UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-16079

AIR METHODS CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Delaware	84-0915893
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

7301 South Peoria, Englewood, Colorado	80112
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code (303) 792-7400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x  No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer,” “large accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated Filer ¨	Accelerated Filer x
Non-accelerated Filer ¨  (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ¨  No  x

The number of shares of Common Stock, par value $.06, outstanding as of October 23, 2009, was 12,388,554.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION
	Item 1.	Consolidated Financial Statements
		Consolidated Balance Sheets – September 30, 2009 and December 31, 2008 (unaudited)	1
		Consolidated Statements of Income for the three and nine months ended September 30, 2009 and 2008 (unaudited)	3
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008 (unaudited)	4
		Notes to Consolidated Financial Statements (unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
	Item 4.	Controls and Procedures	18
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	19
	Item 1A.	Risk Factors	19
	Item 2.	Changes in Securities	19
	Item 3.	Defaults upon Senior Securities	19
	Item 4.	Submission of Matters to a Vote of Security Holders	19
	Item 5.	Other Information	19
	Item 6.	Exhibits	19
SIGNATURES			20

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Air Methods Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share amounts)

(unaudited)

		September 30,2009				December 31,2008
Assets
Current assets:
Cash and cash equivalents		$	23,181				13,147
Current installments of notes receivable			485				753
Receivables:
Trade, net			126,109				133,467
Refundable income taxes			--				2,239
Other			1,661				2,487
Total receivables			127,770				138,193
Inventories			21,010				20,283
Work-in-process on medical interiors and products contracts			5,445				4,561
Assets held for sale			14,660				20,712
Costs and estimated earnings in excess of billings on uncompleted contracts			9,220				5,840
Prepaid expenses and other			5,706				4,259
Total current assets			207,477				207,748
Property and equipment:
Land			251				251
Flight and ground support equipment			247,685				206,189
Furniture and office equipment			28,541				27,196
			276,477				233,636
Less accumulated depreciation and amortization			(92,874	)			(87,469	)
Net property and equipment			183,603				146,167
Goodwill			20,291				20,291
Notes receivable, less current installments			126				660
Other assets, net of accumulated amortization of $2,148 and $2,411 at September 30, 2009 and December 31, 2008, respectively			17,921				20,058
Total assets		$	429,418				394,924

(Continued)

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Air Methods Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS, Continued

(Amounts in thousands, except share and per share amounts)

(unaudited)

		September 30,				December 31,
		2009				2008
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable		$	12,531				19,520
Current installments of long-term debt			14,315				14,156
Current installments of obligations under capital leases			1,015				1,482
Accounts payable			10,590				13,892
Deferred revenue			6,936				6,710
Billings in excess of costs and estimated earnings on uncompleted contracts			105				990
Accrued wages and compensated absences			15,824				10,422
Due to third party payers			3,882				3,559
Deferred income taxes			9,157				9,340
Other accrued liabilities			17,658				11,715
Total current liabilities			92,013				91,786
Long-term debt, less current installments			86,869				83,784
Obligations under capital leases, less current installments			1,560				2,074
Deferred income taxes			28,058				29,158
Other liabilities			28,718				27,658
Total liabilities			237,218				234,460
Stockholders' equity (notes 2 and 3):
Preferred stock, $1 par value.  Authorized 5,000,000 shares, none issued			--				--
Common stock, $.06 par value. Authorized 16,000,000 shares; issued 12,391,487 and 12,284,679 shares at September 30, 2009, and December 31, 2008, respectively; outstanding 12,378,154 and 12,040,462 shares at September 30, 2009, and December 31, 2008, respectively			744				737
Additional paid-in capital			81,349				80,717
Treasury stock at cost, 227,917 shares at December 31, 2008			--				(4,853	)
Retained earnings			110,107				83,863
Total stockholders' equity			192,200				160,464
Total liabilities and stockholders’ equity		$	429,418				394,924

See accompanying notes to unaudited consolidated financial statements.

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Air Methods Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share and per share amounts)

(unaudited)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2009				2008				2009				2008
Revenue:
Flight revenue, net		$	131,723				131,079				370,917				370,298
Medical interiors and products revenue			5,879				2,753				19,448				9,592
			137,602				133,832				390,365				379,890
Operating expenses:
Flight centers			53,510				52,504				158,499				157,624
Aircraft operations			26,070				33,628				74,743				91,148
Aircraft rental			12,908				12,293				37,824				35,093
Cost of medical interiors and products sold			3,802				1,716				14,131				7,059
Depreciation and amortization			4,758				4,328				13,976				12,628
Gain on disposition of assets, net			(239	)			(1,130	)			(772	)			(2,568	)
General and administrative			15,978				15,947				48,388				50,671
			116,787				119,286				346,789				351,655
Operating income			20,815				14,546				43,576				28,235
Other income (expense):
Interest expense			(1,285	)			(1,270	)			(3,643	)			(3,943	)
Other, net			935				928				2,698				2,180
Income before income taxes			20,465				14,204				42,631				26,472
Income tax expense			7,861				5,835				16,387				10,939
Net income		$	12,604				8,369				26,244				15,533
Basic income per common share (note 3)		$	1.02				.69				2.15				1.28
Diluted income per common share (note 3)		$	1.01				.67				2.12				1.23
Weighted average number of common shares outstanding – basic			12,337,120				12,179,714				12,218,369				12,170,980
Weighted average number of common shares outstanding – diluted			12,498,320				12,522,932				12,397,026				12,590,252

See accompanying notes to unaudited consolidated financial statements.

