----

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| S | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|---------------------------------------------------------------------------------------------------|

| For      the quarterly period ended | March 31,2008 |
|-------------------------------------|---------------|

| £ | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

| For      the transition period from |   | to |   |
|-------------------------------------|--------|----|--------|

| Delaware                                                            | 84-0915893                                   |
|---------------------------------------------------------------------|----------------------------------------------|
| (State      or Other Jurisdiction of Incorporation or Organization) | (I.R.S.      Employer Identification Number) |

| 7301 South Peoria,      Englewood, Colorado         | 80112           |
|-----------------------------------------------------|-----------------|
|  (Address      of Principal Executive Offices) | (Zip      Code) |

| Large      accelerated Filer £                                                       | Accelerated      Filer S              |
|-------------------------------------------------------------------------------------------|---------------------------------------|
| Non-accelerated      Filer £      (Do      not check if a smaller reporting company) | Smaller reporting company      £ |

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TABLE OF CONTENTS

| PART      I.  | FINANCIAL      INFORMATION |                                                                                          |
|---------------|----------------------------|-----------------------------------------------------------------------------------------------|
|          |                       |                                                                                          |   |
|          | Item      1.               | Consolidated Financial Statements                                                             |   |
|          |                       |                                                                                          |   |
|          |                       | Consolidated Balance Sheets - March 31, 2008 and      December 31, 2007                       | 1 |
|          |                       |                                                                                          |   |
|          |                       | Consolidated Statements of Operations for the three      months ended March 31, 2008 and 2007 | 3 |
|          |                       |                                                                                          |   |
|          |                       | Consolidated Statements of Cash Flows for the three      months ended March 31, 2008 and 2007 | 4 |
|          |                       |                                                                                          |   |
|          |                       | Notes to Consolidated Financial    Statements                                                 | 6 |
|          |                       |                                                                                          |   |
|          | Item      2.               | Management's Discussion and Analysis of Financial Condition      and Results of Operations    | 10 |
|          |                       |                                                                                          |   |
|          | Item      3.               | Quantitative and Qualitative Disclosures about Market      Risk                               | 18 |
|          |                       |                                                                                          |   |
|          | Item      4.               | Controls and Procedures                                                                       | 18 |
|          |                       |                                                                                          |   |
| PART      II. | OTHER      INFORMATION     |                                                                                          |
|          |                       |                                                                                          |   |
|          | Item      1.               | Legal Proceedings                                                                             | 19 |
|          |                       |                                                                                          |   |
|          | Item      1A.              | Risk Factors                                                                                  | 19 |
|          |                       |                                                                                          |   |
|          | Item      2.               | Unregistered Sales of Equity Securities and Use of      Proceeds                              | 19 |
|          |                       |                                                                                          |   |
|          | Item      3.               | Defaults upon Senior Securities                                                               | 19 |
|          |                       |                                                                                          |   |
|          | Item      4.               | Submission of Matters to a Vote of Security      Holders                                      | 19 |
|          |                       |                                                                                          |   |
|          | Item      5.               | Other Information                                                                             | 19 |
|          |                       |                                                                                          |   |
|          | Item      6.               | Exhibits                                                                                      | 19 |
|          |                       |                                                                                          |   |
|          | SIGNATURES                 | 20                                                                                            |

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Table of Contents

Consolidated 

BALANCE 

|                                                                                                                               |   | March      31, |    |   | December      31, |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                                                                                               |   | 2008           |    |   | 2007              |   |
| Assets                                                                                                                             |   |           |    |   |              |   |
|                                                                                                                               |   |           |    |   |              |   |
| Current      assets:                                                                                                               |   |           |    |   |              |   |
| Cash      and cash equivalents                                                                                                     |   | $              | 12,510  |   |              |   | 5,134 |   |
| Current      installments of notes receivable                                                                                      |   |           | 761     |   |              |   | 881 |   |
| Receivables:                                                                                                                       |   |           |    |   |              |   |   |   |
| Trade                                                                                                                              |   |           | 127,530 |   |              |   | 135,633 |   |
| Refundable      income taxes                                                                                                       |   |           | 14,964  |   |              |   | 20,669 |   |
| Other                                                                                                                              |   |           | 3,690   |   |              |   | 2,760 |   |
|                                                                                                                               |   |           | 146,184 |   |              |   | 159,062 |   |
|                                                                                                                               |   |           |    |   |              |   |   |   |
| Inventories                                                                                                                        |   |           | 15,425  |   |              |   | 15,241 |   |
| Work-in-process      on medical interiors and products contracts                                                                   |   |           | 3,496   |   |              |   | 1,395 |   |
| Assets      held for sale                                                                                                          |   |           | 13,680  |   |              |   | 25,865 |   |
| Costs      and estimated earnings in excess of billings on uncompleted      contracts                                              |   |           | 4,881   |   |              |   | 3,457 |   |
| Deferred      income taxes                                                                                                         |   |           | 2,006   |   |              |   | -- |   |
| Prepaid      expenses and other                                                                                                    |   |           | 4,489   |   |              |   | 3,822 |   |
|                                                                                                                               |   |           |    |   |              |   |   |   |
| Total      current assets                                                                                                          |   |           | 203,432 |   |              |   | 214,857 |   |
|                                                                                                                               |   |           |    |   |              |   |   |   |
| Property      and equipment:                                                                                                       |   |           |    |   |              |   |   |   |
| Land                                                                                                                               |   |           | 251     |   |              |   | 251 |   |
| Flight      and ground support equipment                                                                                           |   |           | 178,223 |   |              |   | 179,123 |   |
| Buildings      and other equipment                                                                                                 |   |           | 16,799  |   |              |   | 16,475 |   |
|                                                                                                                               |   |           | 195,273 |   |              |   | 195,849 |   |
| Less      accumulated depreciation and amortization                                                                                |   |           | (84,800 | )      |              |   | (81,103 | ) |
|                                                                                                                               |   |           |    |   |              |   |   |   |
| Net      property and equipment                                                                                                    |   |           | 110,473 |   |              |   | 114,746 |   |
|                                                                                                                               |   |           |    |   |              |   |   |   |
| Goodwill      (note 2)                                                                                                             |   |           | 21,766  |   |              |   | 20,307 |   |
| Notes      and other receivables, less current installments                                                                        |   |           | 716     |   |              |   | 1,251 |   |
| Other      assets, net of accumulated amortization of $2,195 and $1,959 at March 31,      2008 and December 31, 2007, respectively |   |           | 20,222  |   |              |   | 18,391 |   |
|                                                                                                                               |   |           |    |   |              |   |   |   |
| Total      assets                                                                                                                  |   | $              | 356,609 |   |              |   | 369,552 |   |

