FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended September 30, 1998

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from __________________ to __________________

         Commission file number                        1-13934


                         MIDWEST EXPRESS HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

         Wisconsin                                              39-1828757
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                             Identification No.)
                                             
                            6744 South Howell Avenue
                           Oak Creek, Wisconsin 53154
                    (Address of Principal executive offices)
                                   (Zip code)

                                  414-570-4000
              (Registrant's telephone number, including area code)

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

                                             Yes    X           No      

As of October 31, 1998, there were 14,081,542  shares of Common Stock,  $.01 par
value, of the Registrant outstanding.


                                     Page 1


<PAGE>


                         MIDWEST EXPRESS HOLDINGS, INC.

                                    FORM 10-Q

                     For the period ended September 30, 1998



                                     INDEX


                         PART I - FINANCIAL INFORMATION

                                                                        Page No.
Item 1.    Financial Statements (unaudited)

           Consolidated Statements of Income                               3

           Condensed Consolidated Balance Sheets                           4

           Consolidated Statements of Cash Flows                           5

           Unaudited Notes to Consolidated Financial Statements            6

Item 2.    Management's Discussion and Analysis of Results of              7
           Operationsand Financial Condition
               

                           PART II - OTHER INFORMATION


Item 6.    Exhibits and Reports on Form 8-K                                16

SIGNATURES                                                                 17

                                       2


<PAGE>


Part I  Item I - Financial Statements
<TABLE>

                         MIDWEST EXPRESS HOLDINGS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)
<CAPTION>


                                                                     Three Months             Nine Months
                                                                   Ended September 30,    Ended September 30,
                                                                    1998        1997        1998        1997
                                                                  --------    --------    --------    -------
Operating revenues:                                                                     
<S>                                                               <C>         <C>          <C>         <C>     
       Passenger service...................................       $ 95,172    $ 81,731     $265,970    $229,578
       Cargo...............................................          2,894       3,156        8,763       8,448
       Other...............................................          5,757       4,512       17,599      14,637
                                                                ----------     -------      -------     -------
         Total operating revenues..........................        103,823     89,399       292,332     252,663
                                                                ----------     -------      -------     -------
Operating expenses:                                                                                 
       Salaries, wages and benefits........................         28,579      23,921       84,060      66,483
       Aircraft fuel and oil...............................         10,532      12,043       32,144      37,405
       Commissions ........................................          8,434       8,423       23,187      23,606
       Dining services.....................................          5,314       4,580       14,632      12,768
       Station rental, landing and other fees..............          6,274       5,800       19,720      18,183
       Aircraft maintenance materials and repairs..........         10,496       7,146       26,949      21,409
       Depreciation and amortization.......................          2,615       2,110        7,364       6,359
       Aircraft rentals....................................          4,899       4,373       14,323      12,947
       Other...............................................          9,764       9,215       26,803      26,735
                                                                ----------       -----       ------     -------
         Total operating expenses..........................         86,907      77,611      249,182     225,895
                                                                ----------      ------      -------     -------
Operating income...........................................         16,916      11,788       43,150      26,768
                                                                ----------      ------      -------     -------
                                                                                        
Other income (expense):                                                                 
       Interest income.....................................            415         257        1,304         896
         Interest expense..................................            (70)        (24)        (211)        (24)
         Other.............................................            (19)        (18)         (57)        (37)
                                                                ----------    --------      --------    -------
         Total other income (expense)......................            326         215        1 ,036        835
                                                                ----------    --------      --------    -------
                                                                                        
Income before income taxes.................................         17,242      12,003        44,186     27,603
Provision for income taxes.................................          6,447       4,445        16,551     10,216
                                                                ----------    --------      --------    -------
Net income.................................................     $   10,795    $  7,558      $ 27,635    $17,387
                                                                ==========    ========      ========    =======
                                                                                        
Net income per common share - basic........................     $      .77    $    .53      $   1.96    $  1.22
                                                                ==========    ========      ========    =======
Net income per common share - diluted......................     $      .75    $  .53        $   1.93    $  1.21
                                                                ==========    ========      ========    =======
</TABLE>


                 See notes to consolidated financial statements.   
                                                                   