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Air Methods Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(unaudited)

		Nine Months Ended September 30,
		2009				2008
Cash flows from operating activities:
Net income		$	26,244				15,533
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense			13,976				12,628
Deferred income tax expense (benefit)			(1,283	)			5,363
Stock-based compensation			906				1,624
Tax benefit from exercise of stock options			(1,347	)			(567	)
Gain on disposition of assets, net			(772	)			(2,568	)
Unrealized loss on derivative instruments			264				--
Changes in assets and liabilities:
Increase in prepaid expenses and other current assets			(1,609	)			(669	)
Decrease in receivables			10,423				12,986
Increase in inventories			(727	)			(3,736	)
Increase in work-in-process on medical interiors and costs in excess of billings			(4,264	)			(4,290	)
Increase in accounts payable, other accrued liabilities, and other liabilities			10,953				7,620
Increase (decrease) in deferred revenue and billings in excess of costs			(659	)			394
Net cash provided by operating activities			52,105				44,318
Cash flows from investing activities:
Acquisition of property and equipment			(43,246	)			(40,715	)
Proceeds from disposition and sale of equipment			8,060				14,486
Decrease (increase) in notes receivable and other assets			2,300				(631	)
Net cash used by investing activities			(32,886	)			(26,860	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net			3,239				1,114
Purchases of common stock			--				(2,905	)
Tax benefit from exercise of stock options			1,347				567
Net borrowings (repayments) under line of credit			(19,258	)			919
Proceeds from issuance of long-term debt			34,035				--
Payments for debt issue costs			(573	)			(145	)
Payments of long-term debt and notes payable			(26,544	)			(12,024	)
Payments of capital lease obligations			(1,431	)			(947	)
Net cash used by financing activities			(9,185	)			(13,421	)
Increase in cash and cash equivalents			10,034				4,037
Cash and cash equivalents at beginning of period			13,147				5,134
Cash and cash equivalents at end of period		$	23,181				9,171
Interest paid in cash during the period		$	3,516				3,592
Income taxes paid in cash during the period		$	8,756				312

(Continued)

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Air Methods Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued

(Amounts in thousands)

(unaudited)

Non-cash investing and financing activities:

In the nine months ended September 30, 2009, the Company entered into capital leases of $450 to finance the purchase of equipment and into a note payable of $552 to finance insurance policies. In the nine months ended September 30, 2009, the Company settled notes payable of $8,954 in exchange for the aircraft securing the debt. The Company also entered into notes payable of $16,424 to finance the purchase of aircraft which are held for sale as of September 30, 2009.

In the nine months ended September 30, 2008, the Company entered into capital lease obligations of $1,600 to finance the purchase of equipment. In the nine months ended September 30, 2008, the Company settled notes payable of $24,203 in exchange for the aircraft securing the debt. The Company also entered into notes payable of $22,831 to finance the purchase of aircraft which were held for sale as of September 30, 2008.

See accompanying notes to unaudited consolidated financial statements.

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Air Methods Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the consolidated financial statements for the respective periods. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2008. The Company has evaluated subsequent events occurring through the filing date of these financial statements (November 6, 2009) and has determined that there were no subsequent events to record or disclose in this report.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company considers its critical accounting policies involving more significant judgments and estimates to be those related to revenue recognition, deferred income taxes, depreciation and residual values, and fair values of assets acquired and liabilities assumed in business combinations. Actual results could differ from those estimates.

(2) Stockholders’ Equity

Changes in stockholders’ equity for the nine months ended September 30, 2009, consisted of the following (amounts in thousands except share amounts):

		Shares Outstanding				Amount
Balances at January 1, 2009			12,040,462			$	160,464
Issuance of common shares for options exercised			334,725				3,239
Tax benefit from exercise of stock options			--				1,347
Stock-based compensation			2,967				906
Net income			--				26,244
Balances at September 30, 2009			12,378,154			$	192,200

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Air Methods Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(unaudited)

(3) Income per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by all common shares and dilutive potential common shares outstanding during the period. The reconciliation of basic to diluted weighted average common shares outstanding is as follows:

		2009				2008
For quarter ended September 30:
Weighted average number of common shares outstanding – basic			12,337,120				12,179,714
Dilutive effect of:
Common stock options			155,524				337,059
Unvested restricted stock			5,676				6,159
Weighted average number of common shares outstanding – diluted			12,498,320				12,522,932
For nine months ended September 30:
Weighted average number of common shares outstanding – basic			12,218,369				12,170,980
Dilutive effect of:
Common stock options			174,200				416,676
Unvested restricted stock			4,457				2,596
Weighted average number of common shares outstanding – diluted			12,397,026				12,590,252

Common stock options of 38,500 and 222,234 were not included in the diluted income per share calculation for the quarter and nine months ended September 30, 2009, respectively, because their effect would have been anti-dilutive. Common stock options of 38,500 were not included in the diluted income per share calculation for the quarter and nine months ended September 30, 2008, because their effect would have been anti-dilutive.

(4) New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued FASB ASC 105 (formerly FASB Statement No. 168), Generally Accepted Accounting Principles, establishing the FASB Accounting Standards CodificationTM (ASC) as the source of authoritative generally accepted accounting principles (GAAP) to be applied by nongovernmental entities. FASB ASC 105 is effective for annual and interim periods ending after September 15, 2009, and the Company has updated its references to GAAP in this report in accordance with the provisions of this pronouncement. The implementation of FASB ASC 105 did not have a material effect on its financial position or results of operation.

In April 2009, the FASB issued FASB ASC 820-10-65 (formerly FASB Staff Position No. FAS 157-4), Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This standard applies to all assets and liabilities within the scope of accounting pronouncements that require or permit fair value measurements, with certain defined exceptions, and provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. ASC 820-10-65 is effective for interim reporting periods ending after June 15, 2009. The implementation of ASC 820-10-65 did not have a material effect on the Company’s financial position or results of operation.

