<PAGE>



                 SECURITIES AND EXCHANGE COMMISSION
                       Washington, DC 20549

                            FORM 10-K
                 FOR ANNUAL AND TRANSITION REPORTS
              PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                SECURITIES AND EXCHANGE ACT OF 1934

         (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934
            For the fiscal year ended December 31, 1996
       (  )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934

                   Commission file number 1-8836

                    HAWAIIAN AIRLINES, INC.
     (Exact name of registrant as specified in its charter)


    HAWAII                                                    99-0042880
(State or other jurisdiction of                           (I.R.S. employer
incorporation or organization)                            identification no.)


3375 Koapaka Street, Suite G-350                                       96819
    Honolulu, Hawaii                                               (Zip code)
(Address of principal executive offices)

Registrant's telephone number, including area code:  (808) 835-3700

Securities registered pursuant to Section 12(b) of the Act:

    TITLE OF EACH CLASS               NAME OF EACH EXCHANGE ON WHICH REGISTERED
    -------------------               -----------------------------------------
Preferred Stock Purchase Rights                         American Stock Exchange
Common Stock ($.01  par value)                           Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
                                   None

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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.                     Yes (X )    No (  )

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court.                          Yes (X )    No (  )

As of March 1, 1997, 39,626,458 shares of Common Stock of the Registrant were
outstanding. The aggregate market value of voting stock held by non-affiliates
(20,684,942 shares of Common Stock) of the Registrant is approximately
$74,672,000.


<PAGE>
                         DOCUMENTS INCORPORATED BY REFERENCE

       The Registrant's Notice of 1997 Annual Meeting of Shareholders and
Proxy Statement are incorporated herein by reference in Part III of this Form
10-K.


                               EXHIBIT INDEX ON PAGE 44









                                      2
<PAGE>

                                  TABLE OF CONTENTS


                                                                           PAGE

COVER PAGE                                                                   1
                                      PART I
ITEM 1.         BUSINESS.                                                    4
ITEM 2.         PROPERTIES.                                                 11
ITEM 3.         LEGAL PROCEEDINGS.                                          11
ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.        11

                                     PART II

ITEM 5.         MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                SHAREHOLDER MATTERS.                                        11
ITEM 6.         SELECTED FINANCIAL DATA.                                    11
ITEM 7.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS.                        12
ITEM 8.         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                25
ITEM 9.         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE.                        26

                                       PART III

ITEM 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.         26
ITEM 11.        EXECUTIVE COMPENSATION.                                     27
ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT.                                             27
ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.             27

                                       PART IV

ITEM 14.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
                ON FORM 8-K.                                               28
                EXHIBIT INDEX                                              44
                SIGNATURES                                                 45

                                     TABLE INDEX

                BALANCE SHEETS                                            F-2
                STATEMENTS OF OPERATIONS                                  F-4
                STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)              F-5
                STATEMENTS OF CASH FLOWS                                  F-7
                NOTES TO FINANCIAL STATEMENTS                             F-9
                SUPPLEMENTAL FINANCIAL INFORMATION                        F-33
                SELECTED FINANCIAL AND STATISTICAL DATA                   F-34
                SCHEDULE                                                  S-1


                                      3
<PAGE>

                                       PART I

ITEM 1.  BUSINESS.
         --------
                                     THE COMPANY
                                     -----------

Hawaiian Airlines, Inc. ("Hawaiian Airlines" or the "Company") is the largest
airline headquartered in Hawaii, based on operating revenues of $384.5
million for 1996.  The Company is engaged primarily in the scheduled
transportation of passengers, cargo and mail over a route system which
services the six major islands of the State of Hawaii ("Interisland") and Las
Vegas and four key United States ("U.S.") West Coast gateway cities, Los
Angeles, San Francisco, Seattle and Portland ("Transpac").  In addition,
Hawaiian Airlines provides the only direct service from Hawaii to Pago Pago,
American Samoa and Papeete, Tahiti ("Southpac").  The Company also provides
charter service from Honolulu to Las Vegas and, effective February 1997, to
Anchorage, Alaska ("Overseas Charter"). The Company operates a fleet of 13
DC-9 aircraft and 10 DC-10 aircraft.

The Company was incorporated in January 1929 under the laws of the Territory
of Hawaii.  The Common Stock of the Company trades on the American Stock
Exchange and Pacific Stock Exchange under the symbol "HA."  The Company's
principal offices are located at 3375 Koapaka Street, Suite G-350, Honolulu,
Hawaii 96819, and its telephone and facsimile numbers are (808) 835-3700 and
(808) 835-3690, respectively.

                                      OPERATIONS
                                      ----------
PASSENGER SERVICE
-----------------

The Company's passenger airline business is its chief source of revenue.
Scheduled passenger service consists of, on average, approximately 150
flights per day among the six major islands of the State of Hawaii (i.e.,
Interisland), daily service to Las Vegas and four key U.S. West Coast gateway
cities (i.e., Transpac), and twice weekly service to Pago Pago, American
Samoa and weekly service to Papeete, Tahiti in the South Pacific (i.e.,
Southpac).  The Company also provides charter service to Las Vegas and,
effective February 1997, Anchorage (i.e., Overseas Charter).

The entire Interisland market averages approximately nine million passengers
annually.  Management estimates approximately two-thirds of Interisland
travelers are visitors to Hawaii while the balance are Hawaii residents.
Residents rely on Interisland flights in much the same way as mainland
residents rely on a state highway system.  The Company's Interisland
operations provide service to seven airports on the six major Hawaiian
islands of Oahu, Hawaii, Maui, Kauai, Molokai and Lanai. At December 31,
1996, Hawaiian Airlines' Interisland fleet consisted of 13 DC-9 aircraft.
During 1996, the Interisland market represented approximately 37.8% of the
Company's total operating revenues.

During 1996, the Company's Transpac operations served Las Vegas and the U.S.
West Coast gateway cities of Los Angeles, San Francisco, Seattle and
Portland. At December 31, 1996, 10 DC-10 aircraft were used to service
Transpac routes. In 1996, the Transpac market represented approximately 49.0%
of the Company's total operating revenues.

Hawaiian Airlines currently is the sole carrier providing air service from
Honolulu to American Samoa and Tahiti.  As a result of this lack of
competition, fares are relatively stable throughout the year.  Southpac
routes are serviced with DC-10 aircraft.  During 1996, the Southpac market
represented approximately 5.9% of the Company's total operating revenues.

In addition to its regularly scheduled service, in 1996 the Company also
operated, on average, six charter flights per week to Las Vegas utilizing
DC-10 aircraft. The Company's Overseas Charter operation produced 7.3% of the
Company's total operating revenues in 1996.

                                      4
<PAGE>
FUEL
----

Aviation fuel is a significant expense for any air carrier and even marginal
changes in fuel prices can greatly impact a carrier's profitability.  The
following table sets forth statistics about Hawaiian Airlines' aviation fuel
consumption and cost for each of the last three years:

                 GALLONS       TOTAL COST,      AVERAGE      % OF
                CONSUMED     INCLUDING TAXES   COST PER    OPERATING
      YEAR   (IN THOUSANDS)   (IN THOUSANDS)    GALLON     EXPENSES
      --------------------------------------------------------------
      1996     98,729         $ 75,642        76.6 CENTS     19.8%

      1995     92,167         $ 56,463        61.3 CENTS     16.2%

      1994     78,180         $ 47,457        60.7 CENTS     14.9%


Refer to MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS contained in Part II, Item 7 of this Form 10-K for
further discussion on aircraft fuel expense.

The single most important factor affecting petroleum product prices,
including the price of aviation fuel, continues to be the actions of the OPEC
countries in setting targets for the production and pricing of crude oil.  In
addition, aviation fuel prices are affected by the markets for heating oil,
diesel fuel, automotive gasoline and natural gas.  All petroleum product
prices continue to be subject to unpredictable economic, political and market
factors.  Also, the balance among supply, demand and price has become more
reactive to world market conditions.  Accordingly, the price and availability
of aviation fuel, as well as other petroleum products, continues to be
unpredictable.  In the event of a fuel supply shortage resulting from a
disruption of oil imports or otherwise, higher fuel prices or curtailment of
scheduled service could result.  A one cent change in the cost per gallon of
fuel has an impact on the Company's operating expenses of approximately
$82,000 per month (based on 1996 consumption). Changes in fuel prices may
have a greater impact on the Company than certain of its Transpac competitors
with more modern, fuel efficient aircraft.

In 1993, new taxes were placed on the production of certain fuels based on
their energy content. The airline industry received a two-year moratorium
from the effects of such taxes.  In October 1995, the industry and
thereafter, the Company became subject to an additional 4.3CENTS per gallon
tax.  As a result, the Company incurred $2.9 million more in fuel taxes in
1996 than in 1995.  The Company cannot predict whether or to what extent it
has been or will be able to pass on such additional costs to its customers.

As discussed below, although Hawaiian Airlines has contracts with several
different fuel suppliers, almost all of its aviation fuel is purchased from
Northwest Airlines, Inc. ("Northwest").

AIRCRAFT
--------

The Company's fleet consists of 10 DC-10 and 13 DC-9 aircraft.  All of the
Company's aircraft are leased except for two DC-9s that are owned by the
Company.  Of the DC-10s, nine are leased under long-term operating leases
with American Airlines, Inc. ("American") and expire in 2001.  One DC-10 is
leased under a short-term operating lease which expires in 1997.  Of the
leased DC-9s (including related flight equipment), seven are leased under
operating leases and four are leased under capital leases that expire at
various times through the year 2004.

Aircraft maintenance costs represent a significant operating cost for the
Company (approximately 18% for 1996) that will increase as the Company's
aircraft increase in age.  The average age of the Company's DC-10 aircraft is
23 years and its DC-9 aircraft is 18 years.  The Company intends to replace
some or all of its existing aircraft with replacement aircraft in the next
decade in order to reduce maintenance costs and achieve other operating
efficiencies, although no assurance can be given that the Company will have
the capital necessary to replace such aircraft.

In the event one or more of the Company's aircraft were to be out of service,
the Company may have difficulty completing its scheduled or chartered
service. Any interruption of service caused by the

                                      5
<PAGE>
unavailability of aircraft due to unscheduled servicing or repair or
otherwise, or lack of availability of substitute aircraft, could have a
material adverse effect on the Company's service, reputation and
profitability.  As is customary in the airline industry, the Company does not
have business interruption insurance.

                                 SEGMENT INFORMATION
                                 -------------------

Refer to MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS contained in Part II, Item 7 of this Form 10-K for
discussion on Industry Segment Information.

                                  SEASONALITY
                                  -----------

The airline industry is a highly cyclical business with substantial
volatility. Airlines frequently experience short-term cash requirements
caused by both seasonal fluctuations in traffic that often put a drain on
cash during off-peak periods and other factors that are not necessarily
seasonal, including the extent and nature of price and other competition from
other airlines, changing levels of operations, national and international
events, fuel prices and general economic conditions, including inflation.
Because a substantial portion of airline travel, both personal and to a
lesser extent business,  is discretionary, the  industry tends to experience
adverse financial results in general economic downturns.  Accordingly,
airlines require substantial liquidity to sustain continued operations under
most conditions.  Working capital deficits are not uncommon in the airline
industry since airlines typically have no product inventories and sales not
yet flown are reflected as current liabilities.

The Company's results are sensitive to seasonal and cyclical volatility
primarily due to seasonal leisure and holiday travel. The Company believes
that Hawaii is one of the most popular destinations for passengers flying on
frequent flyer travel awards and is in general a popular spot for vacation
travelers.  As such, traffic levels are typically lowest in the first quarter
of the year with strong travel periods during June, July, August and
December.  Aggressive fare pricing strategies that increase the availability
and size of ticket discounts are utilized during weaker travel periods.
Because certain of the Company's costs do not vary significantly regardless
of traffic levels, such seasonality substantially affects the Company's
profitability and liquidity.

                                DEPENDENCE ON TOURISM
                                ---------------------

Since the Company's operations are limited almost exclusively to flights to,
from and among, the Hawaiian Islands, the Company's profitability is linked
to the number of travelers to, from and among the Islands and a material
reduction in the number of such travelers would have a material adverse
effect on the Company's operations. Tourists constitute a majority of the
travelers to Hawaii. Because tourism levels are related to discretionary
income, the level of Hawaiian tourism is affected by the strength of the
economies in the areas from which tourists to Hawaii typically originate.
Hawaiian tourism is also dependent upon the popularity of Hawaii as a tourist
destination and negative events reduce tourist interest in Hawaii.  In
addition, from time to time, various events such as the Persian Gulf War and
industry-specific problems such as strikes have had a negative impact on
tourism in Hawaii.

After reaching its peak in 1990, the Hawaii tourism industry experienced
three consecutive years of decline, with year over year improvement from 1994
through 1996.  Results from the Hawaii Visitors and Convention Bureau
indicate that there were 6.8 million visitors to Hawaii in 1996, an increase
of 3.6% over 1995.  Approximately 41% came from Asia and the Pacific and
approximately 59% came from the U.S. mainland and Canada.  While 1996 was
encouraging, local economists expect that tourism in the future will grow
slowly, if at all. Significant obstacles to growth in Hawaii visitor traffic
have been and will continue to be the recent resurgence of the vacation cruise
industry, more effective promotion by areas such as Mexico, the Caribbean,
Europe and domestic leisure attractions such as theme parks and Las Vegas and
the increased incidence of domestic airline seat sales, which have become
more prevalent during the past two years and result in the diversion of
potential Hawaii discretionary travel.   No assurance can be given that the
level of tourism traffic to Hawaii will in fact return to pre-1991 levels or
that it will not decline in the future.  A decline in the level of Hawaii
tourism traffic could have a material adverse effect on the Company's
operations.
                                      6
<PAGE>
                                 COMPETITION

The airline industry is highly competitive and susceptible to price discounting,
primarily due to the effects of the Airline Deregulation Act of 1978, recodified
into the Transportation Act, which has substantially eliminated government
authority to regulate domestic routes and fares, and has increased the ability
of airlines to compete with respect to destination, flight frequencies and
fares.  Airline profit levels are highly sensitive to, and from 1990 to 1992
were severely impacted by, adverse changes in fuel costs, average yield and
passenger demand.  The emergence in recent years of several new carriers,
typically with low cost structures, has further increased the competitive
pressures on U.S. airlines.  Aircraft, skilled labor and gates at most airports
continue to be available to start-up carriers.  In some cases, the new entrants
have initiated or triggered price discounting. Increased competition combined
with rising operational costs and pricing pressures have created financial
difficulties for most airlines leading to the U.S. airline industry having
suffered unprecedented losses in recent years.  As a result, many airlines have
been acquired or forced to restructure or have ceased operations.  Although the
industry produced profits in 1995 and 1996, no assurance can be given that this
performance can be sustained in the future.

Many of the Company's competitors are larger and have substantially greater
resources than the Company. In addition, the commencement of service by new
carriers on the Company's routes could negatively impact the Company's operating
results.  Competing airlines have, and may in the future, undercut the Company's
fares and increase capacity on routes beyond market demand in order to increase
their market shares.  Such activity by other airlines could reduce fares or
passenger traffic to levels where profitable operations could not be achieved.
Due to its smaller size and liquidity, the Company may be less able to withstand
aggressive marketing tactics or a prolonged fare war initiated by its
competitors.

Although the domestic airline industry has at present abandoned deeply
discounted general pricing structures, and fare levels have continued to
increase from 1992 levels, significant industry-wide discounts could be
reimplemented at any time, and the introduction of broadly available, deeply
discounted fares by a major U.S. airline could result in lower yields for the
entire industry and could have a material adverse effect on the Company's
operating results.

Airlines are subject to a high degree of financial and operating leverage.  Due
to high fixed costs, the expenses of each flight do not vary proportionately
with the number of passengers carried, but the revenues generated from a
particular flight are directly related to the number of passengers carried.
Accordingly, while a decrease in the number of passengers carried would cause a
corresponding decrease in revenue (if not offset by higher fares), it may result
in a disproportionately greater decrease in profits.  However, an increase in
the number of passengers carried would have the opposite effect.

The airline industry is highly sensitive to general economic conditions.  Again,
because a substantial portion of airline travel is discretionary, the operating
and financial results of the Company may be negatively impacted by any downturn
in national or regional economic conditions in the U.S., particularly California
and Hawaii, and certain Asian countries, particularly Japan.  Any prolonged
general reduction in airline passenger traffic may adversely affect the Company.
The airline industry is characterized by low gross profit margins and revenues
that vary to a substantially greater degree than do the related costs.
Accordingly, a significant shortfall from expected revenue levels could have a
material adverse affect on the Company's operations.

INTERISLAND

While there are several small commuter and air taxi companies which provide air
transportation to airports which cannot be served with large aircraft, the
Interisland market is serviced primarily by two carriers, Hawaiian Airlines and
the Company's primary competitor in the Interisland market, Aloha Airlines, Inc.
("Aloha").  Aloha's competitive position is strengthened through its marketing
affiliation with United Airlines, Inc. ("United"), the largest carrier of
passengers to Hawaii.  Aloha participates in United's frequent flyer program and
also has a code sharing agreement with United.  Aloha principally utilizes 17
Boeing 737 aircraft with a schedule that averages approximately 180 daily
flights, which service the same basic Interisland routes as the Company.
Hawaiian Airlines has approximately 150

                                      7
<PAGE>

Interisland flights per day.  The Company believes that Interisland competition
is primarily based on fare levels, flight frequency, on-time performance and
reliability, name recognition, frequent flyer programs, customer service and
aircraft type.

TRANSPAC

The Company currently competes with major carriers such as United, Delta
Airlines, Inc., Northwest and, to a lesser extent, Continental Airlines, Inc.
and American on its Transpac routes.  In addition to the competition produced by
the major carriers, 1996 saw continued competition from charter carriers in the
Transpac market.  The Company believes that Transpac competition is primarily
based on fare levels, flight frequency, on-time performance and reliability,
name recognition, frequent flyer programs, customer service and in-flight
service.

                          RELIANCE ON THIRD PARTIES

The Company has entered into agreements with contractors, including American,
Northwest and certain other airlines, to provide certain facilities and services
required for its operations, including aircraft leasing and maintenance, code
sharing, reservations, computer services, frequent flyer programs, passenger
processing, fuel, ground facilities, baggage and cargo handling and personnel
training.  This reliance on third parties to provide services subjects the
Company to various risks, including the risk that such services could be
discontinued without adequate replacement services being available.

The Company leases all of its DC-10 aircraft from American.  American maintains
these aircraft and the Company pays an hourly charge for maintenance services,
monthly in arrears subject to a monthly minimum.  During 1996, the Company
incurred approximately $56.4 million of lease and maintenance expenses under the
American DC-10 aircraft leases.  American has the right to terminate its
obligation to provide aircraft maintenance services on and after January 1,
1999, upon 180 days prior notice.  If American terminated the maintenance
arrangement, the Company would have to seek an alternate source of maintenance
service or maintain its DC-10s by itself, and no assurance can be given that the
Company would be able to do so on a basis that is as cost-effective as the
American maintenance arrangement.  The Company also participates in American's
AAdvantage frequent flyer program and SABRE reservation system, which makes the
Company more competitive.  The Company's participation in the AAdvantage program
expires in 1997, subject to renewal, and its participation in SABRE expires in
2001.

The Company purchases almost all of its aviation fuel from Northwest pursuant to
an agreement between the two companies which provides that, in case of
shortages, Northwest will provide fuel to its own fleet first and then a portion
of the remaining fuel available will be allocated between Hawaiian Airlines and
any other applicable airlines.  The agreement requires Northwest to provide
Hawaiian Airlines with aviation fuel at Northwest's actual acquisition cost
without markup for profit and with reimbursement only for out-of-pocket costs.
The agreement is renewed automatically on December 31 of each year unless
canceled by either of the parties with 90 days written notice. Hawaiian Airlines
is prohibited from reselling such fuel.  No assurance can be given that the
Company would be able to secure an adequate supply of fuel from alternate
sources if a fuel shortage were to cause the supply from Northwest to be
inadequate or if Northwest were to cancel the agreement. The Company paid
Northwest approximately $70.9 million, $53.0 million and $43.9 million for the
fuel supplied under this agreement in 1996, 1995 and 1994, respectively.
Further, effective July 1996, the Company entered into a cooperative marketing
agreement with Northwest, which provides for extensive marketing cooperation,
including a code sharing arrangement and frequent flyer participation.

Approximately 74% of the Company's ticket sales are currently made by travel
agents, including wholesalers.  Travel agents generally have a choice between
one or more airlines when booking a customer's flight.  Accordingly, any effort
by travel agencies to favor another airline or to disfavor the Company could
adversely affect the Company.  Although management intends to continue to offer
an attractive and competitive product to travel agencies and to maintain
favorable relations with travel agencies, there can be no assurance that travel
agencies will not disfavor the Company or favor other airlines in the future,
either of which could have an adverse effect on the Company's operations.

                                      8
<PAGE>
                                  REGULATION

GENERAL

As a certificated air carrier, Hawaiian Airlines is subject to the regulatory
jurisdiction of the U.S. Department of Transportation (the "DOT") and the
Federal Aviation Administration (the "FAA").  The DOT has jurisdiction over
certain aviation matters such as the carrier's certificate of public convenience
and necessity, international routes and fares, consumer protection policies
including baggage liability and denied-boarding compensation and unfair
competitive practices as set forth in the Transportation Act.  Hawaiian Airlines
and all other domestic airlines are subject to regulation by the FAA under the
Transportation Act. The FAA has regulatory jurisdiction over flight operations
generally, including equipment, ground facilities, security systems, maintenance
and other safety matters.  To assure compliance with its operational standards,
the FAA requires air carriers to obtain operations, air worthiness and other
certificates which may be suspended or revoked for cause.  The FAA also conducts
safety audits and has the power to impose fines and other sanctions for
violations of aviation safety and security regulations.  Hawaiian Airlines, as
are other carriers, is subject to inspections by the FAA in the normal course of
its business on a routine ongoing basis.  Hawaiian Airlines operates under a
Certificate of Public Convenience and Necessity issued by the DOT (authorizing
it to provide commercial aircraft service) as well as a Part 121 Scheduled
Carrier Operating Certificate issued by the FAA.

LIMITATION ON FOREIGN OWNERSHIP OF SHARES

The Transportation Act prohibits non-U.S. citizens from owning more than 25% of
the voting interest of a U.S. air carrier.  The Company's Restated Articles of
Incorporation provide that the ownership or control of more than 25% (to be
increased or decreased from time to time to that percentage permissible under
the laws of the U.S.) of issued and outstanding voting capital stock of the
Corporation by persons who are not "citizens of the U.S." is prohibited.  As of
December 31, 1996, less than 0.1% of the Common Stock of the Company was known
to be held by non-U.S. citizens.

MAINTENANCE DIRECTIVES AND OTHER REGULATIONS

In the last several years, the FAA has issued a number of maintenance directives
and other regulations relating to, among other things, collision avoidance
systems, airborne windshear avoidance systems, noise abatement and increased
inspection requirements.  The Company expects to continue to incur substantial
expenditures for the purpose of complying with these new regulations.
Additional laws and regulations have been proposed from time to time that could
significantly increase the cost of airline operations by, for example, imposing
additional requirements or restrictions on operations.  Laws and regulations
also have been considered from time to time that would prohibit or restrict the
ownership and/or transfer of airline routes or takeoff and landing slots.  Also,
the award of international routes to U.S. carriers (and their retention) is
regulated by treaties and related agreements between the U.S. and foreign
governments which are amended from time to time.  The Company cannot predict
what laws and regulations will be adopted or what changes to international air
transportation treaties will be effected, if any, or how they will affect the
Company.

The FAA frequently issues air worthiness directives, often in response to
specific incidents or reports by operators or manufacturers, requiring operators
of specified equipment to perform prescribed inspections, repairs or
modifications within stated time periods or numbers of cycles.  Hawaiian
Airlines has developed extensive maintenance programs which consist of a series
of phased checks of each aircraft type.  These checks are performed at specified
intervals measured either by time flown or by the number of takeoffs and
landings ("cycles") performed.  Checks range from daily "walk around"
inspections, to more involved overnight maintenance checks, to exhaustive and
time consuming overhauls.  Aircraft engines are subject to phased, or
continuous, maintenance programs designed to detect and remedy potential
problems before they occur.  The service lives of certain parts and components
of both airframe and engines are time or cycle controlled.  Parts and other
components are replaced or overhauled prior to the expiration of their time or
cycle limits.  The FAA approves all airline maintenance programs, including
changes to the programs.  In addition, the FAA licenses the mechanics who
perform the inspections and repairs, as well as the inspectors who monitor the
work.

                                      9
<PAGE>

Hawaiian Airlines believes that it is in compliance with all requirements
necessary to maintain in good standing its operating authority granted by the
DOT and its air carrier operating certificate issued by the FAA.  A
modification, suspension or revocation of any of the Company's DOT or FAA
authorizations or certificates would have a material adverse effect upon the
Company.

Several aspects of airlines' operations are subject to regulation or oversight
by Federal agencies other than the FAA and DOT.  The antitrust laws are enforced
by the U.S. Department of Justice.  The U.S. Postal Service has jurisdiction
over certain aspects of the transportation of mail and related services provided
by the Company's cargo services.  Labor relations in the air transportation
industry are generally regulated under the Railway Labor Act.  The Company and
other airlines certificated prior to October 24, 1978 are also subject to
preferential hiring rights granted by the Transportation Act to certain airline
employees who have been furloughed or terminated (other than for cause).

In 1990, Congress passed legislation phasing out the use of Stage 2 aircraft in
the U.S. by December 31, 1999, with the possibility of certain waivers until
December 31, 2003, when full phase out is required.  Congress provided an
exemption for air carriers operating in Hawaii, or between a place in Hawaii and
a place outside the 48 contiguous states, to operate as many Stage 2 aircraft of
a certain weight as they operated on November 5, 1990.  Air carriers that
provided flights between places only in Hawaii on November 5, 1990 may include
in the number of Stage 2 aircraft under the exemption all Stage 2 aircraft that
it owned or leased on November 5, 1990, whether or not the aircraft were
operated by the carrier on that date.  However, an air carrier may provide
flights between places only in Hawaii using Stage 2 aircraft only if the carrier
provided the service on November 5, 1990. The Company believes these exemptions
restrict air carriers other than the Company and Aloha from operating Stage 2
aircraft in Hawaii. Because Stage 2 aircraft are less expensive to acquire than
Stage 3 aircraft, this exemption provides limited protection against the entry
of another carrier, which would be required to operate an all Stage 3 fleet.
This advantage is partially offset by the fact that Stage 3 aircraft are
generally less expensive to operate and maintain, as well as the fact that in
any event over time, carriers will move toward having an all Stage 3 fleet.

