##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended December 31, 2004                                                 
|  
|or
|  
|o  |  | 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 001-31898





PINNACLE AIRLINES CORP.


(Exact name of registrant as specified in its charter)


|                                                                                              |  |                                         
|--------------------------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                                      |  | 03-0376558                              
|(State or other jurisdiction of
    incorporation or organization)                            |  | (I.R.S. Employer
    Identification No.)
|                                                                                             
|1689 Nonconnah Blvd, Suite 111
    Memphis, Tennessee(Address of principal executive offices) |  | 38132(Zip Code)                         

Registrants telephone number, including area code:


901-348-4100


Securities registered pursuant to Section 12(b) of the
Act:


|                             |  |                                           
|---------------------------- |  | ------------------------------------------
|Title of each class:         |  | Name of each exchange on which registered:
|                             |  |                                           
|Common Stock, $.01 par value |  | Nasdaq National Market                    

Securities registered pursuant to Section 12 (g) of
the Act:


None


þ o


þ


þ o






Documents Incorporated by Reference














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TABLE OF CONTENTS


|                                                   |  |                                                                                                                      |    |  |    | 
|-------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I                                            
|Item 1.                                            |  | Business                                                                                                             |    |  | 1  | 
|                                                   |  | Our Company                                                                                                          |    |  | 1  | 
|                                                   |  | Our Airline Services Agreement with
    Northwest                                                                    |    |  | 1  | 
|                                                   |  | Our Employees                                                                                                        |    |  | 6  | 
|                                                   |  | Maintenance of Aircraft                                                                                              |    |  | 7  | 
|                                                   |  | Training                                                                                                             |    |  | 7  | 
|                                                   |  | Safety and Security                                                                                                  |    |  | 8  | 
|                                                   |  | Insurance                                                                                                            |    |  | 8  | 
|                                                   |  | Regulations                                                                                                          |    |  | 8  | 
|                                                   |  | Markets and Routes                                                                                                   |    |  | 9  | 
|                                                   |  | Recent Developments                                                                                                  |    |  | 9  | 
|                                                   |  | Risk Factors Affecting Our
    Business                                                                              |    |  | 11 | 
|                                                   |  | Website                                                                                                              |    |  | 18 | 
|Item 2.                                            |  | Properties                                                                                                           |    |  | 18 | 
|                                                   |  | Flight Equipment                                                                                                     |    |  | 18 | 
|                                                   |  | Facilities                                                                                                           |    |  | 19 | 
|Item 3.                                            |  | Legal Proceedings                                                                                                    |    |  | 19 | 
|                                                   |  | Environmental Matters                                                                                                |    |  | 19 | 
|                                                   |  | Regulatory Matters                                                                                                   |    |  | 19 | 
|Item 4.                                            |  | Submission of Matters to a Vote of Security
    Holders                                                              |    |  | 19 | 
|PART II                                           
|Item 5.                                            |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |    |  | 20 | 
|Item 6.                                            |  | Selected Financial Data                                                                                              |    |  | 21 | 
|Item 7.                                            |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |    |  | 23 | 
|                                                   |  | Review of 2004                                                                                                       |    |  | 23 | 
|                                                   |  | Outlook for 2005                                                                                                     |    |  | 23 | 
|                                                   |  | Certain Statistical Information                                                                                      |    |  | 25 | 
|                                                   |  | Basis of Presentation                                                                                                |    |  | 25 | 
|                                                   |  | Results of Operations                                                                                                |    |  | 28 | 
|                                                   |  | Liquidity and Capital Resources                                                                                      |    |  | 31 | 
|                                                   |  | Critical Accounting Policies                                                                                         |    |  | 33 | 
|                                                   |  | Recent Accounting Pronouncements                                                                                     |    |  | 35 | 
|                                                   |  | Forward Looking Statements                                                                                           |    |  | 35 | 
|Item 7A.                                           |  | Quantitative and Qualitative Disclosure
    About Market Risk                                                        |    |  | 37 | 
|Item 8.                                            |  | Financial Statements and Supplementary
    Data                                                                      |    |  | 38 | 
|Item 9.                                            |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |    |  | 65 | 
|Item 9A.                                           |  | Controls and Procedures                                                                                              |    |  | 65 | 
|PART III                                          
|Item 10.                                           |  | Directors and Executive Officers of the
    Registrant                                                               |    |  | 66 | 
|Item 11.                                           |  | Executive Compensation                                                                                               |    |  | 66 | 
|Item 12.                                           |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |    |  | 66 | 
|Item 13.                                           |  | Certain Relationships and Related
    Transactions                                                                   |    |  | 66 | 
|Item 14.                                           |  | Principal Accountant Fees and Services                                                                               |    |  | 66 | 
|PART IV                                           
|Item 15.                                           |  | Exhibits, Financial Statement Schedules,
    and Reports on Form 8-K                                                 |    |  | 66 | 
|SIGNATURES                                         |  |                                                                                                                      | 67 | 
|EX-23.1  CONSENT OF ERNST & YOUNG LLP             
|EX-31.1  RULE 13A-14(A) CEO CERTIFICATION         
|EX-31.2  RULE 13A-14(A) CFO CERTIFICATION         
|EX-32  SECTION 1350 CERTIFICATION OF THE CEO & CFO



i



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PART I







|        |         
|------- | --------
|Item 1. | Business






Our Company













Our Airline Services Agreement with Northwest




1



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|        |         
|------- | --------
|Item 1. | Business

Our Airline Services Agreement with Northwest (continued)




















2



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|        |         
|------- | --------
|Item 1. | Business



Our Airline Services Agreement with Northwest (continued)








| |                   
| | ------------------
| | Scope of Agreement





| |                           
| | --------------------------
| | Code-Sharing and Marketing





| |                   
| | ------------------
| | Aircraft Financing







| |                                       
| | --------------------------------------
| | Airport Facilities and Ground Handling



3



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|        |         
|------- | --------
|Item 1. | Business



Our Airline Services Agreement with Northwest (continued)










| |                            
| | ---------------------------
| | Establishing New Operations







| |                                                       
| | ------------------------------------------------------
| | Northwests Ability to Use Other Regional
    Airlines



4



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|        |         
|------- | --------
|Item 1. | Business



Our Airline Services Agreement with Northwest (continued)




| |                 
| | ----------------
| | Labor Disruption





| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | terminate the ASA, which would immediately terminate the leases
    and subleases for all of our CRJs; and                                                                                                        
|
| |  | prior to electing to terminate the ASA, immediately terminate
    the subleases for 89 of our CRJs, and if the strike continues
    for more than 45 days, terminate the subleases for all but
    50 of our CRJs.