In April 2009, the FASB issued FASB ASC 825-10-65 (formerly FASB Staff Position No. FAS 107-1 and APB 28-1), Interim Disclosures about Fair Value of Financial Instruments, which requires disclosures about fair value of financial instruments for interim reporting periods, as well as in annual financial statements, in either the body or the accompanying notes of summarized financial information. ASC 825-10-65 is effective for interim reporting periods ending after June 15, 2009, and did not have a material effect on the Company’s financial position or results of operation when adopted in the second quarter of 2009.

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Air Methods Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(unaudited)

(4) New Accounting Pronouncements, continued

In May 2009, the FASB issued FASB ASC 855-10-20 (formerly FASB Statement 165), Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. ASC 855-10-20 is effective for interim or annual reporting periods ending after June 15, 2009. The implementation of this statement in the second quarter of 2009 did not have a material effect on the Company’s financial position or results of operation.

(5) Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and cash equivalents, accounts receivable, notes receivable, notes payable, accounts payable, and accrued liabilities:

The carrying amounts approximate fair value because of the short maturity of these instruments.

Long-term debt:

Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities and on recent transactions, the fair value of long-term debt as of September 30, 2009, is estimated to be $100,015,000.

(6) Business Segment Information

Summarized financial information for the Company’s operating segments is shown in the following table (amounts in thousands). Amounts in the “Corporate Activities” column represent corporate headquarters expenses, corporate income tax expense, and results of insignificant operations. The Company does not allocate assets between operating segments for internal reporting and performance evaluation purposes. Operating segments and their principal products or services are as follows:

· Community-Based Services (CBS) - provides air medical transportation services to the general population as an independent service in 21 states. Services include aircraft operation and maintenance, medical care, dispatch and communications, and medical billing and collection.

· Hospital-Based Services (HBS) - provides air medical transportation services to hospitals in 32 states under exclusive operating agreements. Services include aircraft operation and maintenance.

· Products Division - designs, manufactures, and installs aircraft medical interiors and other aerospace and medical transport products for domestic and international customers.

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Air Methods Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(unaudited)

(6) Business Segment Information, continued

For quarter ended September 30:		CBS				HBS				Products Division				Corporate Activities				Intersegment Eliminations				Consolidated
2009
External revenue		$	80,194				51,553				5,855				--				--				137,602
Intersegment revenue			54				--				4,563				--				(4,617	)			--
Total revenue			80,248				51,553				10,418				--				(4,617	)			137,602
Operating expenses			(60,102	)			(43,642	)			(7,533	)			(4,475	)			3,723				(112,029	)
Depreciation & amortization			(2,505	)			(1,854	)			(141	)			(258	)			--				(4,758	)
Interest expense			(356	)			(730	)			(9	)			(190	)			--				(1,285	)
Other income (expense), net			984				--				--				(49	)			--				935
Income tax expense			--				--				--				(7,861	)			--				(7,861	)
Segment net income (loss)		$	18,269				5,327				2,735				(12,833	)			(894	)			12,604
2008
External revenue		$	82,511				48,580				2,741				--				--				133,832
Intersegment revenue			54				--				6,527				--				(6,581	)			--
Total revenue			82,565				48,580				9,268				--				(6,581	)			133,832
Operating expenses			(63,947	)			(45,048	)			(7,013	)			(4,180	)			5,230				(114,958	)
Depreciation & amortization			(1,429	)			(2,530	)			(153	)			(216	)			--				(4,328	)
Interest expense			(569	)			(609	)			--				(92	)			--				(1,270	)
Other income, net			877				--				--				51				--				928
Income tax expense			--				--				--				(5,835	)			--				(5,835	)
Segment net income (loss)		$	17,497				393				2,102				(10,272	)			(1,351	)			8,369

For nine months ended September 30:
2009
External revenue		$	220,294				150,665				19,406				--				--				390,365
Intersegment revenue			162				--				16,673				--				(16,835	)			--
Total revenue			220,456				150,665				36,079				--				(16,835	)			390,365
Operating expenses			(176,936	)			(128,475	)			(28,327	)			(13,138	)			14,063				(332,813	)
Depreciation & amortization			(7,379	)			(5,406	)			(436	)			(755	)			--				(13,976	)
Interest expense			(1,074	)			(1,947	)			(18	)			(604	)			--				(3,643	)
Other income, net			2,649				--				--				49				--				2,698
Income tax expense			--				--				--				(16,387	)			--				(16,387	)
Segment net income (loss)		$	37,716				14,837				7,298				(30,835	)			(2,772	)			26,244
2008
External revenue		$	229,574				140,846				9,470				--				--				379,890
Intersegment revenue			162				--				16,489				--				(16,651	)			--
Total revenue			229,736				140,846				25,959				--				(16,651	)			379,890
Operating expenses			(189,677	)			(129,680	)			(20,803	)			(12,359	)			13,492				(339,027	)
Depreciation & amortization			(5,741	)			(5,915	)			(449	)			(523	)			--				(12,628	)
Interest expense			(1,809	)			(1,910	)			--				(224	)			--				(3,943	)
Other income, net			2,033				--				--				147				--				2,180
Income tax expense			--				--				--				(10,939	)			--				(10,939	)
Segment net income (loss)		$	34,542				3,341				4,707				(23,898	)			(3,159	)			15,533

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

The following discussion of the results of operations and financial condition should be read in conjunction with our consolidated financial statements and notes thereto included in Item 1 of this report. This report, including the information incorporated by reference, contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The use of any of the words “believe,” “expect,” “anticipate,” “plan,” “estimate,” and similar expressions are intended to identify such statements. Forward-looking statements include statements concerning our possible or assumed future results; flight volume and collection rates for CBS operations; size, structure and growth of our air medical services and products markets; continuation and/or renewal of HBS contracts; acquisition of new and profitable Products Division contracts; and other matters. The actual results that we achieve may differ materially from those discussed in such forward-looking statements due to the risks and uncertainties described in the Risk Factors section of this report, in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in other sections of this report, as well as in our annual report on Form 10-K. We undertake no obligation to update any forward-looking statements.