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Table of Contents

|                                                                                                                                                                     |   | March      31, |       |   | December      31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                                                                                                                                                     |   | 2008           |       |   | 2007              |   |
| Liabilities and      Stockholders' Equity                                                                                                                                |   |           |       |   |              |   |
|                                                                                                                                                                     |   |           |       |   |              |   |
| Current      liabilities:                                                                                                                                                |   |           |       |   |              |   |
| Notes      payable                                                                                                                                                       |   | $              | 12,549     |   |              |   | 24,203 |   |
| Current      installments of long-term debt                                                                                                                              |   |           | 17,502     |   |              |   | 17,250 |   |
| Current      installments of obligations under capital leases                                                                                                            |   |           | 1,110      |   |              |   | 1,100 |   |
| Accounts      payable                                                                                                                                                    |   |           | 16,063     |   |              |   | 14,970 |   |
| Deferred      revenue                                                                                                                                                    |   |           | 7,184      |   |              |   | 6,321 |   |
| Billings      in excess of costs and estimated earnings on uncompleted      contracts                                                                                    |   |           | 721        |   |              |   | 1,621 |   |
| Accrued      wages and compensated absences                                                                                                                              |   |           | 13,881     |   |              |   | 11,782 |   |
| Accrued      lease costs for assets held for sale (note 2)                                                                                                               |   |           | 4,085      |   |              |   | 6,331 |   |
| Due      to third party payers                                                                                                                                           |   |           | 3,582      |   |              |   | 3,901 |   |
| Deferred      income taxes                                                                                                                                               |   |           | --         |   |              |   | 3,030 |   |
| Other      accrued liabilities                                                                                                                                           |   |           | 11,588     |   |              |   | 11,590 |   |
|                                                                                                                                                                     |   |           |       |   |              |   |   |   |
| Total      current liabilities                                                                                                                                           |   |           | 88,265     |   |              |   | 102,099 |   |
|                                                                                                                                                                     |   |           |       |   |              |   |   |   |
| Long-term      debt, less current installments                                                                                                                           |   |           | 73,967     |   |              |   | 75,611 |   |
| Obligations      under capital leases, less current installments                                                                                                         |   |           | 862        |   |              |   | 1,140 |   |
| Deferred      income taxes                                                                                                                                               |   |           | 28,809     |   |              |   | 28,159 |   |
| Other      liabilities                                                                                                                                                   |   |           | 19,299     |   |              |   | 20,523 |   |
|                                                                                                                                                                     |   |           |       |   |              |   |   |   |
| Total      liabilities                                                                                                                                                   |   |           | 211,202    |   |              |   | 227,532 |   |
|                                                                                                                                                                     |   |           |       |   |              |   |   |   |
| Stockholders'      equity (notes 3, 4 and 5):                                                                                                                            |   |           |       |   |              |   |   |   |
| Preferred      stock, $1 par value.  Authorized 5,000,000 shares, none      issued                                                                             |   |           | --         |   |              |   | -- |   |
| Common      stock, $.06 par value. Authorized 16,000,000 shares; issued 12,202,879 and      12,136,879 shares at March 31, 2008 and December 31, 2007,      respectively |   |           |   732 |   |              |   |   728 |   |
| Additional      paid-in capital                                                                                                                                          |   |           | 77,751     |   |              |   | 76,698 |   |
| Retained      earnings                                                                                                                                                   |   |           | 66,924     |   |              |   | 64,594 |   |
|                                                                                                                                                                     |   |           |       |   |              |   |   |   |
| Total      stockholders' equity                                                                                                                                          |   |           | 145,407    |   |              |   | 142,020 |   |
|                                                                                                                                                                     |   |           |       |   |              |   |   |   |
| Total      liabilities and stockholders’ equity                                                                                                                    |   | $              | 356,609    |   |              |   | 369,552 |   |

