United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the fiscal year ended December 31, 1999.

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 for the Transition Period From           to

Commission file number  000-21642

                                   AMTRAN, INC.

             (Exact name of registrant as specified in its charter)

              Indiana                                       35-1617970
  -------------------------------                    -----------------------
  (State or other jurisdiction of                       (I.R.S.  Employer
   incorporation or organization)                       Identification No.)

     7337 West Washington Street
       Indianapolis, Indiana                                  46231
  -------------------------------                    -----------------------
 (Address of principal executive offices)                 (Zip  Code)

                                  (317) 247-4000
              (Registrant's telephone number, including area code)

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

Securities registered pursuant to Section 12(g) of the Act:
                     Title of each class
                 Common Stock, No Par Value

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  periods 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. [X]

                Applicable Only to Issuers Involved in Bankruptcy
                   Proceedings During the Preceding Five Years

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  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 ______ No ______

                      Applicable Only to Corporate Issuers

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practical date.

Common Stock,  Without Par Value - 12,066,021 shares as of  February 29, 2000.

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K into which the document is incorporated:  (1) Any annual report
to  security  holders;  (2) Any  proxy  or  information  statement;  and (3) Any
prospectus  filed  pursuant  to Rule 424(b) or (c) under the  Securities  Act of
1933.

Portions of  the Amtran, Inc. and  Subsidiaries' Proxy  Statement dated April 5,
2000, are incorporated by reference into Part III.
<PAGE>

<TABLE>
<CAPTION>
                                                      TABLE OF CONTENTS
                                               FORM 10-K ANNUAL REPORT - 1999
                                                AMTRAN INC. AND SUBSIDIARIES


                                                                                                                     Page #

PART I
<S>           <C>                                                                                                        <C>
         Item 1.     Business........................................................................................... 4
         Item 2.     Properties.........................................................................................10
         Item 3.     Legal Proceedings..................................................................................10
         Item 4.     Submission of Matters to a Vote of Security Holders................................................10

PART II
         Item 5.     Market for the Registrant's Common Stock and Related Security Holder Matters.......................11
         Item 6.     Selected Consolidated Financial Data...............................................................11
         Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations..............12
         Item 7a.    Quantitative and Qualitative Disclosures About Market Risk.........................................32
         Item 8.     Financial Statements and Supplementary Data........................................................34
         Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............49

PART III
         Item 10.    Directors and Officers of the Registrant...........................................................49
         Item 11.    Executive Compensation.............................................................................49
         Item 12.    Security Ownership of Certain Beneficial Owners and Management.....................................49
         Item 13.    Certain Relationships and Related Transactions.....................................................50

PART IV
         Item 14.    Exhibits, Financial Statement Schedule and Reports on Form 8-K.....................................50
         Item 14d.   Valuation and Qualifying Accounts..................................................................53

</TABLE>

<PAGE>


PART I - Continued

Item 1.           Business

Amtran, Inc. (the "Company") owns American Trans Air, Inc. ("ATA"), the eleventh
largest  passenger  airline in the United States (based on 1999  revenues) and a
leading  provider of airline  services in selected  markets.  The Company is the
largest commercial charter airline in the United States and the largest provider
of passenger airline services to the U.S.  military,  in each case based on 1999
revenues.  For the year ended  December  31,  1999,  the revenues of the Company
consisted of 55.7% scheduled service, 23.5% commercial charter service and 11.2%
military charter service, with the balance derived from related services.

Scheduled Service

The Company  provides  scheduled  service  through ATA to selected  destinations
primarily from its gateways at Chicago-Midway and Indianapolis and also provides
transpacific  services  between the  western  United  States and Hawaii.  In the
second  quarter  of  1999,   the  Company  added   scheduled   service   between
Chicago-Midway and Philadelphia. The Company focuses on routes where it believes
it can be a  leading  provider  of  nonstop  service  and  targets  leisure  and
value-oriented business travelers.

The Company believes that it has significant  competitive  advantages in each of
its primary markets.

      Chicago-Midway,   the  Company's  largest  and  fastest  growing  gateway,
     represented  approximately  56.7% of the Company's total scheduled  service
     capacity in 1999.  The Company is the number one carrier in terms of market
     share in 20 out of its 22 nonstop routes from  Chicago-Midway.  The Company
     believes  its  service at this  gateway  would be  difficult  to  replicate
     because of limited available airport capacity. This competitive position is
     enhanced by  Chicago-Midway's  proximity  to downtown  Chicago and the fact
     that, for a substantial  portion of the population  within the metropolitan
     region,  Chicago-Midway is the most convenient  airport.  The Company began
     service at Chicago-Midway in December 1992.

      Hawaii  represented  approximately  18.5% of the Company's total scheduled
     service  capacity  in 1999.  The  Company  believes  it is the  lowest-cost
     provider of scheduled service between the western United States and Hawaii,
     which is critical in this  price-sensitive,  predominantly  leisure market.
     Furthermore, a majority of the Company's capacity in the Hawaiian market is
     contracted to the nation's  largest  independent  Hawaiian  tour  operator,
     which  assumes  capacity,  yield and fuel risk.  The Company has served the
     Hawaiian  market since 1974 through its commercial  charter  operations and
     since 1987 through its scheduled service operations.

      Indianapolis  represented  approximately  14.0%  of  the  Company's  total
     scheduled  service  capacity in 1999. The Company began  scheduled  service
     from  Indianapolis  in 1986  and  believes  that  it  benefits  from  being
     perceived as the hometown  airline.  The Company is the number one provider
     in terms of market  share in seven of its eight  nonstop  jet  routes  from
     Indianapolis.  In  Indianapolis,  the  Company  operates  Ambassadair,  the
     nation's largest travel club with approximately 41,000 individual or family
     memberships, providing the Company with a local marketing advantage similar
     to a frequent flier program.

Commercial Charter Service

The Company is the largest  commercial  passenger  charter airline in the United
States and  provides  services  throughout  the  world,  primarily  to U.S.  and
European  tour  operators.  The Company seeks to maximize the  profitability  of
these  operations by leveraging its leading market  position,  diverse  aircraft
fleet and worldwide  operating  capability.  The Company believes its commercial
charter services are a predictable  source of revenues and operating  profits in
part because its commercial  charter  contracts require tour operators to assume
capacity,  yield and fuel price risk, and also because of the Company's  ability
to re-deploy assets into favorable  markets.  The Company's  commercial  charter
services are marketed  through a network of domestic  sales offices along with a
London office.

Military/Government Charter Service

The Company has provided  passenger  airline services to the U.S. military since
1983 and is currently the largest commercial airline provider of these services.
The Company  believes that because these  operations are generally less seasonal
than  leisure  travel,  they  have  tended to have a  stabilizing  impact on the
Company's  operating margins.  The U.S. government awards one-year contracts for
its military charter business and  pre-negotiates  contract prices for each type
of aircraft that a carrier makes available.  The Company believes that its fleet
of aircraft is well suited to the needs of the military.
<PAGE>
Strategy

The Company  intends to enhance its position as a leading  provider of passenger
airline  services to selected markets where it can capitalize on its competitive
strengths. The key components of this strategy are:

Participate in Markets Where it Can Be a Leader
The  Company  focuses on markets  where it can be a leading  provider of airline
services.  In scheduled service, the Company concentrates on routes where it can
be the  number one or number two  carrier.  The  Company  achieves  this  result
principally through superior nonstop schedules,  value-oriented service, focused
marketing  efforts and certain airport and aircraft  advantages.  The Company is
the leading  provider of commercial and military  charter services in large part
because of its variety of aircraft types,  superior operational  performance and
its worldwide service capability.

Maintain Low-Cost Position
For 1997,  1998 and 1999,  the Company's  operating cost per available seat mile
("CASM") of 6.09(cent), 6.09(cent) and 6.84(cent),  respectively, was the lowest
among large U.S.  passenger  airlines.  The airline segment CASM was 5.97(cent),
6.00(cent)  and  6.38(cent),  respectively,  for the years ended 1997,  1998 and
1999. See  "--Management's  Discussion  and Analysis of Financial  Condition and
Results of  Operations--Results  of  Operations  in Cents per ASM." The  Company
believes  that  its  low-cost  structure  provides  a  significant   competitive
advantage,  allowing it to operate profitably while pricing competitively in the
scheduled  service and  commercial  and military  charter  markets.  The Company
believes its low-cost position is primarily derived from its simplified product,
route structure, low aircraft ownership costs and low overhead costs.

Target Growth Opportunities
The  Company  intends to expand its  operations  selectively  in areas  where it
believes it can achieve attractive financial returns.

      Charter  Expansion.  The Company has  acquired  five  long-range  Lockheed
     L-1011-500  aircraft primarily for commercial and military charter service,
     whose low-cost and high-seating capacity will enable the Company to compete
     for  business  that it could  not  previously  accommodate  (e.g.,  nonstop
     service to certain South American, European and Asian destinations).

      Scheduled  Service  Expansion  at  Chicago-Midway.  The  Company  plans to
     increase   frequencies   and  add  up  to  four   destinations   from   its
     Chicago-Midway  gateway  over  the  next  12  months  and to  support  this
     expansion  by adding  four  Boeing  757-200  aircraft to its fleet in 2000.
     Included in these new  destinations is new service  between  Chicago-Midway
     and Ronald Reagan Washington National Airport,  beginning April 3, 2000, as
     well as new  services to Boston and  Seattle,  beginning  May 7, 2000.  The
     Company  will also  occupy  additional  gates  upon  completion  of the new
     terminal at  Chicago-Midway  to facilitate these expanding  operations.  In
     addition,  the Company  will use the  proceeds of a $17.0  million  Special
     Facility  Revenue Bond issued in December 1999 to pay a portion of the cost
     of construction of a Federal  Inspection  Service  facility  ("FIS") at the
     Chicago-Midway  Airport.  This will allow international  flights to operate
     directly to and from Chicago-Midway.

      Selected   Acquisitions.   The  Company  continually   evaluates  possible
     acquisitions  of related  businesses  or  interests  therein to enhance its
     competitive position in its market segments.  The Company also continues to
     evaluate possible  business  combinations with air carriers and others that
     could result in a change of control of Amtran.

Industry Overview

Scheduled Airline Service
In the United  States,  the  scheduled  airline  business is  dominated by large
scheduled airlines, most of which have developed hub-and-spoke route systems. As
a result of this  structure,  many smaller  cities or airports are not served by
direct or nonstop flights to leisure  destinations,  and many secondary  leisure
destinations do not receive direct or nonstop service from more than a few major
U.S.   cities.   In  developing  its  business,   the  Company  has  focused  on
low-frequency,  nonstop or direct service from its principal gateways to leisure
or business destinations where there is little or no competing direct or nonstop
service.

Commercial and Military/Government Charter Airline Service
In the United States,  the passenger charter airline business is served by major
scheduled  airlines  and  a  number  of  U.S.  and  non-U.S.  charter  airlines.
Historically,  charter  airlines  have  supplemented  the  service  provided  by
scheduled  airlines by  providing  additional  capacity at times of peak demand,
such as during the Persian Gulf War, and on a  longer-term  basis to  supplement
the U.S.  military's own passenger fleet.  Based on the most recently  available
Department of Transportation  ("DOT")  statistics,  total charter flights by all
U.S.  airlines  represented  approximately  2.7%  of all  available  seat  miles
("ASMs") flown within the United States during the twelve months ended September
30, 1999.

<PAGE>

The Company's Airline Operations

Services Offered
The following  table provides a summary of the Company's  major revenue  sources
for the periods indicated:

<TABLE>
<CAPTION>

                                                     Year Ended December 31,
                                 ---------- --- --------- --- --------- --- --------- --- -----------
<S>                                 <C>            <C>           <C>           <C>            <C>
                                    1999           1998          1997          1996           1995
                                 ---------- --- --------- --- --------- --- --------- --- -----------
                                                      (Dollars in millions)

Scheduled service                   $624.6        $511.3        $371.8        $386.5          $362.0
                                 ---------- --- --------- --- --------- --- --------- --- -----------
Commercial charter                   263.8         222.6         228.1         226.4           229.5
Military charter                     126.2         121.9         131.1          84.2            77.5
                                 ---------- --- --------- --- --------- --- --------- --- -----------
       Total charter service         390.0         344.5         359.2         310.6           307.0
                                 ---------- --- --------- --- --------- --- --------- --- -----------
Other                                107.8          63.6          52.2          53.8            46.0
                                 ---------- --- --------- --- --------- --- --------- --- -----------
        Total                     $1,122.4        $919.4        $783.2        $750.9          $715.0
                                 ========== === ========= === ========= === ========= === ===========
</TABLE>


Scheduled Service
The Company  provides  scheduled  airline  services on selected  routes where it
believes  that it can be one of the leading  carriers  in the  market,  focusing
primarily on low-cost, nonstop or direct flights. The Company currently provides
scheduled  service  primarily  from its  gateway  cities of  Chicago-Midway  and
Indianapolis  to  popular  vacation  destinations  such as  Hawaii,  Las  Vegas,
Florida, California,  Mexico and the Caribbean, as well as to New York's John F.
Kennedy and LaGuardia Airports, Philadelphia, Denver and Dallas-Ft. Worth.

Beginning in April 1997 the Company had entered into a code-share agreement with
Chicago Express to operate passenger airline services between Chicago-Midway and
the cities of Indianapolis, Milwaukee, Des Moines, Dayton and Grand Rapids using
Jetstream 31 propeller  aircraft.  The agreement was expanded in October 1997 to
include Lansing and Madison.  On April 30, 1999, the Company acquired all of the
issued and outstanding  stock of Chicago  Express.  Chicago  Express' results of
operations,  beginning May 1999, were consolidated  into the Company,  replacing
the fixed fee per flight previously  recorded by the Company.  This generated no
material change to operating expenses and the operating revenues associated with
these operations were already reflected in the Company's results of operations.

In January 2000, Chicago Express entered into an agreement to purchase nine SAAB
340B  aircraft,  engines and related  parts.  The  aircraft  will be placed into
service  throughout 2000 in conjunction  with the return of the current fleet of
Jetstream 31s to the lessor.

Included in the Company's jet scheduled  service are bulk sales  agreements with
tour  operators.  Under these  arrangements,  which are very  similar to charter
sales,  the tour  operator  may  take up to 85% of an  aircraft  as a  bulk-seat
purchase. The seats which the Company retains are sold through its own scheduled
service  distribution  network.  Under bulk sales  arrangements,  the Company is
obligated to provide transportation to the tour operators' customers even in the
event of  non-payment to the Company by tour  operators.  To minimize its credit
exposure under these  arrangements,  the Company  requires bonding or a security
deposit for a portion of the contract  price.  Bulk seat sales amounted to $59.0
million,  $68.6 million and $71.2 million in 1997, 1998 and 1999,  respectively,
which  represented  7.5%,  7.5%  and  6.3%,   respectively,   of  the  Company's
consolidated revenues for such periods.

Commercial Charter
Commercial  charter  represented  29.1%,  24.2% and 23.5%,  respectively  of the
Company's consolidated revenues for 1997, 1998 and 1999. The Company's principal
customers  for  commercial  charter are tour  operators,  sponsors of  incentive
travel packages and specialty charter customers.

Tour Operator Programs.  These leisure-market  programs are generally contracted
for repetitive,  round-trip patterns, operating over varying periods of time. In
such  an  arrangement,  the  tour  operator  pays a fixed  price  for use of the
aircraft,  including the crew and all necessary  passenger and aircraft handling
services,  and  assumes  responsibility  and  risk  for the  actual  sale of the
available aircraft seats.  Under most of its contracts with tour operators,  the
Company passes through  increases in fuel costs from a contracted  price.  Under
these  contracts,  if the fuel increase  causes the tour operator's fuel cost to
rise in  excess of 10%,  the tour  operator  has the  option  of  canceling  the
contract. The Company is exposed to increases in fuel costs that occur within 14
days of flight time.

Although the Company  serves tour  operators on a worldwide  basis,  its primary
customers are  U.S.-based.  The Company's  five largest tour operator  customers
represented approximately 16.2%, 14.4% and 12.5%, respectively, of the Company's
consolidated revenues for 1997, 1998 and 1999, and the ten largest tour operator
customers represented approximately 20.8%, 17.5% and 14.7%, respectively, of the
Company's consolidated revenues for the same periods.

Incentive  Travel   Programs.   Many   corporations   offer  travel  to  leisure
destinations  or special  events as incentive  awards for their  employees.  The
Company  has  historically  provided  air  travel for many  corporate  incentive
programs.  Incentive  travel customers range from national  incentive  marketing
companies who arrange such programs for corporate clients, to large corporations
that handle their incentive travel programs on an in-house basis.

Specialty  Charters.  The Company  operates a  significant  number of  specialty
charter flights.  These programs are normally  contracted on a single round-trip
basis and vary  extensively  in  nature.  These  flights  allow the  Company  to
increase aircraft utilization during off-peak periods.

Military/Government Charter
In 1997,  1998 and  1999,  sales to the U.S.  military  and  other  governmental
agencies  were  approximately  16.8%,  13.3%  and  11.2%,  respectively,  of the
Company's consolidated revenues.  Traditionally, the Company's focus has been on
short-term military "contract  expansion" business which is routinely awarded by
the U.S.  government  based on  availability of appropriate  aircraft.  The U.S.
government  awards one-year  contracts for its military  charter  business,  and
pre-negotiates  contract  prices  for each  type of  aircraft  a  carrier  makes
available.  Such  contracts are awarded based upon the  participating  airlines'
average costs.  The short-term  expansion  business is awarded pro rata to those
carriers with aircraft  availability  who have been awarded the most fixed-award
business,  and then to any additional carrier that has aircraft  available.  The
Company's current contractor  teaming  arrangement  significantly  increases the
likelihood that the team will receive both  fixed-award  and contract  expansion
business. See "--Management's Discussion and Analysis of Financial Condition and
Results of Operations--Military/Government Charter Revenues."

The Company is subject to biennial inspections by the Department of Defense as a
condition of retaining its eligibility to perform military charter flights.  The
last such inspection was completed in the fourth quarter of 1999.

Other Business
In addition to its core charter and scheduled  service  businesses,  the Company
operates  several other smaller  businesses that complement its core businesses.
The Company  sells ground  arrangements  (hotels,  car rentals and  attractions)
through its  Ambassadair  and ATA Leisure  Corp.  subsidiary  brands such as ATA
Vacations,  Travel  Charter  and Key Tours;  provides  airframe  and  powerplant
mechanic training through American Trans Air Training Corporation;  and provides
helicopter charter services through its ExecuJet subsidiary.  Additionally,  the
Company, through its subsidiary Amber Air Freight, markets cargo services in the
Company's  scheduled and charter  operations.  In aggregate,  these  businesses,
together with  incidental  revenues  associated  with core charter and scheduled
service  operations,  accounted  for  6.6%,  6.9%  and  9.6%,  respectively,  of
consolidated revenues in 1997, 1998 and 1999.

Aircraft Fleet

As of December  31,  1999,  the Company was  certified  to operate a fleet of 18
Lockheed L-1011s,  24 Boeing 727-200ADVs and 11 Boeing 757-200s.  As of December
31,  1999 the  Company  had also  taken  delivery  of one  incremental  Lockheed
L-1011-500 which was undergoing  modifications and not yet flight certified. The
Company also  acquired  Chicago  Express on April 30, 1999,  which is separately
certified to operate nine Jetstream 31 propeller aircraft.

Lockheed L-1011 Aircraft
The Company's 19 Lockheed  L-1011 aircraft are wide-body  aircraft,  11 of which
have a range  of 2,971  nautical  miles,  three  of which  have a range of 3,425
nautical  miles,  and five of which have a range of 5,577 nautical  miles.  (One
aircraft did not operate on the Company's  certificate  as of December 31, 1999,
but is scheduled to be placed into service in the first  quarter of 2000.) These
aircraft  conform  to the  FAA's  Stage  3  noise  requirements  and  have a low
ownership cost relative to other wide-body aircraft types. See  "--Environmental
Matters."  These aircraft have an average age of  approximately  24 years. As of
December 31, 1999,  18 of these  aircraft  were owned by the Company and one was
under an  operating  lease that  expires in March 2003.  Certain of the Lockheed
L-1011 aircraft owned by the Company are subject to mortgages and other security
interests  granted in favor of the Company's  lenders under its revolving credit
facility.  See "Management's  Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

Boeing 727-200ADV Aircraft
The Company's 24 Boeing  727-200ADV  aircraft are narrow-body  aircraft equipped
with high-thrust, JT8D-17/-17A engines and have a range of 2,050 nautical miles.
These aircraft conform to Stage 3 noise requirements as of December 31, 1999 and
have an average age of  approximately  20 years.  The Company leases 14 of these
aircraft,  with initial lease terms that expire between  October 2000 and August
2003,  subject to the Company's  right to extend each lease for varying terms or
purchase the aircraft.

Boeing 757-200 Aircraft
The  Company's  11 Boeing  757-200  aircraft  are  relatively  new,  narrow-body
aircraft, all of which have a range of 3,679 nautical miles. These aircraft, all
of which are leased,  have an average age of approximately  three years and meet
Stage 3 noise requirements.  The Company's Boeing 757-200s have higher ownership
costs than the Company's  Lockheed L-1011 and Boeing  727-200ADV  aircraft,  but
lower  operational  costs. In addition,  the Company's  Boeing 757-200s have the
capacity to operate on extended flights over water. The leases for the Company's
Boeing 757-200  aircraft have initial terms that expire on various dates between
December 2001 and September 2019,  subject to the Company's right to extend each
lease for varying terms.

In order to  enhance  the  reliability  of its  service,  the  Company  seeks to
maintain  at least two spare  Lockheed  L-1011 and three  spare  Boeing  727-200
aircraft at all times.  Spare aircraft can be dispatched on short notice to most
locations where a substitute aircraft is needed for mechanical or other reasons.

Although Lockheed L-1011 and Boeing 727-200ADV aircraft are subject to the FAA's
Aging Aircraft  program,  the Company does not currently expect that its cost of
compliance for these aircraft will be material. See "--Regulation."

Flight Operations

Worldwide  flight  operations are planned and controlled by the Company's Flight
Operations Group based in Indianapolis,  Indiana,  which is staffed on a 24-hour
basis, seven days a week.  Logistical support necessary for extended  operations
away  from  the  Company's  fixed  bases  is  coordinated   through  its  global
communications  network. The Company has the ability to dispatch maintenance and
operational personnel and equipment as necessary to support temporary operations
around the world.

Maintenance and Support

The Company's  Maintenance  and  Engineering  Center is located at  Indianapolis
International  Airport.  This 120,000 square-foot  facility was designed to meet
the  maintenance  needs of the Company's  fleet and to provide  supervision  and
control of purchased maintenance  services.  The Company has approximately 1,200
employees supporting its maintenance and technical efforts.

The Company currently maintains 14 permanent maintenance  facilities,  including
its Indianapolis facility. In addition, the Company utilizes "road teams," which
are  dispatched  primarily as charter flight  operations  require to arrange and
supervise  maintenance  services at temporary  locations.  The Company also uses
road teams to supervise all maintenance not performed in-house.

Fuel Price Risk Management

The  Company has fuel  reimbursement  clauses and  guarantees  which  applied to
approximately 53.4%, 45.0% and 34.8%, respectively,  of consolidated revenues in
1997,  1998 and 1999.  The Company did not engage in any  material  fuel hedging
activities in 1997, but engaged in a fuel hedging program from 1998 to mid-1999,
which hedged a significant portion of its scheduled service fuel exposure during
that time  period.  See  "Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations - Operating Expenses - Fuel and Oil."

Competition

The  Company's  products and services  face varying  degrees of  competition  in
diverse markets.