Overview

We provide air medical transportation services throughout the United States and design, manufacture, and install medical aircraft interiors and other aerospace products for domestic and international customers. Our divisions, or business segments, are organized according to the type of service or product provided and consist of the following:

· Community-Based Services (CBS) - provides air medical transportation services to the general population as an independent service. Revenue consists of flight fees billed directly to patients, their insurers, or governmental agencies, and cash flow is dependent upon collection from these individuals or entities. In the nine months ended September 30, 2009, the CBS Division generated 56% of our total revenue, decreasing from 60% in the nine months ended September 30, 2008.

· Hospital-Based Services (HBS) - provides air medical transportation services to hospitals throughout the U.S. under exclusive operating agreements. Revenue consists of fixed monthly fees (approximately 75% of total contract revenue) and hourly flight fees (approximately 25% of total contract revenue) billed to hospital customers. In the nine months ended September 30, 2009, the HBS Division generated 39% of our total revenue, increasing from 37% in the nine months ended September 30, 2008.

· Products Division - designs, manufactures, and installs aircraft medical interiors and other aerospace and medical transport products for domestic and international customers. Products Division generated 5% of our total revenue in the nine months ended September 30, 2009, compared to 3% in the nine months ended September 30, 2008.

See Note 6 to the consolidated financial statements included in Item 1 of this report for operating results by segment.

We believe that the following factors have the greatest impact on our results of operations and financial condition:

· Flight volume. Fluctuations in flight volume have a greater impact on CBS operations than HBS operations because almost all of CBS revenue is derived from flight fees, as compared to approximately 25% of HBS revenue. By contrast, 81% of our costs primarily associated with flight operations incurred during 2009 (including salaries, aircraft ownership costs, hull insurance, and general and administrative expenses) are mainly fixed in nature. While flight volume is affected by many factors, including competition and the effectiveness of marketing and business development initiatives, the greatest single variable has historically been weather conditions. Adverse weather conditions—such as fog, high winds, or heavy precipitation—hamper our ability to operate our aircraft safely and, therefore, result in reduced flight volume. Total patient transports for CBS operations were approximately 10,800 and 30,600 for the quarter and nine months ended September 30, 2009, respectively, compared to approximately 10,700 and 32,900 for the quarter and nine months ended September 30, 2008, respectively. Patient transports for CBS bases open longer than one year (Same-Base Transports) were approximately 9,900 and 28,700 in the quarter and nine months ended September 30, 2009, respectively, compared to approximately 10,000 and 30,200 in the quarter and nine months ended September 30, 2008, respectively. Cancellations due to unfavorable weather conditions for CBS bases open longer than one year were 220 higher in the quarter and 231 lower in the nine months ended September 30, 2009, compared to 2008. We believe that Same-Base Transports in 2009 were negatively affected by the overall weaker economic conditions in the United States.

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· Reimbursement per transport. We respond to calls for air medical transports without pre-screening the creditworthiness of the patient and are subject to collection risk on services provided to insured and uninsured patients. Medicare and Medicaid also receive contractual discounts from our standard charges for flight services. Flight revenue is recorded net of provisions for contractual discounts and estimated uncompensated care. Both provisions are estimated during the period the related services are performed based on historical collection experience and any known trends or changes in reimbursement rate schedules and payer mix. The provisions are adjusted as required based on actual collections in subsequent periods. Net reimbursement per transport for CBS operations is primarily a function of price, payer mix, and timely and effective collection efforts. Both the pace of collections and the ultimate collection rate are affected by the overall health of the U.S. economy, which impacts the number of indigent patients and funding for state-run programs, such as Medicaid. Medicaid reimbursement rates in many jurisdictions have remained well below the cost of providing air medical transportation. In addition, the collection rate is impacted by changes in the cost of healthcare and health insurance; as the cost of healthcare increases, health insurance coverage provided by employers may be reduced or eliminated entirely, resulting in an increase in the uninsured population. Pending healthcare legislation, if enacted, may also affect collections. The average gross charge per transport increased 13.2% in the nine months ended September 30, 2009, compared to 2008, contributing to an increase of 6.8% in net reimbursement per transport over the same period. Provisions for contractual discounts and estimated uncompensated care for CBS operations are as follows:

		For quarters ended September 30,								For nine months ended September 30,
		2009				2008				2009				2008
Gross billings			100	%			100	%			100	%			100	%
Provision for contractual discounts			37	%			33	%			38	%			34	%
Provision for uncompensated care			20	%			21	%			20	%			21	%

The increase in the total percentage of uncollectible accounts for 2009 is primarily attributable to price increases. Although price increases generally increase the net reimbursement per transport from insurance payers, the amount per transport collectible from private patient payers and Medicare and Medicaid does not increase proportionately with price increases. Therefore, depending upon overall payer mix, price increases will usually result in an increase in the percentage of uncollectible accounts. Although we have not yet experienced significant increased limitations in the amount reimbursed by insurance companies, continued price increases may cause insurance companies to limit coverage for air medical transport to amounts less than our standard rates.

· Aircraft maintenance. Both CBS and HBS operations are directly affected by fluctuations in aircraft maintenance costs. Proper operation of the aircraft by flight crews and standardized maintenance practices can help to contain maintenance costs. Increases in spare parts prices from original equipment manufacturers tend to be higher for aircraft which are no longer in production. Three models of aircraft within our fleet, representing 25% of the rotor wing fleet, are no longer in production and are, therefore, susceptible to price increases which outpace general inflationary trends. In addition, on-condition components are more likely to require replacement with age. Since January 1, 2008, we have taken delivery of 41 new aircraft and expect to take delivery of five additional aircraft through the end of 2009. We have replaced discontinued models and other older aircraft with the new aircraft, as well as provided capacity for base expansion. Replacement models of aircraft typically have higher ownership costs than the models targeted for replacement but lower maintenance costs. Total maintenance expense for CBS and HBS operations decreased 23.9% and 17.3% from the quarter and nine months ended September 30, 2008, to the quarter and nine months ended September 30, 2009, respectively, while total flight volume for CBS and HBS operations decreased 4.9% and 5.6% over the same periods. Maintenance cost per hour on newer aircraft has remained relatively constant on an annual basis. Maintenance cost per hour on older models of aircraft, however, may vary more widely on a quarterly basis depending on component overhaul and replacement and aircraft refurbishment cycles.

