Exhibit 10.23

                   LOAN AND SECURITY AGREEMENT

                           dated as of

                       September 28, 2001

                             between

                     ATLANTIC COAST AIRLINES

                               and

                       WACHOVIA BANK, N.A.

                        TABLE OF CONTENTS

                                                                Page

ARTICLE I. DEFINITIONS                                            1
 SECTION 1.01   DEFINITIONS                                       1
 SECTION 1.02   ACCOUNTING TERMS AND DETERMINATIONS              18
 SECTION 1.03   REFERENCES                                       18
 SECTION 1.04   USE OF DEFINED TERMS                             18
 SECTION 1.05   TERMINOLOGY                                      18

ARTICLE II. THE CREDITS                                          19
 SECTION 2.01  COMMITMENT TO LEND                                19
 SECTION 2.02  METHOD OF BORROWING                               19
 SECTION 2.03  CONTINUATION AND CONVERSION ELECTIONS             20
 SECTION 2.04  NOTE                                              20
 SECTION 2.03  MATURITY OF LOANS                                 20
 SECTION 2.06  INTEREST RATES                                    20
 SECTION 2.07  COMMITMENT FEE                                    21
 SECTION 2.08  OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT   23
 SECTION 2.09  MANDATORY REDUCTION AND TERMINATION OF COMMITMENT 23
 SECTION 2.10  OPTIONAL PREPAYMENTS                              23
 SECTION 2.11  MANDATORY PREPAYMENTS                             23
 SECTION 2.12  GENERAL PROVISIONS AS TO PAYMENTS                 24
 SECTION 2.13  COMPUTATION OF INTEREST AND FEES                  24

ARTICLE III. CONDITIONS TO BORROWINGS                            25
 SECTION 3.01  CONDITIONS TO FIRST BORROWING                     25
 SECTION 3.02  CONDITIONS TO ALL BORROWINGS                      26

ARTICLE IV. LETTER OF CREDIT FACILITY                            27
 SECTION 4.01  OBLIGATION TO ISSUE                               27
 SECTION 4.02  TYPES AND AMOUNTS                                 27
 SECTION 4.03  CONDITIONS                                        27
 SECTION 4.04  ISSUANCE OF LETTERS OF CREDIT                     28
 SECTION 4.05  REIMBURSEMENT OBLIGATIONS; DUTIES OF THE LENDER   28
 SECTION 4.06  [INTENTIONALLY OMITTED]                           29
 SECTION 4.07  PAYMENT OF REIMBURSEMENT OBLIGATIONS              29
 SECTION 4.08  COMPENSATION FOR LETTERS OF CREDIT AND LENDER     30
               REPORTING REQUIREMENTS
 SECTION 4.09  INDEMNIFICATION; EXONERATION                      30

ARTICLE V. REPRESENTATIONS AND WARRANTIES                        31
 SECTION 5.01  CORPORATE EXISTENCE AND POWER                     31
 SECTION 5.02  CORPORATE AND GOVERNMENTAL AUTHORIZATION;
               NO CONTRAVENTION                                  31
 SECTION 5.03  BINDING EFFECT                                    31
 SECTION 5.04  FINANCIAL INFORMATION                             31
 SECTION 5.05  NO LITIGATION                                     32
 SECTION 5.06  COMPLIANCE WITH ERISA                             32
 SECTION 5.07  COMPLIANCE WITH LAWS; PAYMENT OF TAXES            32
 SECTION 5.08  SUBSIDIARIES                                      32
 SECTION 5.09  INVESTMENT COMPANY ACT                            33
 SECTION 5.10  PUBLIC UTILITY HOLDING COMPANY ACT                33
 SECTION 5.11  OWNERSHIP OF PROPERTY; LIENS                      33
 SECTION 5.12  NO DEFAULT                                        33
 SECTION 5.13  FULL DISCLOSURE                                   33
 SECTION 5.14  ENVIRONMENTAL MATTERS                             33
 SECTION 5.15  CAPITAL STOCK                                     34
 SECTION 5.16  MARGIN STOCK                                      34
 SECTION 5.17  INSOLVENCY                                        34
 SECTION 5.18  INSURANCE                                         35
 SECTION 5.19  LABOR MATTERS                                     35
 SECTION 5.20  OTHER DEBT                                        35

ARTICLE VI. AFFIRMATIVE COVENANTS                                35
 SECTION 6.01  INFORMATION                                       35
 SECTION 6.02  INSPECTION OF PROPERTY, BOOKS AND RECORDS         37
 SECTION 6.03  CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE  37
 SECTION 6.04  COMPLIANCE WITH LAWS; PAYMENT OF TAXES            37
 SECTION 6.05  INSURANCE                                         37
 SECTION 6.06  MAINTENANCE OF PROPERTY                           37
 SECTION 6.07  ENVIRONMENTAL MATTERS                             38
 SECTION 6.08  NOTICES OF CERTAIN EVENTS                         38

ARTICLE VII. NEGATIVE COVENANTS                                  38
 SECTION 7.01  USE OF PROCEEDS                                   39
 SECTION 7.02  CONSOLIDATIONS, MERGERS AND SALES OF ASSETS       39
 SECTION 7.03  CHANGE IN FISCAL YEAR                             39
 SECTION 7.04  LOANS OR ADVANCES                                 39
 SECTION 7.05  RESTRICTED PAYMENTS                               39
 SECTION 7.06  INVESTMENTS                                       39
 SECTION 7.07  ACQUISITIONS                                      39
 SECTION 7.08  LIMITATION ON LIENS AND SUBSIDIARY DEBT           39
 SECTION 7.09  RESTRICTIONS ON ABILITY OF SUBSIDIARIES
               TO PAY DIVIDENDS                                  40
 SECTION 7.10  CONSOLIDATED FIXED CHARGES COVERAGE RATIO         40
 SECTION 7.11  CONSOLIDATED LEVERAGE RATIO                       40
 SECTION 7.12  MINIMUM LIQUIDITY                                 40
 SECTION 7.13  CONSOLIDATED SENIOR INDEBTEDNESS/EBITDA RATIO     41
 SECTION 7.14  DISSOLUTION                                       41

ARTICLE VIII. DEFAULTS                                           41
 SECTION 8.01  EVENTS OF DEFAULT                                 41

ARTICLE IX. CHANGE IN CIRCUMSTANCES                              43
 SECTION 9.01  BASIS FOR DETERMINING INTEREST RATE
               INADEQUATE OR UNFAIR                              43
 SECTION 9.02  ILLEGALITY                                        43
 SECTION 9.03  INCREASED COST AND REDUCED RETURN                 44
 SECTION 9.04  BASE RATE LOANS SUBSTITUTED FOR LIBOR RATE LOANS  45
 SECTION 9.05  COMPENSATION                                      45

ARTICLE X. SECURITY AGREEMENT                                    45
 SECTION 10.01 SECURITY INTEREST IN COLLATERAL                   45
 SECTION 10.02 SECURITY INSTRUMENTS; FURTHER ASSURANCES          46
 SECTION 10.03 POWER OF ATTORNEY                                 46

ARTICLE XI. MISCELLANEOUS                                        47
 SECTION 11.01 NOTICES                                           47
 SECTION 11.02 NO WAIVERS                                        47
 SECTION 11.03 EXPENSES; DOCUMENTARY TAXES                       47
 SECTION 11.04 INDEMNIFICATION                                   47
 SECTION 11.05 SETOFF; SHARING OF SETOFFS                        48
 SECTION 11.06 AMENDMENTS AND WAIVERS                            48
 SECTION 11.07 INDEPENDENCE OF COVENANTS                         48
 SECTION 11.08 SUCCESSORS AND ASSIGNS                            49
 SECTION 11.09 CONFIDENTIALITY                                   50
 SECTION 11.10 REPRESENTATION BY LENDER                          51
 SECTION 11.11 VIRGINIA LAW                                      51
 SECTION 11.12 SEVERABILITY                                      51
 SECTION 11.13 INTEREST                                          51
 SECTION 11.14 INTERPRETATION                                    52
 SECTION 11.15 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION     52
 SECTION 11.16 COUNTERPARTS                                      52
 SECTION 11.17 SOURCE OF FUNDS -- ERISA                          52
 EXHIBIT A          FORM OF NOTE
 EXHIBIT B          FORM OF OPINION OF COUNSEL FOR THE BORROWER
 EXHIBIT C          FORM OF NOTICE OF BORROWING
 EXHIBIT D          FORM OF NOTICE OF CONTINUATION OR CONVERSION
 EXHIBIT E          FORM OF COMPLIANCE CERTIFICATE
 EXHIBIT F          FORM OF CLOSING CERTIFICATE
 EXHIBIT G          FORM OF OFFICER'S CERTIFICATE

 Schedule 4.08      SUBSIDIARIES
 Schedule 4.20      OTHER DEBT

<PAGE> 1

               LOAN  AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is dated
as  of  September 28, 2001 by and among ATLANTIC  COAST  AIRLINES
(the   "Borrower"),  a  California  corporation,  ATLANTIC  COAST
AIRLINES  HOLDINGS,  INC.,  a Delaware  corporation  ("Holdings";
Borrower and Holdings being herein collectively called the  "Loan
Parties"  and, individually, a "Loan Party"), and WACHOVIA  BANK,
N.A. (the "Lender").

     The parties hereto agree as follows:

                           ARTICLE I.
                           DEFINITIONS

     SECTION 1.01   Definitions.

   The  terms  as  defined in this Section 1.01  shall,  for  all
purposes  of this Agreement and any amendment hereto  (except  as
herein   otherwise  expressly  provided  or  unless  the  context
otherwise requires), have the meanings set forth herein:

     "Account"  shall  have  the meaning  ascribed  to  the  term
"account"  under the UCC, and shall include, without  limitation,
any  right  to  payment for goods sold or leased or for  services
rendered  which  is not evidenced by an Instrument,  Document  or
Chattel Paper, whether secured or unsecured, and whether  or  not
earned by performance.

     "Account  Debtor"  means any Person who  is  or  may  become
obligated under or on account of an Account.

     "Acquisition"  means any transaction or  series  of  related
transactions  for the purpose of, or resulting  in,  directly  or
indirectly, (a) the acquisition by the Borrower or any Subsidiary
of all or substantially all of the assets of a Person (other than
a  Subsidiary) or of any business or division of a Person  (other
than  a  Subsidiary), (b) the acquisition by the Borrower or  any
Subsidiary  of  more than 50% of any class of  Voting  Stock  (or
similar  ownership  interests)  of  any  Person  (provided   that
formation  or organization of any entity shall not constitute  an
"Acquisition" to the extent that the amount of the Investment  in
such  entity is permitted under Section 6.06), or (c)  a  merger,
consolidation, amalgamation or other combination by the  Borrower
or  any  Subsidiary with another Person (other than a Subsidiary)
if  the  Borrower  or  such Subsidiary is the  surviving  entity;
provided  that in any merger involving the Borrower, the Borrower
must be the surviving entity.

     "Affiliate"  of any relevant Person means any  other  Person
(other  than  a  Subsidiary):  (i) who  directly,  or  indirectly
through one or more intermediaries controls, or is controlled by,
or  is  under common control with, the relevant Person; (ii)  who
beneficially owns or hold 5% or more of any class of  the  Voting
Stock  of such Person; or (iii) 5% or more of the Voting Stock  (
or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by
such Person or a Subsidiary of such person.  For the purposes  of
this Agreement, United shall not be deemed an Affiliate of a Loan
Party.

     "Agreement" means this Loan and Security Agreement,  as  the
same  may  hereafter  be  amended,   modified,  supplemented   or
restated from time to time, and all exhibits hereto.

<PAGE> 2

     "Applicable Law" means all laws, rules and regulations
applicable to the Person, conduct, transaction, covenant or Loan
Documents in question, including, but not limited to, all
applicable common law and equitable principles; all provisions of
all applicable stat and federal constitutions, statutes, rules,
regulations and orders of governmental bodies; order, judgment
and decrees of all courts and arbitrators and all Environmental
Laws.

     "Applicable Margin" means, for any day, the rate  per  annum
set  forth  below  opposite  the  applicable  Consolidated  Fixed
Charges  Coverage Ratio then in effect, it being understood  that
the  Applicable  Margin for (i) Revolving Credit Loans  that  are
LIBOR  Rate  Loans shall be the percentage set forth in  Table  I
under  the  column  Applicable  Margin  for  LIBOR   Loans,  (ii)
Revolving  Credit  Loans that are Base Rate Loans  shall  be  the
percentage  set  forth  in Table I under  the  column  Applicable
Margin  for Base Rate Loans, (iii) the unused line fee  shall  be
the  percentage set forth in Table I under the column  Applicable
Margin  for  Unused Line Fee; and (iv) the letter of  credit  fee
shall  be  the percentage set forth in Table I under  the  column
Applicable Margin for Letter of Credit Fee:

<TABLE>
<CAPTION>
                             Table I
  Revolving Credit Loans; Unused Line Fee: Letter of Credit Fee

Consolidated    Applicable  Applicable  Applicable  Applicable
Fixed Charges   Margin for  Margin for  Margin for  Margin for
Coverage Ratio  LIBOR       Base Rate   Letter of   Unused
                      Borrowings  Borrowings  Credit Fee  Line Fee
<S>                   <C>        <C>          <C>         <C>
Less than or          1.375%     0.25%        1.375%      0.375%
  equal to 1.8
Greater than 1.8      0.95%      0.125%       0.95%       0.25%
  and less than or
  equal to 2.25
Greater than 2.25     0.875%     0.0%         0.875%      0.20%
</TABLE>
     "Assignee" has the meaning set forth in Section 10.08(c).

     "Authority"  means  the  Metropolitan  Washington   Airports
Authority.

     "Availability" means the amount of money which  Borrower  is
entitled  to borrow from time to time as Revolving Credit  Loans,
such  amount  being the difference derived when the  sum  of  the
principal  amount  of  Revolving Credit  Loans  then  outstanding
(including any amounts which Lender may have paid for the account
of  Borrower pursuant to any of the Loan Documents and which have
not been reimbursed by Borrower) is subtracted from the Borrowing
Base.  If the amount outstanding is equal to or greater than  the
Borrowing Base, Availability is zero (0).

     "Availability  Reserve" means, on any date of  determination
thereof,  an amount equal to the sum of (i) any amounts  of  past
due  rent  or other charges (other than project rent as specified
in  the  Lease)  owing at such time by Borrower to the  Authority
under the Lease; (ii) any amounts which Borrower is obligated  to
pay pursuant to the provisions of the Loan Documents but does not
pay  when due and which Lender elects to pay pursuant to  any  of
the  Loan  Documents for the account of Borrower; and  (iii)  the
amount  of all Letter of Credit Obligations outstanding  at  such
date except for those with respect to the Bond Letter of Credit.

<PAGE> 3

     "Base  Rate" means for any Base Rate Loan for any  day,  the
rate  per  annum equal to the higher as of such day  of  (i)  the
Prime  Rate,  or (ii) one-half of one percent above  the  Federal
Funds  Rate.  For purposes of determining the Base Rate  for  any
day, changes in the Prime Rate or the Federal Funds Rate shall be
effective on the date of each such change.

     "Base Rate Borrowing" means a Revolving Credit Borrowing  if
the  advances  under such borrowing bear or are to bear  interest
calculated by reference to the Base Rate.

       "Base Rate Loan" means a Revolving Credit Loan, or portion
thereof, during any period in which it bears interest at  a  rate
based upon the Base Rate.

     "Board  of  Governors" means the Board of Governors  of  the
Federal Reserve System of the United States.

     "Bond  Documents" mean collectively the Bond Loan Agreement,
the  Bonds,  the  Reimbursement Agreement,  and  all  guaranties,
agreements,  opinions,  certificates or  assurances  executed  in
connection therewith.

     "Bond   Letter   of  Credit"  means  Lender's   irrevocable,
transferable  direct-pay letter of credit  in  substantially  the
form  of Exhibit A to the Reimbursement Agreement in the original
undrawn amount of $12,147,090.41.

       "Bond  Loan Agreement" means that certain Loan  and  Trust
Agreement  dated  as  of May 1, 2001 between  among  Issuer,  the
Borrower  and  the  Bond Trustee, pursuant to  which  the  Issuer
issued the Bonds.

     "Bond   Trustee"  means  Allfirst  Trust  Company,  National
Association.

     "Bonds"  mean  those certain Issuer's Variable  Rate  Demand
Revenue  Bonds  (Atlantic  Coast Airlines)  Series  2001  in  the
aggregate principal amount of $12,345,000.

     "Borrower"  means  Atlantic  Coast  Airlines,  a  California
corporation, and its successors and its permitted assigns.

     "Borrowing" means a borrowing hereunder consisting of  Loans
made  to the Borrower pursuant to Article II.  A Borrowing  is  a
"Base  Rate  Borrowing" if such Loans are Base Rate  Loans  or  a
"LIBOR Rate Borrowing" if such Loans are LIBOR Rate Loans.

     "Borrowing Base" means an amount equal to the Rotable  Spare
Parts  Borrowing  Base  on the date of determination;  minus  the
Availability Reserve.

     "Borrowing  Base  Certificate" means  a  certificate  of  an
officer of Borrower certifying to Lender the amount and value  of
all  of  Borrower's  Rotable Spare Parts, and  other  information
about  the  Collateral reasonably requested by Lender,  as  of  a
specific  date,  such  certificate  to  be  in  form  and  detail
reasonably satisfactory to Lender.

      "Business Day" means any day excluding Saturday, Sunday and
any  day  which  is  a  legal  holiday  under  the  laws  of  the
Commonwealth of Virginia or is a day on which banking
<PAGE> 4
 institutions located in the Commonwealth of Virginia are closed,
provided, however, that when used with reference to a LIBOR  Rate
Loan (including the making, continuing, prepaying or repaying  of
any  LIBOR Rate Loan), the term "Business Day" shall also exclude
any  day  on  which banks are not opened for dealings  in  dollar
deposits on the London interbank market.

     "Capital  Stock"  means any nonredeemable capital  stock  of
the Borrower or any Consolidated Subsidiary (to the extent issued
to   a  Person  other  than  the  Borrower),  whether  common  or
preferred.

     "Cash  Collateral"  means  cash  deposited  with  Lender  in
accordance with this Agreement as security for the Obligations to
the extent provided in this Agreement.

     "Cash  Collateral Account" means an interest-bearing account
established  by  Lender on its books and to  which  Lender  shall
credit  all  Cash Collateral deposited with Lender in  accordance
with this Agreement.

     "Capital   Expenditures"   means   expenditures   made    or
liabilities incurred for the acquisition of any fixed  assets  or
improvements,  replacements, substitutions or  additions  thereto
which  have  a  useful life of more than one year, including  the
total principal portion of Capitalized Lease Obligations.

     "Capitalized   Lease  Obligations"  means  any  Indebtedness
represented by obligations under a lease that is required  to  be
capitalized  for financial reporting purposes in accordance  with
GAAP.

     "Cash  Equivalents" means (i) marketable direct  obligations
issued   or  unconditionally  guaranteed  by  the  United  States
Government and backed by the full faith and credit of the  United
States  Government having maturities of not more than  three  (3)
months from the date of acquisition; (ii) certificates of deposit
and  time  deposits (including eurodollar time  deposits)  having
maturities  of not more than three (3) months from  the  date  of
acquisition,  and banker's acceptances having maturities  of  not
more  than  three  (3) months from the date  of  acquisition  and
overnight  bank  deposits, which in each case (unless  issued  by
Lender)  are not subject to offset rights in favor of  such  bank
arising  from  any  banking relationship with  such  bank;  (iii)
commercial paper having a maturity within three (3) months  after
the  date of acquisition thereof; (iv) money market mutual funds;
(v)  municipal auction rate preferred instruments; (vi) corporate
auction rate preferred instruments; (vii) municipal auction  rate
bonds; and (viii) variable rate demand notes.

     "CERCLA"  means  the  Comprehensive  Environmental  Response
Compensation and Liability Act, 42 U.S.C.  9601 et. seq. and  its
implementing regulations and amendments.

