EX-10.3</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w5.txt">EX-10.5</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w6.txt">EX-10.6</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w7.txt">EX-10.7</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w8.txt">EX-10.8</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w10.txt">EX-10.10</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w13.txt">EX-10.13</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w15.txt">EX-10.15</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w16.txt">EX-10.16</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w17.txt">EX-10.17</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w18.txt">EX-10.18</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w19.txt">EX-10.19</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w27.txt">EX-10.27</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv10w29.txt">EX-10.29</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv21w1.txt">EX-21.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv23w1.txt">EX-23.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv99w1.txt">EX-99.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="p67334exv99w2.txt">EX-99.2</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>

<DIV align="center">
<B><FONT size="2">2002 FORM 10-K REPORT</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">No.</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">Part I</FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;1.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Business
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;2.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Properties
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;3.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Legal Proceedings
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;4.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Submission of Matters to a Vote of Security
    Holders
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">Part II</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;5.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Market Price of and Dividends on the
    Registrant&#146;s Common Equity and Related Stockholder Matters
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;6.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Selected Financial Data
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;7.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Management&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;7A.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Quantitative and Qualitative Disclosure about
    Market Risk
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;8.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Financial Statements and Supplementary Data
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;9.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">Part III</FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;10.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Directors and Executive Officers of the Registrant
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;11.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Executive Compensation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;12.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Security Ownership of Certain Beneficial Owners
    and Management
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;13.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Certain Relationships and Related Transactions
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;14.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Controls and Procedures
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="7" align="center" valign="top">
    <B><FONT size="2">Part IV</FONT></B></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Item&nbsp;15.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom">
    <FONT size="2">Exhibits, Financial Statement Schedules and
    Reports on Form 8-K
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">1
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PART I" -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="center">
<B><FONT size="2">PART I</FONT></B>

<P align="left">
<B><FONT size="2">Forward-Looking Statements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">This Form&nbsp;10-K Report contains certain
statements including, but not limited to, information regarding
the replacement, deployment, and acquisition of certain numbers
and types of aircraft, and projected expenses associated
therewith; costs of compliance with Federal Aviation
Administration regulations and other rules and acts of Congress;
the passing of taxes, fuel costs, inflation, and various
expenses to the consumer; the relocation of certain operations
of Mesa; the resolution of litigation in a favorable manner and
certain projected financial obligations. These statements, in
addition to statements made in conjunction with the words
&#147;expect,&#148; &#147;anticipate,&#148; &#147;intend,&#148;
&#147;plan,&#148; &#147;believe,&#148; &#147;seek,&#148;
&#147;estimate,&#148; and similar expressions, are
forward-looking statements within the meaning of the Safe Harbor
provision of Section&nbsp;27A of the Securities Act of 1933 as
amended and Section&nbsp;21E of the Securities Exchange Act of
1934 as amended. These statements relate to future events or the
future financial performance of Mesa and only reflect
management&#146;s expectations and estimates. The following is a
list of factors, among others, that could cause actual results
to differ materially from the forward-looking statements:
changing business conditions in certain market segments and
industries; changes in Mesa&#146;s code-sharing relationships;
the inability of either America West or US Airways to pay its
obligations under the code-share agreements; the inability of
US&nbsp;Airways to successfully restructure and emerge from
bankruptcy; an increase in competition along the routes Mesa
operates or plans to operate; material delays in completion by
the manufacturer of the ordered and yet-to-be delivered
aircraft; availability and cost of funds for financing new
aircraft; changes in general economic conditions; changes in
fuel price; changes in regional economic conditions; Mesa&#146;s
relationship with employees and the terms of future collective
bargaining agreements; satisfactory resolution of union contract
negotiations with the Company&#146;s pilots; the impact of
current and future laws, additional terrorist attacks;
Congressional investigations, and governmental regulations
affecting the airline industry and Mesa&#146;s operations;
bureaucratic delays; amendments to existing legislation;
consumers unwilling to incur greater costs for flights;
unfavorable resolution of negotiations with municipalities for
the leasing of facilities; and risks associated with litigation
outcomes. One or more of these or other factors may cause
Mesa&#146;s actual results to differ materially from any
forward-looking statement. Mesa is not undertaking any
obligation to update any forward-looking statements contained in
this Form&nbsp;10-K.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All references to &#147;we,&#148;
&#147;our,&#148; &#147;us,&#148; or &#147;Mesa&#148; refer to
Mesa Air Group, Inc., and its predecessors, direct and indirect
subsidiaries, and affiliates.
</FONT>

<!-- link2 "Item 1. Business" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Business</I></FONT></B>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mesa Air Group, Inc. (&#147;we,&#148;
&#147;us,&#148; &#147;Mesa&#148; or the &#147;Company&#148;) is
a holding company whose principle subsidiaries operate as
regional air carriers providing scheduled passenger and
airfreight service, as well as subsidiaries primarily in support
of its operating airlines. The Company serves 147&nbsp;cities in
37&nbsp;states, the District of Columbia, Canada, and Mexico. At
September&nbsp;30, 2002, the Company operated a fleet of 124
aircraft and had approximately 889 daily departures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approximately 98% of our consolidated passenger
revenues for the fiscal year ended September&nbsp;30, 2002 were
derived from operations associated with code-share agreements.
Our subsidiaries have code-share agreements with America West
Airlines, Inc. (&#147;America West&#148;), Frontier Airlines,
Inc. (&#147;Frontier&#148;), Midwest Express Airlines, Inc.
(&#147;Midwest Express&#148;), and US Airways, Inc. (&#147;US
Airways&#148;). These code-share agreements allow use of the
code-share partner&#146;s reservation system and flight
designator code to identify flights and fares in computer
reservation systems, permit use of logos, service marks,
aircraft paint schemes and uniforms similar to the code-share
partners and provide coordinated schedules and joint advertising.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to carrying passengers, we carry
freight and express packages on our passenger flights and have
interline small cargo freight agreements with many other
carriers. We also have contracts with the
</FONT>

<P align="center"><FONT size="2">2
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">U.S.&nbsp;Postal Service for carriage of mail to
the cities we serve and occasionally operate charter flights
when our aircraft are not otherwise used for scheduled service.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our airline operations are conducted by the
following airline subsidiaries:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mesa Airlines, Inc. (&#147;MAI&#148;), a Nevada
    corporation, operates regional jet and turboprop aircraft as
    America West Express under a code-share agreement with America
    West, primarily at America West&#146;s operations hub located in
    Phoenix; as US&nbsp;Airways Express under a code-share agreement
    with US Airways, primarily at US Airways&#146; hubs on the East
    Coast, including operations in Florida: and as Frontier
    JetExpress under a code-share agreement with Frontier Airlines
    in Denver.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Air Midwest, Inc. (&#147;Air Midwest&#148;), a
    Kansas corporation, operates Beechcraft 1900D 19-seat turboprop
    aircraft as US Airways Express under separate code-share
    agreements with US Airways at US Airways&#146; hub operations in
    Pittsburgh, Philadelphia, Kansas City and Tampa. In February
    2001, the Company entered into an agreement wherein Air
    Midwest&#146;s flights in Kansas City code-share with both
    Midwest Express and US Airways. Air Midwest also operates as
    Mesa Airlines in Albuquerque, New Mexico and in select Essential
    Air Service (&#147;EAS&#148;) markets. The Albuquerque hub
    operation and select EAS markets are &#147;Independent
    Operations&#148; and are not subject to a code sharing agreement
    with a major carrier.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Freedom Airlines, Inc. (&#147;Freedom&#148;), a
    Nevada corporation, operates CRJ-700 aircraft and plans to
    operate CRJ-900 aircraft as America West Express under a
    code-share agreement at America West&#146;s operations hub in
    Phoenix. Freedom Airlines began revenue flight operations on
    October&nbsp;19, 2002.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">CCAir, Inc. (&#147;CCAir&#148;), a Delaware
    corporation, ceased operations on November&nbsp;3, 2002. During
    fiscal year 2002, CCAir operated turboprop aircraft as US
    Airways Express under a code-share agreement with US Airways at
    US Airways&#146; operations hub in Charlotte.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless the context indicates otherwise, the terms
&#147;Mesa,&#148; &#147;the Company,&#148; &#147;we,&#148;
&#147;us,&#148; or &#147;our,&#148; refer to Mesa Air Group,
Inc. and its subsidiaries.
</FONT>

<P align="left">
<B><FONT size="2">Corporate Structure</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mesa is a Nevada corporation that was originally
formed in New Mexico, with its principal executive office in
Phoenix, Arizona.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to operating the airline subsidiaries
listed above, we also have the following other subsidiaries:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">MPD, Inc., a Nevada corporation, doing business
    as Mesa Pilot Development and MPD&nbsp;&#151; ASU, operates our
    training program for new pilots in conjunction with San Juan
    College in Farmington, New Mexico and Arizona State University
    in Tempe, Arizona.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Regional Aircraft Services, Inc., a Pennsylvania
    corporation is a subsidiary of WestAir Holdings, Inc. and
    performs aircraft component repair and overhaul services.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mesa Leasing, Inc., a Nevada corporation, was
    established to assist in the acquisition and leasing of aircraft.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">MAGI Insurance, Ltd., a Barbados, West Indies
    based captive insurance company, was established for the purpose
    of obtaining more favorable aircraft liability insurance rates.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Ritz Hotel Management Corp., a Nevada
    Corporation, was established to facilitate the Company&#146;s
    acquisition and management of a Phoenix area hotel property used
    for crew accommodations in training.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">WestAir Holding, Inc., a California corporation,
    was the owner of WestAir Commuter Airlines, Inc. a California
    corporation (&#147;WestAir&#148;). WestAir ceased operations in
    1998.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">3
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Aircraft in Operation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth our aircraft fleet
(owned and leased) in operation by aircraft type as of
September&nbsp;30, 2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="32%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Canadair</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Embraer</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Regional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Regional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Jet-200</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Jet</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beechcraft</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">DeHavilland</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">DeHavilland</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(CRJ)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(ERJ)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1900D</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dash 8-100</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dash 8-200</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">TOTAL</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">US Airways Express
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">America West Express
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frontier JetExpress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mesa Airlines
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth our aircraft fleet
(owned and leased) in operation by aircraft type as of
December&nbsp;6, 2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Canadair</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Embraer</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Canadair</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Regional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Regional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Regional</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Jet-200</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Jet</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Jet-700</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beechcraft</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">DeHavilland</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(CRJ)(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(ERJ)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(CRJ)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1900D</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dash 8-200</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">TOTAL</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">US Airways Express
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">America West Express
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frontier JetExpress
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mesa Airlines
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company returned two CRJ-200 aircraft on
    short-term leases in December 2002. In addition, the Company has
    three spare CRJ-200s that it anticipates flying for US Airways
    in the second quarter of fiscal year 2003.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Code-Share Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our airline subsidiaries have agreements with
America West, US Airways, Frontier, and Midwest Express to use
those carriers&#146; designation codes (commonly referred to as
a &#147;code-share&#148;). These code-share agreements allow use
of the code-share partner&#146;s reservation system and flight
designator code to identify flights and fares in computer
reservation systems, permit use of logos, service marks,
aircraft paint schemes and uniforms similar to the code-share
partners and provide coordinated schedules and joint
advertising. The Company&#146;s passengers traveling on flights
operated pursuant to code-share agreements receive mileage
credits in the respective frequent flyer programs of the
Company&#146;s code-share partners, and credits in those
programs can be used on flights operated by the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial arrangement between us and our
code-share partners involve either a revenue-guarantee or
pro-rate arrangement. Both the America West code-share agreement
and the US Airways regional jet code-share agreement are
revenue-guarantee flying agreements. Under the terms of these
flying agreements, the major carrier controls marketing,
scheduling, ticketing, pricing and seat inventories. The Company
receives a guaranteed payment based upon a fixed minimum monthly
amount plus amounts related to departures and block hours flown
plus direct reimbursement for expenses such as fuel, landing
fees and insurance. Among other advantages, revenue-guarantee
arrangements reduce the Company&#146;s exposure to fluctuations
in passenger traffic and fare levels, as well as fuel prices.
The US Airways turboprop and the Frontier JetExpress code-share
agreements are pro-rate agreements, for which the Company
receives an allocated portion of the passengers&#146; fare and
pays all of the costs of transporting the passenger.
</FONT>

<P align="center"><FONT size="2">4
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes our available seat
miles (&#147;ASMs&#148;) flown and revenue recognized under our
code-share agreements for the year ended September&nbsp;30, 2002:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Passenger</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">In thousands</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ASM&#146;s</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenue</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">America West (Revenue-Guarantee)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,494,469</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">193,173</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">US Airways (Revenue-Guarantee)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,281,181</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">166,387</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">US Airways (Pro-rate)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">439,515</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,608</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frontier (Pro-rate)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">185,071</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,736</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mesa Airlines
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59,191</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,922</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,459,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">480,826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>America West
Code-Sharing Agreement</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently operate five CRJ-700s, 25 CRJ-200s,
ten Dash-8s and three B1900D aircraft for America West under a
code-sharing agreement. The code-share agreement provides for
the Company to increase its fleet up to 25 CRJ-900s, 15
CRJ-700s, 25 CRJ-200s, 12 Dash-8s and five B1900Ds. The first
CRJ-700 was placed into service in October 2002. In exchange for
providing flights and all other obligations under the agreement,
we receive a fixed monthly minimum amount plus certain
additional amounts based upon the number of flights flown and
block hours performed during the month. America West also
reimburses us for certain costs on an actual basis, including
fuel costs, aircraft ownership and financing costs, landing
fees, passenger liability and hull insurance, and aircraft
property taxes. We also receive a monthly payment from America
West based on a percentage of revenue from flights that we
operate under the code-share agreement. Under the code-share
agreement, America West has the right to reduce the Dash-8,
B1900, and combined CRJ fleets utilized under the code-share
agreement by one aircraft in any six-month period; provided,
however, America West must wait one year following the last
scheduled delivery date of such aircraft to remove any CRJ-700
or CRJ-900 aircraft. In addition, America West may not reduce
the Dash-8 aircraft to below a total of six. To date, America
West has notified the Company of its intent to reduce the number
of aircraft operated under the code-share agreement by
(i)&nbsp;three CRJ-200s, (ii)&nbsp;two additional Dash-8
aircraft and (iii)&nbsp;three additional B1900D aircraft. The
Company anticipates operating the removed aircraft under
code-share agreements with the Company&#146;s other partners.
The code-share agreement terminates on the eighth anniversary of
the date the last aircraft is added to the fleet under the
agreement, which is currently anticipated to be 2012. The
Company is currently in negotiations with America West on
overall fleet composition.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>US Airways
Code-Sharing Agreements</I></FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Jet
Code-Share Agreement</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We currently operate 32 Embraer regional jets for
US Airways under a code-sharing agreement. The code-sharing
agreement, as amended, provides that we will operate 52 regional
jets as US Airways Express. The jet code-share agreement
provides that we will provide US Airways Express service between
US Airways hubs and cities designated by US Airways. In exchange
for performing the flight services under the agreement, we
receive from US Airways a fixed monthly minimum amount, plus
certain additional amounts based upon the number of flights
flown and block hours performed during the month. Additionally,
certain costs incurred by Mesa in performing the flight services
are &#147;pass-through&#148; costs, whereby US Airways agrees to
reimburse us for the actual amounts incurred for these items:
insurance, property tax per aircraft, fuel cost, oil cost,
catering cost, and landing fees. We also receive a fixed profit
margin based upon total costs under the agreement. On
August&nbsp;11, 2002, US Airways filed for Chapter&nbsp;11
bankruptcy protection. On November&nbsp;18, 2002, the
U.S.&nbsp;Bankruptcy Court for the Eastern District of Virginia
approved a motion filed by US Airways to continue the existing
regional (i)&nbsp;jet code-share agreement and (ii)&nbsp;all
amendments thereto, including the provisions for an additional
20 jets. The additional 20 jets must be in compliance with the
&#145;jets-for-jobs&#146; provisions in the US Airways pilot
contract and requires the approval of the Company&#146;s pilots.
Additionally, on November&nbsp;22, 2002, the Company signed a
non-binding letter of intent with US Airways to provide an
</FONT>

<P align="center"><FONT size="2">5
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">additional 50 regional jets. In connection with
this letter of intent, the Company agreed to issue 3,000,000
warrants to US Airways. The additional aircraft, which will also
be subject to &#145;jets-for-jobs,&#146; would be delivered
beginning in mid- to late-2003. The jet code-share agreement for
(i)&nbsp;the initial 32 ERJ-145s terminates on December&nbsp;31,
2008, unless US&nbsp;Airways elects to exercise its option to
extend the term for three years upon twelve months&#146; notice;
and (ii)&nbsp;the additional 20 jets terminates on the tenth
anniversary of the date the first additional jet is added, which
is currently anticipated to be January 2003, unless US Airways
elects to exercise its option to extend the term for two years
upon 12&nbsp;months notice.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding the foregoing, US Airways may
terminate the code-share agreement at any time for cause upon
90&nbsp;days notice and subject to our right to cure under any
of the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If we fail to retain or utilize the aircraft in
    the manner required under the jet code-share agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If we admit liability or are found liable for
    serious safety infractions by the Federal Aviation
    Administration (&#147;FAA&#148;), a finding which leads to the
    suspension or revocation of Mesa&#146;s operating certificate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><I><FONT size="2">Turboprop
Code-Share Agreements</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to three separate turboprop code-sharing
agreements with US Airways, we currently operate 30&nbsp;B1900D
turboprop aircraft under a pro-rate revenue-sharing arrangement.
We control scheduling, inventory and pricing subject to US
Airways&#146; concurrence that such service does not adversely
affect its other operations in the region. We are allocated a
portion of each passenger&#146;s fare based on a standard
industry formula and are required to pay all the costs of
transporting the passenger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">US Airways may terminate the turboprop agreements
at any time for cause upon not less than five days notice under
any of the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If we fail to utilize the aircraft as specified
    in the agreements.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If we fail to achieve specified levels of
    operating performance in completion factors and on-time arrival
    performance.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If we fail to comply with the trademark license
    provisions of the agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If we fail to perform the material terms,
    covenants or conditions of the code-sharing agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Upon a change in our ownership or control without
    the written approval of US Airways.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The turboprop code-share agreements terminate in
2005 provided, however, most of the turboprop flying
arrangements can be terminated by US Airways for any reason upon
one hundred eighty (180)&nbsp;days prior advance written notice.
Renewal of one code-share agreement with US Airways does not
guarantee the renewal of the other code-share agreements with US
Airways.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Frontier
Airlines, Inc. Jet Code-Sharing Agreement</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 2001, we entered into a five-year
pro-rate revenue-sharing code-share agreement with Frontier
Airlines, Inc. Under the terms of the agreement, we will market
and sell flights operated by Mesa as Frontier JetExpress. This
code-share began February&nbsp;17, 2002 with service between
Denver and selected cities. We currently operate four 50-seat
CRJ-200 regional jet aircraft between Denver and the following
cities: San Jose, San Diego, Ontario, Oakland and Wichita.
</FONT>

<P align="left">
<B><FONT size="2">Fleet Plans and Aircraft Manufacturer
Relationships</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>ERJ
Program</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 1999, we entered into an agreement with
Empresa Brasiliera de Aeronautica SA (&#147;Embraer&#148;) to
acquire 36 Embraer ERJ-145 50-passenger regional jets. Mesa
introduced the ERJ-145 aircraft into revenue service in the
third quarter of fiscal 2000 as US Airways Express. As of
September&nbsp;30, 2002, we have taken delivery of 32
ERJ-145&#146;s, which have been financed as operating leases. We
have the right to cancel the
</FONT>

<P align="center"><FONT size="2">6
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">delivery of the four remaining firm aircraft. In
conjunction with this purchase agreement, Mesa has
$4.2&nbsp;million remaining on deposit with Embraer, which is
included with lease and equipment deposits at September&nbsp;30,
2002. The remaining deposit will be returned to us either upon
the delivery of the last four aircraft or upon notification by
us of our intention to cancel the orders for the last four
aircraft.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>CRJ
Program</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 1996, we entered into an agreement (the
&#147;1996 BRAD Agreement&#148;) with Bombardier Regional
Aircraft Division (&#147;BRAD&#148;) to acquire 16 CRJ-200
50-passenger regional jet aircraft. The 1996 BRAD Agreement also
granted the Company an option to acquire an additional 16
regional jet aircraft. In fiscal 1997, we exercised our option
to purchase the additional 16 CRJ aircraft reserved under the
option provisions of the 1996 BRAD Agreement. The Company has
received all 32 CRJ-200 aircraft under the 1996 BRAD Agreement.
The aircraft are currently under permanent financing as
operating leases with initial terms of 16.5 to 18.5&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2001, the Company entered into a second
agreement with BRAD to acquire 20 50-seat CRJ-200s, 20 64-seat
CRJ-700s and 20 80-seat CRJ-900s (the &#147;2001 BRAD
Agreement&#148;). Under the 2001 BRAD Agreement, we have the
right to convert up to five CRJ-700 aircraft to CRJ-900 aircraft
and to cancel our CRJ-200 order. We have notified BRAD of our
intention to convert to CRJ-900s. The total number of firm
aircraft currently on order is 15 CRJ-700s and 25 CRJ-900s. The
transaction includes standard product support provisions,
including training support, preferred pricing on initial
inventory provisioning, maintenance support and technical
publication support. Deliveries of the CRJ-700 commenced in July
2002, with revenue service commencing in October. We are the
launch customer of the CRJ-900 and expect to take delivery of
the first aircraft in the first calendar quarter of 2003. In
addition to the firm orders, Mesa has an option to acquire an
additional 80 CRJ-700 or CRJ-900 regional jets. In conjunction
with the 2001 BRAD Agreement, Mesa has $8.8 million on deposit
with BRAD, which is included with lease and equipment deposits
at September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes our jet fleet
status and current fleet expansion plans currently under
contract for the periods indicated:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">CRJ-700</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">CRJ-900</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">CRJ-200</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Firm</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Firm</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">CRJ-700</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">CRJ-900</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ERJ-145</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ERJ-145</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cumulative</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">CRJ-200</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Orders</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Orders</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Firm Orders</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Delivered:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">At 9/30/2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Scheduled deliveries:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal 2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">130</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal 2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">160</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal 2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">208</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal 2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">230</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fiscal 2008 and beyond
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">270</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
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    <TD align="left"><HR size="1" noshade></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Total</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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</TR>

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    <TD align="left"><HR size="4" noshade></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="left"><HR size="4" noshade></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes two CRJ-200s we were flying under
    short-term operating leases. The aircraft were returned to the
    lessor in the first quarter of fiscal 2003.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Beechcraft
1900D</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, we owned 39 and
leased seven Beechcraft 1900D aircraft. In fiscal year 2002, we
returned 12 Beechcraft 1900D aircraft. We are currently in the
process of returning excess aircraft to the manufacturer and
anticipate operating 43 aircraft during fiscal 2003. We
anticipate returning the remaining three aircraft in the second
quarter of fiscal 2003.
</FONT>

<P align="center"><FONT size="2">7
</FONT>

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<P align="left">
<B><FONT size="2">Marketing</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our flight schedules are structured to facilitate
the connection of our passengers with the flights of our
code-share partners at their hub airports and to maximize local
and connecting service to other carriers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under our US Airways Express turboprop and
Frontier JetExpress operations, the Company&#146;s market
selection process follows an in-depth analysis on a
route-by-route basis and is followed by a review and approval
process in a joint effort with US Airways or Frontier regarding
the level of service and fares. We believe that this selection
process enhances the likelihood of profitability in a given
market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the America West code-share agreement and
the US Airways regional jet agreement, market selection, pricing
and yield management functions are performed by America West and
US Airways, respectively. Our role is simply to operate our
fleet in the safest and most reliable manner in exchange for
fees paid under a generally fixed payment schedule. We intend to
expand our operations performed pursuant to these
revenue-guarantee agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under our code-share agreements, the code-share
partner coordinates advertising and public relations within
their respective regions. In addition, our traffic is impacted
by the major airline partners&#146; advertising programs in
regions outside those served by us, with the major
partners&#146; customers becoming our customers as a result of
through fares. Under pro-rate code-share arrangements, our
passengers also benefit from through fare ticketing with the
major airline partners and greater accessibility to our flights
on computer reservation systems and in the Official Airline
Guide.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our pro-rate agreements and Independent Operation
flights are promoted through, and our revenues are generally
believed to benefit from, listings in computer reservation
systems, the Official Airline Guide and through direct contact
with travel agencies and corporate travel departments. We
participate in shared advertising with resort and rental
property operators and ski areas in leisure markets in which we
operate. Our independent and Frontier JetExpress operations
utilize SABRE, a computerized reservation system widely used by
travel agents, corporate travel offices and other airlines. The
reservation systems of our code-share partners are also utilized
in each of our other operations through their respective
code-share agreements. We also pay booking fees to owners of
other computerized reservation systems based on the number of
independent and prorate passengers booked by travel agents using
such systems. We believe that we have good relationships with
the travel agents serving our passengers.
</FONT>

<P align="left">
<B><FONT size="2">Competition</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The airline industry is highly competitive and
volatile. Airlines compete in the areas of pricing, scheduling
(frequency and timing of flights), on-time performance, type of
equipment, cabin configuration, amenities provided to
passengers, frequent flyer plans, travel agent commissions and
the automation of travel agent reservation systems. Further,
because of the Airline Deregulation Act, airlines are currently
free to set prices and establish new routes without the
necessity of seeking governmental approval. At the same time,
deregulation has allowed airlines to abandon unprofitable routes
where the affected communities will not be left without air
service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe that the Airline Deregulation Act
facilitated our entry into scheduled air service markets and
allows us to compete on the basis of service and fares, thus
causing major carriers to seek out further contractual
agreements with carriers like us as a way of expanding their
respective networks. However, the Airline Deregulation Act makes
the entry of other competitors possible, some of which may have
substantial financial resources and experience, creating the
potential for intense competition among regional air carriers in
our markets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our code-share agreements provide a
significant competitive advantage in hub airports where our
major partner has a predominant share of the market. The ability
to control connecting passenger traffic by offering superior
service creates difficulty for other regional airlines wishing
to compete at such hubs. In addition to enhanced competitiveness
offered by the code-share agreements, we compete with other
airlines by offering frequent flights, flexible schedules and
numerous fare levels.
</FONT>

<P align="center"><FONT size="2">8
</FONT>
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<P align="left">
<B><FONT size="2">Fuel</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Historically, we have not experienced problems
with the availability of fuel, and believe that we will be able
to obtain fuel in quantities sufficient to meet our existing and
anticipated future requirements at competitive prices. Standard
industry contracts generally do not provide protection against
fuel price increases, nor do they ensure availability of supply.
However, the Company&#146;s code-share agreement with America
West and the regional jet service agreement with US Airways
allow fuel used in the performance of the agreements to be
billed to the code-share partner, thereby reducing the
Company&#146;s exposure to fuel price fluctuations. In fiscal
2002, approximately 76% of the Company&#146;s fuel was
associated with the Company&#146;s America West code-share and
US Airways regional jet service agreements. A substantial
increase in the price of jet fuel, to the extent our fuel costs
are not reimbursed, or the lack of adequate fuel supplies in the
future may have a material adverse effect on the Company&#146;s
business, financial condition, results of operations and
liquidity.
</FONT>

<P align="left">
<B><FONT size="2">Maintenance of Aircraft and Training</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All mechanics and avionics specialists employed
by us have the appropriate training and experience and hold the
required licenses issued by the FAA. Using a combination of
FAA-certified maintenance vendors and our own personnel and
facilities, the Company maintains its aircraft on a scheduled
and &#147;as-needed&#148; basis. We emphasize preventive
maintenance and inspect our aircraft engines and airframes as
required. We also maintain an inventory of spare parts specific
to the aircraft types we fly. We provide periodic in-house and
outside training for our maintenance and flight personnel and
also takes advantage of factory training programs that are
offered when acquiring new aircraft.
</FONT>

<P align="left">
<B><FONT size="2">Insurance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We carry types and amounts of insurance customary
in the airline industry, including coverage for public
liability, passenger liability, property damage, product
liability, aircraft loss or damage, baggage and cargo liability
and workers&#146; compensation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the terrorist attacks on
September&nbsp;11, 2001, aviation insurers have significantly
reduced the maximum amount of insurance coverage available to
commercial air carriers for war-risk coverage, while at the same
time, significantly increasing the premiums for this coverage as
well as for aviation insurance in general. Given the significant
increase in insurance costs, the federal government is providing
insurance assistance under the Air Transportation Safety and
System Stabilization Act. In addition, the federal government
has issued war-risk coverage to U.S. air carriers that is
generally renewable for 60-day periods. However, the
availability of aviation insurance is not guaranteed and our
inability to obtain such coverage at affordable rates may result
in the grounding of our aircraft. Insurance costs are reimbursed
under the terms of our code-share agreement with America West,
and our regional jet service agreement with US Airways.
</FONT>

<P align="left">
<B><FONT size="2">Employees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, we employed
approximately 3,100 employees. Approximately 2,300 of our
employees are represented by various labor organizations. Our
continued success is partly dependent on our ability to continue
to attract and retain qualified personnel. Historically, we have
had no difficulty attracting qualified personnel to meet our
requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our five-year agreement with the Air Line Pilots
Association (&#147;ALPA&#148;) for a single pilot contract for
MAI and Air Midwest expired in December 2001. We are currently
in contract negotiations with the pilots of MAI and Air Midwest
for a new collective bargaining agreement. In July 2002, ALPA
filed suit against the Company under the Railway Labor Act
alleging (i)&nbsp;violation of the duty to bargain in good
faith; (ii)&nbsp;attempting to undermine ALPA as the collective
bargaining representative of pilots; and (iii)&nbsp;failure to
refrain from making changes to status quo rates of pay, rules or
working conditions. For more information regarding this matter,
see the disclosure under the caption
&#147;Item&nbsp;3&nbsp;&#151; Legal Proceedings&#148; below.
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">MAI&#146;s flight attendants are represented by
the Association of Flight Attendants (&#147;AFA&#148;). On
October&nbsp;18, 2002, the Company and the AFA amended the terms
of the agreement and extended the term through June 2006.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pilot turnover at times is a significant issue
among regional carriers when major carriers are hiring
experienced commercial pilots away from regional carriers. The
addition of aircraft, especially new aircraft types, can result
in pilots upgrading between aircraft types and becoming
unavailable for duty during the extensive training periods
required. No assurances can be made that pilot turnover and
unavailability will not be a significant problem in the future,
particularly if major carriers expand their operations.
Similarly, there can be no assurance that sufficient numbers of
new pilots will be available to support any future growth.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No other Mesa subsidiaries are parties to any
other collective bargaining agreement or union contracts.
</FONT>

<P align="left">
<B><FONT size="2">Essential Air Service Program</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Essential Air Service program administered by
the United States Department of Transportation (&#147;DOT&#148;)
guarantees a minimum level of air service in certain
communities, predicated on predetermined guidelines set forth by
Congress. Based on these guidelines, the DOT will subsidize air
service to communities that might not otherwise have air
service. We service 20 such cities for an annual subsidy of
approximately $14.0&nbsp;million. There is no guarantee that we
will continue to receive subsidies for the cities we serve. If
the funding under this program is terminated for any of the
cities served by the Company, in all likelihood we would not
continue to fly in these markets, and as a result, we would be
forced to find alternative uses for the Beechcraft 1900D 19-seat
turboprop aircraft affected.
</FONT>

<P align="left">
<B><FONT size="2">Regulation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an interstate air carrier, we are subject to
the economic jurisdiction, regulation and continuing air carrier
fitness requirements of the DOT. Such requirements include
minimum levels of financial, managerial and regulatory fitness.
The DOT is authorized to establish consumer protection
regulations to prevent unfair methods of competition and
deceptive practices, to prohibit certain pricing practices, to
inspect a carrier&#146;s books, properties and records, and to
mandate conditions of carriage. The DOT also has the power to
bring proceedings for the enforcement of air carrier economic
regulations, including the assessment of civil penalties, and to
seek criminal sanctions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to the jurisdiction of the FAA
with respect to its aircraft maintenance and operations,
including equipment, ground facilities, dispatch, communication,
training, weather observation, flight personnel and other
matters affecting air safety. To ensure compliance with its
regulations, the FAA requires airlines to obtain an operating
certificate, which is subject to suspension or revocation for
cause, and provides for regular inspections.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective March 1997, the FAA required that
regional airlines with aircraft of 10 or more passenger seats
operating under FAR Part 135 rules to begin operating those
aircraft under FAR Part 121 regulations. The Company, as one of
the largest regional airlines operating under FAR Part 135
regulations, completed the transition to Part 121 within the
FAA&#146;s deadline. These requirements have resulted in a
significant increase our costs, adversely affecting our ability
to profitably serve certain markets. Such increased costs are
primarily related to additional training, dispatch and
maintenance procedures. We continue to work to minimize the cost
of these new operating procedures while fully complying with FAR
Part 121 operating requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to various federal and local laws
and regulations pertaining to other issues of environmental
protocol. We believe we are in compliance with all governmental
laws and regulations regarding environmental protection.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are also subject to the jurisdiction of the
Federal Communications Commission with respect to the use of its
radio facilities and the United States Postal Service with
respect to carriage of United States mail. Local governments in
certain markets have adopted regulations governing various
aspects of aircraft operations, including noise abatement and
curfews.
</FONT>

<P align="center"><FONT size="2">10
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Available Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We maintain a website where additional
information concerning our business can be found. The address of
that website is <I>www.mesa-air.com</I>. We make available free
of charge on our website our annual report on Form&nbsp;10-K,
quarterly reports on Form&nbsp;10-Q, current reports on
Form&nbsp;8-K and amendments to those reports, as soon as
reasonably practicable after we electronically file or furnish
such materials to the SEC.
</FONT>

<!-- link2 "Item 2. Properties" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Properties</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our primary property consists of the aircraft
used in the operation of our flights. The following table lists
the aircraft owned and leased by the Company as of
September&nbsp;30, 2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Number of Aircraft</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Operating on</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Passenger</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Type of Aircraft</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Owned</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Leased</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sept. 30, 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Capacity</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CRJ-200 Regional Jet
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CRJ-700 Regional Jet
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Embraer Regional Jet
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Beechcraft 1900D
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dash 8-100
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Dash 8-200
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Embraer EMB-120
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">99</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">See &#147;Business&nbsp;&#151; Airline
Operations&#148; and &#147;MANAGEMENT&#146;S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS&nbsp;&#151; Liquidity and Capital Resources&#148; for
a discussion regarding the Company&#146;s aircraft fleet
commitments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to aircraft, we have office and
maintenance facilities to support our operations. Our facilities
are summarized in the following table:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Approximate</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Type</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Location</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Square Feet</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Headquarters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Phoenix, AZ
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">26,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Training/ Administration
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Phoenix, AZ
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">27,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hangar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jamestown, NY
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hangar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Farmington, NM
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Engine Shop
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Farmington, NM
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">6,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hangar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Phoenix, AZ
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hangar/ Office
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Wichita, KS
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hangar/ Office
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Dubois, PA
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hangar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Reading, PA
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">56,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Office
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charlotte, NC
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Hangar
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Charlotte, NC
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">Leased</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">30,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Building is owned, underlying land is leased.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We lease ticket counters, check-in and boarding
and other facilities in the passenger terminal areas in the
majority of the airports we serve and staff those facilities
with our personnel. America West, US Airways and Frontier also
provide facilities, ticket handling and ground support services
for the Company at certain airports.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our corporate headquarters facility is leased
pursuant to a ten-year lease that commenced November&nbsp;1,
1998. In October 2002, we entered into an amendment to increase
the total square footage to 26,000 and
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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<DIV align="left">
<FONT size="2">extend the term to August&nbsp;31, 2012. The
Training/ Administration facility is subject to an 89-month
lease that commenced on June&nbsp;1, 2001.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We believe our facilities are suitable and
adequate for our current and anticipated needs.
</FONT>

<!-- link2 "Item 3. Legal Proceedings" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Legal
Proceedings</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 2001, we reached agreement with United
Airlines, Inc. to extend the current Mesa/ US&nbsp;Airways
regional jet contract by an additional two years, to
December&nbsp;31, 2010, contingent upon completion of the
proposed merger between United and US Airways. Under the
agreement, Mesa and United agreed to drop all outstanding
litigation between the two parties. On July&nbsp;27, 2001,
United and US&nbsp;Airways terminated their proposed merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2001, we filed a complaint in Arizona
state court against the law firm of Beus Gilbert P.L.L.C.
(&#147;Beus Gilbert&#148;) arising out of Beus Gilbert&#146;s
representation of the Company in a suit against United Airlines
(&#147;UAL litigation&#148;) that was settled in March 2001. The
suit seeks a judgment voiding the fee arbitration provision (the
&#147;arbitration provision&#148;) of a contingency fee
agreement between the Company and Beus Gilbert. The provision
purports to require that all disputes as to attorneys&#146; fees
payable to Beus Gilbert be submitted to arbitration for final
determination. Notwithstanding the requirement to arbitrate, the
provision further purports to grant Beus Gilbert the right,
&#147;in its sole and absolute discretion,&#148; to reject the
decision of the arbitrator, impose an award in the amount equal
to five times the aggregate hourly rate of all attorneys and
paralegals who worked on the legal matter (plus costs and
expenses), and enforce that award as though it were a civil
judgment. Relying on the arbitration provision, following the
settlement of the UAL Litigation, Beus Gilbert demanded in
excess of $23.0&nbsp;million, which it claims to have computed
by applying a 5X multiplier in the arbitration provision to fees
that allegedly accrued in excess of $4.0&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The suit against Beus Gilbert alleges that the
arbitration provision is void as a matter of law because it is
illusory and lacks mutual consideration; that it is also void
because it violates a public purpose: a fair and equitable
resolution of the parties&#146; fee dispute by an impartial
arbitrator; and that it is unenforceable because it circumvents
the legal and ethical requirements that attorneys&#146; fees be
reasonable. The Company seeks a determination by the Court of
the fee dispute between the parties. On November&nbsp;27, 2001,
the court granted Beus Gilbert&#146;s motion to compel
arbitration to resolve the dispute and ordered the arbitrator to
decide whether the fee resulting from a 5X multiplier would be
reasonable. On July&nbsp;9, 2002, the arbitrator awarded Beus
Gilbert $5.8 million which is included in other accrued expenses
at September&nbsp;30, 2002. The Company has appealed the
arbitrator&#146;s decision.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and/or its subsidiaries is also
involved in a lawsuit involving the Air Line Pilots Association,
International (&#147;ALPA&#148;), the union that represents the
Mesa Airlines and Air Midwest pilots.
</FONT>

<P align="left">
<FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Alpa v. Mesa
Airlines, Inc., et al.,</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The proceeding brought by ALPA, Case
No.&nbsp;CV-02-1333-PHX-PGR (D. Ariz.) names as defendants the
Company, our Mesa Airlines subsidiary and our Chairman in his
individual capacity. It asserts three claims under the Railway
Labor Act: (1)&nbsp;violation of the duty to bargain in good
faith; (2)&nbsp;attempting to undermine ALPA as the collective
bargaining representative of the Mesa Airlines pilots; and
(3)&nbsp;failure to refrain from making changes to status quo
rates of pay, work rules or working conditions prior to
exhausting the statute&#146;s mediation procedures. The latter
two counts are based primarily on our announcement that we
intend to establish a new subsidiary, Freedom Airlines, to
perform flying for America West Airlines using CRJ-700 and
CRJ-900 aircraft. We deny that we have violated the statute in
any fashion and plan a vigorous defense against ALPA&#146;s
suit. The complaint was filed in July 2002. We filed a motion to
dismiss in September 2002. Oral arguments are scheduled in
January 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are also involved in various other legal
proceedings and FAA civil action proceedings that the Company
does not believe will have a material adverse effect upon our
business, financial condition or results of operations, although
no assurance can be given to the ultimate outcome of any such
proceedings.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Item 4. Submission of Matters to a Vote of Security Holders" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Submission
of Matters to a Vote of Security Holders</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None.
</FONT>

<P align="left">
<B><FONT size="2">Executive Officers of the Registrant</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the names and ages
of the executive officers of the Company and certain additional
information:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Age</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Position</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jonathan G. Ornstein
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Executive Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Lotz
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President and Chief Operating Officer
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">George Murnane III
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Executive Vice President
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Rodena Turner-Bojorquez
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, Human Resources.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael Ferveda
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President&nbsp;&#151; Freedom Airlines, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Brian S. Gillman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President, General Counsel and Secretary
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Donald Harrison
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President of Maintenance&nbsp;&#151; Mesa
    Airlines, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert Hornberg
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President and CIO
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">F. Carter Leake
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President&nbsp;&#151; CCAir, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mickey Moman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President of Flight Operations&nbsp;&#151;
    Mesa Airlines, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Jeff P. Poeschl
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vice President&nbsp;&#151; Finance
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gregory Stephens
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">President&nbsp;&#151; Air Midwest, Inc.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert B. Stone
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Financial Officer and Treasurer
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jonathan G. Ornstein
</FONT></I><FONT size="2">was appointed President and Chief
Executive Officer of Mesa Air Group, Inc. effective May&nbsp;1,
1998. Mr.&nbsp;Ornstein relinquished his position as President
of the Company in June 2000. From April 1996 to his joining the
Company as Chief Executive Officer, Mr.&nbsp;Ornstein served as
President and Chief Executive Officer and Chairman of Virgin
Express S.A./ N.V., a European airline. From 1995 to April 1996,
Mr.&nbsp;Ornstein served as Chief Executive Officer of Virgin
Express Holdings, Inc. Mr.&nbsp;Ornstein joined Continental
Express Airlines, Inc., as President and Chief Executive Officer
in July 1994 and, in November 1994, was named Senior Vice
President, Airport Services at Continental Airlines, Inc.
Mr.&nbsp;Ornstein was previously employed by the Company from
1988 to 1994, as Executive Vice President and as President of
the Company&#146;s WestAir Holding, Inc., subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Michael J. Lotz</FONT></I><FONT size="2">,
President and Chief Operating Officer, joined the Company in
July 1998. In January 1999, Mr.&nbsp;Lotz became Chief Operating
Officer. In August 1999, Mr.&nbsp;Lotz became the Company&#146;s
Chief Financial Officer and in January 2000 returned to the
position of Chief Operating Officer. On June&nbsp;22, 2000,
Mr.&nbsp;Lotz was appointed President of the Company. Prior to
joining the Company, Mr.&nbsp;Lotz served as Chief Operating
Officer of Virgin Express, S.A./ N.V., a position he held from
October 1996 to June 1998. Previously, Mr.&nbsp;Lotz was
employed by Continental Airlines, Inc., most recently as Vice
President of Airport Operations, Properties and Facilities at
Continental Express.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">George Murnane III</FONT></I><FONT size="2">,
Executive Vice President, was appointed Executive Vice President
of the Company effective December 2001. Mr.&nbsp;Murnane has
served as a director of the Company since June 1999.
Mr.&nbsp;Murnane has served as the President of Barlow
Management, Inc. since 1998. From 1996 to December 2001,
Mr.&nbsp;Murnane was a Director and Executive Vice President of
International Airline Support Group, Inc., a leading
redistributor of aftermarket commercial aircraft spare parts and
lessor and trader of commercial aircraft and engines, most
recently as its Chief Operating Officer. From 1995 to 1996,
Mr.&nbsp;Murnane served as Executive Vice President and Chief
Operating Officer of Atlas Air, Inc., an air cargo company. For
1986 to 1996, he was an investment banker with the New York
investment banking firm of Merrill Lynch &#38; Co., most
recently as a Director in the firm&#146;s Transportation Group.
Mr.&nbsp;Murnane currently serves on the Board of Directors of
International Airline Support Group, Inc. and North-South
Airways, Inc.
</FONT>

<P align="center"><FONT size="2">13
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Rodena
Turner-Bojorquez</FONT></I><FONT size="2">, Vice President of
Human Resources, joined the Company in May 1998. From 1996 to
1998, Ms.&nbsp;Turner-Bojorquez served as a Director at Virgin
Express, where she oversaw the customer service and flight crew
administration departments. From 1994 to 1996, she was Senior
Director of Human Resources at Continental Express. She holds a
BA in accounting from California State University, Fresno.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Michael Ferveda</FONT></I><FONT size="2">,
President of Freedom Airlines, Inc. (&#147;FAI&#148;), was
appointed President in May 2002. Prior to becoming President of
FAI, Mr. Ferveda served as the Senior Vice President of Mesa
Airlines, Inc. He joined the Company in September 1990.
Mr.&nbsp;Ferverda has served the Company in several capacities
including pilot, Flight Instructor/ Check Airman, Assistant
Chief Pilot, FAA Designated Examiner, FAA Director of Operations
and Divisional Vice President. Mr.&nbsp;Ferverda was a pilot
with Eastern Airlines from 1973 to 1989. Prior to joining
Eastern Airlines, Mr.&nbsp;Ferverda served as an Aviator in the
United States Navy. Mr.&nbsp;Ferverda is a graduate of Indiana
University.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Brian S. Gillman</FONT></I><FONT size="2">,
Vice President, General Counsel and Secretary, joined the
Company in February 2001. From July 1996 to February 2001, he
served as Vice President, General Counsel and Secretary of
Vanguard Airlines, Inc. in Kansas City, Missouri. From September
1994 to July 1996, Mr.&nbsp;Gillman was a corporate associate in
the law firm of Stinson, Mag &#38; Fizzell, P.C., Kansas City,
Missouri. Mr.&nbsp;Gillman received his Juris Doctorate and
B.B.A. in Accounting from the University of Iowa in 1994 and
1991, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Donald Harrison</FONT></I><FONT size="2">,
Vice President of Maintenance of Mesa Airlines, Inc., joined in
April 1999. Prior to joining the Company, Mr.&nbsp;Harrison was
employed at Dimension Aviation from March 1997 to April 1999 as
Vice President and General Manager. Prior to joining Dimension
Aviation, Mr.&nbsp;Harrison was employed as an aviation
consultant for Dee Howard from 1996 to March 1997.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Robert Hornberg</FONT></I><FONT size="2">,
Vice President and Chief Information Officer, joined the Company
in July 1998 as Director of Information Services.
Mr.&nbsp;Hornberg was appointed Vice President and Chief
Information Officer in September 2000. For October 1994 to April
1998, Mr.&nbsp;Hornberg was Director of Information Services for
Western Pacific Airlines.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">F.&nbsp;Carter
Leake</FONT></I><FONT size="2">, President of CCAir, Inc.,
joined the Company as Executive Vice-President of CCAir, in
January 2001. In October 2001, Mr.&nbsp;Leake was appointed
President. Prior to joining the Company, Mr.&nbsp;Leake served
as a Director of Sales for Bombardier Regional Aircraft from
November 1996 to January 2001. Previously, Mr.&nbsp;Leake was an
analyst with SH&#38;E, an aviation consulting firm in New York,
and a US Air Force military pilot.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Mickey Moman</FONT></I><FONT size="2">, Vice
President of Flight Operations of Mesa Airlines, Inc., joined
Mesa Airlines in October 1987. Mr.&nbsp;Moman was appointed Vice
President of Flight Operations with Mesa Airlines in May 2002.
Prior to employment with Mesa, he served eight years with the
FAA in various positions and prior to that served eight years in
the U.S. Air Force. While at Mesa, Mr.&nbsp;Moman started as a
line pilot in the Beech&nbsp;99. Mr.&nbsp;Moman has served the
Company in many capacities including pilot, Chief Pilot,
Director of Operations and Vice President of Training.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Jeff P. Poeschl</FONT></I><FONT size="2">,
Vice President&nbsp;&#151; Finance, joined the Company in
December 2000. From 1988 to the date, Mr.&nbsp;Poeschl joined
the Company, he was employed by Deloitte &#38; Touche in
Milwaukee, Wisconsin, most recently as Senior Manager. Mr.
Poeschl obtained his Bachelor of Arts in Business
Administration, double-majoring in Accounting and Finance, at
the University of Wisconsin.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Gregory Stephens</FONT></I><FONT size="2">,
President of Air Midwest, Inc., joined Air Midwest in 1985 as a
ground service worker, working his way up to station operations,
customer service agent, crew scheduler and dispatcher.
Mr.&nbsp;Stephens also held positions as Director of Planning
and Pricing, Director of Safety and Vice-President and General
Manager of Air Midwest. Mr.&nbsp;Stephens was appointed Vice
President of Customer Service in 1998 of Mesa Airlines and
appointed President of Air Midwest in December 1999.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Robert B. Stone</FONT></I><FONT size="2">,
Chief Financial Officer and Treasurer, joined the Company in
January 2000. Prior to joining the Company, Mr.&nbsp;Stone was
employed by the Boeing Company for more than 20&nbsp;years, most
recently as Vice President, Financial Planning and Analysis.
Mr.&nbsp;Stone obtained his MBA from Pacific Lutheran University
and his Bachelor of Arts in Business Administration at the
University of Washington.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "PART II" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">PART II</FONT></B>

<!-- link2 "Item 5. Market for Registrant&#146;s Common Equity and Related Stockholder Matters" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;5.</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Market for Registrant&#146;s Common Equity
    and Related Stockholder Matters</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Market Price of Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth, for the periods
indicated, the high and low price per share of Mesa common stock
for the two most recent fiscal years, as reported by NASDAQ.
Mesa&#146;s common stock is traded on the NASDAQ National Market
System under the symbol &#147;MESA.&#148;
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Fiscal 2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Fiscal 2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.89</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.00</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.56</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.74</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.49</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;6, 2002, we had approximately
1,247 shareholders of record. We have never paid cash dividends
on our common stock. The payment of future dividends is within
the discretion of our board of directors and will depend upon
our future earnings, if any, our capital requirements, bank
financing, financial condition and other relevant factors.
</FONT>

<P align="left">
<B><FONT size="2">Recent Sales of Unregistered
Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;7, 2002, in connection with an
agreement entered into with Raytheon Aircraft Company
(&#147;Raytheon&#148;), we issued a warrant to purchase shares
of our common stock to Raytheon. This warrant allows Raytheon to
purchase up to an aggregate of 233,068 shares of our common
stock at a per share exercise price of $10.00. Raytheon paid a
purchase price of $1.50 per share underlying the warrant. The
warrant is exercisable at any time over a three-year period
following its date of issuance. Absent a default by us under the
agreement with Raytheon in which case vesting is accelerated,
the shares underlying the warrant vest (and are therefore
purchasable by Raytheon) according to the following schedule:
13,401 shares in fiscal year 2001; 116,534 shares in fiscal year
2002; 58,267 shares in fiscal year 2003 and 44,866 shares in
fiscal year 2004. On March&nbsp;12, 2002 and November&nbsp;22,
2002, Raytheon exercised its option to purchase the 2001 shares
and 2002 shares. The sale of the warrant and the shares
underlying the warrant were made pursuant to an exemption from
registration pursuant to Section&nbsp;4(2) under the Securities
Act of 1933, as amended.
</FONT>

<P align="center"><FONT size="2">15
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Item 6. Selected Financial Data" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Selected Financial Data</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Selected Financial Data and Operating
Statistics</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The selected financial data as of and for each of
the five years ended September&nbsp;30, 2002, are derived from
the Consolidated Financial Statements of the Company and its
subsidiaries and should be read in conjunction with the
Consolidated Financial Statements included elsewhere in this
Form&nbsp;10-K and the related notes thereto and
&#147;MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.&#148; The Consolidated
Financial Statements of the Company for the fiscal years ended
September&nbsp;30, 2002, 2001 and 2000, have been audited by
Deloitte &#38; Touche LLP, independent auditors. The
Consolidated Financial Statements of the Company for the fiscal
years ended September&nbsp;30, 1999 and 1998 have been audited
by KPMG LLP, independent auditors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In thousands of dollars except per share data and
average fare amounts and as otherwise indicated.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Years Ended:</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999(4)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1998(5)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">496,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">471,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">404,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">494,866</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">503,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">594,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">429,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">402,487</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">533,910</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,222</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(70,642</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,814</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,129</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(39,044</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,469</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,096</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,382</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,524</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(71,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,031</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,815</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(58,229</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,309</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,412</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(50,467</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)&nbsp;per share:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Working capital (deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,016</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">79,086</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">65,436</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,040</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,446</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">423,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">386,594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">403,773</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt, excluding current portion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">135,533</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">245,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,649</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net book value per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.79</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.95</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Passengers carried
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,118,839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,789,180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,457,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,255,696</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,969,104</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue passenger miles (000)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,986,164</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,796,058</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,561,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,324,867</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,407,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Available seat miles (&#147;ASM&#148;) (000)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,459,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,289,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,951,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,594,861</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,581,946</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average passenger journey in miles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">388</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">350</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">311</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">236</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average stage length in miles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">225</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Load factor
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Break-even passenger load factor
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue per ASM in cents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating cost per ASM in cents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average yield per revenue passenger mile in cents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average fare
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93.93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">106.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80.91</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Aircraft in service
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cities served
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">147</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">153</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Number of employees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,820</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,480</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,423</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net loss in fiscal 2002 includes the effect of
    impairment and restructuring charges of $26.7&nbsp;million
    (pretax).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net loss in fiscal 2001 includes the effect of
    impairment and restructuring charges of $80.9&nbsp;million
    (pretax).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Net earnings in fiscal 2000 include the
    cumulative effect of the accounting change from the accrual
    method to the direct expense method for maintenance costs of
    $18.1&nbsp;million (pretax)&nbsp;and the benefit of reversing a
    valuation allowance for deferred tax assets of
    $21.9&nbsp;million.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes Mesa as of and for the twelve months
    ended September&nbsp;30, 1999, CCAir as of and for the twelve
    months ended September&nbsp;30, 1999. Net loss in fiscal 1999
    includes the effect of impairment and restructuring charges of
    $28.9&nbsp;million (pre-tax) and the reversal of a previous
    charge for the cancellation of the UAL code share agreement of
    $14.0&nbsp;million (pretax).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mesa as of and for the twelve months ended
    September&nbsp;30, 1998, CCAir as of and for the twelve months
    ended December&nbsp;31, 1998.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">16
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our June&nbsp;9, 1999 acquisition of CCAir was
accounted for as a pooling of interests and, accordingly, our
consolidated financial statements have been restated to include
the results of CCAir for all periods presented. The consolidated
financial statements of CCAir for the 1998 fiscal year has not
been restated to change CCAir&#146;s audited year end to
September&nbsp;30.
</FONT>

<!-- link2 "Item 7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Management&#146;s Discussion and Analysis
    of Financial Condition and Results of Operations</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following discussions and analysis provides
information which management believes is relevant to an
assessment and understanding of the Company&#146;s results of
operations and financial condition. The discussion should be
read in conjunction with the Consolidated Financial Statements
and the related notes thereto, and the Selected Financial Data
and Operating Data contained elsewhere herein.
</FONT>

<P align="left">
<B><FONT size="2">Critical Accounting Estimates and
Judgments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The discussion and analysis of our financial
condition and results of operations is based upon our financial
statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of
America. In connection with the preparation of these financial
statements, we are required to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenue, and
expenses, and related disclosure of contingent liabilities. On
an ongoing basis, we evaluate our estimates, including those
related to revenue recognition, the allowance for doubtful
accounts, medical claims reserve, valuation of assets held for
sale and costs to return aircraft and a valuation allowance for
certain deferred tax assets. We base our estimates on historical
experience and on various other assumptions that we believe are
reasonable under the circumstances. Such historical experience
and assumptions form the basis for making judgments about the
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have identified the accounting policies below
as critical to our business operations and the understanding of
our results of operations. The impact of these policies on our
business operations is discussed throughout Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations where such policies affect our reported and expected
financial results. The discussion below is not intended to be a
comprehensive list of our accounting policies. For a detailed
discussion on the application of these and other accounting
policies, see Note 1 in the Notes to the Consolidated Financial
Statements, which contains accounting policies and other
disclosures required by accounting principles generally accepted
in the United States of America.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Revenue Recognition</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial arrangement between Mesa and their
code-share partners involve either a revenue-guarantee or
pro-rate arrangement. Under a revenue-guarantee arrangement, the
major airline generally pays a monthly guaranteed amount. Both
the America West code-share agreement and the US Airways
regional jet code-share agreement are revenue-guarantee flying
agreements. Under the terms of these flying agreements, the
major carrier controls marketing, scheduling, ticketing, pricing
and seat inventories. The Company receives a guaranteed payment
based upon a fixed minimum monthly amount plus amounts related
to departures and block hours flown plus direct reimbursement
for expenses such as fuel, landing fees and insurance. Among
other advantages, revenue-guarantee arrangements reduce the
Company&#146;s exposure to fluctuations in passenger traffic and
fare levels, as well as fuel prices. The US Airways turboprop
and the Frontier JetExpress code-share agreements are pro-rate
agreements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Allowance for Doubtful
    Accounts</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed above, amounts billed under revenue
guarantee arrangements are subject to the interpretation of the
applicable code-share agreement and are subject to audit by the
code-share partner. Periodically our code-share partners dispute
amounts billed and pay amounts less than those billed. Ultimate
collection of the remaining amounts not only depends upon Mesa
prevailing under audit, but also upon the financial well-being
of the code-share partner. As such, the Company periodically
reviews amounts past due and records a reserve for amounts
estimated to be uncollectible. The allowance for doubtful
accounts was $12.8&nbsp;million and $14.7&nbsp;million at
September&nbsp;30, 2002 and 2001, respectively. If the
Company&#146;s actual ability to collect these
</FONT>