· Competitive pressures from low-cost providers. We are recognized within the industry for our standard of service and our use of cabin-class aircraft. Many of our regional competitors utilize aircraft with lower ownership and operating costs and do not require a similar level of experience for aviation and medical personnel. Reimbursement rates established by Medicare, Medicaid, and most insurance providers are not contingent upon the type of aircraft used or the experience of personnel. However, we believe that higher quality standards help to differentiate our service from competitors and, therefore, lead to higher utilization.

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· Employee recruitment and relations. The ability to deliver quality services is partially dependent upon our ability to hire and retain employees who have advanced aviation, nursing, and other technical skills. In addition, hospital contracts typically contain minimum certification requirements for pilots and mechanics. In September 2003, our pilots voted to be represented by a collective bargaining unit, and we signed a collective bargaining agreement on March 31, 2006. The agreement was effective January 1, 2006, through April 30, 2009. Negotiations on a new collective bargaining agreement (CBA) commenced in the fourth quarter of 2008 and were referred for mediation during the second quarter of 2009. Under the Railway Labor Act, mediation decisions are non-binding on either party, and the duration of the process may vary depending upon the mediator assigned and the complexity of the issues negotiated. Other employee groups may also elect to be represented by unions in the future.

Results of Operations

We reported net income of $12,604,000 and $26,244,000 for the three and nine months ended September 30, 2009, respectively, compared to net income of $8,369,000 and $15,533,000 for the three and nine months ended September 30, 2008, respectively. Net reimbursement per transport for CBS operations increased 6.6% and 6.8% in the quarter and nine months ended September 30, 2009, compared to 2008, while Same-Base Transports for CBS operations were 1.7% and 5.0% lower over the same periods, respectively. Aircraft operating expenses decreased 22.5% and 18.0% for the quarter and nine months ended September 30, 2009, compared to 2008, reflecting lower maintenance and fuel costs.

Flight Operations – Community-Based Services and Hospital-Based Services

Net flight revenue increased $644,000, or 0.5%, and $619,000, or 0.2%, for the quarter and nine months ended September 30, 2009, respectively, compared to 2008. Flight revenue is generated by both CBS and HBS operations and is recorded net of provisions for contractual discounts and uncompensated care.

· CBS – Net flight revenue decreased $2,310,000, or 2.8%, to $80,189,000 for the third quarter of 2009 and $9,180,000, or 4.0%, to $220,275,000 for the nine months ended September 30, 2009, for the following reasons:

· Net revenue of $7,305,000 for the quarter and nine months ended September 30, 2008, pursuant to a contract to support the Federal Emergency Management Agency in disaster recovery efforts. No such revenue was generated in the quarter and nine months ended September 30, 2009.

· Decreases of 171, or 1.7%, and 1,511, or 5.0%, in Same-Base Transports for the quarter and nine months ended September 30, 2009, respectively, compared to 2008. Cancellations due to unfavorable weather conditions for CBS bases open longer than one year were 220 higher in the third quarter of 2009 but 231 lower in the nine months ended September 30, 2009, compared to 2008. The decline in Same-Base Transports is believed to be primarily attributable to overall economic conditions in the United States.

· Increases of 9.8% and 13.2% in average gross charge per transport for the quarter and nine months ended September 30, 2009, respectively, compared to 2008. Net reimbursement per transport increased approximately 6.6% and 6.8%, over the same periods.

· Incremental net revenue of $7,192,000 and $16,252,000 for the quarter and nine months ended September 30, 2009, respectively, generated from new service agreements with another air medical service provider in the Atlanta area and the addition of twelve new CBS bases, including two bases resulting from the conversion of an HBS contract, during either 2009 or 2008.

· Closure of seventeen bases during either 2009 or 2008, resulting in decreases in net revenue of approximately $4,241,000 and $14,628,000 during the quarter and nine months ended September 30, 2009, respectively.

· HBS – Net flight revenue increased $2,954,000, or 6.1%, to $51,534,000 for the third quarter of 2009 and $9,799,000, or 7.0%, to $150,642,000 for the nine months ended September 30, 2009, for the following reasons:

· Incremental net revenue of $1,540,000 and $7,212,000 for the quarter and nine months ended September 30, 2009, generated from the addition of one new contract and the expansion of nine contracts during either 2009 or 2008.

· Cessation of service under eight contracts during either 2009 or 2008 and the conversion of one contract to CBS operations in the second quarter of 2009, resulting in decreases in net revenue of approximately $2,321,000 and $7,178,000 for the quarter and nine months ended September 30, 2009, respectively.

· Annual price increases in the majority of contracts based on changes in the Consumer Price Index or spare parts prices from aircraft manufacturers and the renewal of contracts at higher rates.

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· Decreases of 3.6% and 8.2% in flight volume for the quarter and nine months ended September 30, 2009, respectively, for all contracts excluding new contracts, contract expansions, and closed contracts discussed above.

Flight center costs (consisting primarily of pilot, mechanic, and medical staff salaries and benefits) increased $1,006,000, or 1.9%, and $875,000, or 0.6%, for the quarter and nine months ended September 30, 2009, respectively, compared to 2008. Changes by business segment are as follows:

· CBS – Flight center costs increased $390,000, or 1.2%, to $33,068,000 and decreased $983,000, or 1.0%, to $96,622,000 for the quarter and nine months ended September 30, 2009, respectively, for the following reasons:

· Increases of approximately $3,193,000 and $7,289,000 for the quarter and nine months ended September 30, 2009, respectively, for the addition of personnel to staff new base locations described above.

