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

                                    FORM 10-Q


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

For  the  quarterly  period  ended         June  30,  2004
                                   ---------------------------------------------

                                       OR

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

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

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


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


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


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


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


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


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

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

The  number  of shares of Common Stock, par value $.06, outstanding as of August
6,  2004,  was  10,921,211.


<PAGE>
                                TABLE OF CONTENTS



PART I.     FINANCIAL INFORMATION

            Item 1.  Consolidated Unaudited Financial Statements

                     Consolidated Balance Sheets - June 30, 2004 and
                     December 31, 2003                                         1

                     Consolidated Statements of Operations for the three and
                     six months ended June 30, 2004 and 2003                   3

                     Consolidated Statements of Cash Flows for the six
                     months ended June 30, 2004 and 2003                       5

                     Notes to Unaudited Consolidated Financial Statements      7

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

            Item 3.  Quantitative and Qualitative Disclosures about Market
                     Risk                                                     23

            Item 4.  Controls and Procedures                                  23


PART II.    OTHER INFORMATION

            Item 1.  Legal Proceedings                                        24

            Item 2.  Changes in Securities                                    24

            Item 3.  Defaults upon Senior Securities                          24

            Item 4.  Submission of Matters to a Vote of Security Holders      24

            Item 5.  Other Information                                        24

            Item 6.  Exhibits and Reports on Form 8-K                         25

SIGNATURES                                                                    26


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

                    ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                    AIR METHODS CORPORATION AND SUBSIDIARIES

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

                                                                JUNE 30,   DECEMBER 31,
                                                                  2004         2003
                                                               -------------------------
<S>                                                            <C>         <C>
Assets
------

Current assets:
  Cash and cash equivalents                                    $   5,298          5,574
  Current installments of notes receivable                            59             58
  Receivables:
    Trade                                                        100,657         89,867
    Less allowance for doubtful accounts                         (37,431)       (30,301)
                                                               -------------------------
                                                                  63,226         59,566

    Other                                                          3,414          3,420
                                                               -------------------------
        Total receivables                                         66,640         62,986
                                                               -------------------------

  Inventories                                                      8,881          9,143
  Work-in-process on medical interiors and products contracts        380            145
  Assets held for sale                                               454            431
  Costs and estimated earnings in excess of billings on
    uncompleted contracts                                          1,626          2,249
  Deferred tax asset                                                  --            105
  Prepaid expenses and other                                       1,986          1,653
                                                               -------------------------

      Total current assets                                        85,324         82,344
                                                               -------------------------

Equipment and leasehold improvements:
  Land                                                               190            190
  Flight and ground support equipment                            131,184        149,568
  Furniture and office equipment                                  11,528         10,436
                                                               -------------------------
                                                                 142,902        160,194
  Less accumulated depreciation and amortization                 (48,635)       (47,117)
                                                               -------------------------

      Net equipment and leasehold improvements                    94,267        113,077
                                                               -------------------------

Goodwill                                                           6,485          6,485
Notes receivable, less current installments                        1,150          1,426
Other assets, net of accumulated amortization of $1,700 and
  $1,347 at June 30, 2004 and December 31, 2003, respectively     11,423         10,675
                                                               -------------------------

      Total assets                                             $ 198,649        214,007
                                                               =========================

                                                                             (Continued)
</TABLE>


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

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

                                                                             JUNE 30,   DECEMBER 31,
                                                                               2004         2003
                                                                             ------------------------
<S>                                                                          <C>        <C>
Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
  Current installments of long-term debt                                     $   5,927         6,110
  Current installments of obligations under capital leases                       2,700         2,886
  Accounts payable                                                               4,775         6,097
  Accrued overhaul and parts replacement costs                                      --         7,702
  Deferred revenue                                                               4,388         2,898
  Billings in excess of costs and estimated earnings on
    uncompleted contracts                                                          936           174
  Deferred income taxes                                                            862            --
  Accrued wages and compensated absences                                         6,570         6,015
  Other accrued liabilities                                                      7,107         6,780
                                                                             ------------------------

      Total current liabilities                                                 33,265        38,662

Long-term debt, less current installments                                       76,720        76,680
Obligations under capital leases, less current installments                         62           251
Accrued overhaul and parts replacement costs                                        --        26,107
Deferred income taxes                                                           10,982         5,151
Other liabilities                                                                6,097         6,468
                                                                             ------------------------

      Total liabilities                                                        127,126       153,319
                                                                             ------------------------

Stockholders' equity (note 4):

  Preferred stock, $1 par value.  Authorized 5,000,000
    shares, none issued                                                             --            --
  Common stock, $.06 par value. Authorized 16,000,000
    shares; issued 10,910,081 and 10,817,594 shares at June 30,
    2004 and December 31, 2003, respectively                                       655           649
  Additional paid-in capital                                                    64,673        64,413
  Retained earnings (accumulated deficit)                                        6,195        (4,374)
                                                                             ------------------------

      Total stockholders' equity                                                71,523        60,688
                                                                             ------------------------

      Total liabilities and stockholders' equity                             $ 198,649       214,007
                                                                             ========================
</TABLE>


See  accompanying  notes  to  unaudited  consolidated  financial  statements.


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

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

                                                             THREE MONTHS ENDED       SIX MONTHS ENDED
                                                                   JUNE 30,               JUNE 30,
                                                            ---------------------------------------------
                                                               2004         2003       2004       2003
                                                            ---------------------------------------------
<S>                                                         <C>          <C>         <C>        <C>

Revenue:
  Flight revenue                                            $   72,861      55,638    132,438    106,358
  Sales of medical interiors and products                        1,360       1,577      3,385      2,912
  Parts and maintenance sales and services                          34         249         66        492
                                                            ---------------------------------------------
                                                                74,255      57,464    135,889    109,762
                                                            ---------------------------------------------
Operating expenses:
  Flight centers                                                24,313      21,086     48,559     41,397
  Aircraft operations                                           14,886      14,100     28,607     27,284
  Aircraft rental                                                3,532       3,059      6,862      5,860
  Medical interiors and products sold                              539       1,379      1,177      2,503
  Cost of parts and maintenance sales and services                  37         250         84        491
  Depreciation and amortization                                  2,734       2,808      5,411      5,556
  Bad debt expense                                              15,481       5,572     25,221     11,902
  Loss on disposition of assets, net                                22          13         26         26
  General and administrative                                     6,795       5,520     13,117     10,224
                                                            ---------------------------------------------
                                                                68,339      53,787    129,064    105,243
                                                            ---------------------------------------------

      Operating income                                           5,916       3,677      6,825      4,519

Other income (expense):
  Interest expense                                              (2,033)     (1,928)    (4,120)    (3,934)
  Interest income                                                    5           3          9          6
  Other, net                                                       272         391        554        706
                                                            ---------------------------------------------

Income before income tax expense and cumulative effect of
    change in accounting principle                               4,160       2,143      3,268      1,297

Income tax expense                                              (1,642)       (836)    (1,294)      (506)
                                                            ---------------------------------------------

Income before cumulative effect of change in accounting
    principle                                                    2,518       1,307      1,974        791

Cumulative effect of change in method of accounting for
    maintenance costs, net of income taxes  (note 2)                --          --      8,595         --

                                                            ---------------------------------------------
      Net income                                            $    2,518       1,307     10,569        791
                                                            =============================================

                                                                                              (Continued)
</TABLE>


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

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

                                                            THREE MONTHS ENDED      SIX MONTHS ENDED
                                                                  JUNE 30,                JUNE 30,
                                                              2004        2003        2004       2003
                                                           ---------------------------------------------
<S>                                                        <C>          <C>        <C>         <C>

Basic income per common share (note 3):
  Income before cumulative effect of change in accounting
    principle                                              $       .23        .14         .18        .08
  Cumulative effect of change in method of accounting for
    maintenance costs, net of income taxes                          --         --         .79         --
                                                           ---------------------------------------------
  Net income                                               $       .23        .14         .97        .08
                                                           =============================================

Diluted income per common share (note 3):
  Income before cumulative effect of change in accounting
    principle                                              $       .22        .13         .18        .08
  Cumulative effect of change in method of accounting for
    maintenance costs, net of income taxes                          --         --         .76         --
                                                           ---------------------------------------------
  Net income                                               $       .22        .13         .94        .08
                                                           =============================================

Weighted average number of common shares   outstanding -
basic                                                       10,867,002  9,561,705  10,849,728  9,541,905
                                                           =============================================

Weighted average number of common shares   outstanding -
diluted                                                     11,264,313  9,931,526  11,260,892  9,896,207
                                                           =============================================
</TABLE>


See accompanying notes to unaudited consolidated financial statements.


