EXECUTION COPY

                               SECURITY AGREEMENT

     THIS SECURITY AGREEMENT, dated as of September 29, 2003 (this "Agreement"),
by Midwest Express Holdings, Inc., a Wisconsin corporation ("Holdings"), Midwest
Airlines, Inc., a Wisconsin corporation ("Midwest"), Skyway Airlines, Inc., a
Delaware corporation ("Skyway" and together with Midwest, "Carriers"), and YX
Properties, LLC, a Nebraska limited liability company ("YX") (each individually
"Debtor," and collectively "Debtors"), SF Capital Partners, Ltd. as agent (in
such capacity, "Collateral Agent") for the benefit of the parties identified on
Schedule A hereto and their respective successors and assigns (each individually
"Noteholder" and collectively, "Noteholders") and Noteholders.

                                    RECITALS
                                    --------

     A. Holdings is the direct or indirect, as applicable, 100% parent of
Carriers and YX.

     B. Debtors have issued, or intend to issue, to Noteholders those certain
6.75% Convertible Senior Secured Notes due October 1, 2008, in an aggregate
principal amount of $25,000,000 (the "Notes").

     C. As a condition to their willingness to purchase the Notes, Noteholders
have required that Debtors execute and deliver this Agreement to secure Debtors'
respective obligations under the Notes.

                                   AGREEMENTS
                                   ----------

     In consideration of the Recitals, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

     1. Definitions.

          As used in this Agreement, the following terms shall have the
     designated meanings:

          a. The term "Act" means Title 49 of the United States Code which,
     among other things, recodified and replaced the U.S. Federal Aviation Act
     of 1958, and the regulations promulgated thereunder, or any subsequent
     legislation that amends, supplements or supersedes such provisions.

          b. The term "Aircraft" shall have the meaning ascribed to it in
     Section 1(e)(ii).

          c. The term "Appliance" means any instrument, mechanism, equipment,
     part, apparatus, appurtenance or accessory, including communications
     equipment, that is used in operating or controlling an aircraft in flight,
     is installed in or attached to the aircraft, and is not part of an Aircraft
     or Engine.

          d. The term "Business Day" means any day other than a Saturday, Sunday
     or other day on which commercial banks are authorized or required by law to
     be closed in the state of New York.

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          e. The term "Collateral" means all of the following property which
     Debtors own on the date hereof, wherever located:

               i. all equipment and fixtures, other than Aircraft, Engines,
          Spare Parts and Appliances;

               ii. the aircraft described on Schedule B hereto (individually and
          collectively "Aircraft"), together with (and the term "Aircraft" shall
          include) all appliances, parts, instruments, appurtenances,
          accessories and equipment (including communication and radar
          equipment) now owned by either Carrier and now or hereafter
          incorporated or installed in or attached to any of such aircraft, and
          all substitutions, replacements and renewals of any and all thereof
          now owned by either Carrier and all other property now owned by either
          Carrier which shall hereafter become physically incorporated or
          installed in or attached to such aircraft, exclusive of Engines (as
          defined below); provided, however, that if any DC9 Collateral is sold
          or otherwise disposed of, pursuant to Section 7(b) of the Notes, prior
          to the termination of the Escrow Agreement (as defined in the
          Securities Purchase Agreement), Collateral Agent hereby authorizes
          Debtors to redact Schedule B accordingly and make such conforming
          changes as are necessary to any FAA filings or related documents;

               iii. all aircraft engines described on Schedule C hereto or
          described in any Supplemental Security Agreement (as hereinafter
          defined) (individually "Engine" and collectively "Engines") together
          with (and the terms "Engine" and "Engines" shall include) all
          appliances, parts, instruments, appurtenances, accessories and
          equipment now owned by either Carrier and now or hereafter
          incorporated or installed in or attached to any of such aircraft
          engines, and all substitutions, replacements and renewals of any and
          all thereof now owned by either Carrier and all other property now
          owned by either Carrier which shall hereafter become physically
          incorporated or installed in or attached to such aircraft engines,
          exclusive of Aircraft (as defined above); provided, however, that if
          any DC9 Collateral is sold or otherwise disposed of, pursuant to
          Section 7(b) of the Notes, prior to the termination of the Escrow
          Agreement, Collateral Agent hereby authorizes Debtors to redact
          Schedule B accordingly and make such conforming changes as are
          necessary to any FAA filings or related documents;

               iv. all Spare Parts;

               v. all Appliances;

               vi. the rights and operational authority now held by any Debtor
          in and to the operating authority granted by the FAA (pursuant to
          Title 14 of the United States Code of Federal Regulations, Part 93,
          Subparts K and S, as amended from time to time, or any successor or
          recodified regulation) to conduct one Instrument Flight Rule (as
          defined under the federal aviation regulations) landing or takeoff
          operation in a specified time period at Ronald Reagan Washington
          National Airport (DCA) or La Guardia Airport (LGA) (such rights and
          operational authority are referred to in this Agreement as the
          "Slots," and are described on Schedule E hereto);

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               vii. all books, records and documents of any Debtor relating to
          Collateral described in clauses (i) through (vii) above, including,
          records and documents relating to such Collateral's operation,
          maintenance or repair, including manufacturer's manuals, service
          bulletins, Aircraft log books and, flight manuals and minimum
          equipment lists for the Aircraft, Engines, Spare Parts or Appliances
          (the "Collateral Records");

               viii. all proceeds of any and all of the properties described in
          paragraphs (i) through (vii) above, including rents, leases and
          profits and insurance proceeds (and Debtors' rights to receive such
          insurance proceeds) with respect to any of the foregoing Collateral
          and other proceeds of any kind resulting from any Event of Loss with
          respect to any Aircraft or Engine;

          provided, however, that the Collateral shall not include the Excluded
          Assets.

          f. The term "Collateral Records" shall have the meaning ascribed to it
     in Section 1(e)(vii).

          g. The term "DC9 Collateral" means all Aircraft of Model DC9-14 or
     DC9-32 identified on Schedule B, together with all Engines attached to any
     such Aircraft and all equipment, Spare Parts and Appliances designed to be
     installed in or attached to such Aircraft.

          h. The term "DOT" means the Department of Transportation of the United
     States of America, and any successor governmental authority.

          i. The terms "Engine" and "Engines" shall have the meanings ascribed
     to them in Section 1(e)(iii).

          j. The term "Event of Loss" means any of the following events with
     respect to any Aircraft or any Engine:

               i. The actual total loss of such Aircraft or such Engine;

               ii. Such Aircraft or such Engine shall become lost, stolen (and
          not returned within 30 days), destroyed, damaged beyond repair or
          permanently rendered unfit for use for any reason whatsoever;

               iii. Any damage to such Aircraft or such Engine that shall result
          in an insurance settlement with respect thereto on the basis of a
          total loss; or

               iv. The condemnation, confiscation or seizure of, or requisition
          of title to or use (other than use by the United States government)
          of, such Aircraft or such Engine continuing to the earlier of the
          expiration of 60 days thereafter or the receipt of insurance or other
          proceeds with respect thereto.

          k. The term "Excluded Assets" means assets subject to Permitted Liens
     described in clause (ii) and (viii) of the definition of Permitted Liens.

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          l. The term "Existing Bank Liens" means all liens on and security
     interests in Collateral securing obligations arising under that certain
     Senior Secured Revolving Credit Agreement, dated as of August 31, 2001, as
     amended, by and among Holdings, the Lenders party thereto and U.S. Bank
     National Association, as a Lender and as Agent.

          m. The term "FAA" means the Federal Aviation Administration of the
     United States of America, and any successor governmental authority.

          n. The term "GAAP" means generally accepted accounting principles set
     forth from time to time in the opinions and pronouncements of the
     Accounting Principles Board and the American Institute of Certified Public
     Accountants and statements and pronouncements of the Financial Accounting
     Standards Board (or agencies with similar functions of comparable stature
     and authority within the U.S. accounting profession), which are applicable
     to the circumstances as of the date of determination.

          o. The term "Obligations" means:

               i. Any and all present and future debts, obligations and
          liabilities of Debtors to Noteholders pursuant to the Notes, whether
          due or not due, absolute or contingent, liquidated or unliquidated,
          determined or undetermined, whether for principal, contract interest
          (whether before or after maturity) or other debts, obligations or
          liabilities, and whether or not any or all such debts, obligations and
          liabilities are or become barred by any statute of limitations or
          otherwise unenforceable;

               ii. All debts, obligations and liabilities of Debtors under this
          Agreement.

