SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ___________________

                                    FORM 10-Q


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

For  the  quarterly  period  ended               September  30,  2006
                                  ---------------------------------------------

                                       OR

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

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

                         Commission file number  0-16079
                                                --------

                             AIR METHODS CORPORATION
                             -----------------------
             (Exact name of Registrant as Specified in Its Charter)

                   Delaware                              84-0915893
                   --------                              ----------
         (State or Other Jurisdiction                  (IRS Employer
        of Incorporation or Organization)           Identification Number)


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


        Registrant's Telephone Number, Including Area Code (303) 792-7400
                                                           --------------


     Former Name, Former Address and Former Fiscal Year, if Changed Since Last
                                  Report:  N/A


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.
Yes  X   No
    ---     ---

Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act).  Yes  X   No
                                                        ---     ---

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).  Yes      No  X
                                           ---     ---

The  number of shares of Common Stock, par value $.06, outstanding as of October
27,  2006,  was  11,805,613.


<PAGE>
<TABLE>
<CAPTION>
                                      TABLE OF CONTENTS

<S>         <C>        <C>                                                               <C>
PART I.     FINANCIAL INFORMATION

            Item 1.     Consolidated Financial Statements

                        Consolidated Balance Sheets - September 30, 2006 and
                          December 31, 2005 (unaudited)                                    1

                        Consolidated Statements of Operations for the three and nine
                          months ended September 30, 2006 and 2005 (unaudited)             3

                        Consolidated Statements of Cash Flows for the nine months ended
                          September 30, 2006 and 2005 (unaudited)                          4

                        Notes to Consolidated Financial Statements (unaudited)             6

            Item 2.     Management's Discussion and Analysis of Financial Condition
                          and Results of Operations                                       12

            Item 3.     Quantitative and Qualitative Disclosures about Market Risk        20

            Item 4.     Controls and Procedures                                           21

PART II.    OTHER INFORMATION

            Item 1.     Legal Proceedings                                                 22

            Item 1A.    Risk Factors                                                      22

            Item 2.     Changes in Securities                                             22

            Item 3.     Defaults upon Senior Securities                                   22

            Item 4.     Submission of Matters to a Vote of Security Holders               22

            Item 5.     Other Information                                                 23

            Item 6.     Exhibits                                                          23

SIGNATURES                                                                                24
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                   PART I: FINANCIAL INFORMATION

                             ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                             AIR METHODS CORPORATION AND SUBSIDIARIES

                                    CONSOLIDATED BALANCE SHEETS
                           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                            (UNAUDITED)

                                                                     SEPTEMBER 30,   DECEMBER 31,
                                                                         2006            2005
                                                                    ------------------------------
<S>                                                                 <C>              <C>
Assets
------

Current assets:
  Cash and cash equivalents                                         $        3,805          3,218
  Current installments of notes receivable                                     161             65
  Receivables:
    Trade                                                                  163,757        129,107
    Less allowance for doubtful accounts                                   (57,267)       (45,540)
                                                                    ------------------------------
                                                                           106,490         83,567
    Other                                                                    3,505          2,524
                                                                    ------------------------------
      Total receivables                                                    109,995         86,091
                                                                    ------------------------------

  Inventories                                                               10,120          9,197
  Work-in-process on medical interiors and products contracts                1,945            762
  Assets held for sale                                                      19,627          6,446
  Costs and estimated earnings in excess of billings on
    uncompleted contracts                                                    3,303          3,548
  Deferred income taxes                                                      1,962          1,133
  Prepaid expenses and other                                                 2,507          2,051
                                                                    ------------------------------

      Total current assets                                                 153,425        112,511
                                                                    ------------------------------

Property and equipment:
  Land                                                                         251            441
  Flight and ground support equipment                                      153,856        143,342
  Furniture and office equipment                                            13,484         13,354
                                                                    ------------------------------
                                                                           167,591        157,137
  Less accumulated depreciation and amortization                           (71,359)       (63,607)
                                                                    ------------------------------

      Net property and equipment                                            96,232         93,530
                                                                    ------------------------------

Goodwill                                                                     6,485          6,485
Notes receivable, less current installments                                    237             99
Other assets, net of accumulated amortization of $3,475 and $2,773
  at September 30, 2006 and December 31, 2005, respectively                  8,152          8,907
                                                                    ------------------------------

      Total assets                                                  $      264,531        221,532
                                                                    ==============================
</TABLE>

                                                                     (Continued)


                                       1
<PAGE>
<TABLE>
<CAPTION>
                          AIR METHODS CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS, CONTINUED
                  (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                       (UNAUDITED)

                                                                SEPTEMBER 30,   DECEMBER 31,
                                                                     2006           2005
                                                                ----------------------------
<S>                                                             <C>             <C>
Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
  Notes payable                                                 $       19,165         6,446
  Current installments of long-term debt                                 7,963         9,399
  Current installments of obligations under capital leases                 673           657
  Accounts payable                                                       9,643         8,405
  Deferred revenue                                                       1,987         3,913
  Billings in excess of costs and estimated earnings on
    uncompleted contracts                                                  294           332
  Accrued wages and compensated absences                                 8,895         7,217
  Due to third party payers                                              2,474         1,858
  Income taxes payable                                                   3,596           860
  Other accrued liabilities                                              6,297         6,585
                                                                ----------------------------

      Total current liabilities                                         60,987        45,672

Long-term debt, less current installments                               67,373        57,704
Obligations under capital leases, less current installments                479           688
Deferred income taxes                                                   19,625        19,997
Other liabilities                                                       11,187        11,260
                                                                ----------------------------

      Total liabilities                                                159,651       135,321
                                                                ----------------------------

Stockholders' equity (note 3):
  Preferred stock, $1 par value.  Authorized 5,000,000 shares,
    none issued                                                             --            --
  Common stock, $.06 par value. Authorized 16,000,000 shares;
    issued 11,805,613 and 11,605,590 shares at September 30,
    2006, and December 31, 2005, respectively                              708           696
  Additional paid-in capital                                            68,877        66,219
  Retained earnings                                                     35,295        19,296
                                                                ----------------------------

      Total stockholders' equity                                       104,880        86,211
                                                                ----------------------------

      Total liabilities and stockholders' equity                $      264,531       221,532
                                                                ============================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       2
<PAGE>
<TABLE>
<CAPTION>
                                    AIR METHODS CORPORATION AND SUBSIDIARIES

                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                  (UNAUDITED)

                                                           THREE MONTHS ENDED          NINE MONTHS ENDED
                                                               SEPTEMBER 30,             SEPTEMBER 30,
                                                         ---------------------------------------------------
                                                             2006         2005         2006         2005
                                                         ---------------------------------------------------
<S>                                                      <C>           <C>          <C>          <C>
Revenue:
  Flight revenue                                         $   114,517       88,094      306,143      240,917
  Sales of medical interiors and products                      1,374        2,415        4,277        5,739
  Parts and maintenance sales and services                       197           24          339           70
                                                         ---------------------------------------------------
                                                             116,088       90,533      310,759      246,726
                                                         ---------------------------------------------------
Operating expenses:
  Flight centers                                              34,380       28,265       98,701       80,542
  Aircraft operations                                         20,450       16,119       57,281       47,857
  Aircraft rental                                              5,490        4,608       15,859       13,370
  Medical interiors and products sold                            674        1,626        2,087        3,622
  Cost of parts and maintenance sales and services               225           23          268           88
  Depreciation and amortization                                3,239        3,022        9,604        8,890
  Bad debt expense                                            25,568       17,834       68,733       44,181
  Loss (gain) on disposition of assets, net                       16           (5)        (546)         376
  Litigation settlement                                       (1,417)          --       (1,417)          --
  General and administrative                                  10,341        9,146       30,189       26,974
                                                         ---------------------------------------------------
                                                              98,966       80,638      280,759      225,900
                                                         ---------------------------------------------------

      Operating income                                        17,122        9,895       30,000       20,826

Other income (expense):
  Interest expense                                            (1,522)      (1,228)      (4,348)      (4,646)
  Loss on early extinguishment of debt                            --           --           --       (3,104)
  Other, net                                                     452          361        1,192          694
                                                         ---------------------------------------------------

Income before income taxes                                    16,052        9,028       26,844       13,770

Income tax expense                                             6,446        3,530       10,845        5,416
                                                         ---------------------------------------------------
      Net income                                         $     9,606        5,498       15,999        8,354
                                                         ===================================================

Basic income per common share (note 2)                   $       .82          .50         1.36          .76
                                                         ===================================================

Diluted income per common share (note 2)                 $       .78          .47         1.30          .72
                                                         ===================================================

Weighted average number of common shares outstanding -
basic                                                     11,774,700   11,034,754   11,724,182   11,020,936
                                                         ===================================================

Weighted average number of common shares outstanding -
diluted                                                   12,275,968   11,634,024   12,291,559   11,536,716
                                                         ===================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>
                                           AIR METHODS CORPORATION AND SUBSIDIARIES

                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (AMOUNTS IN THOUSANDS)
                                                          (UNAUDITED)

