----

----

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

| For      the quarterly period ended | June      30, 2008 |
|-------------------------------------|--------------------|

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

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

| Delaware                                                            | 84-0915893                                   |
|---------------------------------------------------------------------|----------------------------------------------|
| (State      or Other Jurisdiction of Incorporation or Organization) | (I.R.S.      Employer Identification Number) |
|                                                                |                                         |
| 7301 South Peoria,      Englewood, Colorado                         | 80112                                        |
| (Address      of Principal Executive Offices)                       | (Zip      Code)                              |

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

----

----

----

TABLE OF CONTENTS

| PART      I.  | FINANCIAL      INFORMATION |                                                                                                 |
|---------------|----------------------------|------------------------------------------------------------------------------------------------------|
|          |                       |                                                                                                 |   |
|          | Item      1.               | Consolidated Unaudited Financial Statements                                                          |   |
|          |                       |                                                                                                 |   |
|          |                       | Consolidated Balance Sheets – June 30, 2008 and December 31,      2007                         | 1 |
|          |                       |                                                                                                 |   |
|          |                       | Consolidated Statements of Operations for the three and six      months ended June 30, 2008 and 2007 | 3 |
|          |                       |                                                                                                 |   |
|          |                       | Consolidated Statements of Cash Flows for the six months ended      June 30, 2008 and 2007           | 4 |
|          |                       |                                                                                                 |   |
|          |                       | Notes to Unaudited Consolidated Financial      Statements                                            | 6 |
|          |                       |                                                                                                 |   |
|          | Item      2.               | Management’s Discussion and Analysis of Financial Condition and      Results of Operations     | 11 |
|          |                       |                                                                                                 |   |
|          | Item      3.               | Quantitative and Qualitative Disclosures about Market      Risk                                      | 19 |
|          |                       |                                                                                                 |   |
|          | Item      4.               | Controls and Procedures                                                                              | 20 |
|          |                       |                                                                                                 |   |
| PART      II. | OTHER      INFORMATION     |                                                                                                 |
|          |                       |                                                                                                 |   |
|          | Item      1.               | Legal Proceedings                                                                                    | 21 |
|          |                       |                                                                                                 |   |
|          | Item      1A.              | Risk Factors                                                                                         | 21 |
|          |                       |                                                                                                 |   |
|          | Item      2.               | Unregistered Sales of Equity Securities and Use of      Proceeds                                     | 21 |
|          |                       |                                                                                                 |   |
|          | Item      3.               | Defaults upon Senior Securities                                                                      | 21 |
|          |                       |                                                                                                 |   |
|          | Item      4.               | Submission of Matters to a Vote of Security      Holders                                             | 21 |
|          |                       |                                                                                                 |   |
|          | Item      5.               | Other Information                                                                                    | 21 |
|          |                       |                                                                                                 |   |
|          | Item      6.               | Exhibits                                                                                             | 21 |
|          |                       |                                                                                                 |   |
| SIGNATURES    | 22                         |

----

Table of Contents

Item 1. Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS

|                                                                                                                              |   | June 30,2008 |    |   | December 31,2007 |        |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-----------------------|-------------|
| Assets                                                                                                                            |   |              |    |   |                  |        |
|                                                                                                                              |   |              |    |   |                  |        |
| Current      assets:                                                                                                              |   |              |    |   |                  |        |
| Cash      and cash equivalents                                                                                                    |   | $                 | 9,574   |   |                  |        | 5,134 |   |
| Current      installments of notes receivable                                                                                     |   |              | 750     |   |                  |        | 881 |   |
| Receivables:                                                                                                                      |   |              |    |   |                  |        |   |   |
| Trade,      net                                                                                                                   |   |              | 136,042 |   |                  |        | 135,633 |   |
| Refundable      income taxes                                                                                                      |   |              | --      |   |                  |        | 20,669 |   |
| Other                                                                                                                             |   |              | 2,887   |   |                  |        | 2,760 |   |
| Total      receivables                                                                                                            |   |              | 138,929 |   |                  |        | 159,062 |   |
|                                                                                                                              |   |              |    |   |                  |        |   |   |
| Inventories                                                                                                                       |   |              | 17,491  |   |                  |        | 15,241 |   |
| Work-in-process      on medical interiors and products contracts                                                                  |   |              | 2,443   |   |                  |        | 1,395 |   |
| Assets      held for sale                                                                                                         |   |              | 22,024  |   |                  |        | 25,865 |   |
| Costs      and estimated earnings in excess of billings on uncompleted      contracts                                             |   |              | 5,741   |   |                  |        | 3,457 |   |
| Prepaid      expenses and other                                                                                                   |   |              | 4,016   |   |                  |        | 3,822 |   |
|                                                                                                                              |   |              |    |   |                  |        |   |   |
| Total      current assets                                                                                                         |   |              | 200,968 |   |                  |        | 214,857 |   |
|                                                                                                                              |   |              |    |   |                  |        |   |   |
| Property      and equipment:                                                                                                      |   |              |    |   |                  |        |   |   |
| Land                                                                                                                              |   |              | 251     |   |                  |        | 251 |   |
| Flight      and ground support equipment                                                                                          |   |              | 192,349 |   |                  |        | 179,123 |   |
| Furniture      and office equipment                                                                                               |   |              | 17,016  |   |                  |        | 16,475 |   |
|                                                                                                                              |   |              | 209,616 |   |                  |        | 195,849 |   |
| Less      accumulated depreciation and amortization                                                                               |   |              | (87,706 | )      |                  |        | (81,103 | ) |
|                                                                                                                              |   |              |    |   |                  |        |   |   |
| Net      property and equipment                                                                                                   |   |              | 121,910 |   |                  |        | 114,746 |   |
|                                                                                                                              |   |              |    |   |                  |        |   |   |
| Goodwill      (note 2)                                                                                                            |   |              | 22,433  |   |                  |        | 20,307 |   |
| Notes      receivable, less current installments                                                                                  |   |              | 697     |   |                  |        | 1,251 |   |
| Other      assets, net of accumulated amortization of $2,079 and $1,959 at June 30,      2008 and December 31, 2007, respectively |   |              | 20,241  |   |                  |        | 18,391 |   |
|                                                                                                                              |   |              |    |   |                  |        |   |   |
| Total      assets                                                                                                                 |   | $                 | 366,249 |   |                  |        | 369,552 |   |
|                                                                                                                              |   |              |    |   |                  |        |   |   |
|                                                                                                                              |   |              |    |   |                  | (Continued) |   |