INSURANCE

The Company is exposed to potential losses that may be incurred in the event of
an aircraft accident.  Any such accident could involve not only the repair or
replacement of a damaged aircraft and its consequential temporary or permanent
loss of service, but also significant potential claims of injured passengers and
others.  The Company is required by the DOT to carry liability insurance on each
of its aircraft.  The Company currently maintains public liability insurance
which management believes is adequate and consistent with current industry
practice.  However, there can be no assurance that the amount of such coverage
will not be changed or that the Company will not bear substantial losses from
accidents.  Substantial claims resulting from an accident in excess of related
insurance coverage could have a material adverse effect on the Company.

TICKET AND CARGO TAX

Prior to 1996, the airline industry was subject to a 10.0% excise tax on each
ticket sold (other than Transpac flights), a 6.25% cargo excise tax and a $6.00
international departure tax (including Transpac and Overseas Charter flights).
These taxes lapsed on January 1, 1996, but were reinstated on August 28, 1996.
These taxes lapsed again on January 1, 1997, but were reinstated on March 7,
1997 effective through September 30, 1997.  The Company has and will adjust its
fares accordingly based upon prevailing market conditions.  There can be no
assurance that the Company will be able to maintain its current fare levels or
predict with any certainty the effects on its fares should the taxes again lapse
and/or be reinstated.

                                  EMPLOYEES

As of December 31, 1996, Hawaiian Airlines had  2,392 employees, of which
2,020 were employed on a full-time basis.  The majority of Hawaiian Airlines'
employees are covered by labor agreements with the International Association
of Machinists and Aerospace Workers (AFL-CIO) ("IAM"), the Air Line Pilots
Association International ("ALPA"), the Association of Flight Attendants
("AFA"), the Transport Workers Union ("TWU") and the Communications Section
Employees Union.  The IAM, ALPA, AFA, TWU and Communications
Section Employees ratified new bargaining unit contracts in 1996.

                                      10

<PAGE>

                                   PART II

ITEM 2.  PROPERTIES.

         Information provided in Notes 4, 5 and 6 to the Financial Statements
         contained in Part IV, Item 14 of this Form 10-K is incorporated herein
         by reference.

ITEM 3.  LEGAL PROCEEDINGS.

         Information provided in Note 11 to the Financial Statements contained
         in Part IV, Item 14 of this Form 10-K is incorporated herein by
         reference.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
         MATTERS.

(a)      Market Information.

         The Registrant's Common Stock is traded on the American Stock Exchange
         and Pacific Stock Exchange under the symbol HA. The following table
         sets forth the reported high and low sales prices for the Common Stock
         for the quarters indicated, as reported by the American Stock
         Exchange:


                              First     Second    Third     Fourth
                     1996     Quarter   Quarter   Quarter   Quarter
                  ---------------------------------------------------
                     High      3-1/2     7-1/16    5-1/8     4
                     Low       1-5/8     2-7/8     3-1/4     3

                               First     Second    Third     Fourth
                      1995     Quarter   Quarter   Quarter   Quarter
                  ---------------------------------------------------
                     High      N/A*      13-1/2    6-7/16    3-7/8
                     Low       N/A*       1-5/8    2-3/4     2-3/16

         *  The Company commenced distribution of its Common Stock on June 19,
         1995, in accordance with its consolidated Plan of Reorganization dated
         September 21, 1993, as subsequently amended.

(b)      Holders.

         As of March 19, 1997, there were approximately 1,040 holders of record
         of the Company's Common Stock.

(c)      Dividends.

         Under the terms of the financing arrangement with CIT Group/Credit
         Finance, Inc., the Company is restricted from paying any cash or stock
         dividends.  No dividends were paid by the Company in 1996 or 1995.

ITEM 6.  SELECTED FINANCIAL DATA.

         Information under the caption "Selected Financial and Statistical
         Data" on pages F-33 to F-35 contained in Part IV, Item 14 of this Form
         10-K is incorporated herein by reference.

                                      11
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Certain statements contained heretofore that are not related to historical
results, including, without limitation, statements regarding the Company's
business strategy and objectives, future financial position and estimated
cost savings, are forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act and involve
risks and uncertainties.  Although the Company believes that the assumptions
on which these forward-looking statements are based are reasonable, there can
be no assurance that such assumptions will prove to be accurate and actual
results could differ materially from those discussed in the forward-looking
statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed under Part I, Item I,
Business and heretofore, as well as those discussed elsewhere in this Form
10-K.  All forward-looking statements contained in this Form 10-K are
qualified in their entirety by this cautionary statement.

                                 INTRODUCTION

In response to the financial difficulties experienced by the Company in the
early 1990s, Hawaiian Airlines, HAL, INC., Hawaiian Airlines' then parent
company, and West Maui Airport, Inc., another then wholly owned subsidiary of
HAL, INC. (collectively the "Predecessor"), voluntarily commenced a Chapter
11 bankruptcy reorganization pursuant to a consolidated Plan of
Reorganization dated September 21, 1993, as subsequently amended (the
"Reorganization Plan"). The Company emerged from Chapter 11 bankruptcy on
September 12, 1994  (the "Effective Date") with Hawaiian Airlines being the
sole surviving corporation (the "Reorganized Company").

In 1996, the Company was successful in its concerted efforts to improve its
liquidity and financial position.

RECAPITALIZATION

On January 31, 1996, the Company received a $20.0 million cash equity
infusion through the purchase by Airlines Investors Partnership, L.P. ("AIP")
of 18,181,818 shares of the Company's Common Stock (the "Shares"), par value
$.01 per share, and four shares of the Company's Class B Special Preferred
Stock, par value $.01 per share (collectively the "AIP Investment").  As of
December 31, 1996, AIP owned approximately 45.9% of the Company's common
equity.  As a result, AIP currently controls substantially all actions to be
taken by the shareholders of the Company.  Pursuant to the Company's Amended
Bylaws and the terms of the Series B Special Preferred Stock, until such time
as AIP ceases to own at least 35.0% of the common equity, it would have the
right to nominate six of the 11 nominees to stand from time to time for
election as directors of the Company.  Thereafter, AIP would have the right
to nominate five, four or three directors so long as it owned at least 25%,
10% or 5%, respectively, of the common equity.  In 1996, six of AIP's
director nominees were elected to the Board of Directors.

AIP and the Company have entered into a registration rights agreement
pursuant to which AIP has the right to require the Company, on two occasions,
to use its best efforts to register, at the Company's expense subject to
certain conditions, some or all of the Shares under the Securities Act of
1933, as amended (the "Securities Act").  In addition, AIP has the right to
have the Shares included in any other registered offering of shares of Common
Stock made within 10 years after consummation of the AIP Investment.

In September 1996, the Company completed a shareholder rights offering and an
investor offering (collectively the "Offerings") which collectively raised
approximately $39.3 million in gross proceeds of equity capital.  The
Offerings were intended to permit the Company's shareholders to reduce the
dilutive effect of the AIP Investment, as described above, on their equity
investment in the Company and to raise additional equity capital.  The
Offerings resulted in the issuance of 12,092,500 new shares of Common Stock
at the subscription price of $3.25 per share.  The effects of the Offerings
have been reflected in the Company's balance sheets net of approximately $3.2
million of estimated costs and approximately $1.9 million in fully recourse,
interest-bearing notes received from holders of options granted as part of
the shareholder rights offering who exercised such options to purchase
592,500 shares of Common Stock in the Offerings.

                                      12
<PAGE>
RESTRUCTURING AND ELIMINATION OF DEBT

Upon consummation of the AIP Investment and satisfaction of certain other
conditions, the Company entered into certain arrangements with American and
AMR Corporation, American's Parent Company ("AMR") AMR pursuant to which,
American and AMR accepted the following:

(i)   The payment of up to $10.0 million of deferred lease rents and maintenance
      payments (and accrued interest thereon) under the Company's long-term
      aircraft lease agreement with American (the "Aircraft Lease Agreement")
      and the reimbursement of $250,000 of American's fees and expenses in
      connection with the transaction through the issuance by the Company to
      American of a $10.25 million promissory note secured by certain assets of
      the Company (the "American Note"). The American Note bore interest at
      10.0% per annum, payable quarterly in arrears, and had a final maturity
      date of September 11, 2001. The Company had the option to prepay the
      American Note for $9.15 million at any time before January 31, 1997, or at
      any time thereafter, in whole or in part, at its remaining principal
      balance, without premium.  On December 24, 1996, the Company exercised its
      option to prepay the American Note for $9.15 million plus accrued interest
      with all liens securing the American Note being released;

(ii)  Reduction of basic rents under the Aircraft Lease Agreement by
      approximately 28.0% for a period of three years, at which time basic rents
      would revert back to 1995 levels.  The Company agreed to pay a minimum
      amount for hourly maintenance charges and basic rents and maintenance
      amounts are payable monthly in arrears, rather than weekly in advance.
      American has the right to terminate its obligation to provide aircraft
      maintenance services on and after January 1, 1999 upon 180 days prior
      notice;

(iii) American's relinquishment of $2.0 million of letters of credit which
      secured the Company's obligations to American under the Aircraft Lease
      Agreement.  The termination of these letters of credit increased the
      Company's borrowing capacity under the Credit Facility, as defined below;

(iv)  Issuance of the Warrants to AMR (the "AMR Warrants"), which entitled
      the holder to acquire up to 1,897,946 shares of Common Stock (the "AMR
      Warrant Shares") exercisable at $1.10 per share (adjusted to 1,949,338
      shares at $1.07 per share pursuant to applicable anti-dilution
      provisions). As a result of the Offerings, warrants to purchase an
      additional 51,392 shares of Common Stock were issued to AMR with the
      exercise price of the AMR Warrants being adjusted to $1.07 per share.
      One-half of the AMR Warrants are currently exercisable, but the balance
      of the AMR Warrants were to become exercisable only if American and the
      Company had entered into a code sharing arrangement by January 1, 1997
      regarding the placement of the two letter flight designator code for
      American's flights on certain of the Company's Interisland flights.  The
      Company extended the date upon which the balance of the AMR Warrants
      could become exercisable, subject to the satisfaction of certain agreed
      upon conditions.  While the Company and AMR continue their attempts to
      consummate the code sharing arrangement, the conditions upon which the
      exercisable date of the balance of the AMR Warrants had been extended
      were not satisfied and on January 31, 1997, the balance of the AMR
      Warrants expired.  The remaining outstanding AMR Warrants, if not
      exercised, expire on September 11, 2001; and

(v)   American's right to require the Company, on two occasions, to use its best
      efforts to register, at the Company's expense subject to certain
      conditions, some or all of the AMR Warrant Shares under the Securities
      Act.  In addition, AMR has the right to have the AMR Warrant Shares
      included in any other registered offering of shares of Common Stock made
      before September 11, 2001. If any person or entity acquires a majority of
      the outstanding Common Stock before September 11, 2001, the Company is
      required to use its best efforts to cause the seller or sellers of such
      Common Stock to permit AMR to include the AMR Warrant Shares in such sale
      on the same terms as those available to such seller.  AIP has agreed that,
      if it were one of the sellers in such a sale, it would permit AMR to
      participate in such sale.

The arrangements with American provided the Company with substantial
benefits. In addition, basic rents under the Aircraft Lease Agreement were
reduced by approximately 28.0% for three years over the term and improved
cash flow over the three-year period.  Furthermore, the release by American
of the security deposit letters of credit resulted in $2.0 million of
borrowing capacity becoming available to the Company under the Credit
Facility.  In
                                      13
<PAGE>

total, these arrangements with American improved the Company's liquidity by
approximately $15.0 million and resulted in the reduction of cash operating
expenses by approximately $3.0 million per year for three years.

On April 29, 1996, the company's credit facility with CIT Group/Credit
Finance, Inc. (the "Credit Facility") was amended to increase the borrowing
capacity thereunder from $8.15 million to $15.0 million. The $15.0 million
Credit Facility consists of two secured term loans and a secured revolving
line of credit including up to $6.0 million of letters of credit.  The term
loans will amortize in equal installments over periods of 48 and 60 months,
respectively. The outstanding principal amounts of the term loans will become
due and payable upon termination of the Credit Facility.  Available credit is
subject to change determined by recalculation of the borrowing base,
repayments due under the term loans and repayments arising from the
disposition and other changes in the related collateral securing the Credit
Facility.  The Credit Facility has an initial term of three years from April
29, 1996 and renews automatically for successive terms of two years each,
unless terminated by either party on at least 60 days notice prior to the end
of the then-current term. Interest accrues at prime plus 2.0%.  The Company
may terminate the Credit Facility at any time, on 30 days notice and payment
of certain early termination fees during the initial term and without
termination fees during any renewal term.

As of December 31, 1996, the total availability under the Credit Facility was
$13.2 million with aggregate term loans and letters of credit outstanding in
the amounts of  $6.8 million and $100,000, respectively.  As of December 31,
1995, the total availability under the Credit Facility amounted to
approximately $3.4 million, which amount was fully drawn in the form of $1.3
million in borrowings and $2.1 million in letters of credit.

The Credit Facility is secured by a first lien on substantially all of the
Company's property, excluding the Company's owned and leased aircraft, the
Company's aircraft engines while installed on an aircraft and certain
security deposits.  In addition, terms of the Credit Facility restrict the
Company from paying any cash or stock dividends on its Common Stock.

In connection with the AIP Investment, the Company agreed with the GPA Group
plc and its affiliate AeroUSA, Inc. (collectively the "GPA Companies") that,
if closing of the Offerings were to have occurred by September 30, 1996, the
Company would repurchase all of the shares of Common Stock owned by the GPA
Companies and repay certain secured and unsecured promissory notes held by
the GPA Companies.  The stock repurchase price would be $1.10 per share and
the promissory notes would be repaid at approximately 85.0% of the then
carrying value of the notes, including any deferred costs and other expenses
owed.  At its option, the Company could make such repurchase and repayment at
any time prior to the closing of the Offerings.  As required by the provider
of the Credit Facility in connection with the amendment thereof, the Company
exercised this option in April 1996.  Based on the number of shares owned by
the GPA Companies and the carrying value of the notes as of such date, the
Company paid approximately $4.7 million to the GPA Companies to repurchase
the shares and repay the notes.  The payment to the GPA Companies was funded
by borrowings under the Credit Facility in April 1996.

UNIONS AND LABOR AGREEMENTS

Upon consummation of the AIP Investment and satisfaction of certain other
conditions, amendments to the labor agreements for each of the Company's five
labor unions became effective.

The amendments to the agreements extend the amendable date of all five
contracts from February 28, 1997 to February 28, 2000.  Each of the five
unions agreed to certain economic concessions, which include cancellation of
certain scheduled pay increases, with new pay increases to be effective
December 1, 1998 and January 1, 2000. Management expects that these
concessions will reduce cash operating expenses which would otherwise have
been incurred by an aggregate amount of approximately $10.0 million during
the two-year period ending December 1997.  In exchange for the wage
concessions, the Company agreed to negotiate a gain-sharing program to
provide employees the opportunity to receive wage rate increases resulting
from work rule and productivity modifications, which would produce cost
savings to the Company.  In addition, the Company agreed to establish a
profit bonus plan, which would provide all employees (other than senior
management) with cash bonuses if the Company achieves certain pre-tax profit
targets.  The contracts as modified provide additional furlough protection to
employees under certain specified circumstances.  The Company and unions also
have agreed to include certain additional low-cost or no-cost provisions that
are specific to each of the
                                      14
<PAGE>

respective union contracts. The estimated cash operating expense savings
noted above do not include estimated costs associated with these gain sharing
and profit bonus plan initiatives because management cannot presently
determine the amount of such costs.

Pursuant to their collective bargaining agreements, AFA, IAM and ALPA each
have the right to nominate one of the nominees to stand from time to time for
election as directors of the Company.  In 1996, each of the IAM, ALPA and AFA
director nominees was elected to the Board of Directors.

                       LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1996, the Company had working capital of $8.4 million,
representing a $60.1 million improvement from the net working capital deficit
of $51.7 million at December 31, 1995.

A majority of the improvement in net working capital is associated with cash
and cash equivalents totaling $37.2 million as of December 31 1996, an
increase of $31.8 million from December 31, 1995.  The increase is a direct
result of the net proceeds generated from the AIP Investment and the
Offerings which totaled approximately $52.7 million.  Net working capital was
also enhanced when, as described above, in January 1996, certain agreements
and arrangements with American were consummated, which provided for, among
other things, the payment of previously deferred lease rents and maintenance
payments and interest thereon and the reimbursement of fees and expenses
through the issuance of the American Note.  Working capital is also available
through the Credit Facility as discussed above.

Operating activities for the year ended December 31, 1996 provided $1.0
million in cash and cash equivalents.  Investing activities for the year
ended December 31, 1996, used $9.7 million of cash and cash equivalents to
acquire property and equipment, partially offset by $2.8 million in proceeds
received from the disposition of equipment.  Financing activities for the
year ended December 31, 1996 provided $37.7 million in cash and cash
equivalents, a direct result of a net $53.1 million inflow from the AIP
Investment and Offerings described above and a net outflow of $14.4 million
associated with the Company's long-term debt and capital lease obligations.

The Company made approximately $9.7 million of $11.1 million in planned
capital expenditures during the year ended December 31, 1996.  The Company
plans to make approximately $20.1 million of capital expenditures in the
ordinary course of business during 1997.  Consistent with 1996, these
expenditures include the capitalized portions of certain scheduled DC-9
checks and overhauls.  Also included are expenditures for rotable equipment
and ground equipment, software and related hardware, facilities and certain
other projects.

The Company believes that its ability to generate cash, both internally from
operations and externally from debt and equity issues, is adequate to
maintain sufficient liquidity to fund its capital expenditure programs and to
cover debt and other cash requirements in the foreseeable future.

                            FREQUENT FLYER PROGRAM

The Company's Gold Plus frequent flyer program was initiated in 1983.  As of
December 31, 1996 and 1995, the Company's Gold Plus membership had more than
571,000 and 560,000 members, respectively, including approximately 349,000
and 361,000 active members, respectively.

The Gold Plus program rewards its members with mileage credits primarily for
travel on Hawaiian Airlines.  Gold Plus members are entitled to a choice of
various awards based on accumulated mileage, with a majority of the awards
being certain free air travel at a later date.  Travel awards available in
the Gold Plus program range from a 5,000 award, which offers a one-way
Interisland flight, to 60,000 and 75,000 mile awards, which offer a round
trip first-class Transpac flight and round trip first-class Southpac flight,
respectively.  Miles traveled under the Gold Plus program are accounted for
as revenue passenger miles, which, in turn, are used in the calculation of
the Company's yield. Non-travel awards are valued at the incremental cost of
tickets exchanged for such awards.

The Company recognizes a liability in the period in which members have
accumulated sufficient mileage points to allow for award redemption.  The
liability is adjusted based on net mileage earned and utilized for award

                                      15
<PAGE>

redemption on a monthly basis.  The incremental cost method is used, computed
primarily on the basis of fuel and catering costs, exclusive of any overhead
or profit margin.  In estimating the amount of such incremental costs to be
accrued in the liability for potential future Gold Plus free travel, a
current average cost per award mile is determined.  Incremental fuel expended
per passenger is based on engineering formulas to determine the quantity used
for the weight of each added passenger and baggage.  Such incremental
quantity of fuel is priced at current levels.  Catering is based on average
cost data per passenger for the most recent 12 month period.

As of December 31, 1996 and 1995, Gold Plus members had accumulated
approximately 2.4 billion and 3.3 billion miles, respectively, representing
liabilities totaling approximately $800,000 and $489,000, respectively.  The
Company's accruals assume full redemption of mileage points. During the years
ended December 31, 1996, 1995 and 1994, 857 million, 581 million and 636
million award miles were redeemed, respectively.

The Company believes that the usage of free travel awards will not result in
the displacement of revenue customers and, therefore, such usage will not
materially affect the Company's liquidity or operating results.  The use of
free travel awards is subject to review by the Company to limit the
possibility of displacing revenue passengers.  Usage of Gold Plus travel
redemption accounted for approximately 2.9%, 2.2% and 2.7% of Interisland
traffic and a negligible percentage of Transpac and Southpac traffic in 1996,
1995 and 1994, respectively.


                                      16
<PAGE>
                            RESULTS OF OPERATIONS

                            1996 COMPARED TO 1995

For the year ended December 31, 1996, the Company generated operating income
of $2.0 million and incurred a net loss of $1.5 million.  This represents a
$3.9 million improvement from the 1995 operating loss of $1.9 million and a
$4.0 million improvement from the 1995 net loss of $5.5 million.  Through
third quarter 1996, the Company had generated operating and net income of
$8.1 million and $2.3 million, respectively.  Fourth quarter 1996 results
were negatively impacted by a 4.8% decrease in westbound visitors to Hawaii
and a 27.3% rise in the Company's average aircraft fuel cost per gallon as
compared to fourth quarter 1995.  The Company also experienced higher than
anticipated maintenance costs for DC-9 engines in fourth quarter 1996.
Decreased demand for travel to Hawaii during fourth quarter 1996, caused in
part by aggressive competition for travel dollars in other markets, has
continued into first quarter 1997.  Preliminary statistics for January 1997
from the Hawaii Visitors and Convention Bureau reflect a 2.6% decrease in
westbound visitor arrivals when compared to January 1996.

Included in the 1996 net loss is a provision for income taxes of $1.4
million. While generally accepted accounting standards require that the
provision be recorded, a majority of the provision will not require cash
outlay as it will be offset by net operating loss carryforwards available to
the Company.  As noted in Note 8 in NOTES TO FINANCIAL STATEMENTS contained
in Part IV, Item 14 of this Form 10-K, the estimated income tax benefit from
the expected utilization of these net operating loss carryforwards has been
applied as a reduction to reorganization value in excess of amounts allocable
to identifiable assets.


                                      17
<PAGE>

OPERATING REVENUES

The following table compares 1996 operating revenues to those in 1995, in
thousands, by service type:

<TABLE>
<CAPTION>
                                                                                 Increase
                                                        1996        1995        (Decrease)
                                                      ------------------------------------
<S>                                                   <C>          <C>          <C>
Interisland:
    Passenger......................................   $133,019     $122,079     $10,940
    Cargo..........................................      5,826        6,702        (876)
    Other..........................................      6,319        5,698         621
                                                      --------     --------     -------
                                                       145,164      134,479      10,685
                                                      --------     --------     -------

Transpac:
    Passenger......................................    173,419      156,155      17,264
    Cargo..........................................     11,906        9,555       2,351
    Other..........................................      3,528        3,114         414
                                                      --------     --------     -------
                                                       188,853      168,824      20,029
                                                      --------     --------     -------

Southpac:
    Passenger......................................     19,828       19,293         535
    Cargo..........................................      2,391        1,912         479
    Other..........................................        360          229         131
                                                      --------     --------     -------
                                                        22,579       21,434       1,145
                                                      --------     --------     -------

Overseas Charter:
    Passenger......................................     27,835       22,167       5,668
    Other..........................................         42           -           42
                                                      --------     --------     -------
                                                        27,877       22,167       5,710
                                                      --------     --------     -------

         Total.....................................   $384,473     $346,904     $37,569
                                                      --------     --------     -------
                                                      --------     --------     ---------
</TABLE>

                                      18

<PAGE>

The following table compares applicable 1996 operating and financial
passenger revenue statistics to those in 1995, in thousands, except as
otherwise indicated:

<TABLE>
<CAPTION>

                                                                                     Increase
                                                       1996          1995           (Decrease)          %
                                                   ----------------------------------------------------------
<S>                                                <C>               <C>              <C>              <C>
Interisland:
    Revenue passengers............................      3,828          3,721              107          2.9
    Revenue passenger miles.......................    508,286        490,044           18,242          3.7
    Available seat miles..........................    921,752        937,736          (15,984)         (1.7)
    Passenger load factor.........................       55.1%            52.3%           2.8           5.4
    Yield.........................................       26.2 CENTS       24.9 CENTS      1.3 CENTS     5.2

Transpac:
    Revenue passengers............................      1,080              994             86           8.7
    Revenue passenger miles.......................  2,647,869        2,506,774        141,095           5.6
    Available seat miles..........................  3,371,049        3,034,177        336,872          11.1
    Passenger load factor.........................       78.5%            82.6%          (4.1)         (5.0)
    Yield.........................................        6.5 CENTS        6.2 CENTS      0.3 CENTS     4.8

Southpac:
    Revenue passengers............................         63               66             (3)         (4.5)
    Revenue passenger miles.......................    167,850          174,548         (6,698)         (3.8)
    Available seat miles..........................    279,154          266,406         12,748           4.8
    Passenger load factor.........................       60.1%            65.5%          (5.4)         (8.2)
    Yield.........................................       11.8 CENTS       11.1 CENTS      0.7 CENTS     6.3

Overseas Charter:
    Revenue passengers............................        190              155             35          22.6
    Revenue passenger miles.......................    515,982          425,797         90,185          21.2
    Available seat miles..........................    528,787          439,142         89,645          20.4

</TABLE>

Operating revenues totaled $384.5 million in 1996 compared to $346.9 million
in 1995, an increase of $37.6 million or 10.8%.

Revenues from Interisland passenger service totaled $133.0 million during
1996, an increase of $10.9 million or 9.0% from 1995 Interisland passenger
revenues of $122.1 million.  Increases of 2.9% and 3.7% in Interisland
passengers carried and Revenue Passenger Miles ("RPMs"), respectively, were
augmented by an increase in Interisland yield of 1.3CENTS or 5.2%.  Increases
in Interisland revenue passengers carried and revenue passenger miles were
primarily caused by the Company increasing its share of the Interisland
passenger market based on management's estimates by approximately one
percentage point year over year.  Interisland yield in 1996 increased
compared to 1995 due to (i) the Company being able to maintain and/or
increase certain Interisland fares and (ii) the effects of lower yielding
promotional fare ticket programs being less prevalent in 1996 than in 1995.

Revenues from Transpac passenger operations totaled $173.4 million during
1996 compared to $156.2 million in 1995, an increase of $17.2 million or
11.1%.  The Company experienced increases of 8.7% and 5.6% in its passengers
carried and RPMs, respectively.  Increases in revenue passengers carried and
RPMs were a direct result of increased frequencies in the Transpac market as
denoted by the increase in Transpac available seat miles by 11.1%.  Transpac
yield also increased by 0.3 CENTS or 4.8%.  Again, similar to above, the
increase in yield was primarily caused by general increases in certain
Transpac fares and the effects of promotional fare ticket programs being less
prevalent in 1996 than in 1995.

                                      19
<PAGE>

Transpac cargo revenues amounted to $11.9 million in 1996, an increase of
$2.4 million or 24.6% from 1995 Transpac cargo revenues of $9.6 million.  The
increase was a direct result of additional frequencies in the Company's
Transpac routes. The Company transported 3.8 or 24.0% more tons of freight in
1996, while maintaining its Transpac cargo yield at 24.5 CENTS.