<P align="center"><FONT size="2">17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">receivables and the actual financial viability of
its partners is materially different than estimated, the
Company&#146;s estimate of the allowance could be materially
understated or overstated.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Accrued Health Care Costs</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is currently self-insured for health
care costs and as such, estimates a reserve for the cost of
claims that have not been paid as of the balance sheet date. The
Company&#146;s estimate of this reserve is based upon historical
claim experience and upon the recommendations of its health care
provider. At September&nbsp;30, 2002 and 2001, the Company has
accrued $2.0&nbsp;million and $1.4&nbsp;million, respectively,
for the cost of future health care claims. If the ultimate
development of these claims is significantly different than
those that have been estimated, the reserves for future health
care claims could be materially overstated or understated.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Long-lived Assets, Aircraft and Parts Held
    for Sale</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-lived assets to be held and used are
reviewed for impairment whenever events or changes in
circumstances indicate that the related carrying amount may not
be recoverable. When required, impairment losses on assets to be
held and used are recognized based on the fair value of the
asset. The Company determines the fair value based upon
estimates of future cash flows, market value of similar assets
and/ or independent appraisals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-lived assets to be disposed of and parts
held for sale are reported at the lower of carrying amount or
fair value less cost to sell. Aircraft and parts held for sale
are comprised of aircraft the Company has identified as surplus
as well as expendable and rotable inventory that is in excess of
the Company&#146;s needs. Aircraft currently identified as held
for sale are under contract to return to the manufacturer and
are valued at the contract price, less the cost to return the
aircraft to meet the manufacturer&#146;s return conditions. The
Company estimates quantities of rotable and expendable inventory
that are surplus to its needs by employing independent
consultants who utilize mathematical models to determine optimum
inventory levels based on such variables as size of fleet,
number of maintenance bases and desired reliability. Quantities
of rotable and expendable inventory that are surplus to the
Company&#146;s needs are valued at fair market value, less costs
to sell. Fair market value is determined based upon the
Company&#146;s experience in selling similar assets and outside
appraisals. If the actual value of these surplus parts is
materially different than estimated, the Company&#146;s estimate
of fair market value could be materially understated or
overstated.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Costs to Return Aircraft Held for
    Sale</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company periodically returns aircraft to the
manufacturer or lessor that have been identified as excess. It
is standard practice in the industry that aircraft returns must
meet established contractual return conditions. The ultimate
cost of completing the maintenance necessary to meet these
return conditions is not known until all the work is completed
and accepted by the manufacturer or lessor. As such, the Company
estimates these costs at the time of the decision to the return
aircraft. The Company&#146;s estimates are based upon historical
experience in performing this and similar maintenance; however,
the ultimate cost cannot be readily determined until the
aircraft or engine is opened and examined. At September&nbsp;30,
2002 and 2001, the Company accrued $8.1&nbsp;million and
$4.7&nbsp;million, respectively, for the cost to return
aircraft. If the ultimate cost to return these aircraft is
significantly different than what has been estimated, the
reserves for the costs to return aircraft could be materially
overstated or understated.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Valuation Allowance for Deferred Tax
    Assets</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company records deferred tax assets for the
value of benefits expected to be realized from the utilization
of alternative minimum tax credit carryforwards and state and
federal net operating loss carryforwards. The Company
periodically reviews these assets for realizability based upon
expected taxable income in the applicable taxing jurisdictions.
To the extent the Company believes some portion of the benefit
may not be realizable, an estimate of the unrealized portion is
made and an allowance is recorded. At September&nbsp;30, 2002
and 2001, the Company had a valuation allowance for certain
deferred tax assets not expected to be realized of
$2.9&nbsp;million and $2.2 million, respectively. If the
ultimate realization of these deferred tax assets is
significantly different than those that have been estimated, the
valuation allowance for deferred tax assets could be materially
overstated or understated.
</FONT>

<P align="center"><FONT size="2">18
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Results of Operations</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">General</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mesa Air Group, Inc. and its subsidiaries
(collectively referred to herein as &#147;Mesa&#148; or the
&#147;Company&#148;) is an independently owned regional airline
serving 147&nbsp;cities in 37&nbsp;states, Canada and Mexico. At
September&nbsp;30, 2002, Mesa operated a fleet of
124&nbsp;aircraft and had approximately 889&nbsp;daily
departures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Mesa&#146;s airline operations during fiscal year
2002 were conducted by three regional airline subsidiaries
primarily utilizing hub-and-spoke systems. Mesa Airlines, a
wholly owned subsidiary of Mesa, operates as America West
Express under a code-share and revenue sharing agreement with
America West Airlines, Inc., as US Airways Express under
code-sharing agreements with US Airways, Inc. and as Frontier
Jet Express under a code-sharing agreement with Frontier. Air
Midwest, Inc., a wholly owned subsidiary of Mesa, also operates
under a code-sharing agreement with US Airways and flies as US
Airways Express and also operates an independent division, doing
business as Mesa Airlines, from Albuquerque, New Mexico and
Dallas, Texas. Air Midwest also has a code-sharing agreement
with Midwest Express in Kansas City on flights operated as US
Airways Express. Prior to it ceasing operations on
November&nbsp;4, 2002, CCAir, a wholly owned subsidiary of Mesa,
operated under a code-share agreement with US Airways that
permitted CCAir to operate under the name US Airways Express and
to charge their joint passengers on a combined basis with US
Airways. In addition, Freedom Airlines, Inc., a wholly owned
subsidiary of Mesa Air Group, Inc. began operating as America
West Express pursuant to the code-share and revenue sharing
agreement with America West in October 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following tables set forth selected operating
and financial data of the Company for the years indicated below.
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Operating Data</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Passengers
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,118,839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,789,180</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,457,989</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Available seat miles (&#147;ASM&#148;)(000s)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,459,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,289,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,951,116</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue passenger miles (000s)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,986,164</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,796,058</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,561,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Load factor
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">54.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Yield per revenue passenger mile (cents)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Revenue per ASM (cents)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16.0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating cost per ASM (cents)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Average stage length (miles)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">298</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">268</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Number of operating aircraft in fleet
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">118</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gallons of fuel consumed
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">90,969,241</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">86,977,636</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">78,832,519</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Block hours flown
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352,323</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">383,310</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">395,446</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Departures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">323,675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">343,638</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">19
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">Operating Expense Data</FONT></B>

<DIV align="center">
<B><FONT size="2">Years Ended</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">September&nbsp;30, 2002, 2001 and
2000</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="19%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cost</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cost</FONT></B></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cost</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ASM</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ASM</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Total</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ASM</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(000s)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(cents)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(000s)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(cents)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(000s)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Revenues</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(cents)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Flight operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">262,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.8</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">272,944</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">223,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maintenance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,037</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Aircraft &#38; traffic servicing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,838</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Promotion &#38; sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General &#38;
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation &#38;
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,932</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment and restructuring charge
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15.4</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">503,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">101.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">594,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">429,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">91.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,440</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,469</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,463</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,404</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(691</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Fiscal 2002 Versus Fiscal 2001</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">General</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Operating Revenues</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, operating revenues decreased by
$26.6&nbsp;million (5.1%) to $496.8&nbsp;million, from
$523.4&nbsp;million in fiscal 2001. Although our revenue
decreased, revenue under revenue-guarantee contracts increased
by 12.4% in fiscal 2002 over fiscal 2001. The primary reason for
the increase was the addition of 13&nbsp;regional jets that were
placed into service in 2002 (eight of which were operated
pursuant to revenue-guarantee agreements for the majority of the
year). Offsetting this increase, revenue derived from our
pro-rate revenue operations, which currently accounts for
approximately 25% of our revenue, decreased 35.7% compared to
the prior year. The decrease in pro-rate revenue was primarily
due to reductions in pro-rate flying capacity and industry-wide
declines in load factors as a result of September&nbsp;11th. As
a result of decreases in capacity and the effects of the events
of September&nbsp;11, 2001, passengers traveling on such
pro-rate flights decreased 42.9% for the year. Under
revenue-guarantee contracts, we are substantially insulated from
industry passenger trends.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Operating Expenses</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Flight Operations</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, flight operations expense
decreased 3.8% to $262.5&nbsp;million (7.6&nbsp;cents per ASM)
from $272.9&nbsp;million (8.3&nbsp;cents per ASM) in fiscal
2001. The $10.4&nbsp;million decrease in expense in fiscal 2002,
is primarily attributable to the reduction in turboprop flying
as well as cost reduction initiatives related to the turboprop
operation, which included $1.0&nbsp;million associated with the
Raytheon agreement. The decrease on a cost per ASM basis for the
year ended September&nbsp;30, 2002, is a result of an increase
in the proportion of regional jet ASMs in our fleet. Regional
jets generally have lower operating costs per ASM than turboprop
aircraft.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Maintenance Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, maintenance expense decreased
0.8% to $100.0&nbsp;million (2.9&nbsp;cents per ASM) from
$100.8&nbsp;million (3.1&nbsp;cents per ASM) in fiscal 2001. The
decrease in maintenance costs for fiscal 2002 is primarily the
result of $3.4&nbsp;million in benefits received as part of the
cost reduction agreement reached with Raytheon Aerospace and
reduced turboprop flights. The decrease was offset by higher
than expected engine maintenance in the fourth quarter due to
problems related to unexpected component failures, resulting in
the premature removal and overhaul of jet engines. The decrease
in cost per ASM is a result of an increase in the proportion of
regional jet ASMs and the turboprop cost reduction initiatives.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Aircraft and Traffic Servicing
    Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, aircraft and traffic servicing
expense decreased 14.4% to $46.1&nbsp;million (1.3&nbsp;cents
per ASM) from $53.8&nbsp;million (1.6&nbsp;cents per ASM) in
fiscal 2001. The decrease in aircraft and traffic service
expense is primarily due to reduced turboprop flights. On an ASM
basis, the reduction is a result of the increase in the
proportion of regional jet ASMs. The Company can service
regional jets with the same number of personnel as smaller
turboprop aircraft even though regional jets carry more
passengers. In addition, the Company also had more regional jets
in service under the US Airways contract in 2002 than in 2001.
Under our regional jet contract with US Airways, many of the
aircraft and traffic servicing expenses are absorbed directly by
US Airways.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Promotion and Sales</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, promotion and sales expense
decreased 43.6% to $12.5 million (0.4&nbsp;cents per ASM) from
$22.2&nbsp;million (0.7&nbsp;cents per ASM) in fiscal 2001. The
decrease is primarily a result of the decrease in booking fees
and franchise fees paid to the Company&#146;s code-share
partners as a result of the decrease in pro-rate passenger
traffic. Our contract with America West and our jet contract
with US Airways eliminate booking fees and travel agency
commissions being charged directly to the Company and as such,
these costs per ASM are expected to decline as the America West
Express and US Airways Express jet operations continue to grow.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">General and Administrative Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, general and administrative
expense decreased 10.9% to $44.3&nbsp;million (1.3&nbsp;cents
per ASM) from $49.7&nbsp;million (1.5&nbsp;cents per ASM) in
fiscal 2001. The decrease is primarily due to a reduction in bad
debt expense of $13.0&nbsp;million, which was due to allowances
for receivables recorded in the prior year as a result of the
effect that terrorist attacks that took place on
September&nbsp;11, 2001 had on our code-share partners. In
addition, professional fees decreased approximately
$3.0&nbsp;million as the majority of the legal costs associated
with the Beus Gilbert matter were accrued in 2001. We also
reduced our 401(k) matching contribution by $0.7&nbsp;million in
2002. These decreases were offset by increases in passenger
liability insurance of $9.9&nbsp;million due to increased
premiums as a result of the events of September&nbsp;11, 2001 as
well as a $4.3&nbsp;million contract claim release to US Airways
as a result of the US Airways bankruptcy restructuring.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Depreciation and Amortization</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, depreciation and amortization
expense decreased 20.1% to $10.9&nbsp;million (0.3&nbsp;cents
per ASM) from $13.7&nbsp;million (0.4&nbsp;cents per ASM) in
fiscal 2001. The decrease is primarily due to the cessation of
depreciation on aircraft and parts held for sale and reduced
depreciation expense on the aircraft that were impaired at
September&nbsp;30, 2001. We are also no longer incurring
goodwill amortization expense as all goodwill was written off at
September&nbsp;30, 2001.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Impairment and Restructuring Charges</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fourth quarter of fiscal 2002, the
Company&#146;s subsidiary, CCAir made a decision to discontinue
its operations. As a result of this decision, the Company
recorded a restructuring and impairment charge of
$19.8&nbsp;million. The charge is comprised of $0.7&nbsp;million
of severance and other employee related liabilities,
$4.6&nbsp;million in aircraft related return costs,
$7.8&nbsp;million for future aircraft lease payments,
$4.1&nbsp;million to reduce the value of rotable and expendable
inventory to fair market value less costs to sell,
$0.9&nbsp;million to
</FONT>

<P align="center"><FONT size="2">21
</FONT>
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<DIV align="left">
<FONT size="2">write off the value of equipment and leasehold
improvements and $1.7&nbsp;million to reduce maintenance
deposits held by a lessor to net realizable value.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also in the fourth quarter of fiscal 2002, we
returned 12 of the 15 B1900D aircraft permitted under our
agreement with Raytheon. As a result of unanticipated increases
in the cost of meeting return conditions, we recorded an
additional impairment charge of $3.3&nbsp;million. The remaining
three aircraft are expected to be returned to Raytheon by the
end of the fiscal second quarter of 2003. We also took a charge
of $3.6&nbsp;million to accrue for the remaining lease payments
and future costs of returning two Shorts 360 aircraft the
Company is subleasing to an operator in Europe.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Interest Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The decrease in interest expense of
$8.1&nbsp;million from $13.5&nbsp;million in 2001 to
$5.4&nbsp;million in 2002 is due to reduced interest rates as
the majority of our Beechcraft 1900D fleet is financed at
variable interest rates as well as $0.9&nbsp;million in benefits
received from Raytheon Aerospace as part of the cost reduction
agreement.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Other Income and Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2002, other income and expense
decreased $14.3&nbsp;million from income of $10.9&nbsp;million
(0.3&nbsp;cents per ASM) in 2001 to expense of $3.4&nbsp;million
in 2002. Included in other income is $3.2&nbsp;million in net
investment related losses (unrealized losses of
$5.2&nbsp;million offset by realized gains of
$2.0&nbsp;million). The investment losses include losses from
the Company&#146;s portfolio of aviation related securities,
including $1.9&nbsp;million incurred by our subsidiary UFLY. The
minority interest in these losses is deducted out of our net
income or loss after income taxes. Included in other income for
fiscal 2001 was $14.7 million in grants received from the DOT as
part of the Airline Transportation Safety and System
Stabilization Act.
</FONT>

<P align="left">
<B><FONT size="2">Fiscal 2001 Versus Fiscal 2000</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Operating Revenues</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, operating revenues increased by
$51.8&nbsp;million (11.0%) to $523.4&nbsp;million, from
$471.6&nbsp;million in fiscal 2000. The increase was primarily
due to the addition of 13 regional jets employed under revenue
guarantee contracts with America West and US Airways.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Operating Expenses</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Flight Operations</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, flight operations expense
increased 22.3% to $272.9&nbsp;million (8.3&nbsp;cents per ASM)
from $223.2&nbsp;million (7.6&nbsp;cents per ASM) in fiscal
2000. The $50.0&nbsp;million increase was primarily due to
increased fuel costs of approximately $18.1&nbsp;million,
increased lease costs of approximately $21.6&nbsp;million and
increased pilot wages of approximately $9.0&nbsp;million as well
as an increase of $0.7&nbsp;million related to health insurance
costs. These expense increases were the result of adding
additional regional jets in fiscal 2001.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Maintenance Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, maintenance expense increased
20.8% to $100.8&nbsp;million (3.1&nbsp;cents per ASM) from
$83.5&nbsp;million (2.8&nbsp;cents per ASM) in fiscal 2000.
Increased maintenance expenditures are primarily due to the
increased number of activity based or time sensitive maintenance
events and the expiration of the warranty period on many of our
CRJ aircraft.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Aircraft and Traffic Servicing
    Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, aircraft and traffic servicing
expense decreased 0.1% to $53.8&nbsp;million (1.6&nbsp;cents per
ASM) from $53.8&nbsp;million (1.8&nbsp;cents per ASM) in fiscal
2000. The relative stability of aircraft and traffic servicing
expense is due to the Company serving approximately the same
number of cities in 2001 as in 2000, 118 versus 120,
respectively.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Promotion and Sales</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, promotion and sales expense
decreased 16.2% to $22.2&nbsp;million (0.7&nbsp;cents per ASM)
from $26.6&nbsp;million (0.9&nbsp;cents per ASM) in fiscal 2000.
The decrease is primarily due to the Company&#146;s continued
downsizing of its B1900D fleet and the resulting decrease in
prorate flying.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">General and Administrative Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, general and administrative
expense increased 83.3% to $49.7&nbsp;million (1.5&nbsp;cents
per ASM) from $27.1&nbsp;million (0.9&nbsp;cents per ASM) in
fiscal 2000. The $22.6&nbsp;million increase is primarily due to
$14.6&nbsp;million in allowances on receivables from our
code-share partners as a result of the impact of the attacks of
September&nbsp;11th and the impact that the decline in passenger
traffic and softening economy have had on their business and
ability to pay, $4.8&nbsp;million in reserves for professional
fees and an increase of approximately $2.3&nbsp;million in
property taxes as a result of increases to the Company&#146;s
jet fleet.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Depreciation and Amortization</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, depreciation and amortization
expense decreased 12.5% to $13.7&nbsp;million (0.4&nbsp;cents
per ASM) from $15.6&nbsp;million (0.5&nbsp;cents per ASM) in
fiscal 2000. The decrease is primarily due to the cessation of
depreciation on B1900D aircraft held for sale.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Impairment and Restructuring Charges</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the second quarter of fiscal 2001, we
recognized a charge of approximately $22.7&nbsp;million on 15
B1900D aircraft we returned or intend to return to the
manufacturer. The charge was comprised of an impairment loss to
write the aircraft down to the contractual selling price less
the estimated costs to prepare the aircraft for return to the
manufacturer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to the economic slowdown and the effects of
the terrorist attacks in the fourth quarter of fiscal 2001, we
wrote off the unamortized value of the goodwill associated with
certain B1900D route systems totaling $9.3&nbsp;million. The
Company also took an additional charge of approximately
$40.7&nbsp;million related to its B1900D fleet. The charge is
comprised of an impairment loss of $40.4&nbsp;million on the
value of 36&nbsp;B1900D aircraft the Company is planning to
continue to fly.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fourth quarter of fiscal 2001, the Company
made a decision to discontinue operating Jetstream Super&nbsp;31
aircraft from its Charlotte hub. As a result of this decision,
the Company took a $4.9&nbsp;million charge that is included in
other accrued liabilities and other non-current liabilities at
September&nbsp;30, 2001. The charge is comprised of
$3.6&nbsp;million related to the remaining lease payments on
nine Jetstream Super&nbsp;31 aircraft, $1.2&nbsp;million related
to the costs to buyout the remaining term of the maintenance
contract associated with these aircraft and $0.1&nbsp;million
related to costs to return the aircraft.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We also elected to accelerate the disposition of
excess inventory. During the fourth quarter of fiscal 2001, we
hired an independent consulting firm to determine our inventory
needs and to value our surplus inventory. Prior to
September&nbsp;11, 2001, the Company had been selling off
surplus inventory on a passive basis as opportunities arose. As
a result of this decision, the Company took a $3.2&nbsp;million
charge to reduce its surplus inventory to net realizable value,
less costs to sell. The surplus inventory is carried on the
balance sheet under the heading of aircraft and parts held for
sale.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <I><FONT size="2">Other Income and Expense</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Included in other income is $14.7&nbsp;million
related to amounts received and to be received from the DOT
under the Air Transportation Safety and Stabilization Act. This
amount is offset by $3.7&nbsp;million in net investment related
losses (unrealized losses of $8.0&nbsp;million offset by
realized gains of $4.3&nbsp;million).
</FONT>

<P align="left">
<B><FONT size="2">Liquidity and Capital Resources</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We had cash, cash equivalents and marketable
securities of $54.4&nbsp;million at September&nbsp;30, 2002,
compared to cash, cash equivalents and marketable securities of
$83.3&nbsp;million at September&nbsp;30, 2001. Primary uses of
cash included (i)&nbsp;repaying $20.0&nbsp;million in funds
borrowed under our line of credit after September&nbsp;11th,
2001, (ii)&nbsp;reducing accounts payable by $19.7&nbsp;million
after extending the days outstanding in
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<DIV align="left">
<FONT size="2">the periods following the events of
September&nbsp;11, 2001, (iii)&nbsp;capital expenditures of
$13.5&nbsp;million (primarily rotable aircraft parts),
(iv)&nbsp;principal payments on long-term debt of
$9.4&nbsp;million, (v)&nbsp;cost to return aircraft of
$6.6&nbsp;million and (vi)&nbsp;repurchases of common stock of
$6.0&nbsp;million. Offsetting these uses of cash, cash sources
included (i)&nbsp;receiving $13.0&nbsp;million from past
contractual claims and $5.2&nbsp;million in various lease
incentives that are included in deferred credits,
(ii)&nbsp;sales and reductions in levels of expendable and
rotable inventory of $19.2&nbsp;million, (iii)&nbsp;net return
of aircraft deposits of $4.9&nbsp;million and (iv)&nbsp;net
contributions from minority interest shareholders of UFLY of
$2.0&nbsp;million. The above factors, among others, resulted in
a $28.6&nbsp;million decrease in cash, cash equivalents and
marketable securities during fiscal 2002, which comprises the
majority of the decrease noted above.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, we had receivables
of approximately $29.1&nbsp;million (net of an allowance for
doubtful accounts of $12.8&nbsp;million), compared to
$29.4&nbsp;million (net of an allowance for doubtful accounts of
$14.7&nbsp;million) at September&nbsp;30, 2001. The amounts due
consist primarily of receivables due from our code-share
partners, passenger ticket receivables due through the Airline
Clearing House (&#147;ACH&#148;) and amounts due from the DOT
under the Airline Stabilization Act. The allowance for doubtful
accounts was decreased as a result of the settlement with
US&nbsp;Airways where previously reserved receivables were
written off against the allowance.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2002, we had code-share agreements
with America West, US&nbsp;Airways, Frontier Airlines and
Midwest Express Airlines. Approximately 98%, 97% and 95% of the
Company&#146;s consolidated passenger revenue for the years
ended September&nbsp;30, 2002, 2001 and 2000, respectively, were
derived from these agreements. Accounts receivable from our
code-share partners were 57% and 29% of total gross accounts
receivable at September&nbsp;30, 2002 and 2001, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A reduction in business travel, a slowing economy
and the terrorist attacks of September&nbsp;11, 2001 all have
had a significant impact on the airline industry, including
America West and US&nbsp;Airways. Continuing declines in the
economy or an inability to receive government grants and loan
guarantees could have a material adverse effect on the viability
of either of these airlines. A termination of the America West
or US&nbsp;Airways code share agreements (specifically the jet
contracts) would have a material adverse effect on our business
prospects, financial position, results of operations and cash
flows.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a termination without renewal should occur,
management believes they would be able to reduce costs quickly
through reductions in headcount or parking aircraft.
Additionally management believes they could continue flying
certain routes or transfer certain aircraft, particularly the
regional jets, to new markets and new code-share arrangements
with other carriers. As of December&nbsp;6, 2002, we had cash
and marketable securities in excess of $45.0&nbsp;million.
Management believes additional proceeds of approximately
$10&nbsp;million could be generated through the cancellation of
aircraft orders. Management believes these actions would provide
sufficient working capital to meet its operating needs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 1999, we entered into an agreement with
Empresa Brasiliera de Aeronautica SA (&#147;Embraer&#148;) to
acquire 36&nbsp;Embraer ERJ-145 50-passenger regional jets. We
introduced the ERJ-145 aircraft into revenue service in the
third quarter of fiscal 2000 as US&nbsp;Airways Express. As of
September&nbsp;30, 2002, the Company had taken delivery of
32&nbsp;ERJ-145&#146;s, which have been financed as operating
leases. We have the right to cancel the four remaining firm
aircraft. In conjunction with this purchase agreement, we have
$4.2&nbsp;million remaining on deposit with Embraer, which is
included with lease and equipment deposits at September&nbsp;30,
2002. The remaining deposit will be returned either upon the
delivery of the last four aircraft or notification by us of our
intention to cancel the orders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have significant long-term lease obligations
primarily relating to our aircraft fleet. The leases are
classified as operating leases and are therefore excluded from
our consolidated balance sheets. At September&nbsp;30, 2002, we
leased 99&nbsp;aircraft with remaining lease terms ranging from
1 to 17&nbsp;years. Future minimum lease payments due under all
long-term operating leases were approximately $1.5&nbsp;billion
at September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our long-term debt was primarily incurred
pursuant to the acquisition of our B1900D aircraft. In 2002, the
Company retired $32.7&nbsp;million in debt by returning
12&nbsp;B1900D aircraft. At September&nbsp;30, 2002, we owned
39&nbsp;B1900D aircraft which have underlying maturities through
2011.
</FONT>

<P align="center"><FONT size="2">24
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, our Board of Directors
authorized us to repurchase up to 10% of the outstanding shares
of our common stock (approximately 3.4&nbsp;million shares). In
January 2001, the Board approved the repurchase by the Company
of up to an additional one million shares of our common stock.
As of September&nbsp;30, 2002, we had acquired and retired
approximately 4.0&nbsp;million shares (approximately 12.5%) of
our outstanding common stock at an aggregate cost of
approximately $24.0&nbsp;million, leaving approximately
400,000&nbsp;shares available for repurchase under the existing
Board authorizations. In October 2002, our Board of Directors
authorized the repurchase of an additional two&nbsp;million
shares. Purchases are made at management&#146;s discretion based
on market conditions and the Company&#146;s financial resources.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have negotiated 10-year engine maintenance
contracts with General Electric Aircraft Engines
(&#147;GE&#148;) for our CRJ aircraft, Rolls-Royce Allison
(&#147;Rolls-Royce&#148;) for our ERJ aircraft and Pratt and
Whitney, Canada Aircraft Services (&#147;PWC&#148;) for our Dash
8-200 aircraft. The GE contract requires a monthly payment based
upon flight hours incurred. The Rolls-Royce and PWC contracts
provide for payment at the time of the repair event for a fixed
dollar amount per flight hour. The rate under all contracts is
subject to escalation based on changes in certain price indices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2000, we reached agreement with Fleet
Capital for a $35&nbsp;million line of credit, collateralized by
the Company&#146;s inventory and receivables. The agreement,
which expires in December 2003, has provisions that allow the
expansion of available credit to $50&nbsp;million by adding new
lenders provided that there is additional collateral. The
agreement also contains a financial covenant that requires the
maintenance of certain financial ratios related to fixed charge
coverage and total debt to capital. The Company was in
compliance with these covenants at September&nbsp;30, 2002. We
intend to use the facility for general working capital purposes.
We also had $13.7&nbsp;million in letters of credit outstanding
at September&nbsp;30, 2002, which reduced the amount available
under our line of credit with Fleet. There were no amounts
outstanding under this facility at September&nbsp;30, 2002.
Based upon available collateral, $4.1&nbsp;million remained
available under the line at September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May 2001, we entered into an agreement with
BRAD to acquire 20&nbsp;50-seat CRJ-200s, 20&nbsp;64-seat
CRJ-700s and 20&nbsp;80-seat CRJ-900s (the &#147;2001 BRAD
Agreement&#148;). Under the agreement, Mesa has the right to
convert up to five CRJ-700 aircraft to CRJ-900 aircraft and to
cancel the CRJ-200 aircraft. We have notified BRAD of our
intention to convert to CRJ-900s. The total number of firm
aircraft orders is now 15&nbsp;CRJ-700s and 25&nbsp;CRJ-900s. We
secured the order with a $4.0&nbsp;million deposit and will
continue to make 24&nbsp;monthly deposits of approximately
$1.1&nbsp;million through April 2003. In February 2002,
Bombardier returned $7.0&nbsp;million of deposits to the Company
and applied $5.5&nbsp;million to outstanding obligations.
Deposits of $2.5&nbsp;million will be returned to us upon
completion of permanent financing on the first five aircraft
($500,000 per aircraft). The remaining deposits will be returned
on a pro rata basis in equal amounts upon completion of
permanent financing on each of the last five aircraft
($3.0&nbsp;million per aircraft). The transaction includes
standard product support provisions, including training support,
preferred pricing on initial inventory provisioning, maintenance
support and technical publication support. The aggregate list
value of the 40&nbsp;CRJ-700 and 900&#146;s to be acquired under
the agreement is approximately $1.0&nbsp;billion. Deliveries of
the CRJ-700 commenced in July 2002, with revenue service
commencing in October. We are the launch customer of the CRJ-900
and expect to take delivery of the first aircraft in the first
calendar quarter of 2003. In addition to the firm orders, we
have an option to acquire an additional 80&nbsp;CRJ-700 and
CRJ-900 regional jets. In conjunction with the 2001 BRAD
Agreement, we have $8.8&nbsp;million on deposit with BRAD, which
is included with lease and equipment deposits at
September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;11, 2002, US&nbsp;Airways, filed
for Chapter&nbsp;11 bankruptcy protection. As a result of this
filing, US&nbsp;Airways was required to obtain ratification of
its code-share and revenue-guarantee agreements with the
Company. Should US&nbsp;Airways not emerge from bankruptcy, this
could have a material adverse effect on the Company. Subsequent
to year-end, the Company reached agreement with US&nbsp;Airways
to expand their regional jet agreement by adding 20&nbsp;50-seat
regional jets to the existing fleet of 32 regional jet aircraft.
The 20 additional regional jets are scheduled to be integrated
into the US&nbsp;Airways Express network in 2003, subject to
compliance with the &#145;jets-for-jobs&#146; provisions of the
US Airways pilot contract. The aircraft are expected to be
provided from a combination of internal and external sources.
The agreement, including the original 32 regional jets under
contract, was ratified by the United States Bankruptcy Court on
November&nbsp;8, 2002.
</FONT>

<P align="center"><FONT size="2">25
</FONT>
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<DIV align="left">
<FONT size="2">Additionally, on November&nbsp;22, 2002, the
Company signed a non-binding letter of intent with
US&nbsp;Airways to provide an additional 50 regional jets and
issue a warrant to purchase 3,000,000&nbsp;shares of our common
stock. These aircraft, which will also be subject to
&#145;jets-for-jobs,&#146; would be delivered beginning in
mid-to late-2003. As part of the US&nbsp;Airways bankruptcy
restructuring, the Company also agreed to release our claim
against $4.3&nbsp;million in payments previously withheld by
US&nbsp;Airways following the events of September&nbsp;11, 2001.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Management believes that the Company will have
adequate cash flow to meet our operating needs. This is a
forward-looking statement. Actual cash flows could materially
differ from this forward-looking statement as a result of many
factors, including the termination of one or more code-share
agreements; failure of US&nbsp;Airways to emerge from bankruptcy
protection; failure to sell, dispose of, or redeploy excess
aircraft in a timely manner; a substantial decrease in the
number of routes allocated to us under its code-share agreements
with our code-share partners; reduced levels of passenger
revenue, additional taxes or costs of compliance with
governmental regulations; fuel cost increases; increases in
competition; additional terrorist attacks; increases in interest
rates; general economic conditions and unfavorable settlement of
existing litigation.
</FONT>

<P align="left">
<B><FONT size="2">Commitments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;30, 2002, we had
$128.8&nbsp;million in long-term debt (including current
maturities). This amount consisted primarily of
$120.8&nbsp;million in notes payable related to the
Company&#146;s fleet of Beechcraft 1900D turboprop aircraft,
$4.9&nbsp;million related to the settlement of past contractual
claims of an aircraft manufacturer and $1.0&nbsp;million related
to a mortgage note payable on one of our real estate properties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth our cash
obligations as of September&nbsp;30, 2002.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="23%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2005</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2006</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2007</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Thereafter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term Debt:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable related to B1900Ds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,561</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,546</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,119</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">75,359</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Note payable to manufacturer
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">786</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,791</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mortgage note payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">838</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,029</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">656</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">304</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">321</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payments under operating leases:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash aircraft rental payments(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121,639</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">113,943</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,625</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107,390</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,003</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">897,892</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,457,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease payments on equipment and operating
    facilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">572</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">531</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">369</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">214</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,217</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total lease payments
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,474</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107,604</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">898,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,459,709</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">141,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,216</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">116,992</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">115,854</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,584</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">974,573</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,588,466</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Lease payments on aircraft flown pursuant to the
    our guaranteed-revenue agreements are reimbursed by the
    applicable code-share partner.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Recent Accounting Pronouncements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001, the FASB issued SFAS
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets.&#148; This statement will supercede SFAS
No.&nbsp;121, &#147;Accounting for the Impairment of Long-Lived
Assets and Long-lived Assets to be Disposed of.&#148; SFAS
No.&nbsp;144 retains the fundamental provisions of SFAS
No.&nbsp;121 for (i)&nbsp;recognition and measurement of the
impairment of long-lived assets to be held and used; and
(ii)&nbsp;measurement of the impairment of long-lived assets to
be disposed of by sale. The statement requires assets held for
sale to be reclassified as held and used if not disposed in one
year. The statement further requires that the results of
operations of assets to be disposed by other than sale be
presented in continuing
</FONT>

<P align="center"><FONT size="2">26
</FONT>

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<DIV align="left">
<FONT size="2">operations until the assets are disposed of or
abandoned. The Company adopted SFAS No.&nbsp;144 on
October&nbsp;1, 2002. The adoption did not have a material
impact on the Company&#146;s financial condition or results of
operations.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2002, the FASB issued SFAS No.&nbsp;145,
&#147;Rescission of FASB Statements No.&nbsp;4, 44, and 64,
Amendment of FASB Statement No.&nbsp;13, and Technical
Corrections as of April 2002.&#148; This statement rescinds SFAS
No.&nbsp;4, &#147;Reporting Gains and Losses from Extinguishment
of Debt,&#148; and an amendment of that Statement, SFAS
No.&nbsp;64, &#147;Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements&#148; and excludes extraordinary item
treatment for gains and losses associated with the
extinguishment of debt that do not meet the APB Opinion
No.&nbsp;30, &#147;Reporting the Results of
Operations&nbsp;&#151; Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions&#148;
(&#147;APB&nbsp;30&#148;) criteria. Any gain or loss on
extinguishment of debt that was classified as an extraordinary
item in prior periods presented that does not meet the criteria
in APB&nbsp;30 for classification as an extraordinary item shall
be reclassified. SFAS No.&nbsp;145 also amends SFAS No.&nbsp;13,
&#147;Accounting for Leases,&#148; as well as other existing
authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability
under changed conditions. The Company is required to adopt SFAS
No.&nbsp;145 effective October&nbsp;1, 2002. The adoption did
not have a material impact on its financial condition or results
of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2002, the FASB issued SFAS No.&nbsp;146,
&#147;Accounting for Costs Associated with Exit or Disposal
Activities.&#148; This statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue
No.&nbsp;94-3, &#147;Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)&#148;
(&#147;EITF&nbsp;94-3&#148;). SFAS No.&nbsp;146 requires that a
liability for costs associated with an exit or disposal activity
be recognized when the liability is incurred. Under
EITF&nbsp;94-3, a liability for exit costs, as defined in
EITF&nbsp;94-3, was recognized at the date of an entity&#146;s
commitment to an exit plan. The provisions of SFAS No.&nbsp;146
are effective for exit or disposal activities that are initiated
by the Company after December&nbsp;31, 2002.
</FONT>

<!-- link2 "Item 7A -- Quantitative and Qualitative Disclosures About Market Risk" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;7A&nbsp;&#151; </FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Quantitative and Qualitative Disclosures
    About Market Risk</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have exposure to market risk associated with
changes in interest rates related primarily to our debt
obligations and short-term marketable investment portfolio. The
Company&#146;s debt obligations are primarily variable in rate
and therefore have exposure to changes in interest rates. A 10%
change in interest rates would result in an approximately
$0.3&nbsp;million impact on interest expense. The Company also
has investments in debt securities. If short-term interest rates
were to average 10% more than they did in fiscal year 2002,
there would be no material impact on the Company&#146;s interest
income. The Company&#146;s investments in equity securities are
subject to market risk related to fluctuations in share prices
for those shares held. A 10% change in the price of trading
securities held at the level of investment at September&nbsp;30,
2002 would impact the results of the Company by approximately
$0.9&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have exposure to certain market risks
associated with our aircraft fuel. Aviation fuel expense is a
significant expense for any air carrier and even marginal
changes in the cost of fuel greatly impact a carrier&#146;s
profitability. Standard industry contracts do not generally
provide protection against fuel price increases, nor do they
insure availability of supply. However, both the US&nbsp;Airways
and America West contract code share agreements allow fuel costs
to be reimbursed by the code-share partner, thereby reducing our
overall exposure to fuel price fluctuations. In fiscal 2002, 76%
of our fuel requirements were associated with these contracts.
Each one cent change in the price of jet fuel amounts to a $0.2
million change in annual fuel costs for that portion of fuel
expense which is not reimbursed by our code-share partners.
</FONT>

<P align="center"><FONT size="2">27
</FONT>
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<!-- link2 "Item 8. Financial Statements and Supplementary Data" -->
<DIV align="left"><A NAME="010"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Financial Statements and Supplementary
    Data</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Consolidated Financial Statements</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="79%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Page 29
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#151;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Independent Auditors&#146; Report.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Page 30
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#151;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consolidated Statements of Operations&nbsp;&#151;
    Years ended September&nbsp;30, 2002, 2001 and 2000.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Page 31
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#151;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consolidated Balance Sheets&nbsp;&#151;
    September&nbsp;30, 2002 and 2001.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Page 32
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#151;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consolidated Statements of Cash Flows&nbsp;&#151;
    Years ended September&nbsp;30, 2002, 2001 and 2000.
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Page 34
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#151;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consolidated Statements of Stockholders&#146;
    Equity&nbsp;&#151; Years ended September&nbsp;30, 2002, 2001 and
    2000.
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Page 35
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">&#151;
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Notes to Consolidated Financial Statements.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission have been omitted because they are not applicable,
not required or the information has been furnished elsewhere.
</FONT>

<P align="center"><FONT size="2">28
</FONT>
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<P align="center">
<B><FONT size="2">INDEPENDENT AUDITORS&#146; REPORT</FONT></B>

<P align="left">
<FONT size="2">To the Board of Directors and Stockholders of
</FONT>

<DIV align="left">
<FONT size="2">Mesa Air Group, Inc.
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Phoenix, Arizona
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have audited the accompanying consolidated
balance sheets of Mesa Air Group, Inc. and subsidiaries (the
&#147;Company&#148;) as of September&nbsp;30, 2002 and 2001, and
the related consolidated statements of operations,
stockholders&#146; equity and cash flows for each of the three
years in the period ended September 30, 2002. These financial
statements are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In our opinion, such consolidated financial
statements present fairly, in all material respects, the
financial position of Mesa Air Group, Inc. as of
September&nbsp;30, 2002 and 2001, and the results of their
operations and their cash flows for each of the three years in
the period ended September&nbsp;30, 2002, in conformity with
accounting principles generally accepted in the United States of
America.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;2 to the financial
statements substantially all of the Company&#146;s passenger
revenue is derived from code share agreements with America West
and US&nbsp;Airways.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As discussed in Note&nbsp;4 to the financial
statements, effective October&nbsp;1, 1999, the Company changed
its method of accounting for certain maintenance costs.
</FONT>

<P align="left">
<FONT size="2">DELOITTE &#38; TOUCHE LLP
</FONT>

<P align="left">
<FONT size="2">Phoenix, Arizona
</FONT>

<DIV align="left">
<FONT size="2">November&nbsp;22, 2002
</FONT>
</DIV>

<P align="center"><FONT size="2">29
</FONT>

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<P align="center">
<B><FONT size="2">PART&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL
INFORMATION</FONT></B>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF
OPERATIONS</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="49%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="4"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands, except per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating revenues:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Passenger
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">480,826</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">508,518</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">461,159</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Freight and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,957</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,453</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">496,783</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">523,378</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">471,612</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating expenses:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Flight operations
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">262,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">272,944</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">223,200</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Maintenance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,037</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">83,473</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Aircraft and traffic servicing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,057</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,776</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">53,838</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Promotion and sales
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,547</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22,243</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General and administrative
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44,256</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27,103</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,932</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment and restructuring charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total operating expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">503,005</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">594,020</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">429,798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,222</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(70,642</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41,814</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,440</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,469</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(15,463</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Interest income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,542</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,822</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,371</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other income (expense)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,404</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,914</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(691</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total other expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,302</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(733</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,783</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before income taxes and
    cumulative effect of accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,524</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(71,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28,031</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes (benefit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,632</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,299</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,756</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,892</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,787</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of $0
    applicable income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,085</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,892</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest in consolidated subsidiary
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">583</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,309</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;per common share &#151; basic:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.55</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;per common share &#151;
    diluted:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income (loss)&nbsp;before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.54</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="4"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED BALANCE SHEETS</FONT></B>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands, except</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">share data)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="11" align="center" valign="top">
    <B><FONT size="2">Assets</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current assets:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marketable securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,517</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,793</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables, primarily traffic, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,072</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expendable parts and supplies, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,238</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,449</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Aircraft and parts held for sale
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,546</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">63,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,392</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">171,201</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">241,012</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment, net
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease and equipment deposits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,538</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,277</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Aircraft held for sale
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,867</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,566</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">423,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="11" align="center" valign="top">
    <B><FONT size="2">Liabilities and Stockholders&#146;
    Equity</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current portion of long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,927</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Note payable&nbsp;&#151; bank
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,434</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,193</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Air traffic liability
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,362</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,506</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,407</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161,926</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Long-term debt, excluding current portion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,549</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,345</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other noncurrent liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,821</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">639</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">262,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">320,860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">967</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Commitments and contingencies (notes&nbsp;2, 5,
    7, 15, 16 and 21)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stockholders&#146; equity:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock of no par value,
    75,000,000&nbsp;shares authorized; 31,989,886 and
    33,049,183&nbsp;shares issued and outstanding
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,387</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Retained earnings (accumulated deficit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25,570</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,261</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total liabilities and stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">352,343</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">423,986</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="61%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash Flows from Operating
    Activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,309</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Adjustments to reconcile net income
    (loss)&nbsp;to net cash flows provided by operating activities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,932</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Impairment and restructuring charges
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,675</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,853</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of change in accounting
    principle
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(18,085</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,651</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,068</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,350</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized (gain)&nbsp;loss on investment
    securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of deferred credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,958</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,209</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,024</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for doubtful accounts
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,605</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,327</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">235</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Provision for obsolete expendable parts and
    supplies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(583</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Changes in assets and liabilities:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Receivables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,228</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,584</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,095</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Expendable parts and supplies
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10,953</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,634</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,989</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Prepaid expenses and other current assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,526</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,707</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,599</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accounts payable
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,692</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21,127</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,236</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">510</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,721</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cost to return aircraft held for sale
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,648</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,623</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accrued liabilities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,629</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,562</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,341</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET CASH PROVIDED BY (USED IN) OPERATING
    ACTIVITIES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,374</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,222</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash Flows from Investing
    Activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Capital expenditures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,466</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,922</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(40,245</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from sale of assets held for sale
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,198</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net purchases of investment securities
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,349</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,072</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,908</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in other assets
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,301</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">302</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(865</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Lease and equipment deposits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,860</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,820</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(465</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET CASH PROVIDED BY (USED IN) INVESTING
    ACTIVITIES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,058</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(30,512</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(46,483</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Cash Flows from Financing
    Activities:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Principal payments on long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,371</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,802</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(8,062</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net borrowings (payments)&nbsp;on line of credit
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Proceeds from issuance of common stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock purchased and retired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,956</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,770</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,784</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Payment from aircraft manufacturer in deferred
    credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,207</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Change in deferred credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,195</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,616</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,554</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Contribution from minority interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Distribution to minority interest shareholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET CASH PROVIDED BY (USED IN) FINANCING
    ACTIVITIES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(14,202</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">47,202</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,241</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">NET CHANGE IN CASH AND CASH EQUIVALENTS
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28,634</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,101</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(26,502</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52,905</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CASH AND CASH EQUIVALENTS AT END OF YEAR
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45,870</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">74,504</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,403</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<DIV align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>
</DIV>

<DIV align="right">
<FONT size="2">(Continued)
</FONT>
</DIV>

<P align="center"><FONT size="2">32
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF CASH
FLOWS</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SUPPLEMENTAL CASH FLOW INFORMATION:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash paid for interest, net of amounts capitalized
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,331</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,912</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,992</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cash paid for income taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">556</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,559</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">SUPPLEMENTAL NON-CASH INVESTING AND FINANCING
    ACTIVITIES:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Return of aircraft for reduction of long-term
    debt and accrued interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,749</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46,263</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory credits received in conjunction with
    aircraft financing
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax benefit&nbsp;&#151; stock compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="right">
<FONT size="2">(Concluded)
</FONT>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">33
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>

<P align="center">
<B><FONT size="2">CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146;
EQUITY</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="54%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Retained</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Accumulated</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">2002, 2001, and 2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Deficit)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Total</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In thousands, except number of shares)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at October&nbsp;1, 1999
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,197,752</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">123,492</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(27,057</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">96,435</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercise of stock options
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock purchased and retired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,962,400</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,784</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(10,784</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at September&nbsp;30, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,286,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112,759</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,815</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144,574</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercise of stock options
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,531,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,951</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock purchased and retired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(768,120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,770</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(6,770</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax benefit&nbsp;&#151; stock compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,447</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at September&nbsp;30, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,049,183</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,387</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(16,261</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">103,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercise of stock options
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">154,123</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">930</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Common stock purchased and retired
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,213,420</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,956</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(5,956</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tax benefit&nbsp;&#151; stock compensation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">188</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of warrants
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,309</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,309</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Balance at September&nbsp;30, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31,989,886</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,670</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25,570</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center">
<FONT size="2">See accompanying notes to consolidated financial
statements.
</FONT>

<P align="center"><FONT size="2">34
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS</FONT></B>

<DIV align="center">
<B><FONT size="2">Years ended September&nbsp;30, 2002, 2001 and
2000</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Principles of
Consolidation and Organization</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying consolidated financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America
and include the accounts of Mesa Air Group, Inc. and its
wholly-owned operating subsidiaries (collectively
&#147;Mesa&#148; or the &#147;Company&#148;): Mesa Airlines,
Inc. (&#147;MAI&#148;), a Nevada corporation and certificated
air carrier; Freedom Airlines, Inc. (&#147;Freedom&#148;), a
Nevada corporation and certificated air carrier; Air Midwest,
Inc. (&#147;Air Midwest&#148;), a Kansas corporation and
certificated air carrier; CCAir, Inc. (&#147;CCAir&#148;), a
Delaware corporation and certificated air carrier; MPD, Inc., a
Nevada corporation, doing business as Mesa Pilot Development;
Regional Aircraft Services, Inc. (&#147;RAS&#148;) a
Pennsylvania company; Mesa Leasing, Inc., a Nevada corporation;
and MAGI Insurance, Ltd., a Barbados, West Indies based captive
insurance company. MPD, Inc. provides pilot training in
coordination with a community college in Farmington, New Mexico
and with Arizona State University in Tempe, Arizona. RAS
performs aircraft component repair and overhaul services. MAGI
Insurance, Ltd. is a captive insurance company created to handle
freight and baggage claims in addition to a portion of the
Company&#146;s aviation insurance. At September&nbsp;30, 2002,
the Company owned 56% of UFLY, LLC. (&#147;UFLY&#148;), a
Delaware Limited Liability Company, which was established to
make strategic investments in US Airways common stock. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s airline subsidiaries have
agreements with America West, US Airways, Frontier, and Midwest
Express to use those carriers&#146; designation codes (commonly
referred to as a &#147;code-share&#148;). These code-share
agreements allow use of the code-share partner&#146;s
reservation system and flight designator code to identify
flights and fares in computer reservation systems, permit use of
logos, service marks, aircraft paint schemes and uniforms
similar to the code-share partners and provide coordinated
schedules and joint advertising. The Company&#146;s passengers
traveling on flights operated pursuant to code-share agreements
receive mileage credits in the respective frequent flyer
programs of the Company&#146;s code-share partners, and credits
in those programs can be used on flights operated by the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial arrangement between Mesa and their
code-share partners involve either a revenue-guarantee or
pro-rate arrangement. Under a revenue-guarantee arrangement, the
major airline generally pays a monthly guaranteed amount. Both
the America West code-share agreement and the US Airways
regional jet code-share agreement are revenue-guarantee flying
agreements. Under the terms of these flying agreements, the
major carrier controls marketing, scheduling, ticketing, pricing
and seat inventories. The Company receives a guaranteed payment
based upon a fixed minimum monthly amount plus amounts related
to departures and block hours flown plus direct reimbursement
for expenses such as fuel, landing fees and insurance. Among
other advantages, revenue-guarantee arrangements reduce the
Company&#146;s exposure to fluctuations in passenger traffic and
fare levels, as well as fuel prices. The US Airways turboprop
and the Frontier JetExpress code-share agreements are pro-rate
agreements, for which the Company receives an allocated portion
of the passengers&#146; fare and pays all of the costs of
transporting the passenger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Renewal of one code-share agreement with a code
share partner does not guarantee the renewal of any other code
share agreement with the same code-share partner. The agreement
with America West expires in 2012; the agreements with US
Airways expire on various dates from 2005 to 2012; the
agreements with Frontier and Midwest Express expire in 2006.
Although the provisions of the code-share agreements vary from
contract to contract, generally each agreement is subject to
cancellation should the Company&#146;s subsidiaries fail to meet
certain operating performance standards, breach other
contractual terms and conditions and, in the case of the US
Airways turboprop code-share agreements generally upon six
months notice by either party. The US Airways regional jet
service agreement and the Kansas City code-share agreement are
not subject to the six-month cancellation clause.
</FONT>

<P align="center"><FONT size="2">35
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company also operates Beech 1900D turboprop
aircraft as Mesa Airlines in Albuquerque, New Mexico and Dallas,
Texas. The Albuquerque and Dallas operations do not have
code-share agreements.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and Cash
Equivalents</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company considers all highly liquid
investments with an original maturity of three months or less to
be cash equivalents.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketable
Securities</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marketable securities consist of shares of common
stock and are stated at market value as determined by the most
recently traded price of each security at the balance sheet
date. All marketable securities are defined as trading
securities under the provisions of Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No.&nbsp;115,
&#147;Accounting for Certain Investments in Debt and Equity
Securities.&#148;
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables
and Concentration of Risk</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The passenger tickets collected by the Company at
the time of travel are primarily sold by the code share partners
as discussed above. As a result, the Company has a significant
concentration of its accounts receivable tied to its
relationship with its code share partners. See discussion in
Note&nbsp;2.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expendable
Parts and Supplies</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Expendable parts and supplies are stated at the
lower of cost using the first-in, first-out method or market,
and are charged to expense as they are used.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aircraft and
Parts Held for Sale</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Aircraft and parts held for sale are comprised of
aircraft the Company has identified as surplus as well as
expendable and rotable inventory that is in excess of the
Company&#146;s needs. Aircraft currently identified as held for
sale are under contract to return to the manufacturer and are
valued at the contract price, less the cost to return the
aircraft to meet the manufacturer&#146;s return conditions. The
Company estimates quantities of rotable and expendable inventory
that are surplus to its needs by employing independent
consultants who utilize mathematical models to determine optimum
inventory levels based on such variables as size of fleet,
number of maintenance bases and desired reliability. Quantities
of rotable and expendable inventory that are surplus to the
Company&#146;s needs are valued at fair market value, less costs
to sell. Fair market value is determined based upon the
Company&#146;s experience in selling similar assets and outside
appraisals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2001, the Company had 21
Beechcraft&nbsp;1900D turboprop aircraft held for sale. During
2002, the Company returned 12 of these aircraft to the
manufacturer and returned six of these aircraft to operations
leaving three Beechcraft 1900D turboprop aircraft held for sale
at September&nbsp;30, 2002. The six aircraft were returned to
operations as a result of the Company being awarded additional
essential air service contracts in 2002. The Company has a
contract to return the remaining three aircraft to the
manufacturer and the returns are anticipated to take place in
the second quarter of fiscal 2003.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and
Equipment</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and equipment are stated at cost and
depreciated over their estimated useful lives to their estimated
salvage values using the straight line method.
</FONT>

<P align="center"><FONT size="2">36
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Estimated useful lives of the various
classifications of property and equipment are as follows:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="27%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">30 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Flight equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">7-20 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">5-12 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">3-5 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vehicles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">5 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Rotable inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Life of the aircraft or term of the lease</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Leasehold improvements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">Life of asset or term of lease, whichever is less</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-lived assets to be held and used are
reviewed for impairment whenever events or changes in
circumstances indicate that the related carrying amount may be
impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amount
according to the provisions of Statement of Financial Accounting
Standards No.&nbsp;121, &#147;Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed
Of.&#148; If the undiscounted future cash flows are found to be
less than the carrying amount, an impairment loss is recognized
to reduce the carrying amount of the asset to fair market value.
Certain long-lived assets to be disposed of are reported at the
lower of carrying amount or fair value less cost to sell.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Interest related to deposits on aircraft purchase
contracts is capitalized as part of the aircraft. The Company
capitalized approximately $1.2&nbsp;million and
$1.1&nbsp;million of interest in fiscal 2002 and 2001,
respectively.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other
Assets</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other assets primarily consist of the capitalized
costs associated with establishing financing for aircraft and
the noncurrent portion of prepaid maintenance. The financing
costs are amortized over the lives of the associated aircraft
leases which are primarily 16-17&nbsp;years. Prepaid maintenance
is amortized over the term of the related maintenance contract
(six years).
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Air Traffic
Liability</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Air traffic liability represents the cost of
tickets sold but not yet used. The Company records the revenue
associated with these tickets in the period the passenger flies.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income
Taxes</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in future years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date. The Company and its subsidiaries
file a consolidated federal income tax return.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Deferred
Credits</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred credits consist of lease incentives
received at lease inception and other credits related to the
aircraft and are amortized on a straight-line basis as a
reduction of lease expense over the term of the respective
leases.
</FONT>

<P align="center"><FONT size="2">37
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenue
Recognition</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Both the America West code-share agreement and
the US Airways regional jet code-share agreement are
revenue-guarantee flying agreements. Under a revenue-guarantee
arrangement, the major airline generally pays a monthly
guaranteed amount per flight. The Company receives a guaranteed
payment for each departure operated and each mile flown, with
certain costs, and reimbursement for expenses such as fuel and
landing fees. The Company primarily recognizes revenue under its
revenue-guarantee agreements when the transportation is provided
according to certain formulas as specified in the code-share
agreements. Under a prorate agreement, the Company receives an
allocated portion of the passengers&#146; fare based on the
percentage of transportation provided. Pursuant to the
Company&#146;s prorate agreements and in the independent
operation, revenue is recognized when transportation is
provided. Tickets sold but not yet used are included in air
traffic liability on the consolidated balance sheets. The
Company also receives subsidies for providing scheduled air
service to certain small or rural communities. Such revenue is
recognized in the period in which the air service is provided.
The amount of the subsidy payments is determined by the United
States Department of Transportation on the basis of its
evaluation of the amount of revenue needed to meet operating
expenses and to provide a reasonable return on investment with
respect to eligible routes.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Maintenance
Expense</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The cost of engine and aircraft maintenance is
charged to expense as incurred. The Company records the expense
in the period when the related aircraft or engine is returned.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Minority
Interest</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2001, the Company entered into an agreement to
form UFLY for the purpose of making strategic investments in US
Airways, Inc. In 2002, UFLY was formally established and was
capitalized with $5.0&nbsp;million from the Company and
$5.0&nbsp;million from other members. At September&nbsp;30,
2002, the Company owned 56% of UFLY and therefore the financial
results of UFLY are included in the consolidated financial
results of the Company. Amounts included in the consolidated
statements of operations as minority interest reflect the
after-tax portion of earnings of UFLY that are applicable to the
minority interest partners.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Earnings
(Loss) Per Share</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company accounts for earnings (loss)&nbsp;per
share in accordance with SFAS No.&nbsp;128, &#147;Earnings per
Share.&#148; Basic net income (loss)&nbsp;per share is computed
by dividing net income (loss)&nbsp;by the weighted average
number of common shares outstanding during the periods
presented. Diluted net income (loss)&nbsp;per share reflects the
potential dilution that could occur if outstanding stock options
were exercised. The calculation of the weighted average number
of shares outstanding is as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average shares outstanding&nbsp;&#151;
    basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,803</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,109</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Effect of dilutive outstanding stock options
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">81</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Weighted average shares outstanding&nbsp;&#151;
    diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,803</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32,065</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33,190</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">38
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The effect of certain options to purchase 599,000
and 363,000 shares of common stock in fiscal 2002 and 2001 would
have been antidilutive to the per share calculation.
Accordingly, those options were excluded from the calculation.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock
Options</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company accounts for its stock-based
compensation arrangements in accordance with the provisions of
Accounting Principles Board (&#147;APB&#148;) Opinion
No.&nbsp;25, &#147;Accounting for Stock Issued to
Employees,&#148; and related interpretations. Effective
October&nbsp;1, 1996, the Company adopted SFAS No.&nbsp;123,
&#147;Accounting for Stock-Based Compensation,&#148; which
permits entities to recognize the fair value of all stock-based
awards on the date of grant over the vesting period.
Alternatively, SFAS No.&nbsp;123 also allows entities to
continue to apply the measurement provisions of APB Opinion
No.&nbsp;25 and provide pro forma net earnings and pro-forma
earnings per share disclosures for employee stock option grants
made in fiscal 1996 and future years as if the fair value based
measurement method defined in SFAS No.&nbsp;123 had been
applied. The Company has elected to continue to apply the
measurement provisions of APB Opinion No.&nbsp;25, and to
provide pro-forma disclosures required by SFAS No.&nbsp;123 (See
note&nbsp;13). Warrants issued to non-employees are also
accounted for under SFAS No.&nbsp;123, at fair value on the
measurement date.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Use of
Estimates in the Preparation of Financial
Statements</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The preparation of the Company&#146;s
consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities
at the date of the financial statements. Actual results could
differ from those estimates.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Segment
Reporting</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has adopted SFAS No.&nbsp;131,
&#147;Disclosures About Segments of an Enterprise and Related
Information.&#148; The statement requires disclosures related to
components of a company for which separate financial information
is available that is evaluated regularly by a company&#146;s
chief operating decision maker in deciding the allocation of
resources and assessing performance. The Company is engaged in
one line of business, the scheduled and chartered transportation
of passengers, which constitutes substantially all of its
operating revenues.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Recent
Accounting Pronouncements</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In August 2001, the FASB issued SFAS
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets.&#148; This statement will supercede SFAS
No.&nbsp;121, &#147;Accounting for the Impairment of Long-Lived
Assets and Long-lived Assets to be Disposed of.&#148; SFAS
No.&nbsp;144 retains the fundamental provisions of SFAS
No.&nbsp;121 for (i)&nbsp;recognition and measurement of the
impairment of long-lived assets to be held and used; and
(ii)&nbsp;measurement of the impairment of long-lived assets to
be disposed of by sale. The statement requires assets held for
sale to be reclassified as held and used if not disposed in one
year. The statement further requires that the results of
operations of assets to be disposed by other than sale be
presented in continuing operations until the assets are disposed
of or abandoned. The Company adopted SFAS No.&nbsp;144 on
October&nbsp;1, 2002. The adoption did not have a material
impact on the Company&#146;s financial condition or results of
operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 2002, the FASB issued SFAS No.&nbsp;145,
&#147;Rescission of FASB Statements No.&nbsp;4, 44, and 64,
Amendment of FASB Statement No.&nbsp;13, and Technical
Corrections as of April 2002.&#148; This statement rescinds SFAS
No.&nbsp;4, &#147;Reporting Gains and Losses from Extinguishment
of Debt,&#148; and an amendment of that Statement, SFAS
No.&nbsp;64, &#147;Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements&#148; and
</FONT>