· Decreases of approximately $2,255,000 and $8,727,000 for the quarter and nine months ended September 30, 2009, respectively, due to the closure of base locations described above.

· Increases in salaries for merit pay raises and in the cost of our medical insurance.

· HBS - Flight center costs increased $616,000, or 3.1%, to $20,442,000 and $1,858,000, or 3.1%, to $61,877,000 for the quarter and nine months ended September 30, 2009, respectively, primarily due to the following:

· Increases of approximately $453,000 and $2,255,000 for the quarter and nine months ended September 30, 2009, respectively, for the addition of personnel to staff new base locations described above.

· Decreases of approximately $595,000 and $2,889,000 for the quarter and nine months ended September 30, 2009, respectively, due to the closure of base locations described above.

· Increases in salaries for merit pay raises and in the cost of our medical insurance.

Aircraft operating expenses decreased $7,558,000, or 22.5%, and $16,405,000, or 18.0%, for the quarter and nine months ended September 30, 2009, respectively, in comparison to 2008. Aircraft operating expenses consist of fuel, insurance, and maintenance costs and generally are a function of the size of the fleet, the type of aircraft flown, and the number of hours flown. The decrease in costs is due to the following:

· Aircraft maintenance expense decreased $5,962,000, or 23.9%, to $19,017,000 for the third quarter of 2009 and $11,690,000, or 17.3%, to $56,025,000 for the nine months ended September 30, 2009, primarily attributable to our fleet rejuvenation efforts and to our increasing use of single-engine, rather than twin-engine, aircraft. Since the first quarter of 2008, we have placed 47 new helicopters into service (consisting of 27 single-engine aircraft, 19 twins, and 1 fixed wing aircraft) and eliminated 44 aircraft which were older models (consisting of 11 single-engine aircraft, 29 twins, and 4 fixed wing aircraft). Maintenance cost per hour on newer aircraft has remained relatively constant on an annual basis. Maintenance cost per hour on older models of aircraft, however, may vary more widely on a quarterly basis depending on component overhaul and replacement and aircraft refurbishment cycles.

· The cost of aircraft fuel per hour flown decreased approximately 40.7% and 42.1% for the quarter and nine months ended September 30, 2009, respectively. Fuel costs decreased by $2,231,000 to a total expense of $3,284,000 for the third quarter of 2009 and by $6,311,000 to a total expense of $8,761,000 for the nine months ended September 30, 2009, compared to 2008.

· Decreases in flight volume for bases open longer than one year for both CBS and HBS as described above.

· Increases in hull insurance rates effective July 2009 and 2008.

Aircraft rental expense increased $615,000, or 5.0%, and $2,731,000, or 7.8%, for the quarter and nine months ended September 30, 2009, respectively, in comparison to the quarter and nine months ended September 30, 2008. Incremental rental expense incurred for 35 leased aircraft added to our fleet during either 2008 or 2009 totaled $1,461,000 and $5,492,000 for the quarter and nine months ended September 30, 2009, respectively. The increase for new aircraft was offset in part by selling or refinancing 26 aircraft at lower lease rates or through debt financing.

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Products Division

Medical interiors and products revenue increased $3,126,000, or 113.5%, and $9,856,000, or 102.8%, for the quarter and nine months ended September 30, 2009, compared to 2008. Significant projects in process during 2009 included 48 multi-mission interiors for the U.S. Army’s HH-60L helicopter, 81 litter systems for the U.S. Army’s Medical Evacuation Vehicle (MEV), and eight medical interior kits for commercial customers. Revenue by product line for the quarter and nine months ended September 30, 2009, was as follows:

· $3,592,000 and $14,076,000 – governmental entities

· $2,287,000 and $5,372,000 – commercial customers

Significant projects in 2008 included nine medical interior kits for commercial customers, three of which were still in process as of September 30, 2008. Also in process as of September 30, 2008, were two design contracts for the U.S. Army, 48 multi-mission interiors for the U.S. Army’s HH-60L helicopter, and sixty MEV litter systems. Revenue by product line for the quarter and nine months ended September 30, 2008, was as follows:

· $1,781,000 and $5,090,000 – governmental entities

· $972,000 and $4,502,000 – commercial customers

Cost of medical interiors and products increased $2,086,000, or 121.6%, and $7,072,000, or 100.2%, for the quarter and nine months ended September 30, 2009, compared to 2008, due primarily to changes in sales volume and sales mix. The average net margin earned on projects during 2009 was 34.9% for the third quarter and 22.9% for the nine-month period compared to 25.9% for the third quarter and 15.7% for the nine-month period in 2008. Costs in 2008 also included development and design work on avionics and other aircraft interior configurations for commercial customers, leading to higher engineering and documentation costs and lower profit margins.

General Expenses

General and administrative (G&A) expenses increased $31,000, or 0.2%, and decreased $2,283,000, or 4.5%, for the quarter and nine months ended September 30, 2009, respectively, compared to 2008. G&A expenses include executive management, accounting and finance, billing and collections, information services, human resources, aviation management, pilot training, dispatch and communications, and CBS and HBS program administration. The following events contributed to the change in G&A expenses:

· Completion of the consolidation of the Part 135 Air Carrier Certificate for CJ Systems Aviation Group, Inc., (CJ) into the Air Methods certificate during the second quarter of 2008. Costs of $1,195,000 were incurred in the nine months ended September 30, 2008, related to the consolidation.

· Reorganization of field-based program management during the second quarter of 2009, resulting in the elimination of fifteen positions and the transfer of other personnel into other open positions within the Company.

