THIS DOCUMENT IS A COPY OF THE ANNUAL REPORT ON FORM 10-K FILED ON
APRIL 1, 1997 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.   

               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549
                                
                            FORM 10-K
                                
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                      EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1996

Commission file number 0-21976

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

           Delaware                               13-3621051
  (State of incorporation)                        (IRS Employer
                                              Identification No.)
                                
     515-A Shaw Road, Dulles, Virginia              20166
     (Address of principal executive offices)   (Zip Code)

Registrant's telephone number, including area code:  (703) 925-6000

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

Common Stock par value $ .02          Nasdaq National Market
    (Title of Class)          (Name of each exchange on which registered)

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

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ______

The aggregate market value of voting stock held by nonaffiliates
of the registrant as of March 11, 1997 was approximately
$112,810,113

As of  March  11, 1997 there were 8,519,578 shares of Common
Stock of the registrant issued and 8,507,078 shares of Common
Stock were outstanding.
                                
               Documents Incorporated by Reference
                                
Certain portions of the documents listed below have been
incorporated by reference into the indicated part of this Form 10-K.

Document Incorporated                           Part of Form 10-K
Proxy Statement for 1996 Annual
 Meeting of Shareholders                        Part III, Items 10-13
                                
                                
                                
                                
                                
                                
                             PART I

Item 1.   Business

     General

           This  Annual  Report  on Form 10-K  contains  forward-
looking  statements, particularly those statements identified  by
such  words  as "believes", "plans" or "expects". Actual  results
may  differ  based  on  a  variety of  factors  including  costs,
competitive reactions, and marketplace demand for services on the
Company's routes.

           Atlantic Coast Airlines, Inc. ("ACAI"), is the holding
company  of Atlantic Coast Airlines (the "Company"), one  of  the
largest regional airlines based on total revenues  in the  United
States,  serving thirty-nine destinations in seventeen states  as
of  March  1,  1997, with approximately 421 scheduled  departures
each weekday. The Company markets itself as "United Express"  and
is  the  only code-sharing regional airline for United  Airlines,
Inc. ("United") operating as United Express in the Eastern United
States.  The Company operates primarily from United's East  Coast
hub  at  Washington-Dulles  International  Airport  ("Washington-
Dulles"),  which  serves  the  Washington,  D.C.,  and   Northern
Virginia  markets.  As of March 1, 1997, the Company  operated  a
fleet  of  fifty-six turboprop aircraft.  In 1996,  approximately
65%  of the Company's traffic was point-to-point local travel  or
on-line  connections, 32% connected with United flights,  and  3%
connected to flights of other carriers.

          The Company's code-sharing relationship with United has
contributed  significantly to the Company's growth.  The  Company
coordinates its schedules with United, particularly at Washington-
Dulles, where United operates a hub for both domestic flights and
service  to  Europe and Mexico, and participates with  United  in
cooperative advertising and marketing agreements. The Company has
a  shared  market identity with United, lists its  flights  under
United's  "UA"  flight  designator code in  airline  computerized
reservation  systems ("CRSs") and other published schedules,  and
awards  United's  "Mileage  Plus" frequent  flyer  miles  to  the
Company's  passengers. The Company also participates in  United's
"Apollo" reservation system and other major CRSs, uses the United
Express  logo and has exterior aircraft paint schemes similar  to
those of United.

           The Company believes that its relationship with United
is  strong,  and that United has significant business  incentives
for maintaining that relationship. At Washington-Dulles, United's
operations  are  predominately international and transcontinental
flights  with a lesser number of short haul flights. The  ability
of  the Company to provide service to some of United's short-haul
markets  in the Eastern United States enables United to  continue
to  market,  through the Company, frequent air service  from  its
Washington-Dulles  hub,  thus  adding  incremental   traffic   to
United's international and domestic flights.







     Markets

           As of March 1, 1997, the Company operated 181 non-stop
flights from Washington-Dulles representing more flights from the
airport   than  any  other  airline.  During  1996,  the  Company
accounted  for  more  passenger boardings from  Washington-Dulles
than  any  airline  other than United. On a combined  basis,  the
Company  and  United  generated approximately  56%  of  passenger
traffic at Washington-Dulles during 1996.

           The  Company's top four cities based on  frequency  of
operations  are  Washington-Dulles,  Boston,  New  York-JFK   and
Newark.  During  1996,  the Company added additional  flights  to
existing  Washington-Dulles markets, added new  routes  from  the
Washington-Dulles,   Boston  and  Newark  airports   and   ceased
operations in four markets.  The Company increased operations  in
existing  Washington-Dulles markets by four daily departures  and
added Detroit as a new market which will have an additional  four
flights per day by year end. Further, the Company added new  non-
Dulles flying from Boston, consisting of one new market with  six
daily  departures; and Newark, with two new markets and ten daily
departures.  In  1996  the Company ceased operations  in  Wilkes-
Barre/Scranton  and  Reading, PA, as  well  as  Long  Island  and
Elmira,  NY,  resulting  in  the elimination  of  thirteen  daily
departures from Washington-Dulles.

The  following table sets forth the destinations currently served
by the Company:

Albany, NY                         New Haven, CT
Allentown, PA                      New York, NY (Kennedy)
Baltimore, MD                      New York, NY (LaGuardia)
Binghamton, NY                     Newark, NJ
Boston, MA                         Newport News, VA
Buffalo, NY                        Norfolk, VA
Burlington, VT                     Philadelphia, PA
Charleston, SC                     Pittsburgh, PA
Charleston, WV                     Portland, ME
Charlottesville, VA                Providence, RI
Cleveland, OH                      Raleigh/Durham, NC
Columbus, OH                       Richmond, VA
Dayton, OH                         Roanoke, VA
Detroit, MI                        Rochester, NY
Greensboro, NC                     State College, PA
Harrisburg, PA                     Stewart, NY
Hartford, CT                       Syracuse, NY
Knoxville, TN                      Westchester County, NY
Lynchburg, VA                      Washington-Dulles
Manchester, NH                     

     Fleet Description

           As  of March 1, 1997, the Company operated a fleet  of
fifty-six  turboprop aircraft, consisting of twenty-nine  British
Aerospace   Jetstream-32s  ("J-32s")  and  twenty-seven   British
Aerospace Jetstream-41s ("J-41s").  The Company believes that its
fleet of   J-32 and J-41 aircraft, having varying capacities  and
ranges, allows it to match equipment to the market conditions  on
its routes.

           As  of February 23, 1997, the Company entered into  an
agreement   in  principle  with  Aero  International   (Regional)
("AI(R)"),  acting  as  agent for British Aerospace  (Operations)
Limited,  to acquire twelve new J-41 aircraft.  Delivery  of  the
aircraft  began in March 1997 and will continue through mid-1999.
Five aircraft are scheduled for delivery in 1997.

          On January 28, 1997, the Company announced an agreement
to  acquire  twelve Canadair Regional Jet Series 200  ER  ("CRJ")
aircraft  from  Bombardier,  Inc.  with  options  to  acquire  an
additional thirty-six jets. Deliveries are scheduled to begin  in
July  with  revenue passenger service expected to  begin  in  the
fall.  Four jets are scheduled for delivery in 1997 and eight  in
1998.  The  CRJ is a fifty seat twin engine aircraft designed  to
serve medium-range and secondary markets.  The Company is seeking
to  obtain  approval from its marketing partner, United Airlines,
to incorporate the regional jets into its existing United Express
product.  The  Company  believes  that  CRJs  will  allow  it  to
capitalize  on  its  strong  position  at  Washington-Dulles   in
addition to pursuing other potential route opportunities  in  the
Eastern United States.  See "Outlook" in Item 7, below.

<TABLE>
           The  following table describes the Company's fleet  of
aircraft,  scheduled  deliveries for  1997  and  thereafter,  and
future options as of March 1, 1997.
<CAPTION>
                          Average                         Future
                Passenger Age in   Number    1997        Deliveries/
                           Years     of    Deliveries   
                 Capacity         Aircraft                Options
<S>               <C>       <C>     <C>      <C>       <C>
British            19      7.0      29       -         -
Aerospace J-32
British            29      2.3      27       5         7
Aerospace J-41
Canadair           50       -       -        4       8/36
Regional Jets
</TABLE>

           Aircraft  lease expense during 1996 for the  Company's
aircraft was approximately $29.1 million.

     Restructuring

          In the second quarter 1994 the Company commenced a plan
of  restructuring  to rationalize its fleet structure,  eliminate
unprofitable   routes  and  operations,  and   recapitalize   its
finances. The key elements of the restructuring plan included the
return   of  the  Company's  Embraer  Brasilia  ("EMB-120")   and
deHavilland Dash-8 ("Dash-8") aircraft to the lessors,  the  sale
of  spare  parts and tooling associated with those aircraft,  and
the  closure  of  the  Company's flight  operations  in  Florida.
Management believes that the plan of restructuring addressed  the
Company's  past  financial difficulties  and  that  the  improved
financial performance for the years ending December 31, 1996  and
1995   is   largely   attributable  to  the   benefits   of   the
restructuring,  improved  yield  management,  and   a   generally
improved  economic  environment  for  airlines.  There   are   no
remaining reserves related to the restructuring.



     United Express Agreements

           The Company's code-sharing and related agreements with
United  (the  "United Express Agreements") define  the  Company's
relationship with United. The United Express Agreements authorize
the  Company  to  use  United's "UA" flight  designator  code  to
identify  its  flights  and fares in the  major  CRSs,  including
United's  "Apollo" reservation system, to use the United  Express
logo and exterior aircraft paint schemes and uniforms similar  to
those  of  United,  and  to otherwise advertise  and  market  its
association with United.

          Company passengers may participate in United's "Mileage
Plus"  frequent  flyer  program and are  eligible  to  receive  a
certain  minimum of United frequent flyer miles for each  of  the
Company's  flights.  Mileage Plus members are  also  eligible  to
redeem  their  awards  on the Company's route  system.   In  1996
approximately  5%  of  the  Company's passengers  received  their
tickets as part of a Mileage Plus award.  The Company limits  the
number  of "Mileage Plus" tickets that may be used on its flights
and believes that the displacement, if any, of revenue passengers
is minimal.

            The  United  Express  Agreements  also  provide   for
coordinated schedules and through-fares. A through-fare is a fare
offered by a major air carrier to prospective passengers who,  in
order  to  reach a particular destination, transfer  between  the
major  carrier  and  its code-sharing partner.  Generally,  these
fares are less expensive than purchasing the combination of local
fares.  United  establishes  all  through-fares  and  allows  the
Company a portion of these fares on a fixed rate or formula basis
subject  to  periodic adjustment. The United  Express  Agreements
also  provide  for interline baggage handling,  and  for  reduced
airline  fares  for  eligible United and  Company  personnel  and
families.  The United Express code-sharing agreement  expires  on
March  31,  1998.  The Company intends to negotiate a new  United
Express code-sharing agreement and expects United to continue the
code-sharing relationship.

           Under the United Express Agreements, United provides a
number  of  additional  services to the  Company.  These  include
publication of the fares, rules and related information that  are
part  of  the Company's contracts of carriage for passengers  and
freight;  publication  of  the  Company's  flight  schedules  and
related information; provision of ground support services at many
of  the airports served by both United and the Company; provision
of  ticket  handling  services at United's  ticketing  locations;
provision  of airport signage at airports where both the  Company
and  United operate; provision of United ticket stock and related
documents;  provision  of  expense  vouchers,  checks  and   cash
disbursements  to  Company  passengers inconvenienced  by  flight
cancellations,  diversions and delays;  and  cooperation  in  the
development   and  execution  of  advertising,   promotion,   and
marketing  efforts featuring United Express and the  relationship
between  United and the Company. The Company pays United  monthly
fees  based on the total number of revenue passengers boarded  by
the  Company  on  its flights for the month.  The  fee  escalates
annually over the term of the United Express Agreements.

           The  United Express Agreements require the Company  to
obtain United's consent to operate service between city pairs  as
"United  Express".   If  the  Company experiences  net  operating
expenses that exceed revenues for three consecutive months on any
required  route,  the Company may withdraw  from  that  route  if
United  and  the  Company are unable to negotiate an  alternative
mutually  acceptable level of service for that route. The  United
Express  Agreements also require the Company to  obtain  United's
approval  if  it chooses to enter into code-sharing  arrangements
with  other  carriers, but do not prohibit United from competing,
or  from  entering into agreements with other airlines who  would
compete, on routes served by the Company.

           The  United Express Agreements may be canceled if  the
Company  fails  to  meet certain financial tests  or  performance
standards  or fails to maintain certain minimum flight  frequency
levels,  events which the Company, based on experience  to  date,
believes to be unlikely.

           The United Express Agreements restrict the ability  of
the Company to merge with another company or dispose of assets or
aircraft  without  offering United a right of  first  refusal  to
acquire the Company or such assets or aircraft. United also has a
right of first refusal with respect to issuance by the Company of
shares  of  its  Common Stock if, as a result  of  the  issuance,
certain   of  the  Company's  stockholders  and  their  permitted
transferees do not own at least 50% of the Company's Common Stock
after such issuance. Because those Company stockholders and their
permitted  transferees own substantially  less  than  50%  today,
management  believes  that  such  a  right  is  unlikely  to   be
exercised.

           The United Express Agreements also require the Company
to  obtain  United's  consent to operate  aircraft  with  seating
capacity  for  more  than  thirty passengers  under  the  "United
Express"  name.  The Company has sought United's consent  and  is
awaiting  United's response, regarding operating the  CRJs  under
the code-sharing agreement. See "Outlook" in Item 7, below.

     Fuel

           The Company has not experienced difficulties with fuel
availability and expects to be able to obtain fuel at  prevailing
prices  in quantities sufficient to meet its future requirements.
During  1996,  the Company purchased approximately 80.2%  of  its
fuel  through  an  affiliate of United taking  advantage  of  the
affiliate's   significant  buying  power  and   fuel   purchasing
expertise.   On  March  17, 1997, the Company  renewed  its  fuel
purchasing  agreement with the United affiliate  and  obtained  a
reduction in the base price of fuel at its Washington-Dulles hub.
The   Company's  fuel  purchasing  agreement  does  not   provide
protection  against  fuel price increases  and  does  not  insure
availability of supply.  Fuel costs constituted 9.4%,  8.5%,  and
9.6% of revenues in 1996, 1995, and 1994 respectively.

     Marketing

           The  Company's  advertising and  promotional  programs
emphasize  the Company's close affiliation with United, including
coordinated  flight schedules and the ability  of  the  Company's
passengers  to  participate in United's "Mileage  Plus"  frequent
flyer  program. The Company's services are marketed primarily  by
means  of  listings  in  CRSs and the  Official  Airlines  Guide,
advertising  and  promotions,  and through  direct  contact  with
travel  agencies and corporate travel departments. For  the  year
ended  December  31,  1996, approximately 74%  of  the  Company's
passengers  obtained  their tickets through travel  agencies  and
corporate travel departments. In marketing to travel agents,  the
Company  relies  on personal contacts and direct mail  campaigns,
provides  familiarization flights, and hosts group  presentations
and  other functions to acquaint travel agents with the Company's
services.   Many of these activities are conducted in cooperation
with  United marketing representatives. In addition, the  Company
and  United jointly create radio and print advertising in markets
served by the Company.

           In September 1995 the Company became a participant  in
United's  electronic  ticketing  program.  This  program   allows
customers to travel on flights of United and the Company  without
the  need for a paper ticket. The primary benefit of this program
is improved customer service and reduced ticketing costs. For the
year  ended  December 31, 1996, 16.4% of the Company's passengers
utilized electronic tickets.

     Competition

           The Company competes primarily with regional and major
air carriers as well as with ground transportation. The Company's
competition  from  other  air carriers varies  from  location  to
location,  type  of aircraft (both turbo-prop and  jet),  and  in
certain  cities,  comes  from  carriers  which  serve  the   same
destinations  as  the  Company but through  different  hubs.  The
Company believes that its ability to compete in its market  areas
is  strengthened  by its code-sharing relationship  with  United,
which  has  a substantial presence at Washington-Dulles,  thereby
enhancing  the importance of the "UA" flight designator  code  on
the  East Coast. The Company seeks to compete with other airlines
by   offering  frequent  flights.  In  addition,  the   Company's
competitive   position  benefits  from  the   large   number   of
participants  in United's "Mileage Plus" frequent  flyer  program
who fly regularly to or from the markets served by the Company.

          At its Washington-Dulles hub, the Company faces limited
direct nonstop competition from other carriers. In eleven of  its
markets  from  Dulles,  other airlines have  competing  turboprop
and/or  jet  service.  There are no other  airlines  serving  the
Company's  remaining  twenty-seven Dulles  markets  with  nonstop
flights.  However,  flights  to the  Company's  Washington-Dulles
destinations  are also offered by other carriers from  Washington
National and Baltimore-Washington International airports.

           During  1996,  the Company continued to  see  a  trend
towards a lower percentage of its passengers connecting to United
Airlines flights through its Dulles hub.  One potential cause for
this  trend  was additional competition for connecting passengers
from  other  hub  networks in the region controlled  by  some  of
United's principal competitors.  In 1996, regional jet operations
were  a much larger part of these competing hub networks.   As  a
result, the Company's turbo-prop to jet connections with its code-
share  partner United is increasingly competing with these  other
hub networks jet to jet connections. Some passengers may perceive
jet  to  jet  connections more favorably due to a  jet's  elapsed
flight  time  and comfort relative to a turbo-prop aircraft.  The
Company  believes  that  the  public's  favorable  perception  of
regional  jets  supports its strategy for  acquisition  of  these
aircraft to mitigate any loss of passengers to operators  already
using regional jets.

           The Aviation Deregulation Act of 1978 (the "1978 Act")
eliminated  many  regulatory constraints on airline  competition,
thereby   freeing  airlines  to  set  prices  and,  with  limited
exceptions, to establish domestic routes without the necessity of
seeking  government  approval.  The airline  industry  is  highly
competitive, and there are few barriers to entry in the Company's
markets. Furthermore, larger carriers with greater resources  can
impact the Company's markets through fare adjustments as well  as
flight schedule modifications.