          p. The term "Permitted Liens" means:

               i. the liens and security interests created or contemplated by
          this Agreement;

               ii. liens and security interests securing indebtedness incurred
          in the ordinary course of business and arising out of the lease or
          purchase of goods, or the financing or refinancing of goods previously
          acquired, provided that such liens and security interests cover only
          such goods and contract rights, deposits and/or other intangible
          assets related to such goods and proceeds of any of the foregoing;

               iii. transfers of possession, exchanges and other acts permitted
          by Section 3(a)(x) of this Agreement;

               iv. liens for taxes, assessments or governmental charges or
          claims that are not yet delinquent or that are being contested in good
          faith by appropriate proceedings promptly instituted and diligently
          concluded; provided that any reserve or other appropriate provision as
          shall be required in conformity with GAAP shall have been made
          therefor;

               v. mechanics', materialmen's, carriers', warehousemen's and other
          like liens arising in the ordinary course of business in respect of
          obligations not overdue

<PAGE>
          for a period in excess of 30 days or that are being contested in good
          faith by appropriate proceedings promptly instituted and diligently
          prosecuted; provided further that any reserve or other appropriate
          provision as shall be required in conformity with GAAP shall have been
          made therefore;

               vi. easements, rights of way, restrictions and other similar
          encumbrances incurred in the ordinary course of business which, in the
          aggregate, are not material in amount and which do not in any case
          materially detract from the value of the property subject thereto or
          materially interfere with the ordinary conduct of the business of the
          applicable Debtor;

               vii. any right of the United States government to requisition any
          Aircraft or otherwise to compel a Carrier to deliver possession of or
          provide use of any Aircraft for government purposes;

               viii. liens on and security interests in fixtures located at the
          facility at 6744 S. Howell Avenue, Oak Creek, Wisconsin 53154; and

               ix. any attachment or judgment lien not constituting an Event of
          Default under the Notes.

          q. The term "Person" means an individual, a limited liability company,
     a partnership, a joint venture, a corporation, a trust, an unincorporated
     organization, any other entity and a government or any department or agency
     thereof (collectively, "Persons").

          r. The term "Registration Rights Agreement" means that certain
     Registration Rights Agreement, dated as of September 29, 2003, by and among
     Holdings and the Initial Investors, as defined therein, as the same may be
     amended, restated or otherwise modified from time to time.

          s. The term "Required Noteholders" means at any time particular
     Noteholders holding at least two-thirds of the then outstanding principal
     amount of the Notes.

          t. The term "Securities Purchase Agreement" means that certain
     Securities Purchase Agreement, dated as of September 29, 2003, by and among
     Debtors and Noteholders, as the same may be amended, restated or otherwise
     modified from time to time.

          u. The term "Slots" shall have the meaning ascribed to it in Section
     1(e)(vi).

          v. The term "Spare Part" means any accessory, appurtenance or part of
     an Aircraft, Engine or Appliance, that is to be installed at a later time
     in an Aircraft, Engine or Appliance.

          w. The term "Unrestricted Cash Balance" shall have the meaning
     ascribed to it in the Notes.

     All capitalized terms used in this Agreement and not otherwise defined in
this Agreement shall have the meanings given to them in the Securities Purchase
Agreement or the Notes.

<PAGE>
     2. Security Interest.

     To secure the payment and performance of the Obligations, each Debtor
hereby mortgages to Collateral Agent, and grants to Collateral Agent a security
interest in, for the ratable benefit of Noteholders, all Collateral owned on the
date hereof, wherever located.

     3. Certain Representations, Warranties and Covenants.

          a. Each Debtor hereby represents and warrants and hereby covenants as
     follows:

               i. Debtor has delivered to Collateral Agent all: (A) UCC-1
          financing statements and FAA lien registration statements; (B) UCC
          financing statement, lien or similar search reports for all
          jurisdictions in which any portion of the Collateral is located; and
          (C) FAA title reports regarding the Aircraft and Engines, in each case
          as have been reasonably requested by Collateral Agent. The documents
          delivered pursuant to clauses (B) and (C) above do not reveal any
          mortgage, lien, security interest, charge or encumbrance on the
          Collateral, other than Existing Bank Liens (which liens will be
          released in connection with the closing of this Agreement) and
          Permitted Liens.

               ii. Debtor agrees to maintain all Collateral free and clear of
          all mortgages, deeds of trust, liens, security interests and other
          charges or encumbrances except Permitted Liens.

               iii. Upon: (1) the due filing of appropriate UCC-1 financing
          statements with: (a) the Office of the Department of Financial
          Institutions of the State of Wisconsin for Collateral owned by
          Holdings or Midwest; (b) the Office of the Secretary of State of
          Delaware for Collateral owned by Skyway; and (c) the Office of the
          Nebraska Secretary of State for Collateral owned by YX; and (2) the
          due recordation of this Agreement or any Supplemental Security
          Agreement with the FAA, Collateral Agent on behalf of Noteholders will
          have a valid and perfected security interest in the Collateral prior
          to the rights of all other Persons therein, subject to:

                    (1) Permitted Liens;

                    (2) the rights and interests of the FAA in the Slots,
               including the ability of the FAA to withdraw Slots pursuant to
               the Act; and

                    (3) the possibility of loss of a valid and perfected
               security interest in Spare Parts and Appliances when such
               Collateral is not situated at one of the locations described on
               Schedule D.

               iv. The execution, delivery and performance of this Agreement by
          such Debtor:

                    (1) have been duly authorized by all necessary corporate
               action or limited liability company action, as applicable;

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                    (2) do not and will not require any consent or approval of
               such Debtor's shareholders or members, as applicable;

                    (3) do not violate any provision of any law, rule,
               regulation, order, writ, judgment, injunction, decree,
               determination or award presently in effect having applicability
               to such Debtor;

                    (4) do not violate any provision of such Debtor's articles
               of incorporation, bylaws, articles of organization, operating
               agreement or other organizational documents, as applicable;

                    (5) do not result in a breach of or constitute a default
               under any indenture or loan or credit agreement or any other
               agreement, lease or instrument to which such Debtor is a party or
               by which it or its properties may be bound or affected; and

                    (6) do not require authorization, consent, approval,
               license, exemption of or filing a registration with any court or
               governmental department, commission, board, bureau, agency or
               instrumentality, domestic or foreign, other than filings to
               perfect Collateral Agent's interest in the Collateral, as
               contemplated hereby.

               v. This Agreement is the legal, valid and binding obligation of
          such Debtor enforceable against it in accordance with the terms
          hereof, subject to the effect of general principles of equity and any
          applicable bankruptcy, receivership, insolvency, reorganization,
          moratorium, fraudulent conveyance or transfer or similar laws
          affecting creditors' rights generally.

               vi. Subject to the rights and interests of the FAA in the Slots,
          including the ability of the FAA or other governmental authority to
          withdraw Slots or otherwise modify the rights or obligations of such
          Debtor with respect to the Slots, such Debtor holds the requisite
          authority to hold each of its Slots pursuant to authority granted by
          the FAA; and it has, at all times after obtaining each such Slot,
          complied in all material respects with all of the terms, conditions
          and limitations of each rule or regulation of the FAA and DOT
          regarding each such Slot and with all applicable provisions of the Act
          and there exists no violation as of the date hereof of such terms,
          conditions or limitations that gives the FAA or DOT the right to
          terminate, cancel, withdraw or modify the rights of such Debtor in any
          such Slot.

               vii. Such Debtor is utilizing its Slots in a manner consistent
          with applicable regulations and contracts in order to preserve the
          value of such Slots.

               viii. No such Debtor has received any notice from the FAA, or is
          aware of any other event or circumstance, other than the proposed 2007
          partial phase-out of Slots at La Guardia Airport, that would be
          reasonably likely to impair the Slots or their value.