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

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

                                                                                         SIX MONTHS ENDED JUNE 30,
                                                                                      ------------------------------
                                                                                           2004            2003
                                                                                      ------------------------------
<S>                                                                                   <C>              <C>

Cash flows from operating activities:
  Net income                                                                          $       10,569            791
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization expense                                                      5,411          5,556
    Common stock options and warrants issued for services                                         --             75
    Bad debt expense                                                                          25,221         11,902
    Deferred income tax expense                                                                1,303            436
    Loss on retirement and sale of equipment, net                                                 26             26
    Cumulative effect of change in method of accounting for maintenance                       (8,595)            --
    Changes in assets and liabilities:
      Decrease (increase) in prepaid expenses and other current assets                          (356)           489
      Increase in receivables                                                                (28,875)       (19,813)
      Decrease in parts inventories                                                              262            645
      Decrease (increase) in work-in-process on medical interiors and costs in
        excess of billings                                                                       388           (778)
      Decrease in accounts payable, other accrued liabilities, and other
        liabilities                                                                           (1,280)        (2,274)
      Increase in deferred revenue and billings in excess of costs                             2,252            159
      Increase in accrued overhaul and parts replacement costs                                    --          2,798
                                                                                      ------------------------------
          Net cash provided by operating activities                                            6,326             12
                                                                                      ------------------------------

Cash flows from investing activities:
  Acquisition of equipment and leasehold improvements                                         (7,208)        (2,608)
  Proceeds from disposition and sale of equipment                                              1,217             20
  Decrease (increase) in notes receivable and other assets                                      (783)           270
                                                                                      ------------------------------
          Net cash used by investing activities                                               (6,774)        (2,318)
                                                                                      ------------------------------

                                                                                                         (Continued)
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                    AIR METHODS CORPORATION AND SUBSIDIARIES

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


                                                     SIX MONTHS ENDED JUNE 30,
                                                  ------------------------------
                                                       2004            2003
                                                  ------------------------------
<S>                                               <C>             <C>

Cash flows from financing activities:
  Proceeds from issuance of common stock, net     $         686             300
  Payments for purchases of common stock                   (420)            (32)
  Net borrowings under line of credit                     2,492           4,445
  Proceeds from issuance of long-term debt                8,531           2,490
  Payments of long-term debt                            (10,742)         (3,195)
  Payments of capital lease obligations                    (375)           (362)
                                                  ------------------------------
      Net cash provided by financing activities             172           3,646
                                                  ------------------------------

Increase (decrease) in cash and cash equivalents           (276)          1,340

Cash and cash equivalents at beginning of period          5,574           1,410
                                                  ------------------------------

Cash and cash equivalents at end of period        $       5,298           2,750
                                                  ==============================
</TABLE>


Non-cash  investing  and  financing  activities:

Effective  January  1,  2004,  the  Company changed its method of accounting for
major  engine  and  airframe component overhaul costs from the accrual method of
accounting  to  the direct expense method. Accordingly, the Company reversed its
major  overhaul  accrual  totaling $33,809 for all owned and leased aircraft and
reversed the remaining capitalized maintenance included in fixed assets relating
to  used  aircraft purchases totaling $19,719, with the balance reflected as the
cumulative  effect  of change in accounting principle of $8,595 ($14,090, net of
income  taxes  of  $5,495).

In  the  six  months  ended  June  30,  2004, the Company settled a note payable
totaling  $424  by  applying  a  purchase  deposit  against  it.

In  the  six  months  ended  June  30,  2003, the Company settled a note payable
totaling $1,121 in exchange for the aircraft securing the debt. The Company also
entered  into  a  note  payable  of  $516  to  finance  insurance  policies.

In  the  six  months  ended  June  30, 2003, the Company made adjustments to the
purchase price allocation related to the acquisition of Rocky Mountain Holdings,
LLC  (RMH), which decreased goodwill by $1,090, increased accounts receivable by
$1,488,  and  increased  other  accrued  liabilities  by  $398.




See  accompanying  notes  to  unaudited  consolidated  financial  statements.


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

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

     The  accompanying  unaudited  consolidated  financial  statements have been
     prepared  in  accordance  with generally accepted accounting principles for
     interim  financial  information  and  the  instructions  to  Form  10-Q and
     Regulation  S-X.  Accordingly,  the  accompanying  unaudited  consolidated
     financial  statements  contain  all  adjustments (consisting of only normal
     recurring  accruals) necessary to present fairly the consolidated financial
     statements  for the respective periods. Interim results are not necessarily
     indicative  of  results  for  a  full  year.  The  consolidated  financial
     statements  should  be  read  in  conjunction  with  the  Company's audited
     consolidated  financial  statements  and  notes  thereto for the year ended
     December  31,  2003.

     The  preparation  of  financial  statements  in  conformity with accounting
     principles  generally  accepted  in  the  United States of America requires
     management  to  make  estimates  and  assumptions  that affect the reported
     amounts  of  assets and liabilities and disclosure of contingent assets and
     liabilities  at  the  date  of  the  financial  statements and the reported
     amounts  of  revenue  and expenses during the reporting period. The Company
     considers  its  critical  accounting  policies  involving  more significant
     judgments  and  estimates  to  be  those  related  to  revenue recognition,
     uncollectible  receivables,  deferred  income  taxes, and aircraft overhaul
     costs.  Actual  results  could  differ  from  those  estimates.

     The  Company  operates  under  an  FAA-approved  continuous  inspection and
     maintenance program. The Company accounts for maintenance activities on the
     direct  expense  method. Under this method, commencing January 1, 2004, all
     maintenance costs are recognized as expense as costs are incurred. Prior to
     January  1,  2004,  the  Company  accrued  for  major  engine  and airframe
     component  overhaul costs based on usage of the aircraft component over the
     period  between  overhauls  or  replacements  in  advance of performing the
     maintenance  services.  (See  Note  2).

     Certain  prior  period  amounts  have been reclassified to conform with the
     2004  presentation.

(2)  ACCOUNTING  CHANGE
     ------------------

     Effective January 1, 2004, the Company changed its method of accounting for
     major  engine and airframe component overhaul costs from the accrual method
     of  accounting  to  the  direct  expense  method.  Under the new accounting
     method, maintenance costs are recognized as expense as maintenance services
     are performed. The Company believes the direct-expense method is preferable
     in  the  circumstances  because  the  maintenance liability is not recorded
     until  there is an obligating event (when the maintenance event is actually
     being  performed),  the  direct  expense  method  eliminates  significant
     estimates  and  judgments  inherent under the accrual method, and it is the
     predominant  method  used  in  the  transportation  industry.  Accordingly,
     effective  January 1, 2004, the Company reversed its major overhaul accrual
     totaling  $33,809,000  for  all  owned and leased aircraft and reversed the
     remaining capitalized maintenance included in fixed assets relating to used
     aircraft  purchases totaling $19,719,000, with the balance reflected as the
     cumulative  effect  of  change  in  accounting  principle  of  $8,595,000
     ($14,090,000,  net  of  income  taxes  of  $5,495,000).


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

(3)  INCOME  PER  SHARE
     ------------------

     Basic earnings per share is computed by dividing net income by the weighted
     average  number  of  common  shares  outstanding during the period. Diluted
     earnings  per share is computed by dividing net income by all common shares
     and  dilutive  potential  common  shares  outstanding  during  the  period.

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

<TABLE>
<CAPTION>
                                                                          2004       2003
                                                                       ----------  ---------
<S>                                                                    <C>         <C>
     FOR QUARTER ENDED JUNE 30:
       Weighted average number of common shares outstanding - basic    10,867,002  9,561,705
       Dilutive effect of:
         Common stock options                                              90,238     86,890
         Common stock warrants                                            307,073    282,931
                                                                       ---------------------
       Weighted average number of common shares outstanding - diluted  11,264,313  9,931,526
                                                                       ==========  =========


     FOR SIX MONTHS ENDED JUNE 30:
       Weighted average number of common shares outstanding - basic    10,849,728  9,541,905
       Dilutive effect of:
         Common stock options                                             102,238     76,223
         Common stock warrants                                            308,926    278,079
                                                                       ---------------------
       Weighted average number of common shares outstanding - diluted  11,260,892  9,896,207
                                                                       ==========  =========
</TABLE>

     Common  stock options totaling 640,000 and 187,500 were not included in the
     diluted  income  per share calculation for the quarters ended June 30, 2004
     and 2003, respectively, because their effect would have been anti-dilutive.
     Common  stock  options  totaling  640,000  were not included in the diluted
     income  per  share  calculation for the six months ended June 30, 2004, and
     common  stock  options  totaling 187,500 and common stock warrants totaling
     25,000  were  not  included in the diluted income per share calculation for
     the  six  months  ended June 30, 2003, because their effect would have been
     anti-dilutive.