     Yield Management

           The Company closely monitors its inventory and pricing
of  available  seats  by use of a computerized  yield  management
system. In September 1995, the Company signed a contract for  the
installation  of  a  state-of-the-art revenue management  system,
PROS  IV,  marketed  by  PROS Strategic  Solutions.  This  system
enables  the Company's revenue control analysts, on a  flight  by
flight  basis, to establish the optimal allocation  of  seats  by
fare  class  (the  number of seats made  available  for  sale  at
various  fares).  The Company expects that PROS  IV  will  become
fully operational during the second quarter of 1997.

     Slots

           Slots  are  reservations for takeoffs and landings  at
specified  times and are required by governmental authorities  to
operate  at  certain airports.  The Company utilizes takeoff  and
landing  slots  at the LaGuardia, New York-JFK and White  Plains,
New  York  airports.  Airlines may acquire slots by  governmental
grant, by lease or purchase from other airlines, or by loan  when
another  airline  does  not  use a  slot  but  desires  to  avoid
governmental reallocation of a slot for lack of use.  All  leased
and   loaned   slots  are  subject  to  renewal  and  termination
provisions.

           As of March 1, 1997 the Company utilized ten slots  at
LaGuardia, nine slots at New York-JFK, and eleven slots at  White
Plains.   Of  the  above  slots, the  Company  controls  four  at
LaGuardia and eight at White Plains.  The other slots utilized by
the  Company are either loaned or leased from other carriers  and
are  subject to varying renewal dates. The Company believes  that
as slots expire it will be able to either renew the lease or find
substitute slots at similar prices.

     Employees
<TABLE>
            As  of March 1, 1997, the Company had 1,236 full-time
and 134 part-time employees, classified as follows:

           <S>                          <C>      <C>    
           Classification              Full-    Part-   
                                       Time     Time
           Pilots                        463            
                                                  -
           Flight attendants             138            
                                                  -
           Station personnel             270      122   
           Maintenance personnel         118      2
           Administrative and            231      9      
           clerical personnel                     
           Management                      16     1 
                                                  
                                                        
           Total employees             1,236      134   
</TABLE>



     Labor Groups

           The  Company's pilots are represented by  the  Airline
Pilots  Association  ("ALPA"),  its  flight  attendants  by   the
Association  of Flight Attendants ("AFA"), and its  mechanics  by
the Aircraft Mechanics Fraternal Association ("AMFA").

          The ALPA collective bargaining agreement was amended on
February  26,  1997  and is effective for three  years.  The  new
contract  modifies work rules to allow more flexibility, includes
regional  jet pay rates, and transfers pilots into the  Company's
employee benefit plans. The Company believes that the incremental
cost  as a result of the amendments to the contract will not have
any material effect over the life of the agreement.

           On  March 11, 1994, AMFA was certified by the National
Mediation   Board  (the  "NMB")  as  the  collective   bargaining
representative elected by mechanics and related employees of  the
Company.  As  of  March  1, 1997, AMFA  represented  120  of  the
Company's employees. The Company and AMFA have been attempting to
negotiate  an  initial  contract under  federal  mediation  since
December 1994, but have so far failed to reach agreement. The NMB
has indicated that it is in favor of continuing the negotiations,
and    the   Company   anticipates   participating   in   further
negotiations.

           If,  at  some  point, the NMB should decide  that  the
parties  are  deadlocked, the NMB could declare an impasse  along
with  a thirty day cooling off period.  At the conclusion of that
period if an agreement has not been reached, AMFA would have  the
authority  to  use self help, up to and including  the  right  to
strike.  The  Company  and AMFA are also engaged  in  litigation,
which  is  more  fully described in Item 3, "Legal  Proceedings,"
below.   If  that litigation were resolved in AMFA's favor,  AMFA
would be in a position to use self help, even if the NMB does not
declare an impasse.

           The  Company's  contract  with  the  AFA  will  become
amendable  on  April  30, 1997. The Company expects  to  continue
operating  under  the terms of the existing agreement  until  new
terms are negotiated.

           The  Company believes that the wage rates and benefits
for  other  employee groups are comparable to similar  groups  at
other   regional  airlines.  The  Company  is  unaware   of   any
significant organizing activities by labor unions among its other
non-union employees at this time.

          Annual turnover of Company pilots was approximately 18%
during  1996, compared to 14% during 1995.  In 1996,  several  of
the  major  airlines began hiring greater numbers  of  pilots  to
satisfy  added fleet capacity and to replace a larger  percentage
of  retiring  pilots compared to previous years.  It is  expected
that hiring by all the major airlines will continue, resulting in
a  similar  turnover rate in 1997.  There are no assurances  that
the  Company will be able to hire and train sufficient pilots  to
meet its operational requirements in the future.

     Pilot Training

           The  Company  performs pilot training in state-of-the-
art,  full  motion simulators and conducts training in accordance
with   Federal   Aviation   Administration   ("FAA")   Part   121
regulations.   In  1994,  the  Company  initiated   an   Advanced
Qualification Program ("AQP") to enhance pilot training  in  both
technical and Crew Resource Management ("CRM") skills.   The  FAA
has  recognized  the  Company's leadership in   CRM  training  by
selecting the Company to participate in a FAA sponsored  training
grant.  The  principal objective of the grant  is  to  develop  a
prototype  training program that provides carriers  with  a  more
efficient  approach for integrating CRM procedures into  standard
operating procedures.  For the past eighteen months, the FAA  has
worked  closely  with  the Company and the  first  phase  of  the
program,  development  of  standardized  requirements,   is   now
complete.    The   second  phase  of  the  project,   operational
implementation, began in August 1996.

     Aviation Safety

           On December 20, 1995, the FAA issued regulation 14 CFR
part 119, requiring air carriers operating aircraft under 14  CFR
part  135,  with  a  seating capacity of  ten  to  thirty  seats,
excluding crew members, to comply with and be certified under the
more  stringent air carrier safety regulation 14 CFR part 121  by
March  20,  1997.  The Company has had an internal audit  program
for  flight operations in place since October 1993 and  has  been
training  all  of  its  flight crews under  CFR  Part  121  since
February  1994.   Additionally, the Company  appointed  a  safety
officer  during 1995.  The Company continues to emphasize  safety
in  its  daily  operations  and plans to  implement  several  new
programs  for  flight  crews in 1997.  On  March  10,  1997,  the
Company received certification to operate under 14 CFR part 121.

           The  Company  underwent  an  intensive,  two-week  FAA
National  Aerospace  Inspection Program  ("NASIP")  audit  during
December  1995. The final audit report was issued on January  31,
1996 and consisted of recommendations and minor findings, none of
which resulted in civil penalties.  The Company responded to  the
findings  and believes that it has met and continues to meet  the
required standards for safety and operational performance.

     Regulation

          The airline industry is subject to extensive regulation
of  its operations.  The Department of Transportation ("DOT")  is
authorized to establish consumer protection regulations; prohibit
certain  pricing practices; mandate conditions of  carriage;  and
make  ongoing determinations of a carrier's fitness,  willingness
and  ability to provide air transportation. The DOT also has  the
power to bring proceedings for the enforcement of its regulations
under  the  federal transportation statute, which may  result  in
civil  penalties, revocation of operating authority, and criminal
sanctions.

           The  Company holds a certificate of public convenience
and  necessity issued by the DOT under the transportation statute
which  authorizes  it to conduct air transportation  of  persons,
property,  and mail between all points in the United States,  its
territories  and  possessions. Such a  certificate  requires  the
holder to maintain DOT prescribed minimum levels of insurance and
to comply with all applicable statutes and regulations.

          The DOT has implemented regulations designed to prevent
unfair,  discriminatory, and deceptive practices in the operation
of  computerized  reservation systems. These regulations  do  not
prohibit   or  limit  code-sharing  or  the  practice   of   some
computerized   reservation  system  vendors   to   give   display
preference  to on-line versus interline connecting  flights.  The
DOT  has  stated  that it views the practice as being  consistent
with   the   traveler's  preference  for  on-line  flights   when
reasonably  convenient. The DOT must re-enact  these  regulations
and/or revise them on or after December 31, 1997. There can be no
assurance  that the DOT will not amend its regulations  to  limit
these practices in the future.

          The DOT has proposed to adopt regulations to strengthen
the  requirement that carriers advise booking passengers that all
or  part of their air transportation may be provided by the code-
share partner of the carrier accepting the passenger reservation.
Because  the Company relies on its code-share partner and  travel
agents  to accept reservations on its behalf, the DOT rule,  when
made  final, is not anticipated to have a significant  impact  on
the cost of the Company's compliance with federal regulations.

          Pursuant to the federal transportation statute, no more
than  25%  of  the  voting interest in an U.S.  certificated  air
carrier,  such  as  the Company, may be owned  or  controlled  by
persons  who are not citizens of the United States. The  December
1994  investment  in  the  Company by  a  subsidiary  of  British
Aerospace, PLC, complies with the statute.

           The Company is subject to the jurisdiction of the  FAA
with  respect to aircraft maintenance and operations,  equipment,
ground  facilities,  flight  dispatch, communications,  training,
weather observation, flight personnel and other matters affecting
air  safety. To ensure compliance with its regulations,  the  FAA
requires   airlines  to  obtain  an  operating  certificate   and
operations specifications for the particular aircraft  and  types
of  operations conducted by the carrier, all of which are subject
to  suspension or revocation for cause. The FAA has the authority
to bring proceedings for the enforcement of its regulations which
may   result  in  civil  penalties  or  revocation  of  operating
authority.

           The  FAA has sought to impose civil penalties  on  the
Company for alleged violations of passenger screening procedures,
and  in  one instance for an alleged violation involving  a  non-
revenue   maintenance  ferry  flight.  The  Company  has   either
contested  the  allegations or sought to  enter  into  compromise
agreements  with  the  FAA to conclude the  matters.  It  is  not
expected  that  the  settlement of  these  matters  will  have  a
material adverse effect on the Company.

           The  Company  is  subject to the jurisdiction  of  the
Federal  Communications Commission regarding  the  use  of  radio
facilities. Local governments and authorities in certain  markets
have  adopted regulations governing various aspects  of  aircraft
operations,  including  noise  abatement,  curfews,  and  use  of
airport facilities. The Company believes that it is in compliance
with all such regulations in all material respects.

           From  time  to time the DOT and FAA propose  to  adopt
additional  regulations on air carriers. Some of these  proposals
are   the  result  of  legislation.  For  example,  the  DOT   is
considering  means  by  which air carriers  can  collect  certain
passenger  related  information  not  currently  required  to  be
collected  (date  of  birth,  social security  number,  emergency
contact  and telephone number). Other requirements may be imposed
on  air  carriers  as  a result of the recent  Vice  Presidential
Commission   on  Air  Safety.  For  example,  the   industry   is
considering the operational consequences of implementing  a  more
positive  passenger-bag match system. The  Company  expects  that
certain  proposals  now under discussion will be  implemented  in
some  manner. A number of these proposals, in various  forms  now
under  discussion, could have a substantial financial  impact  on
the air carrier industry including the Company. At this time, the
Company cannot predict the extent to which these proposals may be
imposed or their financial impact.

            The   Company   is  obligated  to  collect   a   U.S.
transportation tax of 10% of passenger ticket revenue.  This  tax
is  known as the aviation trust tax or the "ticket tax". Recently
the  federal  statute  authorizing  the  ticket  expired  on  two
separate  occasions, during the periods January 1,  1996  through
August  26,  1996,  and January 1, 1997 through  March  6,  1997.
Accordingly,  the  Company discontinued  the  collection  of  the
ticket  tax during this period consistent with industry practice.
The  ticket tax was most recently reinstated effective  March  7,
1997, with an expiration date of September 20, 1997. The Congress
has  directed a study of FAA funding requirements and how it  can
best  be  met.  As a result, the excise tax may  be  modified  or
replaced  by a user fee. Such a change in the nature of this  tax
could, if adopted, affect the Company's overall exposure to these
fees.

          Management believes that the industry fare increases in
1996 resulted, in part, from the expiration of the transportation
tax.  The  amount  of  increases due to  this  factor  cannot  be
determined nor can the impact on revenue which resulted from  the
reinstatement of the tax or could result from the adoption  of  a
user fee.

     Seasonality

           As  is common in the industry, the Company experiences
lower  demand  for  its  product during the  period  of  December
through  February. Because the Company's services  and  marketing
efforts are focused on the business traveler, this seasonality of
demand is somewhat greater than for airlines which carry a larger
proportion  of  leisure  travelers. In  addition,  the  Company's
principal  area  of operations experiences more  adverse  weather
during this period, causing a greater percentage of the Company's
and  other  airlines'  flights  to be  canceled.  These  seasonal
factors  have  combined  in  the past  to  reduce  the  Company's
capacity,  traffic, profitability, and cash generation  for  this
three month period as compared to the rest of the year.

     Charter and Freight Service

           The  Company  uses  available aircraft,  primarily  on
weekends when there are fewer scheduled flights, to carry charter
groups  to  destinations such as Atlantic City, New  Jersey,  and
other  regional destinations. The Company also carries  mail  and
small  packages on most of its flights. Total revenues  from  its
charter   flights   and   freight  deliveries   for   1996   were
approximately 1% of the Company's total revenues.


Item 2.   Properties

     Leased Facilities

          Airports

           The Company leases gate and ramp facilities at all  of
the airports it serves and leases ticket counter and office space
at   those  locations  where  ticketing  is  handled  by  Company
personnel.  Payments to airport authorities for ground facilities
are  generally  based  on  a number of factors,  including  space
occupied  as  well  as flight and passenger volume.  The  Company
believes that it can accomodate through various arrangements  the
new  flights  it  plans,  and  is  exploring  possible  long-term
solutions   for   assuring  access  to  adequate  facilities   at
Washington-Dulles. The Company leases all of its aircraft,  which
are described in Fleet Description, under various operating lease
agreements.

          Corporate Offices

           On  February  15,  1997, the Company  established  new
headquarters  in  Dulles,  VA.  The new  facility  provides  over
45,000   square   feet  in  one  building  for   the   executive,
administrative,  training  and system control  departments.  This
facility   compares   to  the  previous   space   consisting   of
approximately  28,500 square feet divided between two  buildings.
The  Company believes that the new headquarters provides adequate
facilities to conduct its current and planned operations.

          Maintenance Facilities

            The   FAA's   safety  regulations  mandate   periodic
inspection  and maintenance of commercial aircraft.  The  Company
performs most maintenance, service and inspection of its aircraft
and   engines  at  its  maintenance  facilities  using  its   own
personnel.

           The  Company  currently  leases  approximately  30,000
square feet of hangar, shop and office space in Lynchburg, VA  to
maintain  the  fleet  of  J-32 and J-41  aircraft.   The  Company
believes  the  Lynchburg  facility is  adequate  to  perform  the
maintenance  functions for the existing fleet. The lease  on  the
hangar  complex is now on a month-to-month basis due  to  an  on-
going  airport  planning study by the Airport  and  the  City  of
Lynchburg. The Company believes that its tenancy at the Lynchburg
facility  is not threatened by the short-term lease. The  Company
also  leases  approximately 3,800 square feet  in  the  Signature
Flight   Support   hangar  at  Washington-Dulles   for   aircraft
maintenance.   The  1996  rental  expense  for  all   maintenance
facilities was approximately $0.2 million.

          The Company has begun to address the need for expanding
its  facilities due to the planned increase in fleet  size.   The
Company   intends  to  build  or  lease  a  hangar  facility   of
approximately  85,000  square feet for planned  occupancy  during
1998   large   enough  to  consolidate  its  future   maintenance
operations.   The  final  site has not been  determined  but  the
Washington-Dulles location is the leading contender for  the  new
maintenance  facility due to the presence of  the  Company's  hub
operation.  The Company has applied to Loudoun County, VA  for  a
tax  exempt bond issuance facility in the amount of $11.0 million
to finance the proposed facility.


Item 3.   Legal Proceedings

           The  Company is a party to routine litigation and  FAA
proceedings incidental to its business, none of which  is  likely
to have a material effect on the Company's financial position.

           The  Company  is a party to an action pending  in  the
United  States District Court for the Southern District of  Ohio,
Peter  J.  Ryerson, administrator of the estate of David Ryerson,
v.  Atlantic Coast Airlines, Case No. C2-95-611.  This action  is
more  fully described in the Company's Annual Report on Form 10-K
for  the  fiscal  year  ended December  31,  1995.   The  Company
believes  that  all claims resulting from this litigation  remain
fully covered under the Company's insurance policy. On March  10,
1997,  the  Court granted Plaintiff's motion to the  effect  that
liability  would not be limited to those damages available  under
the  Warsaw Convention.  As of March 21, 1997, the matter has not
been set for trial.

           The  Company is in litigation with AMFA over the issue
of  whether AMFA has a right to strike prior to the exhaustion of
mediation  pursuant to the Railway Labor Act. See "Labor  Groups"
in  Item  1,  above.  The legal issue arose  over  the  Company's
imposition  of  certain unilateral work rule changes  during  the
period  between  union  certification and an  initial  collective
bargaining agreement.  AMFA objected to this action, but the U.S.
District Court for the Southern District of New York, on December
14,  1995,  ruled  in favor of the Company, declining  to  render
AMFA's requested declaratory judgment and expressly stating  that
AMFA  was  prohibited from striking at that  time.   In  Aircraft
Mechanics  Fraternal Association v. Atlantic  Coast  Airlines,  5
F.3d  90,  the  U.S.  Court of Appeals  for  the  Second  Circuit
affirmed   the   District  Court's  ruling.   AMFA   subsequently
petitioned  again  to the U.S. Court of Appeals  for  the  Second
Circuit  to consider the issue, not previously addressed  by  the
Court, that the company's actions, while legal, should allow AMFA
to  engage  in  self-help, including the right  to  strike.   The
Second  Circuit  heard oral arguments on this matter  in  January
1997 and the parties are awaiting its decision.


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

          No matter was submitted during the fiscal quarter ended
December  31,  1996,  to a vote of the security  holders  of  the
Company through the solicitation of proxies or otherwise.

                             PART II

Item  5.    Market  for  Registrant's Common Equity  and  Related
Stockholder Matters

           The  Company's common stock, par value $.02 per  share
(the  "Common  Stock"), is traded on the Nasdaq  National  Market
("Nasdaq/NM")  under  the symbol "ACAI". Trading  of  the  Common
Stock commenced on July 21, 1993.

           The  following table sets forth the reported high  and
low  closing sale prices of the Common Stock on the Nasdaq/NM for
the periods indicated.

