FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

[ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
         EXCHANGE ACT OF 1934 (FEE REQUIRED)

For Fiscal Year Ended JUNE 30, 1997
                                                        OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from ____________________ to _________________________
Commission file number            0-17846

                                   CCAIR, INC.
                 DELAWARE                      NO. 56-1428192
      State or other jurisdiction of        I.R.S. Employer ID
      incorporation or organization

           P. O. BOX 19929, CHARLOTTE, NC                          28219-0929
           (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:  704/359-8990


           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None
           Securities Registered Pursuant to Section 12(g) of the Act:
                          Common Stock, $0.01 Par Value


Indicate by check mark whether the Registrant (1) has filed all documents and
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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229,405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[ ]

The aggregate market value of Common Stock held by non-affiliates (based upon
the closing price for the Common Stock on the small-cap stock market of the
National Association of Securities Dealers Automated Quotation System) on
September 19, 1997 was approximately $22,591,485.

As of September 19, 1997, there were 7,740,695 shares of $0.01 par value Common
Stock outstanding.

                       Documents Incorporated by Reference

Portions of the Registrant's Definitive Proxy Statement, to be filed with the
Commission not later than 120 days after the end of the Registrant's fiscal year
ended June 30, 1997, are incorporated by reference in Part III hereof, as
specified.



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



<PAGE>






                                   CCAIR, INC.

                       FISCAL 1997 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS


                                     PART I
                                                               PAGE NO.


Item 1.  Business................................................ 1 
Item 2.  Properties.............................................. 6
Item 3.  Legal Proceedings....................................... 6
Item 4.  Submission of Matters to a Vote of Security Holders..    6


                                     PART II


Item 5.  Market for Registrant's Common Equity and Related
          Stockholder Matters.............................................. 7
Item 6.  Selected Financial Data........................................... 7 
Item 7.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations.............................. 9
Item 7A.  Quantitative and Qualitative Disclosure Abour Market Risk........19
Item 8.  Financial Statements and Supplementary Data.......................19
Item 9.  Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure..............................19


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant............. 19
Item 11.  Executive Compensation......................................... 19
Item 12.  Security Ownership of Certain Beneficial
           Owners and Management......................................... 20
Item 13.  Certain Relationships and Related Transactions................. 20


                                     PART IV


Item 14.          Exhibits, Financial Statement Schedules and Reports
                  on Form 8-K.............................................20


                  Index to Financial Statements and Schedules............ F-1

                  Index to Exhibits...................................... E-1



<PAGE>






                                     PART I


ITEM 1.           BUSINESS


GENERAL

         CCAIR, Inc. (the "Company") is a Charlotte, North Carolina based
regional air carrier providing regularly scheduled passenger service to 21
cities in Georgia, Kentucky, Ohio, North Carolina, South Carolina, Virginia, and
West Virginia, primarily from a hub at the Charlotte/Douglas International
Airport. The Company currently operates a fleet of 25 turboprop passenger
aircraft with 1,199 weekly departures scheduled over a route system covering
approximately 205,000 miles. The Company was incorporated under Delaware law in
July 1984 under the name Sunbird Airlines 1984, Inc. for the purpose of
purchasing substantially all of the assets of Sunbird Airlines, Inc. The Company
changed its name to CCAIR, Inc. in January 1986.

         The Company's business has principally involved providing service for
business travelers from small- and medium-sized communities in its market area
to connecting flights of major carriers, principally US Airways, Inc. ("US
Airways"), at the hub operations of US Airways at the Charlotte/Douglas
International Airport. In addition, the Company operates a small number of
flights into Raleigh, North Carolina. In order to market the Company's services,
the Company has an agreement with US Airways that permits the Company to operate
under the name "US Airways Express" and to charge their joint passengers on a
combined basis with US Airways. (See discussion under "Business Agreement with
US Airways" below). The Company believes that its use of US Airways's "US"
flight designator code continues to be the most significant factor contributing
to its ability to compete for passengers and to its historical growth.

         Unless otherwise indicated, references in this Annual Report to years
mean the Company's July 1 to June 30 fiscal years and "fiscal 1997" means the
fiscal year that began on July 1, 1996 and ended on June 30, 1997.


BUSINESS AGREEMENT WITH US AIRWAYS

         Approximately 80% of the Company's passenger revenue is generated by
passengers who are connecting with US Airways flights and is determined under an
agreement for the sharing of joint passenger fares and division of revenue with
US Airways (the "Agreement"). The Agreement expires on October 31, 1998. The
Agreement provides that it may be terminated upon 180 days prior written notice
for any reason by either US Airways or the Company or upon ten (10) days prior
written notice by US Airways under certain conditions, including if: (i) the
Company fails to maintain at least a minimum required operating schedule; (ii)
during any one month the Company's flight completion percentage is less than 96%
due to cancellations attributable to maintenance or operational deficiencies
within the Company's control; (iii) the Company fails to comply with the
trademark licensing provisions of the Agreement; (iv) the Company becomes
insolvent; or (v) there is a change of control or ownership of 51% or more of
the Company's common stock without the consent of US Airways.

         The Agreement provides for coordinating schedules and reservations,
joint fares and advertising. In addition, the Agreement provides that US Airways
or its affiliates will provide to the Company check-in, ticketing, baggage
handling and security services at eleven (11) airports including
Charlotte/Douglas International Airport in Charlotte, North Carolina. As of
February 1, 1994, the Company assumed from US Airways total responsibility for
ground operations at Concourse D of the Charlotte/Douglas International Airport
pursuant to an agreement that requires US Airways to pay a monthly handling fee
to the Company. The fee is currently approximately $372,000 per month.

         The Agreement also authorizes the Company to operate as "US Airways
Express", to use the US Airways "US" flight designator code to identify its
flights and fares for purposes of computer reservations, printed schedules, and
tickets, and to display the US Airways colors and "US Airways Express" logo on
its fleet of aircraft. The Company does not have the exclusive rights to the "US
Airways Express" name or other attributes described above. US Airways has two
subsidiaries serving the Charlotte/Douglas International Airport, Piedmont
Airlines ("Piedmont") and PSA Airlines, Inc.; additionally, US Airways
affiliate, Mesa Airlines, Inc. serves the Charlotte/Douglas International
Airport. These regional airlines operate to destinations not served by the
Company but also utilize the "US Airways Express" name and other US Airways
attributes. The Company pays US Airways handling fees based on the number of
passengers boarded in cities where US Airways provides the Company flight
service and for reservations services.


                                        1

<PAGE>





BUSINESS AGREEMENT WITH US AIRWAYS, CONTINUED

         The Agreement is a significant factor in the Company's operation and
termination of the Agreement would have a material adverse effect on the
Company's business. Additionally, the Company's business could also be adversely
affected by events that adversely affect US Airways. US Airways has until
September 30, 1997 to affirm an order for up to 400 Airbus Industrie aircraft.
Confirmation of the deal depends on first reaching a cost-cutting contract with
its pilots' union. US Airways contends that it will be forced to shrink into a
smaller, regional airline unless it can achieve a "competitive cost structure"
via a new pilot agreement. As the direction and details of US Airways' future
business plans have not yet been disseminated, the Company cannot as yet assess
the effect of such plans on its future operations.


OPERATING STRATEGY AND SEASONAL NATURE OF BUSINESS

         The Company's operating strategy is designed to attract interline
passengers from small- and medium-sized communities in its market area who wish
to connect with flights on major carriers, principally US Airways, at
Charlotte/Douglas International Airport. In addition, the Company seeks to
attract passengers for its local flights between destinations serviced by the
Company. The Company particularly emphasizes providing reliable and conveniently
scheduled service for business travelers.

         The Company's passenger traffic is influenced by seasonal travel.
Increases in passenger traffic generally occur in the months of March through
October and decreases in November through February. The Company's operations
also are influenced by the weather, principally in the winter months.


ROUTES

         The Company operates a "hub and spoke" route system with Charlotte as
its hub. The Company's operations are a component of the "hub and spoke" route
system strategy employed by US Airways at Charlotte. The Company's route system
currently includes service between Charlotte/Douglas International Airport and
sixteen (16) other airports as well as service between Raleigh/Durham, North
Carolina and Asheville, North Carolina, Charleston and Greenville/Spartanburg,
South Carolina and Norfolk, Virginia.

         The following table sets forth selected information about the Company's
route system and scheduling as of September 19, 1997.

<TABLE>
<CAPTION>
<S>                                                       <C>                           <C>

                                                     DATE SERVICE                 FLIGHTS OPERATED
                                                     COMMENCED                       PER WEEKDAY
         Georgia:
                  Athens                              May 1985                          4
                  Augusta                             May 1985                          6
                  Columbus                            November 1994                     3
         North Carolina:
                  Asheville                           May 1985                          3
                  Charlotte                           May 1985                         76
                  Greenville                          May 1985                         10
                  Hickory                             May 1985                          8
                  Jacksonville                        May 1995                          9
                  Kinston                             July 1985                         5
                  Raleigh/Durham                      May 1985                         13
                  Rocky Mount/Wilson                  July 1986                         5
                  Southern Pines/Pinehurst            October 1991                      5
                  Winston-Salem                       May 1985                          3
         South Carolina:
                  Charleston                          April 1995                        4
                  Greenville/Spartanburg              May 1985                          6
         Kentucky:
                  Lexington                           May 1993                          5
         Ohio:
                  Cincinnati                          July 1993                         6

</TABLE>

                                        2

<PAGE>







ROUTES, CONTINUED
<TABLE>
<CAPTION>
<S>                                                       <C>                           <C>

                                                     DATE SERVICE                 FLIGHTS OPERATED
                                                     COMMENCED                       PER WEEKDAY

         Virginia:
                  Lynchburg                           May 1995                          7
                  Norfolk                             February 1995                     3
         West Virginia:
                  Huntington                          April 1987                        4
                  Greenbrier/Lewisburg                February 1995                     1
</TABLE>

         The Company continually reviews and analyzes its route structure for
the purpose of proposing adjustments in flight schedules. Such adjustments are
implemented after the Company receives the consent of US Airways to the
adjustments.


FARES

         The Company derives its passenger revenues from joint fares involving
travel on the route system of both the Company and US Airways and from local
fares. Approximately 80% of the Company's passenger revenues are derived from
joint fares, that is, fares which are shared with US Airways. Local fares, which
are fares for flights provided by the Company within its route system, account
for the balance of the Company's passenger revenues.

         The Company's revenues from joint fares are dependent on pricing
decisions made by US Airways and the Company has little ability to influence
such pricing decisions. The Company prices its local fares to be comparable with
fares charged by major carriers in similar markets. The Company seeks to
maximize its passenger yields by restricting the number of discount fares for
passengers on flights with high passenger demand.

         The Company realized improved average passenger fares of $84.41 in
fiscal 1997. This compared favorably with fares in fiscal 1996 and fiscal 1995,
when the average fare was $82.25 and $72.01, respectively. The average fare
increased in fiscal 1997 as a result of a larger proportion of revenue
passengers being high yield business traffic. Fiscal 1995 fares were negatively
impacted by a competing airline's increased operations in the Company's service
area. US Airways reduced fares, including the joint fares shared with the
Company, to avoid losing market share and to stimulate traffic. The competitor
reduced operations in the Company's service area in the third quarter of fiscal
1995, which allowed US Airways to collect fares higher than those charged in the
previous environment. The Company currently projects fares to remain at levels
achieved in fiscal 1997 throughout 1998. However, many factors, including, but
not limited to, competition, actions by US Airways, fuel costs, regulation, and
general economic conditions can impact fares charged by the Company.


WORKING CAPITAL

         The Company's air traffic receivables are settled through the Airlines
Clearing House and collected monthly, one month in arrears. To reduce the cash
flow issues caused by the collection of receivables one month in arrears, the
Company has obtained a line of credit in the amount of $3.0 million from British
Aerospace Asset Management ("BAAM"), an affiliate of British Aerospace, Inc.
("BAI"), which was increased to $4.0 million in July, 1997.

         Under the line of credit, the air traffic receivables, after set-off of
amounts due US Airways and other airlines, are transferred from the Airlines
Clearing House to a pledge account with a bank. From that account, in accordance
with irrevocable instructions, funds are transferred to BAAM to pay for any sums
due under the line of credit and then to Jet Acceptance Corporation ("JACO"), an
affiliate of BAI, for payments due under lease obligations. The balance in the
pledge account is then paid to the Company.

         Due to the timing of the Airlines Clearing House settlement in June,
the Company held the net Clearing House funds in its Clearing House bank account
on June 30, 1997. Therefore, the Company's balance sheet at June 30, 1997
reflects the net Clearing House settlement of $4,876,000 as cash. The
obligations to the BAI affiliates described above were reflected as current
liabilities on the June 30, 1997 balance sheet and were paid on July 1, 1997.


                                        3

<PAGE>






MARKETING

         The Company's services are promoted primarily through displays in most
airlines' computer reservation systems and the Official Airline Guide and
through direct contact with travel agencies and corporate travel departments.
The Company and US Airways have agreed to coordinate advertising and public
relations for the US Airways Express program.

         In addition, the Company's services are advertised on a cooperative
basis with US Airways. The Company, from time to time, has offered promotional
fares to introduce new service and to stimulate traffic on special occasions and
holidays. The Company also has ticket arrangements with major United States and
foreign air carriers that allow these carriers to write interline tickets on the
Company's flights.


COMPETITION

         The principal competition for the Company is the air service provided
by major and other regional air carriers operating from hub airports in Atlanta,
Cincinnati and Raleigh/Durham. From these hub airports, Delta Air Lines
("Delta"), Midway Airlines ("Midway") and their affiliates offer service to some
destinations also served by US Airways through its hub operations at the
Charlotte/Douglas International Airport. The Company competes with Delta and
Midway and with regional air carriers that have joint marketing agreements with
them for passengers traveling to destinations served through hub airports. The
principal customers for these services are business travelers and competition is
based upon scheduling and flight connections, reliability and, to a lesser
extent, pricing. The Company constantly reviews its scheduling and the frequency
of its flights to reduce the layover time experienced in connecting with a US
Airways flight, in order to minimize the length of the combined trip and to
compete with similar service offered by Delta and Midway. To a lesser extent,
the Company competes with various forms of ground transportation, primarily
private automobiles, which are used to travel to a hub airport or other airport
offering direct air service. The Company believes that the principal factors
affecting the Company's competitive position are scheduling and flight
connections, reliability, pricing, customer service and type of aircraft.


EMPLOYEES

         As of June 30, 1997, the Company had 646 employees. These employees
included 185 pilots and copilots, 45 flight attendants, 284 customer service
personnel, 77 maintenance personnel and 55 other management, administrative,
accounting and marketing personnel.


FUEL

         Fuel costs constitute 9% to 11% of the Company's total operating
expenses. The Company obtains substantially all of its fuel under a consortium
agreement with other airlines. Such arrangement, however, does not assure the
Company access to any specified quantity of fuel and prices thereunder reflect
market prices for fuel. To date, such arrangement has provided adequate supplies
of fuel for the Company. The Company became obligated to pay the 4.3(cent) per
gallon Federal Excise Tax on transportation fuels on October 1, 1995. Airlines
had a three-year exemption from this tax, which became law during 1992. The
Company recognized expense of approximately $351,000 as a result of this tax
during fiscal 1997, and $275,000 in fiscal 1996.

         Fuel prices have experienced significant increases due to market
fluctuations, resulting in increased costs per gallon for the Company. However,
the Company is currently in negotiations with other providers of fuel in an
effort to achieve a more favorable unit price. As fuel expense is currently only
10.6% of operating expenses, the Company does not believe it is cost effective
to attempt to manage fuel price risk. As such, no derivatives or other
off-balance sheet instruments are used to hedge fuel prices.


GOVERNMENTAL REGULATION

         The Company is subject to the Federal Aviation Act of 1958, as amended
(the "Federal Aviation Act"), under which the Department of Transportation (the
"DOT") and the Federal Aviation Administration (the "FAA") exercise regulatory
authority over air carriers. The FAA regulates air safety and flight operations
as well as aircraft noise emissions. The DOT regulates the economic and
consumer-related aspects of the airline industry. The FAA reviews operations of
all carriers, including the Company, on an on-going basis to determine
compliance with FAA regulations and operating authorizations.


                                        4

<PAGE>






GOVERNMENTAL REGULATION, CONTINUED

         The Company applied for a Certificate of Public Convenience and
Necessity under Section 401(d)(1) of the Federal Aviation Act (the "401
Certificate") in order to facilitate aircraft financing. The 401 Certificate was
granted on September 10, 1992.

         Although the Company cannot offer assurances in this regard, it
believes it is in compliance with all requirements necessary to maintain, in
good standing, its operating authorities granted by the DOT and the FAA, and
that its aircraft comply with all applicable Federal and local laws and
regulations pertaining to aircraft noise.

         The Company is subject to various Federal and local laws and
regulations pertaining to other issues of environmental protection. The Company
believes it is in compliance with all governmentally imposed environmental
protection standards.

         The Federal Communications Commission ("FCC") has jurisdiction over the
use of radio facilities by air carriers. Airlines, and in some cases their
personnel, operating transmitters and receivers must obtain licenses from the
FCC, which may be revoked for cause. The Company believes that it and its
personnel hold all required FCC licenses.


THE ESSENTIAL AIR SERVICE PROGRAM

         Pursuant to the Airline Deregulation Act of 1978, certain communities
in the United States are guaranteed specified levels of essential air service
(the "EAS Program"). The EAS Program provides for the payment of compensation to
carriers which volunteer to provide subsidized essential air service and are
selected by the DOT to provide such service. The Company has received subsidy
payments under the EAS Program for Danville and Shenandoah Valley, Virginia. DOT
subsidy payments provided no revenues for the Company in fiscal 1997, and 0.5%
in fiscal 1996. Under provisions in the EAS Program, the Company ceased service
to Danville in October, 1995 and ceased to receive subsidized compensation for
service to Shenandoah Valley effective July, 1996. The Company does not
anticipate initiating service to cities under the EAS program in fiscal 1998,
thus estimates no future EAS revenues.


EXECUTIVE OFFICERS OF THE COMPANY

Name                       Age     Position

Kenneth W. Gann            58      Director, President and Chief Executive 
                                   Officer from November, 1990 to present.

Eric W. Montgomery         38      Vice President of Finance from February, 1995
                                   to present; Secretary from February, 1995 to
                                   present.

Peter J. Sistare           34      Vice President of Operations from 
                                   December, 1993 to present.


GROUND FACILITIES

         The Company presently occupies approximately 11,018 square feet of
office space in the Charlotte/Douglas International Airport's old terminal
building, in Charlotte, North Carolina and 15,000 square feet of hangar space
and 10,000 square feet of space for operations use also at the Charlotte/Douglas
International Airport. The office space is used for the Company's principal
executive and administrative offices and the hangar facility contains the
Company's maintenance operations for its aircraft, as well as maintenance
support and inventory. The office space and hangar facility are leased under
commercial use permits with the City of Charlotte, North Carolina. The permits
are a month-to-month tenancy with an annual rental of $163,500 and are
cancelable upon thirty (30) days notice by either party.

         The Company's counter, baggage, gate and ramp spaces at the airports
served by the Company are provided by US Airways and its affiliates except at
ten (10) airports where the space is leased from the airport authorities. With
respect to the ground operations at Concourse D of the Charlotte/Douglas
International Airport, the Company provides those services under contract with
US Airways. US Airways reimburses the Company for its costs in providing the
services.


                                        5

<PAGE>







ITEM 2.           PROPERTIES



PASSENGER AIRCRAFT

         The Company presently services its passenger route system with a fleet
of 25 leased turboprop aircraft. The following table sets forth certain
information with respect to the Company's passenger aircraft as of September
1997:
<TABLE>
<CAPTION>
<S>                                     <C>              <C>             <C>               <C>              <C>

                                                                        APPROX.          APPROX.         APPROX.
                                    NUMBER OF                          EFFECTIVE        CRUISING         AVERAGE
                                     AIRCRAFT        NUMBER OF           RANGE           SPEED              AGE
AIRCRAFT                            IN SERVICE          SEATS           IN MILES         (MPH)            (YEARS)

Shorts 360                              7                36              250               220              9.5
Jetstream 31                           14                19              350               270             11.4
Dash 8                                  4                37              450               290              7.2
</TABLE>


         The Company operates its Shorts aircraft primarily on its higher
density and shorter-haul markets and its Jetstream aircraft for lower density
and longer-haul segments. The Dash 8 aircraft were leased to operate in certain
longer-haul and high density markets. All of the aircraft are leased, with terms
for the Shorts extending a maximum of seven years and the Jetstreams extending
for a maximum of five years. The renegotiated Dash 8 leases extend to 2007.

         With respect to the Company's renegotiation of its aircraft lease
payments in fiscal 1995 (discussed in Management's Discussion and Analysis of
Financial Condition and Results of Operations), the lease reductions would cease
in the event of a merger, consolidation, acquisition or other significant change
in the ownership of the Company.


