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<SEC-DOCUMENT>0000950124-04-003789.txt : 20040813
<SEC-HEADER>0000950124-04-003789.hdr.sgml : 20040813
<ACCEPTANCE-DATETIME>20040812203239
ACCESSION NUMBER:		0000950124-04-003789
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20040630
FILED AS OF DATE:		20040813

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-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-15495
		FILM NUMBER:		04971716

	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-Q
<SEQUENCE>1
<FILENAME>p69511e10vq.htm
<DESCRIPTION>10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 14pt"><B>SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<P align="center" style="font-size: 18pt"><B>Form&nbsp;10-Q</B>

<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;X&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF<BR>
 SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><B>For the quarterly period-ended June&nbsp;30, 2004</B>



<P align="center" style="font-size: 10pt"><B>or</B>


<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#091;&nbsp;&nbsp;&#093;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF<BR>
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><B>Commission File Number 0-15495</B>


<P align="center" style="font-size: 24pt"><B>Mesa Air Group, Inc.</B>

<DIV align="center" style="font-size: 10pt"><I>(Exact name of registrant as specified in its charter)</I></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Nevada</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>85-0302351</B></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><I>(State or other jurisdiction of</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><I>(I.R.S. Employer Identification No.)</I></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><I>incorporation or organization)</I></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><B>410 North 44th Street, Suite&nbsp;700, Phoenix, Arizona</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>85008</B></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><I>(Address of principal executive offices)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><I>(Zip code)</I></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><B>Registrant&#146;s telephone number, including area code:<BR>
(602)&nbsp;685-4000</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by checkmark 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 last 90&nbsp;days.&nbsp;&nbsp;Yes&nbsp;&nbsp;&nbsp;&#091;X&#093;&nbsp;&nbsp;No&nbsp;&nbsp;&#091;&nbsp;&nbsp;&#093;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by checkmark whether the registrant is an accelerated filer (as
defined in Rule&nbsp;12b-2 of the Exchange Act).&nbsp;&nbsp;Yes&nbsp;&nbsp;&nbsp;&#091;X&#093;&nbsp;&nbsp;No&nbsp;&nbsp;&#091;&nbsp;&nbsp;&#093;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;4, 2004 the registrant had outstanding 31,577,955 shares of
Common Stock.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>TABLE OF CONTENTS</B>



<P align="center" style="font-size: 10pt"><B>INDEX</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="94%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Page No.</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:10px; text-indent:-10px"><A href="#101"><B>PART I &#151; FINANCIAL INFORMATION</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#102">Item&nbsp;1. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:48px; text-indent:-10px"><A href="#103">Condensed Consolidated Statements of Income</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:48px; text-indent:-10px"><A href="#104">Condensed Consolidated Balance Sheets</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:48px; text-indent:-10px"><A href="#105">Condensed Consolidated Statements of Cash Flows</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:48px; text-indent:-10px"><A href="#106">Notes to Condensed Consolidated Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#107">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#108">Item&nbsp;3. Quantitative and Qualitative Disclosures about Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#109">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:10px; text-indent:-10px"><A href="#110"><B>PART II &#151; OTHER INFORMATION</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#111">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#112">Item&nbsp;2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#113">Item&nbsp;3. Defaults Upon Senior Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#114">Item&nbsp;4. Submission of Matters to Vote for Security Holders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#115">Item&nbsp;5. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#116">Item&nbsp;6. Exhibits and Reports on Form&nbsp;8-K</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#117">Signatures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p69511exv10w1.txt">Exhibit 10.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p69511exv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p69511exv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p69511exv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p69511exv32w2.htm">Exhibit 32.2</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt">1
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="101"></A>
</DIV>

<P align="left" style="font-size: 10pt">PART 1. FINANCIAL INFORMATION


<DIV align="left">
<A name="102"></A>
</DIV>

<P align="left" style="font-size: 10pt">Item&nbsp;1. Financial Statements



<P align="center" style="font-size: 10pt">MESA AIR GROUP, INC


<DIV align="left">
<A name="103"></A>
</DIV>

<P align="center" style="font-size: 10pt">CONDENSED CONSOLIDATED STATEMENTS OF INCOME<BR>
(unaudited)<BR>
(in thousands, except per share amounts)


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Restated,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Restated,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>See note 19)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>See note 19)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Passenger</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">232,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">148,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">616,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">408,200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Freight and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,281</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">154,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">636,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">424,481</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Flight operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,957</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Fuel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,045</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,423</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Aircraft and traffic servicing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,981</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Promotion and sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,154</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,047</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,355</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,305</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Impairment and restructuring charges (credits)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,957</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216,801</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">595,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390,263</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,218</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other income (expense):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,941</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,002</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,647</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,435</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other income (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,968</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,587</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total other expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,359</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,633</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14,622</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,166</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income before income taxes and
minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,592</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income before minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,460</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income per common share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">See accompanying notes to condensed consolidated financial statements.



<P align="center" style="font-size: 10pt">2
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">MESA AIR GROUP, INC.


<DIV align="left">
<A name="104"></A>
</DIV>

<P align="center" style="font-size: 10pt">CONDENSED CONSOLIDATED BALANCE SHEETS<BR>
(unaudited)<BR>
(in thousands, except share amounts)


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">206,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">152,547</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,558</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Receivables, primarily traffic, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,493</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Income tax receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Expendable parts and supplies, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,044</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Aircraft held for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,202</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,436</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">349,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,280</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">651,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398,192</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Lease and equipment deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,352</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,484</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,628</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Investments in corporate bonds
and US Treasury notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,053,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">716,936</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LIABILITIES AND STOCKHOLDERS&#146; EQUITY</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,519</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Short-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241,623</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,315</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Air traffic liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,490</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accrued compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,581</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">567</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">896</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,236</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">293,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">330,660</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Long-term debt, excluding current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">553,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,023</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,456</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other noncurrent liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,824</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">926,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604,963</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Stockholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Preferred stock, no par value, 2,000,000 shares
authorized; no shares issued and outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Common stock, no par value, 75,000,000 shares
authorized; 31,554,447 and 31,704,625 shares
issued and outstanding, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114,580</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Retained earnings (accumulated deficit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,607</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred stock compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,239</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126,987</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,973</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total liabilities and stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,053,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">716,936</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">See accompanying notes to condensed consolidated financial statements.



<P align="center" style="font-size: 10pt">3
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">MESA AIR GROUP, INC.


<DIV align="left">
<A name="105"></A>
</DIV>

<P align="center" style="font-size: 10pt">CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
(unaudited)<BR>
(in thousands)


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months Ended</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As restated,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>see Note 19)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><B>Cash Flows from Operating Activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,455</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Adjustments to reconcile net income to net cash flows provided by
(used in) operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,305</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Impairment and restructuring charges (credits)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,957</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Gain on involuntary conversion of aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,283</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,589</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Unrealized loss on investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,358</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Amortization of deferred credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,960</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,109</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Amortization of restricted stock awards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Tax benefit-stock compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Provision for obsolete expendable parts and supplies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Provision for doubtful accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">DOT settlement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,154</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Net sales of investment securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,886</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,758</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40,019</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,713</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Income tax receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,729</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Expendable parts and supplies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,253</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,415</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Prepaid expenses and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,374</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,854</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,361</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(329</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(524</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Cost to return aircraft held for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,320</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,097</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Other accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,049</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,589</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,535</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><B>Cash Flows from Investing Activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47,919</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(19,842</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Acquisition of Midway assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,160</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Proceeds from sale of rotable and expendable inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,179</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Proceeds from aircraft insurance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,218</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Change in other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,071</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">383</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net returns (payments)&nbsp;of lease and equipment deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,646</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">

    <TD><DIV style="margin-left:10px; text-indent:-10px">Purchase of held-to-maturity securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,483</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(58,814</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(25,708</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><B>Cash Flows from Financing Activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Principal payments on long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,127</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,934</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Proceeds from senior convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Debt issue costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,009</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,262</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Proceeds from issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">367</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Common stock purchased and retired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,656</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,245</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Proceeds from receipt of deferred credits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,515</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Distribution to minority interest shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(610</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,943</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">NET CHANGE IN CASH AND CASH EQUIVALENTS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,700</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,870</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">CASH AND CASH EQUIVALENTS AT END OF PERIOD</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">206,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">109,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">4
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt">MESA AIR GROUP, INC.



<P align="center" style="font-size: 10pt">CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
(unaudited)<BR>
(in thousands)


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months Ended</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As restated,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>see Note 19)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">SUPPLEMENTAL CASH FLOW INFORMATION:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash paid for interest, net of amounts capitalized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,607</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash paid for income taxes, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Aircraft delivered under interim financing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">405,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">304,692</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Aircraft and debt permanently financed as operating leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254,225</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Long-term debt assumed in Midway asset purchase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Inventory and other credits received in conjunction with aircraft financing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,023</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Return of aircraft for reduction of long-term debt and accrued interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,164</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="right" style="font-size: 10pt">(Concluded)



<P align="center" style="font-size: 10pt">See accompanying notes to condensed consolidated financial statements.



<P align="center" style="font-size: 10pt">5
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>MESA AIR GROUP, INC.</B>


<DIV align="left">
<A name="106"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)</B>



<P align="left" style="font-size: 10pt"><B>1. Business and Basis of Presentation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying unaudited, condensed consolidated financial statements of
Mesa Air Group, Inc. (&#147;Mesa&#148; or the &#147;Company&#148;) have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q and
Article&nbsp;10 of Regulation&nbsp;S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for a complete set of financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results for the
unaudited three and nine-month periods presented have been made. Operating
results for the three and nine-month periods ended June&nbsp;30, 2004, are not
necessarily indicative of the results that may be expected for the fiscal year
ending September&nbsp;30, 2004. These condensed consolidated financial statements
should be read in conjunction with the Company&#146;s consolidated financial
statements and notes thereto included in the Company&#146;s annual report on Form
10-K/A for the fiscal year ended September&nbsp;30, 2003.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying condensed consolidated financial statements 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;Mesa Airlines&#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; MPD, Inc., a Nevada corporation, doing
business as Mesa Pilot Development; Regional Aircraft Services, Inc. (&#147;RAS&#148;) a
Pennsylvania corporation; Mesa Leasing, Inc., a Nevada corporation; Mesa Air
Group - Aircraft Inventory Management, LLC (&#147;MAG-AIM&#148;), an Arizona Limited
Liability Company; Ritz Hotel Management Corp., a Nevada Corporation; UFLY,
LLC. (&#147;UFLY&#148;), a Delaware Limited Liability Company; and MAGI Insurance, Ltd.
(&#147;MAGI&#148;), 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. UFLY was established in fiscal
2002 to make strategic investments in US Airways common stock. MAGI is a
captive insurance company established for the purpose of obtaining more
favorable aircraft liability insurance rates. CCAir ceased operations on
November&nbsp;3, 2002 and was dissolved in the second quarter of fiscal 2003. All
significant intercompany accounts and transactions have been eliminated in
consolidation.


<P align="left" style="font-size: 10pt"><B>2. Minority Interest</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, which included Jonathan Ornstein, the
Company&#146;s Chairman and Chief Executive Officer. UFLY distributed its assets in
the fourth quarter of fiscal 2003 and was subsequently dissolved prior to
September&nbsp;30, 2003. The Company owned greater than 50% of UFLY in 2003 and
therefore the financial results of UFLY were included in the consolidated
financial results of the Company for that year. Amounts included in the
consolidated statements of income as minority interest reflect the after-tax
portion of earnings of UFLY that are applicable to the minority interest
partners.


<P align="left" style="font-size: 10pt"><B>3. Acquisitions</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2003, the Company announced that it would not be moving
forward with either its proposed consent solicitation or exchange offer for
Atlantic Coast. Transaction related costs of $3.8&nbsp;million are included in
general and administrative expenses in the nine month period ended June&nbsp;30,
2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2003, the Company purchased the assets of Midway Airlines
Corporation (&#147;Midway&#148;) for $9.2&nbsp;million through Midway&#146;s Chapter&nbsp;7 bankruptcy
proceeding. The assets include six leased CRJ-200 aircraft, two owned CRJ-200
aircraft, all of Midway&#146;s CRJ spare parts and support equipment and all related
acquisition materials associated with the operation of Midway&#146;s CRJ operations.
The Company also assumed $24.1&nbsp;million in


<P align="center" style="font-size: 10pt">6
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">debt related to the two CRJ-200 aircraft. The Company purchased the Midway
assets in order to meet its 2004 growth plans. The purchase price has been
allocated to the assets acquired (primarily aircraft and rotable parts) and
liabilities assumed based upon preliminary estimates of fair values.



<P align="left" style="font-size: 10pt"><B>4. Segment Reporting</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS No.&nbsp;131, &#147;Disclosures about Segments of an Enterprise and Related
Information,&#148; 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 has three airline operating
subsidiaries, Mesa Airlines, Freedom Airlines and Air Midwest and various other
subsidiaries organized to provide support for the Company&#146;s airline operations.
The Company had a fourth operating subsidiary, CCAir, which ceased operations
on November&nbsp;3, 2002. The Company has aggregated these operating segments into
four reportable segments. Mesa Airlines and Freedom primarily operate the
Company&#146;s regional jets. Air Midwest operates the Company&#146;s Beech 1900
turboprop aircraft. Prior to ceasing operations, CCAir operated a mixed fleet
of turboprop aircraft. The Other reportable segment includes Mesa Air Group,
RAS, MPD, MAG-AIM, MAGI and UFLY, all of which support Mesa&#146;s operating
subsidiaries. Operating revenues in the Other segment are primarily sales of
rotable and expendable parts to the Company&#146;s operating subsidiaries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mesa Airlines and Freedom provide passenger service with regional jets
under revenue-guarantee contracts with America West, United and US Airways.
Mesa Airlines&#146; code-share agreement with Frontier terminated on December&nbsp;31,
2003. Mesa Airlines also provides passenger service with Dash-8 aircraft under
revenue-guarantee contracts with United and America West. As of June&nbsp;30, 2004,
Mesa Airlines and Freedom operated a fleet of 140 aircraft &#150; 88 CRJs, 36 ERJs
and 16 Dash-8s.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Air Midwest provides passenger service with Beechcraft 1900D aircraft
under pro-rate contracts with America West, US Airways and Midwest Airlines as
well as independent operations as Mesa Airlines. As of June&nbsp;30, 2004, Air
Midwest operated a fleet of 35 Beechcraft 1900D turboprop aircraft.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CCAir provided passenger service with Dash-8 and Jetstream 31 turboprop
aircraft under pro-rate revenue contracts with US Airways. CCAir ceased
operations on November&nbsp;3, 2002.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Other category consists of Mesa Air Group (holding company), MPD, RAS,
MAGI, UFLY, MAG-AIM and Ritz Hotel Management Corp. Mesa
Air Group performs all administrative functions not directly attributable to
any specific operating company. These administrative costs are allocated to the
operating companies based upon specific criteria including headcount, ASM&#146;s and
other operating statistics. MPD operates pilot training programs in conjunction
with San Juan College in Farmington, New Mexico and Arizona State University in
Tempe, Arizona. Graduates of these training programs are eligible to be hired
by the Company&#146;s operating subsidiaries. RAS primarily provides repair services
to the Company&#146;s operating subsidiaries. MAGI is a captive insurance company
located in Barbados. MAG-AIM is the Company&#146;s inventory procurement company.
UFLY was established for the purpose of making strategic investments in US
Airways common stock.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa /</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> June 30, 2004 (000&#146;s)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Eliminations</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">217,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">111,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(109,512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">239,586</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,337</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,541</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,785</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,576</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,941</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(141</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income (loss)&nbsp;before income tax
and minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,612</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,426</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income tax (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(665</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,242</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,768</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">955,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">403,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(324,917</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,053,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,854</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,203</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">7
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa /</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> June 30, 2003 (000&#146;s) (as restated see note 19)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Eliminations</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">131,661</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">62,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(61,221</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">154,075</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,625</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,511</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,330</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,811</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(319</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,002</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(166</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">337</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income (loss)&nbsp;before income tax
and minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(983</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,502</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,697</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income tax (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(377</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,171</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,331</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">279,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(176,914</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">549,292</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Capital expenditures </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,191</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Nine Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa /</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> June 30, 2004 (000&#146;s)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Eliminations</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">569,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">62,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">267,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(262,817</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">636,803</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,709</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,226</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(42,144</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,090</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,498</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,168</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,647</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">906</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income (loss)&nbsp;before income tax
and minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,364</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(42,143</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,468</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income tax (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,447</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,363</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,907</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">955,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">403,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(324,917</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,053,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Capital expenditures </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,919</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Nine Months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa /</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> June 30, 2003 (000&#146;s) (as restated see note 19)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Eliminations</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">355,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">63,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">98,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(94,557</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">424,481</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,305</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,165</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24,412</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,218</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,277</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(174</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(221</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,435</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(275</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income (loss)&nbsp;before income tax
and minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,612</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24,450</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,052</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income tax (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,767</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,364</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,592</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">279,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(176,914</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">549,292</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Capital expenditures </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,842</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">8
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="left" style="font-size: 10pt"><B>5. Investments</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. The
Company&#146;s investments consist of US treasury notes and corporate bonds, which
are classified as held-to-maturity, included in investments and carried at
amortized cost. The remainder of investments, less than $0.2&nbsp;million, relate
to common equity securities of companies operating in the airline industry and
are classified as trading securities during the periods presented and
accordingly, are carried at market value with changes in value reflected in the
current period operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the past, the Company has entered into short positions on common equity
securities when management believed that the Company could capitalize on
downward moves in particular securities and as a hedge against its investment
in common stocks of other airlines. Furthermore, by taking a short position in
other airline&#146;s common stock, the Company effectively hedged against downturns
in the airline industry. Unlike traditional investing where the investor&#146;s risk
is limited to the amount of their investment, when stocks are sold short, there
is no limit to the potential price appreciation of the stock thus there is no
limit to the investor&#146;s loss. The Company marks short positions to market at
each reporting period with the associated gain or loss in value reflected in
other income (expense)&nbsp;in the statement of operations. Included in marketable
securities are liabilities related to short positions on common equity
securities of $13.2&nbsp;million at September&nbsp;30, 2003. As of June&nbsp;30, 2004, the
Company had no liabilities related to short positions. Unrealized losses that
related to trading securities (including short positions) held at June&nbsp;30, 2004
and September&nbsp;30, 2003, were $0.7&nbsp;million and $2.5&nbsp;million, respectively.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in held-to-maturity securities were as follows at June&nbsp;30,
2004:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="68%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>June 30, 2004</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in thousands)</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Estimated</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cost</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gains (Losses)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Fair Value</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Held-to-maturity securities (carried
at amortized cost):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">US treasury note</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>

    <TD align="right">2,008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Corporate bond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,483</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><B>6. Restricted Cash</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has $10.8&nbsp;million in restricted cash on deposit that
collateralizes various letters of credit outstanding as of June&nbsp;30, 2004. The
Company has signed a letter of intent with a financial institution for a $9
million letter of credit facility, of which $4&nbsp;million must be secured, and
expects to finalize the documentation in the fourth quarter of fiscal 2004.


<P align="left" style="font-size: 10pt"><B>7. Accounts Receivable from Code-Share Partners</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has code-share agreements with America West, US Airways,
United and Midwest Airlines. The Company&#146;s code-share agreement with Frontier
expired December&nbsp;31, 2003. Approximately 99% of the Company&#146;s consolidated
passenger revenue for the three and nine months ended June&nbsp;30, 2004 and 2003,
respectively, were derived from these agreements. Accounts receivable from the
Company&#146;s code-share partners were 62% and 57% of total gross accounts
receivable at June&nbsp;30, 2004 and September&nbsp;30, 2003, respectively.


<P align="left" style="font-size: 10pt"><B>8. Deferred Credits</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred credits consist of aircraft purchase incentives provided by the
aircraft manufacturers and deferred gains on the sale and leaseback of interim
financed aircraft. These incentives include credits that may be used to
purchase spare parts, pay for training expenses or reduce other aircraft
operating costs. These deferred credits and gains are amortized on a
straight-line basis as a reduction of lease expense over the term of the
respective leases.


<P align="center" style="font-size: 10pt">9
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt"><B>9. Notes Payable and Long-Term Debt</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2004, the Company completed the private placement of senior
convertible notes due 2024, which resulted in gross proceeds of $100.0&nbsp;million
($97.0&nbsp;million net). Cash interest is payable on the notes at the rate of
2.115% per year on the principal amount at maturity, payable semiannually in
arrears on February&nbsp;10 and August&nbsp;10 of each year, beginning August&nbsp;10, 2004,
until February&nbsp;10, 2009. After that date, the Company will not pay cash
interest on the notes prior to maturity, and the notes will begin accruing
original issue discount at a rate of 3.625% until maturity. On February&nbsp;10,
2024, the maturity date of the notes, the principal amount of each note will be
$1,000. The aggregate amount due at maturity, including interest accrued from
February&nbsp;10, 2009, will be $171.4&nbsp;million. Each of the Company&#146;s wholly-owned
domestic subsidiaries guarantees the notes on an unsecured senior basis. The
notes and the note guarantees are senior unsecured obligations and rank equally
with the Company&#146;s existing and future senior unsecured and unsubordinated
indebtedness. The notes and the note guarantees are junior to any secured
obligations of the Company and any of its wholly owned subsidiaries to the
extent of the collateral pledged.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes are convertible into shares of the Company&#146;s common stock at a
conversion rate of 40.3737 shares per $1,000 in principal amount at maturity of
the notes. This conversion rate is subject to adjustment in certain
circumstances. Holders of the notes may convert their notes only if: (i)&nbsp;the
sale price of the Company&#146;s common stock exceeds 110% of the accreted
conversion price for at least 20 trading days in the 30 consecutive days ending
on the last trading day of the preceding quarter; (ii)&nbsp;on or prior to February
10, 2019, the trading price for the notes falls below certain thresholds; (iii)
the notes have been called for redemption; or (iv)&nbsp;specified corporate
transactions occur. The Company may redeem the notes, in whole or in part,
beginning on February&nbsp;10, 2009, at a redemption price equal to the sum of the
issue price, plus accrued original issue discount, plus any accrued and unpaid
cash interest. The holders of the notes may require the Company to repurchase
the notes on February&nbsp;10, 2009 at a price of $583.40 per note plus accrued and
unpaid cash interest, if any, on February&nbsp;10, 2014 at a price of $698.20 per
note plus accrued and unpaid cash interest, if any, and on February&nbsp;10, 2019 at
a price of $835.58 per note plus accrued and unpaid cash interest, if any. It
is the Company&#146;s intent to settle the notes in cash if the holders require
repurchase in 2009, 2014 and 2019. The Company has filed a shelf registration
statement with the U.S. Securities and Exchange Commission covering the resale
of the notes and the shares of common stock issuable upon conversion thereof.
During fiscal 2003, the Company issued similar senior convertible notes to
those described above. The balance of these notes was $100.0&nbsp;million at June
30, 2004. The Company plans to use the net proceeds from the sale of the notes
for working capital and to fund its obligations with respect to regional jet
deliveries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of the Notes is jointly and severally guaranteed on an
unconditional basis by the Company&#146;s wholly owned domestic subsidiaries. Except
as otherwise specified in the indentures pursuant to which the Notes were
issued, there are no restrictions on the ability of such subsidiaries to
transfer funds to the Company in the form of cash dividends, loans or advances.
General provisions of applicable state law, however, may limit the ability of
any subsidiary to pay dividends or make distributions to the Company in certain
circumstances.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2004, the Company permanently financed five CRJ-700 and four
CRJ-900 aircraft with $207.5&nbsp;million in debt. In March, two additional CRJ-900
aircraft were also financed with $47.2&nbsp;million in debt. The debt bears interest
at the monthly LIBOR plus three percent and requires monthly principal and
interest payments. The manufacturer, through the purchase of certain interest
rate derivatives, has guaranteed the Company&#146;s ownership costs with respect to
these aircraft. These aircraft were on interim financing.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also at June&nbsp;30, 2004, we had $178.9&nbsp;million in notes payable to an
aircraft manufacturer for aircraft on interim financing. Under interim
financing arrangements, the Company takes delivery and title to the aircraft
prior to securing permanent financing and the acquisition of the aircraft is
accounted for as a purchase with debt financing. Accordingly, the
Company reflects the
aircraft and debt under interim financing on the balance sheet during the
interim financing period. After taking delivery of the aircraft, the
Company expects to subsequently enter into a sale-leaseback transaction
with an independent third-party lessor. Upon permanent financing, the proceeds
from the sale- leaseback transaction are used to retire the notes payable to
the manufacturer. Any gain recognized on the sale-leaseback transaction is
deferred and amortized over the life of the lease. Occasionally the Company
will permanently finance aircraft with long-term debt, but it is the
Company&#146;s current
intention to permanently finance aircraft as operating leases rather than debt.
The Company currently has seven aircraft on interim financing with the


<P align="center" style="font-size: 10pt">10
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">manufacturer. These interim financings agreements are six months in length
and provide for monthly interest only payments at LIBOR plus three percent. The
current interim financing agreement with the manufacturer provides for the
Company to have a maximum of 15 aircraft on interim financing at a given time.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt consists of the following:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(In thousands)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Notes payable to bank, collateralized by the underlying aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">250,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Senior convertible notes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Notes payable to manufacturer, collateralized by the underlying aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,601</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Notes payable to bank, collateralized by the underlying aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,829</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">575,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">207,542</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22,012</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,519</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">553,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">199,023</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Short-term debt consists of the following:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Notes payable to manufacturer for interim financed aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">178,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">241,623</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><B>10. Earnings Per Share</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company accounts for earnings per share in accordance with SFAS No.
128, &#147;Earnings per Share.&#148; Basic income per share is computed by dividing net
income by the weighted average number of common shares outstanding during the
periods presented. Diluted income per share reflects the potential dilution
that could occur if outstanding stock options and warrants were exercised. In
addition, dilutive convertible securities are included in the denominator while
interest on convertible debt, net of tax, is added back to the numerator. A
reconciliation of the numerator and denominator used in computing income per
share is as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three Months</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Ended June 30,</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Ended June 30,</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(in thousands)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Share calculation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Weighted average shares &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,557</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Effect of dilutive outstanding stock options
and warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Effect of dilutive outstanding convertible debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Weighted average shares &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,435</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Adjustments to net income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,455</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense on convertible debt, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Adjusted net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">18,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At June&nbsp;30, 2004, the conversion features of the Company&#146;s senior
convertible notes due 2024 had not been met, therefore, the dilutive effect of
the notes was not included in the determination of earnings per common share.
Diluted income per share would have been $0.23 and $0.38 for the three and nine
months ended June&nbsp;30, 2004, respectively, if the dilutive effect of the notes
were to be included in the computation of income per common share. The Emerging
Issues Task Force (&#147;EITF&#148;) of the Financial Accounting Standards Board (&#147;FASB&#148;)
recently made a tentative decision proposing that issuers of convertible
securities with contingent conversion features use the <I>&#147;if-converted&#148; </I>method to
calculate reported EPS irrespective of the contingent conversion trigger being
met. The EITF


<P align="center" style="font-size: 10pt">11
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">is expected to reach a final conclusion at its meeting in September&nbsp;2004.



<P align="left" style="font-size: 10pt"><B>11. Stock Repurchase Program</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;23, 1999 the Board of Directors authorized the repurchase of
10%, or 3.4&nbsp;million shares, of the Company&#146;s outstanding shares of common stock
at the time. On January&nbsp;4, 2001 and October&nbsp;24, 2002 the Board of Directors
amended the original plan and authorized the repurchase of one million and two
million additional shares of common stock, respectively. As of June&nbsp;30, 2004,
the Company has acquired and retired 4.8&nbsp;million shares of our outstanding
common stock at an aggregate cost of approximately $27.3&nbsp;million, leaving 1.6
million shares available for repurchase under the existing Board
authorizations. The Company repurchased the following shares for $1.3&nbsp;million
during the three months ended June&nbsp;30, 2004:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Maximum Number</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Purchased as</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Shares that</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Part of Publicly</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>May Yet Be Purchased</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Period</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Purchased</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Paid per Share</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Announced Plans</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Under the Plan</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">April&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">May&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,616,334</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">June&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,616,334</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><B>12.&nbsp;Beechcraft 1900D Cost Reductions</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;7, 2002, the Company entered into an agreement with Raytheon
Aircraft Credit Company (the &#147;Raytheon Agreement&#148;) to reduce the operating
costs of its 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 satisfying certain spending requirements and, among other
things, the Company remaining current on its payment obligations to Raytheon.
The amount was subsequently reduced to $5.3&nbsp;million as a result of a reduction
in the Company&#146;s fleet of B1900D aircraft. Approximately
$1.3&nbsp;million and $4.0
million was recorded as a reduction to expense during each of the
three and nine months ended
June&nbsp;30, 2004 and June&nbsp;30, 2003, respectively.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In return, the Company granted Raytheon an option to purchase up to
233,068 warrants at a purchase price of $1.50 per warrant. Each warrant
entitles the holder to purchase one share of common stock at an exercise price
of $10.00 per share. 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, options to purchase the
warrants vest according to the following schedule: 13,401 warrants for fiscal
year 2001; 116,534 warrants for fiscal year 2002; 58,267 warrants for fiscal
year 2003 and 44,866 warrants for fiscal year 2004. As of June&nbsp;30, 2004,
Raytheon has exercised its option to purchase the 2001, 2002, and 2003
warrants.


<P align="left" style="font-size: 10pt"><B>13. Impairment of Long-Lived Assets</B>



<P align="left" style="font-size: 10pt"><B><I>CCAir Impairment and Restructuring</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the inability of CCAir to reduce its operating costs and
its continued history of operating losses, as well as receiving a notification
by US Airways of their intent to cancel CCAir&#146;s pro-rate contract effective
November&nbsp;3, 2002, management at CCAir elected to cease operations as of that
date. As a result, the Company took a pretax restructuring and impairment
charge of $19.8&nbsp;million in fiscal 2002, including $7.8&nbsp;million for future
aircraft lease payments, $4.6&nbsp;million in aircraft related return costs, $4.1
million to reduce the value of rotable and expendable inventory to fair market
value less costs to sell, $1.7&nbsp;million to reduce maintenance deposits held by a
lessor to net realizable value, $0.9&nbsp;million to write off the value of
equipment and leasehold improvements and $0.7&nbsp;million of severance and other
employee related liabilities. Once operations ceased, CCAir stopped making
lease payments on its fleet of Dash 8-100 aircraft. CCAir subsequently returned
the aircraft to the lessors. At the time of the shutdown, it was the Company&#146;s
intention to maintain the legal entity of CCAir as well as its operating
certificate with the possibility of either restructuring the airline and
operating it under amended labor agreements in the future or affecting a sale
of CCAir.


<P align="center" style="font-size: 10pt">12
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In fiscal 2003, CCAir surrendered its operating certificate to the FAA and
filed articles of dissolution with the State of Delaware. As a result of these
events and CCAir&#146;s lack of liquidity, it became clear that CCAir would be
unable to pay any of its obligations. In fiscal 2003, in light of CCAir&#146;s
inability to pay its obligations and the resulting dissolution, the Company
reversed the restructuring charges recorded in fiscal 2002 by approximately $12
million. The reversal of these charges was precipitated by the dissolution of
CCAir and the Company&#146;s subsequent determination, after consultation with
counsel, that the Company should not be held legally responsible for the
obligations incurred solely by CCAir and not guaranteed by the Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At June&nbsp;30, 2004, $0.3&nbsp;million of accrued severance and other remains with
respect to this impairment and restructuring.


<P align="left" style="font-size: 10pt"><B><I>Shorts 360 Impairment</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company took a charge for $3.6&nbsp;million in fiscal 2002 to accrue for
the remaining lease payments of two Shorts 360 aircraft and the future costs of
returning these aircraft to the lessor. These leases expire in March&nbsp;2005.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At June&nbsp;30, 2004, $2.2&nbsp;million of accrued aircraft return costs and $0.7
million of accrued aircraft lease payments remain with respect to this
impairment.


<P align="left" style="font-size: 10pt"><B><I>Beechcraft 1900D Impairment</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the second quarter of fiscal 2004, the Company recognized an impairment
charge of $11.3&nbsp;million related to the planned early return of seven leased
B1900D aircraft with lease expirations between December&nbsp;2004 and September
2005. The Company has negotiated the terms of the early return with the
majority of the aircraft lessors and took a charge that included $2.4&nbsp;million
for the present value of future lease payments, $2.4&nbsp;million for the negotiated
settlement of return conditions, $1.2&nbsp;million for the cancellation of
maintenance agreements, $0.8&nbsp;million to reduce maintenance deposits to net
realizable value, and $4.5&nbsp;million to reduce the value of rotable and

expendable inventory to fair value less costs to sell.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the third quarter of fiscal 2004 the Company recognized an impairment
charge of $1.1&nbsp;million due to finalizing agreements to return two of the seven
leased B1900D aircraft impaired in the second quarter of fiscal 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the second quarter of fiscal 2003, the Company returned one of the
remaining three B1900D aircraft permitted under its agreement with Raytheon.
The two remaining aircraft were returned prior to the end of fiscal 2003. As a
result of unanticipated increases in the cost of meeting the return conditions
of these and previous aircraft, the Company recorded an additional impairment
charge of $1.1&nbsp;million.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, $0.1&nbsp;million of accrued aircraft return costs
remained with respect to this impairment.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The changes in the impairment and restructuring charges for the period
ended June&nbsp;30, 2004 and 2003 are as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reversal</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Description of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Sept. 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Dec. 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mar. 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Charge</B><BR>
&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2002</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2002</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Provision</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Charges</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Restructuring:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Severance and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(658</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(602</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(602</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Costs to return aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,107</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,406</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,050</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,514</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Aircraft lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,238</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,109</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,518</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(18,003</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(17,117</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1,050</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(4,634</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="right" style="font-size: 10pt">&#091;Additional columns below&#093;



<P align="left" style="font-size: 10pt">&#091;Continued from above table, first column below repeated&#093;



<P align="center" style="font-size: 10pt">13
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Description of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mar. 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Jun. 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Charge</B><BR>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Restructuring:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Severance and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(602</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(602</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Costs to return aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,514</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,218</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Aircraft lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,518</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,353</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(4,634</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(4,173</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Description of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Sept. 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Dec. 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mar. 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Charge</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Provision</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Restructuring:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Severance and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(548</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(504</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(440</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Costs to return aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,217</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,217</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,609</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Aircraft lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,188</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,023</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,398</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,256</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Cancellation of
maintenance agreement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,179</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Impairment:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Impairment of
maintenance deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(823</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Impairment of surplus
inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,517</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,953</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,744</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(11,317</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(9,484</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="right" style="font-size: 10pt">&#091;Additional columns below&#093;



<P align="left" style="font-size: 10pt">&#091;Continued from above table, first column below repeated&#093;


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reserve</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Description of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mar. 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Jun. 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Charge</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Provision</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Utilized</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">

    <TD><DIV style="margin-left:10px; text-indent:-10px">Restructuring:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Severance and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(349</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Costs to return aircraft</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,609</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,289</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Aircraft lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,256</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(693</TD>
    <TD nowrap>)</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Cancellation of
maintenance agreement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,179</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Impairment:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Impairment of
maintenance deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Impairment of surplus
inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,060</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(9,484</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1,060</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,331</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The reserve balance of $3.3&nbsp;million above is included in accrued expenses,
other non-current liabilities and deferred credits on the accompanying
consolidated balance sheets.