<P align="center"><FONT size="2">39
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">excludes extraordinary item treatment for gains
and losses associated with the extinguishment of debt that do
not meet the APB Opinion No.&nbsp;30, &#147;Reporting the
Results of Operations&nbsp;&#151; Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions&#148;
(&#147;APB&nbsp;30&#148;) criteria. Any gain or loss on
extinguishment of debt that was classified as an extraordinary
item in prior periods presented that does not meet the criteria
in APB 30 for classification as an extraordinary item shall be
reclassified. SFAS No.&nbsp;145 also amends SFAS No.&nbsp;13,
&#147;Accounting for Leases,&#148; as well as other existing
authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability
under changed conditions. The Company was required to adopt SFAS
No.&nbsp;145 effective October&nbsp;1, 2002. The adoption did
not have a material impact on its financial condition or results
of operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June 2002, the FASB issued SFAS No.&nbsp;146,
&#147;Accounting for Costs Associated with Exit or Disposal
Activities.&#148; This statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue
No.&nbsp;94-3, &#147;Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)&#148;
(&#147;EITF 94-3&#148;). SFAS No.&nbsp;146 requires that a
liability for costs associated with an exit or disposal activity
be recognized when the liability is incurred. Under
EITF&nbsp;94-3, a liability for exit costs, as defined in
EITF&nbsp;94-3, was recognized at the date of an entity&#146;s
commitment to an exit plan. The provisions of SFAS No.&nbsp;146
are effective for exit or disposal activities that are initiated
by the Company after December&nbsp;31, 2002.
</FONT>

<P align="left">
<B><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reclassifications</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Certain reclassifications were made to the 2001
and 2000 financial statements to conform to the 2002
presentation.
</FONT>

<P align="left">
<B><FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONCENTRATIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has-code share agreements with
America West, US Airways, Frontier and Midwest Express.
Approximately 98%, 97% and 95% of the Company&#146;s
consolidated passenger revenue for the years ended
September&nbsp;30, 2002, 2001 and 2000, respectively, were
derived from these agreements. Accounts receivable from the
Company&#146;s code-share partners were 57% and 29% of total
gross accounts receivable at September&nbsp;30, 2002 and 2001,
respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A reduction in business travel, a slowing economy
and the terrorist attacks of September&nbsp;11, 2001 all have
had a significant impact on the airline industry, including
America West and US Airways.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In January, America West Airlines, one of the
Company&#146;s major code-share partners, closed a term loan in
the amount of $429&nbsp;million and completed arrangements for
more than $600&nbsp;million in concessions, financing and
financial assistance following final approval by the Air
Transportation Stabilization Board of approximately
$380&nbsp;million in loan guarantees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On August&nbsp;11, 2002, US Airways, filed for
Chapter&nbsp;11 bankruptcy protection. As a result of this
filing, US Airways was required to obtain ratification of its
code-share and revenue-guarantee agreements with the Company.
Should US Airways not emerge from bankruptcy, this could have a
material adverse effect on the Company. Subsequent to year-end,
the Company reached agreement with US Airways to expand their
regional jet agreement by adding 20 50-seat regional jets to the
existing fleet of 32 regional jet aircraft. The 20 additional
regional jets are scheduled to be integrated into the US Airways
Express network in 2003, subject to compliance with the
&#145;jets-for-jobs&#146; provisions of the US Airways pilot
contract. The aircraft are expected to be provided from a
combination of internal and external sources. The agreement,
including the original 32 regional jets under contract, was
ratified by the United States Bankruptcy Court on
November&nbsp;8, 2002. Additionally, on November&nbsp;22, 2002,
the Company signed a non-binding letter of intent with US
Airways to
</FONT>

<P align="center"><FONT size="2">40
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">provide an additional 50 regional jets. In
connection with this letter of intent, the Company agreed to
issue 3,000,000 warrants to US Airways. The additional aircraft,
which will also be subject to &#145;jets-for-jobs,&#146; would
be delivered beginning in mid- to late-2003. The Company also
agreed to release its claim against $4.3&nbsp;million in
payments previously withheld by US Airways following the events
of September&nbsp;11, 2001.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Continuing declines in the economy or an
inability to receive government grants and loan guarantees could
have a material adverse effect on the viability of either of
these airlines. A termination of the America West or US Airways
code-share agreements (specifically the revenue-guarantee jet
contracts) would have a material adverse effect on the
Company&#146;s business prospects, financial position, results
of operations and cash flows.
</FONT>

<P align="left">
<B><FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;AIR
TRANSPORTATION SAFETY AND SYSTEM STABILIZATION ACT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As a result of the large financial losses
attributed to the terrorist attacks on the United States that
occurred on September&nbsp;11, 2001, the Senate and House of
Representatives of the United States of America passed, and the
President signed into law H.R. 2926, the Air Transportation
Safety and System Stabilization Act (the &#147;Airline
Stabilization Act&#148;). The intent of the Airline
Stabilization Act was to preserve the continued viability of the
United States air transportation system by providing support to
passenger airlines in the form of grant money, loan guarantees,
and assistance with increased insurance costs.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The terrorist attacks of September&nbsp;11, 2001
had a significant impact on the Company. Following the attacks,
the air transportation system was temporarily shut down,
resulting in the cancellation of more than 3,300 Mesa Air Group
flights. The cancelled flights and loss of consumer confidence
in the airline industry resulted in lost revenue from these
cancelled flights and lower load factors and revenue yield on
flights operated. The Company was also impacted by the costs
incurred during the temporary shutdown that could not be
avoided, the write down of receivables related to the
Company&#146;s code share partners as well as the resulting
impairment and restructuring charges.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September 2001, the Company recorded as
non-operating income $14.7&nbsp;million associated with amounts
claimed under the Airline Stabilization Act. As of
September&nbsp;30, 2002, the Company received $12.4&nbsp;million
and the remaining $2.3&nbsp;million is included in accounts
receivable. The amount recorded in other income in 2001
represents the total amount claimed by the Company as the
Company incurred losses in excess of this amount prior to
September&nbsp;30, 2001. Amounts paid or payable under the
Airline Stabilization Act are subject to audit and adjustment by
the Federal Government. Amounts in accounts receivable at
September&nbsp;30, 2002, remain outstanding as the Company has
not finalized its claim with the Department of Transportation.
The Company believes that it will ultimately collect the
remaining amounts outstanding.
</FONT>

<P align="left">
<B><FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CHANGE IN
ACCOUNTING PRINCIPLE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective October&nbsp;1, 1999, the Company
elected to change its method of accounting for engine and
airframe maintenance costs on its CRJ aircraft and engine
maintenance on its DeHavilland Dash 8-200 aircraft from the
accrual method to the direct expense method. Under the accrual
method, maintenance costs were accrued to expense on the basis
of estimated future costs and estimated cycles or flight hours
between major maintenance events. Implementation of the change
necessitated the write-off of previously recorded accrued
amounts. Effective October&nbsp;1, 1999, the Company began
expensing these maintenance costs as they are incurred. The
cumulative effect of the change for prior years was a favorable
adjustment of $18.1&nbsp;million. Due to the valuation allowance
at October&nbsp;1, 1999, there is no tax effect related to the
cumulative effect of the change. The impact of the change in
fiscal 2000 totaled approximately $4.9&nbsp;million, which is
included as a reduction of maintenance expense.
</FONT>

<P align="center"><FONT size="2">41
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MARKETABLE
SECURITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has a cash management program which
provides for the investment of excess cash balances primarily in
short-term money market instruments, intermediate-term debt
instruments and common equity securities of companies operating
in the airline industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SFAS No.&nbsp;115, &#147;Accounting for Certain
Investments in Debt and Equity Securities,&#148; requires that
all applicable investments be classified as trading securities,
available for sale securities or held to maturity securities.
All of the Company&#146;s investments are classified as trading
securities during the periods presented and accordingly, are
carried at market value with changes in value reflected in
current period operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company enters into short positions on common
equity securities when management believes that the Company may
capitalize on downward moves in particular securities. The
Company marks short positions to market at each reporting period
with the associated gain or loss value reflected other income
(expense) in the statement of operations. Included in marketable
securities are liabilities related to short positions on common
equity securities of $7.2&nbsp;million and $3.5&nbsp;million at
September&nbsp;30, 2002 and 2001, respectively. Unrealized gains
(losses) for the period that relate to trading securities
(including short positions) held at September&nbsp;30, 2002,
2001 and 2000 were ($5.2)&nbsp;million, ($8.0)&nbsp;million and
($0.5)&nbsp;million, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">6.</FONT></B></TD>
    <TD>
    <B><FONT size="2">PROPERTY AND EQUIPMENT</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Property and equipment consists of the following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Flight equipment, substantially pledged
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">134,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">144,889</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">26,375</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25,354</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Leasehold improvements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,834</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,469</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Furniture and fixtures
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,155</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,296</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Buildings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,126</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Vehicles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,161</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,041</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">172,140</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">182,175</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less accumulated depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(44,690</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(59,744</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127,450</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,431</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">7.</FONT></B></TD>
    <TD>
    <B><FONT size="2">LINE OF CREDIT</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 2000, the Company reached agreement
with Fleet Capital for a $35&nbsp;million line of credit,
collateralized by the Company&#146;s inventory and receivables.
The agreement, which expires in December 2003, has provisions
that allow the expansion of available credit to $50&nbsp;million
by adding new lenders provided that there is additional
collateral. The agreement also contains a financial covenant
that requires the maintenance of certain financial ratios
related to fixed charge coverage and total debt to capital. The
Company was in compliance with these covenants at
September&nbsp;30, 2002. The Company will use the facility for
general working capital purposes. The Company also had $13.7
million in letters of credit outstanding at September&nbsp;30,
2002, which reduced the amount available under the line of
credit. There were no amounts outstanding under this facility at
September&nbsp;30, 2002. Based upon available collateral,
$4.1&nbsp;million remained available under the line at
September&nbsp;30, 2002.
</FONT>

<P align="center"><FONT size="2">42
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">8.</FONT></B></TD>
    <TD>
    <B><FONT size="2">OTHER ACCRUED EXPENSES</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Other accrued expenses consist of the following:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued aircraft return and restructuring costs
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,919</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,525</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred credits&nbsp;&#151; current
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,247</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,810</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued professional fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,082</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,590</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued compensation and benefits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,917</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued property taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,481</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,687</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued lease expense
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,427</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,471</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued landing fees
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,340</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,540</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued simulator time
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,294</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,067</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Accrued interest
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,364</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,775</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,460</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,893</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,407</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">9.</FONT></B></TD>
    <TD>
    <B><FONT size="2">DEFERRED CREDITS</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred credits include the value of lease
incentives, such as consumable and rotable inventory received at
lease inception, and are amortized over the life of the related
lease. In May 2001, Mesa restructured various past contractual
claims it had against Bombardier Regional Aircraft Division.
Under this restructuring, Mesa received $25.2&nbsp;million up
front and will receive $1.1&nbsp;million per month through April
2003 to resolve these outstanding claims. Amounts received have
been classified as deferred credits and are being amortized over
12&nbsp;years, the remaining weighted average life of the
aircraft leases. Deferred credits totaled $59.8&nbsp;million and
$45.2&nbsp;million at September&nbsp;30, 2002 and 2001,
respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">10.</FONT></B></TD>
    <TD>
    <B><FONT size="2">LONG-TERM DEBT</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Long-term debt consists of the following:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Notes payable to manufacturers: approximately
    $1.0&nbsp;million, including interest, due monthly through 2011.
    Notes provide variable rates of interest ranging from 3.26% to
    7.15% at September&nbsp;30, 2002, collateralized by aircraft
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">120,833</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">161,804</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Note payable to manufacturer. Payable in 10 equal
    semi-annual principal payments, interest payable quarterly at 7%
    per annum
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,935</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Mortgage note payable to bank, collateralized by
    real estate, due monthly, principal plus interest at
    7&nbsp;1/2%, due April 2009
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,029</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,059</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,960</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,293</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128,757</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">170,877</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Less current portion
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(19,036</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(52,927</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net long-term debt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">109,721</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">117,950</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Principal maturities of long-term debt for each
of the next five years and thereafter are as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Years ending September&nbsp;30,</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19,036</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,742</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,998</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,534</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thereafter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">76,197</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2002, Mesa has three
surplus Beechcraft 1900D aircraft classified as held for sale.
Unpaid amounts totaling $8.6&nbsp;million associated with these
aircraft are included under the caption of current portion of
long-term debt in the accompanying consolidated balance sheet.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">11.</FONT></B></TD>
    <TD>
    <B><FONT size="2">COMMON STOCK PURCHASE AND RETIREMENT</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December 1999, the Company&#146;s Board of
Directors authorized the Company&#146;s repurchase of up to 10%,
(or 3.4&nbsp;million shares), of the outstanding shares of its
common stock. In January 2001, the Board approved the repurchase
by the Company of up to an additional one million shares of its
common stock. As of September&nbsp;30, 2002, the Company has
acquired and retired approximately 4.0&nbsp;million shares
(approximately 12.5%) of its outstanding common stock at an
aggregate cost of approximately $24.0&nbsp;million leaving
approximately 400,000 shares available for repurchase under the
current Board authorizations. In October 2002, the
Company&#146;s Board of Directors authorized the repurchase of
an additional two&nbsp;million shares. Purchases are made at
management&#146;s discretion based on market conditions and the
Company&#146;s financial resources.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">12.</FONT></B></TD>
    <TD>
    <B><FONT size="2">INCOME TAXES</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Income tax expense (benefit)&nbsp;consists of the
following:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Federal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(470</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,489</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">655</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">585</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,019</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">769</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">594</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Federal
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,948</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,246</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,762</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(703</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,822</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,588</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,651</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,068</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(13,350</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,632</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,299</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,756</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">44
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The difference between the actual income tax
expense (benefit)&nbsp;and the statutory tax expense (benefit)
(computed by applying the U.S.&nbsp;federal statutory income tax
rate of 35&nbsp;percent to income or loss before income taxes)
is as follows:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Years Ended September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Computed &#147;expected&#148; tax expense
    (benefit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(4,733</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(24,981</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,811</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase (reduction)&nbsp;in income taxes
    resulting from:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Non-deductible amortization of intangibles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">807</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">93</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">State taxes, net of federal taxes (benefit)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">511</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,908</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(652</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(106</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">552</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(135</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Increase (decrease)&nbsp;in valuation allowance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">696</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,231</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(21,873</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(3,632</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(23,299</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,756</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Elements of deferred income tax assets
(liabilities)&nbsp;are as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="72%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">September 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Current deferred tax assets (liabilities):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other accrued expenses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,863</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,441</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,394</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Allowance for doubtful receivables
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,037</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,763</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Unrealized trading (gains)&nbsp;losses
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,987</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,144</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alternative minimum tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,947</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,458</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total current deferred taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,228</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,264</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Noncurrent deferred tax assets (liabilities):
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net operating loss
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">24,014</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43,307</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Deferred credits
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,379</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">General business credit carryforwards
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,731</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,730</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Intangibles
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">676</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">798</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Property and equipment
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(11,007</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(25,383</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Valuation allowance
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,927</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,231</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total noncurrent deferred taxes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">29,287</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23,600</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Deferred tax assets include benefits expected to
be realized from the utilization of alternative minimum tax
credit carryforwards of approximately $1.9&nbsp;million which do
not expire and consolidated federal net operating loss
carryforwards of approximately $47.3&nbsp;million which expire
at various dates between 2018 and 2021. In addition, CCAir has
$9.8&nbsp;million in net operating loss carryforwards that are
subject to certain limitations and expire at various dates
between 2009 and 2019. During 2002 and 2001, the Company
established valuation allowances of $0.7&nbsp;million and
$2.2&nbsp;million, respectively, for certain state net operating
loss carryforwards and federal general business credits that are
expected to expire unutilized in the future.
</FONT>

<P align="center"><FONT size="2">45
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">13.</FONT></B></TD>
    <TD>
    <B><FONT size="2">STOCKHOLDERS&#146; EQUITY</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;7, 2002, the Company entered
into an agreement with Raytheon Aircraft Company (the
&#147;Raytheon Agreement&#148;) to, among other things, reduce
the operating costs of the Company&#146;s Beechcraft 1900D
fleet. In connection with the Raytheon Agreement and subject to
the terms and conditions contained therein, Raytheon agreed to
provide up to $5.5&nbsp;million in annual operating subsidy
payments to the Company contingent upon the Company remaining
current on its payment obligations to Raytheon. Approximately
$6.0&nbsp;million (which included $0.7&nbsp;million relating to
2001) was recorded as a reduction to flight operations,
maintenance and interest expense during 2002. In return, the
Company granted Raytheon a warrant to purchase up to 233,068
shares of our common stock at a per share exercise price of
$10.00. The Company recorded the issuance of these warrants at a
value of $0.4&nbsp;million within stockholders&#146; equity as a
debit and credit to common stock and therefore the amounts net
to zero. The contra equity value of these warrants is being
amortized to expense over the vesting period of three years.
Raytheon must pay a purchase price of $1.50 per share underlying
the warrant. Each of the warrants is exercisable at any time
over a three-year period following its date of purchase. Absent
an event of default by the Company in which case vesting is
accelerated, the option to purchase the warrants vests
concurrently with Raytheon&#146;s payment of the related annual
operating subsidy for the following periods or January&nbsp;15
of each year, whichever comes first. The warrants vest according
to the following schedule: 13,401 shares for a portion of fiscal
year 2001; 116,534 shares in fiscal year 2002; 58,267 shares in
fiscal year 2003 and 44,866 shares in fiscal year 2004. As of
December&nbsp;1, 2002, Raytheon has exercised its option to
purchase the 2001 and 2002 warrants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2002, the Company sponsored
the following stock-based compensation plans:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In March 1993, and December 1994, the Company
adopted stock option plans for outside directors. These plans
originally provided for the grant of options for up to 450,000
shares of common stock at fair market value on the date of
grant. There are 52,000 shares outstanding under this plan. At
September&nbsp;30, 2002, there were no options available for
grant under this plan.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On July&nbsp;24, 1998, the Company adopted a new
stock option plan for outside directors. This plan, as amended,
provides for the grant of options for up to 275,000 shares at
fair market value. As of September&nbsp;30, 2002 there are
142,422 options outstanding and 47,843 options available for
future grants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In April 1996, the Company adopted an employee
stock option plan under the new management incentive program
(the &#147;1996 Stock Option Plan&#148;) which provides for the
granting of options to purchase up to 2,800,000 shares of
Company common stock at the fair market value on the date of
grant. On July&nbsp;24, 1998, an additional 1,500,000 options
were approved by the stockholders to be granted under this plan.
As of September&nbsp;30, 2002 there are 1,960,985 options
outstanding and 1,089,428 options available for future grants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;1, 1998, the Company adopted a Key
Officer Stock Option Plan for compensating the Company&#146;s
Chief Executive Officer and Chief Operating Officer, which
provided for the granting of options to purchase up to 1,600,000
shares of the Company&#146;s common stock at the fair market
value on the date of grant. As of September&nbsp;30, 2002 there
are 1,112,533 options outstanding and 300,000 options available
for future grants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 1999, the Company adopted the 1999
Non-Qualified Stock Option Plan and issued options in connection
with the CCAir merger. At September&nbsp;30, 2002, 24,856
options remain outstanding and there are no options available
for future grants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;31, 2001, the Company adopted a
Key Officer Stock Option Plan for compensating the Company Chief
Executive Officer and Chief Operating Officer, which provided
for the granting of options to purchase up to 2,000,000 shares
of the Company&#146;s common stock at the fair market value on
the date of grant. As of September&nbsp;30, 2002 there are
250,000 options outstanding and 1,750,000 options available for
future grants.
</FONT>

<P align="center"><FONT size="2">46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, options granted to employees vest over
a three-year period and options granted to directors vest
immediately upon grant.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Transactions involving stock options under these
plans are summarized as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="40%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(000)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(000)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(000)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at beginning of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Granted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,398</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">627</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.68</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Exercised
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(154</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1,531</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.50</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(51</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Canceled/ Forfeited
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(298</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(798</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Outstanding at end of year
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,543</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,597</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.51</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,299</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.09</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2002, the range of exercise
prices for the aforementioned options was $4.04 to $12.24. The
number of options exercisable at September&nbsp;30, 2002 was
1,861,556, and the weighted-average exercise price of these
options was $7.55.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The per share weighted-average fair value of
stock options granted during 2002, 2001 and 2000 was $4.10,
$5.28, and $3.15, respectively, on the grant date as determined
by using the Black-Scholes option pricing model with the
following weighted average assumptions: expected dividend yield
0.0%, risk-free interest rate of 3.0%, 4.2% and 5.9% and
volatility of 75.5%, 73.5% and 54.2% in 2002, 2001 and 2000,
respectively, and an expected life of 6&nbsp;years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes information
concerning options outstanding at September&nbsp;30, 2002:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="60%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Contractual</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Range of Exercise Prices</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Life</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$4.00&nbsp;&#151; $5.99
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,092,273</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.4 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$6.00&nbsp;&#151; $7.99
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">705,621</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.9 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$8.00&nbsp;&#151; $9.99
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,446,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.6 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$10.00&nbsp;&#151; $11.99
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">285,873</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.3 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.05</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$12.00 and higher
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,454</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4.9 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Options outstanding at September&nbsp;30, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,542,796</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7 years</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company applies the provisions of
APB&nbsp;No.&nbsp;25 and related interpretations in accounting
for its stock-based compensation plans. Accordingly, no
compensation cost has been recognized for awards made pursuant
to its fixed stock option plans. Had the compensation cost for
the Company&#146;s four fixed stock-based compensation plans
been determined consistent with the measurement provisions of
SFAS&nbsp;No.&nbsp;123, the
</FONT>

<P align="center"><FONT size="2">47
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">Company&#146;s net income (loss) and income
(loss) per share would have been as indicated by the pro forma
amounts indicated below:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="63%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net income (loss)&nbsp;as reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(9,309</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,076</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58,872</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,256</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(50,053</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,138</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income(loss) per share&nbsp;&#151; Basic:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">As reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.78</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.37</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.56</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.73</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income(loss) per share&nbsp;&#151; Diluted:
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">As reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.28</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.50</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.77</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.37</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.56</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">14.</FONT></B></TD>
    <TD>
    <B><FONT size="2">BENEFIT PLANS</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has a 401(k) plan covering the
employees of MAI, Air Midwest and the airline support operations
(the Mesa Plan). Under the Mesa Plan, employees may contribute
up to 15&nbsp;percent of their annual compensation, as defined.
Employer contributions are made at the discretion of the Board
of Directors. During fiscal 2002, the Company made matching
contributions of 25 percent of employee contributions up to
10&nbsp;percent of annual employee compensation. Upon completing
two years of service, the employee is 20&nbsp;percent vested in
employer contributions and the remainder of the employer
contributions vest 20&nbsp;percent per year thereafter.
Employees become fully vested in employer contributions after
completing six years of employment. The Company has the right to
terminate the 401(k) plan at any time. Contributions by the
Company to the Mesa Plan for the years ended September&nbsp;30,
2002, 2001 and 2000 were approximately $0.3&nbsp;million,
$0.9&nbsp;million and $0.7&nbsp;million, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">CCAir also has a 401(k) plan covering the
employees of CCAir. The CCAir plan allows employees to defer up
to 17% of annual compensation. Company matching contributions
vary in accordance with labor agreements in force for contract
employees. For non-contract employees, the match is determined
annually by the Board of Directors of CCAir. Upon completing two
years of service, the employee is 20&nbsp;percent vested in
employer contributions and the remainder of the employer
contributions vest 20&nbsp;percent per year. Employees become
fully vested in employer contributions after completing six
years of employment. Contributions by CCAir to this plan were
approximately $0.1 million, $0.2&nbsp;million and
$0.3&nbsp;million in fiscal 2002, 2001 and 2000, respectively.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">15.</FONT></B></TD>
    <TD>
    <B><FONT size="2">LEASE COMMITMENTS</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At September&nbsp;30, 2002, the Company leased 99
aircraft under non-cancelable operating leases with remaining
terms of up to 17&nbsp;years. The aircraft leases require the
Company to pay all taxes, maintenance, insurance and other
operating expenses. The Company has the option to terminate
certain of the leases at various times throughout the lease. At
September&nbsp;30, 2002, two CRJ-700 aircraft are subject to
interim financing agreements. The Company expects to replace
these interim arrangements with long-term operating leases and,
accordingly, requirements under the interim arrangements are
included in the minimum lease commitment table below. Aggregate
rental expense totaled approximately $109.1&nbsp;million,
$87.4&nbsp;million and $63.0&nbsp;million for the years ended
September&nbsp;30, 2002, 2001 and 2000, respectively.
</FONT>

<P align="center"><FONT size="2">48
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Future minimum lease payments under
non-cancelable operating leases are as follows:
</FONT>

<CENTER>
<TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="75%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Years Ending September&nbsp;30,</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2003
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">122,211</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">114,474</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2005
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,994</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2006
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">107,604</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2007
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">108,050</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Thereafter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">898,376</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COMMITMENTS
AND CONTINGENCIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In June&nbsp;1999, Mesa entered into an agreement
with Empresa Brasiliera de Aeronautica SA (&#147;Embraer&#148;)
to acquire 36&nbsp;Embraer ERJ-145 50-passenger regional jets.
Mesa introduced the ERJ-145 aircraft into revenue service in the
third quarter of fiscal 2000 as US&nbsp;Airways Express. As of
September&nbsp;30, 2002, the Company had taken delivery of
32&nbsp;ERJ-145&#146;s, which have been financed as operating
leases. The Company has the right to cancel the four remaining
firm aircraft. In conjunction with this purchase agreement, Mesa
has $4.2&nbsp;million remaining on deposit with Embraer, which
is included with lease and equipment deposits at
September&nbsp;30, 2002. The remaining deposit will be returned
either upon the delivery of the last four aircraft or
notification by Mesa of its intention to cancel the orders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has negotiated 10-year engine
maintenance contracts with General Electric Aircraft Engines
(&#147;GE&#148;) for its CRJ aircraft, Rolls-Royce Allison
(&#147;Rolls-Royce&#148;) for its ERJ aircraft and Pratt and
Whitney, Canada Aircraft Services (&#147;PWC&#148;) for its
Dash&nbsp;8-200 aircraft. The GE contract requires a monthly
payment based upon flight hours incurred. The Rolls-Royce and
PWC contracts provide for payment at the time of the repair
event for a fixed dollar amount per flight hour. The rate under
all contracts is subject to escalation based on changes in
certain price indices.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, the Company signed a six year agreement
with PWC to provide a new fleet management program covering the
maintenance of the Company&#146;s Beechcraft
1900D&nbsp;turboprop engines. Pursuant to the agreement, the
Company sold certain assets of its Desert Turbine Services unit,
as well as all spare PT6 engines at book value. The agreement
with PWC covers all of the Beechcraft 1900D&nbsp;turboprop
aircraft and engines. Pursuant to the agreement, the Company was
required to prepay $6.8&nbsp;million in future maintenance
costs. The prepayment is being amortized to expense over the
term of the agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May&nbsp;2001, we entered into an agreement
with BRAD to acquire 20&nbsp;50-seat CRJ-200s, 20&nbsp;64-seat
CRJ-700s and 20&nbsp;80-seat CRJ-900s (the &#147;2001 BRAD
Agreement&#148;). Under the agreement, Mesa has the right to
convert up to five CRJ-700 aircraft to CRJ-900 aircraft and to
cancel the CRJ-200 aircraft. We have notified BRAD of our
intention to convert to CRJ-900s. The total number of firm
aircraft orders is now 15&nbsp;CRJ-700s and 25&nbsp;CRJ-900s. We
secured the order with a $4.0&nbsp;million deposit and will
continue to make 24&nbsp;monthly deposits of approximately
$1.1&nbsp;million through April&nbsp;2003. In
February&nbsp;2002, Bombardier returned $7.0&nbsp;million of
deposits to the Company and applied $5.5&nbsp;million to
outstanding obligations. Deposits of $2.5&nbsp;million will be
returned to us upon completion of permanent financing on the
first five aircraft ($500,000 per aircraft). The remaining
deposits will be returned on a pro rata basis in equal amounts
upon completion of permanent financing on each of the last five
aircraft ($3.0&nbsp;million per aircraft). The transaction
includes standard product support provisions, including training
support, preferred pricing on initial inventory provisioning,
maintenance support and technical publication support. The
aggregate list value of the 40&nbsp;CRJ-700 and 900&#146;s to be
acquired under the agreement is approximately $1.0&nbsp;billion.
Deliveries of the CRJ-700 commenced in July&nbsp;2002, with
revenue service commencing in October. We are the launch
</FONT>

<P align="center"><FONT size="2">49
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">customer of the CRJ-900 and expect to take
delivery of the first aircraft in the first calendar quarter of
2003. In addition to the firm orders, we have an option to
acquire an additional 80&nbsp;CRJ-700 and CRJ-900 regional jets.
In conjunction with the 2001 BRAD Agreement, we have
$8.8&nbsp;million on deposit with BRAD, which is included with
lease and equipment deposits at September&nbsp;30, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In May&nbsp;2001, the Company filed a complaint
in Arizona state court against the law firm of Beus Gilbert
P.L.L.C. (&#147;Beus Gilbert&#148;) arising out of Beus
Gilbert&#146;s representation of the Company in a suit against
United Airlines (&#147;UAL litigation&#148;) that was settled in
March&nbsp;2001. The suit seeks a judgment voiding the fee
arbitration provision (the &#147;arbitration provision&#148;) of
a contingency fee agreement between the Company and Beus
Gilbert. The provision purports to require that all disputes as
to attorneys&#146; fees payable to Beus Gilbert be submitted to
arbitration for final determination. Notwithstanding the
requirement to arbitrate, the provision further purports to
grant Beus Gilbert the right, &#147;in its sole and absolute
discretion,&#148; to reject the decision of the arbitrator,
impose an award in the amount equal to five times the aggregate
hourly rate of all attorneys and paralegals who worked on the
legal matter (plus costs and expenses), and enforce that award
as though it were a civil judgment. Relying on the arbitration
provision, following the settlement of the UAL Litigation, Beus
Gilbert demanded in excess of $23.0&nbsp;million, which it
claims to have computed by applying a 5X multiplier in the
arbitration provision to fees that allegedly accrued in excess
of $4.0&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The suit against Beus Gilbert alleges that the
arbitration provision is void as a matter of law because it is
illusory and lacks mutual consideration; that it is also void
because it violates a public purpose: a fair and equitable
resolution of the parties&#146; fee dispute by an impartial
arbitrator; and that it is unenforceable because it circumvents
the legal and ethical requirements that attorneys&#146; fees be
reasonable. The Company seeks a determination by the Court of
the fee dispute between the parties. On November&nbsp;27, 2001,
the court granted Beus Gilbert&#146;s motion to compel
arbitration to resolve the dispute and ordered the arbitrator to
decide whether the fee resulting from a 5X multiplier would be
reasonable. On July&nbsp;9, 2002, the arbitrator awarded Beus
Gilbert $5.8&nbsp;million which is included in other accrued
expenses at September&nbsp;30, 2002. The Company has appealed
the arbitrator&#146;s decision.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company and/or its subsidiaries is also
involved in a lawsuit involving the Air Line Pilots Association,
International (&#147;ALPA&#148;), the union that represents the
Mesa Airlines and Air Midwest pilots.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">ALPA v.&nbsp;Mesa Airlines, Inc., et
    al.,</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The proceeding brought by ALPA, Case
No.&nbsp;CV-02-1333-PHX-PGR (D.&nbsp;Ariz.) names as defendants
the Company, its Mesa Airlines subsidiary, and its Chairman in
his individual capacity. It asserts three claims under the
Railway Labor Act: (1)&nbsp;violation of the duty to bargain in
good faith; (2)&nbsp;attempting to undermine ALPA as the
collective bargaining representative of the Mesa Airlines
pilots; and (3)&nbsp;failure to refrain from making changes to
status quo rates of pay, rules or working conditions prior to
exhausting the statute&#146;s mediation procedures. The latter
two counts are based primarily on the Company&#146;s
announcement that it intends to establish a new subsidiary,
Freedom Airlines, to perform flying for America West Airlines
using CRJ-700 and CRJ-900 aircraft. The Company denies that it
has violated the statute in any fashion and plans a vigorous
defense against ALPA&#146;s suit. The complaint was filed in
July&nbsp;2002, and the Company filed a motion to dismiss in
September&nbsp;2002. Oral arguments are scheduled in
January&nbsp;2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company is also involved in various other
legal proceedings and FAA civil action proceedings that the
Company does not believe will have a material adverse effect
upon the Company&#146;s business, financial condition or results
of operations, although no assurance can be given to the
ultimate outcome of any such proceedings.
</FONT>

<P align="center"><FONT size="2">50
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL
INSTRUMENT DISCLOSURE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The carrying amount of cash and cash equivalents,
receivables, accounts payable, accrued compensation and other
liabilities approximate fair values due to the short maturity
periods of these instruments. The fair value of securities is
based on quoted marked prices (see note&nbsp;5). The carrying
value of the Company&#146;s long-term debt approximates fair
value based on the current terms offered for debt of the same or
similar remaining maturities. The difference between the
estimated fair values and carrying values of the Company&#146;s
financial instruments is not material.
</FONT>

<P align="left">
<B><FONT size="2">18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;VALUATION AND
QUALIFYING ACCOUNTS</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="45%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Additions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance at</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Charged to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beginning</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Costs and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Balance at</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Expenses</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Deductions</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">End of Year</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="15" align="center" nowrap><B><FONT size="1">(In thousands)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Allowance for Obsolescence Deducted from
    Expendable Parts and Supplies</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">September&nbsp;30, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(2,229</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">267</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">September&nbsp;30, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">648</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,496</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">September&nbsp;30, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,313</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(465</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,848</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Allowance for Doubtful Accounts Deducted from
    Accounts Receivable</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">September&nbsp;30, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,605</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(7,501</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12,799</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">September&nbsp;30, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,327</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,695</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">September&nbsp;30, 2000
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">368</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SELECTED
QUARTERLY FINANCIAL DATA (UNAUDITED)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table presents selected unaudited
quarterly financial data (in thousands):
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">First</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Second</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Third</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Fourth</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Quarter</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">2002(1)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">111,234</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">119,575</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133,797</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132,177</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating income (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,718</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8,448</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(28,106</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,666</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,185</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,658</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(20,818</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss) per share&nbsp;&#151; basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings (loss)&nbsp;per share&nbsp;&#151;
    diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.63</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">2001(2)</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating revenues
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">133,276</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128,445</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">140,425</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">121,232</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Operating income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9,858</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(17,033</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,876</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(78,343</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,708</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(12,862</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7,484</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(48,406</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings per share&nbsp;&#151; basic
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.49</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Net earnings per share&nbsp;&#151; diluted
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(0.40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">(1.49</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Fourth quarter amounts include impairment and
    restructuring charges totaling $26.7&nbsp;million (pretax).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Quarterly amounts include impairment and
    restructuring charges totaling $22.7&nbsp;million (pretax) and
    $58.2&nbsp;million (pretax) in the second and fourth quarters,
    respectively. Additionally, an allowance for bad debts of
    $14.6&nbsp;million (pretax) was recorded in the fourth quarter.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">51
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">20.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IMPAIRMENT
AND RESTRUCTURING CHARGES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the fourth quarter of fiscal 2002, the
Company&#146;s subsidiary, CCAir, determined to discontinue its
operations. As a result of this decision, the Company took a
restructuring and impairment charge of $19.8&nbsp;million. The
charge is comprised of $0.7&nbsp;million of severance and other
employee related liabilities, $4.6&nbsp;million in aircraft
related return costs, $7.8&nbsp;million for future aircraft
lease payments, $4.1&nbsp;million to reduce the value of rotable
and expendable inventory to fair market value less costs to
sell, $0.9&nbsp;million to write off the value of equipment and
leasehold improvements and $1.7&nbsp;million to reduce
maintenance deposits held by a lessor to net realizable value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Also in the fourth quarter of fiscal 2002, the
Company returned 12 of the 15&nbsp;B1900D aircraft permitted
under its agreement with Raytheon. As a result of unanticipated
increases in the cost of meeting return conditions, the Company
recorded an additional impairment charge of $3.3&nbsp;million.
The remaining three aircraft are expected to be returned to
Raytheon by the end of the fiscal second quarter of 2003. Also
in 2002, the Company&#146;s sublease of two Shorts
360&nbsp;aircraft the Company had been subleasing to an operator
in Europe expired and the Company did not anticipate the lease
to be renewed. As a result, the Company took a charge for
$3.6&nbsp;million to accrue for the remaining lease payments and
the future costs of returning these aircraft to the lessor.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In fiscal 2001, the Company recognized a charge
of approximately $80.8&nbsp;million. The charge was comprised of
$22.7&nbsp;million to write the net book value of 15&nbsp;B1900D
aircraft down to the contractual selling price, less the cost of
preparing the aircraft for return; $9.3&nbsp;million to write
off the unamortized value of the goodwill associated with
certain B1900D route systems; an impairment loss of
$40.7&nbsp;million on the Company&#146;s remaining B1900D fleet;
$4.9&nbsp;million to dispose of nine Jetstream Super&nbsp;31
aircraft and $3.2&nbsp;million to reduce its surplus inventory
to net realizable value.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The changes in the impairment and restructuring
charges for the three fiscal years ended September&nbsp;30, 2002
are as follows:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="22%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reserve</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reserve</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reserve</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Non-</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Reserve</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Description of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Oct.&nbsp;1,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sept.&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cash</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cash</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sept.&nbsp;30,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cash</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Cash</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Sept.&nbsp;30,</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Charge</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Utilized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Provision</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Utilized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Utilized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Provision</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Utilized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Utilized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Restructuring:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Severance and other
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(826</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">590</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(236</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">236</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(658</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Costs to return aircraft
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,202</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,202</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(16,136</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,623</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4,715</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(10,040</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,648</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(8,107</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Aircraft lease payments
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,610</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,610</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9,238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,610</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9,238</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Cancellation of maintenance agreement
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,200</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Impairment:
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Impairment of surplus inventory
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,233</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,233</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(4,143</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">4,143</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Impairment of maintenance deposits
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(1,682</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">1,682</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Impairment of aircraft and other property
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(47,421</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">47,421</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(914</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">914</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Writeoff of goodwill
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9,253</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">9,253</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">&#151;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(3,028</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">590</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(2,438</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(80,853</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">13,859</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">59,907</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(9,525</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(26,675</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">11,458</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">6,739</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(18,003</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)</FONT></TD>
</TR>

<TR>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The reserve balance of $18.0&nbsp;million above
is included in accrued expenses, other non-current liabilities
and deferred credits on the accompanying consolidated balance
sheets.
</FONT>

<P align="center"><FONT size="2">52
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<B><FONT size="2">21.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RELATED PARTY
TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In February&nbsp;1999, the Company entered into
an agreement with Barlow Capital, LLC (&#147;Barlow&#148;),
whereby Barlow would provide financial advisory services related
to aircraft leases, mergers and acquisitions, and certain other
financing arrangements. The Company paid fees totaling $846,000,
$627,000 and $409,000 to Barlow in fiscal 2002, 2001 and 2000,
respectively, for arranging for leasing companies to participate
in the Company&#146;s various aircraft financings under this
agreement. Messrs.&nbsp;Ornstein, Murnane and Swigart are each
members of Barlow Capital, LLC and hold a 20%, 20% and 20%
membership interest, respectively therein. Distributions to the
members are determined by the members on a year-by-year basis.
Substantially all of Barlow&#146;s revenues are derived from its
agreement with the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;9, 1998, the Company entered
into an agreement with International Airline Support Group
(&#147;IASG&#148;) whereby the Company would consign certain
surplus airplane parts to IASG to sell on the open market. IASG
in turn would submit proceeds from such sales to the Company
less a market-based fee. At September&nbsp;30, 2002 and 2001,
the Company had $2.4&nbsp;million and $1.5&nbsp;million in
inventory on consignment with IASG, respectively. During fiscal
2002, 2001 and 2000, respectively, the Company paid IASG
approximately $348,000, $553,000 and $611,000 in commissions on
sales of surplus aircraft parts. During 2002, IASG provided
consultation on determining the fair value of the Company&#146;s
surplus inventory. Mr.&nbsp;Murnane is currently a member of the
board of directors of IASG and was an executive officer of IASG
before joining the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company provides administrative support,
reservation services and office space to Europe-By-Air, Inc. The
Company billed Europe-By-Air approximately $70,000, $64,000 and
$78,000 for these services during fiscal 2002, 2001 and 2000,
respectively. At September&nbsp;30, 2002 and 2001, the Company
had receivables from Europe-By-Air of $32,000 and $7,000,
respectively. Mr.&nbsp;Ornstein and Mr.&nbsp;Swigart are a
shareholder and a Chief Executive Officer and shareholder of
Europe-By-Air, respectively.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In December&nbsp;1999, the Company retained
Providence Capital, Inc. (&#147;Providence&#148;) to assist with
its stock repurchase program as well as other equity trades.
Fees and/or commissions totaling approximately $108,000,
$200,000 and $136,000 were paid to Providence during fiscal
2002, 2001 and 2000, respectively. Mr.&nbsp;Denton is the
President and Chief Executive Officer of Providence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has used the services of the law firm
of Piper Rudnick (formerly Verner, Liipfert, Bernhard, McPherson
and Hand) for labor related actions. In 2002, the Company paid
Piper Rudnick $571,333 for legal-related services.
Mr.&nbsp;Manson is a partner with Piper Rudnick.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;1, 2001, the Company loaned $234,000
to Mr.&nbsp;Ornstein pursuant to a promissory note. Amounts
outstanding under the promissory note bore interest at a rate of
7.5% per annum and required quarterly payments. On
September&nbsp;30, 2001, the Company&#146;s accounts receivable
under the promissory note from Mr.&nbsp;Ornstein totaled
$215,000. On July&nbsp;27, 2002, Mr.&nbsp;Ornstein paid the
entire balance of the note and all accrued interest thereon.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;1, 2001, the Company loaned $90,000
to Mr.&nbsp;Lotz pursuant to a promissory note. Amounts
outstanding under the promissory note bore interest at a rate of
7.5% per annum and required quarterly payments. On
September&nbsp;30, 2001, the Company&#146;s accounts receivable
under the promissory note from Mr.&nbsp;Lotz totaled $83,000. On
July&nbsp;17, 2002, Mr.&nbsp;Lotz paid the entire balance of the
note and all accrued interest thereon.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During fiscal 2001, the Company assisted in the
establishment of Regional Airline Partners (&#147;RAP&#148;), a
political interest group formed to pursue the interests of
regional airlines, communities served by regional airlines and
manufactures of regional airline equipment. Mr.&nbsp;Parker is
the Executive Director of RAP. During 2002 and 2001, the Company
paid expenses totaling $165,000 and $18,000, respectively, of
RAP&#146;s operating costs. Included in these amounts are wages
and expense of Mr.&nbsp;Parker, which amounted to $99,000 and
$4,000
</FONT>

<P align="center"><FONT size="2">53
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">MESA AIR GROUP, INC.</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</FONT></B>

<P align="left">
<FONT size="2">in fiscal 2002 and 2001, respectively. Since
inception, the Company has financed 100% of RAP&#146;s
operations. The Company had a note receivable from RAP of
$17,732 at September&nbsp;30, 2001 that was expensed in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In September&nbsp;2001, the Company entered into
an agreement to form UFLY, LLC, for the purpose of making
strategic investments in US&nbsp;Airways, Inc. In September
2001, the Company began making investments in US&nbsp;Airways
common stock on behalf of the Company and the other investors.
At September&nbsp;30, 2001, the Company had a capital
contribution receivable of $2.6&nbsp;million from the other
investors for such purchases. UFLY, LLC was formally established
in October&nbsp;2001. Shares held by the Company prior to
formation sustained an unrealized loss at September&nbsp;30,
2001 of approximately $1.0&nbsp;million. In 2002, the Company
contributed $5.0&nbsp;million in investments and the other
members contributed $5.0 million in cash to form UFLY. During
2002, UFLY&#146;s investments lost $1.9&nbsp;million. Also
during 2002, UFLY made capital distributions of
$2.5&nbsp;million back to the Company and $3.0&nbsp;million to
the other members. At September&nbsp;30, 2002, the Company owned
approximately 56% of UFLY, Mr.&nbsp;Ornstein is a shareholder/
owner and managing member.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company will enter into future business
arrangements with related parties only where such arrangements
are approved by a majority of disinterested directors and are on
terms at least as favorable as available from unaffiliated third
parties.
</FONT>

<P align="center"><FONT size="2">54
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link2 "Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There were no disagreements with accountants on
accounting and financial disclosure.
</FONT>

<!-- link1 "PART III" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">PART III</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All items in Part&nbsp;III are incorporated
herein by reference as indicated below to our definitive proxy
statement for our 2003 annual meeting of stockholders
anticipated to be held February&nbsp;11, 2003, which will be
filed with the SEC, except for information relating to executive
officers under the heading &#147;Executive Officers of the
Registrant,&#148; which can be found in Part&nbsp;I following
Item&nbsp;4.
</FONT>

<!-- link2 "Item 10. Directors and Executive Officers of the Registrant" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Directors
and Executive Officers of the Registrant</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by Item&nbsp;10 is
incorporated herein by reference to the information contained
under the headings &#147;Election of Directors&#148; and
&#147;Executive Officers&#148; as set forth in our definitive
proxy statement for our 2003 annual meeting of stockholders.
</FONT>

<!-- link2 "Item 11. Executive Compensation" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Executive
Compensation</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by Item&nbsp;11 relating
to our directors is incorporated herein by reference to the
information under the heading &#147;Compensation of
Directors&#148; and the information relating to our executive
officers is incorporated herein by reference to the information
under the heading &#147;Executive Compensation&#148; as set
forth in our definitive proxy statement for our 2003 annual
meeting of stockholders.
</FONT>

<!-- link2 "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" -->
<DIV align="left"><A NAME="015"></A></DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B><FONT size="2">Item&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B></TD>
    <TD>
    <B><I><FONT size="2">Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder
    Matters</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by Item&nbsp;12 is
incorporated herein by reference to the information under the
headings &#147;Election of Directors&#148; and &#147;Security
Ownership of Certain Beneficial Owners and Management&#148; as
set forth in our definitive proxy statement for our 2003 annual
meeting of stockholders.
</FONT>

<!-- link2 "Item 13. Certain Relationships and Related Transactions" -->
<DIV align="left"><A NAME="016"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certain
Relationships and Related Transactions</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information required by Item&nbsp;13 is
incorporated herein by reference to the information under the
heading &#147;Certain Relationships and Related
Transactions&#148; as set forth in our definitive proxy
statement for our 2003 annual meeting of stockholders.
</FONT>

<!-- link2 "Item 14. Controls and Procedures" -->
<DIV align="left"><A NAME="017"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Controls
and Procedures</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We maintain disclosure controls and procedures
that are designed to ensure that information required to be
disclosed in our reports under the Securities Exchange Act of
1934, as amended (the &#147;Exchange Act&#148;) is recorded,
processed, summarized and reported within the time periods
specified in the SEC&#146;s rules and forms, and that such
information is accumulated and communicated to the management,
including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosure. Management necessarily applies its judgment
in assessing the costs and benefits of such controls and
procedures, which, by their nature, can provide only reasonable
assurance regarding management&#146;s control objectives.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Within 90&nbsp;days prior to the date of filing
of this report, we carried out an evaluation, under the
supervision and with the participation of management, including
the Chief Executive Officer along with the Chief Financial
Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act
Rule&nbsp;13a-14. Based upon the foregoing, the Chief Executive
Officer along with the Chief Financial Officer concluded that
our disclosure controls and procedures are designed to ensure
that the information required to be disclosed by us in the
reports filed or submitted by us under the Exchange Act is
recorded, processed, summarized and reported within the
applicable time periods. There have been no
</FONT>

<P align="center"><FONT size="2">55
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">significant changes in our internal controls or
in other factors that could significantly affect internal
controls subsequent to the date we carried out the evaluation.
</FONT>
</DIV>

<!-- link1 "PART IV" -->
<DIV align="left"><A NAME="018"></A></DIV>

<P align="center">
<B><FONT size="2">PART IV</FONT></B>

<!-- link2 "Item 15. Exhibits, Schedules and Reports on Form 8-K" -->
<DIV align="left"><A NAME="019"></A></DIV>

<P align="left">
<B><FONT size="2">Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exhibits,
Schedules and Reports on Form&nbsp;8-K</I></FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(A)&nbsp;Documents filed as part of this report:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference is made
    to consolidated financial statement schedules in item 8 hereof.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reports on
    Form&nbsp;8-K
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We did not file any reports on Form&nbsp;8-K
during the quarter ended September&nbsp;30, 2002.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following exhibits are either filed as part
of this report or are incorporated herein by reference from
documents previously filed with the Securities and Exchange
Commission:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Reference</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Articles of Incorporation of Registrant dated
    May&nbsp;28, 1996
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;3.1 to Registrant&#146;s
    Form&nbsp;10-K for the fiscal year ended September&nbsp;30,
    1996, incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Bylaws of Registrant as amended
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;3.2 to Registrant&#146;s
    Form&nbsp;10-K for the fiscal year ended September&nbsp;30,
    1996, incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Common Stock certificate
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;4.5 to Amendment No.&nbsp;1
    to Registrant&#146;s Form&nbsp;S-18, Registration
    No.&nbsp;33-11765 filed March&nbsp;6, 1987, incorporated herein
    by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Common Stock certificate (issued after
    November&nbsp;12, 1990)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;4.8 to Form&nbsp;S-1,
    Registration No.&nbsp;33-35556 effective December&nbsp;6, 1990,
    incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">1998 Key Officer Stock Option Plan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Appendix&nbsp;A to Registrant&#146;s
    Definitive Proxy Statement, dated June&nbsp;19, 1998
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2001 Key Officer Stock Option Plan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Outside Directors&#146; Stock Option Plan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Appendix&nbsp;B to Registrant&#146;s
    Definitive Proxy Statement, dated June&nbsp;19, 1998
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employee Stock Option Plan, as amended
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Appendix&nbsp;C to Registrant&#146;s
    Definitive Proxy Statement, dated June&nbsp;19, 1998
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Directors&#146; and Officers&#146;
    Indemnification Agreement
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement between USAirways, Inc. and Air
    Midwest, Inc. dated July&nbsp;29, 1994 (Philadelphia)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.44 to Form&nbsp;10-K for
    fiscal year ended September&nbsp;30, 1991, Commission File
    No.&nbsp;0-15495, incorporated herein by reference
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">56
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Reference</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Agreement made as of
    October&nbsp;6, 2000 by and between USAirways, Inc. and Air
    Midwest, Inc. dated July&nbsp;29, 1994
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Service Agreement between USAirways, Inc. and Air
    Midwest, Inc. dated October&nbsp;15, 1990 (Kansas City)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.43 to Form&nbsp;10-K for
    Fiscal year ended September&nbsp;30, 1991, Commission File
    No.&nbsp;0-15495, incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to the Service Agreement made as
    of November&nbsp;1, 1991 by and between USAirways, Inc. and Air
    Midwest, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amendment to the Service Agreement made as
    of February 1993 by and between USAirways, Inc. and Air Midwest,
    Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Third Amendment to the Service Agreement made as
    of October&nbsp;6, 2000 by and between USAirways, Inc. and Air
    Midwest, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.8(</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fourth Amendment to the Service Agreement made as
    of March&nbsp;5, 2002 by and between USAirways, Inc. and Air
    Midwest, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Codeshare and Revenue Sharing Agreement, dated as
    of February&nbsp;1, 2001, by and between Mesa Airlines, Inc. and
    America West, Inc. (Certain portions deleted pursuant to
    confidential treatment.)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.1 to Form&nbsp;10-Q for
    the period ended March&nbsp;31, 2001, incorporated herein by
    reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Codeshare and Revenue Sharing
    Agreement dated as of April&nbsp;27, 2001, by and between Mesa
    Airlines, Inc. and America West, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Codeshare Agreement between Mesa Airlines, Inc.
    and Frontier Airlines, Inc. (certain portions deleted pursuant
    to confidentiality treatment)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.7 to Form&nbsp;10-K for
    the period ended September&nbsp;30, 2001, incorporated herein by
    reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Codeshare Agreement between
    Mesa Airlines, Inc., and Frontier Airlines, Inc., dated as of
    February&nbsp;12, 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.1 to Form&nbsp;10-Q for
    the quarterly period ended December&nbsp;31, 2001, incorporated
    herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.13</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amendment to Codeshare Agreement between
    Mesa Airlines, Inc., and Frontier Airlines, Inc., dated as of
    August&nbsp;1, 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Service Agreement dated as of November&nbsp;11,
    1997 between Mesa Airlines, Inc. and US Airways, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.86 to Mesa Air Group,
    Inc. Form&nbsp;10-Q for the quarter ended December&nbsp;31, 1997
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.15</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Service Agreement dated as of
    November&nbsp;24, 1999, by and between Mesa Airlines, Inc. and
    US Airways, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">57
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Reference</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.16</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amendment to Service Agreement dated as of
    October&nbsp;6, 2000, by and between Mesa Airlines, Inc. and US
    Airways, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.17</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Third Amendment to Service Agreement dated as of
    October&nbsp;17, 2002, by and between Mesa Airlines, Inc. and US
    Airways
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.18</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fourth Amendment to Service Agreement dated as of
    October&nbsp;17, 2002, by and between Mesa Airlines, Inc. and US
    Airways
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.19</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fifth Amendment to Service Agreement dated as of
    October&nbsp;17, 2002, by and between Mesa Airlines, Inc., and
    US Airways
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Aircraft Option Exercise B97-7701-RJTL-3492L
    dated as of August&nbsp;15, 1997 between Mesa Air Group, Inc.
    and Bombardier Inc. (certain portions deleted pursuant to
    confidential treatment request)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.84 to Mesa Air Group,
    Inc. Form&nbsp;10-Q for the quarter ended December&nbsp;31, 1997
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Bombardier Regional Aircraft Division Settlement
    Agreement B97-7701-RJTL-3493L dated as of August&nbsp;15, 1997
    between Mesa Air Group, Inc. and Bombardier Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.85 to Mesa Air Group,
    Inc. Form&nbsp;10-Q for the quarter ended December&nbsp;31, 1997
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Master Purchase Agreement between Bombardier,
    Inc. and Mesa Air Group, Inc., dated May&nbsp;18, 2001 (certain
    portions deleted pursuant to confidential treatment request)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as exhibit 10.1 to the Form&nbsp;10-Q for
    the quarter ended June&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Lease Agreement between Beech Acceptance
    Corporation, Inc. and Mesa Airlines, Inc., negotiated
    September&nbsp;30, 1994 for all prospective 1900&nbsp;D Airliner
    leases
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.67 to Mesa Airlines,
    Inc. Form&nbsp;10-K for the year ended September&nbsp;30, 1994,
    Commission File No.&nbsp;0-15495
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement between the Registrant and Barlow
    Capital, LLC, as amended
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.23 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement dated as of March&nbsp;14,
    2001, between the Registrant and Jonathan G. Ornstein
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.24 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement dated as of January&nbsp;1,
    2001, between the Registrant and Michael&nbsp;J. Lotz
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.25 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement, dated as of
    December&nbsp;6, 2001 between the Registrant and George
    Murnane&nbsp;III
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Employment Agreement entered into by and
    between Mesa Air Group, Inc. and Robert Stone, Carter Leake and
    Brian Gillman
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.26 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Three Gateway Office Lease between Registrant and
    DMB Property Ventures Limited Partnership, dated
    October&nbsp;16, 1998, as amended (Corporate Headquarters)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">58
</FONT>

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="41%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Reference</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">18.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter regarding change in accounting principle
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as exhibit&nbsp;18.1 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Subsidiaries of the Registrant
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Independent Auditors&#146; Consent of Deloitte
    and Touche LLP
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">99.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certification of Principal Executive Officer
    pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">99.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certification of Principal Financial Officer
    pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">File herewith
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company has sought confidential treatment of
    portions of the referenced exhibits.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">59
</FONT>
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<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="020"></A></DIV>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of Section&nbsp;13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">MESA AIR GROUP, INC.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="center">
    <FONT size="2">/s/ JONATHAN G. ORNSTEIN
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Jonathan G. Ornstein
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Chairman and Chief Executive Officer
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">(Principal Executive Officer)
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="center">
    <FONT size="2">/s/ ROBERT B. STONE
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Robert B. Stone
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Chief Financial Officer
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">(Principal Financial Officer)
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="center">
    <FONT size="2">/s/ JEFF P. POESCHL
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Jeff P. Poeschl
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">Vice President&nbsp;&#151; Finance
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">(Principal Accounting Officer)
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Dated: December&nbsp;20, 2002
</FONT>