MAINTENANCE OF AIRCRAFT

         The engines on all of the Company's aircraft are maintained under a
continuous airworthiness maintenance program. The engines on the Shorts 360
aircraft undergo overhaul after every 8,000 hours of operation. This interval is
based on the manufacturer's approved sampling program which allows for
escalation at 500-hour intervals after the completion of a satisfactory engine
overhaul. The engines on the Company's Jetstream 31 aircraft undergo disassembly
inspection and repair after every 3,500 hours of operation. This interval is
also based on the manufacturer's recommendation. The engines on the Dash 8
aircraft undergo overhaul after every 12,000 hours of operation. This interval
is based on the manufacturer's recommendation.

         Substantially all of the maintenance, service and inspection of
aircraft, except major engine and component overhaul, is performed by Company
personnel. Major engine repair is performed by the engine manufacturer or its
authorized overhaul agencies. Component overhaul is performed by the applicable
manufacturer or an appropriate contractor.


ITEM 3.           LEGAL PROCEEDINGS

         None reportable.


ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None reportable.


                                        6

<PAGE>







                                     PART II


ITEM 5.           MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS

         The Company's common stock was first sold to the public in July of
1989, when the Company completed an initial public offering of 1,904,518 shares
of common stock, of which 1,283,872 shares were sold by the Company and the
balance was sold by existing Company stockholders. The Company's common stock is
traded in the over-the-counter market, called the Small-Cap Stock Market of
NASDAQ. The common stock is quoted under the symbol "CCAR". The following table
sets forth the high and low bid quotations for the Company's common stock in the
over-the-counter market as reported by NASDAQ for the quarters of the last two
(2) fiscal years. These over-the-counter market quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions.


     FISCAL 1997               HIGH               LOW

     First Quarter             2 5/16            1 7/16
     Second Quarter            2 1/16            1 7/16
     Third Quarter             2 1/32            1 11/16
     Fourth Quarter            2                 1 13/16

     FISCAL 1996               HIGH               LOW

     First Quarter             3 15/16           2 1/4
     Second Quarter            2 5/8             1 7/8
     Third Quarter             2 3/8             1 1/2
     Fourth Quarter            2 3/8             1 5/8


         At September 19, 1997 there were approximately 401 stockholders of
record.

         The transfer agent for the Company's common stock is First Union
National Bank of North Carolina, Charlotte, North Carolina.

         During its 1996 and 1997 fiscal years, the Company did not pay cash
dividends on its common stock. Based upon its forecast for fiscal 1998, the
Company does not plan to pay cash dividends in fiscal 1998.


ITEM 6.          SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT INCOME PER SHARE)

<TABLE>
<CAPTION>
<S>                                           <C>               <C>              <C>               <C>              <C>

                                                                                        YEAR ENDED JUNE 30
                                                 1997              1996             1995              1994             1993
                                                 ----              ----             ----              ----             ----
Statement of operations data:
  Operating revenues:
    Passenger                                 $67,020           $64,482          $60,804           $60,063          $61,296
    Public service                              ---                 353              695               814              724
    Other                                       1,467             1,399            1,540             1,215            1,159
                                              -------           -------          -------           -------          -------
          Total operating revenues             68,487            66,234           63,039            62,092           63,179
                                              -------           -------          -------           -------          -------

  Operating expenses:
    Flight operation                           23,539            23,490           22,416            25,586           24,131
    Fuel and oil                                7,117             6,262            5,406             5,202            5,858


</TABLE>

                                        7

<PAGE>






ITEM 6.           SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT INCOME PER
                  SHARE), CONTINUED
<TABLE>
<CAPTION>
<S>                                            <C>               <C>              <C>               <C>              <C>

                                                                                        YEAR ENDED JUNE 30
                                                 1997              1996             1995              1994             1993
                                                 ----              ----             ----              ----             ----

    Maintenance materials, repairs
     and overhead                              12,381            12,566           11,619            11,270           11,448
    Ground operations                           8,373             7,839            7,391             9,026            8,100
    Advertising, promotion and
     commissions                                9,868             9,104            9,007             8,921            9,745
    General and administrative                  4,115             4,273            4,802             4,369            3,821
    Depreciation and amortization               1,399             1,814            1,845             1,595            1,446
    Loss from write-off of
     preoperating costs                                                                                                 684
                                              -------           -------          -------           -------          -------
          Total operating expenses             67,092            65,347           62,486            65,969           65,233
                                              -------           -------          -------           -------          -------
          Operating income (loss)               1,395               886              553            (3,877)         ( 2,054)
  Interest expense                             (  742)         (    761)        (    920)          (   819)        (    789)
  Other income (expense), net                       8         (      11)               5          (     60)              60
                                              --------        ---------        ---------         ---------        ---------
  Income (loss) before income taxes               661               114         (    362)           (4,756)         ( 2,783)
  Provision for income taxes                   (  141)        (      18)         ---                ---             ---
                                              -------         ---------      -----------         ---------     --------
          Net income (loss)                   $   520          $     96         $(   362)          $(4,756)         $(2,783)
                                              =======          ========         ========           =======          =======

Net income (loss) per share
          Net income (loss)                   $   .07           $   .01          $(  .05)          $(  .68)         $( .43)
                                              =======           =======          ========          ========         =======

Weighted average common and
 common equivalent shares
 outstanding                                    7,980             7,969            7,382             7,006            6,547
                                               ======            ======           ======            ======          =======
Cash dividends declared
 per common share                               - -               - -              - -               - -              - -
                                           ==========        ==========       ==========        ==========       ========

Balance sheet data:
  Current assets                              $13,458           $14,165          $ 9,713           $11,242          $11,458
  Current liabilities                          16,998            15,525           10,272            11,937            7,850
  Net property and
    equipment                                  13,683            12,332           12,406            13,337           12,283
  Total assets                                 27,971            27,130           22,153            24,629           23,793
  Long-term debt, less
    current portion (1)                         3,346             4,010            4,876             5,902            6,866
  Shareholders'
    equity                                      6,357             5,837            5,032             5,372            7,320

</TABLE>



(1)      See Note 5 to financial statements regarding certain capital lease
         obligations which are included in long-term debt in this schedule.


                                        8

<PAGE>






ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS



RESULTS OF OPERATIONS

         The following table sets forth selected operating data relating to the
Company's passenger service for fiscal years 1997, 1996 and 1995.

<TABLE>
<CAPTION>
<S>                                                      <C>                 <C>                <C>

                                                                      YEAR ENDED JUNE 30
                                                         1997                1996                1995
                                                         ----                ----                ----
Operating revenue (000)                                  $68,488             $66,234            $63,039
Operating expense (000)                                   67,092              65,347             62,486
Revenue passengers carried                               794,013             783,997            844,421
Revenue passenger miles (000) (1)                        146,567             144,695            142,499
Available seat miles (000) (2)                           305,086             311,967            305,388
Passenger load factor (3)                                   48.0%               46.4%              46.7%
Passenger breakeven load factor                             47.6%               46.3%              46.9%
Yield per revenue passenger mile (4)                        45.7(cent)          44.5(cent)         42.7(cent)
Operating cost per available seat mile                      22.0(cent)          20.9(cent)         20.5(cent)
Average passenger trip (miles)                             184.6               183.9              168.7
Average daily aircraft utilization
  per plane (block hours)                                    8.2                 8.0                8.2
Average passenger fare                                    $84.41              $82.25             $72.01
Average completion factor                                  95.9%                95.1%              95.1%
</TABLE>


         (1)      One revenue passenger transported one mile.
         (2)      The product of the number of aircraft miles and the number of
                  available seats on each stage, representing the total
                  passenger capacity offered.
         (3)      The ratio of revenue passenger miles to available seat miles,
                  representing the percentage of seats occupied by revenue
                  passengers.
         (4)      The passenger revenue per revenue passenger mile.

         The following table sets forth selected operating data relating to the
Company's passenger service for each quarter of fiscal year 1997 (see Note 12):

<TABLE>
<CAPTION>
<S>                                         <C>               <C>               <C>              <C>

                                                                 1997 QUARTERLY DATA
                                             FIRST             SECOND            THIRD            FOURTH
                                            QUARTER           QUARTER           QUARTER          QUARTER

Operating revenue (000)                     $17,370           $16,623           $16,484          $18,010
Operating income (loss) (000)                   511               275               363              246
Net income (loss) (000)                         321                55               126               18
Earnings (loss) per share                       .04               .01               .02              .00

Passengers carried                          208,580           202,782           172,116          210,535
Revenue passenger miles (000)                38,691            37,377            31,870           38,629
Available seat miles (000)                   82,391            77,999            70,620           74,076
Passenger load factor                         47.0%             47.9%             45.1%            52.1%
Passenger breakeven load factor               46.1%             47.8%             44.8%            51.7%
Yield per revenue passenger mile               44.3(cent)        43.7(cent)        49.7(cent)       45.8(cent)
Average passenger trip (miles)                185.5             184.3             185.2            183.5
Average passenger fare                      $ 82.13           $ 80.63           $ 92.05          $ 84.06
Operating cost per available
 seat mile                                     20.5(cent)        21.0(cent)        22.8(cent)       24.0(cent)

</TABLE>

                                        9

<PAGE>







ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS, CONTINUED


         FISCAL 1997

         The Company achieved improved operating results in fiscal 1997,
continuing the trend from fiscal 1996. Operating income and net income in the
current year are $1,395,000 and $520,000, respectively, compared to fiscal 1996
operating income of $886,000 and net income of $96,000. Passenger revenues
increased by 3.9%, with operating expenses held at 2.7% growth. Yield per
passenger mile continued to improve in 1997, resulting in 45.7(cent) per revenue
passenger mile ("RPM") as compared to 44.5(cent) per RPM in fiscal 1996.

         Annual revenues increased in fiscal 1997 to $68,488,000 over fiscal
1996 revenues of $66,234,000. The 3.3% increase over prior year is attributable
primarily to increased average fares related to continued industrywide fare
growth. Low fare competitors remain absent from the markets served by the
Company. Additionally, the Company maintained local market fares introduced in
February 1996 to stimulate travel, resulting in enhanced revenues throughout
fiscal 1997. Annual and quarterly yield comparisons are complicated by the
expiration and reimplementation of the federal ticket tax in fiscal 1996 and
1997. The tax lapsed on December 31, 1995 and was reinstated in late August,
1996. The tax again expired on December 31, 1996 and was resumed in early March,
1997. The Company believes that its passenger revenues were stimulated during
the periods the tax was not in effect - the absence of the tax effectively
reduced the cost of air travel. The Company is not able to determine the extent
to which operating results in fiscal 1996 and 1997 benefited from the absence of
the tax, although it does believe that it had a positive impact on its operating
results. A new excise tax formula is being implemented by the federal government
on October 1, 1997; the results of this are not expected to significantly impact
the operating results of the Company.

         Available seat miles ("ASMs") decreased 2.2% from fiscal 1996. The
Company discontinued service between Shenandoah Valley, Virginia and Baltimore,
Maryland in December, 1996. Pursuant to an economic analysis of Shorts aircraft
utilization and profitability, the Company reduced the number of flights using
these aircraft in December, 1996. As such, only seven of the nine Shorts
aircraft were scheduled for the last seven months of fiscal 1997. While ASMs
thus decreased 6.1% for the last seven months of fiscal 1997 when compared to
1996, the load factor increased from 47.8% for the seven months in fiscal 1996
to 49.0% for the comparable period in fiscal 1997.

         The Company, while able to implement changes in its flight schedule
after receiving the consent of US Airways, has limited control over the cities
it serves as a US Airways Express carrier. The Company did receive approval to
discontinue service to Shenandoah Valley, Virginia and Montgomery, Alabama
effective July 8, 1997 and September 4, 1997, respectively, based upon
profitability and aircraft utilization studies. The Company is not aware of any
other schedule changes being contemplated that would have a significant impact
on operations.

         RPMs increased commensurately with revenue passengers, reflecting
growth of 1.2% over fiscal 1996. Elevated RPMs, passengers carried and average
fares are indicative of the overall health of the air transportation industry.
The Company continued to maintain its upward trend in average fares for fiscal
1997. The fiscal 1997 average fare was $84.41, compared to $82.25 in fiscal
1996.

         Operating costs per ASM escalated from 20.9(cent) to 22.0(cent) from
fiscal 1996 to fiscal 1997. Contributing factors include increases in
maintenance outside repair expenses, fuel cost, flight operations and customer
service wages and US Airways' fees for ticketing and passenger handling. These
increases were partially mitigated by cost reductions realized in the Company's
aircraft hull insurance, engine overhaul amortization expenses and savings
realized under the first full year of reduced Jetstream 31 lease payments.


                                       10

<PAGE>







ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED



RESULTS OF OPERATIONS, CONTINUED

         FISCAL 1997, CONTINUED

         Flight operations expense stabilized in fiscal 1997 at $23,539,000, as
compared to $23,490,000 in fiscal 1996. Although the Company experienced
significant increases in pilot and flight management salaries, the additional
expenses were offset by reductions in hull insurance rates and aircraft lease
payments. The Company continues to benefit from reductions in the insured value
of the aircraft fleet and more favorable hull insurance rates resulting in
annual savings of $393,000 in 1997. Additionally, renegotiated lease payments
for the Jetstream 31 fleet finalized in 1996 resulted in further reductions to
lease expenses as compared to fiscal 1996. Pilot salaries escalated 4.9%, or
$336,000 over fiscal 1996 to $7,135,000 in fiscal 1997. Under the plan
negotiated with the Air Line Pilots Association ("ALPA"), pilot salaries were
initially reduced by 16% in October 1994, with 4% of the original concession
being reinstated after each subsequent four-month period. The final increase
scheduled under this plan occurred in February, 1996. Accordingly, fiscal 1997
was the first complete year under the fully reinstated salary levels.
Furthermore, annual seniority wage increases contributed to the augmentation of
pilot salary expense. Flight operations management and support salary expenses
also grew by $100,000 as compared to 1996; enhancement of the training and crew
scheduling departments are the primary factors.

         Crew travel expenses, comprised of meal allowances and accommodations
declined significantly, from $1,280,000 in fiscal 1996 to $1,078,000 in fiscal
1997. In April, 1996, 14 crews were placed in four newly established crew bases
in Lynchburg, Virginia; Cincinnati, Ohio; Lexington, Kentucky and Kinston, North
Carolina. Establishment and maintenance of these new crew bases resulted in
savings of $202,000 in fiscal 1997.

         The Company is obligated pursuant to its contract with its pilots to
match pilot contributions to the Company's 401(k) plan based upon an agreed-upon
earnings formula. The Company has recorded $138,000 of compensation expense
related to its contractual obligation as flight operations expense in fiscal
1997. The Company had insufficient earnings to trigger the matching provision in
fiscal 1996.

         Market fluctuations in price variances in and ASMs flown cause annual
fuel and oil expenses to be volatile. Despite a 2.2% decline in ASMs flown, the
Company experienced a 14% increase in fuel and oil expense, with expenditures of
$7,117,000 in fiscal 1997 versus $6,262,000 in fiscal 1996. Fuel consumption was
8.2 million gallons at an average price per gallon of 87.4(cent) in fiscal 1997,
as compared to 8.3 million gallons at 75.8(cent) per gallon in fiscal 1996. Fuel
prices peaked from October, 1996 through February, 1997, averaging 93.8(cent)
per gallon during this period. Average price per gallon had waned to
approximately 81(cent) per gallon by June, 1997. As fuel expense is only 10.6%
of total operating expenses, the Company does not believe it is cost effective
to attempt to manage fuel price risk; thus no derivatives or other off-balance
sheet instruments are used for hedging purposes.

         Maintenance materials, repairs and overhead decreased 1.5% from fiscal
1996, as expense was $12,381,000 in fiscal 1997 versus $12,566,000 in fiscal
1996. Maintenance expenses typically fluctuate based upon flight hours and
takeoffs and landings. Maintenance expense per ASM remained relatively constant;
4.1(cent) in 1997 and 4.0(cent) in 1996.

         Ground operations expenses increased 6.8% over prior year, resulting in
fiscal 1997 expenditures of $8,373,000 versus $7,839,000 in fiscal 1996. US
Airways passenger handling fees continued to increase. In markets where US
Airways personnel provide customer service and handling, a fee is charged to the
Company; this fee increased 35(cent) per passenger in February, 1997. Fees have
increased periodically as follows: July 1996, $6.50 per passenger; January 1996,
$7.75 per passenger; and February 1997, $8.10 per passenger. While passengers
carried increased by only 10,000, or 1.2%, passenger handling fees escalated
18%, or $555,000 in fiscal 1997.

         Ground operations expense is offset in Charlotte, North Carolina
through the Company's reimbursement rate for operating Concourse D at the
Charlotte/Douglas International Airport. The Company's reimbursement increased
from $354,000 to $359,000 in August, 1996 and $372,000 in January, 1997. The
Company cannot predict the timing or extent of any future passenger handling fee
adjustments. Customer Service salaries at Company-operated stations increased
$149,000 due to the combination of general wage increases, service schedule
alterations, and additional overtime.


                                       11

<PAGE>






ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED



RESULTS OF OPERATIONS, CONTINUED

         FISCAL 1997, CONTINUED

         Advertising, promotion and commissions expense increased from 14.1% of
passenger revenue in fiscal 1996 to 14.7% in fiscal 1997. On January 1, 1996, US
Airways implemented a new reservations fee structure which resulted in an
additional $.90 per passenger charge. Fiscal 1997 thus received an entire year,
or an additional $370,000 of this expense as compared to 1996. CRS fees also
increased on a per-passenger basis in fiscal 1997.

         Total general and administrative expenses in fiscal 1997 were
$4,116,000 as compared to $4,273,000 in fiscal 1996, for a decrease of 3.7%.
While salaries increased by $166,000, property taxes declined $303,000. The
property tax decrease was due to refunds of $118,000 resulting from personal
property reclassifications for tax purposes for the years allowed under local
statute (1991-1995). Other general and administrative decreases resulted from
$75,000 in refunded sales and use taxes related to off-road fuel taxes
originally remitted in 1994 through 1996.

         Depreciation and amortization expense declined slightly from $1,814,000
in fiscal 1996 to $1,699,000 in fiscal 1997, as asset additions for rotable
flight equipment, ground equipment and leasehold improvements were minimal in
the current year, and thus little depreciation was generated on current-year
property additions.

         In fiscal 1997, recognition of net operating loss carryforwards offset
income tax expense at the statutory rate; however, the Company's effective
federal income tax rate was 21.3% which reflects the impact of the alternative
minimum tax on operations. Income tax expense was $141,000 in fiscal 1997, as
compared to $18,100 for fiscal 1996. At June 30, 1997 the Company had
approximately $5,860,000 of United States Federal regular tax operating loss
carryforwards available to offset future taxable income. These carryforwards
begin expiring on June 30, 2005.

         The estimates of future results included above are based upon present
information regarding operations and future trends. While the Company believes
that the estimates constitute its best judgment on future results, the actual
results may differ materially from the estimates.


         FISCAL 1996

         The operating results for fiscal 1996 continued the positive trend from
fiscal 1995. Passenger revenues increased 6.0%, attributable to the improved
yield per revenue passenger mile of 44.5(cent) in fiscal 1996 from 42.7(cent) in
fISCAL 1995. The result of these overall improvements was operating income of
$886,000 and a net income of $96,000 versus operating income of $553,000 and a
net loss of $362,000 in fiscal 1995. Operating expense increases of 4.6%
partially offset the revenue improvement.

         Annual revenues for the 1996 and 1995 fiscal years were $66,234,000 and
$63,039,000, respectively. The 5.1% increase over the prior year was due to the
absence of low-fare competitors in the Company's markets and to continued
industrywide fare growth. Additionally, in February, 1996 the Company
implemented local market fares for travel between Company-controlled
destinations, thus stimulating travel and increasing revenues. Revenues were
significantly hampered, however, by inclement weather in the Company's operating
area during the third quarter of 1996. Severe winter storms caused the
cancellation of approximately 1,200 flights during this quarter. As a result,
the Company estimates that operating revenues were adversely impacted by
approximately $1,100,000. Harsh weather in the northeast section of the United
States caused further revenue losses as connecting passengers with reservations
on the Company's flights were unable to initiate their trips.

         The Company experienced yield erosion in the months of May and June,
1996. The yield declined from 44.4(cent) in April to 42.5(cent) in May and
41.7(cent) in June. While some slippage in yield is normal, the presence of
low-cost/low fare competitors in the Company's service area exacerbated the
negative effects.


                                       12

<PAGE>






ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED



Results of Operations, continued

         FISCAL 1996, CONTINUED

         Available seat miles increased 2.2% over fiscal 1995. The growth was
primarily due to increased daily service to longer-haul markets, including
Columbus, Georgia, Lexington, Kentucky and Lynchburg, Virginia, increasing total
weekday departures to 216 from 213 in fiscal 1995.

         While the number of revenue passengers carried decreased by 7.2%,
revenue passenger miles increased 1.6% as compared to fiscal 1995 as a result of
changes to the Company's service schedule. Because the low-fare competition in
1995 was not present in 1996 to depress fares, the Company was able to maintain
higher average ticket prices of $82.25 in fiscal 1996 versus $72.01 in fiscal
1995, thus increasing yield per revenue passenger mile to 44.5(cent), an
increase of 4.2% over 1995.