<P align="left" style="font-size: 10pt"><B>14. Other Income (Expense)</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
income represents investment income for the three and
nine months ended June&nbsp;30, 2004. Other expense for the nine months ended June
30, 2003 includes a gain on the involuntary conversion of an aircraft for $1.3
million related to the crash of Flight 5481 in January&nbsp;2003. The gain in 2003
was offset by $4.1&nbsp;million in expense related to the Company&#146;s settlement
 of amounts received under the Air Transportation Safety and System
Stabilization Act. The Company&#146;s investment

<P align="center" style="font-size: 10pt">14
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">
 gains and losses for the nine
months ended June&nbsp;30, 2003 include 100% of the investment gains and losses of
UFLY; the minority interest is deducted out of the Company&#146;s operations after
income taxes.



<P align="left" style="font-size: 10pt"><B>15. Stockholders&#146; Equity</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company applies the provision of APB Opinion 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 provision of SFAS No.&nbsp;148, &#147;Accounting for Stock-Based
Compensation-Transition and Disclosure,&#148; the Company&#146;s net income (loss)&nbsp;and
income (loss)&nbsp;per share would have been as indicated by the pro forma amounts
indicated below:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three Months Ended</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months Ended</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(in thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(in thousands)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,455</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Stock option compensation expense
determined
under fair value based method, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(418</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD nowrap  align="right">(531</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(862</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,275</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Pro forma net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,180</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income per share &#151; basic:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income per share &#151; diluted:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><B>16. Commitments and Contingencies</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2001, the Company entered into an agreement with Bombardier
Regional Aircraft Division (&#147;BRAD&#148;) to
purchase a total of 15 CRJ-700s and 25 CRJ-900s. The transaction includes
standard product support provisions, including training, preferred pricing on
initial inventory provisioning, maintenance and technical publications. As of
June&nbsp;30, 2004, the Company has taken delivery of 15 CRJ-700 aircraft and 22
CRJ-900 aircraft and anticipates taking delivery of the remaining 3 CRJ-900
aircraft in fiscal 2004 and 2005. In addition to the firm orders, Mesa has an
option to acquire an additional 80 CRJ-700 and CRJ-900 regional jets. In
January&nbsp;2004, the Company exercised options to acquire 20 CRJ-700 and CRJ-900
aircraft (exact mix to be determined at a later date) for delivery through
2005. In conjunction with this purchase agreement, Mesa has $15.0&nbsp;million on
deposit with BRAD, which is included in lease and equipment deposits at June&nbsp;30,
2004. The remaining deposits are expected to be returned in equal amounts upon
completion of permanent financing on each of the last five aircraft ($3.0
million per aircraft).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;8, 2003, US Airways Express Flight 5481, operated by Air
Midwest, crashed shortly after takeoff from Charlotte Douglas International
Airport en route to Greenville/Spartanburg, S.C. The Company has cooperated
fully with all federal, state and local regulatory and investigatory agencies
to ascertain the cause of the accident. The Company is unable to predict the
amount of claims, if any, which may ultimately be made against it and how those
claims might be resolved. The Company maintains substantial insurance coverage
and, at this time, management has no reason to believe that such insurance
coverage will not be sufficient to cover any claims arising from the crash.
Therefore, the Company believes that the resolution of any claims will not have
a material adverse effect on its financial position, results of operations or
cash flows. The Company is unable to predict the extent of any adverse effect
on its revenues, yields or results of operations which may result from the
public perception of the accident of Flight 5481.


<P align="center" style="font-size: 10pt">15
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.


<P align="left" style="font-size: 10pt"><B>17. Deferred Stock Compensation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
March&nbsp;2004, the Company issued restricted stock grants of 428,297
shares to the Company&#146;s Chief Executive Officer and the Company&#146;s President and
Chief Operating Officer. The restricted stock shares vest in one-third
increments over a three-year period beginning on March&nbsp;31, 2005. The Company
recorded $3.5&nbsp;million in stockholders&#146; equity for deferred compensation. The
deferred compensation is amortized on a straight-line basis over the vesting
period of the grants.


<P align="left" style="font-size: 10pt"><B>18. Reclassifications</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain 2003 amounts previously reported have been reclassified to conform
with the 2004 presentation.


<P align="left" style="font-size: 10pt"><B>19. Restatement of Financial Statements</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has periodically entered into agreements with manufacturers
for the acquisition of aircraft. Under these agreements, it is common for the
Company to take delivery of aircraft prior to having permanent financing in
place under short-term interim financing arrangements. These short-term interim
financing arrangements are typically six months or less, are provided by the
manufacturer and are described as short-term leases in the aircraft purchase
agreements. After taking delivery of aircraft, the Company pursues permanent
financing for the aircraft in the form of a long-term operating lease through
sale-leaseback transactions or through long-term debt. The Company previously
accounted for the interim financing as a short-term operating lease, with
payments to the manufacturer recorded as lease expense.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2004, the Company&#146;s management determined that certain of the
interim aircraft financing arrangements consisted of borrowings that should
have been recorded as debt financing and the interim financed aircraft should
have been reflected on the Company&#146;s balance sheet. Accordingly, the Company
has restated its financial statements to reflect aircraft, debt and the related
depreciation expense of the aircraft in its financial statements during the
interim financing period. In addition, the payments recorded as lease expense
were reflected as interest expense. As a result of the restatement, the Company
has recognized a deferred gain on those aircraft permanently financed through
subsequent sale-leaseback transactions. The deferred gain, equal to the
difference between the aircraft&#146;s purchase price and depreciated value, was
recorded as a deferred credit and will be amortized over the life of the lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result, the accompanying condensed consolidated financial statements
for the three and nine months ended June&nbsp;30, 2003 have been restated from the
amounts previously reported to correct the accounting for these transactions. A
summary of the significant effects of the restatement on the accompanying
condensed consolidated financial statements is presented below.


<P align="left" style="font-size: 10pt"><B>For the three months and nine months ended June&nbsp;30, 2003<BR>
(In thousands, except per share amounts)<BR>
(Unaudited)</B>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Restated)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Previously</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Restated)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Previously</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reported)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reported)</B></TD>

</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Flight operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">56,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">57,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">152,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">157,203</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,026</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,251</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,002</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,092</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,435</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,509</TD>
    <TD nowrap>)</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">16
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Restated)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Previously</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Restated)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(As Previously</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reported)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Reported)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,728</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,278</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income per common share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.54</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">17
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="107"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;2. </B><B><I>Management&#146;s Discussion and Analysis of Financial Condition and Results
of Operations.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of our
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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying management&#146;s discussion and analysis of financial
condition and results of operations gives effect to the restatement of the
condensed consolidated financial statements for the three and nine months ended
June&nbsp;30, 2003 as described in Note 20 to the condensed consolidated financial
statements.


<P align="left" style="font-size: 10pt"><B><I>Forward-Looking Statements</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>This </B><B>Form 10-Q</B><B> Report contains certain statements regarding Mesa&#146;s future
performance and financial results 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 and other 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 America West, US Airways
or United Airlines to pay their obligations under the code-share agreements;
the inability of United Airlines to successfully restructure and emerge from
bankruptcy; the ability of our other code-share partners to avoid 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; 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
unwillingness 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 </B><B>Form 10-Q</B><B>.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investors should read the risks identified under &#147;Risk Factors&#148; below for
a more detailed discussion of these and other factors.</B>


<P align="left" style="font-size: 10pt"><B>GENERAL</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
181 cities in 43 states, Canada, Mexico and the Bahamas. At June&nbsp;30, 2004, Mesa
operated a fleet of 175 aircraft with over 1,000 daily departures.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mesa&#146;s airline operations during fiscal year 2004 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. (&#147;America West&#148;), as United Express under a code-share and revenue
guarantee agreement with United Airlines, Inc. (&#147;United Airlines&#148; or &#147;United&#148;)
and as US Airways Express under a code-share and revenue guarantee agreement
with US Airways,


<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Inc. (&#147;US Airways&#148;). Air Midwest, Inc. (&#147;Air Midwest&#148;), a wholly owned
subsidiary of Mesa, operates as US Airways Express under a code-share agreement
with US Airways, as America West Express under a code-share agreement with
America West, and also operates an independent division, doing business as Mesa
Airlines, from Albuquerque, New Mexico and Dallas, Texas. Air Midwest also has
a code-share agreement with Midwest Airlines (&#147;Midwest&#148;) in Kansas City on
flights operated as US Airways Express. In addition, Freedom Airlines, Inc., a
wholly owned subsidiary of the Company, began operating as America West Express
pursuant to the code-share and revenue sharing agreement with America West in
October&nbsp;2002. Prior to it ceasing operations on November&nbsp;3, 2002, CCAir, a
wholly owned subsidiary of Mesa, operated under a code-share agreement with US
Airways as US Airways Express.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately 99% of our consolidated passenger revenues for the nine
months ended June&nbsp;30, 2004 were derived from operations associated with
code-share agreements. Our subsidiaries have code-share agreements with America
West, Midwest Airlines, United Airlines and US Airways. 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, and aircraft paint schemes and uniforms
similar to the code-share partners and provide coordinated schedules and joint
advertising.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 U.S. 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June, the Company finalized an agreement with LogisTechs, Inc., an
affiliate of GE Capital Aviation Services (GECAS)&nbsp;for the sale, management and
repair of its CRJ 200 aircraft rotable spare parts inventory. Under the
agreement, LogisTechs will purchase approximately $25&nbsp;million in existing and
future spare parts inventory to support Mesa&#146;s CRJ 200 fleet. The initial
funding of the transaction occurred on August&nbsp;4, 2004. As part of the
transaction, Mesa received $10.5&nbsp;million in cash, a note receivable of $6
million and placed $4.5&nbsp;million on deposit with LogisTechs. The final closing
is expected to take place within 60&nbsp;days. The Company has also agreed with
LogisTechs to negotiate similar agreements for up to $43&nbsp;million of spare parts
for Mesa&#146;s current and to be delivered fleet of Bombardier CRJ 700/900 and
current fleet of Embraer 145s.


<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">The following tables set forth quarterly comparisons for the periods indicated
below:



<P align="center" style="font-size: 10pt"><B>OPERATING DATA</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three Months Ended</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months Ended</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30, 2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30, 2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30, 2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30, 2003</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Passengers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,826,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,728,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,097,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,504,782</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Available seat miles (000&#146;s)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,929,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,183,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,984,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,137,997</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Revenue passenger miles (000&#146;s)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,419,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">773,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,470,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,942,842</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Load factor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">73.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">65.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">69.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">61.9</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Yield per revenue passenger mile (cents)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Revenue per available seat mile (cents)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating cost per available seat mile (cents) *</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Average stage length (miles)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">330</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Number of operating aircraft in fleet</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">141</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Gallons of fuel consumed</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,516,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,251,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,290,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,795,535</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Block hours flown</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">370,554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">283,212</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Departures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,607</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216,436</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">* Excluding the reversal of restructuring charges in fiscal 2003


<P align="center" style="font-size: 10pt"><B>CONSOLIDATED FINANCIAL DATA</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15"><B>Three Months Ended</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15"><B>Nine Months Ended</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>June 30, 2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>June 30, 2003</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>June 30, 2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>June 30, 2003</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Costs per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Costs per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Costs per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Costs per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>ASM</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% of total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>ASM</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% of total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>ASM</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% of total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>ASM</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% of total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(cents)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Revenues</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(cents)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Revenues</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(cents)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Revenues</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(cents)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Revenues</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Flight operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">32.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.0</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Fuel</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">20.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.9</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">19.9</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Aircraft and traffic servicing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Promotion and sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Impairment and restructuring
charges (credits)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)%</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">90.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">90.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">93.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">91.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD nowrap>%</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Note: numbers in table may not recalculate due to rounding


<P align="center" style="font-size: 10pt"><B>FINANCIAL DATA BY OPERATING SEGMENT</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23"><B>Three Months Ended June 30, 2004 (000&#146;s)</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa/Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Elimination</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">217,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">20,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">111,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(109,512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">239,586</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(91,930</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216,801</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,541</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,785</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23"><B>Three Months Ended June 30, 2003 (000&#146;s)</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa/Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Elimination</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">131,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">62,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(61,221</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">154,075</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,777</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47,757</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,745</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,511</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,330</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">20
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23"><B>Nine Months Ended June 30, 2004 (000&#146;s)</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa/Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Elimination</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">569,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">62,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">267,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(262,817</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">636,803</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">509,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(220,673</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">595,713</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,226</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(42,144</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,090</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23"><B>Nine Months Ended June 30, 2003 (000&#146;s)</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Mesa/Freedom</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Air Midwest</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CCAir</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Elimination</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">355,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">63,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">98,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(94,557</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">424,481</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">330,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,768</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(70,145</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390,263</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,165</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24,412</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,218</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

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</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><B>RESULTS OF OPERATIONS</B>



<P align="left" style="font-size: 10pt"><B><I>For the three months ended June&nbsp;30, 2004 versus the three months ended June&nbsp;30,
2003</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating Revenues:</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, operating revenue increased by $85.5
million, or 55.5%, from $154.1&nbsp;million to $239.6&nbsp;million. The increase in
revenue is primarily attributable to the addition of 37 additional regional
jets flown by Mesa and Freedom compared to the same period in 2003.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating Expenses</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Flight Operations</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, flight operations expense increased
$20.5&nbsp;million or 36.1%, to $77.4&nbsp;million (4.0 cents per ASM) from $56.9&nbsp;million
(4.8 cents per ASM) for the comparable period in fiscal 2003. The increase is
consistent with the 37 additional regional jets added at Mesa and Freedom. The
decrease on an ASM basis is due to the economies of scale realized by operating
the larger CRJ-700 and CRJ-900 regional jets.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fuel</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, fuel expense increased $25.1&nbsp;million
or 89.7%, to $53.1&nbsp;million (2.8 cents per ASM) from $28.0&nbsp;million (2.4 cents
per ASM) for the comparable period in fiscal 2003. Into-plane fuel cost
increased 26% per gallon, resulting in a $10.9&nbsp;million unfavorable price
variance and consumption increased 50% resulting in a $14.2&nbsp;million unfavorable
volume variance. The increase in volume was due to the additional regional jets
added to the fleet. In the quarter ended June&nbsp;30, 2004 approximately 93% of
our fuel costs were reimbursed by our code-share partners.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Maintenance Expense</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, maintenance expense increased $15.7
million or 56.6%, to $43.5&nbsp;million (2.3 cents per ASM) from $27.8&nbsp;million (2.3
cents per ASM) for the comparable period in fiscal 2003. Mesa and Freedom&#146;s
maintenance expense increased $15.1&nbsp;million primarily as a result of increases
in the number of aircraft in their fleet, repair costs on certain rotable
parts, headcount and engine overhaul expenses. Air Midwest&#146;s maintenance
expense increased $0.6&nbsp;million due to the addition of employees as a result of
transitioning outsourced mechanic labor to in-house and the associated delays
in the transition.


<P align="center" style="font-size: 10pt">21
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Aircraft and Traffic Servicing</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, aircraft and traffic servicing expense
increased by $6.7&nbsp;million or 59.7%, to $17.9&nbsp;million (0.9 cents per ASM) from
$11.2&nbsp;million (0.9 cents per ASM) for the comparable period in fiscal 2003. The
increase is primarily related to an increase of 20% in regional jet departures.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Promotion and Sales</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, promotion and sales expense decreased
$0.6&nbsp;million or 30.9%, to $1.5&nbsp;million (0.1 cents per ASM) from $2.1&nbsp;million
(0.2 cents per ASM) for the comparable period in fiscal 2003. The decrease is
due to a decline in booking and franchise fees paid by Air Midwest under the
Company&#146;s prorate agreements with its code-share partners, caused by a decline
in passengers carried under these agreements. The Company does not pay these
fees under its regional jet revenue-guarantee contracts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, general and administrative expense
increased $4.9&nbsp;million or 48.0%, to $15.0&nbsp;million (0.8 cents per ASM) from
$10.2&nbsp;million (0.9 cents per ASM). A portion of the increase is related to an
increase of $1.0 in passenger liability insurance, which is based upon the
number of passengers carried and an increase of $0.8&nbsp;million related to health
benefits expenses due to an increase in employees and the nature and volume of
claims. Bad debt expense also increased $1.1&nbsp;million due to a reserve for
certain accounts receivables. The remainder of the increase consisted of
increased wages and other benefits related to increased headcount consistent
with the Company&#146;s growth.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Depreciation and Amortization</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the quarter ended June&nbsp;30, 2004, depreciation and amortization expense
increased $3.7&nbsp;million or 102.4%, to $7.3&nbsp;million (0.4 cents per ASM) from $3.6
million (0.3 cents per ASM) for the comparable quarter in the prior year. The
increase is related to the purchase of 11 CRJ-700 and CRJ-900 aircraft that
were permanently financed with debt as well as rotable provisioning for the
additional regional jets at Mesa and Freedom.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impairment and Restructuring Charges</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the third quarter of fiscal 2004 the Company recognized an impairment
charge of $1.1&nbsp;million due to finalizing agreements to return the last two of
the seven leased B1900D aircraft impaired in the second quarter of fiscal 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Expense</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense increased $4.9&nbsp;million or 246.9%, to $6.9&nbsp;million for the
three months ended June&nbsp;30, 2004 from $2.0&nbsp;million for the three months ended
June&nbsp;30, 2003. The increase in interest expense is comprised of $2.7&nbsp;million in
interest on the senior convertible notes and $2.2&nbsp;million in interest on the
permanently financed aircraft debt.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Income (Expense)</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense)&nbsp;increased $4.3&nbsp;million from an expense of $4.0
million for the quarter ended June&nbsp;30, 2003 to income of $0.3&nbsp;million for the
quarter ended June&nbsp;30, 2004. Other expense for the quarter ended June&nbsp;30, 2003
is primarily attributable to a settlement with the DOT of $4.1&nbsp;million.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Minority Interest</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts included in minority interest reflect the after-tax portion of
earnings of UFLY, LLC that are applicable to the minority interest partners.
UFLY was dissolved in the fourth quarter of fiscal 2003.


<P align="left" style="font-size: 10pt"><B><I>For the nine months ended June&nbsp;30, 2004 versus the nine months ended June&nbsp;30,
2003</I></B>



<P align="center" style="font-size: 10pt">22
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating Revenues:</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, operating revenue increased by
$212.3&nbsp;million, or 50.0%, from $424.5&nbsp;million to $636.8&nbsp;million. The increase
in revenue is primarily attributable to a $213.9&nbsp;million increase in revenue
associated with the operation of 37 additional regional jets flown by Mesa and
Freedom compared to the same period in 2003. This increase was partially offset
by a net decrease of approximately $1.6&nbsp;million at Air Midwest. The decrease at
Air Midwest was primarily due to a decline in passengers carried as a result of
parking seven leased aircraft in the second quarter resulting in a decrease of
$4.3&nbsp;million; however, this decrease was offset by increased Essential Air
Service subsidies of $2.5&nbsp;million received as a result of additional markets
served and higher subsidy rates on existing markets.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating Expenses</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Flight Operations</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, flight operations expense
increased $63.2&nbsp;million or 41.3%, to $216.1&nbsp;million (4.3 cents per ASM) from
$153.0&nbsp;million (4.9 cents per ASM) for the comparable period in fiscal 2003.
The increase is consistent with the increased capacity from the additional
regional jets added to Mesa and Freedom&#146;s fleet. The decrease on an ASM basis
is due to the additional regional jets added at Mesa and Freedom and the
reduction in turboprop aircraft at Air Midwest.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fuel</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, fuel expense increased $51.8
million or 64.7%, to $131.8&nbsp;million (2.6 cents per ASM) from $80.0&nbsp;million (2.6
cents per ASM) for the comparable period in fiscal 2003. Into-plane fuel cost
increased 11% per gallon, resulting in a $13.2&nbsp;million unfavorable price
variance and consumption increased 48% resulting in a $38.6&nbsp;million unfavorable
volume variance. The increase in volume was due to the additional regional jets
added to the fleet. In the nine months ended June&nbsp;30, 2004 approximately 91% of
our fuel costs were reimbursed by our code-share partners.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Maintenance Expense</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, maintenance expense increased
$32.9&nbsp;million or 39.0%, to $117.3&nbsp;million (2.4 cents per ASM) from $84.4
million (2.7 cents per ASM) for the comparable period in fiscal 2003. Mesa and
Freedom&#146;s maintenance expense increased $25.5&nbsp;million primarily as a result of
increases in the number of aircraft in their fleet, repair costs on certain
rotable parts, headcount and engine overhaul expenses. Air Midwest&#146;s
maintenance expense increased $3.3&nbsp;million due to the addition of employees as
a result of transitioning outsourced mechanic labor to in-house and the
associated delays in the transition. The decrease on an ASM basis is due to the
lower maintenance costs associated with adding new jets into the Company&#146;s
fleet.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Aircraft and Traffic Servicing</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, aircraft and traffic servicing
expense increased by $9.8&nbsp;million or 25.7%, to $47.8&nbsp;million (1.0 cents per
ASM) from $38.0&nbsp;million (1.2 cents per ASM) for the comparable period in fiscal
2003. The increase is primarily related to an increase of 18% in regional jet
departures. The decrease on an ASM basis is due to the efficiencies attained by
adding additional regional jets at Mesa and Freedom and the reduction in
turboprop aircraft at Air Midwest and CCAir.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Promotion and Sales</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, promotion and sales expense
decreased $1.6&nbsp;million or 26.1%, to $4.5&nbsp;million (0.1 cents per ASM) from $6.2
million (0.2 cents per ASM) for the comparable period in fiscal 2003. The
decrease is due to a decline in booking and franchise fees paid by Air Midwest
and CCAir under the Company&#146;s


<P align="center" style="font-size: 10pt">23
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<P align="left" style="font-size: 10pt">prorate agreements with its code-share partners, caused by a decline in
passengers carried under these agreements. The Company does not pay these fees
under its regional jet revenue-guarantee contracts.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, general and administrative expense
increased $18.7&nbsp;million or 65.9%, to $47.0&nbsp;million (0.9 cents per ASM) from
$28.4&nbsp;million (0.9 cents per ASM). The increase is primarily related to $3.8
million in costs associated with the attempted merger with Atlantic Coast
Airlines, Inc. and $3.5&nbsp;million in executive compensation as a result of the
restructuring of employment contracts of top executives. The remainder of the
increase is related to rising healthcare costs associated with increased
headcount of $2.0&nbsp;million, an increase in passenger liability insurance of $2.6
million, which is based upon the number of passengers carried, an increase in
bad debt expense of $1.9&nbsp;million, an increase in property taxes of $1.7&nbsp;million
due to the increase in the number of aircraft operating at the end of calendar
2003 versus 2002, an increase in wages and other employee related expenses of
$2.6&nbsp;million due to increased headcount, and an increase of $0.6&nbsp;million for
rent expense due to the expansion of the corporate office.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Depreciation and Amortization</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2004, depreciation and amortization
expense increased $7.4&nbsp;million or 65.5%, to $18.7&nbsp;million (0.4 cents per ASM)
from $11.3&nbsp;million (0.4 cents per ASM) for the comparable quarter in the prior
year. The increase is primarily due to the purchase of 11 regional jets as well
as an increase in the number of aircraft on interim financing and an increase
in rotable aircraft inventory at Mesa and Freedom.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impairment and Restructuring Charges</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the second quarter of fiscal 2004, the Company recognized an impairment
charge of $11.3&nbsp;million related to the planned early return of seven leased
B1900D aircraft with lease expirations between December&nbsp;2004 and September
2005. The Company has negotiated the terms of the early return with the
majority of the aircraft lessors and took a charge that included $2.4&nbsp;million
for the present value of future lease payments, $2.4&nbsp;million for the negotiated
settlement of return conditions, $1.2&nbsp;million for the cancellation of
maintenance agreements, $0.8&nbsp;million to reduce maintenance deposits to net
realizable value, and $4.5&nbsp;million to reduce the value of rotable and
expendable inventory to fair value less costs to sell.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the third quarter of fiscal 2004 the Company recognized an impairment
charge of $1.1&nbsp;million due to additional costs for two of the seven leased
B1900D aircraft impaired in the second quarter of fiscal 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the nine months ended June&nbsp;30, 2003, the Company recognized an
additional impairment charge of $1.1&nbsp;million related to the costs of returning
Beechcraft 1900D aircraft to the manufacturer. The Company also reversed $7.4
million in restructuring charges for future aircraft leases related to CCAir
aircraft that were returned to the lessor and $4.6&nbsp;million in aircraft related
return costs for these same aircraft. The reversal of these charges was
precipitated by the dissolution of CCAir and the Company&#146;s subsequent
determination, after consultation with counsel, that the Company should not be
held legally responsible for the aircraft lease obligations and aircraft
related return costs incurred solely by CCAir and not guaranteed by the
Company.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest Expense</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense increased $10.2&nbsp;million or 137.4%, to $17.6&nbsp;million for
the nine months ended June&nbsp;30, 2004 from $7.4&nbsp;million for the nine months ended
June&nbsp;30, 2003. The increase in interest expense is primarily comprised of $6.2
million in interest on the senior convertible notes and $3.9&nbsp;million in
interest on the permanently financed aircraft debt.


<P align="center" style="font-size: 10pt">24
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other Income (Expense)</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income (expense)&nbsp;increased $4.7&nbsp;million from expense of $2.6&nbsp;million
for the nine months ended June&nbsp;30, 2003 to income of $2.1&nbsp;million for the nine
months ended June&nbsp;30, 2004. Other income for the nine months ended June&nbsp;30,
2004 is primarily attributable to investment income of $1.7&nbsp;million related to
the Company&#146;s portfolio of aviation related securities. In fiscal 2003, other
expense is primarily comprised of the settlement with the DOT of $4.1&nbsp;million.
This expense was offset by the gain on involuntary conversion of an aircraft of
$1.3&nbsp;million related to the crash of Flight 5481 in January of 2003.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Minority Interest</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts included in minority interest reflect the after-tax portion of
earnings of UFLY, LLC that are applicable to the minority interest partners.
UFLY was dissolved in the fourth quarter of fiscal 2003.


<P align="left" style="font-size: 10pt"><B>LIQUIDITY AND CAPITAL RESOURCES</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had cash, cash equivalents, and marketable securities (including
restricted cash and held-to-maturity securities) of $219.6&nbsp;million at June&nbsp;30,
2004, compared to $166.1&nbsp;million at September&nbsp;30, 2003. We improved our cash
position by issuing convertible notes in February, raising $97.0&nbsp;million in
capital (after expenses). Uses of cash included capital expenditures of $47.9
million due to the expansion of our regional jet fleet and related provisioning
of rotable inventory to support the additional jets. The Company also purchased
the assets of bankrupt Midway airlines for $9.2&nbsp;million to further our regional
jet expansion. Our cash and cash equivalents and marketable securities are
intended to be used for working capital, capital expenditures, acquisitions,
and to fund our obligations with respect to regional jet deliveries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2004, we completed the private placement of senior convertible
notes due 2024, which resulted in gross proceeds of $100.0&nbsp;million ($97.0
million net). Cash interest is payable on the notes at the rate of 2.115% per
year on the principal amount at maturity, payable semiannually in arrears on

February&nbsp;10 and August&nbsp;10 of each year, beginning August&nbsp;10, 2004, until
February&nbsp;10, 2009. After that date, we will not pay cash interest on the notes
prior to maturity, and the notes will begin accruing original issue discount at
a rate of 3.625% until maturity. On February&nbsp;10, 2024, the maturity date of the
notes, the principal amount of each note will be $1,000. The aggregate amount
due at maturity, including interest accrued from February&nbsp;10, 2009, will be
$171.4&nbsp;million. Each of our wholly owned domestic subsidiaries guarantee the
notes on an unsecured senior basis. The notes and the note guarantees are
senior unsecured obligations and rank equally with our existing and future
senior unsecured indebtedness. The notes and the note guarantees are junior to
any of our secured obligations and any of our wholly owned subsidiaries to the
extent of the collateral pledged.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The notes are convertible into shares of our common stock at a conversion
rate of 40.3737 shares per $1,000 in principal amount at maturity of the notes.
This conversion rate is subject to adjustment in certain circumstances. Holders
of the notes may convert their notes only if: (i)&nbsp;after March&nbsp;31, 2004, the
sale price of our common stock exceeds 110% of the accreted conversion price
for at least 20 trading days in the 30 consecutive trading days ending on the
last trading day of the preceding quarter; (ii)&nbsp;on or prior to February&nbsp;10,
2019, the trading price for the notes falls below certain thresholds; (iii)&nbsp;the
notes have been called for redemption; or (iv)&nbsp;specified corporate transactions
occur. We may redeem the notes, in whole or in part, beginning on February&nbsp;10,
2009, at a redemption price equal to the issue price, plus accrued original
issue discount, plus any accrued and unpaid cash interest. The holders of the
notes may require us to repurchase the notes on February&nbsp;10, 2009 at a price of
$583.40 per note plus accrued and unpaid cash interest, if any, on February&nbsp;10,
2014 at a price of $698.20 per note plus accrued and unpaid cash interest, if
any, and on February&nbsp;10, 2019 at a price of $835.58 per note plus accrued and
unpaid cash interest, if any. It is our intent to settle the notes in cash if
the holders require repurchase in 2009, 2014 or 2019. We have filed a shelf
registration statement with the U.S. Securities and Exchange Commission
covering the resale of the notes and the underlying common stock. We plan to
use the net proceeds from the sale of the notes for working capital and to fund
our obligations with respect to regional jet deliveries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2004, we permanently financed five CRJ-700 and four CRJ-900
aircraft with $207.5&nbsp;million in debt. In March&nbsp;2004, two additional CRJ-900
aircraft were also financed with $47.2&nbsp;million in debt. The debt bears


<P align="center" style="font-size: 10pt">25
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<P align="left" style="font-size: 10pt">interest at the monthly LIBOR plus three percent and requires monthly
principal and interest payments. These aircraft were on interim financing.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2003, we purchased the assets of Midway Airlines Corporation
(&#147;Midway&#148;) for $9.2&nbsp;million through Midway&#146;s Chapter&nbsp;7 bankruptcy proceeding.
As part of the purchase, we assumed $24.1&nbsp;million in debt related to the two
CRJ-200 aircraft.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also at June&nbsp;30, 2004, we had $178.9&nbsp;million in notes payable to an
aircraft manufacturer for aircraft on interim financing. Under interim
financing arrangements, the Company takes delivery and title of the aircraft
prior to securing permanent financing and the acquisition of the aircraft is
accounted for as a purchase with debt financing. Accordingly, we reflect the
aircraft and debt under interim financing on our balance sheet during the
interim financing period. After taking delivery of the aircraft, it is the
Company&#146;s intention to subsequently enter into a sale-leaseback transaction
with an independent third-party lessor. Upon permanent financing, the proceeds
from the sale and leaseback transaction are used to retire the notes payable to
the manufacturer. Any gain recognized on the sale-leaseback transaction is
deferred and amortized over the life of the lease. Occasionally the Company
will permanently finance aircraft with long-term debt, but it is our current
intention to permanently finance aircraft as operating leases rather than debt.
The Company currently has seven aircraft on interim financing with the
manufacturer. These interim financings agreements are six months in length and
provide for monthly interest only payments at LIBOR plus three percent. The
current interim financing agreement with the manufacturer provides for the
Company to have a maximum of 15 aircraft on interim financing at a given time.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, we had receivables of approximately $37.3&nbsp;million
(net of an allowance for doubtful accounts of $5.1&nbsp;million). The amounts due
consist primarily of receivables due from our code-share partners and passenger
ticket receivables due through the Airline Clearing House.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first nine months of fiscal 2004, we had code-share agreements
with America West, US Airways, United and Midwest Airlines. Approximately 99%
of our consolidated passenger revenue for the quarter ended June&nbsp;30, 2004 was
derived from these agreements. Accounts receivable from our code-share partners
was 62% of total gross accounts receivable at June&nbsp;30, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The termination of the America West, United or US 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. If 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June, the Company finalized an agreement with LogisTechs, Inc., an
affiliate of GE Capital Aviation Services (GECAS)&nbsp;for the sale, management, and
repair of its CRJ 200 aircraft rotable spare parts inventory. Under the
agreement, LogisTechs will purchase approximately $25&nbsp;million in existing and
future spare parts inventory to support Mesa&#146;s CRJ 200 fleet.
The initial funding of the transaction occurred on August 4, 2004. As
part of the transaction, the Company received $10.5 million in cash, a note
receivable of $6 million and placed $4.5 million on deposit with
LogisTechs. The final closing is expected to take place within 60
days.
The Company has also agreed with LogisTechs to
negotiate similar agreements for up to $43&nbsp;million of spare parts for Mesa&#146;s
current and to be delivered fleet of Bombardier CRJ 700/900 and current fleet
of Embraer 145.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since 1999, our Board of Directors authorized us to repurchase up to 6.4
million shares of our outstanding common stock. As of June&nbsp;30, 2004, we had
acquired and retired approximately 4.8&nbsp;million shares (approximately 15%) of
our outstanding common stock at an aggregate cost of approximately $27.3
million, leaving approximately 1.6&nbsp;million shares available for repurchase
under the existing Board authorizations. Purchases are made at management&#146;s
discretion based on market conditions and our financial resources.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have $10.8&nbsp;million in restricted cash on deposit collateralizing
various letters of credit outstanding as of June&nbsp;30, 2004. The restricted cash
on deposit is required due to the expiration of our line of credit with Fleet
Capital on December&nbsp;7, 2003. We have signed a letter of intent with a financial
institution for a $9&nbsp;million letter of credit facility, of which $4&nbsp;million
must be secured, and we expect to finalize the documentation in the
fourth quarter.
This facility will replace the expired facility with Fleet Capital.


<P align="center" style="font-size: 10pt">26
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, we had
 23 aircraft remaining on order under our
May&nbsp;2001 aircraft purchase agreement with BRAD. In conjunction with this
purchase agreement, we had $15.0&nbsp;million remaining on deposit with BRAD, which
was included with lease and equipment deposits at June&nbsp;30, 2004. The remaining
deposits will be returned on upon completion of permanent financing on each of
the last five aircraft under firm order with Bombardier ($3.0&nbsp;million per
aircraft).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, we had permanently financed 30 of the 37 CRJ-700 and
CRJ-900 aircraft delivered under the 2001 BRAD agreement; the remaining
aircraft are subject to interim financing. We may utilize interim financing
provided by the manufacturer and to fund up to 15 aircraft at any one time
under this facility. Our ability to obtain additional interim financing is
contingent upon obtaining permanent financing for the aircraft already
delivered. There are no assurances that we will be able to obtain permanent
financing for future aircraft deliveries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 June&nbsp;30, 2004, we
leased 126 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 $2.1&nbsp;billion at June&nbsp;30, 2004.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of August&nbsp;4, 2004, we had cash and marketable securities in excess of
$208.2&nbsp;million, including restricted cash of $10.7&nbsp;million. We believe that we
will have adequate cash flow to meet our operating needs.


<P align="left" style="font-size: 10pt"><B>Commitments</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, we had $575.3&nbsp;million in long-term debt (including
current maturities). This amount consisted primarily of $250.8&nbsp;million in notes
payable related to the acquisition of 11 regional jets, $100.1&nbsp;million related
to the issuance of the senior convertible notes at 6.25%, $100.0&nbsp;million
related to the issuance of senior convertible notes at 3.625%, $96.0&nbsp;million in
notes payable related to the Company&#146;s fleet of Beechcraft 1900D turboprop
aircraft, $23.4&nbsp;million related to the two CRJ 200 aircraft acquired from
Midway, $3.8&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. As of June&nbsp;30, 2004, we had $178.9&nbsp;million
in short-term notes payable to the manufacturer for interim financed aircraft.