| |                                                           
| | ----------------------------------------------------------
| | Term and Termination of Agreement; Remedies for
    Breach





| |   |                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our failure to make any payment under any aircraft lease or
    sublease;                                                                                                                                                  
|
| |  | an event of default by us of any term of any aircraft lease or
    sublease;                                                                                                                                               
|
| |  | an event of default under any of our other agreements with
    Northwest;                                                                                                                                                  
|
| |  | our failure to make payments under our promissory note to
    Northwest (which was subsequently retired in February 2005);                                                                                                 
|
| |  | our failure to make payments under our revolving credit facility
    with Northwest;                                                                                                                                       
|
| |  | our failure to maintain required insurance coverages;                                                                                                                                                                      
|
| |  | our failure to comply with Northwests inspection
    requirements;                                                                                                                                                        
|
| |  | our failure to operate more than 50% of our aircraft for more
    than seven consecutive days or our failure to operate more than
    25% of our aircraft for more than 21 consecutive days, other
    than as a result of:



| |    |                                                                                                                                              
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------
| | 1) | an FAA order grounding all commercial flights or all air
    carriers or grounding a specific aircraft type of all carriers,                 
|
| | 2) | a scheduling action by Northwest or                                                                                                          
|
| | 3) | Northwests inability to perform its obligations under the
    airline services agreement as a result of a strike by Northwest
    employees;



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | suspension or revocation of our authority to operate as an
    airline by the FAA or the Department of Transportation
    (DOT);                                                                                                                                                                                                                                                                                                                               
|
| |  | a change of control of our company or our affiliates;                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | operation by Pinnacle Airlines, Inc. or an affiliate of
    (1) an aircraft type which causes Northwest to violate its
    collective bargaining agreement with its pilots or (2) an
    aircraft certificated as having (a) 60 or more seats or
    (b) a maximum gross takeoff weight of 70,000 pounds or more
    (or such greater seat or weight limits as may be established
    under Northwests collective bargaining agreement with its
    pilots); and

5



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|        |         
|------- | --------
|Item 1. | Business

Our Airline Services Agreement with Northwest (continued)




| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | any replacement of the chief executive officer of either
    Pinnacle Airlines Corp. or Pinnacle Airlines, Inc. that is not
    approved by Northwest.





| |                                     
| | ------------------------------------
| | Treatment of Assets upon Termination







| |                
| | ---------------
| | Indemnification






Our Employees






6



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|        |         
|------- | --------
|Item 1. | Business

Our Employees (continued)




|                  |  |           |       |  |                    |                                                                               |                         |               
|----------------- |  | --------- | ----- |  | ------------------ | ----------------------------------------------------------------------------- | ----------------------- | --------------
|                  |  | Number    |       |  |                    |                                                                               |                        
|                  |  | of        |       |  |                    |                                                                               |                        
|Employee Group    |  | Employees |       |  | Representing Union |                                                                               | Contract Amendable Date
|                  |  |           |       |  |                    |                                                                               |                        
|Pilots            |  |           | 1,000 |  |                    | Airline Pilots Association                                                    |                         | April 30, 2005
|Flight Attendants |  |           | 625   |  |                    | Paper, Allied-Industrial, Chemical and Energy Workers
    International Union |                         | July 31, 2006 
|Customer Service  |  |           | 890   |  |                    | Paper, Allied-Industrial, Chemical and Energy Workers
    International Union |                         | March 19, 2010




Maintenance of Aircraft















Training






7



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|        |         
|------- | --------
|Item 1. | Business

Training (continued)







Safety and Security







Insurance











Regulations






8



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Item 1.Business




Regulations (continued)







Markets and Routes







Recent Developments












| |   |                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | during a quarter (and only during such quarter) if the closing
    price of our common stock exceeds 120% of the conversion price
    of the Notes (initially $15.86 per share) for at least 20
    of the last 30 trading days of the preceding quarter;
|
| |  | during a five day period after the Notes have traded for a five
    day period at a price that is less than 98% of the equivalent
    value that could be realized upon conversion of the Notes;                                                         
|
| |  | if we call the convertible Notes for redemption;                                                                                                                                                                                                         
|
| |  | if a change of control or other specified corporate transactions
    or distributions to holders of our common stock occurs (and in
    some instances, we may also owe an additional premium upon a
    change in control); and                         
|
| |  | during the 10 trading days prior to the maturity date of
    February 15, 2025.                                                                                                                                                                          

9



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|        |         
|------- | --------
|Item 1. | Business

Recent Developments (continued)






|                                  |  |                                       |       | 
|--------------------------------- |  | ------------------------------------- | ----- | 
|                                  |  | Increase in Fully Diluted Shares with
|                                  |  | $121 Million Principal Amount        
|Average Stock Price during Period |  | Outstanding (thousands)              
|                                  |  |                                      
|$11.00                            |  |                                       |      | 
|$12.00                            |  |                                       |      | 
|$13.00                            |  |                                       |      | 
|$14.00                            |  |                                       | 510   | 
|$15.00                            |  |                                       | 1,087 | 
|$16.00                            |  |                                       | 1,591 | 
|$17.00                            |  |                                       | 2,036 | 

10



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|        |         
|------- | --------
|Item 1. | Business




Risk Factors Affecting Our Business


Risks Relating to our ASA with Northwest




| |                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are dependent on the services that Northwest provides
    to us. If our ASA with Northwest is terminated, we could lose
    our only significant source of revenue and earnings, our
    regional jet fleet, access to our airport facilities, and the
    services Northwest provides to us.







| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Northwest may decide not to grow our fleet beyond 139 CRJs
    or to use other regional airlines, and any future growth from
    Northwest may be on less than favorable terms.







| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | Reduced utilization levels of our aircraft under the ASA
    would reduce our revenues and earnings.



11



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|        |         
|------- | --------
|Item 1. | Business

Risks Relating to our ASA with Northwest (continued)




| |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our ASA may cause us to earn lower operating margins than
    we have targeted, or to experience losses, if some of our future
    costs are higher than expected and may limit our ability to
    benefit from improved market conditions or increased operational
    efficiency. In addition, our target operating margin under the
    ASA could be reduced beginning in 2008, and our operating margin
    will not be subject to any guaranteed floor.









| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | There are constraints on our ability to establish new
    operations to provide airline services to major airlines other
    than Northwest.