<P align="center">
<B><FONT size="2">POWER OF ATTORNEY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints JONATHAN
G. ORNSTEIN and JEFF P. POESCHL, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him in his name, place and
stead, in any and all capacities, to sign any and all amendments
to this Form&nbsp;10-K Annual Report, and to file the same, with
all exhibits thereto, and other documents in connection
therewith with the Securities and Exchange Commission, granting
onto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises as fully and to all intent and purposes as he might or
could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JONATHAN G. ORNSTEIN<BR>
    <HR size="1" noshade>Jonathan G. Ornstein
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Chairman of the Board, Chief Executive Officer
    and Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JAMES E. SWIGARD<BR>
    <HR size="1" noshade>James E. Swigart
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">60
</FONT>

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="39%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ DANIEL J. ALTOBELLO<BR>
    <HR size="1" noshade>Daniel J. Altobello
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ HERBERT A. DENTON<BR>
    <HR size="1" noshade>Herbert A. Denton
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ RONALD R. FOGLEMAN<BR>
    <HR size="1" noshade>Ronald R. Fogleman
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ MAURICE A. PARKER<BR>
    <HR size="1" noshade>Maurice A. Parker
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ GEORGE MURANE&nbsp;III<BR>
    <HR size="1" noshade>George Murnane&nbsp;III
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JULIE SILCOCK<BR>
    <HR size="1" noshade>Julie Silcock
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <FONT size="2">/s/ JOSEPH L. MANSON<BR>
    <HR size="1" noshade>Joseph L. Manson
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">December&nbsp;20, 2002
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">61
</FONT>

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<P align="center">
<B><FONT size="2">CERTIFICATION</FONT></B>

<P align="left">
<FONT size="2">I, Jonathan G. Ornstein, certify that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed
    this annual report on Form&nbsp;10-K of Mesa Air Group, Inc.;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my
    knowledge, this annual 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 annual
    report;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my
    knowledge, the financial statements, and other financial
    information included in this annual 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 annual report;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    registrant&#146;s other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules&nbsp;13a-14 and
    15d-14) for the registrant and we have:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;designed such disclosure controls and
    procedures 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 annual report is being prepared;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;evaluated the effectiveness of the
    registrant&#146;s disclosure controls and procedures as of a
    date within 90&nbsp;days prior to the filing date of this annual
    report (the &#147;Evaluation Date&#148;); and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    registrant&#146;s other certifying officer and I have disclosed,
    based on our most recent evaluation, to the registrant&#146;s
    auditors and the audit committee of registrant&#146;s board of
    directors (or persons performing the equivalent functions):
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrant&#146;s ability to record, process,
    summarize and report financial data and have identified for the
    registrant&#146;s auditors any material weaknesses in internal
    controls; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrant&#146;s internal controls; and
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    registrant&#146;s other certifying officer and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">/s/ JONATHAN G. ORNSTEIN
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Jonathan G. Ornstein
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Mesa Air Group, Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Date: December&nbsp;20, 2002
</FONT>

<P align="center"><FONT size="2">62
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">CERTIFICATION</FONT></B>

<P align="left">
<FONT size="2">I, Robert B. Stone, certify that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;I have reviewed
    this annual report on Form&nbsp;10-K of Mesa Air Group, Inc.;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my
    knowledge, this annual 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 annual
    report;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on my
    knowledge, the financial statements, and other financial
    information included in this annual 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 annual report;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    registrant&#146;s other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules&nbsp;13a-14 and
    15d-14) for the registrant and we have:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;designed such disclosure controls and
    procedures 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 annual report is being prepared;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;evaluated the effectiveness of the
    registrant&#146;s disclosure controls and procedures as of a
    date within 90&nbsp;days prior to the filing date of this annual
    report (the &#147;Evaluation Date&#148;); and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">5.&nbsp;The registrant&#146;s other certifying
    officer and I have disclosed, based on our most recent
    evaluation, to the registrant&#146;s auditors and the audit
    committee of registrant&#146;s board of directors (or persons
    performing the equivalent functions):
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrant&#146;s ability to record, process,
    summarize and report financial data and have identified for the
    registrant&#146;s auditors any material weaknesses in internal
    controls; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrant&#146;s internal controls; and
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    registrant&#146;s other certifying officer and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">/s/ ROBERT B. STONE
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Robert B. Stone
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Mesa Air Group, Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Date: December&nbsp;20, 2002
</FONT>

<P align="center"><FONT size="2">63
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "EXHIBIT INDEX" -->
<DIV align="left"><A NAME="021"></A></DIV>

<P align="center">
<B><FONT size="2">EXHIBIT INDEX</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Reference</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Articles of Incorporation of Registrant dated
    May&nbsp;28, 1996
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;3.1 to Registrant&#146;s
    Form&nbsp;10-K for the fiscal year ended September&nbsp;30,
    1996, incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">3.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Bylaws of Registrant as Amended
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;3.2 to Registrant&#146;s
    Form&nbsp;10-K for the fiscal year ended September&nbsp;30,
    1996, incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Common Stock certificate
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;4.5 to Amendment No.&nbsp;1
    to Registrant&#146;s Form&nbsp;S-18, Registration
    No.&nbsp;33-11765 filed March&nbsp;6, 1987, incorporated herein
    by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">4.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Common Stock certificate (issued after
    November&nbsp;12, 1990)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;4.8 to Form&nbsp;S-1,
    Registration No.&nbsp;33-35556 effective December&nbsp;6, 1990,
    incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">1998 Key Officer Stock Option Plan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Appendix&nbsp;A to Registrant&#146;s
    Definitive Proxy Statement, dated June&nbsp;19, 1998
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2001 Key Officer Stock Option Plan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Outside Directors&#146; Stock Option Plan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Appendix&nbsp;B to Registrant&#146;s
    Definitive Proxy Statement, dated June&nbsp;19, 1998
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">5.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employee Stock Option Plan, as amended
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Appendix&nbsp;C to Registrant&#146;s
    Definitive Proxy Statement, dated June&nbsp;19, 1998
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Directors&#146; and Officers&#146;
    Indemnification Agreement
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement between USAirways, Inc. and Air
    Midwest, Inc. dated July&nbsp;29, 1994 (Philadelphia)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.44 to Form&nbsp;10-K for
    fiscal year ended September&nbsp;30, 1991, Commission File
    No.&nbsp;0-15495, incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Agreement made as of
    October&nbsp;6, 2000 by and between USAirways, Inc. and Air
    Midwest, Inc. dated July&nbsp;29, 1994
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Service Agreement between USAirways, Inc. and Air
    Midwest, Inc. dated October&nbsp;15, 1990 (Kansas City)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.43 to Form&nbsp;10-K for
    fiscal year ended September&nbsp;30, 1991, Commission File
    No.&nbsp;0-15495, incorporated herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to the Service Agreement made as
    of November&nbsp;1, 1991 by and between USAirways, Inc. and Air
    Midwest, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amendment to the Service Agreement made as
    of February 1993 by and between USAirways, Inc. and Air Midwest,
    Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Third Amendment to the Service Agreement made as
    of October&nbsp;6, 2000 by and between USAirways, Inc. and Air
    Midwest, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.8(</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fourth Amendment to the Service Agreement made as
    of March&nbsp;5, 2002 by and between USAirways, Inc. and Air
    Midwest, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">64
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Reference</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Codeshare and Revenue Sharing Agreement, dated as
    of February&nbsp;1, 2001, by and between Mesa Airlines, Inc. and
    America West, Inc. (Certain portions deleted pursuant to
    confidential treatment)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.1 to Form&nbsp;10-Q for
    the period ended March&nbsp;31, 2001, incorporated herein by
    reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Codeshare and Revenue Sharing
    Agreement dated as of April&nbsp;27, 2001, by and between Mesa
    Airlines, Inc. and America West, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Codeshare Agreement between Mesa Airlines, Inc.
    and Frontier Airlines, Inc. (certain portions deleted pursuant to
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.7 to Form&nbsp;10-K for
    the period ended September&nbsp;30, 2001, incorporated herein by
    reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">confidentiality treatment) First Amendment to
    Codeshare Agreement between Mesa Airlines, Inc., and Frontier
    Airlines, Inc., dated as of February&nbsp;12, 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.1 to Form&nbsp;10-Q for
    the quarterly period ended December&nbsp;31, 2001, incorporated
    herein by reference
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.13</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amendment to Codeshare Agreement between
    Mesa Airlines, Inc., and Frontier Airlines, Inc., dated as of
    August&nbsp;1, 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Service Agreement dated as of November&nbsp;11,
    1997 between Mesa Airlines, Inc. and US Airways, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.86 to Mesa Air Group,
    Inc. Form&nbsp;10-Q for the quarter ended December&nbsp;31, 1997
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.15</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">First Amendment to Service Agreement dated as of
    November&nbsp;24, 1999, by and between Mesa Airlines, Inc. and
    US Airways, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.16</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Second Amendment to Service Agreement dated as of
    October&nbsp;6, 2000, by and between Mesa Airlines, Inc. and US
    Airways, Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.17</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Third Amendment to Service Agreement dated as of
    October&nbsp;17, 2002, by and between Mesa Airlines, Inc. and US
    Airways
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.18</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fourth Amendment to Service Agreement dated as of
    October&nbsp;17, 2002, by and between Mesa Airlines, Inc. and US
    Airways
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.19</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Fifth Amendment to Service Agreement dated as of
    October&nbsp;17, 2002, by and between Mesa Airlines, Inc., and
    US Airways
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Aircraft Option Exercise B97-7701-RJTL-3492L
    dated as of August 15, 1997 between Mesa Air Group, Inc. and
    Bombardier Inc. (certain portions deleted pursuant to
    confidential treatment request)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.84 to Mesa Air Group,
    Inc. Form&nbsp;10-Q for the quarter ended December&nbsp;31, 1997
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Bombardier Regional Aircraft Division Settlement
    Agreement B97-7701-RJTL-3493L dated as of August&nbsp;15, 1997
    between Mesa Air Group, Inc. and Bombardier Inc.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.85 to Mesa Air Group,
    Inc. Form&nbsp;10-Q for the quarter ended December&nbsp;31, 1997
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">65
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="43%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="42%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Reference</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Master Purchase Agreement between Bombardier,
    Inc. and Mesa Air Group, Inc., Dated May&nbsp;18, 2001 (certain
    portions deleted pursuant to confidential treatment request)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as exhibit 10.1 to the Form&nbsp;10-Q for
    the quarter ended June&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Lease Agreement between Beech Acceptance
    Corporation, Inc. and Mesa Airlines, Inc., negotiated
    September&nbsp;30, 1994 for all prospective 1900 D Airliner
    leases
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.67 to Mesa Airlines,
    Inc. Form&nbsp;10-K for the year ended September&nbsp;30, 1994,
    Commission File No.&nbsp;0-15495
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement between the Registrant and Barlow
    Capital, LLC, as amended
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.23 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement dated as of March&nbsp;14,
    2001, between the Registrant and Jonathan G. Ornstein
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.24 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement dated as of January&nbsp;1,
    2001, between the Registrant and Michael J. Lotz
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.25 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employment Agreement, dated as of
    December&nbsp;6, 2001 between the Registrant and George Murnane
    III
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Form of Employment Agreement entered into by and
    between Mesa Air Group, Inc. and Robert Stone, Carter Leake and
    Brian Gillman
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as Exhibit&nbsp;10.26 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">10.29</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Three Gateway Office Lease between Registrant and
    DMB Property Ventures Limited Partnership, dated
    October&nbsp;16, 1998, as amended (Corporate Headquarters)
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">18.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Letter regarding change in accounting Principle
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed as exhibit 18.1 to Registrant&#146;s
    Form&nbsp;10-K for the year ended September&nbsp;30, 2001
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">21.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Subsidiaries of the Registrant
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Independent Auditors&#146; Consent of Deloitte
    and Touche LLP
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">99.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certification of Principal Executive Officer
    pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">99.2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certification of Principal Financial Officer
    pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Filed herewith
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company has sought confidential treatment of
    portions of the referenced exhibit.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">66
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.2
<SEQUENCE>3
<FILENAME>p67334exv5w2.txt
<DESCRIPTION>EX-5.2
<TEXT>
<PAGE>
                                                                     Exhibit 5.2

                              MESA AIR GROUP, INC.
                       2001 KEY OFFICER STOCK OPTION PLAN



1.    PURPOSE OF THE PLAN; TYPE OF PLAN

      (a)   Establishment and General Purpose. Mesa Air Group, Inc. (the
            "Company") hereby establishes the 2001 Key Officer Stock Option
            Plan (the "Plan"). The purpose of the Plan is to compensate the
            chief executive officer of the Company ("CEO") and the president and
            chief operating officer of the Company ("COO," together with the
            CEO, the "Key Officers") with stock options ("Options") to induce
            their entry into employment agreements (as to each, their
            "Employment Agreement") or otherwise to induce them to remain as
            employees of the Company, and in either event to provide an
            incentive for them to improve the Company's performance. Without the
            Plan, the Board does not believe it can attract and retain the
            caliber of officers necessary to operate the Company in today's
            competitive environment. An extremely competitive market currently
            exists for senior executive officers and valuable stock options
            owned by senior management of competitors of the Company make a
            generous stock option plan necessary to attract and retain officers.

      (b)   Designation of Stock Options as Non-Qualified Stock Options. Options
            granted under the Plan shall not be treated as incentive stock
            options under Section 422 of the Internal Revenue Code of 1986, as
            amended (the "Code").


2.    ADMINISTRATION OF THE PLAN

      (a)   Creation of the Committee. This Plan will be administered by a
            committee of persons (hereinafter, the "Committee") as chosen by the
            Board of Directors of the Company (the "Board"). The Committee will
            generally consist of one or more members of the Board. If a
            Committee does not exist, or for any other reason determined by the
            board, the Board may take any action under the Plan that otherwise
            would be the responsibility of the Committee.

      (b)   Composition of Committee. With respect to Options granted to a
            person subject to Rule 16b-3 of the Securities Exchange Act of 1934
            or any successor rule ("Rule 16b-3"), unless otherwise determined by
            the Board, the Committee granting such Options shall be the entire
            Board or shall be comprised solely of two or more "non-employee
            directors" as defined by Rule 16b-3. With respect to Options granted
            to a "covered employee" under Section 162(m) of the Code ("Section
            162(m)"), unless otherwise determined by the Board, the Committee
            granting such Options shall be comprised solely of two or more
            "outside directors" as defined by Section 162(m). With respect to
            Options granted to a person subject to both Rule 16b-3 and Section
            162(m), unless otherwise determined by the Board, all grants will be
            made in a manner that complies with
<PAGE>
            both Rule 16b-3 and Section 162(m). The Committee shall be so
            constituted at all times as to permit the Plan to comply with Rule
            16b-3 or any successor rule.

      (c)   Power and Authority of Committee. The Committee will have authority
            and discretion to interpret the Plan, to establish, amend, and
            rescind any rules and regulations relating to the Plan, to decide
            all questions and settle all controversies and disputes which may
            arise in connection with the Plan, and to make all other
            determinations that may be necessary or advisable for the
            administration of the Plan.

3.    STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN

      (a)   Description of Stock and Maximum Shares Allocated. The stock subject
            to the provisions of this Plan and issuable upon exercise of the
            Options are shares of the Company's common stock ("Common Stock"),
            no par value, which may be either unissued or treasury shares, as
            the Board may from time to time determine. Subject to adjustment as
            provided in Section 7, the aggregate number of shares of Common
            Stock covered by the Plan issuable upon exercise of all Options
            shall be 2,000,000 shares, which shares shall be reserved for
            issuance upon the exercise of the Options. The maximum number of
            shares that will be subject to Options granted under the Plan to any
            Key Officer during any calendar year will be as set forth in Section
            4(b)(i) and (ii), subject to adjustment as described in Section 7.
            (The shares available for Options under this Plan and all other
            shares of Common Stock of the Company shall be referred to herein as
            the "Shares.") If the exercise price of any Option is satisfied by
            tendering Shares to the Company, only that number of Shares issued
            net of the Shares tendered shall be considered issued and delivered
            for purposes of determining the maximum number of Shares available
            for issuance under this Section.

      (b)   Restoration of Unpurchased Shares. If an Option expires or
            terminates for any reason prior to its exercise in full before the
            term of the Plan expires, the Shares subject to, but not issued
            under, such Option shall again be available for other Options
            hereafter granted.


4.    OPERATION OF THE PLAN

      (a)   Plan Participants. Options shall be granted to the Key Officers.

      (b)   Date of Grants and Allotment.

            (i)   CEO. One hundred and fifty thousand (150,000) Options shall
                  be granted to the CEO on April 1, 2002, and on April 1 of each
                  successive calendar year in which the CEO's Employment
                  Agreement remains in effect. The


                                      -2-
<PAGE>
                  grant of any Options to the CEO in excess of such number of
                  Options will require the approval of the Committee.

            (ii)  COO. One hundred thousand (100,000) Options shall be granted
                  to the COO on January 1, 2002, and on January 1 of each
                  successive calendar year in which the COO's Employment
                  Agreement remains in effect. The grant of any Options to the
                  COO in excess of such number of Options will require the
                  approval of the Committee.

            (iii) If a scheduled Grant Date in any given year fall on a day on
                  which trading in the Shares is closed, the action which would
                  have taken place on such Grant Date shall be delayed until the
                  first day after the scheduled Grant Date that trading in the
                  Shares commences.

            (iv)  Each of the dates on which Options are granted under this
                  Section 4(b) shall be referred to herein as a "Grant Date."

(c)   Price. The Option price per Share shall be equal to the fair market value
      of the underlying Shares on the Grant Date, as determined under Section
      4(d) below.

(d)   Fair Market Value. The fair market value of Shares underlying Options
      granted on any particular Grant Date shall be determined as follows:

      (i)   If the Shares are listed or admitted to trading on any securities
            exchange, the fair market value shall be the average sales price on
            such day on the New York Stock Exchange, or if the Shares have not
            been listed or admitted to trading on the New York Stock Exchange,
            on such other securities exchange on which such stock is then listed
            or admitted to trading, or if no sale takes place on such day on any
            such exchange, the average of the closing bid and asked price on
            such day as officially quoted on any such exchange;

      (ii)  If the Shares are not then listed or admitted to trading on any
            securities exchange, the fair market value shall be the average
            sales price on such day or, if no sale takes place on such day, the
            average of the reported closing bid and asked price on such date, in
            the over-the-counter market as furnished by the National A-2 39
            Association of Securities Dealers Automated Quotation ("NASDAQ"), or
            if NASDAQ at the time is not engaged in the business of reporting
            such prices, as furnished by any similar firm then engaged in such
            business and selected by the Committee; or

      (iii) If the Shares are not then listed or admitted to trading in the
            over-the-counter market, the fair market value shall be the amount
            determined by the Committee in a manner consistent with Treasury
            Regulation Section


                                      -3-
<PAGE>
            20.203 l-2 promulgated under the Code or in such other manner
            prescribed by the Secretary of the Treasury or the Internal Revenue
            Service.

      (e)   Duration of Plan; Term of Options. The term of the Plan, unless
            previously terminated by the Board, is five years. The Board may
            suspend or terminate the Plan at any time. No Option shall be
            granted under the Plan unless granted within five years after the
            adoption of the Plan by the Board, but Options outstanding on the
            date the Plan terminates shall not be terminated or otherwise
            affected by virtue of the Plan's expiration. Except as otherwise
            indicated in Section 6, all Options automatically expire ten years
            from the Grant Date.

      (f)   Vesting of the Options. Subject to Section 6, one-third of the
            Options granted on a Grant Date shall vest on the first
            anniversary after the Grant Date; one-third of the Options granted
            on a Grant Date shall vest on the second anniversary after the Grant
            Date; and the remaining one-third of Options granted on a Grant Date
            shall vest on the third anniversary after the Grant Date.

5.    TERMS AND CONDITIONS OF OPTIONS

      (a)   Individual Agreements. Options granted under the Plan shall be
            evidenced by agreements in such form as the Board or the Committee
            from time to time approves, which agreements shall substantially
            comply with and be subject to the terms of the Plan.

      (b)   Required Provisions. Each agreement shall state:

            (i)   the total number of Shares to which it pertains;

            (ii)  the exercise price for the Shares covered by the Option;

            (iii) the time at which the Option becomes exercisable;

            (iv)  the scheduled expiration date of the Option; and

            (v)   the timing and conditions of issuance of any Option exercise.

      (c)   No Fractional Shares.  Options shall be granted and shall be
            exercisable only for whole Shares; no tractional Shares will be
            issuable upon exercise of any Option granted under the Plan.
            Fractional Options shall be rounded down to the nearest whole Share
            number.

      (d)   Method of Exercising Options. Options shall be exercised by written
            notice to the Company, addressed to the Company at its principal
            place of business. Such notice shall state the election to exercise
            the Option and the number of Shares


                                      -4-
<PAGE>
            with respect to which it is being exercised, and shall be signed by
            the person exercising the Option. Such notice shall be accompanied
            by payment in full of the exercise price for the number of Shares
            being purchased. Payment may be by any of the following methods or
            any combination of the following methods:

            (i)   in cash;

            (ii)  by bank cashier's check;

            (iii) pursuant to a loan from the Company if the Board so determines
                  or if the Key Officer's Employment Agreement so provides;

            (iv)  by delivery to the Company of certificates representing the
                  number of Shares then owned by the Key Officer, the fair
                  market value of which (as determined under Section 4(d))
                  equals the purchase price of the Shares purchased pursuant to
                  the Option, properly endorsed for transfer to the Company, but
                  Shares used for this purpose must have been held by the Key
                  Officer for at least six months, or for such other minimum
                  period as may be established from time to time by the
                  Committee; or

            (v)   with the surrender of vested Options which have a "spread"
                  equal to the amount of payment (with the spread to be
                  determined by the difference between the fair market value of
                  the common stock that is subject to the Option that is being
                  surrendered, as determined in Section 3(d) of the Plan, and
                  the exercise price of the Option being surrendered).

            The Company shall deliver a certificate or certificates representing
            the Option Shares to the purchaser as soon as practicable after
            payment for those Shares has been received. If an Option is
            exercised by any person other than the Option holder, such notice
            shall be accompanied by appropriate proof of the right of such
            person to exercise the Option. All Shares that are purchased and
            paid for in full upon the exercise of an Option shall be fully paid
            and non-assessable.

      (e)   No Rights of a Shareholder. A Key Officer shall have no rights as
            a shareholder with respect to Shares covered by an Option until such
            Option is exercised and a certificate for the underlying Shares is
            issued. Upon such exercise of an Option and issuance of a stock
            certificate, the holder of the Shares of Common Stock so received
            shall have all the rights of a shareholder of the Company. No
            adjustment will be made for cash dividends for which the record date
            is prior to the date a stock certificate is issued upon exercise of
            an Option.

      (f)   Registration Rights. Each grant of Options pursuant to this Plan
            shall be subject to the requirement that, if at any time counsel to
            the Company shall determine that the listing, registration or
            qualification of the Shares subject to such Option upon


                                      -5-
<PAGE>
            any securities exchange or under any state or federal law, or the
            consent or approval of any governmental or regulatory body, is
            necessary as a condition of, or in connection with, the issuance or
            purchase of Shares thereunder, such Option may not be exercised in
            whole or in part unless such listing, registration, qualification,
            consent or approval have been effected or obtained on conditions
            acceptable to the Committee. Notwithstanding the foregoing, the
            Company agrees: (i) to keep in effect a registration statement under
            the Securities Act of 1933, as amended (or any successor statute)
            (the "1933 Act") with respect to the Shares underlying the Options
            for as long as any of the Options remain unexercised; (ii) to keep
            in effect a registration statement under the 1933 Act with respect
            to the resale of any such Shares, to the extent necessary to permit
            the Key Officer or any transferee of the Key Officer's Shares
            (acquired pursuant to an Option) to resell such Shares without any
            restrictions on the resale of such Shares under the 1933 Act; (iii)
            to comply with any registration or similar requirements under the
            laws of any state to the extent necessary to permit the Key Officer
            or any transferee of the Key Officer with respect to such Shares to
            resell such Shares without any restrictions on the resale of such
            Shares under such laws and regulations; (iv) to comply with all
            state and federal laws and regulations regarding disclosure, so as
            to permit the Key Officer and any transferee of the Key Officer to
            resell the Shares underlying the Options without liability under
            such laws and regulations; and (v) to cause all Shares underlying
            any Option to be listed or admitted to trading on any securities
            exchange on which the Shares have been listed or admitted to
            trading, at the time any Option is exercised.

6.    TERMINATION OF EMPLOYMENT; ASSIGNABILITY; DEATH

      (a)   Termination of Employment. Except as more specifically provided in
            Section 6(b), (c), (d) or (e), below, if any Key Officer ceases to
            be an employee of the Company prior to March 14,2004 (in the case of
            Ornstein) or January 1,2004 (in the case of Lotz), such Key Officer
            may, within three months after the date of such Key Officer's
            termination of employment (but not after the stated expiration date
            of an Option), exercise any Option that has become vested prior to
            the date of such termination. If any Key Officer is employed by the
            Company for the period beginning with the date this Plan is approved
            by the Board and ending on March 13,2004 (in the case of Ornstein)
            or December 3 1,2003 (in the case of Lotz), and thereafter ceases to
            be an employee of the Company, the expiration date for exercise of
            the Options held by such Key Employee shall not be earlier than ten
            years from the Grant Date.

     (b)    Disability. If the Key Officer is removed as an employee of the
            Company due to Disability (as defined in such Key Officer's
            Employment Agreement), any unvested Option shall become fully vested
            and the Key Officer (or his representative) may exercise the
            Options, in whole or in part, at any time prior to


                                      -6-
<PAGE>
            the stated expiration date of the Options, and if such removal
            occurs prior to March 14, 2004 (in the case of Ornstein) or January
            1, 2004 (in the case of Lotz), the expiration date for exercise of
            the Options shall not be earlier than ten years from the Grant Date.

      (c)   Discharge for Cause. If a Key Officer is removed as an employee of
            the Company for Cause (as such term is defined in such Key Officer's
            Employment Agreement), the Options shall terminate upon the
            effective date of the removal. Notwithstanding the foregoing, if
            such Key Officer is employed by the Company for the period beginning
            with the date this Plan is approved by the Board and ending on March
            13, 2004 (in the case of Ornstein) or December 31, 2003 (in the
            case of Lotz), such Key Officer may exercise the Options, in whole
            or in part, to the extent they were exercisable on the date when the
            Key Officer's removal was effective, at any time prior to the tenth
            anniversary of the Grant Date of the Options.

      (d)   Termination Without Cause or For Good Reason. If a Key Officer
            is terminated by the Company without Cause (as such term is defined
            in such Key Officer's Employment Agreement) or if the Key Officer
            terminates employment for Good Reason (as such term is defined in
            such Key Officer's Employment Agreement), any unvested Option held
            by such Key Officer shall vest immediately, and such Key Officer
            shall have until the stated expiration date of any Options to
            exercise them, but if such termination occurs prior to March 14,
            2004 (in the case of Ornstein) or January 1, 2004 (in the case of
            Lotz), the expiration date for exercise of the Options shall not be
            earlier than ten years from the Grant Date.

      (e)   Death of Option Holder. If a Key Officer dies while serving as an
            employee of the Company, any unvested Option held by such Key
            Officer shall become fully vested and shall be exercisable until the
            stated expiration date thereof by the person or persons
            ("successors") to whom such Key Officer's rights pass under will or
            by the laws of descent and distribution, but if the Key Officer's
            death occurs prior to March 14,2004 (in the case of Ornstein) or
            January 1, 2004 (in the case of Lotz), the expiration date for
            exercise of the Options shall not be earlier than ten years from the
            Grant Date. An Option may be exercised (and payment of the Option
            price made in full) by the successors only after written notice to
            the Company, specifying the number of shares to be purchased. Such
            notice shall comply with the provisions of Section 5(f).

      (f)   Assignability. No Option or the privileges conferred thereby shall
            be assignable or transferable by a holder except:

            (i)   by will or the laws of descent and distribution;


                                      -7-
<PAGE>
            (ii)  to an immediate family member (which for this purpose is
                  defined as a spouse, a child by blood or adoption, a
                  grandchild by blood or adoption, and any trust, partnership,
                  limited liability company, or other entity whose primary
                  beneficiaries include one or more of any such immediate family
                  members) of the Key Officer holding such Option; or

            (iii) to an organization exempt from Federal income tax under
                  Section 501(c)(3) or Section 501(c)(4) of the Code.

      (g)   The provisions of this Section 6 shall be subject to call rights
            with respect to the Options, if any, that are set forth in the Key
            Officer's Employment Agreement or in any other agreement between the
            Key Officer and the Company.

7.    CERTAIN ADJUSTMENTS

      The aggregate number of Shares subject to the Plan, the number of Shares
covered by outstanding Options, and the price per share stated in such Options
shall be proportionately adjusted for any increase or decrease in the number of
outstanding Shares of Common Stock of the Company resulting from a subdivision
or consolidation of Shares or any other capital adjustment or from the payment
of a stock dividend or from any other increase or decrease in the number of such
Shares effected without receipt by the Company of consideration therefor in
money, services or property.

8.    COMPLIANCE WITH LEGAL REQUIREMENTS

      (a)   Registration Statement Preparation. The Key Officer hereby agrees to
            supply the Company with such information and to cooperate with the
            Company, as the Company may reasonably request, in connection with
            the preparation and filing of the registration statements and
            amendments thereto under the 1933 Act and applicable state statutes
            and regulations applicable to the Option Shares.

      (b)   Additional Restrictions on Option Exercise. Notwithstanding any
            provision to the contrary contained herein, a Key Officer may
            exercise Options only so long as such exercise does not violate the
            law or any rule or regulation adopted by any applicable governmental
            authority.

9.    MISCELLANEOUS

      (a)   No Funding. This Plan shall be unfunded. The Company shall not be
            required to establish any special or separate fund or to make any
            other segregation of assets to assure any payment under the Plan.


                                      -8-
<PAGE>
      (b)   Nevada Law. The Plan and the Options granted thereunder shall be
            governed by the laws of the State of Nevada.

      (c)   Withholding of Taxes. The Company's obligation to issue Shares upon
            the exercise of an Option shall be subject to the Key Officer's
            satisfaction of all applicable federal, state, and local income and
            other tax withholding requirements. For these purposes, the Company
            shall have the right to deduct from any other compensation of the
            Key Officer any such taxes (including FICA taxes) required by law to
            be withheld with respect to the granting or exercise of any Options.
            At the time an Option is exercised by a Key Officer, the Committee,
            in its sole discretion, may permit the Key Officer to satisfy such
            withholding obligations by transferring previously-owned Shares to
            the Company, or by directing the Company to withhold from Shares
            otherwise issuable to such Key Officer upon the exercise of the
            Option. For these purposes, the value of Shares would be determined
            under Section 3(d) on the date that the amount of tax to be withheld
            is to be determined.

      (d)   Other Employee Benefits. The amount of any compensation deemed to be
            received by a Key Officer as a result of the exercise or grant of
            any Options shall not constitute "earnings" with respect to which
            any other employee benefits of such Key Officer are determined,
            including without limitation benefits under any pension, profit
            sharing, life insurance or salary continuation plan.


                  DATED to be effective as of October 30, 2001.
                                              ----------------

                                              MESA AIR GROUP, INC.



                                              By: /s/ Jonathan Ornstein
                                                 -------------------------------
                                                 Jonathan Ornstein
                                                 Chairman of the Board

        ATTESTED BY:

By: /s/ Brian S. Gillman
   ------------------------------
   Brian S. Gillman
   Secretary


                                       -9-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>p67334exv10w1.txt
<DESCRIPTION>EX-10.1
<TEXT>
<PAGE>
                                                                    Exhibit 10.1

                              MESA AIR GROUP, INC.

                            INDEMNIFICATION AGREEMENT

      This Indemnification Agreement ("Agreement") is entered into as of October
___, 2002, by and between Mesa Air Group, Inc., a Nevada corporation (the
"Company"), and ______("Indemnitee").

                                    RECITALS

      A. The Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance.

      B. The Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.

      C. Indemnitee does not regard the current protection available as adequate
under the present circumstances, and Indemnitee and other directors, officers,
employees, agents and fiduciaries of the Company may not be willing to continue
to serve in such capacities without additional protection.

      D. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.

      E. In view of the considerations set forth above, the Company desires that
Indemnitee be indemnified by the Company as set forth herein.

      NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

      1.    Indemnification.

            (a) Indemnification of Expenses. The Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any hearing, inquiry or investigation that Indemnitee in good faith believes
might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "Claim") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any subsidiary of the Company, or is or was serving at the request
of the Company as a director, officer, employee,


<PAGE>

agent or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by reason of any action or inaction
on the part of Indemnitee while serving in such capacity (hereinafter an
"Indemnifiable Event") against any and all expenses incurred by or on behalf of
Indemnitee (including attorneys' fees and all other costs, expenses and
obligations incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in, any such action, suit, proceeding, alternative
dispute resolution mechanism, hearing, inquiry or investigation), costs of
supersedes and other appeal bonds, judgments, fines, penalties and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld or delayed) of such Claim and any
federal, state, local or foreign taxes imposed on Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement (collectively,
hereinafter "Expenses"), including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses. The Company
shall make such payment of Expenses as soon as practicable but in any event no
later than ten days after written demand by Indemnitee therefor is presented to
the Company.

            (b) Change in Control. The Company agrees that if there is a Change
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then, with respect to all matters
thereafter arising concerning the rights of Indemnitee to payments of Expenses
and Expense Advances under this Agreement or any other agreement or under the
Company's Articles of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 9(d) hereof) shall be selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld or delayed). Such counsel, among other things, shall
render its written opinion to the board of directors of the Company and
Indemnitee as to whether and to what extent Indemnitee would be permitted to be
indemnified under applicable law and the Company agrees to abide by such
opinion. The Company agrees to pay the reasonable fees of the Independent Legal
Counsel referred to above and to fully indemnify such counsel against any and
all expenses (including attorneys' fees), claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.

            (c) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 8 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any
proceeding referred to in Section 1(a) of this Agreement, or in defense of any
claims, issue or matter herein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by Indemnitee (or on his behalf) in connection therewith. If Indemnitee
is not wholly successful in any proceeding referred to in Section 1(a) of this
Agreement, but is successful on the merits or otherwise (including dismissal
without prejudice) as to one or more, but less than all claims, issues or
matters therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by Indemnitee
(or on his behalf) in connection with each successfully resolved claim, issue or
matter. For purposes of this Section 1(c), and without limitation, the
termination of any claim, issue or matter in any proceeding referred to in
Section 1 of this Agreement by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.


                                       2
<PAGE>

      2.    Expenses; Indemnification Procedure.

            (a) Advancement of Expenses. To the fullest extent permitted by
applicable law, the Expenses incurred by Indemnitee pursuant to Section 1(a) of
this Agreement in connection with any proceeding or any claim, issue or matter
therein shall be paid by the Company in advance (and "Expense Advance") of the
final disposition of such proceeding or any claim, issue or matter therein no
later than 10 days after receipt by the Company of an undertaking by or on
behalf of Indemnitee ("Indemnitee Undertaking") to repay such amount to the
extent that it is ultimately determined that Indemnitee is not entitled to be
indemnified by the Company. The Indemnitee Undertaking shall be in a form
reasonably acceptable to the Company, shall not be secured and shall be interest
free.

            (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.

            (c) Reviewing Party. Upon written request by Indemnitee for
indemnification pursuant to Section 2(b) of this Agreement, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case: (i) if a Change in Control shall have
occurred, in the manner set forth in Section 1(b) of this Agreement; or (ii) if
a Change in Control shall not have occurred, (A) by a vote of the stockholders
of the Company, (B) by the board of directors of the Company by majority vote of
a quorum consisting of directors who were not parties to the action, suit or
proceeding, (C) if a majority vote of a quorum consisting of directors who were
not parties to the action, suit or proceeding so order, by Independent Legal
Counsel in a written opinion to the board of directors of the Company, or (D) if
a quorum consisting of directors who were not parties to the action, suit or
proceeding cannot be obtained, by Independent Legal Counsel in a written opinion
to the board of directors of the Company, a copy of which shall be delivered to
Indemnitee; and, if so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within 10 days after such
determination.

            (d) Presumptions; Burden of Proof; Effect of Certain Provisions.

                  (i) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 2(b) of this Agreement, and the Company shall have the
burden of proof in overcoming such presumption by clear and convincing evidence.
The termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not


                                       3
<PAGE>

permitted by applicable law. Further, neither the failure of the Company
(including its board of directors or Independent Legal Counsel) to have made a
determination prior to the commencement of such action pursuant to this
Agreement that indemnification is proper in the circumstances because Indemnitee
has met the applicable standard of conduct, nor an actual determination by the
Company (including its board of directors or Independent Legal Counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that Indemnitee has not met the applicable
standard of conduct.

                  (ii) If the person, persons or entity empowered or selected in
accordance with the terms of this Agreement to determine whether Indemnitee is
entitled to indemnification shall not have made a determination within 60 days
after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an additional 30 days, if
the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of this Section
2(d) shall not apply if the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to the terms of this Agreement.

                  (iii) For purposes of any determination of whether Indemnitee
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal
proceeding, Indemnitee had no reasonable cause to believe his conduct was
unlawful (collectively, "Good Faith"), Indemnitee shall be deemed to have acted
in Good Faith if Indemnitee's action is based on the records or books of account
of the Company and any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise of which Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent
("Enterprise"), including financial statements, or on information supplied to
Indemnitee by the officers of any of Enterprise in the course of their duties,
or on the advice of legal counsel for the Enterprise or on information or
records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected with the
reasonable care by the Enterprise. The provisions of this Section 2(d) shall not
be deemed to be exclusive or to limit in any way the other circumstances in
which the Indemnitee may be deemed to have met the applicable standard of
conduct set forth in this Agreement.

                  (iv) Actions of Others. The knowledge and/or actions, or
failure to act, of any director, officer, agent or employee of the Enterprise
shall not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.

            (e) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies.


                                       4
<PAGE>

The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of Indemnitee, all amounts payable as a result
of such action, suit, proceeding, inquiry or investigation in accordance with
the terms of such policies.

            (f) Selection of Counsel. In the event the Company shall be
obligated hereunder to pay the Expenses of any Claim, the Company, if
appropriate, shall be entitled to assume the defense of such Claim with counsel
approved by Indemnitee, upon the delivery to Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same Claim; provided
that, (i) Indemnitee shall have the right to employ Indemnitee's counsel in any
such Claim at Indemnitee's expense and (ii) if (A) the employment of counsel by
Indemnitee has been previously authorized by the Company, (B) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not continue to retain such counsel to defend such Claim, then the fees
and expenses of Indemnitee's counsel shall be at the expense of the Company.

      3.    Additional Indemnification Rights; Nonexclusivity.

            (a) Scope. The Company hereby agrees to indemnify Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the other provisions of this Agreement, the
Company's Articles of Incorporation, the Company's Bylaws or by statute. In the
event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a Nevada corporation to indemnify a
member of its Board of Directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the right of a
Nevada corporation to indemnify a member of its Board of Directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 7(a) hereunder.

            (b) Nonexclusivity. The indemnification provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Articles of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested directors, the General Corporation Law of the
State of Nevada, or otherwise. The indemnification provided under this Agreement
shall continue as to Indemnitee for any action taken or not taken while serving
in an indemnified capacity even though Indemnitee may have ceased to serve in
such capacity.

      4.    No Duplication of Payments. The Company shall not be liable under
            this Agreement to make any payment in connection with any Claim made
            against Indemnitee to the extent Indemnitee has otherwise actually
            received payment (under any insurance policy, Articles of
            Incorporation, Bylaw or otherwise) of the amounts otherwise
            indemnifiable hereunder.


                                       5
<PAGE>

      5. Partial Indemnification. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of
Expenses incurred in connection with any Claim, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which Indemnitee is entitled.

      6. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

      7. Exceptions. Except where so ordered by a court of competent
jurisdiction, any other provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement:

            (a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
omissions or transactions from which Indemnitee may not be relieved of liability
under applicable law;

            (b) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Articles of Incorporation or Bylaws now or hereafter in effect relating to
Claims for Indemnifiable Events, (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such Claim, (iii) as
otherwise required under section 78.7502 (or other applicable code section) of
Nevada General Corporation Law, or (iv) in actions involving a counterclaim,
interpleader, or third party claim, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be;

            (c) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous; or

            (d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

      8. Period of Limitations. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from


                                       6
<PAGE>

the date of accrual of such cause of action, and any claim or cause of action of
the Company shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two-year period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such
cause of action, such shorter period shall govern.


      9. Construction of Certain Phrases.

            (a) For purposes of this Agreement, references to the "Company"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees,
agents or fiduciaries, so that if Indemnitee is or was a director, officer,
employee, agent or fiduciary of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, Indemnitee shall stand in the
same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

            (b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee, agent or fiduciary of the
Company which imposes duties on, or involves services by, such director,
officer, employee, agent or fiduciary with respect to an employee benefit plan,
its participants or its beneficiaries; and if Indemnitee acted in good faith and
in a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.

            (c) For purposes of this Agreement a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of the Company
representing more than 50% of the total voting power represented by the
Company's then outstanding Voting Securities (as defined below), (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company's
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining


                                       7
<PAGE>

outstanding or by being converted into Voting Securities of the surviving
entity) at least 50% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of transactions)
all or substantially all of the Company's assets.

            (d) For purposes of this Agreement, "Independent Legal Counsel"
shall mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 2(c) hereof, who shall not have otherwise performed
services for the Company, the Indemnitee or any officer, director, subsidiary or
other affiliate thereof within the last five years (other than with respect to
matters concerning the rights of Indemnitee under this Agreement, or of other
indemnitees under similar indemnity agreements) and who shall be experienced in
matters of corporate law. The Company shall be responsible for any and all fees
and expenses of the Independent Legal Counsel.

            (e) For purposes of this Agreement, a "Reviewing Party" shall mean
any appropriate person or body consisting of the stockholders of the Company,
the Company's board of directors, or Independent Legal Counsel, as set forth in
Section 2(c) of this Agreement in accordance with section 78.751 (or any
successor provision) of Nevada General Corporation Law.

            (f) For purposes of this Agreement, "Voting Securities" shall mean
any securities of the Company that vote generally in the election of directors.

      10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

      11. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director, officer, employee, agent or fiduciary of the Company or of any other
enterprise at the Company's request.

      12. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such


                                       8
<PAGE>

action determines that each of the material assertions made by Indemnitee as a
basis for such action was not made in good faith or was frivolous. In the event
of an action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be paid all Expenses incurred by Indemnitee in defense of such
action (including costs and expenses incurred with respect to Indemnitee's
counterclaims and cross-claims made in such action), and shall be entitled to
the advancement of Expenses with respect to such action, unless, as a part of
such action, a court having jurisdiction over such action determines that each
of Indemnitee's material defenses to such action was made in bad faith or was
frivolous.

      13. Notice. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five calendar days after deposit with the U.S.
Postal Service or other applicable postal service, if delivered by first class
mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one business
day after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid, or (d) one calendar day after the business day of
delivery by facsimile transmission, if delivered by facsimile transmission with
copy by first class mail, postage prepaid, and shall be addressed if to the
Indemnitee, at the Indemnitee's address as set forth beneath his signature to
this Agreement and if to the Company at the address of its principal corporate
offices (attention: Secretary) or at such other address as such party may
designate by ten calendar days' advance written notice to the other party
hereto.

      14. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Arizona
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the court of
competent jurisdiction of the State of Arizona, which shall be the exclusive and
only proper forum for adjudicating such a claim.

      15. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

      16. Choice of Law. This Agreement shall be governed by and its provisions
construed and enforced in accordance with the laws of the State of Nevada, as
applied to contracts between Nevada residents, entered into and to be performed
entirely within the State of Nevada, without regard to the conflict of laws
principles thereof.

      17. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who


                                       9
<PAGE>

shall execute all documents required and shall do all acts that may be necessary
to secure such rights and to enable the Company effectively to bring suit to
enforce such rights.

      18. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

      19. Integration and Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and supersedes and merges all previous
written and oral negotiations, commitments, understandings and agreements
relating to the subject matter hereof between the parties hereto.

      20. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.

                 [Remainder of Page Intentionally Left Blank.]


                                       10
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.

                                                MESA AIR GROUP, INC.,
                                                a Nevada corporation

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

                                                Title:
                                                      --------------------------

                                                Address: 410 North 44th Street
                                                         Suite 700
                                                         Phoenix, Arizona 85008

AGREED TO AND ACCEPTED BY:

INDEMNITEE

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

Address:
        -----------------------------

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

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


                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>p67334exv10w3.txt
<DESCRIPTION>EX-10.3
<TEXT>
<PAGE>
                                                                    Exhibit 10.3

                                FIRST AMENDMENT

This First Amendment is entered and made as of October 6, 2000 (the
"Amendment") as an amendment to the Agreement dated as of July 29, 1994 by and
between US Airways, Inc. ("US Airways") (previously US Air, Inc.) and MESA
AIRLINES, INC., d/b/a/FLORIDAGULF AIRLINES ("Contractor") (the "Agreement").

                                  WITNESSETH:

WHEREAS, US Airways and Contractor have entered into the Agreement; and

WHEREAS, US Airways and Contractor desire to amend certain provisions of the
Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, US Airways and Contractor hereby agree as
follows:

1. Section 9.01(a) of the Agreement is hereby amended by deleting that
provision in its entirety and substituting the following language in lieu
thereof:

     "(a) This Agreement will become effective on the date first written above
     and will continue in effect thereafter through July 29, 2005, unless it is
     terminated at an earlier date pursuant to one or more of the provisions of
     this Article 9."

2. Except as amended hereby, the Service Agreement shall remain in full force
and effect.

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

MESA AIRLINES, INC.                       US AIRWAYS, INC.



/s/ Jonathan Ornstein                     /s/ Thomas M. Hanley    10/16/00
- -----------------------------------       ----------------------------------
By: Jonathan Ornstein                     By: Thomas M. Hanley
Title: Chairman                           Title: Vice President
                                                 US Airway Express

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>p67334exv10w5.txt
<DESCRIPTION>EX-10.5
<TEXT>
<PAGE>
                                                                    Exhibit 10.5
                      FIRST AMENDMENT TO SERVICE AGREEMENT

      THIS FIRST AMENDMENT to the SERVICE AGREEMENT made as of November 1, 1991
by and between USAIR, INC. ("USAir") and AIR MIDWEST, INC. ("Contractor").

                                   WITNESSETH:

      WHEREAS, USAir and Contractor desire to amend certain provisions of the
SERVICE AGREEMENT, dated October 15, 1990; and

      WHEREAS, USAir and Contractor desire to amend certain provisions of the
SERVICE AGREEMENT which authorizes Contractor to operate as a USAir Express
carrier; and

      NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and for other valuable consideration, the receipt of which
are hereby acknowledged, USAir and Contractor hereby agree as follows:

1.    Article 2 - AIR SERVICE TO BE PROVIDED BY CONTRACTOR

(a)   Section 2.01 Schedules to be Operated

      As of the effective date of this Amendment, Section 2.01(a) is deleted and
the following substituted in lieu thereof:

            "Throughout the life of this Agreement and any amendment or
extension thereof, Contractor shall schedule and operate USAir Express service
to connect the following cities to Kansas City, Missouri (the "Hub") on a
nonstop through-plane or connecting basis:

        Cedar Rapids, IA                  Little Rock, AR
        Denver, CO                        Lincoln, NE
        Dodge City, KS                    Liberal, KS
        Des Moines, IA                    Manhattan, KS
        Fayetteville, AR                  Omaha, NE
        Great Bend, KS                    Salina, KS
        Garden City, KS                   Sioux City, IA
        Goodland, KS                      Sioux Falls, SD
        Hays, KS                          Springfield, MO
        Joplin, MO                        Topeka, KS
        Lamar, CO                         Wichita, KS

(b)   Section 2.05 Airports to be Used

      As of the effective date of this Amendment, the cities and airports listed
in Section 2.04 are deleted and the following substituted in lieu thereof:

            Cedar Rapids, IA:       Cedar Rapids Municipal Airport
            Denver, CO:             Stapleton International Airport
            Dodge City, KS:         Dodge City Municipal Airport
            Des Moines, IA:         Des Moines International Airport
            Fayetteville, AR:       Fayetteville Drake Field Airport
            Great Bend, KS:         Great Bend Municipal Airport


<PAGE>

            Garden City, KS:        Garden City Municipal Airport
            Goodland, KS:           Goodland Municipal Airport (Renner Field)
            Hays, KS:               Hays Municipal Airport
            Joplin, MO:             Joplin Regional Airport
            Lamar, CO:              Lamar Municipal Airport
            Little Rock, AR:        Little Rock Regional Airport
            Lincoln, NE:            Lincoln Municipal Airport
            Liberal, KS:            Liberal Municipal Airport
            Manhattan, KS:          Manhattan Municipal Airport
            Omaha, NE:              Omaha Eppley Airfield
            Salina, KS:             Salina Municipal Airport
            Sioux City, IA:         Sioux Gateway Airport
            Sioux Falls, SD:        Joe Foss Field
            Springfield, MO:        Springfield Regional Airport
            Topeka, KS:             Forbes Field
            Wichita, KS:            Mid-Continent Airport

2.    Article 4 - JOINT PASSENGER FARES AND DIVISION OF REVENUE

      As of the effective date of this Amendment, the existing language in
Article 4 is deleted in its entirety and the following substituted in lieu
thereof:

      "Joint passenger fares between USAir and Contractor shall be established
as mutually agreed upon by USAir and Contractor. Division of such fares is set
as follows:

      1)    Full fares (F and Y fares) will be divided by using cost factors as
            outlined by the joint fare prorate standards formerly required by
            the Civil Aeronautics Board in Phase 4 of the Domestic Passenger
            Fare Investigation, Docket 21866;

            and

      2)    Discount fares (fares other than F or Y) will be divided using the
            Straight Rate Prorate formula, unless the division of such fares is
            otherwise mutually agreed to by USAir and Contractor;

            and

      3)    Whether using the procedures in (1) or (2) as outlined above, where
            either party has a connecting middle city within the routing,
            revenue shall be decided by deleting the middle city for the
            prorating process."

3.    MISCELLANEOUS

      (a) Effective Date of this Amendment. This Amendment shall be effective as
of the date first written above when executed by authorized officers of each of
the parties.

      (b) Terms. Terms are used in this Amendment as they are defined in the
SERVICE AGREEMENT.


<PAGE>

      (c) Continued Effect. Except as amended hereby, the SERVICE AGREEMENT
shall remain in full force and effect.

      (d) Execution in Counterparts. This Amendment may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.

      IN WITNESS WHEREOF, the parties have executed this Amendment.

WITNESS:                            USAIR, INC.




- -------------------------------      By      /S/ Gordon Linkon
                                        ----------------------------------------
                                                Gordon Linkon, Vice President
                                                USAir Express Division

WITNESS:                             AIR MIDWEST, INC.



                                    By     /S/ Dick Paquette
- -------------------------------       ----------------------------------------
                                                Dick Paquette
                                                Vice President &
                                                General Manager

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>p67334exv10w6.txt
<DESCRIPTION>EX-10.6
<TEXT>
<PAGE>
                                                                    Exhibit 10.6
                      SECOND AMENDMENT TO SERVICE AGREEMENT

      THIS SECOND AMENDMENT to the SERVICE AGREEMENT (the "Amendment") made as
of February , 1993 by and between USAIR, INC. ("USAir") and AIR MIDWEST
("Contractor").


                                   WITNESSETH:

      WHEREAS, USAir and Contractor have entered into the SERVICE AGREEMENT,
dated as October 15, 1990, as amended; and

      WHEREAS, USAir and Contractor desire to amend certain provisions of the
SERVICE AGREEMENT which authorizes Contractor to operate as an USAir Express
carrier; and

      NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, USAir and Contractor hereby
agree as follows:

1.    Article 4 - PASSENGER FARES AND DIVISION OF REVENUES

      As of the effective date of this Amendment, the existing language in
Article 4 is deleted in its entirety and the following substituted in lieu
thereof:

            "Section 4.01                       Local Fares

      Contractor shall establish (and USAir shall publish) local (selling) fares
applicable to Contractors' USAir Express markets and Contractor shall be paid
its local fares for passengers solely on Contractor's USAir Express flights in
accordance with industry and Clearing House practices.

            Section 4.02                        All Other Fares

      USAir will establish all fares using the "US" designator except for those
specifically addressed in Section 4.01.

            Section 4.03                        Division of Revenues

      (1) All fares will be divided in accordance with the straight rate/prorate
formula via procedures outlined in USAir Express Revenue Accounting Instruction
Manual, unless the division of such fares is otherwise mutually agreed to by
USAir and Contractor. (Under the straight rate/prorate formula, each parties'
portion of the actual joint (through) fare is determined by the ratio of its
prorate coach (Y) fare to the sum of the individual full (prorate) coach (Y)
fares for all of the flight segments involved.)"

(2)   MISCELLANEOUS

            (a) Effective Date of This Amendment. This Amendment shall be
      effective as of the date first written above when executed by authorized
      officers of each of the parties.


<PAGE>

            (b) Terms. Terms are used in this Amendment as they are defined in
      the Services Agreement.

            (c) Continued Effect. Except as amended hereby, the SERVICES
      AGREEMENT shall remain in full force and effect.

            IN WITNESS WHEREOF, the parties have executed this Amendment.

            WITNESS:                       US AIR, INC.


                                            By     /S/ Keith Houk
- -------------------------------               ------------------------------
                                                      Keith Houk, Vice President
                                                      USAir Express Division

            WITNESS:

                                            By     /S/ A.R. Dick Paquette
- -------------------------------               ----------------------------------
                                                       A.R. (Dick) Paquette
                                                       President and COO

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>p67334exv10w7.txt
<DESCRIPTION>EX-10.7
<TEXT>
<PAGE>
                                                                    Exhibit 10.7
                                 THIRD AMENDMENT

This Third Amendment is entered and made as of October 6, 2000 (the "Third
Amendment") as an amendment to the Agreement dated as of October 15, 1990, by
and between US Airways, Inc. ("US Airways") and Air Midwest, Inc. ("Contractor")
(the "Agreement").

                                   WITNESSETH:

WHEREAS, US Airways and Contractor have entered into the Agreement; and

WHEREAS, on August 6, 1991, US Airways and Contractor amended the Agreement in
certain respects ("First Amendment"); and

WHEREAS, in February of 1993, the parties further amended the Agreement in
certain respects ("Second Amendment"); and

WHEREAS, US Airways and Contractor desire to further amend certain provisions of
the Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter
set forth and for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, US Airways and Contractor hereby agree as follows:

      1.    The first sentence of Section 9.01 (a) is hereby amended by striking
            the language contained therein and substituting the following in
            lieu thereof:

              "This Agreement will become effective October 15th 1990 and will
              continue in effect thereafter through October 15, 2005, unless it
              is terminated at an earlier date pursuant to one or more of the
              provisions of this Article 9."

      2.    Section 9.02(h) is hereby deleted in its entirety and existing
            Section 9.02 (i) is renumbered as Section 9.02(h).

      3.    Except as amended hereby, the Service Agreement shall remain in full
            force and effect.


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

      AIR MIDWEST, INC.                               US AIRWAYS, INC.

        /S/ Jonathan Ornstein                      /S/ Thomas M. Hanley
     --------------------------                  ---------------------------
     By:      Jonathan Ornstein                  By:      Thomas M. Hanley
     Title:   Chairman                           Title:   Vice President
                                                          US Airways Express

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>9
<FILENAME>p67334exv10w8.txt
<DESCRIPTION>EX-10.8
<TEXT>
<PAGE>
                                                                    Exhibit 10.8
                                FOURTH AMENDMENT

This Fourth Amendment is entered and made as of March 5, 2001 (the "Fourth
Amendment") as an amendment to the Agreement dated as of October 15, 1990, by
and between US Airways, Inc. ("US Airways") and Air Midwest, Inc. ("Contractor")
(the "Agreement").

                                   WITNESSETH:

WHEREAS, US Airways and Contractor have entered into the Agreement; and

WHEREAS, in August 6, 1991, the parties further amended the Agreement in certain
respects ("First Amendment"); and

WHEREAS, in February of 1993, the parties further amended the Agreement in
certain respects ("Second Amendment"); and

WHEREAS, on October 6, 2000, the parties further amended the Agreement in
certain respects ("Third Amendment");

NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter
set forth and for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, US Airways and Contractor hereby agree as follows:

      1.    Section 11.01 of the Agreement is hereby amended by inserting a
            subsection "(a)" before the word "Contractor" in the first paragraph
            of such Section.

      2.    Section 11.01 of the Agreement is hereby amended by inserting a new
            subsection "(b)" at the end of the first paragraph as follows:

            "(b)Effective March 5, 2001, US Airways hereby grants to Contractor
            for a period of one year, the right to conduct operations described
            in Section 2.01 above, as amended, and any additional operations
            undertaken by subsequent amendment hereto under the trademark "US
            Airways Express" on behalf of Midwest Express Airlines, subject to
            all of the terms and conditions of Article 11 of the Agreement." Air
            Midwest Airlines flights d/b/a US Airways Express which operate
            between Kansas City to the airports listed in Section 2.01 will be
            permitted to carry the YX code when connecting to Midwest Express
            Airlines flights from Kansas City to the airports listed below. Any
            one or more of the airports listed is subject to change at the sole
            discretion of US Airways, provided that US Airways provides 60 days
            notice to Air Midwest:

                  [***]
      3.    Except as amended hereby, the Agreement shall remain in full force
            and effect.

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

        AIR MIDWEST, INC.                            US AIRWAYS, INC.