(4)  STOCKHOLDERS'  EQUITY
     ---------------------

     Changes  in  stockholders'  equity  for the six months ended June 30, 2004,
     consisted  of  the  following  (amounts in thousands except share amounts):

<TABLE>
<CAPTION>
                                                           Shares
                                                        Outstanding    Amount
                                                        ----------------------
<S>                                                     <C>           <C>

       Balances at January 1, 2004                       10,817,594   $60,688

       Issuance of common shares for options exercised      138,111       686
       Purchase of treasury shares                          (45,624)     (420)
       Net income                                                --    10,569
                                                        ----------------------

       Balances at June 30, 2004                         10,910,081   $71,523
                                                        ======================
</TABLE>


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

(5)  STOCK-BASED  COMPENSATION
     -------------------------

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

<TABLE>
<CAPTION>
                                                    Three Months Ended     Six Months Ended
                                                         June 30,              June 30,
                                                      2004       2003       2004      2003
                                                   -----------------------------------------
<S>                                                <C>         <C>        <C>       <C>
Net income before cumulative effect of change in
  accounting principle:
    As reported                                    $    2,518      1,307     1,974       791
    Pro forma                                           2,446      1,244     1,830       679

Net income:
    As reported                                    $    2,518      1,307    10,569       791
    Pro forma                                           2,446      1,244    10,425       679

Basic income per share before cumulative effect
  of change in accounting principle:
    As reported                                    $      .23        .14       .18       .08
    Pro forma                                             .23        .12       .17       .07

Basic income per share:
    As reported                                    $      .23        .14       .97       .08
    Pro forma                                             .23        .12       .96       .07

Diluted income per share before cumulative effect
  of change in accounting principle:
    As reported                                    $      .22        .13       .18       .08
    Pro forma                                             .22        .12       .16       .06

Diluted income per share:
    As reported                                    $      .22        .13       .94       .08
    Pro forma                                             .22        .12       .94       .06
</TABLE>


     The fair value of each option grant is estimated on the date of grant using
     the  Black-Scholes option-pricing model with the following weighted average
     assumptions  used for grants in 2004 and 2003, respectively: dividend yield
     of  0%;  expected volatility of 30% and 32%; expected life of 4 years and 3
     years;  and risk-free interest rates of 3.3% and 1.7%. The weighted average
     fair value of options granted during the six months ended June 30, 2004 and
     2003,  was  $2.81  and  $3.11,  respectively.


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

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

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

     -    Community-Based  Model  (CBM)  -  provides  air medical transportation
          services  to  the  general  population as an independent service in 16
          states.  Services  include aircraft operation and maintenance, medical
          care, dispatch and communications, and medical billing and collection.
     -    Hospital-Based  Model  (HBM)  -  provides  air  medical transportation
          services  to  hospitals  throughout the U.S. under exclusive operating
          agreements.  Services  include  aircraft  operation  and  maintenance.
     -    Products  Division  -  designs,  manufactures,  and  installs aircraft
          medical  interiors  and other aerospace and medical transport products
          for  domestic  and  international  customers.

<TABLE>
<CAPTION>
                                               Products   Corporate   Intersegment
FOR QUARTER ENDED JUNE 30:      CBM     HBM    Division  Activities   Eliminations   Consolidated
--------------------------------------------------------------------------------------------------
<S>                           <C>      <C>     <C>       <C>          <C>            <C>
2004
External revenue              $50,839  22,056     1,360          --             --         74,255
Intersegment revenue               --      --     1,767          --         (1,767)            --
                              --------------------------------------------------------------------
Total revenue                  50,839  22,056     3,127          --         (1,767)        74,255
                              --------------------------------------------------------------------

Operating expenses             28,563  18,657     2,261       1,999         (1,628)        49,852
Depreciation & amortization     1,379   1,239        66          50             --          2,734
Bad debt expense               15,481      --        --          --             --         15,481
Interest expense                1,027     979        --          27             --          2,033
Interest income                    --      --        --          (5)            --             (5)
Income tax expense                 --      --        --       1,642             --          1,642
                              --------------------------------------------------------------------
Segment net income (loss)     $ 4,389   1,181       800      (3,713)          (139)         2,518
                              ====================================================================

Total assets                  $61,256     N/A       N/A     139,557         (2,164)       198,649
                              ====================================================================

2003
External revenue              $33,605  22,072     1,577         210             --         57,464
Intersegment revenue               --      --       967          --           (967)            --
                              --------------------------------------------------------------------
Total revenue                  33,605  22,072     2,544         210           (967)        57,464
                              --------------------------------------------------------------------

Operating expenses             23,255  18,374     2,278       1,867           (758)        45,016
Depreciation & amortization     1,186   1,147        44         431             --          2,808
Bad debt expense                5,572      --        --          --             --          5,572
Interest expense                  929     956        --          43             --          1,928
Interest income                    --      --        --          (3)            --             (3)
Income tax expense                 --      --        --         836             --            836
                              --------------------------------------------------------------------
Segment net income (loss)     $ 2,663   1,595       222      (2,964)          (209)         1,307
                              ====================================================================

Total assets                  $66,503     N/A       N/A     136,189         (2,164)       200,528
                              ====================================================================
</TABLE>


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

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

<TABLE>
<CAPTION>
                                                                 Products   Corporate   Intersegment
FOR SIX MONTHS ENDED JUNE 30:                   CBM       HBM    Division  Activities   Eliminations   Consolidated
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>       <C>      <C>       <C>          <C>            <C>
2004
External revenue                              $89,883   42,621      3,385          --             --        135,889
Intersegment revenue                               --       --      3,933          --         (3,933)            --
                                              ----------------------------------------------------------------------
Total revenue                                  89,883   42,621      7,318          --         (3,933)       135,889
                                              ----------------------------------------------------------------------

Operating expenses                             55,736   36,863      4,744       3,930         (3,395)        97,878
Depreciation & amortization                     2,709    2,496        108          98             --          5,411
Bad debt expense                               25,221       --         --          --             --         25,221
Interest expense                                2,056    1,946         --         118             --          4,120
Interest income                                    --       --         --          (9)            --             (9)
Income tax expense                                 --       --         --       1,294             --          1,294
                                              ----------------------------------------------------------------------
Segment net income (loss) before cumulative
  effect of change in accounting principle      4,161    1,316      2,466      (5,431)          (538)         1,974
Cumulative effect of change in accounting
  principle, net                                   --       --         --       8,595             --          8,595
                                              ----------------------------------------------------------------------
Segment net income (loss)                     $ 4,161    1,316      2,466       3,164           (538)        10,569
                                              ======================================================================

Total assets                                  $61,256      N/A        N/A     139,557         (2,164)       198,649
                                              ======================================================================

2003
External revenue                              $63,319   43,107      2,912         424             --        109,762
Intersegment revenue                               --       --      2,084          --         (2,084)            --
                                              ----------------------------------------------------------------------
Total revenue                                  63,319   43,107      4,996         424         (2,084)       109,762
                                              ----------------------------------------------------------------------

Operating expenses                             44,011   36,406      4,358       4,044         (1,740)        87,079
Depreciation & amortization                     2,301    2,302         89         864             --          5,556
Bad debt expense                               11,902       --         --          --             --         11,902
Interest expense                                1,925    1,945         --          64             --          3,934
Interest income                                    (1)      (2)        --          (3)            --             (6)
Income tax expense                                 --       --         --         506             --            506
                                              ----------------------------------------------------------------------
Segment net income (loss)                     $ 3,181    2,456        549      (5,051)          (344)           791
                                              ======================================================================

Total assets                                  $66,503      N/A        N/A     136,189         (2,164)       200,528
                                              ======================================================================
</TABLE>


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

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

OVERVIEW

The  Company  provides air medical transportation services throughout the United
States  and  designs,  manufactures, and installs medical aircraft interiors and
other aerospace products for domestic and international customers. The Company's
divisions,  or business segments, are organized according to the type of service
or  product  provided  and  consist  of  the  following:
-    Community-Based  Model (CBM) - provides air medical transportation services
     to  the  general  population as an independent service. Revenue consists of
     flight  fees  billed  directly to patients, their insurers, or governmental
     agencies, and cash flow is dependent upon collection from these individuals
     or entities. In the first six months of 2004 the CBM Division generated 66%
     of the Company's total revenue, increasing from 58% in the first six months
     of  2003.
-    Hospital-Based  Model  (HBM) - provides air medical transportation services
     to  hospitals  throughout  the  U.S.  under exclusive operating agreements.
     Revenue  consists of fixed monthly fees (65% of total contract revenue) and
     hourly  flight  fees  (35%  of  total  contract revenue) billed to hospital
     customers.  In  the first six months of 2004 the HBM Division generated 31%
     of  the  Company's  total  revenue,  decreasing  from  39%  in  2003.
-    Products  Division  -  designs, manufactures, and installs aircraft medical
     interiors  and  other aerospace and medical transport products for domestic
     and  international  customers. In the first six months of 2004 the Products
     Division  generated 3% of the Company's total revenue, unchanged from 2003.

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

The  Company believes that the following factors have the greatest impact on its
results  of  operations  and  financial  condition:

-    FLIGHT  VOLUME.  Fluctuations in flight volume have a greater impact on CBM
     operations  than HBM operations because 100% of CBM revenue is derived from
     flight  fees,  as compared to 35% of HBM revenue. By contrast, aproximately
     64%  of  the  Company's  costs  primarily associated with flight operations
     (including  salaries, aircraft ownership costs, hull insurance, and general
     and  administrative  expenses)  are  mainly  fixed  in nature. While flight
     volume  is  affected  by  many  factors,  including  competition  and  the
     distribution  of  calls  within  a  market,  the greatest single factor has
     historically  been  weather  conditions. Adverse weather conditions-such as
     fog,  high  winds,  or  heavy precipitation-hamper the Company's ability to
     operate  its  aircraft  safely  and,  therefore,  result  in reduced flight
     volume.  Total  patient  transports  for  CBM operations were approximately
     8,000  and  15,000  for  the  quarter  and  six months ended June 30, 2004,
     respectively,  compared  to  approximately 6,300 and 11,400 for the quarter
     and  six  months ended June 30, 2003. Patient transports for CBM bases open
     longer  than  one  year (Same-Base Transports) were approximately 6,700 and
     12,200  in  the  quarter  and six months ended June 30, 2004, respectively,
     compared  to  approximately  6,000 and 10,700 in the quarter and six months
     ended  June  30,  2003.