Competition for Scheduled Services
In scheduled service, the Company competes both against the large U.S. scheduled
service  airlines and, from time to time,  against smaller  regional or start-up
airlines.  Competition  is  generally  on  the  basis  of  price,  schedule  and
frequency, quality of service and convenience.

Competition for Commercial Charter Services
In the commercial  charter market,  the Company  competes both against the major
U.S.  scheduled  airlines and against small U.S. charter  airlines.  The Company
also  competes  against  several  European  and Mexican  charter  and  scheduled
airlines.  The scheduled  carriers compete for leisure travel customers with the
Company's  commercial  charter  operations  in  a  variety  of  ways,  including
wholesaling  discounted seats on scheduled flights to tour operators,  promoting
packaged  tours to  travel  agents  for sale to  retail  customers  and  selling
discounted,  airfare-only  products  to the  public.  As a result,  all  charter
airlines, including the Company, generally are required to compete for customers
against the lowest revenue-generating seats of the scheduled airlines.

The Company also competes directly against other charter airlines. In the United
States,  these charter airlines are smaller in size than the Company. In Europe,
several  charter  airlines  are as large or  larger  than the  Company.  Certain
European  charter  airlines are affiliates of large  scheduled  airlines or tour
operators.

Competition for Military/Government Charter Services
The Company competes for military and other  government  charters with primarily
smaller U.S.  airlines.  The  allocation  of U.S.  military  air  transportation
contracts  is based  upon the number  and type of  aircraft a carrier,  alone or
through a teaming arrangement, makes available for use to the military.

Insurance

The Company  carries  types and amounts of  insurance  customary  in the airline
industry, including coverage for public liability, passenger liability, property
damage,  aircraft  loss or damage,  baggage  and cargo  liability  and  workers'
compensation.  Under the Company's  current insurance  policies,  it will not be
covered by such insurance  were it to fly,  without the consent of its insurance
provider, to certain high-risk countries.  The Company will support certain U.S.
government  operations  in areas  where its  insurance  policy  does not provide
coverage when the U.S. government provides replacement insurance coverage.

Employees

As of December 31, 1999, the Company had approximately  7,000 full and part-time
employees,  approximately  2,400  of  whom  were  represented  under  collective
bargaining  agreements.  The Company's flight  attendants are represented by the
Association of Flight  Attendants  ("AFA"),  and the Company's cockpit crews are
represented by the Air Line Pilots Association ("ALPA").  The current collective
bargaining  agreement  with the AFA  became  subject to  amendment,  but did not
expire, in December 1998. The current collective  bargaining agreement with ALPA
will be subject to  amendment,  but will not  expire,  in  September  2000.  The
Company  began  negotiations  with the AFA in the third quarter of 1998 to amend
the collective bargaining agreement,  and a tentative agreement was announced on
February 14, 2000. The flight dispatchers elected the Transport Workers Union to
represent  them in October 1999.  Due to the small number of  dispatchers,  this
election is expected to have a minimal impact on the Company's operations.

The Company  believes  that  relations  with its employees are good. A prolonged
dispute with employees who are  represented by a union, or any sizable number of
employees, could have an adverse impact on the Company's operations.

Regulation

The  Company is subject to a wide range of  governmental  regulation,  including
that of the DOT and the Federal Aviation Administration ("FAA").

The DOT principally regulates economic matters affecting air service, including:
air  carrier  certification  and  fitness;   insurance;   leasing  arrangements;
allocation of route rights and  authorization of proposed  scheduled and charter
operations;   allocation  of  landing  slots  and  departing   slots;   consumer
protection;  and  competitive  practices.  The FAA  primarily  regulates  flight
operations,  especially  matters affecting air safety,  including  airworthiness
requirements for each type of aircraft and crew certification.  The FAA requires
each carrier to obtain an operating  certificate  and operations  specifications
authorizing the carrier to fly to specific airports using specified equipment.

Several aspects of airline  operations are subject to regulation or oversight by
federal  agencies  other than the DOT and FAA. The United States Postal  Service
has jurisdiction over certain aspects of the  transportation of mail and related
services provided by the Company through its cargo affiliate. Labor relations in
the air transportation  industry are generally regulated under the Railway Labor
Act, which vests in the National  Mediation Board certain regulatory powers with
respect to disputes  between  airlines and labor unions arising under collective
bargaining agreements. The Company is subject to the jurisdiction of the Federal
Communications  Commission regarding the utilization of its radio facilities. In
addition, the Immigration and Naturalization  Service, the U.S. Customs Service,
and the  Animal  and  Plant  Health  Inspection  Service  of the  Department  of
Agriculture  have  jurisdiction  over  inspection  of  the  Company's  aircraft,
passengers and cargo to ensure the Company's  compliance with U.S.  immigration,
customs and import  laws.  Also,  while the  Company's  aircraft  are in foreign
countries,  they must comply with the  requirements  of similar  authorities  in
those countries. The Commerce Department also regulates the export and re-export
of the Company's U.S.-manufactured aircraft and equipment.

In addition to various federal regulations, local governments and authorities in
certain markets have adopted  regulations  governing various aspects of aircraft
operations,  including noise abatement,  curfews and use of airport  facilities.
Many U.S. airports have adopted or are considering adopting a Passenger Facility
Charge of up to $3.00  generally  payable by each  passenger  departing from the
airport and remitted by the Company to the applicable airport authority.

At the Company's aircraft  maintenance  facilities,  materials are used that are
regulated  as  hazardous  under  federal,  state and local laws.  The Company is
required to maintain  programs  to protect the safety of the  employees  who use
these  materials and to manage and dispose of any waste  generated by the use of
these materials in compliance  with these laws.  More generally,  the Company is
also  subject  at these  facilities  to  federal,  state and  local  regulations
relating to protection of the  environment and to discharge of material into the
environment.  The Company does not expect that the costs associated with ongoing
compliance  with any of these  regulations  will have a  material  impact on the
Company's capital  expenditures,  earnings or competitive  position.  Additional
laws  and  regulations   have  been  proposed  from  time  to  time  that  could
significantly increase the cost of airline operations by, for instance, imposing
additional requirements or restrictions on operations.

Based upon  bilateral  aviation  agreements  between the U.S. and other nations,
and, in the absence of such agreements,  comity and reciprocity principles,  the
Company,  as a charter carrier,  is generally not restricted as to the frequency
of its flights to and from most foreign destinations.  However, these agreements
generally  restrict  the  Company to the  carriage  of  passengers  and cargo on
flights  which either  originate in the U.S. and  terminate in a single  foreign
nation,  or which originate in a single foreign nation and terminate in the U.S.
Proposals for any  additional  charter  service must  generally be  specifically
approved  by  the  civil  aeronautics  authorities  in the  relevant  countries.
Approval of such  requests is typically  based on  considerations  of comity and
reciprocity and cannot be guaranteed.

The Company  believes 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
could have a material adverse effect upon the Company.

Environmental Matters

Under the Airport  Noise and Capacity  Act of 1990 and related FAA  regulations,
the Company's  aircraft must comply with certain Stage 3 noise  restrictions  by
certain  specified  deadlines.  In  general,  the  Company  is  prohibited  from
operating any Stage 2 aircraft after December 31, 1999. As of December 31, 1999,
the Company's entire fleet met Stage 3 requirements.

In addition to the  aircraft  noise  regulations  administered  by the FAA,  the
Environmental  Protection  Agency  regulates  operations,  including air carrier
operations,  which affect the quality of air in the United  States.  The Company
believes it has made all necessary  modifications to its operating fleet to meet
fuel-venting requirements and smoke-emissions standards.

Item 2.    Properties

The Company leases three adjacent office buildings in Indianapolis consisting of
approximately 136,000 square feet. These buildings are located approximately one
mile  from  the  Indianapolis  International  Airport  terminal  and are used as
principal business offices and for the Indianapolis reservations center.

The Company's Maintenance and Engineering Center is also located at Indianapolis
International  Airport.  This 120,000 square-foot  facility was designed to meet
the base maintenance  needs of the Company's  operations,  as well as to provide
support services for other maintenance locations.  The Indianapolis  Maintenance
and  Engineering  Center  is an  FAA-certificated  repair  station  and  has the
capability  to  perform  routine,  as well as  non-routine,  maintenance  on the
Company's aircraft.

During the second  quarter of 1999,  the  Company  completed  construction  of a
120,000  square-foot  building  immediately  adjacent to the Company's hangar at
Indianapolis  International Airport. In 1995, the Company completed the lease of
Hangar No. 2 at Chicago's Midway Airport for an initial lease term of ten years,
subject to two five-year renewal options. The Company has completed  significant
improvements to this leased property,  which is used to provide line maintenance
for the Boeing 757-200 and Boeing 727-200 narrow-body fleets.

Since 1995, the Company has occupied an 18,700 square-foot  reservation facility
located  near  Chicago's  O'Hare  Airport.   This  reservation  facility  serves
customers  in  the  greater  Chicago   metropolitan   area  in  support  of  the
Chicago-Midway scheduled service operation.

The Company also  routinely  leases  various  properties at airports  around the
world for use by passenger  service,  flight operations and maintenance  staffs.
Other properties are also leased for the use of sales office staff.

At  December  31,  1999,  the  Company  was  certified  to operate a fleet of 53
aircraft.  The following table summarizes the ownership  characteristics of each
aircraft type operated by the Company as of the end of 1999.

<TABLE>
<CAPTION>

         Ownership                 Boeing             Boeing              Lockheed              Lockheed
           Status                727-200ADV          757-200ER          L-1011-50/100          L-1011-500

<S>                                   <C>                                     <C>                   <C>
           Owned                      1                 N/A                   1                     4
       (Unencumbered)

           Owned                      9                 N/A                  12                    N/A

   (Encumbered-Pledged on
       Bank Facility)

           Leased                    14                  9                   N/A                   N/A
      (Fixed Buy-out)

      Operating-Lease                N/A                 2                    1                    N/A
        (No Buy-out)

           TOTAL                     24                 11                   14                     4

</TABLE>

Item 3.    Legal Proceedings

Various  claims,  contractual  disputes and lawsuits  against the Company  arise
periodically involving complaints which are normal and reasonably foreseeable in
light of the nature of the Company's  business.  The majority of these suits are
covered by  insurance.  In the opinion of  management,  the  resolution of these
claims  will not have a  material  adverse  effect  on the  business,  operating
results or financial condition of the Company.

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

No matter was submitted to a vote of security  holders  during the quarter ended
December 31, 1999.

<PAGE>


PART II


Item 5.     Market for the Registrant's Common Stock and Related Security Holder
            Matters

The  Company's  common  stock trades on the Nasdaq  National  Market tier of The
Nasdaq  Stock  Market  under the symbol  "AMTR." The Company had 272  registered
shareholders  at December 31, 1999, and 279 registered  shareholders at December
31, 1998.

<TABLE>
<CAPTION>

                                                               Year Ended December 31, 1999
Market Prices of Common Stock                       High                  Low                Close
                                               --------------- -------------------- -------------------
<S>                                                 <C>                   <C>                <C>
First quarter                                      28 1/8                18 1/2               19

Second quarter                                       25                  18 7/8              24 5/8

Third quarter                                       27 1/2               18 1/2              18 3/4

Fourth quarter                                       22                  16 1/2              19 3/8

                                                               Year Ended December 31, 1998
Market Prices of Common Stock                       High                  Low                Close
                                               --------------- -------------------- -------------------
First quarter                                      16 3/8                 7 1/2              16 1/4

Second quarter                                       27                  15 1/8              24 5/8

Third quarter                                        30                  20 7/8              23 1/2

Fourth quarter                                     27 5/8                13 3/4              27 1/8

No dividends have been paid on the Company's common stock since becoming publicly held.
</TABLE>


Item 6.  Selected Consolidated Financial Data-(Unaudited)

The  unaudited  selected  consolidated  financial  data in this  table have been
derived  from  the  consolidated  financial  statements  of the  Company for the
respective periods presented.  The data should  be read in conjunction  with the
consolidated  financial  statements and related notes.
<TABLE>
<CAPTION>
                                                                 Amtran, Inc.
                                                             Five-Year Summary
                                                          Year Ended December 31,
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>          <C>         <C>         <C>         <C>
(Dollars in thousands, except per share data and ratios)               1999         1998        1997        1996        1995
-----------------------------------------------------------------------------------------------------------------------------------

Statement of Operations Data:
     Operating revenues                                           $  1,122,366  $  919,369  $  783,193  $  750,851  $   715,009
     Operating expenses                                              1,032,339     843,996     769,709     786,907      697,073
     Operating income (loss) (1)                                        90,027      75,373      13,484    (36,056)       17,936
     Income (loss) before taxes                                         77,797      67,210       6,027    (39,581)       14,653
     Net income (loss)                                                  47,342      40,081       1,572    (26,674)        8,524
     Net income (loss) per share - basic (2)                              3.86        3.41        0.14      (2.31)         0.74
     Net income (loss) per share - diluted (2)                            3.51        3.07        0.13      (2.31)         0.74

Balance Sheet Data (at end of period):
     Property and equipment, net                                  $    511,832  $  329,332  $  267,681  $  224,540  $   240,768
     Total assets                                                      815,281     594,549     450,857     369,601      413,137
     Total debt                                                        347,871     246,671     191,804     149,371      138,247
     Shareholders' equity (3)                                          151,376     102,751      56,990      54,744       81,185
     Ratio of total debt  to shareholders' equity                         2.30        2.40        3.37        2.73         1.70
     Ratio of total liabilities to shareholders' equity                   4.39        4.79        6.91        5.75         4.09


Selected Operating Statistics for
Consolidated Passenger Services: (4)
     Revenue passengers carried (thousands)                            7,044.6     6,168.3     5,307.4     5,680.5      5,368.2
     Revenue passenger miles (millions)                               10,949.0     9,758.1     8,986.0     9,172.4      8,907.7
     Available seat miles (millions)                                  15,082.6    13,851.7    12,647.7    13,295.5     12,521.4
     Passenger load factor                                               72.6%       70.5%       71.0%       69.0%        71.1%

</TABLE>

(1)   The Company has  reclassified  gain (loss) on the sale of operating assets
      for 1995 from  non-operating  gain (loss) to operating income (loss) to be
      consistent with the 1996-1999 presentation.  Also, in the third quarter of
      1996,  the Company  recorded a $4.7 million loss on the disposal of leased
      assets associated with the reconfiguration of its fleet.

(2)   In  1997,  the  Company  adopted  Financial   Accounting  Standards  Board
      Statement 128,  "Earnings per Share," which  established new standards for
      the  calculation  and  disclosure of earnings per share.  All prior period
      earnings per share amounts  disclosed in this five-year  summary have been
      restated to conform to the new standards under Statement 128.

(3)   No dividends were paid in any periods presented.

(4)   Operating  statistics  pertain only to ATA  (including  the  operations of
      Chicago  Express)  and do not  include  information  for  other  operating
      subsidiaries of the Company.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Overview

Amtran is a leading provider of targeted  scheduled airline services and charter
airline services to leisure and other value-oriented travelers.  Amtran, through
its  principal  subsidiary,  ATA,  has been  operating  for 27 years  and is the
eleventh largest U.S. passenger airline in terms of 1999 revenues.  ATA provides
scheduled  service through  nonstop and connecting  flights from the gateways of
Chicago-Midway and Indianapolis to popular vacation destinations such as Hawaii,
Las  Vegas,  Florida,  California,  Mexico  and  the  Caribbean,  as  well as to
Philadelphia, Denver, Dallas-Ft. Worth and New York City's LaGuardia and John F.
Kennedy  Airports.  ATA also provides  charter  service  throughout the world to
independent tour operators, specialty charter customers and the U.S. military.

For the year ended December 31, 1999,  the Company  generated  record  operating
income and net income.  Although all business  units  performed well during this
period,  scheduled service continued to generate the strongest overall growth in
pricing and traffic of the major business units.

o   Scheduled service revenue per available seat mile ("RASM") increased 7.5% in
    1999, as compared to 1998.

o   Scheduled service ASMs increased 13.6% between 1999 and 1998.

o   Load factor increased to 77.4% in 1999 as compared to 74.4% in 1998.

In 1999, the Company's  consolidated  measures of RASM and CASM were impacted by
the  acquisition of tour operators  Travel Charter and Key Tours,  because these
companies contributed  significant operating revenue and expense to consolidated
results, without increasing ASMs. The operations of these tour operators,  along
with the Company's  existing  vacation package brand,  ATA Vacations,  have been
combined and reported as a separate operating segment, ATA Leisure Corp.
("ATALC") (see Note 13 to Consolidated Financial Statements).


<PAGE>


Results of Operations in Cents Per ASM

The  following  table  sets  forth,  for  the  periods  indicated,  consolidated
operating revenues and expenses expressed as cents per ASM.
<TABLE>
<CAPTION>

                                                                              Cents per ASM
                                                                           Year Ended December 31,
<S>                                                             <C>               <C>              <C>
                                                                1999              1998             1997
                                                                ----              ----             ----

Consolidated operating revenues:                                7.44              6.64             6.19

Consolidated operating expenses:
     Salaries, wages and benefits                               1.67              1.52             1.36
     Fuel and oil                                               1.13              0.99             1.22
     Depreciation and amortization                              0.64              0.57             0.49
     Handling, landing and navigation fees                      0.59              0.54             0.55
     Aircraft rentals                                           0.39              0.38             0.43
     Aircraft maintenance, materials and repairs                0.37              0.39             0.41
     Crew and other employee travel                             0.33              0.30             0.29
     Ground package cost                                        0.33              0.14             0.15
     Passenger service                                          0.26              0.24             0.26
     Commissions                                                0.26              0.21             0.21
     Other selling expenses                                     0.19              0.16             0.12
     Advertising                                                0.12              0.13             0.10
     Facilities and other rentals                               0.09              0.07             0.07
     Other                                                      0.47              0.45             0.43
                                                                ----              ----             ----
          Total consolidated operating expenses                 6.84              6.09             6.09
                                                                ----              ----             ----
     Consolidated operating income                              0.60              0.55             0.10
                                                                ====              ====             ====
     ASMs (in thousands)                                    15,082,630        13,851,731       12,647,683

</TABLE>

The following table sets forth, for the periods  indicated,  operating  revenues
and expenses for each reportable segment, in thousands of dollars, and expressed
as cents per ASM.


                                               Year Ended December 31,
--------------------------------------------------------------------------------
                                      1999             1998           1997
                                      ----             ----           ----
Airline and Other
     Operating revenue (000s)      $1,027,526         $897,884       $758,971
     RASM (cents)                      6.81             6.48           6.00
     Operating expense (000s)      $  961,935         $830,977       $755,492
     CASM (cents)                      6.38             6.00           5.97

ATALC
     Operating revenue (000s)      $   94,840         $ 21,485       $ 24,222
     RASM (cents)                      0.63             0.16           0.19
     Operating expense (000s)      $   70,404         $ 13,019       $ 14,217
     CASM (cents)                      0.46             0.09           0.12

<PAGE>


Year Ended December 31, 1999, Versus Year Ended December 31, 1998

Consolidated Flight Operating and Financial Data

The following table sets forth, for the periods indicated, certain key operating
and financial data for the consolidated  flight operations of the Company.  Data
shown for "Jet"  operations  include  the  consolidated  operations  of Lockheed
L-1011,  Boeing  727-200 and Boeing  757-200  aircraft  in all of the  Company's
business  units.  Data shown for "J31"  operations  include  the  operations  of
Jetstream 31 propeller aircraft by Chicago Express as the ATA Connection.
<TABLE>
<CAPTION>

                                                     Twelve Months Ended December 31,
------------------------------------- ----------------------------------------------------------------
                                                1999            1998        Inc (Dec)     % Inc (Dec)
------------------------------------- --------------- --------------- ---------------- ---------------
<S>                                           <C>             <C>               <C>              <C>
Departures Jet                                50,207          45,881            4,326            9.43
Departures J31(a)                             17,716          16,388            1,328            8.10
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Departures (b)                        67,923          62,269            5,654            9.08
------------------------------------- --------------- --------------- ---------------- ---------------

Block Hours Jet                              157,481         144,237           13,244            9.18
Block Hours J31                               17,979          16,166            1,813           11.21
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Block Hours (c)                      175,460         160,403           15,057            9.39
------------------------------------- --------------- --------------- ---------------- ---------------

RPMs Jet (000s)                           10,913,081       9,727,097        1,185,984           12.19
RPMs J31 (000s)                               35,922          30,991            4,931           15.91
------------------------------------- --------------- --------------- ---------------- ---------------
  Total RPMs (000s) (d)                   10,949,003       9,758,088        1,190,915           12.20
------------------------------------- --------------- --------------- ---------------- ---------------

ASMs Jet (000s)                           15,025,000      13,799,507        1,225,493            8.88
ASMs J31 (000s)                               57,630          52,224            5,406           10.35
------------------------------------- --------------- --------------- ---------------- ---------------
  Total ASMs (000s) (e)                   15,082,630      13,851,731        1,230,899            8.89
------------------------------------- --------------- --------------- ---------------- ---------------

Load Factor Jet                                72.63           70.49             2.14            3.04
Load Factor J31                                62.33           59.34             2.99            5.04
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Load Factor (f)                        72.59           70.45             2.14            3.04
------------------------------------- --------------- --------------- ---------------- ---------------

Passengers Enplaned Jet                    6,838,339       5,991,662          846,677           14.13
Passengers Enplaned J31                      206,304         176,604           29,700           16.82
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Passengers Enplaned (g)            7,044,643       6,168,266          876,377           14.21
------------------------------------- --------------- --------------- ---------------- ---------------

Revenue (000s)                            $1,122,366        $919,369         $202,997           22.08
RASM in cents (h)                               7.44            6.64             0.80           12.05
CASM in cents (i)                               6.84            6.09             0.75           12.32
Yield in cents (j)                             10.25            9.42             0.83            8.81
------------------------------------- --------------- --------------- ---------------- ---------------
</TABLE>

  See footnotes (g) through (j) on page 15.

(a) Chicago Express Airlines,  Inc. ("Chicago Express") provides service between
Chicago-Midway and the cities of Indianapolis,  Milwaukee,  Des Moines,  Dayton,
Grand  Rapids,  Lansing and Madison as the ATA  Connection,  using  Jetstream 31
("J31") propeller aircraft.

(b) A departure is a single  takeoff and landing  operated by a single  aircraft
between an origin city and a destination city.

(c) Block hours for any aircraft  represent  the elapsed time  computed from the
moment  the  aircraft  first  moves  under its own power  from the  origin  city
boarding  ramp to the moment it comes to rest at the  destination  city boarding
ramp.

(d) Revenue  passenger  miles (RPMs)  represent the number of seats  occupied by
revenue passengers multiplied by the number of miles those seats are flown. RPMs
are an industry measure of the total seat capacity actually sold by the Company.

(e) Available seat miles (ASMs) represent the number of seats available for sale
to revenue  passengers  multiplied by the number of miles those seats are flown.
ASMs are an industry  measure of the total seat capacity offered for sale by the
Company, whether sold or not.

(f) Passenger  load factor is the  percentage  derived by dividing RPMs by ASMs.
Passenger load factor is relevant to the evaluation of scheduled service because
incremental  passengers  normally provide  incremental revenue and profitability
when  seats  are  sold  individually.  In the  case of  commercial  charter  and
military/government  charter,  load  factor is less  relevant  because an entire
aircraft is sold by the Company instead of individual  seats.  Consolidated load
factors  and  scheduled  service  load  factors for the Company are shown in the
appropriate tables for industry  comparability,  but load factors for individual
charter businesses are omitted from applicable tables.

(g) Passengers  enplaned are the number of revenue passengers who occupied seats
on the  Company's  flights.  This  measure is also  referred  to as  "passengers
boarded."

