---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q/A

(Mark
One)

þ                            QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934



|For the quarterly period ended March 31, 2003
|---------------------------------------------



|OR
|--



 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF
1934



For the transition period from ____________ to ______________



AirTran Holdings, Inc.

(Exact name of registrant as specified in its charter)



State of Incorporation:     Nevada



9955 AirTran Boulevard, Orlando, Florida 32827

(Address of principal executive offices) (Zip Code)



(407) 251-5600

(Registrants telephone number, including area code)



Commission file number:
1-15991         I.R.S. Employer Identification No: 58-2189551



LOGO



AirTran Airways, Inc.

(Exact name of registrant as specified in its charter)



State of Incorporation:     Delaware



9955 AirTran Boulevard, Orlando, Florida 32827

(Address of principal executive offices) (Zip Code)



(407) 251-5600

(Registrants telephone number, including area code)



Commission file number:
333-37487-09             I.R.S. Employer Identification No: 65-0440712



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. YesÖNo



Indicate by check mark whether the registrants are accelerated filers (as defined in Rule
12b-2 of the Exchange Act).

YesÖNo



As of April 30, 2003 there were approximately 71,966,000 shares of common stock of AirTran Holdings, Inc. and 1,100 shares of common stock of AirTran Airways, Inc.
outstanding.



The registrant AirTran Airways, Inc. meets the conditions set
forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore participating in the filing of this form in the reduced disclosure format permitted by such Instructions.



---





---

EXPLANATORY NOTE



The purpose of this Amendment to the Companys Form 10-Q for the period ended March 31, 2003 is to revise the presentation of certain
operating statistics under Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations to conform to the requirements of the Securities and Exchange Commission with regard to the use of non-GAAP
financial measures. This Amendment continues to speak as of the date of the original filing of the Quarterly Report, and the Company has not updated the disclosures contained therein to reflect any events that occurred at a later date. The
amendments in no way affect the Companys current or past reported earnings or financial statements but simply modify or remove certain items from the presentation of non-GAAP financial measures. Item 2 is hereby amended and restated in its
entirety.



---

ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS



FORWARD-LOOKING STATEMENTS



The information contained in this section: (i) has been derived from our
historical financial statements and should be read together with our historical financial statements and related notes included elsewhere in this document, in addition to our Annual Report on Form 10-K for the year ended December 31, 2002 as filed
with the U.S. Securities & Exchange Commission; and (ii) is not a comprehensive discussion and analysis of our financial condition and results of operations, but rather updates disclosures made in such Annual Report. The discussion below
contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties
including, but not limited to: consumer demand and acceptance of services offered by us, our ability to achieve and maintain acceptable cost levels, fare levels and actions by competitors, regulatory matters, general economic conditions, commodity
prices and changing business strategies. Forward-looking statements are subject to a number of factors that could cause actual results to differ materially from our expressed or implied expectations, including, but not limited to: our performance in
future periods, our ability to generate working capital from operations, our ability to take delivery of and to finance aircraft, the adequacy of our insurance coverage and the results of litigation or investigations. Our forward-looking statements
can be identified by the use of terminology such as anticipates, expects, intends, believes, will or the negative thereof, or variations thereon or comparable terminology. We undertake no
obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.



GENERAL INFORMATION



We operate in a highly competitive industry that is characterized in general by cyclical financial performance, sensitivity to general economic conditions and large capital investments. The environment in which we
operate has most recently been affected by high fuel prices, military actions in Iraq, a weak domestic economy and residual effects of the terrorist event of September 11, 2001 (September 11 Events) including significant escalations in the cost of
aviation insurance and security services. In light of these conditions, we believe we have performed well against our competitors both on a financial and operating performance basis. At a time when our competitors have posted substantial financial
losses and continue to reduce their scheduled services, we have remained profitable, increased our Boeing 717 fleet, and announced new service to the West Coast and achieved greater fleet utilization, all while reducing our operating costs per
available seat mile (CASM). Despite these economic challenges our focus on controlling costs enabled us to report our fourth consecutive quarter of profitability following the September 11 Events.



Our financial and operating results for any interim period are not necessarily indicative of
those for the entire year, because the air transportation business is subject to seasonal fluctuations. Higher demand for air travel has traditionally resulted in more favorable financial and operating results for the second and third quarters of
the year than for the first and fourth quarters.