        /S/ Greg Stephens                          /S/ Thomas M. Hanley
     --------------------------                 ---------------------------
     By:      Greg Stephens                     By:      Thomas M. Hanley
     Title:   President                         Title:   Vice President
                                                         Express Division


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>10
<FILENAME>p67334exv10w10.txt
<DESCRIPTION>EX-10.10
<TEXT>
<PAGE>
                                                                   Exhibit 10.10

                          FIRST AMENDMENT TO CODE SHARE
                          AND REVENUE SHARING AGREEMENT

This FIRST AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT (this "First
Amendment") is dated to be effective the 27th day of April, 2001 (the "Effective
Date"), between AMERICA WEST AIRLINES, INC., a Delaware corporation ("AWA"), and
MESA AIRLINES, INC., a Nevada corporation ("MESA").

                                    RECITALS:

A. AWA and MESA have entered into a Code Share and Revenue Sharing Agreement,
entered into as of March 20, 2001, to be effective retroactive to February 1,
2001 (the "Code Share Agreement"), to provide scheduled air transportation
services as America West Express. All capitalized terms used herein but not
defined shall have the meaning given to such terms in the Code Share Agreement.

B. AWA and MESA desire to amend the Code Share Agreement to provide additional
time for MESA to execute the Aircraft Contract.

NOW, THEREFORE, in consideration of the recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, AWA
and MESA agree as follows:

                                   AMENDMENTS

1. The parties agree that Paragraph 1 of the Code Share Agreement shall be
amended in its entirety as follows:

      Effectiveness. This Agreement replaces the Original Agreement effective
      upon the date (the "Effective Date") that MESA executes a binding
      agreement to acquire the CRJ Aircraft required to be provided by MESA
      pursuant to Section 2.2.2 of this Agreement (the "Aircraft Contract").
      MESA shall provide AWA with written notice of the date the Aircraft
      Contract is executed together with copies of the Aircraft Contract. On the
      date of execution of the Aircraft Contract, all of the terms and
      provisions of this Agreement shall be effective retroactive to the
      Contract Date. On the Effective Date, the Original Agreement shall be
      terminated in its entirety. All sums payable pursuant to Section 6 of the
      Original Agreement between the Contract Date and Effective Date shall be
      recalculated pursuant to the terms of Section 7 of this Agreement, and
      AWA, subject to the rights regarding disputed amounts contained in Section
      7.8, shall pay additional and undisputed sums payable within 30 days after
      receipt of a written invoice for such recalculation. Until the Effective
      Date, AWA and MESA shall continue to perform pursuant to the Original
      Agreement. If the Aircraft Contract is not executed by June 1, 2001, then
      this Agreement shall automatically terminate and the terms and conditions
      of the Original Agreement shall remain in full force and effect.
      Simultaneously with the execution of this Agreement, AWA and MESA shall
      enter into an amendment to the Original Agreement providing for the
      addition of 3 CRJs under the Original Agreement if this Agreement is
      terminated pursuant to this Section.
<PAGE>
      As of the Contract Date, AWA and MESA dispute certain amounts that are
      payable between AWA and MESA under the Original Agreement (the "Disputed
      Amounts"). MESA and AWA shall continue to work to resolve their respective
      obligations concerning the Disputed Amounts pursuant to the terms of the
      Original Agreement. This is a new and separate agreement from the Original
      Agreement. The terms of this Agreement shall not be used by either MESA or
      AWA to determine or interpret the respective payment obligations of the
      parties for the Disputed Amounts. The respective obligations for the
      Disputed Amounts and other matters and disputes arising under the Original
      Agreement prior to the Contract Date shall be resolved pursuant to the
      terms, covenants, rights and remedies of the Original Agreement, shall not
      affect the rights, duties and obligations of AWA or MESA under this
      Agreement and shall not permit AWA or MESA to exercise any remedies under
      this Agreement. The intent of AWA and MESA is to resolve any disputes
      concerning the Disputed Amounts or any other matters and disputes under
      the Original Agreement and not pursuant to this Agreement.

                                  MISCELLANEOUS

2. Effect. Except as otherwise set forth in this First Amendment, the Code Share
Agreement shall remain in full force and effect as originally set forth.

3. Counterparts. This First Amendment may be executed in counterparts, all of
which when taken together shall be one and the same document.

4. Entire Agreement: This First Amendment constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior understandings with respect thereto.

     AWA:                                  AMERICA WEST AIRLINES, INC.,
                                           A Delaware corporation

                                           By: /S/ Andrew Nocella
                                               -------------------------------



     MESA:                                 MESA AIRLINES, INC.,
                                           A Nevada corporation

                                           By:  /S/ Jonathan Ornstein
                                               ---------------------------------
                                                    Jonathan G. Ornstein
                                                    Chief Executive Office


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>11
<FILENAME>p67334exv10w13.txt
<DESCRIPTION>EX-10.13
<TEXT>
<PAGE>
                                                                   Exhibit 10.13

                               AMENDMENT NO. 2 TO
                               CODESHARE AGREEMENT

      This Amendment No. 2 (the "Amendment") is made and entered into as of
August 1, 2002 (the "Effective Date"), by and between Frontier Airlines, Inc.
("Frontier"), a corporation organized under the laws of Colorado, and Mesa
Airlines, Inc. ("Mesa"), a corporation organized under the laws of Nevada.

RECITALS:

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

      B.    Both Mesa and Frontier recognize the importance of maintaining high
            levels of service in order to attract and retain passengers.

      C.    One such way to attract and retain passengers is to operate the
            scheduled flights and do so on-time.

DEFINITIONS:

      A.    Completion Benchmark: Frontier Airlines' completion rate for its
            network-wide operations during the same month it is used to
            benchmark Mesa's performance.

      B.    On-time Benchmark: Frontier Airlines' on-time departure performance
            rate for its network-wide operations during the same month it is
            used to benchmark Mesa's performance. An on-time departure is when
            an aircraft leaves the gate between zero to fifteen minutes after
            scheduled departure, otherwise the departure is not considered
            on-time.

      C.    Incentive Penalty: The amount to be paid as a penalty for the
            difference between the actual number of flights completed or
            performed on-time and the Completion or the On-time Benchmarks.

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

14.2 (d) Fees will be assessed to incentivise Mesa to operate those flights
     marketed under the Frontier Airlines (F9*) code in a manner equal or
     exceeding the performance of Frontier Airlines' operations. Mesa shall
     be penalized if performance falls below either the Completion Benchmark
     or the On-time Benchmark for any given month.

      1. Determination of number of flights to be penalized

      a)    In order to determine if Mesa flights fall below the completion
            levels required by the Codeshare Agreement, Frontier will first
            multiply the Completion Benchmark by the total number of Mesa
            scheduled departures
<PAGE>
            for the month then subtract the number of Mesa flights operated
            during the month. If the result is a positive number, this number of
            flights to be penalized for failing to meet the completion
            performance requirements (see example in section 1(c)).

      b)    In order to determine if Mesa flights fall below the on-time levels
            required by the Codeshare Agreement, Frontier will first multiply
            the On-time Benchmark by the total number of Mesa scheduled
            departures for the month then subtract the number of Mesa flights
            operated on-time during the month. If the result is a positive
            number, this is the number of flights to be penalized for failing to
            meet the on-time performance requirements (see example in section
            1(c)).

      c)    Sample Calculations

            1.    By way of illustration, the following is a sample Completion
                  Penalty Calculation. If, for example, in the month of August,
                  Frontier completes [***] of its flights, the Completion
                  Benchmark for August is [***}. Further, if Mesa has scheduled
                  [***] flights for that month, it needs to complete a minimum
                  of [***] flights during the month of August, it will pay an
                  Incentive Penalty for the thirteen flights it failed to
                  complete.

            2.    By way of illustration, the following is a sample On-time
                  Penalty Calculation. If, for example, in the month of August,
                  Frontier performs [***] of its flights on-time, the On-time
                  Benchmark for August is [***]. Further, if Mesa has scheduled
                  [***] flights for that month, it needs to complete a minimum
                  of [***] flights on-time in order to meet the On-time
                  Benchmark. If Mesa completes only [***] flights on-time during
                  the month of August, it will pay an Incentive Penalty for the
                  one hundred flights it failed to complete on-time.

      2. Penalty fees

            a)    For each flight below the Completion Benchmark, Mesa shall pay
                  Frontier [***]. This penalty will double for each consecutive
                  month Mesa fails to meet the Completion Benchmark.

            b)    For each flight below the On-time Benchmark, Mesa shall pay
                  Frontier [***]. This penalty will double for each consecutive
                  month Mesa fails to meet the On-Time Benchmark.

            c)    The maximum fine for each month will not exceed [***].

            d)    In the event that Mesa's completion rate exceeds the
                  Completion Benchmark by two or more percentage points and
                  Mesa's on-time performance exceeds the On-Time benchmark by
                  two or more percentage points in the same month, Frontier will
                  pay Mesa [***]

      3. Settlement of Penalty fees

<PAGE>

            a)    Penalties are only to be paid if Mesa falls below the
                  benchmark performance set by Frontier Airlines.

            b)    Mesa is to pay any penalties for performance which drops below
                  the benchmark requirements within 30 days of receipt of
                  Frontier's notice informing Mesa that it failed to meet the
                  benchmark.

      4. Exchange of Performance data.

            Frontier and Mesa are to exchange performance figures weekly
            relative to their performance, and specifically for the percentage
            of departures leaving on-time within 15 minutes of schedule and
            percentage of scheduled flights departed.

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

                                              MESA AIRLINES, INC.


                                              By:     /S/ Mike Lotz
                                                 -------------------------------
                                              Name:
                                                   -----------------------------
                                              Title:      President
                                                    ----------------------------


                                              FRONTIER AIRLINES, INC.


                                              By:     /S/ Sean Menke
                                                 -------------------------------
                                              Name:
                                                 -------------------------------

                                               Title:   VP Marketing & Planning
                                                    ----------------------------






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>12
<FILENAME>p67334exv10w15.txt
<DESCRIPTION>EX-10.15
<TEXT>
<PAGE>
                                                                   Exhibit 10.15

                                 FIRST AMENDMENT

This First Amendment is entered and made as of November 24, 1999 (the
"Amendment") as an amendment to the Service Agreement dated as of November 11,
1997, by and between US Airways, Inc. ("US Airways") and MESA AIRLINES, INC.
("MesaJet") (the "Agreement").

                                   WITNESSETH:

WHEREAS,  US Airways and MesaJet have entered in the Agreement; and

WHEREAS, on or about the 15th day of June, 1999, US Airways and MesaJet entered
into a Memorandum of Understanding relating to the amendment of the Agreement in
certain respects; and

WHEREAS, US Airways and MesaJet desire to amend certain provisions of the
Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter
set forth and for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, US Airways and MesaJet hereby agree as follows:

      1. Exhibit 2.1 of the Agreement is hereby amended by adding the following
to the list of operational aircraft set forth therein:


<TABLE>
<CAPTION>
       Date                                   Number of Operational Aircraft
       ----                                   ------------------------------
<S>                          <C>              <C>
       April                 1999                          *
       May                   1999                          *
       September             1999                          *
       April                 2000                          *
       April                 2000                          *
       April                 2000                          *
       June                  2000                          *
       July                  2000                          *
       August                2000                          *
       September             2000                          *
       September             2000                          *
       October               2000                          *
       November              2000                          *
       December              2000                          *
       January               2000                          *
       February              2001                          *
</TABLE>
<PAGE>
      US Airways acknowledges that changes in the delivery schedule may arise
      due to circumstances beyond MesaJet's control, including, without
      limitation, manufacturing delays, FAA or other regulatory delays or other
      operational delays. MesaJet will make every reasonable effort to provide
      as much advance notice to US Airways of such a change in the delivery
      schedule as set forth in Exhibit 2.1. Under no circumstances will MesaJet
      be liable to US Airways in any manner whatsoever for damages claimed by US
      Airways or claims made against US Airways, resulting from a change in the
      delivery schedule set forth in this Exhibit 2.1 when delays are beyond
      MesaJet's reasonable control.

2.    A new subsection 2.1(a) is hereby added to the Agreement as follows: "(a)
      The in-service target date for Aircraft deliveries * in paragraph 1 of
      this First Amendment will be on or about the 15th day of the month
      indicated therein. Notwithstanding the preceding sentence, in the event
      there are two or more deliveries in a given month, the in-service date for
      the second aircraft will be on or about the 21st day of the month and the
      in-service date for the third aircraft will be on or about the 30th day of
      the month. MesaJet will inform US Airways of the exact in-service dates
      for each month ninety (90) days prior to first day of the in-service month
      indicated."

3.    A new subsection 2.1(b) is hereby added to the Agreement as follows:
      "Notwithstanding the listing of aircraft numbered * in Schedule 2.1,
      attached hereto and made a part hereof, such aircraft will only be
      accepted by US Airways to the extent that fleet growth in the US Airways
      mainline jet network allows greater than thirty-five (35) regional jets to
      be operated with the US Airways code pursuant to its labor agreement scope
      clause. However, if fleet growth in the US Airways mainline jet network
      does not reach a level to allow greater than thirty-five (35) regional
      jets to be operated with the US Airways code, and provided that US Airways
      gives at least three months written notice, MesaJet will not be obligated
      to provide, and US Airways will not be obligated to accept the additional
      Aircraft numbered *."
<PAGE>
4.    New subsections 2.2(a), (b), and (c) are added to the Agreement as
      follows:

      "(a) With the exception of Aircraft Numbered * listed in paragraph number
      1 of this First Amendment, the additional Aircraft referenced in that
      paragraph will be a different model from the current regional jets MesaJet
      operates as US Airways Express under the Agreement. The additional
      Aircraft are * aircraft. US Airways hereby allows MesaJet to swap regional
      * currently in service with US Airways under the Agreement into *, as long
      as the total number of regional jets MesaJet has in service with US
      Airways is not reduced as a result of such aircraft swap.

      (b) MesaJet will have the right to perform such aircraft swaps referenced
      in subsection 2.2 (a), above, upon no less than ninety (90) days notice
      prior to the first day of the month such swap is contemplated to occur. At
      such time US Airways and MesaJet will jointly restructure the MesaJet
      regional jet schedule to accomplish such swap in a manner to minimize any
      adverse impact on aircraft utilization and on US Airways passengers.

      (c) US Airways will provide reasonable assistance to MesaJet in meeting
      the FAA requirements necessary to add the new * onto the MesaJet operating
      certificate. US Airways will provide a single point of contact US Airways
      employee to coordinate efforts within US Airways and interface with
      MesaJet on the new * aircraft, including training and proving run
      requirements associated with the addition of such aircraft."

      5. Section 2.7 is hereby amended by deleting the word "thirteenth" in the
ninth line of that Section, substituting the word "seventeenth" in lieu thereof,
and inserting the parenthetical "(a "Spare Aircraft")" after the word "aircraft"
near the end of that line.

6.    A new section 2.9 is hereby added to the Agreement as follows:

      "2.9 US Airways and MesaJet will cooperate to develop ways to reduce
      damage to Aircraft caused by impacts from ramp equipment, such as jet
      bridges, baggage carts,
<PAGE>
      GPU and air conditioning carts and deicing equipment operated by US
      Airways personnel."

7.    A new section 2.10 is hereby added to the Agreement as follows: "2.10 US
      Airways will coordinate schedule planning with MesaJet to minimize flight
      crew and maintenance costs, subject to meeting US Airways reasonable
      marketing objectives."

8.    A new subsection 5.2(a) is hereby added to the Agreement as follows: "(a)
      Notwithstanding the RJ Model referenced in section 5.1 above, US Airways
      will adjust the reimbursement for * according to the following:

      (i)   *.

      (ii)  Effective as of April 1. 1999, to the extent MesaJet operates
            greater than * Aircraft under this Agreement, US Airways will * per
            Aircraft than the monthly ownership costs contained in the RJ Model.
            In addition, such ownership costs will be subject to adjustments due
            to changes in interest rates incurred in financing such Aircraft.
            Such adjustments due to changes in interest rates will be in
            accordance with the table attached hereto as Appendix A.

      (iii) The interest rate referenced in subsection 5.2 (a) (ii) above, is
            primarily predicted upon the * providing the debt financing
            economically necessary for support of the *. In the event * fails to
            provide such debt for a given Aircraft, then (a) MesaJet's
            obligation to supply and US Airways obligation to accept such
            additional Aircraft is suspended, and (b) US Airways and MesaJet
            will cooperated to obtain alternative financing from * at a rate
            acceptable to both Parties.

      (iv)  US Airways will increase reimbursement for MesaJet Crew costs by *.
            Such adjustment will be amended by mutual agreement of the Parties
            at the end of the sixth month following the execution of this
            Amendment, and every six months thereafter, based on increases and
<PAGE>
            decreases in MesaJet's actual flight training costs (excluding pilot
            salaries)."

     9. Sections 5.4 and 5.5 of the Agreement are hereby deleted in their
entirety and US Airways hereby * and will eliminate the * from the date hereof
and throughout the remainder of the term of the Agreement. US Airways will
reimburse MesaJet the full amount withheld for services provided during 1999.

      10. Section 7.1 of the Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:

                  "7.1 This Agreement is effective as of the date and year first
                  written above, and services provided hereunder will continue,
                  without interruption for a period * from the in-service date
                  of the first *, unless it is terminated on an earlier date
                  pursuant to the provisions of this Article 7. US Airways will
                  have the right to extend the term on each Aircraft by *."

      11. Section 7.4 of the Agreement is hereby deleted in its entirety.

      12. Section 8.1 of the Agreement is hereby amended by changing "*" and "*"
in line one to "*" and "*", respectively.

      13. Section 8.2 of the Agreement is hereby amended by changing "arrival"
in line one to "*".

      14. A new subsection 8.3 is hereby added to the Agreement as follows:

"8.3 In the event that an aircraft used by MesaJet to perform services called
for in this Agreement is damaged during the execution of agreed to ground
support functions set forth in Section 4.3 of the Agreement by a US Airways
employee, or an individual contracted by US Airways to perform such ground
support services, and such damage is sustained while the aircraft is parked or
being pushed or towed by said employee or contract individual, and
<PAGE>
such damage occurs while the aircraft is not being operated by a MesaJet
employee or individual contracted by MesaJet to perform services for MesaJet,
then the calculations contained in this Article 8 will be modified as follows:

            The number of scheduled flights for the month will be reduced by *.
            This modification to the calculation of performance will only be
            applied if US Airways is notified in writing within one business day
            of the date on which such damage occurs of: i) the time, place and
            circumstances surrounding the damage; ii) the expected flight
            adjustments/cancellations made or required due to the out of service
            aircraft and; iii) the estimated return to service date of the
            damaged aircraft.

            15. A new subsection 8.4 is hereby added to the Agreement as
            follows:

"8.4 Both parties agree that attrition of pilots is a normal part of the
planning and execution of a regional jet operation. Further both parties
understand that from time to time, the pilot hiring at US Airways may be greater
than expected and that the increase in US Airways hiring may affect the
attrition rate of active Mesa pilots. Since a higher than expected attrition
rate may affect MesaJet's operating performance, the parties agree that in the
event that the following conditions exist, then the calculations contained in
this Article 8 will be modified as set forth below:

      (a)   Triggering Event:

      If within a given month, US Airways hires an extraordinary number of
      active Mesa pilots, as defined below, then the calculations contained in
      this Article 8 will be modified. For use within this section the following
      definitions will apply:

                  1. The act of hiring an Mesa pilot will be defined as the
                  successful completion by an active Mesa pilot of the total US
                  Airways pilot employment process up to and including the
                  sign-on process and the attendance at the first day of
                  training.

                  2. (a) The number of active Mesa pilots hired by US Airways
                  will be deemed to be extraordinary if: i.) Mesa's pilot
                  attrition rate to all certified
<PAGE>
    non-Mesa carriers for any given month increases * over the average attrition
    rate for the preceding six months; ii)US Airways' hiring of Mesa pilots in
    any given month exceeds by * the average number of Mesa pilots hired in the
    preceding six months, and iii) the actual number of Mesa pilots hired as a
    result of the * increase in Mesa's pilot attrition rate referenced in
    2(a)(i) above.

    (b) Subsequent to the occurrence of a triggering event, as defined in
    Section 8.4 (a), above, Mesa's attrition rate for any given month shall be
    calculated using the attrition rate for the month immediately preceding the
    triggering event. Such attrition rate shall remain Mesa's average attrition
    rate for the preceding * months, for purposes of the next two subsequent
    monthly calculations of Mesa's pilot attrition rate, or until the actual
    number of Mesa pilots hired by US Airways in a given month returns to or
    falls below the actual number for the month immediately preceding the
    triggering event.

    3. An active Mesa pilot will be defined as any Mesa pilot who is currently a
    certified Captain or First Officer.

16. A new subsection 8.5 is hereby added to the Agreement as follows:

    "8.5 Modification of the Article 8 Calculations

    Once it has been mutually agreed that a triggering event, as described in
Section 8.4 (a), above, has occurred, then the monthly calculations in this
Article 8 will be modified for the month of the triggering event and the next
month in the following manner:

(a) The number of scheduled flights that is used to calculate the completion
    performance measures will be reduced *. The number of normally experienced
    flight crew cancellations will be determined by *.
<PAGE>
(b)   The number of scheduled flights that is used to calculate the arrival
      performance measures will be reduced by *. The number of normally
      experienced flight crew arrival delays will be determined by *."

17.   A new section 12.3 is hereby added to the Agreement as follows;

      "12.3 US Airways will have the right of first refusal on * groups of *
      supplemental Aircraft * that MesaJet has on firm order (the "Conditional
      Aircraft"). Such rights of first refusal will expire *. The delivery dates
      of such Conditional Aircraft are set forth below.

<TABLE>
<CAPTION>
                          Aircraft Number         Delivery Date
                          ---------------         -------------
<S>                      <C>                      <C>
        Block One                 *               May              *
                                  *               September        *
                                  *               November         *
                                  *               December         *
                                  *               April            *
                                  *               May              *
                                  *               June             *
                                  *               June             *
</TABLE>


      (a)   In the event US Airways exercises its right to one or more of the
            Conditional Aircraft, then within one year of such exercise, the
            Parties will work together to determine whether and if so, which
            Conditional Aircraft will be considered as a second Spare Aircraft.
            Such determination will be based upon completion and on-time
            statistics of the fleet. Either Party will have the right to
            determine whether a second Spare Aircraft is necessary after the
            delivery of the first Conditional Aircraft. The Parties will
            mutually agree on the timing of the introduction of the second Spare
            Aircraft.
<PAGE>
18.   A new subsection 12.4 is hereby added to the Agreement as follows:

      "12.4 MesaJet has additional aircraft on option order at a rate * Section
      12.3, above ("Option Aircraft"). MesaJet's rights to the Option Aircraft
      are *. US Airways may, by giving written notice one month prior to the
      Notice Period to MesaJet, direct MesaJet to increase the number of
      Aircraft ordered beyond *. In the event Us Airways foregoes exercising
      greater than * consecutive blocks of Option Aircraft, then US Airways will
      forego rights to *. In the event US Airways directs MesaJet to increase
      the number of Aircraft ordered beyond *, such Option Aircraft will be
      delivered to US Airways in accordance with the schedule attached hereto as
      Exhibit B. The schedule set forth in Exhibit B is indicative only and is
      subject to change. However, MesaJet will use all reasonable efforts to
      adhere to said schedule *."

Except as reflected above, the Agreement remains unchanged in all other
respects. Upon its execution, this First Amendment, together with the Agreement,
will be the complete and binding understanding of the Parties with respect to
the terms and conditions of the Agreement, as amended by the terms set forth
herein.

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

MESA AIRLINES, INC.                                  US AIRWAYS, INC.

/S/ William P. Kostel                             /S/ Thomas M. Hanley
- ---------------------                          ---------------------------------
By:                                            By:      Thomas M. Hanley
Title:   Vice President - Planning             Title:   Vice President
                                                        US Airways Express
<PAGE>
                                   Appendix A
                   OWNERSHIP REIMBURSEMENT ADJUSTMENT SCHEDULE


<TABLE>
<CAPTION>
             Reference Interest            Ownership
             RATE (%)                      Adjustment
             --------                      ----------
<S>                                        <C>
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
             *                               *
</TABLE>



*Where Reference Interest Rate is: Five Year LIBOR as published on Reuters
Service under code USD5YDHBEL
<PAGE>
                                   APPENDIX B
                            OPTION AIRCRAFT SCHEDULE

<TABLE>
<CAPTION>
Option                                             Option Notice
Number   Aircraft Number   Delivery Month-Year      Month-Year
- ------   ---------------   -------------------      ----------
<S>      <C>               <C>                     <C>
*        Aircraft #*       July *                    December *
*        Aircraft #*       August *                  December *
*        Aircraft #*       September *               December *
*        Aircraft #*       October *                 December *
*        Aircraft #*       November *                December *
*        Aircraft #*       January *                 May *
*        Aircraft #*       February *                May *
*        Aircraft #*       March *                   May *
*        Aircraft #*       April *                   May *
*        Aircraft #*       June *                    October *
*        Aircraft #*       August *                  October *
*        Aircraft #*       September *               October *
*        Aircraft #*       October *                 March *
*        Aircraft #*       November *                March *
*        Aircraft #*       December *                March *
*        Aircraft #*       January *                 March *
*        Aircraft #*       March *                   August *
*        Aircraft #*       April *                   August *
*        Aircraft #*       May *                     August *
*        Aircraft #*       June *                    August *
</TABLE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>13
<FILENAME>p67334exv10w16.txt
<DESCRIPTION>EX-10.16
<TEXT>
<PAGE>
                                                                   Exhibit 10.16

                                SECOND AMENDMENT

This Second Amendment is entered and made as of October 6, 2000 (the
"Amendment") as an amendment to the Service Agreement dated as of November 11,
1997, by and between US Airways, Inc. ("US Airways") and MESA AIRLINES, INC.
("MesaJet") (the "Agreement"), as amended.

                                   WITNESSETH:

WHEREAS,  US Airways and MesaJet have entered into the Agreement; and

WHEREAS, US Airways and MesaJet amended the Agreement in certain respects on
November 24, 1999 ("First Amendment"); and

WHEREAS, US Airways and MesaJet desire to further amend certain provisions of
the Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter
set forth and for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, US Airways and MesaJet hereby agree as follows:

1. The first sentence of Section 7.1 of the Agreement is hereby amended as
follows:

   "This Agreement is effective as of the date and year first written above, and
services provided hereunder will continue, without interruption through *,
unless it is terminated on an earlier date pursuant to the provisions of this
Article 7."

2. Section 12.3 of the Service Agreement is hereby amended to reflect that US
Airways exercised its right of first refusal on Aircraft *. The delivery dates
on the aircraft set forth in that Section shall remain as stated therein. A new
third sentence is hereby added in the first paragraph of that section as
follows:

   "In the event that the proposed merger between UAL Corp. and US Airways is
not consummated, then US Airways' right of first refusal with respect to the *."

3. Except as amended hereby, the Service Agreement shall remain in full force
and effect.

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

    MESA AIRLINES, INC.                                  US AIRWAYS, INC.


   /S/ Jonathan Ornstein                       /S/ Thomas M. Hanley
- ---------------------------                 ------------------------------------
By:                                         By:
Title:                                      Title:
<PAGE>
                                     CONSENT

This consent, dated as of the 6th day of October, 2000 is made by Mesa Airlines,
Inc. ("Mesa), a Nevada corporation having its principal place of business at 410
N. 44th Street, Suite 700, Phoenix, Arizona, 85008 at the request of US Airways,
Inc. ("US Airways"), a Delaware corporation having its principal place business
at 2345 Crystal Drive, Arlington, Virginia, 22227.

                                    RECITALS

      WHEREAS, Mesa and US Airways are parties to that certain Service Agreement
dated November 11, 1997 (as amended, the "Service Agreement") relating to air
transportation services provided by Mesa to US Airways;

      WHEREAS, the Service Agreement specifically provides that neither Mesa's
nor US Airways' right and obligations established under the Service Agreement
may be assigned, in whole or in part, without prior written consent of the
other;

      WHEREAS, US Airways Group, Inc. (" US Airways Group"), the parent company
of US Airways, has entered into a merger agreement (the "Merger Agreement") with
UAL Corporation ("UAL"), United Airlines, Inc.'s parent corporation, pursuant to
which US Airways Group will merge with a subsidiary of UAL and, in connection
with that Merger Agreement, US Airways Group, UAL and Robert Johnson have
entered into a memorandum of understanding to create a new airline to be called
"DC Air",

       *;
       *;

      NOW, THEREFORE be it known that:
<PAGE>
                                     CONSENT

         Pursuant to Article 13.5 of the Service Agreement, Mesa hereby gives
its consent to the assignment by US Airways of up to *. *.

         This Consent is given in anticipation of the consummation of the Merger
Agreement. In the event such acquisition is not consummated by December 31,
2001, this Consent shall be void and of no effect.

         DATED this 6th day of October, 2000.
MESA AIRLINES, INC.

    /s/ Jonathan Ornstein
By:____________________________
Name:__________________________
Title:___________________________




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>14
<FILENAME>p67334exv10w17.txt
<DESCRIPTION>EX-10.17
<TEXT>
<PAGE>
                                                                   Exhibit 10.17


                                 THIRD AMENDMENT

This Third Amendment is entered and made as of this 17th day of October, 2002
(the "Amendment") as an amendment to the Service Agreement dated as of November
11, 1997, by and between US Airways, Inc. ("US Airways") and Mesa Airlines, Inc.
as amended ("MesaJet" or "Mesa") (the "Agreement").

                                   WITNESSETH:

WHEREAS, US Airways and MesaJet have entered into the Agreement; and

WHEREAS, US Airways and MesaJet have entered into the First Amendment to the
Agreement dated as of November 24, 1999 (the "First Amendment"); and

WHEREAS, US Airways and MesaJet have entered into the Second Amendment to the
Agreement dated as of October 6, 2000 (the "Second Amendment"); and

WHEREAS, MesaJet has entered into a Consent Agreement dated as of October 6,
2000;

WHEREAS, US Airways and MesaJet desire to amend certain provisions of the
Agreement;

NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter
set forth and for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, US Airways and MesaJet hereby agree as follows:
<PAGE>
         1. ARTICLE 2.1 is hereby deleted in its entirety and replaced with the
following:

"2.1     At all times during the term of this Agreement and any amendment or
extension thereof, MesaJet will schedule and operate US Airways Express air
transportation service between various domestic city-pairs (hereinafter referred
to as "the Service") using up to * seat jet aircraft (hereinafter referred to as
"the Aircraft"). The city-pairs from which the air transportation services are
to be provided by MesaJet pursuant to this agreement will be selected by US
Airways in its sole discretion. US Airways may, * days' advance written notice
to MesaJet, designate changes in the following: city-pairs served, aircraft
routings, or flight frequencies."

         2. Exhibit 2.1 shall be deleted in its entirety.

         3. The first sentence of ARTICLE 2.2 is hereby deleted in its entirety
and replaced with the following:

"2.2     The Aircraft will have the capacities and payloads the same as those of
the Aircraft performing the Service as of the date of this Amendment, unless
established otherwise by mutual agreement."

         2. Exhibit 2.2 shall be deleted in its entirety.

         3. ARTICLE 5 is hereby deleted in its entirety and replaced with the
following:

"ARTICLE 5                 COMPENSATION FOR SERVICES

SECTION 5.1 PRICING MODEL DESCRIPTION

US Airways and MesaJet have developed a certain invoicing model, hereinafter
referred to as "the Pricing Model" and set forth in Exhibit 5.1, which, in
addition to US Airways' requirement in Section 5.12, will be used to determine
the full and total compensation to be paid by US Airways for city-pairs flown by
the Aircraft pursuant to this Agreement.


                                       2
<PAGE>
The Pricing Model is a Microsoft Excel spreadsheet application that calculates
the amounts due to/from MesaJet based on defined variables and flight activity
of the Aircraft in a particular billing month. The Pricing Model inputs are set
into three categories, *, and are collectively referred to as the Pricing Model
Variables.

For any given billing month, the Pricing Model will be used to calculate * "*"
and the Pricing Model will be used to calculate * "*".

SECTION 5.2 MONTHLY PRICING MODEL VARIABLES

Monthly Pricing Model Variables will refer to the Pricing Model Variables that
change from month to month based on *. Examples of support resources are *.
Descriptions of the Monthly Pricing Model Variables and the conditions under
which the variable may change are presented below and in Exhibit 5.1.

(a)      The "Active RJ - US" variable set forth in Exhibit 5.1 for a given
month shall mean the number of the Aircraft, * flown in the Service, available,
by mutual agreement, for scheduled service in a billing month. For any changes
to the number of Aircraft under this Agreement, Mesa shall notify and US Airways
shall confirm the number of Aircraft available to schedule * days before the
billing month. When an Aircraft is placed into service in the middle of a
billing month, the Active RJ - US variable shall be calculated by *.

(b)      The "Spare RJ - US" variable set forth in Exhibit 5.1 for a given month
shall mean the number of * Aircraft assigned, by mutual agreement, as a spare
aircraft in the billing month. Mesa shall notify and US Airways shall confirm
the Aircraft identified as a spare aircraft * days before the billing month. In
addition, each month, Mesa shall provide US Airways with a schedule of planned
maintenance events or other out of service time for the Aircraft over the next *
period. When a spare aircraft is assigned in the middle of a billing month, the
Spare RJ - US variable shall be calculated by the


                                       3
<PAGE>
number of available aircraft days with respect to the Aircraft as a spare
aircraft divided by the number of days in the month.

(c)      The "Total RJ - US" variable set forth in Exhibit 5.1 for a given month
shall mean the sum of the Active RJ - US variable and the Spare RJ - US
variable.

(d)      The "Total RJ - Mesa" variable set forth in Exhibit 5.1 for a given
month shall mean the number of *, or such other regional jet aircraft flown by
Mesa either in the Service or on behalf of itself or another air carrier, in the
billing month. When such aircraft is placed into service in the middle of a
billing month, the Total RJ - Mesa variable shall be calculated *.

(e)      The "Block Hours" variable set forth in Exhibit 5.1 for a given month
shall mean the block hours for actual revenue flights operated in the Service
under the terms of this Agreement in the billing month. For the purpose of
developing a Pre-Bill Invoice, the Block Hours variable shall be equal to *.

(f)      The "Revenue Passengers" variable set forth in Exhibit 5.1 for a given
month shall mean the actual number of enplaned US Airways Express passengers on
the Aircraft in the billing month. For the purpose of developing a Pre-Bill
Invoice, the Revenue Passengers variable shall be calculated by *.

(g)      The "Departures" variable set forth in Exhibit 5.1 for a given month
shall mean the actual revenue departures operated in the Service under the terms
of this Agreement in the billing month. For the purpose of developing a Pre-Bill
Invoice, the Departures variable shall be equal to *.

(h)      The "RPMs" variable set forth in Exhibit 5.1 for a given month shall
mean the actual number of US Airways Express revenue passenger miles (RPMs)
produced in the billing month by the Aircraft in the Service. For the purpose of
developing a Pre-Bill Invoice, the RPMs variable shall be calculated by *.


                                       4
<PAGE>
(i)      The "Crew Ratio - Pilots" variable set forth in Exhibit 5.1 for a given
month shall be calculated by dividing *. The total number of ERJ-145 (and/or
CRJ-200, if applicable) pilots shall be determined by selecting pilots who meet
one of the four (4) criteria below from the pilot crew bid roster from the
fifteenth (15th) day of the billing month. Mesa agrees to provide to US Airways
the crew bid roster for the billing month. For the purpose of developing a
Pre-Bill Invoice, the Crew Ratio - Pilots variable shall be equal to the prior
month's ratio. Note that the Pricing Model applies a formula to adjust the Crew
Ratio - Pilots if it is greater than *.

         1)       Captains who are non-management line holding pilots qualified
                  as Captains for the Aircraft in the Service.

         2)       First Officers who are non-management line holding pilots
                  qualified as First Officers for Aircraft in the Service.

         3)       Pilots who are in training for Captain positions for Aircraft
                  in the Service.

         4)       Pilots who are in training for First Officer positions for
                  Aircraft in the Service.

Notwithstanding the above, for the billing months of June 2002 to January 2003,
the Crew Ratio - Pilots will be fixed at *. In January 2003, US Airways and Mesa
will jointly review the crew ratio based on optimized Bornemann crew schedule
and practical allocation of crew bases against the March 2003 published flight
schedule, and will establish a revised Crew Ratio - Pilots in good faith which
is based on such joint review. If the parties can not reach agreement as to a
new fixed Crew Ratio - Pilots based on such joint review, the parties agree to
use *.

(j)      The "Crew Ratio - Flight Attendants" variable set forth in Exhibit 5.1
for a given month shall be calculated by *. Mesa agrees to provide the flight
attendant crew bid schedule for the crew bid closest from the fifteenth (15th)
day of the billing month as well as the number of aircraft requires a flight
attendant or flight attendants by the FAA. Note that if an aircraft requires
more than one flight attendant then the block hours will be weighted
accordingly. Note also that the Pricing Model applies a formula to adjust the
Crew Ratio - Flight Attendants if it is greater than *.


                                       5
<PAGE>
Notwithstanding the above, for the billing months of June 2002 to January 2003,
the Crew Ratio - Flight Attendants will be the lower of *. In January 2003, US
Airways and Mesa will jointly review the crew ratio based on optimized Bornemann
crew schedule and practical allocation of crew bases against the March 2003
published flight schedule, and will establish a revised Crew Ratio - Flight
Attendants in good faith which is based on such joint review. If the parties can
not reach agreement as to a new fixed Crew Ratio - Flight Attendants based on
such joint review, the parties agree to use *.

(k)      The "Number of Maintenance Bases" variable set forth in Exhibit 5.1 for
a given month shall mean *.

(l)      The "Spare Parts Value - US" variable set forth in Exhibit 5.1 for a
given month shall mean *. For the purposes of developing a Pre-Bill, the Spare
Parts Value - US variable shall be set at the most recent month's actual amount.

(m)      The "Owned Engine Value - US" variable set forth in Exhibit 5.1 for a
given month shall mean the *. When an engine is assigned in the middle of a
billing month, the Owned Engine Value - Total RJ - Mesa variable shall be
calculated by *. For the purposes of developing a Pre-Bill, the Owned Engine
Value - US variable shall be set at the most recent month's actual amount.

(n)      The "Leased Engine Costs Per Month - US" variable set forth in Exhibit
5.1 for a given month shall mean *. When an engine is assigned in the middle of
a billing month, the Leased Engine Costs Per Month - US variable shall be
calculated by the number of days the engine was available days divided by the
number of days in the month. For the purposes of developing a Pre-Bill, the
Leased Engine Costs Per Month - US variable shall be set at the most recent
month's actual amount.

(o)      The "RJ Consignments Cost Per Month - US" variable set forth in Exhibit
5.1 for a given month shall mean *. For the purposes of developing a Pre-Bill,
the ERJ Consignments Cost Per Month - US variable shall be set at the most
recent month's actual amount.


                                       6
<PAGE>
(p)      The "Aircraft Ownership Cost Per Month" variable set forth in Exhibit
5.1 for a given month shall mean *. Mesa agrees to provide an aircraft ownership
schedule as shown in Exhibit 5.1. For the purposes of developing a Pre-Bill, the
Aircraft Ownership Cost Per Month variable shall be set at the most recent
month's actual amount plus an estimate for any additional aircraft.

SECTION 5.3 MONTHLY PASS-THROUGH COST VARIABLES

Monthly Pass-Through Cost Variables will refer to the Pricing Model Variables
that change from month to month based on actual costs incurred by the MesaJet
operation. Mesa will provide invoices to support the Monthly Pass-Through Costs
and will be reimbursed accordingly. Examples include *. Descriptions of the
Monthly Pass-Through Costs variables and the conditions under which the variable
is changed is presented below and in Exhibit 5.1.

(a)      The "Hull Insurance Per Aircraft" variable set forth in Exhibit 5.1 for
a given month shall mean the *. The insured value of the aircraft shall be *.
Mesa agrees to provide a schedule of hull insurance by aircraft as shown in
Exhibit 5.1.

(b)      The "Property Tax Per Aircraft" variable set forth in Exhibit 5.1 for a
given month shall mean *. Mesa agrees to provide the property tax rate that will
be applicable in a calendar year and has been validated by Mesa's auditor.

(c)      The "Fuel Cost" variable set forth in Exhibit 5.1 for a given month *.
Any fuel costs in excess of * per gallon shall be paid directly by US Airways.
Mesa agrees to provide the invoices that support the fuel costs. For the
purposes of developing a Pre-Bill, the fuel cost shall be calculated by *.

e)       The "Oil Cost" variable set forth in Exhibit 5.1 for a given month
shall mean the *. Mesa agrees to provide the invoices that support the oil cost.
For the purposes of developing a Pre-Bill, the oil cost will be calculated by *.


                                       7
<PAGE>
(f)      The "Catering Cost" variable set forth in Exhibit 5.1 for a given month
shall mean *. Mesa agrees to provide the invoices that support the catering
costs. For the purposes of developing a Pre-Bill, the catering cost shall be
calculated by multiplying the most recent month's actual catering cost per
passenger by the Revenue Passengers.

(g)      The "Pax Liability Cost" variable set forth in Exhibit 5.1 for a given
month shall mean the actual passenger liability insurance cost for MesaJet
Revenue Passengers enplaned on the Aircraft in the Service for that billing
month. For the purposes of developing a Pre-Bill, the passenger liability cost
shall be calculated by *.

(h)      The "Landing Fees" variable set forth in Exhibit 5.1 for a given month
shall mean *. Mesa agrees to provide the invoices that support the landing fee
costs. For the purposes of developing a Pre-Bill, the Landing Fees variable
shall be calculated by *.

SECTION 5.4 SET PRICING MODEL VARIABLES

Set Pricing Model Variables will be defined as *. *. Descriptions of the Set
Pricing Model Variables and the conditions under which the variable is changed
are presented below and in Exhibit 5.1.

(a)      The "CPI Adjustment" variable set forth in Exhibit 5.1 shall mean the
consumer price index (CPI) adjustment that is reset once a year on November 11th
and is calculated by dividing the current year CPI as reported by the Bureau of
Labor Statistics to the CPI reported in November of 1999.

(b)      The "Annual Wages Per Crew -- Pilot" variable set forth in Exhibit 5.1
for a given month shall mean * per year, based on a captain rate of * per block
hour and a first officer rate of * per block hour and assuming * block hours per
crew per year. The base amount shall be adjusted when Mesa's pilot contract wage
scales are changed. *. *.


                                       8
<PAGE>
(c)      The "Benefits As A Percent of Wages" variable set forth in Exhibit 5.1
for a given month shall mean *.

(d)      The "Per Block Hour -- Pilots" variable set forth in Exhibit 5.1 for a
given month shall mean *. *.

(e)      The "Add'l Per Bhr -- Pilots > 12 AC" variable set forth in Exhibit 5.1
for a given month shall mean *. The base amount shall be changed by mutual
agreement *. Note the Add'l Per Block Hour -- Pilots > 12 AC variable applies to
block hours generated by aircraft number *. The block hours generated by
aircraft number *.

(f)      The "Annual Wages Per FA" variable set forth in Exhibit 5.1 for a given
month shall mean *. *. The adjustment amount will be determined by *. The
adjustment percentage is the percent increase or decrease of the average annual
wage in the new contract for a flight attendant with the weighted average
seniority of the flight attendant population at the time of the adjustment.

(g)      The "Cost Per FA Training" variable set forth in Exhibit 5.1 for a
given month shall mean *. The base amount shall be adjusted each year on
November 11th by *.

(h)      The "Per Block Hour Driven -- FA" variable set forth in Exhibit 5.1 for
a given month shall mean the base amount of *. The base amount shall be adjusted
each year on November 11th by *.

(i)      The "Mtx Per Block Hour" variable set forth in Exhibit 5.1 for a given
month shall mean *. The base amount shall be adjusted each year on November 11th
by *.

(j)      The "Mtx Per Cycle" variable set forth in Exhibit 5.1 for a given month
shall mean the base amount *. *.

(k)      The "Cost Per Maintenance Base Per Month" variable set forth in Exhibit
5.1 for a given month shall mean the *. The base amount shall be adjusted each
year on


                                       9
<PAGE>
November 11th by *. Mesa shall reduce the Cost per Maintenance Base per Month in
an amount equal to *.

(l)      The "G/A Per Active Aircraft Per Month" variable set forth in Exhibit
5.1 for a given month shall mean the base amount of *. *.

(m)      The "G/A Per Pilot Per Month" variable set forth in Exhibit 5.1 for a
given month shall mean the base amount of *. The base amount shall be adjusted
each year on November 11th by *. Note the pilots assigned to each entity is
calculated by *.

(n)      The "Crew RON Per Active Aircraft Per Day" variable set forth in
Exhibit 5.1 for a given month shall mean *. The base amount shall be adjusted
each year on November 11th by *.

(o)      The "Dispatch Per Departure" variable set forth in Exhibit 5.1 for a
given month shall mean the base amount *. The base amount shall be adjusted each
year on November 11th by multiplying *.

(p)      The "Indirect G/A Per Total Aircraft Per Month" variable set forth in
Exhibit 5.1 for a given month shall mean the base amount of * for *. The base
amount shall be adjusted each year on November 11th by *.

(q)      The "Mesa Profit as a Percent of Total" set forth in Exhibit 5.1 for a
given month shall mean *.


                                       10
<PAGE>
SECTION 5.5 DELIVERY OF PRE-BILL INVOICE PRICING MODEL VARIABLES

Mesa agrees to provide the Pricing Model Variables to US Airways ten days prior
to the first day of each month for the purpose of validating the inputs to be
used to prepare the Pre-Bill Invoice.

SECTION 5.6 REVIEW OF PRE-BILL INVOICE PRICING MODEL VARIABLES

Upon receipt of the Pricing Model Variables, US Airways will review the Pricing
Model Variables for reasonability. If any Pricing Model Variable is missing or
determined by the US Airways to be unreasonable, then US Airways will request,
in writing, further support for the "challenged" variable. *. Such "substitute"
variables will be reported to Mesa within one business day of their calculation.

SECTION 5.7 CALCULATION OF PRE-BILL INVOICE

Mesa agrees to prepare the Pre-Bill invoice using the Pricing Model Variables as
adjusted per Section 5.6 above and provide the Pricing Model Exhibit 5.1 and
related support schedules with each invoice.

SECTION 5.8 PAYMENT OF PRE-BILL INVOICE

US Airways will pay the Pre-Bill Invoice, *, by wire transfer on the first
business day of the billing month provided the Pricing Model Variables were
received by US Airways ten days prior to the first business day of the month per
Section 5.5 above. * will be paid on a Friday or the last business day of each
week in the amount of the following week's projected * from * or applicable
vendor as approved by US Airways. A payment will not be made when the fuel
invoice from * or applicable vendor has no scheduled payment in the following
week.


                                       11
<PAGE>
SECTION 5.9 DELIVERY OF FINAL INVOICE PRICING MODEL VARIABLES

Mesa agrees to provide Pricing Model Variables and supporting invoices for each
Monthly Pass-Through Cost Variable to US Airways no later than one hundred
twenty (120) days after the end of the billing month for the purpose of
preparing the Final Invoice. Since the statistics and fuel costs for a given
month are expected to be available less than thirty (30) days after the end of a
billing month, a "Statistical True-up" shall be calculated using the Pre Bill
invoice input variables except for actual statistics and fuel costs and settled
in the next billing month.

SECTION 5.10 REVIEW OF FINAL INVOICE PRICING MODEL VARIABLES

Upon receipt of the Pricing Model Variables and Monthly Pass-Through Cost
Variable supporting invoices, US Airways will review the Pricing Model Variables
for reasonability. For example, US Airways will verify the statistics provided
by Mesa using the US Airways statistical database. If any Pricing Model Variable
is missing or determined by US Airways to be unreasonable, US Airways will
request, in writing, further support for the "challenged" variable. The
challenged variable must be must be at least * different from the most recent
accepted value. If US Airways reviews the additional support of the "challenged"
variable and continues to consider the variable unreasonable, a "substitute"
variable which will be no greater than the most recent month's validated amount
will be substituted for the "challenged" variable. Such "substitute" variables
will be reported to Mesa within one business day of their calculation and prior
to payment of the Final Invoice. Disputes regarding "challenged" variables will
be resolved following the procedures described in Article 15 of the Agreement.


                                       12
<PAGE>
SECTION 5.11 CALCULATION OF FINAL INVOICE

Mesa agrees to prepare the Final Invoice using the Pricing Model Variables as
adjusted per Section 5.10 above. The amount calculated by the Pricing Model
final input will be compared to the amount paid in the Pre-Bill Invoice. If the
amount calculated by the Pricing Model with the final input variables is greater
than the amount paid in the Pre-Bill Invoice, then the difference will be due to
Mesa. If the amount calculated by the Pricing Model with the final input
variables is less than the Pre-Bill Invoice, then the difference will be due to
US Airways.

SECTION 5.12 REIMBURSED EXPENSES

US Airways and Mesa recognize that certain expenses that are the responsibility
of US Airways will be paid by Mesa each month and that Mesa will be reimbursed
by US Airways for these expenses. In order to be reimbursed for these expenses,
Mesa must submit an invoice with supporting documentation for each item within
one hundred twenty (120) days of the billing month to US Airways. Examples of
reimbursed expenses include, but are not limited to, *. In addition to
reimbursing the invoiced amount, US Airways agrees to pay an administrative fee
equal to * of the invoiced amount.

SECTION 5.13 PAYMENT OF FINAL INVOICE AND REIMBURSED EXPENSES

If US Airways owes Mesa per the calculation in Section 5.11 above, US Airways
will pay the amount owed by wire transfer on the first business day of the next
billing month. If Mesa owes US Airways per the calculation in Section 5.11
above, US Airways will take a credit for the amount due from Mesa on the wire
transfer for the next billing month. If no amount is due to Mesa in the next
billing month, then Mesa will pay via wire transfer the amount owed to US
Airways on the first day of the next billing month. Further, US Airways will pay
the invoice for reimbursed expenses via wire transfer on


                                       13
<PAGE>
the first business day of the next billing month provided however, that the
invoice was received ten days before the first of the next billing month.

SECTION 5.14 EXCLUSIVE EMBRAER ERJ-145 FLEET

The Aircraft assigned to fly under this Agreement are expected to be entirely
ERJ-145 aircraft. Should Mesa's entire ERJ-145 aircraft be assigned to this
Agreement, the following Pricing Model Variables will be reviewed and revised by
mutual agreement.

a)       The "Actual Crew Ratio -- Pilots" variable

b)       The "Annual Wages Per Crew -- Pilots" variable

c)       The "Spare Parts Value -- Total RJ - Mesa" variable

d)       The "Owned Engine Value -- Total RJ - Mesa" variable

e)       The "Leased Engine Costs Per Month -- Total RJ - Mesa" variable

f)       The "ERJ Consignments Cost Per Month -- Total RJ - Mesa" variable


                                       14
<PAGE>
Except as reflected above, the Agreement remains unchanged in all other
respects. Upon its execution, this Third Amendment, together with the Agreement,
will be the complete and binding understanding of the Parties with respect to
the terms and conditions of the Agreement, as amended by the terms set forth
herein.

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

MESA AIRLINES, INC.                            US AIRWAYS, INC.




/S/ Michael Lotz                               /S/ N. Bruce Ashby
- --------------------------------              ----------------------------------
By:  Michael Lotz                              By:      N. Bruce Ashby
Title:  President                              Title:   Senior Vice President,
                                                        Corporate Development


                                       15


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>15
<FILENAME>p67334exv10w18.txt
<DESCRIPTION>EX-10.18
<TEXT>
<PAGE>
                                                                   Exhibit 10.18


                                FOURTH AMENDMENT

         This Fourth Amendment is entered and made as of this 17th day of
October, 2002 (the "Amendment") as an amendment to the Service Agreement dated
as of November 11, 1997, by and between US Airways, Inc. ("US Airways") and Mesa
Airlines, Inc. as amended ("MesaJet" or "Mesa") (the "Agreement").

                                   WITNESSETH:

         WHEREAS, US Airways and Mesa have entered into the Agreement; and

         WHEREAS, US Airways and Mesa have entered into the First Amendment to
the Agreement dated as of November, 24, 1999 (the "First Amendment"); and

         WHEREAS, US Airways and Mesa have entered into the Second Amendment to
the Agreement dated as of October 6, 2000 (the "Second Amendment"); and

         WHEREAS, Mesa has entered into a Consent Agreement dated as of October
6, 2000; and

         WHEREAS, US Airways and Mesa have entered into the Third Amendment to
the Agreement dated as of October 17, 2002 (the "Third Amendment"); and

         WHEREAS, US Airways and Mesa desire to amend certain provisions of the
Agreement;

         NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is acknowledged, and intending to be legally bound, US
Airways and Mesa hereby agree as follows:

The following is added as a new Section 5.15 of the Agreement.

         1.       Within seven (7) business days of the execution of this
Amendment, US Airways shall file with the United States Bankruptcy Court for the
Eastern District of Virginia, or any other bankruptcy court (the "Court") having
jurisdiction over the cases under Chapter 11, Title 11, of the United States
Code (the "Bankruptcy Code" of US
<PAGE>
Airways (the "Case"), a motion to assume the Agreement, and all amendments
thereto, under Section 365 of the Bankruptcy Code.

2.       The effectiveness of this Amendment shall be conditioned on and subject
to the entry of a final order (the "Order") by the Court, or any other
bankruptcy court having jurisdiction over the cases under Chapter 11 Title 11 of
the Bankruptcy Code filed by US Airways (a) authorizing and directing US Airways
to assume the Agreement, as previously amended and modified by this Agreement,
under Section 365 of the Bankruptcy Code, and (b) approving the terms of this
Amendment and authorizing and directing US Airways to enter into and be bound by
this Amendment. In the event the Order is not entered on or before December 13,
2002, this Amendment shall be null and void and of no force or effect. The Order
shall provide that US Airways' obligations under the Agreement and this
Amendment shall be post-petition, administrative obligations of US Airways under
Section 503 of the Bankruptcy Code, except for obligations that arise, or become
due and payable, after the Breach Date (as defined below) as provided below.
Notwithstanding the foregoing, in the event US Airways fails to confirm a
Chapter 11 plan of reorganization in the Case under which US Airways continues
to operate as an air carrier on substantially the same basis as the date hereof
or the Case is dismissed or converted to a case under Chapter 7 of the
Bankruptcy Code and as a result thereof US Airways suspends or discontinues
flight operations, US Airways may terminate the Agreement by providing 10 days
prior written notice of Mesa of such termination. In such event, US Airways
shall be deemed to have breached the Agreement as of the effective date of such
termination (the "Breach Date") and Mesa shall be entitled to assert, subject to
objection (x) an administrative claim for any obligations arising before the
Breach Date and (y) a general unsecured pre-petition claim for damages resulting
from such termination incurred, or for obligations that become due and payable,
after the Breach Date. Furthermore, Mesa shall refund any amounts paid to it by
US Airways on account of services to be provided for any time period after the
Breach Date within three business days of receipt of written demand from US
Airways to Mesa.

3.       Mesa agrees that it shall waive any claim to, and, upon entry of the
Order, release and hold US Airways harmless from, payments of: (a) * (the "*")
which has been
<PAGE>
previously invoiced to US Airways as partial payment for services performed
under the Agreement during the period October 1, 2001 through December 31, 2001;
(b) * (the "Reimbursable Expense Amount") representing certain claims presented
by Mesa and approved by US Airways for reimbursable expenses; and (c) an amount
of * related to expenses incurred during the period July 2000 to April 2002 (the
"Settlement Amount"), provided that in the event the Agreement is terminated for
any reason, other than by reason of Mesa's breach of its obligations under the
Agreement, including without limitation a termination under Section 7.2, 7.3 or
7.4 of the Agreement or a termination in the event that US Airways fails to
confirm a plan of reorganization in the Case, Mesa shall have an allowed claim
against US Airways, which in the event a plan of reorganization has not been
confirmed in the case as of such date, shall be treated as a general unsecured
pre-petition claim against US Airways, in the full amount of the *, the
Reimbursable Expense Amount, and the Settlement Amount. . In the event US
Airways breaches this Agreement, and to the extent such breach gives rise to any
pre-petition claims by Mesa against US Airways by operation of this Agreement,
Mesa shall have a period of thirty (30) days from the date of such breach to
file proofs of claim to assert such pre-petition claims against US Airways,
whether or not such breach occurs subsequent to the November 4, 2002 bar date
for filing proofs of claim.

         4.       Subject to the provisions of Paragraph 2 above, to the extent
Mesa is required to refund any compensation it has received under the *, Mesa
shall have a general post-petition administrative claim against US Airways in an
amount equal to the amount of such compensation that Mesa is required to refund.

         5.       Upon execution of an agreement between Mesa and US Airways
which contemplates * or more additional regional jets ("Fifth Amendment"), Mesa
will defer payment in an amount not to exceed * million of the Pre Bill Invoice
as referenced in the Third Amendment Section 5.8 from the first day of the
billing month to the first day of the month following the billing month. Any
amount above * million shall be paid in advance at the beginning of the month.
This payment cycle will continue until US Airways emerges from Chapter 11.
Commencing with the billing month following the emergence of US Airways from
Chapter 11, Section * of the Agreement shall be hereby
<PAGE>
amended such that the Pre Bill Invoice for all Mesa flying for the Service will
be paid on the * of each billing month with each payment representing * of the
Pre Bill Invoice.

6.       AUDIT: US Airways and Mesa hereby agree that US Airways will, at its
own cost and expense and within three months of executing this Amendment, retain
an independent third party auditor to implement a system audit of Mesa's
invoices to US Airways under the Agreement for the period July 2000 to April
2002 (the "Audit"), in accordance with the terms of the Third Amendment. Mesa
shall promptly provide all information necessary to the independent third party
auditor and the auditor shall complete the Audit in a timely manner. The
independent third-party auditor shall verify the calculations, statistical data
inputs and assumptions used in determining the amounts paid by US Airways to
Mesa during the period of the Audit and to determine, without taking into
consideration the above "Settlement Amount" payment *, if any amounts are owed
by one party to the other for such period. In the event that the net of any such
amounts would result in a payment from one party to the other (the "Audit
Amount"), US Airways and Mesa agree that the Audit Amount shall be the lesser
of: (x) such payment or (y) *.