<P align="center" style="font-size: 10pt">27
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">The following table sets forth our cash obligations as of June&nbsp;30, 2004.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>In thousands:</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2006</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2007</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Thereafter</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Long-term debt:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Senior convertible debt notes &#150;
2.4829% (assuming no conversions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">100,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">100,112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Senior convertible debt notes &#150;
2.115% (assuming no conversions)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Notes payable related to B1900Ds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,954</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Notes payable related to CRJ-700s
and 900s</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,795</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Notes payable related to CRJ-200s</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Note payable to manufacturer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,756</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Mortgage note payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">970</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total long-term debt:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">575,253</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Short-term debt:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Notes payable to manufacturer &#150;
interim financing (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,939</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total debt:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">754,192</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Payments under operating leases:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash
aircraft rental payments (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,281,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,045,871</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Lease payments on equipment and
operating facilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,520</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185,435</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">180,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,285,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,052,391</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Future aircraft acquisition costs (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">875,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">875,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,108,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">206,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">207,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">203,940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">189,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,765,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,681,583</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Represents the principal amount of notes payable to the manufacturer for
interim financed aircraft. The Company expects to permanently finance
these aircraft under operating leases in the following year; however,
these aircraft may also be financed as debt.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Lease payments on aircraft flown pursuant to our guaranteed-revenue
agreements are reimbursed by the applicable code-share partner.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Represents the estimated cost of commitments to acquire CRJ-200, CRJ-700
and CRJ-900 aircraft in the future.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>Critical Accounting Estimates and Judgments</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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


<P align="center" style="font-size: 10pt">28
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">our reported and expected financial results. The discussion below is not
intended to be a comprehensive list of our accounting policies. For further
discussion on the application of these and other accounting policies, see Note
1 in the Notes to the Consolidated Financial Statements in Form&nbsp;10-K/A, which
contains accounting policies and other disclosures required by accounting
principles generally accepted in the United States of America.



<P align="left" style="font-size: 10pt"><B><I>Revenue Recognition</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The America West, United and the US Airways regional jet code-share
agreements are revenue-guarantee flying agreements. Under a revenue-guarantee
arrangement, the major airline generally pays a fixed monthly minimum amount,
plus certain additional amounts based upon the number of flights flown and
block hours performed. The contracts also include reimbursement of certain
costs incurred by Mesa in performing flight services. These costs, known as
&#147;pass-through costs,&#148; may include aircraft ownership cost, passenger and hull
insurance, aircraft property taxes as well as, fuel, landing fees and catering.
The contracts also include a profit component that may be determined based on a
percentage of profits on the Mesa flown flights, a profit margin on certain
reimbursable costs as well as a profit margin based on certain operational
benchmarks. The Company primarily recognizes revenue under its
revenue-guarantee agreements when the transportation is provided. The majority
of the revenue under these contracts is known at the end of the accounting
period and is booked as actual. The Company performs an estimate of the profit
component based upon the information available at the end of the accounting
period. All revenue recognized under these contracts is presented at the gross
amount billed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The America West, US Airways, and Midwest Airlines B1900D turboprop
code-share agreements are pro-rate agreements. Under a pro-rate agreement, the
Company receives a percentage of the passenger&#146;s fare based on a standard
industry formula that allocates revenue based on the percentage of
transportation provided. Revenue from our pro-rate agreements and our
independent operation is recognized when transportation is provided. Tickets
sold but not yet used are included in air traffic liability on the consolidated
balance sheets.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 under the
Essential Air Service Program 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.


<P align="left" style="font-size: 10pt"><B><I>Allowance for Doubtful Accounts</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts billed by the Company under revenue guarantee arrangements are
subject to our interpretation of the applicable code-share agreement and are
subject to audit by our code-share partners. Periodically our code-share
partners dispute amounts billed and pay amounts less than the amount 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 $5.1&nbsp;million at June&nbsp;30, 2004 and $4.7&nbsp;million at
September&nbsp;30, 2003. If the Company&#146;s actual ability to collect these
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.


<P align="left" style="font-size: 10pt"><B><I>Accrued Health Care Costs</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is currently self-insured for health care costs and as such, a
reserve for the cost of claims that have not been paid as of the balance sheet
date is estimated. The Company&#146;s estimate of this reserve is based upon
historical claim experience and upon the recommendations of its health care
provider. At June&nbsp;30, 2004 and September&nbsp;30, 2003, the Company accrued $2.4
million and $1.8&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.


<P align="left" style="font-size: 10pt"><B><I>Long-lived Assets, Aircraft and Parts Held for Sale</I></B>



<P align="center" style="font-size: 10pt">29
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment are stated at cost and depreciated over their
estimated useful lives to their estimated salvage values using the
straight-line method. 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. Under the provisions of Statement of
Financial Accounting Standards No.&nbsp;144, &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets,&#148; the Company records an impairment loss if the
undiscounted future cash flows are found to be less than the carrying amount of
the asset. If an impairment loss has occurred, a charge is recorded to reduce
the carrying amount of the asset to fair value. Long-lived assets to be
disposed of are reported at the lower of carrying amount or fair value less
cost to sell.


<P align="left" style="font-size: 10pt"><B><I>Valuation Allowance for Deferred Tax Assets</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 June&nbsp;30,
2004 and September&nbsp;30, 2003, the Company had a valuation allowance for certain
deferred tax assets not expected to be realized of $0.1&nbsp;million. Realization of
these deferred tax assets is dependent upon generating sufficient taxable
income prior to expiration of any net operating loss carryforwards. The Company
believes it will generate sufficient taxable income in the future to realize
these net operating loss carryforwards as the Company has had pretax income in
fiscal 2003, 2002 and 2001 (excluding impairment charges) and as the Company
has taken steps to minimize the financial impact of its unprofitable
subsidiaries. Although realization is not assured, management believes it is
more likely than not that the recorded deferred tax asset, net of the valuation
allowance provided, will be realized. 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.


<P align="left" style="font-size: 10pt"><B>AIRCRAFT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table lists the aircraft owned and leased by the Company for
scheduled operations as of June&nbsp;30, 2004:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Operating on</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Passenger</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B> Type of Aircraft</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Leased</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30, 2004</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Capacity</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Canadair 200 Regional Jet</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Canadair 700 Regional Jet</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Canadair 900 Regional Jet</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Embraer 145 Regional Jet</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Beechcraft 1900D</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Dash 8-200</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Embraer EMB 120</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>ERJ Program</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, the Company has taken delivery of all 36 ERJ-145
50-passenger regional jets contracted for under the June&nbsp;1999 aircraft purchase
agreement with Embraer. All aircraft have been permanently financed as
operating leases.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>CRJ Program</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;1996, we entered into an agreement (the &#147;1996 BRAD Agreement&#148;)
with Bombardier Regional Aircraft Division (&#147;BRAD&#148;) to acquire 32 CRJ-200
50-passenger regional jet aircraft. The 32 aircraft have been delivered and are
currently under permanent financing as operating leases with initial terms of
16.5 to 18.5&nbsp;years.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2001, we entered into a second agreement with BRAD (the &#147;2001 BRAD
Agreement&#148;) to purchase a total of 15 CRJ-700s and 25 CRJ-900s. The transaction
includes standard product support provisions, including training, preferred
pricing on initial inventory provisioning, maintenance and technical
publications. The Company


<P align="center" style="font-size: 10pt">30
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">has accepted delivery of 15 CRJ-700s. We are the launch customer of the
CRJ-900, and as of June&nbsp;30, 2004, have taken delivery of 22 CRJ-900 aircraft.
In addition to the firm orders, Mesa has an option to acquire an additional 80
CRJ-700 or CRJ-900 regional jets. In January&nbsp;2004, the Company exercised
options to acquire 20 CRJ-700 and CRJ-900 aircraft (exact mix to be determined
at a later date) for delivery through 2005. In conjunction with the 2001 BRAD
Agreement, Mesa has $15.0&nbsp;million on deposit with BRAD, which was included with
lease and equipment deposits at June&nbsp;30, 2004.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2003 and 2004, the Company acquired 11 previously operated CRJ-100/200
aircraft in order to meet required deliveries under its code-share agreements.
The aircraft are financed as operating leases. The Company continues to
actively pursue previously operated 50-seat regional jet aircraft to meet its
contractual delivery requirements. The Company plans to lease five
additional
previously operated CRJ-200 aircraft over the next quarter.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also in 2004, the Company acquired eight CRJ 200 aircraft through the
purchase of the assets of Midway. Of the eight aircraft acquired, two are
owned and six are leased.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the Company&#146;s jet fleet status and current
fleet expansion plans, as well as options on additional aircraft deliveries,
for the periods indicated:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CRJ-700</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CRJ-900</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CRJ-</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Firm</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Firm</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>700/900</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>ERJ-145</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>ERJ-145</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Cumulative</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>CRJ-100/200</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Orders</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Orders</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Firm Orders</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Options</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Delivered:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">At 6/30/2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Scheduled deliveries:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Fiscal 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Fiscal 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Fiscal 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Fiscal 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">207</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Fiscal 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Fiscal 2009 and
Beyond</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><B>Total</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:20px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">*</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has the right to convert a portion of these CRJ-900
aircraft to CRJ-700 aircraft at a later date.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Beechcraft 1900D</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, we owned 35 Beechcraft 1900D aircraft. Effective
March&nbsp;31, 2004, the Company parked seven leased B1900 aircraft and has
negotiated the terms of the early return with all of the aircraft lessors.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dash-8</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, we operated 16 leased Dash-8 aircraft.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Aircraft Financing Relationships with the Manufacturer</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is customary business practice to enter into interim financing with the
manufacturer. Under interim financing arrangements, the Company takes delivery
and title of the aircraft prior to securing permanent financing. After taking
delivery of the aircraft, it is the Company&#146;s intention to subsequently enter

into a sale-leaseback transaction with an independent third-party lessor.
Occasionally the Company will permanently finance aircraft with long-term debt,
but it is our current intention to permanently finance aircraft as operating
leases rather than debt. The Company currently has seven aircraft on interim
financing with the manufacturer. These interim financings agreements are six
months in length and provide for monthly interest only payments at LIBOR plus
three percent. The current interim financing agreement with the manufacturer
provides for the Company to have a maximum of 15 aircraft on interim financing
at a given time.


<P align="left" style="font-size: 10pt"><B>RISK FACTORS</B>



<P align="center" style="font-size: 10pt">31
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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>Risks Related to Our Business</B>



<P align="left" style="font-size: 10pt"><I>The negative impact of the September&nbsp;11, 2001 terrorist attacks and the
resulting government responses could be material to our financial condition,
results of operations and prospects.</I>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terrorist attacks of September&nbsp;11, 2001 were highly publicized. The
impacts that these events will continue to have on the airline industry in
general, and on us in particular, are not known at this time, but are expected
to include a substantial impact on our operations due to:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a reduction in the demand for travel in the near and mid-term until
public confidence in the air transportation system is restored;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an increase in costs due to enhanced security measures and
government directives in response to the terrorist attacks;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an increase in the cost of aviation insurance in general, and the
cost and availability of coverage for acts of war, terrorism,
hijacking, sabotage and similar acts of peril in particular; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an increase in airport rents and landing fees.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we expect that the general increase in hostilities relating
to reprisals against terrorist organizations and the continued threat of
further terrorist attacks will continue to negatively impact our revenues and
costs in the near and mid-term. The extent of the impact that the terrorist
attacks and their aftermath will have on our operations, and the sufficiency of
our financial resources to absorb this impact, will depend on a number of
factors, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the adverse impact that terrorist attacks, and the resulting
government responses, will have on the travel industry and the economy
in general;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the potential increase in fuel costs and decrease in availability
of fuel if oil-producing countries are affected by the aftermath of the
terrorist attacks, including the government&#146;s responses, and our
ability to manage this risk in connection with that part of our
operations where our fuel costs are not reimbursed by our code-share
partners under the terms of our code-share agreements;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to reduce our operating costs and conserve financial
resources, taking into account the cost increases (including
significant increases in the cost of aviation insurance) expected to
result from the aftermath of the terrorist attacks and the government&#146;s
responses;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any resulting decline in the value of the aircraft in our fleet;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to raise additional financing, if necessary, taking
into account our current leverage and the limitations imposed by the
terms of our existing indebtedness;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of crew members who may be called for duty in the
reserve forces of the armed services and the resulting impact on our
ability to operate as planned; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the scope and nature of any future terrorist attacks.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><I>We are dependent on our agreements with our code-share partners.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on relationships created by our code-share agreements. We derive
a significant portion of our consolidated passenger revenues from our revenue
guarantee code-share agreements with America West, United Airlines, and US
Airways. Our code-share partners have certain rights to cancel the applicable
code-share agreement upon the occurrence of certain events or the giving of
appropriate notice, subject to certain conditions. Although no notice has been
given to date that any party intends to cancel these contracts, there can be no
assurance that they will not serve notice at a later date of their intention to
cancel, forcing us to stop selling those routes with the applicable


<P align="center" style="font-size: 10pt">32
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">partner&#146;s code and potentially reducing our traffic and revenue. In
addition, our code-share agreement with America West allows America West,
subject to certain restrictions, to reduce the combined CRJ fleets utilized
under the code-share agreement by one aircraft in any six-month period
commencing in January&nbsp;2007. In addition, beginning in February&nbsp;2007, America
West may eliminate the Dash-8 aircraft upon 180&nbsp;days prior written notice.
America West has used this provision to reduce the number of aircraft covered
by the code-share agreement and there can be no assurance that, commencing in
January&nbsp;2007, they will not continue to further reduce the number of covered
aircraft.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, because a majority of our operating revenues are currently
generated under revenue-guarantee code-share agreements, if any one of them is
terminated, our operating revenues and net income could be materially adversely
affected unless we are able to enter into satisfactory substitute arrangements
or, alternatively, fly under our own flight designator code, including
obtaining the airport facilities and gates necessary to do so. In fiscal year
2004 to date, our America West code-share agreement accounted for 37% of our
consolidated passenger revenues, our US Airways code-share agreement accounted
for 43% of our consolidated passenger revenues and our United code-share
agreement accounted for 18% of our consolidated passenger revenues. Any
material modification to, or termination of, our code-share agreements with any
of these partners could have a material adverse effect on our financial
condition, the results of our operations and the price of our common stock.
Should any of our revenue-guarantee code-share agreements be terminated, we
cannot assure you that we would be able to enter into substitute code-share
arrangements, that any such arrangements would be as favorable to us as the
current code-share agreements or that we could successfully fly under our own
flight designator code.


<P align="left" style="font-size: 10pt"><I>If our code-share partners or other regional carriers experience events that
negatively impact their financial strength or operations, our operations also
may be negatively impacted.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are directly affected by the financial and operating strength of our
code-share partners. Any events that negatively impact the financial strength
of our code-share partners or have a long-term effect on the use of our
code-share partners by airline travelers would likely have a material adverse
effect on our business, financial condition and results of operations. In the
event of a decrease in the financial or operational strength of any of our
code-share partners, such partner may seek to reduce, or be unable to make, the
payments due to us under their code-share agreement. In addition, they may
reduce utilization of our aircraft. Although there are certain monthly
guaranteed payment amounts, there are no minimum levels of utilization
specified in the code-share agreements. UAL Corp., the parent of our code-share
partner United Airlines, has not emerged from reorganization under Chapter&nbsp;11
of the U.S. Bankruptcy Code. Additionally, US Airways, which accounted for 43%
of our consolidated passenger revenue in for the first nine months of fiscal
2004, had its corporate credit rating reduced to &#145;CCC&#043;&#146; from &#145;B-&#146; by Standard &#038;
Poor&#146;s on May&nbsp;5, 2004. The financial performance of US Airways and United could
directly affect their ability to perform under our code-share agreements with
them. If any of our code-share partners, including US Airways, becomes
bankrupt, our code-share agreement with such partner may not be assumed in
bankruptcy and would be terminated. This and other such events could have an
adverse effect on our business, financial condition and results of operations.
In addition, any negative events that occur to other regional carriers and that
affect public perception of such carriers generally could also have a material
adverse effect on our business, financial condition and results of operations.


<P align="left" style="font-size: 10pt"><I>Our code-share partners may expand their direct operation of regional jets thus
limiting the expansion of our relationships with them.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on major airlines like America West, United Airlines and US
Airways electing to contract with us instead of purchasing and operating their
own regional jets. However, these major airlines possess the resources to
acquire and operate their own regional jets instead of entering into contracts
with us or other regional carriers. We have no guarantee that in the future our
code-share partners will choose to enter into contracts with us instead of
purchasing their own regional jets or entering into relationships with
competing regional airlines. A decision by America West, United Airlines, or US
Airways to phase out our contract-based code-share relationships or to enter
into similar agreements with competitors could have a material adverse effect
on our business, financial condition or results of operations. In addition to
Mesa Airlines, US Airways and United Airlines have similar code-share
agreements with other competing regional airlines. Mesa Airlines is currently
America West&#146;s only code-share partner.


<P align="center" style="font-size: 10pt">33
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<P align="left" style="font-size: 10pt"><I>If we experience a lack of labor availability or strikes, it could result in a
decrease of revenues due to the cancellation of flights.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The operation of our business is significantly dependent on the
availability of qualified employees, including, specifically, flight crews,
mechanics and avionics specialists. Historically, regional airlines have
experienced high pilot turnover from time to time as a result of air carriers
operating larger aircraft hiring their commercial pilots. Further, the addition
of aircraft, especially new aircraft types, can result in pilots upgrading
between aircraft types and becoming unavailable for duty during the required
extensive training periods. There can be no assurance that we will be able to
maintain an adequate supply of qualified personnel or that labor expenses will
not increase.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At June&nbsp;30, 2004, we had approximately 4,500 employees, a significant
number of whom are members of labor unions, including the Air Line Pilots
Association and the Association of Flight Attendants. Our collective bargaining
agreement with the Air Line Pilots Association expires in August&nbsp;2007 and our
collective bargaining agreement with the Association of Flight Attendants
expires in June&nbsp;2006. The inability to negotiate acceptable contracts with
existing unions as agreements expire or with new unions could result in work
stoppages by the affected workers, lost revenues resulting from the
cancellation of flights and increased operating costs as a result of higher
wages or benefits paid to union members. We cannot predict which, if any, other
employee groups may seek union representation or the outcome or the terms of
any future collective bargaining agreement and therefore the effect, if any, on
our financial condition and results of operations. If negotiations with unions
over collective bargaining agreements prove to be unsuccessful, following
specified &#147;cooling off&#148; periods, the unions may initiate a work action,
including a strike, which could have a material adverse effect on our business,
financial condition and results of operations.


<P align="left" style="font-size: 10pt"><I>Increases in our labor costs, which constitute a substantial portion of our
total operating costs, will cause our earnings to decrease.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Labor costs constitute a significant percentage of our total operating
costs, and we have experienced pressure to increase wages and benefits for our
employees. Under our code-share agreements, our reimbursement rates contemplate
labor costs that increase on a set schedule generally tied to an increase in
the consumer price index or the actual increase in the contract. We are
responsible for our labor costs, and we may not be entitled to receive
increased payments under our code-share agreements if our labor costs increase
above the assumed costs included in the reimbursement rates. As a result, a
significant increase in our labor costs above the levels assumed in our
reimbursement rates could result in a material reduction in our earnings.


<P align="left" style="font-size: 10pt"><I>If new airline regulations are passed or are imposed upon our operations, we
may incur increased operating costs and experience a decrease in earnings.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Laws and regulations, such as those described below, have been proposed
from time to time that could significantly increase the cost of our operations
by imposing additional requirements or restrictions on our operations. We
cannot predict what laws and regulations will be adopted or what changes to air
transportation agreements will be effected, if any, or how they will affect us,
and there can be no assurance that laws or regulations currently proposed or
enacted in the future will not increase our operating expenses and therefore
adversely affect our financial condition and results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As an interstate air carrier, we are subject to the economic jurisdiction,
regulation and continuing air carrier fitness requirements of the Department of
Transportation, which include required levels of financial, managerial and
regulatory fitness. The Department of Transportation 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, to mandate conditions of carriage and
to suspend an air carrier&#146;s fitness to operate. 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.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are also subject to the jurisdiction of the FAA with respect to our
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.


<P align="center" style="font-size: 10pt">34
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incur substantial costs in maintaining our current certifications and
otherwise complying with the laws, rules and regulations to which we are
subject. We cannot predict whether we will be able to comply with all present
and future laws, rules, regulations and certification requirements or that the
cost of continued compliance will not significantly increase our costs of doing
business.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FAA has the authority to issue mandatory orders relating to, among
other things, the grounding of aircraft, inspection of aircraft, installation
of new safety-related items and removal and replacement of aircraft parts that
have failed or may fail in the future. A decision by the FAA to ground, or
require time-consuming inspections of, or maintenance on, all or any of our
turboprops or regional jets, for any reason, could negatively impact our
results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to state and federal regulation, airports and municipalities
enact rules and regulations that affect our operations. From time to time,
various airports throughout the country have considered limiting the use of
smaller aircraft, such as Embraer or Canadair regional jets, at such airports.
The imposition of any limits on the use of our regional jets at any airport at
which we operate could interfere with our obligations under our code-share
agreements and severely interrupt our business operations.


<P align="left" style="font-size: 10pt"><I>Fluctuations in fuel costs could adversely affect our operating expenses and
results.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The price and supply of jet fuel is unpredictable and fluctuates based on
events outside our control, including geopolitical developments, regional
production patterns and environmental concerns. Although approximately 91% of
our fuel costs for fiscal 2004 was reimbursed by our code-share partners, price
escalations or reductions in the supply of jet fuel will increase our operating
expenses and, to the extent such fuel costs are not reimbursed by our
code-share partners, could cause our operating results and net income to
decline.


<P align="left" style="font-size: 10pt"><I>If additional security and safety measures regulations are adopted, we may
incur increased operating costs and experience a decrease in earnings.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Congress recently adopted increased safety and security measures designed
to increase airline passenger security and protect against terrorist acts. Such
measures have resulted in additional operating costs to the airline industry.
The Aviation Safety Commission&#146;s report recommends the adoption of further
measures aimed at improving the safety and security of air travel. We cannot
forecast what additional security and safety requirements may be imposed on our
operations in the future or the costs or revenue impact that would be
associated with complying with such requirements, although such costs and
revenue impact could be significant. To the extent that the costs of complying
with any additional safety and security measures are not reimbursed by our
code-share partners, our operating results and net income could be adversely
affected.


<P align="left" style="font-size: 10pt"><I>If our operating costs increase as our aircraft fleet ages and we are unable to
pass along such costs, our earnings will decrease.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As our fleet of aircraft age, the cost of maintaining such aircraft, if
not replaced, will likely increase. There can be no assurance that costs of
maintenance, including costs to comply with aging aircraft requirements, will
not materially increase in the future. Any material increase in such costs
could have a material adverse effect on our business, financial condition and
results of operations. Because many aircraft components are required to be
replaced after specified numbers of flight hours or take-off and landing
cycles, and because new aviation technology may be required to be retrofitted,
the cost to maintain aging aircraft will generally exceed the cost to maintain
newer aircraft. We believe that the cost to maintain our aircraft in the
long-term will be consistent with industry experience for these aircraft types
and ages used by comparable airlines.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our aircraft are mechanically reliable based on the
percentage of scheduled flights completed and as of June&nbsp;30, 2004 the average
age of our regional jet fleet is 2.85&nbsp;years. However, there can be no assurance
that such aircraft will continue to be sufficiently reliable over longer
periods of time. Furthermore, any public perception that our aircraft are less
than completely reliable could have a material adverse effect on our business,
financial condition and results of operations.


<P align="center" style="font-size: 10pt">35
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<P align="left" style="font-size: 10pt"><I>Our fleet expansion program will require a significant increase in our leverage
and the financing we require may not be available on favorable terms or at all.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The airline business is very capital intensive and, as a result, many
airline companies are highly leveraged. During the fiscal 2004, our debt
service payments totaled $28.8&nbsp;million and our lease payments totaled $128.5
million. We have significant lease obligations with respect to our aircraft and
ground facilities, which aggregated approximately $2.1&nbsp;billion at June&nbsp;30,
2004. As of June&nbsp;30, 2004, our growth strategy involves the acquisition of
eight more Bombardier regional jets during fiscal 2004. As of June&nbsp;30, 2004, we
had permanently financed 30 of the 37 CRJ-700 and CRJ-900 aircraft delivered
under the 2001 BRAD agreement; the remaining aircraft are subject to interim
financing. We may utilize interim financing provided by the manufacturer and
have the ability to fund up to 15 aircraft at any one time under this facility.
Our ability to obtain additional interim financing is contingent upon obtaining
permanent financing for the aircraft already delivered. There are no assurances
that we will be able to obtain permanent financing for future aircraft
deliveries.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurance that our operations will generate sufficient
cash flow to make such payments or that we will be able to obtain financing to
acquire the additional aircraft necessary for our expansion. If we default
under our loan or lease agreements, the lender/lessor has available extensive
remedies, including, without limitation, repossession of the respective
aircraft and, in the case of large creditors, the effective ability to exert
control over how we allocate a significant portion of our revenues. Even if we
are able to timely service our debt, the size of our long-term debt and lease
obligations could negatively affect our financial condition, results of
operations and the price of our common stock in many ways, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increasing the cost, or limiting the availability of, additional
financing for working capital, acquisitions or other purposes;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limiting the ways in which we can use our cash flow, much of which
may have to be used to satisfy debt and lease obligations; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>adversely affecting our ability to respond to changing business or
economic conditions or continue our growth strategy.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we need funds and cannot raise them on acceptable terms, we may be
unable to realize our current plans or take advantage of unanticipated
opportunities and could be required to slow our growth.


<P align="left" style="font-size: 10pt"><I>We depend on Bombardier to supply us with the aircraft we require to expand.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;30, 2004, we are obligated under our code-share agreements to
place an additional 27 regional jets in service over the next 12&nbsp;months. We
currently have firm orders with Bombardier for an additional 23 regional jets.
We also have options to acquire an additional 60 regional jets that are
exercisable through 2008.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are dependent on Bombardier as manufacturer of these jets and certain
factors may limit or preclude our ability to obtain these regional jets,
including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Bombardier could refuse, or may not be financially able, to perform
its obligations under the applicable purchase agreement for the
delivery of the regional jets; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a fire, strike or other event could occur that affects Bombardier&#146;s
ability to completely or timely fulfill its contractual obligations.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any disruption or change in the delivery schedule of these regional jets
would affect our overall operations and our ability to fulfill our obligations
under our code-share agreements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations could be materially adversely affected by the failure or
inability of Bombardier or any key component manufacturers to provide
sufficient parts or related support services on a timely basis or by an
interruption of fleet service as a result of unscheduled or unanticipated
maintenance requirements for our aircraft.


<P align="center" style="font-size: 10pt">36
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<P align="left" style="font-size: 10pt"><I>Reduced utilization levels of our aircraft under the revenue-guarantee
agreements would adversely impact our revenues and earnings.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even though our revenue-guarantee agreements require a fixed amount per
month to compensate us for our fixed costs, if our aircraft are underutilized
(including taking into account the stage length and frequency of our scheduled
flights) we will lose the opportunity to receive a margin on the variable costs
of flights that would have been flown if our aircraft were more fully utilized.


<P align="left" style="font-size: 10pt"><I>If we incur problems with any of our third party service providers, our
operations could be adversely affected by a resulting decline in revenue or
negative public perception about our services.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our reliance upon others to provide essential services on behalf of our
operations may result in the relative inability to control the efficiency and
timeliness of contract services. We have entered into agreements with
contractors to provide various facilities and services required for our
operations, including aircraft maintenance, ground facilities, baggage handling
and personnel training. It is likely that similar agreements will be entered
into in any new markets we decide to serve. All of these agreements are subject
to termination after notice. Any material problems with the efficiency and
timeliness of contract services could have a material adverse effect on our
business, financial condition and results of operations.


<P align="left" style="font-size: 10pt"><I>We are at risk of losses and adverse publicity stemming from any accident
involving any of our aircraft.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If one of our aircraft were to crash or be involved in an accident, we
could be exposed to significant tort liability.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;8, 2003, US Airways Express Flight 5481, operated by Air
Midwest, crashed shortly after takeoff from Charlotte Douglas International
Airport en route to Greenville/Spartanburg, S.C. The estates of the passengers
from Flight 5481, or the passengers, or their estates, of any other future
aircraft accident may seek to recover damages for death or injury. Although we
believe our present insurance coverage is sufficient to cover any claims
arising from the crash of Flight 5481, there can be no assurance that the
insurance we carry to cover damages arising from these or any future accidents
will be adequate. Accidents could also result in unforeseen mechanical and
maintenance costs. In addition, any accident involving an aircraft that we
operate could create a public perception that our aircraft are not safe, which
could result in air travelers being reluctant to fly on our aircraft. To the
extent a decrease is associated with our operations not covered by our
code-share agreements, such a decrease could have a material adverse affect on
our business, financial condition or results of operations.


<P align="left" style="font-size: 10pt"><I>If we become involved in any material litigation or any existing litigation is
concluded in a manner adverse to us, our earnings may decline.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are, from time to time, subject to various legal proceedings and
claims, either asserted or unasserted. Any such claims, whether with or without
merit, could be time-consuming and expensive to defend and could divert
management&#146;s attention and resources. There can be no assurance regarding the
outcome of current or future litigation.


<P align="left" style="font-size: 10pt"><I>Our business would be harmed if we lose the services of our key personnel.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success depends to a large extent on the continued service of our
executive management team. We have employment agreements with certain executive
officers, but it is possible that members of executive management may leave us.
Departures by our executive officers could have a negative impact on our
business, as we may not be able to find suitable management personnel to
replace departing executives on a timely basis. We do not maintain key-man life
insurance on any of our executive officers.


<P align="left" style="font-size: 10pt"><I>We may experience difficulty finding, training and retaining employees.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business is labor-intensive, we require large numbers of pilots,
flight attendants, maintenance technicians and other personnel and we
anticipate that our expansion plans will require us to recruit, train and
retain a significant number of new employees over the next several years.


<P align="center" style="font-size: 10pt">37
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The airline industry has from time to time experienced a shortage of
qualified personnel, specifically pilots and maintenance technicians. In
addition, as is common with most of our competitors, we have faced considerable
turnover of our employees. Although our employee turnover has decreased
significantly since September&nbsp;11, 2001, our pilots, flight attendants and
maintenance technicians often leave to work for larger airlines, which
generally offer higher salaries and better benefit programs than regional
airlines are financially able to offer. Should the turnover of employees,
particularly pilots and maintenance technicians, sharply increase, the result
will be significantly higher training costs than otherwise would be necessary.
We cannot assure you that we will be able to recruit, train and retain the
qualified employees that we need to carry out our expansion plans or replace
departing employees. If we are unable to hire and retain qualified employees at
a reasonable cost, we may be unable to complete our expansion plans, which
could have a material adverse affect our financial condition, results of
operations and the price of our common stock.


<P align="left" style="font-size: 10pt"><B>Risks Related To Our Industry</B>



<P align="left" style="font-size: 10pt"><I>If competition in the airline industry increases, we may experience a decline
in revenue.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increased competition in the airline industry as well as competitive
pressure on our code-share partners or in our markets could have a material
adverse effect on our business, financial condition and results of operation.
The airline industry is highly competitive. The earnings of many of the
airlines have historically been volatile. The airline industry is susceptible
to price discounting, which involves the offering of discount or promotional
fares to passengers. Any such fares offered by one airline are normally matched
by competing airlines, which may result in lower revenue per passenger, i.e.,
lower yields, without a corresponding increase in traffic levels. Also, in
recent years several new carriers have entered the industry, typically with low
cost structures. In some cases, new entrants have initiated or triggered price
discounting. The entry of additional new major or regional carriers in any of
our markets, as well as increased competition from or the introduction of new
services by established carriers, could negatively impact our financial
condition and results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our reliance on our code-share agreements with our major airline partners
for the majority of our revenue means that we must rely on the ability of our
code-share partners to adequately promote their respective services and to
maintain their respective market share. Competitive pressures by low-fare
carriers and price discounting among major airlines could have a material
adverse effect on our code-share partners and therefore adversely affect our
business, financial condition and results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The results of operations in the air travel business historically
fluctuate in response to general economic conditions. The airline industry is
sensitive to changes in economic conditions that affect business and leisure
travel and is highly susceptible to unforeseen events, such as political
instability, regional hostilities, economic recession, fuel price increases,
inflation, adverse weather conditions or other adverse occurrences that result
in a decline in air travel. Any event that results in decreased travel or
increased competition among airlines could have a material adverse effect on
our business, financial condition and results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to traditional competition among airlines, the industry faces
competition from ground and sea transportation alternatives. Video
teleconferencing and other methods of electronic communication may add a new
dimension of competition to the industry as business travelers seek lower-cost
substitutes for air travel.


<P align="left" style="font-size: 10pt"><I>The airline industry is heavily regulated.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Airlines are subject to extensive regulatory and legal compliance
requirements, both domestically and internationally, that involve significant
costs. In the last several years, the FAA has issued a number of directives and
other regulations relating to the maintenance and operation of aircraft that
have required us to make significant expenditures. FAA requirements cover,
among other things, retirement of older aircraft, security measures, collision
avoidance systems, airborne windshear avoidance systems, noise abatement,
commuter aircraft safety and increased inspection and maintenance procedures to
be conducted on older aircraft.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incur substantial costs in maintaining our current certifications and
otherwise complying with the laws, rules and regulations to which we are
subject. We cannot predict whether we will be able to comply with all present
and future laws, rules, regulations and certification requirements or that the
cost of continued compliance will not


<P align="center" style="font-size: 10pt">38
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<P align="left" style="font-size: 10pt">significantly increase our costs of doing business, to the extent such
costs are not reimbursed by our code-share partners.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FAA has the authority to issue mandatory orders relating to, among
other things, the grounding of aircraft, inspection of aircraft, installation
of new safety-related items and removal and replacement of aircraft parts that
have failed or may fall in the future. A decision by the FAA to ground, or
require time consuming inspections of or maintenance on, all or any of our
aircraft, for any reason, could negatively impact our results of operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to state and federal regulation, airports and municipalities
enact rules and regulations that affect our operations. From time to time,
various airports throughout the country have considered limiting the use of
smaller aircraft, at such airports. The imposition of any limits on the use of
our aircraft at any airport at which we operate could interfere with our
obligations under our code-share agreements and severely interrupt our business
operations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional laws, regulations, taxes and airport rates and charges have
been proposed from time to time that could significantly increase the cost of
airline operations or reduce revenues. For instance, &#147;passenger bill of rights&#148;
legislation was introduced in Congress in 2001 which would have, among other
things, required the payment of compensation to passengers as a result of
certain delays and limited the ability of carriers to prohibit or restrict
usage of certain tickets. If adopted, these measures could have had the effect
of raising ticket prices, reducing revenue and increasing costs. Restrictions
on the ownership and transfer of airline routes and takeoff and landing slots
have also been proposed. In addition, as a result of the terrorist attacks in
New York and Washington, D.C. in September&nbsp;2001, the FAA has imposed more
stringent security procedures on airlines. We cannot predict what other new
regulations may be imposed on airlines and we cannot assure you that laws or
regulations enacted in the future will not materially adversely affect our
financial condition, results of operations and the price of our common stock.


<P align="left" style="font-size: 10pt"><I>The airline industry has been subject to a number of strikes which could affect
our business.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The airline industry has been negatively impacted by a number of labor
strikes. Any new collective bargaining agreement entered into by other regional
carriers may result in higher industry wages and add increased pressure on us
to increase the wages and benefits of our employees. Furthermore, since each of
our code-share partners is a significant source of revenue, any labor
disruption or labor strike by the employees of any one of our code-share
partners could have a material adverse effect on our financial condition,
results of operations and the price of our common stock.