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Table of Contents

STATEMENTS 

|                                                                      |   | Three      Months Ended March 31, |       |
|---------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                      |   | 2008                              |       |   | 2007 |   |
| Revenue:                                                                  |   |                              |       |   |   |   |
| Flight      revenue, net                                                  |   | $                                 | 114,473    |   |   |   | 79,161 |   |
| Sales      of medical interiors and products                              |   |                              | 3,626      |   |   |   | 2,297 |   |
|                                                                      |   |                              | 118,099    |   |   |   | 81,458 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Operating      expenses:                                                  |   |                              |       |   |   |   |   |   |
| Flight      centers                                                       |   |                              | 52,140     |   |   |   | 35,550 |   |
| Aircraft      operations                                                  |   |                              | 27,066     |   |   |   | 15,244 |   |
| Aircraft      rental                                                      |   |                              | 11,079     |   |   |   | 5,807 |   |
| Cost      of medical interiors and products sold                          |   |                              | 3,002      |   |   |   | 1,740 |   |
| Depreciation      and amortization                                        |   |                              | 4,098      |   |   |   | 3,411 |   |
| Loss      (gain) on disposition of assets, net                            |   |                              | (1,308     | ) |   |   | 152 |   |
| General      and administrative                                           |   |                              | 17,146     |   |   |   | 12,151 |   |
|                                                                      |   |                              | 113,223    |   |   |   | 74,055 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Operating      income                                                     |   |                              | 4,876      |   |   |   | 7,403 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Other      income (expense):                                              |   |                              |       |   |   |   |   |   |
| Interest      expense                                                     |   |                              | (1,567     | ) |   |   | (1,422 | ) |
| Other,      net                                                           |   |                              | 643        |   |   |   | 455 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Income      before income taxes                                           |   |                              | 3,952      |   |   |   | 6,436 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Income      tax expense                                                   |   |                              | (1,622     | ) |   |   | (2,738 | ) |
|                                                                      |   |                              |       |   |   |   |   |   |
| Net      income                                                           |   | $                                 | 2,330      |   |   |   | 3,698 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Basic      income per common share (note 5)                               |   | $                                 | .19        |   |   |   | .31 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Diluted      income per common share (note 5)                             |   | $                                 | .18        |   |   |   | .30 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Weighted      average number of common shares outstanding – basic   |   |                              | 12,151,342 |   |   |   | 11,876,835 |   |
|                                                                      |   |                              |       |   |   |   |   |   |
| Weighted      average number of common shares outstanding – diluted |   |                              | 12,623,358 |   |   |   | 12,362,198 |   |

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Table of Contents

CASH 

|                                                                                        |   | Three      Months Ended March 31, |   |
|---------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                        |   | 2008                              |   |   | 2007 |   |
|                                                                                        |   |                              |   |   |   |   |
| Cash      flows from operating activities:                                                  |   |                              |   |   |   |   |
| Net      income                                                                             |   | $                                 | 2,330  |   |   |   | 3,698 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |   |                              |   |   |   |   |   |   |
| Depreciation      and amortization expense                                                  |   |                              | 4,098  |   |   |   | 3,411 |   |
| Deferred      income tax expense                                                            |   |                              | 1,622  |   |   |   | 110 |   |
| Stock-based      compensation                                                               |   |                              | 508    |   |   |   | 753 |   |
| Tax      benefit from exercise of stock options                                             |   |                              | --     |   |   |   | (68 | ) |
| Loss      (gain) on disposition of assets, net                                              |   |                              | (1,308 | ) |   |   | 152 |   |
| Changes      in assets and liabilities:                                                     |   |                              |   |   |   |   |   |   |
| Increase      in prepaid expenses and other current assets                                  |   |                              | (667   | ) |   |   | (683 | ) |
| Decrease      in receivables                                                                |   |                              | 5,388  |   |   |   | 3,694 |   |
| Increase      in inventories                                                                |   |                              | (184   | ) |   |   | (535 | ) |
| Increase      in work-in-process on medical interiors and costs in excess of      billings  |   |                              | (3,525 | ) |   |   | (2,055 | ) |
| Increase      in accounts payable, other accrued liabilities, and other      liabilities    |   |                              | 1,484  |   |   |   | 1,857 |   |
| Increase      (decrease) in deferred revenue and billings in excess of    costs             |   |                              | (37    | ) |   |   | 199 |   |
| Net      cash provided by operating activities                                              |   |                              | 9,709  |   |   |   | 10,533 |   |
|                                                                                        |   |                              |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                  |   |                              |   |   |   |   |   |   |
| Acquisition      of equipment and leasehold improvements                                    |   |                              | (4,194 | ) |   |   | (5,389 | ) |
| Proceeds      from disposition and sale of equipment and assets held for      sale          |   |                              | 4,383  |   |   |   | -- |   |
| Increase      in notes receivable and other assets, net                                     |   |                              | (1,365 | ) |   |   | (1,590 | ) |
| Net      cash used by investing activities                                                  |   |                              | (1,176 | ) |   |   | (6,979 | ) |