     "CERCLIS"  means  the  Comprehensive Environmental  Response
Compensation and Liability Inventory System established  pursuant
to CERCLA.

     "Change  of  Law"  shall  have  the  meaning  set  forth  in
Section 9.02.

     "Chattel  Paper"  shall have the mean ascribed  to  "chattel
paper" under the UCC.

<PAGE> 5

     "Claim"  means  any  and  all claims, demands,  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,
suits,  costs,  expenses or disbursements of any kind  or  nature
whatsoever  (including reasonable attorneys' fees and  expenses),
whether  arising under or in connection with the Loan  Documents,
under  any  Applicable Law (including any Environmental  Law)  or
otherwise.

     "Closing   Certificate"  has  the  meaning  set   forth   in
Section 3.01(d).

     "Closing Date" means September 28, 2001.

     "Code"  means the Internal Revenue Code of 1986, as amended,
or any successor Federal tax code.

      "Collateral"  means (i) the Leasehold  Interest;  (ii)  all
Rotable  Spare Parts, and all logs, manuals, certificates,  data,
and   inspection,  modification,  repair,  and  overhaul  records
required by the FAA to be maintained specific thereto, (iii)  all
substitutions and replacements of the property described in  (ii)
above,  (iv) General Intangibles, documents, instruments,  plans,
permits,  books and records, and fixtures now or hereafter  owned
by  the Loan Parties relating to the Leasehold Interest, and (iv)
the  proceeds  of  any of the foregoing items  (i)  through  (iv)
above, including, but not limited to, unearned insurance premiums
and  proceeds of insurance covering the Collateral, and  any  and
all  accounts,  general intangibles, contract rights,  inventory,
equipment, money, drafts, instruments, deposit accounts or  other
tangible  or intangible property of Borrower resulting  from  the
sale  (authorized  or unauthorized) or other disposition  of  the
Collateral,  or  any portion thereof, and the  proceeds  of  such
proceeds.

     "Commitment" shall have the meaning assigned to such term in
Section 2.01.

     "Commitment  Letter  Agreement" means  that  certain  letter
agreement, dated as of August  20, 2001 between the Loan  Parties
and the Lender relating to the structure of the Loans and certain
fees from time to time payable by the Loan Parties to the Lender,
together with all amendments and supplements thereto.

     "Compliance  Certificate"  has  the  meaning  set  forth  in
Section 6.01(c ).

     "Consolidated" means consolidated in accordance with GAAP of
the accounts or other items as to which such term applies.

     "Consolidated  Adjusted  Net  Earnings  from  Operations  of
Borrower" for any fiscal period means the net earnings (or  Loss)
after  provisions  for  income taxes for such  fiscal  period  of
Borrower  as  reflected on the financial statements  supplied  to
Lender as required herein, but excluding:

       (i)    any  gain or loss arising from the sale of  capital
              assets;
      (ii)    any gain arising from any write-up of assets;
     (iii)    earnings of any Subsidiary of Borrower accrued
              prior to the date it became a Subsidiary;
      (iv)    earnings of any corporation, substantially all the
              assets of which have been acquired in any manner by Borrower,
              realized by such corporation prior to
<PAGE> 6
             the date of such acquisition;
       (v)   any portion of the net earnings of any Subsidiary of
             Borrower which for any
             reason  is  unavailable for payment of dividends to
             Borrower;
      (vi)   the  earnings of Borrower to which any assets of
             Borrower shall have been sold, transferred or disposed of,
             or into which Borrower shall have merged, or been a party
             to any to any consolidation or other form of reorganization,
             prior to the date of such transaction;
     (vii)   any  gain or loss arising from the acquisition of any Securities
             of Borrower; and
    (viii)   any gain or loss arising from extraordinary or non-recurring
             items unless approved by Lender.

     "Consolidated EBITDA" means with respect to any  Person  for
any  period,  the sum of (i) Consolidated Adjusted  Net  Earnings
from  Operations  of   such Person for such fiscal  period,  plus
(ii)  interest, taxes, depreciation and amortization expenses  of
such  Person  for  such fiscal period which were subtracted  from
earnings  in calculating Consolidated Adjusted Net Earnings  From
Operations of such Person for such fiscal period.

     "Consolidated  EBITDAR" with respect to any Person  for  any
fiscal  period means the sum of (i) Consolidated EBITDA  of  such
Person for such fiscal period, plus  (ii) rental expenses of such
person for such fiscal period which were subtracted from earnings
in calculating Consolidated Adjusted Net Earnings from Operations
of such Person for such fiscal period.

     "Consolidated  Fixed  Charges", with  respect  to  the  Loan
Parties for any period, means the sum of (i) interest expense  of
the  Loan Parties for such fiscal period in respect of all of its
Indebtedness  for  Money Borrowed, plus (ii) regularly  scheduled
payments of principal on Indebtedness for Money Borrowed required
to  be  paid  by the Loan Parties during such period, plus  (iii)
rentals for aircraft, engines and propellers required to be  paid
by the Loan Parties during such period, as computed in accordance
with GAAP.

     "Consolidated Fixed Charges Coverage Ratio" with respect  to
any  the Loan Parties on the determination date thereof means  at
the  end  of  each Testing Period, the ratio of (i)  Consolidated
EBITDAR  of  the Loan Parties to (ii) Consolidated Fixed  Charges
required  to  be  paid  by the Loan Parties during  such  Testing
Period.

     "Consolidated Leverage Ratio" means with respect to the Loan
Parties  at any date, the ratio of (i) Indebtedness of  the  Loan
Parties  and  any  other  Subsidiaries  at  such  date  to   (ii)
Consolidated  Net Worth of the Loan Parties and any  Subsidiaries
at such date.

     "Consolidated  Net  Worth" means with respect  to  the  Loan
Parties  at any date, the total stockholder's equity of the  Loan
Parties  and  any Subsidiaries shown on its Consolidated  balance
sheet at such date in accordance with GAAP.

       "Consolidated   Senior  Indebtedness/Consolidated   EBITDA
Ratio"  on  the determination thereof with respect  to  the  Loan
Parties at the end of each Testing Period means the ratio of  (i)
the  aggregate  principal balance of all Senior Indebtedness  for
Money  Borrowed outstanding at the end of such Testing Period  to
(ii) Consolidated EBITDA for the Testing Period then ended.
<PAGE> 7
      "Consolidated Subsidiary" means at any date any  Subsidiary
or  other entity the accounts of which, in accordance with  GAAP,
would  be  consolidated with those of the Loan Parties  in  their
consolidated financial statements as of such date.
     "Controlled  Group" means all members of a controlled  group
of  corporations  and all trades or businesses  (whether  or  not
incorporated)  under  common control  which,  together  with  the
Borrower, are treated as a single employer under Section  414  of
the Code.

     "Daily  LIBOR  Loan" means a Loan, or any  portion  thereof,
during any period in which it bears interest at a rate based upon
the Daily LIBOR Rate.

     "Daily LIBOR Rate" means for each day that such rate  is  in
effect under this Agreement, an interest rate per annum equal  to
the  quotient of (a) the Wachovia, N.A. LIBOR Rate in effect  for
such  day  divided by (b) a percentage (expressed as  a  decimal)
equal to 100% minus Statutory Reserves.

     "Debt" of any Person means at any date, without duplication,
(i)  all obligations of such Person for borrowed money, (ii)  all
obligations of such Person evidenced by bonds, debentures,  notes
or  other  similar  instruments, (iii) all  obligations  of  such
Person  to  pay  the  deferred  purchase  price  of  property  or
services,  except trade accounts payable arising in the  ordinary
course of business, (iv) all obligations of such Person as lessee
under  capital  leases, (v) all obligations  of  such  Person  to
reimburse any bank or other Person in respect  of amounts payable
under  a banker's acceptance, (vi) all Redeemable Preferred Stock
of  such  Person  (in  the event such Person is  a  corporation),
(vii)  all  obligations of such Person to reimburse any  bank  or
other  Person in respect of amounts paid under a letter of credit
or  similar  instrument, (viii) all Debt of others secured  by  a
Lien  on  any asset of such Person, whether or not such  Debt  is
assumed by such Person, and (ix) all Debt of others Guaranteed by
such Person.

     "Deed  of  Trust"  means the Credit Line Leasehold  Deed  of
Trust and Security Agreement executed by Borrower on or about the
date hereof in favor of the trustee named therein for the benefit
of  Lender,  as  it  may  be amended, modified,  supplemented  or
restated  from  time to time, by which Borrower has  granted  and
conveyed  to  the trustee for the benefit of Lender, as  security
for   $12,345,000  of  the  Obligations,  Liens  upon  Borrower's
Leasehold  Interest  in the Realty leased by  Borrower  from  the
Authority pursuant to the Lease.

     "Default" means any condition or event which constitutes  an
Event  of Default or which with the giving of notice or lapse  of
time  or  both would, unless cured or waived, become an Event  of
Default.

     "Default Rate" means, with respect to any Loan, on any  day,
the sum of the Prime Rate plus 2%.

     "Depreciation"  means  for  any  period  the  sum   of   all
depreciation  expenses of the Loan Parties and their Consolidated
Subsidiaries  for such period, as determined in  accordance  with
GAAP.

     "Document"  shall  have the meaning  ascribed  to  the  term
"document" under the UCC.

<PAGE> 8

     "Dollars"  or  "$" means dollars in lawful currency  of  the
United States of America.

     "Domestic  Business  Day" means any day except  a  Saturday,
Sunday  or other day on which commercial lenders in Virginia  are
authorized by law to close.

     "Environmental Authority" means any foreign, federal, state,
local   or  regional  government  that  exercises  any  form   of
jurisdiction or authority under any Environmental Requirement.

     "Environmental Authorizations" means all licenses,  permits,
orders,   approvals,  notices,  registrations  or   other   legal
prerequisites for conducting the business of the Borrower or  any
Subsidiary required by any Environmental Requirement.

     "Environmental  Judgments and Orders" means  all  judgments,
decrees or orders arising from or in any way associated with  any
Environmental Requirements, whether or not entered upon  consent,
or  written agreements with an Environmental Authority  or  other
entity   arising  from  or  in  any  way  associated   with   any
Environmental  Requirement, whether  or  not  incorporated  in  a
judgment, decree or order.

     "Environmental  Laws"  means all federal,  state  and  local
laws,   rules,   regulations,  ordinances,   programs,   permits,
guidance's, orders and consent decrees relating to health, safety
and environmental matters.

     "Environmental  Liabilities" means any liabilities,  whether
accrued,  contingent or otherwise, arising from and  in  any  way
associated with any Environmental Requirements.

     "Environmental Notices" means notice from any  Environmental
Authority  or  by  any  other person or entity,  of  possible  or
alleged  noncompliance with or liability under any  Environmental
Requirement,   including  without  limitation   any   complaints,
citations,  demands or requests from any Environmental  Authority
or  from  any  other  person  or entity  for  correction  of  any
violation  of any Environmental Requirement or any investigations
concerning any violation of any Environmental Requirement.

     "Environmental   Proceedings"   means   any   judicial    or
administrative proceedings arising from or in any way  associated
with any Environmental Requirement.

     "Environmental Releases" means releases as defined in CERCLA
or  under  any  applicable state or local  environmental  law  or
regulation.

     "Environmental  Requirements" means  any  legal  requirement
relating  to health, safety or the environment and applicable  to
the Borrower, any Subsidiary or the Leasehold Interest, including
but  not  limited to any such requirement under CERCLA or similar
state   legislation  and  all  federal,  state  and  local  laws,
ordinances, regulations, orders, writs, decrees and common law.

     "ERISA" means the Employee Retirement Income Security Act of
1974,  as  amended from time to time, or any successor law.   Any
reference to any provision of ERISA shall also be deemed to be  a
reference to any successor provision or provisions thereof.

<PAGE> 9

     "Eurocurrency  Liabilities" shall have the meaning  ascribed
thereto in Regulation D issued by the Board of Governors.

     "Event   of   Default"  has  the  meaning   set   forth   in
Section 8.01.

     "FAA"  means the Federal Aviation Administration, an  agency
of  the United States Government, or any successor or replacement
administration or governmental agency having the same or  similar
authority and responsibilities.

     "Facility  Amount"  means at any date of  the  determination
thereof,   the   sum   of   (i)   Twenty-Five   Million   Dollars
($25,000,000.00), less (ii) the Letter of Credit Amount  at  such
date.

     "Federal Funds Rate" means, for any day, the rate per  annum
(rounded upward, if necessary, to the next higher 1/100th of  1%)
equal  to the weighted average of the rates on overnight  Federal
funds  transactions  with members of the Federal  Reserve  System
arranged  by  Federal funds brokers on such day, as published  by
the Federal Reserve Bank of New York on the Domestic Business Day
next  succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the
Federal  Funds  Rate  for such day shall be  such  rate  on  such
transactions on the next preceding Domestic Business  Day  as  so
published  on  the  next succeeding Domestic  Business  Day,  and
(ii)  if  such rate is not so published for any day, the  Federal
Funds Rate for such day shall be the average rate charged to  the
Lender  on  such day on such transactions, as determined  by  the
Lender.

     "Fiscal  Quarter"  means  any fiscal  quarter  of  the  Loan
Parties.

     "Fiscal Year" means any fiscal year of the Loan Parties.

     "GAAP"   means  generally  accepted  accounting   principles
applied  on  a  basis consistent with those which, in  accordance
with Section 1.02, are to be used in making the calculations  for
purposes  of  determining  compliance  with  the  terms  of  this
Agreement.

     "General  Intangibles" with respect  to  the  Loan  Parties,
means all general intangibles now or hereafter owned by the  Loan
Parties  relating  to the Leasehold Interest,  and  the  proceeds
thereof.

     "Guarantor" means Atlantic Coast Airlines Holdings,  Inc,  a
Delaware  corporation,  and any other Person  who  may  hereafter
guarantee payment or performance of the whole or any part of  the
Obligations.

     "Guarantee"  by any Person means any obligation,  contingent
or  otherwise, of such Person directly or indirectly guaranteeing
any  Debt  or  other obligation of any other Person and,  without
limiting the generality of the foregoing, any obligation,  direct
or  indirect,  contingent or otherwise, of  such  Person  (i)  to
secure,  purchase  or  pay (or advance or supply  funds  for  the
purchase  or  payment of) such Debt or other obligation  (whether
arising  by  virtue of partnership arrangements, by agreement  to
keep-well, to purchase assets, goods, securities or services,  to
provide  collateral  security, to  take-or-pay,  or  to  maintain
financial statement conditions or otherwise) or (ii) entered into
for  the  purpose of assuring in any other manner the obligee  of
such  Debt  or  other  obligation of the payment  thereof  or  to
protect such obligee against loss in respect

<PAGE> 10

  thereof (in whole or in part), provided that the term Guarantee
shall  not include endorsements for collection or deposit in  the
ordinary course of business.  The term "Guarantee" used as a verb
has a corresponding meaning.

     "Hazardous    Materials"   includes,   without   limitation,
(a)  solid  or  hazardous  waste,  as  defined  in  the  Resource
Conservation  and Recovery Act of 1980, 42 U.S.C.  6901  et  seq.
and  its  implementing  regulations and  amendments,  or  in  any
applicable  state  or  local  law or regulation,  (b)  "hazardous
substance", "pollutant", or "contaminant" as defined  in  CERCLA,
or   in   any  applicable  state  or  local  law  or  regulation,
(c)  gasoline,  or  any  other petroleum product  or  by-product,
including   crude  oil  or  any  fraction  thereof,   (d)   toxic
substances,  as  defined in the Toxic Substances Control  Act  of
1976,  or in any applicable state or local law or regulation  and
(e)  insecticides, fungicides, or rodenticides, as defined in the
Federal  Insecticide, Fungicide, and Rodenticide Act of 1975,  or
in  any applicable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time.

        "Improvements"   means  the  maintenance   facility   and
associated access roadway, vehicle parking and maneuvering  areas
and aircraft paving aprons on the Realty.

     "Indebtedness",  as  applied to  a  Person,  means,  without
duplication:

        (i)  all items which in accordance with GAAP would  be
             included  in determining total liabilities as shown  on  the
             liability side of a balance sheet of such Person as  at  the
             date   as   of  which  Indebtedness  is  to  be  determined,
             including, without limitation, Capitalized Lease Obligations;

       (ii)  all obligations of other Persons which such Person
             has guaranteed; and

      (iii)  in the case of Borrower (without duplication), the Obligations.

     "Instrument"  shall have the meaning ascribed  to  the  term
"instrument" under the UCC.

     "Investment" means any investment in any Person, whether  by
means of (i) purchase or acquisition of all or substantially  all
of  the  assets  of  such Person (or of a  division  or  line  of
business  of  such  Person),  (ii)  purchase  or  acquisition  of
obligations   or  securities  of  such  Person,   (iii)   capital
contribution to such Person, (iv) loan or advance to such Person,
(v) making of a time deposit with such Person, (vi) Guarantee  or
assumption of any obligation of such Person or (vii) by any other
means.

     "Issuer"  means  the  Industrial  Development  Authority  of
Loudoun County, Virginia.

     "Lease" means that certain Ground Lease Agreement, dated  as
of  June  23,  1997, between the Authority and the  Borrower,  as
amended.

     "Leasehold  Interest" means the Borrower's interest  in  the
Realty and the Improvements under the Lease.

     "Lender"  means Wachovia Bank, N.A., and its successors  and
assigns.

<PAGE> 11

     "Lender's  Expenses" means and includes:  (a) all reasonable
costs and expenses which Borrower is required to pay or cause  to
be  paid  under this Agreement or any of the other Loan Documents
and  which  are  paid  or  advanced by  Lender  pursuant  to  the
provisions  of this Agreement or any of the other Loan Documents;
(b)  all  taxes and insurance premiums of every kind  and  nature
which Borrower is required to pay or cause to be paid under  this
Agreement or any of the other Loan Documents and which  are  paid
or  advanced  by  Lender  pursuant  to  the  provisions  of  this
Agreement  or any of the other Loan Documents; (c) all  necessary
or  advisable filing, recording, publication and search fees paid
or  incurred  by  Lender  in  connection  with  the  transactions
contemplated  by  this  Agreement; (d) all reasonable  costs  and
expenses  paid  or incurred by Lender (with or without  suit)  to
correct  any default or enforce any provisions of this  Agreement
or  any of the other Loan Documents or in gaining possession  of,
maintaining,   handling,   preserving,   storing,   refurbishing,
appraising, selling, preparing for sale and advertising  to  sell
the  Collateral,  whether or not a sale is consummated;  (e)  all
reasonable  costs  and  expenses paid or incurred  by  Lender  in
enforcing  or  defending this Agreement, any of  the  other  Loan
Documents,  or  any  portion of any thereof; and  (f)  reasonable
attorneys  fees  and  expenses paid  or  incurred  by  Lender  in
enforcing  or  defending this Agreement, any of  the  other  Loan
Documents or any provision of any thereof, whether or not suit is
brought,  and  including any action brought in any bankruptcy  or
insolvency proceeding.

     "Lending  Office" means (i) the Lender's office  located  at
its   address  set  forth  on  the  signature  pages  hereof  (or
identified on the signature pages hereof as its Lending  Office),
or  such  other office as Lender may hereafter designate  as  its
Lending Office by notice to the Borrower.

     "Letter  of  Credit" means any letter of  credit  issued  by
Lender  or any of Lender's Affiliates for the account of Borrower
pursuant to this Agreement.

     "Letter  of Credit Amount", at any time, means the aggregate
undrawn face amount of all Letters of Credit then outstanding.

     "Letter  of Credit Application Agreement" means the Lender's
standard form of letter of credit application, together with  all
schedules and exhibits thereto, as such form may be modified from
time to time.

     "Letter  of  Credit Obligations" means that portion  of  the
Obligations  constituting  Borrower's  obligations  to  reimburse
Lender for all amounts paid by Lender under or with respect to  a
Letter of Credit.

