SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ___________________

                                    FORM 10-Q


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

For the quarterly period ended         September 30, 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 October
29,  2004,  was  10,943,340.


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


PART I.   FINANCIAL INFORMATION
<S>                                                                                    <C>
          Item 1.   Consolidated Financial Statements

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

                    Consolidated Statements of Operations for the three and nine
                    months ended September 30, 2004 and 2003                              3

                    Consolidated Statements of Cash Flows for the nine months
                    ended September 30, 2004 and 2003                                     5

                    Notes to 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           24

          Item 4.   Controls and Procedures                                              24


PART II.  OTHER INFORMATION

          Item 1.   Legal Proceedings                                                    25

          Item 2.   Changes in Securities                                                25

          Item 3.   Defaults upon Senior Securities                                      25

          Item 4.   Submission of Matters to a Vote of Security Holders                  25

          Item 5.   Other Information                                                    25

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


SIGNATURES                                                                               26
</TABLE>


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

                    ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                    AIR METHODS CORPORATION AND SUBSIDIARIES

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

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

Current assets:
  Cash and cash equivalents                                         $        7,461          5,574
  Current installments of notes receivable                                      60             58
  Receivables:
    Trade                                                                   96,977         91,509
    Less allowance for doubtful accounts                                   (32,396)       (30,301)
                                                                    ------------------------------
                                                                            64,581         61,208

    Other                                                                    3,143          3,420
                                                                    ------------------------------
      Total receivables                                                     67,724         64,628
                                                                    ------------------------------

  Inventories                                                                8,879          9,143
  Work-in-process on medical interiors and products contracts                  575            145
  Assets held for sale                                                       5,245            431
  Costs and estimated earnings in excess of billings on
    uncompleted contracts                                                    2,315          2,249
  Deferred tax asset                                                            --            105
  Prepaid expenses and other                                                 2,491          1,653
                                                                    ------------------------------

      Total current assets                                                  94,750         83,986
                                                                    ------------------------------

Equipment and leasehold improvements:
  Land                                                                         190            190
  Flight and ground support equipment                                      132,944        149,568
  Furniture and office equipment                                            11,195         10,436
                                                                    ------------------------------
                                                                           144,329        160,194
  Less accumulated depreciation and amortization                           (50,434)       (47,117)
                                                                    ------------------------------

      Net equipment and leasehold improvements                              93,895        113,077
                                                                    ------------------------------

Goodwill                                                                     6,485          6,485
Notes receivable, less current installments                                    813          1,426
Other assets, net of accumulated amortization of $1,897 and $1,347
   at September 30, 2004 and December 31, 2003, respectively                 9,769         10,675
                                                                    ------------------------------

      Total assets                                                  $      205,712        215,649
                                                                    ==============================
</TABLE>

                                                                     (Continued)


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

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


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

Current liabilities:
  Notes payable                                                     $        4,748            --
  Current installments of long-term debt                                     5,897         6,110
  Current installments of obligations under capital leases                   2,517         2,886
  Accounts payable                                                           6,135         6,097
  Accrued overhaul and parts replacement costs                                  --         7,702
  Deferred revenue                                                           3,845         2,898
  Billings in excess of costs and estimated earnings on
    uncompleted contracts                                                      744           174
  Deferred income taxes                                                      2,850            --
  Accrued wages and compensated absences                                     5,194         6,015
  Other accrued liabilities                                                 12,316         8,422
                                                                    -----------------------------

      Total current liabilities                                             44,246        40,304

Long-term debt, less current installments                                   72,786        76,680
Obligations under capital leases, less current installments                     33           251
Accrued overhaul and parts replacement costs                                    --        26,107
Deferred income taxes                                                        9,920         5,151
Other liabilities                                                            5,700         6,468
                                                                    -----------------------------

      Total liabilities                                                    132,685       154,961
                                                                    -----------------------------

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 10,932,171 and 10,817,594 shares at September 30, 2004
    and December 31, 2003, respectively                                        656           649
  Additional paid-in capital                                                64,724        64,413
  Retained earnings (accumulated deficit)                                    7,647        (4,374)
  Treasury stock at par, 4,040 common shares at
    September 30, 2004                                                          --            --
                                                                    -----------------------------
      Total stockholders' equity                                            73,027        60,688
                                                                    -----------------------------
      Total liabilities and stockholders' equity                    $      205,712       215,649
                                                                    =============================
</TABLE>


See accompanying notes to consolidated financial statements.