                                        3

<PAGE>


Part I  Item I - Financial Statements
<TABLE>

                         MIDWEST EXPRESS HOLDINGS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
<CAPTION>
                                                                         September 30,       December 31,
                                                                             1998               1997
                                                                             -----              ----
                                                                          (Unaudited)
                                     ASSETS
Current assets:
<S>                                                                         <C>                <C>     
          Cash and cash equivalents...................................      $ 27,967           $ 32,066
     Accounts receivable:
         Traffic, less allowance for doubtful accounts
             of $236 and $231 at
             September 30, 1998 and December 31, 1997,                         5,887              5,106
             respectively.............................................
         Other receivables............................................           435                444
                                                                            --------           --------
                  Total accounts receivable...........................         6,322              5,550
     Inventories......................................................         4,043              3,942
     Prepaid expenses.................................................         4,855              3,414
     Deferred income taxes............................................         6,128              4,655
     Aircraft and modifications intended to be financed
             by sale and leaseback                                               951              6,000
                                                                            --------           --------
     transactions.....................................................
                  Total current assets................................        50,266             55,627
                                                                            --------           --------
Property and equipment, at cost.......................................       233,034            160,048
     Less accumulated depreciation....................................        79,460             70,892
                                                                            --------           --------
Net property and equipment............................................       153,574             89,156
Landing slots and leasehold rights, net...............................         4,654              4,900
Purchase deposits on flight equipment.................................         2,333             14,500
Other assets..........................................................         1,864              2,565
                                                                            --------           --------
Total assets..........................................................     $ 212,691           $166,748
                                                                           =========           ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable.................................................     $   5,805           $  5,560
     Income taxes payable.............................................         3,062                215
     Air traffic liability............................................        37,223             28,934
     Accrued liabilities..............................................        41,618             33,774
                                                                           ---------           --------
                  Total current liabilities...........................        87,708             68,483
                                                                           ---------           --------
Long-term debt........................................................         3,246             3,333
Deferred income taxes.................................................        10,406             12,509
Noncurrent scheduled maintenance expense..............................        10,016              7,594
Accrued pension and other postretirement benefits.....................        .6,577              5,462
Other noncurrent liabilities..........................................         5,449              5,969
                                                                           ---------           --------
Total liabilities.....................................................     $ 123,402           $103,350
                                                                           ---------           --------
Shareholders' equity:
     Preferred stock, without par value, 5,000,000 shares
       authorized, no shares issued or outstanding....................             -                  -
     Common stock, $.01 par value, 25,000,000 shares authorized,
        14,464,056 shares issued in 1998 and 9,642,807 in 1997........           145                 96
     Additional paid-in capital.......................................         9,635              9,531
          Treasury stock, at cost.....................................        (6,466)            (4,572)
     Retained earnings................................................        85,975             58,343
                                                                           ---------           --------
Total shareholders' equity............................................        89,289             63,398
                                                                           ---------           --------
Total liabilities and shareholders' equity............................     $ 212,691           $166,748
                                                                           =========           ========

</TABLE>

                 See notes to consolidated financial statements.

                                       4

<PAGE>


Part I  Item I- Financial Statements
<TABLE>

                         MIDWEST EXPRESS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)
<CAPTION>

                                                                        Nine Months Ended September 30,
                                                                             1998               1997
                                                                            ------             ------
Operating activities:
<S>                                                                       <C>                  <C>    
     Net income.......................................................    $ 27,635             $17,387
     Items not involving the use of cash:
         Depreciation and amortization................................       7,364               6,359
         Deferred income taxes........................................      (3,576)                292
         Other........................................................       3,637               3,236
     Changes in operating assets and liabilities:
         Accounts receivable..........................................        (772)                177
          Inventories.................................................        (101)               (346)
         Prepaid expenses.............................................      (1,441)                403
         Accounts payable.............................................         245                 495
         Income taxes payable.........................................       2,847               2,009
               Accrued liabilities....................................       7,844              (2,358)
         Air traffic liability........................................       8,289               9,246
                                                                          --------             -------
     Net cash provided by operating activities........................      51,971              36,900
                                                                          --------             -------
Investing activities:
     Capital expenditures.............................................     (75,482)             (23,042)
     Aircraft acquisitions and modifications financed
       by or intended to be financed by sale and leaseback
       transactions...................................................         557              (11,799)
     Proceeds from sale of property and equipment.....................         309                   49
     Other............................................................      12,868               (3,570)
                                                                          --------             --------
     Net cash used in investing activities............................     (61,748)             (38,362)
                                                                          --------             --------
Financing activities:
     Proceeds from sale and leaseback transactions....................       4,492                1,266
     Purchase of treasury stock.......................................      (2,003)              (1,977)
     Other............................................................       3,189                 (918)
                                                                          --------             --------
     Net cash provided by (used in)  financing activities.............       5,678                1,629)
                                                                          --------             --------
Net (decrease) increase in cash and cash equivalents..................      (4,099)              (3,091)
Cash and cash equivalents, beginning of period........................      32,066               27,589
                                                                          --------              -------
Cash and cash equivalents, end of period..............................    $ 27,967              $24,498
                                                                          ========              =======

Supplemental schedule of non-cash investing and financing activities:
  Long-term debt assumed in connection with capital expenditures          $    -                $ 3,487
                                                                          ========              =======
</TABLE>


                 See notes to consolidated financial statements.

                                       5

<PAGE>



                         Midwest Express Holdings, Inc.
              Unaudited Notes to Consolidated Financial Statements

1. Business and Basis of Presentation

         Basis of Presentation
         The consolidated  financial  statements for the nine-month period ended
         September  30,  1998  are   unaudited   and  reflect  all   adjustments
         (consisting  only of normal  recurring  adjustments)  that are,  in the
         opinion  of  management,  necessary  for a  fair  presentation  of  the
         financial  position and operating  results for the interim period.  The
         consolidated  financial  statements  should be read in conjunction with
         the consolidated financial statements and notes thereto,  together with
         management's discussion and analysis of financial condition and results
         of operations, contained in the Company's Annual Report to Shareholders
         and  incorporated  by reference in the Company's  Annual Report on Form
         10-K for the year ended  December 31, 1997.  The results of  operations
         for the nine-month  period ended September 30, 1998 are not necessarily
         indicative  of the results for the entire  fiscal year ending  December
         31, 1998.

         Stock Split
         On April 22, 1998,  the Company  announced  that its Board of Directors
         had  approved  a plan to split its stock  3-for-2  in the form of a 50%
         stock  dividend.  The new shares were issued May 27 to  shareholders of
         record as of May 11.  The  financial  and share  information  presented
         herein for all periods  has been  adjusted to reflect the effect of the
         stock dividend.