       "LIBOR Lending Office", with respect to Lender, means  the
office  designated as the LIBOR Lending Office for Lender on  the
signature  pages  of  this Agreement (or on  any  Assignment  and
Acceptance, in the case of an assignee) and such other office  of
Lender  or any of its Affiliates that is hereafter designated  by
notice to Lender.

     LIBOR  Rate  Loan" means a Loan, or portion thereof,  during
any  period in which it bears interest at a rate based  upon  the
applicable Daily LIBOR Rate.

     "Lien"  means, with respect to any Collateral, any mortgage,
deed  to  secure  debt,  deed  of trust,  lien,  pledge,  charge,
security interest, security title, preferential arrangement which
has  the practical effect of constituting a security interest  or
encumbrance, or encumbrance or servitude of

<PAGE> 12

any  kind  in  respect  of such Collateral to  secure  or  assure
payment of a Debt or a Guarantee, whether by consensual agreement
or  by  operation of statute or other law, or by  any  agreement,
contingent  or  otherwise, to provide any of the foregoing.   For
the  purposes  of this Agreement, the Borrower or any  Subsidiary
shall be deemed to own subject to a Lien any Collateral which  it
has  acquired  or holds subject to the interest of  a  vendor  or
lessor  under  any conditional sale agreement, capital  lease  or
other title retention agreement relating to such asset.

     "Liquidity" means Cash and Cash Equivalents.

     "Loan" means the Revolving Credit Loan.

     "Loan  Account"  means the loan account established  on  the
books of Lender pursuant to this Agreement.

     "Loan  Documents"  means this Agreement, the  Note  and  the
Security  Documents,  as such documents and  instruments  may  be
amended or supplemented from time to time.

     "Long  Term  Debt" means at any date any Debt  of  the  Loan
Parties   and  any  Consolidated  Subsidiary  determined   on   a
consolidated basis as of such date which matures (or the maturity
of   which  may  at  the  option  of  the  Loan  Parties  or  any
Consolidated  Subsidiary be extended such that it  matures)  more
than one year after such date.

     "Margin   Stock"  means  "margin  stock"   as   defined   in
Regulations T, U or X.

     "Material Adverse Effect" means, with respect to any  event,
act,  condition  or occurrence of whatever nature (including  any
adverse   determination  in  any  litigation,   arbitration,   or
governmental investigation or proceeding), whether singly  or  in
conjunction  with  any  other  event  or  events,  act  or  acts,
condition  or conditions, occurrence or occurrences,  whether  or
not  related, a material adverse change in, or a material adverse
effect  upon,  any  of  (a) the financial condition,  operations,
business,  properties or prospects of the Loan  Parties  and  any
Consolidated  Subsidiaries taken as a whole, (b) the  rights  and
remedies  of the Lender under the Loan Documents, or the  ability
of  the Loan Parties to perform their obligations under the  Loan
Documents  to  which  it is a party, as applicable,  or  (c)  the
legality, validity or enforceability of any Loan Document.

     "Maximum  Rate"  means  the  maximum  non-usurious  rate  of
interest  permitted by Applicable Law that at any time,  or  from
time to time, may be contracted for, taken, reserved, charged  or
received  on  the  Indebtedness in question  or,  to  the  extent
permitted by Applicable Law, under such Applicable Law  that  may
hereafter  be  in  effect and which allow  a  high  maximum  non-
usurious   interest  rate  than  applicable   law   now   allows.
Notwithstanding  any  other provision hereof,  the  Maximum  Rate
shall  be  calculated on a daily basis (computed  on  the  actual
number  of  days elapsed over a year of 365 or 366 days,  as  the
case may be).

     "Moody's" means Moody's Investor Service, Inc.

     "Multiemployer  Plan" shall have the meaning  set  forth  in
Section 4001(a)(3) of ERISA.

<PAGE> 13

     "Net Income", for any period, means the aggregate amount  of
net income of the Loan Parties, after taxes, for such period,  as
determined in accordance with GAAP.

     "Note"   means   the  promissory  note  of   the   Borrower,
substantially in the form of Exhibit A, evidencing the obligation
of  the Borrower to repay the Loan, together with all amendments,
consolidations, modifications, renewals and supplements thereto.

     "Notice   of  Borrowing"  has  the  meaning  set  forth   in
Section 2.02(a) of this Agreement.

     "Notice  of Continuation or Conversion" has the meaning  set
forth in Section 2.03. of this Agreement.

     "Obligations"  means  the obligations of  the  Loan  Parties
under this Agreement.

     "Officer's  Certificate"  has  the  meaning  set  forth   in
Section 3.01(e).

       "Overadvance" means a Revolving Credit Loan made by Lender
when  an  Overadvance Condition exists or would result  from  the
making of such Revolving Credit Loan.

     "Overadvance Condition" means, at any date, a condition such
that   the  principal  amount  of  the  Revolving  Credit   Loans
outstanding  to  Borrower  on such  exceeds  the  lesser  of  the
Borrowing Base or the Facility Amount on such date.

     "Participating  Lender" means any financial institution  who
shall  be granted the right by Lender to participate in the  Loan
and who shall have entered into a participation agreement in form
and substance satisfactory to Lender.

     "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.

     "Permitted  Liens"  means any Lien of a  kind  specified  in
Section 7.08 of this Agreement.

     "Person"  means an individual, a corporation, a partnership,
an  unincorporated association, a trust or any  other  entity  or
organization,  including, but not limited  to,  a  government  or
political subdivision or an agency or instrumentality thereof.

     "Plan"  means  at any time an employee pension benefit  plan
which  is covered by Title IV of ERISA or subject to the  minimum
funding  standards under Section 412 of the Code  and  is  either
(i)  maintained by a member of the Controlled Group for employees
of any member of the Controlled Group or (ii) maintained pursuant
to  a  collective  bargaining agreement or any other  arrangement
under  which  more than one employer makes contributions  and  to
which a member of the Controlled Group is then making or accruing
an obligation to make contributions or has within the preceding 5
plan years made contributions.

     "Prime Rate" refers to that interest rate so denominated and
set  by Wachovia from time to time as an interest rate basis  for
borrowings.   The Prime Rate is but one of several interest  rate
bases  used by Wachovia.  Wachovia lends at interest rates  above
and below the Prime Rate.

<PAGE> 14

        "Projections"   means   the  Loan   Parties'   forecasted
Consolidated (i) balance sheets, (ii) profit and loss statements,
and  (iii)  cash  flow statements, all prepared on  a  consistent
basis  with  the  Loan Parties' historical financial  statements,
together  with appropriate supporting details and a statement  of
underlying assumptions.

     "Properly Contested", in the case of any Indebtedness  of  a
Loan Party or any of its Subsidiaries (including, but not limited
to,  any  Taxes) means any such Indebtedness that is not paid  as
and  when  due or payable by reason of such Loan Party's  or  any
Subsidiary's  bona fide dispute concerning its liability  to  pay
the  same  or concerning the amount thereof, provided, that:  (i)
such  Indebtedness is being properly contested in good  faith  by
appropriate   proceedings  promptly  instituted  and   diligently
conducted;  (ii)  such  Loan  Party has  established  appropriate
reserves as shall be required in conformity with GAAP; (iii)  the
non-payment of such Indebtedness will not have a Material Adverse
Effect;  (iv)  no Lien is imposed upon such Loan Party's  or  any
Subsidiary's  Property with respect to such  Indebtedness  unless
such  Lien  is at all time junior and subordinate in priority  to
the  Liens in favor of Lender (except only with respect to  Taxes
that have a priority as a matter of any state's Applicable Laws);
and  (v)  if  such  contest is abandoned, settled  or  determined
adversely  to  such  Loan Party or any of its Subsidiaries,  such
Loan  Party immediately pays such Indebtedness and all  penalties
and interest in connection therewith.

     "Property"  means any interest in any kind  of  property  or
asset,   whether  real,  personal  or  mixed,  or   tangible   or
intangible,  leased  or otherwise used or occupied  by  the  Loan
Parties or any Subsidiary, wherever located.

     "Purchase   Money  Indebtedness"  means  and  includes   (i)
Indebtedness (other than the Obligations) for payment of  all  or
any  part  of  the  purchase  price of  any  Property,  (ii)  any
Indebtedness (other than the Obligations) incurred at the time of
or  within ten (10) days prior to or after the acquisition of any
Property  for  the purpose of financing all or  any  part  o  the
purchase  price  thereof, and (iii) any renewals,  extensions  or
refinancings thereof.

     "Realty"  means  that  certain parcel of  real  property  of
approximately   6.96   acres   located   at   Washington   Dulles
International Airport in Loudoun County, Virginia leased from the
Authority  by  the Borrower and on which Borrower's  Improvements
are constructed.

     "Redeemable  Preferred  Stock"  of  any  Person  means   any
preferred stock issued by such Person which is at any time  prior
to  the  Termination Date either (i) mandatorily  redeemable  (by
sinking fund or similar payments or otherwise) or (ii) redeemable
at the option of the holder thereof.

     "Regulation D" means Regulation D of the Board of Governors,
as  in  effect  from  time to time, together  with  all  official
rulings and interpretations issued thereunder.

     "Regulation T" means Regulation T of the Board of Governors,
as  in  effect  from  time to time, together  with  all  official
rulings and interpretations issued thereunder.

     "Regulation U" means Regulation U of the Board of Governors,
as  in  effect  from  time to time, together  with  all  official
rulings and interpretations issued thereunder.

<PAGE> 15

     "Regulation X" means Regulation X of the Board of Governors,
as  in  effect  from  time to time, together  with  all  official
rulings and interpretations issued thereunder.

     "Reimbursement  Agreement"  means  that  certain  Letter  of
Credit  and Reimbursement Agreement, dated of even date herewith,
among  the  Lender and the Loan Parties, pursuant  to  which  the
Lender is issuing the Bond Letter of Credit, as amended, modified
supplemented or restated from time to time

     "Reimbursement Obligations" means Borrower's  obligation  to
repay  and reimburse Lender for any draws made on any Letters  of
Credit,  all  as more particularly set forth in the Reimbursement
Agreement and in this Agreement.

     "Related Fund" means, with respect to any fund that  invests
in  lender loans, any other fund that invests in lender loans and
is advised or managed by the same investment advisor as Lender.

     "Remarketing Agent" shall have the mean ascribed  to  such
term in the Bond Loan Agreement.

     "Reportable  Event"  means any of the  event  set  forth  in
Section 4043(b) of ERISA.

     "Restricted Investment" means any investment made in cash or
by  delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by  loan,
advance,  deposit, capital contribution or otherwise, or  in  any
Property except the following:

         (i)   investments in one or more Subsidiaries of a Loan
               Party (other than Atlantic Coast Jet, Inc.) to the
               extent existing on the Closing Date;

        (ii)   Property to be used in the ordinary course of
               business;

       (iii)   investments in direct obligations of the United
               States of America, or any agency thereof or obligations
               guaranteed by the United States of America, provided that
               such  obligations mature within one year from the date of
               acquisition thereof;

        (iv)   investments in time deposits, demand deposits and
               certificates  of deposit maturing within one year
               from the date of acquisition issued by a bank or trust
               company organized under the laws of the United States or
               any state thereof having capital surplus and undivided
               profits aggregating at least $500,000,000;

         (v)   investments in commercial paper given the highest
               rating  by a national credit rating agency and maturing
               not more than three hundred sixty four (364) days from the
               date of creation thereof;

        (vi)   tax-free Industrial Revenue Bonds secured by
               letters of credit which Bonds are available for sale
               at auction not less frequently than weekly;

       (vii)   cash and Cash Equivalents; and

<PAGE> 16

      (viii)   other investments approved by Lender.

     "Restricted  Payment"  means  (i)  any  dividend  or   other
distribution  on  any  shares  of the  Borrower's  Capital  Stock
(except  to Holdings for so long as Holdings is a Loan Party)  or
(ii)   any  payment  on  account  of  the  purchase,  redemption,
retirement  or  acquisition of (a) any shares of  the  Borrower's
Capital Stock (except shares acquired upon the conversion thereof
into  other  shares  of its Capital Stock)  or  (b)  any  option,
warrant  or  other  right  to acquire shares  of  the  Borrower's
Capital Stock.

     "Revolving  Credit  Commitment" means $25,000,000,  as  such
amount  may  be  reduced from time to time pursuant  to  Sections
2.09, 2.10 and 2.11.

       "Revolving Credit Loan" means a Base Rate Loan or a  Libor
Rate  Loan  made  under  the  Revolving  Credit  Commitment,  and
Revolving Credit Loans means Base Rate Loans or Libor Rate  Loans
made  under  the Revolving Credit Commitment, or any  or  all  of
them, as the context shall so require.

     "Rotable Spare Parts" means those Spare Parts which  can  be
(i) economically restored to a serviceable condition, (ii) in the
normal course of operations, can be repeatedly rehabilitated to a
fully  serviceable condition, and (iii) are either serialized  or
have the capability to be serialized.

     "Rotable  Spare  Parts Borrowing Base" means  sixty  percent
(60%)  of  the  value of Borrower's Rotable Spare Parts  at  such
date, in each case calculated on the basis of original cost  less
accumulated depreciation in accordance with GAAP.

       "Security" shall have the same meaning as in Section  2(1)
of the Securities Act of 1933, as amended.

     "Security Documents" means the this Agreement, the  Deed  of
Trust,  the  Guaranty  Agreement, and all other  instruments  and
agreements now or at any time hereafter securing the whole or any
part of the Obligations.

     "Senior  Indebtedness  for  Money  Borrowed"  means  all  of
Borrower's   Indebtedness   for   Money   Borrowed   except   for
Subordinated Debt.

     "Solvent"  as  to  any Person, means such  Person  (i)  owns
Property  whose  fair  market value is greater  than  the  amount
required  to  pay  all  of such Person's Indebtedness  (including
contingent  debts), (ii) is generally able  to  pay  all  of  its
Indebtedness as such Indebtedness matures and (iii)  has  capital
sufficient  to  carry  on its business and transactions  and  all
business and transactions in which it is about to engage.

     "Spare  Parts" means  an accessory, appurtenance or part  of
an   aircraft,  aircraft  engine,  or   propeller,  including  an
instrument  or piece of equipment intended to be attached  to  an
aircraft  (in all cases prior to installation in or incorporation
into  such  aircraft, aircraft engine or propeller  or  following
removal  from same); provided that Spare Parts shall not include:
(i)  aircraft engines; (ii) aircraft propellers; or  (iii)  items
owned or hereafter acquired by the Loan Parties and removed  from
aircraft,  aircraft  engines or propellers  until  such  time  as
replacement items have
<PAGE> 17
been installed on the aircraft, aircraft engine or propeller  and
the  original  items  have been returned  to  the  Loan  Parties'
inventory.

     "S&P"  means Standard & Poor's Ratings Group, a division  of
McGraw-Hill, Inc.

     "Statutory  Reserves"  means, on any  date,  the  percentage
(expressed  as a decimal) established by the Board  of  Governors
which   is   the  then  stated  maximum  rate  for  all  reserves
(including,  but not limited to, any emergency,, supplemental  or
other  marginal reserve requirements) applicable  to  any  member
bank  of  the  Federal Reserve System in respect to  Eurocurrency
Liabilities  (or  any  successor category  of  liabilities  under
Regulation  D).   Such reserve percentage shall include,  without
limitation,  those  imposed pursuant to said Regulation  D.   The
Statutory Reserves shall be adjusted automatically on and  as  of
the effective date of any change in such percentage.


       "Subordinated Debt" means any Indebtedness of a Loan Party
that  is  subordinated  to the Borrower's obligations  under  the
Facility in a manner and upon terms satisfactory to Lender.


     "Subsidiary"  means any corporation of which a Person  owns,
directly  or indirectly through one or more intermediaries,  more
than  50%  of  the  Voting  Stock at the time  of  determination.
Unless  otherwise qualified, all references to a "Subsidiary"  or
to  "Subsidiaries" in this Agreement shall refer to a  Subsidiary
or Subsidiaries of the Borrower.

     "Taxes" has the meaning set forth in Section 2.12(c).

     "Testing  Period"  means  each period  of  consecutive  four
quarters.

     "Termination Date" means October 15, 2003.

     "Total  Unused  Revolving Credit Commitment"  means  at  any
date,  an  amount  equal  to  (A) the  aggregate  amount  of  the
Revolving  Credit Commitment at such time, less (B) the  sum  of:
(i) the outstanding principal amount of the Revolving Credit Loan
at  such time, plus (ii) the aggregate outstanding amount of  the
Letter of Credit Obligations.

     "Transferee" has the meaning set forth in Section 11.08(d).

     "Type" means the type of Loan, which shall either be a LIBOR
Rate Loan or a Base Rate Loan.

     "UCC"  means the Uniform Commercial Code as adopted  and  in
force  in the Commonwealth of Virginia, as from time to  time  in
effect.

     "United"   means   United   Airlines,   Inc.,   a   Delaware
corporation.

     "Unused Revolving Credit Commitment" means, at any date,  an
amount   equal  to  $25,000,000  less  the  average   outstanding
principal  balance of the Revolving Credit Loan and the aggregate
outstanding  amount of the Letter of Credit Obligations  for  the
prior calendar quarter.

<PAGE> 18

     "Voting Stock" means securities (as such term is defined  in
Section  2(1) of the Securities Act of 1933, as amended)  of  any
class  or  classes, the holders of which are ordinarily,  in  the
absence  of  contingencies, entitled to elect a majority  of  the
corporate directors (or Persons performing similar functions).

     "Wachovia" means Wachovia Bank, N.A. and its successors.

     "Wholly  Owned Subsidiary" means any Subsidiary all  of  the
shares  of  capital stock or other ownership interests  of  which
(except directors' qualifying shares) are at the time directly or
indirectly owned by either of the Loan Parties.

     SECTION 1.02   Accounting Terms and Determinations.

   Unless otherwise specified herein, all terms of an accounting
character  used  herein  shall  be  interpreted,  all  accounting
determinations  hereunder  shall  be  made,  and  all   financial
statements required to be delivered hereunder shall be  prepared,
in  accordance  with GAAP, applied on a basis consistent  (except
for  changes  concurred in by the Borrower's  independent  public
accountants or otherwise required by a change in GAAP)  with  the
most  recent  audited consolidated financial  statements  of  the
Borrower  and  its  Consolidated Subsidiaries  delivered  to  the
Lender unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in
determining  compliance  with  any  of  the  provisions  of  this
Agreement  or any of the other Loan Documents:  (i) the  Borrower
shall  have objected to determining such compliance on such basis
at the time of delivery of such financial statements, or (ii) the
Lender  shall  so  object in writing within  30  days  after  the
delivery of such financial statements, in either of which  events
such  calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as  to
which  such  objection  shall  not  have  been  made  (which,  if
objection  is  made in respect of the first financial  statements
delivered  under  Section 5.01 hereof, shall mean  the  financial
statements referred to in Section 5.04).

     SECTION 1.03   References.

   Unless  otherwise indicated, references in this  Agreement  to
"Articles",   "Exhibits",  "Schedules",  "Sections"   and   other
subdivisions  are  references to articles,  exhibits,  schedules,
sections and other subdivisions hereof.

     SECTION 1.04   Use of Defined Terms.

  All terms defined in this Agreement shall have the same defined
meanings  when  used in any of the other Loan  Documents,  unless
otherwise  defined  therein or unless the context  shall  require
otherwise.

     SECTION 1.05   Terminology.

   All personal pronouns used in this Agreement, whether used  in
the masculine, feminine or neuter gender, shall include all other
genders;  the singular shall include the plural, and  the  plural
shall  include the singular.  Titles of Articles and Sections  in
this  Agreement are for convenience only, and neither  limit  nor
amplify the provisions of this Agreement.

<PAGE> 19

                            ARTICLE II.
                           THE CREDITS

     SECTION 2.01   Commitment to Lend.