<P align="left" style="font-size: 10pt"><B>Risks Related to Our Common Stock</B>



<P align="left" style="font-size: 10pt"><I>Provisions in our charter documents might deter acquisition bids for us.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation and bylaws contain provisions that, among
other things:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>authorize our board of directors to issue preferred stock ranking
senior to our common stock without any action on the part of the
shareholders;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>establish advance notice procedures for shareholder proposals,
including nominations of directors, to be considered at shareholders&#146;
meetings;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>authorize a majority of our board of directors, in certain
circumstances, to fill vacancies on the board resulting from an
increase in the authorized number of directors or from vacancies;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restrict the ability of shareholders to modify the number of authorized directors; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restrict the ability of stockholders to call special meetings of shareholders.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Section&nbsp;78.438 of the Nevada general corporation law
prohibits us from entering into some business combinations with interested
stockholders without the approval of our board of directors. These provisions
could make it more difficult for a third party to acquire us, even if doing so
would benefit our stockholders.


<P align="center" style="font-size: 10pt">39
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<P align="left" style="font-size: 10pt"><I>Our stock price may continue to be volatile and could decline substantially.</I>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stock market has, from time to time, experienced extreme price and
volume fluctuations. Many factors may cause the market price for our common
stock to decline following this offering, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our operating results failing to meet the expectations of securities analysts or investors in any quarter;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>downward revisions in securities analysts&#146; estimates;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>material announcements by us or our competitors;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>public sales of a substantial number of shares of our common stock following this offering;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>governmental regulatory action; or</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>adverse changes in general market conditions or economic trends.</TD>
</TR>

</TABLE>

<DIV align="left">
<A name="108"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;3. Qualitative and Quantitative Disclosure about Market Risk.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no material changes in the Company&#146;s market risk since
September&nbsp;30, 2003.

<DIV align="left">
<A name="109"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;4. Controls and Procedures.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of its
Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the Company&#146;s disclosure controls and procedures. Disclosure controls and
procedures are designed to ensure that information required to be disclosed in
the periodic reports filed or submitted under the Securities and Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission&#146;s rules and forms. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company&#146;s disclosure controls and procedures were effective
as of the end of the period covered by this report but also concluded that
there are certain weaknesses in our expendable and rotable parts area that
could be improved upon. We are dedicating resources to correct these issues and
are in the process of implementing the necessary corrections. The agreement
with LogisTechs also required us to implement certain procedures directed
towards monitoring the locations of our rotable inventory. Additionally, in
April&nbsp;2004, the Company determined that certain interim financing arrangements
were not properly accounted for. As a result of this determination, we
implemented procedures to review contract documentation to ensure that
provisions of our contractual obligations are appropriately reflected in our
consolidated financial statements. No change in the internal control over
financial reporting occurred during the last fiscal quarter that has materially
affected, or is likely to materially affect, the internal control over
financial reporting, except as noted above.


<P align="center" style="font-size: 10pt">* * *



<P align="center" style="font-size: 10pt">40
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="110"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>PART II. OTHER INFORMATION</B>


<DIV align="left">
<A name="111"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;1. </B><B><I>Legal Proceedings.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are 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.

<DIV align="left">
<A name="112"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;2. </B><B><I>Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities</I></B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(A)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>None</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(B)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>None</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(C)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In February&nbsp;2004, the Company completed the private placement of
senior convertible notes due 2024, which resulted in gross proceeds of
$100.1&nbsp;million to the Company. Cash interest is payable on the notes at
the rate of 2.115% per year on the principal amount at maturity, payable
semiannually in arrears on February&nbsp;10 and August&nbsp;10 of each year,
beginning August&nbsp;10, 2004, until February&nbsp;10, 2009. After that date, the
Company will not pay cash interest on the notes prior to maturity, and
the notes will begin accruing interest at a rate of 3.625% until
maturity. On February&nbsp;10, 2024, the maturity date of the notes, the
principal amount of each note will be $1,000. The aggregate amount due
at maturity, including interest accrued from February&nbsp;10, 2009, will be
$171,409,000. Each of the Company&#146;s wholly-owned domestic subsidiaries
will guarantee the notes on an unsecured senior basis. The notes and the
note guarantees are senior unsecured obligations and rank equally with
the Company&#146;s existing and future senior unsecured and unsubordinated
indebtedness. The notes and the note guarantees are junior to any
secured obligations of the Company and any of its wholly owned
subsidiaries to the extent of the collateral pledged.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The notes are convertible into shares of the Company&#146;s common stock at a
conversion rate of 40.3737 shares per $1,000 in principal amount at
maturity of the notes. This conversion rate is subject to adjustment in
certain circumstances. Holders of the notes may convert their notes only
if: (i)&nbsp;the sale price of our common stock exceeds 110% of the accreted
conversion price for at least 20 trading days in the 30 consecutive days
ending on the last trading day of the preceding quarter; (ii)&nbsp;on or prior
to February&nbsp;10, 2019, the trading price for the notes falls below certain
thresholds; (iii)&nbsp;the notes have been called for redemption; or (iv)
specified corporate transactions occur. The Company may redeem the notes,
in whole or in party, beginning on February&nbsp;10, 2009, at a redemption
price equal to the sum of the issue price, plus accrued original issue
discount, plus any accrued and unpaid cash interest. The holders of the
notes may require the Company to repurchase the notes on February&nbsp;10,
2009 at a price of $583.40 per note plus accrued and unpaid cash
interest, if any, on February&nbsp;10, 2014 at a price of $698.20 per note
plus accrued and unpaid cash interest, if any, and on February&nbsp;10, 2019
at a price of $835.58 per note plus accrued and unpaid cash interest, if
any. It is our intent to settle the notes in cash if the holders require
repurchase in 2009, 2014 and 2019. The Company has filed a shelf
registration statement with the U.S. Securities and Exchange Commission
covering the resale of the notes and the shares of common stock issuable
upon conversion thereof. We plan to use the net proceeds from the sale of
the notes for working capital and to fund our obligations with respect to
regional jet deliveries.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(D)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>None</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(E)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On December&nbsp;23, 1999, the Board of Directors authorized the
repurchase of 10%, or 3.4&nbsp;million shares, of the Company&#146;s outstanding
 shares of common stock at the time. On January&nbsp;4, 2001 and October&nbsp;24,
2002 the Board of Directors amended the original plan and authorized the
repurchase of one million and two million additional shares of common
stock, respectively. As of June&nbsp;30, 2004, the Company has acquired and
retired 4.8&nbsp;million shares of our outstanding common stock at an
aggregate cost of approximately</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">41
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>$27.3&nbsp;million, leaving 1.6&nbsp;million shares available for repurchase under
the existing Board authorizations, which is open ended. The Company
repurchased the following shares during the three months ended June&nbsp;30,
2004:</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Maximum Number</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Purchased as</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Shares that</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Part of Publicly</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>May Yet Be Purchased</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Period</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Purchased</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Paid per Share</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Announced Plans</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Under the Plan</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">April&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">May&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,616,334</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">June&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,616,334</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<A name="113"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;3. </B><B><I>Defaults upon Senior Securities.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable

<DIV align="left">
<A name="114"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;4. </B><B><I>Submission of Matters to vote for Security Holders.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None

<DIV align="left">
<A name="115"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;5. </B><B><I>Other Information.</I></B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None

<DIV align="left">
<A name="116"></A>
</DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;6. </B><B><I>Exhibits and Reports on Form&nbsp;8-K.</I></B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(A)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD>Exhibits:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>


    <TD width="1%" nowrap align="left">10.1(1)</TD>
    <TD width="4%">&nbsp;</TD>
    <TD> Amended and Restated United Express Agreement between United
Airlines, Inc. and Mesa Air Group, Inc.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">31.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification Pursuant to Rule&nbsp;13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as Amended</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">31.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification Pursuant to Rule&nbsp;13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as Amended</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">32.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted
Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">32.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted
Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</TD>
</TR>

</TABLE>



<P>
<HR size="1" width="18%" align="left" noshade>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="94%">The Company has sought confidential treatment of portions of the
referenced exhibit.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">42
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">






<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(B)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD>Reports on Form&nbsp;8-K</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD>On July&nbsp;28, 2004, Mesa Air Group, Inc. issued a press release related
to its financial results for the third quarter ended June&nbsp;30, 2004 and
conducted a publicly-available conference call discussing those results.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On April&nbsp;30, 2004, Mesa Air Group, Inc. issued a press release
relating to its financial results for the second quarter ended March&nbsp;31,
2004 and describing a restatement of certain financial information.</TD>
</TR>

</TABLE>

<DIV align="left">
<A name="117"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">MESA AIR GROUP, INC.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ GEORGE MURNANE III</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:50px">George
Murnane III</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Executive Vice President and CFO</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Dated: August&nbsp;11, 2004



<P align="center" style="font-size: 10pt">43
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">Index to Exhibits



<P align="left" style="font-size: 10pt">Exhibits:


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated United Express Agreement between United Airlines,
Inc. and Mesa Air Group, Inc.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exhibit&nbsp;31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to Rule&nbsp;13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as Amended</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exhibit&nbsp;31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to Rule&nbsp;13a-14(a)/15d-14(a) of the
Securities Exchange Act of 1934, as Amended</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exhibit&nbsp;32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted
Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Exhibit&nbsp;32.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted
Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P>
<HR size="1" width="18%" align="left" noshade>
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<TR valign="top">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">The Company has sought confidential treatment of portions of the
referenced exhibit.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">44
</DIV>

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</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>p69511exv10w1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                                             * TEXT OMITTED AND FILED SEPARATELY
                                                CONFIDENTIAL TREATMENT REQUESTED
                                           UNDER 17 C.F.R. SECTION 200.80(B)(4),
                                                            200.83 AND 240.24b-2

                                                      United Contract No. 163872

                              AMENDED AND RESTATED

                           UNITED EXPRESS(R) AGREEMENT

                                     BETWEEN

                             UNITED AIR LINES, INC.

                                       AND

                              MESA AIR GROUP, INC.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                              TITLE                                PAGE
- -------                              -----                                ----
<S>                                                                       <C>
I.         DEFINITIONS.................................................     1

II.        SCOPE, TERM, AND CONDITIONS.................................     4

           A.  SCOPE ..................................................     4

           B.  TERM ...................................................     5

           C.  CONDITIONS..............................................     7

III.       SUPPORT SERVICES AND FACILITIES.............................     7

           A.  GENERAL.................................................     7

           B.  SPECIAL SUPPORT SERVICES................................     7

           C.  COMMUNICATIONS..........................................    10

           D.  RESERVATIONS............................................    10

           E.  OPERATIONS..............................................    11

           F.  STATION SUPPORT SERVICES................................    14

           G.  TARIFFS AND SCHEDULE PUBLICATION........................    14

           H.  SALES SETTLEMENT........................................    15

           I.  ADVERTISING AND PROMOTIONS..............................    17

           J.  AUTOMATION..............................................    17

           K.  OTHER SUPPLIES..........................................    20

           L.  CONTRACTOR ASSISTANCE...................................    21

IV.        AIR SERVICES TO BE PROVIDED BY CONTRACTOR...................    21

           A.  SCHEDULES AND CHARTERS TO BE OPERATED BY CONTRACTOR.....    21

           B.  AIRCRAFT TO BE USED.....................................    23

           C.  INVENTORY...............................................    26

           D.  FLIGHT CREWS TO BE USED.................................    26

           E.  INFLIGHT SALES..........................................    27
</TABLE>

                                                                               i
<PAGE>

<TABLE>
<S>                                                                        <C>
V.         OPERATING RESTRICTIONS......................................    27

           A.  UNITED EXPRESS OPERATIONS ONLY..........................    27

           B.  NO OPERATION OUTSIDE AGREEMENT..........................    27

           C.  BREACH OF OPERATING RESTRICTIONS........................    28

VI.        LICENSE.....................................................    28

           A.  GRANT OF LICENSE........................................    28

           B.  TERMS AND CONDITIONS GOVERNING LICENSE..................    28

           C.  INFRINGEMENT............................................    30

VII.       ADDITIONAL UNDERTAKINGS.....................................    30

           A.  BULK PURCHASES..........................................    31

           B.  FUEL ...................................................    31

           C.  PURCHASE BY UNITED OF PASS THROUGH COST ITEMS...........    31

           D.  UNIFORMS................................................    31

           E.  PASSES AND REDUCED RATE TRAVEL..........................    31

           F.  SIGNAGE.................................................    32

           G.  ENVIRONMENTAL...........................................    32

           H.  START-UP COSTS..........................................    32

           I.  AIRCRAFT SUBSTITUTIONS..................................    33

VIII.      RATES PAYABLE TO CONTRACTOR.................................    33

           A.  RATES ..................................................    33

           B.  OPERATING GOALS.........................................    36

           C.  MARKUP .................................................    37

           D.  WIRE TRANSFER AND RECONCILIATION........................    37

IX.        FEES PAYABLE TO UNITED......................................    38

           A.  GOVERNMENT ASSISTANCE...................................    38

X.         MAINTENANCE AND FUELING.....................................    39
</TABLE>

                                                                              ii
<PAGE>

<TABLE>
<S>                                                                        <C>
XI.        U.S. MAIL...................................................    39

XII.       INSURANCE...................................................    39

           A.  INSURANCE TYPES.........................................    39

           B.  30-DAY NOTICE...........................................    40

           C.  FAILURE TO MAINTAIN INSURANCE...........................    40

XIII.      LIABILITY AND INDEMNIFICATION...............................    40

           A.  EMPLOYER'S LIABILITY AND WORKERS' COMPENSATION..........    40

           B.  INDEMNIFICATION BY CONTRACTOR...........................    40

           C.  INDEMNIFICATION BY UNITED...............................    41

           D.  CONTRACTOR'S SUPPLIES LIABILITY.........................    41

           E.  UNITED DEFINITIONS......................................    43

XIV.       REPORTS.....................................................    43

           A.  CLOSE-OUT ENTRIES.......................................    43

           B.  BOARDING INFORMATION....................................    44

           C.  OPERATING PERFORMANCE...................................    44

           D.  INSPECTION..............................................    44

           E.  FINANCIAL STATEMENTS....................................    44

           F.  GOVERNMENT FILINGS......................................    44

           G.  COPY OF GOVERNMENT REPORTS..............................    45

XV.        INDEPENDENT CONTRACTORS AND UNAUTHORIZED OBLIGATIONS........    45

           A.  INDEPENDENT CONTRACTORS.................................    45

           B.  UNAUTHORIZED OBLIGATIONS................................    46

           C.  CONTRACTOR OPERATED FLIGHTS.............................    46

XVI.       DEFAULT AND TERMINATION.....................................    46

           A.  OPERATIONS DEFAULT......................................    46

           B.  COVENANT DEFAULT........................................    47
</TABLE>

                                                                             iii
<PAGE>

<TABLE>
<S>                                                                        <C>
           C.  DEFAULT BY CONTRACTOR...................................    47

           D.  SIMILAR AGREEMENTS......................................    48

           E.  NON-COMPLIANCE WITH STANDARDS...........................    48

           F.  CONSEQUENCES OF TERMINATION.............................    49

           G.  UNITED'S LIQUIDATED DAMAGES.............................    49

           H.  RESTRICTED ACTIONS......................................    50

XVII.      ASSIGNMENT, MERGER AND ACQUISITION..........................    50

           A.  ASSIGNMENT..............................................    50

           B.  MERGER AND ACQUISITION..................................    51

XVIII.     CHANGE OF LAW...............................................    51

XIX.       TAXES, PERMITS AND LICENSES.................................    51

           A.  TRANSACTION TAXES.......................................    51

           B.  PAYROLL TAXES...........................................    52

           C.  PERMITS AND LICENSES....................................    52

XX.        REVIEW......................................................    52

XXI.       JURISDICTION................................................    53

XXII.      NOTICES.....................................................    53

XXIII.     APPROVALS AND WAIVERS.......................................    54

XXIV.      GOVERNING LAW...............................................    54

XXV.       CUMULATIVE REMEDIES.........................................    54

XXVI.      FORCE MAJEURE...............................................    55

XXVII.     SEVERABILITY AND CONSTRUCTION...............................    55

XXVIII.    ACKNOWLEDGMENT..............................................    55

XXIX.      CONFIDENTIALITY.............................................    55

XXX.       RELATED AND THIRD PARTY AGREEMENTS..........................    56

XXXI.      ENTIRE AGREEMENT............................................    56
</TABLE>

                                                                              iv
<PAGE>

<TABLE>
<S>                                                                          <C>
  XXXII.     REFERENCES TO TIME PERIODS...................................   56

APPENDIX A   .............................................................   58

APPENDIX B   .............................................................   59

APPENDIX C   .............................................................   60

APPENDIX D   .............................................................   61

APPENDIX E   .............................................................   63

APPENDIX F   .............................................................   64

APPENDIX G   .............................................................   66

APPENDIX H   .............................................................   68

APPENDIX I   .............................................................   77

APPENDIX J   .............................................................   78

Appendix K   .............................................................   79
</TABLE>

                                                                               v
<PAGE>

                                             * TEXT OMITTED AND FILED SEPARATELY
                                                CONFIDENTIAL TREATMENT REQUESTED
                                           UNDER 17 C.F.R. SECTION 200.80(B)(4),
                                                            200.83 AND 240.24b-2

                           UNITED EXPRESS(R) AGREEMENT

      This Agreement, dated as of January 28, 2004, is between UNITED AIR LINES,
INC., a Delaware corporation, with its worldwide headquarters located at 1200 E.
Algonquin Road, Elk Grove Township, IL 60007 ("UNITED"), and Mesa Air Group,
Inc., a Nevada corporation, having its principal mailing address at 410 N 44th
St., Suite 700 Phoenix, AZ 85008 ("CONTRACTOR").

                                   WITNESSETH:

      WHEREAS, United holds a certificate of public convenience and necessity
issued pursuant to the Federal Aviation Act of 1958 authorizing United to engage
in air transportation of persons, property and mail, and is a major airline
providing scheduled air service in both national and international markets;

      WHEREAS, Contractor is the parent company of a group of air carriers
holding a certificate of public convenience and necessity issued pursuant to the
Federal Aviation Act of 1958 authorizing them to engage in air transportation of
persons and property;

      WHEREAS, Contractor is willing to cause one or more of its wholly-owned
subsidiaries to perform service on behalf of United;

      WHEREAS, United owns various trademarks, service marks, trade names,
logos, emblems, uniform designs and distinctive exterior and interior color
decor and patterns for its aircraft, including, but not limited to, the service
mark United Express (hereinafter referred to individually and collectively as
"UNITED MARKS" or "MARKS");

      WHEREAS, United has entered into agreements with several regional carriers
to provide air transportation services under the United Express mark for city
pairs where it is generally uneconomic for United to operate such services;

      WHEREAS, United will provide Contractor, pursuant to the terms of this
Agreement, a non-exclusive license to use one or more of the United Marks in
connection with Contractor's United Express Services.

      NOW, THEREFORE, in consideration of the foregoing premises, mutual
covenants and obligations hereinafter contained, the parties agree as follows:

I     DEFINITIONS

      A. "Apollo Services" means the computerized Apollo Reservations and
Ticketing Service (or any similar or substitute service offered by or on behalf
of United),  which

                                                                               1
<PAGE>

performs flight, hotel, rental car and other travel related services,
reservations and ticket issuance functions.

      B. "Contractor Location"

      means any airport terminal facility where Contractor provides Contractor's
United Express Services pursuant to this Agreement and Contractor, but not
United, has employees stationed (including any terminal facility where
Contractor provides Contractor's United Express Services pursuant to this
Agreement that is different from the terminal facility from which United
operates in the same airport).

      C. "Contractor's United Express Services"

      means the services or operations provided and maintained by Contractor or
its affiliates in connection with providing scheduled air transportation service
as a United Express Carrier and related ground and other services to United and
its affiliates pursuant to the terms of this Agreement (including, without
limitation, the services required under ARTICLE IV).

      D. "United Express Service Standards" or "Service Standards"

      means the procedures prescribed by United that describe United's approved
standards, policies, requirements and procedures for various activities relating
to the provision of air transportation services. These Service Standards are
provided in APPENDIX H.

      E. "Default"

      means, individually or collectively, a SECTION A DEFAULT, a SECTION B
DEFAULT, a SECTION C DEFAULT, a SECTION D DEFAULT, or a SECTION E DEFAULT, each
as defined in ARTICLE XVI.

      F. "Designated Personnel"

      means all of Contractor's employees who provide Contractor's United
Express Services in job classifications requiring direct public contact.
Furthermore, this covers all customer service, ramp service, pilots, and flight
attendants.

      G. "Effective Date"

      shall have the meaning set forth in ARTICLE II.B.

      H. "Environmental Laws"

      means all federal, state, local and foreign laws and regulations, and
airport rules, regulations and policies relating to pollution or the
environment, including, without limitation, laws and regulations relating to
emissions to the air, discharges to surface and subsurface waters, safe drinking
water, the storage, release, disposal, transport or

                                                                               2
<PAGE>

handling of chemicals, pollutants, contaminants, wastes, hazardous substances,
petroleum and petroleum products, and aircraft noise, vibration, exhaust and
overflight.

      I. "Ground Handling Duties"

      means the provision of one or more of the following: (1) lavatory service,
(2) overnight cabin cleaning, (3) loading and unloading of baggage, mail and
freight, (4) receipt and dispatch, (5) baggage delivery, and (6) provisioning
personnel and storage space.

      J. "Ground Handling Provider" means, for each city in which Contractor
operates flights in Contractor's United Express Services, either United or
another entity selected by United (which, in some cities, will be Contractor) to
provide ground handling services to Contractor in that city.

      K. "Joint Location"

      means any airport terminal where Contractor provides Contractor's United
Express Services pursuant to this Agreement and both United and Contractor have
employees stationed.

      L. "Marks" or "United Marks"

      shall have the meaning set forth in the recitals of this Agreement.

      M. "Rates"

      shall have the meaning set forth in ARTICLE VIII

      N. "Related Agreements"

      shall have the meaning set forth in ARTICLE XXX.

      O. "Revenue Passenger"

      means each passenger traveling on Contractor in connection with
Contractor's United Express Services who holds a ticket (electronic or
otherwise), flight coupon, voucher or other form of document that (i) entitles
that passenger to board an aircraft and (ii) is issued pursuant to or in
connection with a published or unpublished fare. Passengers traveling on a
purchased ticket (including ID50 airline industry reduced rate tickets),
wholesaler voucher, or voucher issued as denied boarding compensation, shall be
considered to be Revenue Passengers. In addition, passengers traveling on a free
ticket as (or as part of) a Mileage Plus(R) award or a free ticket issued in
conjunction with a two-for-one fare or other similar fare established by United,
shall be considered to be Revenue Passengers. A passenger traveling on any other
type of free or service charge-based ticket, including, but not limited to, a
site inspection ticket, or wholesaler compensation ticket, any travel agent or
wholesaler traveling on a positive space or space available ticket, and any
employee of United, Contractor or any other carrier traveling on

                                                                               3
<PAGE>

either a positive space or space available ticket, shall not be considered a
Revenue Passenger. All Revenue Passengers shall be considered when calculating
any Monthly Incentive Payment.

      P. "Support Services"

      means those activities set forth in ARTICLE III which are related to the
operation of airline services except during flight.

      Q. "Termination Date"

      shall have the meaning set forth in ARTICLE II.B.

      R. "United Express Carrier"

      means an air carrier which has been contractually given a non-exclusive
license to use the mark United Express and one or more other United Marks in
connection with providing air transportation service to United pursuant to an
agreement between United and such air carrier.

      S. "United Location"

      means any airport terminal facility where Contractor and United both have
operations and United, but not Contractor, has employees stationed.

      T. "United's Actual Cost"

      means any and all costs or expenses actually incurred by United, not
including any markup by United, any allocation of administrative or overhead
expenses, or any administrative service charge imposed by United.

      U. "Aircraft Used in United Express Service"

      means any type and amount of aircraft set forth in APPENDIX A.

II.   SCOPE, TERM, AND CONDITIONS

      A. SCOPE

      The scope of this Agreement pertains to type and amount of Contractor's
aircraft set forth in APPENDIX A, and as it may be amended in accordance
herewith from time to time.

                                                                               4
<PAGE>

      B. TERM

      1. TURBOPROP: This Agreement becomes effective on July 6, 2003 at 1:01
a.m., Chicago, Illinois time, on (the "EFFECTIVE DATE") and shall terminate 1
years from the effective date (the "TERMINATION DATE"), unless it is terminated
at an earlier date by United giving written notice * months prior to the *
anniversary of the Effective Date, or as otherwise set forth under the
provisions of this Agreement. Notwithstanding the preceding sentence, those
provisions of this Agreement that specifically require actions prior to the
Effective Date shall be effective upon execution of this Agreement. * months
prior to the Termination Date, United and Contractor shall engage in discussions
regarding the potential extension of the Agreement or ramp down schedule for
Contractor's United Express operations; provided, however, that the decision to
extend or ramp down the Agreement shall be at United's sole discretion. The
terms of any extension of the Agreement will be mutually agreed upon by
Contractor and United.

            (i)   DELIVERY OF TURBOPROPS: Turboprops must be delivered and ready
to enter the United Express schedule on the dates described in Appendix A.

            (ii)  CONSEQUENCES FOR LATE DELIVERY OF TURBOPROPS: If any Turboprop
is delivered later than * after the dates set out in Appendix A other than for
reasons set forth below *. If, upon inspection, an aircraft is determined by
Contractor to have any damage that must be repaired, or if the aircraft is
damaged after takeoff en route to Contractor for delivery, Contractor will have
the choice either to repair or replace the aircraft. If Contractor chooses to
repair the aircraft, the * deadline will be extended by no longer than the time
spent repairing the aircraft after the original * deadline. If Contractor
chooses to replace the aircraft, the * deadline will be extended by no longer
than the time it would have taken to repair the aircraft. The inspection
mentioned above must take place on or before *, regardless of the date of this
contract, and if Contractor determines from such inspection that repairs will be
necessary, Contractor must advise United of this delay by no later than * or
this extension of the delivery deadline will be waived. For no other reason will
the * deadline be extended. In such a case where repairs are required,
Contractor will use commercially reasonable efforts to expedite the repairs to
the aircraft.

      2. REGIONAL JET: This Agreement as it relates to the RJ-50 and RJ-70
(collectively, "RJ") fleet becomes effective on August 1, 2003 at 1:01 a.m.,
Chicago, Illinois time (the "RJ START DATE").

            a.    INITIAL RJ-70: The first * 70-seat or 64-seat Regional Jet
("RJ") aircraft, as the case may be, will be divided into three tranches of *, *
and * aircraft, respectively ("RJ Tranches"). The term of this Agreement for (a)
the first RJ Tranche, which shall consist of the * RJ aircraft having the
earliest lease expiration dates, will expire *, (b) the second RJ Tranche of *
RJ aircraft will expire on *, and (c) the third RJ Tranche, which shall consist
of the * RJ aircraft having the latest lease expiration dates, will expire on *.
Upon expiration of this Agreement for each RJ Tranche, and if United

- -----------------------------
*Confidential Treatment Requested

                                                                               5
<PAGE>

and Contractor do not thereupon extend the term of this Agreement for such RJ
Tranche, then ramp down of the aircraft for such RJ Tranche out of the terms and
conditions of this Agreement will take place gradually over * following
termination at a rate of no more than * aircraft per month, to be mutually
agreed upon by United and Contractor.

                  (i)   DELIVERY OF INITIAL RJ-70s: RJ-70s must be delivered and
ready to enter the United Express schedule on the dates described in Appendix A.

                  (ii)  CONSEQUENCES FOR LATE DELIVERY OF RJ-70S: If any RJ-70
is delivered later than * after the dates set out in Appendix A, *. In the case
where any of the RJ-70s cannot be delivered because of a delay by Bombardier of
RJ-900s to Contractor for reasons wholly related to Bombardier manufacturing
(including Bombardier employee strikes), and in the case that Bombardier can
produce verifiable proof that the delivery of the RJ-900s was a) delayed (and
the period of delay) and b) delayed for reasons wholly related to Bombardier
manufacturing (including Bombardier employee strikes), then *.

            b.    RJ-50: For * 50-seat Regional Jet ("RJ-50") aircraft, the term
of this Agreement will expire no later than * and will correspond to the
introduction of the * Replacement RJ 70s as outlined in ARTICLE FII.B.2.c.

                  (i)   DELIVERY OF FIRST FIVE RJ-50S: First * RJ-50s must be
delivered and ready to enter the United Express schedule on the dates described
in Appendix A.

                  (ii)  CONSEQUENCES FOR LATE DELIVERY OF FIRST FIVE RJ-50S: If
any RJ-50 is delivered later than * after the dates set out in Appendix A *.

                  (iii) DELIVERY OF LAST TEN RJ-50S: Contractor must provide
delivery dates for each of the Last * RJ-50s at any time at its discretion
before *. Once Contractor has submitted to United the delivery dates for the
Last * RJ-50s, at United's sole discretion United will be entitled to accept or
decline authorization of these aircraft on an aircraft by aircraft basis. If
accepted, Contractor must deliver the RJ50 on the date set out in the Last *
RJ-50 Schedule. If declined, Contractor will no longer be authorized to add the
declined aircraft to United Express' Fleet and no payments or penalties will be
owed by United on such declined aircraft..

                  (iv)  CONSEQUENCES FOR LATE DELIVERY OF LAST TEN RJ-50S: If
any RJ-50 is delivered later than * after the dates set out in Last * RJ-50
Schedule, *.

            c.    15 REPLACEMENT RJ 70S: The delivery of * RJ70s will occur no
sooner than the withdrawal of the * short term RJ50s on a one for one basis. *
All Replacement RJ-70 deliveries (and the corresponding RJ-50 retirements) must
be completed by no later than *. The term for the * replacement RJ 70s shall
expire * from the delivery of each individual RJ70, but in any case no later
than *.

- -----------------------------
*Confidential Treatment Requested

                                                                               6
<PAGE>

                  (i)   DELIVERY OF REPLACEMENT RJ-70S: Contractor must advise
United of the delivery date of each Replacement RJ-70 no later than * before the
delivery date of each RJ-70. Contractor must advise United of the delivery dates
of all RJ-70s no later than *. Replacement RJ-70s must be delivered and ready to
enter the United Express schedule on these dates.

                  (ii)  CONSEQUENCES FOR LATE DELIVERY OF REPLACEMENT RJ-70S: *.

      C.    CONDITIONS

            1. RENEWAL OPTION. Upon expiration of this Agreement, for each RJ-70
Tranche and for the RJ-50 fleet, United may renew the term hereof for each RJ
Tranche aircraft and for each RJ-50 aircraft for an additional term of *, on the
then existing terms and conditions, upon at least * written notice prior to the
end of such term.

PILOT CONSIDERATION for 70-seat Regional Jet Employment for Furloughed United
Pilots. Contractor acknowledges that United has been required to furlough some
of its pilots over the past several years. As additional consideration, with the
exception of Paragraph 11 of the Letter 03-22, Contractor has agreed to
provisions outlined in Letter 03-22, Letter 03-23 and Letter 03-24, "Job
Opportunities for Furloughed United Pilots" between United and the Air Line
Pilot Association dated August 21, 2003, August 21, 2003 and September 5, 2003,
which is incorporated herein by reference. United retains the right to recall
furloughed pilots hired by Contractor. Should United decide to recall
aforementioned pilots within * months of any pilot's Contractor hire date,
United will reimburse the aforementioned pilots for Contractor's pilot prorated
training costs of $* per CRJ pilot, $* per Dash-8 pilot and $* per B1900 pilot,
prorated by the number of months remaining until that pilot's * anniversary as
compared to the full cost over *.

III.  SUPPORT SERVICES AND FACILITIES

      A. GENERAL

            1. SUPPORT SERVICES. United and Contractor will provide Support
Services and facilities to the extent and in the manner set forth in the
subsequent provisions of this ARTICLE III. All such Support Services and
facilities set forth in this ARTICLE III will be furnished only with respect to
Contractor's United Express Services.

            2. APPROVAL OF SUPPORT SERVICES. United reserves the right to
approve or disapprove the implementation of any Support Services or facilities
offered to Contractor for Contractor's United Express Services by any third
party at any location. Such approval shall not be unreasonably withheld.

      B. SPECIAL SUPPORT SERVICES

- -----------------------------
*Confidential Treatment Requested

                                                                               7
<PAGE>

            In addition to other services to be made available to or provided to
Contractor pursuant to this Agreement, and as summarized in and in accordance
with APPENDIX B (City Pairs and Ground Handling) and APPENDIX C (Contractor
Support Services), United agrees that it or its designees will provide and
Contractor agrees to use the following services and facilities for Contractor's
United Express Services, be they provided by United or its designee:

            1. USE OF THE UNITED DESIGNATOR CODE

            All scheduled air transportation provided by Contractor as a part of
Contractor's United Express Services will be displayed by United in Apollo
Services, the Official Airline Guide ("OAG") and all other computerized
reservations systems, using the appropriate United designator code, "UA" or
"UA*," and a flight number within a range of flight numbers assigned by United.

            2. USE OF APOLLO SERVICES

            In selling and providing Contractor's United Express Services,
Contractor will only use Apollo Services, including United's automated check-in,
United's ticketing (including United's electronic ticketing service,
E-Ticket(SM)) and boarding passes, advance seat reservation system and United's
automated baggage tag printing and baggage tracing systems.

            3. PARTICIPATING IN UNITED'S MILEAGE PLUS(R) PROGRAM

            At United's discretion, all passengers with paid tickets traveling
on a flight segment included in Contractor's United Express Services, whether or
not in conjunction with a United flight segment, will be awarded mileage credits
for United's Mileage Plus Program or any other frequent flyer program as
specifically approved by United. Contractor shall not participate in the
frequent traveler program of any other carrier in connection with Contractor's
United Express Services, unless otherwise mutually agreed between United and
Contractor in writing. United has sole discretion concerning decisions relating
to accrual or redemption of award travel on Contractor's United Express flights.
In addition, United will bear the cost of providing redemption travel and
receive all revenue and benefits from the sale of frequent flyer credits (e.g.
miles) related to Contractor's United Express service.

            4. USE OF UNITED TICKET STOCK, BAGGAGE TAGS AND TICKET WALLETS

            In selling air transportation of passengers and property, both
on-line and off-line, Contractor will use only United passenger ticket stock,
ticket wallets and baggage tags in connection with Contractor's United Express
Services. Unless otherwise agreed, United will provide to Contractor all United
passenger ticket stock, United airway bills, United cargo bills and other
shipping documentation for all Contractor's United Express Services, and United
will provide to Contractor ticket wallets and baggage tags for Joint Locations
and United Locations only; provided that such quantities do not exceed
reasonable levels. Contractor shall reimburse United, at United's Actual Cost,
for all

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documentation requested by Contractor. Ticket wallets, baggage tags and other
passenger processing documents approved by United will be acquired by Contractor
for all Contractor Locations through a supplier designated by United. Contractor
shall be required to convert to the use of different ticket wallets, baggage
tags and other passenger processing documents upon * prior written notice to
Contractor by United.

            5. CREDIT CARD SALES AND REJECTS; BAD CHECKS

            Contractor will use only credit-industry or airline-industry
standard credit card vouchers and receipts in connection with credit card sales
for tickets, cargo, excess baggage or other services on Contractor's United
Express Services. * Contractor will reimburse United for the expenses of such
discount fees and credit card rejects. Contractor will absorb the risk of bad
checks used as payment for tickets and vouchers written by Contractor for
passage or freight in connection with Contractor's United Express Services.