                                       12
<PAGE>
-    RECEIVABLE  COLLECTIONS.  The  Company  responds  to  calls for air medical
     transports  without  pre-screening the creditworthiness of the patient. For
     CBM operations, bad debt expense is estimated during the period the related
     services  are  performed  based  on  historical  collection experience. The
     provision is adjusted as required based on actual collections in subsequent
     periods.  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. Effective
     January  1,  2004, the Company instituted a price increase of approximately
     5%  for its CBM operations. However, net revenue after bad debt expense per
     transport  remained unchanged in the second quarter of 2004 compared to the
     second  quarter of 2003 and decreased 4.2% in the six months ended June 30,
     2004,  compared  to  2003.  The  total provision for expected uncollectible
     amounts,  including  contractual  discounts  for  Medicare/Medicaid and bad
     debts,  increased  from  42.4%  of related gross flight revenue for the six
     months ended June 30, 2003, to 48.1% in the six months ended June 30, 2004.
     The Company believes the decrease in collection rate is driven primarily by
     overall  economic  conditions.  Staffing within the billing and collections
     department  also  has  a  direct  impact  on  the  pace of collections, and
     timeliness of collections may have an impact on the ultimate collectibility
     of  receivables. In 2004, the Company increased staffing in the billing and
     collections  department,  segmented billing by region, and hired a national
     billing  director  to  address  recent  slowdowns  in  collections.

-    AIRCRAFT  MAINTENANCE. Both CBM and HBM 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 (OEM's) tend to be higher for aircraft which are no
     longer  in production. Three models of aircraft within the Company's fleet,
     representing  approximately  28%  of  the  total  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. Total maintenance expense for CBM
     and  HBM  operations,  as  adjusted  for  the  change  in accounting method
     described  below,  increased  25.9% and 24.6% in the quarter and six months
     ended  June  30,  2004,  respectively, compared to 2003, while total flight
     volume  for CBM and HBM operations increased 12.1% and 13.5%, respectively,
     over  the  same periods. The Company continues to evaluate opportunities to
     modernize  its fleet in order to enhance long-term control over maintenance
     costs.  Replacement  models  of  aircraft,  however,  typically have higher
     ownership  costs  than  the  models  targeted  for  replacement.

-    COST  PRESSURES  ON  HEALTHCARE INSTITUTIONS. Publicly and privately funded
     healthcare  institutions  both  face pressures to reduce the rising cost of
     healthcare  and  to  modify  or  eliminate certain non-core operations as a
     result of reductions in funding. Flight programs based at a single hospital
     typically  require  subsidization  from  other  hospital  operations.  As a
     result,  a  growing  number of healthcare institutions are evaluating their
     delivery  model for air medical transportation services, creating expansion
     opportunities  for  CBM operations. In the past 12 months, the CBM division
     commenced  operations  at  two  new  locations  which  had  previously been
     hospital-based  flight  programs with either the Company or another vendor.
     At  the  expiration  of  contracts  in the fourth quarter of 2003 and first
     quarter  of  2004,  two of the Company's HBM customers also converted their
     flight  programs  to  the  community-based  model with services provided by
     another  operator.  The  Company expects the trend toward conversion of HBM
     programs to CBM operations to continue as healthcare institutions recognize
     the  viable  alternatives  available  for  outsourcing.

-    COMPETITIVE  PRESSURES  FROM  LOW-COST PROVIDERS. The Company is recognized
     within  the industry for its standard of service and its use of cabin-class
     aircraft.  Many of the Company's 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 the aviation
     and  medical  personnel.  However, the Company believes that higher quality
     standards  help  to  differentiate  its  service  from  competitors  and,
     therefore,  lead  to  higher  utilization. Deploying multiple aircraft in a
     market  also  serves  as  a  barrier  to  entry  for  lower cost providers.

-    EMPLOYEE  RELATIONS.  In  September  2003, the Company's pilots voted to be
     represented  by  a collective bargaining unit. Negotiations on a collective
     bargaining  agreement  began  in early 2004. Other employee groups may also
     elect  to  be  represented  by  unions  in the future. Although the Company
     believes that current salary and benefits arrangements are competitive with
     others within the industry, the impact of a collective bargaining agreement
     on  the  cost  of  operations  has  not  yet  been  determined.


                                       13
<PAGE>
RESULTS OF OPERATIONS

The  Company reported net income of $2,518,000 and $10,569,000 for the three and
six  months  ended  June  30,  2004,  compared  to  net income of $1,307,000 and
$791,000  for  the  three and six months ended June 30, 2003. Net income for the
six  months  ended  June  30, 2004 included the cumulative effect of a change in
accounting  principle  of  $8,595,000, as discussed more fully below. Before the
cumulative  effect  of  the change in accounting principle, the Company reported
net  income  of $1,974,000 for the six months ended June 30, 2004. Growth in net
income  for  2004  was  primarily  due  to  an increase in flight volume for CBM
operations,  resulting  from both the opening of new bases and increases in Same
Base  Transports.  The increase in revenue was offset in part by a 4.2% decrease
in  net  reimbursement  per transport (revenue after Medicare/Medicaid discounts
and  bad  debt  expense)  during  the six-month period of 2004 compared to 2003.

CHANGE IN ACCOUNTING METHOD

Effective  January  1,  2004,  the  Company changed its method of accounting for
major  engine  and  airframe component overhaul costs from the accrual method of
accounting  to  the  direct  expense  method.  Under  the new accounting method,
maintenance  costs  are  recognized  as  expense  as  maintenance  services  are
performed.  Accordingly,  effective  January  1,  2004, the Company reversed its
major  overhaul  accrual  totaling $33,809,000 for all owned and leased aircraft
and  reversed  the  remaining  capitalized  maintenance included in fixed assets
relating  to  used  aircraft  purchases  totaling  $19,719,000, with the balance
reflected  as  the  cumulative  effect  of  change  in  accounting  principle of
$8,595,000  ($14,090,000,  net  of  income  taxes  of  $5,495,000).

Pro  forma results, assuming the change in accounting principle had been applied
retroactively, are as follows for the quarter and six months ended June 30, 2003
(amounts  in  thousands):

<TABLE>
<CAPTION>
                                  Three Months Ended       Six Months Ended
                                     June 30, 2003          June 30, 2003
                               As Reported   Pro Forma  As Reported  Pro Forma
                               -----------------------------------------------
<S>                            <C>           <C>        <C>          <C>

Aircraft operations expense    $     14,100     12,285       27,284     23,681
                               ===============================================
Depreciation and amortization  $      2,808      2,430        5,556      4,800
                               ===============================================

Net income                     $      1,307      2,645          791      3,450
                               ===============================================

Basic income per share         $        .14        .28          .08        .36
                               ===============================================

Diluted income per share       $        .13        .27          .08        .35
                               ===============================================
</TABLE>

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

FLIGHT  REVENUE  increased $17,223,000, or 31.0%, and $26,080,000, or 24.5%, for
the  three  and  six months ended June 30, 2004, respectively, compared to 2003.
Flight  revenue  is generated by both CBM and HBM operations and is recorded net
of  contractual  allowances  under  agreements  with  third-party  payers  and
Medicare/Medicaid  discounts.

-    CBM  -  Flight  revenue increased $17,209,000, or 51.2%, to $50,805,000 for
     the  second  quarter  of 2004 and $26,523,000, or 41.9%, to $89,817,000 for
     the  six  months  ended  June  30,  2004,  for  the  following  reasons:
     -    Revenue  of  $6,947,000 and $12,303,000 for the quarter and six months
          ended  June  30,  2004,  respectively, from the addition of 15 new CBM
          bases  either  during  or  subsequent to the six months ended June 30,
          2003.
     -    Purchase  of  certain business assets from another air medical service
          provider  in  southeastern  Arizona  in  May  2003,  resulting  in the
          expansion of operations from three bases to five. Transport volume for
          all  bases  in the region increased 81.8% and 91.6% in the quarter and
          six  months  ended  June  30,  2004,  compared  to 2003, respectively,
          resulting  in  incremental  revenue  of  approximately  $805,000  and
          $2,508,000,  respectively.
     -    Closure  of  one base in the fourth quarter of 2003 and another in the
          first  quarter  of  2004,  resulting  in  a  decrease  in  revenue  of
          approximately  $927,000  and $1,635,000 for the quarter and six months
          ended  June  30,  2004,  respectively.


                                       14
<PAGE>
     -    Increase  in  Same  Base  Transports.  Excluding the impact of the new
          bases  and  base closures discussed above, total flight volume for all
          CBM operations increased 11.0% and 13.3% in the quarter and six months
          ended  June  30,  2004,  respectively, compared to the prior year. The
          increase  in flight volume is primarily attributed to improved weather
          conditions  and  an  increase  in  flight  requests, driven in part by
          enhanced  crew  outreach  and  other  marketing  initiatives  in  2004
          compared  to  2003.
     -    Average  price  increase  of  approximately  5% for all CBM operations
          effective  January  1,  2004.