----

Table of Contents

|                                                                                                                                                                     |   | June 30,2008 |       |   | December 31,2007 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|-----------------------|--------|
| Liabilities and      Stockholders' Equity                                                                                                                                |   |              |       |   |                  |   |
|                                                                                                                                                                     |   |              |       |   |                  |   |
| Current      liabilities:                                                                                                                                                |   |              |       |   |                  |   |
| Notes      payable                                                                                                                                                       |   | $                 | 19,627     |   |                  |   | 24,203 |   |
| Current      installments of long-term debt                                                                                                                              |   |              | 15,925     |   |                  |   | 17,250 |   |
| Current      installments of obligations under capital leases                                                                                                            |   |              | 1,087      |   |                  |   | 1,100 |   |
| Accounts      payable                                                                                                                                                    |   |              | 14,701     |   |                  |   | 14,970 |   |
| Deferred      revenue                                                                                                                                                    |   |              | 6,799      |   |                  |   | 6,321 |   |
| Billings      in excess of costs and estimated earnings on uncompleted      contracts                                                                                    |   |              | 961        |   |                  |   | 1,621 |   |
| Accrued      wages and compensated absences                                                                                                                              |   |              | 10,369     |   |                  |   | 11,782 |   |
| Accrued      lease costs for assets held for sale (note 2)                                                                                                               |   |              | 3,479      |   |                  |   | 6,331 |   |
| Due      to third party payers                                                                                                                                           |   |              | 3,538      |   |                  |   | 3,901 |   |
| Deferred      income taxes                                                                                                                                               |   |              | 3,004      |   |                  |   | 3,030 |   |
| Other      accrued liabilities                                                                                                                                           |   |              | 14,046     |   |                  |   | 11,590 |   |
|                                                                                                                                                                     |   |              |       |   |                  |   |   |   |
| Total      current liabilities                                                                                                                                           |   |              | 93,536     |   |                  |   | 102,099 |   |
|                                                                                                                                                                     |   |              |       |   |                  |   |   |   |
| Long-term      debt, less current installments                                                                                                                           |   |              | 75,682     |   |                  |   | 75,611 |   |
| Obligations      under capital leases, less current installments                                                                                                         |   |              | 612        |   |                  |   | 1,140 |   |
| Deferred      income taxes                                                                                                                                               |   |              | 26,443     |   |                  |   | 28,159 |   |
| Other      liabilities                                                                                                                                                   |   |              | 19,113     |   |                  |   | 20,523 |   |
|                                                                                                                                                                     |   |              |       |   |                  |   |   |   |
| Total      liabilities                                                                                                                                                   |   |              | 215,386    |   |                  |   | 227,532 |   |
|                                                                                                                                                                     |   |              |       |   |                  |   |   |   |
| Stockholders'      equity (notes 3, 4, and 5):                                                                                                                           |   |              |       |   |                  |   |   |   |
| Preferred      stock, $1 par value.  Authorized 5,000,000 shares, none      issued                                                                             |   |              | --         |   |                  |   | -- |   |
| Common      stock, $.06 par value. Authorized 16,000,000 shares; issued 12,217,979 and      12,136,879 shares at June 30, 2008, and December 31, 2007,      respectively |   |              |   733 |   |                  |   |   728 |   |
| Additional      paid-in capital                                                                                                                                          |   |              | 78,372     |   |                  |   | 76,698 |   |
| Retained      earnings                                                                                                                                                   |   |              | 71,758     |   |                  |   | 64,594 |   |
|                                                                                                                                                                     |   |              |       |   |                  |   |   |   |
| Total      stockholders' equity                                                                                                                                          |   |              | 150,863    |   |                  |   | 142,020 |   |
|                                                                                                                                                                     |   |              |       |   |                  |   |   |   |
| Total      liabilities and stockholders’ equity                                                                                                                    |   | $                 | 366,249    |   |                  |   | 369,552 |   |