AIRCRAFT INSURANCE



Our financial performance is particularly sensitive to fluctuations in
the cost of aircraft insurance. Following the September 11 Events, aviation insurers provided notice to all air carriers that coverage for aircraft hull and liability war-risk would be cancelled in seven days. Upon cancellation of our policies, we
purchased new policies in the commercial insurance market at significantly higher rates and, in certain cases, at reduced levels of coverage compared to our previous policies. Pursuant to the Air Transportation Safety and System Stabilization Act
(Stabilization Act), the federal government currently provides coverage for renewable 60-day periods for the gap between the coverage that is available in the commercial insurance market and what air carriers require for third party liabilities
arising from war risks. In November 2002, Congress passed the Homeland Security Act, which mandated the federal government to provide third party passenger and hull war-risk insurance coverage to commercial carriers through August 31, 2003 and
permits such coverage to be extended until December 31, 2003. The Emergency Wartime Supplemental Appropriations Act (Wartime Act) (see Note 8 to the Unaudited Condensed Consolidated Financial Statements) extends the governments mandate to
provide war-risk insurance until August 31, 2004 with an option to extend the coverage through December 31, 2004. There is no assurance the federal government will continue to provide similar coverage beyond this date. The federal governments
failure to renew the insurance gap coverage beyond this date may substantially increase our insurance costs.



---

SECURITY SERVICES



Our financial and operational performance is particularly sensitive to the implementation and execution of federally mandated security services. Prior to the September 11
Events, air carriers were primarily responsible for conducting the security screening of their passengers and the aircraft they operated. The federal government became responsible for aviation security procedure design and enforcement following
these events. To date we have complied with the numerous security directives the federal government has issued, and at times modified after issuance, without sacrificing the operational efficiency of our business. Any future directives could affect
our future financial and operational performance.



On April 16, 2003, the
Wartime Act was signed into law. Among other items, the legislation includes a $2.3 billion cash reimbursement to air carriers for security fees remitted to the TSA since the September 11 Events. We expect to receive our proportional share of
security fees paid, as defined, during the second quarter of 2003.



RESULTS
OF OPERATIONS



For the three months ended March 31, 2003 and 2002



The table below sets forth selected financial and operating data for
the three months ended March 31, 2003 and 2002.



|                                         |  | Three Months EndedMarch 31, |           |   | PercentChange |  
|---------------------------------------- |  | --------------------------- | --------- | - | ------------- | -
|                                         |  | 2003                        |           |   | 2002          |  
|Revenue passengers                       |  |                             | 2,560,160 |   |               |  
|Revenue passenger miles (000s)           |  |                             | 1,567,412 |   |               |  
|Available seat miles (000s)              |  |                             | 2,311,961 |   |               |  
|EBITDA                                   |  | $                           | 11,700    |   |               | $
|Operating margin                         |  |                             | 4.0       | % |               |  
|Net margin                               |  |                             | 1.0       | % |               |  
|Block hours                              |  |                             | 64,929    |   |               |  
|Passenger load factor                    |  |                             | 67.8      | % |               |  
|Break-even load factor                   |  |                             | 67.1      | % |               |  
|Average fare                             |  | $                           | 78.86     |   |               | $
|Average yield per RPM                    |  |                             | 12.88     | ¢ |               |  
|Passenger revenue per ASM                |  |                             | 8.73      | ¢ |               |  
|Operating cost per ASM                   |  |                             | 8.63      | ¢ |               |  
|Average cost of aircraft fuel per gallon |  |                             | 107.55    | ¢ |               |  
|Weighted-average number of aircraft      |  |                             | 67        |   |               |  



---

Pursuant to Regulation G, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is not a financial
measure recognized under Accounting Principles Generally Accepted in the United States (GAAP). We believe that the non-GAAP measure, EBITDA, provides useful information regarding our ability to service our debt. EBITDA should not, however, be
considered in isolation as a substitute for net income, cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. Following is a reconciliation of GAAP net income to EBITDA:



|                    |  | Three Months EndedMarch 31, |       
|------------------- |  | --------------------------- | ------
|                    |  | 2003                        |       
|                    |  | (in thousands)              |       
|Net income per GAAP |  | $                           | 2,036 
|Income tax benefit  |  |                             |      
|Other expense, net  |  |                             | 6,342 
|Depreciation        |  |                             | 3,322 
|                    |  |                             |       
|EBITDA              |  | $                           | 11,700
|                    |  |                             |       