                                                                                            NINE MONTHS ENDED SEPTEMBER 30,
                                                                                         -----------------------------------
                                                                                               2006              2005
                                                                                         -----------------------------------
<S>                                                                                      <C>               <C>
Cash flows from operating activities:
  Net income                                                                             $        15,999              8,354
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation and amortization expense                                                          9,604              8,890
    Bad debt expense                                                                              68,733             44,181
    Deferred income tax expense (benefit)                                                         (1,201)             5,406
    Stock-based compensation                                                                         311                 --
    Tax benefit from exercise of stock options                                                      (833)                --
    Loss (gain) on retirement and sale of equipment, net                                            (546)               376
    Loss on early extinguishment of debt                                                              --              3,104
    Changes in assets and liabilities:
      Decrease in prepaid expenses and other current assets                                          217                300
      Increase in receivables                                                                    (92,637)           (59,004)
      Increase in inventories                                                                       (923)              (461)
      Increase in work-in-process on medical interiors and costs in excess of billings              (938)              (578)
      Increase in accounts payable, other accrued liabilities, and other
        liabilities                                                                                7,000              4,327
      Decrease in deferred revenue and billings in excess of costs                                (1,964)              (714)
                                                                                         -----------------------------------
        Net cash provided by operating activities                                                  2,822             14,181
                                                                                         -----------------------------------

Cash flows from investing activities:
  Acquisition of property and equipment                                                          (13,228)            (3,878)
  Proceeds from disposition and sale of equipment                                                  1,803              1,070
  Increase in notes receivable and other assets                                                     (100)              (341)
                                                                                         -----------------------------------
        Net cash used by investing activities                                                    (11,525)            (3,149)
                                                                                         -----------------------------------
</TABLE>


                                                                     (Continued)


                                       4
<PAGE>
<TABLE>
<CAPTION>
                           AIR METHODS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                                   (AMOUNTS IN THOUSANDS)
                                         (UNAUDITED)

                                                           NINE MONTHS ENDED SEPTEMBER 30,
                                                        ------------------------------------
                                                              2006               2005
                                                        ------------------------------------
<S>                                                     <C>                <C>
Cash flows from financing activities:
  Proceeds from issuance of common stock, net           $          1,526                235
  Tax benefit from exercise of stock options                         833                 --
  Net borrowings (repayments) under line of credit                14,057               (353)
  Proceeds from issuance of long-term debt                         2,749             20,000
  Payments for debt issue costs                                      (87)              (431)
  Payments of long-term debt                                      (9,246)           (28,171)
  Debt retirement costs                                               --             (1,380)
  Payments of capital lease obligations                             (542)              (469)
                                                        ------------------------------------
      Net cash provided (used) by financing activities             9,290            (10,569)
                                                        ------------------------------------

Increase in cash and cash equivalents                                587                463

Cash and cash equivalents at beginning of period                   3,218              2,603
                                                        ------------------------------------

Cash and cash equivalents at end of period              $          3,805              3,066
                                                        ====================================

Interest paid in cash during the year                   $          3,924              4,884
                                                        ====================================

Income taxes paid in cash during the year               $          8,577                272
                                                        ====================================
</TABLE>

Non-cash investing and financing activities:

In  the  nine months ended September 30, 2006, the Company settled notes payable
of  $6,446  in  exchange  for  the  aircraft securing the debt. The Company also
entered  into notes payable of $19,165 to finance the purchase of aircraft which
are  held  for  sale  as  of  September  30,  2006.

In  the  nine  months  ended September 30, 2006, the Company entered into a note
payable of $673 to finance insurance policies and into capital lease obligations
of  $349  to  finance  the  purchase  of  equipment.

In  the  nine months ended September 30, 2005, the Company settled notes payable
of  $5,105  in  exchange  for  the  aircraft securing the debt. The Company also
settled  a  note payable totaling $346 by applying a purchase deposit against it
and  entered  into a note payable of $396 to finance insurance policies and into
capital  lease  obligations  of  $832  to  finance  the  purchase  of equipment.

In  the  nine  months  ended September 30, 2005, the Company wrote off $1,724 in
debt  origination  costs  and  note  discount  related  to the retirement of its
subordinated  debt.

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>
AIR METHODS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1)  BASIS OF PRESENTATION
     ---------------------

     The  accompanying  unaudited  consolidated  financial  statements have been
     prepared  in  accordance  with generally accepted accounting principles for
     interim  financial  information  and  the  instructions  to  Form  10-Q and
     Regulation  S-X.  Accordingly,  the  accompanying  unaudited  consolidated
     financial  statements  contain  all  adjustments (consisting of only normal
     recurring  accruals) necessary to present fairly the consolidated financial
     statements  for the respective periods. Interim results are not necessarily
     indicative  of  results  for  a  full  year.  The  consolidated  financial
     statements  should  be  read  in  conjunction  with  the  Company's audited
     consolidated  financial  statements  and  notes  thereto for the year ended
     December  31,  2005.

     The  preparation  of  financial  statements  in  conformity with accounting
     principles  generally  accepted  in  the  United States of America 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  revenue  and expenses during the reporting period. The Company
     considers  its  critical  accounting  policies  involving  more significant
     judgments  and  estimates  to  be  those  related  to  revenue recognition,
     uncollectible  receivables,  deferred  income  taxes,  and depreciation and
     residual  values.  Actual  results  could  differ  from  those  estimates.

(2)  INCOME  PER  SHARE
     ------------------

     Basic  earnings  per  share  is  computed  by  dividing  net  income by the
     weighted  average  number  of  common shares outstanding during the period.
     Diluted earnings per share is computed by dividing net income by all common
     shares  and dilutive potential common shares outstanding during the period.
     The  reconciliation  of  basic  to  diluted  weighted average common shares
     outstanding  is  as  follows:

<TABLE>
<CAPTION>
                                                                          2006        2005
                                                                       ----------  ----------
<S>                                                                    <C>         <C>
     FOR QUARTER ENDED SEPTEMBER 30:
       Weighted average number of common shares outstanding - basic    11,774,700  11,034,754
       Dilutive effect of:
         Common stock options                                             425,279     119,672
         Common stock warrants                                             75,989     479,598
                                                                       ----------------------
       Weighted average number of common shares outstanding - diluted  12,275,968  11,634,024
                                                                       ======================

     FOR NINE MONTHS ENDED SEPTEMBER 30:
       Weighted average number of common shares outstanding - basic    11,724,182  11,020,936
       Dilutive effect of:
         Common stock options                                             484,937      44,342
         Common stock warrants                                             82,440     471,438
                                                                       ----------------------
       Weighted average number of common shares outstanding - diluted  12,291,559  11,536,716
                                                                       ======================
</TABLE>

     Common  stock  options  of  70,000  and  55,000  were  not  included in the
     diluted  income per share calculation for the quarter and nine months ended
     September  30,  2006,  respectively,  because  their effect would have been
     anti-dilutive.  Common  stock options totaling 727,000 were not included in
     the  diluted  income  per  share  calculation  for  the  nine  months ended
     September  30,  2005,  because  their effect would have been anti-dilutive.


                                       6
<PAGE>
AIR METHODS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(3)  STOCKHOLDERS'  EQUITY
     ---------------------

     Changes  in  stockholders'  equity  for  the  nine  months  ended September
     30,  2006,  consisted  of  the following (amounts in thousands except share
     amounts):

<TABLE>
<CAPTION>
                                                             Shares
                                                           Outstanding   Amount
                                                           ---------------------
<S>                                                        <C>          <C>
       Balances at January 1, 2006                          11,605,590  $ 86,211

       Issuance of common shares for options and warrants
         exercised                                             200,023     1,526
       Tax benefit from exercise of stock options                   --       833
       Stock-based compensation                                     --       311
       Net income                                                   --    15,999
                                                           ---------------------

       Balances at September 30, 2006                       11,805,613  $104,880
                                                           =====================
</TABLE>

(4)  STOCK-BASED COMPENSATION
     ------------------------

     Effective  January  1,  2006,  the  Company  implemented FASB Statement No.
     123R  (Statement  123R),  Accounting  for  Stock-Based  Compensation,  an
     amendment  of  FASB  Statement  No.  123, adopting the modified prospective
     method of implementation. Statement 123R requires recognition in the income
     statement  of  the  grant-date  fair  value  of  stock  options  and  other
     equity-based  compensation  issued  to  employees.  Under  the  modified
     prospective  method, compensation cost has been recognized in the financial
     statements  beginning  with the effective date based on the requirements of
     Statement  123R  for  all  share-based payments granted after that date and
     based  on the requirements of Statement 123 for all unvested awards granted
     prior  to the effective date of Statement 123R. During the quarter and nine
     months  ended  September  30,  2006,  the  Company  recognized $125,000 and
     $311,000,  respectively,  in  compensation  expense  related to outstanding
     stock  options.  Total  unrecognized  compensation cost related to unvested
     stock-based awards as of September 30, 2006, was $1,126,000 and is expected
     to  be  recognized  over the remaining weighted average vesting term of 2.3
     years.  Any  future  excess tax benefits derived from the exercise of stock
     options  will  be  recorded  prospectively  and reported as cash flows from
     financing  activities  in  accordance  with  FAS  123R.