----

Table of Contents

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                      |   | Three      Months EndedJune 30, |       |   | Six      Months EndedJune 30, |   |
|---------------------------------------------------------------------------|--------|--------------------------------------|------------|--------|------------------------------------|--------|
|                                                                      |   | 2008                                 |       |   | 2007                               |   |   | 2008 |   |   | 2007 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |
| Revenue:                                                                  |   |                                 |       |   |                               |   |   |   |   |   |   |   |
| Flight      revenue, net                                                  |   | $                                    | 124,746    |   |                               |   | 89,695 |   |   |   | 239,219 |   |   |   | 168,856 |   |
| Sales      of medical interiors and products                              |   |                                 | 3,213      |   |                               |   | 1,038 |   |   |   | 6,839 |   |   |   | 3,335 |   |
|                                                                      |   |                                 | 127,959    |   |                               |   | 90,733 |   |   |   | 246,058 |   |   |   | 172,191 |   |
| Operating      expenses:                                                  |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Flight      centers                                                       |   |                                 | 52,980     |   |                               |   | 37,244 |   |   |   | 105,120 |   |   |   | 72,794 |   |
| Aircraft      operations                                                  |   |                                 | 30,454     |   |                               |   | 17,419 |   |   |   | 57,520 |   |   |   | 32,663 |   |
| Aircraft      rental                                                      |   |                                 | 11,721     |   |                               |   | 6,019 |   |   |   | 22,800 |   |   |   | 11,826 |   |
| Cost      of medical interiors and products sold                          |   |                                 | 2,341      |   |                               |   | 386 |   |   |   | 5,344 |   |   |   | 2,126 |   |
| Depreciation      and amortization                                        |   |                                 | 4,202      |   |                               |   | 3,479 |   |   |   | 8,300 |   |   |   | 6,890 |   |
| Gain      on disposition of assets, net                                   |   |                                 | (130       | )      |                               |   | (497 | ) |   |   | (1,438 | ) |   |   | (345 | ) |
| General      and administrative                                           |   |                                 | 17,578     |   |                               |   | 12,568 |   |   |   | 34,724 |   |   |   | 24,719 |   |
|                                                                      |   |                                 | 119,146    |   |                               |   | 76,618 |   |   |   | 232,369 |   |   |   | 150,673 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                                     |   |                                 | 8,813      |   |                               |   | 14,115 |   |   |   | 13,689 |   |   |   | 21,518 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Other      income (expense):                                              |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                     |   |                                 | (1,106     | )      |                               |   | (1,318 | ) |   |   | (2,673 | ) |   |   | (2,740 | ) |
| Other,      net                                                           |   |                                 | 609        |   |                               |   | 491 |   |   |   | 1,252 |   |   |   | 946 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                                           |   |                                 | 8,316      |   |                               |   | 13,288 |   |   |   | 12,268 |   |   |   | 19,724 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense                                                   |   |                                 | (3,482     | )      |                               |   | (5,463 | ) |   |   | (5,104 | ) |   |   | (8,201 | ) |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                           |   | $                                    | 4,834      |   |                               |   | 7,825 |   |   |   | 7,164 |   |   |   | 11,523 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Basic      income per common share (note 5)                               |   | $                                    | .40        |   |                               |   | .66 |   |   |   | .59 |   |   |   | .97 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Diluted      income per common share (note 5)                             |   | $                                    | .38        |   |                               |   | .63 |   |   |   | .57 |   |   |   | .93 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of common shares outstanding – basic   |   |                                 | 12,181,790 |   |                               |   | 11,886,613 |   |   |   | 12,166,566 |   |   |   | 11,881,751 |   |
|                                                                      |   |                                 |       |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of common shares outstanding – diluted |   |                                 | 12,608,043 |   |                               |   | 12,431,098 |   |   |   | 12,617,804 |   |   |   | 12,382,830 |   |

----

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                |   | Six      Months Ended June 30, |    |
|-----------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                                |   | 2008                                |    |   | 2007 |   |
|                                                                                                |   |                                |    |   |   |   |
| Cash      flows from operating activities:                                                          |   |                                |    |   |   |   |
| Net      income                                                                                     |   | $                                   | 7,164   |   |   |   | 11,523 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities:         |   |                                |    |   |   |   |   |   |
| Depreciation      and amortization expense                                                          |   |                                | 8,300   |   |   |   | 6,890 |   |
| Deferred      income tax expense (benefit)                                                          |   |                                | 4,461   |   |   |   | (1,853 | ) |
| Stock-based      compensation                                                                       |   |                                | 1,040   |   |   |   | 1,104 |   |
| Tax      benefit from exercise of stock options                                                     |   |                                | --      |   |   |   | (68 | ) |
| Gain      on disposition of assets, net                                                             |   |                                | (1,438  | ) |   |   | (345 | ) |
| Changes      in assets and liabilities:                                                             |   |                                |    |   |   |   |   |   |
| Increase      in prepaid expenses and other current assets                                          |   |                                | (194    | ) |   |   | (124 | ) |
| Decrease      in receivables                                                                        |   |                                | 12,152  |   |   |   | 1,698 |   |
| Increase      in inventories                                                                        |   |                                | (2,250  | ) |   |   | (1,402 | ) |
| Increase      in work-in-process on medical interiors and costs in excess of      billings          |   |                                | (3,332  | ) |   |   | (767 | ) |
| Increase      (decrease) in accounts payable, other accrued liabilities, and other      liabilities |   |                                | (2,215  | ) |   |   | 4,992 |   |
| Increase      (decrease) in deferred revenue and billings in excess of    costs                     |   |                                | (182    | ) |   |   | 882 |   |
| Net      cash provided by operating activities                                                      |   |                                | 23,506  |   |   |   | 22,530 |   |
|                                                                                                |   |                                |    |   |   |   |   |   |
| Cash      flows from investing activities:                                                          |   |                                |    |   |   |   |   |   |
| Acquisition      of property and equipment                                                          |   |                                | (22,856 | ) |   |   | (9,238 | ) |
| Proceeds      from disposition and sale of equipment and assets held for      sale                  |   |                                | 6,303   |   |   |   | 1,529 |   |
| Increase      in notes receivable and other assets                                                  |   |                                | (1,286  | ) |   |   | (2,686 | ) |
| Net      cash used in investing activities                                                          |   |                                | (17,839 | ) |   |   | (10,395 | ) |
|                                                                                                |   |                                |    |   |   |   |   |   |
|                                                                                                |   |                                |    |   |   | (Continued) |   |