   The  Lender  agrees,  on the terms and  conditions  set  forth
herein, to make Revolving Credit Loans to the Borrower from  time
to  time  before the Termination Date; provided that, immediately
after  each Revolving Credit Loan is made, the maximum  aggregate
outstanding  principal amount of Revolving Credit  Loans  by  the
Lender,  plus  the  aggregate amount  of  the  Letter  of  Credit
Obligations  shall not exceed at any one time the amount  of  the
Revolving  Credit Commitment, provided further that,  subject  to
the  foregoing limitations, from and after the Closing  Date  the
aggregate  principal  amount  of  all  Revolving  Credit   Loans,
together  with  the aggregate principal amount of the  Letter  of
Credit  Obligations, at any one time outstanding shall not exceed
the  Revolving Credit Commitment. (as such figure may be  reduced
from   time   to   time  as  provided  in  this  Agreement,   the
"Commitment"). Each Revolving Credit Borrowing that  is  a  Libor
Rate  Borrowing  under  this Section shall  be  in  an  aggregate
principal  amount of $500,000 or any larger multiple of  $500,000
and each Revolving Credit Borrowing that is a Base Rate Borrowing
under  this Section shall be in an aggregate principal amount  of
$500,000 or any larger multiple of $500,000 (except that any such
Revolving Credit Borrowing may be in the aggregate amount of  the
Total  Unused Revolving Credit Commitment). Within the  foregoing
limits, the Borrower may borrow under this Section, repay or,  to
the  extent permitted by Section 2.10, prepay Loans and  reborrow
under  this  Section at any time before the Termination  Date  in
accordance  with  this  Agreement.  Each  Revolving  Credit  Loan
shall,  at  the option of Borrower, be made or continued  as,  or
converted  into, a Base Rate Loan or a LIBOR Rate Loan  upon  the
terms set forth herein.

     SECTION 2.02   Method of Borrowing.

     (a)  The Borrower shall give the Lender telephonic notice (a
"Notice of Borrowing"), which notice shall be consistent with the
funds transfer agreement signed by an officer of the Borrower and
on  file  with the Lender, prior to 11:00 a.m. (McLean,  Virginia
time) on the same Business Day of each Borrowing, specifying:

          (i)  the date of such Borrowing,

         (ii)  the aggregate amount of such Revolving Credit Borrowing, and

        (iii)  whether the Revolving Credit Loans comprising such
               Borrowing are to be Base Rate Loans or LIBOR Rate Loans.

     (b)  A Notice of Borrowing, once received by the Lender, shall
          not thereafter be revocable by the Borrower.

     (c)  Not later than 2:00 p.m. (McLean, Virginia time) on the date
          of each Borrowing, the Lender shall (except as provided in
          paragraph (d) of this Section) credit the amount of such
          Borrowing, in Federal or other funds immediately available,
          pursuant to the funds transfer agreement signed by an officer of
          the Borrower and on file with the Lender, unless the Lender
          determines that any applicable condition specified in Article III
          has not been satisfied.
<PAGE> 20

     (d)  Notwithstanding anything to the contrary contained in this
          Agreement, no LIBOR Rate Borrowing may be made if there
          shall have occurred a Default, which Default shall not have
          been cured or waived.

     (e)  In the event that a Notice of Borrowing fails to specify
          whether the Revolving Credit Loans comprising such Borrowing
          are to be Base Rate Loans or LIBOR Rate Loans, such Loans
          shall be made as Base Rate Loans.

     SECTION 2.03   Continuation and Conversion Elections.

   By giving telephonic notice (a "Notice of  Continuation  or
Conversion")  to  the  Lender on or before  12:00  p.m.,  McLean,
Virginia time, on a Business Day, the Borrower may from  time  to
time  irrevocably elect, by notice on the same Business  Day,  in
the case of Base Rate Loans or 3 Business Days in advance, in the
case  of  LIBOR  Rate  Loans, that all,  or  any  portion  in  an
aggregate  principal  amount of $500,000 or any  larger  integral
multiple  of  $500,000 be, (i) in the case of  Base  Rate  Loans,
converted into LIBOR Rate Loans or (ii) in the case of LIBOR Rate
Loans, converted into Base Rate Loans or continued as LIBOR  Rate
Loans (in the absence of delivery of a Notice of Continuation  or
Conversion  with  respect  to any LIBOR  Rate  Loan  at  least  3
Business  Days  before the last day of the then current  Interest
Period with respect thereto, such LIBOR Rate Loan shall, on  such
last  day,  automatically convert to a Base Rate Loan); provided,
however,  that no portion of the outstanding principal amount  of
any  Loans  may be continued as, or be converted into, any  LIBOR
Rate Loan when any Default has occurred and is continuing.

     SECTION 2.04   Note.

   The  Revolving  Credit  Loans shall  be  evidenced  by  a  single
Revolving Credit Note payable to the order of the Lender for  the
account  of its Lending Office in an amount equal to the original
principal amount of the Revolving Credit Commitment.

     SECTION 2.05   Maturity of Loans.

     (a)  Each Revolving Credit Loan shall mature, and the principal
amount thereof shall be due and payable on, the Termination Date.

     (b)  Notwithstanding the foregoing, the outstanding principal
amount of the Loans, if any, together with all accrued but unpaid
interest thereon, if any, shall be due and payable on the
Termination Date; unless the Termination Date is otherwise
extended by the Lender, in its sole and absolute discretion.
Upon the written request of the Borrower, which request shall be
delivered to the Lender no more than 60 days, and no less than 30
days, prior to the then-current Termination Date, the Lender
shall have the option (without any obligations whatsoever so to
do) of extending the Termination Date for an additional 364-day
period.  The Lender shall notify the Borrower at least 15 days
prior to the then-current Termination Date whether it chooses to
extend the Termination Date for such an additional 364-day period
(but failure by the Lender to give such notice within such period
shall be deemed to be a denial by the Lender of the Borrower's
request to extend the Termination Date).

     SECTION 2.06   Interest Rates.

     (a)  In determining interest for purposes of this Section 2.06
and  fees  for  purposes of Section 2.07, the  Borrower  and  the
Lender   shall   refer  to  Holdings'  most  recent  Consolidated
quarterly  and  annual (as the case may be) financial  statements
delivered pursuant to

<PAGE> 21

Section  5.01(a) or (b), as the case may be.  If  such  financial
statements  require  a  change  in  interest  pursuant  to   this
Section 2.06 or fees pursuant to Section 2.07, the Borrower shall
deliver  to  the Lender, along with such financial statements,  a
notice to that effect, which notice shall set forth in reasonable
detail  the  calculations supporting the  required  change.   The
"Performance Pricing Determination Date" is the date which is the
first  day of the Fiscal Quarter after delivery of such financial
statement.   Any such required change in interest and fees  shall
become effective on such Performance Pricing Determination  Date,
and  shall  be  in  effect  until the  next  Performance  Pricing
Determination Date, provided that  no fees or interest  shall  be
decreased  pursuant to this Section 2.06 or  Section  2.07  if  a
Default  is in existence on the Performance Pricing Determination
Date.

     (b)  Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is
made  until it becomes due, at a rate per annum equal to the Base
Rate  for  such  day plus the Applicable Margin.   Such  interest
shall  be payable in arrears on the first day of each month while
such Base Rate Loan is outstanding and on the date such Base Rate
Loan is converted to a LIBOR Rate Loan.  Any overdue principal of
and,  to the extent permitted by applicable law, overdue interest
on any Base Rate Loan shall bear interest, payable on demand, for
each  day  until  paid at a rate per annum equal to  the  Default
Rate.

     (c)  Each LIBOR Rate Loan shall bear interest on the outstanding
principal amount thereof, at a rate per annum equal to the sum of
the Daily LIBOR Rate in effective from time to time plus the
Applicable Margin.  Such interest shall be payable monthly in
arrears on the first day of each month while such LIBOR Rate Loan
is outstanding.  Any overdue principal of and, to the extent
permitted by law, overdue interest on any LIBOR Rate Loan shall
bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.

     (d)  The Lender shall determine each interest rate applicable to
the Loans hereunder.  The Lender shall give prompt notice to the
Borrower and the Lender by telecopier of each rate of interest so
determined, and its determination thereof shall be conclusive in
the absence of manifest error.  The applicable rate of interest
for all LIBOR Rate Loans shall be increased or decreased, as the
case may be, by an amount equal to any increase or decrease in
the Daily LIBOR Rate, with such adjustments to be effective as of
the opening day of business on the day that any such change in
the Daily LIBOR Rate becomes effective.

     (e)  After the occurrence and during the continuance of an Event
of Default, the principal amount of the Loans (and, to the extent
permitted by applicable law, all accrued interest thereon) may,
at the election of the Lender, bear interest at the Default Rate.

     SECTION 2.07   Commitment Fee.

   The Borrower shall pay to the Lender a commitment fee equal to
the product of (i) the aggregate of the daily average amounts  of
the  Lender's  Unused  Revolving  Credit  Commitment  during  the
applicable period, times (ii) a per annum percentage equal to the
Applicable  Commitment  Fee  Rate.   Such  commitment  fee  shall
accrue  from and including the Closing Date to and including  the
Termination Date.  Commitment fees shall be payable quarterly  in
arrears  on the first Commitment Fee Payment Date following  each
Commitment  Fee  Determination Date and on the Termination  Date;
provided   that   should  the  Revolving  Credit  Commitment   be
terminated at any time prior to the

<PAGE> 22

Termination  Date  for any reason the entire accrued  and  unpaid
commitment fee through the date of termination shall be  paid  on
the  date  of  such termination.  The "Applicable Commitment  Fee
Rate"  shall  be determined quarterly based upon the Consolidated
Fixed  Charges Coverage Ratio for the Loan Parties,  collectively
on a combined basis, calculated as of the last day of each Fiscal
Quarter, as follows:

<TABLE>

<CAPTION>

             Consolidated Fixed           Applicable
              Charges Coverage         Commitment Fee
                    Ratio                   Rate



            <C>                             <C>

            Less than or equal to           .375%
            1.8 to 1.0

            Less than or equal to           .25%
            2.25 to 1.0 but
            greater than 1.8 to
            1.0

            Greater than 2.25  to           .20%
            1.0

</TABLE>

The  Applicable Commitment Fee Rate shall be determined effective
as  of  the date (herein, the Commitment Fee Determination Date")
which  is  45  days after the last day of the Fiscal Quarter  for
which  the  Consolidated Fixed Charges Coverage  Ratio  is  being
determined, based on the quarterly financial statements for  such
Fiscal  Quarter,  and  the  Applicable  Commitment  Fee  Rate  so
determined  shall  remain  effective  from  such  Commitment  Fee
Determination Date until the date which is 45 days after the last
day   of  the  Fiscal  Quarter  in  which  such  Commitment   Fee
Determination  Date  falls (which latter  date  shall  be  a  new
Commitment  Fee Determination Date); provided that  (i)  for  the
period  from and including the Closing Date to but excluding  the
Commitment  Fee  Determination Date  next  following  the  Fiscal
Quarter  ending December 31, 2001, the Applicable Commitment  Fee
Rate  shall  be  0.375%;  (ii) in the  case  of  any   Applicable
Commitment  Fee Rate determined for the fourth and  final  Fiscal
Quarter  of a Fiscal Year, the Commitment Fee Determination  Date
shall  be  the date which is 90 days after the last day  of  such
Fiscal Quarter and such  Applicable Commitment Fee Rate shall  be
determined  based upon the consolidated annual audited  financial
statements of the Loan Parties for the Fiscal Year ended  on  the
last  day  of  such final Fiscal Quarter, and  (iii)  if  on  any
Commitment  Fee  Determination Date the Loan Parties  shall  have
failed to deliver to the Lender the financial statements required
to  be  delivered  pursuant to Sections 6.01(a) or  6.01(b)  with
respect to the Fiscal Year or Fiscal Quarter most recently  ended
prior  to  such Commitment Fee Determination Date, then  for  the
period  beginning on such Commitment Fee Determination  Date  and
ending  on the earlier of (A) the date on which the Loan  Parties
shall  deliver  to  the  Lender the financial  statements  to  be
delivered pursuant to Section 6.01(b) with respect to such Fiscal
Quarter  or  any subsequent Fiscal Quarter, and (B) the  date  on
which  the  Loan  Parties  shall deliver  to  the  Lender  annual
financial statements required to be delivered pursuant to Section
6.01(a)  with  respect  to the Fiscal Year  which  includes  such
Fiscal  Quarter  or  any subsequent Fiscal Year,  the  Applicable
Commitment  Fee  Rate shall be determined as if the  Consolidated
Fixed Charges Coverage Ratio was less than or equal to 1.8 to 1.0
at  all  times  during such period; provided that the  Applicable
Commitment Fee

<PAGE> 23

shall not be decreased pursuant to this Section 2.07 if a Default
is in existence on the related Commitment Fee Determination Date,
unless and until such Default shall have been cured or waived  in
writing.

     SECTION 2.08   Optional Termination or Reduction of Commitment.

   The Borrower may, upon at least 3 Business Days' notice to the
Lender,  terminate  at  any time, or proportionately  reduce  the
Unused  Revolving  Credit Commitment from  time  to  time  by  an
aggregate  amount of at least $5,000,000 or any  larger  integral
multiple of $1,000,000.  If the Commitment is terminated  in  its
entirety, all accrued fees (as provided under Section 2.07) shall
be due and payable on the effective date of such termination.

     SECTION 2.09   Mandatory Reduction and Termination of Commitment.

     (a)  The Revolving Credit Commitment shall terminate on the
Termination  Date and any Revolving Credit Loans then outstanding
(together with accrued interest thereon) shall be due and payable
on such date.

     (b)  The Revolving Credit Commitment shall be reduced by the
amount of any mandatory prepayment made pursuant to
Section 2.11(b).

     SECTION 2.10   Optional Prepayments.

     (a)  The Borrower may, upon at least 1 Business Days' notice to
the  Lender, prepay any Base Rate Borrowing in whole at any time,
or  from  time  to time in part in amounts aggregating  at  least
$500,000,  by paying the principal amount to be prepaid  together
with  accrued  interest thereon to the date of prepayment.   Each
such  optional prepayment shall be applied to prepay ratably  the
Base Rate Loans included in such Base Rate Borrowing.

     (b)  Subject to any payments required pursuant to the terms of
Article IX for such LIBOR Rate Loan, upon 3 Business Day's prior
written notice, the Borrower may prepay in minimum amounts of
$500,000 (or any lesser amount equal to the outstanding balance
of such Loan) all or any portion of the principal amount of any
LIBOR Rate Loan prior to the maturity thereof.
(c)  A notice of prepayment pursuant to this Section 2.10, once
received by the Lender, shall not thereafter be revocable by the
Borrower.

     SECTION 2.11   Mandatory Prepayments.

     Notwithstanding anything to the contrary contained elsewhere
in  this  Agreement,  if  an Overadvance Condition  shall  exist,
Borrower  shall,  without the necessity of a demand,  either  (a)
repay  the outstanding Revolving Credit Loans that are Base  Rate
Loans  or LIBOR Rate Loans in an amount sufficient to reduce  the
aggregate unpaid principal amount of all such Loans by an  amount
equal to such excess; or (b) deposit with Lender, for application
to  any outstanding Revolving Credit Loans as the same become due
and   payable,  cash  in  an  amount  sufficient  to  cure   such
Overadvance  Condition,  to  be  held  by  Lender  in  the   Cash
Collateral  Account, pending disbursement of same to Lender,  but
subject  to  Lender's  Lien therein and  rights  of  offset  with
respect thereto.

<PAGE> 24

     SECTION 2.12   General Provisions as to Payments.

     (a)  The Borrower shall make each payment of principal of, and
interest  on,  the  Revolving Credit Loans and  of  Reimbursement
Obligations  and commitment fees hereunder, without  any  setoff,
counterclaim  or any deduction whatsoever, not later  than  11:00
a.m. (McLean, Virginia time) on the date when due, in Federal  or
other  funds  immediately available in McLean, Virginia,  to  the
Lender at its address referred to in Section 9.01.

     (b)  Whenever any payment of principal of, or interest on, the
Base Rate Loans or of fees hereunder shall be due on a day which
is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day.  Whenever any
payment of principal of or interest on, the LIBOR Rate Loans
shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business
Day.
     (c)  All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement
with respect to any Revolving Credit Loan, Reimbursement
Obligation or fee relating thereto shall be paid without
deduction for, and free from, any taxes, imposts, levies, duties,
deductions, or withholdings of any nature now or at anytime
hereafter imposed by any governmental authority or by any taxing
authority thereof or therein excluding in the case of the Lender,
taxes imposed on or measured by its net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which
the Lender is organized or any political subdivision thereof and,
in the case of the Lender, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of the
Lender's applicable Lending Office or any political subdivision
thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes").  In the
event that the Borrower is required by applicable law to make any
such withholding or deduction of Taxes with respect to any Loan
or fee or other amount, the Borrower shall pay such deduction or
withholding to the applicable taxing authority, shall promptly
furnish to the Lender in respect of which such deduction or
withholding is made all receipts and other documents evidencing
such payment and shall pay to the Lender additional amounts as
may be necessary in order that the amount received by the Lender
after the required withholding or other payment shall equal the
amount the Lender would have received had no such withholding or
other payment been made.
     In  the event the Lender receives a refund of any Taxes paid
by  the Borrower pursuant to this Section 2.12(c), it will pay to
the  Borrower  the  amount of such refund promptly  upon  receipt
thereof;  provided that if at any time thereafter it is  required
to  return such refund, the Borrower shall promptly repay  to  it
the amount of such refund.

     Without prejudice to the survival of any other agreement  of
the  Borrower  hereunder, the agreements and obligations  of  the
Borrower  and the Lender contained in this Section 2.12(c)  shall
constitute   a  continuing  agreement  and  shall   survive   the
termination  of  this  Agreement  and  the  payment  in  full  or
cancellation of the Note.

     SECTION 2.13   Computation of Interest and Fees.

   Interest on Base Rate Loans based on the Prime Rate  shall  be
computed  on  the  basis  of  a year  of  365  or  366  days,  as
applicable,  and  paid  for the actual  number  of  days  elapsed
(including  the first day but excluding the last day).   Interest
on  Base  Rate Loans based on the Federal Funds Rate and interest
on

<PAGE> 25

LIBOR Rate Loans shall be computed on the basis of a year of  360
days  and  paid for the actual number of days elapsed, calculated
from  and  including the first day thereof to but  excluding  the
last  day  thereof.   Facility fees and any  other  fees  payable
hereunder  shall be computed on the basis of a year of  360  days
and  paid  for  the actual number of days elapsed (including  the
first day but excluding the last day).

                          ARTICLE III.
                    CONDITIONS TO BORROWINGS

     SECTION 3.01   Conditions to First Borrowing.

   The obligation of the Lender to make a Loan on the occasion of
the  first  Borrowing  is  subject to  the  satisfaction  of  the
conditions set forth in Section 3.02 and receipt by the Lender of
the following:

     (a)  from each of the parties hereto of either (i) a duly
executed  counterpart of this Agreement signed by such  party  or
(ii)  a facsimile transmission of such executed counterpart (with
the original to be sent to the Lender by overnight courier);

     (b)  a duly executed Note for the account of the Lender, pursuant
to Section 2.04;

     (c)  an opinion letter of Reed Smith Hazel & Thomas LLP, counsel
for the Loan Parties, dated as of the Closing Date, substantially
in the form of Exhibit B;

     (d)  a certificate (the "Closing Certificate") substantially in
the form of Exhibit F), dated as of the Closing Date, signed by a
principal financial officer of the Borrower, to the effect that
(i) no Default has occurred and is continuing on the date of the
first Borrowing and (ii) the representations and warranties of
the Borrower contained in Article V are true on and as of the
date of the first Borrowing hereunder;

     (e)  all documents which the Lender may reasonably request
relating to the existence of the Loan Parties, the corporate
authority for and the validity of this Agreement and the Note,
and any other matters relevant hereto, all in form and substance
satisfactory to the Lender, including, without limitation, a
certificate of the Loan Parties substantially in the form of
Exhibit G (the "Officer's Certificate"), signed by the Secretary
or an Assistant Secretary of the Borrower and Holdings,
certifying as to the names, true signatures and incumbency of the
officer or officers of the Borrower and Holdings authorized to
execute and deliver the Loan Documents, and certified copies of
the following items:  (i) the Borrower's Certificate of
Incorporation, (ii) the Borrower's Bylaws, (iii) the Certificate
of Incorporation of Holdings; (iv) the Bylaws of Holdings, (v) a
certificate of the Secretary of State of the State of California
as to the good standing of the Borrower as a California
corporation, (vi) a certificate of the Secretary of the State of
Delaware as to the good standing of Holdings as a Delaware
corporation, (vii) certificates of good standing with respect to
the Borrower and Holdings from the Virginia State Corporation
Commission, and (iv) the action taken by the Board of Directors
of Holdings authorizing the Loan Parties' execution, delivery and
performance of this Agreement and the other Loan Documents;

     (f)  a Notice of Borrowing;
<PAGE> 26

     (g)  delivery of the Security Documents duly executed, accepted
and  acknowledged  by  or on behalf of each  of  the  signatories
thereto;

     (h)  copies of all filing receipts or acknowledgments issued by
any governmental authority (including, without limitation, the
FAA) to evidence any filing or recordation necessary to perfect
the Liens of Lender in the Collateral and evidence in a form
acceptable to Lender that such Liens constitute valid and
perfected first priority security interests and Liens;

     (i)  a policy of title insurance insuring the lien of the Deed of
Trust as a first lien on the Leasehold Interest; and

     (j)  payment by Borrower to Lender of the fees referenced in the
Commitment Letter Agreement; and

     (k)   delivery of such other documents, instruments and
agreements as Lender shall reasonably request in connection  with
the foregoing matters.