                        1995           High             Low
          First quarter                3.125          1.750
          Second quarter               9.000          2.500
          Third quarter               10.375          7.125
          Fourth quarter              11.500          6.625

          1996
          First quarter               16.250          7.375
          Second quarter              17.125         12.625
          Third quarter               15.875         11.000
          Fourth quarter              13.125          9.250

          1997
          First quarter               17.000         16.500
          (through March 11, 1997)

           As  of March 11, 1997, the closing sales price of  the
Common  Stock on  Nasdaq/NM was $17.000 per share and there  were
approximately 123 holders of record of Common Stock.

           The  Company  has not paid any cash dividends  on  its
Common Stock and does not anticipate paying any Common Stock cash
dividends  in  the  foreseeable future. The  Company  intends  to
retain  earnings  to  finance the growth of its  operations.  The
payment of Common Stock cash dividends in the future will  depend
upon  such factors as earnings levels, capital requirements,  the
Company's   financial   condition,  the  applicability   of   any
restrictions imposed upon the Company's subsidiary by certain  of
its  financing agreements, and other factors deemed  relevant  by
the  Board  of  Directors. In addition, Atlantic Coast  Airlines,
Inc.  is a holding company and its only significant asset is  its
investment in its subsidiary, Atlantic Coast Airlines.

           In  January  1996,  the Company's Board  of  Directors
declared   dividends  of  approximately  $0.3  million   on   its
Redeemable  Series  A  Cumulative  Convertible  Preferred   Stock
representing the cumulative dividend for the full year 1995.  The
Company paid these dividends in February 1996. On March 29, 1996,
the Company redeemed all of the preferred stock for $3.8 million.
The  preferred  stock  was  issued  to  JSX  Capital  Corporation
("JSX"), a subsidiary of British Aerospace, Inc. in December 1994
as  part of a $20.0 million financing agreement consisting of  an
equity investment and available borrowings.  The preferred  stock
was  convertible into common stock at the option of  JSX  at  any
time on or after September 15, 1997.

Item 6.   Selected Financial Data

           The  following selected financial data relating to  the
years ended December 31, 1996, 1995, 1994, 1993 and 1992 have been
derived from the Company's consolidated financial statements which
have  been  audited  by  BDO Seidman, LLP,  Independent  Certified
Public  Accountants,  whose report with  respect  thereto  appears
elsewhere  in this Annual Report on Form 10-K. The following  data
should  be  read in conjunction with "Management's Discussion  and
Analysis of Results of Operations and Financial Condition" and the
Consolidated  Financial  Statements  and  Notes  thereto  included
elsewhere in this Annual Report on Form 10-K.
<TABLE>
               SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
       (Dollars in thousands, except per share and related operating data)
<CAPTION>
                                Year  ended December 31,
                                                     
<S>                        <C>        <C>        <C>        <C>       <C>
                           1996       1995       1994       1993      1992
                                                                        
Operating revenues:                                                                                                           
  Passenger revenues     $179,370   $153,918   $156,047   $145,786   $84,393
  Total operating        182,484    156,968    158,919     149,103    85,871
revenues                                                       
Operating expenses:                                                   
  Salaries and related    44,438     40,702     41,590     35,162      20,493
costs
  Aircraft fuel           17,124     13,303     15,189     15,397       9,514
  Aircraft maintenance    16,841     15,252     22,345     19,714      10,657
and materials
  Aircraft rentals and    33,325     29,454     40,135     34,872      19,761
landing fees
  Traffic commissions     28,550     25,938     25,913     22,914      12,796
and related fees
  Depreciation and         2,846      2,240      2,329      1,654       2,283
amortization
  Other                   19,523     17,755     20,597     16,823       9,365
  Write-off of                 -          -      6,000          -       2,917
intangible assets
  Restructuring             (426)      (521)     8,099         -           -
(reversals) charges
  Total operating        162,221    144,123    182,197    146,536      87,786
expenses                                                       

Operating income (loss)   20,263     12,845    (23,278)     2,567     (1,915)
                                                                      
  Interest expense-net                                                       
and amortization of debt  (1,013)    (1,802)   (2,153)    (2,298)    (2,602)
discount and finance
costs
  Interest income             341        66          -          60         98
  Other (expenses)           (17)       181        295       (225)          -
income
                            (655)    (1,555)   (1,858)     (2,463)    (2,504)
                                                                      
Income (loss) before      19,608     11,290    (25,136)       104     (4,419)
income tax expense                                   
Income tax provision                 (1,212)         -         67         20
(benefit)                    450
                                                                              
Income (loss) before      19,158     12,502    (25,136)        37     (4,439)
extraordinary item                                   
Extraordinary item (1)         -        400          -     (1,780)          -
  Net Income (loss)      $19,158     $12,902   $(25,136)   $(1,743)  $(4,439)
                                                   
</TABLE>
<TABLE>
               SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
       (Dollars in thousands, except per share and related operating data)
<CAPTION>
                                Year  ended December 31,
                                                                      
<S>                        <C>       <C>       <C>        <C>        <C>
                          1996      1995      1994       1993       1992
Income (loss) per share:                                           
  Primary:                                                                
    Earnings (loss)        $2.14     $1.39   $(3.67)     $  0.01   $(1.18)
before extraordinary
item
    Extraordinary item         -      0.05         -      (0.29)         -
  Net  earnings (loss)     $2.14     $1.44   $(3.67)    $ (0.28)   $(1.18)
per share
                                                                          
  Fully diluted:                                                          
    Earnings (loss)        $2.14     $1.33   $(3.67)     $  0.01   $(1.18)
before extraordinary
item
    Extraordinary item         -      0.04         -      (0.29)         -
  Net  earnings (loss)     $2.14    $ 1.37   $(3.67)    $ (0.28)   $(1.18)
per share
                                                                          
                                                                          
</TABLE>
<TABLE>
<S>                           <C>       <C>       <C>         <C>       <C>
Average  number of common                                                  
shares outstanding                                                        
 (in thousands)            8,963     8,736     6,858       6,083     3,750
      Primary              8,963     9,390     6,858       6,083     3,750
      Fully diluted
Selected Operating Data:                                           
  Departures           137,924   131,470   134,804      97,291    56,213
  Revenue passengers   1,462,241 1,423,463 1,545,520  1,445,878   781,421
carried                      
    Revenue passenger    358,725   348,675   393,013     381,489   219,602
miles (000s) (2)
    Available seat miles 771,068   731,109   885,744     853,668   468,697
(000s) (3)
    Passenger load         46.5%     47.7%     44.3%       44.7%     46.9%
factor (4)
    Breakeven passenger    41.4%     43.9%     47.0%       43.9%     45.0%
load factor (5)
    Revenue per           $0.237    $0.215    $0.179      $0.175    $0.183
available seat mile
    Cost per available    $0.211    $0.198    $0.189      $0.171    $0.177
seat mile (6)
    Average yield per     $0.500    $0.441    $0.397      $0.382    $0.384
revenue passenger mile
(7)
    Average fare            $123      $108      $101        $101      $108
    Average passenger        245       245       254         264       281
trip length (miles)
    Aircraft in service       57        54        56          62        37
(end of period)
    Destinations served       39        41        42          54        36
(end of period)
                                                                   
Consolidated Balance                                               
Sheet Data:
    Working capital      $17,782    $4,552   $(4,488)    $(3,935)   $(1,658)
(deficiency)                                       
    Total assets          64,758    47,499    40,095      52,448    26,628
    Long-term debt and     5,673     7,054     6,675       5,941    11,647
capital leases, less
current portion
    Redeemable common          -         -         -           -     2,475
stock warrants
    Redeemable Series A,                                                  
Cumulative,                    -     3,825     3,825           -         -
Convertible, Preferred stock
    Total stockholders'   34,637    14,561     1,922      19,595   (2,231)
equity (deficit)
</TABLE>
 (1)   In connection with the early extinguishment of certain senior notes, in
   1993 the Company recorded an extraordinary charge of $1,779,583 resulting
   from the write-off of the unamortized portion of debt discount and the
   deferred finance costs associated with the extinguished debt; and in 1995 an
   extraordinary gain of $400,000 related to the early extinguishment of debt.
   No similar extinguishments were recognized in 1996.

(2)   "Revenue passenger miles" or "RPMs" represent the number of miles flown by
   revenue passengers.

(3)   "Available seat miles" or "ASMs" represent the number of seats available
   for passengers multiplied by the number of scheduled miles the seats are
   flown.

(4)  "Passenger load factor" represents the percentage of seats filled by
   revenue passengers and is calculated by dividing revenue passenger miles by
   available seat miles.

(5)   "Breakeven passenger load factor" represents the percentage of seats
   filled by revenue passengers for the airline to break even after operating
   expenses, less other revenues and excluding restructuring and write-offs of
   intangible assets.  Had restructuring and write-offs of intangible assets
   been included for the years ended December 31, 1996, 1995, 1994, 1993 and
   1992, this percentage would  have been 41.3%, 43.8%, 51.0%, 43.9% and 48.0%,
   respectively.

(6)   "Operating cost per available seat mile" represents total operating
   expenses excluding restructuring and write-offs of intangible assets divided
   by available seat miles.  Had restructuring and write-offs of intangible
   assets been included for the years ended December 31, 1996, 1995, 1994, 1993
   and 1992, cost per available seat mile would have been $0.210, $0.197,
   $0.206, $0.172 and $0.187, respectively.

(7)   "Average yield per revenue passenger mile" represents the average
   passenger revenue received for each mile a revenue passenger is carried.


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


General

          In 1996 the Company posted a record profit of $19.2
million compared to a profit of $12.9 million for 1995, and a
loss of $25.1 million in 1994.  The improvement over 1995 and
1994 reflects increases in the Company's yields as well as  a
reduction   in   the   break-even  passenger   load   factor.
Management believes that these improvements are due to, among
other factors, the results of a major restructuring in 1994.

           In the second quarter 1994 the Company commenced a
plan  of  restructuring to rationalize its  fleet  structure,
eliminate    unprofitable   routes   and   operations,    and
recapitalize   its  finances.  The  key   elements   of   the
restructuring plan included the return of the Company's  EMB-
120  and  Dash-8 aircraft to the lessors, the sale  of  spare
parts  and  tooling associated with those aircraft,  and  the
closure of the Company's flight operations in Florida.

            As  a  result  of  these  actions,  coupled  with
improvements in yield management, marketing, and a  generally
improved  economic  environment  for  airlines,  the  Company
returned  to  profitability  in  the  second  quarter   1995,
achieving record profitability for 1995 and 1996.

Results of Operations

           The Company earned net income of $19.2 million  or
$2.14  per fully diluted share in 1996 compared to net income
of  $12.9  million or $1.37 per fully diluted share in  1995,
and  a net loss of $25.1 million or $(3.67) per fully diluted
share  in  1994. During 1996, the Company generated operating
income  of $20.3 million compared to $12.8 million for  1995,
and an operating loss of $23.3 million for 1994.

           The improvement in operating results from 1995  to
1996  reflects a 10.2% increase in unit revenue (revenue  per
available  seat mile) from $0.215 to $0.237 partially  offset
by  a  6.6%  increase in unit cost (cost per  available  seat
mile),  coupled with a 5.5% increase in available seat  miles
("ASMs").  These results were achieved despite a  challenging
operating  environment brought about by a 20.5%  increase  in
the total cost per gallon of fuel in 1996.

           The  Company's 1995 operating results reflect  the
significant  improvement  over  1994  brought  about  by  the
Company's restructuring plan. Unit revenue increased 20.1% to
21.5   cents  compared  to  17.9  cents  in  1994.  Partially
offsetting  this  was a 4.8% increase in unit  costs  as  the
process  of  removing  larger  capacity  EMB-120  and  Dash-8
aircraft and spare parts from the fleet continued through the
second quarter 1995.

           The  Company's 1994 operating results reflect  the
operation  of larger capacity EMB-120 and Dash-8 aircraft  in
addition  to  J-32s  and J-41s; a separate Florida  operation
which was closed in the third quarter 1994; the recording  of
$8.1  million  in restructuring charges and the write-off  of
$6.0 million in aircraft purchase options.

Fiscal Year 1996 vs. 1995

Operating Revenues

          The Company's operating revenues increased 16.3% to
$182.5  million in 1996 compared to $157.0 million  in  1995.
The  increase  resulted from a 13.4% increase  in  yield  per
revenue passenger mile ("RPM") to $.500 in 1996 compared from
$.441  in  1995, and a 2.9% increase in RPMs.  The  increased
traffic as measured in RPM's reflects a 5.5% increase in ASMs
partially  offset by a decrease in passenger load  factor  of
1.2  percentage points. Total passengers increased 2.7%  year
over year and length of haul remained unchanged.

          Management believes that industry fare increases in
1996  resulted  in part from the expiration of  the  aviation
trust  fund tax, also known as the "ticket tax", on  December
31,  1995.  The  amount of the increases due to  this  factor
cannot  be  determined, nor can the impact on  revenue  which
resulted  from  the reinstatement of the tax  on  August  27,
1996.  The  ticket tax subsequently expired on  December  31,
1996,  and  was  reinstated for the  period  March  7,  1997,
through September 30, 1997.

Operating Expenses

           The Company's operating expense increased 12.6% in
1996  over  1995  reflecting increased ASMs and  unit  costs.
1996 unit costs increased 6.6% to 21.1 cents compared to 19.8
cents  in 1995 reflecting increases in passenger and  revenue
related   costs   (traffic  commissions  and  booking   fees)
associated  with a 13.4% increase in yield, increased  profit
sharing costs related to the higher net income in 1996, and a
28.7% increase in the total cost of fuel.
           A  summary  of operating expenses as a percent  of
operating  revenues and operating cost per ASM for the  years
ended December 31, 1996 and 1995 is as follows:
<TABLE>
                              1996              1995
<S>                        <C>     <C>      <C>      <C>
                         Percent   Cost   Percent    Cost
                           of      per       of
                        Operating        Operating  per ASM
                                   ASM      
                        Revenues  (cents)  Revenues  (cents)
                                            
Salaries  and   related  24.4%     5.8     25.9%     5.7
costs
Aircraft fuel             9.4%     2.2      8.5%     1.8
Aircraft    maintenance   9.2%     2.2      9.7%     2.1
and materials
Aircraft  rentals   and  18.3%     4.3     18.8%     4.0
landing fees
Traffic commissions and  15.6%     3.7     16.5%     3.5
related fees
Depreciation        and   1.6%      .4      1.4%      .3
amortization
Other                    10.7%     2.5     11.3%     2.4
Restructuring reversals   (.2%)     (.1)    (.3%)     (.1)
                                                       
    Total                89.0%     21.0    91.8%     19.7
</TABLE>


          Salaries and related expenses were $44.4 million in
1996,  an  increase of 9.2% as compared to $40.7 million  for
1995.  Total employees increased approximately 8.0% to  1,370
in 1996. In addition, a contractual rate increase of 4.5% for
flight  attendants became effective in May 1996. Total  block
hours  increased  5.7%  or  9,350  hours  compared  to   1995
resulting  in  a  corresponding increase in  flight  payroll.
Profit  sharing  expense  increased  80.4%  or  $1.6  million
reflecting  the  Company's higher level of  profitability  in
1996.

          Aircraft fuel expense was $17.1 million in 1996, an
increase  of  28.7% compared to $13.3 million  in  1995.  The
increase in 1996 fuel expense resulted primarily from a 20.5%
increase  in  the total cost per gallon due to  increases  in
aircraft  fuel  prices, the 4.3 cents  per  gallon  fuel  tax
imposed by the federal government in October 1995, and a 5.7%
increase  in  block  hours.   The average  cost  per  gallon,
including  into-plane fees, was 82.8 cents in 1996  and  68.7
cents  in  1995. The price of fuel in the first quarter  1997
has  moderated somewhat, however, there can be  no  assurance
that the trend of lower fuel prices will continue.

           Aircraft  maintenance  and materials  expense  was
$16.8 million in 1996, an increase of 10.4% compared to $15.3
million in 1995. The increase in 1996 resulted primarily from
a  5.7% increase in block hours as well as an increase in the
average age of the fleet, expiration of warranty coverage  on
certain  aircraft and rate increases in contract  maintenance
for engines.

            The Company's maintenance accounting policy is  a
combination of expensing events as incurred and accruals  for
maintenance  events.   The Company accrues  for  current  and
future maintenance events on an ongoing basis which it  feels
will  be  sufficient to cover maintenance costs for aircraft.
Maintenance accruals are estimated on a cost per flight  hour
basis for all aircraft including those under warranty.

          Aircraft rental and landing fees were $33.3 million
in  1996,  an increase of 13.1% compared to $29.5 million  in
1995.  The  increased  expense reflects two  additional  J-41
aircraft  delivered  in  1996 and the  full  year  effect  of
aircraft delivered in 1995.

           Traffic  commissions and related fees  were  $28.6
million  in  1996,  an increase of 10.1%  compared  to  $25.9
million  in  1995. The increased commission in 1996  reflects
the  increased  passenger revenue in 1996.  Commission  rates
fluctuate  based  on  the  mix  of  commissionable  and  non-
commissionable tickets, and have changed due to a cap on  the
total  amount  of commission which can be claimed  by  travel
agents. Commission as a percentage of total passenger revenue
averaged 7.4% in 1996 and 8.0% in 1995. Related fees  include
program   fees  to  United  and  segment  booking  fees   for
reservations.

           Depreciation  and amortization  expense  was  $2.8
million  in  1996,  an  increase of 27.1%  compared  to  $2.2
million in 1995. The increase in 1996 results primarily  from
the  acquisition of additional rotable spare parts associated
with  additional  J-41  aircraft, improvements  to  aircraft,
leasehold  improvements, and purchases of computer equipment.
There  were no significant changes in amortization in  either
1996 or 1995.

           Other  operating  expenses were $19.5  million  in
1996, an increase of 10.0% compared to $17.8 million in 1995.
The  increase  in  other operating expenses  during  1996  is
primarily  attributed to increased glycol  costs  related  to
severe  winter  weather  during the first  quarter  of  1996,
increased  legal  fees  related to  union  negotiations,  and
increased pilot training costs.

           The Company reversed excess restructuring reserves
of $0.4 million in 1996 and $0.5 million in 1995. The Company
established  the  reserves with a charge of $8.1  million  in
1994.  The reversals reflected remaining unused reserves  for
pilot   requalification,  return  conditions,   spare   parts
reconciliation, and miscellaneous professional  fees.   There
are no remaining reserves related to the restructuring.