----

Table of Contents

|                                                  |   | Six      Months Ended June 30, |   |
|-------------------------------------------------------|--------|-------------------------------------|--------|
|                                                  |   | 2008                                |   |   | 2007 |   |
|                                                  |   |                                |   |   |   |   |
| Cash      flows from financing activities:            |   |                                |   |   |   |   |
| Proceeds      from issuance of common stock, net      |   | $                                   | 639    |   |   |   | 103 |   |
| Tax      benefit from exercise of stock options       |   |                                | --     |   |   |   | 68 |   |
| Net      borrowings (payments) under line of credit   |   |                                | 5,531  |   |   |   | (8,099 | ) |
| Proceeds      from issuance of long-term debt         |   |                                | --     |   |   |   | 1,573 |   |
| Payments      for debt issue costs                    |   |                                | (71    | ) |   |   | (46 | ) |
| Payments      of long-term debt                       |   |                                | (6,785 | ) |   |   | (4,932 | ) |
| Payments      of capital lease obligations            |   |                                | (541   | ) |   |   | (839 | ) |
| Net      cash used in financing activities            |   |                                | (1,227 | ) |   |   | (12,172 | ) |
|                                                  |   |                                |   |   |   |   |   |   |
| Increase      (decrease) in cash and cash equivalents |   |                                | 4,440  |   |   |   | (37 | ) |
|                                                  |   |                                |   |   |   |   |   |   |
| Cash      and cash equivalents at beginning of period |   |                                | 5,134  |   |   |   | 4,219 |   |
|                                                  |   |                                |   |   |   |   |   |   |
| Cash      and cash equivalents at end of period       |   | $                                   | 9,574  |   |   |   | 4,182 |   |
|                                                  |   |                                |   |   |   |   |   |   |
| Interest      paid in cash during the period          |   | $                                   | 2,327  |   |   |   | 2,775 |   |
|                                                  |   |                                |   |   |   |   |   |   |
| Income      taxes paid in cash during the period      |   | $                                   | 276    |   |   |   | 4,593 |   |

----

Table of Contents

Notes to Unaudited 

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

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

|                              |   | PreliminaryAllocation |    |   | Adjustments |   |   | RevisedAllocation |   |
|-----------------------------------|--------|-----------------------|---------|--------|-------------|--------|--------|-------------------|--------|
| Assets      purchased:            |   |                  |    |   |        |   |   |              |   |
| Receivables                       |   | $                     | 28,763  |   |        |   | (2,945 | )                 |   |   | 25,818 |   |
| Equipment      and other property |   |                  | 14,490  |   |        |   | (369   | )                 |   |   | 14,121 |   |
| Aircraft                          |   |                  | 5,589   |   |        |   | --     |              |   |   | 5,589 |   |
| Inventory                         |   |                  | 3,547   |   |        |   | --     |              |   |   | 3,547 |   |
| Goodwill                          |   |                  | 13,722  |   |        |   | 2,126  |              |   |   | 15,848 |   |
| Other                             |   |                  | 11,243  |   |        |   | 1,443  |              |   |   | 12,686 |   |
|                              |   |                  | 77,354  |   |        |   | 255    |              |   |   | 77,609 |   |
| Long-term      debt               |   |                  | (11,169 | )      |        |   | --     |              |   |   | (11,169 | ) |
| Other      liabilities assumed    |   |                  | (41,006 | )      |        |   | (255   | )                 |   |   | (41,261 | ) |
| Total      liabilities assumed    |   |                  | (52,175 | )      |        |   | (255   | )                 |   |   | (52,430 | ) |
| Purchase      price               |   | $                     | 25,179  |   |        |   | --     |              |   |   | 25,179 |   |

----

Table of Contents

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

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

|                                                 |   | SharesOutstanding |       |   | Amount |   |
|------------------------------------------------------|--------|-------------------|------------|--------|--------|--------|
|                                                 |   |              |       |   |   |   |
| Balances      at January 1, 2008                     |   |              | 12,136,879 |   |   | $      | 142,020 |   |
|                                                 |   |              |       |   |   |   |   |   |
| Issuance      of common shares for options exercised |   |              | 44,500     |   |   |   | 639 |   |
| Stock-based      compensation                        |   |              | 36,600     |   |   |   | 1,040 |   |
| Net      income                                      |   |              | --         |   |   |   | 7,164 |   |
|                                                 |   |              |       |   |   |   |   |   |
| Balances      at June 30, 2008                       |   |              | 12,217,979 |   |   | $      | 150,863 |   |

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

----

Table of Contents

|   | 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 outstanding during      the period and dilutive potential common  shares. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      reconciliation of basic to diluted weighted average common shares      outstanding is as follows: |
|--------|------------------------------------------------------------------------------------------------------------|

|                                                                      |   | 2008   |       |   | 2007   |   |
|---------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| For      quarter ended June 30:                                           |   |   |       |   |   |   |
| Weighted      average number of common shares outstanding – basic   |   |   | 12,181,790 |   |   |   | 11,886,613 |   |
| Dilutive      effect of:                                                  |   |   |       |   |   |   |   |   |
| Common      stock options                                                 |   |   | 422,668    |   |   |   | 460,817 |   |
| Common      stock warrants                                                |   |   | --         |   |   |   | 83,668 |   |
| Unvested      restricted stock                                            |   |   | 3,585      |   |   |   | -- |   |
| Weighted      average number of common shares outstanding – diluted |   |   | 12,608,043 |   |   |   | 12,431,098 |   |
|                                                                      |   |   |       |   |   |   |   |   |
| For      six months ended June 30:                                        |   |   |       |   |   |   |   |   |
| Weighted      average number of common shares outstanding – basic   |   |   | 12,166,566 |   |   |   | 11,881,751 |   |
| Dilutive      effect of:                                                  |   |   |       |   |   |   |   |   |
| Common      stock options                                                 |   |   | 449,189    |   |   |   | 419,180 |   |
| Common      stock warrants                                                |   |   | --         |   |   |   | 81,899 |   |
| Unvested      restricted stock                                            |   |   | 2,049      |   |   |   | -- |   |
| Weighted      average number of common shares outstanding – diluted |   |   | 12,617,804 |   |   |   | 12,382,830 |   |

|   | Common      stock options of 38,500 were not included in the diluted income per share      calculation for the quarter and six months ended June 30, 2008, because      their effect would have beenanti-dilutive. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