Summary



We recorded operating income of $8.4 million, net income of $2.0 million and earnings per
basic and diluted common share of $0.03 for the three months ended March 31, 2003. For the comparative period in 2002, we recorded an operating loss of $2.9 million, a net loss of $3.0 million and a loss per basic and diluted earnings per common
share of $0.04. Included in the 2002 results was a $5.6 million after-tax, noncash credit adjustment reducing Other expense, net that was related to the change in value of our fuel-related derivative contracts. These contracts were terminated during
the first quarter of 2002. Also included in the first quarter 2002 results was an income tax benefit of $0.8 million resulting from a reduction in our tax liability as a result of an economic stimulus package passed by Congress (see Note 6 to the
Unaudited Condensed Consolidated Financial Statements). The sum of these special items reduced our loss per common share by $0.09.



Operating Revenues



Our operating revenues for the quarter increased by $48.7 million (30.6 percent) primarily due to an increase in passenger revenues. The increase in passenger revenues was primarily due to a 31.3 percent increase in
traffic, as measured by revenue passenger miles (RPMs) flown.



First quarter
2003 capacity, as measured by available seat miles (ASMs), increased 28.5 percent compared to the first quarter of 2002. The capacity increase resulted from the net addition of 7 aircraft between March 2002 through March 2003, including the delivery
of 24 B717 aircraft and the retirement of 17 DC-9 aircraft and an increase in our aircraft utilization from 10.1 hours per day to 11.0 hours per day. When coupled with our RPM growth of 31.3 percent, our load factor increased 1.5 percentage points
to 67.8 percent. Our average fare increased 7.7 percent from $73.22 to $78.86 while our average yield, as measured by revenues per passenger seat mile, decreased by 1.3 percent to 12.88 cents per revenue passenger mile. This decline in yield is due
to the passenger stage length (RPM/revenue passengers) increasing faster than our average fare. Unit revenue or passenger revenue per available seat mile (RASM) increased 0.9 percent.



Operating Expenses



Our operating expenses increased by $37.4 million (23.0 percent) on ASM growth of 28.5 percent, resulting in a reduction in our CASM of 4.3 percent to 8.63 cents. Our
operating expenses per ASM were as follows:



|                             |  | Three Months EndedMarch 31, |   |  | Percent Change |  
|---------------------------- |  | --------------------------- | - |  | -------------- | -
|                             |  | 2003                        |   |  | 2002           |  
|Salaries, wages and benefits |  | 2.36                        | ¢ |  | 2.52           | ¢
|Aircraft fuel                |  | 2.04                        |   |  | 1.88           |  
|Aircraft rent                |  | 1.14                        |   |  | 0.76           |  
|Distribution                 |  | 0.46                        |   |  | 0.59           |  



---

|                                         |  | Three Months EndedMarch 31, |   |  | Percent Change |  
|---------------------------------------- |  | --------------------------- | - |  | -------------- | -
|                                         |  | 2003                        |   |  | 2002           |  
|Maintenance, materials and repairs       |  | 0.65                        |   |  | 0.59           |  
|Landing fees and other rents             |  | 0.50                        |   |  | 0.56           |  
|Aircraft insurance and security services |  | 0.24                        |   |  | 0.43           |  
|Marketing and advertising                |  | 0.31                        |   |  | 0.32           |  
|Depreciation                             |  | 0.14                        |   |  | 0.25           |  
|Other operating                          |  | 0.79                        |   |  | 1.12           |  
|                                         |  |                             |   |  |                |  
|Total CASM                               |  | 8.63                        | ¢ |  | 9.02           | ¢
|                                         |  |                             |   |  |                |  



Salaries, wages and benefits
increased $9.3 million (20.6 percent) primarily due to the addition of flight crews and ground support personnel hired to operate and support the growth of our B717 aircraft fleet and new destinations added to our route system, as well as
contractual wage increases and higher costs associated with our employee benefit programs. These costs, on an ASM basis, decreased by 6.3 percent.



Aircraft fuel increased $13.3 million (39.5 percent) due to increases in the price of aircraft fuel purchases and an increase in block hours flown partially offset
by fuel consumption improvements. Our average cost per gallon of fuel increased 23.1 percent to 107.55 cents and our block hours flown increased 22.8% while our fuel consumption decreased 7.8 percent to 675 gallons per block hour. We continue to
realize savings from reduced fuel consumption per block hour as we replace the DC-9 aircraft in our operating fleet with the comparatively more fuel-efficient B717 aircraft. Fuel consumption per block hour improvements are expected to continue
through the remainder of this year when we expect to be operating an all-Boeing 717 aircraft fleet.