-    HBM  -  Flight  revenue  increased $14,000, or 0.1%, to $22,056,000 for the
     second  quarter of 2004 and decreased $443,000, or 1.0%, to $42,621,000 for
     the  six  months  ended  June  30,  2004,  for  the  following  reasons:
     -    Discontinuation  of  service  under three contracts either prior to or
          during  the  first  quarter  of  2004.  In addition, during the fourth
          quarter  of  2003,  one  HBM customer converted to CBM operations. The
          resulting  decrease  in  revenue  from  all  of  these  actions  was
          approximately  $1,446,000  and $2,817,000 for the three and six months
          ended  June  30,  2004,  respectively.
     -    Revenue  of  approximately  $391,000  and $530,000 for the quarter and
          six-month  period,  respectively, generated by the addition of one new
          contract  during  the  first  quarter  of  2004.
     -    Annual  price  increases in the majority of contracts based on changes
          in  the  Consumer  Price  Index.
     -    Increase of 6.9% in flight volume for the quarter and six months ended
          June  30, 2004, for all contracts excluding the discontinued contracts
          and  the  new  contract  discussed  above.

FLIGHT  CENTER COSTS (consisting primarily of pilot, mechanic, and medical staff
salaries  and  benefits)  increased  $3,227,000,  or  15.3%,  to $24,313,000 and
$7,162,000,  or  17.3%, to $48,559,000 for the quarter and six months ended June
31,  2004,  respectively,  compared  to 2003. Changes by business segment are as
follows:

-    CBM  -  Flight  center costs increased $3,545,000, or 28.4%, to $16,033,000
     for the second quarter of 2004 and $7,336,000, or 30.0%, to $31,820,000 for
     the  six  months  ended  June  30,  2004,  for  the  following  reasons:
     -    Approximately $2,811,000 and $5,788,000 for the quarter and six months
          ended  June  30, 2004, for the addition of personnel to staff new base
          locations  described  above.
     -    Decrease  of  approximately  $420,000 and $681,000 for the quarter and
          six  months  ended June 30, 2004, due to the closure of base locations
          described  above.
     -    Increases  in  salaries  for  merit  pay  raises.
     -    Increase  of  approximately  $265,000 and $550,000 for the quarter and
          six  months  ended  June  30,  2004,  for  telecommunications  costs
          associated  with  dispatch  operations.

-    HBM  -  Flight  center costs decreased $319,000, or 3.7%, to $8,280,000 for
     the  second  quarter  of 2004 and $175,000, or 1.0%, to $16,739,000 for the
     six  months  ended  June  30,  2004,  primarily  due  to  the  following:
     -    Decrease  of approximately $524,000 and $1,022,000 for the quarter and
          six  months  ended June 30, 2004, due to the closure of base locations
          described  above.
     -    Approximately  $132,000  and  $164,000  for the quarter and six months
          ended  June  30, 2004, for the addition of personnel to staff new base
          locations  described  above.
     -    Increases  in  salaries  for  merit  pay  raises.

AIRCRAFT  OPERATING  EXPENSES  increased  $786,000,  or 5.6%, and $1,323,000, or
4.8%,  for  the  three  and  six  months  ended  June 30, 2004, respectively, in
comparison  to  the three and six months ended June 30, 2003. Aircraft operating
expenses  consist  of fuel, insurance, and maintenance costs and generally are a
function of the size of the fleet, the type of aircraft flown, and the number of
hours  flown.  The  increase  in  costs  is  due  to  the  following:
-    Addition  of  14  helicopters  for CBM operations and 10 for HBM operations
     either  during or subsequent to the first six months of 2003. The resulting
     increase  in  aircraft  operating  expenses  was approximately $708,000 and
     $1,170,000  for  the  three  and  six  months  ended  June  30,  2004.
-    Increase  in  maintenance  costs for engine overhauls and aircraft interior
     refurbishment.  Refurbishment was required due to the age of the interiors.
-    Increase  in  the  cost  of  aircraft  fuel.
-    Decrease  of approximately 15% in hull insurance rates effective July 2003.


                                       15
<PAGE>
AIRCRAFT  RENTAL EXPENSE increased $473,000, or 15.5%, and $1,002,000, or 17.1%,
for the three and six months ended June 30, 2004, respectively, in comparison to
the  three and six months ended June 30, 2003. Incremental rental expense for 20
leased aircraft added to the Company's fleet, either during or subsequent to the
first  six  months of 2003, totaled $550,000 and $1,060,000 in the three and six
months  ended  June  30,  2004,  respectively.

BAD  DEBT  EXPENSE  increased $9,909,000, or 177.8%, and $13,319,000, or 111.9%,
for  the  quarter  and  six months ended June 30, 2004, compared to 2003, due in
part  to the increase in related CBM flight revenue. Bad debt as a percentage of
related  net  flight  revenue was 30.5% and 28.1% for the quarter and six months
ended  June  30,  2004, respectively, compared to 16.6% and 18.8% in the quarter
and  six  months ended June 30, 2003, respectively, primarily as the result of a
change  in  payer  mix.  Flight  revenue  is  recorded  net of Medicare/Medicaid
discounts.  The  total  reserve  for  expected  uncollectible amounts, including
contractual  discounts  and  bad  debts,  increased  from 45.0% of related gross
flight revenue for the second quarter of 2003 to 46.7% for the second quarter of
2004,  and  from  42.4% for the six months ended June 30, 2003, to 48.1% for the
six  months ended June 30, 2004. The Company believes the decrease in collection
rates  is  due  to  general  recessionary  trends  in  the economy and a related
increase  in  the  number of uninsured patients. Bad debt expense related to HBM
operations  and  Products  Division  was not significant in either 2004 or 2003.

PRODUCTS  DIVISION

SALES  OF  MEDICAL  INTERIORS AND PRODUCTS decreased $217,000, or 13.8%, for the
second  quarter  of 2004 compared to 2003, and increased $473,000, or 16.2%, for
the  six  months  ended June 30, 2004, compared to 2003. Significant projects in
2004  included ongoing production of 13 Multi-Mission Medevac Systems for the U.
S. Army's HH-60L Black Hawk helicopter and 21 litter systems for the U.S. Army's
Medical  Evacuation  Vehicle  (MEV).  In the second quarter of 2004, the Company
also  began  production  of  a  multi-mission  interior  for a Sikorsky FIREHAWK
helicopter  for  the Los Angeles County Fire Department. Revenue by product line
for  the  quarter  and  six  months  ended  June  30, 2004, respectively, was as
follows:
-    $250,000  and  $459,000  - manufacture and installation of modular, medical
     interiors
-    $830,000  and  $2,021,000  -  manufacture  of  multi-mission  interiors
-    $280,000  and $905,000 - design and manufacture of other aerospace products

Significant  projects  in 2003 included the manufacture of eight modular medical
interiors for four commercial customers. Also in the second quarter of 2003, the
Company  began the manufacture of 11 Multi-Mission Medevac Systems for the U. S.
Army's HH-60L Black Hawk helicopter. Revenue by product line for the quarter and
six  months  ended  June  30,  2003,  respectively,  was  as  follows:
-    $1,251,000  and  $2,423,000  -  manufacture  and  installation  of modular,
     medical  interiors
-    $185,000  and  $185,000  -  manufacture  of  multi-mission  interiors
-    $141,000  and $304,000 - design and manufacture of other aerospace products

COST  OF  MEDICAL  INTERIORS  AND  PRODUCTS  decreased  $840,000,  or 60.9%, and
$1,326,000,  or  53.0%,  for  the  three  and six months ended June 30, 2004, as
compared  to the previous year. The average net margin earned on projects during
2004  was  47%  compared  to 21% in 2003, primarily due to the change in product
mix.  The  margin earned on multi-mission interiors is typically higher than the
margins  earned  on  modular  medical  interiors  for  commercial  customers. In
addition, aircraft interiors completed for commercial customers during 2003 were
for  new types of aircraft in which the Company had not previously installed its
modular  interior,  leading  to  higher  engineering and documentation costs and
lower  profit  margins.  Cost  of  medical  interiors and products also includes
certain  fixed costs, such as administrative salaries and facilities rent, which
do  not  vary  with  volume of sales and which are absorbed both by projects for
external  customers  and  by  interdivisional  projects.


                                       16
<PAGE>
GENERAL  EXPENSES

DEPRECIATION  AND AMORTIZATION EXPENSE decreased $74,000, or 2.6%, and $145,000,
or  2.6%,  for  the  three  and  six  months  ended June 30, 2004, respectively,
compared  to  2003.  The  decrease  is primarily the result of the change in the
method  of  accounting  for  major  engine  and airframe component overhauls and
replacements,  as  discussed  more fully above. As part of the change in method,
the  Company  reversed  the  remaining capitalized maintenance included in fixed
assets  relating  to  used  aircraft  purchases,  resulting  in  a  decrease  of
approximately  $378,000 and $756,000 in depreciation expense for the quarter and
six months ended June 30, 2004, respectively. The decrease was offset in part by
depreciation  on  engine  upgrades,  an  upgraded  flight  tracking  system, and
computer  hardware  and  software  acquired  subsequent  to  June  30,  2003.