12



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|        |         
|------- | --------
|Item 1. | Business

Risks Related to Our Business and Operations




| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Northwest Airlines is our largest source of operating
    revenue, and financial or operational difficulties at Northwest
    could have a negative impact on our financial condition.







| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | We may experience difficulty finding, training and
    retaining employees, which may interfere with our expansion
    plans.







| |                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Strikes or labor disputes with our employees may adversely
    affect our ability to conduct our business and could result in
    the termination of the ASA or in significant reductions in the
    benefits of the agreement to us.





| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | Increases in our labor costs, which constitute a
    substantial portion of our total operating costs, may directly
    impact our earnings.



13



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Item 1.Business




Risks Related to Our Business and Operations (continued)








| |                                                                                       
| | --------------------------------------------------------------------------------------
| | We are highly leveraged, which could hurt our ability to
    meet our strategic goals.





| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | limit our ability to obtain additional financing to support
    capital expansion plans and for working capital and other
    purposes;                     
|
| |  | divert substantial cash flow from our operations and expansion
    plans in order to service our debt;                                                      
|
| |  | limit our flexibility in planning for, or reacting to, changes
    in our business and the industry in which we compete; and                                
|
| |  | place us at a possible competitive disadvantage compared to less
    leveraged competitors and competitors that have better access to
    capital resources.



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | Our reputation and financial results could be harmed in
    the event of an accident or incident involving our
    aircraft.





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|        |         
|------- | --------
|Item 1. | Business



Risks Related to Our Business and Operations (continued)




| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | We are increasingly dependent on technology in our
    operations, and if our technology fails, our business may be
    adversely affected.







| |                                                    
| | ---------------------------------------------------
| | Our quarterly results of operations will fluctuate.







| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may be unable to obtain all of the aircraft, engines,
    parts or related maintenance and support services we require
    from Bombardier or General Electric, which could have a material
    adverse impact on our business.





15



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|        |         
|------- | --------
|Item 1. | Business

Risks Related to Our Business and Operations (continued)






| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under certain circumstances, we may be required to pay
    cash or a combination of cash and our common stock to holders of
    our 3.25% senior convertible notes due 2025 at their option
    prior to the maturity date.





| |   |                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | during a quarter (and only during such quarter) if the closing
    price of our common stock exceeds 120% of the conversion price
    of the Notes (initially $15.86 per share) for at least 20
    of the last 30 trading days of the preceding quarter;
|
| |  | during a five day period after the notes have traded for a five
    day period at a price that is less than 98% of the equivalent
    value that could be realized upon conversion of the Notes;                                                         
|
| |  | if we call the Notes for redemption;                                                                                                                                                                                                                     
|
| |  | if a change of control or other specified corporate transactions
    or distributions to holders of our common stock occurs (and in
    some instances, we may also owe an additional premium upon a
    change in control); and                         
|
| |  | during the 10 trading days prior to the maturity date of
    February 15, 2025.                                                                                                                                                                          



Risks Associated with the Airline Industry




| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Increased competition in the airline industry could reduce
    Northwests need to utilize our services and limit
    Northwests desire to expand its relationship with
    us.





16



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|        |         
|------- | --------
|Item 1. | Business



Risks Associated with the Airline Industry (continued)




| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Increased competition in the regional jet industry could
    affect our growth opportunities.







| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Changes in government regulation imposing additional
    requirements and restrictions on our operations could increase
    our operating costs and result in service delays and
    disruptions.







Aviation insurance is a critical safeguard of our
financial condition. It might become difficult to obtain
adequate insurance at a reasonable rate in the future.






17



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|        |         
|------- | --------
|Item 1. | Business



Risks Associated with the Airline Industry (continued)




| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may be affected by factors beyond our control,
    including weather conditions, increased security measures and
    U.S. and world conditions and events.










| |        
| | -------
| | Website

www.nwairlink.com





Item 2.Properties





Flight Equipment




|                          |  |             |     |  |                  |  |    | 
|------------------------- |  | ----------- | --- |  | ---------------- |  | -- | 
|                          |  | Number      |     |  | Standard Seating | 
|Aircraft Type             |  | of Aircraft |     |  | Configuration    | 
|                          |  |             |     |  |                  | 
|Canadair Regional Jet 200 |  |             | 42  |  |                  |  | 50 | 
|Canadair Regional Jet 440 |  |             | 75  |  |                  |  | 44 | 
|                          |  |             |     |  |                  | 
|                          |  |             | 117 |  |                  |  |    | 
|                          |  |             |     |  |                  | 



18



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Item 2.Properties
(continued)





Facilities




|               |  |                                                       |  |                |  |                       
|-------------- |  | ----------------------------------------------------- |  | -------------- |  | ----------------------
|Location       |  | Description                                           |  | Square Footage |  | Lease Expiration Date 
|               |  |                                                       |  |                |  |                       
|Memphis, TN    |  | Corporate Headquarters and Corporate Education Center |  | 47,000         |  | August 2011           
|Memphis, TN    |  | Hangar and Maintenance Facility                       |  | 51,250         |  | December 2016         
|Knoxville, TN  |  | Hangar and Maintenance Facility                       |  | 55,000         |  | Termination of the ASA
|South Bend, IN |  | Hangar and Maintenance Facility                       |  | 30,000         |  | Termination of the ASA
|Ft. Wayne, IN  |  | Hangar and Maintenance Facility                       |  | 18,000         |  | December 2006         










|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings






Environmental Matters







Regulatory Matters









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



19



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PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



|                                             |  |      |       |  |     |   |       | 
|-------------------------------------------- |  | ---- | ----- |  | --- | - | ----- | 
|                                             |  | High |       |  | Low |  
|                                             |  |      |       |  |     |  
|2003                                         |  |      |       |  |     |   |       | 
|Fourth Quarter (beginning November 25, 2003) |  | $    | 13.91 |  |     | $ | 12.80 | 
|2004                                         |  |      |       |  |     |   |       | 
|First Quarter                                |  | $    | 15.99 |  |     | $ | 12.55 | 
|Second Quarter                               |  | $    | 14.63 |  |     | $ | 11.30 | 
|Third Quarter                                |  | $    | 11.01 |  |     | $ | 8.55  | 
|Fourth Quarter                               |  | $    | 13.94 |  |     | $ | 9.17  | 