Overseas charter revenues in 1996 totaled $27.8 million, an increase over
$22.2 million of 1995 Overseas charter revenues of $5.7 million.  The
increase is attributable to the Company operating, on average, six charters
per week throughout 1996 versus, on average, three to four charters per week
throughout the first six months of 1995.

OPERATING EXPENSES

The following table compares operating expenses for 1996 with 1995 by major
category, in thousands:

<TABLE>
<CAPTION>
                                                                                     Increase
                                                             1996        1995       (Decrease)
                                                           -----------------------------------
<S>                                                        <C>          <C>         <C>
Wages and benefits.....................................    $108,626     $108,274     $   352
Aircraft fuel, including taxes and oil.................      75,884       56,724      19,160
Maintenance materials and repairs......................      68,984       60,581       8,403
Purchased services.....................................      22,491       20,192       2,299
Aircraft rentals.......................................      16,954       16,477         477
Sales commissions......................................      13,369       13,875        (506)
Rentals other than aircraft and engines................       9,774        9,021         753
Advertising and promotion..............................       8,770        8,301         469
Depreciation and amortization..........................       8,731        7,859         872
Passenger food.........................................       8,286        8,185         101
Landing fees...........................................       8,267        8,202          65
Reservation fees and services..........................       7,432        6,808         624
Insurance-hull and liability...........................       4,106        3,920         186
Personnel expenses.....................................       4,104        3,868         236
Interrupted trips......................................       2,456        1,823         633
Professional and legal fees............................       2,445        2,032         413
Early retirement provision.............................           -        2,000      (2,000)
Other..................................................      11,767       10,663       1,104
                                                           --------     --------     -------
         Total.........................................    $382,446     $348,805     $33,641
                                                           --------     --------     -------
                                                           --------     --------     -------
</TABLE>

Operating expenses totaled $382.4 million in 1996, an increase of $33.6
million or 9.6% from total operating expenses of $348.8 million in 1995.

Aircraft fuel, including taxes and oil, increased by $19.2 million or 33.8%
to $75.9 million in 1996 from $56.7 million in 1995.  The increase is
principally due to (i) approximately $2.9 million more in fuel taxes incurred
in 1996 than 1995 due to the Company becoming subject to an additional 4.3
CENTS per gallon tax effective October 1, 1995; (ii) $4.0 million in
additional fuel cost as the Company consumed approximately 6.6 million or
7.1% more gallons of aircraft fuel in 1996 than in 1995 due to increased
frequencies; and (iii) $10.9 million in added fuel expense as the average
cost per gallon, excluding the 4.3 CENTS per gallon tax, increased by 11.8
CENTS or 20.6%.

Maintenance materials and repairs in 1996 totaled $69.0 million, an increase
of $8.4 million or 13.9% over 1995.  A majority of the increase was
associated with increased expenses of $7.6 million associated with the
Company's DC-10 fleet as the Company operated, on average, one more DC-10 in
1996 than in 1995.  The Company also incurred an additional $600,000 of
expenses in 1996 versus 1995 for maintenance of its DC-9 airframes.

                                      20
<PAGE>

Purchased services increased by $2.3 million or 11.4% to $22.5 million in
1996 from $20.2 million in 1995.  A majority of the increase was associated
with $1.7 million in additional ground handling and security charges due to
increased frequencies by the Company incurred in 1996.

Early retirement provision of $2.0 million in 1995 represents the estimated
effects on the Company's pension and postretirement benefit obligations from
the early retirement program offered in the first quarter of 1995.

EXTRAORDINARY ITEMS

In 1996, the Company paid approximately $4.7 million to the GPA Companies to
repurchase 827,221 shares of Common Stock and to repay approximately $4.5
million of long-term debt at a 15.0% discount, including any deferred costs
and other expenses owed.  These transactions resulted in an extraordinary
gain, net of income taxes, of approximately $409,000.

Further, in December 1996, the Company exercised its option to prepay the
American Note for $9.15 million plus accrued interest.  Early extinguishment
of the American Note resulted in an extraordinary gain, net of income taxes,
of approximately $357,000.

NEW ACCOUNTING PRONOUNCEMENTS

LONG-LIVED ASSETS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of."
SFAS No. 121 requires that long-lived assets and certain identifiable
intangible assets held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable.  If the future cash flows expected to
result from use of the asset (undiscounted and without interest charges) are
less than the carrying amount of the asset, an impairment loss is recognized.
Measurement of that loss is based on the fair value of that asset.
Generally, SFAS No. 121 also requires that long-lived assets and certain
identifiable intangible assets to be disposed of be reported at the lower of
the asset carrying amount or fair value, less cost to sell.

The Company adopted the provisions of SFAS No. 121 on January 1, 1996.  The
adoption of SFAS No. 121 did not have a material effect on the Company's
financial condition or results of operations.

STOCK-BASED COMPENSATION

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes a new, fair value-based method of
accounting for stock-based employee compensation, but does not require an
entity to apply the new method for purposes of preparing its basic financial
statements.  For an entity not applying the new method for purposes of
preparing its basic financial statements, SFAS No. 123 requires footnote
disclosure of pro forma net income and earnings per share information for
employee stock option grants made in 1995 and future years as if the fair
value-based method had been applied.  The Company adopted the provisions of
SFAS No. 123 on January 1, 1996, and has elected to continue to apply the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and provide the pro forma disclosures required by
SFAS No. 123.

                            1995 COMPARED TO 1994

The financial results of the Reorganized Company have been affected due to
the recapitalization and adoption of fresh start reporting as of September
12, 1994 and such results are not comparable in all respects to the
Predecessor. Nevertheless, the operating revenues and expenses of the
Reorganized Company in 1995 have been compared to the combined operating
revenues and expenses of the Reorganized Company and Predecessor in 1994.
Significant differences between 1995 and 1994 as a result of the
recapitalization and fresh start adjustments have

                                      21
<PAGE>

been disclosed.

For the year ended December 31, 1995, the Company incurred operating and net
losses of $1.9 million and $5.5 million, respectively. The 1995 operating
loss represents a decrease of $10.8 million or 85.0% from the operating loss
of $12.7 million in 1994.

OPERATING REVENUES

The following table compares 1995 operating revenues to those in 1994, in
thousands, by service type:

<TABLE>
<CAPTION>
                                                                                     Increase
                                                             1995        1994       (Decrease)
                                                           -----------------------------------
<S>                                                        <C>          <C>         <C>
Interisland:
    Passenger..........................................    $122,079     $119,750     $ 2,329
    Cargo..............................................       6,702        6,513         189
    Other..............................................       5,698        5,670          28
                                                           --------     --------     -------
                                                            134,479      131,933       2,546
                                                           --------     --------     -------

Transpac:
    Passenger..........................................     156,155      142,116      14,039
    Cargo..............................................       9,555        7,688       1,867
    Other..............................................       3,114        2,896         218
                                                           --------     --------     -------
                                                            168,824      152,700      16,124
                                                           --------     --------     -------

Southpac:
    Passenger..........................................      19,293       18,311         982
    Cargo..............................................       1,912        2,138        (226)
    Other..............................................         229          252         (23)
                                                           --------     --------     -------
                                                             21,434       20,701         733
                                                           --------     --------     -------

Overseas Charter:
    Passenger..........................................      22,167          646      21,521
                                                           --------     --------     -------

         Total.........................................    $346,904     $305,980     $40,924
                                                           --------     --------     -------
                                                           --------     --------     -------
</TABLE>


                                      22

<PAGE>

The following table compares applicable 1995 operating and financial
passenger revenue statistics to those in 1994, in thousands, except as
otherwise indicated:

                                                             Increase
                                1995         1994           (Decrease)        %
                               ------------------------------------------------

Interisland:
    Revenue passengers.........  3,721        3,639            82           2.3
    Revenue passenger miles..  490,044      476,051        13,993           2.9
    Available seat miles.....  937,736      854,073        83,663           9.8
    Passenger load factor......  52.3%        55.7%          (3.4)         (6.1)
    Yield......................  24.9 CENTS   25.2 CENTS     (0.3) CENTS   (1.2)

Transpac:
    Revenue passengers............ 994          880           114          13.0
    Revenue passenger miles. 2,506,774    2,231,106       275,668          12.4
    Available seat miles.... 3,034,177    2,857,081       177,096           6.2
    Passenger load factor....... 82.6%        78.1%           4.5           5.8
    Yield........................ 6.2 CENTS    6.4 CENTS     (0.2) CENTS   (3.1)

Southpac:
    Revenue passengers............. 66           65             1           1.5
    Revenue passenger miles... 174,548      173,182         1,366           0.8
    Available seat miles...... 266,406      284,495       (18,089)         (6.4)
    Passenger load factor....... 65.5%        60.9%           4.6           7.6
    Yield....................... 11.1 CENTS   10.6 CENTS      0.5 CENTS     4.7

Overseas Charter:
    Revenue passengers............ 155            1           154          N/M *
    Revenue passenger miles... 425,797        2,202       423,595          N/M *
    Available seat miles...... 439,142        4,141       435,001          N/M *

*  Not meaningful.

Operating revenues totaled $346.9 million in 1995 compared to $306.0 million
in 1994, an increase of $40.9 million or 13.4%.

Revenues from Interisland passenger service totaled $122.1 million during
1995, an increase of $2.3 million or 1.9% from 1994 Interisland passenger
revenues of $119.8 million.  Increases of 2.3% and 2.9% in Interisland
passengers carried and revenue passenger miles, respectively, were offset by
a decrease in Interisland yield of 0.3 CENTS or 1.2%.  Increases in
Interisland revenue passengers carried, revenue passenger miles and available
seat miles were a direct result of increased schedule frequencies due to
operational concepts such as the Island Shuttle operating for a full year in
1995 versus a partial year in 1994 and the use of promotional fare ticket
programs to stimulate traffic and increase liquidity.  The promotional fare
ticket programs, however, were also the primary cause of dilution in the 1995
Interisland yield.

Revenues from Transpac passenger operations amounted to $156.2 million during
1995 compared to $142.1 million in 1994, an increase of $14.0 million or
9.9%. The increase in Transpac passenger revenues resulted primarily from an
increase in Transpac load factor of 5.8%.  The increase in load factor was
offset by a 0.2 CENTS or 3.1% decrease in Transpac yield year over year.
Transpac yields were affected by heavy pricing competition in the Transpac
market and similar to above, the effects of promotional fare ticket programs.

Southpac passenger revenues in 1995 totaled $19.3 million, representing an
increase of $982,000 or 5.4% from

                                       23
<PAGE>

1994.  Both Southpac load factor and yield increased year over year by 7.6%
and 4.7%, respectively.  The increase in yield is primarily attributable to
increases to all Southpac fares in late 1994.

Transpac cargo revenues increased by $1.9 million or 24.3% from 1994.
Increased frequency in its Transpac routes allowed the Company to transport
5.1 or 48.4% more tons of freight in 1995.  The increase in tonnage was
offset by a decrease in yield year over year of 5.9 CENTS or 16.3%.  The
decrease in Transpac cargo yield was primarily caused by a change in mix as
the Company carried more agricultural and bulk freight in 1995 versus 1994.

Overseas charter revenues of $22.2 million were earned in 1995 due to the
commencement of charter operations between Honolulu, Hawaii and Las Vegas,
Nevada in 1995.

OPERATING EXPENSES

The following table compares operating expenses for 1995 with 1994 by major
category, in thousands:

                                                                      Increase
                                            1995            1994     (Decrease)
                                         --------------------------------------

Wages and benefits...................... $  108,274     $  102,670     $  5,604
Aircraft fuel, including taxes and oil...    56,724         47,682        9,042
Maintenance materials and repairs........    60,581         46,541       14,040
Aircraft rentals.........................    16,477         23,966       (7,489)
Purchased services.......................    20,192         19,866          326
Sales commissions........................    13,875         12,841        1,034
Rentals other than aircraft and engines..     9,021          9,633         (612)
Passenger food...........................     8,185          8,972         (787)
Depreciation and amortization............     7,859          6,797        1,062
Landing fees.............................     8,202          6,793        1,409
Reservation fees and services............     6,808          6,635          173
Advertising and promotion................     8,301          4,909        3,392
Personnel expenses.......................     3,868          4,056         (188)
Insurance-hull and liability.............     3,920          3,388          532
Interrupted trips........................     1,823          2,038         (215)
Early retirement provision...............     2,000              -        2,000
Professional and legal fees..............     2,032          1,656          376
Other....................................    10,663         10,226          437
                                          ----------     ----------    ---------
         Total.......................... $  348,805     $  318,669    $  30,136
                                          ----------     ----------    ---------
                                          ----------     ----------    ---------


Operating expenses totaled $348.8 million in 1995, an increase of $30.1
million or 9.4% from total operating expenses of $318.7 million in 1994.

Wages and benefits increased $5.6 million or 5.5% in 1995.  The increase is
primarily attributed to  (1) $3.6 million of additional wages and benefits
due to 5.0% to 6.7%  wage increases effective September 1, 1994 and (2) $2.0
million of noncash compensation expense recognized under the provisions of a
1994 Stock Option Plan for officers and key employees of the Company.

Aircraft fuel, including taxes and oil, increased by $9.0 million or 19.0%
from $47.7 in 1994 to $56.7 million in 1995.  While average cost per gallon
remained relatively stable year over year at $0.61, the Company consumed 14.0
million or 17.9% more gallons in 1995 than 1994, primarily due to increased
frequencies on the Company's Interisland and Transpac routes.

                                       24
<PAGE>

Maintenance materials and repairs totaled $60.5 million in 1995, an increase
of $14.0 million or 30.1% over 1994. The Company incurred approximately $9.8
million less in maintenance costs for its L-1011 and DHC-7 aircraft during
1994, the year these aircraft were phased out of service.  However, the
elimination of maintenance costs related to these aircraft was offset by
$23.8 million of additional maintenance incurred in 1995 for the Company's
DC-10 and DC-9 fleets.

Aircraft rentals decreased by $7.5 million or 31.2% year over year.  The
decrease was a net result of (i) non-existence of rental expense for L-1011
and DHC-7 aircraft in 1995 since these aircraft were phased out of service in
1994, as compared to $3.3 million of L-1011 and DHC-7 rents in 1994; (ii) a
$4.2 million decrease in DC-9 aircraft end engine rents due to such rents
being restructured on the Effective Date; and (iii) $4.4 million in
additional rents for DC-10 aircraft.

Sales commissions totaled $13.9 million in 1995, an increase of $1.1 million
or 8.6% over total sales commissions of $12.8 million in 1994.  The increase
is primarily attributable to $1.0 million in additional commissions related
to incentive programs offered to wholesalers designed to stimulate traffic.

Depreciation and amortization increased by $1.1 million or 15.6%.  An
additional $2.5 million of amortization of reorganization value in excess of
identifiable assets in 1995 was offset by $1.7 million less in depreciation
from the reclassification of approximately $13.5 million of property and
equipment to assets held for sale on the Effective Date.

Landing fees increased by $1.4 million or 20.7% to $8.2 million in 1995.  The
increase was principally caused by increased frequencies in the Transpac
markets (specifically Los Angeles, Las Vegas and Portland) and the
Interisland market.

Advertising and promotion totaled $8.3 million in 1995, an increase of $3.4
million or 69.1% over 1994, a direct result of efforts to increase the
Company's exposure in the Interisland and West Coast markets through
advertising and telecommunications media.

Other operating expenses in 1995 were reduced by the reversal of $1.8 million
in preconfirmation contingency accruals initially provided for on the
Effective Date.

NONOPERATING INCOME (EXPENSE)

Reorganization expenses in 1994 totaled $14.0 million and principally
represents $5.7 million and $7.6 million in legal and professional fees and
employee concession claims, respectively, associated with the Predecessor's
Chapter 11 process and $638,000 in fresh start adjustments recorded on the
Effective Date in accordance with SOP 90-7.

EXTRAORDINARY ITEMS

An extraordinary gain of approximately $190.1 million was recorded in the
third quarter of 1994 primarily due to the extinguishment of prepetition
obligations.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Reorganized Company's and Predecessor's Financial Statements,
accompanying Notes and related Independent Auditors' Report and Selected
Financial and Statistical Data are contained in Part IV, Item 14 of this Form
10-K and are incorporated herein by reference.

                                       25
<PAGE>

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE.

None.


                                   PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

MICHAEL J. MCQUAY has been Executive Vice President and Chief Operating
Officer of Hawaiian Airlines, Inc. since June 15, 1996. He was formerly with
Continental Airlines from December 1971 until June 1996. While with
Continental Airlines he held a variety of positions including President and
CEO, Continental Air Micronesia, Vice President Maintenance Operations, Vice
President Customer Service Sales/Support, Vice President Hub Operations, Vice
President International Operations and Regional Vice President Customer
Service. Age 48.


                       EXECUTIVE OFFICERS OF THE COMPANY

The following thirteen officers comprise the Executive Officers of the Company.

BRUCE R. NOBLES has been the President and Chief Executive Officer of
Hawaiian Airlines since 1993.  He was Chairman of the Board of Hawaiian
Airlines from September 1994 until February 1996. In 1991 he was President
and Chief Executive Officer for L'Epress, Inc. in New Orleans, Louisiana. He
was President and Chief Operating Officer of Trump Shuttle, Inc. in New York,
New York from 1988 until 1990. Mr. Nobles resigned as President and Chief
Executive Officer of the Company effective as of March 31, 1997. Age 50.*

MICHAEL J. MCQUAY has been Executive Vice President and Chief Operating
Officer of Hawaiian Airlines, Inc. since June 15, 1996. He was formerly with
Continental Airlines from December 1971 until June 1996. While with
Continental Airlines he held a variety of positions including President and
CEO, Continental Air Micronesia, Vice President Maintenance Operations, Vice
President Customer Service Sales/Support, Vice President Hub Operations, Vice
President International Operations and Regional Vice President Customer
Service. Age 48.

JOHN L. GARIBALDI has been Executive Vice President and Chief Financial
Officer of Hawaiian Airlines since May 1, 1996.  He was Vice President and
Chief Financial Officer for the Queen's Health Systems from 1992 until 1996
and Senior Vice President-Finance and Planning and Chief Financial Officer
for Aloha Airgroup, Inc./Aloha Airlines, Inc. from 1985 until 1992.

PETER W. JENKINS has been Senior Vice President-Marketing and Sales for
Hawaiian Airlines since 1994.  He was the Director of Communications
at ITT Sheraton Corporation from 1987 until 1994 in Honolulu, Hawaii.
Age 55.

H. NORMAN DAVIES JR. has been Vice President-Safety and Security of Hawaiian
Airlines since January 6, 1997.  He was Chief Pilot in New York for Delta
Airlines from November 1991 until June 1996. Age 60.

RAE A. CAPPS has been Vice President, General Counsel and Corporate Secretary
of Hawaiian Airlines since 1993.  She was an attorney at the law firm of
Goodsill Anderson Quinn & Stifel in Honolulu, Hawaii from 1990 until 1993.
Age 44.

CLARENCE K. LYMAN has been Vice President-Finance, Treasurer and Assistant
Corporate Secretary of Hawaiian Airlines since 1991.  He was Vice
President-Treasurer and Assistant Corporate Secretary of Hawaiian Airlines
from 1989 until 1991.  Age 50.

                                       26
<PAGE>

MICHAEL J. CONROY has been Vice President-Human Resources for Hawaiian
Airlines since November 18, 1996.  He was Vice President-Human Resources at
Ringier America from 1990 until 1996.  Age 50.

JAMES H. DAVIS, JR. has been Vice President-Flight Operations of Hawaiian
Airlines since 1995.  Prior to that, he was a Partner and Vice President of
Operations of Hawaii Aviation Contract Services, Inc. from 1990 until 1994.
He was also the DC-10 Chief Pilot of Japan Air Charter from 1990 until 1994.
He was a Wide Body Line Captain and Chief Pilot of International Operations
of Hawaiian Airlines from 1968 until 1990.  Age 58.

MICHAEL P. LOO has been Vice President-Controller of Hawaiian Airlines since
1996.  He was Staff Vice President-Controller for Hawaiian Airlines from 1994
until 1995.  He was a certified public accountant at the firm of KPMG Peat
Marwick LLP from 1986 until 1993 where he held the title of Senior Manager.
Age 32.

JOHN P. SOLOMITO has been Vice President-Customer Services of Hawaiian
Airlines since 1992.  He was the General Manager of Pan American World
Airways, Inc. in Los Angeles, California from 1988 until 1992.  Age 58.

GLEN L. STEWART has been Vice President-Transpacific and Southpacific
Marketing of Hawaiian Airlines since 1993.  He was Senior Vice
President-Transpacific of Hawaiian Airlines from 1991 to 1993, Senior Vice
President-North American Sales of Hawaiian Airlines in 1991 and Senior Vice
President-Finance and Chief Financial Officer of Hawaiian Airlines from 1989
until 1991.  Age 54.

GLENN G. TANIGUCHI has been Vice President-Schedule Planning and Reservations
of Hawaiian Airlines since 1995.  He was Staff Vice President-Schedule
Planning and Reservations for Hawaiian Airlines from 1991 until 1995 and
Director-Schedule Planning and Reservations of Hawaiian Airlines from 1986
until 1991.  Age 53.

*PAUL J. CASEY will succeed Bruce R. Nobles as President and Chief Executive
Officer of Hawaiian Airlines as of April 14, 1997.

All officers are appointed annually by the Board of Directors at the Board of
Directors' first meeting after the annual meeting of the stockholders at
which the Board of Directors is elected.

No executive officer or director of the Company bears any relationship by
blood, marriage or adoption to any other executive officer or director.

In September 1993, the Company, HAL, INC. and West Maui Airport, Inc. filed a
voluntary petition of relief under Chapter 11.  At the time or within two
years before the time of the Chapter 11 filing, Messrs. Nobles, Lyman,
Solomito and Stewart, and Ms. Capps were executive officers of the Company,
HAL, INC. and/or West Maui Airport, Inc.

Information provided in the Company's 1997 Proxy Statement is incorporated
herein by reference for Part III, Items 10 through 13 of this Form 10-K.

ITEM 11.   EXECUTIVE COMPENSATION.

ITEM 12.   SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



                                       27
<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)      1. Financial Statements.

            Independent Auditors' Report.

            Balance Sheets, December 31, 1996 and 1995 (Reorganized Company).

            Statements of Operations for the Years ended December 31, 1996 and
            1995 (Reorganized Company), the Period from September 12, 1994 to
            December 31, 1994 (Reorganized Company) and the Period from
            January 1, 1994 to September 11, 1994 (Predecessor).

            Statements of Shareholders' Equity (Deficit) for the Years ended
            December 31, 1996 and 1995 (Reorganized Company), the Period from
            September 12, 1994 to December 31, 1994 (Reorganized Company) and
            the Period from January 1, 1994 to September 11, 1994 (Predecessor).

            Statements of Cash Flows for the Years ended December 31, 1996 and
            1995 (Reorganized Company), the Period from September 12, 1994 to
            December 31, 1994 (Reorganized Company) and the Period from
            January 1, 1994 to September 11, 1994 (Predecessor).

            Notes to Financial Statements.

            Quarterly Financial Information (Unaudited).

            Selected Financial and Statistical Data.

         2. Financial Statement Schedule.

            Independent Auditors' Report on Financial Statement Schedule for the
            Years Ended December 31, 1996, 1995 and 1994.

            Schedule    Valuation and Qualifying Accounts.

            Schedules not listed above are omitted because of the absence of
            the conditions under which they are required or because the
            required information is included in the financial statements or
            notes thereto.

(b)       Reports on Form 8-K.

          None.

(c)       Exhibits.

          Exhibit 2      Plan of Acquisition, Reorganization, Arrangement,
                         Liquidation, or Succession.

                         (1) Third Amended Consolidated Plan of Reorganization
                             of HAL, INC., Hawaiian Airlines, Inc. and West
                             Maui Airport, Inc. dated August 29, 1994 filed as
                             Exhibit 99.1 to HAL, INC.'s Current Report on Form
                             8-K during the third quarter of 1994 (date of
                             report - August 30, 1994) is incorporated herein
                             by reference.

                         (2) Articles of Merger of Hawaiian Airlines, Inc. and
                             West Maui Airport, Inc. and Articles of Merger of
                             Hawaiian Airlines, Inc. and HAL, INC. both

                                      28

<PAGE>

                             dated September 12, 1994, filed as Exhibits 2.1 and
                             2.2 to HAL, INC.'s Current Report on Form 8-K
                             during the third quarter of 1994 (date of report -
                             September 12, 1994) are incorporated herein by
                             reference.

          Exhibit 3      Articles of Incorporation, Bylaws

                         (1) Restated Articles of Incorporation filed as
                             Exhibit 3 to the Company's Quarterly Report on
                             Form 10-Q (date of report - September 30, 1996)
                             are incorporated herein by reference.

                         (2) Amended and Restated Bylaws filed as Exhibit 3(2)
                             to the Company's Annual Report on Form 10-K (date
                             of report - December 31, 1995) are incorporated
                             herein by reference.

          Exhibit 4      Instruments Defining the Rights of Security Holders
                         Including Indentures

                         (1) Rights Agreement dated December 23, 1994 filed as
                             Exhibit (1) to Hawaiian Airlines, Inc. current
                             Report on Form 8-K during the fourth quarter of
                             1994 (date of report - December 23, 1994) is
                             incorporated herein by reference.

                         (2) The following Agreements filed as Exhibit 4 to the
                             Company's Quarterly Report on Form 10-Q for the
                             period ended June 30, 1995 are incorporated herein
                             by reference:

                             (a) Amendment No. 1 dated as of May 4, 1995 to
                                 Rights Agreement dated as of December 23, 1994
                                 by and between Hawaiian Airlines, Inc. and
                                 Chemical Trust Company of California;

                             (b) Amendment No. 1 to 1994 Stock Option Plan
                                 dated as of May 4, 1995;

                             (c) Amendment No. 1 dated as of May 4, 1995 to
                                 Warrants Nos. 1-10.

                         (3) 1994 Stock Option Plan, as amended, filed as
                             Exhibit 4 to the Company's Registration Statement
                             on Form S-8 as filed November 15, 1995 is
                             incorporated herein by reference.

                         (4) The following Agreements filed as Exhibits 4 to the
                             Company's Annual Report on Form 10-K (date of
                             report - December 31, 1995) are incorporated herein
                             by reference.

                             (a) Rightsholders Agreement dated as of
                                 January 31, 1996, by and among Hawaiian
                                 Airlines, Inc., Airline Investors Partnership,
                                 L.P., AMR Corporation, Martin Anderson and
                                 Robert Midkiff;

                             (b) Amendment No. 2 to the Rights Agreement, as
                                 amended, dated as of January 31, 1996 by and
                                 between Hawaiian Airlines, Inc. and Chemical
                                 Trust Company of California;

                             (c) Amendment No. 2 to 1994 Stock Option Plan, as
                                 amended, dated as of December 8, 1995.