<PAGE>
               ix. Except for sales or dispositions pursuant to Section 3(a)(x),
          such Debtor will take, or cause to be taken, all actions as may be
          necessary now or in the future to maintain, renew and obtain the
          rights, licenses, authorizations or certifications as are necessary to
          the continued use by such Debtor of its Slots.

               x. Such Debtor will not, without the prior written consent of
          Collateral Agent, sell, assign, lease or otherwise dispose of or
          relinquish possession of any of the Collateral, except that, unless an
          Event of Default (as defined in Section 12) shall have occurred and be
          continuing, such Debtor may:

                    (1) in the case of either Carrier, transfer possession of
               any of its Aircraft or Engines to the United States government
               pursuant to a contract or lease pursuant to which the United
               States government assumes all liability for any damage, loss,
               destruction or failure to return possession of such Aircraft or
               such Engine at the end of the term of such contract, a copy of
               which shall be furnished to Collateral Agent;

                    (2) in the case of either Carrier, transfer possession in
               the ordinary course of business of any of its Aircraft, Engines,
               Spare Parts or Appliances to the manufacturer thereof or any
               other organization for testing, repairs, servicing, maintenance,
               overhaul, alterations or modifications;

                    (3) in the case of either Carrier, exchange Engines in the
               ordinary course of business for equivalent engines, provided that
               such Carrier complies with the terms and conditions of Section 8
               for Replacement Engines; provided, however, that: (i) such
               replacement engines shall be made Collateral subject to the lien
               of this Agreement; and (ii) the representations and warranties
               made herein with respect to Engines shall be true and correct in
               all material respects as to such Replacement Engines;

                    (4) exchange Collateral other than Engines in the ordinary
               course of business for Collateral of substantially comparable
               value and utility; provided, however, that such replacement
               Collateral is made subject to the lien of this Agreement; and

                    (5) in the case of any Debtor, sell or otherwise dispose of
               Collateral as permitted under Section 7(b) of the Notes.

                    (6) in the case of any Debtor, and with the exception of
               real property, Aircraft and Engines, sell or otherwise dispose of
               any Collateral, that is no longer of any utility to such Debtor.

               xi. The Slots identified on Schedule E are all of the Slots held
          by such Debtor that such Debtor may sell or lease under the Act.

               xii. The chief executive office (as such term is used in Article
          9 of the Uniform Commercial Code) of each Debtor is accurately set
          forth beneath the signature of such Debtor below.

<PAGE>
          b. Each of the Carriers hereby represents and warrants and hereby
     covenants as follows:

               i. Schedule B and Schedule C identify, respectively, all Aircraft
          and Engines owned by such Carrier, free and clear of any mortgage,
          lien, security interest or other charge or encumbrance, except
          Existing Bank Liens and Permitted Liens.

               ii. Such Carrier has, and at all time will have, good title to
          the Aircraft and the Engines identified on Schedule B or Schedule C,
          as applicable, free and clear of all mortgages, liens, security
          interests and other charges or encumbrances except Existing Bank Liens
          and Permitted Liens, and has, and at all times will have, full power
          and authority to mortgage and grant a lien and security interest in,
          and assign rights in, the Aircraft and Engines.

               iii. Such Carrier has, and at all time will have, good title to
          the Spare Parts and Appliances owned by it, as applicable, free and
          clear of all mortgages, liens, security interests and other charges or
          encumbrances except Existing Bank Liens and Permitted Liens, and has,
          and at all times will have, full power and authority to grant a lien
          and security interest in, and assign rights in, the Spare Parts, and
          Appliances.

               iv. With the exception of the DC9 Collateral, such Carrier agrees
          to keep the Spare Parts and Appliances at one of the facilities
          identified on Schedule D, it being understood that, the Spare Parts
          and Appliances may from time to time in the ordinary course of
          business be installed on aircraft (including, but not limited to,
          Aircraft) and that during such time as such equipment is so installed
          such equipment shall not be included within the definition "Spare
          Parts" or "Appliances" and shall not, if installed on aircraft that
          are not Aircraft, be subject to this Agreement or the Collateral
          Agent's security interest hereunder.

               v. The Spare Parts and Appliances are maintained by or on behalf
          of such Carrier.

               vi. Such Carrier is, and at all times will be: (i) a "Citizen of
          the United States" as defined in Section 40l02(a)(15) of 49 U.S.C.;
          (ii) an air carrier as to which the provisions of Section 1110 of the
          United States Bankruptcy Code apply; and (iii) an air carrier
          certificated under Sections 41102(a) and 44705 of 49 U.S.C.

               vii. Each of the Aircraft is registered with the Federal Aviation
          Administration in the name of the applicable Carrier indicated on
          Schedule B and such Carrier will take all necessary action to cause
          such registration to remain in effect.

               viii. Such Carrier's Collateral Records (as defined in Section
          1(e)(vii)) are located only at the locations listed on Schedule F, or
          such Carrier's respective chief executive office, as set forth beneath
          the signature of such Carrier below.

               ix. Such Carrier shall bear all risk of loss or damage to its
          Collateral.

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               x. With the exception of the DC9 Collateral, such Carrier, at its
          own cost and expense, shall service, repair and maintain each of its
          Aircraft and Engines in accordance with an FAA-approved maintenance
          program and all manufacturer's aircraft maintenance manuals and
          airworthiness directives, and, subject to such Carrier's right to
          apply proceeds of insurance in accordance with Section 10(f) below,
          shall install replacement equipment and parts on each of its Aircraft
          and Engines so as to keep each such Aircraft or Engine in such
          operating condition as may be required to permit each such Aircraft
          and Engine to be utilized in commercial charter operations and
          scheduled airline service in the United States and shall maintain all
          records, logs and other materials that may be required to permit each
          such Aircraft and Engine to be so utilized.

               xi. Such Carrier will comply and will cause compliance with all
          laws, regulations or orders of any government or governmental
          authority, domestic or foreign, having jurisdiction over such Carrier
          or its Collateral, including all applicable operational and
          maintenance requirements of the Federal Aviation Administration, and
          will at all times maintain in effect appropriate United States FAA
          Certificates of Airworthiness for each of its Aircraft.

               xii. With the exception of the DC9 Collateral, such Carrier shall
          maintain its Collateral in compliance with all applicable
          manufacturer's manuals and service bulletins, and agrees that such
          Collateral will not be maintained, used or operated in violation of
          any law or any rule, regulation or order of any government or
          governmental authority, domestic or foreign, having jurisdiction over
          such Carrier, or in violation of any airworthiness certificate,
          license or registration relating to such Collateral issued by any such
          government or governmental authority, and in the event that such laws,
          rules, regulations or orders require alteration of any of such
          Collateral, such Carrier, at its own cost and expense, will conform
          thereto or obtain conformance therewith within the time period
          allotted for compliance by such government or governmental authority,
          and will maintain the same in proper operating condition under such
          laws, rules, regulations and orders; provided, however, that such
          Carrier may, in good faith, contest the validity or application of any
          such law, rule, regulation or order in any reasonable manner that does
          not materially and adversely affect the interests of Collateral Agent
          under this Agreement.

               xiii. Without the prior written consent of Collateral Agent, such
          Carrier shall not fly any of its Aircraft or Engines or suffer any
          thereof to be flown or located to, from or within:

                    (1) any area excluded from coverage by any insurance policy
               required hereunder to be maintained in effect with respect to
               each of such Aircraft or any such Engine; or

                    (2) any area of hostilities recognized or designated by the
               United States government or an insurance carrier then insuring
               aircraft in such Carrier's fleet, unless fully covered by
               war-risk hull insurance or unless such Aircraft or Engine is
               operated or used under contract or lease with the government of
               the United States of America pursuant to which the government

<PAGE>
               of the United States assumes all liability for any damage, loss,
               destruction or failure to return possession of such Aircraft or
               Engine at the end of the term of such contract.

     4. Inspection.

     Upon reasonable request, Debtors will permit any authorized representatives
of Collateral Agent to inspect the Collateral or any part thereof, and
reasonably to examine, copy or make extracts from the Collateral Records.

     5. Liens, Encumbrances and Claims.

     Debtors will not directly or indirectly create, incur, assume or suffer to
exist any lien, security interest, charge or encumbrance on or with respect to
any part or all of the Collateral, title thereto or any interest therein, except
any Permitted Liens. Each Debtor shall, at its sole expense, defend the security
interest in the Collateral that it owns against any and all claims of any party
(other than holders of Permitted Liens) adverse to any Noteholders and take such
action and execute such financing statements and other documents as Noteholders
may from time to time reasonably request to maintain the perfected status of the
security interest granted hereunder and Collateral Agent is hereby authorized to
file all such financing statements and other documents without further action on
the part of Debtors.