Aircraft rent increased $12.7 million (92.0 percent) due to the lease financing of 24 additional B717 aircraft between March 2002 and March 2003. We have lease-financing commitments in place to accept delivery
of 16 B717 aircraft during the remainder of 2003. During the first quarter of 2003, we took delivery of 7 B717 aircraft which have been lease-financed in accordance with our commitments.



Distribution costs decreased approximately $0.1 million (0.6 percent) primarily due to (i) a greater percentage of our passenger
sales being generated online via our website, and (ii) savings generated by revisions to our commission structure. We recognize significant savings when our sales are transacted via our website as opposed to the more traditional methods such as
through travel agents and global distribution systems. During the first quarter of 2003 sales booked via the Internet were approximately 58.5 percent compared to 53.6 percent in the same period in 2002. Additionally, the revision of our commission
structure during the second quarter of 2002 to eliminate the standard 5 percent commission for travel agencies continues to reduce our overall commission expense. We continue to offer a standard five percent commission for sales transacted through
the travel agent section of our website. Our commissions cost savings were partially offset by increased computer reservation system and credit card fees. The additional transaction volume derived from our growth in revenue passengers generated the
escalation in these fees. On an ASM basis, distribution costs decreased 22.0 percent.



Maintenance, materials and repairs increased $4.5 million (42.7 percent). On a block hour basis, maintenance costs increased 16.2 percent to $232 per block hour. During the first quarter of 2003, we entered into agreements covering
the maintenance, repair and overhaul of the major Boeing 717 (B717) aircraft parts and components. Under these agreements we pay monthly fees based on either the number of flight hours flown or the number of landings made. The contracts cover normal
maintenance and repair costs on the major aircraft components excluding the airframe. Historically, we expensed most maintenance and repair costs as incurred. Under the new contracts, maintenance costs will be expensed monthly as the aircraft are
utilized. In general, we anticipate our maintenance costs will increase as the age of our B717 fleet increases.



Landing fees and other rents increased $1.5 million (14.7 percent) reflecting landing fee rate increases, growth in the number of flights we operated and the
leasing of facilities at the new destinations added to our route system. On an ASM basis, these costs decreased by 10.7 percent.



Aircraft insurance and security services decreased $2.3 million (28.9 percent) partially due to negotiated reductions in aircraft insurance premiums for passenger
liability and hull insurance as well as extensions to the government program providing supplemental third party war-risk insurance coverage at substantially lower premiums than prevailing commercial rates. In November 2002, Congress passed the
Homeland Security Act, which provided for the federal government to provide this insurance coverage through December 2003. The Wartime Act (see Note 8 to the Unaudited



---

Condensed Consolidated Financial Statements) extends the governments mandate to provide war-risk insurance through August 2004 and permits such
coverage to be extended to December 2004. In addition, during the first quarter of 2002, we incurred a substantial increase in security expense due to additional security screening requirements instituted by the federal government following the
September 11 Events. However, during the first quarter of 2002, the newly established Transportation Security Administration took over many of those procedures. Aircraft insurance and security services decreased by 44.2 percent on an ASM basis.



Marketing and advertising increased $1.4 million (24.7 percent)
primarily reflecting our promotional efforts associated with the development of our new destinations and our efforts to maintain market share in existing destinations. These costs decreased by 3.1 percent on an ASM basis.



Depreciation decreased $1.1 million (24.7 percent) primarily due to the retirement of
17 owned DC-9 aircraft between March 2002 and March 2003. This decrease was partially offset by depreciation associated with additional spare parts and equipment provisioning for the B717 aircraft.



Other operating expenses decreased $2.1 million (10.2 percent) primarily from reduced
subservice expenses utilized in 2002.



Nonoperating Expenses



Other expense, net increased by $5.3 million. The first quarter of 2002 included a
$5.6 million after-tax, noncash credit adjustment related to the change in value of our fuel-related derivative contracts (see Note 5 to the Unaudited Condensed Consolidated Financial Statements). The first quarter of 2003 did not include any
special adjustments. Providing a partial offset, interest expense decreased during the first quarter of 2003, based on reductions to our debt obligations.