· Closure of the CJ patient billing office and incorporation of these functions into our existing billing department, resulting in the elimination of sixteen full-time positions as well as additional contract positions. The transition was completed during the second quarter of 2008.

· Consolidation of corporate overhead functions.

Income tax expense was $7,861,000 and $16,387,000 in the quarter and nine months ended September 30, 2009, respectively, compared to $5,835,000 and $10,939,000 in the quarter and nine months ended September 30, 2008, respectively. The effective tax rate was approximately 38% for 2009 and 41% for 2008. The decrease in the effective tax rate was primarily attributed to a decrease in certain permanent book-tax differences. In addition, the rate used to determine current state income taxes decreased primarily due to a change in Colorado statute defining the apportionment calculation effective January 1, 2009.

Liquidity and Capital Resources

Our working capital position as of September 30, 2009, was $115,464,000, compared to $115,962,000 at December 31, 2008. Cash generated by operations was $52,105,000 in 2009, compared to $44,318,000 in 2008, reflecting the change in operating results described above.

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Cash used by investing activities totaled $32,886,000 in 2009 compared to $26,860,000 in 2008. Significant equipment acquisitions in 2009 included the purchase of sixteen aircraft for approximately $36.1 million. During 2009 we sold eight aircraft for total proceeds of $5.9 million and received $1.5 million in insurance proceeds for an aircraft damaged in a ground incident. Equipment acquisitions in 2008 included the buyout of twenty leased aircraft for approximately $25.4 million, three of which were subsequently sold during the period for net proceeds of approximately $3.5 million. We also sold nine other aircraft during the period for total proceeds of $10.5 million.

Financing activities used $9,185,000 in 2009 compared to $13,421,000 in 2008. The primary use of cash in both 2009 and 2008 was regularly scheduled payments of long-term debt and capital lease obligations. In 2008 we also repurchased 100,000 shares of our common stock for $2.9 million. In 2009 we used proceeds of $34.0 million from thirteen new long-term debt agreements to purchase nine helicopters and to pay off $14.5 million of short-term notes payable to an aircraft manufacturer for the delivery of four helicopters. The long-term notes are payable over five-, seven-, or ten-year terms and have a weighted average interest rate of 6.7%. We used proceeds from operations to fully pay off the balance against our revolving credit facility during the second quarter of 2009.

As of December 31, 2008, we had open purchase commitments totaling approximately $165.3 million for 56 aircraft. During 2009, we canceled commitments totaling approximately $140.5 million for 46 aircraft due to changes in fleet requirements. We have already taken delivery of the remaining 10 aircraft covered by these commitments. As of September 30, 2009, we do not expect to forfeit any material deposits related to aircraft commitment cancellations since the deposits have either already been applied to purchases or been refunded to us, or are expected to be applied against purchases during the fourth quarter of 2009.

As of September 30, 2009, we are scheduled to take delivery of five new aircraft before the end of the year. Commitments for long-term debt or lease financing have been received to cover the purchase price and cost to install medical interiors for all five aircraft.

Divisional Summary of Events

Community-Based Services

Effective January 1, 2009, and again July 1, 2009, we increased prices for our CBS operations an average of approximately 5%. In 2009, we opened eight new bases, including two resulting from the conversion of an HBS customer to CBS operations, and closed six due to insufficient flight volume. We also entered into service agreements in Georgia with another air medical service provider, allowing for base consolidations in the service area. We opened one new base in the northeast region during the fourth quarter of 2009 and expect to open four additional bases across the United States during the first quarter of 2010.

Hospital-Based Services

In the first quarter of 2009, we began operations under a new three-year contract, representing two aircraft, with a customer in Alaska. Contracts with seventeen hospital customers are due for renewal in 2009, eight of which have been renewed for terms ranging from one to four years. In the third quarter of 2009, we were notified that two contracts which were due for renewal in 2009 will not be renewed upon expiration in the fourth quarter, bringing to five the total number of contracts which will not be renewed in 2009.

Products Division

As of September 30, 2009, we had 48 HH60L units, 81 MEV units, and seven commercial medical interiors in process. During the second quarter of 2009, the U.S. Army notified us that it intended to reduce the number of MEV units to be delivered under the current contract from 306 units to 81 units, plus a number of spares. During the third quarter of 2009 we received notification that the U.S. Army intends to reinstate the original production contract. Negotiations on terms and conditions are currently in progress. Revenue and costs related to the termination process were fully recognized during the third quarter. Deliveries under all contracts in process are expected to be completed early in 2010, and remaining revenue, excluding the impact of reinstating the original MEV production contract of approximately 225 remaining units, is estimated at $7.4 million.

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All Segments

There can be no assurance that we will continue to maintain flight volume or current levels of collections on receivables for CBS operations, renew operating agreements for our HBS operations, generate new profitable contracts for the Products Division, or enter into a new CBA on terms substantially similar to or more profitable than the existing arrangement. Based on the anticipated levels of HBS and CBS flight activity and the projects in process for the Products Division, we expect to generate sufficient cash flow to meet our operational needs throughout the remainder of 2009. Effective March 31, 2009, we amended one of the covenants under our senior credit facility such that the calculation of Total Adjusted Debt (as defined in the senior credit facility) excludes rental expense associated with aircraft leases that have been bought out. Such amendment will provide us with more borrowing capacity as it relates to leased aircraft that have been purchased. In 2009 we have been in compliance with our debt covenants, both with and without the effect of the amendment. At September 30, 2009, we have approximately $45.5 million of borrowing capacity available under the senior credit facility.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an on-going basis, management evaluates our estimates and judgments, including those related to revenue recognition, income taxes, and valuation of long-lived assets and goodwill. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which 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. Management believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