     6. Collateral Agent.

          a. Appointment of Collateral Agent. Subject to the terms and
     conditions of this Agreement, Noteholders hereby appoint SF Capital
     Partners, Ltd. as Collateral Agent for the benefit of Noteholders with
     respect to the liens upon, and the security interests in, the Collateral,
     and with respect to the rights and remedies granted under and pursuant to
     this Agreement, and SF Capital Partners, Ltd. hereby accepts such
     appointment and agrees to act as agent for the benefit of Noteholders. The
     appointment of Collateral Agent shall be effective with respect to all
     financing statements filed in any UCC filing office, all FAA lien
     registration statements and all other filings or recordings of Collateral
     Agent's security interest and lien pursuant to this Agreement.

          b. Duties of Collateral Agent. Each Noteholder hereby irrevocably
     authorizes Collateral Agent to take such action on its behalf under the
     provisions of this Agreement and to exercise such powers and to perform
     such duties hereunder as are specifically delegated to or required of
     Collateral Agent by the terms hereof and such other powers as are
     reasonably incidental hereto. The duties of Collateral Agent shall be
     mechanical and administrative in nature; Collateral Agent shall not have by
     reason of this Agreement a fiduciary relationship with any Noteholder.
     Noteholders hereby expressly authorize Collateral Agent on behalf of all
     Noteholders, without the necessity of any notice to, or further consent
     from, any Noteholder, from time to time, to take any action with respect to
     any Collateral that may be necessary to perfect or maintain the perfection
     of the security interest in and liens upon the Collateral granted pursuant
     to this Agreement.

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          c. Collateral Agent's Release of Security Interest. Noteholders hereby
     authorize Collateral Agent, at its discretion, to release the Collateral
     from the security interest granted by this Agreement pursuant to Section 16
     of this Agreement.

          d. Liability of Collateral Agent. In the absence of gross negligence,
     willful misconduct or breach of this Agreement, Collateral Agent will not
     be liable to Noteholders for any action or failure to act or any error of
     judgment, negligence, mistake or oversight on Collateral Agent's part or on
     the part of any of its attorneys, employees or agents.

          e. Indemnification of Collateral Agent. Each Noteholder shall
     reimburse and indemnify Collateral Agent, in proportion to each
     Noteholder's respective holding of the outstanding Notes, for and against
     any and all liabilities, obligations, losses, damages, penalties, actions,
     judgments, suits, costs, expenses, attorneys' fees or disbursements which
     may be imposed on, incurred by or asserted against the Collateral Agent in
     performing its duties hereunder; provided, however, that no Noteholder
     shall be liable for any portion of such liabilities, obligations, losses,
     damages, penalties, actions, judgments, suits, costs, expenses, attorneys'
     fees or disbursements resulting from the Collateral Agent's gross
     negligence or willful misconduct.

          f. No Reliance on Collateral Agent. Neither Collateral Agent nor any
     of its attorneys, employees or agents shall be deemed to have made any
     representations or warranties, express or implied, with respect to, nor
     shall Collateral Agent or any such attorney, employee or agent be liable to
     Noteholders for:

                    (1) any recitals, representations, warranties or covenants
               made by Debtors in this Agreement;

                    (2) the due or proper execution or authorization of this
               Agreement by any party other than Collateral Agent;

                    (3) the present or future solvency or financial worth of
               Debtors; or

                    (4) the value, condition, existence or ownership of any of
               the Collateral or the sufficiency of any filing or other
               procedure taken or to be taken to attach or perfect any lien or
               security interest in the Collateral.

          g. Collateral Agent's Right to Perform for Debtors. If any Debtor
     shall fail to make any payment required hereunder or shall fail to perform
     or comply with any of such Debtor's agreements contained herein, Collateral
     Agent may, upon ten (10) days' prior written notice to such Debtor, make
     such payment or perform or comply with such agreement, and each Debtor
     shall be obligated to reimburse the Collateral Agent for such Debtor's
     ratable share of the amount of such payment.

          h. Collateral Agent as Attorney. Each Debtor hereby irrevocably and
     severally appoints Collateral Agent, effective while an Event of Default
     exists, the true and lawful attorney of such Debtor (with full power of
     substitution) in the name, place and stead of, and at the expense of, such
     Debtor in connection with the enforcement of the rights and remedies
     provided for in Sections 12 and 13:

<PAGE>
               i. to give any necessary receipts or acquittances for amounts
          collected or received thereunder;

               ii. to make all necessary transfer of all or any part of the
          Collateral in connection with any sale, lease or other disposition
          made pursuant hereto; and

               iii. to execute and deliver for value all necessary or
          appropriate bills of sale, assignments and other instruments in
          connection with any such sale, lease or other disposition.

          i. Collateral Agent's Rights as Noteholder. Collateral Agent shall
     have the same rights and powers under this Agreement as any other
     Noteholder and may exercise such rights and powers as though it were not
     Collateral Agent.

          j. Successor Collateral Agent. Collateral Agent may, upon sixty days'
     written notice to Noteholders, Holdings and Debtors, resign at any time,
     and Noteholders may, by an affirmative vote of Required Noteholders, remove
     Collateral Agent at any time. Upon any such resignation or removal,
     Noteholders shall have the right to appoint a successor Collateral Agent,
     by affirmative vote of Required Noteholders, and shall provide notice of
     appointment of such successor Collateral Agent to Holdings and Debtors. No
     resignation or removal of Collateral Agent shall become effective until a
     replacement Collateral Agent has been appointed and such successor agent
     has accepted such appointment.

     7. Early Termination.

     If: (i) Debtors maintain the Unrestricted Cash Balance as shown by the
quarterly financial statements of Holdings as filed with the SEC at no less than
$75,000,000 as of the end of any fiscal quarter for any period of six
consecutive fiscal quarters, which period begins with a fiscal quarter ending on
or after March 31, 2005; provided, however, that if the sum of the First Closing
(as defined in the Securities Purchase Agreement) proceeds released to Debtors
from escrow under the Escrow Agreement in respect of the principal amount of
Notes and the Second Closing (as defined in the Securities Purchase Agreement)
proceeds is less than $25,000,000, then the dollar amount set forth in this
clause (i) shall be reduced by an amount equal to the product of 3.0 times the
amount by which such sum is less than $25,000,000; or (ii) at any time the
aggregate balance of Notes outstanding is less than or equal to $10,000,000 and
the Unrestricted Cash Balance as shown by the financial statements of Holdings
as filed with the SEC is no less than $37,500,000 as of the most recent fiscal
quarter-end; then this Agreement and the liens and security interests granted
hereunder shall be terminated pursuant to Section 16 below.

     8. Replacement Engines.

     If an Event of Loss shall occur with respect to an Engine, the applicable
Carrier shall give Collateral Agent prompt written notice thereof and shall
either:

     (i) elect to apply and/or deposit the insurance proceeds arising from such
Event of Loss pursuant to the provisions of Section 10(f); or

<PAGE>
     (ii) within 60 days after such notice, duly convey to Collateral Agent, for
the benefit of itself and Noteholders, a lien and security interest in another
equivalent engine of the same model and manufacturer owned or acquired by such
Carrier (and not already subject to a security interest securing the
Obligations), free and clear of all security interests, liens, charges and other
encumbrances (except Permitted Liens) and having a value and utility reasonably
equivalent to, and being in as good operating condition as, and having
performance and durability characteristics reasonably equivalent to, the Engine
with respect to which such Event of Loss occurred if such Engine were in the
condition and repair as required by the terms hereof immediately prior to the
occurrence of such Event of Loss (each, a "Replacement Engine").

     In connection with any substitutions hereunder, the applicable Carrier
shall deliver to Collateral Agent the following:

          a. a Supplemental Security Agreement substantially in the form of
     Exhibit 8(a) (the "Supplemental Security Agreement") hereto duly executed
     by such Carrier describing the Replacement Engine(s) to be subjected to the
     lien and security interest of this Agreement;

          b. a certificate signed by the Treasurer or other authorized officer
     of such Carrier (an "Officer's Certificate"), dated as of the date of
     execution of such Supplemental Security Agreement, stating:

               i. that such Carrier is the owner of the Replacement Engine(s)
          described in such Supplemental Security Agreement, free and clear of
          all security interests, liens, charges and other encumbrances except
          Permitted Liens and that legal and beneficial title thereto is vested
          in such Carrier;

               ii. that such Supplemental Security Agreement has been duly
          authorized, executed and delivered by such Carrier;

          c. an opinion or opinions of counsel for such Carrier reasonably
     acceptable to Collateral Agent to be dated the date of execution of such
     Supplemental Security Agreement, stating:

                    (1) that the Replacement Engine(s) described in such
               Supplemental Security Agreement are free and clear of all
               recorded security interests, liens, charges and other
               encumbrances, except Permitted Liens;

                    (2) that such Supplemental Security Agreement:

                         (a) has been duly authorized, executed and delivered by
                    such Carrier and is enforceable against such Carrier; and

                         (b) creates a valid first security interest in and to
                    the Replacement Engine or Engines described in such
                    Supplemental Security Agreement, subject to Permitted Liens,
                    enforceable, wherever such Replacement Engine(s) are located
                    within the United States, against all third parties and
                    securing all obligations purported to be secured thereby,
                    and such security interest is fully perfected; and

<PAGE>
                    (3) that such Supplemental Security Agreement has been duly
               filed for recordation in accordance with the provisions of the
               Act;

          d. such evidence of title of such Carrier to such Replacement
     Engine(s), of the value thereof and compliance with the insurance
     provisions of Section 10 with respect thereto, as Collateral Agent may
     reasonably request; it being understood that it shall not be reasonable,
     absent an Event of Default, for Collateral Agent to request an appraisal of
     such Replacement Engine(s) if such Carrier would not ordinarily do so under
     the circumstances.