Income Tax Expense (Benefit)



Income tax expense (benefit) was $0 and $(1.0) million for the three months ended March 31, 2003 and 2002, respectively. During 2002, we recorded income tax benefit of
$0.8 million due to a change in federal tax law as discussed in the following paragraph.



The Job Creation and Worker Assistance Act passed by Congress in March 2002 resulted in a retroactive suspension of the alternative minimum tax (AMT) NOL 90 percent limitation. This legislation resulted in a tax
benefit of $0.8 million for the first quarter of 2002. In accordance with SFAS No. 109, Accounting for Income Taxes, the effect of changes in tax laws or rates is included in income in the period that includes the enactment date, resulting in
the recognition of the change in the first quarter of 2002.



We have not
recognized any benefit from the future use of existing NOL carryforwards. We have not recognized any such benefit because our evaluation of all the available evidence does not indicate that it is more likely than not that we will generate sufficient
future taxable income to realize such benefit. We had consolidated federal income tax NOL carryforwards of approximately $116 million at December 31, 2002. Our NOL carryforwards will begin to terminate in 2012 to the extent they have not been used
to reduce taxable income prior to such time. Our ability to use our NOL carryforwards to reduce taxable income is dependent upon, among other things, our not experiencing an ownership change of more than 50 percent during any three-year
testing period as defined in the Internal Revenue Code. We do not believe we have experienced an ownership change in the three-year testing period immediately prior to December 31, 2003. Future changes in the ownership or constructive ownership of
our common stock (including, among other things, conversion of our Convertible Notes due 2023 into common stocksee Note 8 to the Unaudited Condensed Consolidated Financial Statements) could result in an aggregate change in ownership of more
than 50 percent as defined in the Internal Revenue Code, which could substantially limit the availability or our NOL carryforwards.



LIQUIDITY AND CAPITAL RESOURCES



As of March 31, 2003, our cash and cash equivalents, including restricted cash, totaled $168.1 million compared to $138.3 million at December 31, 2002 and $121.8 million
at March 31, 2002. Operating activities for the first quarter of 2003 generated $17.0 million of cash compared to cash used of $25.2 million in the first quarter of 2002. The increase was primarily due to the 2002 first quarter payment of
$16.5 million in excise tax that had been deferred from the fourth quarter of 2001 as provided by the Stabilization Act. Investing activities used $5.5 million in cash during the first quarter of 2003



---

compared to a use of cash of $3.4 million in the first quarter of 2002. Both the 2003 and 2002 first quarters consumed
cash primarily due to the purchase of spare parts and equipment provisioning for the B717 aircraft fleet. In the quarter ended March 31, 2003, we also received a return of aircraft deposits of $2.2 million. Financing activities used $0.6
million of cash in the first quarter of 2003 and provided $0.4 million during the same period in 2002. The changes in financing activities for the first quarter of 2003 and 2002 are primarily from the payment of debt and capital lease obligations
offset by the sale of common stock associated with the exercise of stock options.



The Wartime Act was approved by Congress in April 2003 which includes a supplemental appropriations bill that requires reimbursement to domestic, commercial air carriers for their proportional share of passenger security fees paid or
collected through the date of enactment of the legislation. Highlights of the provision relating to air carriers are as follows:



| |  |  | $2.3 billion for reimbursement of airline security fees that have been paid or collected by the carriers as of the date of enactment. The reimbursement will occur not later than 30
days from the date of enactment of the legislation. Additionally, the collection of the passenger security fees will be suspended during the period beginning June 1, 2003 and ending September 30, 2003.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $100 million to compensate carriers for direct costs associated with installing strengthened cockpit doors and locks.
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | Aviation war-risk insurance provided by the government is extended through August 2004 with an option to extend the coverage through December 2004.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



We expect to receive our proportional share of the funds from the Wartime Act during the
second quarter of 2003. We cannot, at this time, estimate the amount we expect to receive under this program.



We have historically relied primarily on operating cash flows to provide working capital. We presently have no lines of credit or short-term borrowing facilities. We generally satisfied all of our working capital
expenditure requirements from cash provided by operating activities, from external capital sources or from the sale of assets. Substantial portions of our assets have been pledged to secure various issues of our outstanding indebtedness. To the
extent the pledged assets are sold, the applicable financing agreements generally require the sales proceeds to be applied to repay the corresponding indebtedness. To the extent our access to capital is constrained, we may not be able to make
certain capital expenditures or continue to implement certain other aspects of our strategic plan.