Table of Contents

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

|  (7) | 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 operating segments for internal reporting      and performance evaluation purposes. Operating segments and their      principal products or services are asfollows: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

|  For      quarter ended June 30:                         |   | CBS    |    |   | HBS    |   |    | ProductsDivision |   |   | CorporateActivities |   |   | IntersegmentEliminations |   |   | Consolidated |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|------------------|--------|--------|---------------------|--------|--------|--------------------------|--------|--------|--------------|--------|
| 2008                                                               |   |   |    |   |   |   |    |             |   |   |                |   |   |                     |   |   |         |   |
| External      revenue                                              |   | $      | 77,746  |   |   |   | 47,015  |             |   |   | 3,198               |   |   |                     | --     |   |         |   | -- |   |   |   | 127,959 |   |
| Intersegment      revenue                                          |   |   | 108     |   |   |   | --      |             |   |   | 5,996               |   |   |                     | --     |   |         |   | (6,104 | ) |   |   | -- |   |
| Total      revenue                                                 |   |   | 77,854  |   |   |   | 47,015  |             |   |   | 9,194               |   |   |                     | --     |   |         |   | (6,104 | ) |   |   | 127,959 |   |
| Operating      expenses, excluding depreciation & amortization |   |   | (64,518 | )      |   |   | (43,620 | )                |   |   | (7,748              | )      |   |                     | (4,409 | )      |         |   | 5,351 |   |   |   | (114,944 | ) |
| Depreciation      & amortization                               |   |   | (2,181  | )      |   |   | (1,713  | )                |   |   | (151                | )      |   |                     | (157   | )      |         |   | -- |   |   |   | (4,202 | ) |
| Interest      expense                                              |   |   | (494    | )      |   |   | (563    | )                |   |   | --                  |   |   |                     | (49    | )      |         |   | -- |   |   |   | (1,106 | ) |
| Other      income, net                                             |   |   | 569     |   |   |   | --      |             |   |   | --                  |   |   |                     | 40     |   |         |   | -- |   |   |   | 609 |   |
| Income      tax expense                                            |   |   | --      |   |   |   | --      |             |   |   | --                  |   |   |                     | (3,482 | )      |         |   | -- |   |   |   | (3,482 | ) |
| Segment      net income (loss)                                     |   | $      | 11,230  |   |   |   | 1,119   |             |   |   | 1,295               |   |   |                     | (8,057 | )      |         |   | (753 | ) |   |   | 4,834 |   |
|                                                               |   |   |    |   |   |   |    |             |   |   |                |   |   |                     |   |   |         |   |   |   |   |   |   |   |
| 2007                                                               |   |   |    |   |   |   |    |             |   |   |                |   |   |                     |   |   |         |   |   |   |   |   |   |   |
| External      revenue                                              |   | $      | 61,846  |   |   |   | 27,860  |             |   |   | 1,027               |   |   |                     | --     |   |         |   | -- |   |   |   | 90,733 |   |
| Intersegment      revenue                                          |   |   | 36      |   |   |   | --      |             |   |   | 5,385               |   |   |                     | --     |   |         |   | (5,421 | ) |   |   | -- |   |
| Total      revenue                                                 |   |   | 61,882  |   |   |   | 27,860  |             |   |   | 6,412               |   |   |                     | --     |   |         |   | (5,421 | ) |   |   | 90,733 |   |
| Operating      expenses, excluding depreciation & amortization |   |   | (45,505 | )      |   |   | (24,569 | )                |   |   | (5,249              | )      |   |                     | (2,587 | )      |         |   | 4,771 |   |   |   | (73,139 | ) |
| Depreciation      & amortization                               |   |   | (1,846  | )      |   |   | (1,389  | )                |   |   | (148                | )      |   |                     | (96    | )      |         |   | -- |   |   |   | (3,479 | ) |
| Interest      expense                                              |   |   | (657    | )      |   |   | (610    | )                |   |   | --                  |   |   |                     | (51    | )      |         |   | -- |   |   |   | (1,318 | ) |
| Other      income, net                                             |   |   | 473     |   |   |   | --      |             |   |   | --                  |   |   |                     | 18     |   |         |   | -- |   |   |   | 491 |   |
| Income      tax expense                                            |   |   | --      |   |   |   | --      |             |   |   | --                  |   |   |                     | (5,463 | )      |         |   | -- |   |   |   | (5,463 | ) |
| Segment      net income (loss)                                     |   | $      | 14,347  |   |   |   | 1,292   |             |   |   | 1,015               |   |   |                     | (8,179 | )      |         |   | (650 | ) |   |   | 7,825 |   |