     In addition, if the Borrower desires funding of a LIBOR Rate
Loan  on  the  Closing Date, the Lender shall have received,  the
requisite  number of days prior to the Closing  Date,  a  funding
indemnification  letter satisfactory to  it,  pursuant  to  which
(i)  the  Lender  and  the Borrower shall have  agreed  upon  the
interest  rate and amount of Borrowing for such LIBOR Rate  Loan,
and (ii) the Borrower shall indemnify the Lender from any loss or
expense  arising  from the failure to close  on  the  anticipated
Closing  Date identified in such letter or the failure to  borrow
such LIBOR Rate Loan on such date.

     SECTION 3.02   Conditions to All Borrowings.

  The obligation of the Lender to make a Revolving Credit Loan on
the occasion of each Borrowing is subject to the satisfaction  of
the following conditions:

     (a)  receipt by the Lender of a Notice of Borrowing;

     (b)  the fact that, immediately before and after such Borrowing,
no Default shall have occurred and be continuing;

     (c)  the fact that the representations and warranties of the Loan
Parties contained in Article V of this Agreement shall be true on
and as of the date of such Borrowing (except to the extent any
such representation or warranty is expressly made as of a prior
date); and

     (d)  the fact that, immediately after such Borrowing, the
conditions set forth in Section 2.01shall have been satisfied.

     Each Borrowing and each Notice of Continuation or Conversion
hereunder shall be deemed to be a representation and warranty  by
the  Loan  Parties on the date of such Borrowing as to the  truth
and  accuracy of the facts specified in paragraphs (b),  (c)  and
(d)  of  this  Section;  provided, that (i)  if  such  Notice  of
Continuation or Conversion is to a LIBOR Rate Loan,  such  Notice
of  Continuation  or  Conversion shall be deemed  to  be  such  a
representation and warranty

<PAGE> 27

by  the  Loan  Parties  only  as to  the  matters  set  forth  in
paragraphs  (b)  and (d) above, and (ii) if such Borrowing  is  a
Base  Rate  Borrowing  or  if  such  Notice  of  Continuation  or
Conversion  is to a Base Rate Loan, such Borrowing or  Notice  of
Continuation or Conversion shall be deemed to be a representation
and warranty by the Loan Parties only as to the matters set forth
in paragraph (d) above.

                           ARTICLE IV.
                    LETTER OF CREDIT FACILITY

     SECTION 4.01   Obligation to Issue. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations
and warranties of the Borrower herein set forth, Lender shall issue for
the account of Borrower or any Loan Party, one or more Letters of Credit
denominated in Dollars in accordance  with  this Article IV, from time
to time during the period  commencing on the Closing Date and ending
on the Domestic Business Day prior to the Termination Date.

     SECTION 4.02   Types and Amounts.  Lender shall have no
obligation to issue any Letter of Credit at any time:

     (a)  if the aggregate maximum amount then available for drawing
under  Letters of Credit, after giving effect to the issuance  of
the requested Letter of Credit, shall exceed any limit imposed by
law or regulation upon the Lender;

     (b)  if, after giving effect to the issuance of the requested
Letter of Credit, the aggregate outstanding principal balance of
the Revolving Credit Loan, together with all outstanding Letter
of Credit Obligations (exclusive of the Bond Letter of Credit)
would exceed the Borrowing Base, or;

     (c)  which has an expiration date (i) more than twenty-four (24)
months after the date of issuance or (ii) after the Termination
Date.

     SECTION 4.03   Conditions.  In addition to being subject to the
satisfaction  of  the  conditions contained  in  Article  V,  the
obligation of the Lender to issue any Letter of Credit is subject
to the satisfaction in full of the following conditions:

     (a)  the Borrower shall have delivered to the Lender, at such
times and in such manner as the Lender may prescribe, a Letter of
Credit  Application  Agreement  and  such  other  documents   and
materials  as may be required pursuant to the terms  thereof  all
satisfactory in form and substance to the Lender, and  the  terms
of  the  proposed Letter of Credit shall be satisfactory in  form
and substance to the Lender; and

     (b)  as of the date of issuance no order, judgment or decree of
any court, arbitrator or authority shall purport by its terms to
enjoin or restrain the Lender from issuing the Letter of Credit
and no law, rule or regulation applicable to the Lender and no
request or directive (whether or not having the force of law)
from any governmental body with jurisdiction over the Lender
shall prohibit or request that the Lender refrain from the
issuance of letters of credit generally or the issuance of that
Letter of Credit.
<PAGE> 28

     SECTION 4.04   Issuance of Letters of Credit.

     (a)  Request for Issuance.  At least two Business Days before the
effective date for any Letter of Credit, the Borrower shall  give
the Lender a written notice containing the original signature  of
an  authorized officer or employee of the Borrower.  Such  notice
shall  be irrevocable and shall specify the original face  amount
of  the Letter of Credit requested, the effective date (which day
shall be a Business Day) of issuance of such requested Letter  of
Credit, the date on which such requested Letter of Credit  is  to
expire,   the  amount  of  then  outstanding  Letter  of   Credit
Obligations, the purpose for which such Letter of Credit is to be
issued,  whether such Letter of Credit may be drawn in single  or
partial  draws  and  the person for whose benefit  the  requested
Letter of Credit is to be issued.

     (b)  Issuance; Notice of Issuance.  If the conditions set forth
in Sections 4.02 and 4.03 are satisfied, the Lender shall issue
the requested Letter of Credit.

     (c)  No Extension or Amendment.  The Lender shall not extend or
amend any Letter of Credit if the issuance of a new Letter of
Credit having the same terms as such Letter of Credit as so
amended or extended would be prohibited by Section 4.02 or
Section 4.03.

     SECTION 4.05   Reimbursement Obligations; Duties of the Lender.

     (a)  Reimbursement.  Notwithstanding any provisions to the
contrary  in the Reimbursement Agreement or any Letter of  Credit
Application Agreement:

         (i)  the Borrower shall reimburse the Lender for drawings under a
              Letter of Credit issued by it no later than the earlier of (A)
              the time specified in such Letter of Credit Application
              Agreement, or (B) 1 Business Day after the payment by the
              Lender;

        (ii)  any Reimbursement Obligation with respect to any Letter of
              Credit shall bear interest from the date of the relevant
              drawing under the pertinent Letter of Credit until the date
              of payment in full thereof at a rate per annum equal to (A)
              prior to the date that is 3 Business Days after the date of
              the related payment by the Lender, the Base Rate plus the
              Applicable Margin and (B) thereafter, the Default Rate; and

       (iii)  in order to implement the foregoing, upon the
              occurrence of a draw under any Letter of Credit, unless the
              Lender is reimbursed in accordance with Subsection (i) above,
              the Borrower irrevocably authorizes the Lender to treat such
              nonpayment as a Notice of Borrowing in the amount of such
              Reimbursement Obligation and the Lender to make a Base Rate
              Loan to Borrower in such amount regardless of whether the
              conditions precedent to the making of Base Rate Loans
              hereunder have been met.  The Borrower further authorizes
              the Lender to credit the proceeds of such Base Rate Loan so
              as to immediately eliminate the liability of the Borrower
              for Reimbursement Obligations under such Letter of Credit.

     (b)  Duties of the Lender.  Any action taken or omitted to be
taken  by the Lender in connection with any Letter of Credit,  if
taken  or  omitted in the absence of willful misconduct or  gross
negligence,  shall  not  put  the  Lender  under  any   resulting
liability to any Loan Party.  In

<PAGE> 29

determining whether to pay under any Letter of Credit, the Lender
shall  have no obligation relative to any Loan Party, other  than
to  confirm  that any documents required to have  been  delivered
under  such Letter of Credit appear to comply on their face  with
the requirements of such Letter of Credit.

     SECTION 4.06   [Intentionally Omitted].

     SECTION 4.07   Payment of Reimbursement Obligations.

      (a)  Payments to Lender.  The Borrower agrees to pay to the
Lender the amount of all Reimbursement Obligations, interest  and
other  amounts payable to the Lender under or in connection  with
any  Letter  of  Credit  issued for the Borrower's  or  any  Loan
Party's account immediately when due, irrespective of:

            (i)  any lack of validity or enforceability of this
                 Agreement or any of the other Loan Documents;

           (ii)  the existence of any claim, set-off, defense or
                 other right which the Borrower or any Loan Party may
                 have at any time against a beneficiary named in a Letter
                 of Credit or any transferee of any Letter of Credit (or
                 any Person for whom any such transferee may be acting),
                 the Lender, or any other Person, whether in connection with
                 this Agreement, any Letter of Credit, the transactions
                 contemplated herein or any unrelated transactions;

          (iii)  any draft, certificate or any other document presented
                 under the Letter of Credit proves to be forged, fraudulent,
                 invalid or insufficient in any respect or any statement
                 therein being untrue or inaccurate in any respect;

           (iv)  the surrender or impairment of any security for the
                 performance or observance of any of the terms of any of
                 the Loan Documents;

            (v)  payment by the Lender under any Letter of Credit proving to
                 be forged, fraudulent, invalid or insufficient in any
                 respect or any statement therein being untrue or inaccurate
                 in any respect;

           (vi)  payment by the Lender under any Letter of Credit against
                 presentation of any draft or certificate that does not comply
                 with the terms of such Letter of Credit, except payment
                 resulting from the gross negligence or willful misconduct of
                 the Lender; or

          (vii)  any other circumstances or happenings whatsoever,
                 whether or not similar to any of the foregoing, except
                 circumstances or happenings resulting from the gross
                 negligence or willful misconduct of the Lender.
<PAGE> 30

     SECTION 4.08   Compensation for Letters of Credit and Lender
Reporting Requirements.

          (a)  Letter of Credit Fees.  The Borrower shall pay to the Lender
with  respect to each Letter of Credit issued hereunder a  letter
of  credit  fee  ("Letter of Credit Fee") equal to a  semi-annual
rate  based upon the Applicable Margin for Letters of Credit,  or
after  the  occurrence and during the continuance of  a  Default,
the Default Rate, multiplied by the face amount of such Letter of
Credit,  payable  on  the Business Day on which  such  Letter  of
Credit  is  issued  and every six months thereafter.   Letter  of
Credit Fees payable hereunder shall be computed on the basis of a
year  of  360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).

          (b)  Lender Charges.  The Borrower shall also pay to the Lender
its customary administrative fees in connection with the issuance
and/or renewal of each Letter of Credit.

     SECTION 4.09   Indemnification; Exoneration.

          (a)  Indemnification.  In addition to amounts payable as
elsewhere  provided  in  this  Article  IV,  the  Borrower  shall
protect,  indemnify, pay and save the Lender  harmless  from  and
against  any  and  all  claims,  demands,  liabilities,  damages,
losses,   costs,  charges  and  expenses  (including   reasonable
attorneys' fees) which the Lender may incur or be subject to as a
consequence  of  the issuance of any Letter  of  Credit  for  the
Borrower's account other than as a result of its gross negligence
or  willful  misconduct, as determined by a  court  of  competent
jurisdiction.

          (b)  Assumption of Risk by Borrower.  As between the Borrower and
the Lender,  the Borrower assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit issued for the
Borrower's or any Loan Party's account by, the respective
beneficiaries of such Letters of Credit.  In furtherance and not
in limitation of the foregoing, the Lender shall not be
responsible for (i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of the
Letters of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or
forged, (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason, (iii) failure of the beneficiary of a
Letter of Credit to comply duly with conditions required in order
to draw upon such Letter of Credit, (iv) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher, for errors in interpretation of
technical terms, (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof, (vii) the
misapplication by the beneficiary of a Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (viii)
any consequences arising from causes beyond the control of the
Lender.

          (c)  Exoneration.  In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any
action taken or omitted by the Lender under or in connection with
the Letters of Credit or any related certificates if taken or
omitted in good faith
<PAGE> 31

and  with  reasonable care, shall not put the  Lender  under  any
resulting liability to the Borrower or any Loan Party or  relieve
the  Borrower  of any of its obligations hereunder  to  any  such
Person.

                           ARTICLE V.
                 REPRESENTATIONS AND WARRANTIES

     Each  of  the  Loan Parties represents and warrants  to  the
Lender that:

     SECTION 5.01   Corporate Existence and Power.

   Each of the Borrower  and  Holdings  is  a  corporation  duly
organized, validly existing and in good standing under  the  laws
of  the jurisdiction of its incorporation.  The Borrower is  duly
qualified  to transact business in every jurisdiction  where,  by
the  nature of its business, such qualification is necessary, and
has   all   corporate  powers  and  all  governmental   licenses,
authorizations, consents and approvals required to carry  on  its
business as now conducted, except in each case where such failure
to be so qualified or have such powers, licenses, authorizations,
consents  or approvals would not have a Material Adverse  Effect.
Borrower  is an air carrier holding a certificate issued  by  the
FAA under 49 U.S.C. 44705.

     SECTION 5.02   Corporate and Governmental Authorization;  No
Contravention.

   The execution, delivery and performance by the Loan Parties of
this Agreement, the Note and each of the other Loan Documents  to
which  such Loan Party is a party, as applicable, (i) are  within
such   Loan  Party's  corporate  powers,  (ii)  have  been   duly
authorized  by all necessary corporate action, (iii)  require  no
action by or in respect of or filing with, any governmental body,
agency  or  official,  (iv) do not contravene,  or  constitute  a
default  under, any provision of applicable law or regulation  or
of the certificate of incorporation or by-laws of the Borrower or
of  any  agreement, judgment, injunction, order, decree or  other
instrument  binding upon the Borrower or any of its Subsidiaries,
and  (v) do not result in the creation or imposition of any  Lien
on any asset of the Borrower or any of its Subsidiaries except as
contemplated by the Loan Documents.

     SECTION 5.03   Binding Effect.

   This Agreement constitutes a valid and binding agreement of the
Borrower  enforceable in accordance with its terms, and the  Note
and  the  other  Loan Documents, when executed and  delivered  in
accordance with this Agreement, will constitute valid and binding
obligations of the Borrower enforceable in accordance with  their
respective  terms,  provided that the enforceability  hereof  and
thereof  is subject in each case to general principles of  equity
and  to  bankruptcy,  insolvency and similar laws  affecting  the
enforcement of creditors' rights generally.

     SECTION 5.04   Financial Information.

          (a)  The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 2000 and the related
consolidated statements of income, shareholders' equity and  cash
flows  for  the Fiscal Year then ended, reported on by  KPMG,LLP,
copies  of  which  have been delivered to  the  Lender,  and  the
unaudited  consolidated financial statements of the Borrower  for
the  interim period ended June 30, 2001 copies of which have been
delivered to the Lender, fairly present, in conformity with GAAP,
the consolidated financial

<PAGE> 32

position of the Borrower and its Consolidated Subsidiaries as  of
such  dates and their consolidated results of operations and cash
flows for such periods stated.

          (b)  The aftermath of the events of September 11, 2001 will have
a  Material  Adverse Effect on the commercial  aviation  industry
generally  and  on  the  business and affairs  of  the  Borrower,
including  its  ability  to  operate all  flights  as  previously
planned,  its relationships with its major airline partners,  and
its  costs of operations including insurance and security  costs.
Otherwise,  since  June 30, 2001 there has been  no  event,  act,
condition  or  occurrence having, or which  could  reasonably  be
expected  to have, alone or in the aggregate, a Material  Adverse
Effect.

     SECTION 5.05   No Litigation.

   There  is  no action, suit or proceeding pending,  or  to  the
knowledge  of the Loan Parties' threatened, against or  affecting
Holdings  or  any  of  its  Subsidiaries  before  any  court   or
arbitrator  or  any governmental body, agency or official  which,
alone or in the aggregate, could reasonably be expected to have a
Material  Adverse   Effect  or which in  any  manner  draws  into
question the validity of or could impair the ability of the  Loan
Parties  to  perform  their respective  obligations  under,  this
Agreement, the Note or any of the other Loan Documents.

     SECTION 5.06   Compliance with ERISA.

          (a)  Holdings and Borrower have fulfilled their obligations under
the  minimum funding standards of ERISA and the Code with respect
to  each Plan and are in compliance in all material respects with
the  presently applicable provisions of ERISA and the  Code,  and
have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA.

          (b)  Neither Holdings nor Borrower has incurred any withdrawal
liability with respect to any Multiemployer Plan under Title IV
of ERISA, and no such liability is expected to be incurred.

     SECTION 5.07   Compliance with Laws; Payment of Taxes.

   Holdings  and  its  Subsidiaries are in  compliance  with  all
applicable   laws,  regulations  and  similar   requirements   of
governmental authorities, except where such compliance  is  being
contested in good faith through appropriate proceedings or  where
non-compliance, alone or in the aggregate, could  not  reasonably
be  expected to have a Material Adverse Effect.  There have  been
filed  on  behalf of Holdings and its Subsidiaries  all  Federal,
state,  local and foreign income, excise, property and other  tax
returns which are required to be filed by them and to the best of
Holdings'  knowledge, all taxes due pursuant to such  returns  or
pursuant  to any assessment received by or on behalf of  Holdings
or  any  Subsidiary  have been paid.  The charges,  accruals  and
reserves on the books of Holdings and its Subsidiaries in respect
of taxes or other governmental charges are, in the opinion of the
Loan  Parties, adequate.  The Loan Parties have not given or been
requested to give a waiver of the statute of limitation  relating
to the payment of Federal, state, local  or foreign taxes.

     SECTION 5.08   Subsidiaries.

   Schedule 5.08 hereto states (i) the name of each corporate  or
joint venture Affiliate of each Loan Party and the nature of  the
affiliation,  (ii)  the  number and  nature  of  all  outstanding
Securities of each Loan Party, and (ii) the number of

<PAGE> 33

authorized, issued and treasury shares of each Loan Party.   Each
Loan Party has good title to all of the shares it purports to own
of  the stock of each of the Subsidiaries, free and clear in each
case  of  any  Lien other than Permitted Liens.  All such  shares
have  been  duly  issued and are non-assessable.   There  are  no
outstanding  options to purchase, or any rights  or  warrants  to
subscribe for, or any commitments or agreements to issue or sell,
or  any Securities or obligations convertible into, or any powers
of  attorney relating to, shares of the capital stock of any Loan
Party or any of its respective Subsidiaries, except as listed  on
Schedule   6.08.    There  are  no  outstanding   agreements   or
instruments  binding upon any Loan Party's shareholders  relating
to the ownership of its shares of capital.  Borrower is a wholly-
owned Subsidiary of Holdings.  Borrower, Atlantic Coast Jet, Inc.
and  Atlantic  Coast Academy, Inc. are the only  Subsidiaries  of
Holdings.  Borrower has no Subsidiaries other than Atlantic Coast
Airlines, Inc., an inactive Delaware corporation which, as of the
Closing  Date,  is  not  conducting any  activities  and  has  no
material assets.