           Interest expense net of interest income  was  $0.6
million  in  1996  and  $1.7 million in 1995.  The  decreased
expense  reflects  reduced  borrowings  under  the  Company's
accounts   receivable  financing  facility  and   the   early
retirement of a $4.0 million convertible term note to JSX  in
December 1995.

           The  Company recorded a provision for income taxes
of  approximately  $0.5 million for 1996  as  compared  to  a
benefit  of approximately $1.2 million in 1995.  The  benefit
recorded in 1995 reflects the adjustment for the deferred tax
asset  of $1.5 million in the fourth quarter of 1995, net  of
valuation  allowance.  The effective  tax  rate  in  1996  of
approximately  2.3% is significantly less than the  statutory
federal   and  state  rates  due  principally  to  the   full
utilization   of   the  operating  loss   carryforwards   and
elimination of the valuation allowance.

           The  Company has recorded a net deferred tax asset
of  $3.1  million at December 31, 1996.  The Company believes
that realization of the net deferred tax asset is more likely
than  not because of profitable operations over the past  two
years due largely to the success of the restructuring of  its
aircraft fleet initiated in 1994; continued profitability  in
the Company's operations; and the utilization of the existing
net operating losses.

           The Company expects the effective tax rate in 1997
to  approximate statutory federal and state rates.  There are
no operating loss carryforwards available for 1997.

Fiscal Year 1995 vs. 1994

Operating Revenues

           The Company's operating revenues decreased 1.2% to
$157.0  million in 1995 compared to $158.9 million  in  1994.
The   decrease  resulted  from  an  11.3%  decrease  in  RPMs
resulting from 7.9% fewer passengers carried. Yield  per  RPM
increased  11.1%  to  $.441 in 1995  versus  $.397  in  1994,
partially  offset by a 11.3% reduction in RPMs.  Load  factor
increased  in 1995 by 3.4 load factor points caused  by  ASMs
decreasing  by  17.5% more than offsetting  the  decrease  in
RPMs.

Operating Expenses

          1995 unit costs increased 4.8% to 19.8 cents versus
18.9  cents in 1994 as a result of a 17.5% decrease  in  ASMs
brought about by the 1994 restructuring plan which simplified
fleet  types  through  the  elimination  of  larger  capacity
aircraft.  The  increased  unit  costs  also  resulted   from
passenger  and  revenue  related costs  associated  with  the
higher yield and load factor, and the costs of profit sharing
in 1995.

           A  summary of operating expenses as  a percent  of
operating revenues, and operating cost per ASM for the  years
ended December 31, 1995, and 1994 is as follows:
<TABLE>
                               1995             1994
<S>                        <C>     <C>      <C>      <C>
                         Percent   Cost   Percent   Cost
                           of      per      of
                         Operating ASM  Operating  per ASM
                         Revenues (cents) Revenues  (cents)

Salaries  and   related  25.9%     5.7     26.2%     4.7
costs
Aircraft fuel             8.5%     1.8      9.6%     1.7
Aircraft    maintenance   9.7%     2.1     14.1%     2.5
and materials
Aircraft  rentals   and  18.8%     4.0     25.3%     4.5
landing fees
Traffic commissions and  16.5%     3.5     16.3%     2.9
related fees
Depreciation        and   1.4%      .3      1.5%     .3
amortization
Other                    11.3%     2.4     13.0%     2.3
Write-off of intangible  (.3%)     (.1)     8.9%     1.6
asset and Restructuring
charges (reversals)
                                                          
    Total                91.8%     19.7    114.9%   20.5
                                               
</TABLE>

           Salaries  and related expenses were $40.7  million
for  1995,  a decrease of 2.1% compared to $41.6 million  for
1994.   In  1995  salaries  and related  expenses  were  $0.9
million  less  than 1994 reflecting the reduction  in  flight
crews  and  ground  personnel resulting  from  the  Company's
restructuring  in  1994. Offsetting this savings  was  profit
sharing  expense of $2.0 million based on the Company's  1995
profit. There was no profit sharing in 1994.

           Aircraft fuel expense was $13.3 million in 1995, a
decrease of 12.4% for 1995 compared to $15.2 million in 1994.
The  average cost per gallon including into-plane  fees,  was
68.7  cents in 1995 and 67.0 cents in 1994.  Fuel expense  in
1995  decreased 12.4% from 1994 reflecting the reduced  level
of  operations  in  1995  and the utilization  of  more  fuel
efficient J-41's instead of  EMB-120 and Dash-8 aircraft.

           Aircraft  maintenance  and materials  expense  was
$15.3  million in 1995, a decrease of 31.7% compared to $22.3
million in 1994. The reduction of maintenance expense in 1995
of  $7.0 million reflects the fleet simplification associated
with the Company's restructuring in 1994.

          Aircraft rental and landing fees were $29.5 million
in  1995,  a  decrease of 26.6% compared to $40.1 million  in
1994. The reduced 1995 expense resulted from the  elimination
of  the larger EMB-120 and Dash-8 aircraft. The reduction was
partially offset by increased rental expense related  to  the
1995 deliveries of nine J-41 aircraft.

           Traffic  commissions and related fees  were  $25.9
million in 1995. Traffic commissions and related fees in 1995
were relatively unchanged from 1994 primarily reflecting  the
same  level  of  revenue compared to 1994.  Commission  rates
fluctuate  based  on  the  mix  of  commissionable  and  non-
commissionable tickets, and have changed due to a cap on  the
total  amount  of commission which can be claimed  by  travel
agents. Commission as a percentage of total passenger revenue
averaged 8.0% in 1995, and 7.9% in 1994. Related fees include
program   fees  to  United  and  segment  booking  fees   for
reservations.

           Depreciation  and amortization  expense  was  $2.2
million  in 1995, a decrease of 3.8% compared to $2.3 million
in  1994. The 1995 decrease reflects the elimination of spare
parts inventory related to the fleet simplification offset by
increases  in  spare  parts  for the  delivery  of  new  J-41
aircraft.  There were no significant changes in  amortization
in 1995.

           Other  operating  expenses were $17.8  million  in
1995,  a decrease of 13.8% compared to $20.6 million in 1994.
The  decrease  in  other operating expenses  during  1995  is
primarily  attributed  to  a  reduction  in  facility  rental
expense  related  to  the  Company's restructuring  in  1994,
reduced glycol expense due to more normal winter weather, and
reduced   hull   insurance   expense   due   to   the   fleet
simplification.

           Amortization  and  write-off of intangible  assets
were  negligible in 1995. In 1994 the Company wrote off  $6.0
million related to EMB-120 aircraft purchase options as  part
of the restructuring plan.

           Restructuring expense and reversals  were  a  $0.5
million  credit  in 1995 and an expense of  $8.1  million  in
1994.  The  credit in 1995 reflected elimination of remaining
unused  restructuring  reserves  for  pilot  requalification,
return   conditions,   spare   parts   reconciliation,    and
miscellaneous professional fees. The restructuring charge  of
$8.1 million in 1994 consisted primarily of reserves for EMB-
120  and Dash-8 return conditions, maintenance base closings,
and the elimination of the Florida operation.

           Interest expense net of interest income  was  $1.7
million  in  1995 and $2.2 million in 1994. Interest  expense
was  lower  in  1995  compared  to  1994  reflecting  reduced
borrowings  on  the receivables facility as well  as  reduced
borrowings from JSX.

           In  the first quarter of 1995 the Company borrowed
$4.0  million  under  a convertible term loan  agreement.  On
December 29, 1995, the Company prepaid the note at a discount
which resulted in an extraordinary gain of $0.4 million.

           The Company recorded a deferred tax asset, net  of
valuation  allowance, and a corresponding income tax  benefit
of  $1.5  million in the fourth quarter of 1995.  Realization
of  the  deferred  tax asset was dependent upon  the  Company
generating  pretax income of at least $4.0 million  in  1996.
Based  on  the operating results in 1994, management believed
that  it  was  more  likely than not that the  Company  would
achieve at least this pretax income level in 1996. The actual
pretax income for 1996 was $19.6 million.

           The Company recorded a provision for income taxes,
before   the   income  tax  benefit  of  $1.5   million,   of
approximately  $0.3  million  for  1995.  The  provision   is
insignificant  in relation to pretax income of  approximately
$11.3 million due to utilization of net operating losses. The
net operating loss carryforward for 1995 was $14.7 million.

Outlook

           This Outlook section and the Liquidity and Capital
Resources  section below contain forward-looking  statements.
The  Company's  actual results may differ significantly  from
the  results discussed in forward-looking statements. Factors
that  could  cause  the Company's future  results  to  differ
materially  from the expectations described here include  the
extent   to  which  the  Company's  operation  of   CRJs   is
coordinated with the Company's code-sharing relationship, the
response  of  the  Company's  competitors  to  the  Company's
business  strategy,  market acceptance  of  the  new  service
(including jet service), routes and schedules offered by  the
Company,  the cost of fuel, the weather, and satisfaction  of
regulatory requirements.

            A  central  element  of  the  Company's  business
strategy is expansion of its aircraft fleet. The Company  has
commitments  to  acquire twelve 29-seat J-41 aircraft  during
the  period  March 1997 through mid-1999, and twelve  50-seat
CRJs  from July 1997 through 1998. The introduction of  these
aircraft,  particularly the CRJs, will expand  the  Company's
business into new markets.  In general, introduction  of  new
markets into the Company's route system results, at least  in
the short-term, in operating expenses that may not be matched
by increases in operating revenues.

           In  order  to operate the CRJs under  the  "United
Express" name, the Company must obtain United's consent under
the   United  Express  Agreements.  The  Company  has  sought
United's consent, and is awaiting United's response regarding
incorporating  the  CRJs  into its  existing  United  Express
product. While the Company currently operates only under  the
"United  Express" name, the Company believes that it will  be
able  to operate CRJs successfully regardless of whether such
operation   is   under   the   United   Express   Agreements.
Nonetheless,  the  Company  believes  that  its  results   of
operations  could be adversely affected unless the  CRJs  are
operated under the United Express Agreements.

            The   Company  must  complete  several  training,
operational,    and   administrative   requirements    before
commencing CRJ service.  The Company expects that it will  be
able  to  satisfy such requirements during 1997.  The Company
has  not  previously operated jet aircraft but  will  operate
these aircraft under the same FAA regulatory requirements  as
it  does  with  it's current fleet of aircraft.  The  Company
believes  that  the market will support the  new  routes  and
schedules  which the Company's expanded fleet will enable  it
to  implement.  In  addition, the Company  expects  that  its
customers  will  find the new CRJs acceptable for  relatively
longer flights, enhancing the Company's ability to compete in
a broader geographic market.

           The Company will incur significant expenses in its
fleet  expansion  program. Under the Company's  contracts  to
acquire  CRJs, the Company is required to make deposits  with
the manufacturer totaling $15.0 million on or before April 1,
1997. The Company  deposited $4.0 million on January 9, 1997,
and  will  execute  a short term promissory  note   with  the
manufacturer  for the remaining $11.0 million  at  8%  annual
interest.  The  April 1, 1997 note will be  payable  in  full
including  accumulated interest, upon delivery of  the  first
aircraft in July 1997.

          In addition, the CRJs and the additional J-41s will
significantly  increase the Company's lease obligations.  The
Company  is  exploring  various third party  lease  financing
arrangements  for  the  aircraft. However,  the  Company  has
backup  lease financing arrangements or sufficient  financing
support with the manufacturer of both the CRJs and J-41s such
that  the  Company believes it will be able  to  acquire  the
aircraft at competitive rates.

            In  1997 the Company anticipates capital spending
of approximately $16.3 million, consisting of $9.8 million in
spare  parts  related to the acquisition of  the  CRJs,  $3.0
million in additional rotable spare parts and engines for the
J-41s,   $2.5  million  for  a  state-  of-the-art   Aircraft
Communications  and  Satellite Navigation System  ("ACASNS"),
and  $1.0  million  for  other capital  assets.  The  Company
anticipates that it will be able to arrange financing for the
spares through a combination of manufacturer and third  party
financing arrangements on favorable terms although  there  is
no  certainty  that such financing will be  available  or  in
place before the commencement of deliveries.

Liquidity and Capital Resources

           The Company's balance sheet improved significantly
during  1996.  Cash and cash equivalents as of  December  31,
1996  were $21.5 million or an increase of $13.1 million over
1995.  Working capital increased to $17.8 million as compared
to $4.6 million at December 31, 1995.

           During 1996, cash provided by operating activities
was  $20.7  million compared to $15.7 million  in  1995.  The
31.9%  increase in annual cash flow from operating activities
primarily  reflects  the improvement  in  the  Company's  net
income for 1996 compared to 1995.

           Accounts  receivable increased by $1.4 million  to
$16.0  million  at  December 31, 1996, an  increase  of  9.3%
compared  to  $14.6  million for 1995.  The  year  over  year
increase   is   attributed  to  increased  passenger   ticket
receivables  resulting  from  higher  passenger  revenue   in
December  1996  versus  December 1995. Prepaid  expenses  and
other  current  assets  increased by  $0.8  million  to  $2.6
million  at December 31, 1996, an increase of  45.3% compared
to $1.8 million for 1995. The increase results from increased
prepaid  insurance,  fuel, and deposits related  to  aircraft
financing.  Current liabilities increased by $1.9 million  to
$24.0  million  at  December 31, 1996, an increase  of   8.6%
compared to $22.1 million at December 31, 1995.  The increase
results  from a larger current portion of long-term debt  and
capital  lease obligations as well as increased reserves  for
maintenance events.

           Cash used in investing activities was $2.2 million
for  1996 compared to $2.0 million for 1995.  The use of cash
in 1996 related to the acquisition of rotable spare parts and
a  spare engine to support the additional deliveries of  J-41
aircraft. Cash used in investing activities in 1995 consisted
of  the  purchase of equipment for leasehold improvements  to
aircraft  pertaining to Traffic Collision Avoidance  Systems,
and the acquisition of spare parts and a spare engine related
to the deliveries of J-41 aircraft.

           Cash used in financing activities in 1996 was $5.4
million  or  a decrease of 28.9% compared to $7.6 million  in
1995.  During 1996 the Company made payments of $1.9  million
on long term debt and capital lease obligations, redeemed the
Series  A  Cumulative Convertible Preferred  Stock  for  $4.2
million,  including  the 1995 accumulated  dividend  of  $0.3
million,  and  received $0.7 million in proceeds  from  stock
options. In 1995 the Company received proceeds from long term
debt  of  $4.2 million primarily related to borrowings  on  a
convertible  term  loan in the first  quarter  of  1995.  The
Company  made  payments on long term debt and  capital  lease
obligations of $5.5 million including the early retirement in
December 1995 of the convertible term loan. The Company  also
paid  $6.4  million  in  1995 to close  out  the  outstanding
balance  at  December  31, 1994, of  an  asset-based  lending
agreement with a financial institution.

     Other Financing

           The  Company has an asset-based lending  agreement
with a financial institution that provides the Company with a
line  of credit of up to $20.0 million. Borrowings under  the
line  of  credit can provide the Company a source of  working
capital until proceeds from ticket coupons are received.  The
line  is  collateralized by all of the Company's  receivables
and  general  intangibles and as of December 31, 1996,  there
was no outstanding balance.

           In December 1994, the Company completed a plan  of
recapitalization with an aircraft supplier that  included  an
$11.0  million equity investment consisting of  common  stock
and Series A Cumulative Convertible Preferred Stock, creation
of  a term loan facility in the amount of $4.0 million and  a
revolving line of credit of $5.0 million.

           In  the first quarter of 1995 the Company borrowed
$4.0  million  on  the term loan facility.  On  December  29,
1995,  the  Company fully prepaid the loan at a discount  and
recorded an extraordinary gain of $0.4 million. On March  29,
1996,   the   Company  redeemed  the  Series   A   Cumulative
Convertible  Preferred Stock in the amount of  $3.8  million.
Dividends for the first quarter of 1996 were not paid due  to
the  redemption  before quarter end in  accordance  with  the
terms  of  the preferred stock agreement.  The Company  never
borrowed  against  the  revolving  line  of  credit  facility
created during the December 1994 recapitalization and on June
12, 1996 the Company canceled the facility.

     Aircraft

           The  Company has significant lease obligations  on
aircraft  which  are classified as operating leases  and  not
reflected  as  liabilities on the Company's  balance  sheets.
(See  Note  8 to the Consolidated Financial Statements.)  The
remaining terms of the leases range from less than  one  year
to  fourteen years. The Company's minimum rental payments  in
1997  under all non-cancelable aircraft operating leases with
remaining  terms  of  more than one year  were  approximately
$28.9  million as of December 31, 1996. The foregoing  amount
does  not  include five J-41 aircraft and four  CRJ  aircraft
scheduled  for delivery in 1997 as the financing arrangements
have not been concluded at this time.

          As of February 23, 1997 the Company entered into an
agreement  with  AI(R) to acquire twelve new  J-41  aircraft.
The  agreement  will allow the Company to take  advantage  of
favorable   third   party  financing   while   allowing   the
refinancing  of  existing J-41s which are currently  financed
through the manufacturer.  The Company believes that it  will
be  able  to obtain third party financing on favorable  terms
although  there is no certainty that such financing  will  be
available  or in place before the commencement of deliveries.
The  delivery  schedule  provides for  the  Company  to  take
delivery of these aircraft beginning in the first quarter  of
1997 and continuing through mid-1999.

           On  January 8, 1997, the Company entered  into  an
agreement  with Bombardier, Inc. to purchase twelve  Canadair
Regional   Jets   with  options  for  thirty-six   additional
aircraft.  The delivery schedule provides for the Company  to
take  delivery of four aircraft in 1997 commencing  in  July.
The  remaining eight aircraft will be delivered during  1998.
Under the terms of the agreement, the Company is required  to
make deposits with the manufacturer totaling $15.0 million on
or  before April 1, 1997.  The Company deposited $4.0 million
on  January  9, 1997 and will execute a short term promissory
note with the manufacturer for the remaining $11.0 million at
8%  annual interest.  The April 1, 1997 note will be  payable
in  full including accumulated interest, upon delivery of the
first aircraft in July 1997.