----

Table of Contents

|  For      six months ended June 30:                           |   | CBS    |     |   | HBS    |   |    | ProductsDivision |   |   | CorporateActivities |   |   | IntersegmentEliminations |    |   | Consolidated |   |
|--------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|---------|------------------|--------|--------|---------------------|--------|--------|--------------------------|---------|--------|--------------|--------|
| 2008                                                               |   |   |     |   |   |   |    |             |   |   |                |   |   |                     |    |   |         |   |
| External      revenue                                              |   | $      | 147,063  |   |   |   | 92,266  |             |   |   | 6,729               |   |   |                     | --      |   |         |   | -- |   |   |   | 246,058 |   |
| Intersegment      revenue                                          |   |   | 108      |   |   |   | --      |             |   |   | 9,962               |   |   |                     | --      |   |         |   | (10,070 | ) |   |   | -- |   |
| Total      revenue                                                 |   |   | 147,171  |   |   |   | 92,266  |             |   |   | 16,691              |   |   |                     | --      |   |         |   | (10,070 | ) |   |   | 246,058 |   |
| Operating      expenses, excluding depreciation & amortization |   |   | (125,730 | )      |   |   | (84,632 | )                |   |   | (13,790             | )      |   |                     | (8,179  | )      |         |   | 8,262 |   |   |   | (224,069 | ) |
| Depreciation      & amortization                               |   |   | (4,312   | )      |   |   | (3,385  | )                |   |   | (296                | )      |   |                     | (307    | )      |         |   | -- |   |   |   | (8,300 | ) |
| Interest      expense                                              |   |   | (1,240   | )      |   |   | (1,301  | )                |   |   | --                  |   |   |                     | (132    | )      |         |   | -- |   |   |   | (2,673 | ) |
| Other      income, net                                             |   |   | 1,156    |   |   |   | --      |             |   |   | --                  |   |   |                     | 96      |   |         |   | -- |   |   |   | 1,252 |   |
| Income      tax expense                                            |   |   | --       |   |   |   | --      |             |   |   | --                  |   |   |                     | (5,104  | )      |         |   | -- |   |   |   | (5,104 | ) |
| Segment      net income (loss)                                     |   | $      | 17,045   |   |   |   | 2,948   |             |   |   | 2,605               |   |   |                     | (13,626 | )      |         |   | (1,808 | ) |   |   | 7,164 |   |
|                                                               |   |   |     |   |   |   |    |             |   |   |                |   |   |                     |    |   |         |   |   |   |   |   |   |   |
| 2007                                                               |   |   |     |   |   |   |    |             |   |   |                |   |   |                     |    |   |         |   |   |   |   |   |   |   |
| External      revenue                                              |   | $      | 115,245  |   |   |   | 53,632  |             |   |   | 3,314               |   |   |                     | --      |   |         |   | -- |   |   |   | 172,191 |   |
| Intersegment      revenue                                          |   |   | 36       |   |   |   | 473     |             |   |   | 8,979               |   |   |                     | --      |   |         |   | (9,488 | ) |   |   | -- |   |
| Total      revenue                                                 |   |   | 115,281  |   |   |   | 54,105  |             |   |   | 12,293              |   |   |                     | --      |   |         |   | (9,488 | ) |   |   | 172,191 |   |
| Operating      expenses, excluding depreciation & amortization |   |   | (88,900  | )      |   |   | (46,970 | )                |   |   | (9,758              | )      |   |                     | (5,997  | )      |         |   | 7,842 |   |   |   | (143,783 | ) |
| Depreciation      & amortization                               |   |   | (3,660   | )      |   |   | (2,747  | )                |   |   | (296                | )      |   |                     | (187    | )      |         |   | -- |   |   |   | (6,890 | ) |
| Interest      expense                                              |   |   | (1,366   | )      |   |   | (1,259  | )                |   |   | --                  |   |   |                     | (115    | )      |         |   | -- |   |   |   | (2,740 | ) |
| Other      income, net                                             |   |   | 910      |   |   |   | --      |             |   |   | --                  |   |   |                     | 36      |   |         |   | -- |   |   |   | 946 |   |
| Income      tax expense                                            |   |   | --       |   |   |   | --      |             |   |   | --                  |   |   |                     | (8,201  | )      |         |   | -- |   |   |   | (8,201 | ) |
| Segment      net income (loss)                                     |   | $      | 22,265   |   |   |   | 3,129   |             |   |   | 2,239               |   |   |                     | (14,464 | )      |         |   | (1,646 | ) |   |   | 11,523 |   |

----

Table of Contents

ITEM 2.   

| · | Community-Based      Services (CBS) - provides air medical transportation services to the      general population as an independent service. Revenue consists of flight      fees billed directly to patients, their insurers, or governmental      agencies, and cash flow is dependent upon collection from these      individuals or entities. In the first six      months of 2008, the CBS Division generated 60% of our total revenue,      compared to 67% in the first six months of2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Hospital-Based      Services (HBS) - provides air medical transportation services to hospitals      throughout the U.S. under exclusive operating agreements. Revenue consists      of fixed monthly fees (approximately 65% of total contract revenue) and      hourly flight fees (approximately 35% of total contract revenue) billed to      hospital customers. In the six months ended June 30, 2008, the HBS      Division generated 37% of our total revenue, compared to 31% in the six      months ended June 30, 2007. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | 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 3% of our total      revenue in the six months ended June 30, 2008, compared to 2% in      2007. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Flight volume.      Fluctuations in flight volume have a greater impact on CBS operations than      HBS operations because almost all of CBS revenue is derived from flight      fees, as compared to approximately 35% of HBS revenue. By contrast, 77% of      our costs primarily associated with flight operations (including salaries,      aircraft ownership costs, hull insurance, and general and administrative      expenses) incurred during the first six months of 2008 are mainly fixed in      nature. While flight volume is affected by many factors, including      competition and the effectiveness of marketing and business development      initiatives, the greatest single variable has historically been weather      conditions. Adverse weather conditions—such as fog, high winds, or heavy      precipitation—hamper our ability to operate our aircraft safely and,      therefore, result in reduced flight volume. Total patient transports for      CBS operations were approximately 11,600 and 22,200 for the quarter and      six months ended June 30, 2008, respectively, compared to approximately      9,800 and 18,100 for the quarter and six months ended June 30, 2007,      respectively. Patient transports for CBS bases open longer than one year      (Same-Base Transports) were approximately 8,700 and 16,200 in the quarter      and six months ended June 30, 2008, respectively, compared to      approximately 9,400 and 17,400 in the quarter and six months ended June      30, 2007, respectively. Cancellations due to unfavorable weather      conditions for CBS bases open longer than one year were 459, or 24.5%, and      1,095 or 27.5%, higher in the quarter and six months ended June 30, 2008,      respectively, compared to 2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| · | Reimbursement per      transport. We respond to calls for air medical transports without      pre-screening the creditworthiness of the patient and are subject to      collection risk on services provided to insured and uninsured patients.      Medicare and Medicaid also receive contractual discounts from our standard      charges for flight services. Flight revenue is recorded net of provisions      for contractual discounts and estimated uncompensated care. Both      provisions are estimated during the period the related services are      performed based on historical collection experience and any known trends      or changes in reimbursement rate schedules and payer mix. The provisions      are adjusted as required based on actual collections in subsequent      periods. Net reimbursement per transport for CBS operations is primarily a      function of price, payer mix, and timely and effective collection efforts.      Both the pace of collections and the ultimate collection rate are affected      by the overall health of the U.S. economy, which impacts the number of      indigent patients and funding for state-run programs, such as Medicaid.      Medicaid reimbursement rates in many jurisdictions have remained well      below the cost of providing air medical transportation. In addition, the      collection rate is impacted by changes in the cost of healthcare and      health insurance; as the cost of healthcare increases, health insurance      coverage provided by employers may be reduced or eliminated entirely,      resulting in an increase in the uninsured population. The average gross      charge per transport increased 14.3% in the six months ended June 30,      2008, compared to 2007, contributing to an increase of 4.0% in net      reimbursement per transport over the same period. Provisions for      contractual discounts and estimated uncompensated care for CBS operations      are as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     | For      quarters endedJune 30, | For      six months endedJune 30, |
|------------------------------------------|--------------------------------------|----------------------------------------|
|                                     | 2008                                 | 2007                                   | 2008 | 2007 |
| Gross      billings                      |  100%                           |  100%                             |  100% |  100% |
| Provision      for contractual discounts |  33%                            |  29%                              |  34% |  31% |
| Provision      for uncompensated care    |  22%                            |  22%                              |  21% |  20% |