         Operating costs per available seat mile increased from 20.5(cent) to
20.9(cent) for fiscal 1995 to 1996. Contributing factors include increases in
fuel costs, pilot training expenses, US Airways fees and engine overhaul
expenses. A portion of these increases were offset by cost reductions recognized
in the Company's aircraft hull insurance, professional fees and property tax
expenses.

         Flight operations expense increased 4.8% to $23,490,000 in 1996,
compared to $22,416,000 in fiscal 1995. In fiscal 1995 reductions in aircraft
lease rates were achieved through negotiations with lessors, which the Company
continued receiving the benefit of in fiscal 1996. Additionally, more favorable
hull insurance rates and reductions in the insured value of the Company's
aircraft yielded a decrease in hull insurance expense of 12.9% or $228,000 as
compared to 1995. Several factors impacted the pilot salaries, resulting in
escalations from $7,428,000 in fiscal 1995 to $8,512,000 in 1996, a 14.6%
increase. Pilot turnover in the fourth quarter was exceptionally high due to
recruiting and hiring by the major airlines. Because the internal pilot reserve
was depleted, the Company incurred significant training costs in order to
maintain necessary crew levels. Additionally, during the period of crew
shortages, flight lines were being covered by existing pilot crews at the higher
pay rates due to overtime. The effect of these factors in the fourth quarter of
1996 as compared to the same period of 1995 is an increase in salaries and
training costs of $480,000, or 30.2%. Furthermore, the final two increases under
the pilot salary reduction plan were phased in during October, 1995 and
February, 1996. Under the plan negotiated with the Air Line Pilots Association
("ALPA"), pilot salaries were initially reduced by 16% in October, 1994, with 4%
of the original concession being reinstated after each subsequent four-month
period. Flight attendant salaries increased 6.3% or $62,000 over the previous
fiscal year due to scheduled service increases.

         Crew travel expenses, encompassing meal allowances and accommodations,
remained relatively unchanged at $1,280,000 and $1,366,000 from fiscal year end
1995 to 1996, respectively. In April, 1996 four new crew bases were established
in Lynchburg, Virginia, Cincinnati, Ohio, Lexington, Kentucky and Kinston, North
Carolina, placing a total of 14 crews at these locations. While crew bases are
designed to reduce crew travel expenses, the savings were not evident for the
fiscal year ended June 30, 1996 because of expenses associated with moving the
crews.

         The escalation of market prices of fuel significantly affected fiscal
1996's fuel expense. Fuel expenditures totaled $5,406,000 in fiscal 1995, and
increased 15.8% to $6,262,000 in 1996, when the average price per gallon of fuel
increased from 67.1(cent) to 75.8(cent). Total fuel consumption was 8.3 million
gallons versus 8.1 million gallons in fisCAL years 1996 and 1995, respectively.
The increase between years was directly related to the increased service
schedule. Fuel expense for 1996 includes the 4.3(cent) per gallon federal excise
tax on transportation fuels which the Company became obligated to pay on October
1, 1995.

         Maintenance materials, repairs and overhead experienced an 8.2%
increase over the previous year, from $11,619,000 to $12,566,000 in fiscal 1996.
The escalation was due exclusively to the increase in annual amortization of
engine and gear overhauls from $3,496,000 in 1995 to $4,393,000 in 1996. From
March, 1995 through the end of fiscal 1996, expenditures related to overhauls of
Dash 8 airframe and engine components were $1,509,000, with amortization lives
ranging from 11 to 48 months. Amortization of these overhaul additions was the
principal factor in the increase in overhaul expense for the fiscal year ended
1996.


                                       13

<PAGE>





ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED


RESULTS OF OPERATIONS, CONTINUED

         FISCAL 1996, CONTINUED

         Ground operations expense increased 6.1% over 1995, as expenses went
from $7,386,000 to $7,839,000. The principal factor in the higher expenses is
the increase in US Airways handling fees that the Company pays as a result of US
Airways handling the Company's passengers in certain markets. Inclement weather
in the winter months caused an additional $200,000 in aircraft servicing charges
in fiscal 1996 as compared to 1995, as deicing fluid purchases drastically
increased.

         Advertising, promotion and commissions expense decreased from 14.8% of
passenger revenue in fiscal 1995 to 14.1% of passenger revenue in 1996. The
reason for this decrease was the revised rate structure for commissions paid to
travel agencies, which went into effect during March, 1995. Commissions paid on
travel agency-generated tickets decreased from an average of 10.0% in 1995 to
8.9% in 1996. As approximately 80% of tickets collected by the Company are
written by travel agencies, the 1996 savings from this structure change was
approximately $575,000. Partially offsetting this reduction was an increase in
reservations fees charged by US Airways. On January 1, 1996, the reservations
fee charged changed to a new fee structure resulting in an additional $360,000
in expense ($.90 per passenger) during the last two quarters of the 1996 fiscal
year over fees which would have been paid under the old structure.

         Total general and administrative expenses decreased 11.0% or $529,000
from 1995 to 1996. Contributing to this decrease were reductions in professional
fees incurred and property tax assessment adjustments. Professional fees were
lower due to the absence of extensive lease and union negotiations that were
present during prior years. Property tax assessments have been reduced as of the
tax year beginning January 1, 1996, going forward through the revaluation of the
aircraft fleet to market value as of the date of filing (January 1, 1996) in the
Company's most significant ad valorem taxing district, North Carolina. This
revaluation and other property tax adjustments resulted in savings in calendar
1996 of $200,000.

         Depreciation and amortization decreased slightly from $1,845,000 in
fiscal 1995 to $1,814,000 in 1996, as asset additions for rotable flight
equipment, ground equipment and leasehold improvements were minimal in fiscal
1996, and thus little depreciation was generated on 1996 property additions.

         In fiscal 1996, recognition of net operating loss carryforwards offset
income tax expense at the statutory rate, but the Company's effective federal
income tax rate was 15.9%, which reflects the impact of the alternative minimum
tax on operations. Income tax expense was thus $18,100 versus $0 in 1995. At
June 30, 1996 the Company had approximately $7,777,000 of United States Federal
regular tax operating loss carryforwards available to offset future taxable
income. These carryforwards begin expiring on June 30, 2005.


         FISCAL 1995

         The operating results for fiscal 1995 reflect significant improvement
over fiscal year 1994. The cost reduction plan initiated by the Company was the
principal reason for the improvement. This plan reduced operating costs by 5.3%,
even though capacity, as measured by available seat miles, increased 5.5%. The
operating expense reductions, while encompassing all functional areas within the
Company, were focused on the following areas: aircraft leases, pilot pay and
passenger handling. Operating results also benefitted from the improved yield
per revenue passenger mile, which increased from 40.3(cent) in fiscal 1994 to
42.7(cent) in fiscal 1995. The result of these improvements was operating income
of $553,000 and a net loss of $362,000, as compared to an operating loss of
$3,877,000 and net loss of $4,756,000 in fiscal 1994.

         Revenues for the years ended June 30, 1995 and 1994 were $63,039,000
and $62,092,000, respectively. The 6.0% increase in yield in fiscal 1995 was the
result of industrywide fare increases implemented in the third quarter of fiscal
1995 and the elimination of the low-fare division of Continental, Continental
Lite, in the same period. Continental Lite was a direct competitor of US Airways
and the Company in its service area, and US Airways reduced fares, including the
joint fares shared with the Company, to avoid losing market share and to
stimulate traffic in the winter of 1993. The Continental Lite pricing and
service strategy was eliminated by Continental Airlines in the third quarter of
fiscal 1995, which allowed US Airways to alter its pricing strategy and thus
resulted in increased yields for the Company based upon higher joint fares.

                                       14

<PAGE>








ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED


Results of Operations, continued

         FISCAL 1995, continued

         The number of available seat miles (ASMs) increased 5.5% in fiscal 1995
over fiscal 1994, primarily as a result of changes in the Company's service
schedule. In conjunction with US Airways's strategy of eliminating jet service
to short haul markets and turning this flying over to US Airways Express
commuter operators, the Company initiated all turbo prop service to Augusta,
Georgia in February, 1995 and Jacksonville, North Carolina and Lynchburg,
Virginia in May 1995. Also during 1995, the Company ceased service to several
cities it had previously served on a shared basis with US Airways from
Charlotte, North Carolina. These cities were Wilmington, North Carolina,
Asheville, North Carolina, Tri- Cities, Tennessee, Columbia, South Carolina,
Huntsville, Alabama and Knoxville, Tennessee. The net effect of this schedule
change was an increase in ASMs, as fourth quarter capacity increased by 5.5%
over the third quarter and 6.9% over the same quarter in fiscal 1994.

         The number of revenue passengers carried decreased by 2.9% and revenue
passenger miles (RPMs) decreased by 4.3% in fiscal 1995 as compared to fiscal
1994. The primary reason for the reduced passengers and RPMs is the elimination
of the low-fare, traffic stimulation environment which existed in the Company's
service area until the cessation of Continental Lite as previously addressed.

         Operating costs per available seat mile in fiscal 1995 declined 10.1%
from 22.8(cent) to 20.5(cent), as compared to thE previous fiscal year. The
increases in fuel, maintenance, advertising, general and administrative and
depreciation were more than offset by decreases in flight operations and ground
operations.

         Flight operations expense decreased by 12.4% in fiscal 1995 to
$22,416,000 compared to $25,586,000 in fiscal 1994. The principal reason for
this reduction was a 19.1% decrease in aircraft lease expense. See discussion
below under Liquidity and Capital Resources. In addition, pilots' salaries and
related costs decreased 4.7% in fiscal 1995 as a result of the implementation of
a salary reduction plan negotiated with the Air Line Pilots Association (ALPA).
The reduced pay levels began in October 1994 and will be phased back in over
sixteen months. The plan entailed an initial 16% pay reduction in October 1994.
After each subsequent four-month period, an additional 4% of the initial
reduction was reinstated until February 1996, at which time the salaries
reverted to the levels prior to October 1, 1994. The Company has previously
estimated that the ALPA agreement would result in savings of approximately
$850,000 from October 1, 1994 through January 31, 1996 at present staffing
levels, of which $638,000 would be realized in fiscal 1995. The actual savings
were $318,000, which differed from the projection due to the increased block
hours flown due to the service schedule increase in the fiscal 1995 fourth
quarter.

         Crew travel expenses were reduced by 9.7%, or $137,000, in fiscal 1995
as a crew base was established in Augusta, Georgia, to decrease crew per diem
and lodging expenses. A Jacksonville, North Carolina crew base was established
in August, 1995. Efficient utilization of pilots allowed the Company to operate
the increased capacity without adding new pilots, thus pilot training costs
consisted only of recurrent training. This efficiency enabled the Company to
reduce crew training costs by $160,000, or 34.0%. Flight attendant salaries and
related costs increased $77,000 or 7.3%, due to scheduled service increases, and
hull insurance expense increased 11.4%, or $182,000, due to rate increases.

         Fuel and oil expense increased to $5,406,000 in fiscal 1995 from
$5,202,000 in fiscal 1994. The average cost per gallon of fuel into plane
decreased to 67.1(cent) in 1995 from 68.3(cent) in 1994, reflecting the
continued savings to the Company from the purchase of fuel through a US Airways
subsidiary. Total fuel consumption was 8.1 million gallons in fiscal 1995 versus
7.7 million gallons in fiscal 1994. The increase from year to year was a direct
result of increased levels of operations.

         Maintenance materials, repairs and overhead increased from $11,270,000
in fiscal 1994 to $11,619,000 in fiscal 1995. The higher costs were attributable
to an increase in the number of flight hours flown, however, the cost of
maintenance repairs and materials per ASM in fiscal 1995 was 3.8(cent) compared
to 3.9(cent) per ASM in fiscal 1994.


                                       15

<PAGE>






ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED



Results of Operations, continued

         FISCAL 1995, continued

         Ground operations expense decreased from $9,026,000 in fiscal 1994 to
$7,391,000 in fiscal 1995. In July of 1993, US Airways increased handling fees
that the Company pays for its passengers. At this time the Company was paying
$8.24 per passenger handled by US Airways. In March of 1994, the Company assumed
responsibility for ground operations at Concourse D at the Charlotte/Douglas
International Airport in conjunction with the implementation of cost cutting
measures by US Airways. The Company assumed the responsibility for the salaries
and benefits of the Concourse D employees, and in return received $296,900 per
month from US Airways and a reduction in passenger handling fees to $5.70 per
passenger.

         In January of 1995, the Company's reimbursement rate for operating
Concourse D increased to $340,000 per month. In March, 1995, the per-passenger
handling fee charged by US Airways increased to $6.20 and increased to $6.50 in
July, 1995. The reduction in ground operations expenses, while primarily due to
the Concourse D realignment, was also due to operational efficiencies
experienced at other stations operated by the Company.

         Advertising, promotion and commissions expense increased from
$8,921,000 in fiscal 1994 to $9,007,000 in fiscal 1995, a 1.0% increase. This
increase is directly related to the passenger revenue increase, as these
expenses as a percentage of passenger revenue remained constant, 14.8% of
revenue in fiscal 1995 and 14.9% of revenue in fiscal 1994.

         General and administrative expense increased to $4,802,000 in fiscal
1995 as compared to $4,369,000 in fiscal 1994. This increase was primarily
attributable to passenger liability and property insurance increases of
$230,000, or 19%. Passenger liability rate increases more than offset the
reduction in passengers and the resultant decrease in RPMs.

         Depreciation and amortization increased from $1,595,000 in fiscal 1994
to $1,845,000 in 1995, primarily as a result of increased depreciation on
rotable flight equipment reclassified from inventory in fiscal 1994.


LIQUIDITY AND CAPITAL RESOURCES

         The Company's cash needs result from continuing operations including
capital expenditures necessary to the operation of its aircraft, and the
continuing payment of creditors in accordance with its Plan of Reorganization.
The Plan of Reorganization was consummated in September, 1991 pursuant to
bankruptcy proceedings initated by the Company. During fiscal 1997 the Company
satisfied its cash requirements through internally generated funds and
borrowings under a revolving line of credit agreement with an affiliate of an
aircraft manufacturer, secured by all of the Company's accounts receivable. The
Company also utilized short-term loans from certain directors and officers
secured by owned flight equipment, a line of credit with Centura Bank, and
through the deferral of certain scheduled lease payments to satisfy its cash
needs.

         PLAN OF REORGANIZATION AND OTHER RESTRUCTURING

         In September, 1995 the Company and Jet Acceptance Corporation ("JACO")
restructured the entire remaining amount due to JACO under the bankruptcy plan,
including the August 31, 1995 installment of $327,000. The amount due was
approximately $1,232,000, net of $402,000 discount at 15% as of June 30, 1995.
Under this agreement, the Company issued a promissory note to JACO in the
principal amount of $676,000, payable in forty-eight equal monthly installments
of $17,727, consisting of principal and interest, beginning on January 30, 1996.
Additionally, the remaining balance due under the bankruptcy plan of $690,000
was satisfied in December, 1995 with the issuance of 325,000 shares of the
Company's common stock to JACO.

         The Company is required to make payments of $166,000 to unsecured
creditors in annual installments in the first quarter of each fiscal year until
1999. The Company intends to make these payments when due.


                                       16

<PAGE>






ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED



LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

         FINANCING

         During fiscal 1997 the Company had available a line of credit (the
"Line") in an amount not to exceed $3,000,000 from British Aerospace Asset
Management ("BAAM"). BAAM is an affiliate of JACO and British Aerospace
Holdings, Inc., the company that had previously collateralized the Company's
bank line through a loan purchase agreement. The Line permits the Company to
borrow up to 50% of a borrowing base, which consists of the Company's
transportation and nontransportation charges to Airlines Clearing House, Inc.
("ACH") or such greater amount as BAAM shall determine, but in no event more
than $3,000,000. The Line is secured by all of the Company's accounts
receivable, bears interest at prime + 2% and was scheduled to terminate on
December 31, 1997, but must be extended by BAAM for successive one-year periods
until December 31, 2001. Subsequent to June 30, 1997, BAAM increased the maximum
credit available to $4,000,000. In conjunction with this increase in the maximum
credit available, BAAM agreed to extend the termination date of the Line until
July 31, 1998 and to increase the amount available for borrowing from 50% to 70%
of the borrowing base.

         In November, 1996 the Company secured a supplemental line of credit
(the "Centura Line") with its primary banking facility, Centura Bank. This is a
revolving line of credit not to exceed $400,000 based on its original terms.
Centura Bank did extend this Line to $800,000 for the months of February through
June, 1997. The outstanding balance on the Centura Line accrues interest at an
annual rate of prime plus 2%, and terminates September 30, 1997. The maximum
amount drawn on the Centura Line was $751,000, with that amount being
outstanding on June 30, 1997.

         During fiscal 1997, the Company obtained several short-term loans from
certain directors and officers. Amounts borrowed under these loans ranged from
$44,000 to $400,000, and earned interest at the rate of ten percent. The
aggregate maximum and average amounts outstanding under these loans were
$810,000 and $79,000, respectively. In connection with these loans, the Company
issued to the lending parties options or warrants to purchase 55,225 shares of
the Company's common stock.

         CAPITAL EXPENDITURES

         Capital expenditures consist of major component overhauls and fixed
asset replacement. Capital expenditures in fiscal 1997 were $6,955,000 as
compared to $6,169,000 in fiscal 1996. The increase is primarily due to
continued expenditures for engine overhauls on the Dash 8 aircraft; these
overhauls were completed in June, 1997. Substantial expenditures on Dash 8
engine overhauls are not expected again until fiscal year 2000. Moderate
reductions were experienced in expenditures for rotable parts and aircraft
leasehold improvements. The Company projects fiscal 1998 capital expenditures to
be approximately $3,800,000, providing consummation of the fleet restructuring
plan as described under Proposed Transactions. The components of the 1998
capital budget are $2,200,000 of engine overhauls, $300,000 of airframe and
landing gear overhauls on the Company's aircraft and $1,300,000 for other
capital items.

         OPERATING CASH FLOW

         The Company receives payments for airline tickets under interline
agreements through the Airlines Clearing House one month in arrears.
Historically, this payment in arrears has caused significant cash flow problems
in the last half of each month. The Company has a line of credit with BAAM to
provide a steady cash flow between ACH settlements. The Company believes that
the restructuring stated above and improved revenue environment will provide
sufficient cash flows to provide for continuing operations, capital expenditures
and scheduled debt and bankruptcy payments absent adverse changes in current
market conditions. If operating cash flows and the Line are insufficient to meet
obligations, the Company has these financing sources available: issuance of
stock, short-term loans from officers and directors, extending terms with trade
creditors and restructuring aircraft lease payments.


                                       17

<PAGE>






ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED


LIQUIDITY AND CAPITAL RESOURCES,CONTINUED

         OPERATING CASH FLOW, continued

         The Company received the June Airlines Clearing House ("ACH") payment
on the scheduled settlement date of June 30, 1997. However, because the first
business day subsequent to receipt of funds was July 1, 1997, the Company
maintained possession of the full settlement amount of $4,876,000 as of June 30,
1997. Ordinarily, BAAM receives payments from the settlement on the first
business day subsequent to the transfer to satisfy the Line balance ($3,000,000
plus interest of $22,000 at June 30, 1997) and accrued aircraft lease payments
due to JACO ($351,000), with the remaining funds to the Company's account. Other
short-term liabilities settled from the residual funds on July 1, 1997 included
the Centura Line of $751,000 plus interest of $3,000 and outstanding loans from
Company Directors and Officers in the amount of $200,000.

         Accounts receivable decreased to $5,629,000 in fiscal 1997 from
$5,937,000 in fiscal 1996. The decrease is due to lower passenger revenue in
June, 1997 versus June, 1996 attributable primarily to a decrease in passenger
traffic from June of 1996 compared to June, 1997.

         Other noncurrent assets increased from $632,000 in fiscal 1996 to
$829,000 in 1997 as prepayments for component overhauls expected to be completed
in a time period greater than the next twelve months increased by $197,000
between the respective balance sheet dates.

         Accounts payable remained stable at $5,521,000 in fiscal 1997 as
compared to $5,546,000 in fiscal 1996 due to similar timing of the monthly
Clearing House settlement. Notes payable, including current maturities,
decreased from $2,226,000 in fiscal 1996 to $1,885,000 in 1997 as a result of
scheduled debt payments.

         PROPOSED TRANSACTIONS

         The Company and its advisors, Barlow Partners, have determined that the
elimination of the Shorts aircraft from the fleet would positively impact the
operating results of the Company. Long-term savings would be achieved in the
areas of reduced spare parts inventories, reduced personnel training expenses,
and reduced lease rates per flight hour. The Company would also realize
improvements in performance measures such as on-time departures and arrivals,
denied boardings and flight cancellations.

         To this end, the Company is currently in negotiations with the aircraft
lessor to terminate the Shorts leases and return the aircraft. In return, the
Company is proposing to issue a subordinated note, convertible to common stock.
Under the terms of the proposed transaction, principal payments on the note
would be paid in either cash or stock at the Company's discretion. Interest
would begin accruing from the date of the agreement, and although interest is
required to be paid in cash, the first interest payment under the note would not
be due until January, 1999. If the transaction is consummated, the face amount
of the note is projected to be approximately $8,000,000. This amount would
encompass approximately $1,800,000 of liabilities (accrued leases and notes
payable) currently recorded in the Company's financial statements at June 30,
1997.

         Under this proposed transaction, the Company anticipates having to meet
certain return conditions, which would entail performing two engine overhauls
(approximately $500,000 in the aggregate). The Company has the same sources of
cash to meet the return conditions as it does to fund continuing operations, as
outlined above.

         The Company is also currently negotiating with BAAM to return its
entire Jetstream 31 fleet and acquire Super 31 aircraft under lease. Under the
terms of the proposed transaction, in return for leasing 14 Super 31 aircraft
through December, 2004, the Company would be able to reduce its rental payments
on Jetstream aircraft by approximately $10,000 per month per aircraft. While
both aircraft have 19 seats, the Super 31 aircraft are approximately five years
newer than the Jetstream 31 aircraft which average 11 years of age, resulting in
reduced maintenance expense and other savings based on operational factors. The
Super 31 aircraft are also faster, more fuel efficient and operate with less
weight restrictions than their precursors. While the Jetstream 31 leases have
return conditions which must be satisfied, the Company's cash outlays related to
these return conditions are projected to be less than $20,000. The Company is
also attempting to acquire six additional Super 31 aircraft to meet short-term
operating needs. The leases on these six incremental aircraft are not
anticipated to exceed one year in duration from inception and are projected to
be at the same lease rate as the 14 aircraft described above.

                                       18

<PAGE>







ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS, CONTINUED


Liquidity and Capital Resources, continued

         OTHER

         On December 20, 1996, US Airways notified the Company that it was
amending the service agreement between US Airways and the Company to change the
method for the division of revenue on joint fares effective with tickets used on
or after July 1, 1997. The implementation of this service agreement amendment
has been delayed. US Airways is still studying the ramifications of this
amendment and the ultimate timing of the implementation of this plan, if it is
implemented at all, is uncertain. Preliminary analysis by the Company indicates
that US Airways will capture an additional 4% of revenues presently allocated to
the Company if and when the plan is implemented.


INFLATION

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



ITEM 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
                  RISK

         The Company has no information to report under this Item.



ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required by this item is submitted beginning on Page
F-4 of this Form 10-K.



ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE

         None.



ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



ITEM 11.          EXECUTIVE COMPENSATION




                                       19

<PAGE>




                                    PART III



ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT



ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Items 10 through 13 are incorporated by reference to the Company's
definitive proxy statement as filed with the Securities and Exchange Commission.


                                     PART IV


ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
                  FORM 8-K


         (a)      The following documents are filed as a part of this report:

                  1. & 2.  The financial statements and schedule required by 
                           this Item can be found as indexed on Page F-1.

                  3.       Exhibits shown by index beginning on page E-1.

         (b)      Reports on Form 8-K.

                  None.


                                       20

<PAGE>






                                   SIGNATURES



         Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                 CCAIR, INC.


DATE:    September 26, 1997                 BY:  /s/ Kenneth W. Gann
                                               ---------------------
                                               Kenneth W. Gann, President and
                                               Chief Executive Officer

         Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S>                                          <C>                                            <C> 

         SIGNATURES                                           TITLE                          DATE


  /s/ Kenneth W. Gann                       Chairman of the Board of Directors,            September  26, 1997
----------------------------
Kenneth W. Gann                             Chief Executive Officer, President
                                            (Principal Executive Officer)


  /s/ Eric W. Montgomery                    Vice President of Finance;                     September  26, 1997
----------------------------                (Principal Financial Officer,
Eric W. Montgomery                          Principal Accounting Officer)
                                            


  /s/ John A. Adams                         Director                                       September  26, 1997
-----------------------------
John A. Adams


  /s/ K. Ray Allen                          Director                                       September  26, 1997
--------------------------------
K. Ray Allen


  /s/ Gordon Linkon                         Director                                       September  26, 1997
------------------------------
Gordon Linkon


  /s/ George Murnane, III                   Director                                       September  26, 1997
-----------------------------
George Murnane, III


  /s/ Dean E. Painter, Jr.                  Director                                       September  26, 1997
------------------------------
Dean E. Painter, Jr.

</TABLE>


                                       21

<PAGE>
                                   CCAIR, INC.

                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULE




                                                                       PAGE NO.


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                 F-2



FINANCIAL STATEMENTS:


         Balance Sheets as of June 30, 1997 and 1996                     F-3


         Statements of Operations for the Years ended June 30,
          1997, 1996 and 1995                                            F-4


         Statements of Changes in Shareholders' Equity for the Years
          ended June 30, 1997, 1996 and 1995                             F-5


         Statements of Cash Flows for the Years ended
          June 30, 1997, 1996 and 1995                                   F-6


         Notes to Financial Statements                                   F-7


FINANCIAL STATEMENT SCHEDULE:


         II       Valuation and Qualifying Accounts for the Years ended
                   June 30, 1997, 1996 and 1995                          S-1




         All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have been
omitted because they are not applicable, not required or the information
presented has been furnished elsewhere.




                                       F-1

<PAGE>





                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




TO CCAIR, INC.:

         We have audited the accompanying balance sheets of CCAIR, Inc. (a
Delaware corporation) as of June 30, 1997 and 1996, and the related statements
of operations, changes in shareholders' equity and cash flows for each of the
three years in the period ended June 30, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CCAIR, Inc. as of
June 30, 1997 and 1996, and the results of its operations and its cash flows for
each of the three years in the period ended June 30, 1997, in conformity with
generally accepted accounting principles.

         Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.




Charlotte, North Carolina,                         ARTHUR ANDERSEN LLP
September 19, 1997.


                                       F-2

<PAGE>



                                   CCAIR, INC.

                                 BALANCE SHEETS
                             JUNE 30, 1997 AND 1996
                            -------------------------

<TABLE>
<CAPTION>
<S>                                                                     <C>                          <C>


     ASSETS                                                                 1997                              1996
                                                                        -----------                       --------
Current assets:
  Cash and cash equivalents                                             $ 4,904,778                  $ 5,059,665
  Receivables, principally traffic,
   less allowance for doubtful
   receivables of $113,700 in 1997
   and $50,000 in 1996                                                    5,628,959                    5,937,222
  Inventories, less allowance for
   obsolescence of $466,000 in 1997
   and 1996                                                               2,082,376                    1,758,453
  Prepaid expenses                                                          842,320                    1,410,113
                                                                        -----------                  -----------
          Total current assets                                           13,458,433                   14,165,453
                                                                        -----------                  -----------

Property and equipment, at cost:
  Flight equipment and leasehold improvements                            24,417,631                   20,700,870
  Ground and other property and equipment                                 4,269,938                    4,135,574
                                                                        -----------                  -----------
                                                                         28,687,569                   24,836,444
   Less accumulated depreciation
    and amortization                                                    (15,004,807)                 (12,504,463)
                                                                        -----------                  -----------
                                                                         13,682,762                      632,244
                                                                        -----------                  -----------
Other noncurrent assets                                                     829,464                   12,331,981
                                                                        -----------                  -----------
          Total assets                                                  $27,970,659                  $27,129,678
                                                                        ===========                  ===========


     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Notes payable and current maturities
   of long-term debt                                                    $   962,748                  $   854,438
  Short-term borrowings                                                   3,951,000                    3,310,000
  Current obligations under capital leases                                  328,465                      373,266
  Accounts payable                                                        5,520,553                    5,546,146
  Accrued expenses                                                        6,316,240                    5,441,201
                                                                        -----------                  -----------
          Total current liabilities                                      17,079,006                   15,525,051
Long-term debt, less current maturities                                     922,345                    1,371,328
Capital lease obligations, less current
 obligations                                                              2,342,517                    2,638,967
Deferred credits, net of amortization of
 $2,293,263 in 1997 and $1,805,462 in 1996                                1,269,635                    1,757,436
                                                                        -----------                  -----------
          Total liabilities                                              21,613,503                   21,292,782
                                                                        -----------                  -----------

Commitments and contingencies (Notes 5, 7 and 11)

Shareholders' equity:
  Common stock, $.01 par value, 10,000,000 shares
   authorized, 7,740,695 issued
   and outstanding at June 30, 1997
   and 1996, respectively                                                    77,407                       77,407
  Additional paid-in capital                                             17,725,184                   17,725,184
  Accumulated deficit                                                   (11,445,435)                 (11,965,695)
                                                                        -----------                  -----------
       Total shareholders' equity                                         6,357,156                    5,836,896
                                                                        -----------                  -----------

          Total liabilities and
           shareholders' equity                                         $27,970,659                  $27,129,678
                                                                        ===========                  ===========
</TABLE>






           The accompanying notes to financial statements are an integral part
of these balance sheets.


                                       F-3

<PAGE>



                                   CCAIR, INC.

                            STATEMENTS OF OPERATIONS
                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
                            ------------------------
<TABLE>
<CAPTION>
<S>                                                  <C>                       <C>                        <C>        


                                                        1997                      1996                       1995
                                                     -----------               -----------                -------


Operating revenue:
  Passenger                                          $67,020,162               $64,482,156                $60,804,001
  Public service                                         ---                       352,888                    695,047
  Other, principally freight
   and charter                                         1,467,460                 1,398,657                  1,539,652
                                                     -----------               -----------                -----------

                                                      68,487,622                66,233,701                 63,038,700
                                                     -----------               -----------                -----------

Operating expenses:
  Flight operations                                   23,539,207                23,490,322                 22,415,288
  Fuel and oil                                         7,117,089                 6,261,716                  5,406,055
  Maintenance materials and repairs                   12,380,857                12,565,634                 11,619,432
  Ground operations                                    8,372,738                 7,838,926                  7,390,643
  Advertising, promotion and
   commissions                                         9,867,686                 9,104,225                  9,006,992
  General and administrative                           4,115,530                 4,273,030                  4,802,454
  Depreciation and amortization                        1,699,181                 1,813,533                  1,844,683
                                                     -----------               -----------                -----------

                                                      67,092,288                65,347,386                 62,485,547
                                                     -----------               -----------                -----------

          Operating income                             1,395,334                   886,315                    553,153

Interest expense                                      (  742,437)               (  761,433)                (  920,528)
Other income (expense), net                                8,291                (   11,027)                     5,252
                                                     ------------              -----------                -----------

          Income (loss) before
           income taxes                                  661,188                   113,855                 (  362,123)
          Provision for income taxes                  (  140,928)               (   18,100)                   -0-
                                                     -----------               -----------                -------

          Net income (loss)                          $   520,260               $    95,755                $(  362,123)
                                                     ===========               ===========                ===========

Income (loss) per common share                       $       .07               $       .01                $(      .05)
                                                     ===========               ===========                ===========

Weighted average common and common
 equivalent shares outstanding                         7,979,632                 7,969,314                  7,381,729
                                                     ===========               ===========                ===========


</TABLE>



             The accompanying notes to financial statements are an integral part
of these statements.


                                       F-4

<PAGE>



                                   CCAIR, INC.

                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
                            -------------------------


<TABLE>
<CAPTION>
<S>                                         <C>          <C>         <C>           <C>             <C>       



                                                                     ADDITIONAL
                                                COMMON STOCK           PAID-IN     ACCUMULATED
                                              SHARES     AMOUNT        CAPITAL       DEFICIT         TOTAL



Balances, June 30, 1994                     7,381,195    $73,812     $16,997,186   $(11,699,327)   $5,371,671

Net loss                                      ----         ---          ----           (362,123)     (362,123)

Exercise of options                            19,500        195          22,962        ----           23,157
                                            ---------    -------     -----------   ------------    ----------

Balances, June 30, 1995                     7,400,695    $74,007     $17,020,148   $(12,061,450)   $5,032,705

Net income                                    ----         ---          ----             95,755        95,755

Issuance of stock to lessor                   325,000      3,250         687,375        ----          690,625

Exercise of options                            15,000        150          17,661        ----           17,811
                                            ---------    -------     -----------   ------------    ----------

Balances, June 30, 1996                     7,740,695    $77,407     $17,725,184   $(11,965,695)   $5,836,896

Net income                                    ----         ---          ----            520,260       520,260
                                            ---------    -------     -----------   ------------    ----------

Balances, June 30, 1997                     7,740,695    $77,407     $17,725,184   $(11,445,435)   $6,357,156
                                            =========    =======     ===========   ============    ==========


</TABLE>




             The accompanying notes to financial statements are an integral part
of these statements.

                                       F-5

<PAGE>



                                   CCAIR, INC.

                            STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
                            ------------------------

<TABLE>
<CAPTION>
<S>                                                                <C>                 <C>                <C>        




                                                                       1997                1996               1995
                                                                   -----------         -----------        --------

 Cash flows from operating activities:
   Net income (loss)                                               $   520,260         $    95,755           (362,123)
   Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
     Note discount amortization                                         76,561             201,503            328,238
     Depreciation and amortization                                   5,595,917           6,206,823          5,388,356
     Lease expense in excess of
      (less than) payments                                            (487,801)             20,496            696,788
     Loss on disposal of assets                                          4,864              31,855             36,902
     Changes in certain assets
      and liabilities:
       Receivables, net                                                308,263             579,850           (272,290)
       Inventories, net                                               (323,923)             26,432            407,334
       Accounts payable                                                (25,593)          1,488,049          1,046,894
       Accrued expenses                                                875,039           1,152,881           (562,790)
       Other note payable                                              ----                ----              (801,000)
       Other changes, net                                              370,573            (889,841)         1,594,916
                                                                   -----------         -----------        -----------
            Net cash provided by
             operating activities                                    6,914,160           8,913,803          7,501,225
                                                                   -----------         -----------        -----------

 Cash flows from investing activities:
   Capital expenditures                                             (6,954,961)         (6,169,304)        (5,437,286)
   Proceeds from sale of assets                                          3,400               4,250             44,539
                                                                   -----------         -----------        -----------
            Net cash used in
             investing activities                                   (6,951,561)         (6,165,054)        (5,392,747)
                                                                   -----------         -----------        -----------

 Cash flows from financing activities:
   Issuance of common stock                                            ----                 17,811             23,157
   Issuance of notes and long-term debt                                573,434             530,281            620,211
   Short-term borrowings, net                                          641,000           3,210,000            100,000
   Reductions of notes and long-term debt,
    including payments under capital
    lease obligations                                               (1,331,920)         (1,504,171)        (3,445,871)
                                                                   -----------         -----------        -----------
            Net cash provided (used)
             by financing activities                                (  117,486)          2,253,921         (2,702,503)
                                                                   -----------         -----------        -----------
 Net increase (decrease) in cash                                    (  154,887)          5,002,670         (  594,025)
 Cash and cash equivalents, beginning of period                      5,059,665              56,995            651,020
                                                                   -----------         -----------        -----------
 Cash and cash equivalents, end of period                          $ 4,904,778         $ 5,059,665        $    56,995
                                                                   ===========         ===========        ===========


</TABLE>





        The accompanying notes to financial statements are an integral part of
these financial statements.


                                       F-6

<PAGE>






                                   CCAIR, INC.

                          NOTES TO FINANCIAL STATEMENTS
                              --------------------




1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A summary of the significant accounting policies applied in the
         preparation of these financial statements follows:

         NATURE OF OPERATIONS AND BASIS OF PRESENTATION - CCAIR, Inc. is an
         independent regional airline providing scheduled passenger service as
         US Airways Express in the southeast United States. CCAIR, Inc. operates
         within one industry (air transportation) and, accordingly, no segment
         information is provided.

         REVENUE RECOGNITION - Passenger revenue is recognized when service is
         rendered. Public service revenue represents Federal subsidies received
         for providing Essential Air Service to certain communities which
         produce insufficient air traffic to profitably support such service.
         Rates for such transportation services are determined under the Federal
         Aviation Act by the Department of Transportation. Revenue is recognized
         when service is rendered.

         FREQUENT TRAVELER AWARDS - The Company does not sponsor its own
         frequent traveler program. It does honor the US Airways program but
         limits the available program seats. The Company's share of future
         travel awards to be incurred, if any, is not determinable but
         usage of such awards are believed by management to be immaterial.

         CASH AND CASH EQUIVALENTS - Cash equivalents include all investments
         with an original maturity of three months or less. Cash and cash
         equivalents are principally held by one bank.

         RECEIVABLES - The Company's air traffic receivables are settled through
         the Airlines Clearing House and collected monthly, one month in
         arrears.

         INVENTORIES - Inventories consist principally of expendable spare parts
         and operating supplies and are valued at the lower of cost or market,
         determined on an average cost basis. Expendable parts are recorded as
         inventory when purchased and charged to operations as used.

         PREPAID EXPENSES - Prepaid expenses include prepaid insurance and
         prepaid maintenance (see "Maintenance" section of Note 1 for additional
         discussion).

         DEPRECIATION AND AMORTIZATION - Property and equipment are depreciated
         to estimated residual values on the straight-line method over their
         economic useful service lives, ranging as follows:

            Flight equipment, excluding spare engines 
               and major overhauls                        10 years 
            Ground and other property and equipment     3-10 years

         Spare engines are depreciated based on actual hours of usage, with a
         total estimated flying time of 60,000 hours. Major overhauls of flight
         equipment are capitalized and depreciated over the period to the next
         overhaul. See "Maintenance" section of Note 1 for additional 
         discussion.

         Leasehold improvements and flight equipment held under capital leases
         are amortized using the straight-line method over the estimated useful
         service lives of the related assets, not exceeding the lease term. Cost
         and accumulated depreciation of property retired or otherwise disposed
         of are removed from the accounts, and the related gain or loss is
         included in other income.


                                       F-7

<PAGE>





                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


         MAINTENANCE - Maintenance and repairs are expensed as incurred except
         for major overhauls. The costs of major overhauls are capitalized when
         incurred and amortized over the period to the next overhaul (generally
         1-4 years). The Company has entered into two maintenance agreements
         under which the Company prepays for certain engine overhauls based on
         hours flown. At the time of overhaul, the Company transfers related
         prepaid amounts to property and equipment, and begins amortization over
         the period to the next overhaul (generally 1-4 years). At June 30, 1997
         and 1996, approximately $1,315,000 and $1,132,000, respectively, has
         been prepaid under the agreements, of which approximately $521,000 and
         $537,000 is included in prepaid expenses on the accompanying 1997 and
         1996 balance sheets. The remaining $794,000 and $595,000 is included in
         other noncurrent assets in the accompanying 1997 and 1996 balance
         sheets, respectively, as it relates to overhauls that management
         expects not to occur within the next twelve months.

         DEFERRED CREDITS - As incentives for the Company to integrate new
         aircraft into its fleet, certain aircraft manufacturers have provided
         the Company with cash, spare parts and other credits. These deferred
         credits are amortized on a straight-line basis over the terms of the
         related operating leases as reductions in rent expense. In addition,
         beginning in fiscal 1995, deferred credits also include lease expense
         in excess of lease payments (see Note 5).

         INCOME TAXES - Deferred tax liabilities and assets are determined based
         on the difference between the financial statement and tax basis of
         assets and liabilities using enacted tax rates in effect for the year
         in which the differences are expected to reverse (see Note 9).

         FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amount of the
         Company's financial instruments approximates fair value at June 30,
         1997 and 1996.

         INCOME (LOSS) PER COMMON SHARE - Income (loss) per common share is
         based on the weighted average number of common shares outstanding after
         consideration of the effect of common stock equivalents.

         USE OF ESTIMATES - The preparation of financial statements in
         conformity with generally accepted accounting principles requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities and disclosure of contingent assets
         and liabilities at the date of the financial statements and the
         reported amounts of revenues and expenses during the reporting period.
         Actual results could differ from those estimates.

         RECLASSIFICATIONS - Certain amounts included in prior years' financial
         statements have been reclassified to conform with 1997 presentation.

         THE FILING - As a result of cash flow difficulties and the need for
         protection based upon its defaults under certain leasing and financing
         arrangements, the Company filed for Chapter 11 bankruptcy on July 5,
         1990.

         THE PLAN OF REORGANIZATION (THE "PLAN")

         Under Chapter 11, certain claims against the Debtor in existence prior
         to the filing of the petition for relief under the Federal Bankruptcy
         laws are stayed while the Debtor continues business operations as
         Debtor-in-Possession. Additional claims arose subsequent to the filing
         date through September 3, 1991, the Plan's effective date. Such claims
         resulted from rejection of executory contracts, including leases, and
         from the determination by the Bankruptcy Court (or agreed to by the
         parties-in-interest) of allowed claims for contingencies and other
         disputed amounts. Claims secured against the Debtor's assets ("Secured
         Claims") also are stayed, although holders of such claims have the
         right to seek relief from the stay. Secured claims are collateralized
         primarily by liens on the Company's property and equipment.


                                       F-8

<PAGE>






                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------


2.       PETITION FOR RELIEF UNDER CHAPTER 11


         THE PLAN OF REORGANIZATION (THE "PLAN")

         The Company received approval from the Bankruptcy Court (the "Court")
         to pay or otherwise honor certain of its prepetition obligations,
         including employee wages, insurance, and payables to US Airways in the
         normal course of business. The Company determined that there was
         insufficient collateral to cover the interest portion of scheduled
         payments on its prepetition debt obligations and discontinued accruing
         interest on these obligations. Contractual interest on those
         prepetition obligations was approximately $847,000, which was $739,000
         in excess of reported interest expense in 1991. Chapter 11 provides for
         reorganization of the Company's debt and equity structure and allows
         the business to continue operations. Subsequent to filing Chapter 11,
         the Company engaged in negotiations with its creditors and other
         parties-in-interest toward achieving a plan of reorganization and a
         settlement of outstanding claims against the Company. As a result of
         these negotiations, the Company filed a Plan of Reorganization on April
         10, 1991, a Revised Plan of Reorganization on May 3, 1991 and a Revised
         and Amended Plan of Reorganization on June 12, 1991 (the "Plan") with
         the Court. On July 19, 1991, the creditors and the Court confirmed the
         Plan effective September 3, 1991.

         In the process of developing the Plan intended to return the Company to
         profitable operations, management evaluated its aircraft fleet, route
         system, and relationship with US Airways, Inc. Under the Bankruptcy
         Code, the Company elected to assume or reject certain aircraft leases,
         real and personal property leases, service contracts and other
         executory prepetition contracts subject to the Court's review. During
         1991, the Company returned three (3) owned aircraft and twelve (12)
         leased aircraft, although subsequently the Company accepted and took
         back four (4) of the leased aircraft.

         DISTRIBUTION TO CREDITORS UNDER THE PLAN - The provisions of the Plan
         divide claims and interests into fourteen (14) classes and contain
         various repayment provisions and compromises of allowed claims. The
         principal Plan provisions vary depending on the class of claims and are
         as follows:

         1.       Payment of ten (10) to twenty (20) percent of allowed claims
                  at the time of the Plan's effective date, with the remainder
                  of such claims paid in equal annual installments over up to
                  eight (8) years;

         2.       Return of aircraft, parts or equipment in satisfaction of
                  allowed claims or in accordance with settlement agreements;

         3.       Release of certain liens on aircraft parts and equipment;

         4.       Issuance of common shares in payment of allowed claims;

         5.       Compromise of claims for prepetition and postpetition accrued
                  aircraft lease payments; assumption of certain aircraft
                  leases, payment of accrued prepetition and postpetition lease
                  payments on rejected aircraft leases and settlement payments
                  at the effective date as well as in future equal annual
                  installments over up to eight (8) years (see Note 7).

3.       US AIRWAYS AGREEMENT

         The Company and US Airways Group, Inc. ("US Airways"), an unaffiliated
         company, have entered into an agreement (the "Agreement") expiring on
         October 31, 1998, whereby the Company provides regional air service on
         air routes of US Airways. The majority of passenger revenue is
         generated from the Agreement through joint passenger fares and division
         of revenue with US Airways. The Company receives use of various US
         Airways service marks including use of the designator code and US
         Airways logo and color patterns. Under the contract, the Company is
         obligated to pay US Airways for reservation services and various ground
         support services (exclusive of aircraft fueling).

                                       F-9

<PAGE>







                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------


3.       US AIRWAYS AGREEMENT, CONTINUED

         The Company is required to maintain certain flight completion factors
         and to meet other conditions as specified in the Agreement. As of June
         30, 1997, the Company is in compliance with all requirements. Should an
         event of default occur, the Agreement provides that US Airways has the
         right to terminate the Agreement upon ten (10) days' written notice.
         The Agreement also provides that it may be terminated by either party
         upon 180 days' notice.

         A summary of other transactions and year-end account balances with US
Airways and subsidiaries is as follows:

<TABLE>
<CAPTION>
<S>                                                  <C>                  <C>                  <C>        

                                                        1997                 1996                 1995
                                                     -----------          -----------          -------
         Service fees expense                        $ 6,516,445          $ 5,550,962          $ 4,839,916
         Passenger revenue receivable                  4,897,651            4,992,157            4,878,676
         Amounts payable                               1,174,114            1,351,120            1,660,404

</TABLE>

4.       ACCRUED EXPENSES

         Accrued expenses by major classification are as follows:

<TABLE>
<CAPTION>
<S>                                                                       <C>                  <C>

                                                                             1997                 1996
                                                                          ----------           -------
         Salaries and wages, vacation pay
          and related payroll taxes                                       $2,457,895           $2,505,445
         Accrued ground and passenger charges                              1,617,409            1,677,384
         Accrued property and excise taxes                                   310,124              330,423
         Accrued leases                                                    1,816,233              898,233
         Other accrued expenses                                              114,579               29,716
                                                                          ----------           ----------
                                                                          $6,316,240           $5,441,201
                                                                          ==========           ==========

</TABLE>

5.       LEASE TRANSACTIONS

         The Company operates using significant amounts of leased property,
         including aircraft, equipment and facilities. Leases generally are on a
         long-term, net rent basis whereby taxes, insurance and maintenance are
         paid by the Company. Rental expenses incurred under all operating
         leases totaled approximately $11,051,000, $11,200,000, and $10,934,000
         for the years ended June 30, 1997, 1996 and 1995, respectively. Monthly
         rentals under one operating lease are required to be paid in full each
         month at the time receivables are collected from the Airlines Clearing
         House. Flight and ground equipment with a capitalized cost of
         approximately $4,498,000 is included in property and equipment, less
         accumulated amortization at June 30, 1997 and 1996 of approximately
         $2,831,000 and $2,485,000, respectively.

         The Company leases aircraft and certain equipment from three different
         lessors. In fiscal 1994, the Company failed to meet certain lease
         payment obligations totaling approximately $585,000 under aircraft
         lease agreements with Mellon Financial Services Corporation #3
         ("Mellon"), resulting in cancellation of the related agreements. The
         Company operated the aircraft under interim leases with Mellon through
         November, 1994. In November, 1994, CIT Leasing Corporation ("CIT"),
         acquired the four Dash 8 aircraft from Mellon. The Company subsequently
         signed new lease agreements with CIT, which expire in June, 2007,
         resulting in an annual reduction of approximately $516,000 in aircraft
         rental payments. As a result, during the second quarter of fiscal 1995,
         the Company reversed the $585,000 of accrued rental payments previously
         due to Mellon as a reduction of flight operations expense.

         The Company did not make lease payments due Shorts in July 1995,
         October 1996 and January and April of 1997; the total of past due
         payments is $1,224,000. The Company is currently negotiating a
         settlement of this liability through the planned issuance of a
         convertible debenture. As of June 30, 1997, the Company has recorded
         the lease payments as a current liability.


                                      F-10

<PAGE>





                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------


5.       LEASE TRANSACTIONS, CONTINUED

         The Company entered into a revised aircraft lease agreement with
         Shorts, effective October 1, 1994, for the Company's nine Shorts 360
         aircraft. This revised agreement provided for reductions in lease
         payments aggregating approximately $94,000 per month for the remainder
         of the lease term. In addition, the Company entered into a revised
         aircraft agreement with Jet Acceptance Corporation ("JACO"), effective
         September 1, 1994, for the Company's twelve Jetstream 31 aircraft. This
         revised agreement provided for reductions in lease payments aggregating
         approximately $98,000 per month through December 31, 1995. In
         September, 1995, JACO agreed to extend the lease reductions for the
         remainder of the lease term. The JACO lease reductions would cease in
         the event of a change in control of the Company. Additionally, the
         Company has agreed to lease replacement Jetstream 31 aircraft, at
         further reduced rates through December, 2001, upon the expiration of
         seven of the current leases with JACO during calendar years 1997, 1998
         and 1999. The Company also committed to lease two additional Jetstream
         31 aircraft during 1995, which were leased by the Company in June and
         December, 1995. The lease terms for the additional aircraft expire in
         December, 2001. The Company has accounted for the modifications to the
         JACO lease agreements as they have occurred. As a result, the Company
         recorded a deferred credit of approximately $906,000, representing the
         excess of rent expense recorded on a straight line basis over actual
         payments made from September, 1994 through September, 1995. This amount
         will reduce lease expense over the remaining term of the leases. At
         June 30, 1997, $466,000 (net of amortization of $440,000) of such
         excess rent expense is included in deferred credits on the accompanying
         balance sheets.

         Future minimum lease payments required under capital and noncancelable
         operating leases with terms of greater than one year, under these new
         lease agreements, are as follows:

<TABLE>
<CAPTION>
<S>                        <C>                                            <C>                   <C>       

                                                                         CAPITAL                OPERATING
                  Years Ended June 30:                                    LEASES                 LEASES
                                                                       ----------             ---------
                           1998                                           510,528               10,819,224
                           1999                                           342,588               10,524,606
                           2000                                           347,922               10,424,640
                           2001                                           374,580               10,424,640
                           2002                                           355,227                8,861,040
                           Thereafter                                   1,692,456               18,841,636
                                                                       ----------             ------------
                                Total lease payments                    3,623,301             $ 69,895,786
                                                                                              ============
                  Less amounts representing interest                      952,319
                                                                       ----------
                                                                        2,670,982
                  Less current obligations                                328,465
                                                                       ----------
                                                                       $2,342,517
                                                                       ==========
</TABLE>


6.       SHORT-TERM BORROWINGS

         In February, 1995, the Company obtained a line of credit (the "Line of
         Credit") in an amount not to exceed $2,500,000, with an increase to
         $3,000,000 in July, 1996, from British Aerospace Asset Management
         ("BAAM"), formerly JSX Capital Corporation. BAAM is an affiliate of Jet
         Acceptance Corporation, the leasing company for the Company's fleet of
         Jetstream 31 aircraft, and British Aerospace Holdings, Inc., the
         company that had previously collateralized the Company's line of credit
         from NationsBank, N.A. through a loan purchase agreement.


                                      F-11

<PAGE>






                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------



6.       SHORT-TERM BORROWINGS, CONTINUED

         The Line of Credit permits the Company to borrow up to 50% of a
         borrowing base, consisting of the Company's transportation and
         nontransportation charges to Airlines Clearing House, Inc. or such
         greater amount as BAAM shall determine, but in no event more than $3.0
         million. The Line of Credit is secured by all of the Company's accounts
         receivable, bears interest at prime + 2% and was scheduled to terminate
         on December 31, 1997. Subsequent to June 30, 1997, BAAM agreed to
         increase the maximum credit available to $4 million and extend the
         termination date to July 31, 1998. Under the provisions of the Line of
         Credit, the Company must comply with certain restrictive operational
         covenants. As of June 30, 1997 the Company is in compliance with all
         covenants. Average amounts outstanding under the credit line were
         approximately $2,307,000 and $1,825,000 during 1997 and 1996,
         respectively. There was $3,000,000 and $2,500,000 outstanding under the
         Line of Credit at June 30, 1997 and 1996, respectively.

         In November, 1996 the Company secured a line of credit with its primary
         banking facility, Centura Bank. This is a $400,000 revolving line of
         credit, with seasonal increases to $800,000 (not to exceed a total
         advance of all credit facilities on Airlines Clearing House net
         receivables). This line is secured by the titles to certain ground
         equipment and vehicles, bears interest at prime plus 2%, and expires on
         September 30, 1997. There was $751,000 outstanding under this line as
         of June 30, 1997, with an average amount outstanding during fiscal 1997
         of $275,000.

         During fiscal 1997 and 1996, the Company obtained short-term loans from
         certain directors and officers. Amounts borrowed under these loans
         ranged from $44,000 to $400,000 during fiscal 1997 and $50,000 to
         $400,000 during fiscal 1996. Interest at rates related to these loans
         were ten percent during fiscal 1997 and fiscal 1996. The aggregate
         maximum and average amounts outstanding under these loans were $810,000
         and $79,000 during fiscal 1997 and $810,000 and $119,000 during fiscal
         1996, respectively. At June 30, 1997 and 1996, $200,000 and $810,000,
         respectively, were outstanding under these loans. In connection with
         these loans, the Company issued to the lending officers and directors
         options and warrants to purchase 55,225 and 59,625 shares of the
         Company's common stock during fiscal 1997 and 1996, respectively (see
         Note 10).


7.       LONG-TERM DEBT AND NOTES PAYABLE

         Long-term debt and notes payable as of June 30, are as follows:

<TABLE>
<CAPTION>
<S>                                                                               <C>                 <C>       


                                                                                   1997                  1996
                                                                                ----------            -------
         Note payable to aircraft manufacturer due in monthly
          installments of $22,625 through September 1, 1999,
          including interest at 10%                                               $598,370            $  750,700
         Note payable to aircraft manufacturer due in monthly
          installments of $17,727 through December 31, 1999,
          including interest at 10%, less $56,530 discount at
          15% at June 30, 1997 and $73,866 at June 30, 1996                        426,008               564,570
         Notes payable, noninterest bearing, to unsecured vendors in
          annual installments through 2000, less $71,608 and $130,833
          discount at 15% at June 30, 1997 and 1996, respectively                  505,220               533,170
         Other notes payable                                                       355,495               377,326
                                                                                ----------            ----------
                                                                                 1,885,093             2,225,766
         Less current maturities                                                   962,748               854,438
                                                                                ----------            ----------
                                                                                $  922,345            $1,371,328
                                                                                ==========            ==========

</TABLE>

         Principal maturities of long-term debt and notes payable are $962,748
         in 1998; $585,806 in 1999; $336,537 in 2000; and $-0- in 2001.


                                      F-12

<PAGE>






                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------



7.       LONG-TERM DEBT AND NOTES PAYABLE, CONTINUED

         On August 31, 1994, the Company did not make a bankruptcy plan annual
         installment payment of $254,000 to Shorts. On March 21, 1995 the
         Company entered into a $573,000 note agreement with Shorts, whereby the
         Company agreed to repay the $254,000, along with $318,500 in missed
         lease payments (see Note 5), in three equal installments due June 1,
         July 1, and August 1, 1995, along with interest at 10%. At June 30,
         1995, $378,500 remained due to Shorts under this note agreement. In
         September, 1995, the Company reached an agreement with Shorts to
         restructure the payment of their outstanding note payable and the
         payment of the entire remaining amount due to Shorts under the
         bankruptcy plan (approximately $466,000, net of $43,000 discount at 15%
         as of June 30, 1995). Under this agreement, in consideration of the
         past due note payable as well as the remaining bankruptcy payments, the
         Company issued a promissory note to Shorts in the principal amount of
         $892,067, payable in forty-eight equal monthly installments of $22,625,
         consisting of principal and interest, beginning on October 1, 1995. At
         June 30, 1997, $598,370 was outstanding on this note.

         A bankruptcy plan annual installment payment of $242,000, originally
         due to JACO on August 31, 1994, was paid in four equal installments
         during fiscal 1995. The Company did not pay a bankruptcy plan annual
         payment of $327,000 to JACO, originally due August 31, 1995. In
         September, 1995, the Company reached an agreement with JACO to
         restructure the payment of the entire remaining amount due to JACO
         under the bankruptcy plan (approximately $1,232,000, net of $402,000
         discount at 15% as of June 30, 1995). Under this agreement, the Company
         issued a promissory note to JACO in the principal amount of $676,000,
         payable in forty-eight equal monthly installments of $17,727,
         consisting of principal and interest, beginning on January 30, 1996.
         Interest at 10% per annum accrued beginning on September 1, 1995. At
         June 30, 1997, $426,008 was outstanding on this note. Additionally, the
         remaining balance due under the bankruptcy plan, subsequent to the
         issuance of the above promissory note, was satisfied with the issuance
         of 325,000 shares of the Company's common stock.


8.       RELATED-PARTY TRANSACTIONS

         On June 30, 1995, the Company entered into a sale and leaseback
         transaction with Adallipa Partners ("the Partnership"), a North
         Carolina partnership acting through its agent, CLG, Inc., whereby the
         Company sold and simultaneously leased back certain aircraft engines.
         The Partnership was formed June 30, 1995, by certain members of the
         Company's Board of Directors, for the purpose of entering into the sale
         and leaseback transaction. During fiscal 1997 CLG, Inc. was purchased
         by Centura Bank (the Company's primary banking facility) from a member
         of the Company's Board of Directors. The Company received $1,000,000 in
         consideration for the engines in July, 1995. Initially, the Company
         recorded a deferred gain of $70,000, in connection with the sale and
         leaseback transaction. The unamortized deferred gain is approximately
         $23,000 at June 30, 1997 which is included in noncurrent rent and other
         liabilities in the accompanying June 30, 1996 balance sheet. To induce
         the Partnership to enter into this transaction, the Company issued to
         the Partnership a warrant to purchase 250,000 shares of the Company's
         common stock (see Note 10).

         The Company paid fees of $58,000, $27,000 and $62,000 in fiscal years
         1997, 1996 and 1995, respectively, to a consulting firm which is
         fifty-percent owned by a member of the Board of Directors.


                                      F-13

<PAGE>






                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------


9.       INCOME TAXES

         The Company's effective tax rate on income before income taxes differs
         from the U.S. statutory federal tax rate as follows:


<TABLE>
<CAPTION>
<S>                                                                     <C>          <C>            <C> 

                    YEAR ENDED JUNE 30
                                                                         1997         1996          1995
                                                                        ------       ------        ------
Income tax expense (benefit) at statutory rate                           35.0%        35.0%        (35.0)%
NOL carryforwards recognized/not
 currently recognizable                                                 (35.0)       (35.0)         35.0
Impact of alternative minimum tax                                        21.3         15.9           -0-
                                                                       -------       -------       -------
Effective income tax rate                                                21.3%        15.9%          -0-%
                                                                       =======       =======       =======

</TABLE>

         Significant components of the Company's deferred income tax assets and
         liabilities at June 30, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
<S>                                                           <C>                       <C>    


         Deferred tax assets:                                  1997                       1996
                                                         ---------------              -----------
           Receivables                                    $    45,500              $     20,000
           Inventories                                        186,400                   186,000
           Accrued expenses                                   336,300                   319,000
           Rent obligations                                   100,500                    32,000
           Net operating loss carryforwards                 2,343,800                 3,111,000
           Alternative minimum tax carryforward               108,800                    18,100
           Investment tax credit carryforwards                 60,000                    60,000
           Valuation allowance                             (   481,100)               (2,362,100)
                                                           -----------               -----------
           Total deferred tax asset                         2,499,200                 1,384,000
         Deferred tax liabilities:
           Property and equipment                          ( 2,499,200)               (1,384,000)
                                                           -----------               -----------
         Net deferred tax                                  $     -0-                  $     -0-
                                                         ===============             ============

</TABLE>

         At June 30, 1997, the Company had approximately $5,860,000 of U. S.
         Federal regular tax operating loss carryforwards available to offset
         future U. S. Federal taxable income, which begin expiring on June 30,
         2005. A valuation allowance has been recognized to offset the related
         deferred tax assets due to the uncertainty of realizing the benefit of
         the loss carryforwards. The Company has $60,000 of investment tax
         credit carryforwards that expire beginning June 30, 1999 and $108,800
         of alternative minimum tax credit carryforwards which are available to
         reduce future federal regular income taxes over an indefinite period.


10.      STOCK OPTIONS

         The Company has adopted two stock option plans for incentive
         compensation of officers and directors. The Fifth Amended and Restated
         Stock Option Plan (the "Stock Option Plan") provides for the grant of
         incentive or non-qualified stock options for officers, key employees
         and directors. The Directors' Compensation Stock Option Plan (the
         "Directors' Plan") provides for the annual grant of stock options in
         lieu of fees for the Company's directors. The exercise price for
         options under either plan is the fair market value on the date of
         grant. Options granted under either plan may be exercisable over a
         period not to exceed ten years. As of June 30, 1997, 51,745 and 185,000
         shares are reserved for future option grants under the Stock Option
         Plan and the Directors' Plan, respectively.

         Warrants to purchase shares of common stock have been issued to
         directors from time to time as additional consideration in certain
         lending transactions. As discussed in Note 5, warrants to purchase
         250,000 shares of common stock were issued in connection with a
         sale-and-leaseback transaction with four directions in June 1995. Since
         that time directors have provided certain short-term loans as needed
         by the Company to meet cash flow deficits. Under resolution adopted by
         the Board of Directors, warrants to purchase 2,500 shares of common
         stock were granted for each $100,000 in loan amount.
         


                                      F-14

<PAGE>





                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------

10.      STOCK OPTIONS, CONTINUED

         One director has elected to receive options under the Stock Option Plan
         instead of warrants for loan made by that director to the Company. The
         exercise price for all warrants has been the fair market value on the
         date of issuance of the warrant. The outstanding warrants have either
         a five-year or ten-year exercise period. Upon consummation of the
         transaction concerning the shorts aircraft discussed in Note 14, the
         Company will issue Barlow Partners, L.P., a warrant to purchase 300,000
         shares of the Company's common stock.

         As of June 30, 1997, 1,310,943 shares of common stock may be issued
         upon the exercise of currently outstanding stock options and warrants.

         The Company applies Accounting Principles Board Opinion No. 25,
         ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, in accounting for its stock
         option plans. Accordingly, no compensation expense has been recognized
         for these plans. Had compensation expense for the Company's stock
         option plans been determined based on the fair value at the grant dates
         for awards under these plans consistent with SFAS No. 123, Accounting
         for Stock- Based Compensation, the Company's net earnings would have
         decreased by approximately $65,444 ($0.01 per share) and $36,890 (less
         than $0.01 per share) in 1997 and 1996, respectively.

         The fair value of each option was estimated on the date of grant using
         the Black-Scholes option-pricing model with the following
         weighted-average assumptions: risk-free interest rate of 6.2% in 1997
         and 6.1% in 1996, no dividends paid, expected life of seven years for
         1997 and 1996, and volatility of 62% for 1997 and 70% for 1996. The
         weighted-average fair value of an option granted during 1997 and 1996
         was $1.05 and $1.43, respectively.

         A summary of the status of the Company's fixed stock option plans as of
         June 30, 1997, 1996 and 1995 was as follows:


================================================================================
                                                OPTION PRICE         WEIGHTED
                           # OF SHARES         RANGE PER SHARE     AVERAGE
                                                                  EXERCISE PRICE
================================================================================
June 30, 1994                     666,668       $ .50 - $4.50               N/A
--------------------------------------------------------------------------------
Granted                           943,425        1.00 - 3.25
--------------------------------------------------------------------------------
Exercised                         (19,500)       1.19 - 4.50
--------------------------------------------------------------------------------
Cancelled                        (625,000)       1.81 - 4.50
================================================================================
June 30, 1995                     965,593       $ .50 - $3.25               N/A
--------------------------------------------------------------------------------
Granted                           181,125        1.81 - 2.38
--------------------------------------------------------------------------------
Exercised                         (15,000)          1.19
--------------------------------------------------------------------------------
Cancelled                          (5,000)          1.81
================================================================================
June 30, 1996                    1,126,718      $ .50 - $3.25             $1.78
--------------------------------------------------------------------------------
Granted                            190,225       1.44 - 2.06               1.57
--------------------------------------------------------------------------------
Cancelled                          (6,000)       1.44 - 2.00               1.19
================================================================================
June 30, 1997                    1,310,943      $ .50 - $3.25             $1.75
================================================================================


         Stock options and warrants exercisable were 1,291,000, 1,120,000 and
         929,000 at June 30, 1997, 1996 and 1995, respectively.



                                      F-15

<PAGE>







                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------



10.      STOCK OPTIONS, CONTINUED

         Summary information regarding options and warrants for the Company
stock as of June 30, 1997 is as follows:

<TABLE>
<CAPTION>
<S>                             <C>                          <C>                 <C>                     <C> 

========================================================================================================================
                                  RANGE OF                NUMBER           WEIGHTED AVERAGE        WEIGHTED AVERAGE
                               EXERCISE PRICES          OUTSTANDING         REMAINING LIFE          RANGE PER SHARE
------------------------------------------------------------------------------------------------------------------------
Options outstanding                 $ .50                       41,668           3.41                   $ .50
                                 1.00 - 1.75                   772,250           7.81                    1.27
                                 1.81 - 2.38                   235,775           8.53                    1.96
                                 2.84 - 3.25                   261,250           1.30                    3.15
------------------------------------------------------------------------------------------------------------------------
Total options                   $ .50 - 3.25                 1,310,943           6.51                    1.75
outstanding
------------------------------------------------------------------------------------------------------------------------
Options exercisable                $ .50                        41,668           3.41                   $ .50
                                 1.00 - 1.75                   756,000           7.77                    1.26
                                 1.81 - 2.38                   232,175           8.51                    1.96
                                 2.84 - 3.25                   261,250           1.30                    3.15
------------------------------------------------------------------------------------------------------------------------
Total options                   $ .50 - 3.25                 1,291,093           6.49                    1.75
exercisable
========================================================================================================================
</TABLE>


         During fiscal 1995, the Company cancelled 533,000 outstanding options
         to purchase shares of the Company's common stock, which options had
         been previously granted under the Stock Option Plan. Simultaneously,
         the Company granted 533,000 additional options at an exercise price
         equal to the market price on the date of grant, subject to terms as
         defined in the Stock Option Plan.

         During fiscal 1997, 1996 and 1995, in connection with the short-term
         loans from officers and directors discussed in Note 6, the Company
         issued to certain officers options to purchase 12,725, 17,125 and
         22,125 shares, respectively, of the Company's common stock, at an
         exercise price equal to the market price on the date of grant. The
         Company also issued to certain directors warrants to purchase 42,500,
         52,500 and 56,250 shares of the Company's common stock, at an exercise
         price equal to market price on the date of grant during fiscal 1997,
         1996 and fiscal 1995, respectively.

         On June 30, 1995, in connection with the sale and leaseback transaction
         discussed in Note 8, the Company issued to the Partnership a warrant to
         purchase 250,000 shares of the Company's common stock, at an issue
         price equal to the fair market value of the Company's common stock on
         June 30, 1995. The warrant carries a three-year term for exercise.



                                      F-16

<PAGE>






                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------



11.      COMMITMENTS AND CONTINGENCIES

         The Company has been engaged with representatives of and counsel for
         Her Majesty the Queen in Right of Canada as Represented by the Ministry
         of Industry, Science and Technology (the "Ministry") in discussions and
         negotiations regarding the reimbursement obligation, if any, of the
         Company to the Ministry arising from the change in lessor for the four
         (4) de Havilland DHC-8-102 aircraft (the "Aircraft") leased by the
         Company. The Ministry has informed the Company that the new lessor, CIT
         Group/Capital Equipment Financing, Inc. ("CIT") made a claim under
         certain economic development insurance provided by the Ministry to the
         former lessor, Mellon Financial Services Corporation #3 ("Mellon"),
         when the Company entered into new lease agreements with CIT for the
         Aircraft in December of 1994. The Ministry asserts that it has a right
         to reimbursement in the amount of $16,996,995 but has proposed that the
         Company agree to pay $6,000,000 secured by a pledge of an undetermined
         number of shares of the Company's common stock.

         The Company does not have an agreement with the Ministry regarding the
         economic development insurance and has not acknowledged any obligation
         to reimburse the Ministry for claims paid under the original leases at
         the same time that the Company entered into new leases with CIT. The
         Company has made certain proposals for future consideration to resolve
         the Ministry's claim. It is uncertain whether the Company and the
         Ministry will reach an agreement on future considerations. Based on
         information presently available to CCAIR, management believes that the
         ultimate outcome of this matter will not have a material impact on the
         financial condition or results of operations of the Company.

         The Company is subject to the regulatory authority of the Federal
         Aviation Administration and the Department of Transportation. These
         agencies require compliance with their standards and conduct safety and
         compliance audits. Violations, if any, of these regulations subject the
         Company to fines or sanctions. The Company is also subject to other
         claims arising in the ordinary course of business. In the opinion of
         management, the outcome of these matters would not have a material
         adverse impact on the Company's financial condition or results of
         operations.


12.      SUPPLEMENTAL CASH FLOW INFORMATION

         Cash flows include interest paid of approximately $723,000, $804,000
         and $627,000 in the years ended June 30, 1997, 1996 and 1995,
         respectively. Income taxes paid, net of refunds, totaled $97,000 in the
         year ended June 30, 1997.

         Noncash transactions include:
<TABLE>
<CAPTION>
<S>                                                          <C>                <C>               <C>    

                                                                           YEAR ENDED JUNE 30
                                                                 1997              1996             1995
                                                              -----------       -----------      -------
         Sale and leaseback of engines, for
          which consideration is recorded
          as other receivable                                    ----              ----          $1,000,000
         Issuance of promissory note for
          previously due lease payments
          and bankruptcy plan installments                       ----              ----             573,200
         Issuance of 325,000 shares and 650,000 shares
          of Common Stock during fiscal 1996
          with proceeds applied to annual
          bankruptcy payments                                    ----           $  690,625           ----
</TABLE>



                                      F-17

<PAGE>






                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------



13.      SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

         The following table presents selected quarterly unaudited financial
         data for the years ended June 30, 1997, 1996, and 1995:

<TABLE>
<CAPTION>
<S>                                         <C>               <C>               <C>              <C>    


                                             FIRST             SECOND            THIRD            FOURTH
                                            QUARTER            QUARTER          QUARTER          QUARTER
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
1997
Operating revenue                           $17,370           $16,623           $16,484          $18,010
Operating income                                511               275               363              246
Net income                                      321                55               126               18
Income per share                                .04               .01               .02              .00

1996
Operating revenue                           $16,230           $16,045           $15,790          $18,169
Operating income (loss)                         539               228               310             (191)
Net income (loss)                               379                39                70             (392)
Income (loss) per share                         .05               .01               .01             (.05)

1995
Operating revenue                           $15,909           $15,096           $14,960          $17,074
Operating income (loss)                        (353)              636               (26)             296
Net income (loss)                              (570)              437              (274)              45
Earnings (loss) per share                      (.08)              .06              (.04)             .01
</TABLE>


14.      EMPLOYEE SAVINGS PLAN

The Company sponsors an employee savings plan (the "Plan") which permits
participants to make contributions by tax deferred salary reductions pursuant to
Section 401(k) of the Internal Revenue Code. In accordance with the Plan
document and the Company's contract with its pilots, conditions have been met
for the 1997 fiscal year to provide matching contributions of 25% of
contributions made by the pilots. The Company has recorded the matching
contributions as a component of compensation expense and reflected the related
liability as accrued expenses as of June 30, 1997.


15.      SUBSEQUENT EVENTS

Subsequent to June 30, 1997, the Company and its advisors, Barlow Partners,
determined that the elimination of the Shorts aircraft from the fleet would
positively impact the operating results of the Company. Long-term savings would
be achieved in the areas of reduced spare parts inventories, reduced personnel
training expenses, and reduced lease rates per flight hour. The Company would
also realize improvements in performance measures such as on-time departures and
arrivals, denied boardings and flight cancellations.

To this end, the Company is currently in negotiations with the aircraft lessor
to terminate the Shorts leases and return the aircraft. In return, the Company
is proposing to issue a subordinated note, convertible to common stock. Under
the terms of the proposed transaction, principal payments on the note would be
paid in either cash or stock at the Company's discretion. Interest would begin
accruing from the date of the agreement, and although interest is required to be
paid in cash, the first interest payment under the note would not be due until
January, 1999. If the transaction is consummated, the face amount of the note is
projected to be approximately $8,000,000.


                                      F-18

<PAGE>





                                   CCAIR, INC.

                    NOTES TO FINANCIAL STATEMENTS, CONTINUED
                              --------------------


15.      SUBSEQUENT EVENTS, CONTINUED

This amount would encompass approximately $1,800,000 of liabilities (accrued
leases and notes payable) currently recorded in the Company's financial
statements at June 30, 1997.

Under this proposed transaction, the Company anticipates having to meet certain
return conditions, which would entail performing two engine overhauls
(approximately $500,000 in the aggregate) in order to meet the requirements.

The Company is also currently negotiating with BAAM to return its entire
Jetstream 31 fleet and acquire Super 31 aircraft under lease. Under the terms of
the proposed transaction, in return for leasing 14 Super 31 aircraft through
December, 2004, the Company would be able to reduce its rental payments on
Jetstream by approximately $10,000 per month per aircraft. While both aircraft
have 19 seats, the Super 31 aircraft are approximately five years newer than the
Jetstream 31 aircraft, resulting in reduced maintenance expense. The Super 31
aircraft are also faster, more fuel efficient and operate with less weight
restrictions than their precursors. While the Jetstream 31 leases have return
conditions which must be satisfied, the Company's cash outlays related to these
return conditions are projected to be less than $20,000. The Company is also
attempting to acquire six additional Super 31 aircraft to meet short-term
operating needs. The leases on these six incremental aircraft are not
anticipated to exceed one year in duration from inception and are projected to
be at the same lease rate as the 14 aircraft described above.

The Company will record the effects of the above fleet restructuring when
consummated which will include a charge to operating expenses for the lease
termination of approximately $6.2 million. In addition, if all elements of the
restructuring are completed as planned, the Company will also write off
approximately $5.4 million of parts assemblies, capital overhauls and leasehold
improvements reflected in the accompanying June 30, 1997 balance sheet.

                                      F-19

<PAGE>
<TABLE>
<CAPTION>
<S>                                                       <C>                      <C>                                         <C>  


                                           SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                          FOR THE YEARS ENDED JUNE 30, 1997, 1996 AND 1995
                                                               --------------------


    COLUMN A                                     COLUMN B                    COLUMN C                   COLUMN D        COLUMN E
----------------                             ---------------     ---------------------------------   --------------    -----------

                                                BALANCE AT                  ADDITIONS                                   BALANCE AT
                                                BEGINNING      CHARGED TO COSTS     CHARGED TO                              END
  DESCRIPTION                                   OF PERIOD       AND EXPENSES       OTHER ACCOUNTS      DEDUCTIONS        OF PERIOD

1997

Reserve for doubtful
 receivables and pricing
 adjustments                                 $    50,000         $    68,400                         $     4,700       $   113,700

Reserve for
 inventory obsolescence                          466,000                                                                   466,000

Reserve for medical claims
 incurred but not reported                       219,000                                             $    54,000           165,000


1996

Reserve for doubtful
 receivables and pricing
 adjustments                                 $   86,800          $    13,200                         $   50,000        $    50,000

Reserve for inventory obsolescence              466,000                                                                    466,000

Reserve for medical claims
 incurred but not reported                      239,000                                                  20,000            219,000


1995

Reserve for doubtful
 receivables and pricing
 adjustments                                 $   186,800                                             $   100,000       $    86,800

Reserve for
 inventory obsolescence                          466,000                                                                   466,000

Reserve for medical claims
 incurred but not reported                       226,000         $    13,000                                               239,000

</TABLE>


                                      S-1


<PAGE>





ITEM 16.  EXHIBITS.

2.                Plan of Reorganization of CCAIR, Inc., effective September 3,
                  1991. (5)

4.                Specimen Common Stock Certificate. (1)

10.1    (a)       The Company's Stock Option Plan dated May 18, 1989 with
                  forms of Incentive Stock Option Agreement and Nonqualified
                  Stock Option Agreement attached. (1)

        (b)       Amendment to the Amended and Restated Stock Option Plan, dated
                  February 6, 1992. (6)

        (c)       Second Amended and Restate Stock Option Plan, dated February
                  6, 1993. (13)

        (d)       Third Amended and Restated Stock Option Plan of the Company,
                  dated February 23, 1994. (10)

        (e)       Fourth Amended and Restated Stock Option Plan of the Company,
                  dated November 15, 1994. (14)

10.2    (a)       Agreement dated October 16, 1991 between CCAIR, Inc. and
                  The Air Line Pilots in the service of CCAIR, Inc. as
                  represented by the Air Line Pilots Association International.
                  (6)

        (b)       Letter of Agreement amendment dated December 14, 1991 between
                  CCAIR, Inc. and The Air Line Pilots in the service of CCAIR,
                  Inc. as represented by the Air Line Pilots Association
                  International. (6)

        (c)       Letter of Agreement amendment dated February 28, 1992 between
                  CCAIR, Inc. and The Air Line Pilots in the service of CCAIR,
                  Inc. as represented by the Air Line Pilots Association
                  International. (6)

        (d)       Letter of Agreement amendment dated February 28, 1992 between
                  CCAIR, Inc. and The Air Line Pilots in the service of CCAIR,
                  Inc. as represented by The Air Line Pilots Association
                  International. (6)

10.3    (a)       Service Agreement between USAir, Inc. and CCAIR, Inc.
                  dated November 1, 1988. (1)

        (b)       First Amendment to Service Agreement between USAir, Inc., and
                  CCAIR, Inc., dated July 1, 1990. (3)

        (c)       Supplemental Agreement between USAir, Inc., and CCAIR, Inc.,
                  dated July 30, 1990. (4)

        (d)       Second Amendment to Service Agreement between USAir, Inc., and
                  CCAIR, Inc., dated January 23, 1991. (4)

        (e)       Third Amendment to Service Agreement between USAir, Inc., and
                  CCAIR, Inc., dated August 1, 1991. (8)

        (f)       Ground Handling Agreement, dated February 1, 1994, between
                  CCAIR. Inc., and USAir, Inc. (10)

10.4    (a)       Loan Agreement dated as of September 4, 1991, between
                  CCAIR, Inc., and NCNB National Bank of North Carolina. (4)

        (b)       Revolving Credit Promissory Note by CCAIR, Inc. in favor of
                  NCNB National Bank of North Carolina, dated September 4, 1991.
                  (4)

        (c)       Security Agreement dated as of September 4, 1991, between
                  CCAIR, Inc., and NCNB National Bank of North Carolina. (4)

        (d)       Loan Purchase Agreement dated as of September 4, 1991, by and
                  among NCNB National Bank of North Carolina, British Aerospace,
                  Inc., and CCAIR, Inc. (4)

        (e)       Security Agreement dated as of September 4, 1991, between
                  CCAIR, Inc. and British Aerospace, Inc. An identical agreement
                  was executed with Jet Acceptance Corporation as of September
                  4, 1991, and is not filed herewith. (4)

        (f)       Pledge of Cash Collateral Account dated as of September 4,
                  1991, by and among CCAIR, Inc., NCNB National Bank of North
                  Carolina, British Aerospace, Inc., and Jet Acceptance
                  Corporation. (4)

        (g)       Loan Agreement dated as of August 14, 1992 between CCAIR, Inc.
                  and NationsBank of North Carolina, N.A. (6)

        (h)       Agreement dated as of January 17, 1994 among CCAIR, Inc.,
                  NationsBank of North Carolina, N.A., British Aerospace, Inc.
                  and Jet Acceptance Corporation. (10)

        (h)(i)    Assignment and Bill of Sale dated as of January 10, 1995 by
                  and among CCAIR, Inc., NationsBank of North Carolina, N.A.,
                  British Aerospace, Inc. and Jet Acceptance Corporation. (16)

10.5              Equipment Lease Agreement dated April 18, 1986 between CLG,
                  Inc. and CCAIR, Inc. (1)

10.6    (a)       Spare Parts Lease Agreement dated as of December 9, 1985
                  between Jet Acceptance Corporation and Sunbird Airlines 1984,
                  Inc. (1)

        (b)       Amendment No. 1 to Spare Parts Lease Agreement, dated August
                  29, 1991, between Jet Acceptance Corporation and CCAIR, Inc.
                  (4)

10.7    (a)      Spare Parts Lease Agreement dated as of December 17, 1987 
                  between Jet Acceptance Corporation and CCAIR, Inc. (1)

        (b)       Amendment No. 1 to Spare Parts Lease Agreement, dated August
                  29, 1991, between Jet Acceptance Corporation and CCAIR, Inc.,
                  said Amendment is substantially identical to the Amendment in
                  Exhibit 10.6(b) and is not filed herewith.

10.8    (a)      Spare Parts Lease Agreement dated as of June 19, 1986 between 
                 Jet Acceptance Corporation and CCAIR, Inc. (1)

        (b)       Amendment No. 1 to Spare Parts Lease Agreement, dated August
                  29, 1991, between Jet Acceptance Corporation and CCAIR, Inc.,
                  said Amendment is substantially identical to the Amendment in
                  Exhibit 10.6(b) and is not filed herewith.

Note:  For footnote references see page E-9.