     9. Alterations; Modification and Additions.

     As applicable, either Carrier, at its own cost and expense, may from time
to time make such alterations and modifications in and additions to any Aircraft
or any Engine as such Carrier may deem desirable in the proper conduct of its
business; provided, however, that no such alteration, modification or addition
shall diminish the value, utility, condition or airworthiness of any Aircraft or
any Engine below the value, utility, condition or airworthiness thereof
immediately prior to such alteration, modification or addition. The parties
acknowledge and agree that this Section 9 shall not limit either Carrier's
discretion to modify the configuration of passenger seats on any Aircraft in any
manner consistent with the program of passenger service in which such Aircraft
is or is to be deployed.

     10. Insurance, Events of Loss, Etc.

          a. As applicable, Carriers, at their own cost and expense, will at all
     times carry and maintain in effect, or cause to be carried and maintained
     in effect, on the Collateral:

               i. third party and passenger liability insurance in an amount not
          less than the greater of (x) $400,000,000 per occurrence and (y) the
          amount of such insurance applicable to any other aircraft of the same
          model and manufacturer as the aircraft described on Schedule B hereto
          which is operated by the applicable Carrier either as owner or as
          original primary lessee (and not as sublessee or assignee of another
          primary lessee) on which such Carrier carries insurance;

               ii. property damage liability insurance;

               iii. aircraft hull risk insurance for each Aircraft and the
          Engines belonging to, installed in or appurtenant to each Aircraft
          (which all-risk hull insurance shall include coverage of Engines and
          Parts while temporarily removed from the Aircraft and not replaced by
          similar components) in an amount not less than the most recent
          appraised value of such Aircraft. Engines that are attached to an
          Aircraft are included in the overall agreed value of the Aircraft, and
          Engines that are detached from the Aircraft (and replaced by similar
          components) are insured on a replacement cost basis;

               iv. all-risk of physical loss or damage insurance on Engines
          while removed from the Aircraft;

               v. all-risk of physical loss or damage insurance on other
          tangible Collateral; and

<PAGE>
               vi. baggage and cargo liability insurance;

     In each case in such amounts (except where amounts are specified above) and
     in such form, including without limitation the form of the loss payable
     clause and the designation of named insureds (as applicable), and with such
     insurance companies, underwriters or funds of recognized responsibility as
     shall be reasonably satisfactory to Collateral Agent and as shall be
     declared from time to time by independent aircraft insurance brokers (who
     may be the brokers regularly employed by Carriers), appointed by Carriers
     and reasonably acceptable to Collateral Agent, to be necessary or advisable
     (in view of the insurance usually carried by corporations engaged in the
     same or a similar business as Carriers, similarly situated with Carriers
     and owning similar aircraft and engines) for the protection of the
     interests of Collateral Agent.

          b. All insurance required hereunder shall provide for payment in the
     United States in U.S. Dollars. All third party and passenger liability and
     property damage liability insurance shall insure against liability that
     Collateral Agent, Noteholders or either Carrier might incur by reason of
     the ownership or operation of any of the Aircraft in or over any area
     (including the high seas) in which any of the Aircraft is operated or
     located, shall be of the type usually carried by corporations engaged in
     the same or a similar business, similarly situated with Carriers, and
     owning similar aircraft and engines and shall cover risks of the kind
     customarily insured against by such corporations and, in the case of
     property damage liability insurance, shall be in amounts that are not less
     than property damage liability insurance applicable to the other aircraft
     in the applicable Carrier's fleet on which such Carrier carries such
     insurance.

          c. All liability policies shall name Collateral Agent as an additional
     insured as its interests may appear. All other policies required hereby
     covering loss or damage to the Collateral shall name Collateral Agent as an
     additional insured as its interests may appear and as a lender loss payee
     and shall provide that any payment thereunder for any loss or damage shall
     be paid to Collateral Agent; provided, however, if no Event of Default has
     occurred and is continuing, and the aggregate amount of all insurance
     proceeds of all losses and damage for the year are less than $2,500,000
     (the "Insurance Proceeds Floor Amount") and the applicable Carrier is
     otherwise entitled to receive a payment thereunder, proceeds under such
     policies shall be paid to the applicable Carrier for application as
     determined by such Carrier in its sole discretion. If no Event of Default
     has occurred and is continuing, but the aggregate amount of all insurance
     proceeds of all losses and damage for the year exceeds the Insurance
     Proceeds Floor Amount, and the applicable Carrier is otherwise entitled to
     receive a payment thereunder, proceeds under such policies in excess of the
     Insurance Proceeds Floor Amount that are received by Collateral Agent may
     be disbursed by Collateral Agent to such Carrier upon the written request
     of such Carrier subject to and provided that each of the following
     conditions is satisfied in form and substance satisfactory to Collateral
     Agent:

               i. all such proceeds shall be applied to repair in full any such
          loss or damage;

               ii. Collateral Agent, in consultation with the Carrier and the
          insurer, shall have determined that such repairs are feasible and
          economically prudent;

<PAGE>
               iii. there are sufficient proceeds on deposit with Collateral
          Agent to completely repair any such loss or damage, or the Carrier
          shall deposit funds with Collateral Agent in the amount of any
          deficiency;

               iv. all disbursements of such proceeds shall be paid by
          Collateral Agent from time to time as work progresses based upon
          disbursement procedures acceptable to Collateral Agent;

               v. the repairs can be completed within sixty (60) days from the
          date of such loss or damage or such other time agreed to in writing
          between the Carrier and Collateral Agent; and

               vi. the Carrier shall pay or reimburse Collateral Agent for all
          of its reasonable costs and expenses incurred in connection with the
          disbursement of such proceeds;

     provided, however, that even once the aggregate amount of insurance
     proceeds of all losses and damage for the year exceeds the Insurance
     Proceeds Floor Amount, insurance proceeds for a loss or damage of less than
     $100,000 per loss shall be paid to the applicable Carrier for application
     as determined by such Carrier in its sole discretion.

          d. All policies shall insure the interests of Collateral Agent
     regardless of any breach or violation by Carriers of warranties,
     declaration or conditions contained in such policies or any action or
     inaction of Collateral Agent or others; each such policy shall be primary
     without right of contribution from any other insurance that is carried by
     Carriers and shall expressly provide that all provisions thereof, except
     the limits of liability, shall operate in the same manner as if there were
     a separate policy covering each insured; each such policy shall waive any
     right of subrogation of the insurers against Collateral Agent; each such
     policy shall waive any right of the insurers to any set-off or counterclaim
     or any other deduction, whether by attachment or otherwise, in respect of
     any liability of Collateral Agent; and each such policy shall provide that,
     if any premium or installment is not paid when due, or if such insurance is
     canceled or terminated for any reason whatsoever, or if the scope of
     coverage or the limits of liability are reduced or any other material
     adverse change is made in or to the rights of Collateral Agent, the
     insurers will promptly notify Collateral Agent in writing and any such
     cancellation, termination or change shall not be effective as to Collateral
     Agent for 30 days after receipt of such notice, and that appropriate
     certification shall be made to Collateral Agent by each insurer with
     respect thereto.

          e. Carriers will cause such broker(s) to agree to advise Collateral
     Agent in writing promptly of any default in the payment of any premium and
     of any other act or omission on the part of either Carrier that it shall
     have knowledge that might invalidate or render unenforceable, in whole or
     in part, any such insurance. Carriers will promptly deliver to Collateral
     Agent, if requested by Collateral Agent, copies of certificates of
     insurance evidencing all such insurance.

          f. Notwithstanding any of the foregoing, upon the occurrence of an
     Event of Loss with respect to an Aircraft or Engine, the applicable Carrier
     may, by written notice to Collateral Agent at any time within sixty (60)
     days after such Event of Loss, elect, in lieu of

<PAGE>
     repairing or replacing any such Aircraft or Engine, that all insurance
     proceeds relating to such Event of Loss shall be (x) applied to optional
     redemption of the Notes, to the extent that such optional redemption shall
     then be permitted under Section 8 of the Notes, or (y) deposited in a
     deposit account or securities account reasonably acceptable to Collateral
     Agent and in which Collateral Agent holds a perfected security interest, to
     the extent that such optional redemption shall not then be permitted under
     Section 8 of the Notes, and the amounts so deposited shall be applied to
     the redemption of the Notes at such time and to such extent as such
     redemption shall become permitted. In the event that either Carrier elects
     to apply and/or deposit insurance proceeds pursuant to the preceding
     sentence, such Carrier shall have no repair or replacement obligations with
     respect to the Aircraft and/or Engine that was the subject of such Event of
     Loss.