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Table of Contents

|                                                  |   | Three      Months Ended March 31, |   |
|-------------------------------------------------------|--------|-----------------------------------|--------|
|                                                  |   | 2008                              |   |   | 2007 |   |
|                                                  |   |                              |   |   |   |   |
| Cash      flows from financing activities:            |   |                              |   |   |   |   |
| Net      borrowings (payments) under line of credit   |   | $                                 | 1,406  |   |   |   | (1,313 | ) |
| Payments      for debt and lease origination costs    |   |                              | (46    | ) |   |   | (40 | ) |
| Proceeds      from long-term debt                     |   |                              | --     |   |   |   | 1,573 |   |
| Payments      of long-term debt                       |   |                              | (2,798 | ) |   |   | (2,191 | ) |
| Payments      of capital lease obligations            |   |                              | (268   | ) |   |   | (445 | ) |
| Tax      benefit from exercise of stock options       |   |                              | --     |   |   |   | 68 |   |
| Proceeds      from issuance of common stock, net      |   |                              | 549    |   |   |   | 103 |   |
| Net      cash used by financing activities            |   |                              | (1,157 | ) |   |   | (2,245 | ) |
|                                                  |   |                              |   |   |   |   |   |   |
| Increase      in cash and cash equivalents            |   |                              | 7,376  |   |   |   | 1,309 |   |
|                                                  |   |                              |   |   |   |   |   |   |
| Cash      and cash equivalents at beginning of period |   |                              | 5,134  |   |   |   | 4,219 |   |
|                                                  |   |                              |   |   |   |   |   |   |
| Cash      and cash equivalents at end of period       |   | $                                 | 12,510 |   |   |   | 5,528 |   |
|                                                  |   |                              |   |   |   |   |   |   |
| Interest      paid in cash during the period          |   | $                                 | 1,165  |   |   |   | 1,441 |   |
|                                                  |   |                              |   |   |   |   |   |   |
| Income      taxes paid in cash during the period      |   | $                                 | 205    |   |   |   | 25 |   |

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Table of Contents

Notes 

| (1) | Basis of      Presentation |
|-----|----------------------------|

| (2) | Acquisition of      Subsidiary |
|-----|--------------------------------|

|                              |   | PreliminaryAllocation |    |   | Adjustments |   |   | RevisedAllocation |   |
|-----------------------------------|--------|-----------------------|---------|--------|-------------|--------|--------|-------------------|--------|
| Assets      purchased:            |   |                  |    |   |        |   |   |              |   |
| Receivables                       |   | $                     | 28,763  |   |        |   | (2,454 | )                 |   |   | 26,309 |   |
| Equipment      and other property |   |                  | 14,490  |   |        |   | (374   | )                 |   |   | 14,116 |   |
| Aircraft                          |   |                  | 5,589   |   |        |   | --     |              |   |   | 5,589 |   |
| Inventory                         |   |                  | 3,547   |   |        |   | --     |              |   |   | 3,547 |   |
| Goodwill                          |   |                  | 13,722  |   |        |   | 1,459  |              |   |   | 15,181 |   |
| Other                             |   |                  | 11,243  |   |        |   | 972    |              |   |   | 12,215 |   |
|                              |   |                  | 77,354  |   |        |   | (397   | )                 |   |   | 76,957 |   |
| Long-term      debt               |   |                  | (11,169 | )      |        |   | --     |              |   |   | (11,169 | ) |
| Other      liabilities assumed    |   |                  | (41,006 | )      |        |   | 397    |              |   |   | (40,609 | ) |
| Total      liabilities assumed    |   |                  | (52,175 | )      |        |   | 397    |              |   |   | (51,778 | ) |
| Purchase      price               |   | $                     | 25,179  |   |        |   | --     |              |   |   | 25,179 |   |

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Table of Contents

| (2) | Acquisition of      Subsidiary, continued |
|-----|-------------------------------------------|

| (3) | Stockholders’      Equity |
|-----|---------------------------------|

|                                                 |   | Shares      Outstanding |       |   | Amount |   |
|------------------------------------------------------|--------|-------------------------|------------|--------|--------|--------|
|                                                 |   |                    |       |   |   |   |
| Balances      at January 1, 2008                     |   |                    | 12,136,879 |   |   | $      | 142,020 |   |
|                                                 |   |                    |       |   |   |   |   |   |
| Issuance      of common shares for options exercised |   |                    | 34,500     |   |   |   | 549 |   |
| Stock-based      compensation                        |   |                    | 31,500     |   |   |   | 508 |   |
| Net      income                                      |   |                    | --         |   |   |   | 2,330 |   |
|                                                 |   |                    |       |   |   |   |   |   |
| Balances      at March 31, 2008                      |   |                    | 12,202,879 |   |   | $      | 145,407 |   |

|  (4) | Stock-based      Compensation |
|-----------|-------------------------------|