     SECTION 5.09   Investment Company Act.

   Neither Holdings, Borrower nor any of their Subsidiaries is an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.

     SECTION 5.10   Public Utility Holding Company Act.

   Neither Holdings, Borrower nor any of their Subsidiaries is  a
"holding  company",  or  a "subsidiary  company"  of  a  "holding
company",  or  an  "affiliate" of a "holding  company"  or  of  a
"subsidiary  company" of a "holding company", as such  terms  are
defined  in  the Public Utility Holding Company Act of  1935,  as
amended.

     SECTION 5.11   Ownership of Property; Liens.

   Each of the Loan Parties has title to its properties sufficient
for  the  conduct of its business, and none of such  property  is
subject to any Lien except as permitted in Section 7.08.

     SECTION 5.12   No Default.

   Neither of the Loan Parties is in default under or with respect
to  any  agreement, instrument or undertaking to which  it  is  a
party or by which it or any of its property is bound which, alone
or  in  the  aggregate, could reasonably be expected  to  have  a
Material  Adverse  Effect.  No Default or Event  of  Default  has
occurred and is continuing.

     SECTION 5.13   Full Disclosure.

   All information heretofore furnished by the Loan Parties to the
Lender  for  purposes of or in connection with this Agreement  or
any  transaction contemplated hereby is, and all such information
hereafter  furnished by the Loan Parties to the Lender  will  be,
true, accurate and complete in every material respect or based on
reasonable estimates on the date as of which such information  is
stated  or  certified.  The Loan Parties have  disclosed  to  the
Lender  in  writing  any and all facts which,  alone  or  in  the
aggregate,  could  reasonably  be expected  to  have  a  Material
Adverse Effect.

     SECTION 5.14   Environmental Matters.

          (a)  Neither the Loan Parties nor any Subsidiary is subject to
any  Environmental  Liability which, alone or in  the  aggregate,
could  reasonably be expected to have a Material  Adverse  Effect
and  neither  the  Loan  Parties  nor  any  Subsidiary  has  been
designated  as  a potentially responsible party under  CERCLA  or
under any state statute similar to CERCLA.  To

<PAGE> 34

the  best of the Loan Parties' knowledge, the Realty has not been
identified  on  any  current or proposed (i) National  Priorities
List  under 40 C.F.R.  300, (ii) CERCLIS list or (iii)  any  list
arising from a state statute similar to CERCLA.

          (b)  No Hazardous Materials have been or are being used,
produced,  manufactured, processed, treated, recycled, generated,
stored,  disposed of, managed or otherwise handled at, or shipped
or transported to or from the Realty or are otherwise present at,
on,  in or under the Realty, or, to the best of the knowledge  of
the  Loan  Parties', at or from any adjacent  site  or  facility,
except  for  Hazardous  Materials used,  produced,  manufactured,
processed,  treated,  recycled, generated, stored,  disposed  of,
managed,  or otherwise handled in compliance with all  applicable
Environmental Requirements except where non-compliance would  not
have a Material Adverse Effect.

          (c)  The Loan Parties, and each of their Subsidiaries, have
procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all
Environmental Requirements in connection with the operation of
the Realty and the Borrower's and each of its Subsidiary's
respective businesses, except where the failure to procure such
authorizations or the failure to comply with such requirements
would not have a Material Adverse Effect.

     SECTION 5.15   Capital Stock.

   All  Capital  Stock, debentures, bonds, notes  and  all  other
securities  of the Loan Parties and their Subsidiaries  presently
issued  and  outstanding  are  validly  and  properly  issued  in
accordance  with all applicable laws, including, but not  limited
to,  the "Blue Sky" laws of all applicable states and the federal
securities laws.

     SECTION 5.16   Margin Stock.

   Neither  Holdings, the Borrower nor any of their Subsidiaries  is
engaged  principally, or as one of its important  activities,  in
the  business of purchasing or carrying any Margin Stock, and  no
part  of  the  proceeds of any Loan will be used to  purchase  or
carry  any  Margin Stock or to extend credit to  others  for  the
purpose  of purchasing or carrying any Margin Stock, or  be  used
for  any  purpose which violates, or which is inconsistent  with,
the provisions of Regulation T, U or X.

     SECTION 5.17   Insolvency.

   After giving effect to the execution and delivery of the  Loan
Documents  and  the  making of the Loans  under  this  Agreement:
(i)  the  Loan  Parties will not (x) be "insolvent,"  within  the
meaning  of such term as used in O.C.G.A.  18-2-22 or as  defined
in   101  of  the "Bankruptcy Code", or Section 2 of  either  the
"UFTA"  or  the  "UFCA",  or as defined or  used  in  any  "Other
Applicable  Law" (as those terms are defined below),  or  (y)  be
unable  to  pay  their debts generally as such debts  become  due
within  the  meaning  of  Section 548  of  the  Bankruptcy  Code,
Section  4 of the UFTA or Section 6 of the UFCA, or (z)  have  an
unreasonably  small  capital  to  engage  in  any   business   or
transaction, whether current or contemplated, within the  meaning
of  Section 548 of the Bankruptcy Code, Section 4 of the UFTA  or
Section  5  of  the UFCA; and (ii) the obligations  of  the  Loan
Parties  under the Loan Documents and with respect to  the  Loans
will not be rendered avoidable under any Other

<PAGE> 35

Applicable  Law.  For purposes of this Section 4.17,  "Bankruptcy
Code" means Title 11 of the United States Code, "UFTA" means  the
Uniform   Fraudulent  Transfer  Act,  "UFCA"  means  the  Uniform
Fraudulent Conveyance Act, and "Other Applicable Law"  means  any
other  applicable law pertaining to fraudulent transfers or  acts
voidable  by creditors, in each case as such law may  be  amended
from time to time.

     SECTION 5.18   Insurance.

   The Loan Parties and each of their Subsidiaries has (either in
the  name  of Holdings, the Borrower or in such Subsidiary's  own
name),  with financially sound and reputable insurance companies,
insurance  in  at least such amounts and against  at  least  such
risks  (including on all its Property, and public  liability  and
worker's compensation) as are usually insured against in the same
general  area by companies of established repute engaged  in  the
same or similar business.

     SECTION 5.19   Labor Matters.

   Except as could not reasonably be expected to have, alone or in
the aggregate, a Material Adverse Effect,

          (a)  there are no strikes or lockouts against the Borrower or any
of  its  Subsidiaries pending or, to the knowledge  of  the  Loan
Parties or any of their Subsidiaries, threatened;

          (b)  the hours worked by and payments made to employees of the
Borrower or any of its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters; and

          (c)  all payments due from the Borrower or any of its
Subsidiaries, or for which any claim may be made against the
Borrower or any of its Subsidiaries, on account of wages and
employee health and welfare insurance and other benefits, have
been paid or accrued as a liability on the books of the Borrower
or its Subsidiary, as appropriate.

     SECTION 5.20   Other Debt.

   Except for the Debt evidenced hereby, Schedule 5.20 sets forth,
as  of December 31, 2000 as updated through August 31, 2001,  the
name  of  each  lender,  the amount of  its  commitment  and  the
maturity  date  of  such  commitment  for  each  credit  facility
pursuant  to  which the Loan Parties and their  Subsidiaries  may
create  or incur Debt of the type described in clauses  (i),  (v)
and (vii) of the definition of "Debt" contained herein.

                           ARTICLE VI.
                      AFFIRMATIVE COVENANTS

     The  Borrower  covenants and agrees that,  so  long  as  the
Revolving  Loan Commitment is in effect hereunder or  any  amount
payable  under this Agreement or any other Loan Document  remains
unpaid:

     SECTION 6.01   Information.

   The Borrower will deliver to the Lender:

          (a)  as soon as available and in any event within 90 days after
the  end of each Fiscal Year, a consolidated balance sheet of the
Loan  Parties as of the end of such Fiscal Year and  the  related
consolidated statements of income, shareholders' equity and  cash
flows  for  such  Fiscal  Year, setting forth  in  each  case  in
comparative  form the figures for the previous fiscal  year,  all
certified by KPMG, LLP or other independent public accountants of
nationally

<PAGE> 36

recognized  standing,  with  such certification  to  be  free  of
exceptions and qualifications not acceptable to the Lender;

          (b)  as soon as available and in any event within 30 days after
the  end  of each month of each Fiscal Year, internally  prepared
monthly  consolidated financial statements of the  Loan  Parties,
all   certified  as  to  fairness  of  presentation,   GAAP   and
consistency  by  the  chief  financial  officer  or   the   chief
accounting officer of Holdings;

          (c)  simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a
certificate, substantially in the form of Exhibit E (a
"Compliance Certificate"), of the chief financial officer or the
chief accounting officer of Holdings (i) setting forth in
reasonable detail the calculations required to establish whether
the Borrower was in compliance with the requirements of Sections
7.05, 7.06, 7.08, 7.10 and 7.11, on the date of such financial
statements; (ii) stating whether any Default exists on the date
of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto; and
(iii) setting forth the Consolidated Leverage Ratio, Consolidated
Fixed Charges Coverage Ratio, the Liquidity and the Consolidated
Senior Indebtedness/Consolidated EBITDA Ratio as of the most
recent Performance Pricing Determination Date and the Applicable
Margin for LIBOR Rate Loans and Base Rate Loans in effect as a
result thereof;

          (d)  within 10 Business Days after the Chairman, the Chief
Executive Officer, the President, the Chief Financial Officer,
the Treasurer or the Controller of Holdings or the Borrower
becomes aware of the occurrence of any Default, a certificate of
the chief financial officer or the chief accounting officer of
Holdings or the Borrower setting forth the details thereof and
the action which the Borrower is taking or proposes to take with
respect thereto;

          (e)  promptly upon the mailing thereof to the shareholders of
Holdings generally, copies of all financial statements, reports
and proxy statements so mailed;

          (f)  promptly upon the filing thereof, notice of the filing of
and electronic availability of copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly
or monthly reports which Holdings shall have filed with the
Securities and Exchange Commission;

          (g)  if and when Borrower or Holdings (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV
of ERISA, or knows that the plan administrator of any Plan has
given or is required to give notice of any such reportable event,
a copy of the notice of such reportable event given or required
to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice;

          (h)  prompt written notice of any legal or arbitral proceedings,
or of any proceedings, by or before any governmental or
regulatory authority or agency, and any material development in
respect of such proceedings, affecting the Borrower or Holdings,
if an adverse
<PAGE> 37

determination in any such proceeding could reasonably be expected
to  have,  alone or in the aggregate, a Material Adverse  Effect;
and

          (i)  from time to time such additional information regarding the
financial position or business of the Loan Parties as the  Lender
may reasonably request.

     SECTION 6.02   Inspection of Property, Books and Records.

   The  Loan Parties will (i) keep, and cause each Subsidiary  to
keep, proper books of record and account in which full, true  and
correct  entries in conformity with GAAP shall  be  made  of  all
dealings  and  transactions  in  relation  to  its  business  and
activities; and (ii) permit, and cause each Subsidiary to permit,
representatives  of the Lender at the Lender's expense  prior  to
the  occurrence  of  a Default and at the Loan  Parties'  expense
after  the  occurrence of a Default to visit and inspect  any  of
their  respective properties, to examine and make abstracts  from
any  of their respective books and records and to  discuss  their
respective  affairs, finances and accounts with their  respective
officers, employees and independent public accountants.  The Loan
Parties  agree  to  cooperate  and  assist  in  such  visits  and
inspections, in each case at such reasonable times and  as  often
as may reasonably be desired.

     SECTION 6.03   Conduct of Business and Maintenance of Existence.

   Each of the Loan Parties shall, and shall cause each Subsidiary
to, maintain its corporate existence and carry on its business in
substantially  the  same  manner and in  substantially  the  same
fields as such business is now carried on and maintained.

     SECTION 6.04   Compliance with Laws; Payment of Taxes.

   Each  of  the  Loan  Parties will, and will  cause  each  of  its
Subsidiaries to, comply with applicable laws (including  but  not
limited  to  ERISA),  regulations  and  similar  requirements  of
governmental  authorities (including but not  limited  to  PBGC),
except  where the necessity of such compliance is being contested
in  good faith through appropriate proceedings diligently pursued
or  where  non-compliance could not, alone or in  the  aggregate,
reasonably  be expected to have a Material Adverse  Effect.   The
Borrower  will, and will cause each of its Subsidiaries  to,  pay
promptly  when due all taxes, assessments, governmental  charges,
claims for labor, supplies, rent and other obligations which,  if
unpaid,  might become a lien against the Property of the Borrower
or  any  Subsidiary, except liabilities being contested  in  good
faith  and  against  which the Borrower has set  up  reserves  in
accordance with GAAP.

     SECTION 6.05   Insurance.

   The  Loan Parties will maintain, and will cause each of  their
Subsidiaries to maintain (either in the name of the  Borrower  or
in  such  Subsidiary's  own  name), with  financially  sound  and
reputable  insurance companies, insurance on all its Property  in
at  least such amounts and against at least such risks (including
on   all   its  Property,  and  public  liability  and   worker's
compensation) as are usually insured against in the same  general
area  by  companies of established repute engaged in the same  or
similar business.

     SECTION 6.06   Maintenance of Property.

   The Borrower shall maintain all of its properties and assets in
good  condition, repair and working order, ordinary wear and tear
excepted, consistent with industry standards and practices.

<PAGE> 38

     SECTION 6.07   Environmental Matters.

          (a)  The Loan Parties shall furnish to the Lender prompt written
notice  of all Environmental Liabilities, pending, threatened  or
anticipated  Environmental  Proceedings,  Environmental  Notices,
Environmental  Judgments and Orders, and  Environmental  Releases
at,  on,  in,  under or in any way affecting the  Realty  or  any
adjacent  property,  and all facts, events,  or  conditions  that
could lead to any of the foregoing.

          (b)  The Loan Parties will handle and use all Hazardous Materials
in compliance with all applicable Environmental Requirements.

          The Loan Parties agrees that upon the occurrence of an
Environmental Release at or on the Realty it will act immediately
to investigate the extent of, and to take appropriate remedial
action to eliminate, such Environmental Release, in accordance
with all applicable Environmental Requirements.


     SECTION 6.08   Notices of Certain Events.

          The Loan Parties shall notify Lender in writing (i) of
the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or any
of the other Loan Documents inaccurate, incomplete or misleading
in any material respect; (ii) promptly after a Loan Party's
learning thereof, of the commencement of any litigation affecting
any Loan Party or the Leasehold Estate and of the institution of
any administrative proceeding which, in either case, if decided
adversely could reasonably be expected to have a Material Adverse
Effect; (iii) promptly after the Borrower enters into any
material modification to the Borrower's agreements with United,
which notice shall contain a summary of such modification; (iv)
promptly after a Loan Party's learning thereof, of any organized
labor dispute of a material nature to which a Loan Party may
become a party or any strikes or walkouts by organized labor
relating to any of its facilities; (v) promptly after a Loan
Party's learning thereof, of any material default by an Loan
Party under any note, indenture, loan agreement, mortgage, lease,
deed, guaranty or other similar agreement relating to any
Indebtedness of such Loan Party exceeding $500,000; (vi) promptly
after the occurrence thereof, of any material Default or Event of
Default; (vii) promptly after the occurrence thereof, of any
material default or event of default by Borrower or United under
any of the Borrower's operating agreements with United; (viii)
promptly after the rendition thereof, of any judgment rendered
against a Loan Party in an amount exceeding $500,000 which is not
fully covered by insurance; and  (x) promptly upon any change of
the fiscal year of the Loan Parties.


                          ARTICLE VII.
                       NEGATIVE COVENANTS

     The  Loan  Parties covenant and agree that, so long  as  the
Revolving Credit Commitment is in effect hereunder or any  amount
payable  under this Agreement or any other Loan Document  remains
unpaid:

<PAGE> 39

     SECTION 7.01   Use of Proceeds.

   No  portion of the proceeds of the Loans will be used  by  the
Loan  Parties  or any Subsidiary (i) in connection with,  whether
directly   or  indirectly,  any  tender  offer  for,   or   other
Acquisition  of,  stock of any corporation with  a  view  towards
obtaining  control of such other corporation, unless such  tender
offer  or  other Acquisition is to be made on a negotiated  basis
with  the approval of the Board of Directors of the Person to  be
acquired,  and  the  provisions of  Section  7.06  would  not  be
violated,  (ii) directly or indirectly, for the purpose,  whether
immediate, incidental or ultimate, of purchasing or carrying  any
Margin Stock, except as otherwise permitted under this Agreement,
or  (iii) for any purpose in violation of any applicable  law  or
regulation.

     SECTION 7.02   Consolidations, Mergers and Sales of Assets.

   The  Borrower will not consolidate or merge with or  into,  or
sell, lease or otherwise transfer all or any substantial part  of
its  assets to, any other Person, or discontinue or eliminate any
business line or segment.

     SECTION 7.03   Change in Fiscal Year.

   The Loan Parties will not change their Fiscal Year.

     SECTION 7.04   Loans or Advances.

   The Loan Parties shall not make loans or advances to any Person
except: (i) short-term loans or advances to officers or employees
of   less  than  $500,000  in  the  aggregate  principal   amount
outstanding at any time, in each case made in the ordinary course
of  business and consistent with practices existing on  September
15,  2001; (ii) transfers in the ordinary course of business;  or
(iii) transactions between the Loan Parties.

     SECTION 7.05   Restricted Payments.

   The  Borrower will not declare or make any Restricted  Payment
after the Closing Date.

     SECTION 7.06   Investments.

   The  Loan Parties shall not make Investments in any Person except
as permitted in Section 7.04 and except Investments (i) in direct
obligations  of  the  United  States Government,  or  any  agency
thereof   or   obligations  guaranteed  by  the   United   States
Government, provided that such obligations mature within one year
from  the date of acquisition thereof, (ii) Investments  in  time
deposits,  demand  deposits and certificates of deposit  maturing
within one year from the date of acquisition issued by a bank  or
trust  company organized under the laws of the United  States  or
any  state  thereof having capital surplus and undivided  profits
aggregating   at   least  $500,000,000;  (iii)   Investments   in
commercial  paper  given  the highest credit  rating  by  S&P  or
Moody's  and in either case maturing not more than 364 days  from
the  date  of creation thereof, (iv) tax-free Industrial  Revenue
Bonds secured by letters of credit which Bonds are available  for
sale  at  auction  not  less frequently  than  weekly;  (v)  Cash
Equivalents;  and (vi) other investments approved  by  Lender  in
writing.

     SECTION 7.07   Acquisitions.

   Neither  the  Borrower  nor  any  of  its  Subsidiaries  shall
consummate,  or  enter  into  any  agreement  providing  for  the
consummation by the Borrower or any of its Subsidiaries, of,  any
Acquisition.

     SECTION 7.08   Limitation on Liens and Subsidiary Debt.

   Neither the Borrower nor any Subsidiary will create, assume or
suffer to exist any Lien on any Collateral now owned

<PAGE> 40

or  hereafter acquired by it, and the Borrower shall  not  permit
any Subsidiary to incur any Debt, except:

          (a)  Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement and listed on  Schedule
7.08;

          (b)  any Lien existing on any specific fixed asset of any
corporation at the time such corporation becomes a Subsidiary and
not created in contemplation of such event;

          (c)  any Lien on any specific fixed asset securing Debt incurred
or assumed for the purpose of financing all or any part of the
cost of acquiring or constructing such asset, provided that such
Lien attaches to such asset concurrently with or within 90 days
after the acquisition or completion of construction thereof;

          (d)  Liens securing Debt owing by any Subsidiary to the Borrower;

          (e)  any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of
the foregoing paragraphs of this Section, provided that (i) such
Debt is not secured by any additional assets, and (ii) the amount
of such Debt secured by any such Lien is not increased;

          (f)  Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt and (ii) do
not in the aggregate materially detract from the value of its
assets or materially impair the use thereof in the operation of
its business;

          (g)  Liens securing taxes, assessments or other similar
governmental charges or levies which are not yet delinquent or
which are being contested in good faith.