(h) Revenue per ASM (expressed in cents) is total  operating  revenue divided by
total ASMs.  This  measure is also  referred  to as "RASM."  RASM  measures  the
Company's  unit revenue  using total  available  seat  capacity.  In the case of
scheduled  service,  RASM is a measure of the combined impact of load factor and
yield (see (j) below for the definition of yield).

(i) Cost per ASM  (expressed  in cents) is total  operating  expense  divided by
total ASMs.  This  measure is also  referred  to as "CASM."  CASM  measures  the
Company's unit cost using total available seat capacity.

(j) Revenue per RPM (expressed in cents) is total  operating  revenue divided by
total RPMs.  This measure is also  referred to as "yield."  Yield is relevant to
the  evaluation of scheduled  service  because yield is a measure of the average
price paid by customers  purchasing  individual seats. Yield is less relevant to
the commercial  charter and  military/government  charter businesses because the
entire  aircraft  is sold at one time for one  price.  Consolidated  yields  and
scheduled  service  yields  are shown in the  appropriate  tables  for  industry
comparability,  but yields for  individual  charter  businesses are omitted from
applicable tables.

Operating Revenues

Total  operating  revenues in 1999 increased 22.0% to $1.122 billion from $919.4
million in 1998. This increase was due to a $113.4 million increase in scheduled
service revenues,  a $41.2 million increase in commercial  charter  revenues,  a
$35.0 million  increase in ground package  revenues,  a $9.1 million increase in
other  revenues,  and a $4.3  million  increase in  military/government  charter
revenues.

Scheduled  Service  Revenues.  The following  table sets forth,  for the periods
indicated,  certain key operating and financial  data for the scheduled  service
operations of the Company.  Data shown for "Jet" operations include the combined
operations of Lockheed  L-1011,  Boeing 727-200 and Boeing  757-200  aircraft in
scheduled  service.  Data shown for "J31"  operations  include the operations of
Jetstream  31  propeller  aircraft  operated  by  Chicago  Express  as  the  ATA
Connection.


<PAGE>

<TABLE>
<CAPTION>

                                                     Twelve Months Ended December 31,
------------------------------------- --------------- --------------- ---------------- ---------------
                                                1999            1998        Inc (Dec)     % Inc (Dec)
------------------------------------- --------------- --------------- ---------------- ---------------
<S>                                           <C>             <C>               <C>             <C>
Departures Jet                                35,402          31,237            4,165           13.33
Departures J31(a)                             17,716          16,388            1,328            8.10
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Departures (b)                        53,118          47,625            5,493           11.53
------------------------------------- --------------- --------------- ---------------- ---------------

Block Hours Jet                              104,555          92,263           12,292           13.32
Block Hours J31                               17,979          16,166            1,813           11.21
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Block Hours (c)                      122,534         108,429           14,105           13.01
------------------------------------- --------------- --------------- ---------------- ---------------

RPMs Jet (000s)                            6,828,181       5,777,555        1,050,626           18.18
RPMs J31 (000s)                               35,922          30,991            4,931           15.91
------------------------------------- --------------- --------------- ---------------- ---------------
  Total RPMs (000s) (d)                    6,864,103       5,808,546        1,055,557           18.17
------------------------------------- --------------- --------------- ---------------- ---------------

ASMs Jet (000s)                            8,809,564       7,756,330        1,053,234           13.58
ASMs J31 (000s)                               57,630          52,224            5,406           10.35
------------------------------------- --------------- --------------- ---------------- ---------------
  Total ASMs (000s) (e)                    8,867,194       7,808,554        1,058,640           13.56
------------------------------------- --------------- --------------- ---------------- ---------------

Load Factor Jet                                77.51           74.49             3.02            4.05
Load Factor J31                                62.33           59.34             2.99            5.04
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Load Factor (f)                        77.41           74.39             3.02            4.06
------------------------------------- --------------- --------------- ---------------- ---------------

Passengers Enplaned Jet                    4,878,643       4,094,454          784,189           19.15
Passengers Enplaned J31                      206,304         176,604           29,700           16.82
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Passengers Enplaned (g)            5,084,947       4,271,058          813,889           19.06
------------------------------------- --------------- --------------- ---------------- ---------------

Revenue (000s)                              $624,647        $511,254         $113,393           22.18
RASM in cents (h)                               7.04            6.55             0.49            7.48
Yield in cents (j)                              9.10            8.80             0.30            3.41
Revenue per segment $ (k)                     122.84          119.70             3.14            2.62
------------------------------------- --------------- --------------- ---------------- ---------------
</TABLE>

See footnotes (a) through (j) on pages 14 and 15.

(k) Revenue per segment flown is determined by dividing total scheduled  service
revenues  by the number of  passengers  boarded.  Revenue per segment is a broad
measure  of the  average  price  obtained  for  all  flight  segments  flown  by
passengers in the Company's scheduled service route network.

Scheduled service revenues in 1999 increased 22.2% to $624.6 million from $511.3
million in 1998.  Scheduled  service  revenues  comprised  55.7% of consolidated
revenues in 1999, as compared to 55.6% of consolidated revenues in 1998.

The Company's  scheduled service at  Chicago-Midway  accounted for approximately
56.7% of scheduled  service ASMs and 77.2% of scheduled  service  departures  in
1999, as compared to 53.4% and 73.5%,  respectively,  during 1998.  During 1998,
the Company began nonstop service to New York's  LaGuardia  Airport,  Dallas-Ft.
Worth and Denver,  which  continued  throughout  1999.  During 1999, the Company
began  nonstop  service to  Philadelphia,  which was not served  during 1998. In
addition to these new services,  the Company  served the following  existing jet
markets in both years: Ft.  Lauderdale,  Ft. Myers, Las Vegas, Los Angeles,  New
York's John F. Kennedy International Airport,  Orlando, Phoenix, St. Petersburg,
San Francisco and Sarasota.  The Company has announced that  effective  April 3,
2000 it will begin  nonstop  service to  Washington  D.C.,  and effective May 7,
2000,  it will begin  nonstop  service  from  Chicago-Midway  to both Boston and
Seattle.

Beginning  in 1997,  the Company also had a  code-share  agreement  with Chicago
Express  under  which,  as  later  amended,  Chicago  Express  operated  19-seat
Jetstream  31  propeller  aircraft  between  Chicago-Midway  and the  cities  of
Indianapolis,  Milwaukee, Des Moines, Dayton, Grand Rapids, Lansing and Madison.
On April 30, 1999, the Company acquired all of the issued and outstanding  stock
of Chicago Express Airlines,  Inc., which continues to operate these services as
a wholly owned subsidiary of the Company.

The Company's  operations at Chicago-Midway  continued to be the fastest growing
portion of its scheduled  service  business in 1999. The Company operated a peak
schedule of 67 daily jet and commuter  departures from Chicago-Midway and served
22 destinations on a nonstop basis in the summer of 1999, as compared to 57 peak
daily  departures and 21 nonstop  destinations  served in the summer of 1998. In
1998, the Company  completed a $1.7 million  renovation of the existing terminal
facilities at Chicago-Midway to enhance their attractiveness and convenience for
its customers. The Company also presently expects to occupy 12 jet gates and one
commuter  aircraft gate at the new  Chicago-Midway  terminal  which is presently
scheduled for  completion  in 2004,  as compared to the six jet gates  currently
occupied in the existing terminal.

The Company's  growing  commitment  to  Chicago-Midway  is  consistent  with its
strategy for  enhancing  revenues  and  profitability  in  scheduled  service by
focusing  primarily  on low cost,  nonstop  flights from  airports  where it has
market or aircraft  advantages in addition to its low cost. The Company  expects
its growing  concentration of connecting  flights at  Chicago-Midway  to provide
both  revenue  premiums  and  operating  cost  efficiencies,  as compared to the
Company's other gateway cities.  In addition,  the Company plans to build an FIS
facility at Chicago-Midway to facilitate direct international flights.

The Company's Hawaii service  accounted for 18.5% of scheduled  service ASMs and
4.7% of scheduled  service  departures  in 1999,  as compared to 21.3% and 5.4%,
respectively,  in 1998. The Company provided nonstop services in both years from
Los  Angeles,  Phoenix  and  San  Francisco  to both  Honolulu  and  Maui,  with
connecting  service  between  Honolulu  and Maui.  The  Company  provides  these
services through a marketing alliance with the largest independent tour operator
serving  leisure  travelers  to  Hawaii  from the  United  States.  The  Company
distributes  the  remaining  seats on these  flights  through  normal  scheduled
service  distribution  channels.  The Company believes it has superior operating
efficiencies  in west  coast-Hawaii  markets  due to the higher  daily  hours of
utilization  obtained for both  aircraft and crews in this market than for other
commercial charter and military applications.

The Company's Indianapolis service accounted for 14.0% of scheduled service ASMs
and 10.8% of  scheduled  service  departures  in 1999,  as compared to 16.1% and
12.7%, respectively,  in 1998. In 1999 and 1998, the Company operated nonstop to
Cancun,  Ft.  Lauderdale,  Ft.  Myers,  Las Vegas,  Los  Angeles,  Orlando,  St.
Petersburg,  San Francisco and Sarasota. The Company has served Indianapolis for
27 years  through the  Ambassadair  Travel Club and in scheduled  service  since
1986.

On June 9, 1999,  nonstop service commenced between Ft. Lauderdale and San Juan,
Puerto Rico, and on June 16, 1999,  nonstop service was begun between New York's
John F. Kennedy  International  Airport and San Juan. Between June and September
1999, the Company  operated  seasonal service between New York's John F. Kennedy
International Airport and Dublin and Shannon, Ireland.

The Company  continuously  evaluates the  profitability of its scheduled service
markets  and  expects  to adjust  its  service  from time to time.  The  Company
believes that  scheduled  service  yields and load factors in 1999 and 1998 have
benefited  from  strong  customer  demand for air  transportation  in the United
States during a period of constrained  industry growth in seat capacity relative
to this demand.

Commercial  Charter  Revenues.  The Company's  commercial  charter  revenues are
derived  principally  from  independent  tour  operators and  specialty  charter
customers.  The Company's  commercial charter product provides  full-service air
transportation to hundreds of  customer-designated  destinations  throughout the
world.  The  Company  believes  that tour  operator  and  specialty  charter are
businesses   where  the  Company's   experience  and  size  provide   meaningful
competitive advantage and are businesses to which the Company remains committed.
Commercial  charter  revenues  accounted for 23.5% of  consolidated  revenues in
1999, as compared to 24.2% in 1998.

The  Company  has   expanded   its  seat   capacity   in  the   commercial   and
military/government charter business units through the acquisition of long-range
Lockheed L-1011 series 500 aircraft.  In July 1998, the Company committed to the
purchase of five such  aircraft for delivery  between the third  quarter of 1998
and the end of 1999. Although Lockheed L-1011 series 500 maintenance  procedures
and  cockpit  design are  similar to the  Company's  existing  fleet of Lockheed
L-1011  series 50 and series 100  aircraft,  they differ  operationally  in that
their ten-to-eleven-hour range permits them to operate nonstop to parts of Asia,
South  America  and  Central  and  Eastern  Europe  using an  all-coach  seating
configuration  preferred  by  the  U.S.  military  and  most  of  the  Company's
commercial  charter  customers.  The Company  placed four of these aircraft into
service in commercial and  military/government  charter  operations during 1999,
which has  increased the  available  seat  capacity for these  charter  business
units, in addition to opening new long-range market opportunities to the Company
which it cannot serve with its existing fleet.  The Company expects to place the
fifth L-1011 series 500 aircraft into service in the first quarter of 2000.

The following table sets forth, for the periods indicated, certain key operating
and financial data for the commercial charter operations of the Company.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------- ----------------------------------------------------------------
                                      Twelve Months Ended December 31,
----------------------------------- ----------------------------------------------------------------
<S>                                           <C>              <C>            <C>             <C>
                                              1999             1998       Inc (Dec)     % Inc (Dec)
                                              ----             ----       ---------     -----------
Departures (b)                              10,212            9,602             610            6.35
Block Hours (c)                             37,119           33,516           3,603           10.75
RPMs (000s) (d)                          3,253,165        3,009,638         243,527            8.09
ASMs (000s) (e)                          4,129,966        3,882,202         247,764            6.38
Passengers Enplaned (g)                  1,753,237        1,617,901         135,336            8.36
Revenue (000s)                            $263,766         $222,571         $41,195           18.51
RASM in cents (h)                             6.39             5.73            0.66           11.52
----------------------------------- --------------- ---------------- --------------- ---------------
</TABLE>

See footnotes (b) through (h) on pages 14 and 15.

The Company  operates in two  principal  components  of the  commercial  charter
business,  known as "track  charter" and  "specialty  charter." The larger track
charter  business  component  is  generally   comprised  of  low  frequency  but
repetitive domestic and international  flights between city pairs, which support
high passenger load factors and are marketed  through tour operators,  providing
value-priced  and convenient  nonstop service to vacation  destinations  for the
leisure traveler.  Since track charter  resembles  scheduled service in terms of
its repetitive  flying patterns between  fixed-city pairs, it allows the Company
to achieve  reasonable  levels of crew and aircraft  utilization  (although less
than for scheduled service), and provides the Company with meaningful protection
from some fuel price increases through the use of fuel escalation  reimbursement
clauses in tour operator  contracts.  Track charter  accounted for approximately
$193.8 million in revenues in 1999, as compared to $176.4 million in 1998.

Specialty  charter  (including  incentive travel programs) is a product which is
designed  to meet the  unique  requirements  of the  customer  and is a business
characterized  by lower frequency of operation and by greater  variation in city
pairs served than the track charter  business.  Specialty  charter includes such
diverse contracts as flying  university  alumni to football games,  transporting
political  candidates  on campaign  trips and moving NASA space  shuttle  ground
crews to alternate landing sites. The Company also operates an increasing number
of trips in  all-first-class  configuration  for certain  corporate and high-end
leisure clients. Although lower utilization of crews and aircraft and infrequent
service to  specialty  destinations  often  result in higher  average  operating
costs,  the Company has  determined  that the revenue  premium earned by meeting
special customer  requirements  more than compensates for these increased costs.
The  diversity  of the  Company's  three fleet types also permits the Company to
meet a customer's  particular needs by choosing the aircraft type which provides
the most economical solution for those requirements. Specialty charter accounted
for  approximately  $40.0  million in  revenues  in 1999,  as  compared to $35.1
million in 1998.

Military/Government  Charter  Revenues.  The following table sets forth, for the
periods   indicated,   certain  key  operating   and  financial   data  for  the
military/government flight operations of the Company.
<TABLE>
<CAPTION>

-------------------------------- ---------------------------------------------------------------
                        Twelve Months Ended December 31,
-------------------------------- ---------------------------------------------------------------
                                           1999            1998       Inc (Dec)     % Inc (Dec)
                                           ----            ----       ---------     -----------
<S>                                       <C>             <C>               <C>          <C>
Departures (b)                            4,444           4,447             (3)          (0.07)
Block Hours (c)                          15,354          16,389         (1,035)          (6.32)
RPMs (000s) (d)                         818,627         821,813         (3,186)          (0.39)
ASMs (000s) (e)                       2,027,471       1,963,069          64,402            3.28
Passengers Enplaned (g)                 199,013         205,641         (6,628)          (3.22)
Revenue (000s)                         $126,213        $121,911          $4,302            3.53
RASM in cents (h)                          6.23            6.21            0.02            0.32
-------------------------------- --------------- --------------- --------------- ---------------
</TABLE>

See footnotes (b) through (h) on pages 14 and 15.

The Company  participates in two related  military/government  charter  programs
known  as  "fixed-award"  and  "short-term  expansion."  Pursuant  to  the  U.S.
military's  fixed-award  system,  each participating  airline is awarded certain
"mobilization  value  points"  based upon the number and type of  aircraft  made
available by that airline for military  flying.  In order to increase the number
of points  awarded,  the Company has  traditionally  participated  in contractor
teaming arrangements with other airlines. Under these arrangements, the team has
a greater likelihood of receiving  fixed-award  business and, to the extent that
the award  includes  passenger  transport,  the  opportunity  for the Company to
operate this flying is enhanced  since the Company  represents a majority of the
passenger  transport  capacity  of the  team.  As part of its  participation  in
teaming  arrangements,  the Company pays a commission to the team,  which passes
that revenue on to all team members based upon their mobilization points.
<PAGE>
All airlines  participating in the fixed-award  business  contract annually with
the U.S.  military  from  October  1 to the  following  September  30.  For each
contract year, reimbursement rates are determined for aircraft types and mission
categories  based  upon  operating  cost  data  submitted  by the  participating
airlines.  These contracts are generally not subject to renegotiation  once they
become effective.

Short-term  expansion  business is awarded by the U.S.  military  first on a pro
rata basis to those  carriers who have been  provided  fixed-award  business and
then to any  other  carrier  with  aircraft  availability.  Expansion  flying is
generally offered to airlines on very short notice.

The overall amount of military flying that the Company  performs in any one year
is dependent upon several factors, including: (i) the percentage of mobilization
value points represented by the Company's team as compared to total mobilization
value  points of all  providers  of military  service;  (ii) the  percentage  of
passenger capacity of the Company with respect to its own team; (iii) the amount
of  fixed-award  and  expansion  flying  required  by the U.S.  military in each
contract year; and (iv) the availability of the Company's aircraft to accept and
fly expansion awards.

In  April  1999,  the  Company  announced  that  it  had  joined  a new  teaming
arrangement  with several  major  passenger and cargo  airlines.  Under this new
teaming  arrangement,   the  Company  expects  its  military/government  charter
revenues to increase  to  approximately  $180.0  million for the  contract  year
beginning  October  1999.  This  represents  more than a 40%  increase  over the
Company's  fiscal  year  1999  military/government  charter  revenues  of $126.2
million.

Ground Package  Revenues.  The Company earns ground package revenues through the
sale of hotel,  car rental and cruise  accommodations  in  conjunction  with the
Company's air transportation  product. The Company markets these ground packages
to its Ambassadair club members and through its ATA Leisure Corp.  subsidiary to
its  scheduled  service and tour operator  customers.  In 1999,  ground  package
revenues  increased  150.9% to $58.2  million,  as compared to $23.2  million in
1998.

Effective  January 31, 1999,  the Company  completed the  acquisition  of Travel
Charter International ("TCI") in Detroit,  Michigan (see Note 12 to Consolidated
Financial   Statements).   TCI  provides   tour   packages,   including   ground
arrangements,  primarily to Mexican, Caribbean and Central American destinations
during the winter season, and to Europe in the summer. Prior to the acquisition,
the Company had a relationship with TCI as a major provider of passenger airline
services  for over 14 years.  Approximately  $15.6  million of the  increase  in
ground  package  revenues was  attributable  to the  incremental  ground package
revenues  of TCI,  none of which  were  included  in the  Company's  results  of
operations in 1998.

Effective April 30, 1999, the Company  completed the purchase of Key Tours, Inc.
and affiliated companies,  also a tour operator serving the Detroit metropolitan
area (see Note 12 to Consolidated Financial Statements). Key Tours provides tour
packages,  including ground  arrangements,  to such leisure  destinations as Las
Vegas and Florida.  The Company has had a relationship with Key Tours as a major
provider of passenger  airline services for over 15 years.  Approximately  $16.6
million of the  increase in ground  package  revenues  was  attributable  to the
incremental ground package revenues of Key Tours, none of which were included in
the Company's results of operations in 1998.

The number of ground packages sold and the average revenue earned by the Company
for a ground  package  sale are a function of the mix of  vacation  destinations
served,  the  quality  and types of ground  accommodations  offered  and general
competitive  conditions with other air carriers offering similar products in the
Company's  markets,  all of which are  factors  that can change  from  period to
period.

Other  Revenues.  Other revenues are comprised of the  consolidated  revenues of
affiliated  companies,   together  with  miscellaneous   categories  of  revenue
associated  with the  scheduled  and charter  operations  of the Company.  Other
revenues  increased  22.8% to $49.6  million  during 1999,  as compared to $40.4
million in 1998. The Company's other revenues increased  primarily due to higher
revenues earned in non-passenger  airline businesses,  especially cargo revenues
which increased  approximately  $6.5 million,  largely due to the acquisition of
the remaining 50% of the Amber Air Freight  partnership at the beginning of 1999
(see Note 12 to Consolidated Financial Statements).

Operating Expenses

Salaries,  Wages and Benefits.  Salaries, wages and benefits include the cost of
salaries and wages paid to the Company's employees,  together with the Company's
cost of employee benefits and  payroll-related  local,  state and federal taxes.
Salaries,  wages and benefits expense in 1999 increased 19.5% to $252.6 million,
as compared to $211.3 million in 1998.

The Company increased its average equivalent employees by approximately 14.8% in
1999 as compared to 1998, in order to  appropriately  staff the Company's growth
between  periods.  This growth was most  significant  in categories of employees
which are influenced directly by flight activity. Some employment growth in 1999
was also  provided to improve  customer  service in targeted  areas,  such as at
airport ticket  counters,  in reservations  and in other  departments  primarily
involved in  delivering  services to the Company's  customers.  The Company also
recorded  $6.7  million  in  additional  salaries,  wages and  benefits  in 1999
attributable to new companies  acquired (see Note 12 to  Consolidated  Financial
Statements).  The  average  rate  of  pay  earned  by  the  Company's  employees
(including  all  categories  of  salaries,  wages  and  benefits)  increased  by
approximately 4.1% in 1999 as compared to 1998.

In 1999, the Company recorded $6.4 million in variable  compensation and related
payroll taxes as compared to 1998,  when $8.9 million in such  compensation  was
recorded.  The Company's variable  compensation plans in both 1999 and 1998 paid
significant  cash awards to employees as a result of the achievement of specific
profitability targets.

Salaries,  wages and benefits cost per ASM increased 9.9% in 1999 to 1.67 cents,
as compared to 1.52 cents in 1998. This unit-cost increase was attributable both
to the faster rate of growth in average equivalent  employees between years than
seat capacity, and to the increase in average salaries paid between years.

Fuel and Oil. Fuel and oil expense increased 24.4% to $170.9 million in 1999, as
compared to $137.4 million in 1998.  The Company  consumed 11.3% more gallons of
jet fuel for flying operations  between years,  which resulted in an increase in
fuel expense of  approximately  $15.0 million.  Jet fuel  consumption  increased
primarily  due to the increased  number of block hours of jet flying  operations
between  periods.  The Company flew 157,481 jet block hours in 1999, as compared
to 144,237 jet block hours in 1998, an increase of 9.2% between years.

Fuel  consumption  growth  between  1999 and 1998 was more than total block hour
growth since the Lockheed L-1011 fleet flew proportionately more block hours and
consumes  approximately  twice the gallons per block hour of the Boeing  727-200
and Boeing 757-200.

During  1999,  the  Company's  average  cost per  gallon  of jet  fuel  consumed
increased by 12.0% as compared to 1998, resulting in an increase in fuel and oil
expense of  approximately  $18.0 million  between  years.  This increase in fuel
price  was  experienced  generally  in  the  airline  industry  as a  result  of
significant  increases  in average  crude oil and  distillate  market  prices as
compared to 1998, particularly in the last two quarters of 1999.

The Company  entered into fuel price hedge  contracts  during 1998 and the first
six months of 1999  under  which the  Company  sought to reduce the risk of fuel
price increases.  These hedges impacted fuel and oil expense by 1.8% and 1.2% in
1999 and 1998, respectively.

Fuel and oil expense  increased 14.1% to 1.13 cents per ASM in 1999, as compared
to 0.99 cents per ASM in 1998, primarily due to the period-to-period increase in
the average price of fuel consumed.