     Prior  to  January  1,  2006,  the Company accounted for its employee stock
     compensation  plans as prescribed under Accounting Principles Board Opinion
     No.  25, Accounting for Stock Issued to Employees (APB Opinion 25). Because
     the  Company  granted its options at or above market value, no compensation
     cost  was  recognized  relating to the plans. Had compensation cost for the
     Company's  stock-based compensation plans been determined based on the fair
     value  at  the grant dates for awards under those plans consistent with the
     provisions  of Statement 123, the Company's net income and income per share
     would  have  been  reduced to the pro forma amounts indicated below for the
     quarter  and  nine  months  ended September 30, 2005 (amounts in thousands,
     except  per  share  amounts):

<TABLE>
<CAPTION>
                                                 As Reported   Pro Forma
                                                 -----------------------
<S>                                              <C>           <C>
          Quarter ended September 30, 2005:
              Net income                         $      5,498      5,306
              Basic income per share                      .50        .48
              Diluted income per share                    .47        .46

          Nine months ended September 30, 2005:
              Net income                         $      8,354      8,011
              Basic income per share                      .76        .73
              Diluted income per share                    .72        .69
</TABLE>


                                       7
<PAGE>
AIR METHODS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(4)  STOCK-BASED COMPENSATION, CONTINUED
     -----------------------------------

     The  Company  has  a  Stock  Option  Plan (the Plan) which provides for the
     granting  of incentive stock options (ISO's) and nonqualified stock options
     (NSO's),  stock  appreciation rights, and supplemental stock bonuses. Under
     the  Plan,  3,500,000  shares  of  common  stock  are reserved for options.
     Generally,  the options granted under the Plan have an exercise price equal
     to  the market value on the date of grant, vest in three equal installments
     beginning  one  year from the date of grant, and expire five years from the
     date  of grant. However, option grants to certain officers and employees in
     2004  included  460,000  options which vest after five years and expire six
     years  from  the  date  of  grant.

     In  August  2006,  the  Company's  shareholders  approved  the  2006 Equity
     Compensation  Plan (2006 Plan) which provides for the granting of incentive
     stock  options,  non-statutory  stock  options, shares of restricted stock,
     stock  appreciation rights and supplemental bonuses consisting of shares of
     common  stock,  cash  or a combination thereof to employees, directors, and
     consultants.  The  maximum  aggregate number of shares of common stock that
     may be made subject to awards under the 2006 Plan is 600,000. The 2006 Plan
     is  administered  by  a committee of the Company's board of directors which
     has  discretion  to  set the exercise price and term of any option granted,
     provided  that  the  term may not exceed ten years. In the third quarter of
     2006,  one  grant  for  15,000  shares  was  awarded  under  the 2006 Plan.

     The  Company  also  has  a  Nonemployee  Director  Stock  Option  Plan (the
     Director Plan) which authorizes the grant of NSO's to purchase an aggregate
     of  300,000 shares of common stock to nonemployee directors of the Company.
     Through  2004,  each  nonemployee  director  completing  one fiscal year of
     service  received  a  five-year option to purchase between 5,000 and 10,000
     shares,  exercisable  at  the  then  current  market value of the Company's
     common  stock.  All  options  under  this plan were vested immediately upon
     issue.

     The  fair  value  of  each  option  grant is estimated on the date of grant
     using  the  Black-Scholes option-pricing model. The Company uses historical
     option  exercise  data  for similar employee groups, as well as the vesting
     period  and  contractual  term,  to  estimate  the expected term of options
     granted;  the  expected  term  represents  the  period of time that options
     granted  are  expected  to  be outstanding. Expected volatility is based on
     historical  volatility  of  the  Company's  stock.  The  risk-free rate for
     periods  within  the  contractual  life  of the option is based on the U.S.
     Treasury  yield  curve  in effect at the time of the grant. During the nine
     months  ended  September  30,  2006,  options  to purchase 70,000 shares of
     stock,  with exercise prices ranging from $22.62 to $28.70, were granted at
     a  weighted  average  fair  value  of $9.14. The following weighted average
     assumptions  were  used  in valuing the grants: expected term of 3.5 years;
     expected  volatility of 37%; risk-free interest rate of 4.83%; and dividend
     yield  of 0%. The weighted average fair value of options granted during the
     nine  months  ended  September  30,  2005,  was  $2.55  using the following
     weighted average assumptions: expected term of 3 years; expected volatility
     of  36%;  risk-free  interest  rate  of  4.0%;  and  dividend yield of 0%;.


                                       8
<PAGE>
AIR METHODS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(4)  STOCK-BASED COMPENSATION, CONTINUED
     -----------------------------------

     The  following  is  a  summary  of  option  activity under all stock option
     plans  during  the  nine  months  ended  September  30,  2006:

<TABLE>
<CAPTION>
                                                                     Weighted-     Aggregate
                                                                      Average      Intrinsic
                                                     Weighted        Remaining       Value
                                                      Average       Contractual   (amounts in
                                         Shares    Exercise Price   Life (Years)   thousands)
                                        ---------  ---------------  ------------  -----------
<S>                                     <C>        <C>              <C>           <C>
     Outstanding at December 31, 2005    961,522   $          8.48
     Granted                              70,000             27.40
     Exercised                          (175,023)             7.74
     Canceled                            (75,000)             8.98
                                        ---------
     Outstanding at September 30, 2006   781,499             10.29           3.0  $    10,678
                                        =========
     Exercisable at September 30, 2006   322,500              8.18           2.2        4,974
                                        =========
</TABLE>

     During  the  nine  months  ended  September  30,  2006 and 2005, options to
     purchase  175,023 and 58,715 shares were exercised with aggregate intrinsic
     values  totaling  approximately  $2,999,000  and  $180,000,  respectively.

(5)  NEW ACCOUNTING PRONOUNCEMENTS
     -----------------------------

     In  June  2006,  the  Financial  Accounting  Standards  Board (FASB) issued
     FASB  Interpretation  No. 48 (FIN 48), Accounting for Uncertainty in Income
     Taxes, to clarify the accounting for uncertainty in income taxes recognized
     in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN
     48  provides  for  recognition  of  a tax position in a company's financial
     statements  only  if  it  is more likely than not that the position will be
     sustained  upon examination, based on the technical merits of the position.
     The  tax  benefit  of  a  tax  position that meets the more-likely-than-not
     recognition  threshold is measured at the largest amount of benefit that is
     greater  than 50 percent likely of being realized upon ultimate settlement.
     FIN  48  is  effective  for  years  beginning  after December 15, 2006. The
     Company  has  not  yet  determined  the  effect  of FIN 48 on its financial
     position  or  results  of  operations.

     In  September  2006,  the  Securities  and  Exchange  Commission staff (SEC
     staff) issued Staff Accounting Bulletin 108 (SAB 108), Financial Statements
     -  Considering  the  Effects  of  Prior Year Misstatements when Quantifying
     Misstatements  in  Current Year Financial Statements, providing guidance on
     how  prior  year  misstatements  should  be  taken  into consideration when
     quantifying misstatements in current year financial statements for purposes
     of  determining  whether  the  current  year's  financial  statements  are
     materially  misstated. SAB 108 requires a company to consider the impact of
     all prior year misstatements reflected in the current year's balance sheet,
     without  consideration of the period in which the misstatement occurred, as
     well  as  to  consider  the amount of the misstatement that occurred in the
     current year in order to determine the materiality of the misstatement. SAB
     108 is effective for years ending after November 15, 2006. The Company does
     not  expect  implementation  of  the guidance in SAB 108 to have a material
     effect  on  its  financial  position  or  results  of  operations.

     In  September  2006,  the  FASB  issued  FASB  Statement No. 157 (Statement
     157),  Fair  Value  Measurements.  Statement  157  defines  fair  value,
     establishes  a  framework  for  measuring  fair value in generally accepted
     accounting  principles,  and  expands  disclosures  about  fair  value
     measurements. It applies under other accounting pronouncements that require
     or  permit  fair value measurements but does not require any new fair value
     measurements. Statement 157 is effective for years beginning after November
     15,  2007.  The  Company does not expect implementation of Statement 157 to
     have  a material effect on its financial position or results of operations.


                                       9
<PAGE>
AIR METHODS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(6)  BUSINESS SEGMENT INFORMATION
     ----------------------------

     Summarized  financial  information  for  the  Company's  operating segments
     is  shown  in  the  following  table (amounts in thousands). Amounts in the
     "Corporate  Activities"  column  represent corporate headquarters expenses,
     corporate  income tax expense, and results of insignificant operations. The
     Company  does  not  allocate  assets  between  Hospital-Based  Model (HBM),
     Products,  and  Corporate Activities for internal reporting and performance
     evaluation  purposes.  Operating  segments  and their principal products or
     services  are  as  follows:

     -    Community-Based  Model  (CBM)  -  provides  air medical transportation
          services  to  the  general  population as an independent service in 18
          states.  Services  include aircraft operation and maintenance, medical
          care, dispatch and communications, and medical billing and collection.
     -    Hospital-Based  Model  (HBM)  -  provides  air  medical transportation
          services  to  hospitals  in  26  states  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.