2.    New Accounting Standards

         The  Company is  required  to adopt SFAS No.  131,  "Disclosures  about
         Segments  of an  Enterprise  and  Related  Information,"  in the fourth
         quarter  of 1998.  SFAS No. 131 will  supersede  the  business  segment
         disclosure requirements currently in effect under SFAS No. 14. SFAS No.
         131,   among  other  things,   establishes   standards   regarding  the
         information  a company is  required  to  disclose  about its  operating
         segments and provides guidance  regarding what constitutes a reportable
         operating  segment.  For the 1998 year end reporting,  the Company will
         report  additional  financial  information  on two operating  segments,
         Midwest Express and Skyway Airlines.

         The Company is required to adopt the  disclosure  requirements  of SFAS
         No.   132,   "Employer's   Disclosures   about   Pensions   and   Other
         Postretirement  Benefits," in the fourth quarter of 1998.  SFAS No. 132
         revises  disclosure  requirements  for such pension and  postretirement
         benefit plans to, among other things,  standardize  certain disclosures
         and eliminate certain other  disclosures no longer deemed useful.  SFAS
         No. 132 does not change the  measurement  or  recognition  criteria for
         such plans.


                                        6

<PAGE>


Part I Item 2.

          Management's Discussion and Analysis of Results of Operations
                             and Financial Condition

                              Results of Operations
Overview
The Company's 1998 third quarter operating income was $16.9 million, an increase
of $5.1  million  from the third  quarter  1997.  Net income  increased  by $3.2
million,  or  42.8%,  to $10.8  million.  For the  first  nine  months  of 1998,
operating  income was $43.2  million,  an increase of $16.4  million  from 1997.
Year-to-date net income increased from $17.4 million to $27.6 million, or 58.9%.
Year-to-date  diluted earnings per share were $1.93, a $.72, or 59.5%,  increase
from 1997 results.

The Company's  total revenue in the third quarter  increased  $14.4 million,  or
16.1%, relative to the third quarter 1997. The increase in revenue was primarily
attributable  to record  passenger  traffic,  which increased  18.9%,  which was
partially due to three additional aircraft in service.  The principal new routes
were Milwaukee-Hartford and Milwaukee-Raleigh/Durham. In addition, the Company's
traffic increased because of Northwest Airlines' and Air Canada's pilot strikes.
The Company  estimates  that  operating  income  increased  $1.2  million in the
quarter because of the incremental  passengers transported during these strikes.
A 2.0% decrease in revenue yield offset the  improvement  in passenger  traffic.
The decrease in revenue  yield was due to higher  traffic in lower yield markets
and lower  yield  traffic  received  as a result of  Northwest  Airlines'  pilot
strike. The Company also posted increased  supplemental revenue from the Midwest
Express MasterCard program, ticket exchange fees and aircraft charters.

The Company's  costs  increased by $9.3 million,  or 12.0%, in the third quarter
1998 due to higher labor and maintenance costs and expenses  associated with the
service  expansions  during 1997 and 1998.  These  higher  costs were  partially
offset by lower fuel prices and reduced  travel agent  commission  expense.  The
Company  benefited  from  significantly  lower fuel prices in the third  quarter
1998,  which  averaged  21.3% less than in the third  quarter  1997.  Lower fuel
prices favorably  impacted operating income by $2.8 million in the third quarter
1998. In addition, a reduced travel agent commission structure  contributed $1.4
million to operating income in the third quarter 1998. The Company also incurred
incremental costs of $1.6 million for two aircraft heavy  maintenance  checks in
the third  quarter  1998.  Additional  detail on cost  changes  is  included  in
subsequent sections.


                                       7
<PAGE>

   Operating Statistics
   The following table provides selected operating  statistics for Midwest
   Express and Skyway.
<TABLE>
<CAPTION>

                                                          Three Months Ended                        Nine Months Ended
                                                            September 30,                             September 30,

                                                                                                                         
                                                                                     %                                         %   
                                                       1998           1997        Change*        1998           1997        Change*
                                                    ---------      ---------    ---------      --------       --------    ---------
Midwest Express Operations                                                             
<S>                                                   <C>            <C>            <C>       <C>            <C>             <C> 
Origin & Destination Passengers                       485,286        413,473        17.4      1,312,484      1,154,683       13.7
Revenue Passenger Miles (000s)                        444,579        374,693        18.7      1,209,059      1,050,179       15.1
Scheduled Service Available Seat Miles (000s)         644,906        571,362        12.9      1,839,701      1,639,871       12.2
Total Available Seat Miles (000s)                     651,038        576,684        12.9      1,861,471      1,667,040       11.7
Load Factor (%)                                         68.9%          65.6%         3.3          65.7%          64.0%        1.7
Revenue Yield                                          $0.188         $0.191        -1.6         $0.194         $0.192        1.2
Cost per total ASM                                     $0.120         $0.120         0.2         $0.120         $0.120         --
Average Passenger Trip Length                           916.1          906.2         1.1          921.2          909.5        1.3
Number of Flights                                      10,739          9,961         7.8         30,659         28,793        6.5
Into-plane Fuel Cost per Gallon                        $0.534         $0.680       -21.4         $0.569         $0.735      -22.7
 Full-time Equivalent Employees at End of Period        2,066          1,850        11.7          2,066          1,850       11.7
Aircraft in Service at End of Period                       27             24        12.5             27             24       12.5