Depreciation and Amortization.  Depreciation and amortization  expense increased
22.0% to $96.0  million in 1999,  as  compared  to $78.7  million  in 1998.  The
Company recorded  goodwill  amortization  expense of $0.9 million in 1999 due to
the  acquisition  of new  businesses  (see  Note  12 to  Consolidated  Financial
Statements), which was not incurred in 1998.

Depreciation  expense  attributable  to owned  engines,  airframes and leasehold
improvements  increased  $9.0 million in 1999, as compared to 1998.  The Company
purchased  nine  Boeing  727-200  aircraft  in 1999,  which had been  previously
financed through operating leases,  thereby increasing  depreciation  expense on
engines  and  airframes  between  years.  The Company  recorded a  reduction  in
aircraft rental expense between periods for the termination of operating  leases
for these aircraft,  which is further described below under "Aircraft  Rentals."
The Company also placed four Lockheed  L-1011-500 owned aircraft into service in
1999,  none of  which  were  owned in  1998.  The  Company  also  increased  its
investment  in rotable  parts and computer  hardware and  software,  among other
items of property  and  equipment,  resulting  in an  increase  in  depreciation
expense of $6.6 million in 1999, as compared to 1998.

Amortization of capitalized engine and airframe overhauls increased $9.7 million
in 1999,  as compared  to 1998,  after  including  the  offsetting  amortization
associated  with  manufacturers'  credits.  Changes  to  the  cost  of  overhaul
amortization  were  partly due to the  increase  in total block hours and cycles
flown  between  comparable  periods for the Boeing  727-200 and Lockheed  L-1011
fleets  since such  expense  varies  with that  activity,  and partly due to the
completion of more engine and airframe overhauls between periods for these fleet
types. Rolls-Royce-powered Boeing 757-200 aircraft, nine of which were delivered
new from the  manufacturer  between late 1995 and late 1999,  are not  presently
generating   any  engine  or  airframe   overhaul   expense  since  the  initial
post-delivery  overhauls for these  aircraft are not yet due under the Company's
maintenance programs.

The cost of engine  overhauls that become worthless due to early engine failures
and which  cannot be  economically  repaired  is  charged  to  depreciation  and
amortization   expense  in  the  period  the  engine  fails.   Depreciation  and
amortization  expense attributable to these write-offs decreased $2.3 million in
1999, as compared to 1998.  When these early engine failures can be economically
repaired, the related repairs are charged to aircraft maintenance, materials and
repairs expense.

As is more fully  explained  in Note 11 to  Consolidated  Financial  Statements,
certain changes in accounting  estimates for depreciation  have been made by the
Company.  Effective July 1, 1998, the Company extended the estimated useful life
of the 13 owned  Lockheed  L-1011  series 50 and series 100 aircraft to a common
retirement  date of December 2004, and also reduced the estimated  salvage value
of the related airframes,  engines and rotables. This change in estimate reduced
depreciation  expense in 1999 by $2.0 million, as compared to 1998. In addition,
effective  January 1, 1999, the Company  extended the estimated  useful lives of
capitalized  Boeing 727-200 airframes,  engines and improvements,  all leasehold
improvements,  and all rotable parts associated with this fleet, and reduced the
associated  estimated salvage values.  The effect of this change in estimate was
to reduce depreciation expense in 1999 by $4.6 million, as compared to 1998.

Depreciation and  amortization  expense per ASM increased 12.3% to 0.64 cents in
1999, as compared to 0.57 cents in 1998.

Handling,  Landing and  Navigation  Fees.  Handling and landing fees include the
costs  incurred by the Company at airports to land and service its  aircraft and
to handle passenger  check-in,  security and baggage where the Company elects to
use  third-party  contract  services  in lieu of its own  employees.  Where  the
Company  uses its own  employees  to  perform  ground  handling  functions,  the
resulting cost appears within salaries,  wages and benefits. Air navigation fees
are incurred when the Company's aircraft fly over certain foreign airspace.

Handling,  landing and  navigation  fees  increased by 19.7% to $89.3 million in
1999, as compared to $74.6 million in 1998. The total number of system-wide  jet
departures  between  1999 and 1998  increased  by 9.4% to  50,207  from  45,881,
resulting in approximately  $6.8 million in volume-related  handling and landing
expense increases between periods. Many of these departures were to destinations
with significantly  higher handling costs and landing fees, and  proportionately
more such departures  were made by wide-body  L-1011 aircraft which incur higher
handling  and  landing  costs  per  departure.  These  price and  departure  mix
variances  resulted in $4.7 million more handling and landing costs in 1999 than
in 1998. The Company incurred approximately $1.1 million in higher deicing costs
in 1999,  as  compared  with 1998,  attributable  to the  impact of more  winter
weather on flight  operations  in 1999 than in 1998.  Additionally,  the Company
recorded  approximately  $1.4 million in higher cargo handling expenses in 1999,
as compared to 1998, due to the  acquisition of T.G. Shown  Associates,  Inc. in
January 1999 (see Note 12 to Consolidated Financial Statements).

The cost per ASM for  handling,  landing  and  navigation  fees  increased  9.3%
to 0.59 cents in 1999,  from 0.54 cents in 1998.

Aircraft  Rentals.  Aircraft  rentals  expense for 1999 increased 10.5% to $58.7
million from $53.1 million in 1998. The Company financed four and refinanced one
additional Boeing 757-200 aircraft in 1999 with operating leases,  including two
aircraft  delivered new from the manufacturer at the end of 1998, and two others
delivered in October and November 1999,  increasing  aircraft rentals expense by
$12.5 million in 1999, as compared to 1998.

The Company also owned nine Boeing  727-200  aircraft  during most of 1999 which
had been financed through operating leases during most of 1998, thereby reducing
aircraft rentals expense by $6.9 million between years.

Aircraft  rentals cost per ASM for 1999 was 0.39 cents, an increase of 2.6% from
0.38 cents per ASM in 1998.

Aircraft  Maintenance,  Materials and Repairs. This expense includes the cost of
expendable  aircraft  spare parts,  repairs to repairable  and rotable  aircraft
components,  contract labor for airframe check and line maintenance  activities,
and other non-capitalized  direct costs related to fleet maintenance,  including
spare engine leases,  parts loan and exchange fees, and related  shipping costs.
Aircraft  maintenance,  materials and repairs  expense  increased  3.5% to $55.6
million in 1999, as compared to $53.7 million in 1998.

The Company expensed a total of 53 maintenance  checks on its fleet during 1999,
as  compared  to 51 in  1998.  The cost of  materials  consumed  and  components
repaired  in  association  with  such  checks  and  other  maintenance  activity
increased by $2.3 million between 1999 and 1998.

The  cost per ASM of aircraft maintenance materials decreased 5.1% to 0.37 cents
in 1999,  as compared to 0.39 cents in 1998.

Crew and Other Employee Travel.  Crew and other employee travel is primarily the
cost of air  transportation,  hotels and per diem  reimbursements to cockpit and
cabin crew members  incurred to position  crews away from their bases to operate
Company  flights  throughout  the  world.  The  cost  of air  transportation  is
generally more  significant for the commercial and  military/government  charter
business units since these flights often operate between cities in which Company
crews are not normally based and may involve extensive international positioning
of crews. Hotel and per diem expenses are incurred for scheduled, commercial and
military/government  charter services,  although higher per diem and hotel rates
generally apply to international assignments.

The cost of crew and other employee  travel  increased 19.5% to $49.7 million in
1999, as compared to $41.6 million in 1998.  During 1999, the Company's  average
full-time-equivalent  cockpit and cabin crew  employment was 9.7% higher than in
1998,  while jet block hours flown  increased by 9.2% between the same  periods.
The  Company  also  experienced  lower  utilization  of crew  members due to the
increase in military business.

The average cost of hotel rooms per  full-time-equivalent  crew member increased
17.6% in 1999, as compared to 1998. Such hotel costs increased  primarily due to
higher room rates paid in 1999.

The cost per ASM for crew and  other  employee  travel  increased  10.0% to 0.33
cents in 1999, from 0.30 cents in 1998.

Ground Package Cost. Ground package cost is incurred by the Company with hotels,
car rental  companies,  cruise lines and similar  vendors who provide ground and
cruise  accommodations to Ambassadair and ATA Vacations  customers as well as to
customers of Travel Charter and Key Tours, which were acquired by the Company in
1999 (see Note 12 to  Consolidated  Financial  Statements).  Ground package cost
increased 151.3% to $49.0 million in 1999, as compared to $19.5 million in 1998.
Approximately  $27.3 million of this increase was attributable to the operations
of Travel  Charter and Key Tours in 1999,  none of which costs were  incurred in
1998.

The cost per ASM of ground packages  increased  135.7% to 0.33 cents in 1999, as
compared to 0.14 cents in 1998.  This increase is a result of the acquisition of
the tour operators, Travel Charter and Key Tours.

Passenger Service.  Passenger service expense includes the onboard costs of meal
and  non-alcoholic  beverage  catering,  the  cost of  alcoholic  beverages  and
in-flight movie headsets sold, and the cost of onboard  entertainment  programs,
together  with certain  costs  incurred for  mishandled  baggage and  passengers
inconvenienced  due to  flight  delays  or  cancellations.  For 1999  and  1998,
catering represented 82.0% and 84.1%,  respectively,  of total passenger service
expense.

The total cost of passenger service increased 15.3% to $39.2 million in 1999, as
compared  to $34.0  million in 1998.  The  Company  experienced  a  decrease  of
approximately  2.7% in the average unit cost of catering each passenger  between
years,  primarily  because in 1999 there were relatively more scheduled  service
passengers  in the  Company's  business  mix, who are provided a less  expensive
catering   product  than  the  Company's   longer-stage-length   commercial  and
military/government     charter     passengers.     This     resulted    in    a
price-and-business-mix reduction of $1.0 million in catering expense in 1999, as
compared to 1998. Total jet passengers boarded, however, increased 14.1% between
years,  resulting  in  approximately  $3.9  million  in  higher-  volume-related
catering expenses between the same sets of comparative periods.

The cost per ASM of passenger  service  increased 8.3% to 0.26 cents in 1999, as
compared to 0.24 cents in 1998.

Commissions. The Company incurs commissions expense in association with the sale
by travel  agents of single seats on scheduled  service and ground  packages for
its tour operator  customers.  In addition,  the Company  incurs  commissions to
secure some commercial and  military/government  charter  business.  Commissions
expense  increased  37.2% to $39.1 million in 1999, as compared to $28.5 million
in 1998.

Approximately  $7.5 million of the increase in  commissions in 1999, as compared
to 1998, was attributable to commissions paid to travel agents by Travel Charter
and Key Tours, which were acquired during the first half of 1999 (see Note 12 to
Consolidated  Financial  Statements).  Such commissions were not included in the
Company's results of operations in 1998.

Scheduled service commissions expense increased by $2.8 million between 1999 and
1998,  due to the  corresponding  increase  in  commissionable  revenues  earned
between  periods.  The Company  experienced  a decrease in fourth  quarter  1999
commission  expenses due to an industry  decrease in travel  agency  commissions
paid from 8.0% to 5.0%.  Commission expense cost per ASM increased 23.8% to 0.26
cents in 1999, as compared to 0.21 cents in 1998.

Other  Selling  Expenses.  Other  selling  expenses are  comprised  primarily of
booking  fees paid to computer  reservation  systems  ("CRS"),  credit card fees
incurred when selling single seats and ground packages to customers using credit
cards for payment, and toll-free telephone service for customers who contact the
Company directly to book reservations. Other selling expenses increased 27.1% to
$28.1 million in 1999, as compared to $22.1 million in 1998.  Scheduled  service
passengers  boarded  increased 19.1% between the same periods.  All such selling
expenses  increased  due to growth in the  scheduled  service and tour  operator
business units between  periods.  Other selling cost per ASM increased  18.8% to
0.19 cents in 1999, as compared to 0.16 cents in 1998.

Advertising.  Advertising  expense  increased  4.5% to $18.6 million in 1999, as
compared  to $17.8  million  in  1998.  The  Company  incurs  advertising  costs
primarily  to  support  single-seat  scheduled  service  sales  and the  sale of
air-and-ground  packages.  Advertising support for these lines of businesses was
increased in 1999,  consistent  with the Company's  overall  strategy to enhance
scheduled  service RASM through increases in load factor and yield. The cost per
ASM of  advertising  decreased  7.7% to 0.12 cents in 1999,  as compared to 0.13
cents in 1998.

Facilities and Other Rentals.  Facilities and other rentals  include the cost of
all ground  facilities  that are leased by the  Company  such as airport  space,
regional  sales offices and general  offices.  The cost of facilities  and other
rentals increased 40.0% to $13.3 million in 1999, as compared to $9.5 million in
1998.  Approximately  $1.7  million of the growth in  facilities  costs  between
periods was attributable to the need to provide  facilities at airport locations
to support new scheduled service  destinations and expanded services at existing
destinations.  Facility  costs also  increased  $0.8  million as a result of the
acquisition of new business (see Note 12 to Consolidated  Financial Statements).
The cost per ASM for facilities and other rentals  increased 28.6% to 0.09 cents
in 1999, as compared to 0.07 cents in 1998.
<PAGE>
Other  Operating  Expenses.  Other operating  expenses  increased 16.1% to $72.2
million in 1999, as compared to $62.2 million in 1998. Other operating  expenses
increased primarily due to the cost of passenger air transportation purchased by
Travel  Charter and Key Tours from air  carriers  other than the Company  during
1999,  none of which was included in the  Company's  1998 results of  operation.
Other  operating  cost per ASM increased 4.4% to 0.47 cents in 1999, as compared
to 0.45 cents in 1998.

Interest  Income  and  Expense.  Interest  expense  in 1999  increased  to $21.0
million,  as compared to $12.8 million in 1998. The increase in interest expense
between periods was primarily due to changes in the Company's  capital structure
resulting from the sale in December 1998 of $125.0  million in principal  amount
of 9.625%  unsecured  senior notes.  In December 1999, the Company  completed an
additional  sale of $75.0 million  principal  amount of 10.5%  unsecured  senior
notes.  Interest  expense of $11.5 million was recorded in 1999 for these notes,
which was not incurred in 1998.

The interest  expense  increase in 1999 was partially offset by $1.7 million due
to more  interest  being  capitalized  primarily on Boeing  757-200 and Lockheed
L-1011-500 fleet  acquisitions,  and $2.3 million due to the repayment of a note
payable secured by a Boeing 757-200 aircraft,  which had been outstanding during
1998.

The Company  invested excess cash balances in short-term  government  securities
and commercial paper and thereby earned $5.4 million in interest income in 1999,
as compared to $4.4 million in 1998.

Other Non-Operating  Income. The Company holds a membership interest in the SITA
Foundation ("SITA"), an organization which provides data communication  services
to the airline  industry.  SITA's  primary asset is its ownership in Equant N.V.
("Equant").  In February and December 1999,  SITA sold a portion of its interest
in Equant in a secondary  public  offering and distributed the pro rata proceeds
to certain of its members (including  Amtran,  Inc.) that elected to participate
in the  offering.  The Company  recorded a gain on the sale of Equant  shares of
$1.7 million in the first  quarter of 1999 and a similar gain of $1.3 million in
the fourth quarter of 1999.

Income Tax Expense.  In 1999 the Company  recorded  $30.5  million in income tax
expense applicable to $77.8 million of pre-tax income for that period,  while in
1998, income tax expense was $27.1 million on pre-tax income of $67.2 million.
The  effective tax rate  applicable  to 1999 was 39.2%,  as compared to 40.4% in
1998.

<PAGE>


Year Ended December 31, 1998, Versus Year Ended December 31, 1997

Consolidated Flight Operating and Financial Data

The following table sets forth, for the periods indicated, certain key operating
and financial data for the consolidated  flight operations of the Company.  Data
shown for "Jet"  operations  include  the  consolidated  operations  of Lockheed
L-1011,  Boeing  727-200 and Boeing  757-200  aircraft  in all of the  Company's
business  units.  Data shown for "J31"  operations  include  the  operations  of
Jetstream  31  propeller  aircraft  operated  by  Chicago  Express  as  the  ATA
Connection.
<TABLE>
<CAPTION>

                                                     Twelve Months Ended December 31,
------------------------------------- ----------------------------------------------------------------
                                                1998            1997        Inc (Dec)     % Inc (Dec)
------------------------------------- --------------- --------------- ---------------- ---------------
<S>                                           <C>             <C>               <C>             <C>
Departures Jet                                45,881          39,517            6,364           16.10
Departures J31(a)                             16,388          10,091            6,297           62.40
------------------------------------- --------------- --------------- --------------- ----------------
 Total Departures (b)                        62,269          49,608           12,661           25.52
------------------------------------- --------------- --------------- ---------------- ---------------

Block Hours Jet                              144,237         129,216           15,021           11.62
Block Hours J31                               16,166          10,210            5,956           58.33
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Block Hours (c)                      160,403         139,426           20,977           15.05
------------------------------------- --------------- --------------- ---------------- ---------------

RPMs Jet (000s)                            9,727,097       8,967,900          759,197            8.47
RPMs J31 (000s)                               30,991          18,055           12,936           71.65
------------------------------------- --------------- --------------- ---------------- ---------------
  Total RPMs (000s) (d)                    9,758,088       8,985,955          772,133            8.59
------------------------------------- --------------- --------------- ---------------- ---------------

ASMs Jet (000s)                           13,799,507      12,615,230        1,184,277            9.39
ASMs J31 (000s)                               52,224          32,453           19,771           60.92
------------------------------------- --------------- --------------- --------------- ----------------
  Total ASMs (000s) (e)                   13,851,731      12,647,683        1,204,048            9.52
------------------------------------- --------------- --------------- ---------------- ---------------

Load Factor Jet                                70.49           71.09           (0.60)          (0.84)
Load Factor J31                                59.34           55.63             3.71            6.67
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Load Factor (f)                        70.45           71.05           (0.60)          (0.84)
------------------------------------- --------------- --------------- ---------------- ---------------

Passengers Enplaned Jet                    5,991,662       5,210,578          781,084           14.99
Passengers Enplaned J31                      176,604          96,812           79,792           82.42
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Passengers Enplaned (g)            6,168,266       5,307,390          860,876           16.22
------------------------------------- --------------- --------------- ---------------- ---------------

Revenue (000s)                              $919,369        $783,193         $136,176           17.39
RASM in cents (h)                               6.64            6.19             0.45            7.27
CASM in cents (i)                               6.09            6.09                -               -
Yield in cents (j)                              9.42            8.72             0.70            8.03
------------------------------------- --------------- --------------- ---------------- ---------------
</TABLE>

  See footnotes (a) through (j) on pages 14 and 15.

Operating Revenues

Total  operating  revenues in 1998 increased 17.4% to $919.4 million from $783.2
million in 1997. This increase was due to a $139.5 million increase in scheduled
service revenues,  a $10.5 million increase in other revenues and a $0.9 million
increase in ground package revenues, partially offset by a $5.5 million decrease
in   commercial   charter   revenues,   and   a   $9.2   million   decrease   in
military/government charter revenues.


<PAGE>


Scheduled  Service  Revenues.  The following  table sets forth,  for the periods
indicated,  certain key operating and financial  data for the scheduled  service
operations of the Company.  Data shown for "Jet" operations include the combined
operations of Lockheed  L-1011,  Boeing 727-200 and Boeing  757-200  aircraft in
scheduled  service.  Data shown for "J31"  operations  include the operations of
Jetstream  31  propeller  aircraft  operated  by  Chicago  Express  as  the  ATA
Connection.
<TABLE>
<CAPTION>

                                                     Twelve Months Ended December 31,
------------------------------------- ----------------------------------------------------------------
                                                1998            1997        Inc (Dec)     % Inc (Dec)
------------------------------------- --------------- --------------- ---------------- ---------------
<S>                                           <C>             <C>               <C>             <C>
Departures Jet                                31,237          23,800            7,437           31.25
Departures J31(a)                             16,388          10,091            6,297           62.40
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Departures (b)                        47,625          33,891           13,734           40.52
------------------------------------- --------------- --------------- ---------------- ---------------

Block Hours Jet                               92,263          72,883           19,380           26.59
Block Hours J31                               16,166          10,210            5,956           58.33
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Block Hours (c)                      108,429          83,093           25,336           30.49
------------------------------------- --------------- --------------- ---------------- ---------------

RPMs Jet (000s)                            5,777,555       4,523,245        1,254,310           27.73
RPMs J31 (000s)                               30,991          18,055           12,936           71.65
------------------------------------- --------------- --------------- ---------------- ---------------
  Total RPMs (000s) (d)                    5,808,546       4,541,300        1,267,246           27.90

------------------------------------- --------------- --------------- ---------------- ---------------
ASMs Jet (000s)                            7,756,330       6,209,825        1,546,505           24.90
ASMs J31 (000s)                               52,224          32,453           19,771           60.92
------------------------------------- --------------- --------------- ---------------- ---------------
  Total ASMs (000s) (e)                    7,808,554       6,242,278        1,566,276           25.09
------------------------------------- --------------- --------------- ---------------- ---------------

Load Factor Jet                                74.49           72.84             1.65            2.27
Load Factor J31                                59.34           55.63             3.71            6.67
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Load Factor (f)                        74.39           72.75             1.64            2.25
------------------------------------- --------------- --------------- ---------------- ---------------

Passengers Enplaned Jet                    4,094,454       3,087,706        1,006,748           32.61
Passengers Enplaned J31                      176,604          96,812           79,792           82.42
------------------------------------- --------------- --------------- ---------------- ---------------
  Total Passengers Enplaned (g)            4,271,058       3,184,518        1,086,540           34.12
------------------------------------- --------------- --------------- ---------------- ---------------

Revenue (000s)                              $511,254        $371,762         $139,492           37.52
RASM in cents (h)                               6.55            5.96             0.59            9.90
Yield in cents (j)                              8.80            8.19             0.61            7.45
Revenue per segment $ (k)                     119.70          116.74             2.96            2.54
------------------------------------- --------------- --------------- ---------------- ---------------
</TABLE>

See footnotes (a) through (j) on pages 14 and 15. See footnote (k) on page 16.

Scheduled service revenues in 1998 increased 37.5% to $511.3 million from $371.8
million in 1997.  Scheduled  service  revenues  comprised  55.6% of consolidated
revenues in 1998, as compared to 47.5% of consolidated revenues in 1997.

Between  April 1997 and April  1999,  the  Company  operated  under a code share
agreement  with  Chicago  Express  under  which  Chicago  Express  flew  19-seat
Jetstream 31 propeller aircraft as the ATA Connection between Chicago-Midway and
the cities of Indianapolis, Milwaukee, Des Moines, Dayton, Grand Rapids, Lansing
and Madison. The period-to-period percentage changes in departures,  block hours
and  passengers  boarded  were  significantly  impacted by the  operation of ATA
Connection Jetstream 31 commuter flights in the twelve months ended December 31,
1998,  which operated only during the nine months ended December 31, 1997.  Such
operations in all periods  generate  comparatively  less impact to ASMs and RPMs
due to the  small  seat  capacity  and  short  stage  length  of ATA  Connection
propeller aircraft as compared to the Company's jet aircraft. In April 1999, the
Company  acquired  all of the issued and  outstanding  stock of Chicago  Express
Airlines,  Inc.,  which  continues to operate  these  services as a wholly owned
subsidiary of the Company.