     SECTION 7.09   Restrictions on Ability of Subsidiaries to Pay
Dividends.

   The  Borrower shall not permit any Subsidiary to, directly  or
indirectly,  create  or otherwise cause or  suffer  to  exist  or
become effective any encumbrance or restriction on the ability of
any  such  Subsidiary to (i) pay any dividends or make any  other
distributions  on  its  Capital Stock or any  other  interest  or
(ii) make or repay any loans or advances made by the Borrower  or
any other Subsidiary to such Subsidiary.

     SECTION 7.10   Consolidated Fixed Charges Coverage Ratio.

   The  Consolidated Fixed Charges Coverage Ratio, as of the end  of
any  Fiscal  Quarter, for the period of four  consecutive  Fiscal
Quarters  most recently ended will not at any time be  less  than
1.6 to 1.00.

     SECTION 7.11   Consolidated Leverage Ratio.

   The   Loan  Parties  shall  at  no  time  permit  their  combined
Consolidated Leverage Ratio to be greater than 1.7 to 1.00.

     SECTION 7.12   Minimum Liquidity.

<PAGE> 41

   The   Loan  Parties  shall  not  permit  their  combined  minimum
Liquidity at any time to be less than $30,000,000.


     SECTION 7.13   Consolidated Senior Indebtedness/EBITDA Ratio.

   The   Loan  Parties  shall  at  no  time  permit  their  combined
Consolidated  Senior Indebtedness/Consolidated  EBITDA  Ratio  to
exceed 2.5 to 1:0.

     SECTION 7.14   Dissolution.

   The  Loan  Parties  shall  not suffer or  permit  dissolution  or
liquidation either in whole or in part.



                          ARTICLE VIII.
                            DEFAULTS

     SECTION 8.01   Events of Default.

   If  one  or more of the following events ("Events of Default")
shall have occurred and be continuing:

          (a)  the Borrower shall fail to pay when due any principal of any
Loan  or  shall  fail to pay any interest on any  Loan  within  5
Business  Days  after written notice of such due date,  or  shall
fail  to  pay any fee or other amount payable hereunder within  5
Business Days after written notice that such fee or other  amount
is due; or

          (b)  the Loan Parties shall fail to observe or perform any
covenant contained in Section 6.02(ii) or Article VII; or

          (c)  the Loan Parties shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in
this Agreement (other than those covered by paragraph (a) or (b)
above) or the other Loan Documents and such failure shall not
have been cured within 30 days after the earliest to occur of (i)
written notice thereof has been given to the Borrower by the
Lender or (ii) the Borrower otherwise becomes aware of any such
failure; or

          (d)  any representation, warranty, certification or statement
made by the Loan Parties in Article V of this Agreement or in any
certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or

          (e)  the Loan Parties shall default (after the expiration of any
applicable notice and cure periods) on any material contract with
or obligation when due to a third party or default (after the
expiration of any applicable notice and cure period) in the
performance of any obligation to a third party incurred for money
borrowed; or

          (f)  the Loan Parties or any Subsidiary or United shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any

<PAGE> 42

substantial part of its Property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; or

          (g)  an involuntary case or other proceeding shall be commenced
against  any  Loan  Party  or any Subsidiary  or  United  seeking
liquidation, reorganization or other relief with respect to it or
its  debts under any bankruptcy, insolvency or other similar  law
now  or  hereafter  in  effect or seeking the  appointment  of  a
trustee,   receiver,  liquidator,  custodian  or  other   similar
official of it or any substantial part of its Property, and  such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered  against the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; or

          (h)  one or more judgments or orders for the payment of money in
an aggregate amount in excess of $500,000 shall be rendered
against the Borrower or any Subsidiary and such judgment or order
shall continue unsatisfied and unstayed for a period of 30 days
after entry of the judgment; or

          (i)  a federal tax lien shall be filed against the Borrower or
any Subsidiary under Section 6323 of the Code or a lien of the
PBGC shall be filed against the Borrower or any Subsidiary under
Section 4068 of ERISA and in either case such lien remains
undischarged for a period of 25 days after the date of filing; or

          (j)  the termination or breach of, or a material adverse change
in the Borrower's operating agreements with United; or

          (k)  any Loan Party shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by any Loan
Party which is necessary to the continued or lawful operation of
a material part of its business; or any Loan Party shall be
enjoined, restrained, or otherwise prevented by court,
governmental or administrative order from conducting all or any
material part of its business affairs for a period of more than
30 days; or the Lease or any other material lease or agreement
pursuant to which any Loan Party leases, uses or occupies any
real property shall be cancelled or terminated prior to the
expiration of its stated term; or any Loan Party or United ceases
scheduled air transportation services for a period of more than
30 days; or

          (l)  any Loan Party shall challenge or contest in any action,
suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender (provided that nothing set
forth herein shall preclude a Loan Party from enforcing its
rights, and Lender's duties and obligations, under this Agreement
and the other Loan Documents); or

          (m)  if, after the Closing Date, there shall be any change in the
ownership of Borrower;
<PAGE> 43

then,  and in every such event, (i) the Lender may, by notice  to
the  Borrower,  terminate the Commitment, which  shall  thereupon
terminate  and  (ii) the Lender may, by notice to  the  Borrower,
declare  the  Note (together with accrued interest thereon),  and
all  other  amounts payable hereunder and under  the  other  Loan
Documents,  to  be, and the Note (together with accrued  interest
thereon),  and all other amounts payable hereunder and under  the
other Loan Documents shall thereupon become, immediately due  and
payable  without presentment, demand, protest or other notice  of
any  kind,  all  of  which  are hereby waived  by  the  Borrower,
together  with  interest  at the Default  Rate  accruing  on  the
principal amount thereof from and after the date of such Event of
Default;  provided  that  if any Event of  Default  specified  in
paragraph  (f) or (g) above occurs with respect to the  Borrower,
without  any  notice  to the Borrower or any  other  act  by  the
Lender,  the  Commitment shall thereupon terminate and  the  Note
(together  with accrued interest thereon) and all  other  amounts
payable  hereunder  and  under the  other  Loan  Documents  shall
automatically  and  without  notice become  immediately  due  and
payable  without presentment, demand, protest or other notice  of
any  kind,  all  of  which  are hereby waived  by  the  Borrower,
together  with interest thereon at the Default Rate  accruing  on
the  principal  amount thereof from and after the  date  of  such
Event  of  Default.   Notwithstanding the foregoing,  the  Lender
shall have available to it all other remedies at law or equity.

                           ARTICLE IX.
                     CHANGE IN CIRCUMSTANCES

     SECTION 9.01   Basis for Determining Interest Rate Inadequate or
Unfair.

   If on or prior to the first day of any LIBOR Rate Loan:

          (a)  the Lender determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market,
or

          (b)  the London Interbank Offered Rate as determined by the
Lender will not adequately and fairly reflect the cost to the
Lender of funding LIBOR Rate Loans,
the  Lender shall forthwith give notice thereof to the  Borrower,
whereupon  until  the  Lender  notifies  the  Borrower  that  the
circumstances giving rise to such suspension no longer exist, the
obligation  of the Lender to make LIBOR Rate Loans  specified  in
such notice, or to permit continuations or conversions into LIBOR
Rate Loans, shall be suspended.  Unless the Borrower notifies the
Lender  at least 2 Business Days before the date of any Borrowing
of  LIBOR  Rate  Loans  for  which  a  Notice  of  Borrowing  has
previously  been given, or continuation or conversion  into  such
LIBOR Rate Loans for which a Notice of Continuation or Conversion
has  previously been given, that it elects not to  borrow  or  so
continue or convert on such date, such Borrowing shall instead be
made  as a Base Rate Borrowing, or such LIBOR Rate Loan shall  be
converted to a Base Rate Loan.

     SECTION 9.02   Illegality.

   If, after the date hereof, the adoption of any applicable law,
rule  or  regulation, or any change therein or  any  existing  or
future   law,   rule  or  regulation,  or  any  change   in   the
interpretation  or  administration thereof  by  any  governmental
authority,  central bank or comparable agency  charged  with  the
interpretation or administration thereof (any such  agency  being
referred to as an "Governing Authority" and any such event  being
referred  to as a "Change of Law"), or compliance by  the  Lender
(or its Lending Office) with any request or

<PAGE> 44

directive  (whether  or  not having the  force  of  law)  of  any
Governing Authority shall make it unlawful or impossible for  the
Lender  (or  its Lending Office) to make, maintain  or  fund  its
LIBOR  Rate Loans, the Lender shall forthwith give notice thereof
to the Borrower, whereupon until the Lender notifies the Borrower
that  the circumstances giving rise to such suspension no  longer
exist,   the  obligation  of  the  Lender  to  make   or   permit
continuations  or  conversions  of  LIBOR  Rate  Loans  shall  be
suspended.  Before giving any notice to the Borrower pursuant  to
this  Section,  the  Lender shall designate a  different  Lending
Office  if  such designation will avoid the need for giving  such
notice  and will not, in the judgment of the Lender, be otherwise
disadvantageous  to  the Lender.  If the Lender  shall  determine
that it may not lawfully continue to maintain and fund any of its
outstanding LIBOR Rate Loans to maturity, and shall so specify in
such  notice, the Borrower shall immediately prepay in  full  the
then outstanding principal amount of each LIBOR Rate Loan of  the
Lender, together with accrued interest thereon.

     SECTION 9.03   Increased Cost and Reduced Return.

     (a)  If after the date hereof, a Change of Law or compliance by
the  Lender (or its Lending Office) with any request or directive
(whether  or  not  having  the force of  law)  of  any  Governing
Authority:

       (i)  shall impose, modify or deem applicable any reserve,
            special deposit or similar requirement (including,
            without limitation, any such requirement imposed by
            the Board of Governors of the Federal Reserve System,
            but excluding with respect to any LIBOR Rate Loan any
            such requirement included in an applicable LIBOR
            Rate Reserve Percentage) against assets of, deposits with
            or for the account of, or credit extended by, the Lender
            (or its Lending Office); or

      (ii)  shall impose on the Lender (or its Lending Office) or on
            the London interbank market any other condition affecting its
            LIBOR Rate Loans, its Note or its obligation to make LIBOR
            Rate Loans; and the result of any of the foregoing is to
            increase the cost to the  Lender (or its Lending Office) of
            making or maintaining the Loan, or to reduce the amount of any
            sum received or receivable by the Lender (or its Lending
            Office) under this  Agreement or under its Note with respect
            thereto, by an amount deemed by the Lender to be material, then
            the Lender shall give notice thereof to the Borrower within 90
            days after the Lender becomes aware of such matters and,
            within 15 days after demand by the Lender, the Borrower shall
            pay to the Lender such additional amount or amounts as will
            compensate the Lender for such increased cost or reduction.

    (b)  If the Lender shall have determined that after the date
hereof  the  adoption of any applicable law, rule  or  regulation
regarding capital adequacy, or any change therein, or any  change
in the interpretation or administration thereof, or compliance by
the Lender (or its Lending Office or the bank holding company  of
which  the  Lender is a subsidiary) with any request or directive
regarding  capital adequacy (whether or not having the  force  of
law) of any Governing Authority, has or would have the effect  of
reducing the rate of return on the Lender's (or such bank holding
company's) capital as a consequence of its obligations  hereunder
to  a  level  below that which the Lender (or such  bank  holding
company)  could  have achieved but for such adoption,  change  or
compliance (taking into consideration the Lender's (or such  bank
holding

<PAGE> 45

company's)  policies  with respect to  capital  adequacy)  by  an
amount  deemed by the Lender to be material, then  from  time  to
time  the Lender shall give notice thereof to the Borrower within
90  days  after  the  Lender becomes aware of such  matters  and,
within 15 days after demand by the Lender, the Borrower shall pay
to   the  Lender  such  additional  amount  or  amounts  as  will
compensate  the  Lender (or such bank holding company)  for  such
reduction.

          (c)  The Lender will promptly notify the Borrower of any event of
which  it  has knowledge, occurring after the date hereof,  which
will  entitle the Lender to compensation pursuant to this Section
and will designate a different Lending Office if such designation
will   avoid  the  need  for,  or  reduce  the  amount  of,  such
compensation  and  will not, in the judgment of  the  Lender,  be
otherwise  disadvantageous to the Lender.  A certificate  of  the
Lender claiming compensation under this Section and setting forth
the  additional  amount or  amounts to be paid  to  it  hereunder
shall  be  conclusive  in  the absence  of  manifest  error.   In
determining  such  amount,  the Lender  may  use  any  reasonable
averaging and attribution methods.

          (d)  The provisions of this Section 9.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon
the circumstances of such Participant, Assignee or other
Transferee.  The Lender agrees that it will not seek compensation
or reimbursement provided for in this Section 9.03 unless the
Lender as a matter of policy intends generally to seek comparable
compensation or reimbursement from other borrowers similarly
situated and with similarly documented financial accommodations.

     SECTION 9.04   Base Rate Loans Substituted for LIBOR Rate Loans.

   If  (i) the obligation of the Lender to make or maintain LIBOR
Rate  Loans  has  been  suspended pursuant  to  Section  9.02  or
(ii) the Lender has demanded compensation under Section 9.03, and
the Borrower shall, by at least 5 Business Days' prior notice  to
the  Lender,  have elected that the provisions  of  this  Section
shall  apply,  then,  unless and until the  Lender  notifies  the
Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer apply:

          (a)  all Loans which would otherwise be made by the Lender as, or
permitted  to be continued as or converted into LIBOR Rate  Loans
shall instead be made as or converted into Base Rate Loans, and

          (b)  after each of its LIBOR Rate Loans has been repaid, all
payments of principal which would otherwise be applied to repay
such LIBOR Rate Loans shall be applied to repay its Base Rate
Loans instead.

     SECTION 9.05   Compensation.

   [Intentionally Omitted]



                           ARTICLE X.
                       SECURITY AGREEMENT

     SECTION 10.01  Security Interest in Collateral.

   In  order  to secure prompt repayment of  any and all Obligations
owed  by  Borrower  to  Lender and  in  order  to  secure  prompt
performance  of any and all other Obligations to be performed  by
Borrower, Borrower

<PAGE> 46

hereby  grants  to Lender a continuing security interest  in  and
lien upon the Collateral, whether now owned or existing or at any
time  hereafter acquired, arising or created by Borrower, subject
only  to Permitted Liens.  Lender's security interest in and lien
upon  the Collateral shall attached to all of the Collateral upon
the execution and delivery of this Agreement, without further act
being required of either Lender or Borrower.

     SECTION 10.02  Security Instruments; Further Assurances.

   Lender  may  file one or more Uniform Commercial  Code  financing
statements, providing the Lender with a valid first lien  on  all
Collateral  now owned or hereafter acquired by the  Borrower  and
the  Borrower hereby authorizes the Lender to file such financing
statements.   Said  financing statements may  contain  a  generic
description  of  collateral that is broader than  the  collateral
description contained in the security agreement set forth  herein
except  with  respect  to Collateral constituting  Rotable  Spare
Parts.   Borrower  will perform, or will cause to  be  performed,
upon  the  reasonable  request of Lender, each  and  all  of  the
following:

          (a)  Record, register and file a chattel mortgage and
     security agreement securing the Rotable Spare Parts, as well
     as such notices, financing statements and other documents or
     instruments as may from time to time be reasonably requested
     by Lender to fully carry out the intent of this Agreement,
     with the FAA in Oklahoma City, Oklahoma, and such other
     administrations or governmental agencies, whether domestic
     or foreign, as may be reasonably determined by Lender to be
     necessary or advisable in order to perfect, establish,
     confirm and maintain the security interest and lien created
     hereunder, as a legal, valid and binding security interest
     and lien upon the Collateral;

          (b)  Furnish to Lender evidence of every such
     recording, registering and filing; and

          (c)   Execute  and deliver or perform, or cause  to  be
     executed and delivered or performed, such further and  other
     instruments  and  acts as Lender reasonably  determines  are
     necessary  or  required to fully carry out  the  intent  and
     purpose  of  this Agreement or to subject the Collateral  to
     the security interest and lien created hereunder, including,
     without  limitation: (i) any and all acts and  things  which
     may  be  reasonably  requested by  Lender  with  respect  to
     complying with the laws and regulations of the FAA; and (ii)
     defending the title of Borrower to the Collateral  by  means
     of   negotiation   and,  if  necessary,  appropriate   legal
     proceedings,  against  each and  every  Person  claiming  an
     interest therein contrary or adverse to Borrower's title  to
     same.

     SECTION 10.03  Power of Attorney.

   Borrower hereby irrevocably appoints Lender as its
attorney-in-fact and agent with full power of substitution and re-
substitution for Borrower and in its name to do, at Lender's
option, any one or more of the following acts, upon the
occurrence and during the continuance of an Event of Default but
not thereafter:  (a) to compromise, prosecute or defend any
action, claim or proceeding concerning the Collateral; (b) to do
any and all acts which Borrower is obligated to do under this
Agreement or under any of the other Loan Documents; (c) to
exercise such rights as Borrower might exercise relative to the
Collateral, including, without limitation, the leasing,
chartering or other utilization thereof; (d)to give notice of
Lender's security interest in and the lien upon the Collateral,
including, without limitation, notification to lessees and other
Account Debtors of Lender's security interest in the
<PAGE> 47
rents and other payments due to Borrower relative to the
Collateral, and the collection of any such rents or other
payments; and (e) to execute in Borrower's name and file any
notices, financing statements and other documents or instruments
Lender determines are necessary or required to fully carry out
the intent and purpose of this Agreement or to perfect Lender's
security interest and lien in and upon the Collateral.  The
appointment of Lender as Borrower's attorney-in-fact, and each
and every one of Lender's rights and powers in connection
therewith, being coupled with any interest, are and shall remain
irrevocable during the continuance of an Event of Default until
all of the Obligations have been paid and performed.


                           ARTICLE XI.
                          MISCELLANEOUS

     SECTION 11.01  Notices.

   All  notices, requests and other communications to  any  party
hereunder  shall be in writing (including telecopier  or  similar
writing)  and  shall be given to such party  at  its  address  or
telecopier number set forth on the signature pages hereof or such
other  address  or telecopier number as such party may  hereafter
specify for the purpose by notice to each other party.  Each such
notice, request or other communication shall be effective (i)  if
given  by  telecopier, when such telecopy is transmitted  to  the
telecopier  number specified in this Section and the confirmation
is  received,  (ii)  if  given  by  mail,  72  hours  after  such
communication is deposited in the mails with first class  postage
prepaid,  addressed as aforesaid or (iii) if given by  any  other
means, when delivered at the address specified in this Section.

     SECTION 11.02  No Waivers.

   No  failure  or delay by the Lender in exercising  any  right,
power  or  privilege hereunder or under any Note  or  other  Loan
Document  shall operate as a waiver thereof nor shall any  single
or  partial  exercise  thereof  preclude  any  other  or  further
exercise  thereof or the exercise of any other  right,  power  or
privilege.   The  rights and remedies herein  provided  shall  be
cumulative  and not exclusive of any rights or remedies  provided
by law.

     SECTION 11.03  Expenses; Documentary Taxes.

   The  Borrower shall pay (i) all out-of-pocket expenses of  the
Lender,  including fees and disbursements of special counsel  for
the  Lender, in connection with the preparation of this Agreement
and the other Loan Documents, any waiver or consent hereunder  or
thereunder  or any amendment hereof or thereof or any Default  or
alleged  Default hereunder or thereunder and (ii)  if  a  Default
occurs,  all  out-of-pocket  expenses  incurred  by  the  Lender,
including  fees and disbursements of counsel, in connection  with
such  Default  and  collection and other enforcement  proceedings
resulting therefrom, including out-of-pocket expenses incurred in
enforcing  this  Agreement  and the other  Loan  Documents.   The
Borrower  shall indemnify the Lender against any transfer  taxes,
documentary  taxes, assessments or charges made by any  Governing
Authority  by  reason  of  the execution  and  delivery  of  this
Agreement or the other Loan Documents.