Fixed flight fee revenue under our operating agreements with hospitals is recognized monthly over the terms of the agreements. Flight revenue relating to patient transports is recognized upon completion of the services and is recorded net of provisions for contractual discounts and estimated uncompensated care. Both provisions are estimated during the period the related services are performed based on historical collection experience and any known trends or changes in reimbursement rate schedules and payer mix. The provisions are adjusted as required based on actual collections in subsequent periods. We have from time to time experienced delays in reimbursement from third-party payers. In addition, third-party payers may disallow, in whole or in part, claims for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, determinations of medical necessity, or the need for additional information. Laws and regulations governing the Medicare and Medicaid programs are very complex and subject to interpretation. We also provide services to patients who have no insurance or other third-party payer coverage. There can be no guarantee that we will continue to experience the same collection rates that we have in the past. If actual future collections are more or less than those projected by management, adjustments to allowances for contractual discounts and uncompensated care may be required. Based on related flight revenue for the nine months ended September 30, 2009, a change of 100 basis points in the percentage of estimated contractual discounts and uncompensated care would have resulted in a change of approximately $5,225,000 in flight revenue.

Revenue related to fixed fee medical interior and products contracts is recorded as costs are incurred using the percentage of completion method of accounting. We estimate the percentage of completion based on costs incurred to date as a percentage of an estimate of the total costs to complete the project. Losses on contracts in process are recognized when determined. If total costs to complete a project are greater or less than estimated, the gross margin on the project may be greater or less than originally recorded under the percentage of completion method.

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Income Taxes

In preparation of the consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciable assets, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheets. We then assess the likelihood that deferred tax assets will be recoverable from future taxable income and record a valuation allowance for those amounts we believe are not likely to be realized. Establishing or increasing a valuation allowance in a period increases income tax expense. We consider estimated future taxable income, tax planning strategies, and the expected timing of reversals of existing temporary differences in assessing the need for a valuation allowance against deferred tax assets. In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the valuation allowance would be charged to income in the period such determination was made. Likewise, should we determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the valuation allowance would increase income in the period such determination was made. The effect on deferred income tax assets and liabilities of a change in statutory tax rates applicable to the Company is also recognized in income in the period of the change.

Long-lived Assets Valuation

In accounting for long-lived assets, we make estimates about the expected useful lives, projected residual values and the potential for impairment. Estimates of useful lives and residual values of aircraft are based upon actual industry experience with the same or similar aircraft types and anticipated utilization of the aircraft. Changing market prices of new and used aircraft, government regulations and changes in our maintenance program or operations could  result in changes to these estimates. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. Our cash flow estimates are based on historical results adjusted for estimated current industry trends, the economy, and operating conditions.

Goodwill Valuation

The Company’s goodwill relates to four acquisitions and has been allocated to our community-based and hospital-based services segments. Annually, at December 31, the Company evaluates goodwill for potential impairment using a two-step test at the reporting unit level. The first step of the goodwill impairment test compares the book value of a reporting unit, including goodwill, with its fair value. If the book value of a reporting unit exceeds its fair value, we perform the second step of the impairment test to determine the amount of goodwill impairment loss to be recorded. In the second step, the implied fair value of the reporting unit’s goodwill is compared to the book value of the goodwill. The amount of impairment loss is equal to the excess of the book value of the goodwill over the implied fair value of that goodwill.

We determine the fair value of each reporting unit based upon the reporting unit’s historical operating profit and the Company’s current public trading value. Estimated future operating profit for each reporting unit is also taken into consideration when determining the reporting unit’s fair value. Considerable management judgment is necessary to evaluate the impact of economic changes and to estimate future operating profit for the reporting units. Assumptions used in our impairment evaluations, such as forecasted growth rates and patient receivable collection rates, are based on the best available market information and are consistent with our internal forecasts. Changes in these estimates or a continued decline in general economic conditions could change our conclusion regarding an impairment of goodwill and potentially result in a non-cash impairment loss in a future period.

The estimated fair values of the reporting units have historically exceeded the carrying values of the reporting units. We performed a sensitivity analysis on the Company’s public trading value and on each reporting unit’s historical and estimated future operating profits. Based on the amounts used in the evaluation of goodwill at December 31, 2008, either the Company’s public trading value or the reporting unit’s operating profit would have to decrease by more than 20% before the carrying value of the reporting unit exceeded its fair value.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in market risk at September 30, 2009, from that reported in our Annual Report on Form 10-K for the year ended December 31, 2008, except as follows:

In the second quarter of 2009, we entered into a fuel derivative agreement for the majority of our projected fuel consumption for the six months ending June 30, 2010, to protect us against increases in the cost of Gulf Coast jet fuel above $2.35 per gallon for wholesale purchases.

In the fourth quarter of 2009, we entered into a fuel derivative agreement for the majority of our projected fuel consumption for the six months ending December 31, 2010, to protect us against increases in the cost of Gulf Coast jet fuel above $2.71 per gallon for wholesale purchases.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officers (referred to in this report as the Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Management, under the supervision and with the participation of the Certifying Officers, evaluated the effectiveness of disclosure controls and procedures as of September 30, 2009, pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, the Certifying Officers have concluded that, as of September 30, 2009, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal control over financial reporting that occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our annual report on Form 10-K for the year ended December 31, 2008.

Item 2. Changes in Securities

Not Applicable

Item 3. Defaults upon Senior Securities

Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits

31.1 Chief Executive Officer Certification adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Chief Financial Officer Certification adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 Certification adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

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

	AIR METHODS CORPORATION
Date:  November 6, 2009	By	\s\   Aaron D. Todd
		Aaron D. Todd
		Chief Executive Officer
		(Principal Executive Officer)
Date:  November 6, 2009	By	\s\   Trent J. Carman
		Trent J. Carman
		Chief Financial Officer
		(Principal Financial Officer)
Date:  November 6, 2009	By	\s\   Sharon J. Keck
		Sharon J. Keck
		Chief Accounting Officer
		(Principal Accounting Officer)

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