          On December 30, 1994, the Company agreed to acquire
from British Aerospace twenty additional J-41 aircraft.  Nine
aircraft  were  delivered as of December  31,  1995  and  two
aircraft  were delivered in the first quarter  of  1996.  The
remaining nine aircraft were converted to options to  acquire
aircraft which the Company chose not to exercise.

           In  1996,  the  Company refinanced  the  operating
leases  on two J-41 aircraft that it took delivery of in  the
first  quarter  of  1996 and two J-41 aircraft  it  had  been
operating.   The  refinancing resulted  in  more  competitive
lease  rates  compared  to prior leases.   The  Company  will
actively continue to seek competitive leasing arrangements to
replace its existing aircraft leases.

     Capital Equipment and Debt Service

          In 1997 the Company anticipates capital spending of
approximately  $16.3  million consisting  primarily  of  $9.8
million in spare parts related to the acquisition of regional
jets,  $3.0  million in additional rotable  spare  parts  and
engines  for  the  J-41s, $2.5 million for ACASNS,  and  $1.0
million  for  other capital assets.  The Company  anticipates
that  it  will  be able to arrange financing for  the  spares
through  a  combination  of  manufacturer  and  third   party
financing arrangements on favorable terms, although there  is
no  certainty  that such financing will be  available  or  in
place before the commencement of deliveries.

            Debt   service  for  1997  is  estimated  to   be
approximately  $3.5  million reflecting increased  borrowings
related  to  the purchase of spare engines, spare  parts  and
insurance  premium financing. The foregoing amount  does  not
include  additional  debt  that  may  be  required  for   the
financing of the CRJ spare parts and engines.

           The  Company  believes that,  in  the  absence  of
unusual   circumstances,  its  cash  flow  from   operations,
availability of manufacturer and third party financing, and a
$20.0  million  accounts receivable credit facility  will  be
sufficient  to  meet  its  working  capital  needs,   capital
expenditures,  and  debt service requirements  for  the  next
twelve months.



     Inflation

           Inflation  has not had a material  effect  on  the
Company's operations.

     Recent Accounting Pronouncements

           In  June  1996, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards  No.
125,  "Accounting  for Transfers and Servicing  of  Financial
Assets  and Extinguishment of Liabilities (SFAS 125)".   SFAS
125 provides accounting and reporting standards for transfers
of  financial  assets  using a financial-components  approach
which  focuses on control.  Under this approach, following  a
transfer  of  financial  assets,  a  company  recognizes  the
financial  assets  it  controls and the  liabilities  it  has
incurred, derecognizes financial assets when control has been
surrendered  and derecognizes liabilities when  extinguished.
SFAS 125 is applicable to the Company's borrowings under  its
line  of  credit collateralized by accounts receivable.   The
Company   evaluated  the  financing  transaction  using   the
criteria set forth in SFAS 125 and concluded that it did  not
transfer  control of its accounts receivable to the financial
institution.    Consequently,  the  Company   believes   that
adoption of SFAS 125, as of January 1, 1997, will not have  a
material  impact  on its fiscal 1997 financial  or  operating
results.

            On   March  3,  1997,  the  Financial  Accounting
Standards  Board  issued  Statement of  Financial  Accounting
Standards No, 128, "Earnings per Share (SFAS 128)".  SFAS 128
provides a different method of calculating earnings per share
than  is  currently used in accordance with APB  Opinion  15.
SFAS  128  provides for the calculation of Basic and  Diluted
earnings  per  share.  Basic earnings per share  includes  no
dilution  and  is  computed by dividing income  available  to
common shareholders  by the weighted average number of common
shares  outstanding  for the period.   Diluted  earnings  per
share  reflects  the  potential dilution of  securities  that
could share in the earnings of an entity, similar to existing
fully  diluted earnings per share.  Using the principles  set
forth in SFAS 128, Basic earnings (loss) per share would have
been  $(3.67),  $1.55,  and $2.27 for 1994,  1995  and  1996,
respectively.


Item 8.   Financial Statements and Supplementary Data

           See  Index  to Financial Statements and  Financial
           Statement Schedule included in Item 14.


Item 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure
                              
          None.
                              
                              
                          PART III

           The  information required by this Part III  (Items
10,  11, 12 and 13) is hereby incorporated by reference  from
the Company's definitive proxy statement which is expected to
be  filed  pursuant  to  Regulation  14A  of  the  Securities
Exchange Act of 1934 not later than 120 days after the end of
the fiscal year covered by this report.
                              
                              
                           PART IV

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

     (a)  1.   Financial Statements

               The   Financial  Statements  listed   in   the
               accompanying index to financial statements are
               filed as part of this Annual Report on Form 10-
               K.

          2.   Financial Statement Schedules

               The  Financial Statement Schedules  listed  in
               the accompanying index to financial statements
               are  filed  as part of this Annual  Report  on
               Form 10-K.

          3.   Exhibits

Exhibit
Number                Description of Exhibit
3.1***   Restated   Certificate  of  Incorporation   of   the
          Company.
3.1(a)** Certificate   of   Correction   to   the    Restated
          Certificate of Incorporation.
3.2**    Restated By-laws of the Company.
4.1*     Specimen Common Stock Certificate.
4.2*     Stockholders'  Agreement, effective  as  of  October
          15,  1991, among the Company, the stockholders  and
          the  holder of warrants of the Company named on the
          signature  pages  thereto and a  trust  established
          pursuant  to  the  Atlantic  Coast  Airlines,  Inc.
          Employee   Stock  Ownership  Plan,  together   with
          Amendment and Second Amendment thereto dated as  of
          February 24, 1992 and May 1, 1992 respectively.
4.3*      Registration   Rights  Agreement,   dated   as   of
          September  30,  1991,  among the  Company  and  the
          stockholders  named on the signature pages  thereto
          (the "Stockholders Registration Rights Agreement").
4.4*      Form  of amendment to the Stockholders Registration
          Rights Agreement.
4.16***   Registration Rights Agreement, dated as of December
          30,  1994,  by and between JSX Capital  Corporation
          and Atlantic Coast Airlines, Inc.
10.1*     Atlantic  Coast  Airlines, Inc. 1992  Stock  Option
          Plan.
10.2**    Restated  Atlantic  Coast Airlines,  Inc.  Employee
          Stock  Ownership Plan, effective October 11,  1991,
          as amended through December 31, 1996.
10.4**    Restated  Atlantic Coast Airlines 401(k)  Plan,  as
          amended through February 3, 1997.
10.6#*    United  Express Agreement, dated October  1,  1991,
          among   United   Airlines,  Inc.,  Atlantic   Coast
          Airlines  and the Company, together with  Amendment
          No. 1, dated as of April 1, 1993.
10.7#*    Agreement  to  Lease British Aerospace Jetstream-41
          Aircraft, dated December 23, 1992, between  British
          Aerospace, Inc. and Atlantic Coast Airlines.
10.12(b)****    Amendment  and Restated Severance  Agreement,
          dated  as  of October 18, 1995 between the  Company
          and Kerry B. Skeen.
10.12(c)**      First  Amendment To Severance  Agreement  For
          Kerry B. Skeen effective as of October 16, 1996.
10.12(h)**      Form of Severance Agreement.  The Company has
          entered  into  substantially  identical  agreements
          with  Thomas  J. Moore and with Michael  S.  Davis,
          both dated as of January 1, 1997.
10.12(i)**      Severance  Agreement dated as of January  28,
          1997, between the Company and James B. Glennon.
10.12(j)**Promissory Note in the amount of $75,000 issued to Paul H. Tate
          to the Company dated February 19, 1997 and payable
          September 30, 1997.
10.13(a)** Form of Indemnity Agreement.  The Company has
          entered  into  substantially  identical  agreements
          with  the  individual  members  of  its  Board   of
          Directors.
10.20***  Stock  Purchase Agreement, dated the  30th  day  of
          December   1994,   by   and   among   JSX   Capital
          Corporation, Atlantic Coast Airlines, and  Atlantic
          Coast Airlines, Inc.
10.21***  Acquisition  Agreement, dated as  of  December  30,
          1994,  by  and among Jetstream Aircraft, Inc.,  JSX
          Capital Corporation, and Atlantic Coast Airlines.
10.21(a)**     Amendment Number One to Acquisition Agreement,
          dated  as  of June 17, 1996, by and among Jetstream
          Aircraft,   Inc.,  JSX  Capital  Corporation,   and
          Atlantic Coast Airlines.
10.23**   Loan  and  Security Agreement, dated as of  October
          12,  1995,  between  Atlantic  Coast  Airlines  and
          Shawmut Capital Corporation.
10.24**** Stock Incentive Plan of 1995.
10.25**** Form  of  Incentive  Stock Option  Agreement.   The
          Company  enters into this agreement with  employees
          who  have  been  granted  incentive  stock  options
          pursuant to the Stock Incentive Plans.
10.26**** Form  of Non-Qualified Stock Option Agreement.  The
          Company  enters into this agreement with  employees
          who  have been granted non-qualified stock  options
          pursuant to the Stock Incentive Plans.
10.27**** Split  Dollar  Agreement, dated as of December  29,
          1995, between the Company and Kerry B. Skeen.
10.27(a)** Form  of Split Dollar Agreement.  The Company
          has entered into substantially identical agreements
          with  Thomas  J. Moore and with Michael  S.  Davis,
          both dated as of July 1, 1996.
10.28**** Split  Dollar  Agreement, dated as of December  29,
          1995, between the Company and James B. Glennon.
10.29**** Agreement  of  Assignment of Life  Insurance  Death
          Benefit  As  Collateral, dated as of  December  29,
          1995, between the Company and Kerry B. Skeen.
10.29(a)**      Form  of  Agreement  of  Assignment  of  Life
          Insurance Death Benefit As Collateral.  The Company
          has entered into substantially identical agreements
          with  Thomas  J. Moore and with Michael  S.  Davis,
          both dated as of July 1, 1996.
10.30**** Agreement  of  Assignment of Life  Insurance  Death
          Benefit  As  Collateral, dated as of  December  29,
          1995, between the Company and James B. Glennon.
10.31**   Summary  of  Senior Management Bonus  Program.  The
          Company  has  adopted a plan in  substantially  the
          form as outlined in this Exhibit for 1997.
10.32**** Summary of "Share the Success" Profit Sharing Plan.
          The Company has adopted a plan in substantially this
          form for 1997 and 1996.
10.40#**  Purchase  Agreement  between  Bombardier  Inc.  and
          Atlantic Coast Airlines Relating to the Purchase of
          Canadair  Regional Jet Aircraft  dated  January  8,
          1997.
10.50#**  Purchase   Agreement  for  Twelve  Jetstream   4100
          Aircraft  between Atlantic Coast Airlines and  Aero
          International (Regional) as agent for and on behalf
          of  British  Aerospace (Operations)  Limited  dated
          February 23, 1997.
10.60**   Form of Lease  Agreement between  Atlantic  Coast
          Airlines  and Finova Capital Corporation. The Company
          has entered into four substantially identical 
          agreements during 1996 for four J-41 aircraft.
11.1**    Computation of Per Share Earnings.
21.1*     Subsidiaries of the Company.
23.1**    Consent of BDO Seidman.

#        Portions of this document have been omitted pursuant
       to a request for confidential treatment.
*      Filed as an Exhibit to Form S-1, Registration No.  33-
       62206,  effective  July 20, 1993, incorporated  herein
       by reference.
**     To  be filed as an Amendment to this Annual Report  on
       Form  10-K  for  the  fiscal year ended  December  31,
       1996.
***    Filed as an Exhibit to the Annual Report on Form  10-K
       for the fiscal year ended December 31, 1994, incorporated
       herein by reference.
****   Filed as an Exhibit to the Annual report on Form  10-K
       for the fiscal year ended December 31, 1995, incorporated
       herein by reference.

(b)    Reports  on  Form 8-K.  The Company did not  file  any
       current  reports on Form 8-K during the fourth quarter
       of 1996.
       
                         SIGNATURES
                              
     Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 25, 1997.

                                ATLANTIC COAST AIRLINES, INC.
                                                             
                                     By:  /S/ C. Edward Acker
                                              C. Edward Acker
                                        Chairman of the Board
                                                             
     Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated on March 25, 1997.

Name                            Title
                                
                                
/S/ C. Edward Acker             
C. Edward Acker                 Chairman of the Board of
                                Directors
                                
                                
/S/ Kerry B. Skeen              President
Kerry B. Skeen                  Chief Executive Officer
                                (principal executive officer)
                                
/S/ Paul H. Tate                Senior Vice President
Paul H. Tate                    Chief Financial Officer
                                (principal financial and
                                accounting officer)
/S/ John M. Sullivan            
                                /S/ Gordon A. Cain
John M. Sullivan                Gordon A. Cain
Director                        Director
                                
                                
/S/ Robert E. Buchanan          /S/ James J. Kerley
Robert E. Buchanan              James J. Kerley
Director                        Director
                                
/S/ Joseph W. Elsbury           /S/ James C. Miller
Joseph W. Elsbury               James C. Miller
Director                        Director
                                
                ATLANTIC COAST AIRLINES, INC.
                              
                INDEX TO FINANCIAL STATEMENTS
              AND FINANCIAL STATEMENT SCHEDULE
                        (Item 14(a))



FINANCIAL STATEMENTS:

Report of Independent Certified Public Accountants         F-1

Consolidated:

Balance Sheets as of December 31, 1996 and 1995            F-2

Statements of Operations for the years ended December 31, 1996,
1995 and 1994                                              F-3

Statements of Stockholders' Equity for the years ended December
31, 1996, 1995 and 1994                                    F-4

Statements of Cash Flows for the years ended December 31, 1996,
1995 and 1994                                              F-5

Notes to Financial Statements                              F-6

FINANCIAL STATEMENT SCHEDULE:

Report of Independent Certified Public Accountants on Financial
Statement Schedule                                         S-1
Schedule II - Valuation and Qualifying Accounts            S-5

All  other financial statement schedules are omitted  as  the
required information is presented in the financial statements
or the notes thereto or is not necessary.
<TABLE>
(In thousands, except for share data and par values)
December 31,                                      1996       1995
<S>                                                 <C>       <C>
Assets                                                           
Current:                                                         
    Cash and cash equivalents                   $21,470    $ 8,396
    Accounts receivable, net                     15,961     14,607
    Expendable parts and fuel inventory, net      1,759      1,850
    Prepaid expenses and other current            2,554      1,758
assets
    Total current assets                         41,744     26,611
Property and equipment at cost, net of                             
accumulated depreciation and amortization        16,157     15,513
Preoperating costs, net of accumulated              225        462
amortization
Intangible assets, net of accumulated             2,882      2,864
amortization
Deferred tax asset                                3,140      1,500
Other assets                                        610        549
    Total assets                                $64,758   $ 47,499
                                                 
Liabilities and Stockholders' Equity                              
Current:                                                          
    Accounts payable                             $3,770   $ 3,532
    Current portion of long-term debt             1,319      1,214
    Current portion of capital lease              1,497      1,192
obligations
    Accrued liabilities                          17,376     16,121
    Total current liabilities                    23,962     22,059
Long-term debt, less current portion              2,407      3,260
Capital lease obligations, less current           3,266      3,794
portion
Deferred credits                                    486          -
    Total liabilities                            30,121     29,113
Commitments and contingencies                                     
Redeemable Series A Cumulative Convertible                         
Preferred stock,                                                  
$.02 par value (liquidation preference of             -      3,825
 $3,825), authorized 8,000 shares, 3,825
 shares issued and outstanding
Stockholders' equity:                                             
Preferred Stock, $.02 par value per share;                         
shares authorized                                     -          -
   4,992,000; no shares issued or
  outstanding
Common stock: $.02 par value per share;                            
shares authorized 15,000,000; shares issued         170        167
8,498,910 in 1996 and 8,356,411 in 1995
Class A common stock: nonvoting; par value;                        
$.02 stated value per share; shares                   -          -
authorized 6,000,000; no shares issued or
outstanding
Additional paid-in capital                       37,689     36,774
Less:  Common stock in treasury, at cost,          (125)      (125)
12,500 shares
Accumulated deficit                             (3,097)   (22,255)
Total Stockholders' Equity                       34,637     14,561
  Total Liabilities and Stockholders'           $64,758   $ 47,499
Equity                                           
       See accompanying  notes to consolidated financial statements.
</TABLE>

<TABLE>
(In thousands, except for earnings per share data)
Year ended December 31,                               
                                          1996       1995      1994
<S>                                         <C>       <C>         <C>
Operating revenues:                                                  
  Passenger                              179,370   153,918   156,047
  Other                                    3,114     3,050      2,872
     Total operating revenues            182,484   156,968    158,919
Operating expenses:                                                 
  Salaries and related costs              44,438    40,702    41,590
  Aircraft fuel                           17,124    13,303    15,189
  Aircraft maintenance and materials      16,841    15,252     22,345
  Aircraft rentals and landing fees       33,325    29,454     40,135
  Traffic commissions and related fees    28,550    25,938     25,913
  Depreciation and amortization            2,846     2,240      2,329
  Other                                   19,523     17,755    20,597
  Write-off of intangible asset                -         -      6,000
  Restructuring charges (reversals)         (426)      (521)    8,099
     Total operating expenses            162,221   144,123    182,197
Operating income (loss)                   20,263    12,845   (23,278)
Other income (expense):                                              
  Interest expense                       (1,013)   (1,802)    (2,153)
  Interest income                            341        66         -
  Other income                                17       181       295
     Total other expense                   (655)   (1,555)    (1,858)
             Income (loss) before                                   
income tax provision (benefit)            19,608    11,290  (25,136)
                 and extraordinary item
  Income tax provision (benefit)             450   (1,212)          -
             Income (loss) before         19,158    12,502   (25,136)
extraordinary item
  Extraordinary Item                           -       400          -
Net income (loss)                        $19,158  $ 12,902 $(25,136)
Income (loss) per share:                                                  
Earnings (loss) per common and common                                     
equivalent share:
Primary:                                                             
Earnings (loss) before extraordinary        
item                                       $2.14    $ 1.39    $(3.67)
Extraordinary item                             -      0.05         -
Net earnings (loss)                        $2.14    $ 1.44    $(3.67)
Fully diluted:                                                       
Earnings (loss) before extraordinary item  $2.14     $1.33    $(3.67)
Extraordinary item                             -      0.04         -
Net earnings (loss)                        $2.14      1.37    $(3.67)
                                                                          