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

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


                                                             THREE MONTHS ENDED      NINE MONTHS ENDED
                                                                SEPTEMBER 30,          SEPTEMBER 30,
                                                          ----------------------------------------------
                                                              2004        2003        2004       2003
                                                          ----------------------------------------------
<S>                                                       <C>           <C>        <C>         <C>
Revenue:
  Flight revenue                                          $    66,958     65,023     199,396    171,381
  Sales of medical interiors and products                       1,973      1,702       5,358      4,614
  Parts and maintenance sales and services                         18        234          84        726
  Gain on disposition of assets, net                               --         18          --         --
                                                          ----------------------------------------------
                                                               68,949     66,977     204,838    176,721
                                                          ----------------------------------------------
Operating expenses:
  Flight centers                                               25,421     22,844      73,980     64,241
  Aircraft operations                                          16,081     14,475      44,688     41,759
  Aircraft rental                                               3,911      3,251      10,773      9,111
  Medical interiors and products sold                             641      1,070       1,818      3,573
  Cost of parts and maintenance sales and services                 19        251         103        742
  Depreciation and amortization                                 2,729      2,905       8,140      8,461
  Bad debt expense                                              8,926     10,158      34,147     22,060
  Loss on disposition of assets, net                                8         --          34          8
  General and administrative                                    7,201      5,444      20,318     15,668
                                                          ----------------------------------------------
                                                               64,937     60,398     194,001    165,623
                                                          ----------------------------------------------
        Operating income                                        4,012      6,579      10,837     11,098

Other income (expense):
  Interest expense                                             (1,816)    (2,218)     (5,936)    (6,152)
  Interest income                                                   4         80          13         86
  Other, net                                                      178        (28)        732        678
                                                          ----------------------------------------------
Income before income tax expense and cumulative effect
  of change in accounting principle                             2,378      4,413       5,646      5,710

Income tax expense                                                926      1,721       2,220      2,227
                                                          ----------------------------------------------
Income before cumulative effect of change in accounting
  principle                                                     1,452      2,692       3,426      3,483

Cumulative effect of change in method of accounting for
  maintenance costs, net of income taxes  (note 2)                 --         --       8,595         --
                                                          ----------------------------------------------
        Net income                                        $     1,452      2,692      12,021      3,483
                                                          ==============================================
</TABLE>

                                                                     (Continued)


                                        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     NINE MONTHS ENDED
                                                               SEPTEMBER 30,           SEPTEMBER 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                                              $       .13        .28         .32        .36
  Cumulative effect of change in method of accounting for
    maintenance costs, net of income taxes                          --         --         .79         --
                                                           ---------------------------------------------
  Net income                                               $       .13        .28        1.11        .36
                                                           =============================================

Diluted income per common share (note 3):
  Income before cumulative effect of change in accounting
    principle                                              $       .13        .27         .30        .35
  Cumulative effect of change in method of accounting for
    maintenance costs, net of income taxes                          --         --         .76         --
                                                           ---------------------------------------------
  Net income                                               $       .13        .27        1.06        .35
                                                           =============================================

Weighted average number of common shares  outstanding -
basic                                                       10,921,369  9,577,916  10,873,783  9,554,040
                                                           =============================================

Weighted average number of common shares  outstanding -
diluted                                                     11,296,854  9,974,973  11,272,876  9,926,561
                                                           =============================================
</TABLE>


See accompanying notes to consolidated financial statements.


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

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


                                                                                    NINE MONTHS ENDED SEPTEMBER 30,
                                                                                 ------------------------------------
                                                                                        2004               2003
                                                                                 ------------------------------------
<S>                                                                              <C>                 <C>
Cash flows from operating activities:
  Net income                                                                     $          12,021             3,483
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation and amortization expense                                                    8,140             8,461
    Vesting of common stock options issued for services                                         --                75
    Bad debt expense                                                                        34,147            22,060
    Deferred income tax expense                                                              2,229             2,087
    Loss on retirement and sale of equipment, net                                               34                 8
    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                        (715)              525
      Increase in receivables                                                              (37,243)          (36,764)
      Decrease in inventories                                                                  264             1,264
      Increase in work-in-process on medical interiors and costs in excess of
        billings                                                                              (496)             (281)
      Increase (decrease) in accounts payable and other accrued liabilities                  2,652            (3,521)
      Increase (decrease) in deferred revenue, billings in excess of costs, and
        other liabilities                                                                      739              (769)
      Increase in accrued overhaul and parts replacement costs                                  --             3,583
                                                                                 ------------------------------------
        Net cash provided by operating activities                                           13,177               211
                                                                                 ------------------------------------

Cash flows from investing activities:
  Acquisition of equipment and leasehold improvements                                       (9,378)           (2,884)
  Proceeds from disposition and sale of equipment                                            1,217                10
  Decrease in notes receivable and other assets                                              1,012               620
                                                                                 ------------------------------------
        Net cash used by investing activities                                               (7,149)           (2,254)
                                                                                 ------------------------------------
</TABLE>

                                                                     (Continued)