GENERAL  AND  ADMINISTRATIVE  (G&A) EXPENSES increased $1,275,000, or 23.1%, and
$2,893,000,  or  28.3%,  for  the  quarter  and  six months ended June 30, 2004,
respectively,  compared  to  2003,  reflecting  the  growth  in  the  Company's
operations.  G&A  expenses  were  9.2% and 9.6% of revenue for the three and six
months  ended  June  30,  2004,  respectively, compared to 9.6% and 9.3% for the
three  and  six  months  ended June 30, 2003, respectively. G&A expenses include
accounting  and  finance,  billing  and  collections,  human resources, aviation
management, pilot training, and CBM program administration. During the last half
of  2003, the Company formalized the organization structure for its CBM division
along  regional  and  program lines and added administrative personnel to manage
the  daily  operations  of  CBM  bases. The Company also increased the number of
billing  and  collections  department  personnel  in  2004 to keep pace with the
growth  in  CBM operations and to address recent slowdowns in collections. These
increases  were  offset  in  part  by  a  decrease  in aviation management costs
resulting  from  the consolidation of FAA Part 135 operating certificates from 4
certificates  at  the  beginning  of  2003 to 2 certificates by the beginning of
2004.

INTEREST  EXPENSE  increased  $105,000,  or  5.4%, and $186,000, or 4.7%, in the
quarter  and  six  months  ended  June 30, 2004, respectively, compared to 2003,
primarily  as  a  result  of  increased borrowings against the Company's line of
credit. The average balance outstanding against the line was approximately $20.4
million  and  $19.6 million during the three and six months ended June 30, 2004,
respectively,  compared  to $16.1 million and $15.6 million during the three and
six months ended June 30, 2003, respectively. This increase was partially offset
by  decreases  in principal balances as a result of regularly scheduled payments
and  the refinancing of $17.5 million of debt at lower interest rates during the
fourth  quarter  of  2003  and  first  quarter  of  2004.

The  Company  recorded  INCOME TAX EXPENSE of $1,294,000 in 2004 and $506,000 in
2003,  both  at  an  approximate  effective  rate  of  39%.

LIQUIDITY AND CAPITAL RESOURCES

The  Company had working capital of $52,059,000 as of June 30, 2004, compared to
$43,682,000  at  December  31,  2003.  The change in working capital position is
primarily  attributable  to  the  following:
-    Increase  of  $3,654,000  in  net receivables consistent with the increased
     revenue  for  the  CBM  division  resulting  from  new  base expansions and
     increases  in  flight  volume.
-    Decrease of $7,702,000 in short-term accrued overhaul and parts replacement
     costs  liabilities, due to the change in the method of accounting for major
     engine  and  airframe  component  overhaul costs from the accrual method of
     accounting  to  the  direct  expense method. Effective January 1, 2004, the
     Company  reversed  its  major  overhaul  accrual  for  all owned and leased
     aircraft.

SOURCES AND USES OF CASH

The  Company  had  cash  and cash equivalents of $5,298,000 as of June 30, 2004,
compared to $5,574,000 at December 31, 2003. Cash generated by operations in the
six  months ended June 30, 2004, totaled $6,326,000 compared to $12,000 in 2003,
primarily  due  to  the  improvement  in  operating results, described above. In
addition,  receivable balances, net of bad debt expense, increased $3,654,000 in
2004  compared to $7,911,000 in 2003 despite the continued growth in operations.
The  smaller  increase  reflects  the decline in the overall collection rate for
receivables  in  2004  compared  to  2003  but also the results of the Company's
efforts  to  improve  the  pace  of collections. As described above, the Company
increased  staffing  in  the  billing  and collections department and made other
organizational  changes  to  address recent slowdowns in collections. Total cash
collected  against  CBM  receivable balances was $62.5 million in the six months
ended  June 30, 2004, compared to $43.8 million in the six months ended June 30,
2003.


                                       17
<PAGE>
Cash  used  by  investing  activities  totaled  $6,774,000  in  2004 compared to
$2,318,000  in  2003.  Equipment  acquisitions  in  2004  consisted primarily of
medical  interior  and  avionics installations, information systems hardware and
software,  and  rotable  equipment.  Capital lease financing for the information
systems  acquisitions  is  expected  to be finalized during the third quarter of
2004.  Investment  activities  in  2004  also  included payment of approximately
$590,000  for  deposits  on  the  purchase  of new aircraft. In 2004 the Company
received  $1.2  million for the sale of one of its aircraft which will be leased
back  from  the  buyer.  Equipment  acquisitions  in 2003 consisted primarily of
medical interior and avionics installations, upgrades for existing equipment, or
rotable  equipment.  In 2003, the Company received $116,000 in full payment of a
note  receivable.

Financing  activities generated $172,000 in 2004 compared to $3,646,000 in 2003.
The  Company  used  proceeds  from  new  note  agreements  originated in 2004 to
refinance  existing  debt with higher interest rates and to fund the acquisition
of  new  software  systems  projected  for implementation later in the year. The
primary  use  of  cash in both 2004 and 2003 was regularly scheduled payments of
long-term debt and capital lease obligations. These payments were offset in both
2004  and  2003  by draws against the Company's line of credit and proceeds from
new  note  agreements.

In  January  2004  the  Company  originated  a  note  payable of $1,039,000 with
interest  at 5.08% to refinance existing debt with a higher interest rate and to
fund  the  acquisition of computer hardware and software for systems integration
scheduled  for 2004; the note is payable through January 2010. In March 2004 the
Company  originated  a  note  payable  of  $7,492,000  with interest at 5.60% to
refinance existing debt with a higher interest rate; the note is payable through
April  2010.

In  March  2004,  the Company entered into a commitment agreement to purchase 10
Eurocopter  EC135  helicopters  for approximately $34.3 million, with deliveries
scheduled  through  the  first quarter of 2005. As of June 30, 2004, the Company
had  taken  delivery  of  3  helicopters  under  the  agreement.

In  July  2004,  the  Company entered into a commitment agreement to purchase 15
Bell  427 helicopters for approximately $55.5 million, beginning in 2007, with a
minimum  of  three  deliveries  per  year.  The  agreement  provides for special
incentives,  including a trade-in option for up to 15 Bell 222 helicopters, with
minimum guaranteed trade-in values. The Company intends to place the new EC135's
and  Bell  427's  primarily  into existing bases and to either sell the aircraft
which  are  replaced  or  redeploy  them  into  the  backup  fleet.

OUTLOOK FOR 2004

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

Community-Based Model

The Company opened CBM operations at new locations in Kansas and Kentucky during
the  second  quarter of 2004. The Company expects to open an additional location
on  the  east  coast  during the third quarter of 2004. CBM flight volume at all
other locations is expected to be consistent during 2004 with historical levels,
subject  to  seasonal,  weather-related  fluctuations.  The Company continues to
evaluate  opportunities  to  expand  the  CBM  model  in  other  communities.

Hospital-Based Model

In  March  2004,  the Company began operations under a five-year contract with a
new  customer  in  Florida.  The  Company  renewed a contract in Tennessee for a
six-year  term  during  the  second  quarter  and  a  contract in Virginia for a
three-year  term  and  one  in  Nebraska  for  a  one-year term during the third
quarter.  One  other  hospital  contract is due for renewal in 2004. The Company
expects  to  expand  two  existing  contracts  in Colorado and North Carolina to
additional  satellite  bases  in the fourth quarter of 2004. The Company expects
2004 flight activity for continuing hospital contracts to remain consistent with
historical  levels.


                                       18
<PAGE>
Products Division

In  the second quarter of 2004, the Company was awarded an additional two HH-60L
units  under the contract already in progress for 11 other units. As of June 30,
2004,  the  Company  was continuing the production of all 13 HH-60L units and 21
MEV  units for the U.S. Army and the production of a multi-mission interior in a
Sikorsky FIREHAWK helicopter for the Los Angeles County Fire Department. Work on
these  three  contracts is expected to continue throughout the remainder of 2004
and  into  the  second quarter of 2005. In the third quarter of 2004 the Company
also  received a contract for the production of an additional 19 MEV units, with
delivery scheduled through the second quarter of 2005. Remaining revenue for all
contracts  in  process  as  of  June  30,  2004,  is  estimated at $5.2 million.

The  current U.S. Army Aviation Modernization Plan defines a requirement for 180
HH-60L Multi-Mission Medevac units in total over an unspecified number of years.
The Company has already completed 15 HH-60L units under the program, in addition
to  the  13  currently  under  contract.  The  U.S.  Army  has also forecasted a
requirement  for  a  total  of  118  MEV  units  over  4  years; the Company has
previously  delivered  42  units,  in  addition  to the 40 units currently under
contract.  There  is  no  assurance  that  orders  for  additional units will be
received  in  future  periods.

All Segments

In  2004  the  Company  expects  to  implement  new  software  for several major
information  technology  systems  and  to  upgrade the associated hardware for a
total  cost  of approximately $4.5 million. The majority of the cost is expected
to  be  financed  through  capital  and  operating  lease  agreements.

There  can  be  no  assurance  that the Company will continue to maintain flight
volume or current levels of collections on receivables for CBM operations, renew
operating  agreements  for  its  HBM  operations,  or  generate  new  profitable
contracts  for  the Products Division. Based on the anticipated level of HBM and
CBM  flight  activity and the projects in process for the Products Division, the
Company  expects  to generate sufficient cash flow to meet its operational needs
throughout the remainder of 2004. The Company also had approximately $19,679,000
in  borrowing  capacity available under its revolving credit facility as of June
30,  2004.