                         (5) 1996 Stock Incentive Plan, as amended, filed as
                             Exhibit 4 to the Company's Amendment No. 1 to
                             Registration Statement on Form S-2 as filed
                             July 12, 1996 is incorporated herein by reference.

                                      29

<PAGE>

                         (6) The Company agrees to provide the Securities and
                             Exchange Commission, upon request, copies of
                             instruments defining the rights of security holders
                             of long-term debt of the Company.

          Exhibit 10     Material Contracts

                         (a) The following contracts filed as Exhibit 10 to the
                             Predecessor's Annual Report on Form 10-K for the
                             year ended December 31, 1993 (date of report -
                             September 29, 1994) are incorporated herein by
                             reference:

                             (1)  First Amended Plan of Reorganization filed as
                                  Exhibit A to the Disclosure Statement filed
                                  as Exhibit 99.1 to the Predecessor's Current
                                  Report on Form 8-K during the first quarter
                                  of 1994 (date of report - March 5, 1994);

                             (2)  Engine lease agreement dated as of October 29,
                                  1993 between BA Leasing & Capital Corporation,
                                  as lessor, and Hawaiian Airlines, Inc., as
                                  lessee, for one (1) Pratt & Whitney JT8D-17
                                  engine, bearing manufacturer's serial no.
                                  696699;

                             (3)  Aircraft Purchase Agreement dated as of
                                  November 5, 1993 between GATX Capital
                                  Corporation, as seller, and Hawaiian Airlines,
                                  Inc., as buyer, for one (1) McDonnell Douglas
                                  DC9-51 aircraft, bearing FAA registration no.
                                  N420EA,  together with two (2) Pratt & Whitney
                                  JT8D-17 engines bearing manufacturer's serial
                                  no. 688738 and 688739;

                             (4)  Lease agreement dated as of November 3, 1993
                                  between John Hancock Leasing Corporation, as
                                  lessor, and Hawaiian Airlines, Inc., as
                                  lessee, for two (2) Pratt & Whitney JT8D-17
                                  engines bearing manufacturer's serial no.
                                  708324 and 654028;

                         (b) Aircraft Lease Agreement dated April 1, 1994
                             between Nations Financial Capital Corporation, as
                             lessor, and Hawaiian Airlines, Inc., as lessee, for
                             one (1) McDonnell Douglas DC-9-51 aircraft bearing
                             manufacturer's serial no. 47662, together with two
                             (2) Pratt & Whitney JT8D-17A engines, bearing
                             manufacturer's serial no. 696708 and 688758 filed
                             as Exhibit 99.2 to HAL, INC.'s Quarterly Report on
                             Form 10-Q for the quarter ended March 31, 1994 is
                             incorporated herein by reference.

                         (c) The following contracts filed as Exhibit 10 to the
                             Predecessor's Quarterly Report on Form 10-Q for the
                             quarter ended June 30, 1994 are incorporated herein
                             by reference:

                             (1) Aircraft Lease Agreement dated May 9, 1994
                                 between BA Leasing & Capital Corporation, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 47764, together with
                                 two (2) Pratt & Whitney JT8D-17A engines,
                                 bearing manufacturer's serial no. 696675 and
                                 696674 and one (1) spare Pratt & Whitney
                                 JT8D-17A engine bearing manufacturer's serial
                                 no. 696699;

                             (2) Aircraft Lease Agreement dated May 9, 1994
                                 between Security Pacific Equipment Leasing,
                                 Inc., as lessor, and Hawaiian Airlines, Inc.,
                                 as lessee, for one (1) McDonnell Douglas
                                 DC-9-51 aircraft, manufacturer's serial no.
                                 47735, together with two (2) Pratt & Whitney

                                      30
<PAGE>
                                 JT8D-17A engines, bearing manufacturer's serial
                                 no. 696666 and 688798;

                             (3) Aircraft Lease Agreement dated May 9, 1994
                                 between Security Pacific Equipment Leasing,
                                 Inc., as lessor, and Hawaiian Airlines, Inc.,
                                 as lessee, for one (1) McDonnell Douglas
                                 DC-9-51 aircraft, manufacturer's serial no.
                                 47726, together with two (2) Pratt & Whitney
                                 JT8D-17A engines, bearing manufacturer's serial
                                 no. 696656 and 688710;

                             (4) Merchant Bank Agreement for Visa and Mastercard
                                 dated July 18, 1994 between First Bank National
                                 Association, as Bank, and Hawaiian Airlines,
                                 Inc., as Carrier;

                             (5) Airframe Lease Agreement dated September 22,
                                 1994 between Bank of Hawaii, as lessor, and
                                 Hawaiian Airlines, Inc., as lessee, for one
                                 (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 47763, together with
                                 two (2) Pratt & Whitney JT8D-17A engines,
                                 bearing manufacturer's serial no. 696666 and
                                 688798.

                         (d) The following contracts filed as Exhibit 10 to the
                             Company's Form 8-B dated October 28, 1994 are
                             incorporated herein by reference:

                             (1) The following contracts not filed herewith
                                 since confidential treatment has been
                                 requested pursuant to Rule 24b-2:

                                 (i)  Multihost Agreement dated September 12,
                                      1994 between SABRE Decision Technologies,
                                      Inc. and Hawaiian Airlines, Inc., as
                                      customer, for certain reservation
                                      services;

                                 (ii) Flight Operating System Agreement dated
                                      September 12, 1994 between SABRE Decision
                                      Technologies, Inc. and Hawaiian Airlines,
                                      Inc. as customer, for certain flight
                                      operating system services;

                                (iii) AAdvantage-Registered Trademark-
                                      Participating Carrier Agreement dated
                                      September 12, 1994 between American
                                      Airlines, Inc.-Registered Trademark- as
                                      seller, and Hawaiian Airlines, Inc.,
                                      as customer, for certain frequent flyer
                                      agreements;

                                 (iv) Master Equipment Lease Agreement dated
                                      September 12, 1994, between SABRE
                                      Decision Technologies, Inc., as lessor,
                                      and Hawaiian Airlines, Inc., as lessee,
                                      for certain computer and reservations
                                      equipment;

                             (2) Aircraft Lease Agreement dated September 12,
                                 1994 between American Airlines, Inc.-Registered
                                 Trademark-, as lessor, and Hawaiian Airlines,
                                 Inc., as lessee, for eight (8) DC-10-10
                                 aircraft each with three (3) GE CF6-6K engines,
                                 FAA registration and manufacturer's serial no.
                                 to be advised filed in redacted form since
                                 confidential treatment has been requested
                                 pursuant to Rule 24b-2 for certain portions
                                 thereof;

                             (3) Aircraft Lease Amendment dated November 10,
                                 1992 to Aircraft Lease Agreement dated
                                 March 31, 1992, between AeroUSA, Inc., as
                                 lessor, and Hawaiian Airlines, Inc. as lessee,
                                 for one (1) McDonnell Douglas DC9-51 aircraft,
                                 manufacturer's serial No. 47784;

                                      31
<PAGE>

                             (4) Aircraft Lease Amendment dated August 23, 1994
                                 to Aircraft Lease Agreement dated March 31,
                                 1992, between AeroUSA, Inc., as lessor, and
                                 Hawaiian Airlines, Inc. as lessee, for one (1)
                                 McDonnell Douglas DC9-51 aircraft,
                                 manufacturer's serial No. 47784;

                             (5) Aircraft Lease Amendment dated April 2, 1990 to
                                 Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer,s serial no. 47742;

                             (6) Aircraft Lease Amendment dated October 31, 1990
                                 to Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 47742;

                             (7) Aircraft Lease Amendment dated August 23, 1994
                                 to Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 47742;

                             (8) Aircraft Lease Amendment dated April 2, 1990 to
                                 Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 48122;

                             (9) Aircraft Lease Amendment dated October 31, 1990
                                 to Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 48122;

                            (10) Aircraft Lease Amendment dated August 23, 1994
                                 to Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 48122;

                            (11) Aircraft Lease Amendment dated April 2, 1990 to
                                 Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 47796;

                            (12) Aircraft Lease Amendment dated October 31, 1990
                                 to Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc, as
                                 lessor, and Hawaiian Airlines, Inc., as lessee,
                                 for one (1) McDonnell Douglas DC-9-51 aircraft,
                                 manufacturer's serial no. 47796;

                            (13) Aircraft Lease Amendment dated August 23, 1994
                                 to Aircraft Lease Agreement dated as of
                                 February 28, 1990 between GPA Group plc,

                                      32

<PAGE>

                                 as lessor, and Hawaiian Airlines, Inc., as
                                 lessee, for one (1) McDonnell Douglas DC-9-51
                                 aircraft, manufacturer's serial no. 47796;

                            (14) Chattel Mortgage dated November 5, 1993 between
                                 GATX Capital Corporation, as Secured Party, and
                                 Hawaiian Airlines, Inc., as Debtor, for one (1)
                                 McDonnell Douglas DC9-51 aircraft, bearing
                                 manufacturer's serial no. 47689,  together with
                                 two (2) Pratt & Whitney JT8D-17 engines bearing
                                 manufacturer's serial no. 688738 and 688739;

                            (15) Mortgage Supplement dated November 5, 1993
                                 between GATX Capital Corporation, as Secured
                                 Party, and Hawaiian Airlines, Inc., as Debtor,
                                 for one (1) McDonnell Douglas DC9-51 aircraft,
                                 bearing manufacturer's serial no. 47689,
                                 together with two (2) Pratt & Whitney JT8D-17
                                 engines bearing manufacturer's serial no.
                                 688738 and 688739;

                            (16) Aircraft Lease Agreement dated September 12,
                                 1994 between First Security Bank of Utah, N.A.,
                                 as trustee, and Hawaiian Airlines, Inc., as
                                 lessee, for one (1) McDonnell Douglas DC9-51
                                 aircraft, bearing manufacturer's serial no.
                                 47658, together with two (2) Pratt & Whitney
                                 JT8D-17 engines bearing manufacturer's serial
                                 no. 688712 and 688797;

                            (17) Aircraft Lease Agreement dated September 12,
                                 1994 between Scandinavian Airlines of North
                                 American Inc., as lessor, and Hawaiian
                                 Airlines, Inc., as lessee, for one (1)
                                 McDonnell Douglas DC9-51 aircraft, bearing
                                 manufacturer's serial no. 47654, together with
                                 two (2) Pratt & Whitney JT8D-17 engines
                                 bearing manufacturer's serial no. 688834 and
                                 688728;

                            (18) Engine Lease dated September 12, 1994 between
                                 Aircraft Income Partners II, L.P., as lessor,
                                 and Hawaiian Airlines, Inc., as lessee, for
                                 two (2) Pratt & Whitney JT8D-17A engines,
                                 bearing manufacturer's serial no. 687769B and
                                 688762D;

                            (19) Aircraft Lease Agreement dated September 22,
                                1994 between USL Capital Corporation, as lessor,
                                and Hawaiian Airlines, Inc., as lessee, for one
                                (1) McDonnell Douglas DC9-51 aircraft, bearing
                                manufacturer's serial no. 47661,  together with
                                two (2) Pratt & Whitney JT8D-17 engines bearing
                                manufacturer's serial no. P696707D and P688729D;

                           (20) Engine Lease Agreement dated September 22, 1994
                                between Bank of Hawaii, as lessor, and Hawaiian
                                Airlines, Inc., as lessee, for two (2) Pratt &
                                Whitney JT8D-17A engines, bearing manufacturer's
                                serial no. P696662D and P696667D;

                           (21) Agreement of Lease dated July 12, 1993 between
                                Airport Industrial Park Associates, as owner,
                                and Hawaiian Airlines, Inc., as tenant;

                           (22) Anchorage International Airport Airline
                                Operating Agreement and Terminal Building Lease
                                (International Terminal) dated January 3, 1992
                                between State of Alaska Department of
                                Transportation and Public Facilities and
                                Hawaiian Airlines, Inc.;

                                      33

<PAGE>

                   (23) Anchorage International Airport Advance Right of Entry
                        ADA-30426 of State of Alaska Department of
                        Transportation and Public Facilities dated
                        December 9, 1991;

                   (24) Form of Non-Exclusive Operating Permit between the City
                        of Los Angeles and Hawaiian Airlines, Inc., a
                        Signatory Carrier, Covering the Use of Landing
                        Facilities for Air Carrier Aircraft Operations at
                        Los Angeles International Airport;

                   (25) Form of Non-Signatory Passenger Airline Operating and
                        Lease Agreement between The Port of Portland and
                        Hawaiian Airlines, Inc.;

                   (26) Airports Commission City and County of San Francisco
                        Airline Operating Permit Issued to Hawaiian
                        Airlines, Inc., as Permittee, Director of Airports
                        Permit Action No. 2003;

                   (27) Indenture of Lease (Lease No. DOT-78-24) dated August
                        21, 1978 between the Department of Transportation
                        of the State of Hawaii, as lessor, and Hawaiian
                        Airlines, Inc., as lessee, for use of airport
                        premises at the Kahului Airport on the island of
                        Maui;

                   (28) Addendum No. 1 dated October 9, 1982 to Lease
                        No. DOT-A-78-24 dated August 21, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Kahului
                        Airport on the island of Maui;

                   (29) Addendum No. 2 dated August 31, 1983 to Lease
                        No. DOT-A-78-24 dated August 21, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Kahului
                        Airport on the island of Maui;

                   (30) Amendment No. 3 dated September 1, 1986 to Lease
                        No. DOT-A-78-24 dated August 21, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Kahului
                        Airport on the island of Maui;

                   (31) Amendment No. 4 dated October 3, 1988 to Lease
                        No. DOT-A-78-24 dated August 21, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Kahului
                        Airport on the island of Maui;

                   (32) Indenture of Lease (Lease No. DOT-A-78-31) dated
                        August 10, 1978 between the Department of
                        Transportation of the State of Hawaii, as lessor,
                        and Hawaiian Airlines, Inc., as lessee, for use of
                        airport premises at the Lanai Airport on the
                        island of Lanai;

                   (33) Addendum No. 1 dated August 31, 1983 to Lease
                        No. DOT-A-78-31 dated August 10, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Lanai
                        Airport on the island of


                                      34

<PAGE>

                        Lanai;

                   (34) Amendment No. 2 dated July 22, 1988 to Lease
                        No. DOT-A-78-31 dated August 10, 1978 between the
                        Department of Transportation of the State of Hawaii, as
                        lessor, and Hawaiian Airlines, Inc., as lessee,
                        for use of airport premises at the Lanai Airport
                        on the island of Lanai;

                   (35) Indenture of Lease (Lease No. DOT-A-78-22) dated as of
                        August 10, 1978 between the Department of
                        Transportation of the State of Hawaii, as lessor,
                        and Hawaiian Airlines, Inc., as lessee, for use of
                        airport premises at the Lihue Airport on the
                        island of Kauai;

                   (36) Addendum No. 1 dated March 1, 1981 to Lease
                        No. DOT-A-78-22 dated August 10, 1978 between the
                        Department of Transportation of the State of Hawaii, as
                        lessor, and Hawaiian Airlines, Inc., as lessee,
                        for use of airport premises at the Lihue Airport
                        on the island of Kauai;

                   (37) Addendum No. 2 dated August 31, 1983 to Lease
                        No. DOT-A-78-22 dated August 10, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Lihue
                        Airport on the island of Kauai;

                   (38) Addendum No. 3 dated September 14, 1983 to Lease
                        No. DOT-A-78-22 dated August 10, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Lihue
                        Airport on the island of Kauai;

                   (39) Amendment No. 4 dated December 14, 1987 to Lease
                        No. DOT-A-78-22 dated August 10, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Lihue
                        Airport on the island of Kauai;

                   (40) Amendment No. 5 dated September 15, 1988 to Lease
                        No. DOT-A-78-22 dated August 10, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Lihue
                        Airport on the island of Kauai;

                   (41) Indenture of Lease (Lease No. DOT-A-78-27) dated as of
                        August 10, 1978 between the Department of
                        Transportation of the State of Hawaii, as lessor,
                        and Hawaiian Airlines, Inc., as lessee, for use of
                        airport premises at the Molokai Airport on the
                        island of Molokai;

                   (42) Addendum No. 1 dated August 31, 1983 to Lease
                        No. DOT-A-78-27 dated August 10, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at the Molokai
                        Airport on the island of Molokai;

                   (43) Addendum No. 2 dated July 1, 1985 to Lease
                        No. DOT-A-78-27 dated August 10, 1978 between the
                        Department of Transportation of


                                      35

<PAGE>

                        the State of Hawaii, as lessor, and Hawaiian
                        Airlines, Inc., as lessee, for use of airport premises
                        at the Molokai Airport on the island of Molokai;

                   (44) Amendment No. 3 dated July 29, 1988 to Lease
                        No. DOT-A-78-27 dated August 10, 1978 between the
                        Department of Transportation of the State of Hawaii, as
                        lessor, and Hawaiian Airlines, Inc., as lessee,
                        for use of airport premises at the Molokai Airport
                        on the island of Molokai;

                   (45) Indenture of Lease (Lease No. DOT-76-23) dated as of
                        April 24, 1978 between the Department of
                        Transportation of the State of Hawaii, as lessor,
                        and Hawaiian Airlines, Inc., as lessee, for use of
                        airport premises at General Lyman Field on the
                        island of Hawaii;

                   (46) Addendum No. 2 dated April 1, 1983 to Lease
                        No. DOT-A-76-23 dated April 24, 1978 between the
                        Department of Transportation of the State of Hawaii, as
                        lessor, and Hawaiian Airlines, Inc., as lessee,
                        for use of airport premises at General Lyman Field
                        on the island of Hawaii;

                   (47) Addendum No. 1 dated August 31, 1983 to Lease
                        No. DOT-A-76-23 dated April 24, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at General
                        Lyman Field on the island of Hawaii;

                   (48) Amendment No. 3 dated July 27, 1988 to Lease
                        No. DOT-A-76-23 dated April 24, 1978 between the
                        Department of Transportation of the State of Hawaii, as
                        lessor, and Hawaiian Airlines, Inc., as lessee,
                        for use of airport premises at General Lyman Field
                        on the island of Hawaii;

                   (49) Amendment No. 4 dated December 6, 1989 to Lease
                        No. DOT-A-76-23 dated April 24, 1978 between the
                        Department of Transportation of the State of
                        Hawaii, as lessor, and Hawaiian Airlines, Inc., as
                        lessee, for use of airport premises at General
                        Lyman Field on the island of Hawaii;

                   (50) Indenture of Lease (Lease No. DOT-A-62-32) dated as
                        of May 28, 1962 between the Department of
                        Transportation of the State of Hawaii, as lessor,
                        and Hawaiian Airlines, Inc., as lessee, for use of
                        airport premises at the Honolulu International
                        Airport on the island of Oahu;

                   (51) Lease Extension Agreement dated September 26, 1994 to
                        Lease No. DOT-A-62-32 dated as of May 28, 1962
                        between the Department of Transportation of the
                        State of Hawaii, as lessor, and Hawaiian Airlines,
                        Inc., as lessee, for use of airport premises at
                        the Honolulu International Airport on the island
                        of Oahu;

                   (52) IATA Interline Traffic Agreement - Passenger between
                        IATA and Hawaiian Airlines, Inc.;

                   (53) IATA Interline Traffic Agreement - Cargo between IATA
                        and Hawaiian Airlines, Inc.;


                                      36

<PAGE>

                   (54) IATA Interline Traffic Agreement - Baggage between IATA
                        and Hawaiian Airlines, Inc.;

                   (55) ATA Airline Freight Procedures Agreement dated
                        December 16, 1985;

                   (56) Application and Concurrence for Non-IATA Air Carrier to
                        participate in Bank Settlement Plan - Australia
                        dated December 12, 1988;

                   (57) Application and Concurrence for Non-IATA Air Carrier to
                        participate in Bank Settlement Plan - Canada dated
                        May 18, 1983;

                   (58) Application and Concurrence for Non-IATA Air Carrier to
                        participate in Bank Settlement Plan - New Zealand
                        dated September 16, 1987;

                   (59) Form of Facilities Management and Supplemental
                        Agreement among Computer Associates International,
                        Inc. and Litton Computer Services, as Licensee,
                        and Hawaiian Airlines, Inc., as Client, dated
                        September 30, 1993;

                   (60) Master Lease Agreement dated September 30, 1993 between
                        Comdisco, Inc., as lessor, and Hawaiian Airlines, Inc.
                        as lessee, for computer and telephone equipment;

                   (61) Galileo International Global Airline Distribution
                        Agreement dated as of December 16, 1993 among
                        Galileo International Partnership, and Hawaiian
                        Airlines, Inc., as Participant;

                   (62) Loan and Security Agreement dated as of
                        September 12, 1994 between The CIT Group/Credit
                        Finance, Inc., as Lender, and Hawaiian Airlines,
                        Inc., as Borrower;

                   (63) Letter of Credit Reimbursement and Security Agreement
                        dated as of September 12, 1994 by Hawaiian
                        Airlines, Inc. for the benefit of Martin Anderson;

                   (64) Letter of Credit Reimbursement and Security Agreement
                        dated as of September 13, 1994 by Hawaiian
                        Airlines, Inc. for the benefit of Robert Midkiff;

                   (65) Agreement Relating to the Settlement of Interline
                        Accounts through Airlines Clearing House Inc.
                        dated July 8, 1981;

                   (66) Supplementary Agreement to Agreement Relating to the
                        Settlement of Interline Accounts through Airlines
                        Clearing House, Inc. and amendments made thereto
                        through to October 10, 1986;

                   (67) Supplementary Agreement to Agreement Relating to the
                        Settlement of Interline Accounts through Airlines
                        Clearing House, Inc. and amendments made thereto
                        through to January 30, 1987;

                   (68) Amendment to the Agreement Relating to the Settlement
                        of Interline Accounts through Airlines Clearing
                        House, Inc. and


                                      37

<PAGE>

                        amendments made thereto through to September 17, 1987;

                   (69) Amended and Restated Interline Agreement dated
                        September 1, 1989 by and among LAX TWO CORP. and
                        certain Air Carriers as "Contracting Airlines",
                        including Hawaiian Airlines, Inc.;

                   (70) Airlines Reporting Corporation Carrier Service
                        Agreement dated November 30, 1984 between the
                        Airlines Reporting Corporation and Hawaiian
                        Airlines, Inc.;

                   (71) Stipulation Respecting Claims of the State of Hawaii
                        filed with the Bankruptcy Court July 29, 1994;

                   (72) Stipulation between Hawaiian Airlines, Inc. and
                        Kawasaki Enterprises Inc. filed with the
                        Bankruptcy Court March 31, 1994;

                   (73) Global Settlement Agreement and Adequate Protection
                        Stipulation with GPA filed with the Bankruptcy
                        Court August 12, 1994;

                   (74) Rotable Spare Parts Chattel Mortgage and Security
                        Agreement dated August 23, 1994, as amended.

              (e)  The following contracts filed as Exhibit 10 to the Company's
                   Annual Report on Form 10-K for the year ended December 31,
                   1994 are incorporated herein by reference:

                   (1)  Warrants dated September 12, 1994 granted Martin
                        Anderson.

                   (2)  Warrants dated September 12, 1994 granted Robert
                        Midkiff.

                   (3)  Amendment to Lease Agreement, Lease Supplements and
                        Lease Supplement No. 9, dated November 12, 1994, to
                        original Aircraft Lease Agreement dated September 12,
                        1994, between American Airlines, Inc.-Registered
                        Trademark- as lessor, and Hawaiian Airlines, Inc., as
                        lessee,  for 1) amendment of Lease Agreement, 2) one
                        (1) airframe, U.S. registration number N122AA,
                        manufacturer's serial no. 46522 and three (3) General
                        Electric CF6-6K engines bearing manufacturer's serial
                        nos. 451391, 451166, and 451141.

                   (4)  Lease Amendment No. 2, dated as of April 13, 1995
                        between American Airlines, Inc.-Registered Trademark-
                        and Hawaiian Airlines, Inc. filed in redacted form
                        since confidential treatment has been requested
                        pursuant to Rule 24.b-2 for certain portions thereof.

                   (5)  Aircraft Lease Agreement dated as of November 20, 1994
                        between American Airlines, Inc.-Registered Trademark-,
                        as lessor, and Hawaiian Airlines, Inc., as lessee, for
                        one (1) McDonnell Douglas DC-10-10 aircraft, bearing
                        FAA registration no. N146AA, together with three (3)
                        GE-CF6-6K engines bearing manufacturer's serial nos.
                        451272, 451257 and 451164 filed in redacted form since
                        confidential treatment has been requested pursuant to
                        Rule 24.b-2 for certain portions thereof.

                   (6)  Waiver and Amendment to Loan and Security Agreement
                        dated as of April 13, 1995 between CIT Group/Credit
                        Finance, Inc., as Lender, and Hawaiian Airlines, Inc.,
                        as Borrower.


                                      38

<PAGE>

              (f)  Lease Amendment No. 1 dated as of April 28, 1995 to original
                   Lease Amendment dated as of November 20, 1994, between
                   American Airlines, Inc.-Registered Trademark-, as lessor,
                   and Hawaiian Airlines, Inc., as lessee, for amendment of
                   Lease Agreement filed in redacted form since confidential
                   treatment has been requested pursuant to Rule 24.b-2 for
                   certain portions thereof as Exhibit 10 to the Company's
                   Quarterly Report on Form 10-Q for the quarter ended March
                   31, 1995 is incorporated herein by reference.

              (g)  The following contracts filed as Exhibit 10 to the Company's
                   Quarterly Report on Form 10-Q for the quarter ended June 30,
                   1995 are incorporated herein by reference:

                   (1)  Lease Amendment No. 3 dated as of June 1, 1995 to
                        Aircraft Lease Agreement dated as of September 12,
                        1994, between American Airlines, Inc., lessor, and
                        Hawaiian Airlines, Inc., lessee, for amendment of Lease
                        Agreement filed in redacted form since confidential
                        treatment has been requested pursuant to Rule 24.b-2
                        for certain portions thereof.

                   (2)  Aircraft Lease Agreement dated July 5, 1995 between
                        American Airlines, Inc., lessor and Hawaiian Airlines,
                        Inc., lessee, for one DC-10-10 aircraft filed in
                        redacted form since confidential treatment has been
                        requested pursuant to Rule 24.b-2 for certain portions
                        thereof.