The  Company's  1998   scheduled   service  at   Chicago-Midway   accounted  for
approximately  53.4% of scheduled  service  ASMs and 73.5% of scheduled  service
departures,  as compared to 42.9% and 63.2%,  respectively,  in 1997.  On May 1,
1998, the Company began three daily nonstop flights to Dallas-Ft.  Worth and two
daily nonstop  flights to Denver,  none of which  services were provided  during
1997. In addition to these new services,  the Company added  frequencies in 1998
to most existing jet markets,  including Ft.  Lauderdale,  Ft. Myers, Las Vegas,
Los  Angeles,  Orlando,  Phoenix,  St.  Petersburg  and  San  Francisco.  Flight
frequencies to Sarasota  declined between periods.  ATA Connection  Jetstream 31
flights  in  1998  and  the  nine  months  ended   December  31,  1997,   served
Chicago-Midway from the cities of Dayton, Des Moines, Grand Rapids, Indianapolis
and Milwaukee.  In addition,  the Company  operated ATA Connection  Jetstream 31
service between  Chicago-Midway and the cities of Lansing and Madison throughout
1998,  while such service was operated  only during the fourth  quarter of 1997.
The  Company   operated  57  peak  daily  jet  and  commuter   departures   from
Chicago-Midway  and served 21  destinations  on a nonstop basis in the summer of
1998, as compared to 15 nonstop destinations served in the summer of 1997.

The Company's Hawaii service  accounted for 21.3% of scheduled  service ASMs and
5.4% of scheduled  service  departures  in 1998,  as compared to 24.6% and 6.8%,
respectively,  in 1997. The Company provided nonstop services in both years from
Los  Angeles,  Phoenix  and  San  Francisco  to both  Honolulu  and  Maui,  with
connecting  service between  Honolulu and Maui. In addition,  in 1998,  seasonal
nonstop service was operated from San Diego to Honolulu,  which was not operated
in 1997.

The Company's Indianapolis service  accounted  for  16.1% of  scheduled  service
ASMs and 12.7% of scheduled service departures in 1998, as compared to 20.5% and
18.1%, respectively, in 1997. In 1998, the Company  operated  nonstop to Cancun,
Ft. Lauderdale, Ft. Myers,  Las Vegas, Los Angeles, Orlando, St. Petersburg, San
Francisco and Sarasota.

Commercial Charter Revenues.  Commercial charter revenues accounted for 24.2% of
consolidated  revenues  in 1998,  as compared  to 29.1% in 1997.  Track  charter
accounted for  approximately  $176.4 million in revenues in 1998, as compared to
$184.3 million in 1997.  Specialty  charter  accounted for  approximately  $35.1
million in revenues in 1998, as compared to $34.6 million in 1997.

The following table sets forth, for the periods indicated, certain key operating
and financial data for the commercial charter operations of the Company.

--------------------------------------------------------------------------------
                           Twelve Months Ended December 31,
---------------------------------------------------------------- ---------------
                                1998         1997      Inc (Dec)     % Inc (Dec)
                                ----         ----      ---------     -----------
Departures (b)                 9,602       10,589          (987)          (9.32)
Block Hours (c)               33,516       36,836        (3,320)          (9.01)
RPMs (000s) (d)            3,009,638    3,373,840      (364,202)         (10.79)
ASMs (000s) (e)            3,882,202    4,169,102      (286,900)          (6.88)
Passengers Enplaned (g)    1,617,901    1,840,056      (222,155)         (12.07)
Revenue (000s)              $222,571     $228,062       $(5,491)          (2.41)
RASM in cents (h)               5.73         5.47           0.26            4.75
--------------------------------------------------------------------------------

See footnotes (b) through (h) on pages 14 and 15.

Military/Government  Charter  Revenues.  The following table sets forth, for the
periods   indicated,   certain  key  operating   and  financial   data  for  the
military/government flight operations of the Company.

--------------------------------------------------------------------------------
                        Twelve Months Ended December 31,
--------------------------------------------------------------------------------
                               1998          1997      Inc (Dec)     % Inc (Dec)
                               ----          ----      ---------     -----------
Departures (b)                 4,447        4,860          (413)          (8.50)
Block Hours (c)               16,389       18,704        (2,315)         (12.38)
RPMs (000s) (d)              821,813    1,044,317      (222,504)         (21.31)
ASMs (000s) (e)            1,963,069    2,165,169      (202,100)          (9.33)
Passengers Enplaned (g)      205,641      265,862       (60,221)         (22.65)
Revenue (000s)              $121,911     $131,115       $(9,204)          (7.02)
RASM in cents (h)               6.21         6.06           0.15            2.48
--------------------------------------------------------------------------------

See footnotes (b) through (h) on pages 14 and 15.

Ground  Package  Revenues.  In 1998, ground  package  revenues increased 4.0% to
$23.2 million,  as compared to $22.3 million in 1997.

The Company's Ambassadair Travel Club offers hundreds of  tour-guide-accompanied
vacation  packages to its  approximately  38,000  individual  and family members
annually.  In 1998,  total packages sold decreased 5.0% as compared to 1997, but
the average  revenue earned for each ground package sold increased 20.4% between
periods.

Other  Revenues.  Other revenues are comprised of the  consolidated  revenues of
affiliated  companies,   together  with  miscellaneous   categories  of  revenue
associated  with the  scheduled  and charter  operations  of the Company.  Other
revenues  increased 35.1% to $40.4 million in 1998, as compared to $29.9 million
in 1997.

In 1998, as compared to 1997, the Company earned $4.3 million more in substitute
service revenues, $3.2 million more in cancellation and administrative fees, and
$2.4  million  more in cargo and other  affiliate  company  revenues,  partially
offset by $0.6 million less revenue earned from the sale of surplus and obsolete
aircraft parts.

A substitute  service  agreement  typically  provides for the Company to operate
aircraft with its crews on routes  designated  by the customer  airline to carry
the  passengers  of that  airline  for a  limited  period of time.  The  Company
experienced  increased  demand for this type of service in 1998 due to delays in
new aircraft deliveries being encountered by various airlines.  The Company also
increased its  administrative  fee for  change-of-reservation  on non-refundable
scheduled  service tickets from $50 to $60 per change effective August 1998, and
the volume of such fees earned also increased between years in proportion to the
increase in scheduled service passengers boarded.

Operating Expenses

Salaries, Wages and Benefits.  Salaries,  wages and benefits expense in 1998 in-
creased 22.5% to $211.3 million from $172.5 million in 1997.

The Company increased its average equivalent employees by 18.4% between 1998 and
1997 in order to  appropriately  staff the  growth in  available  seats  offered
between periods.  Categories of employees where this growth was most significant
included cockpit and cabin crews,  reservations  agents,  airport  passenger and
ramp  service  agents,  and  aircraft  maintenance  personnel,  all of which are
influenced directly by flight activity.  Some employment growth in 1998 was also
needed to correct for certain  employee  shortages in 1997,  particularly in the
areas of cockpit  crews,  reservations  agents,  and  airframe  and power  plant
mechanics.

The  average  rate of pay  earned  by the  Company's  employees  (including  all
categories of salaries,  wages and benefits,  except for variable  compensation)
was unchanged  between 1998 and 1997.  While most  employees  received wage rate
increases  between  years,  new employees  are generally  hired at lower average
starting rates of pay than those rates in effect for more senior employees.  The
wage-rate  reductions  attributable  to new  employees  between  1998  and  1997
approximately offset the wage rate increases paid to more senior employees.

In 1998, the Company recorded $8.9 million in variable  compensation and related
payroll taxes as a result of the significant improvement in earnings as compared
to 1997, when no such compensation was incurred.  In the second quarter of 1997,
a one-time charge of $2.0 million was recorded for variable compensation expense
associated  with the  resignation  of the Company's  former  President and Chief
Executive Officer.

Salaries, wages and benefits cost per ASM increased 11.8% in 1998 to 1.52 cents,
as compared to 1.36 cents in 1997. This unit-cost  increase was  attributable to
the faster rate of growth in average  equivalent  employees  between  years than
seat capacity,  and to the variable  compensation  earned in 1998, which was not
earned in 1997.

Fuel and Oil. Fuel and oil expense decreased 10.6% to $137.4 million in 1998, as
compared to $153.7 million in 1997. This decrease  occurred  despite the Company
consuming  9.8% more gallons of jet fuel for flying  operations  between  years,
which  resulted in an increase in fuel expense of  approximately  $15.0 million.
Jet fuel  consumption  increased  primarily due to the increased number of block
hours of jet flying  operations  between  periods.  The Company flew 144,237 jet
block hours in 1998, as compared to 129,216 jet block hours in 1997, an increase
of 11.6% between years.

Fuel  consumption  growth  between  1998 and 1997 was less than total block hour
growth,  however,  since  most of the  block  hour  growth  in  1998  was in the
narrow-body   Boeing   727-200  and  Boeing   757-200   fleets,   which  consume
approximately  50% of the gallons per block hour consumed by the Lockheed L-1011
fleet.

During  1998,  the  Company's  average  cost per  gallon  of jet  fuel  consumed
decreased by 20.0% as compared to 1997,  resulting in a decrease in fuel and oil
expense of  approximately  $34.4 million  between years.  This reduction in fuel
price was  experienced  generally in the airline  industry  throughout 1998 as a
result of  significant  reductions  in average crude oil and  distillate  market
prices as compared to 1997.

During the first,  second and fourth  quarters of 1998, the Company entered into
several fuel price hedge  contracts under which the Company sought to reduce the
risk of fuel price increases  during the year. The Company hedged some 1998 fuel
consumption  under swap agreements  which  established  specific swap prices for
designated  periods  and  hedged  other  1998 fuel  consumption  under  fuel cap
agreements which  guaranteed a maximum price per gallon for designated  periods.
Since the price of fuel  declined  during  most of 1998,  the  Company  recorded
approximately  $2.5 million in  additional  fuel and oil expense under its hedge
contracts,  which added approximately one cent to its average cost per gallon in
1998.

Fuel and oil expense  decreased 18.9% to 0.99 cents per ASM in 1998, as compared
to 1.22 cents per ASM in 1997, primarily due to the period-to-period decrease in
the average price of fuel consumed.

Depreciation  and  Amortization.   Depreciation  and  amortization  expense  in-
creased  25.9% to $78.7  million in 1998,  as compared to $62.5 million in 1997.

Depreciation expense attributable to owned airframes and leasehold  improvements
increased $3.0 million in 1998, as compared to 1997.  The Company  purchased one
Boeing  757-200  and one  Boeing  727-200  aircraft  in late 1997 which had been
previously  financed through operating leases,  thereby increasing  depreciation
expense on  airframes  between  years.  (The  Company  recorded a  reduction  in
aircraft rental expense between periods for the termination of operating  leases
for these  aircraft.  See  "Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations--Operating Expenses--Aircraft Rentals.")
<PAGE>

The Company also recorded additional inventory  obsolescence expense for certain
aircraft  parts held for sale which were sold during the first  quarter of 1998,
and  increased  its  investment  in  rotable  parts and  computer  hardware  and
software, among other items of property and equipment. These changes resulted in
an  increase in  depreciation  expense of $2.4  million in 1998,  as compared to
1997.

Amortization  of  capitalized  engine and  airframe  overhauls  increased  $11.1
million  in  1998,  as  compared  to  1997,   after   including  the  offsetting
amortization  associated  with  manufacturers'  credits.  Changes to the cost of
overhaul  amortization  were partly due to the increase in total block hours and
cycles  flown  between  comparable  periods for the Boeing  727-200 and Lockheed
L-1011 fleets,  since such expense varies with that activity,  and partly due to
the completion of more engine and airframe  overhauls  between periods for these
fleet types.  Rolls-Royce-powered  Boeing 757-200 aircraft,  seven of which were
delivered  new from the  manufacturer  between late 1995 and late 1998,  are not
presently  generating any engine or airframe  overhaul expense since the initial
post-delivery  overhauls for these  aircraft are not yet due under the Company's
maintenance programs.

The cost of engine  overhauls that become worthless due to early engine failures
and which  cannot be  economically  repaired  is  charged  to  depreciation  and
amortization   expense  in  the  period  the  engine  fails.   Depreciation  and
amortization  expense attributable to these write-offs increased $1.3 million in
1998 as compared to 1997.  When these early engine  failures can be economically
repaired, the related repairs are charged to aircraft maintenance, materials and
repairs expense.

Effective July 1, 1998, the Company extended the estimated useful life of the 13
owned Lockheed  L-1011 series 50 and series 100 aircraft to a common  retirement
date of December  2004,  and also  reduced the  estimated  salvage  value of the
related airframes,  engines and rotables.  The effect of this change in estimate
was to reduce depreciation expense in 1998 by $2.1 million, as compared to 1997.

Depreciation and  amortization  expense per ASM increased 16.3% to 0.57 cents in
1998, as compared to 0.49 cents in 1997.

Handling,  Landing and Navigation  Fees.  Handling,  landing and navigation fees
increased  by 7.5% to $74.6  million in 1998,  as compared  to $69.4  million in
1997.  The total  number of  system-wide  jet  departures  between 1998 and 1997
increased  by 16.1% to 45,881  from  39,517,  resulting  in  approximately  $8.8
million  in  volume-related  handling  and  landing  expense  increases  between
periods.

This  volume-related  increase was partially offset,  however,  by a decrease of
approximately  $3.3  million  in  price-and-mix-related   handling  and  landing
expenses for 1998,  as compared to 1997,  attributable  primarily to a change in
jet departure mix.

The cost per ASM for handling,  landing and  navigation  fees  decreased 1.8% to
0.54 cents in 1998, from 0.55 cents in 1997.

Aircraft  Rentals.  Aircraft  rentals  expense for 1998  decreased 2.4% to $53.1
million from $54.4  million in 1997.  The Company  purchased  one leased  Boeing
757-200 in September  1997;  returned one leased Boeing 757-200 to the lessor in
November of 1997;  and added one new leased Boeing 757-200 each in December 1997
and August 1998.  These fleet changes  resulted in a reduction in Boeing 757-200
rentals expense of $0.9 million in 1998, as compared to 1997.  Aircraft  rentals
expense  for the  Boeing  727-200  and  Lockheed  L-1011  fleets  did not change
significantly between years.

Aircraft  rentals cost per ASM for 1998 was 0.38 cents, a decrease of 11.6% from
0.43 cents per ASM in 1997.

Aircraft Maintenance, Materials and Repairs. Aircraft maintenance, materials and
repairs  expense  increased  4.3% to $53.7 million in 1998, as compared to $51.5
million in 1997. The Company  performed a total of 51 light  airframe  checks on
its fleet  during  1998,  as compared to 44 such checks  performed  in 1997,  an
increase of 15.9% between years.  The cost of materials  consumed and components
repaired in association  with such light checks and other  maintenance  activity
increased by $1.6 million between 1998 and 1997.

The cost per ASM of aircraft  maintenance,  materials and repairs decreased 4.9%
to 0.39 cents in 1998, as compared to 0.41 cents in 1997.

Crew and  Other  Employee  Travel.  The cost of crew and other  employee  travel
increased  13.7% to $41.6 million in 1998, as compared to $36.6 million in 1997.
During 1998, the Company's average  full-time-equivalent  cockpit and cabin crew
employment was 13.5% higher than in 1997,  while jet block hours flown increased
by 11.6% between the same periods.

The average cost of hotel rooms per  full-time-equivalent  crew member increased
4.4% in 1998, as compared to 1997. Such hotel costs increased due to both higher
room rates paid in 1998,  and due to aircraft flow changes  associated  with the
Company's 1998 summer  schedule which resulted in more crews  terminating  their
daily flying away from their home bases than in the prior year.

The  average  cost of crew  positioning  per  full-time-equivalent  crew  member
decreased  5.4% in 1998, as compared to 1997.  Crew  positioning  costs declined
primarily due to the shift of revenue  production  from  commercial  charter and
military/government  charter to scheduled service. Crews positioning out of base
for scheduled service can often position at no cost on Company flights,  whereas
positioning  to remote  international  locations for charter  service is usually
done on other carriers at an incremental cost.

The cost per ASM for crew and other employee travel increased 3.4% to 0.30 cents
in 1998,  as compared to 0.29 cents in 1997.

Ground  Package Cost.  Ground  package cost  increased  1.0% to $19.4 million in
1998, as compared to $19.2  million in 1997.  The number of  Ambassadair  ground
packages sold in 1998  decreased  5.0%,  as compared to 1997,  while the average
cost of Ambassadair  ground packages sold increased by 29.8% between years.  The
number of ATA Vacations ground packages sold in 1998 decreased 10.2% as compared
to 1997,  while the average cost of ATA Vacations ground packages sold decreased
by 7.6% between the same periods.  The cost per ASM of ground packages decreased
6.7% to 0.14 cents in 1998, as compared to 0.15 cents in 1997.

Passenger  Service.  For 1998 and 1997,  catering  represented  84.1% and 83.0%,
respectively,  of total passenger service expense.

The total cost of passenger  service increased 3.7% to $34.0 million in 1998, as
compared  to $32.8  million in 1997.  The  Company  experienced  a  decrease  of
approximately  10.2% in the average unit cost of catering each passenger between
years,  primarily  because in 1998 there were relatively more scheduled  service
passengers  in the  Company's  business  mix who are  provided a  less-expensive
catering   product  than  the  Company's   longer-stage-length   commercial  and
military/government     charter     passengers.     This     resulted    in    a
price-and-business-mix reduction of $3.3 million in catering expense in 1998, as
compared to 1997. Total jet passengers boarded, however, increased 15.0% between
years, resulting in approximately $4.0 million in higher volume-related catering
expenses between the same sets of comparative periods.

The cost per ASM of passenger  service  declined 7.7% to 0.24 cents in 1998 from
0.26 cents in 1997.

Commissions.  Commissions  expense  increased  9.2% to $28.5 million in 1998, as
compared to $26.1 million in 1997.

Scheduled service commissions expense increased by $2.3 million between 1998 and
1997.  This  increase was lower than the related  increase of 37.5% in scheduled
service revenues between the same periods, partially because of an industry-wide
reduction in the standard  travel  agency  commission  rate from 10% to 8% which
became  effective  in  October  1997,  and  partially  due  to  relatively  more
non-commissionable  bulk seat  scheduled  service  sales being made in 1998,  as
compared to 1997.  Neither commercial  charter nor  military/government  charter
commissions expense changed significantly between 1998 and 1997.

The cost per ASM of  commissions  expense was  unchanged  at 0.21 cents for both
1998 and 1997.

Other Selling Expenses.  Other selling expenses increased 42.6% to $22.1 million
in 1998,  as compared to $15.5  million in 1997.  Scheduled  service  passengers
boarded increased 34.1% between the same periods.

CRS fees  increased  $3.1 million in 1998,  as compared to 1997,  due to a 40.2%
increase in total CRS bookings made for the expanded  scheduled service business
unit between  periods and due to a 7.5% increase in the average cost of each CRS
booking. Toll-free telephone costs increased $0.5 million between 1998 and 1997,
primarily  due to higher  toll-free  usage related to higher  scheduled  service
reservations  activity.  Credit card fees  increased  $3.0  million in 1998,  as
compared to 1997, due to higher 1998 earned revenues in scheduled  service which
were sold using credit cards as payment.  Other  selling cost per ASM  increased
33.3% to 0.16 cents in 1998, as compared to 0.12 cents in 1997.

 Advertising.  Advertising  expense increased 40.2% to $17.8 million in 1998, as
compared  to $12.7  million in 1997.  The 40.2%  increase  in total  advertising
expense between years was slightly  greater than the 37.5% increase in scheduled
service revenues between the same periods.  The majority of the Company's growth
in 1998 was from  increased  frequencies  at  existing  gateway  cities  such as
Chicago-Midway, which provided some advertising efficiencies in 1998 as compared
to the prior year. Such market-related efficiency was partially offset, however,
due to temporarily higher  advertising  support required in the second and third
quarters  of  1998  for  the  introduction  of the  Company's  new  services  to
Dallas-Ft.  Worth, Denver, San Juan and New York's LaGuardia Airport, as well as
to launch the  Company's  fall  promotions  in the third and fourth  quarters of
1998. The cost per ASM of advertising  increased 30.0% to 0.13 cents in 1998, as
compared to 0.10 cents in 1997.

Facilities and Other Rentals.  Facilities and other rentals  include the cost of
all ground  facilities  that are leased by the  Company  such as airport  space,
regional  sales offices and general  offices.  The cost of facilities  and other
rentals  increased 10.5% to $9.5 million in 1998, as compared to $8.6 million in
1997. The rate of growth in facilities  costs between  periods was comparable to
the 9.5% rate of ASM growth  between  1998 and 1997 due to the  addition  of new
facilities  for services to Denver,  Dallas-Ft.  Worth and New York's  LaGuardia
Airport  between  periods.  The cost per ASM for facility and other  rentals was
unchanged at 0.07 cents in both 1998 and 1997.

Other  Operating  Expenses.  Other operating  expenses  increased 14.5% to $62.2
million in 1998, as compared to $54.3 million in 1997. Other operating  expenses
which experienced significant changes between periods included: (i) $3.1 million
of additional  costs for the Chicago Express  Jetstream 31 code share agreement,
which  agreement was not in effect in the 1997 first  quarter,  and because such
code share was  expanded  to include  Lansing  and  Madison in 1998,  which were
served in only the fourth quarter of 1997;  (ii) $2.3 million in higher expenses
associated with the operation of the Company's affiliate  businesses;  and (iii)
$1.7  million  in  higher  costs  associated  with  the  short-term  leasing  of
substitute aircraft and the reprotection of some of the Company's  passengers on
other  airlines  due  to   higher-than-normal   delayed  and  irregular   flight
operations,  primarily in the second quarter of 1998.  Other  operating cost per
ASM increased 4.7% to 0.45 cents in 1998, as compared to 0.43 cents in 1997.

Interest Income and Expense. Interest expense in 1998 increased to $12.8 million
as compared to $9.5 million in 1997.  The increase in interest  expense  between
periods  was  primarily  due to  changes  in  the  Company's  capital  structure
resulting from the two financings  completed on July 24, 1997, at which time the
Company (i) sold $100.0 million  principal amount of 10.5% unsecured  seven-year
notes,  and (ii)  entered  into a new $50.0  million  secured  revolving  credit
facility,  thereby  replacing the former secured  revolving  credit  facility of
$122.0 million as of June 30, 1997. Additionally,  in December 1998, the Company
sold $125.0 million principal amount of 9.625% unsecured senior notes.

Prior to completing  these new  financings,  the Company  utilized  secured bank
credit  facilities  to finance  cash flow  requirements  of the  Company as they
arose,  thereby  minimizing  the level of borrowings on which  interest would be
paid.  During  1998,  the  Company's   weighted  average  debt  outstanding  was
approximately $159.1 million, as compared to $117.2 million in 1997.

The  weighted  average  effective  interest  rate  applicable  to the  Company's
outstanding  debt in 1998 was 8.56%,  as compared to 8.06% in 1997. The increase
in the weighted average effective interest rates between years was primarily due
to the 10.5% interest rate  applicable to the $100.0 million in unsecured  notes
issued on July 24, 1997,  which was higher than the average  interest rate which
was applicable to borrowings under the former credit facility.

The Company  invested excess cash balances in short-term  government  securities
and commercial paper and thereby earned $4.4 million in interest income in 1998,
as compared to $1.6 million in 1997.

Income Tax Expense.  In 1998 the Company  recorded  $27.1  million in income tax
expense  applicable to  $67.2 million  of pre-tax income for that period,  while
in 1997, income tax expense  was $4.5 million on pre-tax income of $6.0 million.
The  effective tax  rate applicable to 1998 was 40.4%, as  compared to  73.9% in
1997.

Income tax  expense in both sets of  comparative  periods  was  affected  by the
permanent  non-deductibility  for federal income tax purposes of a percentage of
amounts paid for crew per diem (45% in 1998 and 50% in 1997). The effect of this
and other permanent  differences on the effective  income tax rate for financial
accounting  purposes  becomes more pronounced in cases where  before-tax  income
approaches  zero,  which was a significant  reason for the higher  effective tax
rate in 1997.