<TABLE>
<CAPTION>
                                                            Products    Corporate   Intersegment
     FOR QUARTER ENDED SEPTEMBER 30:      CBM       HBM     Division   Activities   Eliminations   Consolidated
     ----------------------------------------------------------------------------------------------------------
<S>                                    <C>        <C>       <C>        <C>          <C>            <C>
     2006
     External revenue                  $ 86,702    28,012      1,374           --             --        116,088
     Intersegment revenue                    --       382      5,586           --         (5,968)            --
                                       -------------------------------------------------------------------------
     Total revenue                       86,702    28,394      6,960           --         (5,968)       116,088
                                       -------------------------------------------------------------------------

     Operating expenses                 (40,960)  (25,963)    (5,336)      (2,800)         4,900        (70,159)
     Depreciation & amortization         (1,748)   (1,303)      (109)         (79)            --         (3,239)
     Bad debt expense                   (25,001)     (567)        --           --             --        (25,568)
     Interest expense                      (815)     (700)        --           (7)            --         (1,522)
     Other income, net                      432        --         --           20             --            452
     Income tax expense                      --        --         --       (6,446)            --         (6,446)
                                       -------------------------------------------------------------------------
     Segment net income (loss)         $ 18,610      (139)     1,515       (9,312)        (1,068)         9,606
                                       =========================================================================

     Total assets                      $116,380       N/A        N/A      150,315         (2,164)       264,531
                                       =========================================================================

     2005
     External revenue                  $ 61,831    26,287      2,415           --             --         90,533
     Intersegment revenue                    --        --      1,501           --         (1,501)            --
                                       -------------------------------------------------------------------------
     Total revenue                       61,831    26,287      3,916           --         (1,501)        90,533
                                       -------------------------------------------------------------------------

     Operating expenses                 (34,635)  (21,089)    (2,990)      (2,211)         1,143        (59,782)
     Depreciation & amortization         (1,539)   (1,299)      (110)         (74)            --         (3,022)
     Bad debt expense                   (17,534)     (300)        --           --             --        (17,834)
     Interest expense                      (658)     (544)        --          (26)            --         (1,228)
     Other income, net                      274        --         --           87             --            361
     Income tax expense                      --        --         --       (3,530)            --         (3,530)
                                       -------------------------------------------------------------------------
     Segment net income (loss)         $  7,739     3,055        816       (5,754)          (358)         5,498
                                       =========================================================================

     Total assets                      $ 83,463       N/A        N/A      128,774         (2,164)       210,073
                                       =========================================================================
</TABLE>


                                       10
<PAGE>
AIR METHODS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(6)  BUSINESS SEGMENT INFORMATION, CONTINUED
     ---------------------------------------

<TABLE>
<CAPTION>
                                                                  Products   Corporate    Intersegment
     FOR NINE MONTHS ENDED SEPTEMBER 30:       CBM        HBM     Division   Activities   Eliminations   Consolidated
     -----------------------------------------------------------------------------------------------------------------
<S>                                         <C>         <C>       <C>        <C>          <C>            <C>
     2006
     External revenue                       $ 223,447    83,035      4,277           --             --        310,759
     Intersegment revenue                          --       382     11,738           --        (12,120)            --
                                            --------------------------------------------------------------------------
     Total revenue                            223,447    83,417     16,015           --        (12,120)       310,759
                                            --------------------------------------------------------------------------

     Operating expenses                      (117,795)  (75,566)   (11,819)      (6,908)         9,666       (202,422)
     Depreciation & amortization               (4,996)   (4,047)      (324)        (237)            --         (9,604)
     Bad debt expense                         (66,608)   (2,125)        --           --             --        (68,733)
     Interest expense                          (2,314)   (1,976)        --          (58)            --         (4,348)
     Other income, net                          1,100        --         --           92             --          1,192
     Income tax expense                            --        --         --      (10,845)            --        (10,845)
                                            --------------------------------------------------------------------------
     Segment net income (loss)              $  32,834      (297)     3,872      (17,956)        (2,454)        15,999
                                            ==========================================================================

     Total assets                           $ 116,380       N/A        N/A      150,315         (2,164)       264,531
                                            ==========================================================================

     2005
     External revenue                       $ 167,026    73,961      5,739           --             --        246,726
     Intersegment revenue                          --        --      5,946           --         (5,946)            --
                                            --------------------------------------------------------------------------
     Total revenue                            167,026    73,961     11,685           --         (5,946)       246,726
                                            --------------------------------------------------------------------------

     Operating expenses                      (101,174)  (60,875)    (8,842)      (6,585)         4,647       (172,829)
     Depreciation & amortization               (4,483)   (3,890)      (316)        (201)            --         (8,890)
     Bad debt expense                         (43,527)     (654)        --           --             --        (44,181)
     Interest expense                          (2,427)   (2,140)        --          (79)            --         (4,646)
     Loss on early extinguishment of debt          --        --         --       (3,104)                       (3,104)
     Other income (expense), net                  733        --         --          (39)            --            694
     Income tax expense                            --        --         --       (5,416)            --         (5,416)
                                            --------------------------------------------------------------------------
     Segment net income (loss)              $  16,148     6,402      2,527      (15,424)        (1,299)         8,354
                                            ==========================================================================

     Total assets                           $  83,463       N/A        N/A      128,774         (2,164)       210,073
                                            ==========================================================================
</TABLE>

(7)  SUBSEQUENT EVENT
     ----------------

     In  October  2006,  the  Company  amended  its  senior  revolving  credit
     facility  to increase the maximum revolving advance amount from $35 million
     to  $45  million.  The  amendment  also  increased the limitation on annual
     capital  expenditures,  inclusive of leased assets, from $40 million to $50
     million.  All  other  terms  and conditions of the credit facility remained
     unchanged.


                                       11
<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The  following  discussion  of the results of operations and financial condition
should  be  read  in  conjunction with our consolidated financial statements and
notes  thereto  included  in  Item  1 of this report. This report, including the
information  incorporated  by  reference, contains forward-looking statements as
defined  in the Private Securities Litigation Reform Act of 1995. The use of any
of  the words "believe," "expect," "anticipate," "plan," "estimate," and similar
expressions are intended to identify such statements. Forward-looking statements
include  statements  concerning  our  possible  or assumed future results; size,
structure  and  growth  of our air medical services and products markets; flight
volume  and  collection rates for CBM operations; continuation and/or renewal of
HBM  contracts;  acquisition  of new and profitable Products Division contracts;
and other matters. The actual results that we achieve may differ materially from
those  discussed  in  such  forward-looking  statements  due  to  the  risks and
uncertainties  described  in  the  Risk  Factors  section  of  this  report,  in
Management's  Discussion  and  Analysis  of  Financial  Condition and Results of
Operations,  and  in  other  sections  of  this report, as well as in our annual
report  on  Form  10-K. We undertake no obligation to update any forward-looking
statements.

OVERVIEW

We  provide air medical transportation services throughout the United States and
design,  manufacture, and install medical aircraft interiors and other aerospace
products  for  domestic  and international customers. Our divisions, or business
segments, are organized according to the type of service or product provided and
consist  of  the  following:
-    Community-Based  Model (CBM) - 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 nine months ended September 30, 2006, the CBM Division
     generated  72% of our total revenue, increasing from 68% in the nine months
     ended  September  30,  2005.
-    Hospital-Based  Model  (HBM) - provides air medical transportation services
     to  hospitals  throughout  the  U.S.  under exclusive operating agreements.
     Revenue consists of fixed monthly fees (approximately 62% of total contract
     revenue)  and  hourly  flight  fees  (approximately  38%  of total contract
     revenue) billed to hospital customers. The division also has two contracts,
     both  expansions  of  contracts with hospital-based customers, for which it
     bills  patients  or  insurers  directly  and is at risk for collection from
     these  parties.  In  the  nine  months  ended  September  30, 2006, the HBM
     Division  generated  27% of our total revenue, decreasing from 30% in 2005.
-    Products  Division  -  designs, manufactures, and installs aircraft medical
     interiors  and  other aerospace and medical transport products for domestic
     and  international  customers.  The  Products  Division generated 1% of our
     total  revenue  in the nine months ended September 30, 2006, compared to 2%
     in  2005.

See  Note  6 to the consolidated financial statements included in Item 1 of this
report  for  operating  results  by  segment.

We believe that the following factors have the greatest impact on our results of
operations  and  financial  condition:

-    FLIGHT  VOLUME.  Fluctuations in flight volume have a greater impact on CBM
     operations  than  HBM  operations  because  nearly  100%  of CBM revenue is
     derived  from  hourly  flight  fees,  as compared to 38% of HBM revenue. By
     contrast,  approximately  58% of our costs primarily associated with flight
     operations  (including  salaries, aircraft ownership costs, hull insurance,
     and  general and administrative expenses) 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 CBM operations were
     approximately  9,200  and  25,700  for  the  quarter  and nine months ended
     September  30,  2006,  respectively,  compared  to  approximately 8,700 and
     24,000  for  the  quarter  and  nine  months  ended  September  30,  2005,
     respectively.  Patient  transports  for CBM bases open longer than one year
     (Same-Base  Transports)  were approximately 8,200 and 24,000 in the quarter
     and  nine  months  ended  September  30,  2006,  respectively,  compared to
     approximately  8,500  and  23,400  in  the  quarter  and  nine months ended
     September  30, 2005, respectively. Cancellations due to unfavorable weather
     conditions were 427, or 26.8%, higher in the third quarter of 2006 compared
     to  the  third quarter of 2005. Weather cancellations were unchanged in the
     nine  months  ended  September  30,  2006,  compared  to  2005.


                                       12
<PAGE>
-    REIMBURSEMENT  PER  TRANSPORT.  Net reimbursement per transport for CBM and
     HBM  at-risk  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.  We  respond  to  calls  for  air  medical  transports  without
     pre-screening  the  creditworthiness  of  the  patient. Bad debt expense is
     estimated  during  the  period  the related services are performed based on
     historical  collection  experience.  The  provision is adjusted as required
     based  on  actual  collections  in  subsequent  periods.  We have increased
     average  prices  for  our CBM operations a total of 27.5% since March 2005,
     contributing  to an increase of 15.6% in net revenue after bad debt expense
     per  transport in the nine months ended September 30, 2006, compared to the
     nine  months  ended  September  30,  2005. The total provision for expected
     uncollectible  amounts,  including  contractual  discounts  for
     Medicare/Medicaid  and  bad  debts, changed from 47.5% and 46.4% of related
     flight  revenue  for  the quarter and nine months ended September 30, 2005,
     respectively,  to  45.0%  and  48.6%  for the quarter and nine months ended
     September  30,  2006,  respectively.  Although  price  increases  generally
     increase  the  net  reimbursement  per transport from insurance payers, the
     amount  per  transport collectible from private patient payers and Medicare
     and  Medicaid  does  not  increase  proportionately  with  price increases.
     Therefore,  depending  upon overall payer mix, price increases will usually
     result  in  an  increase  in  the  percentage  of  uncollectible  accounts.

-    AIRCRAFT  MAINTENANCE.  Both  CBM  and  HBM  operating results 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  36%  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, 2006, we have taken
     delivery  of  ten  new  aircraft  and have the option to purchase seventeen
     additional  aircraft beginning in the fourth quarter of 2006 and continuing
     through  the end of 2007. New aircraft expected to be delivered under these
     options  are  expected  to  replace the discontinued models and other older
     aircraft,  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 CBM and HBM operations increased 32.5% and 20.6% in the quarter
     and  nine  months ended September 30, 2006, respectively, compared to 2005,
     while  total  flight  volume  for  CBM  and  HBM  operations  decreased
     approximately  1.2%  during the third quarter and increased 3.7% during the
     nine  months  ended  September  30,  2006,  compared to the prior year. The
     number of engine events, including overhauls, increased approximately 10.3%
     and  9.8%  in  the  quarter  and  nine  months  ended  September  30, 2006,
     respectively,  compared  to  2005.

-    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  aircraft manufacturer for fifteen aircraft, with
     deliveries scheduled to begin in 2008, 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 regional competitors utilize aircraft with lower ownership and
     operating  costs  and  do  not  require  a  similar level of experience for
     aviation  and  medical  personnel.  Unionization of our pilot workforce has
     also  led  to  higher  compensation  rates  than  those paid by some of our
     competitors  who  are  not  unionized.  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  may also serve as a barrier to entry for
     lower  cost  providers.


                                       13
<PAGE>
-    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
     (CBA)  on  March  31,  2006.  The  agreement  is effective January 1, 2006,
     through April 30, 2009. Significant changes from our previous wage rates or
     benefits  include  increases in initial base pay rates; increase in pay for
     overtime  shifts from regular pay rates to 1.5 times regular pay rates; and
     changes in our contributions to defined contribution retirement plans (401k
     plans). Previously, under one 401k plan, we contributed 2% of gross pay for
     all  eligible  employees and matched 60% of the employees' contributions up
     to  6%  of  their  gross  pay.  Under the other plan, we matched 30% of the
     employees'  contributions up to 6% of their gross pay. The CBA provides for
     Company contributions up to 5.6% of gross pay to both 401k plans, depending
     on  the  level  of each employee's participation. We recorded approximately
     $1,983,000  and  $5,750,000  in incremental salary and benefit costs during
     the  quarter  and  nine months ended September 30, 2006, respectively, as a
     result  of  implementing the CBA provisions. Other employee groups may also
     elect  to  be  represented  by  unions  in  the  future.

RESULTS  OF  OPERATIONS

We  reported  net  income  of  $9,606,000 and $15,999,000 for the three and nine
months  ended  September  30,  2006,  respectively,  compared  to  net income of
$5,498,000  and  $8,354,000  for  the  three and nine months ended September 30,
2005,  respectively.  Net  income  for the nine months ended September 30, 2005,
included  a  pre-tax  loss on early extinguishment of debt of $3,104,000 (with a
tax  effect  of  approximately $1,211,000). Operating income was $17,122,000 and
$30,000,000  for  the  quarter  and  nine  months  ended  September  30,  2006,
respectively,  compared  $9,895,000  and  $20,826,000  for  the quarter and nine
months  ended September 30, 2005, respectively. Net reimbursement (revenue after
Medicare/Medicaid  discounts  and  bad debt expense) for CBM operations improved
29.7%  and  15.6%  for  the  quarter  and  nine months ended September 30, 2006,
respectively,  compared  to  the prior year, while Same-Base Transports for both
CBM and HBM bases remained relatively constant. Improvement in net reimbursement
during  2006 was offset in part by increases in cost of aircraft maintenance and
in  salaries  and  benefits,  primarily as a result of the implementation of the
CBA.

FLIGHT  OPERATIONS  -  COMMUNITY-BASED  MODEL  AND  HOSPITAL-BASED  MODEL

FLIGHT  REVENUE  increased $26,423,000, or 30.0%, and $65,226,000, or 27.1%, for
the  quarter and nine months ended September 30, 2006, respectively, compared to
2005. Flight revenue is generated by both CBM and HBM operations and is recorded
net  of  contractual  allowances  under  agreements  with third-party payers and
Medicare/Medicaid  discounts.

-    CBM - Flight  revenue  increased  $24,886,000, or 40.3%, to $86,693,000 for
     the  third  quarter  of 2006 and $56,451,000, or 33.8%, to $223,414,000 for
     the  nine  months  ended  September  30,  2006,  for the following reasons:
     -    Average  price  increases  totaling  approximately  27.5%  for all CBM
          operations  since  March  2005,  including  6.5%  in  mid-June  2006.
     -    Incremental  revenue  of  $10,873,000  and  $20,362,000  for  the
          quarter  and  nine months ended September 30, 2006, respectively, from
          the  addition of thirteen new CBM bases either during or subsequent to
          the  nine  months  ended September 30, 2005, and from the provision of
          air  medical  transportation services in Gulfport, Mississippi, in the
          aftermath  of Hurricane Katrina, pursuant to a contract with the State
          of  Mississippi.
     -    Closure  of  one  base  during  the  first  quarter of 2005, two bases
          in  the  first  quarter of 2006, and one in the third quarter of 2006,
          resulting  in  decreases  in  revenue  of  approximately  $959,000 and
          $3,016,000  for  the quarter and nine months ended September 30, 2006,
          respectively.
     -    Same Base  Transports  decreased  3.9%  during  the  third  quarter of
          2006 compared to the third quarter of 2005, and increased 2.3% for the
          nine  months  ended  September  30,  2006,  compared to the nine-month
          period  in  2005.  Cancellations due to unfavorable weather conditions
          were  427,  or  26.8%, higher in the third quarter of 2006 compared to
          the third quarter of 2005. Weather cancellations were unchanged in the
          nine  months  ended  September  30,  2006,  compared  to  2005.
     -    Increase  caused  by  a  change  in payer mix to a lower percentage of
          Medicare/Medicaid transports, resulting in lower contractual discounts
          which  are  offset  against flight revenue. Contractual discounts were
          22.5%  and  26.6%  of  related  flight revenue in the quarter and nine
          months  ended  September 30, 2006, respectively, compared to 26.6% and
          27.4%  in  the  quarter  and  nine  months  ended  September 30, 2005,
          respectively.  See  discussion  of  total  provision for uncollectible
          accounts,  including contractual discounts and bad debt expense, below
          under  Bad  Debt  Expense.


                                       14
<PAGE>
-    HBM - Flight  revenue increased $1,537,000, or 5.9%, to $27,824,000 for the
     third quarter of 2006 and $8,775,000, or 11.9%, to $82,729,000 for the nine
     months  ended  September  30,  2006,  for  the  following  reasons:
     -    Incremental  revenue  of  $702,000  and  $3,972,000,  for  the quarter
          and  nine  months  ended  September  30,  2006, respectively, from the
          addition  of  two  new  bases  and  the  expansion  of  six  contracts
          subsequent  to  the  first  quarter  of  2005.
     -    Discontinuation  of  service  under  one  contract  during  the second
          quarter  of  2006,  resulting in decreases in revenue of approximately
          $189,000  and  $408,000 in the quarter and nine months ended September
          30,  2006,  respectively.
     -    Annual  price  increases  in  the  majority  of  contracts  based  on
          changes  in  the  Consumer  Price  Index.
     -    Decreases  of  7.1%  and  2.3%  in  flight  volume for the quarter and
          nine  months ended September 30, 2006, respectively, compared to 2005,
          for  all  contracts  excluding  the  effect of new contracts, contract
          expansions,  and  discontinued  contract  discussed  above.

FLIGHT  CENTER COSTS (consisting primarily of pilot, mechanic, and medical staff
salaries  and  benefits)  increased  $6,115,000,  or  21.6%, and $18,159,000, or
22.5%,  for  the quarter and nine months ended September 30, 2006, respectively,
compared  to  2005.  Changes  by  business  segment  are  as  follows:

-    CBM - Flight center costs increased $4,514,000, or 24.7% to $22,754,000 and
     $12,134,000, or 23.2%, to $64,333,000 for the quarter and nine months ended
     September  30,  2006,  for  the  following  reasons:
     -    Increases  of  approximately  $3,306,000  and  $7,173,000  for  the
          quarter  and  nine  months ended September 30, 2006, respectively, for
          the addition of personnel to staff new base locations described above.
     -    Decreases  of  approximately  $754,000  and  $2,399,000  for  the
          quarter and nine months ended September 30, 2006, respectively, due to
          the  closure  of  base  locations  described  above.
     -    Increases  of  approximately  $1,086,000  and  $3,061,000  in  pilot
          salaries  and benefits for the quarter and nine months ended September
          30,  2006,  respectively,  related  to  the  implementation of the CBA
          effective  January  1,  2006.
     -    Increases  in  salaries  for  merit  pay  raises.
     -    Increases  in  our  cost  of  medical  insurance  premiums.

-    HBM - Flight  center  costs  increased $1,601,000, or 16.0%, to $11,626,000
     and  $6,025,000,  or  21.3%, to $34,368,000 for the quarter and nine months
     ended  September  30,  2006,  primarily  due  to  the  following:
     -    Increases  of  approximately  $239,000  and  $1,131,000  for  the
          quarter  and nine months ended September 30, 2006, for the addition of
          personnel  to  staff  new  base  locations  described  above.
     -    Increases  of  approximately  $897,000  and  $2,689,000  in  pilot
          salaries  and benefits for the quarter and nine months ended September
          30,  2006,  related to the implementation of the CBA effective January
          1,  2006.
     -    Increases  in  salaries  for  merit  pay  raises.
     -    Increases  in  our  cost  of  medical  insurance  premiums.

AIRCRAFT  OPERATING  EXPENSES increased $4,331,000, or 26.9%, and $9,424,000, or
19.7%,  for  the quarter and nine months ended September 30, 2006, respectively,
in  comparison to the quarter and nine months ended September 30, 2005. Aircraft
operating  expenses  consist  of  fuel,  insurance,  and  maintenance  costs and
generally  are  a function of the size of the fleet, the type of aircraft flown,
and  the  number  of hours flown. The increase in costs is due to the following:
-    Addition  of  twenty  helicopters  for  CBM  operations  and  ten  for  HBM
     operations  either  during or subsequent to the nine months ended September
     30,  2005,  resulting in increases of approximately $812,000 and $1,651,000
     for  the  quarter  and  nine months ended September 30, 2006, respectively.
-    Increases  of  approximately  $222,000  and  $311,000 in fuel costs for the
     quarter and nine months ended September 30, 2006, respectively, as a result
     of  the  addition  of new CBM bases, net of the impact of closed CBM bases.
     The  addition of new HBM bases and expansion of HBM programs did not have a
     material  impact  on fuel costs because HBM customers typically pay for all
     fuel  consumed  in  medical  flights.
-    Increases of approximately 12.0% and 16.3% in the cost of aircraft fuel per
     hour  flown  for  the  quarter  and  nine  months ended September 30, 2006,
     respectively.
-    Decreases  in  hull  insurance  rates  effective  July  2005 and July 2006.
-    Changes  in  flight  volume  for  both  CBM  and  HBM  as  described above.
-    Increases  in  the  number  of  engine  and  transmission events, including
     overhauls,  experienced  during the quarter and nine months ended September
     30,  2006,  compared  to  the  prior  year.
-    Annual  price  increases  in the cost of spare parts and overhauls, most of
     which  exceeded  the  rate  of  inflation.


                                       15
<PAGE>
AIRCRAFT  RENTAL EXPENSE increased $882,000, or 19.1%, and $2,489,000, or 18.6%,
for  the  quarter  and  nine  months  ended September 30, 2006, respectively, in
comparison  to the quarter and nine months ended September 30, 2005. Incremental
rental  expense  for  22  leased  aircraft  added to our fleet, either during or
subsequent  to the first nine months of 2005, totaled $885,000 and $3,161,000 in
the quarter and nine months ended September 30, 2006, respectively. The increase
for  new  aircraft  was  offset  in part by refinancing twelve aircraft at lower
lease  rates  during  the  last  three  quarters  of  2005.

BAD  DEBT EXPENSE increased $7,734,000, or 43.4%, and $24,552,000, or 55.6%, for
the  quarter  and nine months ended September 30, 2006, compared to 2005, due in
part  to  the  increase  in  related flight revenue. Bad debt as a percentage of
related  net  flight revenue was 28.9% and 30.1% for the quarter and nine months
ended  September  30,  2006,  respectively,  compared to 28.3% and 26.1% for the
quarter  and  nine  months  ended  September  30,  2005, respectively. The total
provision  for  expected  uncollectible amounts, including contractual discounts
and bad debts, was 45.0% and 48.6% of related flight revenue for the quarter and
nine  months ended September 30, 2006, respectively, compared to 47.5% and 46.4%
for  the  quarter  and  nine  months ended September 30, 2005, respectively. The
decrease  in  the provision during the third quarter of 2006 was attributable to
changes  in  payer  mix and to adjustments to bad debt reserves during the third
quarter of 2005 for lower than anticipated collections. The increase in reserves
for  the  nine  months ended September 30, 2006, compared to the prior year, was
attributed  in  part  to a shift in payer mix in the second quarter of 2006 from
insured  patients  to  uninsured and Medicaid coverage, as well as to lower than
anticipated collections on other accounts. In addition, although price increases
generally increase the net reimbursement per transport from insurance providers,
the  amount  per  transport collectible from private patient payers and Medicare
and  Medicaid does not increase proportionately with price increases. Therefore,
depending  upon  overall  payer  mix,  price increases will usually result in an
increase  in  the  percentage of uncollectible accounts. The total provision for
expected uncollectible amounts as a percentage of related flight revenue for the
quarters  and  nine months ended September 30, 2006 and 2005, is consistent with
our  historical collection experience, taking into consideration fluctuations in
payer  mix  and  the  effect of price increases. Bad debt expense related to the
Products  Division  was  not  significant  in  either  2006  or  2005.

PRODUCTS  DIVISION

SALES  OF  MEDICAL  INTERIORS  AND  PRODUCTS decreased $1,041,000, or 43.1%, and
$1,462,000,  or 25.5%, for the quarter and nine months ended September 30, 2006,
compared  to  2005.  Significant  projects  in  2006  included  continuation  of
production  of  eleven Multi-Mission Medevac Systems for the U. S. Army's HH-60L
Black  Hawk  helicopter  and  21  litter  systems  for  the  U.S. Army's Medical
Evacuation  Vehicle  (MEV).  The  21  MEV  units were completed during the third
quarter  of  2006.  Five modular, medical interior kits for commercial customers
were  completed  during  the nine months ended September 30, 2006, and six other
kits were still in process as of September 30, 2006. Revenue by product line for
the  quarter  and  nine  months  ended  September 30, 2006, respectively, was as
follows:
-    $237,000 and $1,798,000 - design and manufacture of multi-mission interiors
-    $1,058,000 and $2,086,000 - manufacture and installation of modular medical
     interiors
-    $79,000  and  $393,000 - design and manufacture of other aerospace products

In the first quarter of 2005, we completed production of eleven HH-60L units and
19 MEV units. In 2005, we also continued production of 13 additional HH60L units
and  21  additional  MEV  units.  Other  significant  projects  in 2005 included
production  of  a  multi-mission interior for a Sikorsky FIREHAWK helicopter for
the  Los  Angeles County Fire Department and two modular medical interiors for a
commercial  customer.  Revenue  by  product line for the quarter and nine months
ended  September  30,  2005,  respectively,  was  as  follows:
-    $1,235,000  and  $2,824,000  -  design  and  manufacture  of  multi-mission
     interiors
-    $546,000  and  $1,348,000 - manufacture and installation of modular medical
     interiors
-    $634,000  and  $1,567,000  -  design  and  manufacture  of  other aerospace
     products

COST  OF  MEDICAL  INTERIORS  AND  PRODUCTS  decreased  $952,000,  or 58.5%, and
$1,535,000,  or 42.4%, for the quarter and nine months ended September 30, 2006,
respectively,  compared  to  the prior year, consistent with the change in sales
volume.  The average net margin earned on projects during 2006 was 49.9% for the
third  quarter  and  41.4%  for  the nine-month period compared to 30.9% for the
third  quarter and 28.4% for the nine-month period in 2005, primarily due to the
change  in  product  mix.


                                       16
<PAGE>
GENERAL  EXPENSES

DEPRECIATION AND AMORTIZATION EXPENSE increased $217,000, or 7.2%, and $714,000,
or 8.0%, for the quarter and nine months ended September 30, 2006, respectively,
compared  to  2005,  primarily as a result of upgrades to aircraft, engines, and
avionics  systems  and  the  purchase  of  rotable equipment and a new dispatch,
flight  tracking,  and  medical field data software system and related hardware.

LITIGATION  SETTLEMENT of $1,417,000 recorded during the quarter ended September
30, 2006, represents the net amount received in settlement of a lawsuit we filed
against  a  company  related  to  the  fatal  crash of one of our helicopters in
September  2002.  The  amount  recorded  is  net of attorney fees and is related
primarily  to revenue lost in the Nevada CBM program during the period following
the  accident.

GENERAL  AND  ADMINISTRATIVE  (G&A) EXPENSES increased $1,195,000, or 13.1%, and
$3,215,000,  or 11.9%, for the quarter and nine months ended September 30, 2006,
respectively,  compared  to  2005.  G&A  expenses  include executive management,
accounting  and  finance,  billing  and collections, information services, human
resources, aviation management, pilot training, dispatch and communications, and
CBM  program administration. We increased the number of personnel in the billing
and  collections  function  due  to  the  increase  in flight volume and, in the
short-term, to accommodate the transition of accounts from the Bountiful billing
office  to the San Bernardino billing office. Final consolidation of the billing
function  into  the  San  Bernardino  office  is expected to be completed in the
fourth  quarter.  We  also  increased  staffing  in  our  Information  Services
department  to  support  the  expanded information technology infrastructure and
scheduled  software  systems  upgrades.  In  addition,  premiums  for  medical
malpractice  insurance  and directors and officers liability insurance increased
39.6%  and 21.4%, respectively, during the nine months ended September 30, 2006,
compared  to  the prior year. G&A expenses were 8.8% and 9.7% of revenue for the
quarter  and  nine  months  ended  September 30, 2006, respectively, compared to
10.1%  and  10.9% of revenue for the quarter and nine months ended September 30,
2005,  respectively.

INTEREST  EXPENSE  increased  $294,000, or 23.9%, in the quarter ended September
30,  2006,  compared  to the prior year, and decreased $298,000, or 6.4%, in the
nine  months  ended  September  30, 2006, compared to 2005. The increase for the
third  quarter  was  primarily  the result of an increase in the average balance
outstanding  against  our  line  of  credit  from $15.0 million during the third
quarter  of  2005  to  $20.0  million during the third quarter of 2006. Interest
expense  decreased  during  the  nine-month  period  primarily  as  a  result of
regularly  scheduled  payments  of  long-term debt and a decrease in the average
balance  outstanding  against the line from $16.4 million during the nine months
ended  September  30,  2005,  to  $14.9  million  during  the  nine months ended
September  30,  2006.  In  addition,  in  May  2005  we  repaid  $23  million in
subordinated  debt,  which  had an effective interest rate of 16.2% during 2005,
with  the  proceeds  of  $20  million  in  term  loans which bore interest at an
effective rate of approximately 9.1% during 2006. The remainder of the repayment
was  funded  by  draws  against  the  line  of  credit.

LOSS  ON  EARLY  EXTINGUISHMENT  OF DEBT for the nine months ended September 30,
2005,  totaled  $3,104,000  and  related  to  the  repayment  of  $23 million in
subordinated debt in May 2005. The Company wrote off approximately $1,724,000 in
debt  origination  costs  and note discount related to the subordinated debt and
paid a prepayment penalty of $1,380,000 to the holders of the subordinated debt.

INCOME TAX EXPENSE was $6,446,000 and $10,845,000 in the quarter and nine months
ended September 30, 2006, respectively, compared to $3,530,000 and $5,416,000 in
the  quarter  and  nine  months  ended  September  30,  2005,  respectively. The
effective tax rate was approximately 40% for 2006, compared to approximately 39%
for  2005. The higher effective tax rate in 2006 is the result of an increase in
certain  permanent  book-tax  differences.

LIQUIDITY  AND  CAPITAL  RESOURCES

Our working capital position as of September 30, 2006, was $92,438,000, compared
to  $66,839,000  at December 31, 2005. The change in working capital position is
primarily  attributable  to  an  increase  of  $23,904,000  in  net  receivables
consistent  with  increased  revenue for the CBM and HBM divisions and increased
net  reimbursement  for  CBM  operations. These effects were offset in part by a
decrease  in  days'  sales outstanding for CBM operations, measured by comparing
net  revenue  after  bad  debt  for  the  annualized  previous 3-month period to
outstanding open net accounts receivable, from 119 days at December 31, 2005, to
117  days  at  September  30,  2006.


                                       17
<PAGE>
SOURCES  AND  USES  OF  CASH

We  had  cash  and  cash  equivalents  of  $3,805,000  as of September 30, 2006,
compared to $3,218,000 at December 31, 2005. Cash generated by operations in the
nine months ended September 30, 2006, totaled $2,822,000 compared to $14,181,000
in  2005. Receivable balances, net of bad debt expense, increased $23,904,000 in
2006 compared to $14,823,000 in 2005, reflecting continued growth in CBM and HBM
revenue  and an improved net reimbursement rate for CBM operations, as described
above.  In  addition,  during  the nine months ended September 30, 2006, we made
payments  of  $8,577,000  for  income  taxes,  compared  to  $272,000  in  2005.

Cash  used  by  investing  activities  totaled  $11,525,000  in 2006 compared to
$3,149,000  in  2005.  Equipment acquisitions in 2006 consisted primarily of two
used  aircraft for a total of approximately $2.1 million and information systems
hardware  and  software, as well as medical interior and avionics installations.
In  2006, we received $1.5 million from the sale of land and buildings which had
previously served as the headquarters for Rocky Mountain Holdings, LLC, prior to
the acquisition by the Company in 2002. Equipment acquisitions in 2005 consisted
primarily  of  rotable  equipment,  medical  and office equipment for new bases,
information  systems  hardware  and software, and upgrades to aircraft, engines,
and  avionics systems. In 2005 we received $463,000 in insurance proceeds for an
aircraft  destroyed in an accident and sold an aircraft previously classified as
held  for  sale  for  $607,000.

Financing  activities generated $9,290,000 in 2006 compared to using $10,569,000
in  2005.  The primary use of cash in both 2006 and 2005 was regularly scheduled
payments of long-term debt and capital lease obligations. In 2006 these payments
were  offset  by draws against our line of credit and proceeds from the issuance
of common stock upon the exercise of stock options. In 2005, we used $20 million
of  term  loan  proceeds and additional draws against our line of credit to fund
the  early  repayment  of  $23  million  in  subordinated  debt  and the related
prepayment  penalty of $1,380,000. We also paid $431,000 in debt issuance costs,
primarily  associated with the amendment to our senior revolving credit facility
in  May  2005.

In  April 2006 we originated a note payable of $2,749,000 with interest at 6.66%
to refinance balloon payments due under other notes payable. The note is payable
through  June  2011.

In October 2006, we amended our senior revolving credit facility to increase the
maximum  revolving advance amount from $35 million to $45 million. The amendment
also  increased  the  limitation  on  annual  capital expenditures, inclusive of
leased  assets,  from $40 million to $50 million. All other terms and conditions
of  the  credit  facility  remained  unchanged.

OUTLOOK  FOR  2006

The  statements  contained  in  this  Outlook are based on current expectations.
These  statements are forward-looking, and actual results may differ materially.
We  undertake  no  obligation  to  update  any  forward-looking  statements.

Community-Based  Model

In the first quarter of 2006, we began services under a one-year contract with a
military  base  in California and ceased operations at a base in Arizona. During
the  second  quarter of 2006, we opened three new bases in the southeast region,
two  in  the  northeast  region,  and  one  in  California. In July 2006, an HBM
contract  in  Florida converted to CBM operations, and we ceased operations at a
base  in South Carolina. We expect to open two new bases in the northeast region
during  the  fourth  quarter  of  2006. CBM flight volume at all other locations
during  2006  is  expected  to  be consistent with historical levels, subject to
seasonal,  weather-related  fluctuations.  Effective  June 6, 2006, we increased
prices  for  our  CBM  operations  an  average  of  approximately  6.5%.

Hospital-Based  Model

During  the  second  quarter  of 2006, we began rotor wing operations in Montana
under a 3-year contract and discontinued operations under our contract in Puerto
Rico.  During  the  third  quarter  of  2006,  one of our customers in Minnesota
expanded  operations  to  a  satellite location. We expect one other contract to
open  a  satellite  base  in  2006  and  another  in early 2007. Twelve hospital
contracts  are  due  for  renewal  in 2006, seven of which have been renewed for
terms  ranging  from  one  to  three  years.  In  October  2006, we discontinued
operations under a contract in Illinois upon its expiration date. We expect 2006
flight  activity  for  continuing  hospital  contracts to remain consistent with
historical  levels.


                                       18
<PAGE>
Products  Division

As  of September 30, 2006, eleven HH-60L units for the U.S. Army and six modular
medical  interiors  for  commercial customers were in process. At the end of the
third  quarter,  we  also received a contract for 27 additional MEV units. Final
terms  and conditions are under negotiation. Remaining revenue for all contracts
in  process  is  estimated  at  $2.5  million.

The  current U.S. Army Aviation Modernization Plan defines a requirement for 180
HH-60L Multi-Mission Medevac units in total over an unspecified number of years.
We  have already completed 28 HH-60L units under the program, in addition to the
eleven  currently  in  process.  The new contract for 27 MEV units completes the
current  U.S.  Army  requirement  for  this  program. There is no assurance that
orders  for  additional  units  will  be  received  in  future  periods.

All  Segments

There  can  be  no  assurance that we will continue to maintain flight volume or
current  levels  of  collections on receivables for CBM operations, successfully
complete  planned  expansions  of  CBM  and  HBM  operations,  renew  operating
agreements  for our HBM operations, or generate new profitable contracts for the
Products  Division.  Based  on  the  anticipated  levels  of  HBM and CBM flight
activity  and  the  projects  in process for the Products Division, we expect to
generate  sufficient  cash  flow  to  meet  our operational needs throughout the
remainder  of  2006. We also had approximately $12,672,000 in borrowing capacity
available  under  our  revolving  credit  facility as of September 30, 2006. The
maximum  revolving  advance amount under the line was increased from $35 million
to  $45  million  in  October  2006.

CRITICAL  ACCOUNTING  POLICIES

Our  consolidated  financial  statements  have  been prepared in accordance with
accounting  principles  generally accepted in the United States. The preparation
of  these  financial  statements  requires  management  to  make  estimates  and
assumptions  that  affect the reported amounts of assets and liabilities and the
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements  and  the  reported  amounts  of  revenues  and  expenses  during the
reporting  period.

On  an  on-going  basis,  management  evaluates  our  estimates  and  judgments,
including  those  related  to  revenue  recognition,  uncollectible receivables,
deferred  income  taxes,  and depreciation and residual values. Management bases
its  estimates  and  judgments  on  historical  experience  and on various other
factors  that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may  differ  from  these  estimates  under  different assumptions or conditions.
Management  believes  the following critical accounting policies affect its more
significant  judgments and estimates used in the preparation of our consolidated
financial  statements.

Revenue  Recognition

Fixed  flight  fee  revenue  under  our  operating  agreements with hospitals is
recognized  monthly over the terms of the agreements. Flight revenue relating to
patient  transports  is  recognized upon completion of the services. Revenue and
accounts  receivable  are recorded net of estimated contractual allowances under
agreements  with  third-party payers (i.e., Medicare and Medicaid). Estimates of
contractual  allowances  are  initially  determined based on historical discount
percentages  for  Medicare and Medicaid patients and adjusted periodically based
on  actual  discounts.  If actual discounts realized are more or less than those
projected  by management, adjustments to contractual allowances may be required.
Based  on related flight revenue for the nine months ended September 30, 2006, a
change  of 100 basis points in the percentage of estimated contractual discounts
would  have  resulted in a change of approximately $3,103,000 in flight revenue.