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Table of Contents

| (5) | Income per      Share |
|-----|-----------------------|

|                                                                      |   | 2008   |       |   | 2007   |   |
|---------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Weighted      average number of common shares outstanding – basic   |   |   | 12,151,342 |   |   |   | 11,876,835 |   |
| Dilutive      effect of:                                                  |   |   |       |   |   |   |   |   |
| Common      stock options                                                 |   |   | 470,569    |   |   |   | 405,671 |   |
| Common      stock warrants                                                |   |   | --         |   |   |   | 79,692 |   |
| Unvested      restricted stock                                            |   |   | 1,447      |   |   |   | -- |   |
| Weighted      average number of common shares outstanding – diluted |   |   | 12,623,358 |   |   |   | 12,362,198 |   |

| (6) | New Accounting      Pronouncements |
|-----|------------------------------------|

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Table of Contents

| (7) | Business Segment      Information |
|-----|-----------------------------------|

|   | · | Community-Based      Services (CBS) - provides air medical transportation services to the      general population as an independent service in 21 states. Services      include aircraft operation and maintenance, medical care, dispatch and      communications, and medical billing and  collection. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Hospital-Based      Services (HBS) - provides air medical transportation services to hospitals      in 32 states and the District of Columbia under exclusive operating      agreements. Services include aircraft operation and      maintenance. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Products      Division - designs, manufactures, and installs aircraft medical interiors      and other aerospace and medical transport products for domestic and      international customers. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  For      quarter ended March 31: |   | CBS    |    |   | HBS    |   |    | ProductsDivision |   |   | CorporateActivities |   |   | IntersegmentEliminations |   |   | Consolidated |   |
|----------------------------------------|--------|--------|---------|--------|--------|--------|---------|------------------|--------|--------|---------------------|--------|--------|--------------------------|--------|--------|--------------|--------|
| 2008                                   |   |   |    |   |   |   |    |             |   |   |                |   |   |                     |   |   |         |   |
| External      revenue                  |   | $      | 69,317  |   |   |   | 45,251  |             |   |   | 3,531               |   |   |                     | --     |   |         |   | -- |   |   |   | 118,099 |   |
| Intersegment      revenue              |   |   | --      |   |   |   | --      |             |   |   | 3,966               |   |   |                     | --     |   |         |   | (3,966 | ) |   |   | -- |   |
| Total      revenue                     |   |   | 69,317  |   |   |   | 45,251  |             |   |   | 7,497               |   |   |                     | --     |   |         |   | (3,966 | ) |   |   | 118,099 |   |
|  Operating      expenses          |   |   | (61,212 | )      |   |   | (41,012 | )                |   |   | (6,042              | )      |   |                     | (3,770 | )      |         |   | 2,911 |   |   |   | (109,125 | ) |
| Depreciation      & amortization   |   |   | (2,131  | )      |   |   | (1,672  | )                |   |   | (145                | )      |   |                     | (150   | )      |         |   | -- |   |   |   | (4,098 | ) |
| Interest      expense                  |   |   | (746    | )      |   |   | (738    | )                |   |   | --                  |   |   |                     | (83    | )      |         |   | -- |   |   |   | (1,567 | ) |
| Other      income, net                 |   |   | 587     |   |   |   | --      |             |   |   | --                  |   |   |                     | 56     |   |         |   | -- |   |   |   | 643 |   |
| Income      tax expense                |   |   | --      |   |   |   | --      |             |   |   | --                  |   |   |                     | (1,622 | )      |         |   | -- |   |   |   | (1,622 | ) |
| Segment      net income (loss)         |   | $      | 5,815   |   |   |   | 1,829   |             |   |   | 1,310               |   |   |                     | (5,569 | )      |         |   | (1,055 | ) |   |   | 2,330 |   |
|                                   |   |   |    |   |   |   |    |             |   |   |                |   |   |                     |   |   |         |   |   |   |   |   |   |   |
| 2007                                   |   |   |    |   |   |   |    |             |   |   |                |   |   |                     |   |   |         |   |   |   |   |   |   |   |
| External      revenue                  |   | $      | 53,399  |   |   |   | 25,772  |             |   |   | 2,287               |   |   |                     | --     |   |         |   | -- |   |   |   | 81,458 |   |
| Intersegment      revenue              |   |   | --      |   |   |   | 473     |             |   |   | 3,594               |   |   |                     | --     |   |         |   | (4,067 | ) |   |   | -- |   |
| Total      revenue                     |   |   | 53,399  |   |   |   | 26,245  |             |   |   | 5,881               |   |   |                     | --     |   |         |   | (4,067 | ) |   |   | 81,458 |   |
|  Operating      expenses          |   |   | (43,395 | )      |   |   | (22,401 | )                |   |   | (4,509              | )      |   |                     | (3,410 | )      |         |   | 3,071 |   |   |   | (70,644 | ) |
| Depreciation      & amortization   |   |   | (1,814  | )      |   |   | (1,358  | )                |   |   | (148                | )      |   |                     | (91    | )      |         |   | -- |   |   |   | (3,411 | ) |
| Interest      expense                  |   |   | (709    | )      |   |   | (649    | )                |   |   | --                  |   |   |                     | (64    | )      |         |   | -- |   |   |   | (1,422 | ) |
| Other      income, net                 |   |   | 437     |   |   |   | --      |             |   |   | --                  |   |   |                     | 18     |   |         |   | -- |   |   |   | 455 |   |
| Income      tax expense                |   |   | --      |   |   |   | --      |             |   |   | --                  |   |   |                     | (2,738 | )      |         |   | -- |   |   |   | (2,738 | ) |
| Segment      net income (loss)         |   | $      | 7,918   |   |   |   | 1,837   |             |   |   | 1,224               |   |   |                     | (6,285 | )      |         |   | (996 | ) |   |   | 3,698 |   |