 Weighted average common and common                                  
equivalent shares:                         8,963     8,736     6,858
     Primary                               8,963     9,390     6,858
     Fully diluted
        See accompanying notes to consolidated financial statements.
</TABLE>

<TABLE>
<S>                        <C>        <C>        <C>          <C>      <C>
(thousands, except                                                       
for share data)       Common Stock   Additi Treasury Stock               
                      -------------   onal  --------------  Receiva Accumulat
                      -------------    paid---------------    ble       ed
                       ----------      in      -------       from    Deficit
                                                Shares       ESOP
                                     capita     Amount
                         Shares        l
                         Amount
Balance, December     6,842,      $      $  (12,50       $        $          $
31, 1993                 390    137 29,769      0)   (125)    (500)    (9,686)
Exercise of common    22,080      1     46       -       -        -          -
stock options
Sale of common stock  1,460,     28  6,888       -       -        -          -
                         000
Reduction of ESOP          -      -      -       -       -      500          -
receivable
Net Loss                   -      -      -       -       -        -   (25,136)
Balance, December     8,324,    166 36,703  (12,50   (125)        -   (34,822)
31, 1994                 470                    0)
Exercise of common    31,941      1     71       -       -        -          -
stock options
Preferred stock            -      -      -       -       -        -      (335)
dividends declared
Net Income                 -      -      -       -       -        -     12,902
Balance, December     8,356,    167 36,774  (12,50   (125)            (22,255)
31, 1995                 411                    0)                -
Exercise of common    142,49      3    351       -       -        -          -
stock options              9
Tax benefit of stock       -      -    564       -       -        -          -
option exercise
Net Income                 -      -      -       -       -        -     19,158
Balance December 31,  8,498,      $      $  (12,50       $        $          $
1996                     910    170 37,689      0)   (125)        -    (3,097)
                    See accompanying notes to consolidated financial statements.
</TABLE>
                                                                                
<TABLE>
(In thousands)
Year ended December 31,                   1996       1995      1994
<S>                                          <C>        <C>        <C>
Cash flows from operating activities:                                 
    Net income (loss)                        $ 19,158   $ 12,902 $(25,136)
    Adjustments to reconcile net income                                    
(loss) to net cash provided by   (used
in) operating activities:
          Extraordinary gain                        -      (400)          -
          Depreciation                          2,434      1,815      1,704
          Amortization of intangibles and         412        425        625
preoperating costs
          Provision for uncollectible             387        229        225
accounts
          Provision for inventory                  50        120          -
obsolescence
          Amortization of deferred credits       (27)          -       (20)
          Increase in deferred tax asset      (1,640)    (1,500)          -
          Net loss (gain) on disposal of            1        (7)      1,100
fixed assets
          Amortization of debt discount and        46          7          -
finance costs
          Write-off of intangible assets            -          -      6,000
          (Gain) on disposal of slots               -      (177)          -
          Write-off of preoperating costs           -          -      1,041
          Write-off of deferred                     -          -      (346)
credits
    Changes in operating assets and                                   
liabilities:
              Accounts receivable             (1,741)    (1,169)      (576)
              Expendable parts and                41        686       (80)
fuel inventory
              Prepaid expenses and              (796)      2,814      (292)
other current assets
              Preoperating costs                    -          -      (245)
              Other assets                          -         62          -
              Accounts payable                     238    (1,393)    (2,585)
              Accrued liabilities               1,590      1,259      2,853
              Increase in deferred               513          -          -
credits
              Net cash provided by              20,666     15,673   (15,732)
(used in) operating activities
Cash flows from investing activities:                                 
   Purchase of property and equipment    (2,128)    (4,260)    (1,493)
   Proceeds from sales of fixed assets         -      1,916      4,073
   Proceeds from sale of intangible            -         375       786
assets
   Decrease (increase) in deposits          (61)          -      1,821
              Net cash (used in)         (2,189)    (1,969)      5,187
provided by investing activities
Cash flows from financing activities:                                 
   Proceeds from issuance of long-term       486      4,210          -
debt
   Payments of long-term debt            (1,234)    (4,769)    (1,329)
   Payments of capital lease             (1,174)      (689)      (442)
obligations
   Net (decrease) increase in lines of         -    (6,356)     10,709
credit
   Increase in intangible assets           (239)          -          -
   Deferred financing costs                    -       (66)          -
   Payment of convertible preferred        (335)          -          -
stock dividend
   Redeem convertible preferred stock    (3,825)          -          -
   Net proceeds from sale of common            -          -        788
and preferred stock
   Proceeds from exercise of stock           918         72          -
options
   Decrease in receivable from                 -          -        500
Employee Stock Option Plan
              Net cash (used in)         (5,403)    (7,598)     10,226
provided by financing activities 
Net increase (decrease) in cash and       13,074      6,106      (319)
cash equivalents
Cash and cash equivalents, beginning       8,396      2,290      2,609
of year
Cash and cash equivalents, end of year  $ 21,470   $  8,396   $  2,290
            See accompanying  notes to consolidated financial statements.
                                                                 </TABLE>

1.   Summary of       
Accounting       (a)Basis of Presentation
Policies
                    The  consolidated  financial statements  included
                    herein  have  been  prepared  by  Atlantic  Coast
                    Airlines,  Inc.  ("ACAI")  and  its  wholly-owned
                    subsidiary,  Atlantic  Coast  Airlines   ("ACA"),
                    (together,   the   "Company").  All   significant
                    intercompany accounts and transactions have  been
                    eliminated in consolidation. The Company operates
                    predominantly in the air transportation  industry
                    providing  scheduled service for   passengers  to
                    thirty-nine  destinations  in  seventeen  eastern
                    states of the United States.
                    
                 (b)Cash and Cash Equivalents
                    
                    The   Company  considers  investments   with   an
                    original  maturity of three months or  less  when
                    purchased to be cash equivalents.
                    
                 (c)Airline Revenues
                    
                    Passenger  fares and cargo revenues are  recorded
                    as  operating revenues at the time transportation
                    is   provided.  The  value  of  unused  passenger
                    tickets  sold  by  the  Company  is  included  in
                    current  liabilities.  Accounts  receivable   are
                    stated   net   of  allowances  for  uncollectible
                    accounts  of approximately $550,000 and  $287,000
                    at December 31, 1995 and 1996, respectively.
                    
                    The  Company  participates  in  United  Airlines,
                    Inc.'s  ("United")  Mileage Plus  frequent  flyer
                    program.   The  Company  does  not   accrue   for
                    incremental   costs   for  mileage   accumulation
                    relating  to  this program, since the  impact  is
                    immaterial.
                    
                 (d)Concentrations of Credit Risk
                    
                    The     Company    provides    commercial     air
                    transportation  in  the  eastern  United  States.
                    Substantially  all  of  the  Company's  passenger
                    tickets  are  sold  by other  air  carriers.  The
                    Company  has a significant concentration  of  its
                    accounts receivable with other air carriers  with
                    no  collateral.  At December 31, 1995  and  1996,
                    accounts  receivable  from air  carriers  totaled
                    approximately   $13,036,000   and    $14,306,000,
                    respectively.   Such  accounts   receivable   are
                    assigned to a financial institution in connection
                    with  the  Company's  line of credit  arrangement
                    (see  Note 6). Of the total amount, approximately
                    $8,983,000 and $11,044,077, at December 31,  1995
                    and  1996,  respectively, were due  from  United.
                    Accounts    receivable    losses    have     been
                    insignificant.
                    
                 (e)Risks and Uncertainties
                    
                    The  airline  industry is highly competitive  and
                    volatile.  The  Company competes  primarily  with
                    other   air   carriers  and,  particularly   with
                    respect  to  its  shorter  flights,  with  ground
                    transportation.  Airlines  primarily  compete  in
                    areas   of  pricing,  scheduling  and   type   of
                    equipment.    The   Company's   operations    are
                    primarily dependent upon business-related  travel
                    and    are   not   subject   to   wide   seasonal
                    fluctuation. However, some seasonal decline  does
                    occur  during portions of the winter  months  due
                    to  lesser demand. The ability of the Company  to
                    compete with ground transportation and other  air
                    carriers  depends upon public acceptance  of  its
                    aircraft   and   the  provision  of   convenient,
                    frequent  and reliable service to its markets  at
                    reasonable rates.
                    
                    The   Company   entered   into   a   code-sharing
                    agreement  with  United, which expires  on  March
                    31,  1998.   The agreement allows the Company  to
                    operate   under  United's  colors,  utilize   the
                    "United  Express" name and identify  its  flights
                    using  United's  designator  code.   The  Company
                    believes   that  its  relationship  with   United
                    substantially  enhances its  ability  to  compete
                    for   passengers.   The  loss  of  the  Company's
                    affiliation  with United could  have  a  material
                    adverse effect on the Company's business.
                    
                    The  Company's  pilots  are  represented  by  the
                    Airline  Pilots Association ("ALPA"), its  flight
                    attendants   by   the   Association   of   Flight
                    Attendants  ("AFA"),  and its  mechanics  by  the
                    Aircraft    Mechanics    Fraternal    Association
                    ("AMFA").
                    
                    The  ALPA  collective  bargaining  agreement  was
                    amended  on February 26, 1997.  The agreement  is
                    for  three years and is amendable on February 28,
                    2000.   The new contract modifies work  rules  to
                    allow  more flexibility, introduces regional  jet
                    pay   rates,  and  transfers  pilots   into   the
                    Company's  employee  benefit plans.  The  Company
                    believes  that the incremental cost as  a  result
                    of  the amendments to the contract will not  have
                    any   material  effect  over  the  life  of   the
                    agreement.
                    
                    On  March  11,  1994, AMFA was certified  by  the
                    National  Mediation  Board  (the  "NMB")  as  the
                    collective  bargaining representative elected  by
                    mechanics  and related employees of the  Company.
                    As  of March 1, 1997, AMFA represented 120 of the
                    Company's  employees. The Company and  AMFA  have
                    been  attempting to negotiate an initial contract
                    under federal mediation since December 1994,  but
                    have  so  far failed to reach agreement. The  NMB
                    has  indicated that it is in favor of  continuing
                    the  negotiations,  and the  Company  anticipates
                    participating in further negotiations.
                    
                    If,  at  some  point, the NMB should decide  that
                    the  parties were deadlocked, then the NMB  could
                    declare  an  impasse  along  with  a  thirty  day
                    cooling  off period.  At the conclusion  of  that
                    period  if  an  agreement had not  been  reached,
                    AMFA  would have the authority to use self  help,
                    up  to  and  including the right to  strike.  The
                    Company  and AMFA are also engaged in litigation,
                    which  is more fully described in Item 3,  "Legal
                    Proceedings,"  below.  If  that  litigation  were
                    resolved  in  AMFA's favor, AMFA would  be  in  a
                    position  to use self help, even if the NMB  does
                    not declare an impasse.
                    
                    The  Company's contract with the AFA will  become
                    amendable   on  April  30,  1997.   The   Company
                    expects to continue operating under the terms  of
                    the agreement until new terms are negotiated.
                    
                    The  Company  believes that the  wage  rates  and
                    benefits   for   other   employee   groups    are
                    comparable  to  similar groups at other  regional
                    airlines.  The Company is unaware of  significant
                    organizing  activities  by  labor  unions   among
                    other non-union employees at this time.
                    
                 (f)Use of Estimates
                    
                    The   preparation  of  financial  statements   in
                    accordance  with  generally  accepted  accounting
                    principals  requires management to  make  certain
                    estimates and assumptions regarding valuation  of
                    assets, recognition of liabilities for costs such
                    as aircraft maintenance, differences in timing of
                    air   traffic  billings  from  United  and  other
                    airlines and disclosure of contingent assets  and
                    liabilities   at  the  date  of   the   financial
                    statements.  Actual  results  could  differ  from
                    those estimates.
                    
                 (g)Expendable Parts
                    
                    Expendable parts and supplies are stated  at  the
                    lower   of  average  cost  or  market,  less   an
                    allowance for obsolescence. Expendable parts  and
                    supplies are charged to expense as they are used.
                    
                 (h)Property and Equipment
                    
                    Property  and  equipment  are  stated  at   cost.
                    Depreciation  is  computed on  the  straight-line
                    method  over  the estimated useful lives  of  the
                    related  assets which range from five to  fifteen
                    years. Amortization of capital leases is included
                    in depreciation expense.
                    
                 (i)Preoperating Costs
                    
                    Preoperating   costs  represent   the   cost   of
                    integrating  new types of aircraft.  Such  costs,
                    which  consist primarily of flight crew training,
                    are  deferred and amortized over a period of four
                    years on a straight-line basis.
                    
                 (j)Intangible Assets
                    
                    Goodwill,  representing the excess of cost  above
                    the  fair  value  of net assets acquired  in  the
                    acquisition  of  ACA, is being amortized  by  the
                    straight-line  method  over  twenty  years.   The
                    primary  financial indicator used by the  Company
                    to  assess the recoverability of its goodwill  is
                    undiscounted  future cash flows from  operations.
                    The  amount  of impairment, if any,  is  measured
                    based  on  projected future cash  flows  using  a
                    discount  rate  reflecting the Company's  average
                    cost  of funds. Slots are being amortized by  the
                    straight-line method over twenty years.
                    
                 (k)Maintenance
                    
                    The Company's maintenance accounting policy is  a
                    combination  of expensing events as incurred  and
                    accruals  for  maintenance  events.  The  Company
                    accrues for current and future maintenance events
                    on  an  ongoing  basis which  it  feels  will  be
                    sufficient   to  cover  maintenance   costs   for
                    aircraft.  Maintenance accruals are estimated  on
                    a  cost  per  flight hour basis for all  aircraft
                    including those under warranty.
                    
                 (l)Income Taxes
                    
                    The  Company  accounts for deferred income  taxes
                    using the asset and liability method.  Under  the
                    asset  and liability method, deferred tax  assets
                    and liabilities are recognized for the future tax
                    consequences attributable to differences  between
                    the  financial  statement  carrying  amounts  for
                    existing  assets and liabilities  and  respective
                    tax  bases.   Deferred tax assets and liabilities
                    are measured using enacted tax rates expected  to
                    apply  to taxable income in future years in which
                    those  temporary differences are expected  to  be
                    recovered or settled.
                    
                 (m)Stock options
                    
                    The  Company  accounts for its fixed-price  stock-
                    based compensation plans using the principles  set
                    forth  in APB Opinion 25.  Under these principles,
                    the  Company records no charge to expense  at  the
                    grant  date because it grants stock options at  an
                    exercise  price equal to the current market  price
                    and the measurement date is the grant date.
                    
                 (n)Earnings per Share
                    
                    Primary   earnings  per  share  is  computed   by
                    dividing   income,   after  deducting   preferred
                    dividend  requirements, by the  weighted  average
                    number  of  common shares outstanding and  common
                    stock  equivalents. For both  primary  and  fully
                    diluted   earnings   per  share,   common   stock
                    equivalents  consist of shares subject  to  stock
                    options computed using the treasury stock method.
                    
                    For the calculation of fully diluted earnings per
                    share   in   1995,  the  outstanding  convertible
                    preferred  stock  is considered in  the  weighted
                    average  number of common shares when its  effect
                    is dilutive.
                    
                    Common  equivalent shares consisting of  unissued
                    shares  under options and redeemable  convertible
                    preferred  stock  have  been  excluded  from  the
                    computation  for  1994 because  their  effect  is
                    antidilutive.
                    
                    Primary  earnings per share reflect the  dilution
                    of  outstanding stock options as if  the  options
                    were exercised at the beginning of the period  or
                    the issuance date, whichever is later, and as  if
                    the  funds obtained thereby were used to purchase
                    common  stock at the average market price  during
                    the  period.  Fully  diluted earnings  per  share
                    reflect   the  assumed  exercise  of  outstanding
                    stock  options  as if the funds obtained  thereby
                    were  used to purchase common stock at the ending
                    market  price  in  order to reflect  the  maximum
                    potential dilution. For the years ended  December
                    31,   1995   and  1996,  all  of  the   Company's
                    securities  were  dilutive.  Common  and   common
                    equivalent  shares outstanding for fully  diluted
                    earnings  per  share  also include  the  weighted
                    average   effect  of  the  convertible  preferred
                    stock.  The  effect on outstanding common  shares
                    for  the convertible debt was not considered  due
                    to the repayment during 1995.
                 (o)Recent Accounting Pronouncements
                    
                    In  June 1996, the Financial Accounting Standards
                    Board  issued  Statement of Financial  Accounting
                    Standards No. 125, "Accounting for Transfers  and
                    Servicing  of Financial Assets and Extinguishment
                    of  Liabilities (SFAS 125)".  SFAS  125  provides
                    accounting and reporting standards for  transfers
                    of  financial assets using a financial-components
                    approach  which focuses on control.   Under  this
                    approach,  after a transfer of financial  assets,
                    a  company  recognizes the  financial  assets  it
                    controls  and  the liabilities it  has  incurred,
                    derecognizes  financial assets when  control  has
                    been  surrendered  and  derecognizes  liabilities
                    when  extinguished.  SFAS 125  is  applicable  to
                    the  Company's  borrowings  under  its  line   of
                    credit  collateralized  by  accounts  receivable.
                    The  Company  evaluated the financing transaction
                    using  the  criteria set forth in  SFAS  125  and
                    concluded  that  it did not transfer  control  of
                    its   accounts   receivable  to   the   financial
                    institution.  Consequently, the Company  believes
                    that  adoption  of  SFAS 125, as  of  January  1,
                    1997,  will  not have a material  impact  on  its
                    fiscal 1997 financial or operating results.
                    
                    On   March   3,  1997  the  Financial  Accounting
                    Standards  Board  issued Statement  of  Financial
                    Accounting  Standards  No,  128,  "Earnings   per
                    Share   (SFAS   128)".   SFAS  128   provides   a
                    different  method  of  calculating  earnings  per
                    share  than is currently used in accordance  with
                    APB  Opinion  15.   SFAS  128  provides  for  the
                    calculation  of  Basic and Diluted  earnings  per
                    share.   Basic  earnings per  share  includes  no
                    dilution  and  is  computed  by  dividing  income
                    available   to   common  shareholders    by   the
                    weighted   average   number  of   common   shares
                    outstanding  for  the period.   Diluted  earnings
                    per  share  reflects  the potential  dilution  of
                    securities  that could share in the  earnings  of
                    an  entity,  similar  to existing  fully  diluted
                    earnings  per  share.  Using the  principles  set
                    forth  in  SFAS  128, Basic earnings  (loss)  per
                    share  would have been $(3.67), $1.55, and  $2.27
                    for 1994, 1995 and 1996, respectively.
                    