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

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


                                                           NINE MONTHS ENDED SEPTEMBER 30,
                                                        ------------------------------------
                                                              2004               2003
                                                        ------------------------------------
<S>                                                     <C>                <C>
Cash flows from financing activities:
  Proceeds from issuance of common stock, net           $            771                562
  Payments for purchases of common stock                            (453)              (166)
  Net borrowings (repayments) under line of credit                   (86)             6,261
  Proceeds from issuance of long-term debt                         8,531              2,490
  Payments of long-term debt                                     (12,317)            (4,757)
  Payments of capital lease obligations                             (587)              (575)
                                                        ------------------------------------
      Net cash provided (used) by financing activities            (4,141)             3,815
                                                        ------------------------------------

Increase in cash and cash equivalents                              1,887              1,772

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

Cash and cash equivalents at end of period              $          7,461              3,182
                                                        ====================================
</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 nine months ended September 30, 2004, the Company settled a note payable
totaling  $424  by  applying  a  purchase  deposit  against it. The Company also
entered into a note payable of $189 to finance insurance policies.

In  the  nine  months  ended September 30, 2004, the Company entered into a note
payable  of $4,748 to finance the purchase of an aircraft which is held for sale
as  of  September  30,  2004.

In  the  nine  months  ended  September  30,  2003, the Company sold a hangar in
exchange  for  a  note  receivable  totaling  $315.

In  the nine months ended September 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 nine months ended September 30, 2003, the Company made adjustments to the
purchase price allocation related to the acquisition of Rocky Mountain Holdings,
LLC  (RMH), which increased goodwill by $1,341, increased accounts receivable by
$1,070,  decreased  inventory  by  $1,268,  decreased  work  in  process by $33,
decreased  prepaid expenses by $59, decreased equipment by $342, decreased other
assets  by  $27,  increased  accounts  payable  and other accrued liabilities by
$1,647,  increased  deferred  revenue by $66, and decreased other liabilities by
$1,031.


See accompanying notes to 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 fiscal 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 SEPTEMBER 30:
  Weighted average number of common shares outstanding - basic    10,921,369  9,577,916
  Dilutive effect of:
    Common stock options                                              68,201    105,490
    Common stock warrants                                            307,284    291,567
                                                                  ---------------------
  Weighted average number of common shares outstanding - diluted  11,296,854  9,974,973
                                                                  =====================
FOR NINE MONTHS ENDED SEPTEMBER 30:
  Weighted average number of common shares outstanding - basic    10,873,783  9,554,040
  Dilutive effect of:
    Common stock options                                              90,704     89,692
    Common stock warrants                                            308,389    282,829
                                                                  ---------------------
  Weighted average number of common shares outstanding - diluted  11,272,876  9,926,561
                                                                  =====================
</TABLE>

     Common  stock  options  totaling  640,000  were not included in the diluted
     income  per share calculation for the three and nine months ended September
     30,  2004, because their effect would have been anti-dilutive. Common stock
     options  totaling 187,500 were not included in the diluted income per share
     calculation  for  the  quarter  and  nine  months ended September 30, 2003,
     because  their  effect  would  have  been  anti-dilutive.

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

     Changes  in  stockholders'  equity  for the nine months ended September 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      160,201       771
     Purchase of treasury shares                          (49,664)     (453)
     Net income                                                --    12,021
                                                      ----------------------

     Balances at September 30, 2004                    10,928,131   $73,027
                                                      ======================
</TABLE>

     Treasury  shares  of  45,624  were  retired  during  the  nine months ended
     September  30,  2004.


                                        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    Nine Months Ended
                                                        September 30,        September 30,
                                                      2004        2003      2004       2003
                                                   ------------------------------------------
<S>                                                <C>          <C>       <C>        <C>
Net income before cumulative effect of change in
  accounting principle:
    As reported                                    $     1,452     2,692      3,426     3,483
    Pro forma                                            1,379     2,629      3,208     3,308

Net income:
    As reported                                    $     1,452     2,692     12,021     3,483
    Pro forma                                            1,379     2,629     11,803     3,308

Basic income per share before cumulative effect
  of change in accounting principle:
    As reported                                    $       .13       .28        .32       .36
    Pro forma                                              .13       .27        .30       .35

Basic income per share:
    As reported                                    $       .13       .28       1.11       .36
    Pro forma                                              .13       .27       1.09       .35

Diluted income per share before cumulative effect
  of change in accounting principle:
    As reported                                    $       .13       .27        .30       .35
    Pro forma                                              .12       .26        .28       .33

Diluted income per share:
    As reported                                    $       .13       .27       1.06       .35
    Pro forma                                              .12       .26       1.05       .33
</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 32%; and 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 nine months ended September 30, 2004 and 2003, was
$2.94  and  $1.96,  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 17
          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 SEPTEMBER 30:     CBM      HBM    Division  Activities   Eliminations   Consolidated
-------------------------------------------------------------------------------------------------------
<S>                               <C>      <C>      <C>       <C>          <C>            <C>
2004
External revenue                  $43,507  23,469      1,973          --             --         68,949
Intersegment revenue                   --      --      1,674          --         (1,674)            --
                                  ---------------------------------------------------------------------
Total revenue                      43,507  23,469      3,647          --         (1,674)        68,949
                                  ---------------------------------------------------------------------