RISK FACTORS

Actual  results  achieved  by  the  Company  may  differ  materially  from those
described  in  forward-looking  statements  as  a  result  of  various  factors,
including  but  not  limited to, those discussed above in "Outlook for 2004" and
those  described  below.

-    Highly  leveraged  balance  sheet  -  The  Company  is obligated under debt
     facilities  providing  for  up  to  approximately  $102.7  million  of
     indebtedness,  of which approximately $85.4 million was outstanding at June
     30, 2004. If the Company fails to meet its payment obligations or otherwise
     defaults  under  the  agreements  governing indebtedness, the lenders under
     those  agreements  will  have  the right to accelerate the indebtedness and
     exercise  other  rights  and remedies against the Company. These rights and
     remedies include the rights to repossess and foreclose upon the assets that
     serve  as  collateral,  initiate  judicial foreclosure against the Company,
     petition  a  court  to  appoint  a  receiver  for the Company, and initiate
     involuntary bankruptcy proceedings against the Company. If lenders exercise
     their  rights  and  remedies, the Company's assets may not be sufficient to
     repay  outstanding indebtedness, and there may be no assets remaining after
     payment  of  indebtedness  to  provide  a  return  on  common  stock.

-    Restrictive  debt  covenants  -  The  subordinated  notes and senior credit
     facility, into which the Company entered to finance the acquisition of RMH,
     both  contain  restrictive  financial  and  operating  covenants, including
     restrictions  on the Company's ability to incur additional indebtedness, to
     exceed  certain annual capital expenditure limits, and to engage in various
     corporate  transactions  such as mergers, acquisitions, asset sales and the
     payment  of  cash  dividends.  These  covenants will restrict future growth
     through  the  limitation  on capital expenditures and acquisitions, and may
     adversely  impact  the  Company's  ability  to implement its business plan.
     Failure  to  comply  with  the  covenants  defined  in the agreements or to
     maintain  the required financial ratios could result in an event of default
     and accelerate payment of the principal balances due under the subordinated
     notes  and  the  senior credit facility. Given factors beyond the Company's
     control,  such as interruptions in operations from unusual weather patterns
     not  included  in  current  projections, there can be no assurance that the
     Company  will  be  able to remain in compliance with financial covenants in
     the  future,  or  that, in the event of non-compliance, the Company will be
     able  to  obtain waivers from the


                                       19
<PAGE>
     lenders,  or  that  the Company will be able to obtain such waivers without
     payment  of  significant  cash  or  equity  compensation  to  the  lenders.

-    Flight  volume  -  All  CBM revenue and approximately 35% of HBM revenue is
     dependent  upon  flight  volume.  Approximately  30% of the Company's total
     operating  expenses  also  vary  with  the  number  of  hours  flown.  Poor
     visibility,  high  winds,  and  heavy  precipitation  can  affect  the safe
     operation  of  aircraft  and therefore result in a reduced number of flight
     hours  due  to  the  inability  to  fly  during these conditions. Prolonged
     periods  of  adverse weather conditions could have an adverse impact on the
     Company's  operating  results.  Typically, the months from November through
     February  tend  to  have  lower flight volume due to weather conditions and
     other  factors,  resulting  in  lower  CBM  operating  revenue during these
     months.  Flight  volume  for  CBM  operations  can  also be affected by the
     distribution  of  calls  among competitors by local government agencies and
     the  entrance  of  new  competitors  into  a  market.

-    Employee unionization - In September 2003, the Company's pilots voted to be
     represented  by  a  collective bargaining unit, the Office and Professional
     Employees  International  Union.  Negotiations  on  a collective bargaining
     agreement  began  in early 2004. Other employee groups may also elect to be
     represented  by  unions  in  the future. Although the Company believes that
     current salary and benefits arrangements are competitive with others within
     the  industry,  the impact of a collective bargaining agreement on the cost
     of  operations  has  not  yet  been  determined.

-    Governmental  regulation  -  The  air  medical  transportation services and
     products  industry  is  subject  to  extensive  regulation  by governmental
     agencies,  including  the  Federal  Aviation  Administration,  which impose
     significant  compliance  costs  on  the Company. In addition, reimbursement
     rates  for air ambulance services established by governmental programs such
     as  Medicare  directly affect CBM revenue and indirectly affect HBM revenue
     from  hospital  customers.  Changes in laws or regulations or reimbursement
     rates  could  have  a  material  adverse  impact  on  the Company's cost of
     operations  or  revenue  from  flight  operations.

-    Collection  rates - The Company responds to calls for air medical transport
     without pre-screening the creditworthiness of the patient. The CBM division
     invoices  patients  and  their  insurers directly for services rendered and
     recognizes  revenue  net  of estimated contractual allowances. The level of
     bad  debt  expense is driven by collection rates on these accounts. Changes
     in  estimated  contractual allowances and bad debts are recognized based on
     actual collections in subsequent periods. Collectibility is affected by the
     number  of  uninsured  or  indigent patients transported and is, therefore,
     primarily  dependent  upon the health of the U.S. economy. A significant or
     sustained  downturn in the U.S. economy could have an adverse impact on the
     Company's  bad  debt  expense.

-    Aviation  industry hazards and insurance limitations - Hazards are inherent
     in  the  aviation  industry  and  may  result in loss of life and property,
     thereby  exposing  the  Company to potentially substantial liability claims
     arising  out  of the operation of aircraft. The Company may also be sued in
     connection  with  medical  malpractice claims arising from events occurring
     during a medical flight. Under HBM operating agreements, hospital customers
     have  agreed  to  indemnify  the  Company  against liability arising out of
     medical  malpractice  claims  and  to  maintain  insurance  covering  such
     liability, but there can be no assurance that a hospital will not challenge
     the  indemnification  rights  or  will  have sufficient assets or insurance
     coverage  for  full indemnity. In CBM operations, Company personnel perform
     medical procedures on transported patients, which may expose the Company to
     significant  direct  legal  exposure  to  medical  malpractice  claims. The
     Company  maintains  general  liability aviation insurance, aviation product
     liability  coverage,  and  medical malpractice insurance, and believes that
     the  level of coverage is customary in the industry and adequate to protect
     against  claims.  However,  there  can  be  no  assurance  that  it will be
     sufficient  to  cover  potential  claims or that present levels of coverage
     will  be  available  in  the future at reasonable cost. A limited number of
     hull  and liability insurance underwriters provide coverage for air medical
     operators. A significant downturn in insurance market conditions could have
     a  material  adverse  effect  on  the  Company's  cost  of  operations.
     Approximately  37%  of any increases in hull and liability insurance may be
     passed  through to the Company's HBM customers according to contract terms.
     In  addition, the loss of any aircraft as a result of accidents could cause
     both significant adverse publicity and interruption of air medical services
     to  client  hospitals,  which  could  adversely  affect  the  Company's
     relationship  with  such  hospitals  and  operating  results.


                                       20
<PAGE>
-    Foreign ownership - Federal law requires that United States air carriers be
     citizens  of  the  United  States. For a corporation to qualify as a United
     States  citizen, the president and at least two-thirds of the directors and
     other  managing  officers of the corporation must be United States citizens
     and at least 75% of the voting interest of the corporation must be owned or
     controlled  by  United States citizens. If the Company is unable to satisfy
     these  requirements,  operating  authority  from  the  Department  of
     Transportation  may be revoked. Furthermore, under certain loan agreements,
     an event of default occurs if less than 80% of the voting interest is owned
     or  controlled  by United States citizens. As of July 20, 2004, the Company
     was  aware of one foreign person who, according to recent public securities
     filings,  is  believed  to  hold  approximately 10.1% of outstanding Common
     Stock.  Because the Company is unable to control the transfer of its stock,
     it  is  unable  to  assure  that  it  can  remain  in compliance with these
     requirements  in  the  future.

-    Acquisitions  and integration - The Company has grown significantly through
     acquisitions  in  the  past and will continue to pursue acquisitions in the
     future.  With  any  large  acquisition, a significant effort is required to
     assimilate  the  operations,  financial  and  accounting practices, and MIS
     systems,  and  to  integrate  key  personnel  from  the  acquired business.
     Acquisitions  may  cause  disruptions  in  Company  operations  and  divert
     management's  attention  from  day-to-day  operations.  The Company may not
     realize  the  anticipated  benefits  of  past  or  future  acquisitions,
     profitability  may suffer due to acquisition-related costs or unanticipated
     liabilities,  and  the  Company's stock price may decrease if the financial
     markets  consider  the  acquisitions  to  be  inappropriately  priced.

-    Department  of  Defense  funding  -  Several  of  the  projects  which have
     historically been significant sources of revenue for the Products Division,
     including  HH-60L and MEV systems, are dependent upon Department of Defense
     funding. Failure of the U.S. Congress to approve funding for the production
     of  additional  HH-60L or MEV units could have a material adverse impact on
     Products  Division  revenue.