Revenue related to fixed fee medical interior and products contracts is recorded
as  costs  are incurred using the percentage of completion method of accounting.
We  estimate  the  percentage of completion based on costs incurred to date as a
percentage  of an estimate of the total costs to complete the project. Losses on
contracts  in process are recognized when determined. If total costs to complete
a  project  are  greater or less than estimated, the gross margin on the project
may  be  greater  or  less  than  originally  recorded  under  the percentage of
completion  method.


                                       19
<PAGE>
Uncollectible  Receivables

We  respond to calls for air medical transports without pre-screening the credit
worthiness  of  the  patient.  Uncollectible  trade  receivables  are charged to
operations  using  the  allowance method. Estimates of uncollectible receivables
are  determined  monthly  based  on  historical collection rates applied to each
account based upon payer classification and adjusted monthly thereafter based on
actual  collections.  If  actual  future collections are more or less than those
projected  by  management,  adjustments to allowances for uncollectible accounts
may  be  required. There can be no guarantee that we will continue to experience
the  same collection rates that we have in the past. Based on related net flight
revenue  for  the  nine  months  ended September 30, 2006, a change of 100 basis
points in the percentage of estimated uncollectible accounts would have resulted
in  a  change  of  approximately  $2,282,000  in  bad  debt  expense.

Deferred  Income  Taxes

In  preparation  of  the  consolidated  financial statements, we are required to
estimate  income  taxes  in  each of the jurisdictions in which we operate. This
process  involves estimating actual current tax exposure together with assessing
temporary  differences  resulting  from  differing  treatment  of items, such as
depreciable assets, for tax and accounting purposes. These differences result in
deferred  tax  assets  and  liabilities,  which are included in the consolidated
balance  sheets.  We then assess the likelihood that deferred tax assets will be
recoverable  from  future  taxable  income  and record a valuation allowance for
those  amounts  we  believe  are  not  likely  to  be  realized. Establishing or
increasing  a  valuation  allowance in a period increases income tax expense. We
consider  estimated  future  taxable  income,  tax  planning strategies, and the
expected  timing of reversals of existing temporary differences in assessing the
need for a valuation allowance against deferred tax assets. In the event we were
to  determine  that  we  would  not  be  able  to realize all or part of our net
deferred  tax  assets  in  the  future, an adjustment to the valuation allowance
would  be charged to income in the period such determination was made. Likewise,
should  we determine that we would be able to realize our deferred tax assets in
the  future in excess of our net recorded amount, an adjustment to the valuation
allowance  would  increase  income  in  the  period such determination was made.

Depreciation  and  Residual  Values

In accounting for long-lived assets, we make estimates about the expected useful
lives,  projected residual values and the potential for impairment. Estimates of
useful  lives  and  residual  values  of aircraft are based upon actual industry
experience  with  the same or similar aircraft types and anticipated utilization
of  the  aircraft.  Changing  market prices of new and used aircraft, government
regulations and changes in our maintenance program or operations could result in
changes  to  these  estimates.  Long-lived  assets  are evaluated for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of long-lived assets is measured
by  a  comparison  of  the  carrying amount of an asset to future net cash flows
expected  to  be  generated  by  the  asset.


ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

Market  risk  is the potential loss arising from adverse changes in market rates
and  prices,  such  as  foreign currency exchange and interest rates. All of our
sales  and  related  receivables  are payable in U.S. dollars. We are subject to
interest  rate  risk on our debt obligations and notes receivable, some of which
have  fixed  interest  rates, except $20,912,000 outstanding against the line of
credit  and  $25,829,000  in  notes payable. Based on the amounts outstanding at
September  30,  2006,  the  annual  impact  of  a  change of 100 basis points in
interest  rates  would  be  approximately  $467,000.  Interest  rates  on  these
instruments  approximate  current  market  rates  as  of  September  30,  2006.

Periodically we enter into interest rate risk hedges to minimize exposure to the
effect of an increase in interest rates. As of September 30, 2006, we were party
to  one  interest  rate swap agreement. The swap agreement provides that we will
pay  a 3.62% fixed interest rate on $829,000 of notional principal and receive a
floating  interest  rate  (LIBOR  plus  2.50%)  on  the  same amount of notional
principal  from  the  counterparty.


                                       20
<PAGE>
ITEM  4.  CONTROLS  AND  PROCEDURES

DISCLOSURE  CONTROLS  AND  PROCEDURES

We  maintain disclosure controls and procedures that are designed to ensure that
information  required  to  be disclosed in our reports filed or submitted to the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods
specified  by  the  Commission's  rules  and  forms,  and  that  information  is
accumulated  and  communicated  to management, including the principal executive
and  financial officers (referred to in this report as the Certifying Officers),
as  appropriate  to  allow  timely  decisions  regarding  required  disclosure.
Management,  under  the supervision and with the participation of the Certifying
Officers,  evaluated  the effectiveness of disclosure controls and procedures as
of  September 30, 2006, pursuant to Rule 13a-15(b) under the Exchange Act. Based
on that evaluation, the Certifying Officers have concluded that, as of September
30,  2006,  our  disclosure  controls  and  procedures  were  effective.

CHANGES  IN  INTERNAL  CONTROL  OVER  FINANCIAL  REPORTING

There  were  no  significant  changes  in  our  internal  control over financial
reporting  that  occurred during the most recently completed fiscal quarter that
have  materially  affected,  or  are reasonably likely to materially affect, our
internal  control  over  financial  reporting.


                                       21
<PAGE>
                           PART II: OTHER INFORMATION

ITEM 1. LEGAL  PROCEEDINGS

         Not  Applicable

ITEM 1A. RISK  FACTORS

There  have  been  no  material  changes in our risk factors as disclosed in our
annual report on Form 10-K for the year ended December 31, 2005, except as noted
below:

-    Employee  unionization  -  In  September  2003,  our  pilots  voted  to  be
     represented  by  a collective bargaining unit, and we signed a CBA on March
     31,  2006.  The  agreement  is effective January 1, 2006, through April 30,
     2009.  The  CBA establishes procedures for training, addressing grievances,
     discipline  and  discharge,  among  other  matters,  and  defines vacation,
     holiday,  sick, health insurance, and other employee benefits. The CBA also
     establishes  wage  scales,  including adjustments for geographic locations,
     covering  each year of the agreement. Significant changes from our previous
     wage  rates  or  benefits  include  increases  in  initial  base pay rates,
     dependent  upon  each  pilot's  level  of  seniority;  increase  in pay for
     overtime  shifts from regular pay rates to 1.5 times regular pay rates; and
     changes in our contributions to defined contribution retirement plans (401k
     plans). Previously, under one 401k plan, we contributed 2% of gross pay for
     all  eligible  employees and matched 60% of the employees' contributions up
     to  6%  of  their  gross  pay.  Under the other plan, we matched 30% of the
     employees'  contributions up to 6% of their gross pay. The CBA provides for
     Company contributions up to 5.6% of gross pay to both 401k plans, depending
     on  the  level  of each employee's participation. We recorded approximately
     $1,983,000  and  $5,750,000  in incremental salary and benefit costs during
     the  quarter  and  nine months ended September 30, 2006, respectively, as a
     result  of  implementing the CBA provisions. Other employee groups may also
     elect  to  be  represented  by  unions  in  the  future.

ITEM 2. CHANGES  IN  SECURITIES

          Not Applicable

ITEM 3. DEFAULTS  UPON  SENIOR  SECURITIES

          Not Applicable

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

          The 2006 Annual Meeting of Stockholders was held on August 2, 2006. At
          the  meeting,  Dr. Lowell D. Miller and Messrs. Ralph J. Bernstein and
          Paul  H.  Tate were elected to Class III directorships. Voting results
          were  as  follows:

<TABLE>
<CAPTION>
                                           Total Vote
                         Total Vote For  Withheld From
                         Each Director   Each Director
                         --------------  -------------
<S>                      <C>             <C>
     Ralph J. Bernstein      10,005,958        126,355
     Lowell D. Miller        10,003,559        128,754
     Paul H. Tate             9,729,061        403,252
</TABLE>

     Following  the  meeting,  George  W.  Belsey;  Samuel  H.  Gray;  David
     Kikumoto;  Maj. Gen. Carl H. McNair, Jr. (Ret.); Morad Tahbaz; and Aaron D.
     Todd  continued  to  serve  as  directors.

     Stockholders  approved  the  2006  Equity  Compensation Plan which had been
     adopted  by  the  Board  of  Directors  in May 2006, subject to stockholder
     approval.  Voting  results  were  as  follows:

<TABLE>
<CAPTION>
        For      Against   Abstain/Broker Non-Vote
     ---------  ---------  -----------------------
<S>             <C>        <C>
     5,666,281  1,050,958         3,415,074
</TABLE>


                                       22
<PAGE>

ITEM 5. OTHER  INFORMATION

          Not Applicable

ITEM 6. EXHIBITS

     10.1     2006  Equity  Compensation  Plan

     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


                                       23
<PAGE>
SIGNATURES

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


                                        AIR METHODS CORPORATION


Date:  November 8, 2006                 By \s\  Aaron D. Todd
                                          --------------------------------------
                                          Aaron D. Todd
                                          Chief Executive Officer
                                          (Principal Executive Officer)


Date:  November 8, 2006                 By \s\  Trent J. Carman
                                          --------------------------------------
                                          Trent J. Carman
                                          Chief Financial Officer
                                          (Principal Financial Officer)


Date:  November 8, 2006                 By \s\  Sharon J. Keck
                                          --------------------------------------
                                          Sharon J. Keck
                                          Chief Accounting Officer
                                          (Principal Accounting Officer)


                                       24