Income tax expense for 1997 was also significantly affected by the one-time $2.0
million  charge to salaries,  wages and benefits for the executive  compensation
package provided to the Company's former President and Chief Executive  Officer.
Of the total  compensation paid to this former executive of the Company in 1997,
approximately  $1.7 million was  non-deductible  against the  Company's  federal
taxable income.

Liquidity and Capital Resources

Cash Flows.  In 1999,  1998 and 1997, net cash provided by operating  activities
was $159.6 million, $151.8 million and $99.9 million, respectively. The increase
in cash provided by operating  activities  between  periods was  attributable to
such factors as increased earnings, higher depreciation and amortization, higher
accrued  expenses  and other  factors.  These  increases  were  offset by higher
investments in  inventories  and  receivables,  and a lower amount of income tax
deferred in 1999,  as the Company  utilized all  remaining  net  operating  loss
carryforwards from earlier tax years.

Net cash used in investing  activities  was $305.7  million,  $142.4 million and
$76.1  million,  respectively,  in the years ended  December 31, 1999,  1998 and
1997.  Such amounts  primarily  included  capital  expenditures  totaling $274.3
million, $175.4 million and $84.2 million, respectively, for engine and airframe
overhauls, airframe improvements, hushkit installations, the purchase of rotable
parts, and for purchase deposits made on Boeing 757-200 and Lockheed  L-1011-500
aircraft  scheduled for future  delivery.  Included in capital  expenditures for
1999 were  approximately  $41.5 million for the purchase of nine Boeing  727-200
aircraft that were  previously  leased and  approximately  $74.2 million for the
purchase and modification of five Lockheed L-1011-500 aircraft.

Net cash provided by financing  activities for the year ended December 31, 1999,
1998 and 1997 was $93.4 million,  $59.3 million and $6.9 million,  respectively.
This cash  provided  by  financing  activities  was  primarily  attributable  to
proceeds  from  long-term  debt of $99.9  million in 1999  consisting of a $75.0
million  principal  amount of unsecured  senior notes,  a $17.0 million  special
facility  revenue bond and a $7.9 million  note  payable,  as compared to $131.0
million for 1998  consisting of a $125.0 million  principal  amount of unsecured
senior notes and a $6.0 million  special  facility  revenue bond. (See Note 4 to
Consolidated  Financial  Statements.)  These proceeds were offset by payments on
long-term debt of $1.6 million in 1999 for certain monthly installment payments,
as compared to $71.5 million in 1998, for items such as $34.0 million  repayment
on the revolving bank credit facility, $30.0 million repayment of a note payable
and $7.5  million for other  repayments.  These cash inflows were also offset by
cash  outflows  for the  purchase  of  treasury  stock of $8.6  million and $0.1
million,  respectively,  in 1999 and 1998. Cash provided by financing activities
in 1997 of $134.0  million  were  primarily  from the $100.0  million  principal
amount of unsecured notes, which were offset by the full repayment of the former
credit facility.

Aircraft and Fleet Transactions. In November 1994, the Company signed a purchase
agreement  for six new Boeing  757-200s  which,  as  subsequently  amended,  now
provides  for 13 total  aircraft  to be  delivered  between  1995 and  2000.  In
conjunction  with the Boeing  purchase  agreement,  the Company  entered  into a
separate  agreement with Rolls-Royce  Commercial Aero Engines Limited to provide
RB211-535E4  engines  to  power  the  new  Boeing  757-200  aircraft.  With  the
thirteenth  delivery,  the Company will have purchased 26 installed  engines and
four spare engines to support this fleet. The Company  accepted  delivery of the
first nine aircraft under these agreements  between  September 1995 and December
1999, all of which were financed under leases accounted for as operating leases.
The aggregate  purchase  price under these  agreements  for the  remaining  four
aircraft is approximately $50.0 million per aircraft, subject to escalation. Two
deliveries under this agreement are scheduled for June 2000, while the remaining
two aircraft  deliveries are scheduled for the fourth quarter of 2000.  Advanced
payments totaling  approximately  $27.2 million  (approximately $6.8 million per
aircraft)  are required  prior to delivery of the remaining  aircraft,  with the
remaining  purchase price payable at delivery.  As of December 1999, the Company
had  recorded  fixed  asset  additions  of $20.4  million in  advanced  payments
applicable to aircraft  scheduled for future  delivery.  The Company  intends to
finance the remaining  deliveries  under this agreement  through  sale/leaseback
transactions accounted for as operating leases.

In July 1998,  the Company  committed  to the purchase of five  Lockheed  L-1011
series 500  aircraft,  three spare engines and certain  associated  spare parts.
These  aircraft  are powered by  Rolls-Royce  RB211-524B4  engines.  The Company
accepted delivery of these aircraft under this purchase agreement between August
1998 and November 1999. Subsequent to delivery of each aircraft, the Company has
completed certain  modifications and improvements to the airframes and interiors
in order to  qualify  them to operate in a coach  seating  configuration  of 307
seats.  Four  aircraft  were  placed  into  revenue  service in 1999,  operating
primarily in the  commercial and  military/government  charter  businesses.  The
fifth  aircraft  is expected to enter  revenue  service in the first  quarter of
2000.  The Company  used the proceeds  from the  issuance of unsecured  notes in
December 1998 to acquire and modify these aircraft.

The Company purchased an additional  Rolls-Royce-powered Boeing 757-200 aircraft
from an aircraft  lessor in September  1997,  financing this purchase  through a
payment of cash and the  issuance of a $30.7  million  note.  The note  required
monthly  payments of $400,000 in principal  and interest  from October 15, 1997,
through  September  1999,  with  the  balance  due  at  maturity.   The  Company
re-financed this aircraft through a sale/leaseback transaction in December 1998,
at which time the note was repaid in full.  The new lease  initially  expired in
December 1999, but was amended and extended for an additional two-year term. The
lessor may also cancel the lease with six months notice to the Company.

In the second  quarter of 1999,  the Company  completed  the  construction  of a
120,000 square foot Maintenance and Operations  Center  immediately  adjacent to
the Company's maintenance hangar at Indianapolis  International Airport. In June
1999,  the  Company  completed  an $8.0  million  15-year  mortgage  loan on the
Maintenance and Operations  Center. The mortgage loan requires monthly principal
and interest payments.  During the fourth quarter of 1999, the Company completed
a  sale/leaseback  transaction for all furniture and fixtures in the Maintenance
and Operations  Center.  This lease qualifies as a capital lease, with principal
and interest payments to be recognized over a seven year term.

Financings in 1997. On July 24, 1997, the Company sold $100.0 million  principal
amount of 10.5%  unsecured  senior notes in a private  offering under Rule 144A.
The Company subsequently completed an exchange offer to holders of the unsecured
notes in January  1998,  under which offer  those notes  issued in the  original
private offering could be tendered in exchange for fully registered notes having
the same terms. (See Note 4 to Consolidated Financial Statements.)

Financings in 1998. In December 1998, the Company sold $125.0 million  principal
amount of 9.625%  unsecured  senior notes in a public  offering.  (See Note 4 to
Consolidated Financial Statements.)

Financings  in 1999.  On December 9, 1999,  ATA issued $17.0  million  principal
amount of special  facility revenue bonds to finance the construction of certain
facilities at Chicago-Midway  Airport. The bonds are payable from and secured by
a pledge and assignment of special facility  revenues,  including certain of the
City of Chicago's rights under a special facility  financing  agreement  between
the City of Chicago and the Company.  Payment of the bonds is  guaranteed by the
Company. (See Note 4 to Consolidated Financial Statements.)

On December 21, 1999, the Company  completed a private placement under Rule 144A
of $75.0 million  principal amount of 10.5% unsecured senior notes.  These notes
were issued as additional securities covered under the indenture with respect to
the 10.5%  unsecured  senior notes  issued in 1997.  The Company is obligated to
complete  an  exchange  offer in  which  the new  notes  will be  exchanged  for
registered notes having the same terms. On January 25, 2000, the Company filed a
registration statement with the Securities and Exchange Commission in connection
with  this  pending  exchange  offer.  (See  Note  4 to  Consolidated  Financial
Statements.)

In December 1999, the Company revised its revolving credit facility to provide a
maximum of $100.0 million, including up to $50.0 million for stand-by letters of
credit.  The facility matures January 2, 2003, and borrowings under the facility
bear interest,  at the option of ATA, at either LIBOR plus 1.25% to 2.50% or the
agent bank's  prime rate.  The 1999  facility is subject to certain  restrictive
covenants and is  collateralized  by certain  Lockheed L-1011 and Boeing 727-200
ADV aircraft.  As of December 31, 1999,  the Company had no  borrowings  against
this credit facility but did have outstanding  letters of credit secured by this
facility  aggregating  $33.0  million.  No amounts  had been drawn  against  any
letters of credit as of December 31, 1999. (See Note 4 to Consolidated Financial
Statements.)

Aircraft Purchase  Commitments.  The Company has signed a purchase  agreement to
acquire six of the Boeing 727-200 ADV aircraft that are currently leased.  These
aircraft are expected to be purchased in the fourth quarter of 2000.

In January 2000,  Chicago Express  Airlines,  Inc., a wholly owned subsidiary of
Amtran, entered into an agreement to purchase nine SAAB 340B aircraft, including
spare engines, spare parts and crew training, for an aggregate purchase price of
approximately  $30.0  million.  These  aircraft  will  be  placed  into  service
throughout  2000 in  conjunction  with the  retirement  of the current  fleet of
Jetstream J31s, all of which are currently leased.


Future Accounting Changes

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments  and  Hedging  Activities."  This  accounting  standard,   which  is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000,
requires that all  derivatives  be recognized as either assets or liabilities at
fair  value.  The  Company is  evaluating  the new  statement's  provisions  and
currently  expects to adopt SFAS No. 133 in the first quarter of 2001.  Although
the Company currently does not have any significant  derivatives  subject to the
accounting  provisions  of SFAS No. 133, the Company has engaged in certain fuel
price  hedging  contracts  in recent  years to which  accounting  or  disclosure
provisions of this statement might have applied. The Company cannot predict what
impact, if any, adoption of the statement will have.

Year 2000

The  Company   completed  all  year  2000  readiness  work  and  experienced  no
significant problems.

Forward-Looking Information

Information  contained  within  "Business"  and  "Management's   Discussion  and
Analysis  of   Financial   Condition   and  Results  of   Operations"   includes
forward-looking   information   which  can  be  identified  by   forward-looking
terminology   such  as   "believes,"   "expects,"   "may,"   "will,"   "should,"
"anticipates,"  or the  negative  thereof,  or other  variations  in  comparable
terminology. Such forward-looking information is based upon management's current
knowledge of factors affecting the Company's  business.  The differences between
expected  outcomes  and  actual  results  can be  material,  depending  upon the
circumstances. Where the Company expresses an expectation or belief as to future
results  in any  forward-looking  information,  such  expectation  or  belief is
expressed in good faith and is believed to have a reasonable  basis. The Company
can provide no assurance that the statement of expectation or belief will result
or will be achieved or accomplished.

Such forward-looking  statements involve known and unknown risks,  uncertainties
and other factors that may cause actual results to be materially different. Such
factors include, but are not limited to, the following:

o     economic conditions;
o     labor costs;
o     aviation fuel costs;
o     competitive pressures on pricing;
o     weather conditions;
o     governmental legislation;
o     consumer perceptions of our products;
o     demand for air transportation in markets in which we operate; and
o     other  risks  and  uncertainties  listed  from  time to  time  in  reports
      we periodically file with the SEC.

The Company  does  not  undertake to update our  forward-looking  statements  to
reflect future events or circumstances.


Item 7a.  Quantitative and Qualitative Disclosures About Market Risk

The Company is subject to certain market risks,  including  commodity price risk
resulting  from aircraft  fuel price  fluctuations  and interest rate risk.  The
adverse effects of potential  changes in these market risks are discussed below.
The sensitivity analyses presented do not consider the effects that such adverse
changes may have on overall economic activity,  nor do they consider  additional
actions  management may take to mitigate the Company's exposure to such changes.
See the notes to  consolidated  financial  statements  for a description  of the
Company's  accounting  policies and other information related to these financial
instruments.

Aircraft Fuel. The Company's results of operations are significantly impacted by
changes in the price of aircraft fuel. During 1999,  aircraft fuel accounted for
approximately 16.6% of the Company's operating expenses.  Based on the Company's
2000 projected fuel  consumption,  a one cent change in the average annual price
per gallon of aircraft  fuel would impact the  Company's  annual  aircraft  fuel
expense by approximately $2.8 million.

The Company's  short-term risk is mitigated by contractual fuel price escalators
contained in military charter and commercial charter contracts, which enable the
Company to pass through some  increases in fuel cost. The Company has previously
entered  into  certain  fuel swap  contracts  and fuel cap  agreements.  No such
agreements are in place as of December 31, 1999.

Interest Rates. The Company's results of operations are affected by fluctuations
in market interest rates. As of December 31, 1999, the Company has approximately
$100.0  million of  variable-rate  debt  available  through a  revolving  credit
facility. In 2000, the Company does not project to incur significant  borrowings
under the facility, so the risk of exposure to market interest rate fluctuations
is not significant.

As of December 31, 1999, the Company had  fixed-rate  debt with a carrying value
of $300.0  million.  Based  upon  discounted  future  cash flows  using  current
incremental borrowing rates for similar types of instruments,  the fair value of
the fixed-rate debt is estimated at approximately  $295.2 million.  Market risk,
estimated as the potential  increase in fair value resulting from a hypothetical
1.0% decrease in interest rates, was  approximately  $7.5 million as of December
31, 1999.

If 2000 average  short-term  interest rates  decreased by 1.0% over 1999 average
rates, the Company's projected interest income from short-term investments would
decrease by approximately $1.5 million during 2000.


<PAGE>


PART II - Continued


Item 8.        Financial Statements and Supplementary Data


               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS





Board of Directors
Amtran, Inc.



We have audited the accompanying consolidated balance sheets of Amtran, Inc. and
subsidiaries  as of  December  31, 1999 and 1998,  and the related  consolidated
statements of  operations,  changes in  shareholders'  equity and cash flows for
each of the three years in the period ended  December 31, 1999.  Our audits also
included the  financial  statement  schedule  listed in the index at Item 14(a).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 consolidated  financial position of Amtran, Inc. and
subsidiaries  at December  31, 1999 and 1998,  and the  consolidated  results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 1999, in conformity  with  accounting  principles  generally
accepted in the United  States.  Also,  in our  opinion,  the related  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 herein.





/S/ERNST & YOUNG LLP
Indianapolis, Indiana
January 27, 2000


<PAGE>

<TABLE>
<CAPTION>

                                      AMTRAN, INC. AND SUBSIDIARIES
                                       CONSOLIDATED BALANCE SHEETS
                                         (Dollars in thousands)

                                                                           December 31,       December 31,
                                                                               1999             1998
                                                                           ---------------  --------------
                               ASSETS
Current assets:
<S>                                                                      <C>              <C>
     Cash and cash equivalents ..................................        $    120,164     $     172,936
     Receivables, net of allowance for doubtful accounts
     (1999 - $1,511; 1998 - $1,163) .............................              52,099            24,921
     Inventories, net ...........................................              36,686            19,567
     Prepaid expenses and other current assets ..................              22,945            25,604
                                                                            --------------  --------------
Total current assets ............................................             231,894           243,028

Property and equipment:
     Flight equipment ...........................................             781,171           557,302
     Facilities and ground equipment ............................              92,060            68,848
                                                                            --------------  --------------
                                                                              873,231           626,150
     Accumulated depreciation ...................................            (361,399)         (296,818)
                                                                            --------------  --------------
                                                                              511,832           329,332

Assets held for sale                                                                -             7,176
Goodwill ........................................................              23,453                 -
Deposits and other assets .......................................              48,102            15,013
                                                                            --------------  --------------
Total assets ....................................................        $    815,281     $     594,549
                                                                            ==============  ==============

                            LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Current maturities of long-term debt ........................        $      2,079     $       1,476
    Accounts payable ............................................              20,234             7,158
    Air traffic liabilities .....................................              93,507            76,662
    Accrued expenses ............................................             126,180            98,548
                                                                            --------------  --------------
Total current liabilities .......................................             242,000           183,844

Long-term debt, less current maturities .........................             345,792           245,195
Deferred income taxes ...........................................              58,493            52,620
Other deferred items ............................................              17,620            10,139

Commitments and contingencies

Shareholders' equity:

    Preferred stock; authorized 10,000,000 shares; none issued ..                   -                 -
    Common stock, without par value; authorized 30,000,000 shares;
       issued 12,884,306 - 1999; 12,374,577 - 1998 ..............              55,826            47,632
    Treasury stock; 612,052 shares - 1999; 193,506 shares - 1998              (10,500)           (1,881)
    Additional paid-in-capital ..................................              12,910            11,735
    Retained earnings ...........................................              93,673            46,331
    Deferred compensation - ESOP ................................                (533)           (1,066)
                                                                            --------------  --------------
                                                                              151,376           102,751
                                                                            --------------  --------------
Total liabilities and shareholders' equity ......................        $    815,281      $    594,549
                                                                           ==============  ==============
</TABLE>

See accompanying notes.

<PAGE>

<TABLE>
<CAPTION>

                                 AMTRAN, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF OPERATIONS
                         (Dollars in thousands, except per share data)


                                                            Year Ended December 31,
                                                      1999          1998            1997
                                                    -------------------------------------

Operating revenues:
<S>                                                 <C>           <C>          <C>
   Scheduled service .............................  $  624,647    $  511,254   $  371,762
   Charter .......................................     389,979       344,482      359,177
   Ground package ................................      58,173        23,186       22,317
   Other .........................................      49,567        40,447       29,937
                                                     ----------    ----------  -----------
Total operating revenues .........................   1,122,366       919,369      783,193
                                                     ----------    ----------  -----------

Operating expenses:
   Salaries, wages and benefits ..................     252,595       211,304      172,499
   Fuel and oil ..................................     170,916       137,401      153,701
   Depreciation and amortization .................      96,038        78,665       62,468
   Handling, landing and navigation fees .........      89,302        74,640       69,383
   Aircraft rentals ..............................      58,653        53,128       54,441
   Aircraft maintenance, materials and repairs ...      55,645        53,655       51,465
   Crew and other employee travel ................      49,707        41,565       36,596
   Ground package cost ...........................      49,032        19,466       19,230
   Passenger service .............................      39,231        34,031       32,812
   Commissions ...................................      39,050        28,483       26,102
   Other selling expenses ........................      28,099        22,147       15,462
   Advertising ...................................      18,597        17,772       12,658
   Facilities and other rentals ..................      13,318         9,536        8,557
   Other .........................................      72,156        62,203       54,335
                                                     ----------    ----------  -----------
Total operating expenses                             1,032,339       843,996      769,709
                                                     ----------    ----------  -----------
Operating income                                        90,027        75,373       13,484
Other income (expense):
  Interest income ................................       5,375         4,433        1,584
  Interest expense ...............................     (20,966)      (12,808)      (9,454)
  Other ..........................................       3,361           212          413
                                                     ----------    ----------  -----------
Other expenses ...................................    (12,230)       (8,163)      (7,457)
                                                     ----------    ----------  -----------
Income before income taxes .......................      77,797        67,210        6,027
Income taxes .....................................      30,455        27,129        4,455
                                                     ----------    ----------  -----------
Net income .......................................  $   47,342    $   40,081   $    1,572
                                                     ==========    ==========  ===========
Basic earnings per common share:
Average shares outstanding .......................  12,269,474    11,739,106   11,577,727
Net income per share .............................  $     3.86    $     3.41   $     0.14
                                                     ==========    ==========  ===========
Diluted earnings per common share:

Average shares outstanding .......................  13,469,537    13,066,222   11,673,330
Net income per share .............................  $     3.51    $     3.07   $     0.13
                                                     ==========    ==========  ===========

See accompanying notes.
</TABLE>


<PAGE>


PART II - Continued

<TABLE>
<CAPTION>

                                           AMTRAN, INC. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                (Dollars in thousands)


                                                                                  Additional                        Deferred
                                                  Common          Treasury         Paid-in         Retained       Compensation
                                                  Stock            Stock           Capital         Earnings           ESOP
                                                 ---------       ----------      ------------     -----------    --------------
Balance, December 31, 1996                       $  38,341       $ (1,760)       $  15,618         $  4,678          $ (2,133)

<S>                                                                                                   <C>
    Net income ..............................            -              -                -            1,572                 -

    Issuance of common stock for ESOP .......            -              -            (214)                -               533

    Restricted stock grants .................          419              -            (185)                -                 -

    Executive stock options expired .........            -              -             121                 -                 -
                                                 ---------       ----------      ------------     -----------    --------------
Balance, December 31, 1997 ..................       38,760         (1,760)          15,340            6,250            (1,600)

     Net income .............................            -              -                -           40,081                 -

     Issuance of common stock for ESOP ......            -              -            (257)                -               534

     Restricted stock grants ................          147              -             (66)                -                 -

     Stock options exercised ................        8,725              -          (4,089)                -                 -

     Purchase of 8,506 shares of
     treasury stock .........................            -           (121)              -                 -                 -


     Disqualifying disposition of stock .....            -              -             807                 -                 -

                                                 ---------       ----------      ------------     -----------    --------------

Balance, December 31, 1998 ..................       47,632         (1,881)         11,735            46,331            (1,066)

     Net income .............................            -              -               -            47,342                 -

     Issuance of common stock for ESOP ......            -              -              37                 -               533

     Restricted stock grants ................           32              -            (10)                 -                 -

     Stock options exercised ................        6,897              -         (3,207)                 -                 -

     Purchase of 418,546 shares of
     treasury stock .........................            -         (8,619)              -                 -                 -

     Disqualifying disposition of stock .....            -              -           3,887                 -                 -

     Acquisition of businesses ..............        1,265              -             468                 -                 -
                                                 ---------       ----------      ------------     -----------    --------------

Balance, December 31, 1999 ..................   $   55,826      $ (10,500)       $ 12,910         $  93,673        $     (533)
                                                 =========       ==========      ============     ===========    ==============

</TABLE>



See accompanying notes.



<PAGE>


<TABLE>
<CAPTION>

                                          AMTRAN, INC. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             (Dollars in thousands)

                                                                          Year Ended December 31,
                                                                     1999             1998           1997
                                                                ---------------------------------------------

Operating activities:

<S>                                                              <C>              <C>             <C>
Net income ...............................................       $     47,342     $     40,081    $     1,572
Adjustments to reconcile net income
  to net cash provided by operating activities:
     Depreciation and amortization .......................             96,038           78,665         62,468
     Deferred income taxes ...............................              5,873           21,160         11,244
     Other non-cash items ................................             14,463            1,708           (666)
Changes in operating assets and liabilities:
     Receivables .........................................            (21,197)          (1,655)        (3,027)
     Inventories .........................................            (18,746)          (4,356)        (1,637)
     Assets held for sale ................................                  -                -          5,356
     Prepaid expenses ....................................              7,484           (4,712)        (6,321)
     Accounts payable ....................................             10,684           (3,353)        (3,160)
     Air traffic liabilities .............................             (2,465)           8,108         18,655
     Accrued expenses ....................................             20,087           16,166         15,452
                                                                 ------------     ------------    -----------
    Net cash provided by operating activities                         159,563          151,812         99,936
                                                                 ------------     ------------    -----------
Investing activities:

Proceeds from sales of property and equipment                             264           37,061          8,005
Capital expenditures .....................................           (274,300)        (175,417)       (84,233)
Acquisition of businesses, net of cash acquired ..........             16,673                -              -
Reductions of (additions to) other assets ................            (48,355)          (3,996)            173
                                                                 ------------     ------------    -----------
   Net cash used in investing activities                             (305,718)        (142,352)       (76,055)
                                                                 ------------     ------------    -----------
Financing activities:

Payments on short-term debt ..............................                  -           (4,750)             -
Proceeds from long-term debt .............................             99,902          131,000        134,000
Payments on long-term debt ...............................             (1,590)         (71,485)      (127,067)
Proceeds from stock option exercises .....................              3,690            4,636              -
Purchase of treasury stock ...............................             (8,619)            (121)             -
                                                                 ------------     ------------    -----------
   Net cash provided by financing activities                           93,383           59,280          6,933
                                                                 ------------     ------------    -----------
Increase (decrease) in cash and cash equivalents .........            (52,772)          68,740         30,814
Cash and cash equivalents, beginning of period ...........            172,936          104,196         73,382
                                                                 ------------     ------------    -----------
Cash and cash equivalents, end of period .................       $    120,164     $    172,936    $   104,196
                                                                 ============     ============    ===========
Supplemental disclosures:

Cash payments for:
    Interest .............................................       $     24,411     $     14,685    $     6,197
    Income taxes (refunds) ...............................             11,910            7,897           (311)

Financing and investing activities not affecting cash:

    Issuance of long-term debt directly for capital
    expenditures .........................................      $      2,416     $          -     $   30,650
    Issuance of short-term debt directly for capital
    expenditures .........................................               313                -          4,750

</TABLE>


See accompanying notes.