            6. DENIED BOARDING

                  a.    In the event of voluntary or involuntary denied
boardings, Contractor shall make a good faith effort to rebook United Express
customers on the next available flight operated by one of United's code share
partners, such as US Airways, or a Star Alliance partner, provided that the
routing is logical and does not seriously inconvenience the customer.

                  b.    Contractor is required to provide to United, upon
specific written request from United, specific station information regarding the
weight restrictions and aircraft limitations which could results in Denied
Boardings. Such requests shall be made by United's Revenue Management Department
(WHQIM) and responses from Contractor shall be provided within * weeks of such
request.

                  c.    United will pay Contractor the Unit Rates per completed
passenger for interrupted trip expense (RJ-50 and RJ-70 only) as set forth in
Appendix D. Contractor and United agree to review the interrupted trip expense
six months after execution of this agreement. If Contractor's actual
uncontrollable costs are below $* per passenger, Contractor will reduce this
rate to the actual cost for the remainder of this agreement.

            7. TICKET AND BAGGAGE HANDLING FEES

            All ticket handling, baggage handling and other service charges and
fees assessed by carriers other than United relating to Contractor's services
(including, but not limited to, Contractor's United Express Services) will be
absorbed directly by United.

            8. CUSTOMER SERVICE TRAINING

            On a schedule, at a place, to an extent, for a number of persons,
and in a manner determined by United, United will provide training for
Contractor's instructors

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that United deems sufficient to permit Contractor's instructors to be able to
provide and train others to provide customer services for Contractor's United
Express Services. Contractor will have no obligation to pay United for such
training. However, Contractor agrees to adhere to the United Express Standards
of Service as outlined in APPENDIX H for all Customer Service of their United
Express flights.

      C. COMMUNICATIONS

            1. TELEPHONE AND DATA LINES

            United, at its expense, will provide and maintain or arrange for the
provision of reservations telephone lines connecting the cities served by
Contractor in connection with Contractor's United Express Services with United's
Reservations Centers. United, at its expense, will establish, operate and
maintain or arrange for the provision of the data circuits from Contractor's
airport ticket offices and other selected locations linking the United-approved
data processing equipment at those locations with Apollo Services. United, at
its expense, will also provide and arrange for Contractor's SOC Communication
with Apollo Services. United will determine, at its sole discretion, the
necessity and feasibility of installing all such communications equipment. All
other telephone expenses, such as Contractor's long distance expenses shall be
borne by Contractor as a station operating expense.

            2. PROTECTION OF CIRCUITS

            Contractor will take all necessary precautions to protect the data
circuits provided for Contractor's use pursuant to this Agreement by United or
its designee.

      D. RESERVATIONS

            1. RESERVATIONS FUNCTIONS

            United agrees to provide, at its expense, the following reservations
functions for Contractor's United Express Services:

                  a.    Answering reservations telephones, providing information
regarding schedules and fares, making bookings and providing other services
normally associated with airline reservations services in accordance with
United's established procedures.

                  b.    Providing personnel so that telephone calls are answered
at a service level determined by United.

                  c.    Answering all calls terminating on specified telephone
lines as United or United Express, at United's option.

                  d.    To the extent practicable, re-accommodating and
notifying passengers of confirmation on United, Contractor and other airlines
and clearance from wait-list.

                  e.    Reviewing and processing inbound prepaid ticket advices.

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<PAGE>

                  f.    Providing reservations services to the hearing impaired
via a special telephone number during normal business hours.

            2. APOLLO SERVICES ACTIVITIES

            Contractor agrees to use Apollo Services for the following
activities for Contractor's United Express Services, which are to be provided by
United:

                  a.    Establishment, maintenance, display and change of
passenger name records (PNRs).

                  b.    Confirmation of passengers against seat inventory on
Contractor's United Express Services and United's scheduled flights and on other
airlines where flight availability is maintained in Apollo Services.

                  c.    Maintenance of seat availability for Contractor's United
Express Services scheduled flights.

                  d.    Transmission of availability status messages (AVS) for
Contractor's United Express Services scheduled flights to other airlines with
which United has an agreement in accordance with Standard Industry Passenger
Procedures (SIPP).

                  e.    Process inbound reservations messages received from
ARINC addressed to Contractor.

                  f.    Routing of all inbound messages received from ARINC,
other than as stated in ARTICLE III.A.1.d above, to a computer message queue.

            3. CRS FEES

            Computer Reservations System ("CRS FEES") charged to Contractor as a
result of passengers booked on Contractor's United Express will be passed
through to United without markup and subject to invoice audit by United. As soon
as possible, United shall pay such CRS fees on behalf of Contractor.

      E. OPERATIONS

            1. SCHEDULED SERVICE UPDATE

            Contractor will provide accurate updates of its flights' planned and
actual departure and arrival times (including updates of irregularities) in
Apollo Services as soon as the planned flight schedule is changed and the flight
departs and arrives or suffers an irregularity. Specifically, this includes
updating the out, off, on and in times for the aircraft within * minutes of the
occurrence of each event. In the event of flight delays, cancellations or other
schedule irregularities affecting Contractor's United Express Service flights,
and as soon as information concerning such irregularities is available,

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Contractor shall update Apollo Services to reflect such information and, when
requested by United, notify the designated United organization. For delayed
flights, Contractor shall provide updates to Customers and Apollo in no less
than * minute intervals. For purposes of this Agreement, such scheduled and
actual departure and arrival and irregularity information shall be known as
"FLIFO." United will notify Contractor in writing as soon as practicable after
United determines that Contractor has failed to update FLIFO in a timely and
accurate manner. If Contractor fails * times in any consecutive * period (the
"FLIFO THRESHOLD") to update FLIFO in a timely and accurate manner as soon as it
becomes evident to Contractor that a schedule deviation shall take place, then
upon notification by United to Contractor, Contractor shall pay United damages
of * for each occurrence over and above the first * occurrences during such *.
United agrees to bill Contractor any amount owed under this Section within *
after the end of each calendar * period during which Contractor has exceeded the
FLIFO Threshold. Such damages shall be United's exclusive remedy for
Contractor's non-compliance with this paragraph and may be collected by setoffs
against other amounts owed by United to Contractor hereunder.

            2. NO FLIGHT DISPATCH DUTY

            Contractor will be solely responsible for, and United will have no
obligations or duties with respect to, the dispatch of Contractor's flights. For
the purposes of this ARTICLE 2, the term "dispatch" will include, but will not
be limited to, all planning of aircraft itineraries and routings, fueling and
flight release.

            3. COMPLIANCE WITH STATUTES

            Contractor hereby represents, warrants and covenants that all air
transportation services performed by it pursuant to this Agreement or otherwise
will be conducted in full compliance with all applicable statutes, orders, rules
and regulations, whether now in effect or hereafter promulgated, of all
governmental agencies having jurisdiction over Contractor's operations,
including, but not limited to, the Federal Aviation Administration ("FAA") and
the Department of Transportation ("DOT"). Contractor's compliance with such
governmental statutes, orders, rules and regulations will be the sole and
exclusive obligation of Contractor and United will have no obligation,
responsibility or liability, whether direct or indirect, with respect to such
matters except as otherwise expressly provided herein. Additionally, Contractor
will comply during the term of this Agreement with the United/United Express
Safety Standards, as described on APPENDIX G.

            4. WEATHER INFORMATION SERVICE

            From time to time and upon the request of Contractor or its flight
crews, United may furnish Contractor's flight crews with such U.S. Weather
Bureau information or data as may be available to United; provided that (i) in
furnishing any such weather information or data to Contractor, neither United
nor its employees or agents will be

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responsible or liable for the accuracy thereof and, (ii) any and all costs or
expenses associated with such weather information or data are carrier controlled
costs and will be paid by Contractor.

            5. FLIGHT INTERRUPTION MANIFESTS

            Contractor shall use United FIMS to rebook customers who are denied
boarding on any United Express flight. Contractor's Customer Service employees
shall rebook the customer based on the ticketed class of service. If
Contractor's employees upgrade the customer inappropriately, United will bill
Contractor for the incremental cost of the upgrade. Contractor shall use
reasonable best efforts to rebook customers on United code share (e.g. US
Airways) or Star Alliance partner flights provided it does not seriously
inconvenience the passenger.

            6. DIVERSIONS

            United will pay Contractor under the terms of this Agreement for all
Contractor United Express diverted flights that are completed within * hours of
the scheduled arrival time. The cost of busing will be borne by the Contractor
at all times and is not reimbursable by United. Contractor will use its best
efforts to assure that no bus segment exceeds * as defined in the Apollo mileage
database. In the event a diverted flight is not completed within the * hour time
frame, United will pay Contractor for the originally scheduled departure
provided that both of the following conditions apply (i) the diversion is
outside of the control of Contractor and (ii) the destination airport was open
for FAR Part 121 flights at the time of departure and forecasted to be open at
the time of arrival. Contractor will pay for any repositioning costs, which
costs shall not be reimbursable by United. Upon request by United, Contractor
and United agree to meet to discuss opportunities to reduce the number of
Contractor diversions and costs associated with such diversions.

            7. GROUND DELAY PROGRAM

            Contractor will participate in United's ground delay program, which
stipulates that United may request Contractor to cancel, and Contractor shall
cancel, flights to free ATC slots at a hub when the FAA or United's Station
Control Center has initiated a Ground Delay Program ("GDP"). For cancellations
requested by United as part of the GDP, and in accordance with ARTICLE VIII,
United shall pay Contractor only a portion of the amounts normally due had the
flights not been cancelled.

            For flights cancelled under the GDP program, United will pay
Contractor only the *. No payments will be made with respect to the * that
correspond to * in these categories. The Ground Delay Program will not affect
payments in the following three categories unless specifically included above:
*.

            8. STATION OPERATIONS CENTER (SOC) - HUB LOCATIONS

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<PAGE>

            At United's request, Contractor shall provide adequate staffing in
the United Airlines SOC of each designated hub city at United's request. If the
number of departures in any single hub exceeds * per day, Contractor will
provide, at Contractor's expense, a full-time representative at United's
request. Such staffing will be provided during all normal hours of operation. If
the number of daily departures does not exceed * per day, then Contractor will
provide a point of contact and make a representative available on a limited
basis as requested by United.

      F. STATION SUPPORT SERVICES

      United will provide or cause to be provided, at its expense, to Contractor
certain support services as set forth on APPENDIX C, at the United Locations and
Joint Locations set forth in APPENDIX B; provided that United shall have the
right to add, delete or otherwise modify the services described on APPENDIX B if
United provides Contractor with * prior written notice of such modification;
provided, however, United shall use commercially reasonable efforts to notify
Contractor with * prior written notice. United agrees to reimburse Contractor
only for * incurred by Contractor as a result of a United requested location
change within a current station under this Section. *. At Contractor Locations,
Contractor will provide or cause to be provided at least those services and
facilities set forth in APPENDIX C. All such station support services will be
provided as of the Effective Date unless otherwise stated.

      G. TARIFFS AND SCHEDULE PUBLICATION

            1.    GENERAL

            United shall have the sole right and power to establish and modify,
from time to time, the fare/rate classes and fare/rate levels (including through
fares) and fare/rate descriptions for all Contractor's United Express Services
in the city pairs operated by Contractor under this Agreement, in a manner
consistent with pricing (including joint fares) established by United. United
shall comply with applicable governmental regulations pertaining to public
disclosure of fares, rates and rules tariffs and shall pay for any fines or
civil penalties incurred by Contractor as a result of violations by United
thereof, and for the cost of defense of such claims of violations including the
cost of defending or negotiating the terms of a consent order or decree.

            2.    PASSENGER FARE TARIFFS

                  a.    All passenger fare tariffs published for Contractor's
United Express Services shall be included as part of United's tariffs.

                  b.    Contractor shall notify the Airline Tariff Publishing
Company or any successor company performing the same or equivalent services
("ATPCO") that United is authorized to supply, modify or withdraw such rates
with ATPCO. United may file changes to such fares from time to time with ATPCO
as UA fares.

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            3.    AIR FREIGHT AND MAIL RATES

            For all markets operated by Contractor under this Agreement, United
shall have the sole right and power to establish and modify from time to time
all air freight and cargo rates and mail rates covering mail, general commodity,
small package delivery (SPD) and priority air freight shipments and all other
air transportation services (other than mail delivery) for Contractor's United
Express Services in these markets. All such airfreight rates for Contractor's
United Express Services shall be included as part of United's airfreight and
cargo rates tariffs. Contractor shall notify ATPCO that United is authorized to
supply, modify or withdraw such rates with ATPCO.

            4.    TIMETABLES

            United will reflect Contractor's United Express Services in
computerized reservations systems, United's internal reservations system and
Contractor's United Express Services flight connections to United will be listed
as UA connections. United will provide information such that references in
computerized reservations systems, United's internal reservations system and
joint city timetables to Contractor's United Express Services will also contain
notations indicating that such services are performed by Contractor as an
independent contractor under the appropriate United Marks. A similar notation
will be made in the OAG or any successor publication commonly used by the
airline industry for the dissemination of schedule information. Such notations
shall comply with all applicable regulations of DOT.

      H. SALES SETTLEMENT

            1.    PAYMENTS TO UNITED

            Contractor will wire transfer to United an amount equal to
Contractor's Total Net Sales Receipts collected at all Contractor Locations.
"TOTAL NET SALES RECEIPTS" equals total gross sales receipts for all passenger
tickets, airway bills, cargo bills, mail fees, reimbursement for operational
denied boarding and other tickets issued by Contractor for Contractor's United
Express Services (less refunds thereon paid out by Contractor), collected by
Contractor during the applicable period. The frequency of the wire transfer will
be *, for all Total Net Sales Receipts collected during the preceding *.
Contractor's wire transfer will be made by 11:00 a.m. local time to the
following bank account:

            Bank One
            1 Bank One Plaza
            Chicago, IL  60670
            *

Contractor will also require its employees and agents to forward to United, on a
daily basis, all auditors ticket coupons, airway bills, cargo bills, lift
documentation, reports, exchange orders and refund detail issued by Contractor
in connection with Contractor's


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United Express Services during the previous day in accordance with the sales and
reporting procedures specified by United.

            2.    SET OFF AMOUNTS

            In addition to the terms of ARTICLE VIII and the other provisions
hereof, but subject to the terms of ARTICLE XIII, the payment for transportation
furnished by Contractor may be reduced in order to set off:

                  a.    amounts owed by Contractor to United for:

                        (i)   actual loss of revenue resulting from a failure on
the part of Contractor to properly effect a sale pursuant to United's Customer
Service Policies and Procedures applicable to the sale of tickets; and

                        (ii)  fraudulent, grossly negligent or erroneous acts of
employees of Contractor which cause United to suffer a loss;

                  b.    such other adjustments as may be mutually agreed to by
the parties from time to time; and

                  c.    any other undisputed amounts owed by Contractor to
United under this Agreement.

            United will provide Contractor with supporting documentation for
such intended adjustments. Contractor shall have the right to object to any such
adjustment by providing United with written notice of its objection, together
with supporting documentation, within * after its receipt of Contractor's
objection. United agrees to negotiate in good faith with Contractor in order to
resolve all such disputes within * after its receipt of Contractor's supporting
documentation.

            3.    MODIFIED PROCEDURES

            United and Contractor by mutual written agreement may establish
alternative or modified passenger sales procedures in order to accommodate
tickets and exchange orders issued by air carriers which are not participants in
the Airline Clearing House, Inc. ("ACH").

            4.    AUDITS

            During the course of this Agreement, United, or an outside 3rd party
contracted by United, may conduct one (1) on-site audit of all records
(including, but not limited to, work papers of accountants) pertaining only to
Contractor's United Express operations. This will include, but is not limited
to, (i) tickets, air way bills, cargo bills, exchange orders, refunds and other
records relating to sales and refund activity pertaining to Contractor's United
Express Services and (ii) all financial records related only to

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Contractor's United Express Services pertaining to the actual costs for services
provided by Contractor to United as well as the calculation of the rates and
margin payable to Contractor related to Contractor's United Express Services.
Notwithstanding the foregoing, at any time, United, or an outside 3rd party
contracted by United, may conduct on-site audits of all records (including, but
not limited to, work papers of accountants) relating to Pass Through Costs
pertaining to Contractor's United Express Services.

      I.    ADVERTISING AND PROMOTIONS

            1.    TRAVEL CERTIFICATE PROGRAM

            United will allow Contractor to accept, and Contractor agrees to
accept, United/United Express Amenities, Promotional Discount(s) and/or Free
Travel Certificates on Contractor's flight segments, whether or not in
conjunction with a United flight segment.

            2.    RIGHT TO ADVERTISE USING MARKS

            To the extent Contractor is licensed to use the Marks, Contractor
may in its capacity as a United Express Carrier and at its sole expense, with no
reimbursement from United, use the marks to advertise Contractor's United
Express Services. However, any and all such advertisements using one or more of
the United Marks will identify United as the owner of those United Marks
(including in any state company name registrations required of Contractor), and
to the extent that any Mark is registered, will so specify. Notwithstanding the
above, no advertisement, solicitation, document or other material using any
United Mark will be published or otherwise promulgated without United's prior
inspection and approval. No advertising that relates in any way to United,
United Express or Contractor's United Express Services will be placed by
Contractor with an outside advertising agency unless United has given its prior
consent regarding copy, layout and the specific media plan. In addition, where
United has agreed to share the costs of any such advertising, Contractor will
obtain the prior consent of United regarding the funds to be expended for such
advertising.

            3.    PRIOR APPROVAL OF UNITED

            Contractor agrees that it will not use (or attempt to register) any
United trade name or service mark, including, but not limited to, the names
"UNITED AIR LINES, INC.," "UNITED AIRLINES," or "UNITED," or United's logo in
any advertising, or other document or material without first obtaining United's
prior approval of each such use.

      J.    AUTOMATION

            1.    USE AND PROTECTION

            Contractor will use internal United Apollo Services automation.
Contractor agrees to comply with and abide by all terms and restrictions imposed
by United on the use of Apollo Services and associated Automation Equipment, as
defined below.

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<PAGE>

Contractor agrees that all instructions, procedures and manuals provided by
United in connection with Contractor's use of Apollo Services and Automation
Equipment ("AUTOMATION INFORMATION") are and will remain the property of United.
Contractor acknowledges that Apollo Services contains software that is
confidential and proprietary information of United or its affiliates (such as
Galileo International) or any successor thereto. Contractor further agrees that
it will not (or cause any third party to) duplicate, copy or otherwise reproduce
any such software or Automation Information or furnish or disclose any such
software or Automation Information to any other party or to Contractor's
employees other than such employees who have a need to know and who are aware of
and understand the confidential and proprietary nature of the software and
Automation Information.

            2.    INSTALLATION AND TRAINING

            United shall install or cause to be installed a minimum of one
terminal plus associated equipment for printing messages, data, air tickets,
boarding passes and baggage tags ("AUTOMATION EQUIPMENT") at Contractor's
airport locations and selected administrative locations. United will determine,
in the exercise of its sole discretion and judgment, the necessity and
feasibility of installing and upgrading Automation Equipment, so long as the
quantity and quality of Automation Equipment installed at Contractor's airport
locations are sufficient to permit Contractor to satisfy the standards for
Contractor's United Express Services under this Agreement. Any and all
modifications, enhancements, improvements or developments pertaining to the
Automation Equipment, or other new related technology, may be made available to
Contractor by United, in its sole discretion, under terms and conditions to be
determined by United on a case-by-case basis. United will train Contractor's
instructors, as applicable, in the proper use of Apollo Services and Automation
Equipment as described in the Customer Service/Reservations Handbook or any
other related United guidelines. Contractor agrees to establish a training
program with internal instructors. Only qualified personnel who have
satisfactorily completed a United prescribed training program will be permitted
to operate any Automation Equipment (hereinafter "DESIGNATED USERS"). United
may, at its discretion, monitor or test the proficiency level of Designated
Users. If United determines that their proficiency levels are insufficient for
the proper use of the Automated Equipment or Apollo Services, then Contractor
must arrange for its Designated Users to undertake any further training which
United determines necessary to bring such Designated Users to the desired
proficiency level.

            3.    STANDARDS OF USE

                  a.    To maintain an effective interconnection between Apollo
Services and the Automation Equipment and to prevent misuse thereof, Contractor
agrees that Apollo Services and the Automation Equipment will be used and
operated (a) in strict accordance with operating instructions provided by United
or its affiliates in the Customer Services Policies and Procedures, United's
Computer Security Regulations (Series 5-18), and any other related United or
affiliate guidelines, and (b) solely for the performance of the specific
business functions designated by United. Any undesignated business use and all
non-business uses are strictly prohibited. Prohibited uses include,

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<PAGE>

but are not limited to, personal messages, servicing subscribers, travel
agencies, or any other third party, training any other party or any other use
designated as prohibited in the Apollo Services Manual. Contractor will maintain
a list of all employees and agents who have access to Apollo Services and their
assigned file numbers and passwords. United may at any time deny access to
Apollo Services to any employee of Contractor if such employee is found by
United to have abused Apollo Services or the Automation Equipment. Contractor
will take all precautions necessary to prevent unauthorized operation or use of
Apollo Services and the Automation Equipment.

                  b.    Contractor will not alter or change the Apollo Services
display as provided by United or its affiliate without the written consent of
United. Contractor may not provide Apollo Services or its database to any other
person or entity without the written consent of United.

                  c.    Except as expressly permitted in this Agreement or other
written agreement with United, Contractor will not cause any Apollo Services
(including, but not limited to, its software, data bases, intellectual property,
and customer information) to be used (as a basis for any software development or
otherwise), commercially exploited, copied, redistributed, retransmitted,
published, sold, rented, leased, marketed, sublicensed, pledged, assigned,
disposed of, encumbered, transferred, or otherwise altered, modified or
enhanced, without the express written permission of United.

                  d.    Contractor will not engage in any speculative booking or
reservation of space for any airline, hotel, rental car company, or any other
vendor's service or product available through Apollo Services.

            4.    MAINTENANCE, REPAIR AND MODIFICATION

                  a.    United will provide or cause to be provided to
Contractor repair and maintenance services required for the Automation Equipment
at United's expense. To maintain an effective interconnection between the
Automation Equipment and Apollo Services and to preserve the functional
integrity of the Automation Equipment, neither Contractor nor any third party,
other than a third party designated by United, will perform or attempt to
perform maintenance, repair work, alterations or modifications, of any nature
whatsoever, to the Automation Equipment. Contractor will provide free positive
space travel on Contractor's flights for United's Computer Terminal Technicians
or replacements when such travel is for the purpose of repairing Apollo Services
or any Automation Equipment.

                  b.    Contractor will reimburse United for the costs of any
such repairs or maintenance attributable to Contractor's willful misconduct,
gross negligence, or persistent, negligent acts or omissions.

                  c.    United or its designee will have the right to enter upon
any Contractor location during Contractor's business hours for the purpose of
monitoring Contractor's operation of the Automation Equipment and Apollo
Services, inspecting the Automation Equipment, performing such repairs or
maintenance as may be necessary or removing the

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Automation Equipment; provided, however, that United will not during the course
of such monitoring, inspection, repair, or removal unreasonably interfere with
Contractor's business.

            5.    DOWNTIME

            United will notify Contractor of any scheduled or pre-announced
downtimes of Apollo Services.

            6.    NO WARRANTY; RELEASE

                  a.    UNITED MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE AUTOMATION EQUIPMENT OR APOLLO SERVICES.

                  b.    CONTRACTOR HEREBY WAIVES AND RELEASES UNITED AND ITS
AFFILIATES, AND THEIR SUCCESSORS FROM ANY AND ALL OTHER OBLIGATIONS AND
LIABILITIES AND ALL RIGHTS, CLAIMS AND REMEDIES OF CONTRACTOR AGAINST UNITED OR
ITS AFFILIATES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, DUE TO ANY
DEFECTS, ERRORS (INCLUDING, WITHOUT LIMITATION, ANY ERRORS IN RESERVATIONS
AVAILABILITY RECORDS), MALFUNCTIONS OR INTERRUPTIONS OF SERVICE TO APOLLO
SERVICES OR THE AUTOMATION EQUIPMENT, INCLUDING ANY LIABILITY, OBLIGATION,
RIGHT, CLAIM OR REMEDY IN TORT, AND INCLUDING ANY LIABILITY, OBLIGATION, RIGHT,
CLAIM OR REMEDY FOR LOSS OF REVENUE OR PROFIT OR ANY OTHER DIRECT, INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.

            7.    OWNERSHIP AND LIENS

            It is understood and agreed that: (i) all Automation Equipment will
remain the sole property of United; (ii) Contractor will not remove any
identifying marks from any Automation Equipment; (iii) Contractor will not
subject the Automation Equipment to any lien or encumbrance; and (iv) Contractor
will return the Automation Equipment to United immediately upon the termination
of this Agreement.

      K. OTHER SUPPLIES

            1.    Contractor will pay United, for United's * for all forms,
documents, papers and supplies which are required in the normal course of
Contractor's United Express Services under this Agreement and which are
furnished by United or its designated vendors including;

                  a.    Baggage tags and ticket wallets at Joint Locations and
United Locations, and

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                  b.    Passenger ticket stock, city timetables, United airway
bills, United cargo bills and other shipping documentation at Contractor
Locations, United Locations and Joint Locations.

            2.    Contractor will provide and only use United's flight
interruption manifests, unless directed to do otherwise, for the rerouting of
passengers resulting from denied boarding or the delay or cancellation of
Contractor's United Express flights.

            3.    United shall issue an invoice to Contractor for all supplies
purchased from United, however such expenses shall be paid through the ACH and
the invoice to Contractor will be net of cash received by United via ACH.

      L. CONTRACTOR ASSISTANCE

      Contractor will furnish United with all information in Contractor's
possession or that can be reasonably produced by Contractor that United may
require to carry out the services and functions contemplated by this ARTICLE
III.

IV.   AIR SERVICES TO BE PROVIDED BY CONTRACTOR

      A.    SCHEDULES AND CHARTERS TO BE OPERATED BY CONTRACTOR

            1.    UNITED EXPRESS SCHEDULE

                  a.    Commencing on the Effective Date of this Agreement,
Contractor will provide Contractor's United Express Services in the markets
determined by United. At least * prior to the start of operations, United will
provide an initial list of city pairs and flight schedules. Contractor and
United will determine a mutually viable ramp-up plan for implementation of
service. United acknowledges that other contractual restrictions limit
Contractor's ability to provide United Express service in Phoenix, Arizona.

                  b.    Subsequently, United will provide at least * notice of
any planned schedule changes. United may under extraordinary circumstances
provide less than * notice on city pairs to be served, which Contractor shall
use reasonable efforts to accommodate.

                  c.    United agrees that all flight schedules for Contractor's
United Express Services will provide sufficient aircraft routings to ensure
Contractor's ability to rotate aircraft in and out of its current or future
maintenance bases for required line maintenance at no additional cost to United.
United acknowledges Contractor may require additional maintenance facilities to
accommodate its maintenance requirements. These facilities, if constructed, will
result in no additional expense to United.

            2.    CODE SHARE LIMITATION

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            As of the date of this Agreement, but subject to Contractor's
existing contractual code-share agreements, Contractor represents that it does
not plan, nor will it, operate pursuant to a marketing or code share
relationship in a hub operation with any party other than United at the
following airports: * for the term any binding Agreement. Contractor may,
however, fly to aforementioned airports under codeshare or marketing
relationships from another carrier's hub (other than from aforementioned
airports) as a `spoke service'. In the event that Contractor acquires another
entity during the course of this agreement with marketing or codeshare
operations at any of the aforementioned airports, United agrees to allow
Contractor to continue operations at such airports at levels of operations
consistent with the acquirees right of operation at the time of acquisition. In
addition, Mesa will use commercially reasonable efforts to amend its existing
contractual commitments to provide for the above Codeshare Limitations.

            3.    UNITED SCHEDULE CONSENT REQUIRED

            United hereby gives its consent for Contractor to operate its
scheduled air service as a United Express carrier only between the cities
mutually agreed upon by Contractor and United. Such city pairs may be changed or
withdrawn by United from time to time subject to (i) a minimum of * prior
written notice to Contractor, and (ii) compliance with any regulatory
requirements with respect to service to affected airports. Contractor will
ensure that any of its requests for changes in the use by Contractor of the "UA"
or "UA*" code on future routes or in the flight frequencies or city pairs, or
any of them, as operated or served by Contractor (whether necessitated by
altered connections, operating experience or other reason) must be submitted to
United at least * prior to the effective date of such change. All such changes
must be approved in advance by United. The requests for such changes, and the
approvals thereof, must be made in writing, by mail, facsimile, telegram,
telecopy or other electronic message transmittal. If upon review of Contractor's
request, the parties mutually agree to make a Contractor requested change, and
the automation equipment needed to implement the change is available, then such
change will be made as soon as reasonably practicable within the aforementioned
* period. Within the operating capability of the aircraft used by Contractor, as
described in ARTICLE IV.B, and subject to the provisions with respect to changes
in city pairs as provided above, Contractor will comply with all requests by
United to increase, decrease or in any other way adjust or terminate the flight
frequencies or city pairs, or both, as operated and served by Contractor
pursuant to this Agreement.

            4.    CHARTER

            Contractor shall be prohibited from providing charter flights in any
aircraft used in Contractor's United Express Services, without the prior written
consent of United, which consent shall not be unreasonably withheld. Contractor
shall be permitted to retain all revenues from such approved charters. However,
Contractor agrees to pay United a fee of $* per block hour for use of any
chartered RJ-50 aircraft, $* per block hour for use of any chartered RJ-70
aircraft, and $* per block hour for use of any chartered TurboProp aircraft
covered under this Agreement (both United liveried and

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spare aircraft). However, in the event that the charter is for a legally
registered, 501-(C)(3) (not for profit) charity, Contractor agrees to provide in
writing to United the name of the charity and United agrees to waive the entire
per block hour fee for up * annual round trips, in the aggregate of charities.
In the case of each such charter, Contractor hereby agrees that it will not (and
it will not permit others to) operate, promote or otherwise market the charter
under the United Express name, the UA or UA* designator code or any other United
Marks or identification (excepting only the unavoidable use of United Express
liveried aircraft and permanent airport signage). Contractor shall provide
written notice to United of any charter flight using aircraft used in
Contractor's United Express Services prior to the later of (i) the * prior to
the date of such charter flight or (ii) * business days after Contractor's
receipt of the request for such charter flight. Contractor agrees not to provide
any charter flight using aircraft used in Contractor's United Express Services
if United provides written notice to Contractor stating that United elects to
require that Contractor not provide such charter flight, so long as Contractor
receives United's notice prior to the * business day after United's receipt of
Contractor's notice.

            5.    CHANGES INPUT TO RESERVATIONS SYSTEMS

            Changes to Contractor's schedules as set forth in this ARTICLE IV
and which otherwise are in accordance with the terms and conditions of this
Agreement will be submitted by Contractor for input into United's internal
reservations system and computerized reservations systems. At no time may
Contractor make any changes to flights operated by United or any other carrier.

            6.    OPERATING COMMITMENT

            Contractor agrees to operate Contractor's United Express Services in
order to provide air transportation services scheduled pursuant to this ARTICLE
IV. (as modified from time to time) throughout the term of this Agreement.

      B. AIRCRAFT TO BE USED

            1.    AIRCRAFT TYPES.

            Unless otherwise agreed by United, Contractor will provide
Contractor's United Express Services with the type and amount of aircraft set
forth in APPENDIX A and under the terms and conditions of ARTICLE II.B.2. The
aircraft will be scheduled, taking into account heavy scheduled maintenance
requirements and the spare ratio indicated in ARTICLE IV.B.2 below unless
otherwise outlined in APPENDIX A.

                  1.    In accordance with the terms and conditions of this
Agreement, Contractor is authorized to fly the following aircraft under
Contractor's United Express Services:

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                        a.    * BOMBARDIER DASH-8-200 aircraft, which Contractor
shall cause to be delivered in a consistent with APPENDIX A and under
the terms and conditions of ARTICLE II.B.2;

                        b.    INITIAL * CRJ-700 aircraft, which Contractor shall
cause to be delivered in a timeline consistent with APPENDIX A and under the
terms and conditions of ARTICLE II.B.2;

                        c.    * CRJ-200 aircraft, which Contractor shall cause
to be delivered in a timeline consistent with APPENDIX A and under the terms and
conditions of ARTICLE II.B.2;

                        d.    * REPLACEMENT CRJ-70S aircraft, which Contractor
shall cause to be delivered in a timeline consistent with APPENDIX A and under
the terms and conditions of ARTICLE II.B.2;

                        e.    Options on another * RJ-50s and/or RJ-70s to be
delivered pursuant to a mix and delivery schedule to be agreed upon by
Contractor and United.

            2.    TECHNICAL SPECIFICATIONS

                  a.    The aircraft and any replacement aircraft utilized by
Contractor pursuant to this ARTICLE IV.B will bear those United Marks which are
expressly designated by United, whether included on APPENDIX A or otherwise
established by United. United acknowledges for operational reasons Contractor
may operate one Contractor TurboProp white tail aircraft under this Agreement.
Any white tail aircraft covered in this Agreement shall be used solely for
United Express service unless another aircraft of equal or greater capability
and capacity is substituted for the white tail. If the substitution is expected
to exceed * days, Contractor shall provide written notice thereof to United.
Technical specifications covering aircraft colors, schemes, United Marks and
other elements of exterior and interior aircraft decor will be provided to
Contractor by United. Except as provided herein, Contractor will have all
aircraft used to provide Contractor's United Express Services painted and
decorated with the exterior and interior color decors and patterns specified by
United at Contractor's sole expense. In accordance with the technical
specifications referenced in this ARTICLE IV.B.1, Contractor will be responsible
for maintaining all of its aircraft.

                  b.    In addition to the use of the United Marks on its
aircraft, Contractor will use and display a suitable sign or insignia on the
exterior of its aircraft that identifies Contractor as the operator of the
services being provided pursuant to this Agreement. The use and display of such
sign or insignia will be subject to the prior written approval of United as to
its nature, size and location on Contractor's aircraft.

      3.    AIRCRAFT COMMUNICATIONS ADDRESSING AND REPORTING SYSTEM -ACARS.

            i.    TURBOPROPS: Contractor is required to use an ACARS system on
all United Express regional jet flights for the purpose of providing timely and
accurate Flight

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Information (FLIFO). All aircraft delivered on or after * must be delivered with
ACARS already installed. *.

            ii.   REGIONAL JETS: Contractor is required to use an ACARS system
on all United Express regional jet flights for the purpose of providing timely
and accurate Flight Information (FLIFO). *.

For each month and each aircraft that Contractor fails to install ACARs in
accordance to the timeline described in this ARTICLE IV.B.3, Contractor shall
pay to United a sum of $* per aircraft per month. Such payment shall be made as
an offset to the monthly reconciliation process.

            4.    SPARE AIRCRAFT.

            TURBOPROPS: Pursuant to this Agreement, a spare or substitute
turboprop aircraft shall be allocated from the aircraft fleet referenced in
Article IV.B.1 such that the ratio of "aircraft in schedule" divided by
"aircraft in fleet" shall not exceed *, unless otherwise indicated in Appendix
A. This is equivalent to a * spare for every * turboprop aircraft. Such spare
aircraft can be used as a last resort to accommodate passengers and may not be
branded in the interior or exterior with the United Express decor or patterns at
the discretion of Contractor.

            REGIONAL JETS: Pursuant to this Agreement, a spare regional jet
aircraft shall be allocated from the aircraft fleet referenced in Article IV.B.1
such that the ratio of "aircraft in schedule" divided by "aircraft in fleet"
shall not exceed * for all jets (RJ50s and RJ70s combined). This is equivalent
to * spare for every * regional jet aircraft (RJ50s and RJ70s combined). For the
purpose of determining when the operational spare shall enter into service,
Contractor shall have at least * of the * aircraft required for each spare in
service, unless otherwise determined by United. In other words, the first and
second spare can not enter service before the * or * aircraft, respectively. All
Regional Jets, including spares, must be branded in the interior and exterior
with United Marks and decor.

            MAINTENANCE SPARES: From time to time, Contractor may require an
additional aircraft removed from schedule for heavy maintenance. Contractor
agrees to use commercially reasonable heavy maintenance schedules and agrees to
advise United at least * prior to heavy maintenance commencing for each
aircraft.

            5.    SUBSTITUTE AIRCRAFT: In addition to the aircraft authorized by
Article IV.B.1 above, if requested by United, Contractor will use reasonable
efforts to arrange for and make available for its use such substitute aircraft
as are required to effectively maintain Contractor's United Express Services. If
Contractor is unable to operate any flights in its schedule for Contractor's
United Express Services with aircraft bearing United Marks, Contractor will
notify United of such event and the circumstances of Contractor's inability to
so operate and Contractor will be permitted to operate an aircraft

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bearing different elements of aircraft decor than those specified above. If such
operations extend beyond a continuous * period, Contractor must seek and obtain
United's approval for such aircraft substitutions; provided that if Contractor
purchases or leases a used aircraft that does not contain appropriate United
Marks, Contractor will notify United and Contractor may, with the approval of
United, operate such aircraft, so long as such aircraft does not display the
brand name or trademark of any other air carrier (other than Contractor).

            6.    MARK CHANGE:

            United may from time to time change the Marks to be used for United
Express Carriers. At any time during the term of this Agreement, and in the sole
discretion of United, Contractor may be required to use such new or different
Marks, external or internal color decors and patterns on its aircraft and
uniform design as United may determine and to discontinue use of old marks,
external and internal color decors and patterns, and uniform designs. Upon
written notice from United, which will include the specifications for any such
changes in Marks or exterior or interior aircraft decor and patterns or uniform
designs, Contractor will effect such changes in accordance with the schedule
mutually agreed to by the parties. United will pay all costs incurred in
complying with the requirements established in this paragraph.

      C. INVENTORY

      United will have the sole right to use, set and control availability,
levels and use of all seat inventory for the aircraft used by Contractor in
Contractor's United Express Services. United will take all revenue and inventory
risk and will maintain inventory and pricing responsibility. Contractor is
prohibited from providing positive space leisure travel, or any other confirmed
leisure travel that requires removal of a seat from inventory, to any person
other than the positions outlined in APPENDIX J, on Contractor's United Express
flights without the prior written consent of United. All positive space and
leisure travel must be ticketed on United approved ticket stock with
Contractor's full IATA serial and ticketing numbers. Positive space travel is
permitted for Contractor's and United's employees for actual business purposes,
including deadheading flight crews, and for Contractor's employees and Eligibles
in emergency situations only. Contractor may not issue positive space business
travel to anyone other than Contractor's own employees. If in any way whatsoever
Contractor issues tickets in violation of this provision in any form, within *
years of each such violation, Contractor may be billed via the ACH, and
Contractor will pay United, the full unrestricted fare for the class of service
provided on such route for any such inappropriate ticketing.

      D. FLIGHT CREWS TO BE USED

            1.    FLIGHT CREW

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            All of Contractor's United Express Services will be operated with
crews consisting of a captain or pilot, and a first officer or co-pilot. All
such crew members will at all times meet all currently applicable governmental
requirements, as such requirements may be amended from time to time during the
life of this Agreement, and will be fully licensed and qualified for the
services to be performed hereunder. In addition, each of Contractor's captains
will hold a current Airline Transport Pilot Certificate and all Flight Crews to
be used in United Express service must be qualified to fly between all city
pairs on the Effective Date of this Agreement. Crewmembers will also meet all
requirements imposed by the insurance policies that are to be maintained
pursuant to ARTICLE XII.

            2.    FLIGHT ATTENDANTS.

            Contractor's flight attendants will at all times possess all
necessary training and meet all currently applicable governmental requirements,
as such requirements may be amended from time to time during the life of this
Agreement.

      E. INFLIGHT SALES

      Contractor may, at United's request, be required to sell beer, liquor and
other goods on flights included in Contractor's United Express Service. Any
additional goods or services Contractor would like to sell are subject to
United's approval. Contractor agrees that such in-flight sales shall be
conducted in a manner consistent with in-flight sales provided on United's
flights. For beer and liquor sales only, Contractor will be solely responsible
for the direct costs associated with such in-flight sales and shall be entitled
to all revenues generated from such in-flight sales. For all other products,
services or food put on the aircraft at United's request, United shall be
responsible for the incremental costs of such products, services or food and
shall be entitled to all of the revenue associated with such products, services
or food. United shall use its commercially reasonable efforts to assist
Contractor in securing an economical price for the in-flight items.

V.    OPERATING RESTRICTIONS

      A.    UNITED EXPRESS OPERATIONS ONLY

      Other than pursuant to this Agreement and except as set forth in APPENDIX
I, Contractor shall not, and it shall ensure that its subsidiaries do not
directly engage, on its or their own behalf or on behalf of a third party, in
the business of providing air transportation between any of the city pairs set
forth in APPENDIX B.

      B.    NO OPERATION OUTSIDE AGREEMENT

      Without the prior written consent of United, Contractor will not use any
of the services or facilities (excluding maintenance service or facilities)
afforded to Contractor by United to provide air transportation or related
services to other carriers or affiliates of Contractor without the consent of
United. Contractor will not, without United's prior written consent, permit any
third party, whether under a lease arrangement or otherwise,

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to operate any aircraft bearing the United Marks. Furthermore, Contractor shall
comply with the Code Share Limitations in ARTICLE IV.

      C. BREACH OF OPERATING RESTRICTIONS

      Contractor acknowledges that United has no adequate remedy at law and
would be irreparably harmed were Contractor to breach or threaten to breach the
provisions of this ARTICLE V.C and, therefore agrees that United shall be
entitled to injunctive relief to prevent any breach or threatened breach of this
ARTICLE V.C, and to specific performance of its terms, in addition to any other
legal or equitable remedy it may have; provided, further, that Contractor shall
not raise the defense that United has an adequate remedy at law in any equity
proceeding involving it relating to this ARTICLE V.C.

VI.   LICENSE

      A.    GRANT OF LICENSE

      Contractor will conduct all operations described in ARTICLE IV.A above,
and any additional operations undertaken by subsequent amendment hereto, under
the Marks set forth in APPENDIX A or other marks designated by United pursuant
to this ARTICLE IV.A and subject to ARTICLE IV.B.5. In consideration for the
services to be provided by Contractor under this Agreement, United hereby grants
to Contractor, upon the terms and conditions herein contained, a nonexclusive,
nontransferable right and license to use the United Marks, and Contractor hereby
undertakes the obligation to use the licensed United Marks in connection with
the services to be rendered by Contractor under this Agreement; provided,
however, that at any time during the term of this Agreement, United may alter,
amend or revoke the license hereby granted and require Contractor's use of any
new or different Marks in conjunction with the air transportation services
provided hereunder as United may determine in the exercise of its sole
discretion and judgment.

      B.    TERMS AND CONDITIONS GOVERNING LICENSE

            1.    UNITED MARKS.

            Contractor hereby acknowledges United's ownership of the United
Marks, further acknowledges the validity of the United Marks and agrees that it
will not do anything in any way to infringe or abridge United's rights in its
marks or directly or indirectly to challenge the validity of the United Marks.

            2.    SERVICE STANDARDS.

            Contractor agrees that, in providing services under this Agreement
in conjunction with one or more of the United Marks, it will comply with all
service quality standards prescribed by United ("UNITED EXPRESS SERVICE
STANDARDS" OR "SERVICE STANDARDS"). United Express Service Standards include,
but are not limited to, United standards for (a) aircraft types, as referenced
in ARTICLE IV, (b) customer service, as set forth in United's Customer Service
Policies and Procedures, (c) minimum customer

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service training requirements consistent with United's customer service
practices and procedures, (d) in-flight amenities and service, (e) aircraft
appearance, (f) Ground Handling Duties, in accordance with ARTICLE III.A.3, (g)
United/United Express safety programs (and Contractor will enter into any
agreements relating to such programs that are similar to those offered to other
United Express Carriers), (h) any other quality control measures designated by
United, as such standards may be prescribed by United from time to time and (i)
customer problem resolution or ("CPR"). As necessary, United will provide
training to Contractor's designated instructors in the requirements of United's
Customer Service Policies and Procedures; provided that United will at its
expense provide a trainer and materials, and United agrees that the Service
Standards prescribed by it will not be unreasonable in light of the facilities
and aircraft available to Contractor. United will have the right, from time to
time, to inspect Contractor's United Express Services to determine if they
conform to the United Express Service Standards. In the event United determines
that Contractor is not in compliance with the Service Standards United will
notify Contractor and Contractor will promptly rectify any such noncompliance.
Failure on the part of United to conduct such inspections will not relieve
Contractor of its obligations to conform to the Service Standards. If Contractor
fails to comply with any part of the Service Standards and such failure is not
corrected as soon as practicable (and, in any event, within *) after
Contractor's receipt of written notice of such failure from United, then United
may, at its discretion, restrict or eliminate Contractor's pleasure travel
privileges, or suspend Contractor's authority to serve city pair markets, or
impose any other nonexclusive remedy, including breach of contract, or other
remedies available to United. Other non-exclusive remedy would include,
requiring Contractor to bear costs in excess of normal guidelines. The United
Express Service Standards are outlined in APPENDIX H, and may be changed by
United upon notice given from time to time.

            3.    AIRCRAFT GROUND HANDLING PROCEDURES.

            In addition, Contractor agrees that in providing Contractor's United
Express Services, it will conform to all of its Aircraft Ground Handling
Procedures. As used herein, Aircraft Ground Handling Procedures include, but are
not limited to, procedures for (a) deicing, (b) handling and (c) other aircraft
servicing measures, as such procedures may be prescribed by Contractor from time
to time. Contractor agrees that all Aircraft Ground Handling Procedures
prescribed by it will be established in compliance with all applicable federal,
state, local and industry regulations as well as any additional procedures which
United may prescribe from time to time. Contractor will obtain any and all
necessary federal, state, local and regulatory approvals of such Aircraft Ground
Handling Procedures. Once all necessary approvals are obtained, Contractor will
provide a copy of its Aircraft Ground Handling Procedures to United. At each
Joint Location and United Location, as necessary, Contractor will train United
employees in the requirements of Contractor's Aircraft Ground Handling
Procedures; provided that Contractor will provide a trainer and materials and
United will pay all other expenses incurred by its employees in connection with
such training. However, Contractor agrees

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to adhere to the United Express Service Standards outlined in APPENDIX H for all
Ground Handing of their United Express flights.

            4.    LIABILITY FOR OPERATIONS.

            Nothing in this ARTICLE VI.B is intended to nor will be construed so
as to relieve Contractor of any liability or to impose any liability on United
for Contractor's United Express Services by virtue of any of United's rights
under ARTICLE VI.B.2 or ARTICLE III.A.3, whether exercised or not.

            5.    NON-EXCLUSIVITY.

            Nothing in this Agreement is intended nor will be construed to give
Contractor the exclusive right to use the United Marks, or to abridge United's
right to use or to license the Marks, and United hereby reserves the right to
continue use of the United Marks and to license such other uses of such Marks as
United may desire.

            6.    REVERSION OF MARKS.

            Upon termination of this Agreement for any reason, the right to use
herein granted for the United Marks will immediately revert back to United, and
Contractor will have no right to use such Marks in any way. Further, Contractor
will, at its sole cost and expense immediately upon termination of this
Agreement, remove all United Marks from its aircraft, its other vehicles, the
uniforms of its personnel, its facilities and from any and all other places or
things controlled or formerly controlled by Contractor.

      C. INFRINGEMENT

      United will, at its expense, defend, indemnify, release, protect, save and
hold Contractor, its officers, directors, agents and employees harmless from and
against any and all liabilities, damages, expenses, losses, claims, demands,
suits, fines or judgments, including but not limited to attorneys' and
witnesses' fees, costs and expenses incident thereto, which may be suffered by,
accrue against, be charged to or be recovered from Contractor as a result of any
third-party claim that the use by Contractor of any United Mark in accordance
with the terms of this Agreement infringes a registered trademark or service
mark of any third party in the United States, and will pay all costs, damages
and attorneys' fees that a court finally awards as a result of such claim. To
qualify for such defense and payment, Contractor must (i) give United prompt
written notice of any such claim and (ii) allow United to control the defense of
the claim and all related settlement negotiations and fully cooperate with
United in its defense of the claim and the conduct of any settlement
negotiations. United's obligation hereunder is conditioned on Contractor's
agreement that if any Mark becomes, or in United's opinion is likely to become,
the subject of such a claim, Contractor will not dispute that United, at its
option, may either procure the right for Contractor to continue using such Mark
or to replace or modify such Mark so that it becomes non-infringing. This
ARTICLE VI.C states United's entire obligation to Contractor regarding
infringement or the like.

VII.  ADDITIONAL UNDERTAKINGS

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      A.    BULK PURCHASES

      Each party may assist the other in obtaining goods and services useful to
the other party, including, without limitation, fuel, uniforms, supplies and
ground equipment, in a more economical manner. If United identifies
opportunities for cost savings as a result of bulk purchasing on behalf of
Contractor, unless it provides a reasonable reason for not participating
Contractor is obligated to participate in the new cost saving initiative. Prior
to implementing such initiative, Contractor and United shall agree on a
case-by-case basis how to share the benefits of any cost savings initiatives;
provided, however, that absent such agreement in a timely manner and so as to
preclude unnecessary delay in implementation of such initiatives, United and
Contractor shall equally share any monetary savings.

      B.    FUEL

      United, by or through it's subsidiaries, agents or affiliates, shall have
the option to procure fuel and fuel services for or on behalf of Contractor.
Contractor agrees to assist United, its subsidiaries, agents or affiliates in
identifying fuel or fuel service procurement opportunities, to provide data or
analysis pursuant thereto, and to enter into agreements for the provision of
said fuel or fuel services, including any provisions therein, at the direction
of United. United shall use its best efforts to accommodate any operational or
other requirements of Contractor related to fuel or fuel services procured for
or on behalf of Contractor.

      C.    PURCHASE BY UNITED OF PASS THROUGH COST ITEMS

      Pass Through Purchase Rights. United reserves the right to assume the
responsibility for purchasing products and services to be used as Pass Through
Cost items under this Agreement by Contractor.

      D.    UNIFORMS

      Contractor, at its own expense, shall pay for and require all of its
Designated Personnel to wear uniforms which are in the United Express colors and
styles, as approved by United, while performing Contractor's United Express
Services as outlined in APPENDIX H. Contractor agrees that all such Designated
Personnel employed by Contractor shall wear the above-described uniforms. Any
other employees of Contractor who are visible to the public, other than
Designated Personnel, will wear uniforms reviewed and approved by United, which
approval shall not be unreasonably withheld. If United develops or designs new
uniforms for United Express operations, United will cover Contractor's
incremental costs of such new uniforms program.

      E.    PASSES AND REDUCED RATE TRAVEL

      Each party will comply with the terms of a separate agreement between them
under which are granted to the employees of the other party certain passes and
reduced rate pleasure travel privileges. However, United has the right to retain
all revenue

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generated from reduced rate travel, including companion passes, both on United
and United Express operated flights.

      F.    SIGNAGE

      As of the Effective Date, Contractor will display signage advertising its
operations as a United Express Carrier at all Contractor Locations and at those
Joint Locations specified by United. All signage must be approved by United
prior to its use by Contractor, and Contractor shall be responsible for the
acquisition, installation and maintenance of all such signage. The cost of such
signage shall be considered a one-time start up cost for each new station and
shall be considered a Pass Through Cost to be reimbursed by United. Should
United decide to rebrand or change signage requirements beyond the standards
that existed on the Effective Date of this Agreement, United agrees to pay the
incremental costs associated with signage changes as a Pass Through Costs not
subject to Markup.

      G.    ENVIRONMENTAL

            1.    With respect to all matters that relate to or may affect the
environment, Contractor agrees to conduct its operations in a prudent manner,
taking reasonable preventive measures to avoid environmental liabilities,
including, without limitations, measures to prevent unpermitted releases to the
environment.

            2.    Contractor agrees, at its own expense, to conduct its
operations in compliance with all Environmental Laws, including all
environmental rules, regulations, and policies dictated by the applicable
airport authority, including ensuring its employees are trained in the
procedures required to meet all Environmental Laws. United acknowledges that any
Environmental Impact Studies may make it cost prohibitive for Contractor to
operate to certain airports. If flying to certain airports is cost prohibitive
due to Environmental Impact Studies, Contractor may refuse to fly to that
specific airport.

                  To the extent associated with Contractor's activities
(including those of its agents), Contractor shall be responsible, and will
indemnify United, for any and all environmental liabilities, including, without
limitation, any penalties or costs associated with any enforcement action,
airport authority action, or private claim, any remediation or restoration
costs, any investigation costs, legal or environmental consultant costs, or any
property damage costs.

            a. *

      H.    START-UP COSTS

      With regard to Regional Jet aircraft under this Agreement, which are
currently in operation with another airline today, United will pay for those
interior reconfigurations or

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decor changes requested by United. Contractor will pay for the cost of all
exterior changes.

      I.    AIRCRAFT SUBSTITUTIONS

      In the event that a scheduled aircraft is down-gauged to a smaller
aircraft, United will pay the rates hereunder applicable to the smaller aircraft
(i.e. fewer seats) that actually flies the departure. In the event that a
scheduled aircraft is up-gauged to a larger aircraft, United will pay the rates
hereunder applicable to the type of aircraft originally scheduled for departure
for both the originating and any applicable return flight. If United requests in
writing hereunder that a larger aircraft be substituted for a smaller scheduled
aircraft, United will pay the applicable rates for all additional downstream
substitutions that are indirectly a result of the original United requested
substitution. Should such original United Express aircraft substitution result
in indirect substitution downline and United is unwilling to pay for such
indirect substitutions, Contractor has the right to refuse United's original
request for aircraft substitution. Contractor will provide to United copies of
United's requests to substitute aircraft with the normal reconciliation support
materials required from Contractor under the terms of this Agreement.

VIII. RATES PAYABLE TO CONTRACTOR

      A.    RATES

      AS AGREED BY UNITED AND CONTRACTOR:

            1.    CONSIDERATION

            For and in consideration of the transportation services, facilities
and other services to be provided by Contractor hereunder, the right of United
to (i) control all aspects of inventory as described in ARTICLE IV.C, (ii)
receive and retain all air fares, cargo rates and mail charges received by
Contractor and United, and (iii) receive and retain all other revenue received
by Contractor and United as provided in this Agreement, and other valuable
consideration provided under this Agreement, United shall pay Contractor
specified "*" (*) and specified "*" for the * as detailed in APPENDIX D for each
aircraft type.

            2. *

            Contractor and United agree that the * consists of the cost defined
in Appendix D. All other types of expenses, not defined in APPENDIX D as *
Costs, are considered and defined as *.

            3. *

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            The * and * are grouped by "*" for each aircraft type in APPENDIX D.
Within each *, are specific kinds or types of expenses as outlined in APPENDIX
D.

            4. *

            Each *, whether the costs are * or *, is expressed in terms of a
"*." The * express the basic measurement and constitute the driver of costs for
each *. Each * has a specific * as set forth in APPENDIX D.

            5. *

            As of the Effective Date, for each aircraft type, the parties have
established and agreed to a * which is the *. Hereafter, such rates shall be set
in accordance with the procedures set forth herein. Except as expressly provided
in this Agreement, the parties do not want to perform, and have not provided
for, any additional rate changes, rate negotiations or rate setting process.

            6.    ANNUAL ADJUSTMENT FACTORS

            Effective as of each *, Contractor and United agree to increase or
decrease all * within the * for the ensuing contract year by *. Contractor and
United agree to review the interrupted trip expense * after execution of this
agreement. If Contractor's actual uncontrollable costs are below $* per
passenger, Contractor will reduce this rate to the actual cost for the remainder
of this agreement.

            7.    CONSUMER PRICE INDEX

            "CONSUMER PRICE INDEX" OR "CPI" shall mean the percentage growth in
the Consumer Price Index, U.S. City Average, Urban Wage Earners and Clerical
Workers, All Items (base index year 1982-1984=100) as published by the United
States Department of Labor, Bureau of Labor Statistics. If the manner in which
the Consumer Price Index as determined by the Bureau of Labor Statistics shall
be substantially revised, including, without limitation, a change in the base
index year, an adjustment shall be made by the parties in such revised index
which would produce results equivalent, as nearly as possible, to those which
would have been obtained if such Consumer Price Index had not been so revised.
If the Consumer Price Index shall become unavailable to the public because
publication is not readily available to enable the parties to make the
adjustment referred to in this Section, then the parties shall mutually agree to
substitute therefore a comparable index based upon changes in the cost of living
or purchasing power of the consumer dollar published by any other governmental
agency or, if no such index shall be available, then a comparable index
published by a major bank or other financial institution or by a university or a
recognized financial publication.

            8.    EXAMPLE

            *

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            9.    AIRCRAFT OWNERSHIP COSTS

                  a)    RJ-70S. Aircraft ownership costs on the * RJ-70s will be
 paid in accordance with the contract rate table in Appendix D with a Markup of
*% and will not be subject to either annual escalations or adjustment based on
Contractor's performance against Operating Goals.

                  b)    RJ-50S. Aircraft ownership costs for the * RJ-50s will
 be paid in accordance with the contract rate table in Appendix D with a Markup
of *% and will not be subject to either annual escalations or adjustment based
on Contractor's performance against *.

                  c)    TURBOPROPS. Aircraft ownership costs for all turboprops
 will be paid in accordance with the contract rate table in Appendix D with a
Markup subject to adjustment based on Contractor's performance against * as a *.

                  d)    CAP. Under no circumstances will United's total
 ownership costs on any aircraft (actual costs) exceed $* per month for an RJ-50
or $* per month for an RJ-70. United also reserves the right to finance any
aircraft allocated for United Express service.

            10. CARRIER CONTROLLED COST STABILITY.

            Except to the extent that any Markup Points (as established in
APPENDIX E) may apply and the * review of station costs after startup (not to
exceed one-time per station), no other increases or additions to the * element
will be made over the life of this Agreement unless provided for in APPENDIX K,
except for annual CPI adjustments which shall take place on the anniversary of
the Effective Date.

            11. COMMERCIALLY REASONABLE EFFORTS

            Contractor agrees to use commercially reasonable efforts to control
its * and *. Failure to use commercially reasonable efforts to control * shall
be deemed as negligence on the part of the Contractor and may subject such costs
to rejection of payment by United, in which event Contractor waives its rights
to reimbursement of the applicable * items. The parties agree to discuss any
failure by Contractor to use reasonable efforts to control * and *.

            12. NON PAYMENT

                  a.    In the event of a Force Majeure or other disruption
resulting in at least a * suspension of greater than *% of Contractor's United
Express scheduled flights, *. In the event a permanent schedule reduction
results from a disruption, *.

                  b.    In the event that Contractor operates a flight departing
more than * late from the scheduled departure time with a load factor of less
than *% on board,

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Contractor shall not be reimbursed for such flight unless specifically requested
to fly such segment by United.

      B. OPERATING GOALS

      United and Contractor have developed a * ("*") program ("*") that, with
respect to Contractor's United Express operations, is based upon *. Contractor's
performance is evaluated with respect to *. Contractor's * will be used to
determine the amount of * applicable to the * pursuant to the procedures set
forth herein.

            1.    OPERATING GOALS METHODOLOGY

            For * are set forth on APPENDIX E. For *, the Operating Goals shall
be developed using the predetermined methodology set forth below. * for the
calendar year will be established to be effective on each *. Contractor's * are
determined using the following methodology based on United's * for the same
periods:

                  a. *.

                  b. *.

                  c. *.

                  b. *.

            2.    GROUND OPERATIONS. In stations, where Contractor does not
provide ground handling services for itself, performance goals as noted in
Article VIII.B will be adjusted such that mishandled bag goals will not apply to
those departures. Subject to United Ground Operations approval, United agrees to
develop by no later than * a reasonable methodology and associated processes and
procedures to identify, quantify, track and report specific incidents where
non-performance of Controllable Completions and On-Time Zero departures is
primarily due to the fault of the Ground Handling Provider. The aforementioned
report will be shared with Contractor. To the extent that Contractor's
performance in stations, where Contractor is not the Ground Handling Provider
for itself, results in a one or more performance level category (categories
being defined as * levels as outlined in APPENDIX E) reduction in Contractor's
applicable * level for all performance metrics for more than * consecutive
months and such Contractor's performance reduction is caused by the Ground
Handling Provider as outlined in the aforementioned report, United agrees to
provide for an equitable resolution process going forward. United agrees that
after *, Contractor's performance criteria used for the purposes of any SECTION
C DEFAULT will be adjusted to exclude incidents of non-performance of * and *
departures primarily due to the fault of the Ground Handling Provider (as
outlined in the aforementioned report).

            3. *

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            Contractor's *, as defined above in Paragraph 1a-1.d and adjusted
for seasonality using the * in the table in Paragraph 5 below, define the
minimum performance necessary to achieve at least *.

            4.    PERFORMANCE GRADE WIDTHS

            The operating performance values for determining * Performance
Levels will automatically change each year based on Contractor's *. "*" (*)
remain constant and will not be changed over the duration of this Agreement.
These Grade Widths are set forth in the table below, where * are the
Contractor's *:

                  *

            5.    EXAMPLE

                  *

            6.    SEASONALITY ADJUSTMENT

            At the beginning of each year beginning with 2004 goals, after
Contractor's * for the year have been calculated by the methodology outlined
above but before Contractor's * are finalized, Contractor may create the final *
goals by *.

      C. MARKUP

      For each * and for Contractor's entire United Express operations, except
as specified herein, Contractor's * shall be measured with respect to each of
the *. For purposes of determining Contractor's actual *, Contractor shall only
be held accountable (*) *. To establish the * to be applied hereunder, add
together *. United agrees to meet and work with Contractor in an attempt to find
solutions to remedy any failure by Contractor to meet * under this Agreement for
the other * to the extent it is caused by non-Contractor Ground Handling
Providers who provide Contractor's ground handling services at Contractor
Locations.

      D. WIRE TRANSFER AND RECONCILIATION

            1.    On a monthly basis, Contractor will provide an estimate of its
*, assuming C Performance Level and assuming a *, plus its * which never have a
*. This estimate will be based upon the schedule to be operated during the
upcoming month and shall be provided no later than * prior to the start of the
month in which the wire transfers shall be made. These total costs will be
divided by the number of * in the month and wire transferred by United to
Contractor each *.

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            2.    Complete Reconciliation of * (and associated *) according to *
paid under Paragraph 1 above as established in accordance with the terms of this
Agreement, shall be completed by United on a *, but no later than * days after
month's end:

                  a.    * Reconciliation - *. On or before the * day after the
last day of each *, Contractor shall submit to United a report detailing actual
operational statistics pertaining to the payment of *, with a content determined
by United, in a format mutually agreeable to United and Contractor. United shall
review Contractor's submission of operating statistics and compare to United's
internal flight information records. United and Contractor agree to discuss any
discrepancies in the operating data and to make reasonable efforts to resolve
all data discrepancies. Failing an amicable resolution, however, payment shall
be based on the lower level of operating statistics, recorded by Contractor or
United.

                  b.    * Reconciliation - *. On or before the * day after the
last day of each *, Contractor will use reasonable efforts to submit to United
documentation sufficient to support its actual expenses for * items, including
copies of invoices. Upon submission of the information, Contractor must notify
United in writing if any 3rd party information is missing from the submission
information, and provide an explanation for the delay. Under no circumstances
will United pay * more than * months after the expense was incurred.

                  c.    Regional Reconciliation of On Time Performance: At the
end of * or another mutually agreeable timeframe, United and Contractor agree to
readjust the annual operating goals for that previous * based on the actual
amount of flying in each region. If this reconciliation results in any amount
due to Contractor or to United, payment will be made accordingly or offset
against current amounts owing. However, the same seasonality adjustment used at
the beginning of the * shall be applied to the revised regional goals.

IX.   FEES PAYABLE TO UNITED

      A.    GOVERNMENT ASSISTANCE

      Any direct or indirect assistance received by Contractor as a result of
government assistance or bail-out plans that cover costs not incurred by the
Contractor or revenues that are generated by passengers carried by Contractor
and pertaining to Contractor's United Express operations will be forwarded
directly to United. That amount pertaining to Contractor's United Express
operations will be remitted to United pursuant to proration among all of
Contractor's code-sharing partners based upon available seat miles ("ASM's") or
whatever unit is used by the Government to disburse such aid. If the
aforementioned direct or indirect assistance to Contractor is not associated
with or related to operations or services provided to, or in behalf of, United
in any way, then the aforementioned direct and indirect assistance shall not be
forwarded to United. Should United receive any direct or indirect assistance
related in whole, or in part, to specific

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costs incurred by Contractor related to its United Express operations or
services, but not reimbursed by United under this Agreement, United agrees to
forward such monetary assistance to Contractor. Such amount forwarded to
Contractor by United will be based upon Contractor's United Express operations
and prorated between Contractor and United based upon ASM's or whatever unit is
used by the Government to disburse such aid.

X.    MAINTENANCE AND FUELING

      United will have no responsibility under this Agreement for maintenance or
fueling of Contractor's aircraft.

XI.   U.S. MAIL

      United and Contractor agree to cooperate in making bids for mail carriage.

XII.  INSURANCE

      A. INSURANCE TYPES

      During the term of this Agreement, Contractor agrees to procure and
maintain in full force and effect, at its own expense, policies of insurance
with insurers of recognized reputation and responsibility, which provide, unless
otherwise provided in the Aircraft Leases, at a minimum the following insurance:

      1     Comprehensive Airline Liability Insurance, including but not limited
to Aircraft Liability, Passenger Liability, Comprehensive General Liability
Insurance, War Risk and Allied perils, including both passengers and other third
parties, Cargo Liability and Baggage Liability Insurance, with combined single
limits for each and every loss and each aircraft of not less than (i) U.S. $*,
or (ii) U.S. $* per available seat or (iii) the limits that Contractor has in
place, whichever is greatest. Any policies of insurance carried in accordance
with this ARTICLE XI will also contain or be endorsed to contain those
provisions set forth in the attached APPENDIX F.

      2     Aircraft Hull All Risks Insurance, including ground and flight
coverage on Contractor's aircraft, including its engines and all its parts when
installed or temporarily detached from Contractor's aircraft on a
repair-or-replace basis with a deductible United has reasonably deemed
appropriate.

      3     Contractor agrees to maintain Workers' compensation in statutory
amounts required by each state in which any work is performed, in whole or in
part; Employers' Liability, with policy limits not less than $* combined single
limit, for all of Contractor's United Express employees. United shall in no way
be liable for any workers' compensation claims paid by Contractor related to any
of Contractor's operations. The Contractor's insurer agrees to waive rights of
subrogation against United with respect to worker's compensation claims.

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      4     Contractor agrees to maintain Commercial Automobile Liability
Insurance covering all owned, non-owned leased, and hired automobiles, trucks
and trailers, with policy limits of not less than $* combined single limit per
occurrence to cover Contractor's entire United Express operation.

      5     Contractor will be responsible for the first $* of loss or damage to
all automation equipment provided by United to Contractor. Contractor will
evidence property insurance and name United as loss payee.

      B. 30-DAY NOTICE

      On or before the Effective Date of this Agreement, and not less than *
days and * days notice with respect to war risk, before the expiration or
termination date of any insurance required to be maintained by Contractor under
ARTICLE III.A above, Contractor will furnish United with certificates of
insurance, substantially in the form of the attached APPENDIX F, evidencing
compliance with the foregoing requirements, unless otherwise provided in writing
between the parties.

      C. FAILURE TO MAINTAIN INSURANCE

      In the event that Contractor fails to acquire or maintain insurance as
herein provided, United may at its option secure such insurance on Contractor's
behalf at Contractor's expense.

XIII. LIABILITY AND INDEMNIFICATION

      A. EMPLOYER'S LIABILITY AND WORKERS' COMPENSATION

      Each party hereto assumes full responsibility for its employer's liability
and workers' compensation liability to its own officers, directors, employees or
agents on account of injury or death resulting from or sustained in the
performance of their respective service under this Agreement. Each party, with
respect to its own employees, accepts full and exclusive liability for the
payment of workers' compensation and employer's liability insurance premiums
with respect to such employees, and for the payment of all taxes, contributions
or other payments for unemployment compensation or old age benefits, pensions or
annuities now or hereafter imposed upon employers by the government of the
United States or by any state or local governmental body with respect to such
employees measured by the wages, salaries, compensation or other remuneration
paid to such employees, or otherwise, and each party further agrees to make such
payments and to make and file all reports and returns, and to do everything to
comply with the laws imposing such taxes, contributions or other payments.

      B. INDEMNIFICATION BY CONTRACTOR

      Contractor hereby assumes liability for and agrees to indemnify, release,
defend, protect, save and hold United and its officers, directors, agents and
employees harmless

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from and against any and all liabilities, damages, expenses, losses, claims,
demands, suits, fines or judgments, including but not limited to, attorneys' and
witnesses' fees, costs and expenses incident thereto, which may be suffered by,
accrue against, be charged to or be recovered from United or its officers,
directors, employees or agents, by reason of any injuries to or deaths of
persons, except for injury or death of United employees, or the loss of, damage
to or destruction of property, including the loss of use thereof, arising out
of, in connection with or in any way related to any act, error, omission,
operation, performance or failure of performance of Contractor or its officers,
directors, employees and agents, or of any Ground Handling Provider, regardless
of any contributory negligence either active, passive or otherwise on the part
of United or its officers, directors, employees or agents (but excluding the
reckless and willful misconduct or gross negligence of United or its officers,
directors, employees or agents), which is in any way related to the services of
Contractor contemplated by or provided pursuant to this Agreement, or otherwise.
United will give Contractor prompt and timely notice of any claim made or suit
instituted against United which in any way results in indemnification hereunder,
and Contractor will have the right to compromise or participate in the defense
of same to the extent of its own interest.

      C. INDEMNIFICATION BY UNITED

      *

      D. INDEMNIFICATION RELATED TO GROUND HANDLING SERVICES

      Contractor hereby assumes liability for and agrees to indemnify, release,
defend, protect, save and hold each Ground Handling Provider, and its officers,
directors, agents and employees, harmless from and against any and all
liabilities, damages, expenses, losses, claims, demands, suits or judgments,
including but not limited to, attorneys' and witnesses' fees, costs and expenses
incident thereto, which may be suffered by, accrue against, be charged to or be
recovered from such Ground Handling Provider, or its officers, directors,
employees or agents, by reason of any injuries to or deaths of persons (except
employees of Ground Handling Provider or employees of any agent hired by Ground
Handling Provider), or the loss of, damage to or destruction of property,
including the loss of use thereof, arising out of, in connection with or in any
way related to any act, error, omission, operation, performance or failure of
performance of Contractor or its officers, directors, employees and agents,
regardless of any negligence either active, passive or otherwise on the part of
such Ground Handling Provider, or its officers, directors, employees or agents
(but excluding the reckless and willful misconduct or gross negligence of such
Ground Handling Provider or its officers, directors, employees or agents and
excluding such Ground Handling Provider's negligent operation of ground support
equipment to the extent solely of such Ground Handling Provider's
indemnification obligation therefore under the following paragraph), which is in
any way related to the Ground Handling Services. To be eligible for this
indemnity, each Ground Handling Provider will give Contractor prompt and timely
notice of any

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claim made or suit instituted against it which in any way results in
indemnification hereunder, and Contractor will have the right to compromise or
participate in the defense of same to the extent of its own interest. Contractor
acknowledges and agrees that the Ground Handling Providers are third party
beneficiaries of the indemnities provided herein by Contractor, and may bring
legal actions and proceedings (whether administrative, judicial, or otherwise)
in their own names directly against Contractor.

      United will cause each Ground Handling Provider to agree to indemnify
Contractor against any physical loss or damage to any of Contractor's aircraft
caused by such Ground Handling Provider's negligent operation of ground support
equipment, provided that such Ground Handling Provider's liability under this
sentence shall be limited to any loss or damage not exceeding $* in respect of
any incident and shall not extend to any loss or damage below $* in respect of
any incident. In the event that Contractor believes the loss or damage to its
aircraft is excessive, United, Ground Handling Provider and Contractor agree to
meet in order to mitigate such loss or damage.

      Notwithstanding the foregoing, United shall require all Ground Handling
Providers procure and maintain, at their sole cost and expense, Commercial
Aviation General Liability Insurance including, but not limited to, bodily
injury liability, property damage liability, public liability, premises
liability, products completed operations liability, hangerkeepers liability and
contractual liability in an amount not less than Combined Single Limit (for any
Part 121 Certificated Air Carrier or affiliate of such carrier providing such
Ground Handling Services) any one occurrence of not less than USD $*. Said
insurance shall (i) name Contractor as Additional Insured as its interests may
appear, (ii) Be primary without right of contribution from any insurance carried
by or available to Contractor, (iii) contain severability of interests, cross
liability and breach of warranty clauses in favor of Contractor, (iv) shall
provide for 30 days prior written notice of any cancellation or material change
adverse to the interests of Contractor, (v) contain a waiver of insurers' rights
of subrogation against Contractor. Upon request, all Ground Handling Providers
shall provide Contractor with a Certificate of Insurance evidencing same.

      E. CONTRACTOR'S SUPPLIES LIABILITY

      Contractor hereby assumes liability for and agrees to indemnify, release,
defend, protect, save and hold United and its officers, directors, agents and
employees from and against any and all liabilities, damages, losses, claims,
demands, suits, fines or judgments, including but not limited to attorneys' and
witnesses' fees, costs and expenses incident thereto, which may be suffered by,
accrue against, be charged to or be recovered from United or its officers,
directors, employees, or agents by reason of any losses or damages incurred on
account of the loss, misapplication, theft or forgery of passenger tickets,
exchange orders or other supplies furnished by or on behalf of United to
Contractor, or the proceeds thereof, whether or not such proceeds have been
deposited in

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a bank and whether or not such loss is occasioned by the insolvency or
bankruptcy of a bank in which Contractor may have deposited such proceeds, other
than a loss caused by a bank to which funds have been transmitted at the express
direction of United. Contractor's responsibility hereunder for passenger
tickets, exchange orders and other supplies will commence immediately upon the
delivery of said passenger tickets, exchange orders, and other supplies into the
possession of Contractor or any duly authorized officer, agent or employee of
Contractor. United will furnish Contractor prompt and timely notice of any
claims made or suits instituted against United which in any way may result in
the indemnification hereunder, and Contractor will have the right to compromise
or participate in the defense of same to the extent of its own interest.

      F. UNITED DEFINITIONS

      As used in this ARTICLE XIII for purposes of identifying an indemnified
party, all references to United include United's parent company, and any
subsidiary or affiliate of United or its parent company, and their respective
employees, officers, directors and agents. For purposes of this ARTICLE XIII any
passenger who connects in any city from a flight on United or Contractor (the
"CARRYING PARTY") within four (4) hours after the end of such flight to a flight
of the other party (the "CONNECTING PARTY") become passengers of the Connecting
Party when such passenger enters the hold room or waiting area to which they
were deplaned in such city from the Carrying Party's flight to such on-line
city. A passenger of the Carrying Party who does not have a connecting flight
with the other party hereto and prior to entering the hold room or waiting area
after deplaning from the Carrying Party's flight in the Connection City is a
passenger of the Carrying Party. For purposes of this ARTICLE XIII, neither
loading bridges, hallways, stairways, nor ramp areas will be considered part of
the hold room or waiting area.

XIV.  REPORTS

      A.    CLOSE-OUT ENTRIES

      Upon departure of each Contractor flight from Contractor Locations and
Joint Locations, close-out entries shall be made by Contractor in Apollo
Services as required by United and as specified in the Standards of Service.
United will use good faith efforts to notify Contractor in writing as soon as
practicable after United determines that Contractor has failed to perform flight
close-out, as outlined above. If Contractor fails * times in any consecutive *
period to perform flight close-out, as outlined above, where such occurrence is
caused by or arises out of an act or omission of Contractor, then upon
notification by United to Contractor, Contractor shall pay United damages of *
for each occurrence over and above the first * occurrences in such * period.
Contractor is accountable for only the flights which are handled at the ticket
counter and gate by Contractor. Such damages shall be United's exclusive remedy
for Contractor's non-compliance with this paragraph. If United fails to notify
Contractor of its intent to seek damages pursuant to this paragraph within four
months after the end of the * period,

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United shall be deemed to have waived its right to seek such damages for
Contractor's non-compliance with this paragraph during such * period.

      B. BOARDING INFORMATION

      Information reports containing data covering boarding, and other
information agreed to by the parties for Contractor's operations hereunder will
be produced from the close-out entries and provided by United to Contractor on a
monthly basis * after the month end.

      C. OPERATING PERFORMANCE

      Contractor will furnish to United within * after the end of each month a
detailed report of its operating performance, which report will include
information on Contractor's performance during the preceding month for each of
the items designated by United, including, but not limited to, Operating
Performance Standards and aircraft appearance.

      D. INSPECTION

      United may inspect Contractor's corporate records and accounts solely
related to Contractor's United Express Services, from time to time, upon
reasonable notice during the life of this Agreement; provided that such
inspections do not unreasonably interfere with Contractor's business.

      E. FINANCIAL STATEMENTS

      Contractor will furnish to United, (i) within the time frame determined by
the Securities Exchange Commission (SEC) for financial reporting after the end
of the each calendar quarter, unaudited financial statements, including
Contractor's then current corporate balance sheet and profit and loss statement,
and (ii) within * after the end of the Contractor's fiscal year, Contractor's
then current, audited financial statements including, either separately or on a
consolidated basis, the balance sheet and the profit and loss statement,
together with associated footnotes, and a copy of the independent auditor's
report.

      F. GOVERNMENT FILINGS

      Contractor will be responsible for filing all reports relating to its
operations with the DOT, FAA and other applicable government agencies (other
than any such reports for which United has assumed the responsibility to file
them on Contractor's behalf), and Contractor will promptly furnish United with
copies of all such reports and such other available traffic and operating
reports as United may request from time to time during the life of this
Agreement. To the extent only United is in possession of relevant statistics
used in such reports, United will provide such available statistics to
Contractor as necessary for Contractor to complete these filings. If United
fails to provide such

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statistics to Contractor sufficiently in advance of the applicable deadline for
such filings, and Contractor is unable to submit such filings by the deadline
because of such delay, United will reimburse Contractor for any fines or
penalties incurred by Contractor as a result of its failure to submit such
filings by the deadline.

      G. COPY OF GOVERNMENT REPORTS

      Contractor will promptly furnish United with a copy of every final report
that Contractor prepares, whether or not such report is filed with the FAA, NTSB
or any other governmental agency, relating to any accident or incident involving
an aircraft used by Contractor pursuant to this Agreement, when such accident or
incident is claimed to have resulted in the death or injury to any person or the
loss of, major damage to or destruction of any property.

      H. BENCHMARKING

      No greater that once per calendar year, Contractor agrees to participate
in a detailed benchmarking process to be determined by United similar to the one
completed in 2003. United agrees that any aforementioned information, as well as
the one-time audit in ARTICLE III.H.4 will be used for informational purposes
only and not in any manner to become the basis of, or provide justification for,
any rate adjustment not associated with adjustments noted in other parts of this
Agreement.

XV.   INDEPENDENT CONTRACTORS AND UNAUTHORIZED OBLIGATIONS

      A. INDEPENDENT CONTRACTORS

            1.    The employees, agents and independent contractors of each
party hereto (the "Employer") engaged in performing any of the services the
Employer is to perform pursuant to this Agreement are employees, agents, and
independent contractors of the Employer for all purposes and under no
circumstances will be deemed to be employees or agents or independent
contractors of the other Party (the "non-Employer"). The Non-Employer will have
no supervision or control over any such Employer's employees, agents and
independent contractors and any complaint or requested change in procedure made
by the Non-Employer will be transmitted by it to the Employer's designated
representatives. In its performance under this Agreement, each party will act
for all purposes, as an independent contractor and not as an agent for the other
party.

            2.    Notwithstanding the fact that Contractor has agreed to follow
certain procedures, instructions and United Express Service Standards pursuant
to this Agreement, United will have no supervisory power or control over any
employees, agents or independent contractors engaged by Contractor in connection
with its performance hereunder, and all complaints or requested changes in
procedures made by United will, in all events, be transmitted by United to
Contractor's designated representatives. Nothing contained in this Agreement is
intended to limit or condition Contractor's control over its operations or the
conduct of its business as an air carrier, and Contractor and its principals
assume all risks of financial losses which may result from the operation of the
air services to be provided by Contractor hereunder.

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<PAGE>

      B. UNAUTHORIZED OBLIGATIONS

            1.    Nothing in this Agreement authorizes United to make any
contract, agreement, warranty or representation on Contractor's behalf, or to
incur any debt or obligation in Contractor's name ("CONTRACTOR UNAUTHORIZED
OBLIGATION"); and United hereby agrees to defend, indemnify, save, release and
hold Contractor and its officers, directors, employees and agents harmless from
any and all liabilities, claims, judgments and obligations which arise as a
result of or in connection with or by reason of any such Contractor Unauthorized
Obligation made by United or its officers, directors, employees, agents or
independent contractors (other than Contractor) in the conduct of United's
operations.

            2.    Nothing in this Agreement authorizes Contractor to make any
contract, agreement, warranty or representation on United's behalf, or to incur
any debt or obligation in United's name ("UNITED UNAUTHORIZED OBLIGATION"); and
Contractor hereby agrees to defend, indemnify, save, release and hold United and
its officers, directors, employees and agents harmless from any and all
liabilities, claims, judgments and obligations which arises as a result of or in
connection with or by reason of any such United Unauthorized Obligation made by
Contractor or its officers, directors, employees, agents or independent
contractors (other than United) in the conduct of Contractor's operations.

      C. CONTRACTOR OPERATED FLIGHTS

      The fact that Contractor's operations are conducted under the United Marks
and listed under the UA designator code will not affect their status as flights
operated by Contractor, and Contractor and United agree to advise all third
parties, including passengers, of this fact.

XVI.  DEFAULT AND TERMINATION

      A. OPERATIONS DEFAULT

            1.    If either party becomes insolvent; if the other party is not
regularly paying its bills when due without just cause; if either party takes
any step leading to its cessation as a going concern; makes an assignment of
substantially all of its assets for the benefit of creditors or a similar
disposition of the assets of the business; or if either party either ceases or
suspends operations for reasons other than an ARTICLE XXVI Force Majeure
condition (a "SECTION A DEFAULT"), then the other party (the "INSECURE PARTY")
may terminate this Agreement on not less than * written notice (the "Notice
Period") to such party (the "SECTION A DEFAULTING PARTY") unless the Section A
Defaulting Party immediately gives adequate assurance of the future performance
of this Agreement within the Notice Period by establishing an irrevocable letter
of credit -- issued by a U.S. bank acceptable to the Insecure Party, on terms
and conditions acceptable to the Insecure Party, and in an amount sufficient to
cover all amounts potentially due from the Section

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A Defaulting Party under this Agreement -- that may be drawn upon by the
Insecure Party if the Section A Defaulting Party does not fulfill its
obligations under this Agreement in a timely manner.

            2.    If bankruptcy proceedings are commenced with respect to the
Section A Defaulting Party and if this Agreement has not otherwise terminated,
then to the extent permitted by the Bankruptcy Court, the Insecure Party may
upon * prior written notice suspend all further performance of this Agreement
until the Section A Defaulting Party assumes or rejects this Agreement pursuant
to Section 365 of the Bankruptcy Code or any similar or successor provision. Any
such suspension of further performance by the Insecure Party pending the Section
A Defaulting Party's assumption or rejection will not be a breach of this
Agreement and will not affect the Insecure Party's right to pursue or enforce
any of its rights under this Agreement or otherwise.

      B. COVENANT DEFAULT

      If either party (the "SECTION B DEFAULTING PARTY") shall refuse, neglect
or fail to perform, observe, or keep any material covenants, agreements, terms
or conditions contained herein on its part to be performed, observed, and kept
(other than any such covenant or agreement for which this Agreement provides an
exclusive remedy and other than the covenants described in ARTICLE XV.E), and
such refusal, neglect or failure (individually and collectively, a "BREACH")
shall continue for a period of * after written notice to cure such Breach to the
Section B Defaulting Party thereof or such longer period as may be demonstrably
necessary to complete the cure of such failure (but such longer period may not
exceed * after the receipt of the notice to cure) (a "SECTION B DEFAULT") then
the other party may upon * notice to the Section B Defaulting Party terminate
this Agreement. If a notice of Breach is delivered and a notice of termination
is not delivered within * after the end of the * cure period, as applicable, the
other party shall be deemed to have waived its right hereunder to terminate for
the particular occurrence of Breach for which the Section B Defaulting Party
received notice. Notwithstanding the foregoing, if United shall permanently
cease operations as a certificated air carrier, Contractor may give written
notice and terminate the Agreement effective immediately after such cessation of
operations.

      C. DEFAULT BY CONTRACTOR

      If Contractor shall refuse, neglect or fail to cure or perform any one of
the following conditions, United may give Contractor written notice to correct
such condition or cure such breach, and if any such condition or breach shall
continue for *, or, in the case of ARTICLE XV.C.1 below, * after notice to
Contractor thereof (a "SECTION C DEFAULT"), then United may terminate this
Agreement upon * written notice to Contractor if:

            1.    Contractor's operations fall below any of the following three
levels for * (in other words, Contractor will not have failed to comply with the
condition in this

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paragraph if it does not fall below any one or more of the following three
levels at any time during a period of *):

                  a.    less than *% Controllable Flight Completion (excluding
cancellations resulting from weather, Air Traffic Control, labor actions, or
from causes solely attributable to United or the station designated ground
service provider);

                  b.    greater than * Mishandled Bags per * passengers
(excluding stations where Contractor does not handle the ramp operations); and

                  c.    less than *% of flight departures are On-Time zero; or

            2.    Contractor knowingly maintains falsified books or records or
submits false reports of a material nature

            If notice of breach is delivered under this Section and a notice of
termination is not delivered within * thereafter, then United shall be deemed to
have waived its right to terminate under this Section for only the particular
occurrence for which Contractor received notice.

      D. SIMILAR AGREEMENTS

      United may terminate this Agreement with * prior notice (i) if Contractor
or any of its affiliates is in breach of the terms of ARTICLE 0 (Operating
Restrictions) or (ii) if Contractor or any of its affiliates is in breach of the
terms of ARTICLE IV.A.2 (Code Share Limitations) (a "SECTION D DEFAULT"), and
Contractor has failed to cure such breach within * after it occurs. If notice of
breach is not provided within * after United becomes aware of such breach,
United shall be deemed to have waived its right to terminate under this Section
for the particular occurrence of breach for which Contractor received notice.

      E. NON-COMPLIANCE WITH STANDARDS

            1.    If Contractor shall refuse, neglect, or fail to perform or
observe the provisions of the United Express Service Standards or Aircraft
Ground Handling Procedures to be performed, observed, and kept with regard to
one or more city pairs under this Agreement, and such refusal, neglect or
failure shall continue for a period of * after United delivers written notice to
cure such default to Contractor thereof (a "SECTION E DEFAULT") then United may
upon * notice to Contractor terminate this Agreement with regard to the city
pairs involved or as to the entire Agreement at United's discretion. United
acknowledges that except as set forth in Appendix B, United will contract with
the Ground Handling Provider and United shall ensure such Ground Handling
Provider complies with the standards set forth by United.

            2.    Contractor warrants that it shall maintain compliance with the
requirements of APPENDIX G for the term of this Agreement. Any failure to
maintain such compliance shall immediately be brought to United's attention
together with

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corrective actions taken by Contractor or a correction action plan. In the event
that United or any governmental agency with jurisdiction over the safety
requirements referenced in APPENDIX G provides written notice to Contractor that
it is not in compliance with such requirements (including any new requirements
published by the government from time to time) or any corrective action plan
related thereto (a "SECTION E SAFETY DEFAULT"), and in the absence of any
immediate threat to the safety of persons or property (a "CRITICAL SAFETY
EVENT"), Contractor shall have * (or such shorter period directed by the
relevant governmental agency) within which to cure such default. Should
Contractor fail to cure the Section E Safety Default within the cure period, or
if there exists a Critical Safety Event, United may, in whole or part, suspend
or terminate this Agreement or any terms or conditions impacted by such failure
or Event, without further liability; but, with reservation of all other rights
and remedies available to United.

      F. CONSEQUENCES OF TERMINATION

      Any termination pursuant to one or more of the provisions of this
Agreement will be without additional liability to the party initiating such
termination and will not be construed so as to relieve either party hereto of
any debts or obligations, monetary or otherwise, to the other party that accrued
hereunder prior to the effective date of such termination. Each party will be
entitled to any and all damages recoverable and remedies under law or in equity
against the other for any breach by the other party of this Agreement,
regardless of whether the non-breaching party elects to terminate this
Agreement;

      G. UNITED'S LIQUIDATED DAMAGES

            1.    If United terminates this Agreement pursuant to the terms of
this ARTICLE XVI, including for Contractor's breach, then Contractor will pay to
United as liquidated damages, and not as a penalty, the *, for each *; provided,
however, that if United secures another carrier to replace Contractor in the
city pairs served by Contractor under this Agreement as a United Express Carrier
at any of the affected stations, or if United determines that United could
replace Contractor without increasing its damages in these city pairs, then the
liquidated damages will be adjusted as follows:

                  a. *

                  b. *

                  c. *

            2.    For purposes of this Article XV.G,

                  a. "*" means the *.

                  b. "*" shall equal *.

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                  c. The amount of the "*" shall equal the sum *.

                  d. "*" means the *.

                  e. "*" means the *.

            3.    If this Agreement is terminated in a manner such that United
shall have the right to damages under this Article XV.G, United shall, in good
faith and in a commercially reasonable manner, secure another carrier to replace
Contractor and take such other reasonable actions so as to mitigate the damages
owed to United hereunder.

            4.    The inclusion of this Article XV.G, is not intended to modify,
waive or restrict Contractor's rights to exercise any and all remedies available
at law or in equity for United's breach of this Agreement.

            5.    The provisions of this Article XV.G, shall not be applicable
to a termination of this Agreement by United pursuant to Article III.C as a
result of Contractor's failure to meet the conditions referenced in Article
XV.C.1; provided, that the exclusion of the applicability of this Article XV.G
to Article XV.C.1 shall not be deemed to be a waiver of any right which United
may have for remedies at law or in equity.

      Not withstanding the above, total liquidated damages shall in no case
exceed $* aggregate.

      H. RESTRICTED ACTIONS

      Contractor shall not take, nor agree to take, any of the following actions
without United's prior written consent: (a) dispose of any of United's assets,
or (b) enter into any agreements with third parties which create liens, claims
or encumbrances on any of United's assets. To the extent that Contractor engages
in, invests in or otherwise is responsible (financially or otherwise) for any
business, activity or operation other than Contractor's United Express Services,
and unless otherwise expressly agreed in writing with United, Contractor will
ensure that the costs and expenses associated with or allocable to such other
businesses, activities or operations are not charged to or recovered from United
in any way.

XVII. ASSIGNMENT, MERGER AND ACQUISITION

      A. ASSIGNMENT

      This Agreement may be terminated by either United or Contractor (the
"FIRST PARTY") if the other party assigns this Agreement or any of its rights,
duties or obligations under this Agreement (except an assignment of the right to
money to be received hereunder and except to any affiliate of Contractor)
without the prior written consent of the First Party. In the event that this
Agreement is assigned in violation of this ARTICLE

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XVI, without such consent having been given in writing, the First Party will
have the right to terminate this Agreement immediately by telegraphic or written
notice to the other party; provided, however, that a corporate reorganization
that does not result in a material change in the ultimate ownership of
Contractor from the ownership that existed prior to such transaction will not be
considered an assignment as long as all of the entities succeeding to any of the
assets or liabilities of Contractor prior to such corporate reorganization agree
to be bound by this Agreement.

      B. MERGER AND ACQUISITION

      In the event Contractor merges with, or if control of Contractor is
acquired by, another air carrier, or a corporation directly or indirectly owning
or controlling or directly or indirectly owned or controlled by another air
carrier (a "HOLDING COMPANY"), or a corporation directly or indirectly owned or
controlled by any such Holding Company, United will have the option to terminate
this Agreement without liability to Contractor. Should United elect not to
terminate the Agreement, the Holding Company shall be obligated to comply and
perform under the full terms of this Agreement.

XVIII. CHANGE OF LAW

      Notwithstanding anything herein to the contrary, in the event there is any
change in the statutes governing the economic regulation of air transportation,
or in the applicable rules, regulations or orders or interpretation of any such
rule, regulation or order of the DOT or other department of the government
having jurisdiction over air transportation, which change or changes materially
affect the rights or obligations of either party hereto under the terms of this
Agreement, then the parties hereto will consult, no later than * after any of
the occurrences described herein, in order to determine what, if any, changes to
this Agreement are necessary or appropriate, including but not limited to the
early termination of this Agreement. If the parties hereto are unable to agree
whether any change or changes to this Agreement are necessary and proper, or as
to the terms of such changes, or whether this Agreement should be terminated in
light of the occurrences described above, and such failure to reach agreement
continues for a period of * following the commencement of the consultations
provided for by this ARTICLE XVIII, then this Agreement may be terminated by
either party immediately upon providing the other party * prior written notice
of such termination. Any such termination will be without additional obligation
or liability to both parties except that such termination will not relieve
either party of any debt or obligation, monetary or otherwise, accruing
hereunder prior to the effective date of termination.

XIX.  TAXES, PERMITS AND LICENSES

      A. TRANSACTION TAXES

      Contractor agrees to indemnify and hold United harmless from any and all
penalties or interest arising out of any real and personal property, sales and
use,

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occupational, gross receipts, value added, income, franchise and any other
taxes, customs, duties, excise taxes, fees, charges or assessments, of any
nature whatsoever imposed by any federal, state, local or foreign government or
taxing authority upon Contractor or United with respect to Contractor's
performance of this Agreement, or to Contractor's operations, or the equipment
contained therein or services provided thereby, or the revenues derived there
from (except for penalties or interests arising out of any tax upon or measured
by United's revenues, net income or any franchise tax). If a claim is made
against United for any penalties or interest referred to above, United will
promptly notify Contractor and request payment of such claim. If requested by
Contractor in writing, United will upon receipt of indemnity and evidence that
Contractor has made adequate provision for the payment of such penalties or
interest, reasonably satisfactory to United, contest the validity, applicability
or amount of such penalties or interest, taxes and other charges at Contractor's
expense. Contractor shall pay United upon demand for all expenses incurred
(including, without limitation, all costs, expenses, losses, legal and
accountants' fees, penalties and interest) in making payment, in protesting or
seeking refund of such penalties or interest.

      B. PAYROLL TAXES

      Contractor acknowledges that it is responsible for and will pay to the
appropriate authority, and will indemnify and hold United harmless from, any and
all federal or state payroll taxes, FICA, unemployment tax, state unemployment
compensation contribution, disability benefit payments, insurance costs and any
other assessments or charges which relate directly or indirectly to the
employment by Contractor of Contractor's employees. United acknowledges that it
is responsible for and will pay to the appropriate authority, and will indemnify
and hold Contractor harmless from, any and all federal or state payroll taxes,
FICA, unemployment tax, state unemployment compensation contribution, disability
benefit payments, insurance costs and any other assessments or charges which
relate directly or indirectly to the employment by United of United's employees.

      C. PERMITS AND LICENSES

      Contractor will comply with all federal, state and local laws, rules and
regulations, will timely obtain and maintain any and all permits, certificates
or licenses necessary for the full and proper conduct of its operations, and
will pay all fees assessed for airport use including but not limited to landing
fees, user airport fees and prorated airport facility fees. Upon sufficient
notice by United, Contractor further agrees to comply with all mandatory
resolutions issued by the Air Transport Association of America ("ATA") and all
non-binding recommended resolutions of the ATA which are adopted by United.

XX.   REVIEW

      During the term of this Agreement United may, at any time at its
discretion, require a joint review of Contractor's aircraft and facilities to
determine whether Contractor's United Express Services are meeting the
requirements of this Agreement. Such review can include an obligation for
Contractor to respond to reasonable

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information requests and to provide relevant documents. This review is not
intended nor shall it be construed to relieve Contractor of its responsibility
to provide a quality and airworthy aircraft that satisfies all FAA regulations.
In addition, upon request by United, within * after each calendar quarter United
and Contractor will meet to review Contractor's United Express Services during
the preceding calendar quarter.

XXI.  JURISDICTION

      With respect to any lawsuit, action, proceeding or claim relating to this
Agreement or any other agreement between United and Contractor (hereinafter, any
such lawsuit, action, proceeding or claim is referred to as a "LAWSUIT"), each
of the parties hereto irrevocably (i) submits to the exclusive jurisdiction of
the courts of the State of Illinois and the United States District Court located
in the City of Chicago, Illinois, and (ii) waives any objection which it may
have at any time to the laying of venue of any Lawsuit brought in any court,
waives any claim that any Lawsuit has been brought in any inconvenient forum,
and further waives the right to object, with respect to any Lawsuit, that such
court does not have jurisdiction over such party. Nothing in this Agreement
precludes either party hereto from bringing Lawsuits in any other jurisdiction
in order to enforce any judgment obtained in any Lawsuit referred to in the
preceding sentence, nor will the bringing of such enforcement Lawsuit in any one
or more jurisdictions preclude the bringing of any enforcement Lawsuit in any
other jurisdiction.

XXII. NOTICES

      Any and all notices, approvals or demands required to be given in writing
by the parties hereto will be sufficient if sent by certified mail, postage
prepaid, overnight delivery by a nationally recognized delivery company or hand
delivery, to United, addressed to:

            United Air Lines, Inc.
            1200 E. Algonquin Road
            Elk Grove Township, Illinois 60007
            Attn:  - Director, United Express
            Fax:  847-364-6728

and to Contractor, addressed to:

            Mesa Air Group, Inc.
            410 N. 44th Street, Suite 700
            Phoenix, Arizona  85008
            Attn: Chief Financial Officer
            Fax:  602-685-4352

            With a copy to:

            Mesa Air Group, Inc.
            410 N. 44th Street, Suite 700

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            Phoenix, Arizona  85008
            Attn:  Vice President & General Counsel
            Fax:  602-685-4352

or to such other addresses in the continental United States as the parties may
specify in writing.

XXIII. APPROVALS AND WAIVERS

      A.    Whenever this Agreement requires the prior approval or consent of
United, Contractor will make a timely request to United therefore and the
consent will be obtained in writing. United will also consider, in its sole
discretion, other reasonable requests individually submitted in writing by
Contractor for United's consent to a waiver of any obligation imposed by this
Agreement.

      B.    United assumes no liability or obligations to Contractor by
providing any waiver, approval, consent or suggestion to Contractor in
connection with this Agreement, or by reason of any neglect, delay or denial of
any request therefor.

      C.    Except as otherwise provided for in this Agreement, no failure by
either party to execute any power reserved to it by this Agreement, or to insist
upon strict compliance by the other party with any obligation or condition
hereunder, and no custom or practice of the parties at variance with the terms
hereof will constitute a waiver of such party's right to demand exact compliance
with any of the terms herein. Waiver by such party of any particular default by
the other party will not affect or impair such party's rights with respect to
any subsequent default of the same, similar or different nature, nor will any
delay, forbearance or omission of such party to exercise any power or right
arising out of any breach or default by the other party of any of the terms or
provisions hereof will affect or impair such party's right to exercise the same
or constitute a waiver by such party of any right hereunder or the right to
declare any subsequent breach or default and to terminate this Agreement prior
to the expiration of its term. Subsequent acceptance by such party of any
payments due to it hereunder will not be deemed to be a waiver by such party of
any preceding breach by the other party of any terms, covenants or conditions of
this Agreement.

XXIV. GOVERNING LAW

      This Agreement and any dispute arising hereunder, including any action in
tort, will be governed by and construed and enforced in accordance with the
internal laws of the State of Illinois.

XXV.  CUMULATIVE REMEDIES

      Unless and to the extent as may be otherwise expressly stated in this
Agreement, no right or remedy conferred upon or reserved to Contractor or United
by this Agreement is intended to be, nor shall be deemed, exclusive of any other
right or remedy herein or by law or equity provided or permitted, but each will
be cumulative of every other right or remedy.

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<PAGE>

XXVI. FORCE MAJEURE

      Neither party shall be liable for delays or failure in performance
hereunder caused by acts of God, acts of terrorism or hostilities, war, strike,
labor dispute, work stoppage, fire, act of government, court order or any other
cause, whether similar or dissimilar, individually or collectively, "Force
Majeure" events beyond the control of Contractor or United. At any time
following a Force Majeure event, United retains the right to reduce *. After *
from the date of the qualifying Force Majeure event, margins shall return to the
originally scheduled amount. Should such a Force Majeure event occur and Mesa's
margins be reduced, United will agree to extend the term of the Agreement by *
from the date of original termination for *.

XXVII. SEVERABILITY AND CONSTRUCTION

      A.    Each term or provision of this Agreement will be considered
severable, and if, for any reason, any such term or provision herein is
determined to be invalid and contrary to, or in conflict with, any existing or
future law or regulation by a court or agency having valid jurisdiction, such
will not impair the operation of, or have any other effect upon, other terms or
provisions of this Agreement as may remain otherwise enforceable, and the latter
will continue to be given full force and effect and bind the parties hereto, and
said invalid terms or provisions will be deemed not to be a part of this
Agreement.

      B.    The captions appearing in this Agreement have been inserted for
convenience only and will not control, define, limit, enlarge or affect the
meaning of this Agreement or any of its provisions.

XXVIII. ACKNOWLEDGMENT

      A.    Each party expressly disclaims the making of, and acknowledges that
it has not received, any warranty or guarantee, express or implied, as to the
potential volume, profits or success of the business venture contemplated by
this Agreement.

      B.    Each party acknowledges that it has received, read and understood
this Agreement and the Appendices hereto.

XXIX. CONFIDENTIALITY

      A.    Except as required by law (including federal or state securities
laws or regulations) or by the rules and regulations of any stock exchange or
association on which securities of either party or any of its affiliates are
traded, or in any proceeding to enforce the provisions of this Agreement, United
and Contractor hereby agree not to publicize or disclose to any third party the
terms or conditions of this Agreement or any of the Related Agreements without
the prior written consent of the other parties thereto.

      B.    Except as required by law (including federal or state securities
laws or regulations) or by the rules and regulations of any stock exchange or
association on

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which securities of either party or any of its affiliates are traded, or in any
proceeding to enforce the provisions of this Agreement, United and Contractor
hereby agree not to disclose to any third party any confidential information or
data, both oral and written, received from the other and designated as such by
the other without the prior written consent of the party providing such
confidential information or data.

      C. If either party is served with a subpoena or other process requiring
the production or disclosure of any of the agreements, information or data
described in ARTICLE XXVIII.A or ARTICLE XXVIII.B, then the party receiving such
subpoena or other process, before complying with such subpoena or other process,
shall immediately notify the other party of same and permit said other party a
reasonable period of time to intervene and contest disclosure or production.

      D. Upon termination of this Agreement, each party must return to the other
any confidential information or data received from the other and designated as
such by the party providing such confidential information or data which is still
in the recipient's possession or control.

      XXX. RELATED AND THIRD PARTY AGREEMENTS

      United and Contractor shall enter into agreements listed below in this
ARTICLE XXX (the "RELATED AGREEMENTS"). All such Related Agreements will
automatically terminate contemporaneously with the termination of this Agreement
unless termination shall otherwise be effected in accordance with the terms of
such Related Agreements.

            a. Interline/Space Available Employee and Eligible Travel Agreement
(United Contract No. 163648).

            b. Emergency Response Services Agreement. (United Contract No.
163649)

            c. United Express/Positive Space Employee Travel Agreement (United
Contract No. 163467)

XXXI. ENTIRE AGREEMENT

      This Agreement, together with the Related Agreements, including any
Appendices, Attachments and Exhibits attached hereto and thereto, contains the
complete, final and exclusive agreement between the parties hereto with respect
to the subject matter hereof, and supersedes all previous agreements and
understandings, oral and written, with respect to such specific matter and said
Agreement will not be modified, amended or terminated by mutual agreement or in
any manner except by an instrument in writing, executed by the parties hereto.

XXXII. REFERENCES TO TIME PERIODS

      All references to the term "YEAR" in this Agreement shall mean contract
year unless specifically stated otherwise. All references to the term "MONTH" in
this

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Agreement shall mean a full calendar month; provided that if the Effective
Date shall be other than the first day of a calendar month, then the first
"MONTH" of this Agreement shall commence on the Effective Date and end on the
last day of the month in which the Effective Date occurs. All references to the
term "QUARTER" in this Agreement shall mean a calendar quarter; provided that
the first "QUARTER" of this Agreement shall commence on the Effective Date and
terminate on the last day of the calendar quarter in which the Effective Date
occurs. Calendar quarters shall be January 1 through March 31, April 1 through
June 30, July 1 through September 30, and October 1 through December 31.

      IN WITNESS WHEREOF, the parties hereto have by their duly authorized
officers caused this Agreement to be entered into and signed as of the day and
year first above written.

MESA AIR GROUP, INC.                                  UNITED AIR LINES, INC.

By:                                                   By:
   ---------------------------                            ----------------------

Name:                                                 Name: Greg T. Taylor
      ------------------------

Title:                                                Title: Sr. Vice President
      ------------------------
Planning
          --------------------
Date:                                                  Date:
        ----------------------                               -------------------

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<PAGE>

                                   APPENDIX A

             UNITED MARKS & AIRCRAFT USED IN UNITED EXPRESS SERVICE

UNITED MARKS

UNITED EXPRESS

Stylized UNITED EXPRESS lettering

UNITED EXPRESS colors

Stylized letters UA

Uniform Design

Aircraft exterior and interior color decor

Other United Marks approved by United for use by Contractor

                                   *********
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<PAGE>

                                   APPENDIX B

                         CITY PAIRS AND GROUND HANDLING

GROUND HANDLING***

<TABLE>
<CAPTION>
         CUSTOMER
        SERVICE/TICKET       CUSTOMER           GROUND
          COUNTER*        SERVICE/GATES**     HANDLING/RAMP     RECEIPT/DISPATCH
          --------        ---------------     -------------     ----------------
<S>    <C>                <C>                 <C>               <C>
ASE    Air Wisconsin          Air Wisconsin     Air Wisconsin      Air Wisconsin
COS       United                  United            United              United
CPR       SkyWest                SkyWest           SkyWest             SkyWest
DEN       United                Contractor       Contractor          Contractor
DRO     Contractor              Contractor       Contractor          Contractor
EGE     Contractor              Contractor       Contractor          Contractor
GJT       SkyWest                SkyWest         Contractor          Contractor
GUC     Contractor              Contractor       Contractor          Contractor
HDN     Contractor              Contractor       Contractor          Contractor
JAC     Contractor              Contractor       Contractor          Contractor
RAP       SkyWest                SkyWest           SkyWest             SkyWest
SAF     Contractor              Contractor       Contractor          Contractor
</TABLE>

*     Includes Small Package Dispatch (SPD)(TM) service.

**    Any unique ground equipment which is needed to service Contractor's
      aircraft will be provided by Contractor.

***   For purposes of the table above, Contractor, United, or a designated third
      party as applicable, shall provide or cause to be provided the designated
      services as shown in the table.

                                                                              59
<PAGE>

                                   APPENDIX C

                           CONTRACTOR SUPPORT SERVICES

      At all locations not set forth on APPENDIX B where Contractor operates
scheduled air transportation as a United Express Carrier (i.e., Contractor
Locations), Contractor will provide the following minimum services:

      (a)   Contractor's employees shall be fully qualified personnel to handle
Contractor's operations.

      (b)   Posting of signage and decor appointment as specified by United.

      (c)   Adequate check-in areas including passenger waiting room facilities.

      (d)   Security facilities, personnel and passenger screening procedures as
are required by applicable orders, rules and regulations of the FAA or other
government agencies and those standards specified by United.

      (e)   Capability of operating Automation Equipment (Apollo Services) for
the purpose of providing passenger processing and operations in the
configuration and under the procedures specified by United.

      (f)   Baggage handling, delivery and tracing in accordance with procedures
issued by United.

                                                                              60
<PAGE>

                                   APPENDIX D

      REIMBURSEMENT CATEGORIES & RATES PAYABLE TO CONTRACTOR

                                    * ******

      PASS-THROUGH UNIT RATES

                                     ********

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<PAGE>

                                                            DEFINITIONS

      FLYING COST DESCRIPTIONS

                                        DESCRIPTIONS OF CARRIER CONTROLLED COSTS

        * ******

                                              DESCRIPTIONS OF PASS-THROUGH COSTS

         ******

      GROUND HANDLING COST DESCRIPTIONS

                                        DESCRIPTIONS OF CARRIER CONTROLLED COSTS

        ******

                                        CATEGORIES OF PASS-THROUGH COSTS

        ******
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                                                                              62
<PAGE>

                                   APPENDIX E

                    INCENTIVE PROGRAM & 2003 OPERATING GOALS

                            * *****

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                                                                              63
<PAGE>


                                   APPENDIX F

                               LIABILITY INSURANCE

                                   Issued by:

                                 Date of Issue:

THIS IS TO CERTIFY TO: UNITED AIR LINES, INC.

that Insurers are providing 100% of the following Aircraft Hull & Liability
Insurances:

NAME INSURED:

PERIOD OF INSURANCE:

INSURERS:

POLICY NUMBER:

GEOGRAPHICAL LIMITS:                      Worldwide Hull War limited to Western
                                          Hemisphere with commercial
                                          insurance; territorial limitations
                                          not defined in FAA policy.

AIRCRAFT INSURED:                          All aircraft owned or operated by the
                                           Named Insured.

DESCRIPTION OF COVERAGE:                   Comprehensive Airline Liability
                                           Insurance, Contractual Liability,
                                           including Aircraft Liability,
                                           Passenger , Liability War Risk should
                                           the FAA stop carrying it, including
                                           both Passengers and Other Third
                                           Parties, Cargo Liability and
                                           Comprehensive General Liability,
                                           including Hangarkeepers, Excess
                                           Automobile,Host Liquor Liability,
                                           Personal Injury, and Products
                                           Liability/Completed Operations
                                           coverage.  All Risk Physical Damage
                                           Hull Coverage

LIMIT OF LIABILITY                         Combined Single Limits to be
                                           specified consistent with ARTICLE
                                           III.1. Aircraft Hull All Risk per the
                                           Agreed Value,or up to $* per added
                                           aircraft.

SPECIAL PROVISIONS:

The insurers agree that coverage under this policy, by formal endorsement or
otherwise, is extended to insure all relevant terms and conditions of the United
Express Agreement, subject to the policy terms, conditions, limitations and
exclusions, between Contractor and United concerning Contractor's Aircraft,
(hereinafter referred to as "Agreement"), including, inter alia:

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<PAGE>

      1.    The Insurers accept and insure the Indemnity and Hold Harmless
provisions of the Agreement, subject to the policy terms, conditions,
limitations and exclusions.

      2.    United, its affiliates, and their respective directors, officers,
employees, agents and indemnitees are named as additional insureds to the extent
of the liability assumed by Contractor under the Agreement, subject to the
policy terms, conditions, limitations and exclusions.

      3.    The Insurers agree that United shall not be liable for, nor have any
obligation to pay any premium due hereunder, and Insurers further agree that
they shall not offset or counter-claim any unpaid premium against the interest
of United.

      4.    The Insurers agree that all provisions of this insurance, except for
the limits of liability, shall operate in the same manner as if there were a
separate policy issued to each Insured.

      5.    The Insurers agree that this insurance shall be primary insurance
without any right of contribution from any other insurance which is carried by
United.

      6.    The Insurers agree to waive their rights of subrogation against
United, its officers, directors, employees and indemnitees, to the extent the
Contractor has waived and released its rights under the Agreement.

      7.    The Insurers agree that as respects the interest of United, its
directors, officers, employees and indemnitees, this insurance shall not be
invalidated by any action or inaction of the Contractor, its officers, directors
or employees, and shall insure United, its directors, officers, employees and
indemnitees regardless of any breach or violation of any warranties,
declarations, conditions or exclusions contained in the policy by the
Contractor, its officers, directors or employees.

      8.    In the event of cancellation for any reason whatever or if any
change of a restrictive nature is made affecting the insurance certified
hereunder, or if this insurance is allowed to lapse due to non-payment of
premium, such cancellation, change or lapse shall not be effective as to United,
its directors, officers, employees and indemnitees for at least * (* in the case
of non-payment of premiums, * notice of cancellation with respect to war risk)
after written notice by registered mail of such cancellation, change or lapse
shall have been mailed to United.

      9.    With respect to claims or causes of action in favor of United or its
directors, officers, agents or employees, they shall not be considered as
additional insured thereunder.

DATED:
       ----------------------

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<PAGE>

AUTHORIZED REPRESENTATIVE:
                          --------------------------

                                   APPENDIX G

        SAFETY STANDARDS FOR UNITED AIRLINES AND UNITED EXPRESS CARRIERS

We have developed common safety standards to evaluate and effectively manage
safety. We will commit to:

Contractor represents and warrants that it is in compliance with the U.S.
Department of Defense (DoD) Quality and Safety Requirements (and any other
applicable governmental quality or safety requirement) and continues to comply
with all applicable Federal Aviation Regulations (F.A.R.). Contractor further
warrants that it shall maintain compliance with these requirements for the term
of this Agreement. Additional safety reviews and audits may be required at
United's discretion and Contractor shall cooperate with all such reviews and
audits.

In addition, Contractor agrees to the following:

- -     Mutual support of one another in implementing these standards by sharing
      safety data, information and expertise.

- -     Quality maintenance and operations training programs

- -     A carrier internal evaluation program to monitor key safety issues,
      including maintenance practices, required inspection items, technical
      document control, dangerous goods handling, training records and
      qualifications for all personnel.

- -     Quality programs to manage outsourcing of services.

- -     A formalized maintenance quality assurance program.

- -     Implementation of a program to rectify FAA inspection findings.

- -     Presence of a voluntary disclosure program.

- -     Formal process to routinely bring safety and compliance issues to
      the attention of carrier's senior management.

- -     Anonymous safety hazard reporting system.

- -     A Senior Management policy statement supporting open safety
      reporting by employees.

- -     Director of Safety, reporting to the highest levels of management,
      overseeing the carrier's safety programs.

- -     Process for managing required corrective actions from FAA and
      internal audit program as well as employee disclosure.

- -     Ongoing flight safety education/feedback program.

- -     Ground safety program in airport operating areas.

- -     Incident investigation process that includes accountability,
      recommendations and actions taken.

- -     Establishment and maintenance of emergency response procedures and
      manual.

                                                                        66
<PAGE>

      -     Participation in UAL/industry safety information exchange forum.

                                                                              67
<PAGE>

                                   APPENDIX H

                        UNITED EXPRESS SERVICE STANDARDS

      These Service Standards are meant to provide an overview for United
Express carriers of the service expectations established by United Airlines for
the day-to-day delivery of United's product. This document is not intended to be
an all inclusive manual of regulations, but to instead serve as a simple,
helpful source of information. The Service Standards outlined herein may change
from time to time, subject to the needs of the operation and our product
delivery. Any changes to these standards are at the sole discretion of United
Airlines and are not subject to contractual negotiations. Provided, however, the
parties have agreed to specific performance goals in this Agreement and nothing
shall be altered or changed that otherwise affects the economics of the
Agreement.

      It is the responsibility of each United Express carrier to maintain an
adequate number of employees at each location and support group or department
and to operate in a safe and reliable manner, which serves the customer at the
levels of service outlined by these Service Standards.

I.    CUSTOMER SERVICE

Uniforms: United Express employees are required to wear the United designated
uniform for Customer Service personnel. There is to be no deviation from this
uniform and it is to be worn at all times while on duty. Employees in uniform,
on or off duty are not allowed to drink intoxicating beverages, give the
appearance of being intoxicated or visit any establishment whose primary purpose
is to dispense liquor (e.g. bars, saloons, cocktail lounges, liquor stores).
"Uniform" refers to any uniform apparel bearing the United brand or insignia, or
which can be in any way identified with United Airlines or United Express.
Because the actions and appearance of employees influence, to a considerable
extent, the public's opinion of the United brand, uniformed employees must be
mindful of this and conduct themselves accordingly. For complete information on
the uniform and accessory items, review the Customer Service Uniform Appearance
Guidelines.

Training: Each United Express carrier is responsible to train all Customer
Service Representative (CSR) employees, including employees of another carrier
who may be contracted to perform these duties, using the same training modules
and computer assisted training provided by United Airlines. This training will
include, but is not limited to, all functional aspects for customer handling at
the ticket counter, gate, or baggage service.

      -     United Airlines will provide the necessary "Train the Trainer"
            support, but it is the responsibility of each United Express carrier
            to maintain trainer proficiency, knowledge and skill level.

      -     Each new hire CSR, or newly assigned CSR, must receive formal United
            Express customer service training as soon as possible, but not later
            than 30 days after the

                                                                              68
<PAGE>

            date of employment or date of assignment. In either case, training
            must be specific to the employee's job function and task assignment.
            An employee may not work in an area in which he or she has not been
            properly trained.

      -     Each CSR must maintain proficiency in product knowledge, delivery
            and skill level.

      -     Each United Express carrier may add to the United training
            curriculum to meet its individual carrier needs, but it may not
            delete any portion of the United designated curriculum without
            written approval by United Airlines.

      -     All CSRs must complete TL17/17 lessons each week within 7 days of
            issuance.

Service Delivery: In the most basic interaction with the customer, United's
service standards encompass the foundation of service, which is: 1) Greet the
customer. 2) Use the customer's name. 3) Listen to the customers and respond to
their needs. 4) Give direction to the next step. 5) Acknowledge the customer's
importance to United and thank them for flying United Express.

Goals:

      -     Lobby line wait time: 10 minutes

      -     Jet bridge delivery time: 1 minute

      -     Meet the inbound aircraft (non-jet bridge locations) and open
            aircraft passenger door within 2 minutes of block time.

Service Tools: Customer Problem Resolution, or CPR, was created as a means to
provide customer service employees with the ability to resolve customer problems
on the spot, as they occur. CPR may include certificates for a free drink, a
credit of Mileage Plus miles to a customer's Mileage Plus account, or a Travel
Certificate to be used towards the purchase of future airline tickets. Other
tools may also include accommodation vouchers for hotels, cab/bus, or meals. It
is the responsibility of the United Express carrier to use and manage these
tools within United Airlines guidelines. The United Express carrier is
accountable for the safeguarding and appropriate use of these very important
customer tools. The United Express carriers are responsible for cost associated
with any accommodation vouchers written as a result of Contractor's failure to
complete a flight within 3 hours of scheduled completion time as a result of
mechanical issues or crew delays.

Flight Close Out: All flights must be closed out in Apollo/ACI immediately after
departure. This includes making the appropriate PB, PFS and PD entries. All
passenger counts, including revenue and non-revenue passengers, denied
boardings, as well as an accounting of any bags held off due to weight/space
restrictions, should be noted in the open comments field of the flight close out
message. Flight close out must be completed within 10 minutes of flight
departure.

                                                                              69
<PAGE>

Flight Information (FLIFO): All flights must be updated with OUT/OFF/ON/IN times
within ten (10) minutes of actual occurrence to ensure accurate information to
customers and to employees making operational decisions. ETAs and ETDs must also
be entered within ten (10) minutes of the scheduled departure/arrival, and at
every 10 minute interval thereafter for ongoing or rolling delayed flights.

Customer Service Supplies: Each carrier must maintain an adequate amount of
Customer Service supplies to conduct its day-to-day business operation. Each
United Exprss carrier will use United Airlines designated supplies and vendors
and is responsible for the purchase of those supplies, except where United
handles that carrier.

II. RAMP SERVICE

Uniforms: United Express employees are required to wear the United designated
uniform for Ramp Service personnel. There is to be no deviation from this
uniform and it is to be worn at all times while on duty. Employees in uniform,
on or off duty are not allowed to drink intoxicating beverages, give the
appearance of being intoxicated or visit any establishment whose primary purpose
is to dispense liquor (e.g. bars, saloons, cocktail lounges, liquor stores).
"Uniform" refers to any uniform apparel bearing the United brand or insignia, or
which can be in any way identified with United Airlines or United Express.
Because the actions and appearance of employees influence, to a considerable
extent, the public's opinion of the United brand, uniformed employees must be
mindful of this and conduct themselves accordingly.

      -     In a line station, employees may combine pieces of the customer
            service uniform with pieces of the ramp uniform as long as the shirt
            or blouse is either the customer service shirt or blouse, or the
            ramp knit shirt.

      -     In a hub station, ramp personal must wear combinations of the United
            ramp uniform only.

For a review of the Ramp Service uniform, review the Ramp Service Uniform Guide.

Training: It is the responsibility of each United Express carrier to train its
Ramp Service employees, including employees of another carrier who may be
contracted to perform these duties. This training will include, but is not
limited to, load planning, baggage handling, ramp safety and security, ramp
driving, aircraft familiarization, aircraft servicing, receipt and dispatch of
aircraft, baggage make-up, baggage transfer, claim area delivery, baggage
scanning, live animal handling, dangerous goods, aircraft de-icing, Small
Package Delivery ("SPD") and mail handling.

      -     Each new hire, or newly assigned Ramp Service employee, must receive
            formalized training as soon as possible, but not later than 30 days
            after his or her date of employment or date of assignment.

                                                                              70
<PAGE>

      -     Each Ramp Service employee must maintain product and delivery
            proficiency, knowledge and skill level.

Baggage Transfer: In a Hub or connecting station, each United Express carrier is
responsible for the transfer of all baggage/mail/cargo to United and other
airlines. Transferred bags are delivered as follows:

      -     Carry-on (security checked) bags placed in the pit/hold, are to be
            removed and delivered to the customers immediately at planeside.

      -     `City Bags' are to be delivered directly to the baggage claim area.

      -     `Hot Bags', whose window of time is determined on a local level by
            United Airlines, are to be delivered to the connecting flight at the
            gate. The gate drop point is to be determined locally by United.

      -     `Cold Bags', bags outside the Hot Bag window, are to be delivered to
            the designated sorter belt or transfer point.

      -     `Interline Bags' are to be delivered to the designated interline
            drop point.

Goals:

      -     Claim Area Baggage Delivery: Priority Bags delivered First; Last
            City bag delivered within 20 minutes of flight Block time

      -     Scanning: [97%] scanning rate uploaded within 10 minutes of
            departure of each flight

      -     MBTA (Mishandled Baggage Trend Analysis or the ratio of passengers
            mishandled per 1000 boarded.): Rates are determined in conjunction
            with United's corporate goal on an annual basis

      -     Message or meter to downline station with the transfer bag loading
            placements referred to as XBUE (Express Baggage loading message):
            Sent within 10 minutes of the departure of each flight

      -     Baggage Loading Audits:[ 95%] compliance

Ground Handling: United Express carriers are responsible for obtaining all
applicable federal, state, and local regulatory approvals for conducting
business at each location from which they operate. In addition, carriers will
ensure their ground handling procedures will satisfy all federal, state, and
local regulations. Each carrier will provide United with a copy of its station
and ground handling procedures.

From time to time, it may become necessary for United to ground handle United
Express, or on very limited occasions for United Express carriers to ground
handle United. It is the responsibility of the operating carrier to train the
ground handling carrier in all aspects of the required work to be performed.
Such work may include, but is not limited to:

                                                                              71
<PAGE>

      -     Receipt and dispatch of aircraft, ramp safety, ramp driving,
            aircraft differences, aircraft servicing (potable water and
            lavatory), aircraft cleaning, towing, baggage handling, baggage
            loading and transferring, live animal handling, deicing, weight and
            balance, and dangerous goods.

Required training may be done one-on-one, group, or train-the-trainer. In the
case of train-the-trainer, it is then the responsibility of the ground-handling
carrier to train other additional personnel. The ground handling carrier will
ensure that proper training records are initiated, retained and current.

The ground-handling carrier will ensure that all required licenses and logs are
maintained and retained as necessary.

Each carrier is responsible for acquiring its required licenses.

The ground handling carrier will cooperate with any required governmental or
corporate inspection or audit, and will promptly correct any deficiencies found.

The operating carrier is responsible for managing all performance related
criteria. However, the ground handling carrier will make every "best faith"
effort to ensure that all performance requirements are met.

The ground handling carrier agrees to keep the operating carrier informed of any
deficiencies, irregularities and breach of procedures or problems of any type
that may negatively impact the operating carrier or its operating certificate.

The ground handling carrier will immediately advise the operating carrier of any
material change in space, parking location, manpower, or any other shortcoming
that may impact either carrier's operation or costs.

The ground handling carrier will use its own ground equipment wherever possible.

III. IN FLIGHT

Uniforms: United Express Flight Attendants are required to wear the United
designated uniform. There is to be no deviation from this uniform and it is to
be worn at all times while on duty. Employees in uniform, on or off duty are not
allowed to drink intoxicating beverages, give the appearance of being
intoxicated or visit any establishment whose primary purpose is to dispense
liquor (e.g. bars, saloons, cocktail lounges, liquor stores). "Uniform" refers
to any uniform apparel bearing the United brand or insignia, or which can be in
any way identified with United Airlines or United Express. Because the actions
and appearance of employees influence, to a considerable extent, the public's
opinion of the United brand, uniformed employees must be mindful of this and
conduct themselves accordingly. For complete information on the uniform and
accessory items, review the Customer Service Uniform Appearance Guidelines.

                                                                              72
<PAGE>

Training: It is the responsibility of each United Express carrier to train its
own Flight Attendants in accordance with its FAA-certified program.

In Flight Service:

      -     Wherever possible, snack and beverage items should be consistent
            with the products served by United Airlines. United acknowledges
            that Contractor has priced its rates for inflight service on soda
            and pretzel-like snacks. Any changes to this level will require an
            adjustment to the catering cost category.

      -     All in-flight service items, including but not limited to napkins,
            cups, and food items, if branded, shall be branded as United
            Express. Contractor may, with the prominent use of the United
            Express logo, also indicate that the flight is operated by
            Contractor.

      -     Each United Express aircraft will be supplied by United with an
            adequate supply of Hemispheres and SkyMall Magazines. United Express
            carrier must place these two magazines in the designated seat pocket
            of each seat. Hemisphere and SkyMall magazines are the only
            magazines authorized in the seat pockets. Exceptions must be
            approved in writing by United.

      -     In all on board announcements, it is appropriate to announce the
            United Express carrier's name, but the name "United Express" must be
            included. For example, "On behalf of Mesa Airlines, we would like to
            thank you for flying United Express today."

      -     While a contracted carrier provides basic announcements, United may
            request that the United Express carrier make promotional
            announcements on behalf of United from time to time. Such requests
            will be honored and executed by the United Express carrier.

IV. OPERATIONAL GOALS

There are four (4) primary operational Goals that each United Express carrier is
expected to achieve: On-time-zero; Completion (less Weather/ATC/UA Requested
Cancellations); MBTA, and Repurchase Intent. These goals are set at the
beginning of each calendar year and may be adjusted year over year. In addition,
other target goals may be added to help improve the operation, such as: STAR,
Arrival: 14, Block Time, etc. It is expected that each carrier will use
commercially reasonable, but diligent, efforts to achieve these goals, whether
contractual or otherwise. Such goals may be changed or added to by United, as
operational needs demand.

      -     Controllable Completion: The Controllable flight completion goal
            shall be defined as to exclude all cancellations due to weather, ATC
            restrictions, acts or omissions caused by United or its employees or
            agents, cancellations resulting from emergency airworthiness
            directives, and requests made by United to cancel flights to free up
            ATC slots. Actual Controllable Completion is the actual number of
            completed departures / (divided by) (Total scheduled departures -
            (less)

                                                                              73
<PAGE>

            cancels due to weather ATC, air worthiness directives, acts of
            omissions of United and United Requested Cancels )

      -     On Time Zero: The On Time Zero goal is the carriers system wide On
            Time Performance. Actual On Time Zero is the number of On Time
            Departures divided by the Total Scheduled Departures.

      -     Mishandled Baggage-MBTA: (See above definition)

Repurchase Intent (RPI) - Marketrak: United Airlines receives feedback from our
customers through the "Marketrak" survey program on their satisfaction in flying
United Express flights. Each United Express carrier must participate fully in
this program. Ratings for RPI are not compared between carriers. Each carrier's
individual rating is compared to its own historical performance.

Repurchase Intent (RPI): RPI is based upon customer response to their intent to
repurchase or use again United Express services as reflected in the Marketrak
survey. Actual RPI shall be determined by the percentage of customer who
responded on customer surveys that they would "Definitely" or "Most Likely" buy
another ticket on United or United Express.

V. MISCELLANEOUS

ACARS: Each United Express carrier is to use an ACARS system on all United
Express flights for the purpose of providing timely and accurate Flight

Information (FLIFO).

Signage: It is the responsibility of each United Express carrier to provide
appropriate and adequate brand signage, which is designated and approved by
United Airlines. Brand name(s) to be used on signage is as follows:

      -     United Handled City: All signage will reflect the United Airlines
            brand. United Express signs may be used at the departure gate for
            United Express flights at the discretion of United.

      -     Shared United/United Express Handled City: All signage at the ticket
            counter will reflect the United Airlines brand. Signage at the
            United Express handled gate(s) will reflect the United Express
            brand. Signage on the approach to the airport and on the curb to the
            airport terminal will primarily reflect United Airlines, but may, if
            appropriate, reflect United Express as well.

      -     United Express Handled City: All signage will reflect the United
            Express brand.

It is the responsibility of the United Express carrier to ensure that all
federally mandated signage is in place in accordance with regulations.

                                                                              74
<PAGE>

Small Package Dispatch (SPD): United Express carriers will participate in
United's SPD program, accepting SPD shipments at the ticket counter up to 1 hour
prior to the departure of each flight and returning SPD shipments to the
designated delivery point within 30 minutes of the arrival of each flight.

      Carrier will accomplish all necessary input of data into United AFIS
system, within required input standards of the following:

    BSPD      Build Air Waybill - SPD       Within 1 hour of acceptance

    RAFT      Shipment on hand - SPD        Within 30 minutes of flight arrival

U.S. Mail: United Express carriers will participate with United in the
transportation of U.S. Mail in accordance with applicable guidelines. Each
United Express carrier will work with United in obtaining USPS Air System
Contracts for United designated market.

      Effective 9/28/2003 carriers participating in the CAIR 2003 contract will
be required to scan individual pieces of mail at the following touch points:
possession, load, transfer (if applicable) and delivery. The scanning will be
required for payment and will be the basis for measuring performance.
Performance is by class of mail:

            First Class Mail                    92%
            Priority Mail                       95%
            Express Mail                        98%

Station Operations Center (SOC) - Hub Locations: Each United Express carrier
will provide adequate staffing in the United Airlines SOC of each designated hub
city. Such Staffing will be provided during all normal hours of operation.

                                                                              75
<PAGE>
                  REMAIN-OVERNIGHT ("RON") CLEANING STANDARDS
                        WORK TASKS AND STANDARDS MATRIX

<TABLE>
<CAPTION>
       AREA - OVERNIGHT CLEAN                         TASK - OVERNIGHT CLEAN                             APPEARANCE
- ------------------------------------- ------------------------------------------------------- --------------------------------
<S>                                   <C>                                                     <C>
FLIGHT DECK                           -   Remove and replace trash bag                        -   Windshield and glare
                                      -   Vacuum the floor and seats                              shield are clear
                                      -   Damp mop non-carpeted floor                         -   Floors, seats,
                                      -   Damp wipe inside and outside of                         dashboard and center console
                                          windshield and glare shield with water                  free of dust and debris
                                      -   Remove debris                                       -   New trash bag
                                      -   Spot clean ceiling/cockpit door                     -   Clean cup
                                                                                                  holders,ceilings,doors


GALLEY                                -   Floor - vacuum and/or mop                           -   Free of dirt and debris
                                      -   Remove and dispose of all trash and                 -   Hard surface floors and
                                          leftover service items from storage                     drains are dry
                                          areas.
                                      -   Wash all hard surfaces in galleys:

                                                WATER          ALL-PURPOSE CLEANER             DISINFECTANT

                                                Coffee Makers      Floors, walls, counters        Mist
                                                                   Storage areas                  Counters & Floors, trash
                                                                   Drawers                        receptacles &
                                                                                                  compartments

SEATS/JUMPSEATS                       -   Brush crumbs and debris from seat area and floor    -   Seat area is free of
 (Includes all seat parts, i.e., seat -   Remove dirt and debris from personal property areas     dirt and debris
pocket, tray tables, etc.)            -   Damp wipe phones                                    -   Clean personal property
                                      -   Wipe arm and shroud of video screen                     areas
                                      -   Cross seat belts                                    -   Seat belts are crossed
                                      -   Wash tables with cleaner, dry & disinfect           -   Tables and hard
                                      -   Cross seat belts                                        surfaces are free of dirt and
                                      -   Seat back pocket:  CORRECT SAFETY CARD placed           residue
                                          first in seat back pocket. Replace missing or       -   Materials are orderly
                                          damaged seat back pocket materials.                     and in like new condition
                                      -   Straighten contents                                     with CORRECT SAFETY CARD in
                                                                                                  front

                LAVATORY              -   Wash all hard surfaces with cleaners                -   Free of dirt, dust and
                                          and mist with disinfectant                              debris floor to ceiling
                                      -   Scrub and clean toilet bowl with                    -   Mirror is clean and
                                          brush and cleaner and reset splash pan                  streak free
                                      -   Wipe all mirrors with glass cleaner                 -   New odor end (if nec.)
                                      -   Empty trash, wash container & compartment           -   Trash compartment and
                                          with cleaner, mist with disinfectant and                chute free of debris and door
                                          latch door                                              is latched
                                      -   Replace odor end if necessary (fragrance missing)
                                      -   Mop floor

              OVERHEAD BINS           -   Remove all debris                                   -   Free of debris
                                      -   Damp wipe exterior surfaces                         -   Clean exterior surfaces

WALLS, CEILINGS, AIRCRAFT DOOR,       -   Damp wipe/dry  with all-purpose cleaner             -   Clean, visible surfaces
CONSOLES, WINDOWS

        BLANKETS AND PILLOWCASES      -   Clean in plastic or neatly folded                   -   Clean
</TABLE>

                                                                              76
<PAGE>



                                   APPENDIX I

                            Intentionally left blank.

                                                                              77
<PAGE>

                                   APPENDIX J

OFFICER POSITION'S ENTITLED TO POSITIVE SPACE LEISURE TRAVEL ON CONTRACTOR'S
UNITED EXPRESS FLIGHTS

* ****

- ----------
* Confidential Treatment Requested

                                                                              78
<PAGE>

                                   APPENDIX K

                       REIMBURSEMENT FOR MANDATED CHANGES

GOVERNMENTAL REQUIREMENTS. If any governmental rule, order, regulation, or
requirement affecting: (i) all aircraft similarly equipped as the Aircraft
referenced in Appendix B; or (ii) all airlines flying similar equipment as the
Aircraft referenced in Appendix B (a "MANDATED CHANGE" or "MC"), results in an
incremental increase in any of the Carrier Controlled Costs, per Aircraft, then
United shall bear a part (the "UNITED MC COST") of the per Aircraft cost of
implementing the MC (the "MC COST"), where the MC is issued after the Effective
Date and performed during the Term of this Agreement, but only to the extent as
computed as follows, and where:

      1.    If MC Cost is equal to or less than $*, Contractor pays *% of MC
            Cost, and the formula below is inapplicable.

      2.    If MC Cost is equal to or greater than $*, the United MC Cost shall
            be determined by applying the formula below, where C shall be equal
            to the MC Cost * $*.

      3.    If MC Cost is more than $*, but less than $*, the United MC Cost
            shall be determined by (a) first applying the formula below, where C
            shall be equal to the MC Cost minus $*, then (b) multiplying this
            formula-derived * by the unadjusted MC Cost (stated in $*) and
            dividing by *, to yield the final United MC Cost

                                      *****

      *     is (*) of the total number of (*);

      *     is the number of (*) (a) starting from either (i) for Mandated
            Changes which are to be complied during or prior to the * month
            anniversary of this Agreement, of the Term of the Agreement or (ii)
            for Mandated Changes which are to be complied with after the * month
            anniversary of this Agreement, *, and (b) ending in the month in
            which the Mandated Change is complied with;

      *     is the considered life of the MC in months;

      *     is the cost of the MC (i.e., the MC Cost), as adjusted in
            subparagraphs 2 and 3 above;

      *     is United's MC Cost.

- ----------
* Confidential Treatment Requested

                                                                              79
<PAGE>

If a Mandated Change, as issued, has a specific limited life less than *, then
the number of months limiting the life of the Mandated Change shall be
substituted for * in the formula set out above. If the life of the Mandated
Change is related to flight hours and aircraft cycles then a flight-time related
life shall be computed for such Mandated Change as issued based on the average
utilization of the Aircraft.

Contractor shall advise United of each single Mandated Change compliance
requirement, the incremental cost of which is expected to exceed $* per Mandated
Change. United and Contractor agree that the cost of complying with any Mandated
Change shall be based on Contractor's direct (out of pocket) cost therefore and
that United and Contractor shall exercise their best joint efforts to minimize
the cost of such compliance and, if any Mandated Change is proving to be
financially burdensome to either party, to find a mutually agreeable solution to
such financial burden.

- --------
 * Confidential Treatment Requested

                                       80

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>p69511exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<P align="center" style="font-size: 10pt">Exhibit&nbsp;31.1



<P align="center" style="font-size: 10pt">MESA AIR GROUP, INC. AND ITS SUBSIDIARIES



<P align="center" style="font-size: 10pt">CERTIFICATION PURSUANT TO<BR>
RULE 13a-14(a)/15d-14(a)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934, As Amended



<P align="left" style="font-size: 10pt">I, Jonathan G. Ornstein, certify that:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;I have reviewed this quarterly report on Form 10-Q of Mesa Air Group,
Inc.;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&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-15(e) and 15d-15(e) for the registrant and we have:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;disclosed in this report any change in the registrant&#146;s internal
control over financial reporting that occurred during the registrant&#146;s most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant&#146;s internal control over financial reporting;
and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;The registrant&#146;s other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant&#146;s auditors and the audit committee of registrant&#146;s board of
directors (or persons performing the equivalent functions):


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant&#146;s ability to record, process,
summarize and report financial information; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 control over
financial reporting.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ JONATHAN G. ORNSTEIN</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jonathan G. Ornstein</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board and Chief Executive of Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mesa Air Group, Inc.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Date: August&nbsp;11, 2004



<P align="center" style="font-size: 10pt">45
</DIV>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>p69511exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">Exhibit&nbsp;31.2



<P align="center" style="font-size: 10pt">MESA AIR GROUP, INC. AND ITS SUBSIDIARIES



<P align="center" style="font-size: 10pt">CERTIFICATION PURSUANT TO<BR>
RULE 13a-14(a)/15d-14(a)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934, As Amended



<P align="left" style="font-size: 10pt">I, George Murnane III, certify that:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;I have reviewed this quarterly report on Form 10-Q of Mesa Air Group,
Inc.;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&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-15(e) and 15d-15(e) for the registrant and we have:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;evaluated the effectiveness of the registrant&#146;s disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;disclosed in this report any change in the registrant&#146;s internal
control over financial reporting that occurred during the registrant&#146;s most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant&#146;s internal control over financial reporting;
and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;The registrant&#146;s other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant&#146;s auditors and the audit committee of registrant&#146;s board of
directors (or persons performing the equivalent functions):


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant&#146;s ability to record, process,
summarize and report financial information; and


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 control over
financial reporting.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ GEORGE MURNANE III</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">George Murnane III</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Vice President and Chief Financial Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mesa Air Group, Inc.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Date: August&nbsp;11, 2004



<P align="center" style="font-size: 10pt">46
</DIV>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>p69511exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>Exhibit&nbsp;32.1</B>



<P align="center" style="font-size: 10pt"><B>MESA AIR GROUP, INC. AND ITS SUBSIDIARIES</B>



<P align="center" style="font-size: 10pt"><B>CERTIFICATION PURSUANT TO<BR>
18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>



<P align="left" style="font-size: 10pt">In connection with the Quarterly Report of Mesa Air Group, Inc. (the &#147;Company&#148;)
on Form&nbsp;10-Q for the period ended June&nbsp;30, 2004, as filed with the Securities
and Exchange Commission on the date hereof (the &#147;Report&#148;), I, Jonathan G.
Ornstein, Chairman and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, that:



<P align="left" style="font-size: 10pt">(1)&nbsp;The Report fully complies with the requirements of Section&nbsp;13(a) or 15(d)
of the Securities Exchange Act of 1934; and



<P align="left" style="font-size: 10pt">(2)&nbsp;The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Jonathan G. Ornstein</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" width="35%" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Jonathan G. Ornstein</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Chairman of the Board and</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Chief Executive Officer</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Date: August&nbsp;11, 2004



<P align="center" style="font-size: 10pt">47
</DIV>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>p69511exv32w2.htm
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>Exhibit&nbsp;32.2</B>



<P align="center" style="font-size: 10pt"><B>MESA AIR GROUP, INC. AND ITS SUBSIDIARIES</B>



<P align="center" style="font-size: 10pt"><B>CERTIFICATION PURSUANT TO<BR>
18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>



<P align="left" style="font-size: 10pt">In connection with the Quarterly Report of Mesa Air Group, Inc. (the &#147;Company&#148;)
on Form&nbsp;10-Q for the period ended June&nbsp;30, 2004, as filed with the Securities
and Exchange Commission on the date hereof (the &#147;Report&#148;), I, George Murnane
III, Executive Vice President and Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to
ss.906 of the
Sarbanes-Oxley Act of 2002, that:



<P align="left" style="font-size: 10pt">(1)&nbsp;The Report fully complies with the requirements of Section&nbsp;13(a) or 15(d)
of the Securities Exchange Act of 1934; and



<P align="left" style="font-size: 10pt">(2)&nbsp;The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="97%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ George Murnane III</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" width="35%" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">George Murnane III</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Executive Vice President and</TD>
</TR>

<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Chief Financial Officer</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">Date: August&nbsp;11, 2004




<P align="center" style="font-size: 10pt">48
</DIV>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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