                 (p)Reclassifications
                    
                    Certain amounts as previously reported have been
                    reclassified to conform to the current year
                    presentation.
                 
                 
                 
                 
2.  Prepaid      Prepaid expenses and other current assets consist of
Expenses         the following:
     and Other   
     Current     (in thousands)
Assets           December 31,                     1996         1995
                 Prepaid rent                    $     62     $   -
                 Prepaid fuel                         237        33
                 Prepaid insurance                  1,448     1,137
                 Deposits, primarily for aircraft     726       496
                 Prepaid other                         81        92
                                                 $  2,554    $1,758
                                                                      
                                                                      
3.  Property     Property and equipment consist of                    
and              the following:
     Equipment   
                 (in thousands)
                 December 31,                                  
                                                    1996     1995
                 Improvements to aircraft            2,350    2,210
                 Flight equipment, primarily        14,014   11,978
                    rotable spare parts
                 Maintenance and ground equipment    3,380    3,267
                 Computer hardware and software      1,464    1,178
                 Furniture and fixtures                296      272
                 Leasehold improvements                619      465
                                                    22,123   19,370
                 Less:  Accumulated depreciation     5,966    3,857
                    and amortization
                                                   $16,157  $15,513
                                                                   
                                                                   
4.  Intangible  Intangible assets consist of                       
     Assets        the following:
                
                (in thousands)
                December 31,                        1996       1995
                Goodwill                         $  3,173  $  3,172
                Slots                                 350       350
                Deferred financing costs              270        77
                                                    3,793     3,599
                Less:  Accumulated                    911       735
                   amortization
                                                 $  2,882  $  2,864
                                                                     
                On  December  1,  1995, the Company  transferred  its
                rights with respect to five of the Company's eighteen
                landing  slots  at Westchester County Airport  (White
                Plains,  NY)  to  United.  In  accordance  with   the
                agreement, the Company received cash and certain slot
                leases  at LaGuardia airport from United. The Company
                recognized a gain of approximately $177,000 from  the
                sale  of the five slots, which is reflected as  other
                income  in  the accompanying statement of  operations
                for the year ended December 31, 1995.
                                                                      
5.  Accrued        Accrued liabilities consist of                       
                   the following:
   Liabilities  
                (in thousands)
                December 31,                                     
                                                    1996       1995
                Accrued payroll and employee       $  4,929  $  4,554
                   benefits
                Air traffic liability                 2,703     2,690
                Interest                                 13        99
                Aircraft rents                          564       583
                Reservations and handling             2,454     2,155
                Engine and airframe overhaul          3,311     2,242
                   costs
                Fuel                                  1,196       831
                Other                                 2,206     2,967
                                                   $ 17,376  $ 16,121
                                                                   
6.  Debt        On  November 1, 1995, the Company entered into a  line
                of  credit  agreement  with  a  financial  institution
                which,  based on a specified percentage of outstanding
                interline  receivables (financing base), provides  for
                borrowings of up to $20 million.  Interest is  payable
                monthly  at  a  rate of prime (8.25% at  December  31,
                1996)  plus  1.25%.  Under the terms of  the  line  of
                credit  agreement, at December 31, 1996, the Company's
                borrowing limit was approximately $8.6 million.  There
                was  no  balance outstanding under the line of  credit
                at  December 31, 1995, or December 31, 1996.  The line
                of  credit  is collateralized by interline receivables
                and  general intangibles, and will expire on  November
                1,  1998,  or  upon termination of the United  Express
                marketing agreement whichever is sooner.
                                                                            
                Through  October 31, 1995, the Company had  a  line  of     
                credit   arrangement   with  a  financial   institution
                which,  based on a specified percentage of  outstanding
                interline  receivables (financing base),  provided  for
                borrowings of up to $17 million.  Interest was  payable
                monthly at a rate of prime (8.5% at December 31,  1994)
                plus  2.0%. The weighted average interest rate for  the
                year  ended  December 31, 1994 was 9.13%.  At  December
                31,   1994,  the  Company's  available  borrowing   was
                approximately  $3,187,000 and the  outstanding  balance
                was  approximately $6,357,000.  The line of credit  was
                collateralized  by  interline receivables,  unprocessed
                tickets, inventories and equipment.

      Long-term debt consists of the following:                  
      (in thousands)                                             
      December 31,                                   1996      1995
      Note payable to institutional lender, due                      
         October 1, 2000, principal and interest                     
         payable in monthly installments of             $776     $934
         $20,369 with interest at 10%,
         collateralized by engines
      
      Note payable to airport authority, due                         
         April 1, 2001, principal payable monthly                    
         with interest at 6.5% through March 31,         760      907
         1995 and prime plus 1.5% thereafter
         through maturity, collateralized by
         expendable parts inventory
      
      Note payable to institutional lender, due                      
         May 1, 1999, principal and interest                         
         payable in monthly installments of              520      695
         $20,734 with interest at 12%,
         collateralized by aircraft engines
      
      Note payable to institutional lender, due                      
         October 1, 1998, principal payable                          
         monthly with interest at 6.27%,                 466        -
         unsecured
      Note payable to institutional lender, due                      
         December 31, 1999, principal and                            
         interest payable in monthly installments        448      574
         of $14,026 with interest at 8%,
         collateralized by spare parts
      
      Note payable to other airline, due March                       
         31, 1998, principal payable in quarterly                    
         installments of $38,400 with interest at        192      346
         9%, collateralized by ground support
         equipment
      
      Note payable to institutional lender, due                      
         May 1, 1999, principal and interest                         
         payable in monthly installments of              253      339
         $10,112 with interest at 12%,
         collateralized by spare parts
      
      Note payable to institutional lender for                       
         two de-icing trucks, due March 1, 1998,                     
         principal and interest payable in               128      225
         monthly installments of  $9,469 with
         interest at 9%, collateralized by the
         trucks
      
      Note payable  to institutional lender, due                     
         October 1, 2000, principal and interest                     
         payable in monthly installments of              177      215
         $4,731 with interest at 10%,
         collateralized by spare parts
      
      Note payable to institutional lender, due                      
         March 12, 1996, principal and interest                      
         payable in monthly installments of                -       42
         $14,115 with interest at 8.5%,
         collateralized by spare parts
      
      Other                                                6      198
      Total                                            3,726    4,474
      Less:  Current Portion                           1,319    1,214
                                                      $2,407   $3,260
                
                
                On  December 30, 1994, the Company entered into a $20
                million   financing  agreement   with   JSX   Capital
                Corporation   ("JSX"),   an  affiliate   of   British
                Aerospace,  Inc.  ("BAI"). This arrangement  included
                the  conversion of an outstanding loan on a revolving
                credit  facility  of  $10.0  million  to  equity,  an
                additional   $1.0  million  cash  equity  investment,
                creation  of  a term loan facility in the  amount  of
                $4.0  million,  issuance  of  redeemable  convertible
                preferred stock of approximately $3.8 million, and  a
                new   revolving  line  of  credit  facility  of  $5.0
                million.
                
                The  $4.0  million  convertible  term  loan  was  due
                October  31,  1999, with interest at prime  plus  2%,
                payable  monthly, except that through June 30,  1995,
                interest  was  deferrable and could be added  to  the
                principal  balance,  at  the  Company's  option.  The
                principal repayment consisted of 12 equal payments of
                principal  (plus the pro rata portion of  any  unpaid
                interest)  payable on April 30, July 31, and  October
                31  of the years 1996 through 1999. Any principal  or
                interest unpaid as of October 31, 1999, could, at the
                option  of  JSX,  be converted into common  stock  at
                $7.00  per  share at any time thereafter until  paid.
                The  term  loan  was collateralized by the  Company's
                fixed  assets  and accounts receivable. During  1995,
                the Company prepaid the balance in full at a discount
                which resulted in an extraordinary gain of $400,000.
                
                A total of 3,825 shares of Series A Redeemable Convertible
                Preferred  Stock at $1,000 per share with liquidation
                preference  of  full  face amount  plus  accrued  and
                unpaid  dividends  was  issued,  resulting  in  total
                proceeds  of  $3,825,000.  The  shares  were  to   be
                redeemed  by the Company at the end of 7  years.  The
                shares  may be redeemed earlier at the option of  the
                Company.    The  Company  redeemed, at par, the Series
                A Redeemable, Convertible, Preferred Stock on March 29,
                1996.
                
                The  Company did not borrow against the $5.0  million
                revolving  credit facility during 1995 . On  July  1,
                1995,  the  maximum  amount of the  revolving  credit
                facility  was reduced to $2.5 million as specified in
                the  original agreement.  The Company never  borrowed
                against the revolving credit facility and the Company
                terminated the facility in June 1996.
                
                During  1994,  the Company entered into  a  revolving
                line of credit arrangement with JSX which allowed  it
                to  borrow  a  maximum of $10,000,000.  Interest  was
                payable  monthly at rates ranging from prime plus  3%
                to   prime   plus  5%  depending  on  the  level   of
                borrowings.    This   revolving   line   of    credit
                arrangement was repaid by the Company issuing  common
                and  preferred stock in connection with the financing
                arrangement entered into on December 30, 1994.
                As of December 31, 1996, the portions of long-term
                debt due in the five subsequent years are as follows:
                
                (in thousands)
                1997                $  1,319
                1998                   1,161
                1999                     753
                2000                     427
                2001                      66
                                    $  3,726
                                                                              
                At  December 31, 1996, the Company met all  covenants
                associated with its debt and marketing agreements. In
                October  1996, the Company entered into an  agreement
                to purchase the ACASNS Systems for $2.5 million to be
                financed by the supplier subsequent to year-end.  The
                payments  will be made in thirty-one installments  on
                each  installation for all aircraft in the  Company's
                fleet.
                
7.  Obligations  The    Company    leases    certain    equipment for      
Under           noncancellable  terms of more than one  year.  Interest
     Capital    rates  for these leases range from 8.0% to 19.45%.  The
 Leases         net  book  value of the equipment under capital  leases
                at  December  31,  1995, and 1996  is  $5,190,182,  and
                $5,187,298  respectively. The leases  were  capitalized
                at the present value of the lease payments.
                
                 At  December 31, 1996, the future minimum payments,  by 
                year  and  in the aggregate, together with the  present
                value  of  the  net  minimum  lease  payments,  are  as
                follows:
                
                 (in thousands)
                Year Ending December 31,
                 1997                                        $  1,762
                 1998                                           1,649
                 1999                                           1,541
                 2000                                             412
                 2001                                              94
                 Future minimum lease payments                  5,458
                 Amount representing interest                     695
                 Present value of minimum lease                 4,763
                payments
                 Less:  Current maturities                      1,497
                                                             $  3,266
                 
8.  Operating    The  Company leases its principal administrative  and
     Leases     flight facilities under  operating leases expiring in
                2004  with  no  options for renewal.  Future  minimum
                lease  payments  will average approximately  $400,000
                per year for a total of $2,800,000 through the end of
                the lease.
                
                The Company's lease agreements generally provide that
                the  Company  pay taxes, maintenance,  insurance  and
                other operating expenses applicable to leased assets.
                Operating     lease    expense    was    $40,312,627;
                $30,498,699;  and  $33,789,204 for  the  years  ended
                December 31, 1994, 1995 and 1996, respectively.
                
                Future  minimum  lease payments under  noncancellable
                aircraft operating leases at December 31, 1996 are as
                follows:
                
                (in thousands)
                 Year ending December 31,
                 1997                                      $   28,924
                 1998                                          28,738
                 1999                                          28,738
                 2000                                          28,738
                 2001                                          28,738
                 2002 - 2006                                  122,814
                 2007 - 2011                                   60,452
                               Total minimum lease          $ 327,142
                payments
                                                                    
                 On  February  23, 1997, the Company entered  into  an
                agreement  with  AI(R)  to acquire  twelve  new  J-41
                aircraft.  Delivery of the twelve aircraft  began  in
                March  1997 and will continue through mid  1999  with
                five aircraft scheduled for delivery in 1997.
                
                On  January 28,  1997, the Company  announced  an
                agreement  with  Bombardier, Inc. to purchase  twelve
                Canadair  Regional Jets with options  for  thirty-six
                additional aircraft.  The delivery schedule  provides
                for the Company to take delivery of four aircraft  in
                1997   commencing  in  July.   The  remaining   eight
                aircraft  will be delivered during 1998.   Under  the
                terms  of  the agreement, the Company is required  to
                make  deposits  with the manufacturer totaling  $15.0
                million  on  or  before April 1, 1997.   The  Company
                deposited $4.0 million on January 9, 1997,  and  will
                execute  a  short  term  promissory  note  with   the
                manufacturer  for the remaining $11.0 million  at  8%
                annual  interest.  The note on April 1, 1997 will  be
                payable in full including accumulated interest,  upon
                delivery of the first aircraft in July 1997.

9.  Stockholders'  Stock Option Plans
       Equity   
                 The  Company  has  two  nonqualified  stock  option
                plans which provide for the issuance of options  to
                purchase  common stock of the Company to  employees
                and  directors  of  the Company. Under  the  plans,
                options  are granted by the compensation  committee
                of  the  board of directors and become  exercisable
                over  a  three  year  period, commencing  one  year
                after the date of the grant.
                
                The  Company  has  reserved  1,500,000  shares   of
                common  stock  for issuance upon  the  exercise  of
                options granted under the plan. The purchase  price
                of  the  stock is 100% of its fair market value  at
                the date of grant.
                
                 Stock option transactions were as follows:
                
                 Options outstanding, December 31,1993      709,105
                 Granted (at $2.875 to $8.25 per share)      69,000
                 Exercised (at $2.08 to $2.50 per share)    (22,080)
                 Canceled                                   (70,170)
                 Expired (at $2.08 to $2.50 per share)      (28,333)
                 Options outstanding, December 31, 1994     657,522
                 Granted (at $2.50 to $8.875 per share)     184,667
                 Exercised (at $2.08 to $9.75)              (31,941)
                 Canceled                                   (77,336)
                 Options outstanding, December 31,1995      732,912
                 Granted (at $6.375 to $16.125 per share)   397,500
                 Exercised (at $9.375 to $17.125)          (142,499)
                 Canceled                                   (29,501)
                 Options outstanding, December 31,1996      958,412
                 Exercisable at December 31, 1996           479,779
                 Available for grant at December 31,1996    324,757
                 
                The  exercise  price of stock options  at  December
                31,  1996,  ranged from $2.08 to $16.125 per  share
                with   a   weighted  average  exercise  price   and
                remaining  contractual  life  of  $10.25  and   7.5
                years, respectively.
                
                The  estimated  per  share  weighted  average  fair
                value  of  stock  options granted during  1995  and
                1996  was  $4.75 and $10.50, respectively,  on  the
                date  of grant.  A risk-free interest rate of 5.80%
                and  5.25% for 1995 and 1996, and a 135%  and  240%
                volatility  rate  for 1995 and 1996,  respectively,
                with  an  expected life of ten years for both  1995
                and  1996,  was  assumed  in  estimating  the  fair
                value.
                
                The  following  summarizes the  pro  forma  effects
                assuming  compensation for  such  awards  had  been
                recorded  based upon the estimated fair  value  (in
                thousands, except per share data):
                                                                 
                                        1996           1995
                                   As      Pro      As      Pro
                                 Reported Forma   Reported  Forma
                                                                 
               Net Income       $19,158  $15,223   $12,902  $12,146
                                                                 
                 Primary                                         
                earnings
                 per share         $2.14   $1.70    $1.44   $1.39
                                                                 
                 Fully diluted                                   
                 earnings    per   $2.14   $1.70    $1.37   $1.29
                share
                                                                 
               Preferred Stock                                           
                
                 The Board of Directors of the Company is authorized            
                to  provide  for  the issuance by  the  Company  of
                preferred  stock in one or more series and  to  fix
                the      rights,      preferences,      privileges,
                qualifications,   limitations   and    restrictions
                thereof,  including,  without limitation,  dividend
                rights,  dividend rates, conversion rights,  voting
                rights,   terms   of  redemption   or   repurchase,
                redemption  or  repurchase prices,  limitations  or
                restrictions  thereon, liquidation preferences  and
                the number of shares constituting any series or the
                designation  of  such series, without  any  further
                vote or action by the stockholders. The issuance of
                any  series of preferred stock may have an  adverse
                effect  on  the rights of holders of common  stock,
                and  could  decrease  the amount  of  earnings  and
                assets  available for distribution  to  holders  of
                common   stock.  In  addition,  any   issuance   of
                preferred  stock could have the effect of delaying,
                deferring or preventing a change in control of  the
                Company.
                
                At  December  31, 1995, and 1996, the  Company  had
                5,000,000 shares of $.02 par value preferred  stock
                authorized.  8,000 of those shares were  designated
                in   1994   as   Series  A  Cumulative  Convertible
                Preferred Stock, of which 3,825 shares were  issued
                as  of  December 31, 1995. These shares were issued
                in  connection with a financing arrangement entered
                into  by the Company on December 30, 1994 (see Note
                6).
                In  January 1996, the Company's Board  of Directors
                declared  dividends of $334,688  on  its  Series  A
                Cumulative   Convertible  Preferred   Stock.   This
                represents  accrued dividends for  the  year  ended
                December 31, 1995, in accordance with the financing
                arrangement entered into by the Company in December
                1994   (see   Note  6).  The  Company  paid   these
                dividends  in  February 1996. As  of  December  31,
                1995,   this   amount  was  reflected  in   accrued
                liabilities    in   the   accompanying    financial
                statements.
                
                The  Company  redeemed $3.8  million  in  Series  A
                Cumulative Convertible Preferred Stock on March 29,
                1996.   The  preferred stock was issued to  JSX  in
                December  1994  as part of a $20 million  financing
                agreement  consisting of an equity  investment  and
                available  borrowings.   The  preferred  stock  was
                convertible  into common stock at the option of JSX
                at any time on or after September 15, 1997.
                                                                           
10.  Employee   Effective October 11, 1991, the Company established  an
   Benefit      Employee  Stock  Ownership Plan (the  "ESOP")  covering
       Plans    substantially  all  employees. For each  of  the  years
                1992  through  1995, the Company made contributions  to
                the  ESOP  which  were used in part to  make  loan  and
                interest  payments.  For the year  ended  December  31,
                1995,  the  Company  made  contributions  to  the  ESOP
                amounting  to $131,040.  No contribution  was  made  in
                1996.  Shares of common stock acquired by the ESOP  are
                to   be  allocated  to  each  employee  based  on   the
                employee's annual compensation.
                