Operating expenses                 29,884  20,220      2,282       2,278         (1,560)        53,104
Depreciation & amortization         1,342   1,261         74          52             --          2,729
Bad debt expense                    8,696     230         --          --             --          8,926
Interest expense                      920     871         --          25             --          1,816
Interest income                        --      --         --          (4)            --             (4)
Income tax expense                     --      --         --         926             --            926
                                  ---------------------------------------------------------------------
Segment net income (loss)         $ 2,665     887      1,291      (3,277)          (114)         1,452
                                  =====================================================================

Total assets                      $65,821    N/A       N/A       142,055         (2,164)       205,712
                                  =====================================================================

2003
External revenue                  $41,971  23,065      1,702         221             --         66,959
Intersegment revenue                   --      --      2,392          --         (2,392)            --
                                  ---------------------------------------------------------------------
Total revenue                      41,971  23,065      4,094         221         (2,392)        66,959
                                  ---------------------------------------------------------------------

Operating expenses                 25,645  18,560      2,830       2,048         (1,738)        47,345
Depreciation & amortization         1,261   1,167         39         438             --          2,905
Bad debt expense                   10,158      --         --          --             --         10,158
Interest expense                    1,023   1,127         --          68             --          2,218
Interest income                        --     (76)        --          (4)            --            (80)
Income tax expense                     --      --         --       1,721             --          1,721
                                  ---------------------------------------------------------------------
Segment net income (loss)         $ 3,884   2,287      1,225      (4,050)          (654)         2,692
                                  =====================================================================

Total assets                      $70,930     N/A       N/A      135,267         (2,164)       204,033
                                  =====================================================================
</TABLE>


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

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

<TABLE>
<CAPTION>
                                                          Products   Corporate   Intersegment
FOR NINE MONTHS ENDED SEPTEMBER 30:      CBM       HBM    Division  Activities   Eliminations   Consolidated
<S>                                   <C>        <C>      <C>       <C>          <C>            <C>
2004
External revenue                      $133,390   66,090      5,358          --             --        204,838
Intersegment revenue                        --       --      5,607          --         (5,607)            --
                                      -----------------------------------------------------------------------
Total revenue                          133,390   66,090     10,965          --         (5,607)       204,838
                                      -----------------------------------------------------------------------

Operating expenses                      85,620   57,083      7,026       6,208         (4,955)       150,982
Depreciation & amortization              4,051    3,757        182         150             --          8,140
Bad debt expense                        33,917      230         --                         --         34,147
Interest expense                         2,976    2,817         --         143             --          5,936
Interest income                             --       --         --         (13)            --            (13)
Income tax expense                          --       --         --       2,220             --          2,220
                                      -----------------------------------------------------------------------
Segment net income (loss) before
  cumulative effect of change in
  accounting principle                   6,826    2,203      3,757      (8,708)          (652)         3,426
Cumulative effect of change in
  accounting principle, net                 --       --         --       8,595             --          8,595
                                      -----------------------------------------------------------------------
Segment net income (loss)             $  6,826    2,203      3,757        (113)          (652)        12,021
                                      =======================================================================

Total assets                          $ 65,821     N/A        N/A      142,055         (2,164)       205,712
                                      =======================================================================

2003
External revenue                      $105,290   66,172      4,614         645             --        176,721
Intersegment revenue                        --       --      4,476          --         (4,476)            --
                                      -----------------------------------------------------------------------
Total revenue                          105,290   66,172      9,090         645         (4,476)       176,721
                                      -----------------------------------------------------------------------

Operating expenses                      69,656   54,966      7,188       6,092         (3,478)       134,424
Depreciation & amortization              3,562    3,469        128       1,302             --          8,461
Bad debt expense                        22,060       --         --          --             --         22,060
Interest expense                         2,948    3,072         --         132             --          6,152
Interest income                             (1)     (78)        --          (7)            --            (86)
Income tax expense                          --       --         --       2,227             --          2,227
                                      -----------------------------------------------------------------------
Segment net income (loss)             $  7,065    4,743      1,774      (9,101)          (998)         3,483
                                      =======================================================================