Skyway Airlines Operations
Origin & Destination Passengers                        99,144         77,868        27.3        255,313        222,790       14.6
Revenue Passenger Miles (000s)                         22,695         18,451        23.0         58,835         52,077       13.0
Scheduled Service Available Seat Miles (000s)          41,332         41,168         0.4        121,642        119,215        2.0
Total Available Seat Miles (000s)                      41,473         41,236         0.6        121,818        119,465        2.0
Load Factor (%)                                         54.9%          44.8%        10.1          48.4%          43.7%        4.7
Revenue Yield                                          $0.510         $0.551        -7.4         $0.537         $0.546       -1.5
Cost per total ASM                                     $0.236         $0.231         2.5         $0.235         $0.238       -1.3
Average Passenger Trip Length                           228.9          237.0        -3.4          230.4          233.7       -1.4
Number of Flights                                      11,148         10,771         3.5         32,589         31,200        4.5
Into-plane Fuel Cost per Gallon                        $0.623         $0.766       -18.6         $0.642         $0.794      -19.1
 Full-time Equivalent Employees at End of Period          297            264        12.5            297            264       12.5
Aircraft in Service at End of Period                       15             15          --             15             15         --
</TABLE>


         Note:    All  statistics   exclude   charter   operations   except  the
                  following:  total  available  seat miles,  cost per total ASM,
                  into-plane  fuel cost,  number of  employees  and  aircraft in
                  service. Aircraft acquired but not yet placed into service are
                  excluded from the aircraft in service statistics.

                  * Percentage change  calculations may not be recomputed due to
rounding.

                                       8

<PAGE>



      The following  table provides  operating  revenues and expenses for the
      Company expressed as cents per total ASM, including charter operations,
      and as a percentage of total revenues:
<TABLE>
<CAPTION>

                                          Three Months Ended September 30,                  Nine Months Ended September 30,
                                             1998                   1997                      1998                      1997
                                          ----------            ----------                 ----------                ---------
                                           
                                    Per Total       % of    Per Total       % of     Per Total       % of      Per Total       % of
                                      ASM         Revenue     ASM         Revenue      ASM         Revenue       ASM         Revenue
Operating revenues:
<S>                                  <C>          <C>        <C>          <C>         <C>          <C>          <C>          <C>  
Passenger service                    $0.137       91.7%      $0.132       91.4%       $0.134       91.0%        $0.129       90.9%
Cargo                                 0.004        2.8%       0.005        3.5%        0.004        3.0%         0.005        3.3%
Other                                 0.008        5.5%       0.007        5.1%        0.009        6.0%         0.008        5.8%
                                      -----        ----       -----       ----        -----        ----          -----        ----
Total operating revenues              0.150      100.0%       0.145      100.0%        0.147      100.0%         0.141      100.0%

Operating expenses:
Salaries, wages and benefits          0.041       27.5%       0.039       26.7%        0.042       28.8%         0.037       26.3%
Aircraft fuel and oil                 0.015       10.1%       0.020       13.5%        0.016       11.0%         0.021       14.8%
Commissions                           0.012        8.1%       0.014        9.4%        0.012        7.9%         0.013        9.3%
Dining services                       0.008        5.1%       0.007        5.1%        0.007        5.0%         0.007        5.1%
Station rental, landing and           0.009        6.0%       0.009        6.5%        0.010        6.7%         0.010        7.2%
    other fees
Aircraft maintenance                  0.015       10.1%       0.012        8.0%        0.014        9.2%         0.012        8.5%
    materials/repairs
Depreciation and amoritization        0.004        2.5%       0.003        2.4%        0.004        2.5%         0.004        2.5%
Aircraft rentals                      0.007        4.7%       0.007        4.9%        0.007        4.9%         0.007        5.1%
Other                                 0.014        9.4%       0.015       10.3%        0.014        9.2%         0.015       10.6%
                                      -----        ----       -----       -----        -----        ----         -----       -----
Total operating expenses             $0.126       83.5%      $0.126       86.8%       $0.126       85.2%        $0.126       89.4%
                                     ======       =====      ======       =====       ======       =====        ======       =====

Total ASMs (000s)                   692,511                 617,920                1,983,289                 1,786,505
</TABLE>

         Note: Numbers, percents, and totals in this table may not be recomputed
due to rounding.

                Three Months Ended September 30, 1998 Compared to
                      Three Months Ended September 30, 1997

Operating Revenues
Company  operating  revenues totaled $103.8 million in the third quarter 1998, a
$14.4  million,  or 16.1%,  increase  over  revenues for the third quarter 1997.
Passenger  revenues  accounted for 91.7% of total  revenues and increased  $13.4
million, or 16.4%, from 1997 to $95.2 million. The increase is attributable to a
18.9%  increase in passenger  volume,  as measured by revenue  passenger  miles,
offset by a 2.0%  decrease in revenue  yield.  Part of the increase in passenger
volume was caused by pilot  strikes at Northwest  Airlines  and Air Canada.  The
Company  estimates that operating  income  increased $1.2 million in the quarter
because of the incremental passengers transported during these strikes.