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| Item      2. | Management's      Discussion and Analysis of Financial Condition and      Results of Operations |
|--------------|-------------------------------------------------------------------------------------------------|

| · | Community-Based      Services (CBS) - provides air medical transportation services to the      general population as an independent service. Revenue consists of flight      fees billed directly to patients, their insurers, or governmental      agencies, and cash flow is dependent upon collection from these      individuals or entities. In the first quarter      of 2008 the CBS Division generated 59% of our total revenue, decreasing      from 66% in the first quarter of2007. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Hospital-Based      Services (HBS) - provides air medical transportation services to hospitals      throughout the U.S. under exclusive operating agreements. Revenue consists      of fixed monthly fees (approximately 65% of total contract revenue) and      hourly flight fees (approximately 35% of total contract revenue) billed to      hospital customers. In the first quarter of 2008 the HBS Division      generated 38% of our total revenue, increasing from 32% in      2007. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Products      Division - designs, manufactures, and installs aircraft medical interiors      and other aerospace and medical transport products for domestic and      international customers. In the first quarter of 2008 the Products      Division generated 3% of our total revenue, compared to 2% in      2007. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Flight volume.      Fluctuations in flight volume have a greater impact on CBS operations than      HBS operations because almost all of CBS revenue is derived from flight      fees, as compared to approximately 35% of HBS revenue. By contrast, 78% of      our costs primarily associated with flight operations (including salaries,      aircraft ownership costs, hull insurance, and general and administrative      expenses) incurred during the quarter ended March 31, 2008, are mainly      fixed in nature. While flight volume is affected by many factors,      including competition and the effectiveness of marketing and business      development initiatives, the greatest single variable has historically      been weather conditions. Adverse weather conditions—such as fog, high      winds, or heavy precipitation—hamper our ability to operate our aircraft      safely and, therefore, result in reduced flight volume. Total patient      transports for CBS operations were approximately 10,600 for the first      quarter of 2008 compared to approximately 8,300 for the first quarter of      2007. Patient transports for CBS bases open longer than one year,      excluding bases added as a result of the acquisition of the parent company      of CJ Systems Aviation Group (CJ), (Same-Base Transports) were      approximately 7,500 in the first quarter of 2008, compared to 8,100 in the      first quarter of 2007. Cancellations due to unfavorable weather conditions      for CBS bases open longer than one year were 636, or 30.2%, higher in the      first quarter of 2008, compared to the first quarter of    2007. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | Reimbursement per      transport. We respond to calls for air medical transports without      pre-screening the creditworthiness of the patient and are subject to      collection risk on services provided to insured and uninsured patients.      Medicare and Medicaid also receive contractual discounts from our standard      charges for flight services. Flight revenue is recorded net of provisions      for contractual discounts and estimated uncompensated care. Both      provisions are estimated during the period the related services are      performed based on historical collection experience and any known trends      or changes in reimbursement rate schedules and payer mix. The provisions      are adjusted as required based on actual collections in subsequent      periods. Net reimbursement per transport for CBS operations is primarily a      function of price, payer mix, and timely and effective collection efforts.      Both the pace of collections and the ultimate collection rate are affected      by the overall health of the U.S. economy, which impacts the number of      indigent patients and funding for state-run programs, such as Medicaid.      Medicaid reimbursement rates in many jurisdictions have remained well      below the cost of providing air medical transportation. In addition, the      collection rate is impacted by changes in the cost of healthcare and      health insurance; as the cost of healthcare increases, health insurance      coverage provided by employers may be reduced or eliminated entirely,      resulting in an increase in the uninsured population. The average gross      charge per transport increased 11.8% in the quarter ended March 31, 2008,      compared to 2007, contributing to an increase of 2.8% in net reimbursement      per transport in the quarter ended March 31, 2008, compared to 2007.      Provisions for contractual discounts and estimated uncompensated care for      CBS operations are as follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     | For      quarters ended March 31, |
|------------------------------------------|-----------------------------------|
|                                     | 2008                              | 2007 |
| Gross      billings                      | 100%                              | 100% |
| Provision      for contractual discounts |  36%                         |  33% |
| Provision      for uncompensated care    |  19%                         |  18% |