Total assets                          $ 70,930     N/A        N/A      135,267         (2,164)       204,033
                                      =======================================================================
</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 nine months ended September 30, 2004, the CBM Division
     generated  65%  of  the Company's total revenue, increasing from 60% in the
     nine  months  ended  September  30,  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 (approximately 65% of total contract
     revenue)  and  hourly  flight  fees  (approximately  35%  of total contract
     revenue)  billed  to hospital customers. In the nine months ended September
     30,  2004,  the  HBM Division generated 32% of the Company's total revenue,
     decreasing  from  37%  in  2003.
-    Products  Division  -  designs, manufactures, and installs aircraft medical
     interiors  and  other aerospace and medical transport products for domestic
     and  international customers. In 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 approximately 35% of HBM revenue. By contrast,
     approximately  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 23,000 for the quarter and nine months ended September 30, 2004,
     respectively,  compared  to  approximately 7,100 and 18,600 for the quarter
     and  nine months ended September 30, 2003. Patient transports for CBM bases
     open  longer  than one year (Same-Base Transports) were approximately 7,000
     and  19,200  in  the  quarter  and  nine  months  ended September 30, 2004,
     respectively, compared to approximately 7,000 and 17,700 in the quarter and
     nine  months  ended  September  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  decreased  2.6%  and  3.6%  in  the  three and nine months ended
     September 30, 2004, respectively, compared to 2003. The total provision for
     expected  uncollectible  amounts,  including  contractual  discounts  for
     Medicare/Medicaid  and  bad  debts,  increased  from 42.9% of related gross
     flight  revenue  for  the nine months ended September 30, 2003, to 48.5% in
     the nine months ended September 30, 2004. The Company believes the decrease
     in  collection  rate  is  driven  primarily by overall economic conditions.

-    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  27%  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 19.1% and 22.5% in the quarter and nine months
     ended  September  30,  2004,  respectively,  compared  to 2003, while total
     flight  volume  for  CBM  and  HBM  operations  increased  4.2%  and 10.1%,
     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.  During  2004,  the Company entered into purchase
     commitments  for  10  Eurocopter EC135 helicopters, with deliveries in 2004
     and  2005,  and 15 Bell 427 helicopters, with deliveries beginning in 2007.
     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  2003,  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 $1,452,000 and $12,021,000 for the three and
nine  months  ended  September 30, 2004, respectively, compared to net income of
$2,692,000  and  $3,483,000  for  the  three and nine months ended September 30,
2003,  respectively.  Net  income  for the nine months ended September 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 $3,426,000
for  the  nine months ended September 30, 2004. An increase in flight volume for
CBM  operations  during  the  period  was  offset  in part by increased aircraft
maintenance  costs  and  by  decreases of 2.6% and 3.6% in net reimbursement per
transport  (revenue  after  Medicare/Medicaid  discounts  and  bad debt expense)
during  the  quarter  and  nine  months  ended September 30, 2004, respectively,
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 nine months ended September
30,  2003  (amounts  in  thousands):

<TABLE>
<CAPTION>
                                  Three Months Ended         Nine Months Ended
                                  September 30, 2003         September 30, 2003
                               As Reported    Pro Forma    As Reported   Pro Forma
                               -----------------------------------------------------
<S>                            <C>           <C>           <C>          <C>
Aircraft operations expense    $     14,475        13,781       41,759        37,462
                               =====================================================
Depreciation and amortization  $      2,905         2,527        8,461         7,327
                               =====================================================

Net income                     $      2,692         3,346        3,483         6,796
                               =====================================================

Basic income per share         $        .28           .35          .36           .71
                               =====================================================

Diluted income per share       $        .27           .34          .35           .68
                               =====================================================
</TABLE>


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

FLIGHT REVENUE increased $1,935,000, or 3.0%, and $28,015,000, or 16.3%, for the
three  and nine months ended September 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 $1,524,000, or 3.6%, to $43,489,000 for the
     third  quarter  of  2004 and $28,047,000, or 26.6%, to $133,306,000 for the
     nine  months  ended  September  30,  2004,  for  the  following  reasons:
     -    Incremental  revenue of $5,601,000 and $17,904,000 for the quarter and
          nine  months ended September 30, 2004, respectively, from the addition
          of  16  new  CBM  bases either during or subsequent to the nine months
          ended  September  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  22.8% in the nine months ended
          September  30,  2004,  compared  to  2003,  respectively, resulting in
          incremental  revenue  of  approximately  $2,508,000.


                                       14
<PAGE>
     -    Closure  of  one  base in the fourth quarter of 2003, one in the first
          quarter  of  2004, and one during the third quarter of 2004, resulting
          in  a decrease in revenue of approximately $897,000 and $2,532,000 for
          the  quarter  and  nine months ended September 30, 2004, respectively.
     -    Increase  in  Same Base Transports for the nine months ended September
          30,  2004.  Excluding  the  impact  of the new bases and base closures
          discussed  above,  total flight volume for all CBM operations remained
          relatively unchanged during the third quarter of 2004 compared to 2003
          and  increased  8.4%  in  the  nine  months  ended September 30, 2004,
          compared to the prior year. The increase in flight volume for the nine
          months  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,  and  an  average  price  increase  of
          approximately  10%  effective  September  1,  2004.
     -    Decrease  caused  by  a  change in payer mix to a higher percentage of
          Medicare/Medicaid  transports,  resulting  in  higher  contractual
          discounts  which  are  offset  against flight revenue. The increase in
          contractual discounts for the third quarter of 2004 was offset in part
          by  a  decrease in bad debt expense. See discussion of total provision
          for  uncollectible  accounts,  including contractual discounts and bad
          debt  expense,  below  under  Bad  Debt  Expense.