     SECTION 11.04  Indemnification.

   The  Borrower  shall indemnify the Lender and  each  Affiliate
thereof  and  its  respective directors, officers  and  employees
from, and hold each of them harmless against, any and all losses,
liabilities,  claims or damages to which any of them  may  become
subject,  insofar as such losses, liabilities, claims or  damages
arise out of or result from any transaction contemplated by  this
Agreement  or any other Loan Document or any actual  or  proposed
use by the Borrower of the proceeds of any extension of credit by
the Lender

<PAGE> 48

hereunder  or  breach by the Borrower of this  Agreement  or  any
other   Loan  Document  or  from  any  investigation,  litigation
(including, without limitation, any actions taken by  the  Lender
or  to enforce this Agreement or any of the other Loan Documents)
or   other   proceeding  (including,  without   limitation,   any
threatened   investigation  or  proceeding)   relating   to   the
foregoing, and the Borrower shall reimburse the Lender, and  each
Affiliate  thereof  and its respective directors,  officers,  and
employees,  upon  demand  for  any expenses  (including,  without
limitation,  legal  fees) incurred in connection  with  any  such
investigation  or  proceeding; but  excluding  any  such  losses,
liabilities, claims, damages or expenses which are determined  by
a final, non-appealable judgment of a court to have been incurred
by  reason of the gross negligence or willful misconduct  of  the
Person  to  be  indemnified.  In the case of  any  investigation,
litigation  or  other proceeding to which the indemnity  in  this
Section applies, such indemnity shall be effective whether or not
such  investigation, litigation or proceeding is brought  by  the
Borrower or any Subsidiary or Affiliate thereof, or any of  their
respective   directors,  shareholders,   or   creditors   or   an
Indemnified  Party, or any other Person or any Indemnified  Party
is  otherwise a party thereto and whether or not any  transaction
contemplated  by  this Agreement or any other  Loan  Document  is
consummated.

     SECTION 11.05  Setoff; Sharing of Setoffs.

          (a)  The Borrower hereby grants to the Lender a lien for all
indebtedness and obligations owing to them from the Borrower upon
all deposits or deposit accounts, of any kind, or any interest in
any  deposits  or  deposit  accounts thereof,  now  or  hereafter
pledged,  mortgaged, transferred or assigned  to  the  Lender  or
otherwise  in  the possession or control of the  Lender  for  any
purpose  for the account or benefit of the Borrower and including
any  balance  of  any deposit account or of  any  credit  of  the
Borrower  with  the  Lender, whether now  existing  or  hereafter
established, hereby authorizing the Lender at any time  or  times
with  or without prior notice to apply such balances or any  part
thereof to such of the indebtedness and obligations owing by  the
Borrower to the Lender then past due and in such amounts as  they
may  elect,  and whether or not the Collateral, if  any,  or  the
responsibility   of  other  Persons  primarily,  secondarily   or
otherwise  liable may be deemed adequate.  For  the  purposes  of
this  paragraph, all remittances and property shall be deemed  to
be in the possession of the Lender as soon as the same may be put
in transit to it by mail or carrier or by other bailee.

          (b)   The  Borrower  agrees, to the fullest  extent  it  may
effectively  do  so under applicable law, that any  holder  of  a
participation  in the Note, whether or not acquired  pursuant  to
the  foregoing  arrangements, may exercise rights  of  setoff  or
counterclaim  and other rights with respect to such participation
as  fully  as  if such holder of a participation  were  a  direct
creditor of the Borrower in the amount of such participation.

     SECTION 11.06  Amendments and Waivers.

   Any  provision of this Agreement, the Note or any  other  Loan
Documents  may  be  amended  or waived  if,  but  only  if,  such
amendment  or waiver is in writing and is signed by the  Borrower
and the Lender.

     SECTION 11.07  Independence of Covenants.

   All covenants under this Agreement and the other Loan Documents
shall  be given independent effect so that if a particular action
or condition is not permitted by any such covenant, the fact that
it would be permitted by an

<PAGE> 49

exception to, or would be otherwise allowed by, another  covenant
shall  not  avoid the occurrence of a Default if such  action  is
taken or such condition exists.

     SECTION 11.08  Successors and Assigns.

          (a)  The provisions of this Agreement shall be binding upon and
inure  to  the benefit of the parties hereto and their respective
successors and assigns; provided that the Borrower may not assign
or otherwise transfer any of its rights or obligations under this
Agreement.

          (b)  The Lender may at any time sell to one or more financial
institutions (each a "Participant") participating interests in
any Loan owing to the Lender, the Note held by the Lender, the
Commitment hereunder or any other interest of the Lender
hereunder.  In the event of any such sale by the Lender of a
participating interest to a Participant, the Lender's obligations
under this Agreement shall remain unchanged, the Lender shall
remain solely responsible for the performance thereof, the Lender
shall remain the holder of the Note for all purposes under this
Agreement, and the Borrower shall continue to deal solely and
directly with the Lender in connection with the Lender's rights
and obligations under this Agreement.   The Lender selling a
participating interest to any Participant other than an Affiliate
or Related Fund of the Lender in any Loan, the Note, the
Commitment or other interest under this Agreement shall, within
10 Domestic Business Days of such sale, provide the Borrower with
written notification stating that such sale has occurred and
identifying the Participant and the interest purchased by such
Participant.

          (c)  The Lender may at any time assign to one or more commercial
banks, finance companies, insurance companies or other financial
institution or fund which, in each case, in the ordinary course
of business extends credit of the type contemplated herein and
whose becoming an assignee would not constitute a prohibited
transaction under Section 4975 of ERISA (each an "Assignee") all
or a proportionate part of its rights and obligations under this
Agreement, the Note and the other Loan Documents, and such
Assignee shall assume all such rights and obligations, pursuant
to an Assignment and Acceptance, executed by such Assignee, the
Lender, subject to clause (iii) below, by the Borrower); provided
that (i) no interest may be sold by the Lender pursuant to this
paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the Commitment, (ii) if the Lender is
assigning only a portion of the Commitment, then, the amount of
the Commitment being assigned (determined as of the effective
date of the assignment) shall be in an amount not less than
$2,000,000 (except that there shall be no such minimum if the
assignment is to any Affiliate or Related Fund of the Lender),
and (iii) no interest may be sold by the Lender pursuant to this
paragraph (c) to any Assignee that is not an Affiliate or Related
Fund of the Lender without the consent of (unless a Default has
occurred and is continuing) the Borrower, which consent shall not
be unreasonably withheld.  Upon (A) execution of the Assignment
and Acceptance by the Lender, such Assignee, and (if applicable)
the Borrower, (B) delivery of an executed copy of the Assignment
to the Borrower, and (C) payment by such Assignee to the Lender
of an amount equal to the purchase price agreed between the
Lender and such Assignee, such Assignee shall for all purposes be
a Lender party to this Agreement and shall have all the rights
and obligations of the Lender under this Agreement to the same
extent as if it were an original party hereto with a Commitment
as set forth in such instrument of assumption, and the Lender
shall be released from its obligations
<PAGE> 50

hereunder  to a corresponding extent, and no further  consent  or
action by the Borrower or the Lender shall be required.  Upon the
consummation  of  any transfer to an Assignee  pursuant  to  this
Section  11.08(c),  the  Lender  and  the  Borrower  shall   make
appropriate  arrangements so that, if required,  a  new  Note  is
issued to such Assignee.

          (d)  Subject to the provisions of this Section 11.08, the
Borrower  authorizes the Lender to disclose to  any  Participant,
Assignee  or  other  transferee (each  a  "Transferee")  and  any
prospective  Transferee  which  has  executed  a  confidentiality
agreement  any  and  all financial information  in  the  Lender's
possession  concerning the Borrower which has been  delivered  to
the  Lender by the Borrower pursuant to this Agreement  or  which
has  been  delivered to the Lender by the Borrower in  connection
with  the Lender's credit evaluation prior to entering into  this
Agreement.

          (e)  No Transferee shall be entitled to receive any greater
payment under Section 8.03 than the transferor Lender would have
been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 9.02 or 9.03
requiring the Lender to designate a different Lending Office
under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.

          (f)  Anything in this Section 11.08 to the contrary
notwithstanding, the Lender may assign and pledge all or any
portion of the Loans and/or obligations owing to it to any
Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect
of such assigned Loans and/or obligations made by the Borrower to
the assigning and/or pledging Lender in accordance with the terms
of this Agreement shall satisfy the Borrower's obligations
hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment.  No such assignment shall release the
assigning and/or pledging Lender from its obligations hereunder.

     SECTION 11.09  Confidentiality.

   The  Lender agrees to exercise the same standard of care that  it
exercises in the handling of its own confidential information  to
keep  any  information delivered or made available  by  the  Loan
Parties  to  it  which is clearly indicated  to  be  confidential
information, confidential from anyone other than persons employed
or  retained  by  the  Lender who are or are expected  to  become
engaged  in  evaluating, approving, structuring or  administering
the  Loans; provided that nothing herein shall prevent the Lender
from  disclosing  such information (i) to  an  Affiliate  of  the
Lender,  but  subject  to  the same confidentiality  obligations,
(ii)  upon  the  order  of  any court or  administrative  agency,
(iii)  upon  the  request or demand of any regulatory  agency  or
authority  having jurisdiction over the Lender,  (iv)  which  has
been publicly disclosed, (v) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (vi) to the
Lender's legal counsel and independent auditors, and (vii) to any
actual  or proposed Participant, Assignee or other Transferee  of
all  or  part  of  its  rights hereunder;  provided  that  should
disclosure  of any such confidential information be  required  by
virtue  of clause (ii) of the immediately preceding sentence,  to
the extent permitted by law, the Lender shall promptly notify the
Borrower of same so as to allow the Borrower to seek a protective
order or to take any other appropriate action; provided, further,
that, the Lender shall

<PAGE> 51

not  be  required  to  delay compliance  with  any  directive  to
disclose  any  such information so as to allow  the  Borrower  to
effect any such action.

     SECTION 11.10  Representation by Lender.

   The Lender hereby represents that it is a commercial lender or
financial institution which makes loans in the ordinary course of
its  business and that it will make its Loans hereunder  for  its
own  account  in  the ordinary course of such business;  provided
that, subject to Section 11.08, the disposition of the Note  held
by the Lender shall at all times be within its exclusive control.

     SECTION 11.11  Virginia Law.

   This  Agreement, the Note and all of the other Loan  Documents
shall be construed in accordance with and governed by the law  of
the Commonwealth of Virginia.

     SECTION 11.12  Severability.

   In  case any one or more of the provisions contained  in  this
Agreement, the Note or any of the other Loan Documents should  be
invalid,  illegal or unenforceable in any respect, the  validity,
legality and enforceability of the remaining provisions contained
herein  and therein shall not in any way be affected or  impaired
thereby and shall be enforced to the greatest extent permitted by
law.

     SECTION 11.13  Interest.

   In  no  event  shall the amount of interest, and all  charges,
amounts or fees contracted for, charged or collected pursuant  to
this  Agreement, the Note or the other Loan Documents and  deemed
to  be  interest under applicable law (collectively,  "Interest")
exceed  the  highest rate of interest allowed by  applicable  law
(the  "Maximum  Rate"),  and in the event  any  such  payment  is
inadvertently  received by the Lender, then the excess  sum  (the
"Excess") shall be credited as a payment of principal, unless the
Borrower  shall notify the Lender in writing that  it  elects  to
have  the  Excess returned forthwith.  It is the  express  intent
hereof  that  the  Borrower not pay and the Lender  not  receive,
directly  or  indirectly  in any manner whatsoever,  interest  in
excess  of  that which may legally be paid by the Borrower  under
applicable law.  The right to accelerate maturity of any  of  the
Loans does not include the right to accelerate any interest  that
has  not otherwise accrued on the date of such acceleration,  and
the  Lender  does not intend to collect any unearned interest  in
the  event  of  any such acceleration.  All monies  paid  to  the
Lender  hereunder  or under any of the Note  or  the  other  Loan
Documents, whether at maturity or by prepayment, shall be subject
to  rebate of unearned interest as and to the extent required  by
applicable law.  By the execution of this Agreement, the Borrower
covenants, to the fullest extent permitted by law, that  (i)  the
credit or return of any Excess shall constitute the acceptance by
the Borrower of such Excess, and (ii) the Borrower shall not seek
or  pursue  any  other  remedy, legal or equitable,  against  the
Lender,  based in whole or in part upon contracting for  charging
or receiving any Interest in excess of the Maximum Rate.  For the
purpose  of  determining  whether or  not  any  Excess  has  been
contracted  for, charged or received by the Lender, all  interest
at any time contracted for, charged or received from the Borrower
in  connection with this Agreement, the Note or any of the  other
Loan  Documents shall, to the extent permitted by applicable law,
be  amortized,  prorated, allocated and  spread  in  equal  parts
throughout the full term of the Commitment.  The Borrower and the
Lender  shall,  to the maximum extent permitted under  applicable
law,  (i)  characterize any non-principal payment as an  expense,
fee or premium rather than as Interest and (ii) exclude voluntary
prepayments  and  the effects thereof.  The  provisions  of  this
Section shall be deemed to be incorporated into the Note and each
of the other Loan Documents (whether or not any provision of this
Section is

<PAGE> 52

referred to therein).  All such Loan Documents and communications
relating to any Interest owed by the Borrower and all figures set
forth therein shall, for the sole purpose of computing the extent
of  obligations hereunder and under the Note and the  other  Loan
Documents be automatically recomputed by the Borrower, and by any
court considering the same, to give effect to the adjustments  or
credits required by this Section.

     SECTION 11.14  Interpretation.

   No  provision  of  this Agreement or any  of  the  other  Loan
Documents  shall  be  construed against  or  interpreted  to  the
disadvantage  of  any  party  hereto  by  any  court   or   other
governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.

     SECTION 11.15  Waiver of Jury Trial; Consent to Jurisdiction.

   The Loan Parties (a) and the Lender irrevocably waive, to  the
fullest  extent permitted by law, any and all right to  trial  by
jury  in any legal proceeding arising out of this Agreement,  any
of   the  other  Loan  Documents,  or  any  of  the  transactions
contemplated  hereby or thereby, (b) submit to  the  nonexclusive
personal jurisdiction in the Commonwealth of Virginia, the courts
thereof  and  the United States District Courts sitting  therein,
for  the  enforcement of this Agreement, the Note and  the  other
Loan  Documents, (c) waive any and all personal rights under  the
law  of  any  jurisdiction  to object on  any  basis  (including,
without  limitation, inconvenience of forum) to  jurisdiction  or
venue  within  the Commonwealth of Virginia for  the  purpose  of
litigation to enforce this Agreement, the Note or the other  Loan
Documents, and (d) agree that service of process may be made upon
it  at  the address set forth in Section 11.01 for the giving  of
notice to the Borrower.  Nothing herein contained, however, shall
prevent  the  Lender from bringing any action or  exercising  any
rights  against any security and against the Borrower personally,
and against any assets of the Borrower, within any other state or
jurisdiction.

     SECTION 11.16  Counterparts.

   This  Agreement  may be signed in any number of  counterparts,
each  of which shall be an original, with the same effect  as  if
the signatures thereto and hereto were upon the same instrument.

     SECTION 11.17  Source of Funds -- ERISA.

   The  Lender hereby represents to the Borrower that no part  of
the  funds  to be used by the Lender to fund the Loans  hereunder
from  time  to  time  constitutes (i)  assets  allocated  to  any
separate  account maintained by the Lender in which any  employee
benefit plan (or its related trust) has any interest nor (ii) any
other  assets  of  any employee benefit plan.  As  used  in  this
Section, the terms "employee benefit plan" and "separate account"
shall  have  the respective meanings assigned to  such  terms  in
Section 3 of ERISA.



      [REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

     IN  WITNESS  WHEREOF, the parties hereto  have  caused  this
Agreement  to  be duly executed, under seal, by their  respective
authorized officers as of the day and year first above written.

                              BORROWER:

                              ATLANTIC COAST AIRLINES

                              By: /s/                           (SEAL)
                              Title:  Richard J Surratt,
                              Senior Vice President & CFO

                              45200 Business Court, Suite 100
                              Dulles, Virginia 20166
                              Attn:  Richard Surratt
                                     Senior Vice President and
                                     Chief Financial Officer
                              Telecopier number:
                              Confirmation number:


                              HOLDINGS:

                              ATLANTIC  COAST AIRLINES  HOLDINGS,
                              INC., a Delaware corporation

                              By: /s/                           (SEAL)
                              Title:  Richard J Surratt,
                              Senior Vice President & CFO

                              45200 Business Court, Suite 100
                              Dulles, Virginia 20166
                              Attn:  Richard Surratt
                                     Senior Vice President and
                                     Chief Financial Officer
                              Telecopier number:
                              Confirmation number:











          SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT





                              WACHOVIA BANK, N.A.

                              By:                               (SEAL)
                              Name:
                              Title:

                              Lending Office
                              Wachovia Bank, N.A.
                              8270 Greensboro Drive
                              4th Floor
                              McLean, Virginia 22102
                              Attention:
                              Telecopier number:
                              Confirmation number:

                                                        EXHIBIT A

                              NOTE

                    Fairfax County, Virginia

                        September 28, 2001

For value received, ATLANTIC COAST AIRLINES, a California
corporation (the "Borrower"), promises to pay to the order of
WACHOVIA BANK, N.A., a national banking association (the
"Lender"), for the account of its Lending Office, the principal
sum of TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000), or
such lesser amount as shall equal the unpaid principal amount of
each Loan made by the Lender to the Borrower pursuant to the Loan
and Security Agreement referred to below, on the dates and in the
amounts provided in the Loan and Security Agreement.  The
Borrower promises to pay interest on the unpaid principal amount
of this Note on the dates and at the rate or rates provided for
in the Loan and Security Agreement.  Interest on any overdue
principal of and, to the extent permitted by law, overdue
interest on the principal amount hereof shall bear interest at
the Default Rate, as provided for in the Loan and Security
Agreement. All such payments of principal and interest shall be
made in lawful money of the United States in Federal or other
immediately available funds at the office of Wachovia Bank, N.A.,
8270 Greensboro Drive, 4th Floor, McLean, Virginia 22102, or such
other address as may be specified from time to time pursuant to
the Loan and Security Agreement.

     All  Loans  made  by  the Lender, the respective  maturities
thereof, the interest rates from time to time applicable thereto,
and all repayments of the principal thereof shall be recorded  by
the  Lender  and, prior to any transfer hereof, endorsed  by  the
Lender  on the schedule attached hereto, or on a continuation  of
such  schedule attached to and made a part hereof; provided  that
the  failure  of  the  Lender to make  any  such  recordation  or
endorsement  shall  not affect the obligations  of  the  Borrower
hereunder or under the Loan and Security Agreement.

     This  Note is the Note referred to in the Loan and  Security
Agreement dated as of even date herewith between the Borrower and
the Lender (as the same may be amended and modified from time  to
time,  the "Loan and Security Agreement").  Terms defined in  the
Loan  and  Security  Agreement are  used  herein  with  the  same
meanings.   Reference is made to the Loan and Security  Agreement
for  provisions for the optional and mandatory prepayment and the
repayment hereof and the acceleration of the maturity hereof,  as
well  as  the  obligation of the Borrower to  pay  all  costs  of
collection,  including reasonable attorneys fees,  in  the  event
this Note is collected by law or through an attorney at law.

     The  Borrower  hereby waives presentment,  demand,  protest,
notice  of  demand, protest and nonpayment and any  other  notice
required  by  law  relative  hereto,  except  to  the  extent  as
otherwise may be expressly provided for in the Loan and  Security
Agreement.

     IN  WITNESS WHEREOF, the Borrower has caused this Note to be
duly  executed, under seal, by its duly authorized officer as  of
the day and year first above written.

                              BORROWER:

                              ATLANTIC COAST AIRLINES
                              a California corporation

                              By: /s/________________________(SEAL)
                              Name:  Richard J. Surratt
                              Title: Senior Vice President & CFO