Midwest Express Airlines passenger revenue increased by $12.0 million, or 16.8%,
from 1997 to $83.6  million.  This increase  reflects a 17.4% increase in origin
and destination  passengers,  offset by a 1.6% decrease in revenue yield.  Total
capacity,  as measured by scheduled  service  ASMs,  increased  12.9% because of
three  additional  aircraft in scheduled  service during the 1998 quarter.  Load
factor  increased  from  65.6%  in 1997 to  68.9% in  1998.  Revenue  yield  was
negatively  impacted by higher  traffic in lower  yield  markets and lower yield
traffic received as a result of Northwest Airlines' pilot strike.

Skyway passenger revenue increased by $1.4 million, or 13.9%, from 1997 to $11.6
million.  This increase was caused by a 27.3% increase in origin and destination
passengers,  offset by a 7.4% decrease in revenue yield.  Load factor  increased
from 44.8% in 1997 to 54.9% in 1998.  Revenue yield was  negatively  impacted by
the lower yield  traffic  diverted to Skyway as a result


                                       9

<PAGE>

of Northwest  Airlines' pilot strike and a competitive  situation in one market,
which increased load factor with reduced yield.

Revenue from cargo,  charter and other  services  increased  $1.0 million in the
third quarter 1998.  Midwest  Express  benefited from  increased  revenue of $.7
million from the Midwest Express  MasterCard program and $.5 million from ticket
exchange fees. Lower mail freight revenues partially offset these increases as a
result  of  the  U.S.   Postal  Service   transporting   more  mail  via  ground
transportation.

Operating Expenses
1998 operating expenses increased by $9.3 million, or 12.0%, from 1997. The cost
increase was  primarily  due to expanded  operations  as  capacity,  measured by
scheduled  service  available seat miles,  increased 12.0%.  Higher  maintenance
costs and a higher  employee profit sharing accrual offset lower fuel prices and
lower  distribution  costs. Cost per total ASM of 12.6(cent)  decreased .1% from
third quarter 1997.

Salaries,  wages and benefits increased by $4.7 million, or 19.5%. On a cost per
total ASM basis, these costs increased 6.6%, from 3.9(cent) in 1997 to 4.1(cent)
in 1998.  Labor costs  increased  $1.8 million  because of accruals for employee
profit  sharing  and  management  incentive  programs.  The profit  sharing  and
incentive  plans,  which benefit  substantially  all employees and are dependent
entirely on achieving certain levels of profitability,  are payable annually and
accrued  monthly  based  on  earnings-to-date  and  projected  results  for  the
remainder of the year. Excluding profit sharing,  labor costs increased .4% on a
cost per total ASM basis.  The labor cost increase also reflects the addition of
approximately 249 full-time  equivalent employees (216 at Midwest Express and 33
at Skyway)  since  September  30, 1997 and  increases  in labor  rates.  Midwest
Express added  employees  throughout  the  organization  to support the aircraft
placed in service during 1997 and 1998; Skyway added employees  primarily in the
flight operations and maintenance functions.

Aircraft fuel and oil and associated taxes decreased $1.5 million,  or 12.5%, in
1998.  Into-plane fuel prices decreased 21.3% in 1998,  averaging 54.0(cent) per
gallon in 1998 and 68.7(cent) per gallon in 1997. Fuel consumption  increased by
11.4% in the quarter because  Midwest Express  operated 9.2% more aircraft block
hours.  Fuel  prices  have  increased  at Midwest  Express  since the end of the
quarter averaging 58.3(cent) per gallon in October 1998 for scheduled service.

Commission  costs were almost the same third  quarter 1998 versus third  quarter
1997, but decreased 10.7% on a cost per total ASM basis. The new commission rate
structure  implemented in September 1997, which lowered travel agent commissions
from 10% to 8%, reduced commission expenses by $1.4 million.  This reduction was
offset by the increase in passenger revenue of 16.4%.

Dining  services  costs  increased  by $.7  million,  or 16.0%,  from 1997.  The
increase was primarily due to the 17.4%  increase in Midwest  Express origin and
destination passengers. Total dining services cost per Midwest Express passenger
decreased 1.2% to $10.95.

Station rental,  landing and other fees increased by $.5 million,  or 8.2%, from
1997.  The increase was caused by 7.8% more flight  segments by Midwest  Express
and higher  airport costs,


                                       10

<PAGE>


particularly at Ronald Reagan National Airport in Washington D.C.

Maintenance  costs increased by $3.4 million,  or 46.9%, from 1997. The increase
was attributable to more flight hours at Midwest Express, an increase in accrual
rates for future engine overhauls and higher aircraft component repair costs. In
addition,  the Company incurred $1.6 million of incremental  costs for two major
aircraft maintenance checks that required outsourcing.

Depreciation and amortization increased by $.5 million, or 23.9%, from 1997. The
increase was  primarily  the result of  depreciation  associated  with  aircraft
placed in service during the last year.

Aircraft  rental costs  increased by $.5 million in 1998, as a result of Midwest
Express leasing two additional aircraft in 1998.

Other operating  expenses  increased by $.5 million,  or 6.0%, from 1997.  Other
cost increases  included  additional  passenger  booking fees,  professional and
financial  services,  flight  standards  training,  costs  associated  with  the
Company's  frequent  flyer  program,  telecommunication  costs and naming rights
costs for the Midwest Express Center. These cost increases were partially offset
by lower costs for hull and liability  insurance,  legal services,  advertising,
uncollectible accounts, and software.