     11. Indemnification and Expenses.

     Each Debtor does hereby assume liability for, and does hereby agree to
indemnify, protect, save and keep harmless Collateral Agent and Noteholders and
their successors, assigns, representatives, officers, directors, agents and
servants (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, expenses and disbursements, including legal expenses, of whatsoever kind
and nature imposed on, incurred by or asserted against any of the Indemnitees
(whether or not also indemnified against by any other Person) in any way
relating to or arising out of this Agreement or the ownership, lease, service,
control, repair, overhaul, testing, inspection, possession, management, use,
operation, condition, sale or other disposition of any Collateral; provided,
however, that Debtors shall not be required to indemnify anyone for the willful
misconduct or gross negligence of any of the Indemnitees. The indemnities
contained in this Section shall continue in full force and effect
notwithstanding the termination of this Agreement with respect to claims arising
or liabilities incurred prior to such termination.

     12. Event of Defaults; Remedies.

          a. Each of the following events shall constitute an "Event of Default"
     (whether any such event shall be voluntary or involuntary or come about or
     be effected by operation of law or pursuant to or in compliance with any
     judgment, decree or order of any court or any order, rule or regulation of
     any administrative or governmental body) and each such Event of Default
     shall be deemed to exist and continue so long as, but only as long as, it
     shall not have been remedied:

               i. Any Debtor shall fail to perform or observe any covenant or
          agreement to be performed or observed by it hereunder and such failure
          shall continue unremedied for a period of thirty (30) days after
          written notice thereof by Collateral Agent;

               ii. any material representation or warranty made by any Debtor
          herein or any document or certificate furnished by such Debtor to
          Collateral Agent in connection herewith shall at any time prove to
          have been incorrect in any material respect when made; or

<PAGE>
               iii. any Event of Default shall have occurred and be continuing
          under, and as defined in, the Notes.

          b. If any Event of Default shall occur and be continuing, then, in any
     such event, Collateral Agent shall have all remedies available under this
     Agreement and applicable law. Without limitation of the foregoing,
     Collateral Agent may forthwith to the extent permitted by applicable law:
     (i) apply to a court of competent jurisdiction to obtain specific
     performance or observance by any Debtor of any covenant, agreement or
     undertaking on the part of such Debtor hereunder that such Debtor shall
     have failed to observe or perform or to obtain aid in the execution of any
     power granted herein; and/or (ii) proceed to foreclose upon and against the
     lien and security interest created by this Agreement according to the laws
     of the applicable jurisdiction by doing any one or more or all of the acts
     described in paragraph (c) below and/or the following acts, as Collateral
     Agent in its sole and complete discretion may then elect:

               i. institute legal proceedings to foreclose upon and against the
          lien and security interest granted by this Agreement, to recover
          judgments for the Obligations then due and owing and secured hereby,
          and to collect the same out of any of or all the Collateral or the
          proceeds of any sale thereof;

               ii. institute legal proceedings for the sale, under the judgment
          or decree of any court of competent jurisdiction, of any of or all the
          Collateral;

               iii. without regard to the adequacy of the security for the
          Obligations by virtue of this Agreement or any other collateral or to
          the solvency of any Debtor, institute legal proceedings for the
          appointment of a receiver or receivers with respect to any of or all
          the Collateral pending foreclosure hereunder or for the sale of any of
          or all the Collateral under the order of a court of competent
          jurisdiction or under other legal process; or

               iv. Personally or by agents or attorneys, enter upon any premises
          where the Collateral or any part thereof may then be located, and take
          possession of all or any part thereof, and hold, store and keep idle,
          or lease, operate or otherwise use or permit the use of, the
          Collateral or any part thereof, for such time and upon such terms as
          Collateral Agent may in its discretion deem to be in its best
          interest, and demand, collect, and retain all rent, earnings, and
          other sums due and to become due in respect of the same from any party
          whomsoever, accounting only for net earnings, if any, arising from
          such use and charging against all receipts from the use of the same or
          from the sale thereof, by court proceedings or pursuant to paragraph
          (c) below, all other costs, expenses, charges, damages and other
          losses resulting from such use.

          At any sale pursuant to this Section 12, whether under the power of
     sale or by virtue of judicial proceedings, it shall not be necessary for
     Collateral Agent or a public officer under order of a court to have present
     physical or constructive possession of the Collateral to be sold. Upon any
     sale hereunder of any of or all the Collateral or any interest therein, the
     written receipt issued by the officer making such sale under judicial
     proceedings or of Collateral Agent shall be sufficient discharge to the
     purchaser for the purchase money, and such purchaser shall not be obligated
     to see to the application thereof. Any sale hereunder of

<PAGE>
     any of or all the Collateral or any interest therein shall, to the extent
     permitted by applicable law, be a perpetual bar against the applicable
     Debtor with respect to such Collateral or interest therein, as the case may
     be.

          c. If any Event of Default shall occur and be continuing and
     Collateral Agent shall have determined in its discretion in order to effect
     a foreclosure disposition of one or more of the Slots, or in order to
     preserve the value of the Slots pending foreclosure, that the named holder
     of the Slots should be the Collateral Agent or its designee(s), then, in
     any such event, Midwest and YX agree to execute and deliver such necessary
     deeds of conveyance, assignments and other documents or instruments,
     including any notices or applications to the DOT, FAA or any other
     governmental or regulatory authority having jurisdiction over any or all of
     the Slots, as Collateral Agent may demand in order to effect the transfer
     of the Slots in the records of any such governmental or regulatory
     authority to Collateral Agent or such designee(s).

          d. If Collateral Agent should elect to foreclose upon and against the
     lien and security interest created in and by this Agreement, each Debtor
     shall, upon demand of Collateral Agent, deliver to Collateral Agent all or
     any part of such Debtor's Collateral at such time or times and place or
     places as Collateral Agent may specify; and Collateral Agent is hereby
     authorized and empowered to the extent permitted by law, with or without
     the aid of process of law, to enter upon any premises where the Collateral
     or any part thereof may be located and take possession of and remove the
     same. Collateral Agent may thereafter sell, lease and dispose of, or cause
     to be sold, leased or disposed of, all or any part of the Collateral at one
     or more public or private sales, leasings or other dispositions, at such
     places and times and on such terms and conditions as Collateral Agent may
     deem fit. Collateral Agent agrees to give Debtors at least ten (10) days'
     written notice of the date fixed for any public sale, or the date on or
     after that will occur the execution of any contract for any private sale,
     of any of the Collateral.

     13. Application of Proceeds.

     If an Event of Default shall occur and be continuing, the proceeds of any
sale, lease or other disposition of all or any part of the Collateral under this
Agreement and all other sums realized by Collateral Agent pursuant to this
Agreement shall be applied in the following order of priority:

     First: To the payment of the costs and expenses of such sale, lease,
disposition or realization, including reasonable compensation to Collateral
Agent's counsel, and all reasonable expenses, liabilities and advances made or
incurred by Collateral Agent in connection therewith, including without
limitation, taxes upon or with respect to the sale, lease, disposition or
realization and the payment of taxes and liens, if any, prior to the lien and
security interest of this Agreement (except any taxes or liens to which the
respective sale, lease, disposition or realization shall have been subject) and
to the payment of expenses incurred and the reimbursement of payments made by
Collateral Agent pursuant to Section 6(g);

     Second: To the reimbursement (whether to Collateral Agent or Noteholders)
of any liabilities, obligations, losses, damages, penalties, costs, expenses
fees or disbursements that are the subject of indemnification obligations
pursuant to Section 6(e) or Section 11;

<PAGE>
     Third: To the payment of the remainder of the Obligations, pro rata among
Noteholders; and

     Fourth: Upon payment in full of the Obligations, the balance, if any, to
any Debtor or to such other Person(s) as may lawfully be entitled to the
remainder or as any court of competent jurisdiction may direct.