              (h)  The following contracts filed as Exhibit 10 to the Company's
                   Quarterly Report on Form 10-Q for the quarter ended
                   September 30, 1995 are incorporated herein by reference:

                   (1)  Lease Amendment No. 2 dated as of September 29, 1995 to
                        Aircraft Lease Agreement dated as of November 20, 1995,
                        between American Airlines, Inc., lessor, and Hawaiian
                        Airlines, Inc., lessee, for amendment of Lease
                        Agreement filed in redacted form since confidential
                        treatment has been requested pursuant to Rule 24.b-2
                        for certain portions thereof;

                   (2)  Lease Supplement No. 1 dated as of July 19, 1995 to
                        Aircraft Lease Agreement dated as of July 5, 1995,
                        between American Airlines, Inc., lessor, and Hawaiian
                        Airlines, Inc., lessee;

                   (3)  Lease Amendment No. 1 dated as of September 29, 1995 to
                        Aircraft Lease Agreement dated as of July 5, 1995,
                        between American Airlines, Inc., lessor, and Hawaiian
                        Airlines, Inc., lessee, for amendment of Lease
                        Agreement filed in redacted form since confidential
                        treatment has been requested pursuant to Rule 24.b-2
                        for certain portions thereof;

                   (4)  Lease Amendment No. 4 dated as of August 22, 1995 to
                        Aircraft Lease Agreement dated as of September 12,
                        1994, between American Airlines, Inc., lessor, and
                        Hawaiian Airlines, Inc., lessee, for amendment of Lease
                        Agreement filed in redacted form since confidential
                        treatment has been requested pursuant to Rule 24.b-2
                        for certain portions thereof;


                                      39

<PAGE>

                   (5)  Lease Amendment No. 5 dated as of October 6, 1995 to
                        Aircraft Lease Agreement dated as of September 12,
                        1994, between American Airlines, Inc., lessor, and
                        Hawaiian Airlines, Inc., lessee, for amendment of Lease
                        Agreement filed in redacted form since confidential
                        treatment has been requested pursuant to Rule 24.b-2
                        for certain portions thereof.

              (i)  The following contracts filed as Exhibit 10 to the
                   Company's Annual Report on Form 10-K for the year ended
                   December 31, 1995 are incorporated herein by reference:

                   (1)  Amendment No. 1 dated as of February 28, 1996 to
                        Chattel Mortgage and Security Agreement dated as of
                        January 31, 1996 by Hawaiian Airlines, Inc. in favor of
                        American Airlines, Inc.;

                   (2)  Chattel Mortgage and Security Agreement dated as of
                        January 31, 1996 by Hawaiian Airlines, Inc. in favor of
                        American Airlines, Inc.;

                   (3)  Secured Promissory Note in amount of $10,250,000 made
                        by Hawaiian Airlines, Inc. payable to the order of
                        American Airlines, Inc. dated January 31, 1996;

                   (4)  Note Repayment and Stock Purchase Agreement dated as of
                        January 31, 1996 by and among GPA Group plc, AEROUSA,
                        Inc. and Hawaiian Airlines, Inc.;

                   (5)  Stockholders Agreement dated as of January 31, 1996
                        between Airline Investors Partnership, LP., the
                        Association of Flight Attendants, the International
                        Association of Machinists and Aerospace Workers
                        (AFL-CIO) and the Air Line Pilots Association,
                        International;

                   (6)  Aircraft Lease Amendment dated as of January 31, 1996
                        to Aircraft Lease Agreement dated as of March 31, 1992
                        between AEROUSA, Inc., as lessor and Hawaiian
                        Airlines, Inc., as lessee, for one (1) McDonnell
                        Douglas DC-9-51 Aircraft, manufacturer's serial
                        number 47784;

                   (7)  Aircraft Lease Amendment dated as of February 28, 1990
                        between GPA Group plc, as lessor and Hawaiian Airlines,
                        inc., as lessee, for one (1) McDonnell Douglas DC-9-51
                        Aircraft, manufacturer's serial number 47742;

                   (8)  Aircraft Lease Amendment dated as of February 28, 1990
                        between GPA Group plc, as lessor and Hawaiian
                        Airlines, inc., as lessee, for one (1) McDonnell
                        Douglas DC-9-51 Aircraft, manufacturer's serial
                        number 48122;

                   (9)  Aircraft Lease Amendment dated as of February 28, 1990
                        between GPA Group plc, as lessor and Hawaiian
                        Airlines, inc., as lessee, for one (1) McDonnell
                        Douglas DC-9-51 Aircraft, manufacturer's serial
                        number 47796;

                   (10) Lease Amendment No. 8 dated as of January 31, 1996 to
                        Aircraft Lease Agreement dated September 12, 1994
                        between American


                                      40

<PAGE>

                        Airlines, Inc. and Hawaiian Airlines, Inc.;

                   (11) Lease Amendment No. 1 dated as of January 31, 1996 to
                        Aircraft Lease Agreement dated December 15, 1995 between
                        American Airlines, Inc. and Hawaiian Airlines, Inc.;

                   (12) Lease Amendment No. 1 dated as of January 31, 1996 to
                        Aircraft Lease Agreement dated December 30, 1995 between
                        American Airlines, Inc. and Hawaiian Airlines, Inc.;

                   (13) Form of Amended and Restated Indemnification Agreement
                        between Hawaiian Airlines, Inc. and certain directors
                        and officers of the Company dated as of
                        January 30, 1996;

                   (14) Warrant for the Purchase of 948,973 shares of Class A
                        Common Stock issued to AMR Corporation;

                   (15) Warrant for the Purchase of 948,973 shares of Class A
                        Common Stock issued to AMR Corporation;

                   (16) Form of Warrants for the Purchase of shares of Class A
                        Common Stock issued to Martin Anderson;

                   (17) Form of Warrants for the Purchase of shares of Class A
                        Common Stock issued to Robert Midkiff;

                   (18) Aircraft Lease Agreement dated as of December 30, 1995
                        between American Airlines, Inc. and Hawaiian
                        Airlines, Inc.;

                   (19) Aircraft Lease Agreement dated as of December 15, 1995
                        between American Airlines, Inc. and Hawaiian
                        Airlines, Inc.;

                   (20) Lease Amendment No. 7 dated as of December 8, 1995 to
                        Aircraft Lease Agreement dated September 12, 1994
                        between American Airlines, Inc. and Hawaiian
                        Airlines, Inc.;

                   (21) Stock Purchase Agreement dated as of December 8, 1995,
                        between Hawaiian Airlines, Inc., and Airline Investors
                        Partnership, L.P.;

                   (22) Lease Amendment No. 6 dated as of November 20, 1995,
                        to Aircraft Lease Agreement dated September 12, 1994
                        between American Airlines, Inc. and Hawaiian
                        Airlines, Inc.

              (j)  The following contracts filed as Exhibit 10 to the
                   Company's Amendment No. 1 to Registration Statement on
                   Form S-2 as filed with the Commission on July 12, 1996
                   are incorporated herein by reference:

                   (1)  Aircraft Lease Agreement dated as of May 15, 1996
                        between American Airlines, Inc. and Hawaiian Airlines,
                        Inc. filed in redacted form since confidential
                        treatment has been requested pursuant to Rule 406 for
                        certain portions thereof;

                   (2)  Cooperative Marketing Agreement between Northwest
                        Airlines, Inc. and Hawaiian Airlines, Inc. filed in
                        redacted form since confidential treatment has been
                        granted pursuant to Rule 406 for certain portions
                        thereof;


                                      41

<PAGE>

                   (3)  Code Share Agreement between Mahalo Air, Inc. and
                        Hawaiian Airlines, Inc. dated June 28, 1996.

              (k)  The following contract filed as Exhibit 10 to the Company's
                   Quarterly Report on Form 10-Q for the quarter ended
                   September 30, 1996 are incorporated herein by reference:

                   (1)  Aircraft Lease Agreement dated as of November 6, 1996
                        between American Airlines, Inc. and Hawaiian Airlines,
                        Inc. filed in redacted form since confidential
                        treatment has been requested pursuant to Rule 24.b-2
                        for certain portion thereof.

              (l)  Code Sharing Agreement dated November 26, 1996 by and
                   between Hawaiian Airlines, Inc. and Reno Air filed in
                   redacted form since confidential treatment has been
                   requested pursuant to Rule 24b-2 for certain portions
                   thereof.

              (m)  Software Development, Maintenance, and License
                   Agreement dated as of December 31, 1996 by and between
                   SABRE Decision Technologies, a division of The SABRE
                   Group, Inc. and Hawaiian Airlines, Inc.

              (n)  Hawaiian Airlines, Inc. 1996 Nonemployee Director Stock
                   Option Plan.

              (o)  Employment Agreement dated as of May 1, 1996 by and between
                   John L. Garibaldi and the Company.

              (p)  Employment Agreement dated as of June 15, 1996 by and
                   between Michael J. McQuay and the Company.

              (q)  Form of Secured Promissory Note dated September 12, 1996.

              (r)  Form of Stock Pledge Agreement dated as of
                   September 12, 1996.


                                      42

<PAGE>

    Exhibit 11     Computation of Earnings Per Common Stock Share.

    Exhibit 23     Consent of KPMG Marwick LLP.

    Exhibit 24     Power of Attorney.

    Exhibit 27     Financial data schedule.






                                      43

<PAGE>

                                EXHIBIT INDEX



Exhibit
Number                          Description
------                        ----------------
10(l)    Code Sharing Agreement dated November 26, 1996 by and between
         Hawaiian Airlines, Inc. and Reno Air filed in redacted form
         since confidential treatment has been requested pursuant to
         Rule 24b-2 for certain portions thereof.

10(m)    Software Development, Maintenance, and License Agreement dated
         as of December 31, 1996 by and between SABRE Decision
         Technologies, a division of The SABRE Group, Inc. and Hawaiian
         Airlines, Inc.

10(n)    Hawaiian Airlines, Inc. 1996 Nonemployee Director Stock Option Plan.

10(o)    Employment Agreement date as of May 1, 1996 by and between John L.
         Garibaldi and the Company.

10(p)    Employment Agreement dated as of June 15, 1996 by and between
         Michael J. McQuay and the Company.

10(q)    Form of Secured Promissory Note dated September 12, 1996.

10(r)    Form of Stock Pledge Agreement dated as of September 12, 1996.

11       Computation of Earnings Per Common Share.

23       Consent of KPMG Marwick LLP.

24       Power of Attorney.

27       Financial data schedule.





                                      44

<PAGE>

                                  SIGNATURES


Pursuant to the requirements of Section 13 or 1(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                           HAWAIIAN AIRLINES, INC.



March 31, 1997                         By /s/ BRUCE R. NOBLES
                                          -------------------------------------
                                          Bruce R. Nobles
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)



March 31, 1997                         By /s/ JOHN L. GARIBALDI
                                          --------------------------------------
                                          John L. Garibaldi
                                          Executive Vice President
                                          and Chief Financial Officer
                                          (Principal Financial and
                                          Accounting Officer)


                                      45

<PAGE>

                         INDEPENDENT AUDITORS' REPORT


The Board of Directors
Hawaiian Airlines, Inc.:

We have audited the accompanying balance sheets of Hawaiian Airlines, Inc. as
of December 31, 1996 and 1995, and the related statements of operations,
shareholders' equity (deficit) and cash flows for the years ended December
31, 1996 and 1995, the period September 12, 1994 through December 31, 1994,
and the period January 1, 1994 through September 11, 1994.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hawaiian Airlines, Inc.  as
of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years ended December 31, 1996 and 1995, the period September
12, 1994 through December 31, 1994, and the period January 1, 1994 through
September 11, 1994 in conformity with generally accepted accounting
principles.

As discussed in notes 1 and 2 to the financial statements, on September 12,
1994, Hawaiian Airlines, Inc.  emerged from bankruptcy.  The financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting.
As a result, the financial statements of the Reorganized Company are
presented on a different basis than those of the Predecessor Company and,
therefore, are not comparable in all respects.

/s/ KPMG Peat Marwick LLP
Honolulu, Hawaii
February 18, 1997


                                      F-1

<PAGE>

HAWAIIAN AIRLINES, INC.
BALANCE SHEETS (IN THOUSANDS)
DECEMBER 31, 1996 AND 1995 (REORGANIZED COMPANY)


                                                              1996      1995
                                                           ---------  ---------
ASSETS
CURRENT ASSETS:
   Cash and cash equivalents.............................  $  37,237  $   5,389
   Accounts receivable, net of allowance for doubtful
     accounts of $500 in 1996 and $800 in 1995...........     28,022     18,178
   Inventories, net of allowance for obsolescence of
     $315 in 1996 and 1995...............................      7,050      7,648
   Assets held for sale..................................      1,344      1,344
   Prepaid expenses......................................      4,845      5,804
                                                           ---------  ---------
         TOTAL CURRENT ASSETS.............................    78,498     38,363
                                                           ---------  ---------

PROPERTY AND EQUIPMENT:
   Flight equipment......................................     49,419     40,659
   Ground equipment, buildings and leasehold
     improvements........................................      6,536      5,775
                                                           ---------  ---------
         Total...........................................     55,955     46,434
   Accumulated depreciation and amortization.............    (10,161)    (5,043)
                                                           ---------  ---------
         PROPERTY AND EQUIPMENT, NET.....................     45,794     41,391
                                                           ---------  ---------
OTHER ASSETS:
   Assets held for sale..................................      5,083      8,336
   Lease security and other deposits.....................        657      1,053
   Long-term prepayments and other.......................      3,705      5,164
   Reorganization value in excess of amounts
     allocable to identifiable assets, net ("Excess
     Reorganization Value")..............................     62,552     67,333
                                                           ---------  ---------
         TOTAL OTHER ASSETS..............................     71,997     81,886
                                                           ---------  ---------
         TOTAL ASSETS....................................  $ 196,289  $ 161,640
                                                           ---------  ---------
                                                           ---------  ---------

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS                       (CONTINUED)

                                      F-2

<PAGE>

HAWAIIAN AIRLINES, INC.
BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 1996 AND 1995 (REORGANIZED COMPANY)


                                                             1996      1995
                                                           ---------  ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Current portion of long-term debt.....................  $   2,247  $   6,027
   Current portion of capital lease obligations..........      2,912      2,662
   Accounts payable......................................     26,799     35,182
   Air traffic liability.................................     25,524     30,461
   Other accrued liabilities.............................      4,834      8,293
   Current portion of accrued vacation liability.........      5,262      5,052
   Accrued salaries and wages............................      2,527      2,385
                                                           ---------  ---------

         TOTAL CURRENT LIABILITIES.......................     70,105     90,062
                                                           ---------  ---------

LONG-TERM DEBT...........................................      6,353      5,523
                                                           ---------  ---------

CAPITAL LEASE OBLIGATIONS................................      7,387     10,102
                                                           ---------  ---------

OTHER LIABILITIES AND DEFERRED CREDITS:
   Noncurrent portion of accrued vacation liability......        426        425
   Accumulated pension and other postretirement
         benefit obligations.............................     26,100     25,259
    Other................................................      3,045      1,091
                                                           ---------  ---------
         TOTAL OTHER LIABILITIES AND DEFERRED CREDITS....     29,571     26,775
                                                           ---------  ---------

SHAREHOLDERS' EQUITY:
   Common Stock - $.01 par value, 60,000,000 and
         43,050,000 shares authorized in 1996 and 1995,
         respectively, 38,816,972 and 8,740,060 shares
         issued and outstanding in 1996 and 1995,
         respectively (350,348 and 636,247 shares
         issuable in 1996 and 1995, respectively)........        393         94
   Special Preferred Stock - $.01 par value, 2,000,000
         shares authorized in 1996 and 1995, seven and
         no shares issued and outstanding in 1996 and
         1995, respectively..............................          -          -
   Capital in excess of par value........................     95,827     41,193
   Warrants..............................................      1,557        900
   Notes receivable from Common Stock sales..............     (1,714)         -
   Unearned compensation................................           -       (182)
   Minimum pension liability............................           -     (1,170)
   Accumulated deficit..................................     (13,190)   (11,657)
                                                           ---------  ---------

         SHAREHOLDERS'EQUITY............................      82,873     29,178
                                                           ---------  ---------

   COMMITMENTS AND CONTINGENT LIABILITIES
         (NOTES 5, 6, 9, 10, 11 AND 12)

         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.....   $ 196,289  $ 161,640
                                                           ---------  ---------
                                                           ---------  ---------

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      F-3
<PAGE>
HAWAIIAN AIRLINES, INC.
STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (REORGANIZED COMPANY), THE
PERIOD FROM SEPTEMBER 12, 1994 TO DECEMBER 31, 1994 (REORGANIZED COMPANY)
AND THE PERIOD FROM JANUARY 1, 1994 TO SEPTEMBER 11, 1994 (PREDECESSOR)

<TABLE>
<CAPTION>
                                                              REORGANIZED COMPANY           PREDECESSOR
                                                     ----------------------------------------------------
                                                                             PERIOD FROM    PERIOD FROM
                                                                             SEPTEMBER 12,   JANUARY 1,
                                                                               1994 TO        1994 TO
                                                                              DECEMBER 31,  SEPTEMBER 11,
                                                        1996        1995          1994           1994
---------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>           <C>           <C>
OPERATING REVENUES:
  Passenger......................................... $ 326,266    $ 297,527      $ 80,675     $ 199,502
  Charter...........................................    27,835       22,167           536           110
  Cargo.............................................    20,123       18,169         5,300        11,039
  Other.............................................    10,249        9,041         2,646         6,172
                                                     ---------    ---------      --------     ---------
    TOTAL...........................................   384,473      346,904        89,157       216,823
                                                     ---------    ---------      --------     ---------
OPERATING EXPENSES:
  Wages and benefits................................   108,626      108,274        30,889        71,781
  Aircraft fuel, including taxes and oil............    75,884       56,724        15,581        32,101
  Maintenance materials and repairs.................    68,984       60,581        15,595        30,946
  Rentals and landing fees..........................    34,995       33,700        10,381        30,011
  Sales commissions.................................    13,369       13,875         3,209         9,632
  Depreciation and amortization.....................     8,731        7,859         2,291         4,506
  Other.............................................    71,857       67,792        17,479        44,267
                                                     ---------    ---------      --------     ---------
    TOTAL...........................................   382,446      348,805        95,425       223,244
                                                     ---------    ---------      --------     ---------
    OPERATING INCOME (LOSS).........................     2,027       (1,901)       (6,268)       (6,421)
                                                     ---------    ---------      --------     ---------
NONOPERATING INCOME (EXPENSE):
  Interest and amortization of debt expense.........    (3,887)      (4,341)       (1,286)       (1,150)
  Interest income...................................     1,455          762           318           300
  Gain (loss) on disposition of equipment...........      (729)        (233)          558            45
  Other, net........................................      (297)         207           527           502
  Reorganization expenses...........................         -            -             -       (13,950)
                                                     ---------    ---------      --------     ---------
    TOTAL...........................................    (3,458)      (3,605)          117       (14,253)
                                                     ---------    ---------      --------     ---------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS....    (1,431)      (5,506)       (6,151)      (20,674)

INCOME TAXES:
  Currently Payable.................................       (43)           -             -             -
  Reduction to Excess Reorganization Value..........      (825)           -             -             -
                                                     ---------    ---------      --------     ---------
    TOTAL...........................................      (868)           -             -             -
                                                     ---------    ---------      --------     ---------
LOSS BEFORE EXTRAORDINARY ITEMS.....................    (2,299)      (5,506)       (6,151)      (20,674)

Extraordinary Gain, Net of Income Taxes in 1996
  (Currently Payable of $26, Reduction to Excess
  Reorganization Value of $485).....................       766            -             -       190,063
                                                     ---------    ---------      --------     ---------
NET INCOME (LOSS)................................... $  (1,533)   $  (5,506)     $ (6,151)    $ 169,389
                                                     ---------    ---------      --------     ---------
                                                     ---------    ---------      --------     ---------
NET LOSS PER COMMON STOCK SHARE:
  Before extraordinary items........................ $   (0.07)** $   (0.59)**   $  (0.65)**  $     N/M *
  Extraordinary gain, net of income taxes...........      0.02 **         - **          - **        N/M *
                                                     ---------    ---------      --------     ---------
NET LOSS PER COMMON STOCK SHARE..................... $   (0.05)** $   (0.59)**   $  (0.65)**  $     N/M *
                                                     ---------    ---------      --------     ---------
                                                     ---------    ---------      --------     ---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING.........................................    30,975 **     9,400 **      9,400 **      7,137 *
                                                     ---------    ---------      --------     ---------
                                                     ---------    ---------      --------     ---------
</TABLE>
*  Not Meaningful - Per share data is not meaningful as the Predecessor was
   recapitalized and adopted fresh start reporting as of September 12, 1994.
** Includes shares reserved for issuance under the consolidated Plan of
   Reorganization dated September 21, 1993, as amended.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      F-4
<PAGE>

HAWAIIAN AIRLINES, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (REORGANIZED COMPANY), THE PERIOD
FROM SEPTEMBER 12, 1994 TO DECEMBER 31, 1994 (REORGANIZED COMPANY) AND THE
PERIOD FROM JANUARY 1, 1994 TO SEPTEMBER 11, 1994 (PREDECESSOR)

<TABLE>
<CAPTION>
                          COMMON
                          STOCK,                                                  NOTES
                        WARRANTS AND           SPECIAL    CAPITAL IN          RECEIVABLE FROM                MINIMUM
                         OPTIONS     COMMON   PREFERRED   EXCESS OF             COMMON STOCK    UNEARNED      PENSION    ACCUMULATED
                         ISSUABLE    STOCK     STOCK      PAR VALUE   WARRANTS     SALES      COMPENSATION   LIABILITY    DEFICIT
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>          <C>      <C>         <C>          <C>       <C>            <C>            <C>        <C>
PREDECESSOR

BALANCE, DECEMBER 31,
 1993.................. $ 40,504     $    -   $    -      $  12,479    $    -    $       -      $       -      $     -   $(262,865)

Net income.............        -          -        -              -         -            -              -            -     169,389
Fresh start
 adjustments, net......     (504)         -        -        (12,479)        -            -              -            -      93,476
                        --------     ------   ------      ---------    ------    ---------      ---------      -------   ---------
REORGANIZED COMPANY

BALANCE, SEPTEMBER 12,
 1994..................   40,000          -        -              -         -            -              -            -           -

Net loss...............        -          -        -              -         -            -              -            -      (6,151)
                        --------     ------   ------      ---------    ------    ---------      ---------      -------   ---------
BALANCE, DECEMBER 31,
 1994..................   40,000          -        -              -         -            -              -            -      (6,151)

Net loss...............        -          -        -              -         -            -              -            -      (5,506)
Issuance of 8,740,060
 shares of Common Stock
 (636,247 shares of
 Common Stock issuable)  (39,100)        94        -         39,006         -            -              -            -           -
Issuance of warrants to
 acquire 989,011 shares
 of Common Stock.......     (900)         -        -              -       900                                        -           -
Grant of options to
 acquire 592,500 shares
 of Common Stock.......        -          -        -          2,187         -            -         (2,187)           -           -
Amortization of unearned
 compensation on options
 to acquire 592,500
 shares of Common Stock        -          -        -              -         -            -          2,005            -           -
Recordation of minimum
 pension liability.....        -          -        -              -         -            -              -       (1,170)          -
                        --------     ------   ------      ---------    ------    ---------      ---------      -------   ---------
BALANCE, DECEMBER 31,
 1995.................. $      -     $   94   $    -      $  41,193    $  900    $       -      $    (182)     $(1,170)  $ (11,657)

</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS                      (continued)


                                       F-5
<PAGE>

HAWAIIAN AIRLINES, INC.
STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (REORGANIZED COMPANY), THE
PERIOD FROM SEPTEMBER 12, 1994 TO DECEMBER 31, 1994 (REORGANIZED COMPANY)
AND THE PERIOD FROM JANUARY 1, 1994 TO SEPTEMBER 11, 1994 (PREDECESSOR)

<TABLE>
<CAPTION>
                          COMMON
                          STOCK,                                                  NOTES
                        WARRANTS AND           SPECIAL    CAPITAL IN          RECEIVABLE FROM                MINIMUM
                         OPTIONS     COMMON   PREFERRED   EXCESS OF             COMMON STOCK    UNEARNED      PENSION    ACCUMULATED
                         ISSUABLE    STOCK     STOCK      PAR VALUE   WARRANTS     SALES      COMPENSATION   LIABILITY    DEFICIT
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>          <C>      <C>         <C>          <C>       <C>            <C>            <C>        <C>
Net loss............... $      -     $    -   $    -      $       -    $    -    $       -      $       -      $     -   $  (1,533)
Amortization of
 unearned compensation
 on options to acquire
 592,500 shares of
 Common Stock..........        -          -        -              -         -           -             182            -           -
Remeasurement of
 compensation on options
 to acquire shares of
 Common Stock..........        -          -        -          1,071         -            -              -            -           -
Repurchase and
 retirement of 827,221
 shares of Common Stock
 from GPA..............        -         (8)       -           (902)        -            -              -            -           -
Sale of 18,181,818 shares
 of Common Stock to AIP,
 net of $2.2 million of
 transaction costs.....        -        182        -         17,638         -            -              -            -           -
Issuance of warrants
 to AMR to acquire
 948,973 shares of
 Common Stock..........        -          -        -              -       825            -              -            -           -
Issuance of seven
 shares of Special
 Preferred Stock.......        -          -        -              -         -            -              -            -           -
Sale of 12,092,500
 shares of Common
 Stock through the
 Offerings, net of
 $3.2 million of
 transaction costs.....        -        121        -         35,977         -       (1,926)             -            -           -
Exercise of options
 to acquire 115,000
 shares of Common
 Stock.................        -          1        -            185         -            -              -            -           -
Repayment of notes
 receivable from
 Common Stock sales....        -          -        -              -         -          212              -            -           -
Exercise of warrants
 to acquire 300,000
 shares of Common
 Stock.................        -          3        -            665      (168)           -              -            -           -
Reversal of minimum
 pension liability....         -          -        -              -         -            -              -        1,170           -
                         -------     ------   ------      ---------    ------    ---------      ---------      -------   ---------
BALANCE, DECEMBER 31,
 1996..................  $     -     $  393   $    -      $  95,827    $1,557    $ (1,714)      $      -       $     -   $ (13,190)
                         -------     ------   ------      ---------    ------    ---------      ---------      -------   ---------
                         -------     ------   ------      ---------    ------    ---------      ---------      -------   ---------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      F-6

<PAGE>
HAWAIIAN AIRLINES, INC.
STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (REORGANIZED COMPANY), THE PERIOD
  FROM SEPTEMBER 12, 1994 TO DECEMBER 31, 1994 (REORGANIZED COMPANY),  AND THE
  PERIOD FROM JANUARY 1, 1994 TO SEPTEMBER 11, 1994 (PREDECESSOR)
<TABLE>
<CAPTION>
                                                                             REORGANIZED COMPANY             PREDECESSOR
                                                                 ---------------------------------------------------------
                                                                                                PERIOD FROM  PERIOD FROM
                                                                                               SEPTEMBER 12,  JANUARY 1,
                                                                                                  1994 TO       1994 TO
                                                                                                DECEMBER 31, SEPTEMBER 11,
                                                                     1996            1995           1994         1994
--------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>             <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss) . . . . . . . . . . . . . . . . . . . . . .   $  (1,533)     $   (5,506)     $  (6,151)   $  169,389
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Depreciation and amortization . . . . . . . . . . . . . . .       5,260           4,258          1,201         4,506
    Amortization of reorganization value in excess of
      identifiable assets . . . . . . . . . . . . . . . . . . .       3,471           3,601          1,090             -
    Amortization of debt discount . . . . . . . . . . . . . . .          -              557            136             -
    Allowance for doubtful accounts . . . . . . . . . . . . . .         641             719              -           422
    Net periodic postretirement benefit cost. . . . . . . . . .         726           3,309            903         1,988
    Stock option compensation . . . . . . . . . . . . . . . . .       1,253           2,005              -             -
    Early retirement provision. . . . . . . . . . . . . . . . .           -           2,000              -             -
    (Gain) loss on disposition of equipment . . . . . . . . . .         729             233           (558)          (45)
    Extraordinary items, net of income taxes currently payable.      (1,251)              -              -      (190,063)
    Income tax benefit recognized as a reduction to Excess
      Reorganization Value. . . . . . . . . . . . . . . . . . .       1,310               -              -             -
    (Increase) decrease in accounts receivable. . . . . . . . .     (10,485)         (2,622)         3,401        (6,223)
    (Increase) decrease in inventories. . . . . . . . . . . . .         598          (1,414)           220           497
    (Increase) decrease in prepaid expenses . . . . . . . . . .         959             275         (2,233)       (1,133)
    (Decrease) increase in accounts payable . . . . . . . . . .       1,867          17,653         (1,966)        5,774
    (Decrease) increase air traffic liability . . . . . . . . .      (4,937)         (9,921)          (319)       10,602
    (Decrease) increase in accrued liabilities. . . . . . . . .      (3,106)          3,432         (1,323)         (734)
    Other, net. . . . . . . . . . . . . . . . . . . . . . . . .       5,497             209            334           317
                                                                  ---------      ----------      ---------    ----------
      NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
        BEFORE REORGANIZATION EXPENSES. . . . . . . . . . . . .         999          18,788         (5,265)       (4,703)
    Reorganization expenses . . . . . . . . . . . . . . . . . .           -               -              -        10,799
                                                                  ---------      ----------      ---------    ----------
      NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES . . .         999          18,788         (5,265)        6,096
                                                                  ---------      ----------      ---------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Return (issuance) of security deposits. . . . . . . . . . . .           -               -          6,979        (3,007)
  Additions to property and equipment . . . . . . . . . . . . .      (9,677)         (9,165)        (3,603)       (3,682)
  Net proceeds from disposition of equipment. . . . . . . . . .       2,780           4,225            673           817
                                                                  ---------      ----------      ---------    ----------
      NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES . . .      (6,897)         (4,940)         4,049        (5,872)
                                                                  ---------      ----------      ---------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of Common Stock. . . . . . . . . . . . . . . . . . .      52,846               -              -             -
  Proceeds on notes receivable from Common Stock sales. . . . .         212               -              -             -
  Repurchase and retirement of Common Stock . . . . . . . . . .        (910)              -              -             -
  Issuance of long-term debt. . . . . . . . . . . . . . . . . .       7,564           1,591          5,393             -
  Repayment of long-term debt . . . . . . . . . . . . . . . . .     (19,258)        (10,644)        (2,095)         (689)
  Repayment of capital lease obligations. . . . . . . . . . . .      (2,708)         (2,907)        (1,044)       (1,345)
                                                                  ---------      ----------      ---------    ----------
      NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES . . .      37,746         (11,960)         2,254        (2,034)
                                                                  ---------      ----------      ---------    ----------
      NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  . .      31,848           1,888          1,038        (1,810)
Cash and cash equivalents - Beginning of Year or Period . . . .       5,389           3,501          2,463         4,273
                                                                  ---------      ----------      ---------    ----------
CASH AND CASH EQUIVALENTS - END OF YEAR OR PERIOD . . . . . . .   $  37,237      $    5,389      $   3,501    $    2,463
                                                                  ---------      ----------      ---------    ----------
                                                                  ---------      ----------      ---------    ----------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                     F-7
<PAGE>

HAWAIIAN AIRLINES, INC.
STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (REORGANIZED COMPANY), THE PERIOD
  FROM SEPTEMBER 12, 1994 TO DECEMBER 31, 1994 (REORGANIZED COMPANY),  AND THE
  PERIOD FROM JANUARY 1, 1994 TO SEPTEMBER 11, 1994 (PREDECESSOR)

<TABLE>
<CAPTION>
                                                                             REORGANIZED COMPANY             PREDECESSOR
                                                                 ---------------------------------------------------------
                                                                                                PERIOD FROM  PERIOD FROM
                                                                                               SEPTEMBER 12,  JANUARY 1,
                                                                                                  1994 TO       1994 TO
                                                                                                DECEMBER 31, SEPTEMBER 11,
                                                                     1996            1995           1994         1994
--------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>             <C>          <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
INTEREST PAID . . . . . . . . . . . . . . . . . . . . . . . . .   $   3,579      $    3,824      $     988    $    1,009
INCOME TAXES PAID . . . . . . . . . . . . . . . . . . . . . . .         250               -              -             -
REORGANIZATION EXPENSES PAID. . . . . . . . . . . . . . . . . .           -               -              -         3,151

SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
  Reclassification of accounts payable to
    long-term debt. . . . . . . . . . . . . . . . . . . . . . .      10,250               -              -             -
  Remeasurement of compensation on options
    to acquire shares of Common Stock . . . . . . . . . . . . .       1,071               -              -             -
  Issuance of warrants to AMR to acquire 948,973
    shares of Common Stock. . . . . . . . . . . . . . . . . . .         825               -              -             -
  Receipt of notes receivable from Common Stock sales . . . . .       1,926               -              -             -
  Change in minimum pension liability . . . . . . . . . . . . .      (1,170)          1,170              -             -
  Grant of options to acquire 592,500 shares of Common Stock. .           -           2,187              -             -
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS


                                     F-8
<PAGE>

HAWAIIAN AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS

1.  BUSINESS AND ORGANIZATION

Hawaiian Airlines, Inc. ("Hawaiian Airlines" or the "Company") was
incorporated in January 1929 under the laws of the Territory of Hawaii and is
the largest airline headquartered in Hawaii, based on operating revenues of
$384.5 million for 1996.  The Company is engaged primarily in the scheduled
transportation of passengers, cargo and mail over a route system which
services the six major islands of the State of Hawaii ("Interisland") and Las
Vegas and four key United States ("U.S.") West Coast gateway cities, Los
Angeles, San Francisco, Seattle and Portland ("Transpac").  In addition
Hawaiian Airlines provides the only direct service from Hawaii to Pago Pago,
American Samoa and Papeete, Tahiti ("Southpac").  The Company also provides
charter service from Honolulu to Las Vegas and, effective February 1997,
Anchorage, Alaska ("Overseas Charter").

The Company's passenger airline business is its chief source of revenue.
Scheduled passenger service consists of, on average, approximately 150
flights per day among the six major islands of the State of Hawaii (i.e.,
Interisland), daily service to Las Vegas and four key U.S. West Coast gateway
cities (i.e., Transpac), and twice weekly service to Pago Pago, American
Samoa and weekly service to Papeete, Tahiti in the South Pacific (i.e.,
Southpac). In 1996 the Company also operated, on average of six charter
flights per week to Las Vegas (i.e., Overseas Charter).  The Company operates
a fleet of 13 DC-9 aircraft and 10 DC-10 aircraft.

REORGANIZATION

In response to the financial difficulties experienced by the Company in the
early 1990s, Hawaiian Airlines, HAL, INC., Hawaiian Airlines' then parent
company, and West Maui Airport, Inc., another then wholly owned subsidiary of
HAL, INC. (collectively the "Predecessor"), voluntarily commenced a Chapter
11 bankruptcy reorganization pursuant to a consolidated Plan of
Reorganization dated September 21, 1993, as subsequently amended (the
"Reorganization Plan"). The Company emerged from Chapter 11 bankruptcy on
September 12, 1994  (the "Effective Date") with Hawaiian Airlines being the
sole surviving corporation (the "Reorganized Company").

In 1996, the Company was successful in its concerted efforts to improve its
liquidity and financial position.

RECAPITALIZATION

(i)      On January 31, 1996, the Company received a $20.0 million cash equity
         infusion through the purchase by Airlines Investors Partnership, L.P.
         ("AIP") of 18,181,818 shares of the Company's Common Stock (the
         "Shares"), par value $.01 per share, and four shares of the Company's
         Class B Special Preferred Stock, par value $.01 per share
         (collectively the "AIP Investment").  As of December 31, 1996, AIP
         owned approximately 45.9% of the Company's common equity.  As a result,
         AIP currently controls substantially all actions to be taken by the
         shareholders of the Company. Pursuant to the Company's Amended Bylaws
         and the terms of the Series B Special Preferred Stock, until such time
         as AIP ceases to own at least 35.0% of the common equity, it would have
         the right to nominate six of the 11 nominees to stand from time to
         time for election as directors of the Company.  Thereafter, AIP would
         have the right to nominate five, four or three directors so long as it
         owned at least 25%, 10% or 5%, respectively, of the common equity.
         In 1996, six of AIP's director nominees were elected to the Board of
         Directors;

(ii)     In September 1996, the Company completed a shareholder rights offering
         and an investor offering (collectively the "Offerings") which
         collectively raised approximately $39.3 million in gross proceeds of
         equity capital.  The Offerings were intended to permit the Company's
         shareholders to reduce the dilutive effect of the AIP Investment, as
         described above, on their equity investment in the Company and to raise
         additional equity capital. The Offerings resulted in the issuance of
         12,092,500 new shares of Common Stock at the subscription price of
         $3.25 per share. The effects of the Offerings have been reflected in
         the Company's balance sheets net of approximately $3.2 million of
         estimated costs and approximately $1.9 million in fully recourse,
         interest-bearing notes received from holders of options granted as
         part of the

                                     F-9
<PAGE>

         shareholder rights offering who exercised such options to purchase
         592,500 shares of Common Stock in the Offerings.

RESTRUCTURING AND ELIMINATION OF DEBT

Upon consummation of the AIP Investment and satisfaction of certain other
conditions, the Company entered into certain arrangements with American and
AMR pursuant to which, American and AMR accepted the following:

(i)      The payment of up to $10.0 million of deferred lease rents and
         maintenance payments (and accrued interest thereon) under the
         Company's long-term aircraft lease agreement with American (the
         "Aircraft Lease Agreement") and the reimbursement of $250,000 of
         American's fees and expenses in connection with the transaction through
         the issuance by the Company to American of a $10.25 million promissory
         note secured by certain assets of the Company (the "American Note"). On
         December 24, 1996, the Company exercised its option to prepay the
         American Note for $9.15 million plus accrued interest with all liens
         securing the American Note being released;

(ii)     Reduction of basic rents under the Aircraft Lease Agreement by
         approximately 28.0% for a period of three years, at which time
         basic rents would revert back to 1995 levels;

(iii)    American's relinquishment of $2.0 million of letters of credit which
         secured the Company's obligations to American under the Aircraft Lease
         Agreement; and

(iv)     Issuance of the AMR Warrants to AMR, which entitle the holder to
         acquire up to 1,897,946 shares of Common Stock (the "AMR Warrants")
         exercisable at $1.10 per share (adjusted to 1,949,338 shares at
         $1.07 per share pursuant to applicable anti-dilution provisions).
         One-half of the AMR Warrants are currently exercisable, but the
         balance of the AMR Warrants were to become exercisable only if American
         and the Company had entered into a code sharing arrangement by
         January 1, 1997 regarding the placement of the two letter flight
         designator code for American's flights on certain of the Company's
         Interisland flights.  The Company extended the date upon which the
         balance of the AMR Warrants could become exercisable, subject to the
         satisfaction of certain agreed upon conditions.  While the Company and
         AMR continue their attempts to consummate the code sharing arrangement,
         the conditions upon which the exercisable date of the balance of the
         AMR Warrants had been extended were not satisfied and on January 31,
         1997, the balance of the AMR Warrants expired.  The remaining
         outstanding AMR Warrants, if not exercised, expire on September 11,
         2001.

On April 29, 1996, the Company's credit facility provided by CIT Group/Credit
Finance, Inc. (the "Credit Facility") was amended to increase the borrowing
capacity thereunder from $8.15 million to $15.0 million.  The $15.0 million
Credit Facility consists of two secured term loans and a secured revolving
line of credit including up to $6.0 million of letters of credit.  The term
loans are in the amounts of  $5.4 million and $1.3 million and will amortize
in equal installments over periods of 48 and 60 months, respectively.

In connection with the AIP Investment, the Company agreed with GPA Group plc
and its affiliate AeroUSA, Inc. (collectively, the "GPA Companies") that, if
closing of the Offerings were to have occurred by September 30, 1996, the
Company would repurchase all of the shares of Common Stock owned by the GPA
Companies and repay certain secured and unsecured promissory notes held by
the GPA Companies. The stock repurchase price would be $1.10 per share and
the promissory notes would be repaid at approximately 85.0% of the then
carrying value of the notes, including any deferred costs and other expenses
owed.  At its option, the Company could make such repurchase and repayment at
any time prior to the closing of the Offerings.  As required by the provider
of the Credit Facility in connection with the amendment thereof, the Company
exercised this option in April 1996.  Based on the number of shares owned by
the GPA Companies and the carrying value of the notes as of such date, the
Company paid approximately $4.7 million to the GPA Companies to repurchase
the shares and repay the notes. The payment to the GPA Companies was funded
by borrowings under the Credit Facility in April 1996.

                                     F-10
<PAGE>

UNIONS AND LABOR AGREEMENTS

Upon consummation of the AIP Investment and satisfaction of certain other
conditions, amendments to the labor agreements for each of the Company's five
labor unions became effective.

The amendments to the agreements extend the amendable date of all five
contracts from February 28, 1997 to February 28, 2000.  Each of the five
unions agreed to certain economic concessions, which include cancellation of
certain scheduled pay increases, with new pay increases to be effective
December 1, 1998 and January 1, 2000. In exchange for the wage concessions,
the Company agreed to negotiate a gain-sharing program to provide employees
the opportunity to receive wage rate increases resulting from work rule and
productivity modifications, which would produce cost savings to the Company.
In addition, the Company agreed to establish a profit bonus plan, which would
provide all employees (other than senior management) with cash bonuses if the
Company achieves certain pre-tax profit targets.  The contracts as modified
provide additional furlough protection to employees under certain specified
circumstances.  The Company and unions also have agreed to include certain
additional low-cost or no-cost provisions that are specific to each of the
respective union contracts.

Pursuant to their collective bargaining agreements, the Association of Flight
Attendants ("AFA"), the International Association of Machinists and Aerospace
Workers (AFL-CIO) ("IAM") and the Air Line Pilots Association, International
("ALPA"), each have the right to nominate one of the nominees to stand from
time to time for election as directors of the Company.  In 1996, each of the
IAM, ALPA and AFA director nominees were elected to the Board of Directors.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company's financial statements, up to and including the Effective Date,
included herein have been prepared in accordance with the American Institute
of Certified Public Accountants Statement of Position 90-7, "Financial
Reporting for Entities in Reorganization Under the Bankruptcy Code."  For
accounting purposes, the Effective Date of the Reorganization Plan and
inception date for the Reorganized Company is deemed to be September 12,
1994. Under fresh start reporting, the reorganization value of the entity has
been allocated to the Reorganized Company's assets and liabilities on a basis
substantially consistent with the purchase method of accounting.  The portion
of reorganization value not attributable to specific tangible or identifiable
intangible assets of the Company is reflected as reorganization value in
excess of amounts allocable to identifiable assets in the accompanying
balance sheets.  Reorganization value in excess of amounts allocable to
identifiable assets amounted to approximately $72.0 million on the Effective
Date.

Because of the application of fresh start reporting, the financial statements
for periods after reorganization are not comparable to the financial
statements for periods prior to the reorganization.

CASH AND CASH EQUIVALENTS

The Company considers all investments purchased with an original maturity of
three months or less to be cash equivalents.  Short-term cash investments at
December 31, 1996 and 1995 were valued at cost and amounted to $33.2 million
and $2.5 million, respectively.

INVENTORIES

Inventories consisting of flight equipment expendable parts and supplies are
stated at average cost, less an allowance for obsolescence.

ASSETS HELD FOR SALE

Assets held for sale consisting of expendable inventory parts and rotable
flight equipment are stated at the lower of average cost or net realizable
value for expendable inventory parts and the lower of average cost or fair
value less cost to sell for rotable flight equipment.  As of December 31,
1996 and 1995, the Company had approximately $6.4

                                     F-11

<PAGE>

million and $9.7 million, respectively, of expendable inventory parts and
rotable flight equipment held for sale internally or on a consignment basis
with a third party.

                                     F-12
<PAGE>

PROPERTY AND EQUIPMENT

Owned property and equipment are stated at cost.  Costs of major improvements
are capitalized.  Depreciation and amortization are provided on a
straight-line basis over the following estimated useful lives:

    Flight equipment. . . . . . . . . . .  12-15 years, 15% residual value
    Ground equipment. . . . . . . . . . .   5-15 years
    Airport terminal facility . . . . . .     30 years
    Buildings . . . . . . . . . . . . . .  15-20 years
    Leasehold improvements. . . . . . . .  Shorter of lease term or useful life

Maintenance and repairs are charged to operations as incurred, except that
(1) costs of overhauling engines are charged to operations in the year the
engines are removed for overhaul and (2) scheduled heavy airframe overhauls
on DC-9 aircraft are recorded under the deferral method whereby the cost of
overhaul is capitalized and amortized over the shorter of the period
benefited or the lease term.  Additionally, provision is made for the
estimated cost of scheduled heavy airframe overhauls required to be performed
on leased DC-9 aircraft prior to their return to lessors.  Maintenance and
repairs on DC-10 aircraft are charged to operations on a flight hour basis.

REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO IDENTIFIABLE ASSETS

Reorganization value in excess of amounts allocable to identifiable assets is
amortized on a straight-line basis over 20 years.  Accumulated amortization
at December 31, 1996 and 1995 totaled approximately $8.2 million and $4.7
million, respectively.  The Company will continue to assess and evaluate
whether the remaining useful life of the asset requires revision or, through
the use of estimated future undiscounted cash flows over the remaining life
of the asset, whether the remaining balance of the asset is recoverable.  The
assessment of the recoverability of the unamortized amount will be impacted
if estimated future operating cash flows are not achieved.

OTHER ASSETS

Material preoperating costs associated with the introduction of new flight
equipment are amortized on a straight-line basis over the shorter of the
lease period or five years.

ACCRUED VACATION LIABILITY

Accrued vacation in excess of the amount expected to be taken by employees
during the following year is classified as a noncurrent liability.

FREQUENT FLYER AWARDS

A liability for frequent flyer awards is recognized on the incremental cost
basis in the period during which passengers have accumulated sufficient
mileage for award redemption.  Incremental costs primarily include fuel and
catering.

PASSENGER  REVENUES

Passenger fares are recorded as operating revenues when the transportation is
provided.  The value of unused passenger tickets is included as air traffic
liability.

INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in years in which those temporary differences are expected to
be recovered or settled.  The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.

                                    F-13
<PAGE>

INCOME (LOSS) PER SHARE

Income (loss) per share is based on the weighted average number of common
stock shares and, if dilutive, common stock equivalents outstanding during
each year.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

Material estimates that are particularly susceptible to significant change
relate to the determination of air traffic liability and the amounts reported
for accumulated pension and other postretirement benefit obligations.
Management believes that such estimates have been appropriately established
in accordance with generally accepted accounting principles.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of."
SFAS No. 121 requires that long-lived assets and certain identifiable
intangible assets held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable.  If the future cash flows expected to
result from use of the asset (undiscounted and without interest charges) are
less than the carrying amount of the asset, an impairment loss is recognized.
Measurement of that loss is based on the fair value of that asset.
Generally, SFAS No. 121 also requires that long-lived assets and certain
identifiable intangible assets to be disposed of be reported at the lower of
the asset carrying amount or fair value, less cost to sell.

The Company adopted the provisions of SFAS No. 121 on January 1, 1996.  The
adoption of SFAS No. 121 did not have a material effect on the Company's
financial condition or results of operations.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes a new, fair value-based method of
accounting for stock-based employee compensation, but does not require an
entity to apply the new method for purposes of preparing its basic financial
statements.  For an entity not applying the new method for purposes of
preparing its basic financial statements, SFAS No. 123 requires footnote
disclosure of pro forma net income and earnings per share information for
employee stock option grants made in 1995 and future years as if the fair
value-based method had been applied.  The Company adopted the provisions of
SFAS No. 123 on January 1, 1996, and has elected to continue to apply the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and provide the pro forma disclosures required by
SFAS No. 123.

RECLASSIFICATIONS

Certain prior year amounts were reclassified to conform to the 1996
presentation period.  Such reclassifications had no effect on previously
reported results of operations.

3.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable, lease
security and other deposits, accounts payable, other accrued liabilities,
accrued vacation liability and accrued salaries and wages approximate fair
value due to the short maturity of those instruments.  The carrying amount of
notes receivable from Common Stock sales approximates fair value as the terms
of such instruments are reflective of terms offered for similar instruments
of comparable maturities.

The estimated fair values of long-term debt amounted to $8.6 million and
$11.4 million at December 31, 1996 and 1995, respectively. These fair values
were estimated by discounting the future cash flow requirements of each

                                    F-14

<PAGE>

instrument at rates currently offered at the respective year-end dates to the
Company for similar debt instruments of comparable maturities.

4.  FLIGHT EQUIPMENT

All of the Company's aircraft are leased except for two DC-9s.  At December
31, 1996 and 1995, the composition of the Company's aircraft fleet is as
follows:

                                            1996                  1995
                                    -------------------------------------------
             Aircraft Type           Leased       Owned     Leased       Owned
           ----------------         -------------------------------------------
             DC-10                     10           -          8           -
             DC-9                      11           2         11           2
                                    -------------------------------------------
             Total                     21           2         19           2
                                    -------------------------------------------
                                    -------------------------------------------

5.  LEASES

AIRCRAFT LEASES

Nine DC-10 aircraft are leased under operating leases which expire in 2001.
One DC-10 aircraft is leased under a short term operating lease which expires
in 1997.  Effective January 31, 1996, the Company and American agreed to a
reduction in basic rents due on DC-10 operating leases through January 31,
1999, at which time such rents revert to their original levels.  See Note 1.
Seven and four DC-9 aircraft and related flight equipment are leased under
operating and capital leases, respectively,  for various periods ranging
through the year 2004.

Most of the aircraft under operating leases include renewal options and fair
market value purchase options at the end of the lease period.

OTHER LEASES

The Company leases office space for its headquarters, airport facilities,
ticket offices and certain ground equipment in varying terms to 2008.

GENERAL

Rent expense for aircraft, office space, real property and other equipment
during 1996, 1995 and 1994 was $26.7 million, $25.5 million and $33.6
million, respectively, net of sublease rental income from operating leases of
$102,000, $75,000 and $368,000, respectively.

                                    F-15

<PAGE>

Scheduled future minimum lease commitments under operating and capital leases
for the Company as of December 31, 1996, in thousands, are as follows:

                                            Operating      Capital
                                             Leases        Leases
------------------------------------------------------------------------
1997. . . . . . . . . . . . . . . . . . . .  $16,446        $ 3,728
1998. . . . . . . . . . . . . . . . . . . .   15,550          3,367
1999. . . . . . . . . . . . . . . . . . . .   17,670          3,336
2000. . . . . . . . . . . . . . . . . . . .   15,302          1,501
2001. . . . . . . . . . . . . . . . . . . .   10,239              -
Thereafter. . . . . . . . . . . . . . . . .   10,098              -
                                             -------        -------
      Total minimum lease payments. . . . .  $85,305        $11,932
                                             -------
                                             -------
      Less amount representing interest
       (rates ranging from 8.5% to 9.0%). .                   1,633
                                                            -------
      Present value of capital lease
       obligations. . . . . . . . . . . . .                  10,299

      Less current portion of capital lease
       obligations. . . . . . . . . . . . .                   2,912
                                                            -------
      Capital lease obligations, excluding
       current portion. . . . . . . . . . .                 $ 7,387
                                                            -------
                                                            -------

In addition to scheduled future minimum lease payments, the Company is
required to pay for, under agreement with American, monthly DC-10 maintenance
charges. These charges are based on flight hours for the month and are
expensed as incurred.  For the years ended December 31, 1996 and 1995, the
Company incurred $45.2 million and $37.6 million, respectively, in
maintenance charges under such agreement.

The net book value of property held under capital leases as of December 31,
1996 and 1995 totaled $14.7 million and $15.5 million, respectively.

                                    F-16

<PAGE>

6.  DEBT

At December 31, 1996 and 1995, the Company's long-term debt, including
obligations under capital leases, consists of the following, in thousands:

                                                          1996            1995
--------------------------------------------------------------------------------
Secured obligations due 1997-1999..................    $   8,417       $  8,542

Tax obligations due 1997-2000......................          133            158

Unsecured obligations due 1997.....................           50          2,850

Capital lease obligations due 1997-2000............       10,299         12,764
                                                       ---------       --------
                                                          18,899         24,314
Current portion....................................       (5,159)        (8,689)

    Long-term debt and capital lease
         obligations, excluding current portion        $  13,740       $ 15,625
                                                       ---------       --------
                                                       ---------       --------

Secured obligations due 1997-1999 are as follows:

(i)   A secured note executed in 1993 for the purchase of a DC-9
      aircraft from a lessor.  The mortgage note is due in 1999 and is
      payable in monthly installments of principal and interest of
      $59,876.  Interest accrues at 10.315% per annum.  At December 31,
      1996 and 1995, $1.6 million and $2.1 million were outstanding,
      respectively;

(ii)  As described in Note 1, in April 1996, the Company's Credit
      Facility was amended to increase the borrowing capacity
      thereunder from $8.15 million to $15.0 million.  The $15.0
      million Credit Facility consists of two secured term loans and a
      secured revolving line of credit including up to $6.0 million of
      letters of credit.  The term loans will amortize in equal
      installment over periods of 48 and 60 months, respectively. The
      outstanding principal amounts of the term loans will become due
      and payable upon termination of the Credit Facility. Available
      credit is subject to change determined by recalculation of the
      borrowing base, repayments due under the term loans and
      repayments arising from the disposition and other changes in the
      related collateral securing the Credit Facility. The Credit
      Facility has an initial term of three years from April 29, 1996
      and renews automatically for successive terms of two years each,
      unless terminated by either party on at least 60 days notice
      prior to the end of the then-current term.  Interest accrues at
      prime plus 2.0% (10.25% at December 31, 1996).  The Company may
      terminate the Credit Facility at any time, on 30 days notice and
      payment of certain early termination fees during the initial term
      and without termination fees during any renewal term.

      As of December 31, 1996, the total availability under the Credit Facility
      was $13.2 million with aggregate term loans and letters of credit
      outstanding in the amounts of  $6.8 million and $100,000, respectively.
      As of December 31, 1995, the total availability under the Credit Facility
      amounted to approximately $3.4 million, which amount was fully drawn in
      the form of $1.3 million in borrowings and $2.1 million in letters of
      credit.

      The Credit Facility is secured by a first lien on substantially all of
      the Company's property, excluding the Company's owned and leased aircraft,
      the Company's aircraft engines while installed on an aircraft and certain
      security deposits.  In addition, terms of the Credit Facility restrict the
      Company from paying any cash or stock dividends on its Common Stock;

                                     F-17

<PAGE>

(iii)   A note payable executed in 1994 in settlement of $6.0 million of
        administrative claims related to unpaid prepetition L-1011 and DC-9
        aircraft rents.  As discussed in Note 1, the Company exercised its
        option to prepay the note at a discount in April 1996.  Early
        extinguishment of this note payable resulted in an extraordinary gain
        of approximately $402,000, net of income taxes.  The note was originally
        due in 1999, bore interest at 8.0% per annum and was payable in monthly
        installments of principal and interest of $121,658.  At December 31,
        1995, $4.7 million was outstanding;

(iv)    A secured note payable executed in 1992 pursuant to a settlement
        agreement with the Government of Canada related to two DHC-7 aircraft
        and related flight equipment. In January 1996, the note was paid in
        full. The note was originally due in 1996 and was payable in
        installments of $50,000 per month.  As the note bore no interest,
        interest had been imputed as of the Effective Date at 10.0% per annum.
        As of December 31, 1995, $569,000 was outstanding; and

(v)     In January 1996, the Company entered into certain arrangements with
        American and AMR pursuant to which, American and AMR accepted the
        payment of up to $10.0 million of deferred lease rents and
        maintenance payments (and accrued interest thereon) under the
        Aircraft Lease Agreement and the reimbursement of $250,000 of
        American's fees and expenses through the issuance by the Company to
        American of the American Note. On December 24, 1996, the Company
        exercised its option to prepay the American Note for $9.15 million
        plus accrued interest with all liens securing the American Note
        being released. Early extinguishment of the American Note resulted
        in an extraordinary gain of approximately $357,000, net of income
        taxes.  See Note 1.

Tax obligations due 1997-2000 represent allowed priority tax claims for
various taxing jurisdictions, which in accordance with the provisions of the
Reorganization Plan, bear interest at 7.0% per annum and are payable in 24
quarterly installments commencing on the first through sixth anniversaries of
the Effective Date.  The Company is currently in negotiations with respective
tax jurisdictions regarding approximately $500,000 of tax obligations.  At
December 31, 1996 and 1995, the $500,000 is included in accounts payable in
the accompanying balance sheets.

Unsecured obligations due 1997 are as follows:

(i)     A note executed in 1994 in settlement of $2.8 million of administrative
        claims related to unpaid prepetition airport use and occupancy fees to
        the State of Hawaii.  The note is due in 1997 and is payable in monthly
        installments of $100,000.  The note bears no interest; however,
        interest has been imputed at 10.0% per annum. As of December 31,
        1996 and 1995, $50,000 and $1.2 million were outstanding,
        respectively.  In January 1997, the note was paid in full;

(ii)    A note executed in 1994 in settlement of $4.7 million of administrative
        claims related to unpaid postpetition L-1011 aircraft rents.  In July
        1996, the note was paid in full.  The note bore interest at prime plus
        3.0% and was payable in monthly installments of principal and interest
        of $194,010.  At December 31, 1995, $1.6 million was outstanding; and

(iii)   A note executed in 1994 in settlement of $276,000 of administrative
        claims related to unpaid L-1011 aircraft rents. As discussed in Note 1,
        the Company exercised its option to prepay the note at a discount in
        April 1996. Early extinguishment of this note payable resulted in an
        extraordinary gain of approximately $7,000, net of income taxes. The
        note was originally due in October 1996, bore interest at prime plus
        3.0% per annum and was payable in monthly principal installments of
        $11,518.  At December 31, 1995, $115,000 was outstanding.

Obligations under capital leases represent the present value of aggregate
future minimum lease payments discounted using interest rates ranging from
8.5% to 9.0%.  See Note 5.

                                    F-18
<PAGE>

7.  REORGANIZATION AND NONRECURRING OPERATING ITEMS

Operating expenses in 1995 were reduced by the reversal of $1.8 million in
preconfirmation contingency accruals initially provided for on the Effective
Date.

The following reorganization and other items associated with the bankruptcy
proceeding were incurred by the Predecessor during the period from January 1,
1994 to September 11, 1994, in thousands:

Reorganization Items:
    Professional fees......................................    $    5,744
    Employee share of common stock distribution............         7,568
    Other..................................................           268
Revaluation of assets and liabilities......................           370
                                                               ----------
                                                               $   13,950
                                                               ----------
                                                               ----------

8.  INCOME TAXES

Income tax expense is based on an estimated annual effective tax rate which
differs from the federal statutory rate of 34%, primarily due to state income
taxes and certain nondeductible expenses.  The Company's reorganization and
the associated implementation of fresh start reporting gave rise to
significant items of expense for financial reporting purposes that are not
deductible for income tax purposes.

The estimated income tax benefit from the expected utilization of net
operating loss carryforwards arising prior to the Effective Date has been
applied as a reduction to reorganization value in excess of amounts allocable
to identifiable assets, not as a reduction to income tax expense.  While
generally accepted accounting principles require that a provision be
recorded, a majority of the provision will not require cash outlay as it will
be offset by net operating loss carryforwards available to the Company.  As
noted, in 1996, approximately $1.3 million of estimated income tax benefit
from the expected utilization of these net operating loss carryforwards has
been applied as a reduction to reorganization value in excess of amounts
allocable to identifiable assets.

Income tax expense attributable to loss before extraordinary items in 1996
differs from the "expected" tax benefit for that year computed by applying
the U.S. federal corporate income tax rate of 34% to loss before income taxes
and extraordinary items as follows:

    Computed "expected" tax benefit.......................  $    (500)
    Amortization of reorganization value in
     excess of amounts allocable to
     identifiable assets, not deductible
     for tax purposes.....................................      1,200
    State income taxes, net of federal income
     tax benefit..........................................        100
     Other................................................         68
                                                            ---------
                                                            $     868
                                                            ---------
                                                            ---------

As a result of net operating losses and related carryforwards, the Company
and the Predecessor were not required to provide for federal and state income
taxes for 1995 and 1994.

                                      F-19

<PAGE>

The tax effects of temporary differences that give rise to significant
portions of the Company's deferred tax assets and deferred tax liabilities at
December 31, 1996 and 1995 are presented below, in thousands:

                                                             1996        1995
-------------------------------------------------------------------------------
Deferred tax assets:
  Accounts receivable, principally due to
    allowance for doubtful accounts...................  $     200     $    320
  Accumulated pension and
    postretirement benefits...........................     10,440       10,104
  Accrued vacation....................................      1,741        1,646
  Net operating loss carryforwards....................     11,423       20,115
  Airframe return provision...........................        735          964
  Other...............................................      1,579        4,564
                                                        ---------     --------
      Total gross deferred tax assets.................     26,118       37,713

      Less valuation allowance........................    (17,143)     (31,598)
                                                        ---------     --------
      Net deferred tax assets.........................      8,975        6,115

  Deferred tax liabilities:
    Plant and equipment, principally due to
    differences in depreciation.......................     (8,975)      (6,115)
                                                        ---------     --------
    Net deferred taxes................................  $       -     $      -
                                                        ---------     --------
                                                        ---------     --------

The valuation allowance for deferred tax assets as of January 1, 1996 and
1995 was $31.6 million and $47.5 million, respectively.  The net change in
the total valuation allowance for the years ended December 31, 1996 and 1995
was a decrease of $14.5 million and a decrease of $12.9 million,
respectively.  In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized.  The ultimate
realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become
deductible.  Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in
making this assessment.

As a result of the AIP Investment, the Company underwent another ownership
change as defined under Section 382 of the Internal Revenue Code ("IRC
Section 382"). The Offerings did not result in an ownership change for
purposes of IRC Section 382.  IRC Section 382 places an annual limitation on
the amount of income that can be offset by net operating loss carryforwards
generated in pre-ownership change years.

Prior to the AIP Investment, the Company had an existing IRC Section 382
limitation as a result of its Chapter 11 reorganization.  The annual IRC
Section 382 limitation was approximately $2.4 million, plus certain
"built-in" income items that increased the limitation.  The ownership change
from the AIP Investment resulted in a new IRC Section 382 limitation of
approximately $1.7 million plus certain "built-in" income items.  This new
limitation will apply to all net operating losses incurred prior to the AIP
Investment.  As of December 31, 1996, the Company has total net operating
loss carryovers of approximately $130.6 million of which $28.6 million are
unrestricted and are available to offset future taxable income.  If not
utilized to offset future taxable income, the net operating loss
carryforwards will expire between the years 2003 and 2009.

                                     F-20

<PAGE>

9.  BENEFIT PLANS

DEFINED BENEFIT PENSION PLANS

The Company sponsors several defined benefit pension plans
covering substantially all of its employees hired prior to September 1, 1992.
Pilots and ground personnel are covered under three defined benefit pension
plans which provide benefits based primarily on years of service and employee
compensation near retirement.  The IAM and salaried defined benefit pension
plans were frozen effective October 1, 1993. Funding for the ground personnel
plans is based on minimum Employee Retirement Income Security Act of 1974
requirements. Pension cost for the ALPA plan is funded on a current basis
based on the amortization of prior service cost over 20 years. Plan assets
consist primarily of common stocks, government securities, insurance contract
deposits and cash management funds.

The following table summarizes the funded status of the defined benefit plans
of the Company as of December 31, 1996, in thousands:

<TABLE>
<CAPTION>                                  Plans for which       Plans for which
                                             accumulated          assets exceed
                                               benefits            accumulated
                                             exceed assets           benefits
--------------------------------------------------------------------------------
  <S>                                            <C>               <C>
  Fair value of plan assets....................  $   80,613        $   65,271
                                              -----------------  ---------------
  Accumulated benefit obligation:
      Vested...................................     (74,406)          (52,701)
      Non-vested...............................      (8,724)           (2,268)
                                                -----------------  ---------------
                                                    (83,130)          (54,969)

  Additional benefits based on future salary
      levels...................................     (13,592)                -
                                                -----------------  ---------------
  Projected benefit obligation.................     (96,722)          (54,969)
                                                -----------------  ---------------

  Plan assets in excess of (less than)
      projected benefit obligation.............     (16,109)           10,302
  Unrecognized actuarial net loss..............       1,333             2,130
                                                -----------------  ---------------
      Prepaid (accrued) pension cost...........  $  (14,776)       $   12,432
                                                -----------------  ---------------
                                                -----------------  ---------------
</TABLE>

The projected benefit obligation was determined using an assumed
weighted-average discount rate of 7.75% for 1996.  At December 31, 1996, the
assumed weighted-average rate of compensation increase was 4.50% for pilots
and 0.00% for ground personnel. The assumed weighted-average expected
long-term rate of return on plan assets was 9.0% for 1996.

                                     F-21
<PAGE>

The following table summarizes the funded status of the defined benefit plans
of the Company as of December 31, 1995, in thousands:

<TABLE>
<CAPTION>                                  Plans for which       Plans for which
                                             accumulated          assets exceed
                                               benefits            accumulated
                                             exceed assets           benefits
--------------------------------------------------------------------------------
  <S>                                            <C>                <C>
  Fair value of plan assets....................  $   88,877         $  50,736
                                              -----------------  ---------------
  Accumulated benefit obligation:
      Vested...................................     (86,807)          (42,160)
      Non-vested...............................      (7,803)           (2,174)
                                                -----------------  ---------------
                                                    (94,610)          (44,334)
  Additional benefits based on future salary
      levels...................................     (13,860)                -
                                                -----------------  ---------------
  Projected benefit obligation.................    (108,470)          (44,334)
                                                -----------------  ---------------
  Plan assets in excess of (less than)
      projected benefit obligation.............     (19,593)            6,402
  Unrecognized actuarial net loss..............       8,149             3,435
  Amount reflected as minimum pension liability..    (1,170)                -
                                                -----------------  ---------------
      Prepaid (accrued) pension cost...........  $  (12,614)        $   9,837
                                                -----------------  ---------------
                                                -----------------  ---------------
</TABLE>

The projected benefit obligation was determined using an assumed
weighted-average discount rate of 7.25% for 1995.  The assumed
weighted-average rate of compensation increase was 4.50% for pilots and 0.00%
for ground personnel at December 31, 1995.  The assumed weighted-average
expected long-term rate of return on plan assets was 9.0% for 1995.

The provisions of SFAS No. 87, "Employers' Accounting for Pensions," require
the recognition of an additional minimum liability for each defined benefit
plan for which the accumulated benefit obligation exceeds plan assets.  At
December 31, 1995, this amount is recorded as a long-term liability in
accumulated pension and other postretirement benefit obligations and a
separate reduction of shareholders' equity in the accompanying balance
sheets.

Net periodic pension cost for 1996 and 1995 included the following
components, in thousands:

<TABLE>

                                         1996              1995
--------------------------------------------------------------------------------
  <S>                                            <C>                <C>
  Service cost-benefits earned
      during the year..........................  $    3,857         $   3,248
  Interest cost on projected
      benefit obligation.......................      10,882            10,411
  Actual return on plan assets.................     (12,621)          (24,180)
  Net amortization and deferral................         837            12,868
  Early retirement provision...................           -             1,496
                                                -----------------  ---------------
      Net periodic pension cost................  $    2,955         $   3,843
                                                -----------------  ---------------
                                                -----------------  ---------------
</TABLE>

The net periodic pension cost in 1996 and 1995 was determined using an
assumed weighted-average discount rate of 7.25% and 8.25%, respectively.

In the first quarter of 1995, an early retirement program was offered by the
Company to qualified participants of the IAM and salaried defined benefit
plans. The Company recognized a $2.0 million charge to operations in 1995

                                      F-22
<PAGE>

which amount includes the impact of the early retirement program on the
estimated accumulated benefit obligations of the IAM and salaried defined
benefit plans.

Net periodic pension (gain) cost for 1994 included the following components,
in thousands:

<TABLE>
<CAPTION>
                                              Reorganized
                                                Company            Predecessor
                                            ------------------------------------
                                               Period from         Period from
                                            September 12, 1994   January 1, 1994
                                                   to                   to
                                            December 31, 1994   September 11, 1994
--------------------------------------------------------------------------------
  <S>                                            <C>                <C>
  Service cost-benefits earned
      during the period.....................     $      818         $   2,326
  Interest cost on projected
      benefit obligation....................          2,831             6,828
  Actual return on plan assets..............          3,109            (2,244)
  Net amortization and deferral.............         (6,366)           (5,515)
  Fresh start adjustment....................              -            (8,284)
                                                -----------------  ---------------
      Net periodic pension (gain) cost......     $      392         $  (6,889)
                                                -----------------  ---------------
                                                -----------------  ---------------
</TABLE>

The net periodic pension cost in 1994 was determined using an assumed
weighted-average discount rate of 8.25% and 7.25% for the period from
September 12, 1994 to December 31, 1994 and the period from January 1, 1994
to September 11, 1994, respectively.

In the third quarter of 1994, ALPA further ratified certain funding
assumption changes to its defined benefit pension plan which resulted in
decreased required cash contributions to the plan.  The changes were ratified
by ALPA in exchange for 1) an additional allowed general unsecured claim
under the Predecessor's Chapter 11 process; 2) payment by the Reorganized
Company of the pilots' pension plan investment and advisory fees and
administrative expenses in 1994 and 1995, with payments being limited to
$100,000 in 1994; 3) if applicable, future payment directly by the
Reorganized Company for retirement benefits accrued in excess of statutory
compensation limits; and 4) forgiveness of certain immaterial fees due from
ALPA.

Fresh start adjustment of $8.3 million represents the net effect of fresh
start accounting, as applied by the Company in accordance with SOP 90-7, on
the pension benefit obligation as of September 12, 1994.

POSTRETIREMENT PLANS

In addition to providing pension benefits, the Company sponsors two defined
benefit postretirement plans. Employees in the Company's non-pilot group are
eligible for certain medical benefits under one plan if they meet certain age
and service requirements at the time of retirement.  Employees in the
Company's pilot group are eligible for certain medical and life insurance
benefits under another plan if they become disabled or reach normal
retirement age while working for the Company.  The Company continues to fund
the cost of medical and life insurance benefits in the year incurred.

                                      F-23

<PAGE>

The Company's postretirement benefit plans' combined benefit obligations as
of December 31, 1996 and 1995 are as follows, in thousands:

                                                     1996          1995
--------------------------------------------------------------------------
Accumulated benefit obligation:
 Retirees and dependents........................   $ (4,262)     $ (5,848)
 Fully eligible active plan participants........     (2,955)         (341)
 Other active plan participants.................     (7,243)      (12,735)
                                                   ---------     ---------
Unfunded accumulated postretirement
 benefit obligation.............................    (14,460)      (18,924)

Unrecognized net gain...........................    (11,587)       (6,398)
                                                   ---------     ---------
 Accrued postretirement benefit obligation......   $(26,047)     $(25,322)
                                                   ---------     ---------
                                                   ---------     ---------

The accumulated postretirement benefit obligation was determined using an
assumed weighted-average discount rate of 7.75% and 7.25% for 1996 and 1995,
respectively.

Net periodic postretirement benefit cost in 1996 and 1995 included the
following components, in thousands:

                                                     1996          1995
--------------------------------------------------------------------------
Service cost-benefits attributed to
 service during the year........................   $    923      $  1,593
Interest cost on accumulated
 postretirement benefit obligation..............      1,153         1,785
Net amortization and deferral...................       (418)            -
Early retirement provision......................          -           411
                                                   ---------     ---------
 Net periodic postretirement
  benefit cost..................................   $   1,658     $   3,789
                                                   ---------     ---------
                                                   ---------     ---------

A weighted average discount rate of 7.25% and 8.25% was used in determining
net periodic postretirement benefit cost for the years ended December 31,
1996 and 1995, respectively.

As noted above, in the first quarter of 1995, an early retirement program was
offered by the Company to qualified participants of the IAM and salaried
defined benefit pension plans.  The Company recognized a $2.0 million charge
to operations in 1995 for the combined effects of the early retirement
program on the estimated accumulated pension and postretirement benefit
obligations.

                                     F-24
<PAGE>

Net periodic postretirement benefit cost in 1994 included the following
components, in thousands:

                                          Reorganized
                                             Company             Predecessor
                                        ----------------------------------------
                                           Period from           Period from
                                        September 12, 1994     January 1, 1994
                                                to                    to
                                         December 31, 1994    September 11, 1994
--------------------------------------------------------------------------------
Service cost-benefits attributed to
 service during the period..............       $444                 $1,074
Interest cost on accumulated
 postretirement benefit obligation......        459                    986
Net amortization and deferral...........          -                    (72)
                                          ---------------      ----------------
 Net periodic postretirement
  benefit cost..........................       $903                 $1,988
                                          ---------------      ----------------
                                          ---------------      ----------------


A weighted average discount rate of 8.25% and 7.25% was used for the period
from September 12, 1994 to December 31, 1994 and the period from January 1,
1994 to September 11, 1994, respectively.

For measurement purposes, the following ranges of graded rates were used in
the per capita cost of covered medical benefits:

                                 Reorganized
                                   Company                       Predecessor
                      ---------------------------------------------------------
                                           Period from           Period from
                                        September 12, 1994     January 1, 1994
                                                to                    to
                       1996    1995      December 31, 1994    September 11, 1994
--------------------------------------------------------------------------------
Initial rates          9.5%    14.0%           15.0%                 14.0%

Termination rates      4.0%    5.0%             6.0%                  5.0%


The medical cost trend rate assumption has a significant effect on the
amounts reported.  To illustrate, increasing the assumed medical cost trend
rates by 1.0% in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1996, 1995 and 1994 by $1.9 million,
$2.9 million and $3.7 million, respectively, and the aggregate of the service
and interest cost components of net periodic postretirement benefit cost for
the years then ended by $347,000, $632,000 and $584,000, respectively.

OTHER

The Company also sponsors separate deferred compensation plans (401(k)) for
its pilots, flight attendants and ground and salaried personnel.
Participating employer cash contributions are not required under the terms of
the pilots' plan. However, the Company made contributions of 5.0% in 1996,
5.0% in 1995 and 5.0% in 1994, of defined compensation pursuant to the terms
of the flight attendants' plan.  Effective January 1, 1994, the Company is
required to contribute an additional 2.0% to participants in the flight
attendants' plan. Contributions to the flight attendants' plan are funded
currently and totaled approximately $1.1 million, $555,000 and $889,000 in
1996, 1995 and 1994, respectively.

Effective September 1, 1994, the Company is required to contribute 4.0% of
eligible earnings to the IAM and salaried personnel plan.  Contributions from
the Company are required only for those employees who were participants in
the plan as of September 1, 1993.  Contributions to the IAM and salaried
401(k) plan totaled $1.6 million in 1996 and 1995 and $1.1 million in 1994,
respectively.

                                     F-25

<PAGE>

10. CAPITAL STOCK, WARRANTS, RIGHTS AND OPTIONS

AUTHORIZED CAPITAL STOCK

In 1996, the shareholders of the Company approved (i) the conversion of the
outstanding shares of Class B Common Stock into a like number of shares of
Class A Common Stock and (ii) the amendment to the Company's Amended Articles
of Incorporation to eliminate the Class B Common Stock and to designate the
Company's Class A Common Stock as "Common Stock."  The modification to the
securities affected only the name and all other rights of the holders of
Class A Common Stock remained the same.  In 1996, the Restated Articles of
Incorporation of the Company were further amended to increase the authorized
number of shares of Common Stock from 40,000,000 shares to 60,000,000 shares.
As a result of the amendment, the authorized capital stock of the Company
consists of 60,000,000 shares of Common Stock, par value $.01 per share, and
2,000,000 shares of Preferred Stock, $.01 par value per share.

SPECIAL PREFERRED STOCK

As part of the AIP Investment, AIP received four shares of Series B Special
Preferred Stock, which entitle AIP to nominate directors as described in Note
1. AFA, IAM and ALPA each received one share of Series C Special Preferred
Stock, Series D Special Preferred Stock and Series E Special Preferred Stock,
respectively, (collectively the "Special Preferred Stock") which entitle each
union to nominate one director. The holders of each series of the Special
Preferred Stock are entitled to fill a vacancy on the Board of Directors
caused by the removal, resignation or death of a director nominated by that
series if the Board fails to fill such vacancy within 30 days.  AIP has
agreed with each of IAM, ALPA and AFA that so long as the right to have a
representative on the Board is in its respective collective bargaining
agreement, AIP will vote its shares in favor of such union's nominee for the
Board of Directors. In addition to the rights of the Special Preferred Stock
described above, the Special Preferred Stock (i) is senior to Common Stock
and each series is PARI PASSU with each other with respect to rights on
liquidation, dissolution and winding up and will be entitled to receive $.01
per share, and no more, before any payments are made to holders of any stock
ranking junior to the Special Preferred Stock; (ii) has no dividend rights
other than at any time that a dividend is declared and paid on the Common
Stock dividends in an amount per share equal to twice the dividend per share
paid on the Common Stock will be paid on the Special Preferred Stock; (iii)
is entitled to one vote per share and votes with the Common Stock as a single
class on all matters submitted to the shareholders of the Company; (iv)
automatically converts into one share of Common Stock upon the transfer of
such share from the person to whom originally issued to any person that is
not an affiliate of such person; and (v) does not have preemptive rights in
connection with future issuances of the Company's capital stock.

WARRANTS

In January 1996, the Company issued the AMR Warrants to AMR, which entitle
the holder to acquire up to 1,949,338 shares of Common Stock exercisable at
$1.07 per share (as adjusted for anti-dilution provisions). One-half of the
AMR Warrants are currently exercisable and expire, if not exercised, on
September 11, 2001, but the balance of the AMR Warrants were to become
exercisable only if American and the Company had entered into a code sharing
arrangement by January 1, 1997.  See Note 1.

Pursuant to the Reorganization Plan, the Company granted warrants to certain
individuals (the "Reorganization Warrants"), which originally entitled such
individuals to purchase 989,011 shares of Common Stock at an exercise price
of $2.73 per share.  Pursuant to the anti-dilution provisions of the
Reorganization Warrants, upon consummation of the AIP Investment and the
Offerings described in Note 1, the exercise price of the Reorganization
Warrants was adjusted to $1.67 per share and the holders of the
Reorganization Warrants received warrants to purchase an additional 629,961
shares of Common Stock.  The holders of the Reorganization Warrants waived
the anti-dilution provisions thereof in connection with the issuance of the
AMR Warrants. The warrants have a five-year term, expiring September 12,
1999.  As of December 31, 1996, 300,000 Reorganization Warrants had been
exercised.  Another 809,486 Reorganization Warrants were exercised in January
1997.

                                      F-26

<PAGE>

SHAREHOLDER RIGHTS PLAN

On December 1, 1994, the Board of Directors of the Company authorized
adoption of a shareholder rights plan (the "Rights Plan") pursuant to which
there would be attached to each share of Common Stock of the Reorganized
Company one preferred stock purchase right (a "PSP Right").  The Rights Plan
provides that in the event any person becomes the beneficial owner of 10.0%
or more of the outstanding common shares, each PSP Right (other than a PSP
Right held by the 10.0% shareholder) will be exercisable, on and after the
close of business on the tenth business day following such event, to purchase
Hawaiian Airlines Series A Preferred Stock having a market value equal to two
times the then current exercise price (initially $8.00).   The Rights Plan
further provides that if, on or after the occurrence of such event, the
Company is merged into any other corporation or 50.0% or more of the
Company's assets or earning power are sold, each PSP Right (other than a PSP
Right held by the 10.0% shareholder) will be exercisable to purchase common
shares of the acquiring corporation having a market value equal to $16.00.
The PSP Rights expire on December 1, 2004 (unless previously triggered) and
are subject to redemption by the  Company at $0.01 per PSP Right at any time
prior to the first date upon which they become exercisable.

The AIP Investment would have rendered AIP a "10% Shareholder," as that term
is defined in the Rights Plan, thereby triggering the distribution of
preferred stock purchase rights to the Company's shareholders.  Pursuant to
the Rights Plan, the Board of Directors has the power to determine whether
any person, including AIP, is or is not a "10% Shareholder," whether or not
such a determination is adverse to any holder of  PSP Rights.  The Board
determined that the AIP Investment would not render AIP a "10% Shareholder"
and in anticipation of the AIP Investment, amended the Rights Plan to exclude
the AIP Investment from triggering the distribution of the PSP Rights.

STOCK OPTION PLANS

Pursuant to the terms of the Reorganization Plan, 600,000 shares of the
Company's Common Stock were reserved for issuance under a 1994 Stock Option
Plan.  In 1996, the Company adopted (i) a 1996 Stock Incentive Plan which
reserved 2,000,0000 shares of Common Stock for issuance and provides for
discretionary grants of options to the Company's employees and (ii) a 1996
Nonemployee Director Stock Option Plan which reserved 500,000 shares of
Common Stock for issuance and provides for grants of options to members of
the Board of Directors.

In February 1995, options to acquire 592,500 shares of Common Stock were
granted under the 1994 Stock Option Plan.  In May 1996, options to acquire
the remaining 7,500 shares of Common Stock under the 1994 Stock Option Plan
were granted (collectively with those granted in February 1995, the "1994
Options").  The 1994 Options are fully vested and may be exercised at $1.62
per share.  As a result of an amendment to the 1994 Stock Option Plan in
connection with the AIP Investment, the option exercise period was extended
to February 2, 2005. As of December 31, 1996, 115,000 of the options had been
exercised.  No options had been exercised as of December 31, 1995.

In conjunction with the Offerings, options to acquire 607,500 shares of
Common Stock were granted under the 1996 Stock Incentive Plan (the "1996
Options"). The 1996 Options immediately vested and were exercisable at $3.25
per share at any time prior to October 3, 1996.  Options to acquire 592,500
shares of Common Stock were exercised through the issuance in the aggregate
of $1.9 million in fully recourse, interest-bearing notes received from
holders of the options who exercised.  The outstanding balances on these
notes as of December 31, 1996 have been reflected as a reduction to
Shareholders' Equity in the accompanying balance sheets.  The remaining
options to acquire 15,000 shares of Common Stock were forfeited.  The Company
also subsequently granted under the provisions of the 1996 Stock Incentive
Plan, additional options to acquire 200,000 shares of Common Stock ("the
Executive Options") to executive management.  The Executive Options may be
exercised at $3.56 per share with varying amounts of options vesting through
August 12, 2000 and expiring between August 12, 2001 and August 12, 2004, or
as defined in the 1996 Stock Incentive Plan.  As of December 31, 1996, no
Executive Options had been exercised.

In November 1996, the Company also granted options to acquire 89,000 shares
of Common Stock (the "Nonemployee Director Options") to Nonemployee Directors
of the Company.  The options are exercisable in full on May 4, 1997, subject
to the provisions of the 1996 Nonemployee Director Stock Option Plan at an

                                      F-27

<PAGE>

exercise price of $3.69 per share and expire on November 1, 1999.  As of
December 31, 1996, no Nonemployee Director Options had been exercised.

The Company applies the provisions of Accounting Principles Board No. 25,
"Accounting for Stock Issued to Employees," in accounting for its various
plans. Noncash compensation expense of approximately $2.0 million for the
1994 Options was recognized during the year ended December 31, 1995.  The
remaining $182,000 of compensation cost was reflected as unearned
compensation in the shareholders' equity section in the accompanying balance
sheet as of December 31, 1995 and was recognized in January 1996.  As
discussed in Note 1, the AIP Investment constituted a change of control for
purposes of the 1994 Stock Option Plan, thereby accelerating both the vesting
and expiration date of the 1994 Options. In connection with the AIP
Investment, the 1994 Stock Option Plan was amended to extend the 1994 Options
exercise period to February 2, 2005.  This amendment resulted in a new
measurement date for the 1994 Options and approximately $782,000 of related
noncash compensation expense was recorded in January 1996. As the 1996
Options were granted in conjunction with the Offerings, no compensation
expense was required to be recognized.  The Executive Options and Nonemployee
Director Options were granted with an exercise price equivalent to the then
tradeable value of the underlying Common Stock.  Accordingly, no compensation
expense was recorded for these options.

Had the Company determined compensation expense based on the fair value at
the grant date for the 1994 Options, the 1996 Options, the Executive Options
and the Nonemployee Director Options under SFAS No. 123, the Company's net
loss would have been increased to the pro forma amounts indicated below:

                                                          Net Loss
                                  Net Loss         Per Common Stock Share
                           ---------------------  ------------------------
                              1996        1995       1996          1995
                           ---------   ---------  ----------   -----------
         As reported        $(1,533)    $(5,506)    $(0.05)      $(0.59)
         Pro forma           (1,935)     (5,924)     (0.06)       (0.63)

The per share weighted-average fair value of stock options granted during
1996 and 1995 was $0.79 and $4.46 on the date of grant using a Black Scholes
option-pricing model with the following weighted-average assumptions:

                        Expected dividend yield         0.0%
                        Expected volatility            50.0%
                        Risk-free interest rate    4.05% to 7.55%
                        Expected life              Up to 7 years

Pro forma net loss reflects only options granted in 1996 and 1995.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net income amounts
presented above because compensation cost is reflected over the various
options' vesting periods.

                                      F-28

<PAGE>

Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
                                                                            Weighted
                                         Shares of Common Stock            average of
                                     -------------------------------      exercise price
                                        Available for      Under           of shares
                                          options          plan            under plan
                                     -------------------------------      --------------
 <S>                                         <C>            <C>             <C>
 Balance at December 31, 1994                        -             -        $         -
    Authorized
         1994 Stock Option Plan                600,000             -                  -
    Granted
         1994 Stock Option Plan               (592,500)      592,500               1.62
                                           ------------    ---------

 Balance at December 31, 1995                    7,500       592,500        $      1.62
                                                                            -----------
                                                                            -----------
    Authorized
         1996 Stock Incentive Plan           2,000,000             -                  -
         1996 Nonemployee Director Stock
              Option Plan                      500,000             -                  -
    Granted
         1994 Stock Option Plan                 (7,500)        7,500               1.62
         1996 Stock Incentive Plan            (807,500)      807,500               3.33
         1996 Nonemployee Director Stock
              Option Plan                      (89,000)       89,000               3.69

    Exercised
         1994 Stock Option Plan                      -      (115,000)              1.62
         1996 Stock Incentive Plan                   -      (592,500)              3.25

    Forfeited
         1996 Stock Incentive Plan              15,000       (15,000)              3.25
                                           ------------    ---------

 Balance at December 31, 1996                1,618,500       774,000        $      2.36
                                           ------------    ---------        -----------
                                           ------------    ---------        -----------

</TABLE>

At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $1.62 to $3.69 and 5.8
years, respectively.

At December 31, 1996, the number of options exercisable was 485,000 and the
weighted-average exercise price of those options was $2.36.  No options were
exercisable at December 31, 1995.

11. COMMITMENTS AND CONTINGENT LIABILITIES

LITIGATION

The Company is party to a small number of lawsuits.  Two claims remain
asserted against the Reorganized Company for alleged prepetition and/or
administrative claims on or before the Effective Date of the Reorganization
Plan.  Management believes that the Reorganized Company has established
adequate reserves for these bankruptcy related claims.

In addition, the Company is a party to several other claims and legal
actions. In the opinion of management, and after consultation with legal
counsel, the Company believes that the ultimate disposition of these matters
will not have a material adverse effect on the Company's operations or
financial condition.

                                     F-29
<PAGE>

AIRCRAFT MAINTENANCE

Maintenance on the Company's DC-10 aircraft fleet is being performed by
American in accordance with the Federal Aviation Administration's (the "FAA")
regulations and Hawaiian Airlines' approved maintenance program.

Due to the U.S. Government's decision to phase out the VLF/Omega stations,
the Omega navigation system aboard the DC-10 aircraft must be updated to
continue overseas operations.  The current plan is to change to a dual Global
Positioning System during special visits or checks scheduled for 1997.  The
estimated cost is $125,000 per aircraft.

Hawaiian Airlines anticipates that in the period 1997 through 2000, four of
its 13 DC-9 aircraft will require a heavy airframe overhaul check (the "D
Check"). The D Check for a DC-9 requires more than 10,000 man-hours of
maintenance work and includes stripping the airframe, extensively testing the
airframe structure and a large number of parts and components, and
reassembling the overhauled airframe with new or rebuilt components.  The
Company anticipates each D Check to cost approximately $1,300,000.

As a result of certain incidents in 1989 and 1988 involving structural damage
to aircraft in flight operated by carriers other than the Company, the FAA is
requiring or is expected to require structural modifications and the
replacement of certain parts, as well as the implementation of additional
maintenance programs or changes to current programs, with respect to various
types of aircraft over a certain age.  These requirements vary, depending on
the type of aircraft covered.  Based on information currently available, the
Company estimates that the total cost of complying with the aging aircraft
requirements over the 1997 through 2000 period will approximate $600,000 per
DC-9 aircraft.

In addition, the Company expects to incur approximately $100,000 per DC-9
aircraft per year, for maintenance required under a corrosion prevention and
control program.  This program is anticipated to continue indefinitely in the
future.

During the period from 1997 through 2000, the Company anticipates continued
implementation of its supplemental inspection document program for certain of
its DC-9 aircraft which is estimated to range up to $50,000 per aircraft.

Also, the Company intends to standardize altimeters and altitude alerts and
upgrade VHF navigation receivers on its DC-9 aircraft of which six will occur
in 1997 at an estimated average cost of $47,000 per aircraft.

The estimated future cost of complying with FAA regulations as discussed in
the preceding paragraphs will be in addition to the costs of the Company's
current DC-10 and DC-9 fleet maintenance programs.

LOS ANGELES AIRPORT OPERATING TERMINAL

On December 1, 1985, the Company entered into an Interline Agreement with
other airlines for, among other things, the sharing of costs, expenses and
certain liabilities related to the acquisition, construction and renovation
of certain passenger terminal facilities at the Los Angeles International
Airport ("Facilities").  Current tenants and participating members of LAX Two
Corporation (the "Corporation"), a mutual benefit corporation, are jointly
and severally obligated to pay their share of debt service payments related
to Facilities Sublease Revenue Bonds issued to finance the acquisition,
construction and renovation of the Facilities which totaled $111.9 million at
completion.  The Corporation leases the Facilities from the Regional Airports
Improvement Corporation under a lease agreement.  In addition, the
Corporation is also obligated to make annual payments to the city of Los
Angeles for charges related to its terminal ground rental.  All leases of the
Corporation are accounted for as operating leases with related future
commitments as of December 31, 1996 amounting to approximately $195.3
million.  Rent expense relating to these operating leases totaled $4.8
million, $5.9 million and $4.4 million in 1996, 1995 and 1994, respectively.

Member airlines pay the expenses associated with the Facilities on a prorata
share basis calculated primarily upon their respective numbers of passengers
utilizing the Facilities.  The Company accounts for its obligation under this
agreement as an operating lease and incurred $750,000, $842,000 and $737,000
of rent expense in 1996, 1995 and 1994, respectively.

                                     F-30
<PAGE>
FREQUENT FLYER PROGRAM

The Company's Gold Plus frequent flyer program was initiated in 1983.  As of
December 31, 1996 and 1995, the Company's Gold Plus membership had more than
571,000 and 560,000 members, respectively, including approximately 349,000
and 361,000 active members, respectively.

The Gold Plus program rewards its members with mileage credits primarily for
travel on Hawaiian Airlines.  Gold Plus members are entitled to a choice of
various awards based on accumulated mileage, with a majority of the awards
being certain free air travel at a later date.  Travel awards available in
the Gold Plus program range from a 5,000 award, which offers a one-way
Interisland flight, to 60,000 and 65,000 mile awards, which offer a round
trip first-class Transpac flight and round trip first-class Southpac flight,
respectively.  Miles traveled under the Gold Plus program are accounted for
as revenue passenger miles, which, in turn, are used in the calculation of
the Company's yield.  Non-travel awards are valued at the incremental cost of
tickets exchanged for such awards.

The Company recognizes a liability in the period in which members have
accumulated sufficient mileage points to allow for award redemption.  The
liability is adjusted based on net mileage earned and utilized for award
redemption an a monthly basis.  The incremental cost method is used, computed
primarily on the basis of fuel and catering costs, exclusive of any overhead
or profit margin.  In estimating the amount of such incremental costs to be
accrued in the liability for potential future Gold Plus free travel, a
current average cost per award mile is determined.  Incremental fuel expended
per passenger is based on engineering formulas to determine the quantity used
for the weight of each added passenger and baggage.  Such incremental
quantity of fuel is priced at current levels.  Catering is based on average
cost data per passenger for the most recent 12 month period.

As of December 31, 1996 and 1995, Gold Plus members had accumulated
approximately 2.4 billion and 3.3 billion miles, respectively, representing
liabilities totaling approximately $800,000 and $489,000, respectively.  The
Company's accruals assume full redemption of mileage points. During the years
ended December 31, 1996, 1995 and 1994, 857 million, 581 million and 636
million award miles were redeemed, respectively.

The Company believes that the usage of free travel awards will not result in
the displacement of revenue customers and, therefore, such usage will not
materially affect the Company's liquidity or operating results.  The use of
free travel awards is subject to review by the Company to limit the
possibility of displacing revenue passengers.  Usage of Gold Plus travel
redemption accounted for approximately 2.9%, 2.2% and 2.7% of Interisland
traffic and a negligible percentage of Transpac and Southpac traffic in 1996,
1995 and 1994, respectively.

12. RELIANCE ON THIRD PARTIES

The Company has entered into agreements with contractors, including American,
Northwest Airlines, Inc. ("Northwest") and certain other airlines, to provide
certain facilities and services required for its operations, including
aircraft, code sharing, reservations, computer services, frequent flyer
programs, aircraft maintenance, passenger processing, fuel, ground
facilities, baggage and cargo handling and personnel training.  This reliance
on third parties to provide services subjects the Company to various risks,
including the risk that such services could be discontinued without adequate
replacement services being available.

The Company leases all of its DC-10 aircraft from American.  American
maintains these aircraft and the Company pays a minimum monthly charge for
maintenance services, monthly in arrears.  During 1996, the Company incurred
approximately $56.4 million of lease and maintenance expenses under the
American DC-10 aircraft leases.  American has the right to terminate its
obligation to provide aircraft maintenance services on and after January 1,
1999, upon 180 days prior notice.  If American terminated the maintenance
arrangement, the Company would have to seek an alternate source of
maintenance service or maintain its DC-10s by itself, and no assurance can be
given that the Company would be able to do so on a basis that is as
cost-effective as the American maintenance arrangement. The Company also
participates in American's AAdvantage frequent flyer program and SABRE
reservation system.  The Company's participation in the AAdvantage program
expires in 1997, subject to renewal, and its participation in SABRE expires
in 2001.

The Company purchases almost all of its aviation fuel from Northwest pursuant
to an agreement between the two companies which provides that, in case of
shortages, Northwest will provide fuel to its own fleet first and then a
portion of the remaining fuel available will be allocated between Hawaiian
Airlines and any other applicable
                                     F-31
<PAGE>

airlines.  The agreement requires Northwest to provide Hawaiian Airlines with
aviation fuel at Northwest's actual acquisition cost without markup for
profit and with reimbursement only for out-of-pocket costs. The agreement is
renewed automatically on December 31 of each year unless canceled by either
of the parties with 90 days written notice. Hawaiian Airlines is prohibited
from reselling such fuel.  No assurance can be given that the Company would
be able to secure an adequate supply of fuel from alternate sources if a fuel
shortage were to cause the supply from Northwest to be inadequate or if
Northwest were to cancel the agreement. The Company paid Northwest
approximately $70.9 million, $53.0 million and $43.9 million for the fuel
supplied under this agreement in 1996, 1995 and 1994, respectively. Further,
effective July 1996, the Company entered into a cooperative marketing agreement
with Northwest, which provides for extensive marketing cooperation, including
a code sharing arrangement and frequent flyer participation.

13. CONCENTRATION OF BUSINESS RISK

The Company's scheduled service operations are primarily focused on providing
air transportation service to, from, or throughout the Hawaiian Islands.
Therefore, the Company's operations, including its ability to collect its
outstanding receivables, are significantly affected by economic conditions in
the State of Hawaii and by other factors affecting the level of tourism in
Hawaii.

                                     F-32

<PAGE>

<TABLE>
<CAPTION>

HAWAIIAN AIRLINES, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
UNAUDITED QUARTERLY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

                                                               First      Second      Third      Fourth
                                                              Quarter     Quarter    Quarter     Quarter
--------------------------------------------------------------------------------------------------------
<S>                                                           <C>         <C>        <C>         <C>
1996:
  Operating revenues........................................  $94,062     $96,009    $101,213    $93,189
  Operating income (loss)...................................      396       3,104       4,592     (6,065)
  Net income (loss).........................................     (582)      1,538       1,369     (3,858)
  Net income (loss) per Common Stock Share..................    (0.03) *     0.05 *      0.05 *    (0.10) *

                                                               First      Second      Third      Fourth
                                                              Quarter     Quarter    Quarter     Quarter
--------------------------------------------------------------------------------------------------------
1995:
  Operating revenues........................................  $75,508     $85,464    $ 93,355    $92,577
  Operating income (loss)...................................   (7,427)        431       4,436        659
  Net income (loss).........................................   (8,294)       (451)      3,363       (124)
  Net income (loss) per Common Stock Share..................    (0.88) *    (0.05) *     0.33 *    (0.01) *

*   Includes shares reserved for issuance under the consolidated Plan of Reorganization dated September 21, 1993, as amended.

</TABLE>

                                      F-33
<PAGE>

HAWAIIAN AIRLINES, INC.
SELECTED FINANCIAL AND STATISTICAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                  REORGANIZED COMPANY                      PREDECESSOR
                                                          -------------------------------------------------------------------------
                                                                                 PERIOD FROM    PERIOD FROM
                                                                                 SEPTEMBER 12,   JANUARY 1,
                                                                                   1994 TO        1994 TO
                                                                                  DECEMBER 31,  SEPTEMBER 11,
                                                            1996         1995        1994          1994        1993         1992
------------------------------------------------------------------     --------     -------      --------    --------    ----------
<S>                                                       <C>          <C>          <C>          <C>         <C>         <C>
Summary of Operations:
 Operating revenues.....................................  $384,473     $346,904     $89,157      $216,823    $304,109    $ 395,076
 Operating expenses.....................................   382,446      348,805      95,425       223,244     328,947      506,117
                                                          --------     --------     -------      --------    --------    ----------
 Operating loss.........................................     2,027       (1,901)     (6,268)       (6,421)    (24,838)    (111,041)
 Interest expense, net..................................    (2,432)      (3,579)       (968)         (850)     (4,706)     (11,217)
 Gain (loss) on disposition of equipment................      (729)        (233)        558            45        (659)      (1,075)
 Gain on sale of routes.................................         -            -           -             -           -       41,702
 Other, net.............................................      (297)         207         527           502       1,312         (321)
 Reorganization expenses................................         -            -           -       (13,950)    (52,637)           -
                                                          --------     --------     -------      --------    --------    ----------
 Loss before income taxes, extraordinary items and
  cumulative effect of change in accounting principle...    (1,431)      (5,506)     (6,151)      (20,674)    (81,528)     (81,952)
 Income taxes...........................................      (868)           -           -             -           -            -
                                                          --------     --------     -------      --------    --------    ----------
 Loss before extraordinary items and cumulative
  effect of change in accounting principle..............    (2,299)      (5,506)     (6,151)      (20,674)    (81,528)     (81,952)
 Extraordinary items, net of income taxes...............       766            -           -       190,063      12,104      108,722
                                                          --------     --------     -------      --------    --------    ----------
 Income (loss) before cumulative effect of change in
  accounting principle..................................    (1,533)      (5,506)     (6,151)      169,389     (69,424)      26,770
 Cumulative effect of change in accounting principle....         -            -           -             -           -        2,192
                                                          --------     --------     -------      --------    --------    ----------
 Net income (loss)......................................  $ (1,533)    $ (5,506)    $(6,151)     $169,389    $(69,424)   $  28,962
                                                          --------     --------     -------      --------    --------    ----------
                                                          --------     --------     -------      --------    --------    ----------

Loss per Common Stock Share:**
 Before extraordinary items and cumulative effect
  of change in accounting principle.....................  $  (0.07)**  $  (0.59)**  $ (0.65)**   $    N/M*   $    N/M*   $     N/M*
 Extraordinary items, net...............................      0.02 **         - **        - **        N/M*        N/M*         N/M*
 Cumulative effect of change in
  accounting principle...................................        - **         - **        - **        N/M*        N/M*         N/M*
                                                          --------     --------     -------      --------    --------    ----------
 Net loss................................................  $ (0.05)**  $  (0.59)**  $ (0.65)**   $    N/M*   $    N/M*   $     N/M*
                                                          --------     --------     -------      --------    --------    ----------
                                                          --------     --------     -------      --------    --------    ----------
</TABLE>

                                      F-34
<PAGE>

HAWAIIAN AIRLINES, INC.
SELECTED FINANCIAL AND STATISTICAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA) (CONTINUED)

<TABLE>
<CAPTION>
                                                                     REORGANIZED COMPANY                    PREDECESSOR
                                                              -------------------------------   -----------------------------------
                                                                         DECEMBER 31,                               DECEMBER 31,
                                                              -------------------------------   SEPTEMBER 11,  --------------------
                                                                 1996       1995        1994        1994         1993        1992
                                                              ---------  --------    --------   -------------  --------    --------
<S>                                                           <C>        <C>         <C>        <C>            <C>         <C>
Weighted Average Shares Outstanding.........................     30,975     9,400**    9,400**      7,137         6,170      5,123
Shareholders' Equity Per Share..............................       2.12      3.10**     3.60**        N/M*          N/M*       N/M*
Shares Outstanding at Year End..............................     39,167     9,400**    9,400**      7,137         7,136      5,713

Balance Sheet Items:
   Total assets.............................................   $196,289  $161,640   $163,301     $167,211      $105,540   $105,743
   Property and equipment, net..............................     45,794    41,391     37,756       33,312        36,558     38,956
   Long-term debt, excluding current portion................      6,353     5,523     14,152       11,421         2,615      1,800
   Capital lease obligations, excluding current portion.....      7,387    10,102     12,764       12,591             -          -
   Redeemable Preferred Stock and Preference Stock..........          -         -          -            -             -      5,354
   Shareholders' equity (deficit)...........................     82,873    29,178     33,849       40,000      (209,882)  (142,720)

</TABLE>

 *  Not Meaningful  -  Per share data is not meaningful as the Predecessor was
    recapitalized and adopted fresh start reporting as of September 12, 1994.

**  Includes shares reserved for issuance under the consolidated Plan of
    Reorganization dated September 21, 1993, as amended.



                                      F-35

<PAGE>

HAWAIIAN AIRLINES, INC.
SELECTED FINANCIAL AND STATISTICAL DATA (IN THOUSANDS, EXCEPT AS OTHERWISE
INDICATED) (CONTINUED)


<TABLE>
<CAPTION>
                                                        1996           1995           1994            1993           1992
                                                     ---------      ---------      ---------       ---------       ---------
<S>                                                  <C>            <C>            <C>             <C>             <C>
SCHEDULED OPERATIONS:
  Revenue passengers.............................        4,971          4,781          4,584           4,337           4,647
  Revenue passenger miles........................    3,324,005      3,171,366      2,880,339       2,870,713       3,322,045
  Available seat miles...........................    4,571,955      4,238,319      3,995,649       3,850,133       4,710,795
  Passenger load factor..........................        72.7%          74.8%          72.1%           74.6%           70.5%
  Cargo tons.....................................           32             29             23              20              16
  Revenue ton miles..............................      392,387        365,320        324,096         314,725         353,067
  Revenue plane miles............................       19,055         17,619         16,243          15,256          20,909
  Passenger revenue per passenger mile...........          9.8 CENTS      9.4 CENTS      9.7 CENTS       9.5 CENTS      10.3 CENTS
OVERSEAS CHARTER OPERATIONS:
  Revenue passengers............................           190            155              1              14             127
  Revenue passenger miles.......................       515,982        425,797          2,202          14,620         232,447
  Available seat miles..........................       528,787        439,142          4,141          20,938         291,239

</TABLE>


                                      F-36

<PAGE>




                       INDEPENDENT AUDITORS' REPORT ON SCHEDULE


The Board of Directors
Hawaiian Airlines, Inc.:


Under date of February 18, 1997, we reported on the balance sheets of
Hawaiian Airlines, Inc. as of December 31, 1996 and 1995, and the related
statements of operations, shareholders' equity (deficit) and cash flows for
the years ended December 31, 1996 and 1995, the period September 12, 1994
through December 31, 1994 and the period January 1, 1994 through September
11, 1994, which are included herein.  In connection with our audits of the
aforementioned financial statements, we also audited the related financial
statement schedule as listed in item 14(a)(2).  The financial statement
schedule is the responsibility of the Company's management.  Our
responsibility is to express an opinion on the financial statement schedule
based on our audits.

In our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.

The independent auditors' report on the financial statements of Hawaiian
Airlines, Inc. referred to above contains an explanatory paragraph that
states that as discussed in notes 1 and 2 to the financial statements, on
September 12, 1994, Hawaiian Airlines, Inc. emerged from bankruptcy.  The
financial statements of the Reorganized Company reflect the impact of
adjustments to reflect the fair value of assets and liabilities under fresh
start reporting.  As a result, the financial statements of the Reorganized
Company are presented on a different basis than those of the Predecessor
Company and, therefore, are not comparable in all respects.

/s/ KPMG Peat Marwick LLP
Honolulu, Hawaii
February 18, 1997

                                       S-1

<PAGE>

HAWAIIAN AIRLINES, INC.
VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (REORGANIZED COMPANY)

<TABLE>
<CAPTION>

              COLUMN A                COLUMN B            COLUMN C            COLUMN D   COLUMN E
                                                         ADDITIONS
                                                  ------------------------
                                                     (1)           (2)
                                     Balance at   Charged to    Charged to                Balance
                                      Beginning    Costs and      Other                    at End
             Description               of Year     Expenses      Accounts    Deductions   of Year
-------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>           <C>          <C>          <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:

    1996...............................$  800         641            -          941(b)     $ 500
                                       ----------------------------------------------------------
                                       ----------------------------------------------------------
    1995.............................. $  500         719            -          419(b)     $ 800
                                       ----------------------------------------------------------
                                       ----------------------------------------------------------

    1994...............................$  800         422           326(a)    1,048(b)     $ 500
                                       ----------------------------------------------------------
                                       ----------------------------------------------------------

ALLOWANCE FOR OBSOLESCENCE OF FLIGHT EQUIPMENT
    EXPENDABLE PARTS AND SUPPLIES:

    1996...............................$  315          -             -           -         $ 315
                                       ----------------------------------------------------------
                                       ----------------------------------------------------------

    1995...............................$  315          -             -           -         $ 315
                                       ----------------------------------------------------------
                                       ----------------------------------------------------------

    1994...............................$1,212          -             -          897(a)     $ 315
                                       ----------------------------------------------------------
                                       ----------------------------------------------------------

</TABLE>

(a) Adjustments due to the commencement of fresh start reporting on
    September 12, 1994

(b) Doubtful accounts written off, net of recoveries

                                      S-2