         7.       Subject to the terms and conditions hereof, Mesa and US
Airways hereby consider all financial matters for billing months prior to March
1, 2002 related to the Agreement as settled and final, and for the billing
periods commencing March 1, 2002 through October, 2002 as settled and final
other than for adjustments in the normal course of business relating to
Reimbursable Expenses and Statistical True-up.

         8.       Mesa agrees that it will use its commercially reasonable
efforts to facilitate the handling of code-share passengers and the processing
of alliance partner frequent flyer miles pursuant to domestic and international
code-share alliance relationships entered into by US Airways.

Except as reflected above, the Agreement remains unchanged in all other
respects. Upon its execution, this Fourth Amendment, together with the
Agreement, will be the complete and binding understanding of the Parties with
respect to the terms and conditions of the Agreement, as amended by the terms
set forth herein.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their duly authorized representatives as of the day and year first above
written.


MESA AIRLINES, INC.                            US AIRWAYS, INC.






 /S/ Michael Lotz                                /S/ N. Bruce Ashby
By:  Michael Lotz                              By:  N. Bruce Ashby
Title:  President                              Title:  Sr. Vice President
                                                       Corporate Development


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>16
<FILENAME>p67334exv10w19.txt
<DESCRIPTION>EX-10.19
<TEXT>
<PAGE>
                                                                   Exhibit 10.19


                                 FIFTH AMENDMENT

         This Fifth Amendment is entered and made as of this 17th day of
October, 2002 (the "Amendment") as an amendment to the Service Agreement dated
as of November 11, 1997, by and between US Airways, Inc. ("US Airways") and Mesa
Airlines, Inc. as amended ("MesaJet" or "Mesa") (the "Agreement").

                                   WITNESSETH:

         WHEREAS, US Airways and Mesa have entered into the Agreement; and

         WHEREAS, US Airways and Mesa have entered into the First Amendment to
the Agreement dated as of November, 24, 1999 (the "First Amendment"); and

         WHEREAS, US Airways and Mesa have entered into the Second Amendment to
the Agreement dated as of October 6, 2000 (the "Second Amendment"); and

         WHEREAS, Mesa has entered into a Consent Agreement dated as of October
6, 2000; and

         WHEREAS, US Airways and Mesa have entered into the Third Amendment to
the Agreement dated as of October 17th, 2002 (the "Third Amendment"); and

         WHEREAS, US Airways and Mesa have entered into the Fourth Amendment to
the Agreement dated as of October 17th, 2002 (the "Fourth Amendment"); and

         WHEREAS, US Airways and Mesa desire to amend certain provisions of the
Agreement;

         NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is acknowledged, and intending to be legally bound, US
Airways and Mesa hereby agree as follows:

1)       The following Section 2.1(b) is hereby added to the Agreement: SECTION
2.1(B)

         MesaJet will deploy * aircraft, or other similar aircraft subject to
         mutual agreement of the parties, under the Agreement (hereinafter
         referred to as
<PAGE>
         the "Additional Aircraft"), at financing terms and return conditions
         reasonably acceptable to US Airways and in compliance with the
         applicable provisions * protocol as ratified by US Airways ALPA on
         August 8, 2002, based on the delivery schedule attached hereto as
         Exhibit 2.1(b):

2)       Section 5.1 is amended by adding before the word "pursuant" in the
         forth line of the first paragraph "and Additional Aircraft."

3)       Section 5.2(p) "Aircraft Ownership Cost Per Month" is amended by adding
         the following paragraph to the Section:

         The Aircraft Ownership variable for the Additional Aircraft shall be
         the actual monthly lease costs for said aircraft. However, if prior to
         the execution of the documentation procuring Additional Aircraft, US
         Airways is able to arrange for Mesa to receive more favorable financial
         terms from the aircraft owner or lessor for the Additional Aircraft at
         Mesa, the more favorable financial terms will replace those
         contemplated in Section 5.2 of the Agreement (as amended by the Third
         Amendment) for the Additional Aircraft.

4)       Section 5.4(b) "Annual Wages Per Crew - Pilot" is amended by adding the
         following sentence to the Section:

         The Annual Wages Per Crew - Pilot variable will be updated to reflect
         the impact of actual pilot seniority and related pay scales related to
         the Additional Aircraft.

5)       Section 5.4(f) "Annual Wages Per FA" is amended by adding the following
         sentence to the Section:

         The Annual Wages Per FA variable will be updated to reflect the impact
         of actual flight attendant seniority and related pay scales related to
         the Additional Aircraft.

6)       Section 5.4(i) "Maintenance Per Block Hour" is amended by adding the
         following sentence to the Section:

         The Maintenance Per Block Hour variable will be adjusted to reflect
         actual third party maintenance block hour costs related to the
         Additional Aircraft, subject to mutual agreement of the parties, such
         agreement not to be unreasonably withheld by either party.

7)       Section 5.4(q) "Mesa Profit as a Percent of Total" is amended by adding
         the following sentence to the Section:
<PAGE>
         The Mesa Profit as a Percent Total variable for the Additional Aircraft
         shall be *.

8)       Section 5.12, "Reimbursable Expenses" is amended by adding the
         following sentence to the Section:

         For the invoiced amount related to the Additional Aircraft, U.S.
         Airways agrees to pay an administrative fee equal to *.

9)       The following Section 5.17 is hereby added to the Agreement:

         SECTION 5.17 - START-UP CREDIT

         Commencing upon the first business day of the calendar month following
         the later of: (x) the completion of Audit as defined in the Fourth
         Amendment to the Agreement; or (y) US Airways' emergence from Chapter
         11 (the "Payment Start Date"), US Airways shall pay to Mesa (or, in the
         event money is owed to US Airways, Mesa shall pay to US Airways) the
         "Startup Credit" payment, which shall be calculated as the sum of: (z)

         * to be paid by US Airways to Mesa; and (w) the Audit Amount (as
         defined in the Fourth Amendment to the Agreement, and which could
         result in a payment to either party), which Startup Credit payment
         shall be made in twelve (12) equal monthly installments.

10)      The following Section 7.6 is hereby added to the Agreement:

         SECTION 7.6 - TERM AND TERMINATION OF ADDITIONAL AIRCRAFT

         (a)      This Agreement with respect to the Additional Aircraft is
         effective as of the date and year first written above, and Services
         provided hereunder will continue, without interruption until the tenth
         (10th) anniversary of the date the first Additional Aircraft is added
         to Mesa's fleet pursuant to Section 2.1(b) of the Agreement (as amended
         by this Fifth Amendment), unless it is terminated on an earlier date
         pursuant to the provisions in Article 7 of the Agreement or as
         described in (b) as follows. US Airways, at its sole option, may extend
         the Agreement with respect to the Additional Aircraft by two (2) years
         upon written notification to MesaJet at any time up to twelve (12)
         months before the 10th anniversary of the date the first Additional
         Aircraft is added to Mesa's fleet pursuant to Section 2.1(b) of the
         Agreement (as amended by this Fifth Amendment). To accomplish an
         orderly termination of this Agreement with respect to the Additional
         Aircraft, the Parties agree that any termination of this Agreement with
         respect to the Additional Aircraft shall be on an aircraft-by-aircraft
         basis with no more than * Additional Aircraft terminated hereunder and
         returned to MesaJet each month and, to the extent necessary, the
         Parties agree to extend the term of this Agreement (but in no event
         longer than * with respect to
<PAGE>
         the Additional Aircraft to accommodate the orderly termination of the
         Services under this Agreement with respect to the Additional Aircraft.

         (b)      US Airways shall have the right, commencing at the *
                  anniversary of the date the first Additional Aircraft is added
                  to Mesa's fleet pursuant to Section 2.1(b) of the Agreement,
                  to terminate this Agreement with respect to the Additional
                  Aircraft in the event in US Airways' sole discretion subject
                  to its good faith determination that *, at any time upon three
                  hundred sixty five (365) days' prior written notice to Mesa.
                  Termination of this Agreement with respect to the Additional
                  Aircraft will not relieve either party from any obligation or
                  liability accrued hereunder prior to the time of termination.
                  To accomplish an orderly termination of this Agreement with
                  respect to the Additional Aircraft, the parties agree that any
                  such termination shall be on an aircraft-by-aircraft basis
                  with no more than * Additional Aircraft terminated hereunder
                  each month and, to the extent necessary, the parties agree to
                  extend the term of this Agreement (but in no event longer than
                  *) with respect to the Additional Aircraft to accommodate the
                  orderly termination of the Services pursuant to this Agreement
                  with respect to the Additional Aircraft. In the event of such
                  early termination, at Mesa's option, US Airways shall assume
                  payment of Mesa's lease payments for such terminated
                  Additional Aircraft and upon such assumption, may elect to
                  operate such aircraft or to cause such aircraft to be operated
                  by another party, such election to be made at US Airways'
                  discretion, until the expiration of the lease of such
                  terminated Additional Aircraft to Mesa (but in no event longer
                  than the term reviewed by US Airways at the time such aircraft
                  were first placed into the Service in accordance with Section
                  2.1(b); or other term, provided that in the event Mesa
                  undertakes to amend the term or other conditions of the leases
                  of any of the Additional Aircraft subsequent to such aircraft
                  entering the Service, such amendments shall have been approved
                  in writing by US Airways prior to their execution) and shall
                  assume the responsibility to satisfy all return condition
                  obligations pursuant to the lease of such terminated
                  Additional Aircraft to Mesa (but in no event more than the
                  obligations reviewed by US Airways at the time such aircraft
                  were first placed into the Service in accordance with Section
                  2.1(b); or other obligations, provided that in the event Mesa
                  undertakes to amend the return obligations of the leases of
                  any of the Additional Aircraft subsequent to such aircraft
                  entering the Service, such amendments shall have been approved
                  in writing by US Airways prior to their execution).

11)      Article 12 "Option for Additional Aircraft" is hereby deleted in its
         entirety.

Except as reflected above, the Agreement remains unchanged in all other
respects. Upon its execution, this Fifth Amendment, together with the Agreement,
will be the complete
<PAGE>
and binding understanding of the Parties with respect to the terms and
conditions of the Agreement, as amended by the terms set forth herein.

Subject to mutual agreement, Mesa and US Airways agree to enter into a
restatement of the terms and conditions of the Service Agreement, as amended, in
order to substitute Mesa Air Group, Inc. as the signatory party to the
Agreement.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their duly authorized representatives as of the day and year first above
written.


MESA AIRLINES, INC.                            US AIRWAYS, INC.



/S/ Michael Lotz                                /S/ N. Bruce Ashby
By:  Michael Lotz                              By:       N. Bruce Ashby
Title:  President                              Title:    Sr. Vice President
                                                         Corporate Development
<PAGE>
                                    EXHIBIT A

<TABLE>
<CAPTION>
Date                      *                                           *
- ----
                          *                                           *
                          -                                           -
<S>                       <C>                                         <C>

*                                  *                                  *
*                                  *                                  *
*                                  *                                  *
*                                  *                                  *
</TABLE>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>17
<FILENAME>p67334exv10w27.txt
<DESCRIPTION>EX-10.27
<TEXT>
<PAGE>
                                                                   Exhibit 10.27




                              EMPLOYMENT AGREEMENT

                                 BY AND BETWEEN

                               GEORGE MURNANE, III

                                       AND

                              MESA AIR GROUP, INC.










                          DATED AS OF DECEMBER 6, 2001
<PAGE>
                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
December 6, 2001 by and between Mesa Air Group, Inc., a Nevada corporation (the
"Company"), and George Murnane, III ("Executive").

                                    RECITALS

WHEREAS, the Company wishes to offer and Executive has agreed to accept
employment with Mesa Air Group, Inc.

WHEREAS, the parties wish to memorialize the terms and conditions of such
employment in this employment agreement dated as of December 6, 2001.

                                    ARTICLE I

                                 DUTIES AND TERM

         1.1      EMPLOYMENT. In consideration of their mutual covenants and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are acknowledged, the Company agrees to hire Executive, and Executive
agrees to remain in the employ of the Company, upon the terms provided in this
Agreement.

         1.2      POSITION AND RESPONSIBILITIES.

                  (a)      Executive shall serve as the Executive Vice President
of the Company. Executive agrees to perform services, not inconsistent with his
position, as are from time to time assigned to him by the Chief Executive
Officer, President or Board of Directors of the Company.

                  (b)      During the period of his employment under this
Agreement, Executive shall devote substantially all of his business time,
attention, skill and efforts to the faithful performance of his duties under
this Agreement, but Executive shall have the right to engage in personal
business and to participate in charitable and civic activities, during normal
business hours and otherwise, as long as such business and activities do not
unreasonably interfere with Executive's duties to the Company. Notwithstanding
the foregoing, nothing contained herein shall prohibit the Executive to continue
in his capacity as a Director at International Airline Support Group, Inc. and
North-South Airways, Inc.

         1.3      TERM. The term of Executive's employment under this Agreement
shall commence on December 6, 2001, and shall continue, unless sooner
terminated, until December 6, 2005.


                                       1
<PAGE>
         1.4      LOCATION. During the period of his employment under this
Agreement, Executive shall not be required, except with his prior written
consent (which may be withheld in his discretion), to relocate his principal
place of employment outside Maricopa County, Arizona. Required travel on the
Company's business shall not be deemed a relocation so long as Executive is not
required to provide his services under this Agreement outside of Maricopa
County, Arizona, for more than 50% of his working days during any consecutive
six-month period.

                                   ARTICLE II
                                  COMPENSATION

         For all services rendered by Executive in any capacity during his
employment under this Agreement, including, without limitation, services as a
director, officer or member of any committee of the Board of the Company or of
the board of directors of any subsidiary of the Company, the Company shall
compensate Executive as set forth in this Article II.

         2.1      BASE SALARY. The Company shall pay to Executive an annual base
salary of not less than $145,000 (the "Base Salary") during the term of this
Agreement. Executive's Base Salary shall be paid every other week in equal
installments. The Base Salary shall be reviewed annually by the Board or a
committee designated by the Board, and the Board or such committee may, in its
discretion, increase the Base Salary. Notwithstanding the foregoing, beginning
December 6, 2002, the Company shall increase the Base Salary effective each
January 1 during the term of this Agreement, by an amount which is at least
equal to the percentage increase in the Consumer Price Index, all items, Urban
Wage Earners and Clerical Workers, for the Phoenix-Mesa, AZ (MSA) from January
of the immediately prior year to January of the then current year. Subject to
the consent of Executive (which consent shall not be unreasonably withheld), the
Company may reduce the Base Salary under circumstances in which the Company has
suffered severe financial losses and has imposed cuts in salary of other
officers on an across the board basis, but any such reduction may not be at a
greater percentage than the reduction imposed on any other officer unless
otherwise agreed by the Executive.

         2.2      BONUS PAYMENT. The Company shall establish in each fiscal year
during the term of this Agreement an executive bonus plan to provide incentive
compensation to Executive. During the period of Executive's employment under
this Agreement, Executive shall be entitled to the bonus payments with a minimum
annual payment of $40,000 and a maximum payment of $180,000. Such bonus payments
shall be computed according to the terms set forth in Exhibit A, and
incorporated herein. Any bonus payable to Executive under the plan described
herein is referred to as an "Incentive Bonus." Any Incentive Bonuses will be
paid on a quarterly basis, not later than 45 days after the end of each fiscal
quarter (or 90 days after the end of any fiscal year), based on the Company's
financial statements in its Form 10-Q or Form 10-K, as the case may be; payments
made with respect to any fiscal quarter other than the last fiscal quarter of a
fiscal year of the Company will be made on an estimated basis (based on
annualized results), and the parties will account to one another and make
appropriate payment adjustments promptly after the financial statements for any
fiscal year become available. The Company in its discretion may pay bonuses to
Executive in addition to the Incentive Bonuses set forth herein.


                                       2
<PAGE>
         2.3      STOCK OPTIONS.

                  (a)      The Company confirms the grant to Executive,
effective as of December 6, 2001, of options to purchase 150,000 shares of stock
at an exercise price equal to the market value of the Company's common stock on
December 6, 2001 ($6.36), under the terms of the existing stock option plan. In
addition, as of December 6 of each year during the term of this Agreement (or
the next business day if December 6 of any year is not a business day), the
Company shall issue options to purchase not fewer than 40,000 shares of common
stock of the Company (adjusted appropriately for any stock dividend, stock
split, spin-off, reorganization, or similar transaction), under a new stock
option plan the terms of which are described in Section 2.3(c). All stock
options granted under this Agreement shall vest equally over a three (3) year
period.

                  (b)      During the term of this Agreement and thereafter so
long as any stock option granted to Executive by the Company remains outstanding
(whether such stock option was granted prior to or after the date of this
Agreement), the Company shall loan to Executive an amount equal to the aggregate
exercise price of any such stock option, with such loan to be made upon
Executive's giving of notice to the Company that he is exercising a stock option
and desires to have the Company loan to him the exercise price of such stock
option. Any such loan shall be on a full recourse basis, shall be payable within
60 days, and shall be on such other terms as are reasonably acceptable to
Executive but that in any event are no more favorable to Executive than would be
available to Executive from an unrelated third party. The proceeds from any such
loan shall be used to pay the exercise price of the pertinent stock options.

                  (c)      If Executive is terminated without Cause, Executive
terminates his employment for Good Reason, or Executive dies or becomes Totally
Disabled, then all previously granted stock options shall immediately vest and
the expiration date for exercise of such stock options shall be a date not
earlier than ten years from the grant of the stock option.

         2.4      ADDITIONAL BENEFITS.

                  (a)      GENERAL BENEFITS. During the term of this Agreement,
Executive shall be entitled (i) to participate in all employee benefit and
welfare programs, plans and arrangements (including, without limitation,
pension, profit sharing, supplemental pension and other retirement plans,
insurance, hospitalization, medical and group disability benefits, travel or
accident insurance plans) and (ii) to receive fringe benefits, such as dues and
fees of professional organizations and associations, in each case under (i) and
(ii) to the extent that such programs, plans, arrangements, and benefits are
from time to time available to the Company's executive personnel (the programs
and benefits in (i) and (ii) are referred to as "General Benefits"). During the
period of his employment under this Agreement, the Company shall continue to
provide the General Benefits to Executive at a level which shall in no event be
less, in any material respect, than the General Benefits made available to
Executive by the Company as of the date of this Agreement. Subject to the
consent of Executive (which consent shall not be unreasonably


                                       3
<PAGE>
withheld), the Company may reduce the General Benefits under circumstances in
which the Company has suffered severe financial losses and has imposed
reductions in coverage of the General Benefits of other officers on an across
the board basis, but any such reduction may not be disproportionately greater
than the reduction imposed on any other officer.

                  (b)      DEATH BENEFIT. The Company shall promptly (and in any
event not later than 60 days after this Agreement is executed) obtain term life
insurance on the life of Executive such that the aggregate death benefit under
existing and new policies totals $2,000,000; such insurance shall be obtained
under one or more policies from insurers reasonably acceptable to Executive. As
long as Executive is employed by the Company, (i) the Company shall pay the
premiums on the policy (or policies) and shall maintain the policy (or policies)
in full force and effect, and (ii) Executive shall have the exclusive right to
designate the beneficiary under such policy (or policies). The Company shall
assign the policy (or policies) to Executive, without any cost to Executive,
effective immediately after Executive ceases to be an employee of the Company,
regardless of the reason for Executive's termination of employment. The Company
shall not pledge or otherwise encumber the policy (or policies) at any time.

                  (c)      DISABILITY BENEFITS. The Company shall provide
Executive with the following disability benefits:

                           (i)      During any period of disability, illness or
         incapacity during the term of this Agreement which renders Executive at
         least temporarily unable to perform the services required under this
         Agreement, Executive shall receive the Base Salary payable under
         Section 2.1 plus any cash bonus compensation earned pursuant to the
         provisions of this Agreement or any incentive compensation plan then in
         effect but not yet paid, less any cash benefits received by him under
         any disability insurance carried by or provided by the Company. Upon
         Executive's Total Disability (as defined below), which Total Disability
         continues during the payment periods specified in this Section, the
         Company shall pay to Executive, on a monthly basis, for the period
         specified below, an amount (the "Disability Payment") equal to (A)
         one-twelfth of the sum of (1) Executive's Base Salary in effect
         immediately prior to the time such Total Disability occurs, plus (2) an
         amount equal to the greater of (x) the Threshold Bonus or (y) one half
         of the sum of (i) the bonuses (whether Incentive Bonuses or other
         bonuses) that have been paid to Executive with respect to the two
         fiscal years immediately preceding the fiscal year in which the Total
         Disability occurs, and (ii) the bonuses (whether Incentive Bonuses or
         other bonuses) that have been accrued with respect to the two fiscal
         years immediately preceding the fiscal year in which the Total
         Disability occurs but have not been paid (or if Executive has been
         employed by the Company for less than two full fiscal years at the time
         of such Total Disability, then an amount equal to the sum of such paid
         and accrued bonuses with respect to the fiscal year immediately
         preceding the fiscal year in which the Total Disability occurs), which
         payments shall be due in full regardless of any compensation paid to
         Executive as a result of his employment by any other person after the
         date that Total Disability occurs, (B) reduced by the amount of any
         monthly payments under any policy of disability income insurance paid
         for by the Company (including the policy described in Section
         2.4(c)(ii)) which payments are received during the time when any
         Disability Payment is being made


                                       4
<PAGE>
         to Executive following Executive's Total Disability. The Company shall
         pay the Disability Payment to Executive in equivalent installments, at
         the same time or times as would have been the case for payment of Base
         Salary if Executive had not become Totally Disabled and had remained
         employed by the Company, and such payments shall continue until the
         later of the expiration of the term of this Agreement and 48 months,
         except that the Company's obligation to make such payments shall cease
         upon the death of Executive or if Executive ceases to be Totally
         Disabled. Upon Executive's Total Disability, except as provided in this
         Agreement, all rights of Executive under this Agreement shall
         terminate.

                           (ii)     In order to provide a ready source of funds
         with which to pay the benefits provided for in clause (1) above, if
         Executive becomes disabled (determined in accordance with the policy
         described below) during the term of this Agreement and such disability
         extends beyond 180 days, then Executive shall be paid the benefits
         provided for under the disability insurance policy issued by UNUM Life
         Insurance Company (Policy #IBD 060676), which the Company agrees to
         maintain in full force and effect during the term of this Agreement.
         The Company promptly (and in any event not later than 60 days after
         this Agreement is executed) shall cause such policy to be amended to
         the extent necessary to cause Executive to be eligible for disability
         payments for a minimum of four years from the date of such disability
         (that is, providing for 3 -1/2 years of coverage, taking into account
         the 180-day coverage provided by the Company directly under Section
         2.4(c)(i)), and to increase the amount payable to a minimum of $33,333
         per month. To the extent the Company is unable to cause such policy to
         be so amended, then the Company shall be obligated to provide such
         payments to Executive directly. Such coverage shall apply regardless of
         whether such four-year period extends beyond the term of this
         Agreement.

                  (d)      RELOCATION EXPENSES. Company shall compensate
Executive's moving expenses in the following manner:

                           (i)      Company shall compensate Executive for
         reasonable expenses incurred in moving his residence from Atlanta, GA
         to Phoenix, AZ.

                           (ii)     If during the term of this Agreement, if
         Executive's principal place of employment is relocated outside Maricopa
         County, Arizona, in accordance with Section 1.4, the Company shall
         reimburse Executive for all usual relocation expenses incurred by
         Executive and his household in moving to the new location, including,
         without limitation, moving expenses and rental payments for temporary
         living quarters in the area of relocation for a period not to exceed
         six months, real estate brokerage commissions incurred by Executive in
         the sale of his then existing principal residence, and loan financing
         charges and closing costs incurred in connection with the acquisition
         and financing of a new residence. In addition to the Relocation
         Expenses described herein, Executive shall receive interim living
         expenses pending his relocation to Phoenix.

                  (e)      REIMBURSEMENT OF BUSINESS EXPENSES. During the term
of this Agreement, the Company shall, in accordance with standard Company
policies, pay, or reimburse


                                       5
<PAGE>
Executive for, all reasonable travel and other expenses incurred by Executive in
performing his obligations under this Agreement.

                  (f)      VACATIONS. During the term of this Agreement,
Executive shall be entitled to vacations with pay, and to such personal and sick
leave with pay, in accordance with the policy of the Company as may be
established from time to time by the Company and as applies to other executive
officers of the Company. In no event shall Executive be entitled to fewer than
four weeks' annual vacation. Unused vacation days may be carried over from one
year to the next in the maximum amount of four weeks' annual vacation; that is,
to the extent that vacation days to which Executive is entitled remain unused,
such unused vacation days will cumulate and be useable in any subsequent year,
but no more than four weeks' of annual vacation in the aggregate can be carried
over from one year to the next. Any vacation days which remain unused at the end
of a fiscal year that are in excess of such four weeks' annual vacation shall
expire and shall thereafter no longer be useable by Executive, but the Company
shall compensate Executive for any such unused vacation days in accordance with
the formula set forth in Section 4.1(b). Similarly, any unused paid holidays may
be carried over from one year to the next but not in excess of an aggregate of
five days of paid holidays may be carried over from one year to the next; to the
extent any paid holidays remain unused at the end of a fiscal year that are in
excess of such five paid holidays, such paid holidays shall expire and shall
thereafter no longer be useable by Executive, but the Company shall compensate
Executive for any such unused paid holidays in accordance with the formula set
forth in Section 4.1(b).

                  (g)      DIRECTOR FEES. During the term of this Agreement,
Executive shall not be entitled to be paid any fees for attendance at meetings
of the Board of Directors or any committee of the Board of Directors (or the
board or committee of the board of any subsidiary).

                  (h)      AIRLINE PASSES. During the term of this Agreement the
Company shall use its reasonable efforts to obtain for the benefit of Executive
and Executive's immediate family (Executive's spouse, Executive's children, and
the spouse and children of any of Executive's children), the right to fly on a
complimentary basis on the aircraft of other airlines, on a positive space
basis. Such efforts shall include negotiating in good faith with other carriers
for such rights and offering reciprocal rights to the executives (and their
immediate family members) of such other carriers. The Company shall provide to
Executive and Executive's immediate family, during the life of each such
individual, the right to fly on a complimentary basis on any aircraft operated
by the Company or any affiliate at any time (subject only to reasonable and
customary rules regarding availability), on a positive space basis. The Company
shall use its best efforts to cause any successor or subsequent successor to the
business or assets of the Company to grant such rights as to all routes operated
by such successor (or subsequent successor) and any of its affiliates.

                  (i)      PROFESSIONAL SERVICES. During the term of this
Agreement, the Company shall reimburse Executive for his out-of-pocket costs
incurred in connection with the retention of professionals by Executive to
provide Executive with income tax, estate planning, and investment


                                       6
<PAGE>
advisory services. The maximum amount of reimbursable expenses for such purposes
shall be $5,000 for each calendar year during the term of this Agreement. The
Company shall reimburse Executive for such costs promptly after Executive
submits an invoice to Company. In order to preserve Executive's rights to
confidentiality, Executive may satisfy the requirement of submitting an invoice
by providing the Company with a copy of the facing page of the invoice showing
the fees and expenses for the services rendered and the general nature of the
services rendered but without any detail concerning the substance of the
services rendered.

                  (j)      EXECUTIVE SECURITY. During the term of this
Agreement, the Company shall provide to Executive such security services as is
reasonably necessary for the protection of the life and property of Executive
and Executive's immediate family members.

         2.5      PAYMENT OF EXCISE TAXES . If any payment received by Executive
under this Agreement or under the Consulting Agreement provided for in Section
4.3(i), as a result of or following any termination of employment under this
Agreement is subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986 (as amended from time to time, the "Code"), or any
successor or similar provision of the Code (the "Excise Tax"), the Company shall
pay Executive an additional cash amount (the "Gross Up") such that the net
after-tax amount received by Executive under this Agreement is the same as if
the Excise Tax had not applied to any payments made under this Agreement. The
Company shall pay such amounts promptly after the calculation referred to in
Section 2.6 has been made.

         2.6      CERTAIN ADJUSTMENT PAYMENTS . For purposes of determining the
Gross Up, Executive shall be deemed to pay the federal income tax at the highest
marginal rate of taxation (currently 39.6%) in the calendar year in which the
payment to which the Gross Up applies is to be made. The determination of
whether such Excise Tax is payable and the amount of the Excise Tax shall be
made upon the opinion of a national accounting firm selected by Executive and
reasonably acceptable to the Company. If such opinion is not finally accepted by
the Internal Revenue Service upon audit or otherwise, then appropriate
adjustments shall be computed (with interest at the rate required to be paid by
Executive under the Code and with Gross Up, if applicable) by such tax counsel
based upon the final amount of the Excise Tax so determined, and (a) any
additional amount due Executive as a result of such adjustment shall be paid to
Executive by the Company in cash in a lump sum within 30 days after such
computation, or (b) any amount due the Company as a result of such adjustment
shall be paid to the Company by Executive in cash in a lump sum within 30 days
after such computation.

                                   ARTICLE III
                            TERMINATION OF EMPLOYMENT

         3.1      DEATH OR RETIREMENT OF EXECUTIVE . Executive's employment
under this Agreement shall automatically terminate upon the death or Retirement
of Executive.

         3.2      BY EXECUTIVE . Executive shall be entitled to terminate his
employment under this Agreement by giving Notice of Termination to the Company:


                                       7
<PAGE>
                  (a)      for Good Reason;

                  (b)      at any time without Good Reason.

         3.3      BY COMPANY . The Company shall be entitled to terminate
Executive's employment under this Agreement by giving Notice of Termination to
Executive:

                  (a)      in the event of Executive's Total Disability;

                  (b)      for Cause; and

                  (c)      at any time without Cause.


                                   ARTICLE IV
                   COMPENSATION UPON TERMINATION OF EMPLOYMENT

         If Executive's employment under this Agreement is terminated prior to
December 31, 2005 (or if the provisions of clause (y) of Section 4.3 apply),
then except for any other rights or benefits specifically provided for in this
Agreement following his period of employment, the Company shall be obligated to
provide compensation and benefits to Executive only as follows:

         4.1      UPON TERMINATION FOR DEATH OR TOTAL DISABILITY . If
Executive's employment under this Agreement is terminated by reason of his death
or Total Disability, the Company shall:

                  (a)      pay Executive (or his estate) any Base Salary which
has accrued but not been paid as of the termination date (the "Accrued Base
Salary");

                  (b)      pay Executive (or his estate) for unused vacation
days and paid holidays accrued as of the termination date in an amount equal to
his Base Salary multiplied by a fraction the numerator of which is the number of
accrued unused vacation days and paid holidays, and the denominator of which is
260 (the "Accrued Vacation Payment");

                  (c)      reimburse Executive (or his estate) for expenses
incurred by him prior to the date of termination which are subject to
reimbursement pursuant to this Agreement (the "Accrued Reimbursable Expenses");

                  (d)      provide to Executive (or his estate) any accrued and
vested benefits required to be provided by the terms of any Company-sponsored
benefit plans or programs (the "Accrued Benefits"), together with any benefits
required to be paid or provided in the event of Executive's death or disability
under applicable law;

                  (e)      pay Executive (or his estate) any Incentive Bonus or
other bonus with respect to a prior fiscal quarter which has accrued but has not
been paid;


                                       8
<PAGE>
                  (f)      pay Executive (or his estate) any payment under the
Deferred Compensation Plan which has accrued but has not been paid to the
account provided for in such plan;

                  (g)      pay Executive the amounts due under Section 2.4; and

                  (h)      permit Executive (or his estate) to exercise all
vested unexercised stock options (including stock options which by their terms
become exercisable upon death or disability) and warrants outstanding at the
termination date in accordance with the terms of the plans and agreements
pursuant to which such options or warrants were issued.

         4.2      UPON TERMINATION BY COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT
GOOD REASON . If Executive's employment is terminated by the Company for Cause,
or if Executive terminates his employment with the Company prior to December 6,
2005, other than (x) upon Executive's death or Total Disability or (y) for Good
Reason, the Company shall:

                  (a)      pay Executive the Accrued Base Salary;

                  (b)      pay Executive the Accrued Vacation Payment;

                  (c)      reimburse Executive for the Accrued Reimbursable
Expenses;

                  (d)      provide Executive the Accrued Benefits, together with
any benefits required to be paid or provided under applicable law;

                  (e)      pay Executive any accrued Incentive Bonus or other
bonus with respect to a prior fiscal quarter which has accrued but has not been
paid;

                  (f)      permit Executive to exercise all vested unexercised
stock options and warrants outstanding at the termination date in accordance the
terms of the plans and agreements pursuant to which such options and warrants
were issued.

         4.3      UPON TERMINATION BY THE COMPANY WITHOUT CAUSE, OR BY EXECUTIVE
FOR GOOD REASON. If Executive's employment is terminated by the Company without
Cause, or if Executive's employment is terminated by Executive for Good Reason,
or upon a Change in Control of the Company, the Company shall:

                  (a)      pay Executive the Accrued Base Salary;

                  (b)      pay Executive the Accrued Vacation Payment;


                                       9
<PAGE>
                  (c)      reimburse Executive the Accrued Reimbursable
Expenses;

                  (d)      provide Executive the Accrued Benefits, together with
any benefits required to be paid or provided under applicable law;

                  (e)      pay Executive any Incentive Bonus or other bonus with
respect to a prior fiscal quarter which has accrued but has not been paid;

                  (f)      pay Executive, the greater of: (1) such salary and
bonus payments, calculated at the Threshold level, due under the remaining term
of the contract, or (2) salary and bonus payment, calculated at the minimum
level, equal to 2 years of service to the Company.

                  (g)      maintain in full force and effect, for Executive's
and his eligible beneficiaries continued benefit, all of the General Benefits,
for a period of 24 months following the termination date of his employment under
this Agreement, except to the extent that, as to any such General Benefit,
Executive receives the substantial equivalent of such General Benefit as a
result of his employment with another employer after his termination date. If
Executive's continued participation in any General Benefit is not permitted
under the terms of the plan, program or arrangement under which the General
Benefit was provided to the Executive by the Company, the Company shall arrange
to provide Executive with the General Benefit substantially similar to the
General Benefit which Executive would have been entitled to receive under such
plan, program or arrangement;

                  (h)      Executive shall have the right to exercise all
unexercised stock options and warrants outstanding at the termination date in
accordance with the terms of the plans and agreements pursuant to which such
options and warrants were issued, including the provisions of Section 2.3(c).

         4.4      UPON TERMINATION BY THE COMPANY OR RESIGNATION BY THE
EXECUTIVE, FOLLOWING A CHANGE IN CONTROL OF THE COMPANY. If Executive's
employment is terminated by the Company following a Change in Control of the
Company, or resignation from the Company by the Executive within the first
ninety (90) days following a Change in Control, the Company shall:

                  (a)      pay Executive the Accrued Base Salary;

                  (b)      pay Executive the Accrued Vacation Payment;

                  (c)      reimburse Executive the Accrued Reimbursable
Expenses;

                  (d)      provide Executive the Accrued Benefits, together with
any benefits required to be paid or provided under applicable law;


                                       10
<PAGE>
                  (e)      pay Executive any Incentive Bonus or other bonus with
respect to a prior fiscal quarter which has accrued but has not been paid;

                  (f)      in the event of a Change in Control of the Company,
Executive shall be entitled to receive payment representing 4 years of salary
and bonus, calculated at the minimum level, with an agreed minimum payment of at
least one million dollars ($1,000,000);

                  (g)      maintain in full force and effect, for Executive's
and his eligible beneficiaries continued benefit, all of the General Benefits,
for a period of 24 months following the termination date of his employment under
this Agreement, except to the extent that, as to any such General Benefit,
Executive receives the substantial equivalent of such General Benefit as a
result of his employment with another employer after his termination date. If
Executive's continued participation in any General Benefit is not permitted
under the terms of the plan, program or arrangement under which the General
Benefit was provided to the Executive by the Company, the Company shall arrange
to provide Executive with the General Benefit substantially similar to the
General Benefit which Executive would have been entitled to receive under such
plan, program or arrangement; and

                  (h)      Executive shall have the right to exercise all
unexercised stock options and warrants outstanding at the termination date in
accordance with the terms of the plans and agreements pursuant to which such
options and warrants were issued, including the provisions of Section 2.3(c).

         4.5      CALL RIGHTS.

                  (a)      Upon any termination of employment under Section 4.1
or Section 4.3, the Company shall have the right to redeem any stock option,
whether vested or unvested, that is held by Executive as of the date of such
termination and that is designated by the Company in a notice to Executive (a
"Call Election"), at a price equal to 100% of the Black-Scholes Value of such
stock option.

                  (b)      The Black-Scholes Value for any option shall be
determined using the Black-Scholes formula but in any event shall be not less
than the Market Price for the common stock on the date the Call Election is made
(the "Calculation Date"), less the exercise price under the stock option. The
Black-Scholes Value shall be calculated by an independent major investment
banking firm selected by the Company, subject to the approval of Executive; if
Executive does not approve the firm selected by the Company, then the
Black-Scholes Value shall be the average of the amount calculated by the firm
selected by Executive and a major investment banking firm selected by the
Company. The Black-Scholes Value shall be calculated as of the Calculation Date,
and any unvested options for this purpose shall be treated as if fully vested.
The Company shall bear the cost of the firm or firms that conduct the
Black-Scholes valuation. In determining the Black-Scholes Value of any option,
the following rules will apply:

                           (i)      The time to maturity of any option will be
         equal to the period beginning on the Calculation Date and ending on the
         final expiration date of the option


                                       11
<PAGE>
         (the "Option Life"), without regard to any analysis of the effect, or
         likelihood of occurrence, of any event that might cause the expiration
         date to occur sooner.

                           (ii)     The "risk free rate" as to any option will
         be determined as of the Calculation Date, by the U.S. Treasury YTM,
         with a maturity approximately equal to the Option Life, as stated by
         the Federal Reserve.

                           (iii)    The volatility factor will be based on an
         historical sampling of daily stock prices over a period of not less
         than 24 months from the valuation date, and not more than 120 months
         from the valuation date, whichever period yields the highest value.

                           (iv)     No illiquidity or other discount will be
         applied to the value determined by application of the Black-Scholes
         formula, whether by reason of the fact that the options are not
         publicly traded or otherwise.

                  (c)      Unless Executive consents, the Company shall not
         exercise a Call Election to the extent that the Company would be
         unable, without violating the provisions of the General Corporation Law
         of Nevada or the fraudulent conveyance laws of any state, to pay any
         amount due to Executive under Section 4.4(a); if Executive consents to
         the exercise of a Call Election by the Company under such
         circumstances, then, to the extent that the Company is unable, without
         violating the provisions of the General Corporation Law of Nevada, to
         pay any amount due Executive under Section 4.4(a), the Company's
         obligation to make such payment shall be deferred, but only until the
         legal restriction lapses, at which time the payment shall be due, and
         in any event, all amounts that otherwise would have been payable but
         for such restriction shall bear interest at the rate provided for in
         Section 6.11, from the date such payments would have been payable (but
         for such legal restriction) until the date they actually are made.

                  (d)      All payments due by the Company in connection with
         any Call Election are payable within 10 business days after the Call
         Election is made.

                  (e)      Any stock option redeemed by the Company under
         Section 4.4(a) shall be cancelled.


                                    ARTICLE V
                              RESTRICTIVE COVENANTS

         5.1      CONFIDENTIAL INFORMATION AND MATERIALS. Executive agrees that
during the course of his employment with the Company, he has obtained and shall
likely obtain in the future "Confidential Information." "Confidential
Information" is information concerning the Company which the Company attempts to
keep confidential, has not been publicly disclosed by the Company, is not a
matter of common knowledge in the airline industry, and was not known by
Executive prior to his employment by the Company, including certain information
relating to the business plans, marketing plans or programs, forecasts,
statistics relating to routes and markets,


                                       12
<PAGE>
contracts, customers, compensation arrangements, and business opportunities.
Executive agrees that the Confidential Information is proprietary to the
Company.

         5.2      GENERAL KNOWLEDGE. The general skills and experience gained by
Executive during Executive's employment or engagement by the Company, and
information publicly available without breach of any duty owed by any person to
the Company or generally known within the airline industry, is not considered
Confidential Information. Executive is not restricted from working with a person
or entity which has independently developed information or materials similar to
the Confidential Information, but in such a circumstance, Executive agrees not
to disclose the fact that any similarity exists between the Confidential
Information and the independently developed information and materials, and
Executive understands that such similarity does not excuse Executive from the
non-disclosure and other obligations in this Agreement.

         5.3      EXECUTIVE OBLIGATIONS AS TO CONFIDENTIAL INFORMATION AND
MATERIALS. During Executive's employment or engagement by the Company, Executive
shall have access to the Confidential Information and shall occupy a position of
trust and confidence with respect to the Confidential Information and the
Company's affairs and business. Executive agrees to take the following steps to
preserve the confidential and proprietary nature of the Confidential
Information:

                  (a)      NON-DISCLOSURE. During and for a period of two years
after Executive's Employment or engagement by the Company, Executive shall not
use, disclose or otherwise permit any person or entity access to any of the
Confidential Information other than as required in the performance of
Executive's duties with the Company and other than is required to be disclosed
by law or by any court, administrative agency, or arbitration panel.

                  (b)      PREVENT DISCLOSURE. During and for a period of two
years after Executive's Employment or engagement by the Company, except as
provided in Section 5.3(a), Executive shall take all reasonable precautions to
prevent disclosure of the Confidential Information to unauthorized persons or
entities, other than is required to be disclosed by law or by any court,
administrative agency, or arbitration panel.

                  (c)      RETURN ALL MATERIALS. Upon termination of Executive's
employment or engagement by the Company for any reason whatsoever, or earlier if
requested by the Company, Executive shall deliver to the Company all tangible
materials embodying the Confidential Information, including any documentation,
records, listings, notes, data, sketches, drawings, memoranda, models, accounts,
reference materials, samples, machine-readable media and equipment which in any
way relate to the Confidential Information and shall not retain any copies of
any of the above materials.


                                       13
<PAGE>
                                   ARTICLE VI
                                  MISCELLANEOUS

         6.1      DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:

                  (a)      "Accrued Base Salary" - as defined in Section 4.1(a);

                  (b)      "Accrued Benefits" - as defined in Section 4.1(d);

                  (c)      "Accrued Reimbursable Expenses" - as defined in
Section 4.1(c);

                  (d)      "Accrued Vacation Payment" - as defined in Section
4.1(b);

                  (e)      "Base Salary" - as defined in Section 2.1;

                  (f)      "Board" - shall mean the Board of Directors of the
Company;

                  (g)      "Cause" shall mean the occurrence of any of the
following:

                           (i)      Executive's willful misconduct with respect
         to the Company's business which results in a material detriment to the
         Company;

                           (ii)     Executive is convicted of, or enters a plea
         of nolo contendere with respect to, a felony offense; or

                           (iii)    the continued failure or refusal by
         Executive, other than by reason of Executive's disability, to perform
         the duties required of him by this Agreement, which failure or refusal
         is material and is not cured within 45 days following receipt by
         Executive of written notice from the Board specifying the factors or
         events constituting such failure or refusal, except that, as to any
         failure or refusal that is curable but cannot reasonably be cured
         within such 45-day period, no Cause shall be deemed to have occurred
         unless Executive fails to take reasonable steps to cure such failure or
         refusal within such 45-day period, and furthermore, no failure of
         Executive to satisfy any goals, forecasts, or other financial or
         business criteria established by the Company, standing alone, shall
         constitute Cause.

                  (h)      "Change of Control" shall mean and shall be deemed to
have occurred if:

                           (i)      After the date of this Agreement, any
         "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
         Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
         any successor provision), or any other persons who the Board of
         Directors determines in good faith is acting as a group, becomes the
         beneficial owner


                                       14
<PAGE>
         (within the meaning of Rule 13d-3 under the Exchange Act or any
         successor provision) directly or indirectly of securities of the
         Company representing 30% or more of the combined voting power of the
         Company's then outstanding securities ordinarily having the right to
         vote at an election of directors;

                           (ii)     Individuals who, as of the date of this
         Agreement, constitute the Board (the "Incumbent Board") cease for any
         reason to constitute at least 60% of the members of the Board, except
         that any person who becomes a member of the Board subsequent to the
         date of this Agreement whose election, or nomination for election by
         the Company's stockholders was approved by a vote of at least 60% of
         the members then comprising the Incumbent Board (other than an election
         or nomination of an individual whose initial assumption of office is in
         connection with an actual or threatened election contest relating to
         the election of directors of the Company) shall be, for purposes of
         this Agreement, considered as though such person were a member of the
         Incumbent Board; or

                           (iii)    Consummation of

                                    (A) a reorganization, merger, consolidation,
                           or sale or other disposition of all or substantially
                           all of the assets of the Company, in each case, with
                           or to a corporation or other person or entity

                                             (1) of which persons who were the
                                    holders of each class of the Company's
                                    capital stock immediately prior to such
                                    transaction do not receive voting
                                    securities, as a result of their ownership
                                    of such capital stock immediately prior to
                                    such transaction, that constitute both

                                             (x) more than 51% of each class of
                                    capital stock and

                                             (y) more than 51% of the combined
                                    voting power of the outstanding voting
                                    securities entitled to vote generally in the
                                    election of directors of the reorganized,
                                    merged, consolidated or purchasing
                                    corporation (or in the case of a
                                    non-corporate person or entity, functionally
                                    equivalent voting power), or

                                             (2) 80% of the members of the Board
                                    of which corporation (or functional
                                    equivalent in the case of a non-corporate
                                    person or entity) were not members of the
                                    Incumbent Board at the time of the execution
                                    of the initial agreement providing for such
                                    reorganization, merger, consolidation or
                                    sale;

                                    (B) the sale or other disposition of any
                           material route system operated by the Company or any
                           subsidiary (regardless of how such sale or
                           disposition is effected); for this purpose a route
                           system is "material" if the gross revenues
                           attributable to such route system exceed or would
                           exceed


                                       15
<PAGE>
                           50% of the Company's gross revenues on a consolidated
                           basis or if the gross profits reasonably attributable
                           to such route system exceed or would exceed 50% of
                           the gross profits of the Company on a consolidated
                           basis, either

                                             (x) for the fiscal year of the
                                    Company immediately prior to the sale or
                                    disposition or

                                             (y) based on reasonable
                                    projections, for the fiscal year in which
                                    the sale or disposition occurs; or

                                    (C) a liquidation or dissolution of the
                           Company.

                  (i)      "Confidential Information" - as defined in Section
5.1;

                  (j)      "Continued Benefits" - as defined in Section 4.3(g);

                  (k)      "Good Reason" shall mean the occurrence of any of the
following:

                           (i)      Any change by the Company in Executive's
         title, or any significant diminishment in Executive's function, duties
         or responsibilities from those associated with his functions, duties or
         responsibilities as of December 31, 2001;

                           (ii)     Any material breach of this Agreement or any
         other agreement between the Company and Executive (and for purposes of
         this Agreement, any default by the Company to make any payment or to
         provide any fringe benefit shall be considered material) which remains
         uncured for a period of 10 days after Executive gives the Company
         notice of such breach specifying in reasonable detail the event(s)
         constituting such breach;

                           (iii)    Except with Executive's prior written
         consent, relocation of Executive's principal place of employment to a
         location outside of Maricopa County, Arizona, or requiring Executive to
         travel on the Company's business more than is required by Section 1.4;
         or

                  (l).     "Incentive Bonus" - as defined in Section 2.2;

                  (m)      "Market Price" means the officially quoted closing
price of the common stock of the Company, as reported by the principal exchange
on which the common stock of the Company is traded for the date in question. If
there are no transactions on such date, the Market Price shall be determined as
of the immediately preceding date on which there were transactions. If no such
prices are reported on such exchange, then Market Price shall mean the average
of the high and low sale prices for the common stock of the Company (or if no
sales prices are reported, the average of the high and low bid prices) as
reported by a quotation system of general circulation to brokers and dealers. If
the common stock of the Company is not traded on any


                                       16
<PAGE>
exchange or in the over-the-counter market, the Market Price of the common stock
of the Company on any date shall be determined in good faith by the parties.

                  (n)      "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision of this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated. Each Notice of Termination shall be delivered at least 30 days prior
to the effective date of termination;

                  (o)      "Prime Rate" means the prime rate announced by The
Wall Street Journal from time to time.

                  (p)      "Retirement" shall mean normal retirement at age 65;

                  (q)      "Threshold Bonus" shall mean a cash bonus equal to
$80,000 (which is based on the "Threshold" level of bonus under "Bonus Level
Fiscal 2002" as set forth in Exhibit A).

                  (r)      "Total Disability" or "Totally Disabled" shall mean
Executive's failure substantially to perform his duties under this Agreement on
a full-time basis for a period exceeding 180 consecutive days or for periods
aggregating more than 180 days during any twelve-month period as a result of
incapacity due to physical or mental illness, or the occurrence or existence of
a condition that would permanently render Executive unable to substantially
perform his duties under this Agreement on a full-time basis. If there is a
dispute as to whether Executive is or was physically or mentally unable to
perform his duties under this Agreement, such dispute shall be submitted for
resolution to a licensed physician selected by Executive but subject to the
reasonable approval of the Company. If such a dispute arises, Executive shall
submit to such examinations and shall provide such information as such physician
may request, and the determination of the physician as to Executive's physical
or mental condition shall be binding and conclusive.

         6.2      KEY MAN INSURANCE. In addition to the insurance policy
described in Section 2.4(c), the Company shall have the right, in its sole
discretion, to purchase "key man" insurance on the life of Executive. The
Company shall be the owner and beneficiary of any such policy. If the Company
elects to purchase such a policy, Executive shall take such physical
examinations and supply such information as may be reasonably requested by the
insurer.

         6.3      SUCCESSORS, BINDING AGREEMENT. This Agreement shall be binding
upon and run to the benefit of the Company, its successors and assigns, and
shall inure to the benefit of and be enforceable by Executive's personal or
legal representatives, beneficiaries, designees, executors, administrators,
heirs, distributees, devisees and legatees.

         6.4      MODIFICATION; NO WAIVER. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties to this
Agreement. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against


                                       17
<PAGE>
the enforcement of any provision of this Agreement, except by written instrument
by the party charged with such waiver or estoppel. No such written waiver shall
be deemed a continuing waiver unless specifically stated in such waiver, and
each such waiver shall operate only as to the specific term or condition waived
and shall not constitute a waiver of such term or condition for the future or as
to any other term or condition.

         6.5      SEVERABILITY. The covenants and agreements contained in this
Agreement are separate and severable and the invalidity or unenforceability of
any one or more of such covenants or agreements, if not material to the
employment arrangement that is the basis for this Agreement, shall not affect
the validity or enforceability of any other covenant or agreement contained in
this Agreement. If, in any judicial proceeding, a court shall refuse to enforce
one or more of the covenants or agreements contained in this Agreement because
the duration thereof is too long, or the scope thereof is too broad, it is
expressly agreed between the parties to this Agreement that such duration or
scope shall be deemed reduced to the extent necessary to permit the enforcement
of such covenants or agreements.

         6.6      NOTICES. All the notices and other communications required or
permitted under this Agreement shall be in writing and shall be delivered
personally or sent by registered or certified mail, return receipt requested, to
the parties to this Agreement at the following addresses:

                           If to the Company, to it at:

                           Mesa Air Group, Inc.
                           410 North 44th Street, Suite 700
                           Phoenix, AZ  85008
                           Attn:    Chairman of Board of Directors and
                                    General Counsel

                           If Executive, to him at:

                           410 N. 44th Street, Suite 700
                           Phoenix, AZ 85008

Notices hall be deemed to have been given and received upon personal delivery or
three business days after having been deposited, if sent by registered or
certified mail.

         6.7      ASSIGNMENT. This Agreement and any rights under this Agreement
shall not be assignable by either party without the prior written consent of the
other party except as otherwise specifically provided for in this Agreement.

         6.8      ENTIRE UNDERSTANDING. This Agreement (together with any
Exhibits incorporated as a part of this Agreement) constitutes the entire
understanding between the parties to this Agreement and no agreement,
representation, warranty or covenant has been made by either party except as
expressly set forth in this Agreement.


                                       18
<PAGE>
         6.9      EXECUTIVE'S REPRESENTATIONS. Executive represents and warrants
that neither the execution and delivery of this Agreement nor the performance of
his duties under this Agreement violates the provisions of any other agreement
to which he is a party or by which he is bound.

         6.10     INTEREST ON PAST DUE AMOUNTS; ATTORNEYS FEES. All amounts
under this Agreement that are not paid when due shall bear interest at the rate
of 4% per annum above the Prime Rate, from the date such payments were due until
paid. In addition, any party who breaches this Agreement shall be obligated to
pay the reasonable attorneys fees and costs incurred by the other party in
seeking to enforce the terms of this Agreement.

         6.11     GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED FOR ALL PURPOSES BY THE LAWS OF THE STATE OF ARIZONA
APPLICABLE TO CONTRACTS EXECUTED AND WHOLLY PERFORMED WITHIN SUCH STATE.

                                        Mesa Air Group, Inc. (Company)


                                        By:      /S/ Michael Lotz
                                           -----------------------------------
                                        Title:   President
                                              --------------------------------



                                                 /S/ George Murnane III
                                        --------------------------------------
                                        George Murnane, III (Executive)


                                       19
<PAGE>
                                    EXHIBIT A
                                 INCENTIVE BONUS

<TABLE>
<CAPTION>
        Bonus Level                  % Change                   Quarterly                   Annual
      Fiscal 2002 (1)               in EPS (2)                 Amount (3)                 Amount (4)
      ---------------               ----------                 ----------                 ----------
<S>                                 <C>                        <C>                        <C>
          Minimum                    Positive                   $ 10,000                  $  40,000
         Threshold                      5%                      $ 20,000                  $  80,000
          Target                       10%                      $ 30,000                  $ 120,000
          Maximum                      15%                      $ 45,000                  $ 180,000
</TABLE>


Note 1 - For each fiscal year only the % Change in EPS will be reviewed. The
         % Change in EPS will not be greater than the initial year.

Note 2 - EPS is defined as gross profit/loss before taxes and one-time
         non-recurring items divided by basic outstanding shares. These
         percentages will change annually but not be greater than the initial
         year.

Note 3 - The Quarterly Amount will be paid for each of the first three fiscal
         quarters based on the 10Q financial reports filed with the SEC. Then
         Annual Amount will be paid for the fourth quarter less any amounts paid
         for the first three quarters based on the 10K financial reports filed
         with the SEC. These amounts will not be decreased over the term of the
         agreement.

Note 4 - These amounts will not be decreased over the term of the agreement.


                                        i
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            PAGE
<S>                                                                                                         <C>
 ARTICLE I - DUTIES AND TERM.............................................................................     1
          I.1     Employment.............................................................................     1
          1.2     Position and Responsibilities..........................................................     1
          1.3     Term...................................................................................     1
          1.4     Location...............................................................................     2

 ARTICLE II - COMPENSATION...............................................................................     2
          2.1     Base Salary............................................................................     2
          2.2     Bonus Payment..........................................................................     2
          2.3     Stock Options..........................................................................     3
          2.4     Additional Benefits....................................................................     3
          2.5     Payment of Excise Taxes................................................................     7
          2.6     Certain Adjustment Payments............................................................     7

 ARTICLE III - TERMINATION OF EMPLOYMENT.................................................................     7
          3.1     Death or Retirement of Executive.......................................................     7
          3.2     By Executive...........................................................................     8
          3.3     By Company.............................................................................     8

 ARTICLE IV - COMPENSATION UPON TERMINATION OF EMPLOYMENT................................................     8
          4.1     Upon Termination for Death or Total Disability.........................................     8
          4.2     Upon Termination by Company for Cause or by
                  Executive Without Good Reason..........................................................     9
          4.3     Upon Termination by the Company Without
                  Cause, or by Executive for Good Reason.................................................     9
          4.4     Upon Termination by the Company or Resignation
                  by the Executive, following a Change of Control
                  of the Company.........................................................................    10
          4.5     Call Rights............................................................................    11

 ARTICLE V - RESTRICTIVE COVENANTS.......................................................................    12
          5.1     Confidential Information and Materials.................................................    12
          5.2     General Knowledge......................................................................    13
          5.3     Executive Obligations as to Confidential Information and Materials.....................    13

 ARTICLE VI - MISCELLANEOUS..............................................................................    14
          6.1     Definitions............................................................................    14
          6.2     Key Man Insurance......................................................................    17
          6.3     Successors, Binding Agreement..........................................................    17
</TABLE>


                                       ii
<PAGE>
<TABLE>
<S>                                                                                                         <C>
          6.4     Modification; No Waiver................................................................    17
          6.5     Severability...........................................................................    18
          6.6     Notices................................................................................    18
          6.7     Assignment.............................................................................    18
          6.8     Entire Understanding...................................................................    18
          6.9     Executive's Representations............................................................    19
          6.10    Interest on Past Due Amounts; Attorneys Fees...........................................    19
          6.11    Governing Law..........................................................................    19
</TABLE>


                                      iii

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>18
<FILENAME>p67334exv10w29.txt
<DESCRIPTION>EX-10.29
<TEXT>
<PAGE>
                                                                   Exhibit 10.29

                           THREE GATEWAY OFFICE LEASE

     THIS LEASE is made this 16th day of October, 1998, by and between DMB
PROPERTY VENTURES LIMITED PARTNERSHIP, a Delaware limited partnership
("LANDLORD"), and MESA AIR GROUP, INC., a Nevada corporation ("TENANT").

     Landlord hereby leases to Tenant and Tenant leases from Landlord for the
term and upon the conditions and agreements set forth in this Lease a portion
of the real property described on EXHIBIT "A", as illustrated by cross-hatching
or otherwise on the plan attached as EXHIBIT "B", consisting of 21,003 rentable
square feet of space (the "PREMISES") known as Suite 700 in Three Gateway (the
"BUILDING") on the 7th floor. The address of the Building is 410 North 44th
Street, Phoenix, Arizona 85008.

     The rentable square footage of the Premises has been measured in
accordance with the most recent standards established by the Building Owners
and Managers Association (BOMA) for the measurement of rentable square footage
of office space.

                             1. TERM AND POSSESSION

     (a)  Except as otherwise expressly provided in this Lease, the term of
this Lease, and Tenant's obligation to pay rent, shall be for a period of one
hundred twenty (120) months (the "LEASE TERM"), commencing on the Commencement
Date. For purposes of this Lease, the COMMENCEMENT DATE shall be the earlier of
(i) sixty (60) days after the issuance of a City of Phoenix building permit,
provided Landlord's construction obligations under this Lease are substantially
completed, or (ii) the date upon which Tenant begins its business operation in
the Premises. Upon request of either party after the term has commenced,
Landlord and Tenant shall jointly execute a memorandum confirming the
Commencement Date. The Anticipated Commencement Date is November 1, 1998.
Notwithstanding anything to the contrary contained herein, Landlord shall allow
Tenant access to the Premises at least fourteen (14) days prior to the
Commencement Date ("Early Access") in order to install Tenant's equipment,
furnishings and trade fixtures, it being acknowledged that any occupancy of the
Premises for such purposes shall not trigger the Commencement Date or the
payment of rent. Tenant shall not be entitled to Early Access unless Tenant has
complied with the Early Access Indemnity Agreement, the form of which is
attached hereto as Exhibit "E".

     (b)  Upon the termination or expiration of this Lease or upon the
termination of Tenant's right of possession, whether by lapse of time or
otherwise, Tenant shall at once surrender possession of the Premises to
Landlord and remove all of Tenant's property as provided in Article 10.

     (c)  Tenant shall have no right to hold over after the expiration of the
term of this Lease without Landlord's consent. If, with Landlord's consent,
Tenant holds over after the expiration of this Lease, Tenant shall become a
tenant from month to month only, upon all of the terms of this Lease except
that the amount of the Base Rent shall be increased to an amount equal to 125%
of the Base Rental Rate in effect immediately prior to the expiration.

     (d)  OPTION TO EXPAND
          Provided no Event of Default exists under this Lease after any
applicable cure period has expired, Tenant shall have a single option
("EXPANSION OPTION") to expand the Premises into any available additional space
in the Building, except any space that is subject to renewal by a current
tenant, or any space that is subject to options, rights of first refusal or
offer, or similar rights in effect at the time of Tenant's notice to Landlord,
for a term coterminous with this Lease, on the terms set forth in this Article
1(d) and otherwise set forth in this Lease, except that the Tenant Improvement
Allowance (as herein defined) shall be prorated based on the number of months
remaining in the Lease Term. The Expansion Option may be exercised with one
hundred twenty (120) days prior written notice to Landlord. Tenant's obligation
to pay rent on the expansion space shall commence on the earlier of (i) the
date upon which an architect certifies to Tenant that Landlord's construction
obligations under this Lease with respect to such expansion space are
substantially complete or (ii) the date upon which Tenant begins its business
operation in the expansion space. Tenant acknowledges that Landlord will
require a minimum of one hundred twenty (120) days after lease documents are
executed to substantially complete the tenant improvements in the expansion
space.

     (e)  RIGHT OF FIRST OFFER
          Provided no Event of Default exists under this Lease after any
applicable cure period has expired, Tenant shall have a right of first offer to
lease any contiguous available space in the Building during the initial Lease
Term. If Landlord desires to offer for lease any such contiguous available
space, Landlord shall so notify Tenant in writing, which notice (the "FIRST
OFFER NOTICE") shall also include the

                                       1

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                                                                 -----------
                                                                   INITIALS

<PAGE>
new Base Rent amount for such space (calculated in accordance with this Article
1(e)). Tenant shall have five (5) business days following receipt of the First
Offer Notice to notify Landlord of its intention to lease such space, which
notice of intent from Tenant (the "NOTICE OF INTENT") shall be irrevocable. If
Tenant gives such Notice of Intent, the terms of such lease with respect to the
expansion space shall be the same terms and conditions as this Lease (including
without limitation the same initial Lease Term expiration date and Extension
Term), except that the Base Rent for such space shall be equal to the average
prevailing Base Rent per rentable square foot in the Building. Notwithstanding
anything to the contrary herein, if there is less than five (5) years remaining
in the initial Lease Term, then the Tenant Improvement Allowance for such
contiguous space shall be prorated based on the number of months remaining in
the initial Lease Term. If Tenant fails to give the Notice of Intent within five
(5) business days following receipt of Landlord's First Offer Notice, then the
right set forth in this Article 1(f) shall automatically terminate and Landlord
shall be free to market such space to potential tenants, with no further
obligation to re-offer such space to Tenant.

     (f)  RIGHT OF FIRST REFUSAL.

          Provided no Event of Default exists under this Lease after any
applicable cure period has expired, Tenant shall have a continuing right of
first refusal (the "RIGHT OF REFUSAL") to lease any space on the 6th or the 8th
floors of the Building which is available during the Lease Term (a "RIGHT OF
REFUSAL SPACE"). Landlord shall offer any Right of Refusal Space to Tenant on
the same terms and conditions as those proposed to and accepted by an interested
third party (inclusive of a tenant improvement allowance, base year and rental
rate) pro rated to reflect a coterminous lease. Tenant shall have two (2)
business days after receipt of Landlord's written notice in which to exercise
the Right of Refusal. If Tenant has not responded to Landlord within such 2-day
period, then Tenant shall be deemed to have elected not to exercise the Right of
Refusal. If Tenant elects not to exercise the Right of Refusal, then Landlord
shall have one hundred eighty (180) days during which to execute a lease with
any third party for the Right of Refusal Space at materially the same terms
offered to Tenant without again offering such the Right of Refusal Space to
Tenant. Notwithstanding anything to the contrary herein, if Tenant exercises its
Right of First Refusal prior to June 30, 1999, the terms shall be on the same
terms and conditions as set forth in this Lease.

     The parties acknowledge and agree that if Tenant exercises any of the
options set forth above, this Lease shall be amended, as of the date of the
exercise of option to reflect the exercise of such option. Notwithstanding
anything set forth herein to the contrary, if Tenant exercises the Right of
First Refusal, Right of First Offer or Option to Expand during months 85 to 120
of the Lease Term, then Tenant also must exercise its Option to Extend by the
Option Exercise Date as set forth in Article 1(g) hereof.

     (g)  OPTION TO EXTEND.

          Provided no Event of Default exists under this Lease after any
applicable cure period has expired, Tenant shall have the option to extend the
Lease Term for two (2) additional terms of sixty (60) months each (each such
term to be referred to herein as an "EXTENSION TERM"). Tenant shall exercise
each option by giving Landlord notice (the "OPTION EXERCISE NOTICE") of exercise
no earlier than three hundred sixty-five (365) days and no later than one
hundred eighty (180) days prior to the expiration date of the Initial Lease Term
or the then-expiring Extension Term, as applicable (the "OPTION EXERCISE DATE").
If Tenant elects to extend the Initial Lease Term or any Extension Term of this
Lease, such Extension Term shall be upon and subject to all of the terms,
covenants and conditions of this Lease, except:

          The Base Rent per rentable square foot during each Extension Term
shall be the greater of (a) the Base Rent per rentable square foot in effect
immediately prior to the expiration of each Extension Term or (b) a rate equal
to ninety-five percent (95%) of the average prevailing Base Rent per rentable
square foot in the Building (on leases with a five (5) year term) for all new
leases executed during the six (6) month period immediately preceding the Option
Exercise Notice ("COMPARABLE LEASES"). If there were no leases executed in the
Building during such six (6) month period, then Comparable Leases in the twelve
(12) months prior to the date of the Option Exercise Notice will be used to
determine the average prevailing Base Rent per rentable square foot in the
Building. The average prevailing Base Rent shall be reduced by concessions then
being offered or granted by Landlord to tenants in the Building, including free
or deferred rents and moving allowances, and tenant improvement allowances for
renewing Tenants only. Upon request by Tenant, not less than thirty (30) days
prior to the Option Exercise Date, prior to the expiration of the Lease Term,
Landlord shall give Tenant notice of the average prevailing Base Rent per
rentable square foot. If Tenant fails to exercise its option to extend hereunder
by the Option Exercise Date, then the option set forth in this Article 1(g)
shall automatically terminate and Landlord shall be free to market the Premises
to potential tenants.

          Refurbishment Allowance. Landlord will provide a refurbishment
allowance of $3.00 per usable square foot at the beginning of each Extension
Term.

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                                                                   INITIALS
<PAGE>
     (h)  OPTION TO TERMINATE.

          Notwithstanding anything to the contrary in this Lease, Tenant shall
have the option to terminate this Lease, effective as of the end of the sixtieth
(60th) month of the Lease Term, on the terms set forth in this Article 1(h). To
exercise such option, Tenant shall give notice to Landlord of such termination
no later than the end of the forty-eighth (48th) month of the Lease Term, which
notice shall be irrevocable. If such notice is given, Tenant shall pay to
Landlord no later than thirty (30) days prior to the termination date, as
consideration for exercise of this termination right, an amount equal to the
unamortized amount of tenant improvement costs and that portion of the leasing
commissions attributable to the second five (5) year period of the Lease Term,
plus at a return of 12% per annum on such amounts. If Tenant fails to give
timely notice to Landlord of such termination in accordance with this Article
1(h), Tenant shall be conclusively deemed to have forever waived such right to
terminate this Lease.

                                    2. RENT

     (a)  Base Rent. Tenant shall pay to Landlord during the term of this Lease
at the office of Landlord or at such other place as Landlord may designate,
without notice, demand, deduction or set-off, in equal monthly installments in
advance on the first day of each calendar month, Base Annual Rent in the amount
of:

Years 1 - 3 $23.00 per rentable square foot per year $483,069.00 annually;
$40,255.75 monthly
Years 4 - 7 $25.00 per rentable square foot per year $525,075.00 annually;
$43,756.25 monthly
Years 8 - 10 $27.00 per rentable square foot per year $567,081.00 annually;
$47,256.75 monthly

In the event the Commencement Date does not occur on the first day of a
calendar month, Tenant shall pay rent on the Commencement Date for the
fractional month on a pro rata basis.

     (b)  Nature of Payments. All sums required to be paid by Tenant under this
Lease, whether or not so designated, are rent.

     (c)  Late Charges and Interest. Any amount due from Tenant to Landlord
which is not paid when due shall bear interest at three percent (3%) in excess
of the prime rate as established from time to time by Bank One or its successor
in interest (the "Default Rate") from the due date until paid, but the payment
of such interest shall not excuse or cure any default by Tenant under this
Lease. In addition, any rent or other payment not paid within ten (10) days of
its due date shall be subject to five percent (5%) late charge representing the
additional costs and burdens of special handling. Notwithstanding anything to
the contrary contained herein, if payment of any monetary obligation payable
hereunder is received late more than twice in any twelve (12) month period, then
Tenant shall have ten (10) days after notice of non-payment is received to cure
such late payment before the late fee is assessed.

                       3. SECURITY DEPOSIT AND GUARANTIES

     Concurrently with the execution of this Lease, Tenant shall guaranty their
performance by posting a Letter of Credit in the form of Exhibit "F", in the
amount of $400,000. The Letter of Credit shall be released at the end of the
second (2nd) year of the Lease Term, provided that no Event of Default exists
after any applicable cure period has expired, and no Event of Default has ever
existed after any applicable cure period has expired under any provision of this
Lease.

                                     4. USE

     (a)  Tenant shall not use or occupy the Premises for any purpose other than
general office purposes without Landlord's prior written consent. Tenant shall
maintain, at all times, an average density no greater than one (1) person for
each two hundred (200) rentable square feet of the Premises.

     (b)  Tenant shall:

          (i)   Not use or permit upon the Premises anything that would
invalidate any policies of insurance now or hereafter carried on the Premises or
that will increase the rate of insurance on the Premises or the Building;

          (ii)  Pay all additional insurance premiums which may be caused by any
use which Tenant shall make of the Premises other than the permitted use
described in 4(a) above;

          (iii) Not in any manner deface or injure the Premises other than
ordinary wear and tear

                                       3


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                                                                   INITIALS
<PAGE>

and damage caused by a casualty or overload any floor of the Premises;

          (iv)    Not do anything or permit anything to be done upon the
Premises in any way creating a nuisance, or unreasonably disturbing any other
lessee in the Building or injuring the reputation of the Building, including,
without limitation, the playing of music audible outside the Premises and the
placement of signs in or displayed through any window or door;

          (v)     Intentionally omitted;

          (vi)    Not use the Premises for lodging or sleeping purposes;

          (vii)   Not commit or suffer to be committed any waste upon the
Premises;

          (viii)  Not violate any recorded restriction or covenant affecting the
Building, nor use the Premises for any purpose which would be in violation of
any exclusive rights or use granted to other tenants in the Building. Landlord
shall not grant exclusive rights which would prohibit Tenant from using the
Premises for the purposes stated in Article 4(a) above.


     (c)  Tenant, at Tenant's expense, shall comply with all present and future
federal, state and local laws, ordinances, orders, rules and regulations
(collectively, "LAWS"), and shall procure all permits, certificates, licenses
and other authorizations required by applicable Law relating to Tenant's
business or Tenant's use or occupancy of the Premises or Tenant's activities on
the Premises. Tenant shall make all reports and filings required by applicable
Laws. Tenant shall defend, indemnify and hold harmless Landlord and Landlord's
present and future officers, directors, employees, partners and agents from and
against all claims, demands, liabilities, fines, penalties, losses, costs and
expenses, including but not limited to costs of compliance, remedial costs, and
reasonable attorneys' fees, arising out of or relating to any failure to Tenant
to comply with applicable Laws. Without limiting the foregoing, Tenant shall
comply with all applicable Laws relating to environmental matters, and shall
defend, indemnify and hold harmless Landlord and Landlord's present and future
officers, directors, employees, partners and agents from and against all claims,
demands, liabilities, fines, penalties, losses, costs and expenses, including
but not limited to costs of compliance, remedial costs, clean-up costs and
reasonable attorneys' fees, arising from or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant or hazardous or toxic material,
substance or matter from, on or at the Premises or the Building as a result of
any act or omission on the part of Tenant. Tenant's indemnification obligations
shall survive the expiration or termination of this Lease.

Landlord, at Landlord's expense, shall comply with all present and future
federal, state and local laws, ordinances, orders, rules and regulations
(collectively, "LAWS") applicable to this Lease, and shall procure all permits,
certificates, licenses an other authorizations required by applicable Laws
relating to Landlord's business. Landlord shall make all reports and filings
required by applicable all Laws. Landlord shall defend, indemnify and hold
harmless Tenant and Tenant's present and future officers, directors, employees,
partners and agents for, from and against all claims, demands, liabilities,
fines, penalties, losses, costs and expenses, including but not limited to costs
of compliance, remedial costs, and reasonable attorneys' fees, arising out of or
relating to any failure of Landlord to comply with applicable Laws. Without
limiting the foregoing, Landlord shall comply with all Laws relating to
Hazardous Materials and shall defend, indemnify and hold harmless Tenant and
Tenant's present and future officers, directors, employees, partners and agents
for, from and against all claims, demands, liabilities, fines, penalties,
losses, costs and expenses, including but not limited to costs of compliance,
remedial costs, clean-up costs and reasonable attorneys' fees, arising from or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Materials from, on or
at the Premises or the Building as a result of any act or omission on the part
of Landlord. Landlord's indemnification obligations shall survive the expiration
or termination of this Lease.


                                    5. TAXES

     (a)  Tenant shall pay, prior to delinquency, all taxes assessed against or
levied upon Tenant's fixtures, furnishings, equipment and other personal
property located in or upon the Premises. Tenant shall cause the fixtures,
furnishings, equipment and other personal property to be assessed and billed
separately from the real property of which the Premises form a part. In the
event any or all of Tenant's fixtures, furnishings, equipment and other
personal property shall be assessed and taxed with the real property, Tenant
shall pay to Landlord Tenant's share of the taxes within ten (10) days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of the taxes applicable to Tenant's personal


                                       4

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                                                                 -----------
                                                                   INITIALS
<PAGE>

property.


     (b)  Tenant shall, simultaneously with the payment of any sums required to
be paid under this Lease as rent, additional rent or otherwise, reimburse
Landlord for any sales, use, rental, transaction privilege or other excise tax
imposed or levied on, or measured by, the amount paid.

                        6. PARKING AND COMMON USE AREAS

     All parking areas, parking structures, access roads, driveways, pedestrian
sidewalks and ramps, landscaped areas, drainage facilities, exterior lighting,
signs, courtyards, corridors, elevators (if any), entryways, public restrooms,
and other areas and improvements provided by Landlord for the general use in
common of tenants, their officers, agents, employees, customers and other
invitees (all of which are referred to as "COMMON FACILITIES") shall at all
times be subject to the exclusive control and management of Landlord, and
Landlord shall have the right from time to time to modify, enlarge or eliminate
common facilities and to establish, modify and enforce reasonable rules and
regulations with respect thereto. Without limiting the foregoing, Landlord may
designate separate or combined parking areas for visitors, tenants and
employees.

     Landlord agrees at all time during the Lease Term to provide the following
parking spaces to Tenant at their associated monthly costs:

thirteen (13)      covered reserved spaces in the parking structure adjacent to
                   the Building free of charge for the Lease Term,
sixty-four (64)    covered unreserved spaces free of charge in years 1-3 of the
                   Lease Term, and at $30.00 per space per month in years 4-10
                   of the Lease Term, and
twenty-nine (29)   uncovered unreserved spaces free of charge for the Lease
                   Term.

Landlord shall determine the location of said spaces and may re-assign said
spaces from time to time, as Landlord deems necessary.

     If tenant exercises its option(s) to expand hereunder, Landlord shall
provide parking for any such expansion space at the following ratios and
associated monthly rates:


covered reserved       .51 spaces per 1,000 usable square feet at $40.00 per
                       space per month
covered unreserved     2.54 spaces per 1,000 usable square feet at $30.00 per
                       space per month
uncovered unreserved   .81 spaces per 1,000 usable square feet at $20.00 per
                       space per month


             7. OPERATING COSTS, REAL PROPERTY TAXES AND UTILITIES


     (a)  Tenant shall pay Tenant's pro rata share of all of the Building's
operating cost, but only to the extent the Building's operating cost exceeds
the actual operating costs incurred in the calendar year 1998 (the "EXPENSE
STOP"). The Building's operating cost consists of those costs and expenses
directly associated with managing, operating, maintaining and repairing the
office building containing the Premises and the associated parking facilities,
grounds and common facilities, including all electrical, heating, ventilating,
air conditioning, plumbing and other building systems; exterior and interior
water features; utilities; fire and extended coverage insurance; window
cleaning; janitorial services; energy management costs; real property taxes and
general and special assessments; assessments and other amounts legally payable
to the property owner's association created under the restrictive covenants to
which the Building is subject; wages, salaries and employee benefits of
persons performing services in connection with the Building; parking lot and
parking structure sweeping, sealing, patching, restriping, repair and
maintenance; property management fees not to exceed five percent (5%) of gross
revenues; public liability and property damage insurance; supplies, materials,
tools, parts, and equipment; equipment rental charges; bookkeeping, accounting,
legal and other professional charges and expenses; fees for permits and
licenses; administrative expenses; taxes other than real property taxes;
service and maintenance contracts; signage; and landscaping.

Notwithstanding the foregoing, the Building's operating costs shall not include
the following:

(i)     Any costs or expenses for which Landlord is reimbursed or indemnified
        (whether by an insurer, condemnor, tenant or otherwise);
(ii)    Overhead and administrative costs of Landlord not directly incurred in
        the operation and maintenance of the Building;
(iii)   Depreciation or amortization of the Building or its contents or
        components;
(iv)    Capital expenditures, except those incurred for the reduction of
        operating costs;
(v)     Expenses for the preparation of space or other work which Landlord
        performs for any tenant or prospective tenant of the Building;
(vi)    Expenses for repairs or other work which is caused by fire, windstorm,
        casualty or any other insurable occurrence, except costs subject to
        Landlord's insurance deductible;
(vii)   Expenses incurred in leasing or obtaining new tenants or retaining
        existing tenants, including leasing commissions, legal expenses,
        advertising or promotion;



                                       5

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(viii)    Legal expenses incurred in enforcing the terms of any lease;
(ix)      Interest, amortization or other costs, including legal fees,
          associated with any mortgage, loan or refinancing of the Building or
          any common areas;
(x)       Expenses incurred for any necessary replacement of any item to the
          extent that it is covered under warranty;
(xi)      The cost of any item or service which Tenant separately reimburses
          Landlord or pays to third parties, or that Landlord provides
          selectively to one or more tenants of the Building, other than Tenant,
          whether or not Landlord is reimbursed by such other tenant(s). This
          category shall include the actual cost of any special electrical,
          heating, ventilation or air conditioning required by any tenant that
          exceeds normal building standards or is required during times other
          than the business hours stated in this Lease;
(xii)     Accounting and legal fees relating to the ownership, construction,
          leasing, sale or any litigation relating to the Building, or any
          common areas;
(xiii)    Any interest or penalty incurred due to the late payment of any
          operating costs;
(xiv)     The cost of correcting defects in the construction of the Building or
          any common areas; provided, however, that repairs resulting from
          ordinary wear and tear shall not be deemed to be defects;
(xv)      The initial cost of tools and small equipment used in the operation
          and maintenance of the Building, and any common areas which exceeds
          the cost of $1,000 per year in the aggregate;
(xvi)     The initial cost or the replacement cost of any permanent landscaping
          or the regular landscaping maintenance for any property other than the
          land upon which the Building is located, unless associated with fees
          or charges arising from or in connection with any governing
          association or the vested owners for the Building;
(xvii)    The cost of correcting any applicable building or fire code
          violation(s) or any other applicable law relating to the Building, or
          any common areas, or the cost of any penalty or fine incurred for
          noncompliance with the same;
(xviii)   Any costs incurred to test, survey, cleanup, contain, abate or remove
          any environmental or hazardous waste or materials, including asbestos
          containing materials from the Building or any common areas or to
          remedy any breach or violation of any environmental laws;
(xix)     Any personal property taxes of the Landlord for equipment or items not
          used directly in the operation or maintenance of the Building, nor
          connected therewith;
(xx)      All expenditures pertaining to administration of the Building or any
          common areas including payroll and payroll-related expenses associated
          with administrative and clerical personnel; general office
          expenditures; other administrative expenditures (including
          expenditures for travel, entertainment, dues, subscriptions,
          donations, data processing, errors and omissions insurance, automobile
          allowances, political donations and professional fees of any kind)
          unless specifically enumerated as the Building's operating costs;
(xxi)     Rentals and other related expenses, if any, incurred in leasing
          capital items;
(xxii)    Any costs or expenses for sculpture, paintings, or other works of art,
          including, costs incurred with respect to the purchase, ownership or
          leasing of such works of art;
(xxiii)   Contributions to operating costs reserves;
(xxiv)    The cost of overtime or other expense to Landlord in performing work
          expressly provided in this Lease to be borne at Landlord's expense;
(xxv)     All expenses directly resulting from the negligence or willful
          misconduct of the Landlord, its agents, servants or other employees;
(xxvi)    All bad debt loss, rent loss, or reserve for bad debt or rent loss;
(xxvii)   Any amount paid to an entity related to Landlord which exceeds the
          amount that would be paid for similar goods or services on an
          arms-length basis between unrelated parties;
(xxviii)  Salaries of employees above the grade of building superintendent,
          building manager or property manager;
(xxix)    The portion of employee expenses which reflects that portion of such
          employee's time which is not spent directly and solely in the
          operation of the property;
(xxx)     Business interruption insurance and rental value insurance;
(xxxi)    The operating expenses incurred by Landlord relative to retail stores,
          hotels and any specialty service in the Building or on the property,
          except to the extent that such uses share in the cost of operating
          expenses of the Building or property; and
(xxxii)   Property management fees exceeding five (5%) of gross revenues,
          provided that the Expense Stop shall include property management fees
          calculated at the same rate as the year for which the tenant is being
          assessed.

          On the first day of each month Tenant shall pay a monthly advance
charge on account of Tenant's pro rata share of the Building's operating cost
in excess of the Expense Stop. The amount of the monthly charge shall be
established by Landlord and may be adjusted from time to time by Landlord to
reflect Landlord's estimate of current and anticipated cost. Within 120 days
after the end of each fiscal year as established for the Building by Landlord,
Landlord shall provide to Tenant a reasonably detailed summary of the actual
operating costs showing Tenant's actual share and the amount by which Tenant
has overpaid or


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                                                             initials
                                       6
<PAGE>
underpaid. Any overpayment shall be credited to Tenant's account. Any deficiency
shall be payable within ten (10) days after receipt of the statement. In the
alternative, Landlord may, at its option during all or part of the Lease Term,
bill Tenant for its pro rata share of operating cost in excess of the Expense
Stop, in arrears, based on actual costs as they are incurred, in which case
Tenant shall pay the invoice within ten (10) days after receipt.

     (b)  Tenant's Right to Audit. Tenant shall have the right, at its own cost
and expense, to audit and/or inspect Landlord's records at the location of
Landlord's financial records, not more that once in any Lease year, with respect
to Operating Costs, Real Property Taxes and Utilities payable by Tenant under
this Lease for any Lease year. Tenant shall give Landlord not less that thirty
(30) days written notice of its intention to conduct any such audit. If such
audit discloses that the amount paid by Tenant as operating costs for the Lease
years under consideration has been overstated by more than three percent (3%),
then, in addition to rebating to Tenant the overcharge, Landlord shall also
reimburse Tenant for the reasonable costs incurred by Tenant in conducting the
audit and/or inspection.

     (c)  Tenant's pro rata share of the Building's operating cost shall be that
proportion that the rentable area of the Premises bears to the total rentable
area of all rentable area in the Building. The operating cost for the fiscal
year in which this Lease commences or terminates shall be apportioned so that
Tenant shall not be responsible for costs that relate to periods prior to or
subsequent to the term of this Lease except any period of holding over. Rentable
area shall be measured according to BOMA standards as approved July 31, 1980.

     (d)  Tenant shall be solely responsible for the cost of any heating,
ventilation or air conditioning provided to the Premises at Tenant's request
outside of normal business hours, measured at an hourly rate reasonably
established by Landlord and billed to Tenant from time to time by Landlord.
Normal business hours for the Building are from 7:00 a.m. to 6:00 p.m. on Monday
through Friday, and 8:00 a.m. to 12:00 p.m. on Saturday, excluding holidays.

"Excess Consumption" means the consumption of electrical current, heat or
cooling in excess of that which would be provided to the Premises other than
during the foregoing business hours. If Tenant shall require water, heating,
cooling, air or electric current which will result in Excess Consumption, Tenant
shall first procure the consent of Landlord to the use thereof, and Landlord may
cause separate meters to be installed to measure Excess Consumption or establish
another basis for determining the amount of Excess Consumption. Tenant covenants
and agrees to pay for the cost of the Excess Consumption based on Landlord's
actual cost, plus any additional expense incurred in installing meters or
keeping account of the Excess Consumption, at the same time as payment of the
Base Rent is made. Tenant further agrees to pay Landlord the cost, if any, to
upgrade existing mechanical, electrical, plumbing and air facilities, if
required to provide Excess Consumption, upon receipt of a statement therefor.
Excess Consumption costs will not be an Operating Cost for purposes of Article
7.

                    8. CONSTRUCTION, DELIVERY, AND CONDITION

     (a)  If delivery of possession of the Premises to Tenant is delayed beyond
the anticipated Commencement Date because of a delay in the completion of
construction of the Premises by Landlord or because of a failure of an existing
tenant to surrender possession of the Premises to Landlord, then this Lease
shall remain in full force and effect, Landlord shall not be liable to Tenant
for any damage occasioned by delay, and the Commencement Date shall be changed
to the date actual delivery of possession to Tenant is effected. Notwithstanding
the foregoing, if delivery of possession is delayed more than sixty (60) days
after the anticipated Commencement Date as set forth in Article 1(a), Tenant, by
written notice to Landlord, may terminate this Lease prior to taking possession,
and upon such termination any security deposit shall be refunded and both
Landlord and Tenant shall be released of all further obligation.

     (b)  Landlord shall construct improvements in the Premises in accordance
with the plans and specifications attached as or identified in EXHIBIT "C". If
no EXHIBIT "C" is attached, Tenant accepts the Premises AS IS. Landlord has no
obligation to design or construct improvements or to make alterations in the
Premises except as specifically set forth in EXHIBIT "C". Tenant shall pay to
Landlord upon the Delivery Date the amount by which the cost of the work
performed by Landlord exceeds $10.00 per usable square foot (the "TENANT
IMPROVEMENT ALLOWANCE"), and shall pay, in addition, for any increases in costs
resulting from changes in the approved plans and specifications made at Tenant's
request, provided Tenant has approved in advance of such cost increases. The
cost of the work performed shall include all aspects of the improvements,
including but not limited to, all architectural (including space planning),
engineering, and permit fees, corridor and directory signage, actual
construction labor and materials, contractors general conditions, overhead and
profit, and Landlord's prestocked materials. Tenant shall make said payment, if
any, to Landlord within ten (10) business days after receipt of Landlord's
invoice for said payment. Any changes in the approved plans and specifications
shall be subject to approval by both Landlord and Tenant.

                                       7

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                                                                   INITIALS
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Any defects in construction performed by Landlord shall automatically be waived
unless specified in a written punchlist delivered to Landlord within ten (10)
days after Tenant takes possession. Landlord shall promptly correct all defects
set forth in the punchlist.

     (c)  Moving Allowance. If there remains any unused Tenant Improvement
Allowance up to $20,000, Tenant may use such amount for relocation costs.
Landlord will reimburse Tenant for its out-of-pocket relocation costs within
thirty (30) days after the Commencement Date and copies of paid receipts
provided to Landlord.

     (d)  7th Floor Elevator Lobby and Common Corridors. On or before the
Commencement Date, Landlord will, at its sole cost and expense, replace the 7th
Floor elevator lobby and common corridor carpet and wallcovering with building
standard finishes and repaint the painted portions of the 7th Floor elevator
lobby and common corridor ceiling.

                           9. REPAIR AND MAINTENANCE

     (a)  Tenant shall maintain the interior of the Premises in good condition
and repair except that Landlord shall provide normal janitorial service five
nights per week. If Tenant does not perform necessary repairs and maintenance,
Landlord may, but need not, make necessary repairs and replacements, and Tenant
shall pay Landlord the cost upon demand.

     (b)  Subject to the provisions of Article 7, Landlord shall repair and
maintain the common facilities, all building systems (electrical, heating,
ventilation, air conditioning and plumbing), plate glass, and the roof,
exterior and structural elements of the Building, and shall provide normal
janitorial services. Landlord shall not be responsible to make any repairs or
perform any maintenance unless written notice of the need for such repairs or
maintenance is given by Tenant. In the event that any repair that is Landlord's
obligation is not performed by Landlord as soon as possible but in all events
within ten (10) days of written notice from Tenant, then Tenant may perform
such repair at Landlord's cost and Landlord shall reimburse Tenant for such
cost within thirty (30) days after receipt of a paid invoice from Tenant.
Except in the case of a fire or casualty as provided in Article 13, there shall
be no abatement of rent and no liability of Landlord by reason of any entry to
the Premises, interruption of services or facilities, temporary closure of
common facilities, or interference with Tenant's business arising from the
making of any repairs or maintenance.

     Landlord shall not be liable for damages or otherwise in the event of any
failure or interruption of any utility or service supplied to the Premises or
Building by a regulated utility or municipality and no such failure shall
entitle Tenant to terminate this Lease. Tenant shall be entitled to a prorata
abatement of rent resulting from an interruption of utility or service supplied
to the Premises or Building that is within Landlord's control if and only if
Tenant is unable to conduct its business in the Premises or any applicable
portion thereof for a period of more than five (5) consecutive days after
notice has been given to Landlord of such interruption; Tenant shall not be
entitled to any abatement for interruption of utility or service resulting from
force majeure events.

                     10. ALTERATIONS AND PERSONAL PROPERTY

     Tenant shall not make or suffer to be made any alterations, additions or
improvements to the Premises, which require a building permit, including signs,
without the prior written consent of Landlord, which shall not unreasonably be
withheld. Landlord may reasonably condition its consent upon provision of a
payment bond, in amount and form reasonably satisfactory to Landlord, covering
the work to be done by Tenant's contractor. Except at expressly provided herein,
any alterations, additions or improvements to the Premises, including signs, but
not including movable furniture and trade fixtures, shall upon installation
become a part of the realty and belong to Landlord. Tenant shall not install any
antenna, satellite dish or other fixture or equipment on the roof or in the
common facilities, except as provided in Article 22 herein. In the event
Landlord consents to the making of any alterations, additions or improvements to
the Premises by Tenant, they shall be made by Tenant at Tenant's sole cost and
expense and any contractor or person selected by Tenant to perform the work must
first be approved in writing by Landlord, which approval shall not be
unreasonably withheld. Tenant shall not permit any mechanic's or materialmen's
lien to stand against the Premises for any labor or materials provided to the
Premises by any contractor or other person hired or retained by Tenant. Tenant
shall cause any such lien to be discharged (by bonding or otherwise) within ten
(10) days after demand by Landlord, and if it is not discharged within ten (10)
days, Landlord may pay or otherwise discharge the lien and immediately recover
all amounts so expended from Tenant as additional rent. Upon the expiration or
sooner termination of the term of this Lease or of Tenant's right to possession,
Tenant shall remove all of its movable furniture and trade fixtures, and, if
requested by Landlord, at Tenant's sole cost and expense, forthwith remove any
alterations, additions or improvements made by Tenant which are designated by
Landlord to be removed at such time as they are approved by Landlord.

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                                                                       INITIALS

                                       8
<PAGE>
Tenant shall, forthwith at its sole cost and expense, repair any damage to the
Premises caused by such removal and restore the Premises to a condition
reasonably comparable to their condition at the commencement of the Lease.

     Notwithstanding any provision to the contrary in this Lease, Tenant will,
at its sole cost and expense, remove the UPS system and phone switch upon the
expiration or sooner termination of this Lease, and repair any damage to the
Premises caused by such removal.

                    11. CERTAIN RIGHTS RESERVED BY LANDLORD

Landlord shall have the right:

          (i)   To change the Building's name or street address, provided that
it is not changed to the name of any other airline company which conducts the
same or substantially the same business as being conducted by Tenant from the
Premises and Landlord reimburses Tenant for its reasonable actual out-of-pocket
costs resulting from any such change;

          (ii)  Upon reasonable prior telephonic or personal notice to Tenant,
except in the case of an emergency, to enter the Premises either personally or
by designated representative at all reasonable times for the purpose of
examining or inspecting the same, and showing the same to prospective
purchasers; or during the last twelve (12) months of the Lease Term, to exhibit
the Premises to prospective lessees. Landlord may not enter the System Dispatch
Area, see Exhibit B, without being accompanied by a Tenant representative,
except in the case of an emergency;

          (iii) To grant to anyone the exclusive right to conduct any business
or render any service in or to the Building, provided such exclusive right
shall not operate to exclude Tenant from the use expressly permitted under
Article 4.

              12. DAMAGE TO PROPERTY; INJURY TO PERSONS; INSURANCE

     (a)  Tenant shall defend, indemnify and hold Landlord harmless from any
and all claims arising from Tenant's use of the Premises or the conduct of its
business or from any activity, work, or thing done, permitted or suffered by
Tenant in the Premises except to the extent caused by Landlord, its agents,
employees or contractors. Tenant shall further defend, indemnify and hold
Landlord harmless from any and all claims arising from any breach or default in
the performance of this Lease by Tenant, or arising from any act or negligence
of Tenant, or of its agents or employees, and from all costs, attorneys' fees,
expenses and liabilities incurred as a result of any such claim. Tenant, as a
material part of the consideration to Landlord, hereby assumes all risk of
damage to property or injury to persons, in, upon, or about the Premises from
any cause, except to the extent caused by Landlord, its agents, employees or
contractors, and Tenant hereby waives all claims in respect thereof against
Landlord, unless caused by Landlord, its agents, employees or contractors.
Landlord shall not be liable for loss of or damage to any property by theft or
otherwise, or for any injury or damage to persons or property resulting from
fire, explosion, falling plaster, steam, gas, electricity, water or rain which
may leak from any part of any building or from the pipes, appliances or
plumbing works therein, or from the roof, street or subsurface, or from any
other place resulting from dampness or any other cause whatsoever unless
Landlord was negligent. Landlord shall not be liable for interference with the
natural light. Tenant shall give immediate notice to Landlord of any fire,
accident or defect discovered with the Premises.

     (b)  Tenant shall maintain fire and extended coverage insurance throughout
the term of this Lease in an amount equal to one hundred percent of the
replacement value of Tenant's fixtures, equipment and other personal property
located on the Premises together with such other commercially reasonable
insurance as may be required by Landlord's lender or by any government agency.
All proceeds of Tenant's policy of fire and extended coverage insurance shall be
payable to Tenant, and all proceeds of policies of insurance procured by
Landlord shall be payable to Landlord. Tenant hereby waives any right to
recovery from Landlord and Landlord hereby waives any right of recovery from
Tenant for any loss or damage (including consequential loss) resulting from any
of the perils insured against in the standard form fire insurance policy with
extended coverage endorsement. During the term of this Lease, the Tenant shall,
at Tenant's expense, maintain general public liability insurance against claims
for personal injury, death or property damage occurring in, upon or about the
Premises or in the common areas. The limitation of liability of such insurance
shall be not less than One Million Dollars in respect to injury or death of one
person and to the limit of not less than One Million Dollars in respect to any
one accident and to the limit of not less than Five Hundred Thousand Dollars in
respect to property damage. All of Tenant's policies of liability insurance
shall name Landlord as an additional insured, and all policies of insurance or
copies thereof required to be carried by Tenant under this Article 12 shall be
delivered to Landlord prior to the Commencement Date and thereafter at least
thirty days prior to the expiration of the then current policies.

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                                                         initials


                                       9
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Each policy shall contain an endorsement prohibiting cancellation or
non-renewal without at least 30 days prior notice to Landlord.

                             13. FIRE AND CASUALTY

     If the Premises are wholly or partially destroyed or damaged by fire or
other casualty, Landlord shall restore the Premises with reasonable diligence;
provided, however, that Landlord shall have no obligation to restore
improvements not originally provided by Landlord or to replace any of Tenant's
fixtures, furnishings, equipment or personal property. Tenant shall promptly
replace and restore all of Tenant's fixtures, furnishings and equipment damaged
or destroyed by the casualty. Landlord need not commence repairs until
insurance proceeds are available. Proceeds of insurance payable with respect to
a fire or other casualty shall be received and held by Landlord. In the event
all of the Premises are destroyed or damaged by any fire or casualty and in
Landlord's reasonable estimation restoration will require more than ninety
days, then either Landlord or Tenant shall have the option to terminate this
Lease by giving notice to the other. If a fire or casualty occurs within the
last three years of the Lease Term (as extended by any renewal or extension
options which have been exercised), or if any portion of the Building other
than the Premises is damaged or destroyed by fire or casualty and restoration
is expected to require in excess of 45 days, then Landlord may by written
notice to Tenant terminate this Lease, provided that Landlord terminates the
leases of all other similarly affected tenants. In any case, Landlord shall
retain all insurance proceeds paid under Landlord's insurance policies and
Tenant shall retain all insurance proceeds paid under Tenant's insurance
policies. If this Lease is not terminated as provided above, this Lease shall
continue in full force and effect, but rent shall abate until the restoration
is substantially complete. The provisions of this Lease shall govern when this
Lease shall be terminable as a result of a fire or casualty, and no other rule
or statue on the subject shall apply.

                                14. CONDEMNATION

     In the event any portion of this Building shall be appropriated or taken
under the power of eminent domain, this Lease shall terminate and expire as of
the date Tenant is required to vacate the Premises, or, if no portion of the
Premises is taken, as of the date designated in a notice from Landlord
establishing the date of closure of the Building, provided that Landlord
terminates the leases of all other similarly affected tenants. If any portion of
the common facilities, excluding the Building, is appropriated or taken under
the power of eminent domain, this Lease shall not terminate. All awards or
compensation for any taking of any part of the Premises or the Building or
common facilities, whether payable to Landlord or Tenant, shall be the sole
property of Landlord. Notwithstanding anything to the contrary in this Article,
Tenant shall be entitled to receive any portion of an award of compensation
relating to damage to or loss of trade fixtures or other personal property
belonging to Tenant, and Landlord shall be under no obligation to restore or
replace any of Tenant's furnishings, fixtures, equipment and personal property
not included in the tenant improvements. For the purposes of this Article 14, a
voluntary sale or conveyance in lieu of condemnation shall be deemed an
appropriation or a taking under the power of eminent domain.

                15. ASSIGNMENT and SUBLETTING; SALE BY LANDLORD

     (a)  Tenant shall not, either voluntarily or by operation of law, assign,
hypothecate or transfer this Lease, or sublet the Premises or any part thereof,
or permit the Premises or any part thereof to be occupied by anyone other than
Tenant or Tenant's employees, without the Landlord's prior written consent,
which shall not be unreasonably withheld. Landlord shall be under no obligation
to give or withhold consent until all information reasonably required by
Landlord has been provided. No hypothecation, assignment, sublease or other
transfer to which Landlord has consented shall be effective for any purpose
until such time as fully executed documents of such transaction have been
provided to Landlord, and, in the case of an assignment, the assignee has
attorned directly to Landlord, and in the case of a sublease, the sublessee has
acknowledged that the sublease is subject to all of the terms and conditions of
this Lease. Any assignment, mortgage, transfer or subletting of this Lease
which is not in compliance with the provisions of this Article 15 shall be
voidable and shall, at the option of Landlord, terminate this Lease. The
consent by Landlord to an assignment or subletting shall not relieve Tenant
from obtaining the express written consent of Landlord to any further
assignment or subletting or release Tenant from any liability or obligation,
whether or not then accrued. Except as provided in this Article, this Lease
shall be binding upon and inure to the benefits of the successors and assigns
of the parties.

     Affiliate. Landlord's consent shall not be required with respect to (i)
any assignment resulting from a consolidation, merger or purchase of
substantially all of Tenant's assets, (ii) any assignment or sublease to a
person who wholly owns Tenant or who wholly owns the person who wholly owns
Tenant (either of which shall be referred to as a "Parent"), or to a person who
is wholly owned by Tenant or a Parent, or is wholly owned by a person who is
wholly owned by Tenant or a Parent, of (iii) any firm which acquires, is
acquired by, or merges with, Tenant. Tenant, however, shall notify Landlord of

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                                                                       Initials

                                       10

<PAGE>
such assignment or sublease within ten (10) days of entering into the agreement
with the Affiliate.

     Recapture Right. Landlord shall have rights to recapture the Premises in
the event of a sublease of the entire Premises, or to terminate the Lease in
the event of an assignment by Tenant, which is not in compliance with the
assignment and subletting provisions of the Lease.

     (b)  In the event of a sale or conveyance by Landlord of the Premises,
Landlord shall be relieved of all future liability upon any of the covenants or
conditions, express or implied, in favor of Tenant, and Tenant shall to look
solely to Landlord's successor in interest provided Landlord's successor in
interest assumes the Lease. This Lease shall not be affected by any sale, and
Tenant shall attorn to the successor in interest. If any security deposit has
been made by Tenant, the successor in interest shall be obligated to return it
in accordance with the terms hereof and Landlord shall be discharged from any
further liability in reference thereto.

                            16. ESTOPPEL CERTIFICATE

     (a)  Either party shall at any time and from time to time upon not less
then fifteen (15) days prior written notice from the other party execute,
acknowledge and deliver to the requesting party a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect (or if
modified, stating the nature of such modification and certifying that this
Lease, as so modified, is in full force and effect) and the dates to which the
rental and other charges are paid in advance, if any; (ii) acknowledging that
there are not, to such parties knowledge, any uncured defaults on the part of
the requesting party hereunder, or specifying such defaults if they are
claimed; and (iii) certifying such other matters relating to this Lease as the
requesting party may reasonably request. Any such statement may be relied upon
by any prospective purchaser or encumbrancer of all or any portion of the real
property of which the Premises are a part.

     (b)  Tenant's failure to deliver a statement within the time prescribed
shall constitute a material default by Tenant under this Lease and shall be
conclusive upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one
month's rental has been paid in advance.

                            17. LANDLORD'S REMEDIES

     (a)  Only the following shall constitute Events of Default by Tenant:

          (i)   Tenant's failure to pay rent or any other amount due under this
Lease within ten (10) days after notice of nonpayment. Notwithstanding anything
to the contrary contained herein, Landlord shall only give Tenant notice of
non-payment and ten (10) days from receipt of such notice to cure such
non-payment once in any twelve (12) month period before assessing any late fees
and/or interest.

          (ii)  Tenant's failure to execute, acknowledge and return an estoppel
certificate under Article 16 or a subordination agreement under Article 19,
within fifteen (15) days after request.

          (iii) Tenant's failure to comply with the insurance provisions under
this Lease within fifteen (15) days after written notice.

          (iv) Tenant's failure to perform any other obligation under this
Lease within thirty (30) days after notice of nonperformance; provided,
however, that if the breach is of such a nature that it cannot be cured within
thirty (30) days, Tenant shall be deemed to have cured if cure is commenced
promptly and diligently pursued to completion; and provided further, that in
the event of a breach involving an imminent threat to health or safety,
Landlord may in its notice of breach reduce the period for cure to such shorter
period as may be reasonable under the circumstances.

          (v)   Tenant abandons the Premises except temporary absence excused
by reason of fire, casualty, or other cause wholly beyond Tenant's control.

     (b)  Upon the occurrence of an Event of Default, Landlord, at any time
thereafter without further notice or demand may exercise any one or more of the
following remedies concurrently or in succession:

          (i)   Terminate Tenant's right to possession of the Premises by legal
process or otherwise, with or without terminating this Lease, and retake
exclusive possession of the Premises.

          (ii)  From time to time relet all or portions of the Premises, using
reasonable efforts to


                                                                     [ILLEGIBLE]
                                                                      INITIALS
                                       11
<PAGE>
mitigate Landlord's damages. In connection with any reletting, Landlord may
relet for a period extending beyond the term of this Lease and may make
alterations or improvements to the Premises without releasing Tenant of any
liability. Upon a reletting of all or substantially all of the Premises,
Landlord shall be entitled to recover all of its then prospective damages for
the balance of the Lease Term measured by the difference between amounts payable
under this Lease and the anticipated net proceeds of reletting. In no event
shall Tenant be entitled to receive any amount representing the excess of avails
of reletting over amounts payable hereunder.

          (iii)     From time to time recover accrued and unpaid rent and
damages arising from Tenant's breach of the Lease, regardless of whether the
Lease has been terminated, together with applicable late charges and interest at
the Default Rate.

          (iv)      Recover all attorneys' fees and other costs and expenses
incurred by Landlord in connection with enforcing this Lease, recovering
possession, reletting the Premises or collecting amounts owed.

          (v)       Perform the obligation on Tenant's behalf and recover from
Tenant, upon demand, the entire amount expended by Landlord plus 10% for special
handling, supervision, and overhead.

          (vi)      Pursue other remedies available at law or in equity.

     (c)  Upon a termination of Tenant's right to possession, whether or not
this Lease is terminated, subtenancies and other rights of persons claiming
under or through Tenant: (i) shall be terminated or (ii) Tenant's interest shall
be assigned to Landlord. Landlord may separately elect termination or assignment
with respect to each such subtenancy or other matter.

                                  18. NOTICES

     All notices, requests, authorizations, approvals, consents and other such
communications shall be in writing and shall be delivered in person, by private
express overnight delivery service (freight prepaid), by certified or registered
mail, return receipt requested, or by facsimile transmission (confirmed by the
recipient), addressed as follows:

To Landlord:   c/o DMB Associates, Inc.
               410 North 44th Street, Suite 250
               Phoenix, Arizona 85008
               (602) 244-0569 (fax)
               (602) 244-0500

To Tenant:     2325 East 30th Street
               Farmington, New Mexico 87401
               Attn: Gene Hansen
               (505) 326-4485 (fax)
               (505) 326-4478

Notices shall be deemed to be given or received on the date of actual receipt
(or refusal of delivery) at the applicable above-stated address or at such other
address as a party may direct from time to time, upon written notice to the
other party at least ten (10) days prior to the proposed change of address.
Actual notice shall be no substitute for written notice under any provision of
this Lease.

                               19. SUBORDINATION

     Landlord expressly reserves the right at any time to place liens and
encumbrances on and against the Premises and the Building, superior in lien and
effect to this Lease and the estate created hereby, and Tenant shall attorn to
the purchaser of the Building under any trustee's, sheriff's or foreclosure
sale. The subordination of this Lease shall be self-operative without the
necessity of a written instrument. Tenant shall nevertheless execute within ten
(10) days after request a subordination and attornment agreement on the form
customarily used by the holder of the lien or encumbrance which subordinates
this Lease to the lien or encumbrance, which provides that the holder will
recognize Tenant's rights under this Lease, notwithstanding any foreclosure of
the lien or encumbrance, and which requires Tenant to attorn to the purchaser
as provided above.

     Notwithstanding anything to the contrary contained in this Lease, any
subordination of Tenant's leasehold interest pursuant to the terms of this
Article 19 shall be conditioned upon Tenant's receipt of a written
non-disturbance agreement from any ground lessor, mortgagee, trust deed holder,
or other third

                                       12

                                                                     [illegible]
                                                                      ---------
                                                                       INITIALS

<PAGE>
party, to the effect that Tenant's rights hereunder shall not be disturbed so
long as Tenant is not in default beyond any applicable cure period under this
Lease.

                             20. GENERAL PROVISIONS

     (a)  This Lease and the obligations of one party hereto shall not be
affected or impaired because the other party hereto is unable to fulfill any of
its obligations or is delayed in doing so if such inability or delay is caused
by reason of any strike, lockout, civil commotion, war-like operations,
invasion, rebellion, hostilities, military or usurped power, sabotage,
governmental regulations or controls, inability to obtain any material, service
or financing, Act of God or other cause beyond the control of the Landlord or
Tenant.

     (b)  Tenant and its officers, agents, employees, and customers shall
comply with the rules and regulations, as shown on EXHIBIT "D", established by
Landlord and with such modifications and additions as Landlord may hereafter
make for the Building; provided, however, that rules and regulations shall not
materially abrogate any right or privilege expressly granted to Tenant. Any
violation of the rules and regulations shall constitute a breach of this Lease,
provided Landlord has given Tenant notice of such violation and the applicable
cure period provided under Article 17 has expired.

     (c)  The article captions contained in this Lease are for convenience only
and shall not be considered in the construction or interpretation of any
provision.

     (d)  This Lease contains all of the agreements of the parties hereto with
respect to any matter covered or mentioned in this Lease, and no prior
agreement or understanding pertaining to any matter shall be effective for any
purpose. No provision of this Lease may be amended or added to except by an
agreement in writing signed by the parties hereto or their respective
successors in interest.

     (e)  Submission of this instrument for examination shall not bind Landlord
in any manner, and no Lease or obligations of Landlord shall arise until this
instrument is signed and delivered by Landlord and Tenant.

     (f)  No rights to light or air over any property, whether belonging to
Landlord or any other persons, are granted to Tenant by this Lease.

     (g)  No waiver by Landlord of any provision of this Lease or any breach by
Tenant hereunder shall be deemed to be a waiver of any other provision hereof,
or of any subsequent breach by Tenant of the same or any other provision.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act of Tenant, whether or
not similar to the act so consented to or approved. No act or thing done by
Landlord or Landlord's agent during the term of this Lease shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender shall be valid unless in writing and signed by Landlord. No employee
of Landlord or of Landlord's agents shall have any power to accept the keys to
the Premises prior to the termination of this Lease, and the delivery of the
keys to any employee shall not operate as a termination of the Lease or a
surrender of the Premises.

     (h)  Time is of the essence of this Lease.

                                  21. SIGNAGE

     a)   Suite Entry and Lobby Directory. Landlord will provide, and deduct
the cost from the Tenant Improvement Allowance, building standard suite
signage for Tenant and its proportionate share of alphabetical listings on the
main lobby directory.

     b)   Exterior Sign. Tenant may install its name, at its expense, in one
(1) location to be designated by Landlord on the existing monument sign at the
exterior of the Building. Tenant's signs shall be and remain the property of
Tenant and Tenant shall remove such signs at the expiration of the Lease or any
extended terms thereof at Tenant's sole cost and expense, which shall include
Landlord's cost to repair any material damage caused by such removal. Tenant
shall be solely responsible for repairing any damage to its sign unless such
damage is caused by Landlord or its employees or contractors. Tenant's sign
shall comply with all governmental and quasi-governmental laws, rules,
regulations, codes, ordinances, and the like respecting such signage, and shall
conform to Landlord's standards for tenant signs on monument signs at the
Building. All signs visible from outside the Premises shall be subject to the
building standard sign criteria and shall conform with local ordinances and
codes. Tenant's exterior signage rights shall not be transferable in the event
of a sublease or assignment.

                                       13


                                                                     [illegible]
                                                                      ---------
                                                                      INITIALS

<PAGE>
Notwithstanding anything to the contrary herein, if the area of the Premises is
increased to at least 35,000 rentable square feet, Tenant shall have the right
to erect a separate monument sign for its exclusive use at the exterior of the
Building in a location to be approved by Landlord and subject to the terms of
this Article 21(b). Tenant's signage right for such separate monument sign shall
be surrendered if the area of the Premises is reduced to less than 35,000
rentable square feet.

                               22. SATELLITE DISH

     During the term of this Lease, Tenant, at its expense, but without payment
of any rent or license fee to Landlord, shall have the right, subject to all
applicable governmental regulations and Landlord's prior written approval, which
shall not be unreasonably withheld or delayed, to place, maintain, repair and
replace on the roof of the Building, in a location and manner of installation to
be approved by Landlord, which approval shall not be unreasonably withheld,
satellite or microwave dishes, in connection with Tenant's telecommunications
and data transmissions network, and to connect the same to the Premises. Tenant
shall indemnify and hold Landlord harmless for, from and against any and all
costs, damages, liability, or expense (including court costs and reasonable
attorney's fees) in connection with the installation, operation and removal of
Tenant's satellite dish including, without limitation, any damage to the roof or
other portions of the Building and any damage or injury to the person or
property of tenants, visitors or other third parties. Such satellite dish
installed by Tenant shall remain Tenant's property and shall be removed at or
prior to the end of the term of this Lease, at the sole expense of Tenant. If
Tenant fails to do so within fifteen (15) days after the termination of this
Lease, Landlord may, but shall not be obligated to, perform such removal and
restoration at the sole expense of Tenant or Landlord may, at Landlord's option,
deem any such satellite dish to be abandoned. Tenant's satellite dish shall not
interfere with the proper functioning of any presently existing or any future
telecommunications equipment on the roof that is owned or will be owned by
others at the time of installation or modification (if applicable).

                                 23. GENERATOR

Tenant shall have the right to install and maintain, at its sole cost and
expense, a generator on the grounds of the property, in a location to be
determined by Landlord, with no additional rental costs.


<Table>
<S>                                     <C>
LANDLORD:                               ADDRESS:

DMB PROPERTY VENTURES LIMITED           4201 N. 24th Street, Suite 120
PARTNERSHIP, a Delaware limited         Phoenix, Arizona 85016
partnership

By:  DMB G.P., an Arizona corporation

By:  /s/ James C. Hoselton
     --------------------------------
     James C. Hoselton
Its: Vice President


TENANT:                                 ADDRESS:

MESA AIR GROUP, INC.                    2325 East 30th Street
a Nevada corporation                    Farmington, New Mexico 87401

By:  /s/ Jonathan Ornstein
     --------------------------------

Its: CEO
     --------------------------------
</Table>
                                       14

<PAGE>

                                  EXHIBIT "A"

                          DESCRIPTION OF REAL PROPERTY

            Lot 5, PHOENIX GATEWAY AMENDED, according to Book 322 of
            Maps, Page 18, records of Maricopa County, Arizona.



                                       15

<PAGE>

                                  EXHIBIT "B"

                                   PREMISES




                       [MESA AIR GROUP 7TH FLOOR DIAGRAM]



                                       16

<PAGE>

                                  EXHIBIT "C"

                              TENANT IMPROVEMENTS




                       [PHOENIX GATEWAY CENTER 7TH FLOOR DIAGRAM]



                                       17

<PAGE>
                                  EXHIBIT "D"

                         BUILDING RULES AND REGULATIONS

     1.   No sign, placard, picture, advertisement, name or notice of any kind
shall be inscribed, displayed, printed or affixed on or to any part of the
outside or inside of the Building, the Premises or the surrounding area without
the prior written consent of Landlord. If such consent is given by Landlord,
Landlord may regulate the manner of display of the sign, placard, picture,
advertisement, name or notice. Landlord shall have the right to remove any such
item which has not been approved by Landlord or is being displayed in a
non-approved manner without notice to and at the expense of Tenant. Without the
written consent of Landlord, Tenant shall not use pictures of the Building in
connection with or in promoting or advertising the business of Tenant, except
as Tenant's address, without written permission from the Landlord.

     2.   The directory for the Building will be provided exclusively for the
display of the name and location of the Tenants only. Landlord reserves the
right to exclude any other names therefrom and to charge a reasonable fee for
each name other than Tenant's name, placed upon such directory at the request of
Tenant. All approved signs or lettering on doors shall be printed, painted,
affixed or inscribed at the expense of Tenant, unless otherwise arranged, by a
person approved by Landlord.

     3.   The sidewalks, parking areas, halls, passageways, exits, entrances,
elevators, toilets and stairways shall not be obstructed by Tenant, its
customers, invitees, licensees and guests, and (except for toilets) shall not be
used for any purpose other than for ingress to and egress from the Premises.
Tenant shall not throw or allow anyone else to throw anything out of doors or
down the passageways. Tenant shall not place anything or allow anything to be
placed near any window or any glass door, partition or wall which may appear
unsightly, in Landlords sole discretion.

     4.   The toilet rooms, urinals, wash bowls and other apparatus shall not be
used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein. The expense of
any breakage, stoppage or damage resulting from a violation of this rule shall
be borne by the Tenant who, or whose agents, employees or invitees, shall have
caused the same.

     5.   Tenant shall not lay linoleum, tile carpet or other similar floor
coverings in any manner except as approved by Landlord. The expense of repairing
any damage resulting from a violation of this rule or removal of any floor
covering shall be borne by Tenant. All interior window coverings must be
approved by Landlord and Tenant may not remove or replace existing blinds.
Tenant shall not overload the floor of the Premises, shall not mark on or drive
nails, drill or screw into the partitions, woodwork or plaster (except as may be
incidental to the hanging of wall decorations) or in any way deface the Premises
or any part thereof. Tenant shall not allow the installation of telephone wires
or electrical wires or circuits, except with Landlords prior approval. The
installation of telephones and other office equipment affixed to the Premises
shall be installed at the expense of Tenant.

     6.   Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy equipment brought into the Building and
also the times and manner of moving the same in and out of the Building. Safes
or other heavy objects shall, if considered necessary by Landlord, stand on wood
strips of such thickness as shall be necessary to properly distribute the
weight. Landlord will not be responsible for loss of or damage to any such safe
or property from any cause and all damage done to the Building by moving or
maintaining any such safe or other property shall be repaired at the expense of
Tenant. There shall not be used in the Premises or the Building any hand trucks
except those equipped with rubber tires and side guards, and should only be used
in appropriate areas.

     7.   Tenant shall not employ any person or persons, other than the janitor
of the Landlord, for the purpose of cleaning the Premises unless otherwise
agreed to by Landlord. Tenant shall not cause any unnecessary labor by reason of
Tenant's carelessness or indifference in the preservation of good order and
cleanliness. Landlord shall in no way be responsible to Tenant for any theft or
loss of property on the Premises, however occurring, or for any damage done to
the effects of Tenant, by or as a result of the acts of the janitor, any other
employee or contractor of Landlord, or any other person. Landlord's janitor
service shall only include ordinary dusting, housekeeping and cleaning by the
janitor assigned to such work and shall not include moving furniture or other
special services. Window cleaning shall be done only by landlord at intervals it
deems appropriate. Employees or agents of Landlord shall not be requested to
perform any work or do anything outside of their regular duties unless under
special instructions from Landlord.

     8.   No bicycles, skateboards or similar vehicles, animals or birds shall
be brought in or kept in or about the Premises of the Building. No cooking shall
be done or permitted by Tenant in the Premises,

                                       18



                                                                     [illegible]
                                                                      ---------
                                                                      INITIALS

<PAGE>
except preparation with the use of a microwave oven and the preparation of
coffee, tea, hot chocolate and similar items for Tenant, its employees, clients
and guests will be permitted with the approval of Landlord, which approval will
not be unreasonably withheld.

     9.   Tenants shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent the same. Tenant shall not exhibit,
sell, or offer to sell, use rent or exchange any item or service in or from the
Premises unless ordinarily embraced within Tenant's use of the Premises
specified in the Lease. Peddlers, solicitors and beggars shall be reported to
the Landlord. No Tenant shall make or permit to be made any disturbing noises or
disturb or interfere with occupants, or with those having business with such
occupants of the Building, by the use of any musical instrument, radio
phonograph, electronic device, or other devices.

     10.  Tenant shall not use or keep in the Building any noxious gas or
combustible fluid or use any method of heating or air conditioning other than
that supplied by Landlord, nor install or operate machinery, equipment or any
mechanical or electrical device of a nature not directly related to Tenant's
ordinary use of the Premises, by reason of safety, odors and/or vibrations, or
interfere in any way with other Tenants or occupants conducting business in the
Building. Tenant Premises shall not be used for manufacturing or for the storage
of merchandise except as such storage may be incidental to the use of the
Premises for general office purposes. Tenant shall not conduct any auction or
permit any fire sale or bankruptcy sale to be held on the Premises. Tenant shall
not occupy or permit any portion of the Premises to be occupied as an office for
a public stenographer or typist or for the manufacture or sale of liquor,
narcotics or tobacco in any form as a medical office, barber shop, manicure shop
or as an employment bureau, except with prior written consent of Landlord. The
Premises shall not be used for lodging or sleeping or for illegal purposes.

     11.  All keys and access cards to the Building, offices and rooms shall be
obtained from Landlord. All duplicate keys needed by Tenant shall be requested
from Landlord, who shall provide such keys at reasonable charge. Tenant, upon
termination of its tenancy, shall deliver to Landlord the keys and access cards
to the Building, offices, and rooms which shall have been furnished. Tenant
shall not alter or replace any lock or install any additional locks or any bolts
on any door of the Premises without the written consent of Landlord.

     12.  Tenant assumes full responsibility for protecting, at all times, the
Premises and all personal effects of Tenant, its employees, agents and invitees
from theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed and secured, and Landlord shall have no
liability with respect thereto. Tenant shall see that the doors of the Premises
are closed and securely locked before leaving the Building and that all water
faucets, water apparatus, and electrical items are shut off before Tenant or
Tenant's employees leave the building. Tenant shall be responsible for any
damage to the Building or to other Tenants caused by a failure to comply with
this rule.

     13.  On Sundays and legal holidays, and on other days during certain hours
for which the Building may be closed before or after Normal Business Hours,
access to the Building may be controlled through the use of security personnel
and/or security devises. Such personnel will have the right to demand of any and
all persons seeking access to the Building proper identification to determine if
they have the right of access to the Premises. Landlord shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. In case of bomb threats, invasion, mob, riot,
public excitement or other condition, Landlord reserves the right to prevent
access to the Building during the continuance of the same, by closing the doors
or otherwise, for the safety of all lessees and protection of the Building and
property located therein. The foregoing notwithstanding, Landlord shall have no
duty to provide security protection for the Building at any time or to monitor
access thereto.

     14.  The halls, passages, exits, entrances, parking areas, elevators,
stairways, toilets and roof are not the use of the general public and the
Landlord shall in all cases retain the right to control the same and prevent
access thereto by all persons whose presence in the judgement of the Landlord
shall be prejudicial to the safety, character, reputation and interests of the
Project to its Tenants. Landlord reserves the right to exclude or expel from the
Building any person who, in the judgement of Landlord, is intoxicated or under
the influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building.

     15.  Tenant shall not park in driveways or loading areas or in visitor
spaces or reserved parking spaces of other Tenants. Landlord or its agents shall
have the right to cause to be removed any car of Tenant, its employees, agents,
contractors, customers and invitees that may be parked in unauthorized areas,
and Tenant agrees to save and hold harmless Landlord, its agents and employees
from any and all claims, losses, damages and demands, arising or asserted in
connection with the removal of any such vehicle and for all expenses (including
reasonable attorneys' fees and costs) incurred by Landlord in connection with
such

                                       19



                                                                     [illegible]
                                                                     -----------
                                                                      INITIALS


<PAGE>
removal.

     16.  Tenant agrees that it shall comply with all fire regulations that may
be issued from time to time by Landlord or the City of Phoenix Fire Department.
Tenant shall not waste electricity or water and agrees to cooperate fully with
Landlord to assure the most effective operation of the Building's heating and
air conditioning equipment. Tenant shall give prompt notice to Landlord, or its
designee, of any injury to or defects in plumbing, electrical fixtures, heating
apparatus and/or air conditioning equipment so that the same may be attended to
properly.

     17.  The building has been designated a "non-smoking" building. Employees
with a private office may smoke or permit smoking within those areas if other
employees, neighboring tenants or members of the public are not affected.
Smoking is strictly prohibited in conference and meeting rooms, classrooms,
restrooms, waiting areas, hallways, stairways and elevators. Any individual who
refuses to refrain from smoking in an enclosed public area may be issued a
citation by the Phoenix Police Department and assessed a fine of up to $100.

     18.  Landlord reserves the right to rescind, alter, waive, modify, add to,
and amend any rule or regulation at any time prescribed for the Building when,
in Landlord's judgement, it is necessary, desirable or proper for the best
interest of the Building or one or more of its Tenants.

     19.  If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Landlord's instructions for
their installation.

     20.  No equipment, materials, furniture, packages, supplies, merchandise or
other property will be received in the Building or carried in the passenger
elevators. The service level loading dock and freight elevator shall be used for
those purposes.

     21.  Tenant shall not install any radio or television antenna, loudspeaker
or other device on the roof or exterior walls of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the
Building or elsewhere.

     22.  Tenant shall store all its trash and garbage within its Leased
Premises. Tenant shall not place in any trash box or receptacle any material
which cannot be disposed of in the ordinary and customary manner of trash and
garbage disposal. All garbage and refuse disposal shall be made in accordance
with directions issued from time to time by Landlord.

     23.  By executing a copy of these Building Rules and Regulations, Tenant
acknowledges and agrees that it has read and understands these Building Rules
and Regulations and will fully comply with all of the terms and provisions
contained herein.


                                       20


<PAGE>
                                  EXHIBIT "E"
                        EARLY ACCESS INDEMNITY AGREEMENT

     This Access Agreement (the "Agreement") is made and executed this   day of
October, 1998, by and between DMB PROPERTY VENTURES L.P., a Delaware limited
partnership ("Grantor"), and Mesa Air Group, Inc., a Nevada corporation
("Grantee").

                                   RECITALS:


     A.   Grantor owns a certain building known as Three Gateway, 410 North 44th
Street, Phoenix, Arizona (the "Building").

     B.   Grantor intends to lease space (the "Premises") in the Building to
Grantee pursuant to a lease agreement between the parties (the "Lease").

     C.   Grantee wishes access to the Premises at least fourteen (14) days
prior to the commencement of the term of the Lease in order to install Grantee's
equipment, furnishings and trade fixtures, and Grantor is willing to allow
Grantee early access to the Premises for such purpose, on the terms and
conditions hereinafter set forth.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Grantor and Grantee hereby agree as follows:

     1.   Grant of Access.  Grantor hereby grants to Grantee and its employees,
agents, representatives, contractors, subcontractors, and invitees (the
"Grantee's Related Parties") a right of access to and entry upon the Premises
prior to the Commencement Date, solely for the purpose of installing Grantee's
equipment, furnishings and trade fixtures (the "Work") and moving into and
operating in the Premises or portions thereof, subject to the terms and
conditions set forth below and in the Lease.

     2.   Obligations of Grantee.  Grantee shall conduct the Work in a
first-class workmanlike manner in accordance with all applicable laws,
ordinances, rules and any other requirements of state, county or municipal
authorities. Grantee shall not create, or cause to be created, any safety or
other hazard or nuisance in the Premises, in the Building or in any common area
associated with the Building.

     3.   Restoration Obligations.  Subject to the terms of the Lease, Grantor
may retain all or any portion of the improvements constructed in the Premises
and Grantee shall forfeit all rights thereto without further action by Grantee;
and subject to the terms of the Lease, to the extent that Grantor decides not to
retain such improvements, Grantee shall promptly restore the Premises to its
condition immediately prior to this Agreement.

     4.   Indemnification.  Grantee shall indemnify and hold Grantor and its
employees, agents, representatives, contractors, subcontractors, and invitees
(the "Grantor's Related Parties") harmless for, from and against any and all
damages, injuries, liabilities, losses, obligations, fines, costs, expenses,
fees (including without limitation reasonable attorneys' fees), and any and all
other sums of whatever nature and type resulting from any claims, mechanics' or
materialmen's liens, encumbrances, demands, liens, assertions, charges, actions,
suits or proceedings based upon, or arising out of the Work, except to the
extent caused by the negligence or willful misconduct of Grantor or any of
Grantor's Related Parties. The termination of this Agreement shall not affect or
cancel the indemnification obligations of Grantee hereunder.

     5.   Insurance.  Prior to exercising the rights granted hereunder, Grantee
shall comply with the insurance requirements set forth in Article 12 of the
Lease.

     6.   Termination.  The rights and obligations hereunder are temporary and
shall expire upon the Commencement Date of the Lease.


                                      DMB PROPERTY VENTURES LIMITED PARTNERSHIP,
                                      a Delaware limited partnership


                                      By DMB Associates, Inc., an Arizona
                                      corporation

                                      By    /s/ James C. Hoselton
                                        ----------------------------------
                                        James C. Hoselton
                                        Its  Vice President
                                           -------------------------------
                                                                       "GRANTOR"

                                      MESA AIR GROUP, INC., a Nevada corporation

                                      By    /s/ Jonathan Ornstein
                                        ----------------------------------
                                        Its  CEO
                                           -------------------------------
                                                                       "GRANTEE"

                                       21
<PAGE>
                                  EXHIBIT "F"

                                LETTER OF CREDIT

Norwest Bank El Paso, National Association
(Address)
El Paso, TX (Zip)

Date: October (Date), 1998

Beneficiary:   DMB Property Ventures Limited Partnership
               410 N. 44th St., Suite 250
               Phoenix, AZ 85008

Applicant:
               Mesa Air Group, Inc.
               410 N. 44th St., Suite 700
               Phoenix, AZ 85008

                           Letter of Credit Agreement

We open irrevocable standby letter of credit number ________ in the amount of
$400,000.00 (Four hundred thousand dollars and no cents)

In favor of yourselves

Expires October 31, 2000 at our counters

Available against drafts drawn at sight on Norwest Bank El Paso, National
Association, El Paso, Texas bearing the clause "drawn under standby letter of
credit number ________ of Norwest Bank El Paso, Texas, National Association"
accompanied by the following documents:

1.   Beneficiary's manually signed representation to (applicant's name) and
     Norwest Bank El Paso, National Association, written on beneficiary's
     letterhead reading exactly as follows:

     "I am an authorized representative of (beneficiary's name) hereby certify
     an event of default under that certain lease dated ________ between
     ________ and (applicant's name)."

2.   This original letter of credit.

Letter of credit may be presented at Norwest Bank Phoenix although payment will
be made at the counters of Norwest Bank El Paso, National Association.

This credit is subject to the Uniform Customs and practice for Documentary
Credits (1993 Revision) International Chamber of Commerce publication No. 500.

Unless otherwise stated, all documents are to be forwarded to us by mail, or
hand delivered to our counters. Documents to be directed to: Norwest Bank El
Paso, National Association, (Address), El Paso, Texas (Zip Code), Attn:
International Product Services Division, Letters of Credit.

We hereby engage with drawers and/or bona fide holders that drafts drawn and
negotiated in strict conformity with the terms of this credit will be duly
honored upon presentation.

Norwest Bank El Paso, National Association


_____________________              ______________________
Authorized Signature               Authorized Signature



                                       22

                                                                     [ILLEGIBLE]
                                                                     -----------
                                                                       INITIALS

<PAGE>
                            FIRST AMENDMENT TO LEASE

     THIS FIRST AMENDMENT TO LEASE ("Amendment") is made and entered into as of
this 9th day of March, 1999, by and between DMB PROPERTY VENTURES LIMITED,
PARTNERSHIP, a Delaware limited partnership ("Landlord"), and MESA AIR GROUP,
INC., a Nevada corporation ("Tenant").

1.   RECITALS:

     1.1  DMB Property Ventures Limited Partnership, a Delaware limited
          partnership ("Landlord"), and Mesa Air Group, Inc., a Nevada
          corporation ("Tenant"), entered into a Lease Agreement dated October
          16, 1998, wherein Landlord leased to Tenant, and Tenant leased from
          Landlord, Suite #700 in Three Gateway, located at 410 North 44th
          Street, Phoenix, Arizona (the "Premises"). The Lease Agreement, as
          amended, is hereinafter referred to as the "Lease".

     1.2  By this First Amendment, the parties desire to further amend the Lease
          on the terms and conditions hereinafter set forth.

     1.3  All capitalized terms not defined herein shall have the same meaning
          as set forth in the Lease.

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

2.   AGREEMENT

     2.1  The Commencement Date referenced in Article 1(a) of the Lease is
          hereby amended to read October 19, 1998.

     2.2  Except as amended by this First Amendment, the Lease is hereby
          ratified and confirmed in its entirety.

LANDLORD:                               ADDRESS:

DMB PROPERTY VENTURES LIMITED           4201 N. 24th Street, Suite 120
PARTNERSHIP, a Delaware limited         Phoenix, Arizona 85016
Partnership

By: DMB G.P., an Arizona corporation

By:  /s/ James C. Hoselton
     -------------------------
     James C. Hoselton
Its: Vice President


TENANT:                                 ADDRESS:

MESA AIR GROUP, INC.                    410 North 44th Street #700
a Nevada corporation                    Phoenix, Arizona 85008
                                        (602)685-4000 Phone
By:  /s/ Jonathan Ornstein              (602)685-4350 Fax
     --------------------------
     Jonathan Ornstein
Its: CEO
<PAGE>
                           SECOND AMENDMENT TO LEASE
                           -------------------------

     THIS SECOND AMENDMENT TO LEASE ("SECOND AMENDMENT") is made and entered
into as of this 8th day of November, 1999, by and between DMB PROPERTY VENTURES
LIMITED PARTNERSHIP, a Delaware limited partnership ("LANDLORD"), and MESA AIR
GROUP, INC., a Nevada corporation ("TENANT").

1.   RECITALS
     --------

     1.1  Landlord and Tenant entered into a Lease Agreement Dated October 16,
          1998, as amended by the First Amendment to Lease dated March 9, 1999,
          wherein Landlord leased to Tenant 21,003 rentable square feet of space
          known as Suite 700 on the 7th floor at 410 N. 44th Street, Phoenix,
          Arizona (the "PREMISES"). The Lease Agreement, as amended, is
          hereinafter referred to as the "LEASE".

     1.2  By this Second Amendment, the parties desire to further amend the
          Lease by adding 3,116 rentable square feet to the definition of the
          Premises, known as Suite 175 ("SUITE 175") on the 1st floor, as
          further described on Exhibit "B-2" attached hereto, and by this
          reference incorporated herein, on the terms and conditions hereafter
          set forth.

     1.3  Except as specifically defined in this Second Amendment, all
          capitalized items shall have the same meaning as set forth in the
          Lease.

     NOW, THEREFORE, the parties hereto, for good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, state, confirm, and
agree as follows:

2.   AGREEMENT
     ---------

     2.1  The terms of this Second Amendment shall become effective on November
          15, 1999.

     2.2  The total rentable area of the Premises shall be increased by 3,116
          rentable square feet. The total rentable area of the Premises is
          24,119 rentable square feet.

     2.3  The Base Rent referenced in Paragraph 2(a) of the Lease shall be
          amended to include the following:

          SUITE 175 - 3,116 RENTABLE SQUARE FEET
          --------------------------------------
          11/15/99 - 10/18/01  $68,552.04 ANNUALLY  $5,712.67 MONTHLY
          10/19/01 - 10/18/05  $77,900.00 ANNUALLY  $6,491.67 MONTHLY
          10/19/05 - 10/18/08  $84,132.00 ANNUALLY  $7,011.00 MONTHLY

     2.4  With respect to Suite 175, Tenant's Proportionate Share of Operating
          Costs, Real Property Taxes and Utilities referenced in Paragraph 7 of
          the Lease shall be as follows:

          Tenant's Proportionate Share: 1.44% of Building operating expenses.

     2.5  With respect to Suite 175, the Expense Stop referenced in Paragraph 7
          of the Lease shall be equivalent to the actual operating expenses
          incurred in the calendar year 1999.

     2.6  Upon execution of this Second Amendment, Landlord will, at its sole
          cost and expense, shampoo the carpet, and repair and paint the holes
          in existing walls.

     2.7  Article 6, Parking and Common Use Areas, of the Lease shall be amended
          to include the following:

          "With respect to Suite 175, Landlord will provide the following
          parking spaces for Tenant's use:


<PAGE>
                       SECOND AMENDMENT TO LEASE, PAGE 2
                        TO LEASE DATED OCTOBER 16, 1998
             DMB PROPERTY VENTURES LIMITED PARTNERSHIP ("LANDLORD")
                        MESA AIR GROUP, INC. ("TENANT")

          Three (3) covered reserved spaces free of charge for the Lease Term,
          Six (6) covered unreserved spaces free of charge until October 18,
          2001, and at $30.00 per space per month beginning October 19, 2001,
          and Three (3) uncovered, unreserved spaces free of charge for the
          Lease Term."

     2.8  Option to Terminate. Notwithstanding anything to the contrary in this
          Lease, and provided Tenant is not then in default, Tenant shall have
          the option to terminate this Lease with respect to Suite 175 only, at
          any time, by providing Landlord with six (6) months prior written
          notice of its election to do so, which notice shall be irrevocable.

     2.9  As amended herein, all of the terms and conditions of the Lease are
          hereby ratified and confirmed in their entirety.

     IN WITNESS WHEREOF, the parties, have executed this Second Amendment as of
the date first written above.

                                   DMB PROPERTY VENTURES LIMITED PARTNERSHIP,
                                   a Delaware limited partnership,

                                   By DMB G.P., an Arizona corporation

                                   By /s/ James C. Hoselton
                                     -----------------------------------------
                                          James C. Hoselton
                                          Its Vice President
                                             ---------------------------------


                                   MESA AIR GROUP, INC.
                                   a Nevada corporation


                                   By /s/ Jonathan Ornstein
                                     -----------------------------------------
                                          Jonathan Ornstein
                                          Its: CEO
                                             ---------------------------------

                                       2
<PAGE>
                                 EXHIBIT "B-2"

                               SUITE 175 PREMISES

SUITE 175
3,116 RSF

                              [FLOOR PLAN GRAPHIC]

<PAGE>
                             LEASE AMENDMENT THREE               CMD 174B (8/98)

                          (EXPANSION/NOT CO-TERMINOUS)

          THIS LEASE AMENDMENT THREE ("Amendment") is made and entered into as
of the 7th day of November, 2000, by and between CMD REALTY INVESTMENT FUND IV,
L.P., an Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a
Nevada corporation ("Tenant").

     A.   Landlord and Tenant are the current parties to that certain lease
("Original Lease") dated October 16, 1998, for premises (the "Premises") in the
building (the "Building") known as Three Gateway, located at 410 N. 44th
Street, Phoenix, Arizona (the "Property," as may be further described below),
which lease has heretofore been amended or assigned by documents described and
dated as follows: First Amendment to Lease dated March 9, 1999 and Second
amendment to Lease dated November 8, 1999 (collectively, and as amended herein,
the "Lease").

     B.   Tenant has requested that additional space in the Property be added to
the Premises, and Landlord is willing to grant the same, all on the terms and
conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the parties do
hereby agree as follows:

     1.   ADDITIONAL PREMISES; EARLY TERMINATION. The space known as Suite 230
(the "Additional Premises"), the approximate location of which is shown on
Exhibit A hereto, and which shall be deemed to contain 1,191 square feet of
rentable area for purposes hereof, shall be added to and become a part of the
Premises, commencing on November 15, 2000 ("Additional Premises Commencement
Date"), and continuing through September 30, 2001 ("Additional Premises
Expiration Date"), subject to the terms and conditions set forth hereinafter.

     Either party shall have the option to terminate this Lease early, at any
time after May 31, 2001, by providing the other party with at least thirty (30)
days advance written notice of the effective early termination date ("Early
Termination Date"), as though such date were the original expiration date set
forth in this Lease (i.e., the earliest possible Early Termination Date would
be June 1, 2001). Notwithstanding such early termination, Tenant shall timely
pay all rentals and other charges under the Lease with respect to the
Additional Premises, and shall comply with each and every term and provision
hereof, accruing through the Early Termination Date (and all such obligations
accruing through the Early Termination Date shall survive such termination,
including, but not limited to, any rentals or other charges not yet determined
or billed for such period with respect to the Additional Premises prior to the
Early Termination Date). This early termination right is personal to Mesa Air
Group, Inc. If Tenant shall sublease or assign the Lease with respect to all or
any portion of the Premises, then immediately upon such sublease or assignment
Tenant's termination right herein shall concurrently terminate and become null
and void. Notwithstanding anything contained herein to the contrary, if Tenant
leases additional space in the Property, whether pursuant to an expansion right
contained in the Lease or otherwise, this option to terminate by Tenant shall
thereupon be null and void. Tenant's option hereunder shall, at Landlord's
election, terminate if Tenant is in violation of the Lease at the time Tenant
seeks to exercise such option, or at any time thereafter and prior to the Early
Termination Date. Tenant's exercise of such option shall not operate to cure
any violation by Tenant of any of the terms or provisions in the Lease, nor to
extinguish or impair any rights or remedies of Landlord arising by virtue of
such violation.

                                       1

<PAGE>
     2.  BASE RENT FOR ADDITIONAL PREMISES.  The base or minimum monthly rent
for the Additional Premises shall be $2,481.25 per month.

     3.  ADDITIONAL RENT; TENANT'S SHARE.  On the Additional Premises
Commencement Date, all other rentals or other charges based or computed on the
square footage of the Premises, including without limitation, real estate taxes,
and operating or other expenses of the Property, shall be adjusted
proportionately to reflect the Additional Premises rentable square footage, such
that Tenant's share thereof shall be increased by 55/100 percent (0.55%) with
respect to the Additional Premises, for a total of eleven and 69/100 percent
(11.69%) with respect to the entire Premises including the Additional Premises,
through the Additional Premises Expiration Date. The Expense Stop for the
Additional Premises shall be the operating cost for the Building (as set forth
in Section 7 of the Original Lease) for the calendar year 1998.

     4.  CONSOLIDATED OR SEPARATE BILLINGS.  The minimum or base rentals, real
estate taxes, operating or other expenses of the Property, and all other rentals
and charges respecting the Additional Premises are sometimes herein called the
"Additional Premises Rent". Landlord may compute and bill the Additional
Premises Rent (or components thereof) separately or treat the Additional
Premises and Premises as one unit for computation and billing purposes.

     5.  PRORATIONS.  If the Additional Premises Commencement Date and/or
Additional Premises Expiration Date occurs other than on the beginning or end,
respectively, of the applicable payment period under the Lease, Tenant's
obligations for base or minimum rentals, real estate taxes, operating or other
expenses of the Property and other such charges shall be prorated on a per diem
basis.

     6.  OTHER TERMS; CERTAIN PROVISIONS DELETED.  On the Additional Premises
Commencement Date, the Additional Premises shall be added to the Premises under
the Lease, and all terms and conditions then or thereafter in effect under the
Lease shall apply to the Additional Premises, except as provided to the contrary
herein. Notwithstanding the foregoing to the contrary, this Amendment is
intended to supersede any rights of Tenant under the Lease to expand, reduce or
relocate the Premises, extend the term or terminate the Lease early, and all
such provisions are hereby deleted.

     7.  CONDITION OF ADDITIONAL PREMISES; CARPET.  Tenant has inspected the
Additional Premises (and portions of the Building, Property, systems and
equipment providing access to or serving the Additional Premises) or has had an
opportunity to do so, and agrees to accept the same "AS IS" without any
agreements, representations, understandings or obligations on the part of
Landlord to perform any alterations, repairs or improvements, or regarding any
other matter, except that Landlord shall, at Landlord's sole expense, install
carpet in the open area of the Additional Premises (i.e., that area which is
uncarpeted as of the date of this Amendment; the open area to be carpeted
specifically does not include the existing offices) with carpet selected by
Landlord from the Building inventory of carpet (the "Work"). With respect to the
Work: (i) Landlord shall use diligent, good faith efforts to substantially
complete any such improvements to an extent that Tenant can reasonably occupy
the Additional Premises by the Additional Premises Commencement Date set forth
in this Amendment, subject to the other provisions of this Amendment, (ii)
Tenant shall also use diligent, good faith efforts to cooperate, and to cause
its space planners, architects, contractors, agents and employees to cooperate
diligently and in good faith, with Landlord and any space planners, architects,
contractors or other parties designated by Landlord, such that any such
improvements to the Additional Premises can be planned, permits can be obtained,
and the work can be substantially


                                       2

<PAGE>
completed by the Additional Premises Commencement Date set forth in this
Amendment, and (iii) in the event of any dispute as to whether any such
improvements have been substantially completed, Landlord may refer the matter to
Landlord's independent architect, whose decision shall be final and binding on
the parties.

     8.   ADDITIONAL PREMISES COMMENCEMENT DATE ADJUSTMENTS.

          a.  Additional Premises Commencement Date Adjustments and
Confirmation. If the Additional Premises Commencement Date is advanced or
postponed as provided below, the Additional Premises Expiration Date set forth
above shall not be changed, unless Landlord so elects by notice to Tenant. In
addition, if the Additional Premises Commencement Date, as so advanced or
postponed herein, occurs other than on the first day of a calendar month,
Landlord may further elect by notice to Tenant to: (i) extend the term with
respect to the Additional Premises such that the Additional Premises Expiration
Date is the last day of the calendar month in which it would otherwise occur,
and/or (ii) adjust the dates for any fixed increases in the base rent for the
Additional Premises such that they occur on the first day of the calendar month
in which they would otherwise occur. Tenant shall execute a confirmation of the
Additional Premises Commencement Date, Additional Premises Expiration Date and
other dates as adjusted herein in such form as Landlord may reasonably request
within ten(10) days after requested; any failure to respond within such time
shall be deemed an acceptance of the matters as set forth in Landlord's
confirmation. If Tenant disagrees with Landlord's adjustment of the Additional
Premises Commencement Date, Additional Premises Expiration Date or other dates
as adjusted herein, Tenant shall pay Additional Premises Rent and perform all
other obligations commencing and ending on the date or dates determined by
Landlord, subject to refund or credit when the matter is resolved.

          b.  Early Additional Premises Commencement Date. The Additional
Premises Commencement Date, Additional Premises Rent and Tenant's other
obligations respecting the Additional Premises shall be advanced to such earlier
date as: (i) Landlord substantially completes any improvements to the Additional
Premises required to be performed by Landlord under this Amendment to an extent
that Tenant is able to occupy the Additional Premises, and Landlord delivers
possession thereof, or (ii) Tenant, with Landlord's written permission,
otherwise commences occupying the Additional Premises. If either such events
occurs with respect to a portion of the Additional Premises, the Additional
Premises Commencement Date, Additional Premises Rent and Tenant's other
obligations shall be so advanced with respect to such portion (and fairly
prorated based on the rentable square footage involved). During any period that
Tenant shall be permitted to enter the Additional Premises prior to the
Additional Premises Commencement Date other than to occupy the same (e.g., to
perform alterations or improvements), Tenant shall comply with all terms and
provisions of the Lease (including this Amendment), except those provisions
requiring the payment of Additional Premises Rent. Landlord shall permit early
entry, so long as the Additional Premises is legally available, Landlord has
completed any work required of Landlord under this Amendment, and Tenant is in
compliance with the other provisions of the Lease (including this Amendment),
including the insurance requirements.

          c.  Additional Premises Commencement Date Delays. Subject to the other
provisions of this Amendment, the Additional Premises Commencement Date,
Additional Premises Rent and Tenant's other obligations respecting the
Additional Premises shall be postponed to the extent Tenant is unable to
reasonably occupy the Additional Premises because Landlord fails: (i) to
substantially complete any improvements to the Additional Premises required to
be performed by Landlord under this Amendment, or (ii) to deliver

                                       3
<PAGE>
possession of the Additional Premises for any other reason, including holding
over by prior occupants, except to the extent that Tenant, its space planners,
architects, contractors, agents or employees in any way contribute to either
such failures. If either such event occurs with respect to a portion of the
Additional Premises, the Additional Premises Commencement Date, Additional
Premises Rent and Tenant's other obligations shall be so postponed with respect
to such portion (and fairly prorated based on the rentable square footage
involved). Any such delay in the Additional Premises Commencement Date shall not
subject Landlord to liability for loss or damage resulting therefrom, and
Tenant's sole recourse with respect thereto shall be the postponement of
Additional Premises Rent and other obligations described herein.

     9.  SUITE 800.  Landlord and Tenant are currently parties to those certain
License to Occupy Office agreements dated June 17, 1999 and October 18, 1999,
each of which is for a portion of Suite 800. Tenant agrees that such agreements
shall be deemed to be terminated as of November 15, 2000 and agrees to vacate
Suite 800 in its entirety no later than November 15, 2000. Tenant shall pay
Landlord 200% of the amounts then applicable under the License to Occupy Office
agreements prorated, on a per square foot basis to reflect the rentable square
footage of Suite 800, and a per diem basis for each day Tenant shall retain
possession of Suite 800 or any part thereof after November 15, 2000, together
with all damages sustained by Landlord on account thereof. Tenant shall pay such
amounts on demand, and in the absence of demand monthly in advance. The
foregoing provisions, and Landlord's acceptance of any such amounts, shall not
serve as permission for Tenant to hold-over (although Tenant shall remain a
licensee-at-sufferance bound to comply with all provisions of the License to
Occupy Office Space agreements Lease during any time Tenant retains possession
thereof). Landlord shall have the right, at any time after November 15, 2000, to
reenter and possess Suite 800 and remove all property and persons therefrom, and
Landlord shall have such other remedies for holdover as may be available to
Landlord under the Lease, the License to Occupy Office agreements or applicable
laws.

     10.  CONFIDENTIALITY.  Tenant shall keep the content and all copies of this
document and the Lease, all related documents or amendments now or hereafter
entered, and all proposals, materials, information and matters relating thereto
strictly confidential, and shall not disclose, disseminate or distribute any of
the same, or permit the same to occur, except to the extent reasonably required
for proper business purposes by Tenant's employees, attorneys, insurers,
auditors, lenders, and permitted successors and assigns (and Tenant shall
obligate any such parties to whom disclosure is permitted to honor the
confidentiality provisions hereof), and except as may be required law or court
proceedings.

     11.  REAL ESTATE BROKERS.  Tenant represents and warrants that Tenant has
not dealt with any broker, agent or finder in connection with this Amendment,
and agrees to indemnify and hold Landlord, and its employees, agents and
affiliates harmless from all damages, judgments, liabilities and expenses
(including reasonable attorneys' fees) arising from any claims or demands of any
broker, agent or finder with whom Tenant has dealt for any commission or fee
alleged to be due in connection with this Amendment.

     12.  LIMITATION OF LANDLORD'S LIABILITY. Tenant agrees to look solely to
Landlord's interest in the Property for the enforcement of any judgment, award,
order or other remedy under or in connection with the Lease or any related
agreement, instrument or document or for any other matter whatsoever relating
thereto or to the Property or Premises. Under no circumstances shall any present
or future, direct or indirect, principals or investors, general or limited
partners, officers, directors, shareholders, trustees, beneficiaries,
participants, advisors, managers, employees, agents or affiliates of Landlord,
or of any of the other foregoing parties,


                                       4

<PAGE>
or any of their heirs, successors or assigns have any liability for any of the
foregoing matters. In no event shall Landlord be liable to Tenant for any
consequential damages. If Landlord shall convey or transfer the Property or any
portion thereof in which the Premises are contained to another party, such party
shall thereupon be and become landlord hereunder, shall be deemed to have fully
assumed all of Landlord's obligations under this Lease accruing during such
party's ownership, including the return of any security deposit, and Landlord
shall be free of all such obligations accruing from and after the date of
conveyance or transfer.

     13. OFFER. The submission and negotiation of this Amendment shall not be
deemed an offer to enter into the same by Landlord. Tenant's execution of this
Amendment constitutes a firm offer to enter into the same which may not be
withdrawn for a period of forty-five (45) days after delivery to Landlord.
During such period, Landlord may proceed in reliance thereon and permit Tenant
to enter the Additional Premises, but such acts shall not be deemed an
acceptance. Such acceptance shall be evidenced only by Landlord signing and
delivering this Amendment to Tenant.

     14.  WHOLE AMENDMENTS; FULL FORCE AND EFFECT; CONFLICTS. This Amendment
sets forth the entire agreement between the parties with respect to the matters
set forth herein. There have been no additional oral or written representations
or agreements. As amended herein, the Lease between the parties shall remain in
full force and effect. As an inducement for Landlord to enter into this
Amendment, Tenant hereby represents that Landlord is not in violation of the
Lease, and that Landlord has fully performed all of its obligations under the
Lease as of the date on which Tenant signs this Amendment. In case of any
inconsistency between the provisions of the Lease and this Amendment, the latter
provisions shall govern and control. This Amendment may be further modified only
in writing signed by both parties.

     15. INTERPRETATION; DEFINED AND UNDEFINED TERMS. This Amendment has been
prepared from a generic form intended for use with a variety of underlying lease
forms containing a variety of defined and undefined terms. This Amendment shall
be interpreted in a reasonable manner in conjunction with the Lease. If an
Exhibit is attached to this Amendment, the term "Lease" therein shall refer to
this Amendment or the Lease as amended, and terms such as "Commencement Date"
and "Lease Term" shall refer to analogous terms in this Amendment, all as the
context expressly provides or reasonably implies. Unless expressly provided to
the contrary herein: (a) any terms defined herein shall have the meanings
ascribed herein when used as capitalized terms in other provisions hereof, (b)
capitalized terms not otherwise defined herein shall have the meanings, if any,
ascribed thereto in the Lease, and (c) non-capitalized undefined terms herein
shall be interpreted broadly and reasonably to refer to terms contained in the
Lease which have a similar meaning, and as such terms may be further defined
therein. Notwithstanding the foregoing, the parties agree that terms such as
"rentable area" and "rentable square feet" herein do not refer to similar such
terms in the Lease, and include the so-called usable area, without deduction for
columns or projections, multiplied by one or more load or conversion factors, to
reflect a share of certain areas, which may include ground floor and elevator
lobbies, corridors, mechanical, utility, janitorial, boiler and service rooms
and closets, restrooms, and other common, public and service areas, as
determined by Landlord in accordance with existing building records or other
sound management practices.

     16.  DEVELOPMENT OR COMPLEX (IF APPLICABLE). The parties further agree as
follows:

          a.   Definition of Property. The term "Property" herein shall mean the
Building, and any common areas or facilities, easements, corridors, lobbies,
sidewalks, loading areas, driveways, landscaped areas, air rights, development
rights, parking rights, skywalks,

                                       5
<PAGE>
parking garages and lots, and any and all other rights, structures or facilities
operated or maintained in connection with or for the benefit of the Building,
and all parcels or tracts of land on which all or any portion of the Building or
any of the other foregoing items are located. Landlord reserves the right to add
land, buildings, easements or other interests to, or sell or eliminate the same
from, the Property and grant interests and rights in the Property to other
parties. If the Building shall now or hereafter be part of a development or
complex of two or more buildings or structures collectively owned by Landlord or
its affiliates, the Property shall, at Landlord's option also be deemed to
include such other of those buildings or structures as Landlord shall from time
to time designate, and shall as of the date hereof include such buildings and
structures (and related facilities and parcels on which the same are located) as
Landlord shall be currently using in determining Tenant's share of expenses and
taxes.

     b.  Expense and Tax Allocations and Tenant's Share Adjustments.  If the
Property shall now or hereafter be part of or shall include a development or
complex of two or more buildings or structures collectively owned by Landlord or
its affiliates, Landlord may allocate expenses and taxes (or components thereof)
within such complex or development, and between such buildings and structures
and the parcels on which they are located, in accordance with sound accounting
and management practices. In the alternative, Landlord shall have the right to
determine, in accordance with sound accounting and management practices,
Tenant's share of expenses and taxes (or components thereof) based on such items
for all or any such buildings and structures, and any common areas or
facilities, easements, corridors, lobbies, sidewalks, loading areas, driveways,
landscaped areas, air rights, development rights, parking rights, skywalks,
parking garages and lots, and any and all other rights, structures or facilities
operated or maintained in connection therewith or for the benefit thereof, and
all parcels or tracts of land on which all or any portion of any of the other
foregoing items are located; in such event, Landlord may adjust Tenant's share
to be based on the ratio of the rentable area of the Premises to the rentable
area of such buildings as to which such expenses and taxes (or components
thereof) are included. If Landlord is not furnishing all or any particular
utility or service (the cost of which, if performed by Landlord, would be
included in expenses) to a tenant during any period, Landlord may for such
period exclude the rentable area of such tenant from the rentable area of the
Property in computing Tenant's share of the component of expenses for such
utilities or services.



                                       6

<PAGE>
     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.

          LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL]
                    an Illinois limited partnership

                    By:  CMD/Fund IV GP Investments, L.P.
                         an Illinois limited partnership, its general partner

                         By: CMD REIM IV, Inc., an Illinois corporation,
                             its general partner

                             By:/s/ Lee Moreland
                                ----------------
                             Name: Lee Moreland
                             Its: Vice President


          TENANT:   MESA AIR GROUP, INC. [SEAL]
                    a Nevada corporation

                    By:/s/ Mike Lotz
                       -------------
                    Name: Mike Lotz
                    Its: President


                                  CERTIFICATE

     I, ___________________________________________, as _______________________
of the aforesaid Tenant, hereby certify that the individual(s) executing the
foregoing Lease on behalf of Tenant was/were duly authorized to act in
his/their capacities as set forth above, and his/their action(s) are the action
of the Tenant.

(Corporate Seal)              _________________________________________________



                                       7

<PAGE>
                                   EXHIBIT A

                    Floor Plate Showing Additional Premises


Additional Premises
- -------------------


                            [2ND FLOOR - FLOOR PLAN]


                                       8

<PAGE>
                                                                    174D (1/00)



                              LEASE AMENDMENT FOUR

                                (SATELLITE DISH)


     THIS LEASE AMENDMENT FOUR ("Amendment") is made and entered into as of the
15th day of May, 2001, by and between CMD REALTY INVESTMENT FUND IV, L.P., an
Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a Nevada
corporation ("Tenant").

     A.  Landlord and Tenant are the current parties to that certain lease
("Original Lease") dated October 16, 1998, for premises known as Suites 175,
230, and 700 (the "Premises") in the building (the "Building") known as Three
Gateway, located at 410 N. 44th Street, Phoenix, Arizona 85008 (the "Property"),
as it may have been previously amended (collectively, and as amended herein, the
"Lease").

     B.  The parties mutually desire to amend the Lease on the terms hereof.

     NOW, THEREFORE, the parties hereby agree as follows:

     1.  ROOF SPACE AND ROOF ITEMS.  Landlord hereby grants Tenant a
non-exclusive license to use a portion of the roof, or a position on the parapet
or penthouse or other such area near the top of the Property or top of any
garage or other such structure associated therewith ("Roof Space"), as
designated by Landlord in writing, subject to the other provisions hereof.
Tenant shall use the Roof Space only for the purpose of installing the following
item or items (the "Roof Items"): one (1) satellite reception dish, which shall
under no circumstances exceed 18 inches wide by 18 inches tall. The term
("Term") of this license shall commence on July 1, 2001, and continue until the
earlier to occur of the expiration or earlier termination of the Lease or, at
Landlord's option, Tenant's abandonment or failure to use the Premises or Roof
Space or Roof Items, or otherwise by Landlord on thirty days notice.

     2.  PAYMENTS.  Tenant shall pay Landlord, as consideration for reserving
the Roof Space and as additional Rent under the Lease, $50.00 ("Roof Charges")
on or before the first day of each calendar month of the Term without prior
demand, deduction, set-off or counterclaim. Tenant shall also reimburse Landlord
for: (a) all utilities consumed by the Roof Items, as reasonably estimated by
Landlord's engineer, within 30 days after Landlord bills the same from time to
time, and (b) all out-of-pocket costs which Landlord pays to consultants and
other parties (such as but not limited to telecommunications, structural and
roofing consultants, engineers and contractors) in connection with the Roof
Items or the license granted hereunder, together with an amount equal to fifteen
percent (15%) thereof to cover Landlord's overhead, within thirty days after
presentation to Tenant by Landlord of invoices therefor.

     3.  INSTALLATION.

         a.  Roof Items.  Tenant shall not install the Roof Items, or thereafter
make any alterations, additions or improvements to the roof or the Roof Items,
or remove the Roof Items, without the prior written consent of Landlord
concerning all details thereof, including, but not limited to, the location of
the Roof Space. Landlord shall not unreasonably withhold consent, except that
Landlord reserves the right to withhold consent in Landlord's sole discretion
for Roof Items or work affecting the structure or safety of the Property, or any
other parties' rights, or the appearance of the Property from any common or
public areas. Landlord shall approve or reject the proposed installation of the
Roof Items within a reasonable time after Tenant submits (i) plans


                                       1

<PAGE>
and specifications for the installation of the Roof Items, and (ii) copies of
all required governmental, quasi-governmental and other approvals, permits,
licenses, and authorizations which Tenant will obtain at its own expense
(including, but not limited to, approvals from any architectural or design
review committee established under any covenants, conditions and restrictions
applicable to the Property). Landlord also reserves the right to require that:
(a) the Roof Items be placed in a manner that is not attached to the Property
and that does not penetrate the roof (e.g. placed in a movable container), (b)
any installation or other work be done in accordance with any Property rules,
standards or other requirements for roof equipment and/or under the supervision
of Landlord's employees or agents, and in a manner so as to avoid damage to the
Property, (c) roof pavers or walk pads be installed on the roof, at Tenant's
sole cost, to provide a means of access to the Roof Space, (d) screening of a
material prescribed by Landlord be installed, at Tenant's sole cost, to prevent
the Roof Items from being visible to the public or to other tenants or from
other buildings, and (e) all work be performed by contractors approved or
designated by Landlord (and any work affecting the roof must be performed only
by Landlord's designated roofing contractor). All work shall be performed in a
good and workmanlike manner and best industry practices and procedures, in
accordance with all governmental requirements and in accordance with all
provisions of the Lease respecting work to the Premises.

          b.   Connecting Lines and Related Equipment. If Tenant needs to
connect the Roof Items to any other equipment, including connections via
telecommunications cables ("Lines") to the Premises, Tenant shall: (i) obtain
Landlord's prior written approval of all aspects thereof, (ii) use an
experienced and qualified contractor reasonably designated or approved in
writing in advance by Landlord, (iii) comply with such reasonable inside wire
standards and procedures as Landlord may adopt from time to time, including
Landlord's requirements respecting access to and use of the wire closets, riser
system and main distribution frame ("MDF"), and all other provisions of this
Lease, (iv) not install Lines in the same sleeve, chaseway or other enclosure in
close proximity with electrical wire, and not install PVC-coated Lines except as
may be permitted by code, (v) thoroughly test any riser Lines to which Tenant
intends to connect any Lines to ensure that such riser Lines are available and
are not then connected to or used for telephone, data transmission or any other
purpose by any other party (whether or not Landlord has previously approved such
connections), and not connect to any such unavailable or connected riser Lines,
and (vi) not connect any equipment to the Lines which may create an
electromagnetic field exceeding the normal insulation ratings of ordinary
twisted pair riser cable or cause radiation higher than normal background
radiation, unless the Lines therefor (including riser Lines) are appropriately
insulated to prevent such excessive electromagnetic fields or radiation (and
such insulation shall not be provided by the use of additional unused twisted
pair Lines). In addition, all such work shall be performed in a good and
workmanlike manner and best industry practices and procedures, in accordance
with all governmental requirements and in accordance with all provisions of the
Lease respecting work to the Premises.

     4.   CONDITION; PERMITS. Tenant has inspected the roof and agrees to
accept the same hereunder "as is". Landlord does not represent or warrant that
use of the roof hereunder will comply with any applicable federal, state,
county or local Laws or ordinances or the regulations of any of their agencies,
nor any covenants, conditions or restrictions that may apply to the Property,
nor that the roof will be suitable for Tenant's purposes. Tenant agrees that
Tenant shall at all times comply with any applicable federal, state, county or
local laws or ordinances, pertaining to Tenant's use of the roof or the Roof
Items, and all applicable covenants, conditions and restrictions. Tenant's
failure or inability to obtain any necessary permits, approvals, variances or
waivers respecting the Roof Items shall not excuse Tenant from any obligations
under this Lease; any variances or waivers shall be subject to Landlord's prior
written



                                       2
<PAGE>
approval to determine whether such variances or waivers may limit any rights to
place or maintain other roof items at the Property or otherwise adversely affect
Landlord or the Property.

     5.   ROOF OR OTHER PROPERTY DAMAGE; REMOVAL OF ROOF ITEMS. Tenant shall
take all appropriate actions to prevent any roof or building leaks or other
damage or injury to the Roof Space or the Property or contents thereof
(collectively, "Property Damage") caused by Tenant's use of the Roof Space or
its installation, use, maintenance or removal of the Roof Items, and shall
promptly notify Landlord of any such Property Damage. In the event of any such
Property Damage, Landlord may: (i) require that Tenant pay Landlord's reasonable
costs for repairing such Property Damage within fifteen days after Landlord
submits an invoice and reasonable supporting documentation therefor, or (ii)
require that Tenant perform the necessary repairs in a good and workmanlike
manner using a contractor designated or approved by Landlord at Tenant's expense
within fifteen days after Landlord's notice. Upon termination of the Lease or
this Exhibit, Tenant shall disconnect and remove the Roof Items, and, at
Landlord's written election, any Lines installed by or for Tenant hereunder. If
Tenant does not immediately remove the Roof Items or Lines when so required,
Tenant hereby authorizes Landlord to remove and dispose of the same and Tenant
shall promptly pay Landlord's reasonable charges for doing so. Any Lines not
required to be removed pursuant to this Section shall, at Landlord's option,
become the property of Landlord (without payment by Landlord).

     6. MISCELLANEOUS. Except to the extent expressly inconsistent herewith, all
rights and obligations of the parties respecting the Premises under the Lease
shall apply to the Roof Space and Roof Items, including, without limitation,
obligations respecting compliance with laws, hazardous materials, repairs,
casualty damage, indemnities and insurance (including waivers of insurers'
subrogation rights). Landlord shall permit Tenant reasonable access to the roof
for the purposes permitted hereunder, during normal business hours at the
Property upon reasonable advance notice and scheduling through Landlord's
management and security personnel. Access after normal business hours may be
granted by Landlord in its reasonable discretion, and for such reasonable
charges as Landlord shall impose. Landlord reserves the right to enter the roof,
without notice, at any time for the purpose of inspecting the same, or making
repairs, additions or alterations to the Property, or to exhibit the roof to
prospective tenants, purchasers or others, or for any other reason not
inconsistent with Tenant's rights hereunder. In connection with exercising such
rights, upon ten days prior written or oral notice to Tenant's on-site manager
(except that no notice shall be required in an emergency, e.g. to repair roof
leaks associated with the Roof Space or Roof Items), Landlord may temporarily
disconnect the Roof Items and/or move the Roof Items. Landlord also reserves the
right, from time to time upon thirty days prior written notice to Tenant, to
relocate the Roof Space and/or move or require that Tenant move the Roof Items,
to another location or locations, provided: (i) Landlord shall use reasonable
efforts to provide such other space that will be reasonably comparable and
feasible for Tenant's purposes, and (ii) Landlord shall pay all reasonable,
direct, out-of-pocket expenses incurred by Tenant in connection therewith
(excluding lost profits of other consequential damages). Tenant may not assign
or sublicense its rights under this Exhibit, nor let any other party tie into or
use the Roof Items or the roof, and Tenant may not transmit or distribute
signals through the Roof Items to any parties not affiliated with Tenant, and
any attempt to assign, sublicense, transmit or distribute signals in violation
of the foregoing shall be null and void. Tenant shall comply with all FCC
requirements, and shall not use the roof or the Roof Items so as to interfere in
any way with the ability of Landlord or its tenants and occupants of the
Property and neighboring properties to receive radio, television, telephone,
microwave, short-wave, long-wave or other signals of any sort, nor so as to
interfere with the use of any antennas, satellite dishes or other electronic or
electric equipment or facilities currently or hereafter located on the roof or
any floor or area of the Property or other property. If Tenant violates this
Exhibit, Landlord shall have the right

                                       3
<PAGE>
to disconnect the Roof Items until the violations are cured (without limitation
as to Landlord's other remedies under the Lease or at law or equity).

     7.  BROKERS.  Tenant hereby represents and warrants that Tenant has not
dealt with any broker, salesman, agent or finder in connection with this
Amendment, and agrees to defend, indemnify and  hold Landlord, and its
employees, agents and affiliates harmless from all damages, losses, judgments,
liabilities and expenses (including reasonable attorneys' fees) arising from any
claims or demands of any broker, salesman, agent or finder with whom Tenant has
dealt for any commission or fee alleged to be due in connection with this
Amendment.

     8.  GUARANTORS.  This Amendment is subject to, and conditioned upon, the
written acceptance hereof by all guarantors of the Lease, who by signing below
shall agree that their guarantee shall apply to the Lease as amended herein,
unless such requirement is expressly waived in writing by Landlord.

     9.  CONFIDENTIALITY.  Tenant shall keep the content and all copies of this
document and the Lease, all related documents or amendments now or hereafter
entered, and all proposals, materials, information and matters relating thereto
strictly confidential.

    10.  LIMITATION OF LANDLORD'S LIABILITY.  Tenant agrees to look solely to
Landlord's interest in the Property for the enforcement of any judgment, award,
order or other remedy under or in connection with the Lease or any related
agreement, instrument or document or for any other matter whatsoever relating
thereto or to the Property or Premises. Under no circumstances shall any present
or future, direct or indirect, principals or investors, general or limited
partners, officers, directors, shareholders, trustees, beneficiaries,
participants, advisors, managers, employees, agents or affiliates of Landlord,
or of any of the other foregoing parties, or any of their heirs, successors or
assigns have any liability for any of the foregoing matters. In no event shall
Landlord be liable to Tenant for any consequential damages. If Landlord shall
convey or transfer the Property or any portion thereof in which the Premises are
contained to another party, such party shall thereupon be and become landlord
hereunder, shall be deemed to have fully assumed all of Landlord's obligations
under this Lease accruing during such party's ownership, and Landlord shall be
free of all such obligations accruing from and after the date of conveyance or
transfer.

    11.  WHOLE AMENDMENT; FULL FORCE AND EFFECT; CONFLICTS.  This Amendment
shall not be binding unless and until signed and delivered by both parties. This
Amendment sets forth the entire agreement between the parties with respect to
the matters set forth herein. There have been no additional oral or written
representations or agreements. As amended herein, the Lease between the parties
shall remain in full force and effect; provided, this Amendment is intended to
supersede any prior rights of Tenant to have any satellite dishes, antennas or
other such equipment on the roof or other exterior areas of the Property, and
all such provisions are hereby deleted. In case of any inconsistency between the
provisions of the Lease and this Amendment, the latter provisions shall govern
and control. This Amendment may be further modified only in writing signed by
both parties.


                                       4

<PAGE>
     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.



           LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL]
                     an Illinois limited partnership

                     By:    CMD/Fund IV GP Investments, L.P.,
                            an Illinois limited partnership, its general partner

                            By:    CMD REIM IV, Inc., an Illinois corporation,
                                   its general partner


                                   By:
                                       -----------------------------------------
                                   Name: Lee Moreland
                                         ---------------------------------------
                                   Its:  Vice President
                                         ---------------------------------------

           TENANT:   MESA AIR GROUP, INC. [SEAL]
                     a Nevada corporation

                     By: /s/ Lorin Carr
                         -----------------------------------------
                     Name: Lorin Carr
                           ---------------------------------------
                     Its:  Sr. Dir. Cust. Serv.
                           ---------------------------------------


                                  GUARANTORS:

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


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


                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>19
<FILENAME>p67334exv21w1.txt
<DESCRIPTION>EX-21.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 21.1

                             LIST OF SUBSIDIARIES OF
                              MESA AIR GROUP, INC.

1.    Mesa Airlines, Inc.
2.    Air Midwest, Inc.
3.    CCAir, Inc.
4.    MPD, Inc.
5.    Regional Aircraft Services, Inc.
6.    Mesa Leasing, Inc.
7.    MAGI Insurance, Inc.
8.    Ritz Hotel Management Corp.
9.    WestAir Holding, Inc.
10.   Freedom Airlines, Inc.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>20
<FILENAME>p67334exv23w1.txt
<DESCRIPTION>EX-23.1
<TEXT>
<PAGE>
                                                                    Exhibit 23.1

                         INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Mesa Air Group, Inc.:

We consent to the incorporation by reference in Registration Statement Nos.
333-02791, 333-09395, 33-83799, 333-83801, 333-83803, 333-83805 and 333-58646,
of Mesa Air Group, Inc. on Form S-8 of our report dated November 22, 2002,
appearing in the Annual Report on Form 10-K of Mesa Air Group, Inc. for the year
ended September 30, 2002.

DELOITTE & TOUCHE LLP


Phoenix, Arizona
December 20, 2002

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>21
<FILENAME>p67334exv99w1.txt
<DESCRIPTION>EX-99.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 99.1

                                 CERTIFICATION
           PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
       (SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18,
                              UNITED STATES CODE)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of Title 18, United States Code), the
undersigned officer of Mesa Air Group, Inc., a Nevada corporation (the
"Company"), does hereby certify with respect to the Annual Report of the Company
on Form 10-K for the year ended September 30, 2002 as filed with the Securities
and Exchange Commission (the "10-K Report") that:

     (1) the 10-K 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 10-K Report fairly presents, in all
     material respects, the financial condition and results of operations of the
     Company.

Dated: December 20, 2002

/S/ JONATHAN G. ORNSTEIN
- ----------------------------------------
Jonathan G. Ornstein
Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>22
<FILENAME>p67334exv99w2.txt
<DESCRIPTION>EX-99.2
<TEXT>
<PAGE>
                                                                   EXHIBIT 99.2


                                 CERTIFICATION
           PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
        (SUBSECTIONS(a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18,
                              UNITED STATES CODE)


Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and
(b) of section 1350, chapter 63 of Title 18, United States Code), the
undersigned officer of Mesa Air Group, Inc., a Nevada corporation (the
"Company"), does hereby certify with respect to the Annual Report of the Company
on Form 10-K for the year ended September 30, 2002 as filed with the Securities
and Exchange Commission (the "10-K Report") that:

     (1)  the 10-K 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 10-K Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.



Dated: December 20, 2002

/S/ ROBERT B. STONE
_____________________________
Robert B. Stone
Chief Financial Officer



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