In May of 2003, we completed a private placement of $125 million in convertible notes due in 2023. The proceeds will be used to improve our overall liquidity by providing working capital and will be used for general
corporate purposes. The notes bear interest at 7% payable semi-annually on January 1 and July 1. The first interest payment on the notes is due July 1, 2003. The notes are unsecured senior obligations ranking equally with our existing unsecured
senior indebtedness. The notes are unconditionally guaranteed by Airways and rank equally with all unsecured obligations of Airways. The notes and the note guarantee are junior to any secured obligations of ours or Airways to the extent of the
collateral pledged and are also effectively subordinated to all liabilities of our subsidiaries (other than Airways), including deposits and trade payables.



The notes are convertible into shares of our common stock at a conversion rate of 89.9281 shares per $1,000 in principal amount of the notes which equals an initial
conversion price of approximately $11.12 per share. This conversion rate is subject to adjustment in certain circumstances. Holders of the notes may convert their notes if: (i) after June 30, 2003, the price of our common stock exceeds 110 percent
of the conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding quarter (ii) the trading price for the notes falls below certain thresholds; (iii) the notes have been called for
redemption; or (iv) specified corporate transactions occur. We may redeem the notes, in whole or in part, beginning on July 5, 2010 at a redemption price equal to the principal amount of the notes plus any accrued and unpaid interest. The holders of
the notes may require us to repurchase the notes on July 1, 2010, 2013 and 2018 at a repurchase price of 100 percent plus any accrued and unpaid interest. We have agreed to file a shelf registration statement with the U.S. Securities and Exchange
Commission covering the resale of the notes and the underlying common stock.



Commitments



As of March 31, 2003, we had contracted
with The Boeing Company (Boeing) for the acquisition of 73 Boeing 717 (B717) aircraft, 57 of which have been delivered. We have lease-financing commitments in place to accept delivery of the



---

remaining 16 B717 aircraft during 2003. With respect to future B717 option deliveries, we had 6 purchase options remaining at March 31, 2003. We anticipate
retiring all remaining McDonnell Douglas DC-9 (DC-9) aircraft during 2003 and replacing these aircraft with B717 aircraft. If we exercise our purchase options to acquire additional aircraft, additional payments could be required for these aircraft
during the remainder of 2003 and future years. There can be no assurance that sufficient financing will be available for all aircraft and other capital expenditures not covered by firm financing commitments.



OTHER INFORMATION



New Service



We recently announced westward expansion with new service to Denver, Colorado (beginning May 21, 2003), Los Angeles, California (beginning June 4, 2003) and Las Vegas,
Nevada (beginning June 11, 2003). Las Vegas will be our 43rd destination.



Recently Issued Accounting Standards



In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation No. 45 (FIN 45), Guarantors Accounting and disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.
FIN 45 requires that a liability for the fair value of an obligation for guarantees issued or modified after December 31, 2002 be recorded in the financial statements of the guarantor. Guarantees that existed prior to the implementation of FIN 45
are required to be disclosed in financial statements issued after December 15, 2002. While we have various guarantees included in contracts in the normal course of business, primarily in the form of indemnities, these guarantees would only result in
immaterial increases in future costs, and do not represent significant commitments or contingent liabilities of the indebtedness of others.



In January 2003, the FASB issue Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities which requires the consolidation of variable interest
entities, as defined. FIN 46 is applicable to variable interest entities created after January 31, 2003. Variable interest entities created prior to February 1, 2003, must be consolidated effective July 1, 2003. Disclosures are required currently if
consolidation of any variable interest entities is expected. We do not currently believe that any material entities will be consolidated with us as a result of FIN 46.



In December 2002, FASB issued SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. SFAS No. 148 amends
the transition and disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation (see Note 1 to the

Unaudited Condensed
Consolidated Financial Statements).



---

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this Amendment to be signed on their
behalf by the undersigned hereunto duly authorized.



| |  |  |  | 
| |  |  |  | 
| |  |  |  | 
| |  |  |  | 



| |  |                          |  | 
| |  | ------------------------ |  | 
| |  | Date: September 18, 2003 |  | 
| |  |                          |  | 



| |  |  |  | 
| |  |  |  | 
| |  |  |  | 
| |  |  |  | 



| |  |                          |  | 
| |  | ------------------------ |  | 
| |  | Date: September 18, 2003 |  | 
| |  |                          |  |