20



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data







|                                                          |  |                                       |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------------------- |  | ------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                          |  | Years Ended December 31,              |        
|                                                          |  |                                       |        
|                                                          |  | 2004                                  |         |   | 2003 |   |         | 2002 |  |   | 2001    |   |  | 2000 |        
|                                                          |  |                                       |         |   |      |   |         |      |  |   |         |   |  |      |        
|                                                          |  | (In thousands, except per share data) |        
|Statement of Operations Data:                             |  |                                       |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total operating revenues                                  |  | $                                     | 635,448 |   |      | $ | 456,770 |      |  | $ | 331,568 |   |  | $    | 202,050 |   |  | $ | 131,923 |  
|Total operating expenses                                  |  |                                       | 568,145 |   |      |   | 392,601 |      |  |   | 283,912 |   |  |      | 185,077 |   |  |   | 117,362 |  
|Operating income                                          |  |                                       | 67,303  |   |      |   | 64,169  |      |  |   | 47,656  |   |  |      | 16,973  |   |  |   | 14,561  |  
|Operating income as a percentage of operating revenues(1) |  |                                       | 10.6    | % |      |   | 14.0    | %    |  |   | 14.4    | % |  |      | 8.4     | % |  |   | 11.0    | %
|Nonoperating (expense) income                             |  |                                       | (4,178  | ) |      |   | (6,770  | )    |  |   | 2,672   |   |  |      | 6,094   |   |  |   | 67      |  
|Net income                                                |  |                                       | 40,725  |   |      |   | 35,067  |      |  |   | 30,785  |   |  |      | 14,246  |   |  |   | 9,262   |  
|Basic and diluted net income per share                    |  | $                                     | 1.86    |   |      | $ | 1.60    |      |  | $ | 1.41    |   |  | $    | 0.65    |   |  | $ | 0.42    |  
|Shares used in computing basic net income per share       |  |                                       | 21,892  |   |      |   | 21,892  |      |  |   | 21,892  |   |  |      | 21,892  |   |  |   | 21,892  |  
|Shares used in computing diluted net income per share     |  |                                       | 21,911  |   |      |   | 21,892  |      |  |   | 21,892  |   |  |      | 21,892  |   |  |   | 21,892  |  

|                                               |  |                    |         |   |      |   |         |      |  |   |         |  |  |      |        |  |  |   |        | 
|---------------------------------------------- |  | ------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------ |  |  | - | ------ | 
|                                               |  | As of December 31, |        
|                                               |  |                    |        
|                                               |  | 2004               |         |   | 2003 |   |         | 2002 |  |   | 2001    |  |  | 2000 |       
|                                               |  |                    |         |   |      |   |         |      |  |   |         |  |  |      |       
|                                               |  | (In thousands)     |        
|Balance Sheet Data:                            |  |                    |         |   |      |   |         |      |  |   |         |  |  |      |        |  |  |   |        | 
|Cash and cash equivalents                      |  | $                  | 34,912  |   |      | $ | 31,523  |      |  | $ | 4,580   |  |  | $    | 1,891  |  |  | $ | 8,232  | 
|Property and equipment                         |  |                    | 39,416  |   |      |   | 34,286  |      |  |   | 26,631  |  |  |      | 32,785 |  |  |   | 24,072 | 
|Total assets                                   |  |                    | 165,960 |   |      |   | 128,906 |      |  |   | 143,284 |  |  |      | 92,250 |  |  |   | 64,156 | 
|Lines of credit                                |  |                    |        |   |      |   |        |      |  |   | 4,245   |  |  |      | 4,245  |  |  |   |       | 
|Borrowings from Northwest (refinanced in 2005) |  |                    | 125,000 |   |      |   | 142,000 |      |  |   |        |  |  |      |       |  |  |   | 122    | 
|Stockholders (deficiency) equity              |  |                    | (7,548  | ) |      |   | (48,382 | )    |  |   | 82,051  |  |  |      | 55,651 |  |  |   | 41,405 | 

21



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|        |                                    
|------- | -----------------------------------
|Item 6. | Selected Financial Data (continued)

|                                                     |               |                          |           |         |      |  |           |         |  |  |           |         |  |      |           |        |  |  |         |        | 
|---------------------------------------------------- | ------------- | ------------------------ | --------- | ------- | ---- |  | --------- | ------- |  |  | --------- | ------- |  | ---- | --------- | ------ |  |  | ------- | ------ | 
|                                                     |               | Years Ended December 31, |          
|                                                     |               |                          |          
|                                                     |               | 2004                     |           |         | 2003 |  |           | 2002    |  |  | 2001      |         |  | 2000 |          
|                                                     |               |                          |           |         |      |  |           |         |  |  |           |         |  |      |          
|Other Data:                                          |               |                          |           |         |      |  |           |         |  |  |           |         |  |      |           |        |  |  |         |       
|Revenue passengers (in thousands)                    |               |                          | 6,340     |         |      |  | 4,540     |         |  |  | 2,938     |         |  |      | 2,031     |        |  |  | 1,378   |       
|Revenue passenger miles (in thousands)(2)            |               |                          | 2,894,776 |         |      |  | 1,797,631 |         |  |  | 1,091,181 |         |  |      | 673,395   |        |  |  | 404,404 |       
|Available seat miles (in thousands)(3)               |               |                          | 4,219,078 |         |      |  | 2,678,000 |         |  |  | 1,714,151 |         |  |      | 1,153,620 |        |  |  | 687,059 |       
|Passenger load factor(4)                             |               |                          | 68.6      | %       |      |  | 67.1      | %       |  |  | 63.7      | %       |  |      | 58.4      | %      |  |  | 58.9    | %     
|Operating revenue per available seat mile (in cents) |               |                          | 15.06     |         |      |  | 17.06     |         |  |  | 19.34     |         |  |      | 17.51     |        |  |  | 19.20   |       
|Operating costs per available seat mile (in cents)   |               |                          | 13.47     |         |      |  | 14.66     |         |  |  | 16.56     |         |  |      | 16.04     |        |  |  | 17.08   |       
|Block hours                                          |               |                          |           |         |      |  |           |         |  |  |           |         |  |      |           |        |  |  |         |       
|                                                     | CRJs          |                          |           | 323,810 |      |  |           | 210,646 |  |  |           | 124,889 |  |      |           | 58,584 |  |  |         | 10,889 | 
|                                                     | Turboprops(5) |                          |           |        |      |  |           |        |  |  |           | 26,509  |  |      |           | 66,145 |  |  |         | 87,913 | 
|Cycles                                               |               |                          |           |         |      |  |           |         |  |  |           |         |  |      |           |        |  |  |         |       
|                                                     | CRJs          |                          |           | 201,816 |      |  |           | 146,898 |  |  |           | 85,478  |  |      |           | 41,238 |  |  |         | 8,321  | 
|                                                     | Turboprops(5) |                          |           |        |      |  |           |        |  |  |           | 20,262  |  |      |           | 47,570 |  |  |         | 66,881 | 
|Average daily utilization (block hours)              |               |                          |           |         |      |  |           |         |  |  |           |         |  |      |           |        |  |  |         |       
|                                                     | CRJs          |                          |           | 8.98    |      |  |           | 8.83    |  |  |           | 8.47    |  |      |           | 8.22   |  |  |         | 9.31   | 
|                                                     | Turboprops(5) |                          |           |        |      |  |           |        |  |  |           | 4.81    |  |      |           | 7.54   |  |  |         | 8.29   | 
|Average stage length (miles)                         |               |                          | 450       |         |      |  | 384       |         |  |  | 353       |         |  |      | 318       |        |  |  | 262     |       
|Number of operating aircraft (end of period)         |               |                          |           |         |      |  |           |         |  |  |           |         |  |      |           |        |  |  |         |       
|                                                     | CRJs          |                          |           | 117     |      |  |           | 76      |  |  |           | 51      |  |      |           | 30     |  |  |         | 9      | 
|                                                     | Turboprops(5) |                          |           |        |      |  |           |        |  |  |           |        |  |      |           | 24     |  |  |         | 28     | 
|Employees                                            |               |                          | 3,056     |         |      |  | 2,253     |         |  |  | 2,403     |         |  |      | 1,738     |        |  |  | 1,750   |       






|    |                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As discussed in Item 1, Our Airline Services
    Agreement with Northwest, our target operating margin
    under the ASA was 14% from March 1, 2002 to
    November 30, 2003. Effective December 1, 2003, the
    target operating margin is 10%. Prior to March 1, 2002,
    there was no target operating margin as we did not operate under
    an airline services agreement.
|   
|(2) | Revenue passenger miles represents the number of miles flown by
    revenue passengers.                                                                                                                                                                                                                                                                                            
|   
|(3) | Available seat miles represents the number of seats available
    for passengers multiplied by the number of miles the seats are
    flown.                                                                                                                                                                                                                                        
|   
|(4) | Passenger load factor equals revenue passenger miles divided by
    available seat miles.                                                                                                                                                                                                                                                                                          
|   
|(5) | As of December 31, 2002, all Saab turboprop aircraft were
    removed from our operating fleet.                                                                                                                                                                                                                                                                                    

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations




Review of 2004




(i) (ii)








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Successful Completion of 2004 Expansion Plans: The
    addition of 41 CRJs to our fleet during 2004, representing
    an increase of 54%, required us to hire and train a significant
    number of new employees, specifically 304 pilots and 212 flight
    attendants. Our Corporate Education Center has been and will be
    instrumental in training and developing our People to allow for
    such growth. In addition, we successfully opened seven new
    stations as part of Northwests network.                                                    
|
| |  | Increase in Committed Aircraft: In December 2004, we
    amended our ASA with Northwest to increase from 129 to 139 the
    number of CRJs that will be operated by Pinnacle Airlines, Inc.                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Increased Employee Productivity: For the year ended
    December 31, 2004, we decreased our labor costs per block
    hour by approximately 18% compared to 2003. Our headcount per
    aircraft decreased from 30 at December 31, 2003 to 26 at
    December 31, 2004. Our pilot utilization increased 18% from
    57 hours per month for the year ended December 31,
    2003 to 67 hours per month for the year ended
    December 31, 2004. As of December 31, 2004, 40% of our
    flight attendants were part time versus 25% as of
    December 31, 2003.
|
| |  | Decrease in Unit Costs: For the year ended
    December 31, 2004, we decreased our operating costs per
    block hour and ASM by approximately 6% and 8% over 2003,
    respectively.                                                                                                                                                                                                                                                                                                                                                                            




Outlook for 2005




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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Outlook for 2005 (continued)












24



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Outlook for 2005 (continued)





Certain Statistical Information




|                                   |                                             |                          |   |     |       |  |   |      |       |  |      |     |       |      |   |     |       |  |   |     |       | 
|---------------------------------- | ------------------------------------------- | ------------------------ | - | --- | ----- |  | - | ---- | ----- |  | ---- | --- | ----- | ---- | - | --- | ----- |  | - | --- | ----- | 
|                                   |                                             | Years Ended December 31, |  
|                                   |                                             |                          |  
|                                   |                                             | 2004                     |   |     | 2003  |  |   | 2002 |       |  | 2001 |     |       | 2000 |  
|                                   |                                             |                          |   |     |       |  |   |      |       |  |      |     |       |      |  
|Operating expenses per block hour: |                                             |                          |   |     |       |  |   |      |       |  |      |     |       |      |   |     |       |  |   |    
|                                   | Salaries, wages and benefits                |                          | $ | 325 |       |  | $ | 395  |       |  | $    | 456 |       |      | $ | 456 |       |  | $ | 395 |      
|                                   | Aircraft fuel                               |                          |   | 258 |       |  |   | 261  |       |  |      | 224 |       |      |   | 181 |       |  |   | 128 |      
|                                   | Aircraft maintenance, materials and repairs |                          |   | 73  |       |  |   | 67   |       |  |      | 88  |       |      |   | 166 |       |  |   | 186 |      
|                                   | Aircraft rentals                            |                          |   | 645 |       |  |   | 647  |       |  |      | 575 |       |      |   | 326 |       |  |   | 222 |      
|                                   | Other rentals and landing fees              |                          |   | 114 |       |  |   | 139  |       |  |      | 151 |       |      |   | 69  |       |  |   | 57  |      
|                                   | Ground handling services                    |                          |   | 203 |       |  |   | 212  |       |  |      | 155 |       |      |   | 43  |       |  |   | 11  |      
|                                   | Depreciation                                |                          |   | 10  |       |  |   | 14   |       |  |      | 40  |       |      |   | 36  |       |  |   | 33  |      
|                                   | Government reimbursement                    |                          |   |    |       |  |   | (5   | )     |  |      |    |       |      |   |    |       |  |   |    |      
|                                   | Other                                       |                          |   | 126 |       |  |   | 134  |       |  |      | 186 |       |      |   | 207 |       |  |   | 156 |      
|                                   |                                             |                          |   |     |       |  |   |      |       |  |      |     |       |      |  
|                                   |                                             | Total operating expenses |   | $   | 1,754 |  |   | $    | 1,864 |  |      | $   | 1,875 |      |   | $   | 1,484 |  |   | $   | 1,188 | 
|                                   |                                             |                          |   |     |       |  |   |      |       |  |      |     |       |      |  



|                                                       |                                             |                          |  |      |       |  |  |       |       |  |      |      |       |      |  |      |       |  |  |      |       | 
|------------------------------------------------------ | ------------------------------------------- | ------------------------ |  | ---- | ----- |  |  | ----- | ----- |  | ---- | ---- | ----- | ---- |  | ---- | ----- |  |  | ---- | ----- | 
|                                                       |                                             | Years Ended December 31, | 
|                                                       |                                             |                          | 
|                                                       |                                             | 2004                     |  |      | 2003  |  |  | 2002  |       |  | 2001 |      |       | 2000 | 
|                                                       |                                             |                          |  |      |       |  |  |       |       |  |      |      |       |      | 
|Operating expenses per available seat mile (in cents): |                                             |                          |  |      |       |  |  |       |       |  |      |      |       |      |  |      |       |  |  |     
|                                                       | Salaries, wages and benefits                |                          |  | 2.49 |       |  |  | 3.11  |       |  |      | 4.03 |       |      |  | 4.93 |       |  |  | 5.67 |      
|                                                       | Aircraft fuel                               |                          |  | 1.98 |       |  |  | 2.05  |       |  |      | 1.98 |       |      |  | 1.96 |       |  |  | 1.83 |      
|                                                       | Aircraft maintenance, materials and repairs |                          |  | 0.56 |       |  |  | 0.53  |       |  |      | 0.77 |       |      |  | 1.79 |       |  |  | 2.68 |      
|                                                       | Aircraft rentals                            |                          |  | 4.95 |       |  |  | 5.09  |       |  |      | 5.08 |       |      |  | 3.52 |       |  |  | 3.19 |      
|                                                       | Other rentals and landing fees              |                          |  | 0.88 |       |  |  | 1.09  |       |  |      | 1.33 |       |      |  | 0.74 |       |  |  | 0.82 |      
|                                                       | Ground handling services                    |                          |  | 1.56 |       |  |  | 1.67  |       |  |      | 1.37 |       |      |  | 0.47 |       |  |  | 0.16 |      
|                                                       | Depreciation                                |                          |  | 0.08 |       |  |  | 0.11  |       |  |      | 0.36 |       |      |  | 0.39 |       |  |  | 0.48 |      
|                                                       | Government reimbursement                    |                          |  |     |       |  |  | (0.04 | )     |  |      |     |       |      |  |     |       |  |  |     |      
|                                                       | Other                                       |                          |  | 0.97 |       |  |  | 1.05  |       |  |      | 1.64 |       |      |  | 2.24 |       |  |  | 2.25 |      
|                                                       |                                             |                          |  |      |       |  |  |       |       |  |      |      |       |      | 
|                                                       |                                             | Total operating expenses |  |      | 13.47 |  |  |       | 14.66 |  |      |      | 16.56 |      |  |      | 16.04 |  |  |      | 17.08 | 
|                                                       |                                             |                          |  |      |       |  |  |       |       |  |      |      |       |      | 




Basis of Presentation




25



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Basis of Presentation (continued)




|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |      |     |    |   |         |         | 
|----------------------------- | ------------------------------------------- | ---- | ------- | ---------- | --------- |  | --- | ---- | ---------- | - | --------- | ------- | - | ---- | ---- | --- | -- | - | ------- | ------- | 
|                              |                                             |      |         | Increase/  |           |  |     |      | Increase/  |   |           |        
|                              |                                             |      |         | (Decrease) |           |  |     |      | (Decrease) |   |           |        
|                              |                                             | 2004 |         |            | 20032004 |  |     | 2003 |            |   | 20022003 |         |   | 2002 |     
|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |     
|Operating revenues:           |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |      |     |    |   |         |        
|                              | Regional airline services                   |      | $       | 631,504    |           |  |     |      |            |   | $         | 450,611 |   |      |      |     |    |   | $       | 325,386 | 
|                              | Other                                       |      |         | 3,944      |           |  |     |      |            |   |           | 6,159   |   |      |      |     |    |   |         | 6,182   | 
|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |     
|Total operating revenues      |                                             |      | 635,448 |            |           |  | 39  | %    |            |   | 456,770   |         |   |      | 38   | %   |    |   | 331,568 |        
|Operating expenses:           |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |      |     |    |   |         |        
|                              | Salaries, wages and benefits                |      |         | 105,143    |           |  |     | 26   | %          |   |           | 83,316  |   |      |      | 21  | %  |   |         | 69,086  | 
|                              | Aircraft fuel                               |      |         | 83,572     |           |  |     | 52   | %          |   |           | 55,007  |   |      |      | 62  | %  |   |         | 33,932  | 
|                              | Aircraft maintenance, materials and repairs |      |         | 23,545     |           |  |     | 67   | %          |   |           | 14,116  |   |      |      | 6   | %  |   |         | 13,276  | 
|                              | Aircraft rentals                            |      |         | 209,047    |           |  |     | 53   | %          |   |           | 136,273 |   |      |      | 57  | %  |   |         | 87,016  | 
|                              | Other rentals and landing fees              |      |         | 37,101     |           |  |     | 27   | %          |   |           | 29,255  |   |      |      | 28  | %  |   |         | 22,818  | 
|                              | Ground handling services                    |      |         | 65,877     |           |  |     | 48   | %          |   |           | 44,622  |   |      |      | 91  | %  |   |         | 23,422  | 
|                              | Depreciation                                |      |         | 3,153      |           |  |     | 8    | %          |   |           | 2,912   |   |      |      | (53 | )% |   |         | 6,141   | 
|                              | Government reimbursements                   |      |         |           |           |  |     | (100 | )%         |   |           | (1,114  | ) |      |      | 100 | %  |   |         |        | 
|                              | Other                                       |      |         | 40,707     |           |  |     | 44   | %          |   |           | 28,214  |   |      |      | 0   | %  |   |         | 28,221  | 
|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |     
|Total operating expenses      |                                             |      | 568,145 |            |           |  | 45  | %    |            |   | 392,601   |         |   |      | 38   | %   |    |   | 283,912 |        
|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |     
|Operating income              |                                             |      | 67,303  |            |           |  | 5   | %    |            |   | 64,169    |         |   |      | 35   | %   |    |   | 47,656  |        
|Nonoperating (expense) income |                                             |      | (4,178  | )          |           |  | (38 | %)   |            |   | (6,770    | )       |   |      | (353 | )%  |    |   | 2,672   |        
|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |     
|Income before income taxes    |                                             |      | 63,125  |            |           |  | 10  | %    |            |   | 57,399    |         |   |      | 14   | %   |    |   | 50,328  |        
|Income tax expense            |                                             |      | 22,400  |            |           |  | 0   | %    |            |   | 22,332    |         |   |      | 14   | %   |    |   | 19,543  |        
|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |     
|Net income                    |                                             | $    | 40,725  |            |           |  | 16  | %    |            | $ | 35,067    |         |   |      | 14   | %   |    | $ | 30,785  |        
|                              |                                             |      |         |            |           |  |     |      |            |   |           |         |   |      |     