                Effective  January  1,  1992,  the  Company  adopted  a
                401(k)    Plan   (the   "Plan").   The   Plan    covers
                substantially  all  full-time employees  who  meet  the
                Plan's eligibility requirements. Employees may elect  a
                salary  reduction  contribution  up  to  17%  of  their
                annual  compensation not to exceed the  maximum  amount
                allowed by the Internal Revenue Service.
                
                The  Company  may make a discretionary contribution  to
                the  Plan each year; no such contribution was  made  by
                the  Company  for  the year ended  December  31,  1994.
                However, the Company did make contributions of  $16,000
                and  $28,920 for the years ended December 31, 1995  and
                1996, respectively.
                Effective  October  1, 1994, the Plan  was  amended  to
                require  the Company to make contributions to the  Plan
                for   eligible   pilots   in   exchange   for   certain
                concessions.  These contributions are in excess of  any
                discretionary contributions made for the  pilots  under
                the  original  terms of the plan.  The contribution  is
                100%  vested  and equal to 3% of the first  $15,000  of
                compensation  plus  2%  of compensation  in  excess  of
                $15,000.  The  Company's contributions for  the  pilots
                shall  not  exceed  15% of the Company's  adjusted  net
                income  before extraordinary items for such plan  year.
                The  Company's  obligations to make contributions  with
                respect  to all plan years in the aggregate is  limited
                to    $2.5    million.    Contribution   expense    was
                approximately $370,000 and $395,000 for 1996  and  1995
                respectively.  No contribution was made for 1994.
                
                Effective June 1, 1995, the Plan was amended  to  allow
                the   Company   to   make   a  discretionary   matching
                contribution for non-union employees equal  to  25%  of
                salary  contributions up to 4% of  total  compensation.
                Effective  April 1, 1997, all eligible pilots  will  be
                included under the original terms of the Plan.
                
                In  addition  to  the  pilot 401(k),  the  Company  has
                profit   sharing  programs  which  result  in  periodic
                payments   to  all  eligible  employees.  Compensation,
                which  is  based  on attainment of certain  performance
                and  financial  goals, was approximately  $2.6  million
                and $1.2 million in 1996 and 1995, respectively.
                
                                                                             
11.  Income      The  provision  (benefit) for income taxes  includes      
       Taxes    the following components:
                
                (in thousands)
                 Year  Ending  December  31, 1996    1995         1994
                 Federal and state:   
                      Current              2,090       288          -
                      Deferred            (1,640)   (1,500)          -
                 Total provision(benefit) $  450  $(1,212)      $ -

                 A  reconciliation of income tax expense  (benefit)  for
                taxes  on  income at the applicable federal  and  state
                statutory income tax rates (35% federal statutory  rate
                and  5%  state statutory rate for 1994, 1995 and  1996)
                to the tax provision (benefit) recorded is as follows:
                
                (in thousands)
                 Year  ending  December 31,  1996       1995       1994
                 Income   tax   expense                               
                (benefit)                 $6,863     $4,092   $(8,798)
                    at statutory rate                               
                 Increase    (decrease)                               
                in tax                                               
                  expense (benefit):
                         State   income                               
                taxes, net                   980        585   (1,257)
                of   federal benefit
                Change in valuation                                            
                          reserve  for   (1,640)    (1,500)         -
                deferred tax asset
                Generation (utilization)                                        
                            of     net   (5,811)    (4,677)    10,055
                operating loss
                        carryforward
                Alternative                               
                minimum tax expense           -        210         -
                ("AMT")
                      Other                    58         78      -
                 Income   tax   expense  $    450   $(1,212)  $   -
                (benefit)                                          
                                                                  
                 Deferred   income   taxes   result   from   temporary         
                differences which are the result of provisions of the
                tax  laws that either require or permit certain items
                of  income or expense to be reported for tax purposes
                in different periods than for financial reporting.
                                   
                 The  following is a summary of the Company's  deferred
                income taxes as of December 31, 1996, and 1995:
                                                                               
                 (in thousands)                                
                 December 31,                                   
                                                1996         1995
                                                                     
                Deferred tax assets:
                      Engine overhaul              $1,324        $897
                reserve
                      Intangible assets             1,195       1,396
                      Net operating                     -       5,840
                loss carryforward
                      Restructuring                     -         204
                accrual
                      Revenue valuation             1,362       1,443
                reserves
                      Reserve for bad                 265         436
                debts
                      Alternative                                    
                minimum tax                          661         244
                        credit
                carryforwards
                      Other                           358         330
                                                    5,165      10,790
                 Valuation allowance                    -      (7,667)
                 Net deferred tax                   5,165       3,123
                assets
                 Deferred tax                                        
                liabilities:
                     Depreciation                 (1,935)      (1,438)
                     Preoperating costs              (90)        (185)
                                                                      
                          Total                  (2,025)      (1,623)
                deferred tax
                liabilities
                 Net deferred income               $3,140      $1,500
                taxes
                 
                 The valuation allowance established in 1995 was
                eliminated in 1996 as the Company believes that the
                future realization of the deferred tax asset is more
                likely than not.
                
                 The  Tax  Reform  Act of 1986 enacted an  alternative
                minimum  tax system, generally effective for  taxable
                years   beginning  after  December  31,  1986.    The
                Company  is  subject to alternative  minimum  tax  of
                approximately  $1.1  million  for  the   year   ended
                December 31, 1996.  This amount of AMT tax in  excess
                of  regular tax may be utilized as a credit carryover
                against  income tax payable in future  periods.   The
                Company   has   alternative   minimum   tax    credit
                carryforwards available of approximately $661,000  at
                December 31, 1996.
                                                                               
                
12.             Aircraft
 Commitments    
                 As  of February 23, 1997, the Company entered into  an
                agreement  in  principle with AI(R) to acquire  twelve
                new J-41 aircraft.  Delivery of the twelve aircraft is
                to  began in March 1997 and will continue through  mid
                1999.   In  1997  five  aircraft  are  scheduled   for
                delivery.
                
                On   January  28,  1997,  the  Company  announced  its
                decision to acquire twelve CRJs from Bombardier,  Inc.
                with  the  option to acquire an additional  thirty-six
                jets.   Deliveries are scheduled to begin as early  as
                July  1997 with revenue passenger service expected  to
                begin  in  the  Fall.   Four jets  are  scheduled  for
                delivery  in  1997 and eight in 1998.  The  CRJ  is  a
                fifty seat passenger twin engine aircraft designed  to
                serve medium-range and small markets.  The Company  is
                currently  working with its marketing partner,  United
                Airlines,  in  an effort to incorporate  the  regional
                jets into its existing United Express product.
                
                The  Company  is exploring various third  party  lease
                financing arrangements for the aircraft.  However, the
                Company  has  backup lease financing  arrangements  or
                sufficient  financing  support with  the  manufacturer
                such  that  the Company believes it will  be  able  to
                acquire the aircraft at competitive rates.
                
                 Brasilia Options                                              
                
                 The  Company  acquired options to purchase ten  Brasilia     
                aircraft at a total purchase price of approximately  $68
                million  as  part of the ACA acquisition in  1991.  This
                agreement  was  amended during 1992 and  delivery  dates
                were   extended  through  October  1995.   The   Company
                assigned  a value of $6 million to these options.  These
                options   were  charged  to  expense  during   1994   in
                connection  with the Company's restructuring  plan  (see
                Note 13).
                
                 Employment Agreements                                          
                                                                               
                In   October  1995,  the  Company  executed  an  amended
                employment  agreement  with  its  President  and   Chief
                Executive  Officer . The agreement is effective  through
                October  1998  after which it will extend  automatically
                for  successive twelve-month periods unless either party
                terminates it upon 60 days notice. The Company will  pay
                the  President  and Chief Executive Officer  a  specific
                annual  salary subject to annual review and  adjustment.
                The  officer  is  also eligible to  participate  in  the
                Company's incentive bonus and stock option plans.
                                                                               
                 Maintenance Facility                                          
                
                The  Company  has  also begun to address  the  need  for
                expanding its facilities due to the planned increase  in
                fleet  size.  The Company intends to build  or  lease  a
                hangar facility of approximately 85,000 square feet  for
                planned   occupancy   during  1998   large   enough   to
                consolidate  its  future  maintenance  operations.   The
                final  site  has not been determined but the Washington-
                Dulles  location is the leading contender  for  the  new
                maintenance  facility  due  to  the  existence  of   the
                Company's  hub  operation.  The Company has  applied  to
                Loudoun  County,  VA  for  a tax  exempt  bond  issuance
                facility  in the amount of $11.0 million to finance  the
                proposed facility.
                                                                              
                
13.             In  1994  the Company commenced a major restructuring
 Restructuring  plan.  The  basis  of the plan was  to  simplify  the
       Charges  fleet  by eliminating the EMB-120 and Dash-8 aircraft
                fleets   in  conjunction  with  the  elimination   of
                unprofitable    routes,    the    consolidation    of
                maintenance bases and other cost saving measures.
                
                As  of December 31, 1995, the Company's restructuring
                plan   regarding  the  elimination  of  the   EMB-120
                aircraft  is complete. All aircraft were returned  as
                of  December  31,  1994, and  all  spare  parts  were
                delivered  as of the end of the second quarter  1995.
                In  the  second  quarter 1994  the  Company  reserved
                approximately $2.2 million including $0.4 million  in
                unamortized    financing    credits    for    EMB-120
                restructuring,  and $6.0 million related  to  EMB-120
                purchase options.
                
                For   the   full   year   1995   the   Company   paid
                approximately   $1.9   million   against    remaining
                reserves  as  of December 31, 1994, for  a  total  of
                $2.6  million since the reserves were established  in
                1994.  These payments also included return  condition
                payments  to  British  Aerospace  for  J-31  aircraft
                received  from  WestAir.  The  Company  received  net
                proceeds  from  WestAir during 1995 of  $2.1  million
                representing  proceeds  for  spare  parts  and   J-31
                return  condition payments, offset by EMB-120  return
                condition payments due WestAir.
                
                There  are no remaining reserves related to restructuring.
                
                As  of December 31, 1995, the Company's restructuring
                plan   regarding  the  elimination  of   the   Dash-8
                aircraft  was  substantially complete.  All  aircraft
                were  returned  as  of the end of the  first  quarter
                1995,  and all spare parts were delivered as  of  the
                end  of  the  second quarter 1995. In the  third  and
                fourth   quarters   of  1994  the  Company   reserved
                approximately    $5.4    million     for       Dash-8
                restructuring.
                
                For  the full year 1995 the Company paid $4.0 million
                net  of  reimbursements from United against remaining
                reserves  as  of December 31, 1994, for  a  total  of
                $4.3  million since the reserves were established  in
                1994.  The  Company also reversed excess reserves  of
                $0.5  million  related to pilot  requalification  and
                engine overhaul reserves.
                
                The  Company received approximately $2.6 million from
                United   consisting   of  excess   return   condition
                payments  and  reimbursements for Dash-8  maintenance
                and  spare parts repair costs previously paid for  by
                the Company.
                
                The  Company concluded  the accounting for  the  EMB-
                120  restructuring plan as of December 31,  1995  and
                the  Dash-8 restructuring plan as of June  30,  1996.
                There  are no remaining reserves related to restructuring.
                                                                             
                 
14.  Litigation  The   Company  is  a  party  to  routine  litigation
                 incidental to its business, none of which is  likely
                 to have a material effect on the Company's financial
                 position. As of March 20, 1997, the Company  had  no
                 FAA proposed civil penalties pending.
                 
                 The  Company is a party to an action pending in  the
                 United   States  District  Court  for  the  Southern
                 District   of  Ohio  known  as  Peter  J.   Ryerson,
                 administrator  of  the estate of David  Ryerson,  v.
                 Atlantic  Coast Airlines, Case No. C2-95-611.   This
                 action  is  more  fully described in  the  Company's
                 Annual Report on Form 10-K for the fiscal year ended
                 December  31, 1995.  The Company believes  that  all
                 claims  resulting from this litigation remain  fully
                 covered  under  the Company's insurance  policy.  On
                 March 10, 1997, the Court granted Plaintiff's motion
                 to the effect that liability would not be limited to
                 those damages available under the Warsaw Convention.
                 As  of  March 21, 1997, the matter has not been  set
                 for trial.
                 
                 The  Company  is in litigation with  AMFA  over  the
                 issue of whether AMFA has a right to strike prior to
                 the  exhaustion of mediation pursuant to the Railway
                 Labor  Act. The legal issue arose over the Company's
                 imposition  of certain unilateral work rule  changes
                 during the period between union certification and an
                 initial   collective  bargaining  agreement.    AMFA
                 objected to this action, but the U.S. District Court
                 for  the  Southern District of New York, on December
                 14,  1995,  ruled in favor of the Company, declining
                 to  render AMFA's requested declaratory judgment and
                 expressly  stating  that AMFA  was  prohibited  from
                 striking   at  that  time.   In  Aircraft  Mechanics
                 Fraternal Association v. Atlantic Coast Airlines,  5
                 F.3d  90,  the U.S. Court of Appeals for the  Second
                 Circuit affirmed the District Court's ruling.   AMFA
                 subsequently petitioned again to the U.S.  Court  of
                 Appeals  for  the  Second Circuit  to  consider  the
                 issue,  not previously addressed by the Court,  that
                 the  company's  actions, while legal,  should  allow
                 AMFA to engage in self-help, including the right  to
                 strike.  The Second Circuit heard oral arguments  on
                 this  matter  in  January 1997 and the  parties  are
                 awaiting its decision.
                 
                                                                               
15.  Related     The  Company paid approximately $42,500 and  $25,000
 Party           for  the  years  ended December 31, 1994  and  1995,
                 respectively, in consulting fees to The Acker Group,
 Transactions    a   Company   owned   by  one   of   the   Company's
                 officers/stockholders. The agreement under which the
                 fees were paid ended as of February 1995.
                 
                                                                          
16.  Financial   In  December 1995, the Company adopted Statement  of
                 Financial  Accounting Standards No. 107, "Disclosure
 Instruments     of  Fair Value of Financial Instruments" (SFAS 107).
                 SFAS  107 requires the disclosure of the fair  value
                 of  financial instruments; however, this information
                 does  not represent the aggregate net fair value  of
                 the  Company.  Some  of  the  information  used   to
                 determine fair value is subjective and judgmental in
                 nature;  therefore, fair value estimates, especially
                 for   less  marketable  securities,  may  vary.  The
                 amounts actually realized or paid upon settlement or
                 maturity could be significantly different.
                 
                 Unless quoted market price indicates otherwise,  the
                 fair  values of cash and cash equivalents  generally
                 approximate market because of the short maturity  of
                 these  instruments. The Company  has  estimated  the
                 fair  value of long-term debt based on quoted market
                 prices  for similar loans. The estimated fair  value
                 of  the  redeemable preferred stock was obtained  by
                 consulting with the holder which is knowledgeable in
                 the valuation of such a financial instrument.
                 
                                    
                                                                               
                                                                               
                                                                              
                  The estimated fair values of the Company's financial         
                 instruments,  none  of which are  held  for  trading
                 purposes, are summarized as follows (brackets denote
                 liability):
                                                                               
                  (in thousands)                                              
                                           December 31,     December 31,
                                             1996             1995
                                           Estimated       Estimated
                                           Carrying        Carrying 
                                              Fair           Fair
                                        Amount    Value  Amount    Value
              Cash and cash           $21,470   $21,470   $8,396   $8,396
               equivalents                  
              Long-term debt                                           
               (excludes capital lease (3,726)   (3,912)  (4,474)  (4,275)
                 obligations)                 
                                               
                  Redeemable preferred         -       -    3,825   4,160
                 stock
                                                                   
                                                                   
17.  Supplemental                                                  
       Cash Flow                                                   
                  Year ended           1996        1995        1994
Information      December 31,
                  (in thousands)                                   
                  Supplemental                                     
                 disclosures of                                   
                 cash flow                                        
                 information:                                     
                     Cash paid       $   883       $1,804   $1,967
                    during the         1,319          190        -
                    period:
                                 -
                 Interest
                                 -
                 Income taxes
                                                                   
                  The   following   noncash  investing   and   financing
                 activities took place in 1994, 1995 and 1996:
                 
                 In  1994 the Company acquired approximately $2,485,000
                 in  rotable parts under capital lease obligations  and
                 by   the  issuance  of  notes.  These  purchases  were
                 financed by suppliers.
                 
                 In  1995 the Company acquired approximately $2,250,388
                 in  rotable parts under capital lease obligations  and
                 by  issuing  notes. These purchases were  financed  by
                 suppliers.
                 
                 In  December  1995  the Company accrued  dividends  of
                 $334,688   on  its  Series  A  Cumulative  Convertible
                 Preferred Stock (see Note 9).
                 
                 In 1996, the Company acquired approximately $1,194,569
                 in  rotable parts, ground equipment, telephone  system
                 upgrades   and  Director's  and  Officer's   Liability
                 Insurance  under  capital  lease  obligations  and  by
                 issuing  notes.   These  purchases  were  financed  by
                 suppliers and outside lenders.
                 
                 
          REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                    ON FINANCIAL STATEMENT SCHEDULE
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                                       
                                                            Schedule II
                                                                       
             ATLANTIC COAST AIRLINES, INC. AND SUBSIDIARY
                                   
                   VALUATION AND QUALIFYING ACCOUNTS
                                   
<TABLE>
<S>                               <C>        <C>       <C>         <C>
(in thousands)                                                       
                                           Charged                    
                                Balance       to                 Balance
         DESCRIPTION              at        Costs                 at End
                                Beginning    and     Deduction   of Year
                                          Expenses       
                                of Year      
Year ended December 31, 1996                                         
     Allowance for               $550       $387       650         $287
uncollectible accounts
                                                                     
Year ended December 31, 1995                                         
     Allowance for               $321       $229        -          $550
uncollectible accounts
                                                                     
Year ended December 31, 1994                                         
     Allowance for                $96       $225        -          $321
uncollectible accounts
</TABLE>