<PAGE>


PART II - Continued


Notes to Consolidated Financial Statements

1.     Significant Accounting Policies

      Basis of Presentation and Business Description

      The consolidated financial statements include the accounts of Amtran, Inc.
      (the  "Company")  and  its  wholly  owned  subsidiaries.  All  significant
      intercompany accounts and transactions have been eliminated.

      The Company operates  principally in one business segment through American
      Trans Air, Inc.  ("ATA"),  its principal  subsidiary,  which  accounts for
      approximately  90%  of  the  Company's  operating   revenues.   ATA  is  a
      U.S.-certificated air carrier providing domestic and international charter
      and scheduled passenger air services.

      Use of Estimates

      The  preparation  of financial  statements  in conformity  with  generally
      accepted  accounting  principles requires management to make estimates and
      assumptions that affect the amounts  reported in the financial  statements
      and accompanying notes. Actual results could differ from those estimates.

      Cash Equivalents

      Cash  equivalents  are  carried  at cost and are  primarily  comprised  of
      investments in U.S.  Treasury  bills,  commercial  paper and time deposits
      which are purchased with original  maturities of three months or less (see
      Note 2).

      Assets Held For Sale

      Assets  held for  sale  are  carried  at the  lower  of net book  value or
      estimated net realizable value.

      Inventories

      Inventories consist primarily of expendable aircraft spare parts, fuel and
      other  supplies.  Aircraft  parts  inventories  are stated at cost and are
      reduced by an allowance for  obsolescence.  The obsolescence  allowance is
      provided by amortizing the cost of the aircraft parts inventory, net of an
      estimated  residual  value,  over its estimated  useful  service life. The
      obsolescence  allowance at December 31, 1999 and 1998,  was $10.3  million
      and $8.4 million,  respectively.  Inventories  are charged to expense when
      consumed.

      Revenue Recognition

      Revenues are  recognized  when the  transportation  is provided.  Customer
      flight  deposits  and unused  passenger  tickets  sold are included in air
      traffic  liability.  As is  customary  within the  industry,  the  Company
      performs  periodic  evaluations  of  this  estimated  liability,  and  any
      adjustments resulting therefrom, which can be significant, are included in
      the results of  operations  for the periods in which the  evaluations  are
      completed.

      Passenger Traffic Commissions

      Passenger   traffic   commissions  are  recognized  as  expense  when  the
      transportation  is provided  and the related  revenue is  recognized.  The
      amount of passenger  traffic  commissions  paid but not yet  recognized as
      expense is included in prepaid  expenses and other  current  assets in the
      accompanying consolidated balance sheets.

      Property and Equipment

      Property and equipment is recorded at cost and is  depreciated to residual
      value over its  estimated  useful  service  life  using the  straight-line
      method.  Advanced  payments for future aircraft  purchases are recorded at
      cost.  As of  December  31, 1999 and 1998,  the Company had made  advanced
      payments for future aircraft  deliveries  totaling $20.4 million and $13.0
      million,   respectively.  The  estimated  useful  service  lives  for  the
      principal depreciable asset classifications are as follows:

<PAGE>
<TABLE>
<CAPTION>


<S>     <C>                                                 <C>
        Asset                                               Estimated Useful Service Life

        Aircraft and related equipment:
          Lockheed L-1011 (Series 50 and 100)               Depreciating to common retirement date of
                                                            December 2004 (see Note 11)

          Lockheed L-1011 (Series 500)                      Depreciating to common retirement date of
                                                            December 2010

          Boeing 727-200                                    Depreciating to common retirement date of
                                                            December 2008 (see Note 11)

          Boeing 757-200                                    20 years

        Major rotable parts, avionics and assemblies        Life of equipment to which applicable
                                                            (Generally ranging from 6-16 years)

        Improvements to leased flight equipment             Period of benefit or term of lease

        Other property and equipment                        3 - 7 years
</TABLE>


      The costs of major  airframe  and engine  overhauls  are  capitalized  and
      amortized  over  their  estimated  useful  lives  based  upon usage (or to
      earlier fleet common retirement dates) for both owned and leased aircraft.

      Intangible Assets

      Goodwill,  which  represents  the  excess of cost  over fair  value of net
      assets acquired,  is amortized on a straight-line basis over 20 years. The
      Company  periodically reviews the carrying amounts of intangible assets to
      assess  their  continued   recoverability  in  accordance  with  Financial
      Accounting  Standards Board ("FASB") Statement No. 121, Accounting for the
      Impairment of Long-Lived  Assets and for Long-Lived  Assets to be Disposed
      of. The  Company's  policy is to record an  impairment  loss in the period
      when it is  determined  that the  carrying  amount of the asset may not be
      recoverable.

      Financial Instruments

      The  carrying   amounts  of  cash   equivalents,   receivables   and  both
      variable-rate and fixed-rate debt (see Note 4) approximate fair value. The
      fair value of fixed-rate debt, including current maturities,  is estimated
      using  discounted  cash  flow  analysis  based  on the  Company's  current
      incremental rates for similar types of borrowing arrangements.

      During  1998,  the Company  began  entering  into fuel hedge  contracts to
      reduce  the  risk  of  fuel  price  increases.  The  Company  hedged  fuel
      consumption  under both swap  agreements,  which  establish  specific swap
      prices for designated periods, and fuel cap agreements,  which guarantee a
      maximum  price per gallon for  designated  periods.  When the market  fuel
      price  remains  below that  established  in hedge  contracts,  the Company
      records the cost of the fuel hedge contract as a component of fuel expense
      in the period the fuel is consumed.  There were no significant fuel hedges
      during 1999.


2.    Cash and Cash Equivalents

      Cash and cash equivalents consist of the following:
<TABLE>
<CAPTION>

                                                                         December 31,
                                                                     1999             1998
                                                                 ---------------------------
                                                                          (In thousands)
<S>                                                                <C>           <C>
        Cash                                                       $  19,831     $     7,389
        Commercial paper                                              99,948         161,285
        U.S. Treasury repurchase agreements                              385           4,262
                                                                -------------    ------------
                                                                    $120,164       $ 172,936
                                                                =============    ============
<PAGE>
3.    Property and Equipment

      The Company's property and equipment consist of the following:

                                                                         December 31,
                                                                    1999               1998
                                                                 ---------------------------
                                                                         (In thousands)

        Flight equipment, including airframes, engines
        and other                                                  $ 781,171       $ 557,302

        Less accumulated depreciation                                313,090         258,025
                                                                  ----------       ---------
                                                                     468,081         299,277
                                                                  ----------       ---------

        Facilities and ground equipment                               92,060          68,848
        Less accumulated depreciation                                 48,309          38,793
                                                                  ----------       ---------
                                                                      43,751          30,055
                                                                  ----------       ---------
                                                                   $ 511,832       $ 329,332
                                                                   =========       =========
</TABLE>


4.    Long-Term Debt

      Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                      1999            1998
                                                                                   -------------------------
                                                                                         (In thousands)

<S>                                          <C>                      <C>          <C>              <C>
       Unsecured Senior Notes, fixed rate of 10.5%, payable in August 2004         $175,000         $100,000

       Unsecured Senior Notes, fixed rate of 9.625%, payable in December 2005       125,000          125,000

       City of Chicago variable-rate special facility revenue bonds, payable
       in January 2029                                                               16,960                -

       City of Indianapolis advance, payable in June 2001                            10,000           10,000

       Note payable to institutional lender; fixed rate of 8.30% payable in
       varying installments through June 2014                                         7,886                -

       City of Chicago variable-rate special facility revenue bonds, payable
       in December 2020                                                               6,000            6,000

       Other                                                                          7,025            5,671
                                                                                   --------         --------
                                                                                    347,871          246,671
       Less current maturities                                                        2,079            1,476
                                                                                   --------         --------
                                                                                   $345,792         $245,195
                                                                                   ========         ========
</TABLE>


      In  December  1999,  the Company  issued  $17.0  million in  variable-rate
      special  facility  revenue bonds through the City of Chicago.  Interest on
      the bonds is payable on the first of every month, and the principal is due
      on January 1, 2029.  Net  proceeds  from the bonds will be used to finance
      costs  related to  designing,  constructing,  equipping  and  installing a
      Federal Inspection Service facility at Chicago-Midway Airport.

      In June 1999, the Company obtained an $8.0 million,  15-year mortgage loan
      on the new  Maintenance  and Operations  Center.  The  construction of the
      120,000 square foot facility was completed in the second quarter of 1999.

      In December  1998,  the Company sold $125.0  million  principal  amount of
      unsecured senior notes.  Interest is payable on June 15 and December 15 of
      each year.  The Company may redeem the notes,  in whole or in part, at any
      time on or after June 15, 2003,  initially  at 104.81% of their  principal
      amount plus  accrued  interest,  declining  to 102.41% of their  principal
      amount plus  accrued  interest on June 15,  2004,  then to 100.0% of their
      principal amount plus accrued  interest at maturity.  At any time prior to
      June 15, 2001, the Company may redeem up to 35.0% of the principal  amount
      of the notes with the  proceeds of one or more sales of its common  stock,
      at a redemption  price of 109.625% of their principal  amount plus accrued
      interest, provided that at least $81.25 million aggregate principal amount
      of the notes remains outstanding after such redemption.

      The net proceeds of the $125.0 million unsecured notes were  approximately
      $121.0 million after deducting costs and fees of issuance. The Company has
      used the net proceeds for the  purchase of Lockheed  L-1011-500  aircraft,
      engines  and spare  parts,  and,  together  with  available  cash and bank
      facility  borrowings,  for the  purchase  of Boeing  727-200ADV  aircraft,
      engines, engine hushkits and spare parts.

      In July  1997,  the  Company  sold  $100.0  million  principal  amount  of
      unsecured  senior  notes.  The Company sold an  additional  $75.0  million
      principal  amount of these notes in December 1999.  Interest is payable on
      February 1 and August 1 of each year. The Company may redeem the notes, in
      whole or in part,  at any time on or after  August 1, 2002,  initially  at
      105.25% of their principal amount plus accrued interest, declining ratably
      to 100.0% of their principal amount plus accrued interest at maturity.  At
      any time prior to August 1, 2000,  the  Company  may redeem up to 35.0% of
      the original aggregate  principal amount of the notes with the proceeds of
      sales of common stock, at a redemption  price of 110.5% of their principal
      amount plus accrued  interest,  provided  that at least $113.8  million in
      aggregate  principal  amount of the notes remains  outstanding  after such
      redemption.  The net proceeds of the $100.0 million unsecured notes issued
      in 1997 were approximately  $96.9 million,  after deducting costs and fees
      of  issuance.  The Company  used a portion of the net proceeds to repay in
      full the  Company's  prior  bank  facility  and used  the  balance  of the
      proceeds  for general  corporate  purposes.  The net proceeds of the $75.0
      million  unsecured notes issued in 1999 were  approximately  $73.0 million
      after deducting  costs and fees of issuance.  The Company plans to use the
      net proceeds for general business purposes.

      In 1998, the Company  maintained a $5.0 million  revolving credit facility
      available for its short-term  borrowing  needs and for issuance of letters
      of credit.  The credit  facility was available  until January 1999 and was
      collateralized  by certain  aircraft  engines.  At December 31, 1998,  the
      Company had outstanding  letters of credit  aggregating $3.8 million under
      such facility. This facility was terminated in January 1999.

      In January  1999,  the  Company  revised  its 1998  revolving  bank credit
      facility  to provide a maximum  of $75.0  million,  including  up to $25.0
      million for stand-by letters of credit,  as compared to a maximum of $50.0
      million,  including up to $25.0 million for stand-by  letters of credit in
      1998. ATA is the borrower under the credit  facility,  which is guaranteed
      by the Company and each of the Company's  other active  subsidiaries.  The
      principal  amount  of  the  facility  matures  on  January  2,  2003,  and
      borrowings  are secured by certain  Boeing  727-200  aircraft  and certain
      Lockheed L-1011-50 and L-1011-100 aircraft and engines. As of December 31,
      1999,  the  borrowing  base was 75% of the total Boeing  727-200  aircraft
      value and 63% of the total Lockheed L-1011-50 and L-1011-100  aircraft and
      engine values.  Borrowings under the facility bear interest, at the option
      of ATA, at either LIBOR plus 1.25% to 2.5% or the agent bank's prime rate.

      In December 1999, the Company  revised the revolving bank credit  facility
      to provide a maximum of $100.0 million,  including up to $50.0 million for
      stand-by   letters  of   credit.   The  terms  and   conditions   remained
      substantially  the  same,  and the new  facility  is  subject  to  similar
      restrictive covenants as were effective under the prior facility.

      The  unsecured  notes and credit  facilities  are  subject to  restrictive
      covenants,  including,  among other things, limitations on: the incurrence
      of additional indebtedness; the payment of dividends; certain transactions
      with  shareholders  and affiliates;  and the creation of liens on or other
      transactions  involving  certain assets.  In addition,  certain  covenants
      require certain financial ratios to be maintained.

      Future maturities of long-term debt are as follows:


                                   December 31, 1999
                                   -----------------
                                     (In thousands)

       2000                           $       2,079
       2001                                  12,025
       2002                                   1,894
       2003                                   1,371
       2004                                 176,191
       Thereafter                           154,311
                                    ---------------
                                      $     347,871
                                    ===============

      Interest   capitalized  in  connection   with  long-term   asset  purchase
      agreements  and  construction  projects was $3.9 million and $2.0 million,
      respectively, in 1999 and 1998.

<PAGE>
  5.   Lease Commitments

      At December  31,  1999,  the Company had  aircraft  leases on one Lockheed
      L-1011-100,  14 Boeing  727-200s  and 11  Boeing  757-200s.  The  Lockheed
      L-1011-100  has an initial  term of 60 months which  expires in 2003.  The
      Boeing  757-200s  have initial  lease terms which expire from 2001 through
      2019. The Boeing 727-200s have initial lease terms of three to seven years
      and expire  between 2000 and 2003.  The Company also leases three  engines
      for use on the Lockheed L-1011-500s and four engines for use on the Boeing
      757-200s.  The  L-1011-500  engine  leases  expire in 2006 and the 757-200
      leases  expire from 2008 through 2011.  All aircraft  leases are accounted
      for as operating leases.

      The Company is responsible for all maintenance costs on these aircraft and
      engines and must meet specified airframe and engine return conditions.

      As of December 31, 1999, the Company had other long-term leases related to
      certain  ground  facilities,  including  terminal  space  and  maintenance
      facilities,  with lease terms that vary from 1.5 to 32 years and expire at
      various dates through 2028.  The lease  agreements  relating to the ground
      facilities,   which  are  primarily   owned  by   governmental   units  or
      authorities,  generally do not provide for  transfer of  ownership  nor do
      they contain options to purchase.

      The Company leases its headquarters facility from the City of Indianapolis
      under a capital  lease  agreement  which  expires in  December  2002.  The
      agreement  has  an  option  to  extend  for  two  years.  The  Company  is
      responsible  for   maintenance,   taxes,   insurance  and  other  expenses
      incidental to the operation of the facilities.

      Future  minimum  lease  payments at December 31, 1999,  for  noncancelable
      operating leases with initial terms of more than one year are as follows:

                                             Facilities
                         Flight              and Ground
                        Equipment             Equipment            Total
                      ----------------------------------------------------------
                                           (In thousands)

      2000                $  63,621           $  7,915           $ 71,536
      2001                   59,423              5,966             65,389
      2002                   51,187              6,056             57,243
      2003                   45,457              4,848             50,305
      2004                   44,594              6,629             51,223
      Thereafter            429,847             32,610            462,457
                         ----------          ---------           --------
                           $694,129            $64,024           $758,153
                         ==========          =========           ========


      Rental expense for all operating leases  in 1999,  1998 and 1997 was $72.0
      million,  $62.7  million  and $63.0 million, respectively.


6.    Income Taxes

      The provision for income tax expense consisted of the following:

                                                   December 31,
                                   1999             1998              1997
                                  -----------------------------------------
                                                (In thousands)

        Federal:
          Current                 $15,339         $  6,403          $    173

          Deferred                 10,889           18,102             3,706
                                  -------         --------          --------
                                   26,228           24,505             3,879
        State:
          Current                   1,284              686               163
          Deferred                  2,943            1,938               413
                                  -------         --------          --------
                                    4,227            2,624               576
                                  -------         --------          --------
        Income tax expense        $30,455          $27,129           $ 4,455
                                  =======         ========          ========

      The  provision  for income  taxes  differed  from the amount  obtained  by
      applying the  statutory  federal  income tax rate to income  before income
      taxes as follows:

<PAGE>
<TABLE>
<CAPTION>

                                                                 December 31,
                                                    1999             1998          1997
                                                   -------------------------------------
                                                                 (In thousands)
<S>                                                <C>              <C>          <C>
     Federal income taxes at statutory rate        $27,175          $23,523      $2,049

     State income taxes, net of federal benefit      1,997            1,711         367

     Non-deductible expenses                         1,578            1,234       1,947

     Other, net                                      (295)              661          92
                                                   --------         --------    --------
     Income tax expense                            $30,455          $27,129      $4,455
                                                   ========         ========    ========
</TABLE>

      Deferred  income taxes arise from  temporary  differences  between the tax
      basis  of  assets  and  liabilities  and  their  reported  amounts in  the
      financial statements.  The principal  temporary  differences relate to the
      use  of accelerated  methods  of  depreciation  and  amortization  for tax
      purposes.  Deferred tax liability and asset components are as follows:

                                                                 December 31,
                                                             1999           1998
                                                             -------------------
                                                               (In thousands)
         Deferred tax liabilities:
          Tax depreciation in excess of book depreciation   $84,505      $76,560
          Other taxable temporary differences                   474          502
                                                            -------      -------
               Deferred tax liabilities                      84,979       77,062
                                                            -------      -------
         Deferred tax assets:

          Tax benefit of net operating loss carryforwards       270       18,102

          Alternative minimum tax and other tax credit
          carryforwards                                      18,611        8,726

          Vacation pay accrual                                3,839        3,225

          Amortization of lease credits                       1,897        1,964

          Deferred gain on sale of fixed assets               3,411          966

          Other deductible temporary differences              2,565        2,336
                                                            -------      -------
                Deferred tax assets                          30,593       35,319
                                                            -------      -------
         Deferred taxes classified as:
         Current asset                                      $ 4,107      $10,877
                                                            =======      =======
         Non-current liability                              $58,493      $52,620
                                                            =======      =======

At  December  31,  1999,  for federal tax  reporting  purposes,  the Company had
approximately  $0.7  million of net  operating  loss  carryforward  available to
offset future federal  taxable  income and $18.6 million of alternative  minimum
tax and other tax credit  carryforwards  available to offset future  federal tax
liabilities.  The net operating  loss  carryforward  of $0.7 million  expires in
2009. The alternative  minimum tax and other tax credit  carryforwards  of $18.6
million have no expiration dates.

7.    Retirement Plan

      The Company has a defined  contribution 401(k) savings plan which provides
      for  participation by substantially  all the Company's  employees who have
      completed  one year of service.  The Company has elected to  contribute an
      amount equal to 45.0% in 1999,  40.0% in 1998,  and 35.0% in 1997,  of the
      amount  contributed  by each  participant  up to the first six  percent of
      eligible  compensation.  Company matching  contributions expensed in 1999,
      1998  and  1997  were  $3.1  million,   $2.3  million  and  $1.8  million,
      respectively.

      In 1993,  the Company  added an Employee  Stock  Ownership  Plan  ("ESOP")
      feature to its existing 401(k) savings plan. The ESOP used the proceeds of
      a $3.2  million  loan from the Company to purchase  200,000  shares of the
      Company's  common  stock.  The  selling   shareholder  was  the  Company's
      principal  shareholder.  The Company recognized $0.7 million, $0.7 million
      and $0.3 million in 1999,  1998 and 1997,  respectively,  as  compensation
      expense  related to the ESOP.  Shares of common stock held by the ESOP are
      allocated to  participating  employees  annually as part of the  Company's
      401(k) savings plan  contribution.  The fair value of the shares allocated
      during the year is recognized as compensation expense.
<PAGE>
8.     Shareholders' Equity

      In the  first  quarter  of 1994,  the  Board  of  Directors  approved  the
      repurchase of up to 250,000 shares of the Company's  common stock.  In the
      second quarter of 1999, the Board of Directors  approved the repurchase of
      up to 600,000  additional shares of the Company's common stock. A total of
      612,052  shares  had been  repurchased  at a cost of $10.5  million  as of
      December 31, 1999.

      The Company's  1993  Incentive  Stock Plan for Key  Employees  (1993 Plan)
      authorizes  the grant of options for up to 900,000 shares of the Company's
      common stock.  The Company's 1996  Incentive  Stock Plan for Key Employees
      (1996 Plan)  authorizes the grant of options for up to 3,000,000 shares of
      the Company's  common stock.  Options  granted have 5 to 10-year terms and
      generally vest and become fully  exercisable over specified  periods of up
      to three years of continued employment.

      A summary of common stock option changes follows:
<TABLE>
<CAPTION>

                                                            Number of          Weighted-Average
                                                              Shares            Exercise Price
                                                            ----------         ----------------
<S>                          <C> <C>                        <C>                     <C>
     Outstanding at December 31, 1996                       1,629,900               $ 8.74
                                                            ----------         ----------------
         Granted                                            1,588,500                 8.49
         Canceled                                           (706,000)                 7.14
                                                            ----------         ----------------
     Outstanding at December 31, 1997                       2,512,400                 9.39
                                                            ----------         ----------------
         Granted                                              560,900                 9.67
         Exercised                                          (545,347)                 8.50
         Canceled                                           (157,700)                 9.08
                                                            ---------           ---------------
     Outstanding at December 31, 1998                       2,370,253                 9.38
                                                            ---------           ---------------
         Granted                                              582,510                 26.33
         Exercised                                          (431,075)                  8.56
         Canceled                                            (28,528)                 15.02
                                                            ---------           --------------
     Outstanding at December 31, 1999                       2,493,160                $13.41
                                                            =========           ==============
     Options exercisable at December 31, 1998                 755,075                $10.13
                                                            =========           ==============
     Options exercisable at December 31, 1999               1,077,554                $10.04
                                                            =========           ==============
</TABLE>

      During  1996,  the  Company  adopted  the  disclosure  provisions  of FASB
      Statement No. 123 "Accounting for Stock-Based Compensation" (SFAS No. 123)
      with  respect to its stock  options.  As  permitted  by SFAS No. 123,  the
      Company has elected to continue  to account  for  employee  stock  options
      following  Accounting  Principles  Board Opinion No. 25,  "Accounting  for
      Stock Issued to Employees" (APB 25) and related Interpretations. Under APB
      25,  because the exercise  price of the Company's  employee  stock options
      equals the market price of the underlying  stock on the date of grant,  no
      compensation expense is recognized.