     14. Remedies Cumulative.

     No failure or delay on the part of Collateral Agent in exercising, and no
course of dealing with respect to, any rights, power or remedy under this
Agreement, and no notice or demand that may be given to or made upon any Debtor
with respect to any such right, power or remedy, shall constitute a waiver
thereof or limit or impair the rights of Collateral Agent to take any other or
similar action or to exercise any other right, power or remedy granted in this
Agreement or otherwise available to Collateral Agent; nor shall any single or
partial exercise of any rights, power or remedy granted under this Agreement
include any other or further exercise thereof or the exercise of any other
right, power or remedy granted in this Agreement or otherwise available to
Collateral Agent or prejudice its rights against any Debtor in any respect. Each
and every remedy of Collateral Agent shall be cumulative and shall not be
exclusive of any other remedies provided now or hereafter at law, in equity or
otherwise.

     15. Further Assurances.

     Debtors shall, at their own cost and expense (except as otherwise stated
below) cause this Agreement, and any and all additional instruments that shall
be executed pursuant to the terms hereof, to be kept, filed and recorded, at all
times, in such places in the United States and such places outside the United
States to which any of the Aircraft shall be operated as shall be required in
order to perfect and preserve the rights of Collateral Agent hereunder and
furnish to Collateral Agent an opinion or opinions of counsel and, without
limitation of any of the foregoing, at the request of Collateral Agent, promptly
correct any defect, error or omission that may at any time hereafter be
discovered in the contents of this Agreement or in the execution, acknowledgment
or delivery hereof, and will execute, acknowledge and deliver to Collateral
Agent such further documents and assurances and take such further action as
Collateral Agent may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Agreement and to establish
and protect the rights and remedies created or intended to be created in favor
of Collateral Agent hereunder. Without limiting anything set forth above,
Debtors shall promptly file and record such financing statements, continuation
statements and other instruments or documents with respect to the lien and
security interest created hereby as Collateral Agent may reasonably deem
necessary or appropriate fully to perfect the lien and security interest, or
fully to protect its interests, hereunder. Debtors hereby authorize Collateral
Agent to file initial financing statements, amendments and continuation
statements in any jurisdiction that Collateral Agent believes is necessary to
perfect its security interest in the Collateral.

     16. Termination of Agreement; Release of Collateral.

     This Agreement and the security interest granted under this Agreement shall
terminate at the earlier of the date determined pursuant to Section 7 above or
the date when the Obligations shall have been irrevocably paid in full (or the
Obligations shall have been reduced to zero by

<PAGE>
conversion, redemption and/or payment of the Notes). In the event that a Debtor
exchanges or sells Collateral pursuant to clause (3), (4), (5) or (6) of Section
3(a)(x) above, Collateral Agent's liens and security interests on or in such
Collateral shall automatically terminate. Upon termination of this Agreement or
termination of Collateral Agent's security interest in Collateral pursuant to
this Section 16, Collateral Agent shall execute and deliver to Debtors at
Debtors' expense, such instruments of release and termination as shall be
appropriate in order to effect such termination.

     17. Miscellaneous.

     Any provision of this Agreement which shall be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Debtors hereby
waive any provision of law that renders any provision hereof prohibited or
unenforceable in any respect. No term or provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by Debtors and Collateral Agent. The captions in this Agreement
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.

     18. Governing Law.

     This Agreement shall be construed and enforced in accordance with, and
governed by the internal laws of the State of Wisconsin, without reference to
any principles of conflict of laws or choice of laws. All terms not otherwise
defined have the meanings assigned to them by the Act or by Articles 1 and 9 of
the Uniform Commercial Code of the State of Wisconsin, as it may be amended,
reenacted or otherwise in effect from time to time. Invalidity of any provision
of this Agreement shall not affect the validity of any other provision.

     19. Amendment.

     Any amendment or modification of this Agreement and any release of
Collateral from Collateral Agent's lien or security interest under this
Agreement (other than pursuant to Sections 7 and 16 hereof) must be made in
writing and signed by Collateral Agent, Required Noteholders and Debtors;
provided, however, that no amendment, modification or release shall, unless made
in writing and signed by Collateral Agent, all Noteholders, Holdings and
Debtors, do any of the following:

          a. Amend or modify this Section 19 or the definition of "Required
     Noteholders";

          b. Amend or modify Section 13 regarding distribution of proceeds of
     disposition of Collateral.

     20. Notice.

     Any notices required or permitted to be given under the terms of this
Agreement must be sent by certified or registered mail (return receipt
requested), or delivered personally or by courier to the respective address of
Debtors, Noteholders and Collateral Agent, each as set forth on the signature
pages hereof.

     21. Persons Bound.

<PAGE>
     This Agreement benefits Collateral Agent, Noteholders, and their respective
successors and assigns, including every holder or owner of any of the
Obligations, and binds Debtors and their permitted successors and permitted
assigns. Debtors may not assign this Agreement without the prior written consent
of Collateral Agent.

     22. Consent to Jurisdiction.

     Notwithstanding anything to the contrary in this Agreement or any other
agreement between any of Debtors, Collateral Agent and Noteholders prior to the
date hereof, each Debtor, Collateral Agent and each Noteholder, to the extent it
may do so under applicable law, for purposes hereof, hereby:

     (i) irrevocably submits itself to the non-exclusive jurisdiction of the
courts of the State of Wisconsin sitting in the City of Milwaukee, County of
Milwaukee, and to the non-exclusive jurisdiction of the U.S. District Court for
the Eastern District of Wisconsin, and to the non-exclusive jurisdiction of the
courts of the State of New York sitting in the City of New York, Borough of
Manhattan, and to the non-exclusive jurisdiction of the U.S. District Court for
the Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement, the subject matter hereof or any of
the transactions contemplated hereby brought by any of Debtors, Collateral Agent
and Noteholders, or their successors or assigns;

     (ii) waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement or the subject matter
hereof or any of the transactions contemplated hereby may not be enforced in or
by such courts; provided that nothing in this paragraph shall be construed as a
waiver by any of Debtors, Collateral Agent or Noteholders of any right to seek
to remove any such suit, action or proceeding from a state court to a federal
court or from a federal court to a state court; and

     (iii) irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such person at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof; provided that nothing in this paragraph
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.

     23. WAIVER OF JURY TRIAL.

     EACH DEBTOR, COLLATERAL AGENT AND EACH NOTEHOLDER IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY
OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE FOREGOING.

     24. Execution and Delivery.

<PAGE>
     This Agreement may be executed in any number of counterparts (to include
facsimiles), and each such counterpart shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute one and the same
instrument.

     25. Acknowledgement Regarding Noteholders.

     Nothing contained herein, and no action taken by any Noteholder, shall be
deemed to constitute the Noteholders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the
Noteholders are in any way acting in concert or as a group with respect to the
Obligations or the transactions contemplated hereby, provided that the
Obligations or the transactions contemplated hereby may be modified, amended or
waived in accordance with the provisions hereof.

                           [Signature pages to follow]


<PAGE>
     IN WITNESS WHEREOF, the undersigned Debtors, Collateral Agent, and
Noteholders have caused this Security Agreement to be duly executed as of the
date first written above.


                                    MIDWEST EXPRESS HOLDINGS, INC.

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: Senior Vice President and
                                           Chief Financial Officer
                                    Address: 6744 South Howell Avenue
                                             Oak Creek, Wisconsin  53154


                                    MIDWEST AIRLINES, INC.

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: Chief Financial Officer
                                    Address: 6744 South Howell Avenue
                                             Oak Creek, Wisconsin  53154



                                    SKYWAY AIRLINES, INC.

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: Chief Financial Officer
                                    Address: 1190 West Rawson Avenue
                                             Oak Creek, Wisconsin  53154

                                    YX PROPERTIES, LLC

                                    By:/s/ Robert S. Bahlman
                                       -----------------------------------------
                                    Name:  Robert S. Bahlman
                                    Title: President
                                    Address: 6744 South Howell Avenue
                                             Oak Creek, Wisconsin  53154


<PAGE>
                                    SF CAPITAL PARTNERS, LTD.