-    Dependence  on  third  party  suppliers  -  The Company currently obtains a
     substantial  portion of its helicopter spare parts and components from Bell
     Helicopter,  Inc. (Bell) and American Eurocopter Corporation (AEC), because
     its  fleet  is  composed  primarily  of  Bell  and Eurocopter aircraft, and
     maintains supply arrangements with other parties for its engine and related
     dynamic  components. Based upon the manufacturing capabilities and industry
     contacts  of  Bell,  AEC, and other suppliers, the Company believes it will
     not  be  subject  to material interruptions or delays in obtaining aircraft
     parts  and components but does not have an alternative source of supply for
     Bell,  AEC,  and certain other aircraft parts. Failure or significant delay
     by  these  vendors  in  providing  necessary parts could, in the absence of
     alternative  sources  of  supply,  have  a  material  adverse effect on the
     Company.  Because of its dependence upon Bell and AEC for helicopter parts,
     the  Company  may  also  be  subject to adverse impacts from unusually high
     price  increases  which  are  greater  than  overall  inflationary  trends.
     Increases in the Company's monthly and hourly flight fees billed to its HBM
     customers  are generally limited to changes in the consumer price index. As
     a result, an unusually high increase in the price of parts may not be fully
     passed  on  to  the  Company's  HBM  customers.

-    Competition  -  HBM  operations  face  significant competition from several
     national  and  regional  air medical transportation providers for contracts
     with  hospitals and other healthcare institutions. CBM operations also face
     competition  from  smaller  regional carriers and alternative air ambulance
     providers  such  as sheriff departments. Operators generally compete on the
     basis  of  price,  safety  record,  accident  prevention  and training, and
     medical  capability  of  the aircraft offered. The Company's competition in
     the  aircraft  interior  design  and manufacturing industry comes primarily
     from  two  companies  based  in  the  United  States  and  one  in  Europe.
     Competition  is  based  mainly on product features, performance, price, and
     weight. There can be no assurance that the Company will be able to continue
     to  compete  successfully  for  new  or  renewing  contracts in the future.

-    Employee  recruitment  and retention - An important aspect of the Company's
     operations  is  the  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. If the
     Company  is  unable  to  recruit  and  retain  a sufficient number of these
     employees,  the  ability  to  maintain  and  grow  the  business  could  be
     negatively  impacted.


                                       21
<PAGE>
CRITICAL ACCOUNTING POLICIES

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

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

Revenue Recognition

Fixed flight fee revenue under the Company's operating agreements with hospitals
is  recognized monthly over the terms of the agreements. Flight revenue relating
to patient transports is recognized upon completion of the services. Revenue and
accounts  receivable  are recorded net of estimated contractual allowances under
agreements  with  third-party  payers.  Estimates  of contractual allowances are
initially  determined  based on historical discount percentages for Medicare and
Medicaid patients and adjusted periodically based on actual discounts. If actual
discounts  realized  are  more  or  less  than  those  projected  by management,
adjustments  to  contractual  allowances  may  be  required. Based on CBM flight
revenue for the six months ended June 30, 2004, a change of 1% in the percentage
of  estimated  contractual  discounts  would  have  resulted  in  a  change  of
approximately  $1,244,000  in  flight  revenue.

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

Uncollectible Receivables

The  Company  responds to calls for air medical transports without pre-screening
the  credit  worthiness  of  the  patient.  Uncollectible  trade receivables are
charged  to  operations  using  the allowance method. Estimates of uncollectible
receivables  are  determined  monthly  based  on historical collection rates and
adjusted  monthly  thereafter  based  on  actual  collections.  If actual future
collections  are more or less than those projected by management, adjustments to
allowances for uncollectible accounts may be required. There can be no guarantee
that  the  Company will continue to experience the same collection rates that it
has  in  the past. Based on CBM net flight revenue for the six months ended June
30,  2004,  a change of 1% in the percentage of estimated uncollectible accounts
would  have  resulted in a change of approximately $898,000 in bad debt expense.

Deferred Income Taxes

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


                                       22
<PAGE>
would  be able to realize its deferred tax assets in the future in excess of its
net  recorded  amount,  an  adjustment to the valuation allowance would increase
income  in  the  period  such  determination  was  made.

Aircraft Overhaul Costs

The Company operates under an FAA-approved continuous inspection and maintenance
program.  The  Company accounts for maintenance activities on the direct expense
method. Under this method, commencing January 1, 2004, all maintenance costs are
recognized  as  expense  as  costs  are  incurred. Prior to January 1, 2004, the
Company  accrued for major engine and airframe component overhaul costs based on
usage  of  the  aircraft  component  over  the  period  between  overhauls  or
replacements  in  advance  of  performing  the  maintenance  services.

Depreciation and Residual Values

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market  risk  is the potential loss arising from adverse changes in market rates
and  prices,  such  as  foreign currency exchange and interest rates. All of the
Company's product sales and related receivables are payable in U.S. dollars. The
Company  is  subject  to  interest  rate  risk on its debt obligations and notes
receivable,  most  of  which  have  fixed  interest  rates,  except  $17,592,000
outstanding against the line of credit and $2,227,000 in notes payable. Based on
the  amounts  outstanding  at June 30, 2004, the annual impact of a 1% change in
interest  rates  would  be  approximately  $198,000.  Interest  rates  on  these
instruments  approximate  current market rates as of June 30, 2004. Periodically
the  Company  enters  into interest rate risk hedges to minimize exposure to the
effect  of  an  increase  in  interest  rates.

ITEM 4. CONTROLS AND PROCEDURES

The  Company  maintains  disclosure controls and procedures that are designed to
ensure  that information required to be disclosed in the Company's reports filed
or  submitted  to  the  Securities  and Exchange Commission under the Securities
Exchange  Act  of  1934,  as  amended,  is  recorded,  processed, summarized and
reported  within the time periods specified by the Commission's rules and forms,
and  that  information  is accumulated and communicated to management, including
the  principal  executive  and financial officers (referred to in this report as
the  Certifying  Officers),  as  appropriate to allow timely decisions regarding
required  disclosure.  Management  evaluated,  with  the  participation  of  the
Certifying  Officers, the effectiveness of disclosure controls and procedures as
of  June  30,  2004, pursuant to Rule 13a-15(b) under the Exchange Act. Based on
that  evaluation,  the  Certifying  Officers have concluded that, as of June 30,
2004,  the  Company's  disclosure  controls  and  procedures  were  effective.

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

In  2004,  the  Company  expects  to  upgrade  its hardware and software systems
relating  to  finance  and  accounting,  inventory, purchasing, and dispatch and
communications  and  is  monitoring  the  progress  of  the  upgrades.


                                       23
<PAGE>
                           PART II: OTHER INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS

             Not  Applicable

ITEM  2.     CHANGES  IN  SECURITIES

             Not  Applicable

ITEM  3.     DEFAULTS  UPON  SENIOR  SECURITIES

             Not  Applicable

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

     The  2004  Annual Meeting of Stockholders was held on June 17, 2004. At the
     meeting, Messrs. George W. Belsey, Maj. Gen. Carl H. McNair, Jr. (Ret.) and
     David  Kikumoto  were elected to Class I directorships. Voting results were
     as  follows:

<TABLE>
<CAPTION>
                                          Total Vote
                          Total Vote For  Withheld From
                          Each Director   Each Director
                          --------------  -------------
<S>                       <C>             <C>

     George W. Belsey          9,732,765        613,923
     Carl H. McNair, Jr.       9,714,452        632,236
     David Kikumoto            9,732,865        613,823
</TABLE>

     Following  the  meeting,  Ralph  J.  Bernstein;  Samuel  H. Gray; Lowell D.
     Miller,  Ph.  D.;  Morad  Tahbaz; Paul Tate; and Aaron D. Todd continued to
     serve  as  directors.

     The  notice  of  meeting  and  proxy  statement for the Annual Meeting also
     stated  that  the stockholders would be asked to approve a new Stock Option
     Plan  adopted  by  the Board of Directors, subject to stockholder approval.
     The  proxy statement incorrectly described the vote required to approve the
     Plan  as the affirmative vote of a majority of the total outstanding shares
     rather than as the affirmative vote of a majority of the shares present and
     voting  on  the matter. As described in the proxy statement, an affirmative
     vote of more than 5,000,000 shares would have been required and brokers who
     hold  stock  for customers in street name were not permitted to vote shares
     on  this matter unless they received directions from the beneficial owners.
     Although  on  proxies  submitted  prior  to  the  meeting affirmative votes
     exceeded  negative votes by more than 1.4 million, insufficient affirmative
     votes  were  cast to approve the Plan by the required vote described in the
     proxy  statement.  Under the circumstances, the Board of Directors directed
     management  to withdraw the matter from consideration and no vote was taken
     on  the  proposal  at  the  meeting.  The  Board of Directors will consider
     whether  to  present  a  new  Stock  Option Plan for approval at the Annual
     Meeting  next  year.

ITEM  5.  OTHER  INFORMATION

          None


                                       24
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

               EXHIBIT
               NUMBER     DESCRIPTION  OF  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

          (b)  Reports  on  Form  8-K

               None


                                       25
<PAGE>
SIGNATURES

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


                                 AIR METHODS CORPORATION



Date:  August  13,  2004         By  /s/  Aaron  D.  Todd
                                   -----------------------------------------
                                   Aaron  D.  Todd
                                   Chief  Executive  Officer


Date:  August  13,  2004         By   /s/  Trent  J.  Carman
                                   -----------------------------------------
                                   Trent  J.  Carman
                                   Chief  Financial  Officer


Date:  August  13,  2004         By   /s/  Sharon  J.  Keck
                                   -----------------------------------------
                                   Sharon  J.  Keck
                                   Chief  Accounting  Officer


                                       26
<PAGE>