Provision for Income Taxes
Income tax expense for the third quarter 1998 was $6.4  million,  a $2.0 million
increase  from 1997.  The  effective tax rates for the third quarter of 1998 and
1997 were  37.4% and  37.0%,  respectively.  For  purposes  of  calculating  the
Company's  income tax expense and effective tax rate, the Company treats amounts
payable to an affiliate of Kimberly-Clark Corporation under a tax allocation and
separation  agreement  entered into in  connection  with the  Company's  initial
public offering as if they were payable to taxing authorities.

Net Income
Net income for the third  quarter  increased  $3.2  million  from 1997.  The net
income margin increased from 8.5% in 1997 to 10.4% in 1998.

                Nine Months Ended September 30, 1998 compared to
                      Nine Months Ended September 30, 1997

Operating Revenues
Company  operating  revenues  totaled  $292.3  million for the nine months ended
September 30, 1998, a $39.7  million,  or 15.7%,  increase over 1997.  Passenger
revenues  accounted for 91.0% of total revenues and increased $36.4 million,  or
15.9%,  from 1997 to $266.0  million.  The increase is  attributable  to a 15.0%
increase in passenger  volume, as measured by revenue passenger miles, and a .7%
increase in revenue yield.

Midwest Express Airlines passenger revenue increased by $33.2 million, or 16.5%,
from 1997 to $234.4  million.  This  increase was caused by a 13.7%  increase in
passengers and a 1.3% increase in average  passenger trip length.  Total Midwest
Express capacity,  as measured by scheduled service ASMs,  increased 12.2%. Load
factor increased from 64.0% in 1997 to 65.7% in 1998.

                                       11

<PAGE>


Skyway passenger  revenue  increased $3.2 million,  or 11.2%, from 1997 to $31.6
million. This increase was caused by a 14.6% increase in passengers, offset by a
1.5%  decrease in revenue  yield.  Load factor  increased  from 43.7% in 1997 to
48.4% in 1998.

Revenue from cargo, charter and other services increased $3.3 million, or 14.2%,
in 1998.  Midwest Express  benefited from increased revenue of $2.0 million from
the Midwest  Express  MasterCard  program and $.9 million  from ticket  exchange
fees. Revenue from mail and freight services increased 3.7% or $.3 million while
revenue from charter services decreased $.2 million.

Operating Expenses
1998 operating expenses increased $23.3 million, or 10.3%, from 1997,  primarily
due to expanded  operations  as total  capacity,  measured by scheduled  service
available seat miles, increased 11.5%. The Company has benefited from lower fuel
prices and lower  distribution  costs, but these were partially offset by higher
aircraft  maintenance costs and a higher profit sharing accrual.  Cost per total
ASM of 12.6(cent) decreased .6%, from 1997 to 1998.

Salaries,  wages and benefits increased $17.6 million, or 26.4%, from 1997. On a
cost per total ASM basis, these costs increased 13.9%, from 3.7(cent) in 1997 to
4.2(cent) in 1998.  Labor costs  increased $6.3 million  because of accruals for
employee profit sharing and management  incentive  programs.  The profit sharing
and incentive plans, which benefit substantially all employees and are dependent
on achieving certain levels of  profitability,  are payable annually and accrued
monthly based on earnings-to-date and projected results for the remainder of the
year. Excluding the profit sharing accrual,  labor cost increased 5.8% on an ASM
basis. The labor cost increase also reflects the addition of  approximately  249
full-time  equivalent  employees (216 at Midwest Express and 33 at Skyway) since
September 30, 1997 and increases in labor rates. Midwest Express added employees
throughout  the  organization  to support the aircraft  placed in service during
1997 and 1998;  Skyway added  employees  primarily in the flight  operations and
maintenance functions.

Aircraft fuel and oil and associated  taxes  decreased  $5.3 million,  or 14.1%,
from 1997.  Into-plane fuel prices decreased 22.4% in 1998, averaging 57.4(cent)
per gallon in 1998 and 74.0(cent) in 1997.  Fuel  consumption  increased  10.9%,
primarily because of an 8.8% increase in Midwest Express aircraft block hours.

Commissions decreased by $.4 million, or 1.8%, and decreased 11.5% on a cost per
total ASM basis.  The new  commission  rate  structure  implemented in September
1997, which lowered travel agent commissions from 10% to 8%, reduced  commission
expenses by $4.1 million. This reduction was offset by the increase in passenger
revenue of 15.9%.

Dining  services costs  increased $1.9 million,  or 14.6%, in 1998. The increase
was  primarily  due  to  the  13.7%  increase  in  Midwest  Express  origin  and
destination passengers. Total dining services cost per Midwest Express passenger
increased .8% to $11.15.

Station rental,  landing and other fees increased by $1.5 million, or 8.4%, from
1997.  The increase was caused by 6.5% more flight  segments by Midwest  Express
and higher  airport costs,  particularly  at Ronald Reagan  National  Airport in
Washington D.C.


                                       12

<PAGE>

Maintenance  costs increased by $5.5 million,  or 25.9%, from 1997. The increase
was attributable to more flight hours at Midwest Express, an increase in accrual
rates for future engine  overhauls,  higher  aircraft  component  costs and $2.3
million  cost  for  three  major  aircraft   maintenance  checks  that  required
outsourcing.  The  increase  was  offset by an  unscheduled  repair of one MD-88
engine that adversely affected costs by $1.3 million in 1997.