| · | Aircraft maintenance.      Both CBS and HBS operations are directly affected by fluctuations in      aircraft maintenance costs. Proper operation of the aircraft by flight      crews and standardized maintenance practices can help to contain      maintenance costs. Increases in spare parts prices from original equipment      manufacturers tend to be higher for aircraft which are no longer in      production. Five models of aircraft within our fleet, representing 31% of      the rotor wing fleet, are no longer in production and are, therefore,      susceptible to price increases which outpace general inflationary trends.      In addition, on-condition components are more likely to require      replacement with age. Since January 1, 2007, we have taken delivery of 36      new aircraft and have the option to purchase 29 additional aircraft      through the end of 2008. We plan to replace discontinued models and      other older aircraft with the new aircraft expected to be delivered under      these options, as well as to provide capacity for base expansion.      Replacement models of aircraft typically have higher ownership costs than      the models targeted for replacement but lower maintenance costs. Total      maintenance expense for CBS and HBS operations increased 82.6% from the      first quarter of 2007 to the first quarter of 2008, while total flight      volume for CBS and HBS operations increased 38.3% over the same period.      During the first quarter of 2008, we incurred costs for 31 engine      overhauls, compared to 12 overhauls in the first quarter of 2007. The      increase is primarily attributed to the timing of overhaul cycles, as well      as to the acquisition of CJ. The      acquisition of CJ resulted in an increase in the percentage of our fleet      comprised of twin-engine aircraft, which tend to have higher maintenance      costs than single-engine aircraft. Maintenance costs per hour      on newer aircraft has remained relatively constant on an annual basis.      Maintenance costs per hour on older models of aircraft, however, may vary      more widely on a quarterly basis depending on component overhaul and      replacement and aircraft refurbishmentcycles. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | Fuel costs. Both      the cost and availability of fuel are influenced by many economic and      political factors and events occurring in oil-producing countries      throughout the world, and fuel costs fluctuate widely. The price per      barrel of oil has maintained near record levels over the past several      years. We cannot predict the future cost and availability of fuel.      Generally, our HBS customers pay for all fuel consumed in medical flights.      However, our ability to pass on increased fuel costs for CBS operations      may be limited by economic and competitive conditions and by reimbursement      rates established by Medicare, Medicaid, and insurance providers. We do      not currently have any agreements in place to hedge our fuel costs. The      cost of aircraft fuel per hour flown for CBS operations increased      approximately 44.0% in the first quarter of 2008 compared to the first      quarter of 2007 and approximately 22.1% in comparison to the cost per hour      for the year ended December 31,2007. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Aircraft availability.      The recent high rate of growth in the air medical transportation and other      helicopter services industries has generated strong demand for new models      of helicopters. Quality used aircraft are also in short supply worldwide.      We have endeavored to mitigate the shortage of suitable aircraft primarily      through long-term arrangements with a single aircraft manufacturer which      provides us options to purchase up to ten aircraft each year for the next      several years. We also have a purchase commitment with another      manufacturer for fifteen aircraft, with deliveries scheduled to begin in      late 2008 or 2009, as well as options for an additional fifteen aircraft      in future years. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Competitive pressures from      low-cost providers. We are recognized within the industry for our      standard of service and our use of cabin-class aircraft. Many of our      competitors utilize aircraft with lower ownership and operating costs and      do not require a similar level of experience for aviation and medical      personnel. Reimbursement rates established by Medicare, Medicaid, and most      insurance providers are not contingent upon the type of aircraft used or      the experience of personnel. However, we believe that higher quality      standards help to differentiate our service from competitors and,      therefore, lead to higher utilization. Deploying multiple aircraft in a      market also serves as a barrier to entry for lower cost      providers. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Employee recruitment and      relations. The ability to deliver quality services is partially      dependent upon our ability to hire and retain employees who have advanced      aviation, nursing, and other technical skills. In addition, hospital      contracts typically contain minimum certification requirements for pilots      and mechanics. Employees who meet these standards are in great demand and      are likely to remain a limited resource in the foreseeable future. In      September 2003, our pilots voted to be represented by a collective      bargaining unit, and we signed a collective bargaining agreement on March      31, 2006. The agreement is effective January 1, 2006, through April 30,      2009. Other employee groups may also elect to be represented by unions in      the future. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | CBS      – Net flight revenue increased $15,835,000, or 29.7%, to $69,225,000 in      the three months ended March 31, 2008, compared to 2007, for the following      reasons: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net      revenue of $11,926,000 from CJ’s CBS operations during the first quarter      of 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | Increase      of 11.8% in average gross charge per transport for the first quarter of      2008, compared to 2007. Net reimbursement per transport increased      approximately 2.8% over the sameperiod. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Incremental      net revenue of $6,184,000 generated from the addition of fourteen new CBS      bases either during or subsequent to the first quarter of      2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Closure      of three bases subsequent to the first quarter of 2007 and the conversion      of another base to HBS operations during the first quarter of 2007,      resulting in a decrease in net revenue of approximately      $1,824,000. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Decrease      in Same-Base Transports of 7.1% in the first quarter of 2008 compared to      2007. Cancellations due to unfavorable weather conditions for CBS bases      open longer than one year were 30.2% higher in the first quarter of 2008,      compared to the first quarter of2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | HBS      – Net flight revenue increased $19,477,000, or 75.6%, to $45,248,000 for      the quarter ended March 31, 2008, for the following    reasons: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net      revenue of $15,366,000 from CJ’s HBS operations during the first quarter      of 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | Incremental      net revenue of $3,483,000 generated from the addition of three new      contracts, the expansion of two contracts, and the conversion of one base      from CBS operations during or subsequent to the first quarter of      2007. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cessation      of service under three contracts and the conversion of one contract to CBS      operations subsequent to the first quarter of 2007,      resulting in a decrease in net revenue of approximately      $1,039,000. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Annual      price increases in the majority of contracts based on changes in the      Consumer Price Index or spare parts prices from aircraft manufacturers and      the renewal of contracts at higherrates. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increase      of 8.9% in flight volume for all contracts excluding the CJ contracts, new      contracts, contract expansions, and closed contracts discussed      above. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | CBS      – Flight center costs increased $8,878,000, or 37.9%, to $32,298,000 for      the following reasons: |
|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | Flight      center costs of approximately $6,006,000 related to CJ’s CBS operations      for the first quarter of 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increase      of approximately $2,991,000 for the addition of personnel to staff new      base locations described above. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | Decrease      of $762,000 due to the closure of base locations described      above. |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Increases      in salaries for merit pay raises. |
|--------|--------|--------------------------------------------------|