| · | Aircraft      maintenance. Both CBS and HBS operations are directly affected by      fluctuations in aircraft maintenance costs. Proper operation of the      aircraft by flight crews and standardized maintenance practices can help      to contain maintenance costs. Increases in spare parts prices from      original equipment manufacturers tend to be higher for aircraft which are      no longer in production. Five models of aircraft within our fleet,      representing 30% of the rotor wing fleet, are no longer in production and      are, therefore, susceptible to price increases which outpace general      inflationary trends. In addition,      on-condition components are more likely to require replacement with age.      Since January 1, 2007, we have taken delivery of 43 new aircraft and have      the option to purchase 22 additional aircraft through the end of 2008. We      plan to replace discontinued models and other older aircraft with the new      aircraft expected to be delivered under these options, as well as to      provide capacity for base expansion. Replacement models of aircraft      typically have higher ownership costs than the models targeted for      replacement but lower maintenance costs. Total      maintenance expense for CBS and HBS operations increased 72.9% and 77.4%      for the quarter and six months ended June 30, 2008, respectively, compared      to 2007, while total flight volume for CBS and HBS operations increased      24.4% and 30.5% for the quarter and six months ended June      30,  2008, compared to 2007. During the quarter and six months      ended June 30, 2008, we incurred costs for 40 and 71 engine overhauls,      respectively, compared to 25 and 37 overhauls in the quarter and six      months ended June 30, 2007, respectively. The increase is primarily      attributed to the timing of overhaul cycles, as well as to the acquisition      of CJ. The acquisition of CJ resulted in an increase in the percentage of      our fleet comprised of twin-engine aircraft, which tend to have higher      maintenance costs than single-engine aircraft. Maintenance      cost per hour on newer aircraft has remained relatively constant on an      annual basis. Maintenance cost per hour on older models of aircraft,      however, may vary more widely on a quarterly basis depending on component      overhaul and replacement and aircraft refurbishment  cycles. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| · | Fuel costs. Both      the cost and availability of fuel are influenced by many economic and      political factors and events occurring in oil-producing countries      throughout the world, and fuel costs fluctuate widely. The price per      barrel of oil has maintained near record levels over the past several      years. We cannot predict the future cost and availability of fuel.      Generally, our HBS customers pay for all fuel consumed in medical flights.      However, our ability to pass on increased fuel costs for CBS operations      may be limited by economic and competitive conditions and by reimbursement      rates established by Medicare, Medicaid, and insurance providers. We do      not currently have any agreements in place to hedge our fuel costs. The      cost of aircraft fuel per hour flown for CBS operations increased      approximately 69.5% and 57.3% in the quarter and six months ended June      30,  2008, compared to2007. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