Depreciation and amortization  increased by $1.0 million,  or 15.8%,  from 1997.
The  increase  was  primarily  the result of the  depreciation  associated  with
additional aircraft placed in service.

Aircraft  rental costs  increased  $1.4  million as a result of Midwest  Express
leasing two additional aircraft in 1998.

Other operating  expenses increased by .3% from 1997. Higher costs were incurred
for  the   Company's   frequent   flyer   program,   passenger   booking   fees,
telecommunications  and  professional and financial  services.  The increase was
offset primarily by a non-recurring  $1.1 million airport rental credit received
from  Milwaukee  County due to an airport rental  surplus.  Other cost decreases
consisted  of lower  hull and  liability  insurance,  software,  and  facilities
rental.

Provision for Income Taxes
Income tax  expense  for the first  nine  months of 1998 was $16.6  million,  an
increase of $6.3 million from 1997.  The  effective tax rates for the first nine
months 1998 and 1997 were 37.5% and 37.0%, respectively.

Net Income
Net income for the first nine months  increased $10.2 million from 1997. The net
income margin increased to 9.5% in 1998 from 6.9% in 1997.

                                       13

<PAGE>


                         Liquidity and Capital Resources

The Company's cash and cash equivalents  totalled $28.0 million at September 30,
1998,  compared to $32.1  million at December  31,  1997.  Net cash  provided by
operating  activities totalled $52.0 million for the nine months ended September
30,  1998.  Net  cash  used in  investing  activities  totalled  $61.7  million,
primarily due to capital expenditures of $75.5 million.

As of September  30, 1998,  the Company had a working  capital  deficit of $37.4
million versus a $12.9 million deficit on December 31, 1997. The working capital
deficit is due to the Company's air traffic liability (advance bookings, whereby
passengers  have  purchased  tickets  for  future  flights),  accrued  scheduled
maintenance expense and accrued lease payments.  The increase in the deficit was
due to higher advance sales as a result of increased  operations,  higher profit
sharing liability, and higher accrued aircraft lease payments.  Because of these
items,  the  Company  expects to  operate  periodically  with a working  capital
deficit, which is not unusual for the industry.

As of September 30, 1998, the Company's two credit  facilities,  a $55.0 million
revolving bank credit facility and a $20.0 million  secondary  revolving  credit
facility  with  Kimberly-Clark,  have not been used except for letters of credit
totalling  approximately  $16.1  million  that  reduce the  amount of  available
credit.

Capital expenditures  totalled $75.5 million for the nine months ended September
30, 1998.  Capital  expenditures  consisted  primarily of aircraft  purchase and
refurbishment  costs which totaled  $68.1  million.  Other capital  expenditures
included  engine  overhauls,  aircraft  hush  kit  components,   aircraft  major
maintenance and ground equipment.

During 1997, the Company executed definitive purchase documents to acquire eight
used McDonnell Douglas MD-80 series aircraft. The Company has financed the first
four  deliveries  in 1998 using  internal  cash flow and  expects to finance the
remaining four of these aircraft using internal cash flow.

As of March 31, 1998,  leases relating to three of Midwest Express' jet aircraft
are  guaranteed  by  Kimberly-Clark  in return for a  guarantee  fee paid by the
Company. Kimberly-Clark will continue to guarantee these leases until the end of
the current lease terms. None of these jet aircraft leases expires before 2001.

The  Company's  Board of Directors has  authorized a $15.0 million  common stock
repurchase  program. As of September 30, 1998, the Company has purchased a total
of  418,625  shares of common  stock at a cost of $6.8  million  under the share
repurchase  program  which  included a repurchase  of 65,300 shares at a cost of
$2.0 million during the quarter ending September 30, 1998.

On August 5, 1998,  the Company  completed  an $8.3  million  financing of a new
maintenance  hangar facility in Milwaukee.  The facility is financed by 32 year,
tax-exempt, variable rate, demand industrial revenue bonds issued by the City of
Milwaukee.  Milwaukee County, a government unit, is the owner of the facility to
ensure  the  tax-exempt  status.  Interest  payments  made  to  bondholders  and
amortization of the principal are recorded as rent expense.


                                       14

<PAGE>

The Company believes its cash flow from operations,  funds available from credit
facilities and available long-term financing for the acquisition of jet aircraft
will be adequate to provide for working  capital needs and capital  expenditures
through 1998.

                              Pending Developments

This 10-Q filing, and particularly this Pending Developments  section,  contains
forward-looking   statements  that  may  state  the  Company's  or  management's
intentions,  hopes,  beliefs,  expectations or predictions for the future. It is
important to note that the Company's actual results could differ materially from
those  projected  results due to factors that  include,  but are not limited to,
uncertainties   related  to  general  economic  factors,   industry  conditions,
scheduling  developments,  government  regulations,  labor  relations,  aircraft
maintenance  and  refurbishment  schedules,  and  potential  delays  relating to
acquired aircraft.  Additional  information  concerning factors that could cause
actual results to differ materially from those in the forward-looking statements
is contained  from time to time in the Company's SEC filings,  including but not
limited to the Company's  prospectus dated May 23, 1996 included in Registration
Statement on Form S-1 No. 333-03325.