-    HBM  -  Flight  revenue increased $411,000, or 1.8%, to $23,469,000 for the
     third  quarter  of  2004  and decreased $32,000 to $66,090,000 for the nine
     months  ended  September  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  $1,562,000 and $4,379,000 for the three and nine months
          ended  September  30,  2004,  respectively.
     -    Revenue  of  approximately  $396,000  and $926,000 for the quarter and
          nine-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  3.8%  and 5.9% in flight volume for the quarter and nine
          months  ended  September  30,  2004,  respectively,  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 $2,577,000, or 11.3%, and $9,739,000, or 15.2%,
for the quarter and nine months ended September 30, 2004, respectively, compared
to  2003.  Changes  by  business  segment  are  as  follows:

-    CBM - Flight center costs increased $2,595,000, or 18.3% to $16,780,000 and
     $9,931,000,  or  25.7%,  to $48,600,000 for the three and nine months ended
     September  30,  2004,  for  the  following  reasons:
     -    Increase  of  approximately  $2,579,000 and $8,367,000 for the quarter
          and  nine  months  ended  September  30,  2004,  for  the  addition of
          personnel  to  staff  new  base  locations  described  above.
     -    Decrease  of approximately $492,000 and $1,172,000 for the quarter and
          nine  months  ended  September  30,  2004,  due to the closure of base
          locations  described  above.
     -    Increases  in  salaries  for  merit  pay  raises.
     -    Increase  of  approximately  $162,000 and $712,000 for the quarter and
          nine  months  ended  September  30, 2004, for telecommunications costs
          associated  with  dispatch  operations.

-    HBM  -  Flight  center  costs decreased $16,000, or 0.2%, to $8,642,000 and
     $192,000,  or  0.8%,  to  $25,381,000  for  the three and nine months ended
     September  30,  2004,  primarily  due  to  the  following:
     -    Decrease  of approximately $582,000 and $1,767,000 for the quarter and
          nine  months  ended  September  30,  2004,  due to the closure of base
          locations  described  above.
     -    Increase  of  approximately  $139,000 and $303,000 for the quarter and
          nine months ended September 30, 2004, for the addition of personnel to
          staff  new  base  locations  described  above.
     -    Increases  in  salaries  for  merit  pay  raises.


                                       15
<PAGE>
AIRCRAFT  OPERATING  EXPENSES increased $1,606,000, or 11.1%, and $2,929,000, or
7.0%,  for  the three and nine months ended September 30, 2004, respectively, in
comparison  to  the  three  and  nine  months ended September 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  15  helicopters  for CBM operations and 12 for HBM operations
     either during or subsequent to the first nine months of 2003. The resulting
     increase  in  aircraft  operating  expenses  was approximately $533,000 and
     $1,703,000  for  the  three  and  nine  months  ended  September  30, 2004.
-    Increase  of  approximately  21%  in  the number of engine events requiring
     significant  repair  or  overhaul  and increase of approximately 60% in the
     number  of  blade  repairs  for BK117 helicopters for the nine months ended
     September  30,  2004,  compared  to  2003.  The Company also experienced an
     increase  in  maintenance  costs for aircraft interior refurbishment, which
     was  required  due  to  the  age  of  the  interiors.
-    Increase  of  approximately 11.4% and 17.7% for the quarter and nine months
     ended  September  30,  2004, respectively, in the cost of aircraft fuel per
     hour  flown.
-    Decrease  in  hull  insurance  rates  effective  July  2004.

AIRCRAFT  RENTAL EXPENSE increased $660,000, or 20.3%, and $1,662,000, or 18.2%,
for  the  three  and  nine  months  ended  September  30, 2004, respectively, in
comparison  to  the  three and nine months ended September 30, 2003. Incremental
rental  expense  for  21  leased  aircraft  added to the Company's fleet, either
during  or  subsequent  to  the  first nine months of 2003, totaled $769,000 and
$1,830,000  in the three and nine months ended September 30, 2004, respectively.

BAD DEBT EXPENSE decreased $1,232,000, or 12.1%, for the quarter ended September
30,  2004, in comparison to the prior year, but increased $12,087,000, or 54.8%,
for  the  nine  months  ended  September  30,  2004. Bad debt as a percentage of
related  net  flight revenue was 20.0% and 25.4% for the quarter and nine months
ended  September  30,  2004,  respectively,  compared  to 24.2% and 21.0% in the
quarter and nine months ended September 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 43.8% of
related  gross  flight  revenue  for  the third quarter of 2003 to 49.2% for the
third  quarter  of  2004, and from 42.9% for the nine months ended September 30,
2003,  to  48.5%  for  the  nine  months  ended  September 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 and in
patients  covered  by  Medicaid.  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  increased  $271,000, or 15.9%, and
$744,000,  or  16.1%,  for  the  three and nine months ended September 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,
40  litter  systems  for the U.S. Army's Medical Evacuation Vehicle (MEV), and a
multi-mission  interior  for  a Sikorsky FIREHAWK helicopter for the Los Angeles
County  Fire Department. Revenue by product line for the quarter and nine months
ended  September  30,  2004,  respectively,  was  as  follows:
-    $1,360,000  and  $3,381,000  -  design  and  manufacture  of  multi-mission
     interiors
-    $85,000  and  $544,000  -  manufacture  and installation of modular medical
     interiors
-    $527,000  and  $1,432,000  -  design  and  manufacture  of  other aerospace
     products

Significant  projects  in 2003 included the manufacture of eight modular medical
interiors  for  four  commercial  customers.  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
nine  months  ended  September  30,  2003,  respectively,  was  as  follows:
-    $1,067,000  and  $1,252,000  -  design  and  manufacture  of  multi-mission
     interiors
-    $534,000  and  $2,957,000 - manufacture and installation of modular medical
     interiors
-    $101,000  and $405,000 - design and manufacture of other aerospace products


                                       16
<PAGE>
COST  OF  MEDICAL  INTERIORS  AND  PRODUCTS  decreased  $429,000,  or 40.1%, and
$1,755,000,  or 49.1%, for the quarter and nine months ended September 30, 2004,
respectively,  compared  to  the  prior  year.  The average net margin earned on
projects  during  2004  was  48%  compared  to 22% 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
by both projects for external customers and interdivisional projects.


GENERAL EXPENSES

DEPRECIATION AND AMORTIZATION EXPENSE decreased $176,000, or 6.1%, and $321,000,
or  3.8%,  for the three and nine months ended September 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  $1,134,000 in depreciation expense for the quarter
and  nine months ended September 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 September 30, 2003.

GENERAL  AND  ADMINISTRATIVE  (G&A) EXPENSES increased $1,757,000, or 32.3%, and
$4,650,000,  or 29.7%, for the quarter and nine months ended September 30, 2004,
respectively,  compared  to  2003,  reflecting  the  growth  in  the  Company's
operations.  G&A  expenses were 10.4% and 9.9% of revenue for the three and nine
months ended September 30, 2004, respectively, compared to 8.1% and 8.9% for the
three  and  nine  months  ended  September  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.  This increase in administrative
staffing  was offset in part by a reduction in Flight Center Costs for personnel
previously  assigned exclusively to a single base of operation. 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 a slowdown in
collections  in early 2004. During the nine months ended September 30, 2004, the
Company  also  incurred costs of approximately $392,000 to prepare for the audit
of  internal controls required by Section 404 of the Sarbanes-Oxley Act of 2002.
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  decreased  $402,000,  or 18.1%, and $216,000, or 3.5%, in the
quarter  and  nine  months  ended  September 30, 2004, respectively, compared to
2003,  as  a  result  of  changes in the average balance outstanding against the
Company's  line  of  credit,  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 the first quarter of
2004.  The  average  balance  outstanding  against  the  line  of  credit  was
approximately  $16.5  million and $18.5 million during the three and nine months
ended  September  30,  2004,  respectively,  compared to $17.3 million and $16.2
million during the three and nine months ended September 30, 2003, respectively.

The  Company recorded INCOME TAX EXPENSE of $2,220,000 in 2004 and $2,227,000 in
2003,  both  at  an  effective  rate  of  approximately  39%.


                                       17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The  Company  had  working  capital  of  $50,504,000  as  of September 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  $3,096,000  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.
-    Increase of $2,850,000 in deferred income tax liabilities, primarily 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.  Previously,  the accrual method of accounting for
     engine  and  airframe  component  overhaul costs resulted in a deferred tax
     asset,  which  had  both  a  current  and  a  long-term  component.

SOURCES AND USES OF CASH

The  Company  had  cash  and  cash equivalents of $7,461,000 as of September 30,
2004,  compared to $5,574,000 at December 31, 2003. Cash generated by operations
in  the  nine  months  ended September 30, 2004, totaled $13,177,000 compared to
$211,000  in  2003.  Receivable  balances,  net  of  bad debt expense, increased
$3,096,000  in 2004 compared to $14,704,000 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 and the results of the
Company's  efforts  to  improve  the  pace  of collections. Total cash collected
against  CBM  receivable  balances  was  $98.2  million in the nine months ended
September 30, 2004, compared to $69.0 million in the nine months ended September
30,  2003.

Cash  used  by  investing  activities  totaled  $7,149,000  in  2004 compared to
$2,254,000  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 fourth quarter of
2004.  In  2004  the  Company  received  $1.2 million for the sale of one of its
aircraft which will be leased back from the buyer and approximately $1.3 million
from  the refund of deposits for the purchase of new aircraft, primarily through
the  arrangement  of long-term operating lease financing. 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  used $4,141,000 in 2004 compared to generating $3,815,000
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 and other capital expenditures. 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 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 equipment and other capital expenditures; 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 September 30, 2004, the
Company  had  taken  delivery  of  5  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.


                                       18
<PAGE>
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 six new locations since the beginning of
2004,  including  one  in  Pennsylvania during the third quarter, and expects to
open  a new location in Kentucky in the fourth quarter. 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 has renewed all four contracts which were
due  for  renewal  in 2004, including the following in the third quarter: one in
Virginia  for a three-year term; one in Nebraska for a one-year term; and one in
Nebraska  for  a  five-year  term.  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.

Products Division

As of September 30, 2004, the Company was continuing the production of 13 HH-60L
units  and  19 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 fourth quarter of
2004  the  Company  also  received  a contract for the production of two modular
medical  interiors  for  a  commercial  customer, with delivery scheduled in the
first  and  second  quarters  of 2005. Remaining revenue for all contracts as of
September  30,  2004,  is  estimated  at  $4.1  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  63  units,  in  addition  to the 19 units currently under
contract.  There  is  no  assurance  that  orders  for  additional units will be
received  in  future  periods.

All Segments

In the fourth quarter of 2004 the Company implemented new finance and accounting
software  and  expects  to  implement  new  software  for  several  other  major
information  technology systems in 2005. The majority of the cost of new systems
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 $20,855,000
in  borrowing  capacity  available  under  its  revolving  credit facility as of
September  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.


                                       19
<PAGE>
-    Highly  leveraged  balance  sheet  -  The  Company  is obligated under debt
     facilities  providing  for  up  to  approximately  $105.9  million  of
     indebtedness,  of  which  approximately  $86.0  million  was outstanding at
     September 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 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.


                                       20
<PAGE>
-    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.

-    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.


                                       21
<PAGE>
-    Internal  Controls  -  The  Company  is  required  by  Section  404  of the
     Sarbanes-Oxley  Act  of  2002  to include management and auditor reports on
     internal controls as part of its annual report for the year ending December
     31, 2004. The Company continues to devote substantial time and resources to
     the  documentation and testing of internal controls. There is no indication
     that management will be unable to favorably report on internal controls nor
     that  the  Company's  independent  auditors  will  be  unable  to attest to
     management's  findings.  Both  management  and  the auditors, however, must
     complete  their  processes,  which  have never been undertaken before. As a
     result, the Company cannot offer assurance that the work necessary to fully
     comply  with  the  requirements  of Section 404 will be completed timely or
     that  management  or  the auditors will conclude that internal controls are
     effective.  It  is unclear what impact failure to comply fully with Section
     404  or  the  discovery  of  a  material weakness in internal controls over
     financial  reporting  would  have  on  the  Company,  but  it may result in
     additional  expenditures  to  meet  the  requirements, a reduced ability to
     obtain  financing,  or a loss of investor confidence in the accuracy of the
     Company's  financial  reports.

-    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.

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  nine  months  ended September 30, 2004, a change of 1% in the
percentage of estimated contractual discounts would have resulted in a change of
approximately  $1,929,000  in  flight  revenue.


                                       22
<PAGE>
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 creditworthiness 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 nine months ended September 30,
2004, a change of 1% in the percentage of estimated uncollectible accounts would
have  resulted  in  a  change  of  approximately $1,333,000 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 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.


                                       23
<PAGE>
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  $15,114,000
outstanding against the line of credit and $2,176,000 in notes payable. Based on
the  amounts outstanding at September 30, 2004, the annual impact of a 1% change
in  interest  rates  would  be  approximately  $173,000. Interest rates on these
instruments  approximate  current  market  rates  as  of  September  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  September 30, 2004, pursuant to Rule 13a-15(b) under the Exchange Act. Based
on that evaluation, the Certifying Officers have concluded that, as of September
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 the fourth
quarter of 2004, the Company upgraded its hardware and software systems relating
to  finance  and  accounting  and  expects  to  upgrade  the systems relating to
inventory,  purchasing,  and  dispatch  and  communications  in  2005.


                                       24
<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

          None.

ITEM 5.   OTHER INFORMATION

          Not Applicable

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:  November 15, 2004     By   \s\ Aaron D. Todd
                                 -------------------------------------------
                                 Aaron D. Todd
                                 Chief Executive Officer
                                 (Principal Executive Officer)


Date:  November 15, 2004     By    \s\ Trent J. Carman
                                 -------------------------------------------
                                 Trent J. Carman
                                 Chief Financial Officer
                                 (Principal Financial Officer)


Date:  November 15, 2004     By    \s\  Sharon J. Keck
                                 -------------------------------------------
                                 Sharon J. Keck
                                 Chief Accounting Officer
                                 (Principal Accounting Officer)


                                       26
<PAGE>