26



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Basis of Presentation (continued)




|                                                                                |                                                              |                          |         |   |      |   |         |            |   |  |    |   | 
|------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------ | ------- | - | ---- | - | ------- | ---------- | - |  | -- | - | 
|                                                                                |                                                              | Years Ended December 31, |        
|                                                                                |                                                              |                          |        
|                                                                                |                                                              | 2004                     |         |   | 2003 |   |         | % Increase |  
|                                                                                |                                                              |                          |         |   |      |   |         |            |  
|                                                                                |                                                              | (in thousands)           |        
|Regional Airline Services Revenue                                               |                                                              |                          |         |   |      |   |         |            |   |  |    |  
|Regional airline services revenue in accordance with GAAP                       |                                                              | $                        | 631,504 |   |      | $ | 450,611 |            |   |  | 40 | %
|                                                                                | Adjustment to reduce target operating margin to 10% from 14% |                          |         |  |      |   |         | (18,183    | ) |  |    |   | 
|                                                                                |                                                              |                          |         |   |      |   |         |            |  
|Adjusted regional airline services revenue with 10% target
    operating margin |                                                              | $                        | 631,504 |   |      | $ | 432,428 |            |   |  | 46 | %
|                                                                                |                                                              |                          |         |   |      |   |         |            |  
|Operating Income                                                                |                                                              |                          |         |   |      |   |         |            |   |  |    |  
|Operating income in accordance with GAAP                                        |                                                              | $                        | 67,303  |   |      | $ | 64,169  |            |   |  | 5  | %
|                                                                                | Adjustment to reduce target operating margin to 10% from 14% |                          |         |  |      |   |         | (18,183    | ) |  |    |   | 
|                                                                                |                                                              |                          |         |   |      |   |         |            |  
|Adjusted operating income with 10% target operating margin                      |                                                              | $                        | 67,303  |   |      | $ | 45,986  |            |   |  | 46 | %
|                                                                                |                                                              |                          |         |   |      |   |         |            |  



27



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations




Results of Operations




| |                      
| | ---------------------
| | 2004 Compared to 2003



|                                                    |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |   |         |        |   |   |         |         |  
|--------------------------------------------------- | ------------------------------------------- | ----------------------- | ------- | ------- | ------------ | - | ------- | ------- |  | - | ---------- | ------- |  | ------------ | ------- | ------- | ----- | - | ------- | ------ | - | - | ------- | ------- | -
|                                                    |                                             | Year Ended December 31, |        
|                                                    |                                             |                         |        
|                                                    |                                             | 2004                    |         |         | 2003         |  
|                                                    |                                             |                         |         |         |              |  
|                                                    |                                             | Reimbursed              |         |         | Unreimbursed |   |         | Total   |  |   | Reimbursed |         |  | Unreimbursed |         |         | Total |  
|                                                    |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|                                                    |                                             | (in thousands)          |        
|Operating revenues:                                 |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |   |         |        |   |   |         |        
|Regional airline services                           |                                             | $                       | 423,911 |         |              | $ | 207,593 |         |  | $ | 631,504    |         |  | $            | 296,257 |         |       | $ | 154,354 |        |   | $ | 450,611 |        
|Other revenue                                       |                                             |                         |        |         |              |   | 3,944   |         |  |   | 3,944      |         |  |              |        |         |       |   | 6,159   |        |   |   | 6,159   |        
|                                                    |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Total operating revenues                            |                                             |                         | 423,911 |         |              |   | 211,537 |         |  |   | 635,448    |         |  |              | 296,257 |         |       |   | 160,513 |        |   |   | 456,770 |        
|Operating expenses:                                 |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |   |         |        |   |   |         |        
|                                                    | Salaries, wages and benefits                |                         |         |        |              |   |         | 105,143 |  |   |            | 105,143 |  |              |         |        |       |   |         | 83,316 |   |   |         | 83,316  |  
|                                                    | Aircraft fuel                               |                         |         | 83,061  |              |   |         | 511     |  |   |            | 83,572  |  |              |         | 54,731  |       |   |         | 276    |   |   |         | 55,007  |  
|                                                    | Aircraft maintenance, materials and repairs |                         |         | 11,842  |              |   |         | 11,703  |  |   |            | 23,545  |  |              |         | 6,548   |       |   |         | 7,568  |   |   |         | 14,116  |  
|                                                    | Aircraft rentals                            |                         |         | 209,047 |              |   |         |        |  |   |            | 209,047 |  |              |         | 136,273 |       |   |         |       |   |   |         | 136,273 |  
|                                                    | Other rentals and landing fees              |                         |         | 18,651  |              |   |         | 18,450  |  |   |            | 37,101  |  |              |         | 16,512  |       |   |         | 12,743 |   |   |         | 29,255  |  
|                                                    | Government reimbursements                   |                         |         |        |              |   |         |        |  |   |            |        |  |              |         | (1,000  | )     |   |         | (114   | ) |   |         | (1,114  | )
|                                                    | Ground handling services                    |                         |         | 47,533  |              |   |         | 18,344  |  |   |            | 65,877  |  |              |         | 33,223  |       |   |         | 11,399 |   |   |         | 44,622  |  
|                                                    | Depreciation                                |                         |         |        |              |   |         | 3,153   |  |   |            | 3,153   |  |              |         |        |       |   |         | 2,912  |   |   |         | 2,912   |  
|                                                    | Other                                       |                         |         | 11,386  |              |   |         | 29,321  |  |   |            | 40,707  |  |              |         | 9,600   |       |   |         | 18,614 |   |   |         | 28,214  |  
|                                                    |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Total operating expenses                            |                                             |                         | 381,520 |         |              |   | 186,625 |         |  |   | 568,145    |         |  |              | 255,887 |         |       |   | 136,714 |        |   |   | 392,601 |        
|                                                    |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Operating income                                    |                                             | $                       | 42,391  |         |              | $ | 24,912  |         |  | $ | 67,303     |         |  | $            | 40,370  |         |       | $ | 23,799  |        |   | $ | 64,169  |        
|                                                    |                                             |                         |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Operating income as a percent of operating revenues |                                             |                         | 10.0    | %       |              |   | 11.8    | %       |  |   | 10.6       | %       |  |              | 13.6    | %       |       |   | 14.8    | %      |   |   | 14.0    | %      







28



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Item 7.Managements
Discussion and Analysis of Financial Condition and Results of
Operations




| |                                  
| | ---------------------------------
| | 2004 Compared to 2003 (continued)



Operating Expenses.


