Stock  Split - On April  22,  1998,  the  Company  announced  that its  Board of
Directors  had  approved a plan to split its stock  3-for-2 in the form of a 50%
stock  dividend.  The new shares were issued May 27 to shareholders of record as
of May 11.  Fractional  shares were paid to  shareholders in cash. The financial
and share  information  presented  in  Management's  Discussion  and Analysis of
Results of Operations  and Financial  Condition has been adjusted to reflect the
effect of the stock split for all periods.

MD-80 Aircraft - In September 1997 the Company  announced plans to acquire eight
used MD-80 aircraft to be placed into scheduled  service in 1998 and 1999. As of
September 30, 1998, one aircraft has been placed into service and three aircraft
have  been  delivered  and are  being  refurbished.  Two of these  aircraft  are
expected  to be placed into  scheduled  service by the end of 1998 and the third
aircraft is expected to be placed into scheduled service in the first quarter of
1999. Two  additional  aircraft are expected to be delivered in January 1999 and
placed into service  during the second  quarter of 1999.  The final two aircraft
are expected to be  delivered in the fourth  quarter of 1999 and are expected to
be placed into service early in 2000.

Regional Jets - On July 8, 1998, the Company  announced that it has entered into
an agreement with Fairchild  Dornier to acquire five new regional jets,  with an
option to purchase 10 additional aircraft.  Although the aircraft were initially
anticipated to be delivered to Astral  beginning March 1999  continuing  through
September  1999,  they are now expected  beginning June 1999 with delivery to be
completed  by the end of 1999 as a result of a delay in aircraft  certification.
The Company  expects that this project,  including  aircraft  purchase price and
support equipment, will cost approximately $60.0 million and will be financed as
deliveries  take  place.  The  Company  is  continuing  to  evaluate   financing
alternatives.

Year 2000 -The Company  established a year 2000 team in January 1998 to evaluate
and remediate any year 2000 issues. As a result of the Company becoming publicly
owned in September 1995, many systems required immediate replacement. All of the
replacement  systems  purchased  since  then  were  represented  to be year 2000
compliant by their  respective  vendors.  In mid-1997  the

                                       15

<PAGE>


Company designed and implemented a technology  infrastructure composed of almost
all year 2000 compliant products.

Notwithstanding  the above,  the Company has developed  plans to address  issues
related to the impact of the year 2000 on its business.  The Company's Year 2000
Project  involves  five  phases:  Awareness,  Inventory/Assessment,  Renovation,
Validation and Implementation. Internal financial, operational,  non-information
technology  systems and external  interfaces have been inventoried and assessed,
and plans have been  developed  to  remediate  any  non-compliant  systems.  The
Company has one major internally  developed and maintained  system that requires
modifications.  This system, which is used for purchasing,  inventory,  accounts
payable and aircraft  maintenance planning and records, was originally scheduled
for completion of these  modifications  using  in-house  personnel by the end of
1998;  however,  due to a delay in start up, completion is now scheduled by June
1999.  The  company  is also  evaluating  non-technology  systems  that  include
embedded  technology,  such  as  microcontrollers  in  aircraft  parts,  airport
equipment  and  facility  infrastructures.  The  financial  impact of making the
required  system  changes  is not  expected  to be  material  to  the  Company's
consolidated financial position, results of operations or cash flow.

The Company  realizes that  preparedness  is also  predicated upon many external
factors.  Therefore,  the Company is actively pursuing  suppliers and vendors to
evaluate their respective level of preparedness. Questionnaires have been mailed
out to the most  critical  suppliers  and  vendors and the  evaluation  of their
preparedness is in process.  Follow-up action is dictated by the priority of the
service  or  commodity  used and the  response  received.  The  Company  is also
participating  with the airline industry to identify  potential year 2000 issues
at airports,  and within  industry  infrastructure,  including  common  vendors,
suppliers, government agencies, and the Federal Aviation Administration ("FAA").
FAA  operations  are made possible by many critical  computer  systems;  without
these  specialized  systems,  the FAA could not effectively  control the current
level of air traffic,  target  airlines for  inspection,  or provide  up-to-date
weather conditions to pilots and air traffic controllers.

The implications of the Company,  a critical vendor or supplier,  or the FAA not
being  prepared  for the year 2000 could have a material  adverse  affect on the
Company,  resulting  in customer  inconvenience,  increased  costs,  grounded or
delayed  flights,  or a degraded  level of  safety.  To be  prepared  to address
unexpected occurrences, contingency plans will be developed during the first six
months of 1999 for those scenarios within the Company's control. However, due to
the  complexity and  pervasiveness  of the Year 2000 issue and in particular the
uncertainty regarding the compliance programs of third parties, no assurance can
be given that the Company's estimates will be achieved, and actual results could
differ materially from those anticipated.


Other Issues - The Company's annual report for the year ended December 31, 1997,
disclosed  certain  issues  relating to labor  relations and sales taxes.  These
issues remain pending.


PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

                                       16

<PAGE>


         (a)      Exhibits

                  (27) Financial Data Schedule.




         (b)      Reports on Form 8-K

                  No  reports on Form 8-K were filed  during the  quarter  ended
                  September 30, 1998.



                                   SIGNATURES


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                    Midwest Express Holdings, Inc.


Date:    November 16, 1998          By /s/ Robert S. Bahlman                    
      ----------------------        --------------------------------------------
                                    Robert S. Bahlman
                                    Senior Vice President, Chief Financial
                                    Officer and Treasurer


                                       17

<PAGE>

                                 EXHIBIT INDEX

Exhibit No.         Description

  27                Financial Data Schedule