                                    By: Staro Asset Management, LLC, its
                                        investment manager

                                        /s/ Michael A. Roth
                                        ----------------------------------------
                                        By:  Michael A. Roth
                                        Its: Managing Member


                                        Address: 3600 South Lake Drive
                                                 St. Francis, Wisconsin  53235
                                                 Attention: Brian H. Davidson

<PAGE>
                    [SIGNATURE PAGES OF NOTEHOLDERS OMITTED]

                                  NOTEHOLDERS






                                      [NAME OF NOTEHOLDER]

                                     *BY:
                                          --------------------------------------



                                      By:
                                          --------------------------------------
                                          Name:
                                          Title:


<PAGE>

                                   SCHEDULE A

                                   NOTEHOLDERS

                       [SCHEDULE OF NOTEHOLDERS OMITTED]





<PAGE>
                                   SCHEDULE B

                                    AIRCRAFT
<TABLE>
<CAPTION>

      CARRIER               MANUFACTURER              MODEL       MANUFACTURER SERIAL NUMBER     U.S. REGISTRATION
                                                                                                      NUMBER
------------------------------------------------------------------------------------------------------------------
<S>                      <C>                         <C>                    <C>                       <C>
Midwest Airlines,        McDonnell Douglas           DC-9-81                48006                     N812ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48030                     N804ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48032                     N806ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48033                     N807ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48007                     N813ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-81                48010                     N814ME
Inc.                                                 (MD-81)

Midwest Airlines,        McDonnell Douglas           DC-9-82                48072                     N810ME
Inc.                                                 (MD-82)

Midwest Airlines,        McDonnell Douglas           DC-9-82                48071                     N809ME
Inc.                                                 (MD-82)

Skyway Airlines,              Dornier                328-300                 3202                     N359SK
Inc.

Skyway Airlines,              Dornier                328-300                 3136                     N360SK
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-14                 45696                     N700ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47190                     N301ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47102                     N302ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47133                     N401ME
Inc.

Midwest Airlines,        McDonnell Douglas           DC9-32                 47132                     N501ME
Inc.
</TABLE>

<PAGE>
                                   SCHEDULE C

                                    ENGINES
<TABLE>
<CAPTION>

 Attached to Aircraft of Type               Manufacturer                      Model            Engine Serial Number
------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                              <C>                       <C>
McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 718492
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 718441
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725406
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725624
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725472
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725625
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725987
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 717871
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 696360
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725623
DC-9-81 (MD-81) or
DC-9-82 (MD-82)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

 Attached to Aircraft of Type               Manufacturer                      Model            Engine Serial Number
------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                              <C>                       <C>
McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725756
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 726864
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 716739
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 696405
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 718443
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

McDonnell Douglas                          Pratt & Whitney                  JT8D-217C                 725351
DC-9-81 (MD-81) or
DC-9-82 (MD-82)

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0225

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0228

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0226

Dornier 328-300                            Pratt & Whitney                     306B                 PCE-CD0235

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649644
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  655098
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654427
DC9-14, DC9-15 or
DC9-32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

 Attached to Aircraft of Type               Manufacturer                      Model            Engine Serial Number
------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                              <C>                       <C>
McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  657106
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649373
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  666283
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  657218
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  648927
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654619
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654157
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649302
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  649674
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  657758
DC9-14, DC9-15 or
DC9-32

McDonnell Douglas                          Pratt & Whitney                   JT8D-7B                  654159
DC9-14, DC9-15 or
DC9-32
</TABLE>

<PAGE>
                                   SCHEDULE D
                     LOCATION OF SPARE PARTS AND APPLIANCES



1.   Omaha, Nebraska:

     Eppley Airfield
     4501 Abbott Drive
     Omaha, NE 68110

2.   Kansas City, Missouri:

     Kansas City International Airport
     P.O. Box 20062
     Kansas City, MO 64195

3.   Milwaukee, Wisconsin:

     General Mitchell International Airport
     5300 South Howell Avenue
     Milwaukee, WI 53207

     Midwest Airlines Hangar
     555 West Cargo Way
     Milwaukee, WI 53207

     Skyway Airlines Hangar
     401 East Layton Avenue
     Milwaukee, WI 53207

     The Tracer Corporation
     4344 W. Capitol Drive
     Milwaukee, WI  53216

     The Tracer Corporation
     1600 W. Chambers Street
     Milwaukee, WI  53045

4.   Washington, D.C.

     Washington National Airport
     Terminal C
     Washington, DC 20001

<PAGE>
                                   SCHEDULE E

                                     SLOTS
<TABLE>
<CAPTION>

     Grantor          Start Time          Slot Type             Slot ID #                       Airport
----------------------------------------------------------------------------------------------------------------------
<S>                      <C>                                       <C>             <C>
       YX                0700                                      1146            Ronald Reagan Washington National
                                                                                         Airport ("National")

       YX                1000                                      1230                        National

       YX                1000                                      1010                        National

       YX                1100                                      1037                        National

       YX                1200                                      1613                        National

       YX                1800                                      1066                        National

       YX                1900                                      1098                        National

       YX                2100                                      1001                        National

       YX                2100                                      1544                        National

       YX                2100                                      1588                        National

       YX                0630             Departure                3664(1)                La Guardia Airport

       YX                1030              Arrival                 3234                   La Guardia Airport

       YX                1130             Departure                3260                   La Guardia Airport

       YX                1530              Arrival                 3232                   La Guardia Airport

       YX                1800              Arrival                 3009                   La Guardia Airport

       YX                1900             Departure                3591                   La Guardia Airport

       YX                2100              Arrival                 3191                   La Guardia Airport

       YX                2200              Arrival                 3584(1)                La Guardia Airport
</TABLE>
-------------------------------
     (1) Debtor intends to cease to operate the flights that use this Slot
effective October 26, 2003. Debtor will surrender this Slot to the FAA effective
at that time, although Debtor believes that it could reacquire rights to this
Slot if operational needs so required.

<PAGE>
                                  EXHIBIT 8(a)

                      FORM SUPPLEMENTAL SECURITY AGREEMENT


                     SUPPLEMENTAL SECURITY AGREEMENT NO. ___

     THIS SUPPLEMENTAL SECURITY AGREEMENT executed as of _____________, 20__,
(this "Supplemental Security Agreement"), by _____________________ ("Debtor"), a
__________________________ having its chief place of business at 6744 South
Howell Avenue, Oak Creek, Wisconsin 53154, in favor of Collateral Agent for the
benefit of Noteholders under that certain Security Agreement, dated as of
September 29, 2003 (the "Agreement"), by Midwest Express Holdings, Inc., a
Wisconsin corporation, Midwest Airlines, Inc., a Wisconsin corporation; Skyway
Airlines, Inc., a Delaware corporation; YX Properties, LLC, a Nebraska limited
liability company; _________________ as agent for the benefit of the parties
identified on Schedule A thereto (the "Noteholders"); and Noteholders.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to them in the Agreement.

     WHEREAS, Debtor has heretofore executed and delivered to Collateral Agent
the Agreement covering the property of Debtor therein described, to secure the
due and punctual payment and performance of the Obligations;

     WHEREAS, the Agreement was duly recorded with the Federal Aviation
Administration in Oklahoma City, Oklahoma, on _____________, 2003, as Conveyance
No. ___, pursuant to the Act;

     WHEREAS, Debtor is the legal and beneficial owner of each of the Engines
(defined below), free and clear of all liens and encumbrances except Permitted
Liens, and desires to execute and deliver this Supplemental Security Agreement
for the purpose of specifically subjecting said Engines to the lien of the
Agreement;

     WHEREAS, Debtor is an air carrier certificated under Section 401 of the
Act, and holds air carrier operating certificates; and

     WHEREAS, all things necessary to make this Supplemental Security Agreement
valid, binding and legal obligation of Debtor, including all proper corporate
action on the part of the Debtor, have been done and performed and have
happened.

     NOW, THEREFORE, to secure the payment and performance of the Obligations,
Debtor hereby mortgages to Collateral Agent a security interest in, for the
ratable benefit of Noteholders, the following engine(s) (the "Engines"):

      Manufacturer     Model             Manufacturer's
                                          Serial Number
--------------------------------------------------------------------

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

--------------------------------------------------------------------
<PAGE>

     This Supplemental Security Agreement shall be construed and enforced in
accordance with, and governed by the internal laws of the State of New York,
without reference to any principles of conflict of laws or choice of laws.

     This Supplemental Security Agreement shall be construed as supplemental to
the Agreement and shall form a part thereof, and the Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.

     IN WITNESS WHEREOF, the undersigned has caused this Supplemental Security
Agreement to be duly executed, as of the day and year first above written.


                               [CARRIER]

                               -------------------------------------------------
                               By:
                               Its: