[page 18]
                     FIVE-YEAR FINANCIAL AND OPERATING DATA

   MIDWEST EXPRESS HOLDINGS, INC.
   (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


   <TABLE>
   <CAPTION>
                                   1997          1996         1995          1994          1993

   <S>                         <C>            <C>          <C>           <C>           <C>
   Statement of Income Data:
   Total operating revenues    $ 344,557      $304,746     $259,155      $203,592      $165,056
   Total operating expenses      306,087       270,387      227,781       192,328       149,159
   Operating income               38,470        34,359       31,374        11,264        15,897
   Net income                     24,940        21,750       19,129         6,662         9,086
   Net income per share  
    basic (1)                       2.64          2.27         1.84          0.50           N/A
   Net income per share  
    diluted (1)                     2.61          2.26         1.84          0.50           N/A
   Balance Sheet Data:
   Property and equipment,
    net                           89,156        70,903       55,919        57,626        56,486
   Total assets                  166,748       129,135       92,833        95,436        80,161
   Intercompany receivable
    (2)                                0             0           61        17,923         3,199
   Long-term debt                  3,333             0            0             0             0
   Shareholders' equity          $63,398       $40,341      $21,264       $37,840       $31,178

   Selected Operating and
    Other Data (3):
   Midwest Express Airlines:
     Revenue passenger miles
      (000s)                   1,409,528     1,239,966    1,150,338       972,809       785,391
     Available seat miles
      (000s)                   2,198,179     1,954,151    1,794,924     1,600,437     1,314,522
     Passenger load factor (%)      64.1%         63.5%        64.1%         60.8%         59.7%
     Revenue yield (cents per
      RPM)                          19.4          19.3         17.8          16.7          19.0
     Cost per total ASM (cents
      per mile)                     12.1          12.0         11.0          10.8          11.1
     Aircraft in service at
      year-end                        24            22           19            19            16
     Average aircraft
      utilization (hours per
      day)                           9.3           9.2          9.0           8.6           8.3
     Number of FTE employees
      at year-end                  1,889         1,624        1,411         1,334       1,082  

   Astral Aviation, d/b/a Skyway
    Airlines (4):
     Revenue passenger miles
      (000s)                      69,277        71,165       66,415        43,219          N/A 
     Available seat miles
      (000s)                     158,912       160,488      156,113       103,759          N/A 
     Passenger load factor (%)      43.6%         44.3%        42.5%         41.7%         N/A 
     Revenue yield (cents per
      RPM)                          55.1          52.7         49.9          48.3          N/A 
     Cost per total ASM (cents
      per mile)                     23.8          21.6         19.4          17.9          N/A 
     Aircraft in service at
      year-end                        15            15           15            13          N/A 
     Average aircraft utilization 
      (hours per day)                7.7           7.8          7.9           7.9          N/A 
     Number of FTE employees
      at year-end                    277           245          217           177          N/A 

   (1)    Net income per share data is presented on a pro forma basis for 1995 and 1994 results.

   (2)    Intercompany receivable reflects amounts receivable from Kimberly-Clark in connection with the Company's participation
          in Kimberly-Clark's cash management program prior to the Company's initial public offering.

   (3)    Revenue passenger miles, available seat miles, passenger load factor and revenue yield are for scheduled service
          operations. The other statistics include charter operations.

   (4)    Because Astral began service in February 1994, results for 1994 reflect less than a full year of operations. Before
          Astral commenced operations, Mesa Airlines, Inc. ("Mesa"), pursuant to a codesharing agreement with Midwest Express,
          operated routes similar to those that Astral now operates. Because Mesa is not affiliated with the Company, information
          relating to Mesa's results of operations for these routes is not shown.
   </TABLE>



   <PAGE>
   [pages 19-22]

                      MANAGEMENT'S DISCUSSION AND ANALYSIS 
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   Results of Operations
   1997 Overview

   1997 operating income for Midwest Express Holdings, Inc. (the "Company")
   was $38.5 million, an increase of $4.1 million over 1996. Net income in
   1997 increased by $3.2 million to $24.9 million. The favorable change in
   financial results was primarily caused by continued strong demand for air
   travel, successful results from new operations, lower fuel prices and
   improved results from supplemental revenue programs.

   The Company increased scheduled service capacity in 1997 by 11.5%, while
   traffic increased 12.8%. This resulted in a load factor increase of .7
   points, with almost no deterioration in revenue yield. Both of the new
   markets served by Midwest Express Airlines, Inc. ("Midwest Express"),
   Milwaukee-Orlando and Kansas City-New York, performed well. Revenue yield
   decreased .4% in 1997, but this was offset by a 3.2% increase in average
   passenger trip length. Revenue yield was actually very strong during 1997
   as 1996 yields benefited more from the temporary suspension of the 10%
   federal excise tax.

   The Company benefited from significantly lower fuel prices in the fourth
   quarter, which averaged 19.5% less than in the fourth quarter 1996. During
   1997 fuel prices decreased 5.3%, resulting in a favorable impact on
   operating income of $2.8 million.

   Improved results from supplemental revenue programs at Midwest Express
   also favorably impacted financial results in 1997. Midwest Express' credit
   card program generated $2.3 million more revenue in 1997 than in 1996,
   charter services revenue increased $1.2 million in 1997, and revenue from
   ground handling services for other airlines increased $1.2 million in
   1997. Each of these programs has high operating margins.

   Negatively impacting operating income was a 13.2% increase in operating
   expenses. Significant increases occurred in labor and maintenance, which
   are explained in the subsequent section.

   The following table provides operating revenues and expenses for the
   Company expressed as cents per total available seat miles ("ASM"),
   including charter operations, and as a percentage of total operating
   revenues for 1997, 1996 and 1995: 

   <TABLE>
   <CAPTION>
                                    1997                 1996                    1995
                               Per                  Per                    Per
                               Total                Total                  Total
                               ASM        %         ASM          %         ASM        %

   <S>                         <C>       <C>        <C>        <C>         <C>       <C>
   Operating revenues:
     Passenger service         12.95     90.3%      12.81      90.8%       12.03     92.0%
     Cargo                       .48      3.3%        .52       3.7%         .53      4.0%
     Other                       .92      6.4%        .77       5.5%         .52      4.0%
                               -----    -----       -----     -----        -----    -----
   Total operating
    revenues                   14.35    100.0%      14.10     100.0%       13.08    100.0%
   Operating expenses:
     Salaries, wages
      and benefits              3.84     26.7%       3.61      25.6%        3.18     24.3%
     Aircraft fuel
      and oil                   2.09     14.5%       2.19      15.5%        1.78     13.6%
     Commissions                1.31      9.2%       1.31       9.3%        1.26      9.6%
     Dining services             .72      5.0%        .70       4.9%         .75      5.7%
     Station rental/
      landing/other fees        1.02      7.1%       1.00       7.1%         .98      7.5%
     Aircraft maintenance
      materials/repairs         1.17      8.2%        .99       7.0%         .88      6.7%
     Depreciation and
      amortization               .36      2.5%        .35       2.5%         .38      2.9%
     Aircraft rentals            .73      5.1%        .74       5.3%         .75      5.8%
     Other                      1.51     10.5%       1.62      11.5%        1.54     11.8%
                               -----    -----       -----     -----        -----    -----
   Total operating
    expenses                   12.75     88.8%      12.51      88.7%       11.50     87.9%
                               =====    =====       =====     =====        =====    =====
   Total ASM (millions)      2,401.3              2,160.9                1,962.1
                             =======              =======                =======
   </TABLE>


   Note: Numbers in this table cannot be recalculated due to rounding.


                          Year Ended December 31, 1997 
                    Compared to Year Ended December 31, 1996 

   Operating Revenues

   The Company's operating revenues totalled $344.6 million in 1997, a $39.8
   million, or 13.1%, increase over 1996. Passenger revenues accounted for
   90.3% of total revenues and increased $34.2 million, or 12.4%, from 1996
   to $311.0 million. The increase was attributable to a 12.8% increase in
   passenger volume, as measured by revenue passenger miles, offset by a .4%
   decrease in revenue yield. 

   Midwest Express' passenger revenue increased $33.6 million, to $272.9
   million, from 1996, or 14.1%. This increase was caused by a 12.3% increase
   in origin and destination passengers and a .3% increase in revenue yield.
   Midwest Express' capacity, as measured by scheduled service ASM, increased
   12.5%. The increase in capacity is primarily due to the addition of two
   DC-9 aircraft to scheduled service during the year. Load factor increased
   from 63.5% in 1996 to 64.1% in 1997. During the year, revenue yield was
   negatively impacted by the reinstatement of the federal excise tax on
   passenger tickets effective March 7, 1997 and competitive pricing
   pressures on several new routes. Service initiated in March 1997 in the
   Milwaukee-Orlando market resulted in lower yields as expected, but higher
   load factors than the remainder of the Midwest Express system. Fare
   increases late in the third quarter 1997 contributed favorably to revenue
   yield.

   Passenger revenue of Astral Aviation, Inc. ("Skyway") increased by $.6
   million to $38.1 million, or 1.6%, in 1997. This increase was caused by a
   4.4% increase in revenue yield, offset by a 4.3% decrease in origin and
   destination passengers. Total capacity decreased by 1.0%, as one aircraft
   was required for scheduled maintenance during most of the year. Load
   factor decreased from 44.3% in 1996 to 43.6% in 1997.

   Mail and cargo revenue increased $.2 million, or 1.3%, in 1997. This
   increase was due to the aircraft added to scheduled service during the
   year.

   Revenue from other services increased $5.4 million, or 32.6%, in 1997.
   Midwest Express benefited from increased revenue of $2.3 million from the
   Midwest Express MasterCard program and additional ground service contracts
   of $1.2 million. Charter services revenue increased $1.2 million, because
   Midwest Express had one aircraft dedicated to charter operations during
   the first four months of 1997 but did not have a dedicated aircraft until
   the second quarter of 1996. During portions of the second and third
   quarters of 1997, Midwest Express had delays with an aircraft
   refurbishment that required the use of the dedicated charter jet aircraft
   for scheduled service.

   Operating Expenses

   1997 operating expenses increased $35.7 million, or 13.2%, from 1996,
   primarily due to expanded operations. On a cost per total ASM basis,
   Midwest Express' operating expenses increased 1.4%, from 11.97 cents in 
   1996 to 12.14 cents in 1997. Cost per total ASM at Skyway increased 10.0% 
   from 21.59 cents to 23.75 cents.

   Salaries, wages and benefits increased $14.2 million, or 18.2%, from 1996.
   On a cost per total ASM basis, these costs increased from 3.61 cents in 1996
   to 3.84 cents, or 6.4%, in 1997. The labor cost increase was primarily due
   to an increase in the number of employees necessary for expanded service
   and administrative requirements. Midwest Express added employees throughout
   the organization to support the aircraft placed in service during 1996 and
   1997. In addition, employees were added to support aircraft ground
   handling operations in Boston, Kansas City and Washington, D.C., which
   were previously contracted from other airlines. Salaries, wages and
   benefits were also adversely affected by an unanticipated delay in
   completing several new aircraft modifications and refurbishments as
   initially scheduled. This delay caused a temporary excess in aircraft
   flight crews during 1997's second and third quarters. The labor cost
   increase was also due to an adjustment in pay scales for most operations'
   employees at Midwest Express effective January 1, 1997. These rate
   adjustments were implemented based on industry salary surveys and
   management's desire to increase pay scales to maintain a competitive
   position in the industry. Profit sharing decreased $.5 million in 1997
   from 1996.

   Aircraft fuel and oil and associated taxes increased $2.8 million, or
   6.0%, from 1996. Into-plane fuel prices decreased 5.3% in 1997, averaging
   73.1 cents per gallon in 1997 and 77.2 cents in 1996. The Company 
   experienced continued low fuel costs in January 1998, averaging 65.7 cents
   per gallon. Fuel consumption increased 12.0% in 1997 because Midwest Express
   operated 12.1% more aircraft hours.

   Commissions increased by $3.2 million, or 11.4%, due to increased
   passenger revenue. Of the increase, $2.3 million related to increased
   travel agency commissions and $.9 million to increased credit card fees.
   Commissions as a percent of passenger revenue decreased from 10.2% in 1996
   to 10.1% in 1997 due to a new commission rate structure effective
   September 25, 1997, which lowered travel agent commissions from 10% to 8%. 
   The Company's 1997 operating income would have increased approximately 
   $3.2 million had the new commission rate structure been in place during 
   the entire year.

   Dining services costs increased by $2.1 million, or 13.9%, due to
   increased passenger volume. Total dining services costs (including food,
   beverages, linen, catering equipment and supplies) increased from $10.95
   per Midwest Express passenger in 1996 to $11.11 in 1997.

   Station rental, landing and other fees increased by $2.9 million, or
   13.3%, in 1997. Airport costs at Midwest Express increased $2.6 million as
   a result of a 9.8% increase in flight segments. In addition, the Company
   incurred higher landing fees, security costs and facility rental costs at
   most airports.

   Aircraft maintenance, materials and repairs increased by $6.9 million, or
   32.2%, from 1996. Midwest Express maintenance costs increased by $5.4
   million, or 31.1%, and Skyway maintenance costs increased $1.5 million, or
   36.5%. The increase was attributable in part to an unscheduled repair of
   one MD-88 engine, which adversely affected costs by $1.3 million. The
   increase was also attributable to more flight hours at Midwest Express, an
   increase in the number and cost of aircraft component repairs, and an
   increase in Skyway maintenance due to scheduled landing gear and propeller
   repairs and unscheduled engine maintenance.

   Depreciation and amortization increased by $1.0 million, or 12.8%,  in
   1997, primarily as a result of the depreciation associated with capital
   spending and the decision to exercise purchase options on two leased jet
   aircraft in October 1996, offset by two jet aircraft becoming fully
   depreciated during both 1996 and 1997.

   Aircraft rental costs increased $1.4 million, or 8.7%, in 1997 as a result
   of Midwest Express leasing two additional aircraft. The increased cost was
   partially offset by lower lease costs for Skyway's 15 turboprop aircraft
   that were refinanced in the second and third quarter of 1996, and the
   decision to exercise purchase options on two leased aircraft in October
   1996. In addition, the Company leased a second spare engine for its MD-88
   fleet for nine months during 1997.

   Other operating expenses increased by $1.2 million, or 3.5%, from 1996.
   Other operating expenses consist primarily of advertising and promotion,
   insurance, property taxes, reservation fees, administration and other
   items. Travel expenses increased $.5 million due to additional overnight
   costs associated with flight schedule changes, professional and financial
   services increased by $.3 million, software costs increased $.7 million,
   and telecommunication costs increased $.7 million. The increased costs
   were partly offset by decreases in property taxes of $.4 million,
   facilities rental of $.3 million, and headquarter relocation costs of $.3
   million. Other operating expenses on a cost per total ASM basis decreased
   6.9% from 1.62 cents in 1996 to 1.51 cents in 1997.

   Interest Income  
   Interest income reflects interest income on the Company's cash and cash
   equivalents.

   Other Income and Expense  
   Other expenses in 1996 primarily reflected the costs of the secondary
   public offering completed in the second quarter.

   Provision for Income Taxes  
   Income tax expense in 1997 was $14.7 million, an increase of $1.2 million
   from 1996. The effective tax rates for 1997 and 1996 were 37.1% and 38.3%,
   respectively. For purposes of calculating the Company's income tax expense
   and effective tax rate for periods after the Company's initial public
   offering ("Offering"), the Company treats amounts payable to an affiliate
   of Kimberly-Clark Corporation ("Kimberly-Clark") under a tax allocation
   and separation agreement entered into in connection with the Offering as
   if payable to taxing authorities.

   Net Income  
   Net income increased by $3.2 million, or 14.7%, in 1997. The net income
   margin increased to 7.2% in 1997 from 7.1% in 1996.


                          Year Ended December 31, 1996 
                    Compared to Year Ended December 31, 1995 


   Operating Revenues
   The Company's operating revenues totalled $304.7 million in 1996, a $45.6
   million, or 17.6%, increase over 1995. Passenger revenues accounted for
   90.8% of total revenues and increased $38.4 million, or 16.1%, from 1995
   to $276.8 million. The increase was attributable to a 7.8% increase in
   passenger volume, as measured by revenue passenger miles, and a 7.7%
   increase in revenue yield. 

   Midwest Express passenger revenue increased $34.0 million to $239.3
   million, or 16.6%, from 1995. This increase was caused by a 6.0% increase
   in origin and destination passengers and an 8.1% increase in revenue
   yield.  Midwest Express' capacity, as measured by scheduled service ASM,
   increased 8.9%. The increase in capacity is primarily due to the addition
   of two aircraft to scheduled service during May and September 1996, partly
   offset by flight cancellations caused by poor weather in the second
   quarter. Load factor decreased from 64.1% in 1995 to 63.5% in 1996.
   Revenue yield increased primarily because of an improved competitive
   environment, most importantly the discontinuation of Continental Airlines
   "Lite" product in the second quarter 1995. Revenue yield also increased
   due to the temporary elimination of the 10% excise tax on tickets (January
   through August 1996) and improved pricing throughout the industry. Yield
   gains were broad-based, with almost every market realizing improvement. 

   Skyway passenger revenue increased by $4.4 million to $37.5 million, or
   13.2%, in 1996. This increase was caused by a 4.9% increase in origin and
   destination passengers, a 5.6% increase in revenue yield and a 4.9%
   increase in average passenger trip length. The volume increase was
   attributable to two aircraft that were placed in service in the second
   quarter of 1995 and to an increase in load factor, from 42.5% in 1995 to
   44.3% in 1996. 

   Mail and cargo revenue increased $.9 million, or 8.4%, in 1996. This
   increase was due to the aircraft added to scheduled service in May and
   September 1996.

   Revenue from other services increased $6.3 million, or 61.6%, in 1996. The
   Midwest Express MasterCard program, initiated in October 1995, generated
   an additional $4.1 million in revenue during 1996. Charter services
   revenue increased $2.2 million, reflecting the addition of a dedicated
   charter aircraft again in the second quarter of 1996 after not having a
   dedicated charter aircraft since the second quarter of 1995. Revenue from
   other Frequent Flyer agreements increased $.3 million. The revenue
   increase was partly offset by $1.1 million less revenue from maintenance
   contract services, as the maintenance function was more fully utilized to
   maintain Midwest Express aircraft in 1996 and completed fewer services for
   other airlines.


   Operating Expenses
   1996 operating expenses increased $42.6 million, or 18.7%, from 1995,
   primarily due to higher fuel prices, higher labor rates, Midwest Express'
   profit sharing plans, added costs of being a public company, 
   pre-operating costs associated with recently acquired aircraft, and 
   service expansions in May and September 1996. On a cost per total ASM
   basis, Midwest Express' operating expenses increased 8.8%, from 11.00 
   cents in 1995 to 11.97 cents in 1996. Cost per total ASM at Skyway
   increased 11.4% from 19.38 cents to 21.59 cents.

   Salaries, wages and benefits increased $15.1 million, or 23.9%, from 1995.
   On a cost per total ASM basis, these costs increased from 3.18 cents in 1995
   to 3.61 cents, or 13.5%, in 1996. Approximately $5.5 million of the labor 
   cost change was due to increased labor rates. Most of this change was due 
   to an adjustment in pay scales for pilots and other operations employees.
   Salaries, wages and benefits increased $5.2 million because of accruals
   for Midwest Express' profit sharing plans that were implemented on January
   1, 1996. The profit sharing plans, which benefit substantially all Midwest
   Express employees, were based entirely on achieving certain levels of
   profitability and were paid in February 1997. Benefit costs increased by
   $2.1 million at the Company in 1996, and were 24.3% of salaries and wages
   in 1996 and 25.5% in 1995. The remainder of the change in labor costs was
   primarily due to an increase in the number of employees required due to
   expanded service and administrative requirements.

   Aircraft fuel and oil and associated taxes increased $12.1 million, or
   34.3%, from 1995. Into-plane fuel prices increased 23.7% in 1996,
   averaging 77.2 cents per gallon in 1996 and 62.4 cents in 1995. Fuel 
   consumption increased 8.6% because Midwest Express operated 5.9% more 
   flight segments, primarily due to the service expansions in May and 
   September 1996.

   Commissions increased by $3.4 million, or 13.8%, due to increased
   passenger revenue. Of the increase, $2.6 million related to increased
   travel agency commissions and $.8 million to increased credit card fees.
   Commissions as a percent of passenger revenue decreased from 10.4% in 1995
   to 10.2% in 1996.

   Dining services costs were almost identical in 1996 and 1995 despite
   volume increases. Total dining services costs (including food, beverages,
   linen, catering equipment and supplies) decreased from $11.45 per Midwest
   Express passenger in 1995 to $10.95 in 1996. The decrease was primarily
   due to a reduction in costs following the negotiation of a long-term
   contract with the primary food caterer for Midwest Express. Reduced
   pricing was effective January 1, 1996. The reduction in the cost per
   passenger was offset by increased passenger volume.

   Station rental, landing and other fees increased by $2.2 million, or
   11.3%, in 1996. Airport costs at Midwest Express increased $2.1 million, a
   result of a 5.9% increase in flight segments.

   Aircraft maintenance, materials and repairs increased by $4.0 million, or
   22.8%, from 1995. Midwest Express maintenance costs increased by $2.9
   million, or 19.6%, and Skyway maintenance costs increased $1.1 million, or
   37.4%. The increased costs at Midwest Express were caused by 10.5% more
   aircraft flight hours and an increase in aircraft component and
   unscheduled engine repair costs. In addition, Midwest Express completed
   major airframe maintenance (D-Checks) on several aircraft sooner than
   previously planned to facilitate aircraft maintenance and refurbishment
   scheduling. Maintenance accruals were increased to reflect this change.
   Increased costs at Skyway were caused by a 3.9% increase in flight hours,
   the expiration of warranties on most aircraft and higher component repair
   costs.

   Depreciation and amortization increased by $.1 million in 1996, primarily
   as a result of the depreciation associated with capital spending and the
   decision to exercise purchase options on two leased jet aircraft in
   October 1996, offset by two jet aircraft becoming fully depreciated during
   the year.

   Aircraft rental costs increased $1.1 million, or 7.4%, in 1996.  The
   increase is primarily attributable to the addition of more aircraft to the
   fleet (Midwest Express leased three additional aircraft in 1996 and Skyway
   added two aircraft in May 1995), offset by the decision to exercise
   purchase options on two leased jet aircraft in October 1996.

   Other operating expenses increased by $4.5 million, or 14.6%, from 1995.
   Other operating expenses consist primarily of advertising and promotion,
   property and liability insurance, property taxes, reservation fees,
   administration and other items.  Professional, legal and financial
   services increased $1.4 million in 1996 due to the costs associated with
   being a stand-alone public company for the full year, travel expenses
   increased $.7 million because of more crew rooms required due to flight
   schedule changes, charter costs increased $.4 million due to increased
   charter volume, insurance costs increased $.4 million due to the increased
   number of aircraft and passengers, reservation booking fees increased $.3
   million due to higher passenger volumes, and corporate communications
   costs increased $.3 million due to 1996 being the Company's first full
   year as a public company. The increased costs were partly offset by a
   decrease in advertising and promotional expenditures of $.5 million. Other
   operating expenses on a cost per total ASM basis increased 5.2% from 1.54
   cents in 1995 to 1.62 cents in 1996.

   Interest Income 
   Interest income in 1995 relates to an intercompany cash management program
   the Company had with Kimberly-Clark prior to the Offering.  Market rates
   of interest were earned on the amount of cash the Company had advanced to
   Kimberly-Clark. Interest income in 1996 reflected interest income on the
   Company's cash and cash equivalents.

   Other Income and Expense  
   Other expenses in 1996 primarily reflected the costs of the secondary
   public offering completed in the second quarter.  Other expenses in 1995
   include an employee stock grant of $.9 million and costs 
   associated with the Offering of $.7 million.  

   Provision for Income Taxes  
   Income tax expense in 1996 was $13.5 million, an increase of $1.1 million
   from 1995. The effective tax rates for 1996 and 1995 were 38.3% and 39.3%,
   respectively. The higher tax rate in 1995 was generally attributable to
   costs of the Offering that were not deductible for income tax purposes.

   Net Income  
   Net income increased by $2.6 million, or 13.7%, in 1996. The net income
   margin decreased to 7.1% in 1996 from 7.4% in 1995.


   <PAGE>
   [pages 22-23]
                         Liquidity and Capital Resources

   The Company's cash and cash equivalents totalled $32.1 million at December
   31, 1997 compared to $27.6 million at December 31, 1996. Net cash provided
   by operating activities totalled $48.9 million during 1997. Net cash used
   in investing activities totalled $56.6 million, primarily due to aircraft
   acquisitions and related modifications in 1997 of $12.5 million that were
   financed by or intended to be financed by sale and leaseback transactions,
   and due to capital expenditures of $27.6 million. Net cash provided by
   financing activities totalled $12.1 million, primarily due to proceeds
   from sale and leaseback transactions of $15.6 million offset by the
   purchase of treasury stock totalling $2.0 million.

   The Company had a working capital deficit of $12.9 million as of December
   31, 1997, versus a $5.8 million deficit on December 31, 1996. The working
   capital deficit is due to the Company's air traffic liability (advance
   bookings, whereby passengers have purchased tickets for future flights),
   accrued scheduled maintenance expense and accrued lease payments. Because
   of these items, the Company expects to operate periodically with a working
   capital deficit, which is not unusual for the industry.

   As of December 31, 1997, the Company's two credit facilities, a $55.0
   million revolving bank credit facility and a $20.0 million secondary
   revolving credit facility with Kimberly-Clark, have not been used, 
   except for letters of credit totalling approximately $11.4 million that
   reduce the amount of available credit. The letters of credit are used to
   secure certain reserve amounts for stipulated airframe and engine
   maintenance performed on Midwest Express' MD-88 aircraft, to support two
   aircraft leases and for various other purposes. 

   During August 1997, the Company purchased a headquarters building, which
   it previously leased. As part of the transaction, the Company assumed $3.5
   million of long-term debt. The mortage note has an interest rate of 8.25%
   and is payable in monthly installments through April 2011.

   The Company expects to incur capital expenditures of approximately $27.0
   million in 1998. The majority of the spending, $9.0 million, relates to
   the expansion of Midwest Express' hangar facility, discussed in the next
   paragraph. The Company also anticipates capital expenditures in 1998 for 
   capitalized airframe and engine overhauls, aircraft interior noise
   reduction kits, ground equipment and airport modifications to support
   planned growth, and computer equipment to automate and improve processes
   throughout the organization. Future aircraft acquisition costs, including
   noise hush kits and aircraft refurbishment, are not included in the $27.0
   million capital spending forecast for 1998.

   During 1998, Midwest Express will construct a new 70,000-square-foot
   hangar to handle maintenance support for its current fleet and planned
   growth. The new structure will include five aircraft bays and will be used
   for heavy aircraft maintenance work.

   Aircraft acquisitions and modifications financed by or intended to be
   financed by sale and leaseback transactions totalled $12.5 million during
   1997. In addition, during 1997 the Company finalized operating lease
   financing on the acquisition and related modifications of three DC-9-30
   aircraft. In 1998, the Company intends to finalize sale and leaseback
   transactions on two DC-9-30 aircraft, in which case the Company will be
   reimbursed for approximately $6.0 million of related aircraft acquisition
   and modification costs incurred during 1997. 

   During 1997, the Company executed definitive purchase documents to acquire
   eight McDonnell Douglas MD-80 series aircraft and made deposits totalling
   $14.5 million. Four of the aircraft will be received in 1998 and the
   remaining four in 1999. During 1998, the Company expects that this 
   project, including aircraft refurbishment, modification and support 
   equipment, will cost approximately $67.9 million and will be financed as
   deliveries take place.Leases relating to three Midwest Express jet
   aircraft are guaranteed by Kimberly-Clark. The Company pays Kimberly-
   Clark a guarantee fee equal to 1.25% annually of the outstanding lease
   commitments. Kimberly-Clark will continue to guarantee the leases for the
   three jet aircraft until the expiration of their initial lease terms. The
   first of these jet aircraft leases expires in 2001. Aircraft lease
   guarantee fees in 1998 will be approximately $.1 million.

   During the second quarter of 1997, the Company's Board of Directors
   approved increasing the Company's share repurchase program by $10.0
   million over and above the original $5.0 million limit authorized in
   December 1995. During the third quarter of 1997, the Company repurchased
   80,000 shares of common stock totalling $2.0 million. As of December 31,
   1997, the Company has purchased a total of 235,550 shares of common stock
   at a cost of $4.8 million under the share repurchase program.

   The Company believes existing cash and cash equivalents, cash flow from
   operations, funds available from credit facilities and available long-term
   financing for the acquisition of jet and turboprop aircraft will be 
   adequate to meet its current and anticipated working capital requirements 
   and capital expenditures.

                              Pending Developments

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

   DC-9 Aircraft - As of December 31, 1997, two DC-9 aircraft acquired during
   1996 had not yet been placed into service. The first aircraft will
   initially be used as a maintenance support aircraft beginning in the
   second quarter of 1998. The second aircraft will be placed into service
   during the second quarter of 1998; plans for this aircraft have not been
   announced.

   MD-80 Series Aircraft - During January 1998, Midwest Express took delivery
   of the first of eight MD-80 series aircraft the Company recently agreed to
   purchase, and after refurbishment and modification, this aircraft will
   enter scheduled service in mid-1998.  The remaining seven aircraft are 
   expected to be delivered to Midwest Express continuing through 1999. Plans 
   for these aircraft have not been announced. The Company expects that this 
   entire project, including aircraft refurbishment, modification and support 
   equipment, will cost approximately $120.0 million and will be financed 
   as deliveries take place. The Company is currently evaluating financing 
   alternatives. 

   Labor Relations - In December 1997, Midwest Express pilots elected the Air
   Line Pilots Association ("ALPA") for representation in collective
   bargaining. Negotiations have not yet begun. In January 1998, Skyway
   pilots represented by ALPA ratified a four-year labor contract. No other
   employees in the Company are unionized.

   Sales Taxes - During 1996, the Wisconsin Department of Revenue asserted
   that Wisconsin sales taxes should be paid in connection with Midwest
   Express' purchase of meals from its food caterer. While Midwest Express
   does not believe any such sales tax is payable, if the Department of
   Revenue successfully asserts its position, then Midwest Express would be
   liable for back taxes and associated interest in the amount of
   approximately $.6 million, and Midwest Express would have to pay
   approximately $.3 million in additional sales taxes annually in 
   the future.

   Year 2000 - The Company has developed plans to address issues related to
   the impact of the year 2000 on its computer systems. Financial and
   operational systems have been assessed, and initial plans have been
   developed to address systems modification requirements. To date, the
   Company has identified one internal system that will require a moderate
   amount of correction. This system will be modified using in-house
   resources and will be completed by year-end 1998. The Company believes
   that the financial impact of making the required system changes will not
   be material to the Company's consolidated financial position, results of
   operations or cash flows. The Company is also participating with the
   airline industry to identify potential year 2000 issues at airports and
   within industry infrastructure.

   <PAGE>
   [page 24]
                         MIDWEST EXPRESS HOLDINGS, INC. 
                              REPORT OF MANAGEMENT


   To the Shareholders of Midwest Express Holdings, Inc.:

   The management of Midwest Express Holdings, Inc. is responsible for the
   preparation, content, integrity and objectivity of the financial
   statements and other information contained in this annual report. The
   financial statements were prepared using generally accepted accounting
   principles, applied on a consistent basis. The statements have been
   audited by Deloitte & Touche LLP, independent auditors, whose report
   appears on the next page.  

   The Company maintains a system of internal control that is supported by
   written policies and procedures, and is monitored by management and the
   internal audit function. Although all internal control systems have
   inherent limitations, including the possibility of circumvention and
   overriding controls, management believes the Company's internal control
   system provides reasonable assurance as to the integrity and reliability
   of the financial statements and that its assets are safeguarded against
   unauthorized acquisition, use or disposition. Appropriate actions are
   taken by management to correct deficiencies as they are identified.   

   The Audit Committee of the Board of Directors is composed entirely of
   outside directors. The Committee meets periodically with the Company's
   management and internal audit function and with its independent auditors
   to review auditing, internal control and financial reporting matters.

   Based on its assessment of internal control as of December 31, 1997,
   management believes its system of internal control over the preparation of
   financial statements and the safeguarding of assets is effective. 


   /S/ TIMOTHY E. HOEKSEMA

   Timothy E. Hoeksema
   Chairman of the Board, President and Chief Executive Officer

   /S/ ROBERT S. BAHLMAN

   Robert S. Bahlman
   Senior Vice President, Chief Financial Officer, Treasurer and Controller

   <PAGE>
   [page 25]

                         MIDWEST EXPRESS HOLDINGS, INC. 
                              REPORT OF MANAGEMENT



   To the Shareholders and Board of Directors of Midwest Express Holdings,
   Inc.: 

   We have audited the accompanying consolidated balance sheets of Midwest
   Express Holdings, Inc. and subsidiaries as of December 31, 1997 and 1996,
   and the related consolidated statements of income, shareholders' equity
   and cash flows for each of the three years in the period ended December
   31, 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, such consolidated financial statements present fairly, in
   all material respects, the financial position of Midwest Express Holdings,
   Inc. and subsidiaries as of December 31, 1997 and 1996, and the results of
   their operations and their cash flows for each of the three years in the
   period ended December 31, 1997, in conformity with generally accepted
   accounting principles.


   /S/ DELOITTE & TOUCHE LLP

   Milwaukee, Wisconsin
   January 30, 1998 


   <PAGE>
   [pages 26-35]

                        CONSOLIDATED STATEMENTS OF INCOME

   MIDWEST EXPRESS HOLDINGS, INC. 
   YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 
   (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 


                                          1997        1996          1995
   Operating revenues:
     Passenger service . . . . . . .   $311,022    $276,792      $238,422
     Cargo . . . . . . . . . . . . .     11,466      11,316        10,440
     Other . . . . . . . . . . . . .     22,069      16,638        10,293
                                        -------     -------       -------
      Total operating revenues . . .    344,557     304,746       259,155
                                        -------     -------       -------
   Operating expenses:
     Salaries, wages and benefits  .     92,207      78,015        62,964
     Aircraft fuel and oil . . . . .     50,107      47,274        35,212
     Commissions . . . . . . . . . .     31,535      28,310        24,878
     Dining services . . . . . . . .     17,181      15,078        14,882
     Station rental, landing and
      other fees . . . . . . . . . .     24,526      21,652        19,451
     Aircraft maintenance materials
      and repairs  . . . . . . . . .     28,190      21,316        17,356
     Depreciation and amortization .      8,645       7,663         7,515
     Aircraft rentals  . . . . . . .     17,453      16,054        14,954
     Other . . . . . . . . . . . . .     36,243      35,025        30,569
                                        -------     -------       -------
      Total operating expenses . . .    306,087     270,387       227,781
                                        -------     -------       -------
   Operating income  . . . . . . . .     38,470      34,359        31,374

   Other income (expense):
     Interest income . . . . . . . .      1,419       1,084         1,695
     Interest expense  . . . . . . .        (95)        -             (36)
     Other income (expense), net . .       (162)       (211)       (1,507)
      Total other income (expense) .      1,162         873           152
                                        -------     -------       -------
   Income before income taxes  . . .     39,632      35,232        31,526
   Provision for income taxes. . . .     14,692      13,482        12,397
                                        -------     -------       -------
   Net income  . . . . . . . . . . .    $24,940     $21,750       $19,129
                                        =======     =======       =======
   Net income per share basic  . . .      $2.64       $2.27         $1.84(1)
                                        =======     =======       =======
   Net income per share diluted  . .      $2.61       $2.26         $1.84(1)
                                        =======     =======       =======

   (1)   Pro forma


   <PAGE>

                           CONSOLIDATED BALANCE SHEETS

   MIDWEST EXPRESS HOLDINGS, INC. 
   DECEMBER 31, 1997 AND 1996 
   (DOLLARS IN THOUSANDS)                               1997          1996
   ASSETS
   Current assets:
    Cash and cash equivalents  . . . . . . . . . . .   $32,066       $27,589
    Accounts receivable:
      Traffic, less allowance for doubtful
       accounts of $231 in 1997 and $207 in 1996 . .     5,106         4,639
      Other receivables  . . . . . . . . . . . . . .       444           592
                                                       -------       -------
       Total accounts receivable . . . . . . . . . .     5,550         5,231
    Inventories  . . . . . . . . . . . . . . . . . .     3,942         3,122
    Prepaid expenses:
      Commissions  . . . . . . . . . . . . . . . . .     1,509         1,364
      Other  . . . . . . . . . . . . . . . . . . . .     1,905         2,883
                                                       -------       -------
       Total prepaid expenses  . . . . . . . . . . .     3,414         4,247
    Aircraft and modifications intended to
     be financed by sale and leaseback
     transactions  . . . . . . . . . . . . . . . . .     6,000         9,046
    Deferred income taxes  . . . . . . . . . . . . .     4,655         3,334
                                                       -------       -------
       Total current assets  . . . . . . . . . . . .    55,627        52,569
                                                       -------       -------
   Property and equipment, net . . . . . . . . . . .    89,156        70,903
   Landing slots and leasehold rights, less
     accumulated amortization of $1,850 in
     1997 and $1,522 in 1996 . . . . . . . . . . . .     4,900         5,228
   Purchase deposits on flight equipment . . . . . .    14,500             -
   Other assets  . . . . . . . . . . . . . . . . . .     2,565           435
                                                       -------       -------
   Total assets  . . . . . . . . . . . . . . . . . .  $166,748      $129,135
                                                       =======       =======

   LIABILITIES AND SHAREHOLDERS' EQUITY
   Current liabilities:
    Accounts payable   . . . . . . . . . . . . . . .    $5,560        $3,684
    Air traffic liability  . . . . . . . . . . . . .    28,934        22,043
    Accrued liabilities:
      Scheduled maintenance expense  . . . . . . . .     7,115         5,961
      Accrued profit sharing . . . . . . . . . . . .     4,855         5,345
      Vacation pay . . . . . . . . . . . . . . . . .     3,586         2,957
      Frequent Flyer awards  . . . . . . . . . . . .     3,400         2,869
      Other  . . . . . . . . . . . . . . . . . . . .    15,033        15,504
                                                       -------       -------
       Total current liabilities . . . . . . . . . .    68,483        58,363
                                                       -------       -------
   Long-term debt  . . . . . . . . . . . . . . . . .     3,333            - 
   Deferred income taxes . . . . . . . . . . . . . .    12,509         9,894
   Noncurrent scheduled maintenance expense  . . . .     7,594         7,771
   Accrued pension and other postretirement
    benefits   . . . . . . . . . . . . . . . . . . .     5,462         6,138
   Other noncurrent liabilities  . . . . . . . . . .     5,969         6,628
                                                       -------       -------
   Total liabilities . . . . . . . . . . . . . . . .   103,350        88,794
                                                       -------       -------
   Shareholders' equity:
    Preferred stock, without par value, 5,000,000
     shares authorized, no shares issued or
     outstanding   . . . . . . . . . . . . . . . . .        -             - 
    Common stock, $.01 par value, 25,000,000
     shares authorized, 9,642,807 shares issued
     in 1997 and 6,428,571 in 1996   . . . . . . . .        96            64
    Additional paid-in capital   . . . . . . . . . .     9,531         9,545
    Treasury stock, at cost; 223,490 shares
     in 1997 and 99,039 shares in 1996   . . . . . .    (4,572)       (2,672)
    Retained earnings  . . . . . . . . . . . . . . .    58,343        33,404
                                                       -------       -------
   Total shareholders' equity  . . . . . . . . . . .    63,398        40,341
                                                       -------       -------
   Total liabilities and shareholders' equity  . . .  $166,748      $129,135
                                                       =======       =======


   <PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

   MIDWEST EXPRESS HOLDINGS, INC. 
   YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 
   (DOLLARS IN THOUSANDS) 


                                                  1997      1996       1995
   Operating activities:
    Net income   . . . . . . . . . . . . .      $24,940   $21,750    $19,129
    Items not involving the use of cash:
      Depreciation and amortization  . . .        8,645     7,663      7,515
      Deferred income taxes  . . . . . . .        1,294    (3,918)     2,177
      Other  . . . . . . . . . . . . . . .        4,335     3,245      2,212
    Changes in operating assets and
     liabilities:
      Accounts receivable  . . . . . . . .         (319)      483      1,427
      Inventories  . . . . . . . . . . . .         (820)     (396)      (633)
      Prepaid expenses . . . . . . . . . .          833      (715)      (428)
      Accounts payable . . . . . . . . . .        1,876        (3)    (1,285)
      Accrued liabilities  . . . . . . . .        1,236    12,139      2,465
      Air traffic liability  . . . . . . .        6,891     4,793      3,433
                                                -------   -------    -------
    Net cash provided by operating
     activities  . . . . . . . . . . . . .       48,911    45,041     36,012
                                                -------   -------    -------

   Investing activities: 
    Capital expenditures   . . . . . . . .      (27,617)  (25,607)    (7,980)
    Aircraft acquisitions and
     modifications financed by or
     intended to be financed by
     sale and leaseback transactions   . .      (12,520)  (86,771)   (16,558)
    Purchase deposits on flight
     equipment   . . . . . . . . . . . . .      (14,500)       -          - 
    Proceeds from sale of property and
     equipment   . . . . . . . . . . . . .          196        22        327
    Other  . . . . . . . . . . . . . . . .       (2,128)     (151)      (284)
                                                -------   -------    -------
    Net cash used in investing
     activities  . . . . . . . . . . . . .      (56,569) (112,507)   (24,495)
                                                -------   -------    -------
   Financing activities:
    Proceeds from sale and leaseback
     transactions  . . . . . . . . . . . .       15,566    83,895     15,323
    Purchase of treasury stock   . . . . .       (1,977)   (2,790)        - 
    Net decrease in advances to
     Kimberly-Clark  . . . . . . . . . . .           -         -      19,988
    Dividends to Kimberly-Clark  . . . . .           -         -     (35,705)
    Other  . . . . . . . . . . . . . . . .       (1,454)     (676)     3,503
                                                -------   -------    -------
    Net cash provided by financing 
     activities  . . . . . . . . . . . . .       12,135    80,429      3,109
                                                -------   -------    -------
    Net increase in cash and cash
     equivalents   . . . . . . . . . . . .        4,477    12,963     14,626
    Cash and cash equivalents, beginning
     of year   . . . . . . . . . . . . . .       27,589    14,626         - 
                                                -------   -------    -------
    Cash and cash equivalents, end
     of year   . . . . . . . . . . . . . .      $32,066   $27,589    $14,626
                                                =======   =======    =======
    Supplemental cash flow information:
      Cash paid for:
        Income taxes, net of refunds . . .      $11,948*  $19,776*   $11,899
                                                =======   =======    =======
    Interest   . . . . . . . . . . . . . .      $    95   $    -     $    - 
                                                =======   =======    =======
    Supplemental schedule of non-cash
      financing activities:
      Long-term debt assumed in connection
      with capital expenditures  . . . . .      $ 3,487   $    -     $    - 
                                                =======   =======    =======
      Transfer of assets and liabilities
      from Kimberly-Clark:
        Accrued pension and other
          postretirement benefits  . . . .      $    -    $    -      $3,597
        Deferred income taxes  . . . . . .           -         -      (1,471)
                                                -------   -------     ------
        Increase in advances to
          Kimberly-Clark, net  . . . . . .      $    -    $    -      $2,126
                                                =======   =======     ======


   * Included in taxes paid are amounts paid to Kimberly-Clark in accordance
   with the Tax Agreement totalling $5,996 in 1997 and $9,243 in 1996.

   <PAGE>
   <TABLE>
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

   MIDWEST EXPRESS HOLDINGS, INC.
   YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 
   (DOLLARS IN THOUSANDS) 

   <CAPTION>

                                     Common Stock      Additional                         Total
                                   $.01 par   No par   Paid-in    Treasury   Retained  Shareholders'
                                     value     value   Capital     Stock     Earnings      Equity

   <S>                              <C>       <C>      <C>       <C>          <C>         <C>
   Balances at December 31, 1994    $    -    $9,610   $    -    $     -      $28,230     $37,840
    Net income   . . . . . . . .         -        -         -          -       19,129      19,129
    Dividends to Kimberly-Clark          -        -         -          -      (35,705)    (35,705)
    Issuance and transfer of
     common stock  . . . . . . .         64   (9,610)    9,546         -           -           - 
                                    -------  -------   -------   --------     -------     -------
   Balances at December 31, 1995         64       -      9,546         -       11,654      21,264
    Net income   . . . . . . . .         -        -         -          -       21,750      21,750
    Purchase of 103,700 shares
     of treasury stock   . . . .         -        -         -      (2,790)         -       (2,790)
    Issuance of treasury stock upon
     exercise of stock options and
     related tax benefits  . . .         -        -         (5)       107          -          102
    Other  . . . . . . . . . . .         -        -          4         11           -          15
                                    -------  -------   -------   --------     -------     -------
   Balances at December 31, 1996         64       -      9,545     (2,672)     33,404      40,341
    Net income   . . . . . . . .         -        -         -          -       24,940      24,940
    Stock split effected in the
     form of a dividend  . . . .         32       -        (31)        -           (1)         - 
    Purchase of 80,000 shares of
     treasury stock  . . . . . .         -        -         -      (1,977)         -       (1,977)
    Issuance of treasury stock upon
     exercise of stock options and
     related tax benefits  . . .         -        -          3         52          -           55
    Other  . . . . . . . . . . .         -        -         14         25          -           39
                                    -------  -------  --------    -------     -------     -------
   Balances at December 31, 1997    $    96  $     -    $9,531    $(4,572)    $58,343     $63,398
                                    =======  =======  ========    =======     =======     =======
   </TABLE>

   <PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

   MIDWEST EXPRESS HOLDINGS, INC. 
   YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


   Note 1. Business and Basis of Presentation
    
   Organization 
   The accompanying Consolidated Financial Statements reflect the operations
   of the following (collectively, the "Company"): (a) for periods prior to
   September 27, 1995, Midwest Express Airlines, Inc. ("Midwest Express"),
   a subsidiary of Kimberly-Clark Corporation ("Kimberly-Clark"), and (b)
   for periods on and after September 27, 1995, Midwest Express Holdings,
   Inc. 

   On September 27, 1995, Kimberly-Clark and the Company entered into a Stock
   Agreement providing for the transfer by Kimberly-Clark to the Company of
   all the outstanding capital stock of Midwest Express in exchange for
   6,428,571 shares of the Company's $.01 par value common stock. 

   On September 27, 1995, Kimberly-Clark completed, in an initial public
   offering ("Offering"), the sale of the Company's common stock. Following
   the Offering, Kimberly-Clark retained 20% of the outstanding common stock
   of the Company, which was subsequently sold in a secondary public offering
   completed on May 23, 1996. The Company did not receive any proceeds from
   either of the offerings.

   On April 23, 1997, the Company announced that its board of directors had
   approved a plan to split its stock 3-for-2 in the form of a 50% stock
   dividend. The new shares were issued May 28, 1997, to shareholders of
   record as of May 12, 1997. Accordingly, net income per share amounts and
   weighted average shares outstanding have been adjusted to reflect the
   effect of the stock dividend.

   Basis of Presentation 
   The Consolidated Financial Statements include the accounts of Midwest
   Express and its wholly owned subsidiary, Astral Aviation, Inc.
   ("Astral"), which does business as Skyway Airlines. All significant
   intercompany balances and transactions have been eliminated. 

   For all periods prior to September 27, 1995, the accompanying Consolidated
   Financial Statements include the revenues and expenses directly related to
   the Company's operations under Kimberly-Clark. Certain corporate, general
   and administrative expenses of Kimberly-Clark and certain affiliates were
   allocated to the Company on a basis which, in the opinion of management,
   was reasonable (see Note 10). The financial information for the periods
   prior to September 27, 1995, included herein may not necessarily be
   indicative of the results of operations and cash flows had the Company
   operated as a separate, stand-alone company during the entirety of the
   periods presented.
    
   Nature of Operations 
   Midwest Express is a U.S. air carrier providing scheduled passenger
   service from Milwaukee to 25 cities as of December 31, 1997. The Company
   also provided aircraft charter services, aircraft maintenance for other
   airlines, air freight and other airline services. Midwest Express
   established Omaha, Nebraska, as its first base of operations outside of
   Milwaukee in May 1994. Midwest Express provides jet service nonstop
   between Omaha and seven destinations. Astral provides regional scheduled
   passenger service to cities primarily in the upper Midwest.

   Note 2. Accounting Policies 
   The accounting policies of the Company conform to generally accepted
   accounting principles and to accounting practices generally followed in
   the airline industry. Significant policies followed are described below.

   Cash and Cash Equivalents 
   The Company considers all highly liquid investments with purchased
   maturities of three months or less to be cash equivalents. They are
   carried at cost, which approximates market.

   Inventories 
   Inventories consist primarily of maintenance parts, aircraft and
   maintenance supplies and fuel stated at the lower of cost on the first-in,
   first-out (FIFO) method or market and are expensed when used in
   operations.
    
   Property and Equipment 
   Property and equipment is stated at cost and is depreciated  on the
   straight-line method applied to each unit of property for financial
   reporting purposes and by use of accelerated methods for income 
   tax purposes. Aircraft are depreciated to estimated residual values, and
   any gain or loss on disposal is reflected in income. The depreciable lives
   for the principal asset categories are as follows: 

    Asset Category                              Depreciable Life
    Flight equipment                            10 years
    Other equipment                             5 to 8 years
    Office furniture and equipment              5 to 20 years
    Buildings                                   40 years
    Building improvements                       Lesser of 20 years or
                                                remaining life of building

   Other Assets 
   Airport take-off and landing slots have an unlimited life, have
   historically appreciated in value and are occasionally traded, sold or
   leased among airlines. The cost of take-off and landing slots is amortized
   on the straight-line method over 20 years, consistent with industry
   practice. The cost of airport leasehold rights is amortized on the
   straight-line method over the term of the lease. The cost of software is
   amortized on the straight-line method over five years or less.

   Revenue Recognition 
   Passenger and cargo revenues are recognized in the period when the service
   is provided. Contract maintenance revenue is recognized when work is
   completed and invoiced. The estimated liability for sold, but unused,
   tickets is included in current liabilities as air traffic liability.

   Maintenance and Repair Costs 
   Routine maintenance and repair costs for owned and leased aircraft are
   charged to expense when incurred, except for major airframe and engine
   maintenance. Depending on the particular aircraft, these latter costs are
   either (1) accrued to expense on the basis of estimated future costs and
   the estimated number of hours to be flown or the number of future take-
   offs and landings or (2) capitalized when incurred and amortized on the
   basis of estimated hours to be flown or the number of future take-offs and
   landings over the period of time between overhauls. The actual maintenance
   and repair costs to be incurred could differ from the Company's estimates.


   Frequent Flyer Program 
   The estimated incremental cost of providing future transportation in
   conjunction with the Company's Frequent Flyer program is accrued based on
   estimated redemption percentages applied to actual mileage recorded in
   members' accounts. The ultimate cost, however, will depend on the actual
   redemption of Frequent Flyer miles and may be greater than amounts accrued
   at December 31, 1997.
    
   Postretirement Health Care and Life Insurance Benefits 
   The costs of health care and life insurance benefit plans for retired
   employees are accrued over the working lives of employees in accordance
   with Statement of Financial Accounting Standards (SFAS) No. 106,
   "Employers' Accounting for Postretirement Benefits Other Than Pensions."

   Income Taxes 
   The Company accounts for income taxes in accordance with SFAS No. 109,
   "Accounting for Income Taxes." SFAS No. 109 requires that deferred income
   taxes be determined under the asset and liability method. Deferred income
   taxes have been recognized for the future tax consequences of temporary
   differences by applying enacted statutory tax rates applicable to
   differences between the financial reporting and the tax bases of assets
   and liabilities. 

   Prior to the Offering, the Company was a member of the Kimberly-Clark
   consolidated group and, as such, filed a consolidated federal income tax
   return with Kimberly-Clark and its U.S. subsidiaries. The Company also
   filed consolidated state tax returns with Kimberly-Clark and certain of
   its subsidiaries, as well as separately in various states. Income tax
   expense and deferred income tax assets and liabilities are reflected in
   the Company's financial statements in accordance with SFAS No. 109.
    
   Leases 
   Rental obligations under operating leases for aircraft, facilities and
   equipment are charged to expense on the straight-line method over the term
   of the lease.
    
   Hedging Transactions
   The Company has entered into hedging arrangements to reduce its exposure
   to fluctuations in the price of jet fuel. Contracts entered into were not
   material as of December 31, 1997. Net settlements are recorded as
   adjustments to aircraft fuel expense.

   Use of Estimates 
   The preparation of consolidated 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 year. Future results could differ from those
   estimates. 

   Accounting Standards to Be Adopted
   In 1997, the Financial Accounting Standards Board issued SFAS No.
   130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about
   Segments of an Enterprise and Related Information." The Company is
   currently in the process of evaluating the accounting and disclosure
   effects of these Statements.

   Reclassifications
   Certain reclassifications have been made in prior year financial
   statements to conform to the current year presentation.

   Note 3. Property and Equipment
   As of December 31, 1997 and 1996, property and equipment consisted of the
   following (in thousands):

                                         1997            1996
   Flight equipment                  $119,409        $105,180
   Other equipment                      8,547           7,410
   Buildings and improvements          16,911           7,758
   Office furniture and equipment       8,430           5,289
   Construction in progress             6,751           5,155
                                      -------         -------
                                      160,048         130,792
   Less accumulated depreciation      (70,892)        (59,889)
                                      -------         -------
   Property and equipment, net        $89,156         $70,903
                                      =======         =======

   Note 4. Leases
   The Company leases aircraft, terminal space, office space and warehouse
   space. Future minimum lease payments required under operating leases
   having initial or remaining noncancelable lease terms in excess of one
   year as of December 31, 1997 were as follows 
   (in thousands):

   Year ended December 31,
   1998  . . . . . . . . . . . . . . . . . . . .   $22,018
   1999  . . . . . . . . . . . . . . . . . . . .    22,695
   2000  . . . . . . . . . . . . . . . . . . . .    19,061
   2001  . . . . . . . . . . . . . . . . . . . .     5,022
   2002  . . . . . . . . . . . . . . . . . . . .     2,948
   2003 and thereafter . . . . . . . . . . . . .    68,531
                                                   -------
                                                  $160,275
                                                   =======

   As of December 31, 1997, the Company had 10 of its jet aircraft in service
   under operating leases, three of which have been guaranteed by Kimberly-
   Clark. These leases have expiration dates ranging from 1998 through 2008
   and can generally be renewed, based on fair market value at the end of the
   lease term, for one to three years. Five of the leases include purchase
   options at or near the end of the lease term at fair market value, but
   generally not in excess of the defined lessor's cost of the aircraft. 

   As of December 31, 1997, the Company's turboprop fleet was financed under
   operating leases with initial lease terms of five to 12 years, and
   expiration dates ranging from 2001 through 2008. These leases permit
   renewal for various periods at rates approximating fair market value and
   purchase options at or near the end of the lease term at fair market
   value.

   Rent expense for all operating leases, excluding landing fees, was
   $25,435,000, $24,356,000 and $21,884,000 for 1997, 1996 and 1995,
   respectively. 

   Note 5. Financing Agreements 
   At December 31, 1997, the Company had available two credit facilities: (1)
   a $55,000,000 revolving credit facility with three banks and (2) a
   $20,000,000 secondary revolving credit facility with Kimberly-Clark.
   Borrowings under the Kimberly-Clark facility must be repaid prior to
   repayments on the bank credit facility. The bank credit facility requires
   an annual commitment fee of 12.5 basis points on the average unused
   commitment with interest payable on the outstanding principal balance at
   LIBOR plus 50 basis points. The Kimberly-Clark facility does not require a
   commitment fee, and interest will be at a rate equal to the then-current
   rate of interest under the bank credit facility plus 100 basis points.
   There were no outstanding borrowings under these agreements at December
   31, 1997, except for letters of credit totalling approximately $11,400,000
   that reduce the amount of available credit.

   During August 1997, the Company purchased a headquarters building, which
   it previously leased. As part of the transaction, the Company assumed
   $3,487,000 of long-term debt. The mortgage note has an interest rate of
   8.25% and is payable in monthly installments through April 2011. Future
   maturities of long-term debt for the next five years are as follows:
   $117,000 in 1998; $127,000 in 1999; $138,000 in 2000; $182,000 in 2001;
   $214,000 in 2002. The fair value of the Company's borrowing under this
   agreement approximates its carrying value as of December 31, 1997.

   Note 6. Retirement and Benefit Plans 

   Defined Benefit Plans 
   Midwest Express has two defined benefit pension plans covering
   substantially all of its employees. The benefits for these plans are based
   primarily on years of service and employee compensation. It is Midwest
   Express' policy to annually fund at least the minimum contribution as
   required by the Employee Retirement Income Security Act of 1974. 

   The following table sets forth the funded status of the plans at December
   31 (in thousands): 

                                Midwest Express     Supplemental
                                 Pension Plan        Pension Plan
                                1997      1996      1997      1996

   Benefit obligation
       Vested  . . . . . . .   $10,178    $6,243     $410      $204
       Nonvested   . . . . .     1,765     1,119       32        - 
                               -------   -------  -------   -------
   Accumulated benefit
    obligation . . . . . . .   $11,943    $7,362     $442      $204
                               =======   =======  =======   =======
   Projected benefit
    obligation . . . . . . .   $18,552   $11,881   $1,152     $ 511
   Plan assets at fair value    12,331     7,449       -         - 
                               -------   -------  -------   -------
   Projected benefit obligation
    less plan assets . . . .     6,221     4,432    1,152       511
   Unrecognized transition
    asset    . . . . . . . .      (109)     (131)     (19)      (23)
   Unrecognized net prior
    service cost . . . . . .        31        33      (55)      (60)
   Unrecognized net loss . .    (3,856)     (516)    (672)     (179)
   Adjustment required to
    recognize minimum
    liability  . . . . . . .        -         -        36        - 
                               -------   -------  -------   -------
   Accrued pension cost  . .    $2,287    $3,818     $442      $249
                               =======   =======  =======   =======

   The weighted average discount rate used to determine the projected benefit
   obligation was 7.25% and 7.75% as of December 31, 1997 and 1996,
   respectively. The calculation also assumed a 4.25% weighted average rate
   of increase for future compensation levels for 1997 and 1996. The expected
   long-term rate of return on plan assets used in 1997 and 1996 was 10%. The
   unrecognized net loss is amortized on a straight-line basis over the
   average remaining service period of employees expected to receive a plan
   benefit.

   The net periodic pension cost of defined benefit pension plans since the
   Offering includes the following (in thousands):

                                             Midwest Express
                                               Pension Plan
                                      1997         1996         1995

   Service cost (benefits earned
    during the period) . . . . .     $1,656     $ 1,488        $ 345
   Interest cost on projected
    benefit obligations  . . . .      1,132         915          216
   Actual return on plan assets      (1,515)     (1,424)        (130)
   Net amortization and
    deferral . . . . . . . . . .        579         868           28
                                     ------     -------       ------
   Net periodic pension cost . .     $1,852     $ 1,847        $ 459
                                     ======     =======       ======

                                               Supplemental
                                               Pension Plan
                                      1997         1996         1995
   Service cost (benefits earned
    during the period) . . . . . . . $  45       $   19        $   4
   Interest cost on projected
    benefit obligations  . . . . . .    73           38            9
   Net amortization and
    deferral . . . . . . . . . . . .    39           21            5
                                     -----       ------        -----
   Net periodic pension cost . . . . $ 157       $   78        $  18
                                     =====       ======        =====


   Prior to the Offering, substantially all Midwest Express employees
   participated in the defined benefit pension plans of Kimberly-Clark. The
   liabilities related to the Kimberly-Clark benefit plans were carried on
   the books of Kimberly-Clark and were not allocated separately to
   subsidiaries. The portion of pension costs attributable to these employees
   and reflected as expense in the accompanying financial statements was
   $953,000 in 1995. 

   Postretirement Health Care and Life Insurance Benefits 
   Midwest Express allows retirees to participate in unfunded health care and
   life insurance benefit plans. Benefits are based on years of service and
   age at retirement. The plans are principally noncontributory for current
   retirees, and are contributory for most future retirees. 

   The following table sets forth the status of the plans at December 31 
   (in thousands): 

                                           1997           1996 
   Accumulated postretirement
    benefit obligation (APBO)  . . .     $2,151          $1,195
   Unrecognized net (loss) gain  . .       (254)            350
                                         ------          ------
   Accrued postretirement benefit cost   $1,897          $1,545
                                         ======          ====== 

   Midwest Express' APBO is unfunded. Net postretirement benefit cost since
   the Offering includes the following components (in thousands):


                                        1997     1996    1995
   Service cost (benefits
    attributed to service during
    the period)  . . . . . . . .        $211     $180     $43
   Interest on APBO  . . . . . .         141       89      23
   Net amortization and
    deferral . . . . . . . . . .          -        (6)     (1)
                                       -----    -----   -----
   Net postretirement
    benefit cost . . . . . . . .        $352     $263     $65
                                       =====    =====   =====


   The assumed health care cost trend rate was approximately 10% declining
   annually to a rate of 6% by the year 2004, and remaining level thereafter.
   Increasing the rate by one percentage point would not be significant. The
   weighted-average discount rates used in determining the APBO for 1997 and
   1996 were 7.25% and 7.75%, respectively. 

   Prior to the Offering, substantially all retired employees of Midwest
   Express participated in unfunded health care and life insurance benefit
   plans of Kimberly-Clark. The portion of postretirement health care and
   life insurance benefits costs attributable to Midwest Express' employees
   and reflected in the accompanying income statements was $200,000 in 1995. 

   Defined Contribution Plans 
   The Company has two voluntary defined contribution investment plans
   covering substantially all employees. Under these plans, the Company
   matches a portion of employee contributions. During 1995, the Company made
   a one-time contribution of 55,500 shares of its common stock to the
   Midwest Express investment plan for the benefit of Midwest Express
   employees. Amounts expensed and reflected in the accompanying income
   statements were $1,498,000, $1,175,000 and $1,958,000 in 1997, 1996 and
   1995, respectively.

   Profit Sharing Plans
   The Company has three profit sharing plans: an employee profit sharing
   plan for substantially all employees of Midwest Express, an employee
   profit sharing plan for substantially all employees of Astral and an
   Annual Incentive Plan for key management personnel. Company contributions
   for both plans currently are based entirely on achieving specified levels
   of profitability and are payable annually. During 1997 and 1996, the
   Company expensed $4,855,000 and $5,345,000 under these plans,
   respectively.

   Note 7. Net Income Per Share
   Effective for 1997, the Company adopted SFAS No.128, "Earnings Per Share,"
   which established new standards for the calculation of net income per
   share effective for interim and annual periods ending after December 15,
   1997. Accordingly, previously reported net income per share has been
   restated. Reconciliations of the numerator and denominator of the basic
   and diluted per share computations are summarized as follows (in
   thousands, except per share amounts):

                                                             Pro Forma
                                         1997         1996       1995 
   Net Income Per Share - Basic:
     Net income (numerator)  . .      $24,940      $21,750     $17,775
     Weighted average shares
       outstanding (denominator)        9,465        9,593       9,643
                                       ------       ------      ------
     Net income per share - basic       $2.64        $2.27       $1.84
                                       ======       ======      ======
   Net Income Per Share - Diluted:
     Net income (numerator)  . .      $24,940      $21,750     $17,775
     Weighted average shares
       outstanding   . . . . . .        9,465        9,593       9,643
     Effect of dilutive securities
       Stock options   . . . . .           76           49          10
       Shares issuable under the
          1995 Stock Plan for Outside
          Directors  . . . . . .            6            2          - 
                                       ------       ------      ------
     Weighted average shares
       outstanding assuming dilution
       (denominator)   . . . . .        9,547        9,644       9,653
                                       ------       ------      ------
     Net income per share -
       diluted   . . . . . . . .        $2.61        $2.26       $1.84
                                       ======       ======      ======


   Note 8. Shareholders' Equity 
   In 1996, the Board of Directors adopted a shareholders' rights plan and
   made a dividend distribution of one Preferred Share Purchase Right
   ("Right") on each outstanding share of the Company's common stock. As a
   result of the 3-for-2 stock split effected in May 1997, two-thirds of a
   Right is now associated with each share of common stock. The Rights are
   exercisable only if a person or entity acquires 15% or more of the common
   stock or announces a tender offer for 15% or more of the common stock of
   the Company. Each Right initially entitles its holders to buy one one-
   hundredth share of the Company's Series A Preferred Stock at an exercise
   price of $100, subject to adjustment. If a person or entity acquires 15%
   or more of the Company's common stock, then each Right will entitle its
   holder to purchase, at the Right's then-current exercise price, Company
   common stock valued at twice the exercise price. The Board of Directors is
   also authorized to reduce the 15% thresholds referred to above to not less
   than 10%. The Rights expire 
   in 2006.

   Under the Company's 1995 Stock Option Plan, the Compensation Committee of
   the Board of Directors may grant options, at its discretion, to purchase
   shares of common stock to certain employees. An aggregate of 1,038,750
   shares of common stock is reserved for issuance under the Plan. Under the
   Plan, options granted have an exercise price equal to 100% of the fair
   market value of the underlying stock at the date of grant. Granted options
   become exercisable 30% after the first year, 30% after the second year and
   the remaining 40% after the third year, unless otherwise determined, and
   have a maximum term of 10 years.

   Transactions with respect to the Plan have been adjusted to reflect the
   effect of the stock dividend and are summarized as follows:

                                                            Weighted Average
                                                    Shares   Exercise Price

   Options outstanding at January 1, 1995  . . .        -              - 
      Granted  . . . . . . . . . . . . . . . . .   195,000         $12.00
                                                   -------         ------
   Options outstanding at December 31, 1995  . .   195,000          12.00
      Granted  . . . . . . . . . . . . . . . . .    15,000          21.00
      Exercised  . . . . . . . . . . . . . . . .    (6,750)         12.00
      Forfeited  . . . . . . . . . . . . . . . .   (25,500)         12.00
                                                   -------         ------
   Options outstanding at December 31, 1996  . .   177,750         $12.76
      Granted  . . . . . . . . . . . . . . . . .   190,500          24.05
      Exercised  . . . . . . . . . . . . . . . .    (4,500)         12.00
      Forfeited  . . . . . . . . . . . . . . . .    (3,000)         24.17
                                                   -------         ------
   Options outstanding at December 31, 1997  . .   360,750         $18.64
                                                   =======         ======
   Options exercisable at December 31, 1997  . .    96,750         $12.42
                                                   =======         ======


   Options exercisable at December 31, 1997 included 92,250 options with an
   exercise price of $12.00 and 4,500 options with an exercise price of
   $21.00. The following table summarizes information 
   concerning currently outstanding options:


                                                 Weighted
                                                 Average         Weighted
                                                Remaining        Average
                                    Number     Contractual       Exercise
   Range of Exercise Prices      Outstanding       Life           Price

   $12.00  . . . . . . . . . . .  158,250        7.8 years      $12.00
   $21.00 - $24.17 . . . . . . .  202,500        9.1 years       23.82
                                  -------        ---------      ------
   Options outstanding at
    December 31, 1997  . . . . .  360,750        8.5 years      $18.64
                                  =======        =========      ======


   In 1996, the Company adopted the disclosure requirements of SFAS No. 123
   "Accounting for Stock-Based Compensation" (SFAS 123). The Company has
   elected to continue to follow the provisions of Accounting Principles
   Board No. 25 "Accounting for Stock Issued to Employees" and its related
   interpretations; accordingly, no compensation cost has been reflected in
   the financial statements for its stock option plan. Had compensation cost
   for the Company's stock option plan been determined based on the fair
   value at the grant dates for awards under those plans consistent with the
   method of SFAS 123, the Company's net income and net income per share
   would have been reduced to the pro forma amounts indicated below (in
   thousands, except per share amounts):

                                         1997        1996         1995
   Net income:
       As reported . . . . . . . .    $24,940     $21,750      $19,129
       Pro forma . . . . . . . . .    $24,461     $21,535      $19,077
   Net income per share - basic:
       As reported . . . . . . . .      $2.64       $2.27        $1.84
       Pro forma . . . . . . . . .      $2.58       $2.24        $1.84
   Net income per share - diluted:
       As reported . . . . . . . .      $2.61       $2.26        $1.84
       Pro forma . . . . . . . . .      $2.56       $2.23        $1.84


   For purposes of these disclosures, the fair value of each option granted
   was estimated on the date of grant using the Black-Scholes option pricing
   model with the following weighted average assumptions: 

                                         1997        1996         1995
   Expected volatility . . . . . .      27.4%       42.2%         42.2%
   Risk-free interest rate . . . .       5.4%        5.3%          5.3%
   Forfeiture rate . . . . . . . .       5.0%        4.0%          4.0%
   Dividend rate . . . . . . . . .       0.0%        0.0%          0.0%
   Expected life in years  . . . .          5           5            5


   Note 9. Income Taxes 

   The provision for income taxes for the years ended December 31, 1997, 1996
   and 1995 consisted of the following (in thousands): 


                                         1997        1996         1995
   Currently payable:
   Federal . . . . . . . . . . . .    $11,314     $14,780       $8,260
   State   . . . . . . . . . . . .      2,084       2,620        1,960
                                       ------      ------       ------
                                       13,398      17,400       10,220
                                       ------      ------       ------
   Deferred (Credit):
   Federal . . . . . . . . . . . .      1,169      (3,991)       2,077
   State   . . . . . . . . . . . .        125          73          100
                                       ------      ------       ------
                                        1,294      (3,918)       2,177
                                       ------      ------       ------
   Total provision for income taxes   $14,692     $13,482      $12,397
                                       ======      ======       ======


   A reconciliation of income taxes at the U.S. federal statutory tax rate to
   the effective tax rate follows:

                                         1997        1996         1995
   Tax at statutory U.S. tax rates      35.0%       35.0%        35.0%
   State income taxes, net of
     federal benefit . . . . . . .        3.8         3.8          4.2
   Other, net  . . . . . . . . . .       (1.7)       (0.5)         0.1
                                        -----       -----        -----
   Provision for income taxes  . .      37.1%       38.3%        39.3%
                                        =====       =====        =====

   Temporary differences that gave rise to the deferred tax assets and
   liabilities comprise the following (in thousands): 

                                                     1997         1996
   Current deferred income tax assets
    attributable to:
   Accrued liabilities . . . . . .                 $1,742       $1,115
   Maintenance expense liability .                  2,633        1,926
   Other   . . . . . . . . . . . .                    280          293
                                                   ------       ------
   Net current deferred tax assets                 $4,655       $3,334
                                                   ======       ======
   Noncurrent deferred income tax assets
    (liabilities) attributable to:
   Excess of tax over book
    depreciation . . . . . . . . .               $(18,997)    $(17,585)
   Maintenance expense liability .                  2,943        3,011
   Pension liability . . . . . . .                  1,831        2,186
   Other   . . . . . . . . . . . .                  1,714        2,494
                                                  -------       ------
   Net noncurrent deferred tax liabilities       $(12,509)     $(9,894)
                                                  =======       ======


   In connection with the Offering, the Company, Midwest Express, Astral and
   Kimberly-Clark entered into a Tax Allocation and Separation Agreement
   ( 'Tax Agreement''). Pursuant to the Tax Agreement, the Company is treated
   for tax purposes as if it purchased all of Midwest Express' assets at the
   time of the Offering, and as a result, the tax bases of Midwest Express'
   assets were increased to the deemed purchase price of the assets. The tax
   on the amount of the gain on the deemed asset purchase was paid by
   Kimberly-Clark. This additional basis is expected to result in increased
   income tax deductions and, accordingly, may reduce income taxes otherwise
   payable by the Company. Pursuant to the Tax Agreement, the Company will
   pay to Kimberly-Clark the amount of the tax benefit associated with this
   additional basis (retaining 10% of the tax benefit), as realized on a
   quarterly basis, calculated by comparing the Company's actual taxes to the
   taxes that would have been owed had the increase in basis not occurred. In
   the event of certain business combinations or other acquisitions involving
   the Company, tax benefit amounts thereafter will not take into account,
   under certain circumstances, income, losses, credits or carryovers of
   businesses other than those historically conducted by Midwest Express or
   the Company. Except for the 10% benefit, the effect of the Tax Agreement
   is to put the Company in the same financial position it would have been in
   had there been no increase in the tax bases of Midwest Express' assets.
   The effect of the retained 10% benefit is reflected in the financial
   statements as a reduction in the Company's provision for income taxes.

   Note 10. Related Party Transactions
   Prior to the Offering, Kimberly-Clark provided various administrative and
   financial services to the Company, including management information
   systems, employee benefits administration, legal, tax, treasury,
   accounting and risk management services, and certain other corporate staff
   and support services. Costs allocated to the Company for these services
   were based on methods that management believes are reasonable, including
   use of time estimates, headcount and transaction statistics, and similar
   activity-based data.

   The costs allocated and other intercompany transactions between Kimberly-
   Clark and affiliated companies and the Company were as follows for the
   year ended December 31, 1995 (in thousands): 

                                                     1995
   Operating revenues      . . . . . . . . . .   $  4,106
   Operating expenses      . . . . . . . . . .     (1,260)
   Interest income         . . . . . . . . . .      1,428

   Prior to the Offering, the Company had participated in Kimberly-Clark's
   cash management program, under which the Company's cash needs were funded
   by Kimberly-Clark, and the Company's excess cash was advanced to Kimberly-
   Clark.


   Note 11. Commitments and Contingencies 
   At December 31, 1997, the Company had purchase commitments approximating
   $12,219,000 for capital expenditures.

   In February 1997, Midwest Express committed $9,250,000 over 15 years for
   the naming rights to the Midwest Express Center, an 800,000-square-foot
   convention center in Milwaukee scheduled to open in July 1998. 

   During 1997, the Company executed definitive purchase documents to acquire
   eight McDonnell Douglas MD-80 series aircraft. The Company will take
   delivery of four of the aircraft in 1998 and four of the aircraft in 1999.
   The Company expects that this entire project, including aircraft
   refurbishment, modification and support equipment, will cost approximately
   $120,000,000 through the year 2000.

   The Company is a party to routine litigation incidental to its business.
   In the opinion of management, the final disposition of these matters will
   have no material adverse effect on the consolidated financial statements.

   <PAGE>
   [page 36]

   MIDWEST EXPRESS HOLDINGS, INC.
   QUARTERLY FINANCIAL SUMMARY (UNAUDITED)
   (In Thousands, Except Per Share Data)

                                      Three Months Ended
   1997                   March 31    June 30   September 30   December 31

   Operating revenues      $79,920    $83,344       $89,399       $91,894
   Operating expenses       73,447     74,837        77,611        80,192
   Operating income          6,473      8,507        11,788        11,702
   Income before income
    taxes                    6,769      8,830        12,003        12,029
   Income taxes              2,538      3,232         4,445         4,476
   Net income                4,231      5,598         7,558         7,553
   Net income per share -
    basic                     0.45       0.59          0.80          0.80
   Net income per share -
    diluted                   0.44       0.58          0.79          0.79

                                      Three Months Ended
   1997                   March 31    June 30   September 30   December 31

   Operating revenues      $66,608    $76,845       $83,123       $78,170
   Operating expenses       62,192     66,250        69,792        72,153
   Operating income          4,416     10,595        13,331         6,017
   Income before income
    taxes                    4,672     10,697        13,568         6,295
   Income taxes              1,836      4,107         5,211         2,328
   Net income                2,836      6,590         8,357         3,967
   Net income per share -
    basic                     0.29       0.69          0.88          0.42
   Net income per share -
    diluted                   0.29       0.68          0.87          0.42



   SHAREHOLDER INFORMATION

   Headquarters
   Midwest Express Holdings, Inc.
   6744 South Howell Avenue
   Oak Creek, Wisconsin  53154-1402
   (414) 570-4000

   Transfer Agent and Registrar

   Firstar Trust Company
   Milwaukee, Wisconsin

   Independent Auditors
   Deloitte & Touche LLP
   Milwaukee, Wisconsin

   Annual Meeting

   The Annual Meeting of Midwest Express Holdings, Inc. will be held at 10
   a.m. on Wednesday, April 22, 1998, at The Wyndham Milwaukee Center Hotel,
   139 East Kilbourn Avenue, Milwaukee. Shareholders of record on March 3,
   1998, will be mailed an official notice of the meeting.

   Financial Reports

   Form 10-K (without exhibits) and other reports filed with the Securities
   and Exchange Commission are available without charge upon written request
   from the company's Investor Relations department at the headquarters
   address.

   Common Stock

   Midwest Express Holdings, Inc. (symbol: MEH) common stock trades on the
   New York Stock Exchange. As of December 31, 1997, there were 9,642,807
   shares of common stock issued and 612 registered shareholders.
   Following are low and high prices per share for the past two years,
   adjusted to reflect a 3-for-2 stock split on May 28, 1997.

                                1997                1996

   First Quarter          $22 1/2    25 15/16   $17         25
   Second Quarter         $24 9/16   33         $19 7/16    25 13/16
   Third Quarter          $22 1/2    32 3/8     $16 5/16    21 5/16
   Fourth Quarter         $30        39 5/8     $19 9/16    24 1/2

   The company has not paid a cash dividend since its initial public
   offering.