| · | HBS      - Flight center costs increased $7,712,000, or 63.6%, to $19,842,000      primarily due to the following: |
|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | Flight      center costs of approximately $7,063,000 related to CJ’s HBS operations      for the first quarter of 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increase      of approximately $1,193,000 for the addition of personnel to staff new      base locations described above. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | Decrease      of $618,000 due to the closure of base locations described      above. |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Increases      in salaries for merit payraises. |
|--------|--------|-------------------------------------------------|

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| · | Aircraft      operating expenses of $7,149,000 related to CJ’s operations for the first      quarter of 2008. |
|--------|---------------------------------------------------------------------------------------------------------------------|

| · | Increase      of $4,013,000, or 35.7%, in the cost of aircraft maintenance, excluding      the effect of aircraft added as a result of the CJ acquisition and other      aircraft added to the fleet subsequent to the first quarter of 2007. Since      the first quarter of 2007, we have placed 39 new helicopters into service      and eliminated twelve aircraft which were older models. Maintenance costs      per hour on newer aircraft has remained relatively constant on an annual      basis. Maintenance costs per hour on older models of aircraft, however,      may vary more widely on a quarterly basis depending on component overhaul      and replacement and aircraft refurbishment cycles. During the first      quarter of 2008, we incurred costs for 31 engine overhauls, compared to 12      overhauls in the first quarter of 2007. The increase is primarily      attributed to the timing of overhaul cycles, as well as to the acquisition      of CJ. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Changes      in flight volume for bases open longer than one year for both CBS and HBS      as described above. |
|--------|-----------------------------------------------------------------------------------------------------------------|

| · | Increase      of approximately 44.0% in the cost of aircraft fuel per hour      flown. |
|--------|----------------------------------------------------------------------------------------|

| · | Decrease      in hull insurance rates effective July2007. |
|--------|-----------------------------------------------------------|

| · | $818,000      - multi-mission interiors |
|--------|-----------------------------------------|

| · | $1,755,000      - modular medical interiors |
|--------|---------------------------------------------|

| · | $1,053,000      - other aerospace and medical transportproducts |
|--------|-----------------------------------------------------------------|

| · | $293,000      - multi-mission interiors |
|--------|-----------------------------------------|

| · | $577,000      - modular medical interiors |
|--------|-------------------------------------------|

| · | $1,427,000      - other aerospace and medical transportproducts |
|--------|-----------------------------------------------------------------|

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| Item      3. | Quantitative and Qualitative Disclosures about Market      Risk |
|--------------|-----------------------------------------------------------------|

| Item      4. | Controls      and Procedures |
|--------------|------------------------------|

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| Item      1. | Legal Proceedings |
|--------------|-------------------|

| Item      1A. | Risk Factors |
|---------------|--------------|

| Item      2. | Unregistered      Sales of Equity Securities and Use of      Proceeds |
|--------------|-----------------------------------------------------------------------|

| Item      3. | Defaults      Upon SeniorSecurities |
|--------------|-------------------------------------|

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

| Item      5. | Other Information |
|--------------|-------------------|

| Item      6. | Exhibits |
|--------------|----------|

|   | 31.1 | Chief      Executive Officer Certification adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|--------|------|-------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Chief      Financial Officer Certification adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|--------|------|-------------------------------------------------------------------------------------------------------------------|

|   | 32 | Certification      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002 |
|--------|----|-------------------------------------------------------------------------------------------|

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SIGNATURES

|                              | AIR      METHODS CORPORATION |
|-----------------------------------|------------------------------|
|                              |                         |   |
|                              |                         |   |
| Date:  May      9, 2008 | By                           |     \s\   Aaron      D. Todd |
|                              |                         | Aaron      D. Todd |
|                              |                         | Chief      Executive Officer |
|                              |                         | (Principal      Executive Officer) |
|                              |                         |   |
|                              |                         |   |
| Date:  May      9, 2008 | By                           |     \s\   Trent      J. Carman |
|                              |                         | Trent      J. Carman |
|                              |                         | Chief      Financial Officer |
|                              |                         | (Principal      Financial Officer) |
|                              |                         |   |
|                              |                         |   |
| Date:  May      9, 2008 | By                           |     \s\   Sharon      J. Keck |
|                              |                         | Sharon      J. Keck |
|                              |                         | Chief      Accounting Officer |
|                              |                         | (Principal      Accounting Officer) |

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