                                       E-1

<PAGE>



10.9    (a)       Amended and Restated Aircraft Equipment Sublease Agreement 
                  dated as of August 29, 1991, between Jet Acceptance 
                  Corporation and CCAIR, Inc. (4)

        (b)       Acceptance Supplement dated September 5, 1991, between Jet
                  Acceptance Corporation and CCAIR, Inc. (4)

10.10   (a)(i)    Lease Agreement effective as of April 19, 1991 between
                  the Asheville Regional Airport Authority and CCAIR, Inc. (4)

        (a)(ii)   Letter dated August 28, 1991 by Asheville Regional Airport
                  Authority amending Lease. (4)

        (b)       Lease Agreement dated July 5, 1989 between Clarke County
                  Airport Authority and CCAIR, Inc. (4)

        (c)       Agreement dated October 10, 1987 between the Central West
                  Virginia Regional Airport Authority and CCAIR, Inc. (1)

        (d)       Commuter Airline Agreement and Lease dated May 20, 1988
                  between the City of Charlotte and CCAIR, Inc. (1)

        (e)       Agreement dated July 16, 1991 between the Chattanooga
                  Metropolitan Airport Authority and CCAIR, Inc. (4)

        (f)       Airport Use and Lease Agreement entered into as of January 1,
                  1989 between the Richland-Lexington Airport District and
                  CCAIR, Inc. (4)

        (g)       Agreement dated July 1, 1988 between the City of Danville,
                  Virginia and CCAIR, Inc. (1)

        (h)       Airport Use and Lease Agreement dated November 1, 1982 between
                  Greenville-Spartanburg Airport District and Sunbird, Inc. (1)

        (i)(i)    Letter Agreement dated July 13, 1988 from CCAIR, Inc. to
                  Tri-State Airport Authority. (1)

        (i)(ii)   Letter dated February 25, 1991 by Tri-State Airport Authority
                  amending Lease. (4)

        (j)(i)    Airport Use Agreement dated March 1, 1988 between the Board of
                  Commissioners of Onslow County and CCAIR, Inc. (1)

        (j)(ii)   Amendment to Lease dated July 15, 1988 between the same
                  parties. (1)

        (k)       Operating Agreement dated April 15, 1987 between Metropolitan
                  Knoxville Airport Authority and CCAIR, Inc. (1)

        (l)       Lease Agreement dated March 1, 1988 between the City of Macon
                  and CCAIR, Inc. (1)

        (m)       Letter Agreement dated September 5, 1990 between New Hanover
                  County and CCAIR, Inc. (4)

        (n)       Lease Agreement dated May 1, 1989 between Tri-City Airport
                  Commission and CCAIR, Inc. (4)

        (o)       Use Agreement dated May 1, 1991 between Airport Commission of
                  Forsyth County and CCAIR, Inc. (4)

        (p)       Letter from Pitt County - City of Greenville Airport Authority
                  dated May 31, 1990 announcing fee structure. (4)

        (q)       Airport Use Agreement dated May 1, 1991 between Raleigh County
                  Airport Authority and CCAIR, Inc. (4)

        (r)       Letter Agreement dated July 7, 1990 between Mercer County
                  Airport Authority and CCAIR, Inc. (4)

        (s)       Contract for Conduct of Commercial Flight Operations dated
                  September 1, 1991 between Maryland Aviation Administration and
                  CCAIR, Inc. (6)

10.11   (a)(i)    Aircraft Lease between Shorts Air Lease, Inc. and
                  CCAIR, Inc. dated as of July 27, 1987 (Reg. No. N- 121PC).
                  This Aircraft Lease is substantially identical to Aircraft
                  Leases dated as of July 30, 1987 (Reg. No. N-722PC), November
                  20, 1987 (Reg.No. N-729PC), December 22, 1987 (Reg. No. N-
                  360CC), January 25, 1989 (Reg. No. N-747SA) and June 7, 1989
                  (Reg. No. N-153CC), not filed herewith. (1)

        (a)(ii)   Aircraft Lease between Lynrise Air Lease, Inc. (formerly
                  Shorts Air Lease, Inc.) and CCAIR, Inc., dated as of August 1,
                  1991 (Reg. No. N-748SA). (4)

        (a)(iii)  Aircraft Lease between Lynrise Air Lease, Inc., and CCAIR,
                  Inc. dated as of August 1, 1991 (Reg. No. N-159CC). (4)

        (b)       Lease Amendment No. 1 dated as of May 20, 1988 to Aircraft
                  Lease dated as of December 22, 1987 (Reg. No. N-730CC). This
                  Lease Amendment is substantially identical to Lease Amendment
                  dated as of May 20, 1988 (Reg. No. N-360CC), not filed
                  herewith. (1)

        (c)       Lease Supplement No. 1 dated as of July 27, 1987 to Aircraft
                  Lease (Reg. No. N-121PC). This Lease Supplement No. 1 is
                  substantially identical to Lease Supplements dated as of July
                  30, 1987 (Reg.No. N-722PC), November 20, 1987 (Reg. No.
                  N-729PC), December 22, 1987 (Reg. No. N-360CC), August 30,
                  1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No. N-747SA)
                  and June 7, 1989 (Reg. No. N-153CC), not filed herewith. (1)

        (d)       Covenant of Quiet Enjoyment by the First National Bank of
                  Boston and the CIT Group/Financing, Inc. in favor of CCAIR,
                  Inc. and Shorts Air Lease dated as of July 27, 1987 (Reg. No.
                  N-121PC). This Covenant of Quiet Enjoyment is substantially
                  identical to Covenants of Quiet Enjoyment dated as of July 30,
                  1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No. N-729PC)
                  and December 22, 1987 (Reg. No. N-360CC). This Covenant of
                  Quiet Enjoyment is also substantially identical to Covenants
                  of Quiet Enjoyment by the First National Bank of Boston,
                  Meridian Trust Company, Principal Mutual

Note:  For footnote references see page E-9.


                                       E-2

<PAGE>



                  Life Insurance Company and State Street Bank and Trust Company
                  in favor of CCAIR, Inc. and Shorts Air Lease, Inc. dated as of
                  August 30, 1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No.
                  N- 747SA), January 25, 1989 (Reg. No. N-748SA), June 7, 1989
                  (Reg. No. N-153CC) and September 11, 1989 (Reg. No. N-159CC),
                  not filed herewith. (1)

        (e)       Notice of Assignment and Consent from Shorts Air Lease, Inc.
                  to CCAIR, Inc. dated July 27, 1987 (Reg. No. N-121PC). This
                  Notice of Assignment and Consent to Assignment is
                  substantially identical to Notices of Assignment and Consents
                  to Assignment dated as of July 30, 1987 (Reg. No. N-722PC),
                  November 20, 1987 (Reg. No. N 729PC), December 22, 1987 (Reg.
                  No. N-360CC), August 12, 1988 (Reg. No. N-742CC), January 25,
                  1989 (Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA),
                  June 7, 1989 (Reg. No. N-153CC) and September 11, 1989 (Reg.
                  No. N-159CC), not filed herewith. (1)

        (f)       Consent to Assignment from CCAIR, Inc. to the First National
                  Bank of Boston dated July 27, 1987 (Reg. No. N-121PC). This
                  Consent to Assignment is substantially identical to Consents
                  to Assignment from CCAIR, Inc. to the First National Bank of
                  Boston or State Street Bank and Trust Company dated July 30,
                  1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No. N-729PC),
                  December 22, 1987 (Reg. No. N-360CC), August 30, 1988 (Reg.
                  No. N-742CC), January 25, 1989 (Reg. No. N-747SA), January 25,
                  1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and
                  September 11, 1989 (Reg. No. N-159CC), not filed herewith. (1)

        (g)       Sublease Assignment from Shorts Air Lease, Inc. to the First
                  National Bank of Boston dated July 27, 1987 (Reg. No.
                  N-121PC). This Sublease Assignment is substantially identical
                  to Sublease Assignments from the First National Bank of Boston
                  or State Street Bank and Trust Company dated July 30, 1987
                  (Reg. No. N-722PC), November 20, 1987 (Reg. No. N-729PC),
                  December 22, 1987 (Reg. No. N-360CC), August 30, 1988 (Reg.
                  No. N-742CC), January 25, 1989 (Reg. No. N-747SA), January 25,
                  1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-159CC), not
                  filed herewith. (1)

        (h)       Lease Amendment (Reg. N-121PC) dated as of September 30, 1994
                  between Lynrise Air Lease, Inc., formerly Shorts Air Lease,
                  Inc., and CCAIR, Inc. This Lease Amendment is substantially
                  identical to Lease Amendments between Lynrise Air Lease, Inc.
                  and CCAIR, Inc. dated as of September 30, 1994 (Reg. No.
                  N-722PC, Reg. No. N-729PC, Reg. No. N-360CC, Reg. No. N-159CC,
                  Reg. No. N-153CC, Reg. No. N-747HH, Reg. No. N-729PC, Reg. No.
                  N-742CC, and Reg. No. N-748CC), not filed herewith. (16)

10.12             Aircraft Lease between Shorts Air Lease, Inc. and CCAIR, Inc.
                  dated as of August 12, 1988 (Reg. No. N-742CC). (1)

10.13             Participation Agreement among Short Brothers PLC, Westinghouse
                  Credit Corporation, The First National Bank of Boston, Shorts
                  Air Lease, Inc. and the CIT Group/Capital Financing, Inc.
                  dated as of July 27, 1987 (Reg. No. N-121PC). This
                  Participation Agreement is substantially identical to
                  Participation Agreements dated as of July 30, 1987 (Reg. No.
                  N-722PC) and November 20, 1987 (Reg. No. N-729PC); a
                  Participation Agreement dated as of December 22, 1987 (Reg.
                  No. N-360CC) among Short Brothers PLC, Wells Fargo Leasing
                  Corporation, The First National Bank of Boston, Shorts Air
                  Lease, Inc.; and the CIT Group/Capital Financing, Inc. and
                  Participation Agreements among Short Brothers PLC,
                  Westinghouse Credit Corporation, The First National Bank of
                  Boston, Shorts Air Lease, Inc., Principal Mutual Life
                  Insurance Company and Meridian Trust Company dated as of
                  August 12, 1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No.
                  N-747SA) and January 25, 1989 (Reg. No. N-748SA), not filed
                  herewith. (1)

10.14             Trust Agreement between Westinghouse Credit Corporation and
                  The First National Bank of Boston dated as of July 27, 1987
                  (Reg. No. N-121PC). This Trust Agreement is substantially
                  identical to Trust Agreements dated as of July 30, 1987 (Reg.
                  No. N-722PC), November 20, 1987 (Reg. No. N-729PC), August 12,
                  1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No. N-747SA)
                  and January 25, 1989 (Reg. No. N-748SA) and a Trust Agreement
                  between Wells Fargo Leasing Corporation and The First National
                  Bank of Boston dated as of December 22, 1987 (Reg. No.
                  N-360CC), not filed herewith. (1)

10.15             Trust Agreement and Security Agreement Supplement ("Trust and
                  Security Supplement") between The First National Bank of
                  Boston and Westinghouse Credit Corporation dated as of July
                  27, 1987 (Reg. No. N-121PC). This Trust and Security
                  Supplement is substantially identical to Trust and Security
                  Supplements dated as of July 30, 1987 (Reg. No. N-722PC),
                  November 20, 1987 (Reg. No. N-729PC), August 12, 1988 (Reg.
                  No. N-742CC), January 25, 1989 (Reg. No. N-747SA) and January
                  25, 1989 (Reg. No. N-748SA) and a Trust and Security
                  Supplement between The First National Bank of Boston and Wells
                  Fargo Leasing Corporation dated as of December 22, 1987 (Reg.
                  No. N-360CC), not filed herewith. (1)

10.16             Purchase Agreement among Short Brothers PLC, Short Aircraft
                  Delivery, Inc. and The First National Bank of Boston dated
                  July 27, 1987 (Reg. No. N-121PC). This Purchase Agreement is
                  substantially identical to Purchase Agreements dated July 30,
                  1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No. N-722PC),
                  November 20, 1987 (Reg. No. N-729 PC), December 22, 1987 (Reg.
                  No. N-360CC),


Note:  For footnote references see page E-9.


                                       E-3

<PAGE>



                  August 12, 1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No.
                  N-747SA), January 25, 1989 (Reg. No. N-748SA), June 7, 1989
                  (Reg. No. N-153CC) and September 11, 1989 (Reg. No. N-159CC),
                  not filed herewith. (1)

10.17             Aircraft Lease between The First National Bank of Boston and
                  Shorts Air Lease, Inc. dated as of July 27, 1987 (Reg. No.
                  N-121PC). This Aircraft Lease is substantially identical to
                  Aircraft Leases dated as of July 30, 1987 (Reg. No. N-722PC),
                  November 20, 1987 (Reg. No. N-729PC), August 12, 1988 (Reg.
                  No. N-742CC), January 25, 1989 (Reg. No. N-747SA), January 25,
                  1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No. N-153CC) and
                  September 11, 1989 (Reg. No. N-159CC), not filed herewith. (1)

10.18             Lease Supplement No. 1 between The First National Bank of
                  Boston and Shorts Air Lease, Inc. dated as of July 27, 1987
                  (Reg. No. N-121PC). This Lease Supplement No. 1 is
                  substantially identical to Lease Supplements dated as of July
                  30,1987 (Reg. No. N-722PC), November 20, 1987 (Reg. No. N-
                  729PC), December 22, 1987 (Reg. No. N-360CC), August 12, 1988
                  (Reg. No. N-742CC), January 25, 1989 (Reg. No. N-747SA),
                  January 25, 1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No.
                  N-153CC) and September 11, 1989 (Reg. No. N-159CC), Not filed
                  herewith. (1)

10.19             Tax Indemnity Agreement between Westinghouse Credit
                  Corporation and Shorts Air Lease, Inc. dated as of July 27,
                  1987 (Reg. No. N-121PC). This Tax Indemnity Agreement is
                  substantially identical to Tax Indemnity Agreements dated as
                  of July 30, 1987 (Reg. No. N-722PC), November 20, 1987 (Reg.
                  No. N-729PC), December 22, 1987 (Reg. No. N-360CC), August 12,
                  1988 (Reg. No. N-742CC), January 25, 1989 (Reg. No. N-747SA),
                  January 25, 1989 (Reg. No. N-748SA), June 7, 1989 (Reg. No.
                  N-153CC) and September 11, 1989 (Reg. No. N-159CC), not filed
                  herewith. (1)

10.20             Loan and Security Agreement between The First National Bank of
                  Boston and The CIT Group/Capital Financing, Inc. dated as of
                  July 27, 1987 (Reg. No. N-121PC). This Loan and Security
                  Agreement is substantially identical to Loan and Security
                  Agreements dated as of July 30, 1987 (Reg. No. N-722PC),
                  November 20, 1987 (Reg. No. N-729PC), December 22, 1987 (Reg.
                  No. N-360CC), August 12, 1988 (Reg. No. N-742CC), January 25,
                  1989 (Reg. No. N-747SA), January 25, 1989 (Reg. No. N-748SA),
                  June 7, 1989 (Reg. No. N-153CC) and September 11, 1989 (Reg.
                  No. N-159CC), not filed herewith. (1)

10.21  (a)        Interim Aircraft Sublease Agreement dated as of February
                  20, 1991, between CCAIR, Inc., and Jet Acceptance Corporation
                  (Reg. No. N-162PC). This Interim Aircraft Sublease Agreement
                  is substantially identical to Interim Aircraft Sublease
                  Agreements dated as of April 4, 1991 (Reg. No. N-165PC), April
                  5, 1991 (Reg. No. N-164PC) and April 8, 1991 (Reg. No.
                  N-159PC), not filed herewith. (4)

        (b)       Acceptance Supplement dated February 22, 1991 between CCAIR,
                  Inc. and Jet Acceptance Corporation (Reg. No. N-162PC). This
                  Acceptance Supplement is substantially identical to Acceptance
                  Supplements dated April 4, 1991 (Reg. No. N-165PC), April 8,
                  1991, (Reg. No. N-164PC) and April 8, 1991 (Reg. No. N-159PC),
                  not filed herewith.(4)

        (c)       Termination of Sublease between CCAIR, Inc. and Jet Acceptance
                  Corporation (Reg. No. N-162PC). This Termination of Sublease
                  is substantially identical to Terminations of Sublease (Reg.
                  No. N-165PC, N-164PC and N-159PC), not filed herewith. (4)

10.22   (a)       Aircraft Sublease Agreement dated as of August 29, 1991,      
                  between CCAIR, Inc., and Jet Acceptance Corporation (Reg. No.
                  N-162PC). This Aircraft Sublease Agreement is substantially
                  identical to Amended and Restated Aircraft Sublease Agreements
                  dated as of August 29, 1991, (Reg. No. N- 161PC and Reg. No.
                  N-163PC), not filed herewith. (4)

        (b)       Acceptance Supplement dated September 5, 1991, between CCAIR,
                  Inc. and Jet Acceptance Corporation (Reg. No. N-162PC). This
                  Acceptance Supplement is substantially identical to Acceptance
                  Supplements dated September 5, 1991 (Reg. No. N-161PC and Reg.
                  No. N-163PC), not filed herewith. (4)

        (c)       Limited Warranty Agreement and Disclaimer of Warranty dated as
                  of December 27, 1985 between British Aerospace, Inc. and
                  Sunbird Airlines 1984, Inc. (Reg. No. N-162PC). This Limited
                  Warranty Agreement is substantially identical to Limited
                  Warranty Agreements dated December 13, 1985 (Reg. No. N-161PC)
                  and December 27, 1985 (Reg. No. N-163PC), not filed herewith.
                  (1)

        (d)       Aircraft Lease Agreement dated as of November 15, 1985 between
                  American Bank & Trust Co. of PA and Jet Acceptance Corporation
                  (Reg. Nos. N-162PC, N-161PC and N-163PC). (1)

        (e)       Lease Supplement No. 5 dated November 15, 1985 between
                  American Bank & Trust Co. of PA and Jet Acceptance Corporation
                  (Reg. No. N-162PC). This Lease Supplement is substantially
                  identical to Lease Supplements dated November 15, 1985 (Reg.
                  No. N-161PC) and December 27, 1985 (Reg. No. N-163PC), not
                  filed herewith. (1)

        (f)       Mortgage and Trust Indenture dated as of November 15, 1985
                  between American Bank & Trust Company of PA and The
                  Connecticut Bank and Trust Company, National Association (Reg.
                  Nos. N- 162PC, N-161PC and N-163PC). (1)


Note:  For footnote references see page E-9.


                                       E-4

<PAGE>



        (g)       Trust Agreement dated as of November 15, 1985 between
                  Greyhound Leasing & Financial Corporation and American Bank &
                  Trust Co. of PA (Reg. Nos. N162PC, N-161PC and N-163PC). (1)

        (h)       Trust Agreement and Mortgage Supplement No. 5 dated December
                  27, 1985 by American Bank & Trust Co. of PA (Reg. No.
                  N-162PC). This Trust Agreement and Mortgage Supplements dated
                  December 13, 1985 (Reg. No. N-161PC) and December 27, 1985
                  (Reg. No. N-163PC), not filed herewith. (1)

        (i)       Sublease Security Assignment dated as of November 15, 1985 by
                  Jet Acceptance Corporation (Reg. No. N-162PC). This Sublease
                  Security Assignment is substantially identical to Sublease
                  Security Assignments dated as of November 15, 1985 (Reg. No.
                  N-161PC) and November 15, 1985 (Reg. No. N-163PC), not filed
                  herewith. (1)

        (j)       Tax indemnification Agreement dated as of November 15, 1985
                  between Jet Acceptance Corporation and Greyhound Leasing &
                  Financial Corporation (Reg. Nos. N-162PC, N-161PC and
                  N-163PC). (1)

10.23   (a)       Amended and Restated Aircraft Sublease Agreement dated as
                  of August 29, 1991, between CCAIR, Inc., and Jet Acceptance
                  Corporation (Reg. No. N-169PC). This Amended and Restated
                  Aircraft Sublease Agreement is substantially identical to an
                  Amended and Restated Aircraft Sublease Agreement dated as of
                  August 29, 1991, (Reg. No. N-168PC), not filed herewith. (4)

        (b)       Acceptance Supplement dated September 5, 1991, between CCAIR,
                  Inc. and Jet Acceptance Corporation (Reg. No. N-169PC). This
                  Acceptance Supplement is substantially identical to an
                  Acceptance Supplement dated September 5, 1991 (Reg. No.
                  N-168PC), not filed herewith. (4)

        (c)       Limited Warranty Agreement and Disclaimer of Warranty dated as
                  of May 20, 1986 between British Aerospace, Inc. and CCAIR,
                  Inc. (Reg. No. N-169PC). This Limited Warranty Agreement is
                  substantially identical to a Limited Warranty Agreement dated
                  as of May 20, 1986 (Reg. No. N- 168PC), not filed herewith.
                  (1)

        (d)       Aircraft Lease Agreement dated as of May 1, 1986 between
                  Meridian Trust Company and Jet Acceptance Corporation (Reg.
                  Nos. N-169PC and N-168PC), not filed herewith. (1)

        (e)       Lease Supplement No. 2 dated as of May 1, 1986 between
                  Meridian Trust Company and Jet Acceptance Corporation (Reg.
                  No. N-169PC). This Lease Supplement is substantially identical
                  to a Lease Supplement dated May 20, 1986 (Reg. No. N-168PC),
                  not filed herewith. (1)

        (f)       Mortgage and Trust Indenture dated as of May 1, 1986 between
                  Meridian Trust Company and the Connecticut Bank and Trust
                  Company, National Association (Reg. Nos. N-169PC and N-168PC).
                  (1)

        (g)       Trust Agreement dated as of May 1, 1986 between EFC Leasing
                  Corporation and Meridian Trust Company (Reg. Nos. N-169PC and
                  N-168PC). (1)

        (h)       Trust Agreement and Mortgage Supplement No. 2 dated May 20,
                  1986 by Meridian Trust Company (Reg. No. N-169PC). This Trust
                  Agreement and Mortgage Supplement is substantially identical
                  to a Trust Agreement and Mortgage Supplement dated May 20,
                  1986 (Reg. No. N-168PC), not filed herewith. (1)

        (i)       Sublease Security Assignment dated as of May 9, 1986 by Jet
                  Acceptance Corporation (Reg. No. N- 169PC). This Sublease
                  Security Assignment is substantially identical to a Sublease
                  Security Assignment dated as of and May 8, 1986 (Reg. No.
                  N-168PC), not filed herewith. (1)

        (j)       Tax Indemnification Agreement dated as of May 1, 1986 between
                  Jet Acceptance Corporation and EFC Leasing Corporation (Reg.
                  Nos. N-169PC and N-168PC). (1)

10.24   (a)       Aircraft Sublease Agreement dated as of August 29, 1991,
                  between CCAIR, Inc., and Jet Acceptance Corporation (Reg. No.
                  N-164PC). This Aircraft Sublease Agreement is substantially
                  identical to an Aircraft Sublease Agreement (Reg. No. N-165PC)
                  and an Amended and Restated Aircraft Sublease Agreement (Reg.
                  No. N-170PC), dated as of August 29, 1991, not filed herewith.
                  (4)

        (b)       Acceptance Supplement dated September 5, 1991, between CCAIR,
                  Inc. and Jet Acceptance Corporation (Reg. No. N-164PC). This
                  Acceptance Supplement is substantially identical to Acceptance
                  Supplements dated September 5, 1991 (Reg. No. N-165PC and Reg.
                  No. N-170PC), not filed herewith. (4)

        (c)       Limited Warranty Agreement and Disclaimer of Warranty dated as
                  of June 19, 1986 between British Aerospace, Inc. and CCAIR,
                  Inc. (Reg. No. N-164PC). This Limited Warranty Agreement is
                  substantially identical to Limited Warranty Agreements dated
                  as of July 7, 1986 (Reg. No. N-165PC) and December 22, 1986
                  (Reg. No. N-170PC), not filed herewith. (1)

        (d)       Aircraft Lease Agreement dated as of March 1, 1986 between
                  Meridian Trust Company and Jet Acceptance Corporation (Reg.
                  Nos. N-164PC, N-165PC and N-170PC). (1)

        (e)       Lease Addendum dated December 22, 1986 between Meridian Trust
                  Company and Jet Acceptance Corporation (Reg. Nos. N-164PC,
                  N-165PC and N-170PC). (1)

        (f)       Lease Supplement No. 1 dated as of March 1, 1986 between
                  Meridian Trust Company and Jet Acceptance Corporation (Reg.
                  No. N-164PC). This Lease Supplement is substantially identical
                  to Lease Supplements dated March 14, 1986 (Reg. No. N-165PC)
                  and December 22, 1986 (Reg. No. N-170PC), not filed herewith.
                  (1)

Note:  For footnote references see page E-9.