      The weighted-average fair value of options granted during 1999 and 1998 is
      estimated at $9.67 and $5.12 per share,  respectively,  on the grant date.
      These  estimates  were made using the  Black-Scholes  option pricing model
      with  the  following  weighted-average  assumptions  for  1999  and  1998:
      risk-free  interest  rate  of  6.29%  and  5.0%;   expected  market  price
      volatility of .46 and .44;  weighted-average expected option life equal to
      the  contractual  term;  estimated  forfeitures  of 5.6% and 5.0%;  and no
      dividends.

      The  Black-Scholes  option  valuation  model  was  developed  for  use  in
      estimating  the  fair  value  of  traded  options  which  have no  vesting
      restrictions  and are fully  transferable.  In addition,  option valuation
      models use highly  subjective  assumptions,  including the expected  stock
      price  volatility.  Because the  Company's  employee  stock  options  have
      characteristics  significantly different from those of traded options, and
      because changes in the subjective input  assumptions can materially affect
      the fair value estimate,  in management's  opinion, the existing models do
      not necessarily provide a reliable single measure of the fair value of its
      employees'  stock  options.  For  purposes  of pro forma  disclosure,  the
      estimated  fair value of the  options  is  amortized  to expense  over the
      options'  vesting  period  (1  to  3  years).   The  Company's  pro  forma
      information follows:
<PAGE>
<TABLE>
<CAPTION>
                                                    1999          1998        1997
                                                 -------------------------------------
                                                 (In thousands, except per share data)

<S>                                               <C>           <C>        <C>
       Net income as reported                     $ 47,342      $ 40,081   $  1,572
       Net income pro forma                         41,740        37,209         89

       Diluted income per share as reported           3.51          3.07        .13

       Diluted income per share pro forma             3.10           2.85       .01

</TABLE>

      Options  outstanding  at  December  31,  1999,  expire from August 2003 to
      August 2009. A total of 407,453  shares are reserved for future  grants as
      of December 31, 1999,  under the 1993 and 1996 Plans.  The following table
      summarizes  information  concerning outstanding and exercisable options at
      December 31, 1999:

         Range of Exercise Prices                  $7 - 14        $15 - 27
        ------------------------                 ----------       --------
        Options outstanding:
          Weighted-Average Remaining
            Contractual Life                      7.3 years       8.0 years
          Weighted-Average Exercise Price             $8.96          $24.25
          Number                                  1,766,650         726,510

        Options exercisahble:
          Weighted-Average Exercise Price             $9.10          $16.26
          Number                                    936,954         140,600


9.    Earnings per Share

      The following table sets forth the computation of basic and diluted
      earnings per share:
<TABLE>
<CAPTION>
                                                               1999            1998             1997
                                                             ------------------------------------------
      Numerator:
<S>                                                         <C>              <C>            <C>
         Net income                                         $47,342,000      $40,081,000    $ 1,572,000
      Denominator:
         Denominator for basic earnings per
           share - weighted average shares                   12,269,474       11,739,106     11,577,727
         Effect of dilutive securities:
           Employee stock options                             1,200,063        1,327,116         64,725
           Restricted shares                                          -                -         30,878
                                                             ----------      -----------     ----------
         Dilutive potential common shares                     1,200,063        1,327,116         95,603
                                                             ----------      -----------     ----------
         Denominator for diluted earnings per
           share - adjusted weighted average shares          13,469,537       13,066,222     11,673,330
                                                             ==========      ===========     ==========
         Basic earnings per share                            $     3.86       $     3.41     $     0.14
                                                             ==========      ===========     ==========
         Diluted earnings per share                          $     3.51       $     3.07     $     0.13
                                                             ==========      ===========     ==========
</TABLE>



10.   Commitments and Contingencies

       In November  1994,  the Company  signed a purchase  agreement for six new
       Boeing  757-200s,  which, as subsequently  amended,  now provides for the
       delivery  of 13  total  aircraft.  The  amended  agreement  provides  for
       deliveries  of aircraft  between 1995 and 2000.  As of December 31, 1999,
       the  Company  had taken  delivery  of nine  Boeing  757-200s  under  this
       purchase agreement and financed those aircraft using leases accounted for
       as operating  leases.  Two deliveries  under this agreement are scheduled
       for June 2000,  and two  deliveries  are scheduled for November 2000. The
       remaining  aircraft  have an aggregate  purchase  price of  approximately
       $50.0  million per aircraft,  subject to  escalation.  Advanced  payments
       totaling  approximately  $27.2  million  ($6.8  million per aircraft) are
       required  to be made for the  remaining  undelivered  aircraft,  with the
       balance of the purchase price due upon delivery.  As of December 31, 1999
       and 1998,  the  Company  had made  $20.4  million  and $13.0  million  in
       advanced   payments,   respectively,   pertaining   to  future   aircraft
       deliveries.

       The Company has signed a purchase  agreement to acquire six of the Boeing
       727-200 ADV aircraft that are currently  leased.  These  aircraft will be
       purchased in 2000.

       Various  claims,  contractual  disputes and lawsuits  against the Company
       arise periodically  involving  complaints which are normal and reasonably
       foreseeable  in  light  of the  nature  of the  Company's  business.  The
       majority  of these  suits are  covered by  insurance.  In the  opinion of
       management,  the  resolution  of these  claims  will not have a  material
       adverse effect on the business,  operating results or financial condition
       of the Company.

11.   Change in Accounting Estimate

       In July 1998,  the Company  committed  to the  purchase of five  Lockheed
       L-1011 series 500 aircraft for delivery  between August 1998 and November
       1999.  The Company  already  operates 14  Lockheed  L-1011  series 50 and
       series  100  aircraft,  13 of which are owned and one of which is leased.
       The purchase agreement has expanded the size of the Lockheed L-1011 fleet
       from 14 to 19 aircraft.

       As a result of this fleet  expansion,  the Company expects to operate its
       existing  fleet of  Lockheed  L-1011  series 50 and series  100  aircraft
       through December 2004, as opposed to previous  retirement dates which had
       ranged  from  2000 to  2002.  The  Company  implemented  this  change  in
       accounting  estimate  effective  July 1,  1998,  which,  in  addition  to
       extending the estimated useful lives of the 13 owned aircraft and related
       engines,  overhauls and spare parts,  also reduced the estimated  salvage
       value for these  aircraft  as of the common  retirement  date of December
       2004.

       This  change in  accounting  estimate  resulted  in a  reduction  of $4.1
       million and $2.1 million,  respectively, in depreciation and amortization
       expense for the years ended  December 31, 1999 and 1998,  and resulted in
       an increase in net income of $2.5 and $1.2  million in the same  periods.
       Basic and  diluted  earnings  per share for the year ended  December  31,
       1999,  were increased by $0.20 and $0.19,  respectively,  while basic and
       diluted  earnings per share for the year ended  December  31, 1998,  were
       increased by $0.10 and $0.09, respectively.

       In the first quarter of 1999, the Company  purchased eight Boeing 727-200
       aircraft which had previously been financed  through leases accounted for
       as operating  leases.  As of the first  quarter of 1999,  the Company had
       also  completed  the  re-negotiation  of  certain  contract  terms on its
       remaining 15 leased Boeing 727-200 aircraft which generally  provided for
       the purchase of these  aircraft at the end of their  initial lease terms,
       extending  from 1999 to 2003.  The Company  complied with federal Stage 3
       noise regulations by installing hushkits on its entire fleet of 24 Boeing
       727-200  aircraft,  which permits the Company to operate  these  aircraft
       after that date.

       In the  first  quarter  of 1999,  the  Company  implemented  a change  in
       accounting  estimate to extend the estimated  useful lives of capitalized
       Boeing 727-200  airframes,  engines,  leasehold  improvements and rotable
       parts from the end of the initial lease terms of the related  aircraft to
       approximately  2008.  This change in  accounting  estimate  resulted in a
       reduction  of  depreciation  expense of $4.6  million  for the year ended
       December  31, 1999,  which  resulted in an increase in net income of $2.8
       million in 1999.  Basic and diluted earnings per share for the year ended
       December 31, 1999 were increased by $0.23 and $0.21, respectively.

12.    Acquisition of Businesses

       On  January  26,  1999,  the  Company  acquired  all  of the  issued  and
       outstanding stock of T. G. Shown Associates,  Inc., which owns 50% of the
       Amber Air  Freight  partnership.  The other  50% of the  partnership  was
       already owned by the Company.

       On January 31, 1999, the Company  purchased the  membership  interests of
       Travel Charter  International,  LLC ("TCI"), a Detroit-based  independent
       tour operator.  ATA has been providing  passenger airline services to TCI
       for over 14 years. TCI's results of operations,  beginning February 1999,
       were consolidated into the Company.

       On April 30, 1999, the Company acquired all of the issued and outstanding
       stock of Agency Access Training Center,  Inc.  ("AATC") and Key Tours Las
       Vegas,  Inc.  ("KTLV"),  and  additionally  purchased the majority of the
       current  assets and current  liabilities  of Keytours,  Inc.  ("KTI"),  a
       Canadian  corporation.  All  three  companies  (AATC,  KTLV and KTI) were
       previously  under common control and jointly operated an independent tour
       business in the Detroit  metropolitan  area,  using the brand name of Key
       Tours. ATA has been providing passenger airline services to Key Tours for
       over 15 years.  The results of  operations,  beginning  May 1999,  of Key
       Tours brand were consolidated into the Company.

       On April 30, 1999, the Company acquired all of the issued and outstanding
       stock of Chicago Express Airlines, Inc. ("Chicago Express").  The Company
       had a code-share agreement with Chicago Express since April 1997. Chicago
       Express'  results of operations,  beginning May 1999,  were  consolidated
       into the Company.

       The  Company  paid  approximately  $16.1  million in cash and issued $1.3
       million in stock for the  purchase of all  acquisitions  discussed  above
       which were  accounted for using the purchase  method of  accounting.  The
       Company  evaluated  the  effect  of the  acquisitions  on  the  financial
       statements as if the acquisitions were effective January 1998, noting the
       results of operations would not be materially different than reported.

13.    Segment Disclosures

       During  1999, the Company  acquired  several  independent  tour  operator
       businesses and  combined  their operations  with the  Company's  existing
       vacation package brand,  ATA  Vacations. (See Note 12).  These  companies
       comprise the newly formed ATA Leisure Corp. ("ATALC").

       The Company  identifies its segments on the basis of similar products and
       services.  The airline  segment  derives its revenues  primarily from the
       sale of scheduled  service or charter air  transportation.  ATALC derives
       its revenues from the sale of vacation  packages,  which,  in addition to
       air transportation,  includes hotels and other ground arrangements. ATALC
       purchases air transportation for its vacation packages from ATA and other
       airlines.

       The Company's revenues are derived  principally from customers  domiciled
       in the United States.

       The most significant component of the Company's property and equipment is
       aircraft and related  improvements and parts. All aircraft are registered
       in the United States.  The Company  therefore  considers all property and
       equipment to be domestic.

       The United States government is the Company's only external customer that
       accounted for more than 10.0% of consolidated  revenues.  U.S. government
       revenues  accounted for 11.2%,  13.3% and 16.8% of consolidated  revenues
       for 1999, 1998 and 1997, respectively.

       Segment  financial  data as of and for the years ended December 31, 1999,
       1998 and 1997 follows:
<TABLE>
<CAPTION>

                                                                  For the Year Ended December 31, 1999
                                           ---------------------------------------------------------------
                                           Airline        ATALC        Other/Eliminations    Consolidated
                                           -------        -----        ------------------    ------------
                                                                      (In thousands)
       Operating revenue from
<S>                                       <C>            <C>               <C>               <C>
         external customers               $ 972,081      $ 94,840          $ 55,445          $1,122,366
       Inter-segment revenue                 42,970         4,985             2,455              50,410
       Operating expenses                   918,725        70,404            43,210           1,032,339
       Operating income (loss)               88,173       (2,616)             4,470              90,027
       Segment assets (at year-end)         821,373        69,800          (75,892)             815,281



                                                                  For the Year Ended December 31, 1998
                                           --------------------------------------------------------------
                                           Airline        ATALC       Other/Eliminations     Consolidated
                                           -------        -----       ------------------     ------------
                                                                     (In thousands)

       Operating revenue from
         external customers               $ 858,702      $ 21,485          $ 39,182          $ 919,369
       Inter-segment revenue                 24,620             0             2,152             26,772
       Operating expenses                   806,411        13,019            24,566            843,996
       Operating income (loss)               68,894          (43)             6,522             75,373
       Segment assets (at year-end)         637,101          274           (42,826)            594,549


                                                                  For the Year Ended December 31, 1997
                                           --------------------------------------------------------------
                                           Airline        ATALC       Other/Eliminations     Consolidated
                                           -------        -----       ------------------     ------------
                                                                     (In thousands)

       Operating revenue from
         external customer                $ 726,708      $ 24,222          $ 32,263          $ 783,193
       Inter-segment revenue                 25,953           367             2,028             28,348
       Operating expenses                   735,169        14,217            20,323            769,709
       Operating income                       6,657           760             6,067             13,484
       Segment assets (at year-end)         517,264         4,651           (71,058)           450,857

</TABLE>

14.    Subsequent Events

       In January 2000,  Chicago  Express  entered into an agreement to purchase
       nine SAAB 340B aircraft,  engines and spare parts for approximately $30.0
       million.  These  aircraft are nine years old. The SAAB 340B aircraft will
       be placed into service  throughout 2000 in conjunction with the return of
       the current fleet of Jetstream J31s to the lessor. The Company intends to
       finance these aircraft through sale/leaseback transactions.
<PAGE>

       The  Company   completed  a  $238.6  million  Enhanced   Equipment  Trust
       Certificate ("EETC") financing in February 2000. These funds will be used
       as leveraged  lease  financing for seven of the Company's  Boeing 757-200
       aircraft,  three of which had been financed with interim leveraged leases
       in the third and fourth quarters of 1999. The remaining EETC financing is
       expected to be applied to four 757-200  deliveries from the manufacturer,
       two in June 2000 and two in November 2000.  The Company  expects its EETC
       leveraged leases to be accounted for as operating leases.



<TABLE>
<CAPTION>


                                Financial Statements and Supplementary Data
                                         Amtran, Inc. and Subsidiaries
                                    1999 Quarterly Financial Summary
                                                (Unaudited)
-------------------------------------------------------------------------------------------------------
(In thousands, except per share data)     March 31        June 30       September 30      December 31
-------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>              <C>
Operating revenues                        $277,909        $284,714        $303,921         $256,822
Operating expenses                         248,950         254,284         275,851          253,254
Operating income                            28,959          30,430          27,070            3,568
Other expenses                             (1,516)         (3,603)         (3,886)          (3,225)
Income before income taxes                  27,443          26,827          23,184              343
Income taxes (credits)                      10,903          10,122           9,484             (54)
Net income                                $ 16,540        $ 16,705        $ 13,700         $    397
Net income per share - basic              $   1.36        $   1.37        $   1.10         $    .03
Net income per share - diluted            $   1.22        $   1.24        $   1.01         $    .03


                            Financial Statements and Supplementary Data
                                         Amtran, Inc. and Subsidiaries
                                    1998 Quarterly Financial Summary
                                                (Unaudited)
-------------------------------------------------------------------------------------------------------
(In thousands, except per share data)     March 31        June 30       September 30      December 31
-------------------------------------------------------------------------------------------------------
Operating revenues                        $229,305        $238,464        $242,414         $209,186
Operating expenses                         205,896         213,820         219,517          204,763
Operating income                            23,409          24,644          22,897            4,423
Other expenses                             (2,138)         (1,995)         (2,049)          (1,981)
Income before income taxes                  21,271          22,649          20,848            2,442
Income taxes                                 8,872           8,854           8,415              988
Net income                                $ 12,399        $ 13,795        $ 12,433         $  1,454
Net income per share - basic              $   1.07        $   1.19        $   1.06         $    .12
Net income per share - diluted            $   1.02        $   1.05        $    .92         $    .11

</TABLE>


Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

No change of auditors or disagreements on accounting methods have occurred which
would require disclosure hereunder.



Part III

Item 10.   Directors and Officers of the Registrant

The  information  contained on pages 6 and 7 of Amtran,  Inc. and  Subsidiaries'
Proxy  Statement  dated April 5, 2000,  with respect to directors  and executive
officers of the Company, is incorporated herein by reference in response to this
item.


Item 11.   Executive Compensation

The  information   contained  on  pages  12  through  15  of  Amtran,  Inc.  and
Subsidiaries'  Proxy  Statement  dated April 5, 2000,  with respect to executive
compensation and transactions,  is incorporated  herein by reference in response
to this item.


Item 12.   Security Ownership of Certain Beneficial Owners and Management

The information  contained on page 11 of Amtran,  Inc. and  Subsidiaries'  Proxy
Statement  dated April 5, 2000,  with  respect to security  ownership of certain
beneficial  owners  and  management,  is  incorporated  herein by  reference  in
response to this item.

<PAGE>

Item 13.   Certain Relationships and Related Transactions

The  information  contained on page 8 of Amtran,  Inc. and  Subsidiaries'  Proxy
Statement dated April 5, 2000, with respect to certain relationships and related
transactions, is incorporated herein by reference in response to this item.



PART IV

Item 14.   Exhibits, Financial Statement Schedule and Reports on Form 8-K

         (a)  (1)    Financial Statements

                       The following  consolidated  financial  statements of the
                       Company and its subsidiaries are included in Item 8:

                       o Consolidated Balance Sheets for years ended
                         December 31, 1999 and 1998

                       o Consolidated Statements of Operations for years
                         ended December 31, 1999, 1998 and 1997

                       o Consolidated  Statements of Changes in Shareholders'
                         Equity for years ended December 31, 1999, 1998 and 1997

                       o Consolidated Statements of Cash Flows for years ended
                         December 31, 1999, 1998 and 1997

                       o Notes to Consolidated Financial Statements

              (2)    Financial Statement Schedule

                     The following  consolidated  financial  information for the
                     years 1999, 1998 and 1997 is included in Item 14(d):

                                                                            Page
                  o  Schedule II - Valuation and Qualifying Accounts          53

            All  other schedules for which provision  is made in  the applicable
            accounting  regulation of the Securities and Exchange Commission are
            not required under the related  instructions or are inapplicable and
            therefore have been omitted.


              (3)   Exhibits

                    The  following  exhibits  are  submitted  as  a  separate
                    section of this report:

                                                                            Page
                    23.   Consent of Independent Auditor                      52

       (b)     Reports on Form 8-K

               There were no Form 8-Ks filed during the quarter ended
               December 31, 1999

       (c)     Exhibits

               This section is not applicable.

       (d)     Financial Statement Schedule

               This section is not applicable.


<PAGE>


Signatures

Pursuant  to the  requirement  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.


                                        Amtran, Inc.
                                    (Registrant)


Date:  March 30, 2000              J. George Mikelsons
                                   --------------------------
                                   J. George Mikelsons
                                   Chairman
                                   Director

Date:  March 30, 2000              John P. Tague
                                   --------------------------
                                   John P. Tague
                                   President and Chief Executive Officer
                                   Director

Date:  March 30, 2000              James W. Hlavacek
                                   ---------------------------
                                   James W. Hlavacek
                                   Executive Vice President and
                                   Chief Operating Officer
                                   Director

Date:  March 30, 2000              Kenneth K. Wolff
                                   ---------------------------
                                   Kenneth K. Wolff
                                   Executive Vice President and
                                   Chief Financial Officer
                                   Director

Date:  March 30, 2000              Robert A. Abel
                                   ---------------------------
                                   Robert A. Abel
                                   Director

Date:  March 30, 2000              William P. Rogers, Jr.
                                   ---------------------------
                                   William P. Rogers, Jr.
                                   Director

Date:  March 30, 2000              Andrejs P. Stipnieks
                                   ---------------------------
                                   Andrejs P. Stipnieks
                                   Director

Date:  March 30, 2000              David M. Wing
                                   ---------------------------
                                   David M. Wing
                                   Vice President and Controller
                                   Chief Accounting Officer





<PAGE>



              Exhibit 23



                                               CONSENT OF INDEPENDENT AUDITORS


              We consent to the  incorporation  by reference in the Registration
              Statement  (Form  S-3  No.  333-52655)  of  Amtran,  Inc.  and its
              subsidiaries and in the related Prospectus and in the Registration
              Statement (Form S-8 No. 33-65708) pertaining to the 1993 Incentive
              Stock Plan for Key Employees of Amtran,  Inc. and its subsidiaries
              and in the  Registration  Statement  (Form S-3 No.  333-86791)  of
              Amtran, Inc. and its subsidiaries and in the related Prospectus of
              our  report  dated   January  27,   2000,   with  respect  to  the
              consolidated  financial  statements and schedule of Amtran,  Inc.,
              included  in the  Annual  Report  (Form  10-K) for the year  ended
              December 31, 1999.













              /S/ ERNST & YOUNG LLP
              Indianapolis, Indiana
              March 27, 2000






<PAGE>

<TABLE>
<CAPTION>



PART IV                                                                                    SCHEDULE   II
Item 14(d)



                                                            VALUATION AND QUALIFYING ACCOUNTS
                                                                  (Dollars in thousands)

COLUMN A                                     COLUMN B               COLUMN C              COLUMN D       COLUMN E
                                                                    Additions
                                                                    ---------
                                                                       Charged to
                                             Balance at   Charged to   Other                             Balance at
                                             Beginning    Costs and    Accounts -       Deductions -     End of
Description                                  of Period     Expenses    Describe         Describe         Period
                                             ---------    ---------    ---------        ------------     -------

Year ended December 31, 1997:

  Deducted from asset accounts:

<S>                                          <C>          <C>         <C>             <C>             <C>
    Allowance for doubtful accounts          $   1,274    $   1,261   $        -      $     853(1)    $    1,682
    Allowance for obsolescence - Inventory       6,594        1,474            -            437(2)         7,631
    Valuation allowance - Assets
      held for sale                                  -          200            -              -              200
                                             ---------    ---------   ----------        ------------     -------
      Totals                                     7,868        2,935            -          1,290            9,513
                                             =========    =========   ==========        ============     =======
Year ended December 31, 1998:

  Deducted from asset accounts:
    Allowance for doubtful accounts               1,682        1,492           -          2,011(1)         1,163
    Allowance for obsolescence - Inventory        7,631        1,905           -          1,095(2)         8,441
    Valuation allowance - Assets
      held for sale                                 200            -           -            200(3)             -
                                              ---------    ---------   ----------        ------------     -------
      Totals                                      9,513        3,397           -          3,306            9,604
                                              =========    =========   ==========        ============     =======

Year ended December 31, 1999:

  Deducted from asset accounts:
    Allowance for doubtful accounts                1,163       2,318           -          1,970(1)         1,511
    Allowance for obsolescence - Inventory         8,441       1,872           -             22(2)        10,291
                                               ---------    ---------   ----------        ------------    -------
      Totals                                  $    9,604    $  4,190   $       -      $   1,992         $  11,802
                                               =========    =========   ==========        ============    =======
</TABLE>

(1)   Uncollectible accounts written off, net of recoveries

(2)   Obsolescence allowance related to inventory items transferred to flight
      equipment or sold

(3)   Valuation allowance related to parts sold