Table of Contents

| · | CBS      – Net flight revenue increased $15,896,000, or 25.7%, to $77,731,000 for      the second quarter of 2008 and $31,731,000, or 27.5%, to $146,956,000 for      the six months ended June 30, 2008, for the following    reasons: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net      revenue of $11,323,000 and $23,249,000 from CJ’s CBS operations during the      quarter and six months ended June 30, 2008,  respectively. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increases      of 16.7% and 14.3% in average gross charge per transport for the quarter      and six months ended June 30, 2008, respectively, compared to 2007. Net      reimbursement per transport increased approximately 4.9% and 4.0%, over      the same periods. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Incremental      net revenue of $6,917,000 and $12,059,000 for the quarter and six months      ended June 30, 2008, respectively, generated from the addition of fourteen      new CBS bases either during or subsequent to the first six months of      2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Closure      of three bases subsequent to the second quarter of 2007 and the conversion      of another base to HBS operations during the first quarter of 2007,      resulting in decreases in net revenue of approximately $1,981,000 and      $3,805,000 during the quarter and six months ended June 30, 2008,      respectively. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Decrease      of 7.0% in Same-Base Transports for the quarter and six months ended June      30, 2008, compared to 2007. Cancellations due to unfavorable weather      conditions for CBS bases open longer than one year were 24.5% and 27.5%      higher in the quarter and six months ended June 30, 2008, respectively,      compared to 2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | HBS      – Net flight revenue increased $19,155,000, or 68.8%, to $47,015,000 for      the second quarter of 2008 and $38,632,000, or 72.0%, to $92,263,000 for      the six months ended June 30, 2008, for the following    reasons: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net      revenue of $16,107,000 and $31,474,000 from CJ’s HBS operations during the      quarter and six months ended June 30, 2008,  respectively. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Incremental      net revenue of $3,347,000 and $6,830,000 for the quarter and six months      ended June 30, 2008, generated from the addition of three new contracts,      the expansion of three contracts, and the conversion of one base from CBS      operations during or subsequent to the first six months of      2007. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cessation of service      under three contracts and the conversion of one contract to CBS operations      subsequent to the first six months of 2007, resulting in decreases      in net revenue of approximately $2,062,000 and $3,100,000 for the quarter      and six months ended June 30, 2008,  respectively. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | Decreases      of 8.0% and 2.3% in flight volume for the quarter and six months ended      June 30, 2008, respectively, for all contracts excluding the CJ contracts,      new contracts, contract expansions, and closed contracts discussed      above. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | CBS      – Flight center costs increased $7,927,000, or 32.1%, to $32,630,000 for      the second quarter of 2008 and $16,804,000, or 34.9%, to $64,928,000 for      the six months ended June 30, 2008, for the following    reasons: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Flight      center costs of approximately $5,889,000 and $11,894,000 related to CJ’s      CBS operations for the quarter and six months ended June 30, 2008,      respectively. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increases      of approximately $2,212,000 and $5,016,000 for the quarter and six months      ended June 30, 2008, respectively, for the addition of personnel to staff      new base locations described above. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Decreases      of approximately $773,000 and $1,535,000 for the quarter and six months      ended June 30, 2008, respectively, due to the closure of base locations      described above. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

Table of Contents

| · | HBS      - Flight center costs increased $7,809,000, or 62.3%, to $20,350,000 for      the second quarter of 2008 and $15,522,000, or 62.9%, to $40,192,000 for      the six months ended June 30, 2008, primarily due to the      following: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Flight      center costs of approximately $7,011,000 and $14,074,000 related to CJ’s      HBS operations for the quarter and six months ended June 30, 2008,      respectively. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increases      of approximately $1,585,000 and $2,774,000 for the quarter and six months      ended June 30, 2008, respectively, for the addition of personnel to staff      new base locations described above. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Decreases      of approximately $955,000 and $1,573,000 for the quarter and six months      ended June 30, 2008, respectively, due to the closure of base locations      described above. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| · | Aircraft      operating expenses of $8,547,000 and $15,696,000 related to CJ’s      operations for the quarter and six months ended June 30,    2008. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Increases      of $2,730,000, or 21.3%, and $6,743,000, or 28.0%, for the quarter and six      months ended June 30, 2008, respectively, in the cost of aircraft      maintenance, excluding the effect of aircraft added as a result of the CJ      acquisition and other aircraft added to the fleet during or subsequent to      the first six months of 2007. Since the first six months of 2007, we have      placed 49 new aircraft into service and eliminated twelve aircraft which      were older models. Maintenance costs per hour on newer aircraft has      remained relatively constant on an annual basis. Maintenance costs per      hour on older models of aircraft, however, may vary more widely on a      quarterly basis depending on component overhaul and replacement and      aircraft refurbishment cycles. During the quarter and six months ended      June 30, 2008, we incurred costs for 40 and 71 engine overhauls,      respectively, compared to 25 and 37 overhauls in the quarter and six      months ended June 30, 2007, respectively. The increase is primarily      attributed to the timing of overhaul cycles and to the acquisition of      CJ. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| · | Increases      of approximately 69.5% and 57.3% in the cost of aircraft fuel per hour      flown for the quarter and six months ended June 30, 2008,      respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| · | $1,220,000      and $2,038,000 - multi-missioninteriors |
|--------|---------------------------------------------------------|

| · | $1,414,000      and $3,169,000 - modular medicalinteriors |
|--------|-----------------------------------------------------------|

| · | $579,000      and $1,632,000 - other aerospace and medical transport      products |
|--------|------------------------------------------------------------------------------------|

| · | $258,000      and $551,000 - multi-missioninteriors |
|--------|-----------------------------------------------------|

| · | $503,000      and $1,081,000 - modular medicalinteriors |
|--------|---------------------------------------------------------|

| · | $277,000      and $1,703,000 - other aerospace and medical transport      products |
|--------|------------------------------------------------------------------------------------|

----

Table of Contents

----

Table of Contents

----

Table of Contents

----

Table of Contents

| Item 3. | Quantitative      and Qualitative Disclosures about MarketRisk |
|---------|----------------------------------------------------------------|

----

Table of Contents

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

----

Table of Contents

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

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

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

| Item 3. | Defaults      upon Senior Securities |
|---------|--------------------------------------|

| Item 4. | Submission      of Matters to a Vote of SecurityHolders |
|---------|---------------------------------------------------------|

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

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

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

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

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

----

Table of Contents

SIGNATURES

|                                 | AIR      METHODS CORPORATION |
|--------------------------------------|------------------------------|
|                                 |                         |   |
|                                 |                         |   |
| Date:  August      8, 2008 | By                           |   /s/ Aaron D.    Todd |
|                                 |                         | Aaron      D. Todd |
|                                 |                         | Chief      Executive Officer |
|                                 |                         |   |
|                                 |                         |   |
| Date:  August      8, 2008 | By                           |    /s/ Trent J.      Carman |
|                                 |                         | Trent      J. Carman |
|                                 |                         | Chief      Financial Officer |
|                                 |                         |   |
|                                 |                         |   |
| Date:  August      8, 2008 | By                           |    /s/ Sharon J.      Keck |
|                                 |                         | Sharon      J. Keck |
|                                 |                         | Chief      Accounting Officer |

----