                                       E-5

<PAGE>



        (g)       Mortgage and Trust Indenture dated as of March 1, 1986 between
                  Meridian Trust Company and The Connecticut Bank and Trust
                  Company, National Association (Reg. Nos. N-164PC, N-165PC and
                  N- 170PC). (1)

        (h)       Mortgage Addendum dated December 22, 1986 between Meridian
                  Trust Company and The Connecticut Bank and Trust Company,
                  National Association (Reg. Nos. N-164PC, N-165PC and N-
                  170PC). (1)

        (i)       Trust Agreement dated as of March 1, 1986 between Greyhound
                  Leasing and Financial Corporation and Meridian Trust Company
                  (Reg. Nos. N-164PC, N-165PC and N-170PC). (1)

        (j)       Trust Agreement Mortgage Supplement dated March 14, 1986 by
                  Meridian Trust Company (Reg. No. N-164PC). This Trust
                  Agreement and Mortgage Supplement is substantially identical
                  to Trust Agreement and Mortgage Supplements dated March 14,
                  1986 (Reg. No. N-165PC) and December 22, 1986 (Reg. No.
                  N-170PC), not filed herewith. (1)

        (k)       Sublease Security Assignment dated as of June 19, 1986 by Jet
                  Acceptance Corporation (Reg. No. N-164PC). This Sublease
                  Security Assignment is substantially identical to Sublease
                  Security Assignments dated June 19, 1986 (Reg. No. N-165PC)
                  and June 19, 1986 (Reg. No. N-170PC), not filed herewith. (1)

        (l)       Tax Indemnification Agreement dated as of March 1, 1986 (Reg.
                  Nos. N-164PC, N-165PC and N- 170PC). (1)

10.25   (a)       Amended and Restated Aircraft Sublease Agreement dated as
                  of August 29, 1991, between CCAIR, Inc., and Jet Acceptance
                  Corporation (Reg. No. N-156PC). This Amended and Restated
                  Aircraft Sublease Agreement is substantially identical to an
                  Amended and Restated Aircraft Sublease Agreement dated as of
                  August 29, 1991 (Reg. No. N-157PC), not filed herewith. (4)

        (b)       Acceptance Supplement dated September 5, 1991, between CCAIR,
                  Inc. and Jet Acceptance Corporation (Reg. No. N-156PC). This
                  Acceptance Supplement is substantially identical to an
                  Acceptance Supplement dated September 5, 1991 (Reg. No.
                  N-157PC), not filed herewith. (4)

        (c)       Limited Warranty Agreement and Disclaimer of Warranty dated
                  December 17, 1987 between British Aerospace, Inc. and CCAIR,
                  Inc. (Reg. No. N-156PC). This Limited Warranty Agreement is
                  substantially identical to Limited Warranty Agreement dated as
                  of December 17, 1987 (Reg. No. N- 157PC), not filed herewith.
                  (1)

        (d)       Lease Agreement dated as of August 15, 1987 between First
                  Security Bank of Utah, National Association and Jet Acceptance
                  Corporation (Reg. Nos. N-156PC and N-157PC). (1)

        (e)       Lease Supplement No. 1 dated December 17, 1987 between First
                  Security of Utah, National Association and Jet Acceptance
                  Corporation (Reg. Nos. N-156PC and N-157PC). (1)

        (f)       Assignment of Sublease and Security Agreement dated as of
                  August 15, 1987 from Jet Acceptance Corporation to First
                  Security Bank of Utah, National Association (Reg. Nos. N-156PC
                  and N-157PC). (1)

        (g)       Trust Agreement dated as of August 15, 1987 between First
                  Security Bank of Utah, National Association and TECO
                  Investments, Inc. (Reg. Nos. N-156PC and N-157PC). (1)

        (h)       Security Agreement-Trust Deed dated as of August 15, 1987
                  between First Security Bank of Utah, National Association and
                  The Connecticut Bank and Trust Company, National Association
                  (Reg. Nos. N-156PC and N-157PC). (1)

        (i)       Security Agreement-Trust Deed Supplement No. 2 dated as of
                  December 17, 1987 between First Security Bank of Utah,
                  National Association and The Connecticut Bank and Trust
                  Company, National Association (Reg. Nos. N-156PC and N-157PC).
                  (1)

        (j)       Tax Indemnification Agreement dated as of August 15, 1987
                  between TECO Investments, Inc. and Jet Acceptance Corporation
                  (Reg. Nos. N-156PC and N-157PC). (1)

10.26   (a)       Amended and Restated Aircraft Sublease Agreement dated as
                  of August 29, 1991, between CCAIR, Inc., and Jet Acceptance
                  Corporation (Reg. No. N-190PC). This Amended and Restated
                  Aircraft Sublease Agreement is substantially identical to an
                  Aircraft Sublease Agreement dated as of August 29, 1991 (Reg.
                  No. N-159PC), not filed herewith. (4)

        (b)       Acceptance Supplement dated September 5, 1991, between CCAIR,
                  Inc. and Jet Acceptance Corporation (Reg. No. N-190PC). This
                  Acceptance Supplement is substantially identical to an
                  Acceptance Supplement dated September 5, 1991 (Reg. No.
                  N-159PC), not filed herewith. (4)

        (c)       Limited Warranty Agreement and Disclaimer of Warranty dated as
                  of December 17, 1987 between British Aerospace, Inc. and
                  CCAIR, Inc. (Reg. No. N-190PC). This Limited Warranty
                  Agreement is substantially identical to Limited Warranty
                  Agreement dated as of December 17, 1987 (Reg. No. N- 159PC),
                  not filed herewith. (1)

        (d)       Lease Agreement dated as of November 15, 1987 between First
                  Security Bank of Utah, National Association and Jet Acceptance
                  Corporation (Reg. Nos. N-190PC and N-159PC). (1)

Note:  For footnote references see page E-9.


                                       E-6

<PAGE>



        (e)       Assignment of Sublease Security Agreement dated as of November
                  15, 1987 from Jet Acceptance Corporation to First Security
                  Bank of Utah, National Association (Reg. Nos. N-190PC and
                  N-159PC). (1)

        (f)       Trust Agreement dated as of November 15, 1987 between First
                  Security Bank of Utah, National Association and NCNB Lease
                  Investments, Inc. (Reg. Nos. N-190PC and N-159PC). (1)

        (g)       Security Agreement-Trust Deed dated as of November 15, 1987
                  between First Security Bank of Utah, National Association and
                  The Connecticut Bank and Trust Company, National Association
                  (Reg. Nos. N-190PC and N-159PC). (1)

        (h)       Tax Indemnification Agreement dated as of November 15, 1987
                  between NCNB Lease Investments, Inc. and Jet Acceptance
                  Corporation (Reg. Nos. N-190PC and N-159PC. (1)

10.27   (a)       Amended and Restated Aircraft Sublease Agreement dated as
                  of August 29, 1991, between CCAIR, Inc., and Jet Acceptance
                  Corporation (Reg. No. N-158PC). (4)

        (b)       Acceptance Supplement dated September 5, 1991, between CCAIR,
                  Inc. and Jet Acceptance Corporation (Reg. No. N-158PC). (4)

        (c)       Limited Warranty Agreement and Disclaimer of Warranty dated as
                  of February 17, 1988 between British Aerospace, Inc. and
                  CCAIR, Inc. (Reg. No. N-158PC). (1)

        (d)       Lease Agreement dated as of September 1, 1987 between First
                  Security Bank of Utah, National Association and Jet Acceptance
                  Corporation (Reg. No. N-158PC). (1)

        (e)       Assignment of Sublease and Security Agreement dated as of
                  September 1, 1987 from Jet Acceptance Corporation to First
                  Security Bank of Utah, National Association (Reg. No.
                  N-158PC). (1)

        (f)       Trust Agreement dated as of September 1, 1987 between First
                  Security Bank of Utah, National Association and NCNB Lease
                  Investments, Inc. (Reg. No. N-158PC). (1)

        (g)       Security Agreement-Trust Deed dated as of September 1, 1987
                  between First Security Bank of Utah, National Association and
                  The Connecticut Bank and Trust Company, National Association
                  (Reg. No. N-158PC). (1)

        (h)       Tax Indemnification Agreement dated as of September 1, 1987
                  between NCNB Lease Investments, Inc. and Jet Acceptance
                  Corporation (Reg. No. N-158PC). (1)

10.28             Indemnity Agreement dated as of July 11, 1989 between CCAIR,
                  Inc. and Evrika Shipping Corporation. (1)

10.29   (a)       Commercial Use Permit between CCAIR, Inc., and City of
                  Charlotte, North Carolina dated April 1, 1991, relating to Old
                  Terminal Building at Charlotte/Douglas International Airport.
                  (4)

        (b)       Commercial Use Permit dated April 15, 1992 between the City of
                  Charlotte and CCAIR, Inc. (6)

10.30   (a)       Flight Attendant Agreement between CCAIR, Inc., and the
                  Flight Attendants in the service of CCAIR, Inc., as
                  represented by the Association of Flight Attendants, effective
                  May 22, 1991. (4)

        (b)       Letter of Agreement amendment dated May 6, 1992 between CCAIR,
                  Inc. and the Flight Attendants in service of CCAIR, Ins. as
                  represented by the Association of Flight Attendants. (6)

10.31             Letter Agreement dated February 27, 1991 between Pennsylvania 
                  Airlines and CCAIR, Inc. (4)

10.32   (a)       Purchase Agreement No. 8-0237, dated as of February 23,
                  1992 between CCAIR, Inc. and de Havilland Inc. (successor to
                  Boeing of Canada, Ltd., a Delaware corporation, through its de
                  Havilland Division) as amended by letter agreements attached
                  thereto for two de Havilland DHC-8-102 Aircraft (N880CC) and
                  (N881CC). (6)

        (b)       Purchase Agreement Assignment between CCAIR, Inc. and Mellon
                  Financial Services Corporation #3 dated as of May 15, 1992
                  (N880CC). This Purchase Agreement Assignment is substantially
                  identical to Purchase Agreement Assignment (N881CC), dated as
                  of May 15, 1992, not filed herewith. (6)

        (c)       Lease Agreement between CCAIR, Inc. and Mellon Financial
                  Services Corporation #3 dated as of May 15, 1992 (N880CC).
                  This Lease Agreement is substantially identical to Lease
                  Agreements (N881CC), (N882CC) and N883CC) dated as of May 15,
                  1992, not filed herewith. (6)

        (d)       Lease Supplement #1 between CCAIR, Inc. and Mellon Financial
                  Services Corporation #3 dated as of May 22, 1992 (N880CC).
                  This Lease Supplement #1 is substantially identical to Lease
                  Supplements (N881CC), (N882CC) and (N883CC) dated as of May
                  22, June 1 and June 12, 1992, respectively, not filed
                  herewith. (6)

        (e)       Tax Indemnity Agreement between CCAIR, Inc. and Mellon
                  Financial Services Corporation #3 dated as of May 15, 1992
                  (N880CC). This Tax Indemnity Agreement is substantially
                  identical to Tax Indemnity Agreements (N881CC), (N882CC) and
                  (N883CC) dated as of May 15, 1992, not filed herewith. (6)

        (f)       Assignment and Assumption Agreement dated as of November __,
                  1995 between C.I.T. Leasing Corporation and Mellon Financial
                  Services Corporation #3. (16)

        (g)       Aircraft Lease Termination dated as of November ___, 1995
                  between Mellon Financial Services Corporation #3 and CCAIR,
                  Inc. (16)

10.33   (a)       Lease Agreement (Spares) between CCAIR, Inc. and Mellon
                  Financial Services Corporation #3 dated as of August 14, 1992.
                  (6)

Note:  For footnote references see page E-9.


                                       E-7

<PAGE>



        (b)       Lease Supplement between CCAIR, Inc. and Mellon Financial
                  Services Corporation #3 dated as of August 28, 1992. (6)

        (c)       Tax Indemnity Agreement between CCAIR, Inc. and Mellon
                  Financial Services Corporation #3 dated as of August 14, 1992.
                  (6)

10.34             Agreement dated January 1, 1994 between CCAIR, Inc. and the 
                  Mechanics and related employees in the service of CCAIR as 
                  represented by the International Brotherhood of Teamsters. 
                  (13)

10.35             Employment Agreement between Kenneth W. Gann and CCAIR, Inc. 
                  dated February 8, 1994. (13)

10.36   (a)       Agreement dated November 14, 1994, by and among CCAIR, Inc., 
                  British Aerospace Holdings, Inc., formerly British Aerospace, 
                  Inc., and Jet Acceptance Corporation. (16)

        (b)       Acceptance Supplement No. 2(N158PC) dated as of November 14,
                  1994 between Jet Acceptance Corporation and CCAIR, Inc. This
                  Acceptance Supplement No. 2 is substantially identical to
                  Acceptance Supplements No. 2 between Jet Acceptance
                  Corporation and CCAIR, Inc. (N164PC, N162PC, N159PC, N157PC,
                  N156PC, N190PC, N170PC, N169PC, N168PC, N163PC and N161PC),
                  notified herewith. (16)

10.37   (a)       Lease Agreement dated as of November 15, 1994 between
                  C.I.T. Leasing Corporation and CCAIR, Inc. for DHC-8-102
                  Aircraft (Reg. No. 880CC). This Lease Agreement is
                  substantially identical to Lease Agreements dated as of
                  November 15, 1994 between C.I.T. Leasing Corporation and
                  CCAIR, Inc. for DHC-8-102 Aircraft (Reg. No. 881CC, Reg. No.
                  882CC and Reg. No. 883CC), not filed herewith. (16)

        (b)       Lease Agreement (Spares) dated as of November 15, 1994 between
                  C.I.T. Leasing Corporation and CCAIR, Inc. (16)

        (c)       Lease Supplement No. 1 is substantially identical to Lease
                  Supplements No. 1 between C.I.T. Leasing Corporation and
                  CCAIR, Inc. for DHC-8-102 Aircraft (Reg. No. 881CC, Reg. No.
                  882CC and Reg. No. 883CC) and Lease Supplement No. 1 (Spares),
                  not filed herewith. (16)

10.38   (a)       Amended and Restated Loan Agreement dated as of February 10, 
                  1995, between JSX Capital Corporation and CCAIR, Inc.  (16)

        (b)       Revolving Note dated February 10, 1995 in the principal amount
                  of $2,500,000 by CCAIR, Inc. to the order of British Aerospace
                  Holdings, Inc. (16)

        (c)       Amended and Restated Security Agreement dated as of February
                  10, 1995 between JSX Capital Corporation and CCAIR, Inc. (16)

        (d)       Amended and Restated Special Account and Disbursement
                  Authorization Agreement dated as of February 10, 1995 among
                  Wachovia Bank of North Carolina, N.A., CCAIR, Inc., British
                  Aerospace Holdings, Inc., Jet Acceptance Corporation and JSX
                  Capital Corporation. (16)

10.39             Letter Agreement dated September 28, 1995 between JSX Capital 
                  Corporation and CCAIR, Inc. (17)

10.40             September 1995 Master Agreement among CCAIR, Inc., British 
                  Aerospace Holdings, Inc., Jet Acceptance Corporation and JSX 
                  Capital Corporation. (17)

10.41             Second Amendment to Amended and Restated Loan Agreement, 
                  Related Loan Documents and Master Agreement as of July 9, 1997
                  between CCAIR, Inc., British Aerospace Holdings, Inc., Jet 
                  Acceptance Corporation and British Aerospace Asset 
                  Management, Inc. (18)

10.42             CCAIR, Inc. Directors' Compensation Stock Option Plan as of
                  November 14, 1996. (18)

10.43             Line of Credit Commitment as of October 8, 1996 between
                  Centura Bank and CCAIR, Inc. (18)

11                Computation of earnings per share. (17)

16                Letter regarding change in Company's certifying accountant.
                  (9)

23.1              Consent of Arthur Andersen, LLP. (18)


Note:  For footnote references see page E-9.


                                       E-8

<PAGE>



Footnotes:

(1)     Incorporated by reference to Registration Statement on Form S-1, File
        No. 33-28967.

(2)     Incorporated by reference to Annual Report on Form 10-K for the fiscal
        year ended June 30, 1989, File No. 0- 17846.

(3)     Incorporated by reference to Annual Report on Form 10-K for the fiscal
        year ended June 30, 1990, File No. 0- 17846.

(4)     Incorporated by reference to Annual Report on Form 10-K for the fiscal
        year ended June 30, 1991, File No. 0- 17846.

(5)     Incorporated by reference to Current Report on Form 8-K, filed August 1,
        1991.

(6)     Incorporated by reference to Annual Report on Form 10-K for the fiscal
        year ended June 30, 1992, File No. 0- 17846.

(7)     Incorporated by reference to Annual Report on Form 10-K for the fiscal
        year ended June 30, 1993, File No. 0- 17846.

(8)     Incorporated by reference to Pre-Effective Amendment No. 1 to
        Registration Statement on Form S-2, File No. 33-65878.

(9)     Incorporated by reference to Current Report on Form 8-K/A, dated
        November 30, 1993, File No. 0-17846

(10)    Incorporated by reference to Registration Statement on Form S-2, File
        No. 33-77574.

(11)    Incorporated by reference to Amendment No. 1 to Registration Statement
        on Form S-2, File No. 33-77574.

(12)    Incorporated by reference to Amendment No. 2 to Registration Statement
        on Form S-2, File No. 33-77574.

(13)    Incorporated by reference to Annual Report on Form 10-K for the fiscal
        year ended June 30, 1994, File No. 0- 17846.

(14)    Incorporated by reference to Registration Statement on Form S-8 and Form
        S-3, File No. 33-89832.

(15)    Incorporated by reference to Quarterly Report on Form 10-Q for the
        three-month period ended March 31, 1995, File No. 0-17846.

(16)    Incorporated by reference to Post-Effective Amendment No. 1 to
        Registration Statement on Form S-2, File No. 33-77574.

(17)    Incorporated by reference to Annual Report on Form 10-K for the fiscal
        year ended June 30, 1996, File No. 0- 17846.

(18)     Filed herewith.


                                       E-9

<PAGE>



                                   CCAIR, INC.

EXECUTIVE OFFICES
4700 Yorkmont Road - Second Floor                          Phone:   704/359-8990
Charlotte, NC  28208                                       Fax:     704/359-0351

BOARD OF DIRECTORS                                                   OFFICERS

         JOHN A. ADAMS
                  President, Talon Resources, Inc.
                  (Aviation and Financial Consulting)           KENNETH W. GANN
                                                                Chief Executive
                                                             Officer, President
         K. RAY ALLEN
                  Chief Executive Officer and President
                  Computer Intelligence, Incorporated

                                                             ERIC W. MONTGOMERY
         KENNETH W. GANN                                         Vice President
                  Chief Executive Officer                            of Finance
                  President


         GORDON LINKON
                  Retired (Former Chief Executive Officer)     PETER J. SISTARE
                  USAir Shuttle                                  Vice President
                                                                  of Operations

         GEORGE MURNANE, III
                  Executive Vice President and Chief
                  Financial Officer
                  International Airline Support Group, Inc.


         DEAN E. PAINTER, JR.
                  Chairman and Chief Executive Officer
                  CLG, Inc.
                  (Computer Leasing and Sales)

<TABLE>
<CAPTION>

<S>                                                  <C>                                               
FOR MORE INFORMATION                                 REGISTRAR AND
CONTACT:                                             TRANSFER AGENT:
- - - - - - - - - - - - - - - - - - - -              - - - - - - - - - - - - - -
Mr. Kenneth W. Gann  or  Mr. Eric W. Montgomery      First Union National Bank
President and Chief      Vice President-Finance      Shareholder Administration
Executive Officer                                    230 South Tryon Street - 10th Floor
CCAIR, Inc.                                          Charlotte, North Carolina  28288
P. O. Box 19929                                      800/829-8432 
Charlotte, North Carolina  28219-0929
</TABLE>