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Item 7.Managements
Discussion and Analysis of Financial Condition and Results of
Operations




| |                                  
| | ---------------------------------
| | 2004 Compared to 2003 (continued)





| |                      
| | ---------------------
| | 2003 Compared to 2002





Operating Expenses.














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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



| |                                  
| | ---------------------------------
| | 2003 Compared to 2002 (continued)








Liquidity and Capital Resources




Contractual obligations.


|                                             |                                    |                        |           |           |        |   |         |           |       |   |           |         |  |         |         |         |  |   |           |           | 
|-------------------------------------------- | ---------------------------------- | ---------------------- | --------- | --------- | ------ | - | ------- | --------- | ----- | - | --------- | ------- |  | ------- | ------- | ------- |  | - | --------- | --------- | 
|                                             |                                    | Payments Due by Period |          
|                                             |                                    |                        |          
|                                             |                                    |                        |           | Less than |        |   |         |           | After |  
|                                             |                                    | Total                  |           |           | 1 Year |   |         | 1-3 Years |       |   | 4-5 Years |         |  | 5 Years |        
|                                             |                                    |                        |           |           |        |   |         |           |       |   |           |         |  |         |        
|                                             |                                    | (in thousands)         |          
|Contractual obligations:                     |                                    |                        |           |           |        |   |         |           |       |   |           |         |  |         |         |         |  |   |           |          
|Senior convertible notes                     |                                    | $                      | 121,000   |           |        | $ |        |           |       | $ |          |         |  | $       |        |         |  | $ | 121,000   |          
|Interest payments on long-term debt          |                                    |                        | 78,738    |           |        |   | 2,054   |           |       |   | 7,865     |         |  |         | 7,865   |         |  |   | 60,954    |          
|Payment due Northwest for contractual rights |                                    |                        | 5,115     |           |        |   | 5,115   |           |       |   |          |         |  |         |        |         |  |   |          |          
|Operating leases(1)                          |                                    |                        | 3,837,790 |           |        |   | 286,965 |           |       |   | 594,774   |         |  |         | 593,040 |         |  |   | 2,363,011 |          
|Purchase obligations(2)                      |                                    |                        | 5,971     |           |        |   | 1,322   |           |       |   | 1,967     |         |  |         | 1,832   |         |  |   | 850       |          
|                                             |                                    |                        |           |           |        |   |         |           |       |   |           |         |  |         |        
|                                             | Total contractual cash obligations |                        | $         | 4,048,614 |        |   | $       | 295,456   |       |   | $         | 604,606 |  |         | $       | 602,737 |  |   | $         | 2,545,815 | 
|                                             |                                    |                        |           |           |        |   |         |           |       |   |           |         |  |         |        






|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As of December 31, 2004, our obligations relating to
    operating leases, excluding future scheduled deliveries of
    aircraft under the ASA, were as follows (in thousands):

| |  |       |           |           |        |   |         |           |  |   |           |  |  |         |         |  |  |   |           | 
| |  | ----- | --------- | --------- | ------ | - | ------- | --------- |  | - | --------- |  |  | ------- | ------- |  |  | - | --------- | 
| |  |       |           | Less than |        |   |         |           |  |   | After     | 
| |  | Total |           |           | 1 Year |   |         | 1-3 Years |  |   | 4-5 Years |  |  | 5 Years |        
| |  |       |           |           |        |   |         |           |  |   |           |  |  |         |        
| |  | $     | 3,247,690 |           |        | $ | 251,265 |           |  | $ | 502,374   |  |  | $       | 500,640 |  |  | $ | 1,993,411 | 



|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Amounts represent noncancelable commitments to purchase goods
    and services, including certain aircraft parts and information
    technology.





31



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Item 7.Managements
Discussion and Analysis of Financial Condition and Results of
Operations




Liquidity and Capital Resources (continued)










Operating activities.


Investing activities.


32



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Liquidity and Capital Resources (continued)


Financing activities.






Guarantees and indemnifications.










Off-balance sheet arrangements.





Critical Accounting Policies


General.


33



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##### Table of Contents



Item 7.Managements
Discussion and Analysis of Financial Condition and Results of
Operations


Critical Accounting Policies (continued)




Revenue recognition.






Maintenance.




Spare parts.


Property and equipment.


34



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Item 7.Managements
Discussion and Analysis of Financial Condition and Results of
Operations


Critical Accounting Policies (continued)




Long-lived assets.







Recent Accounting Pronouncements









Forward Looking Statements




35



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Item 7.Managements
Discussion and Analysis of Financial Condition and Results of
Operations


Forward Looking Statements (continued)






36



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##### Table of Contents








|         |                                                              
|-------- | -------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure About Market
    Risk



Aircraft fuel.


Interest rates.


Senior convertible notes.


37



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##### Table of Contents








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

|                                                                                                                          |  |  |    | 
|------------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|Report of Independent Registered Public Accounting Firm                                                                   |  |  | 39 | 
|Consolidated Statements of Income for the Years Ended
    December 31, 2004, 2003 and 2002                                |  |  | 40 | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                                              |  |  | 41 | 
|Consolidated Statements of Stockholders Equity
    (Deficiency) for the Years Ended December 31, 2004, 2003
    and 2002 |  |  | 42 | 
|Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2004, 2003 and 2002                            |  |  | 43 | 
|Notes to Consolidated Financial Statements                                                                                |  |  | 44 | 

38



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















39



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##### Table of Contents



PINNACLE AIRLINES CORP.


CONSOLIDATED STATEMENTS OF INCOME


|                                                       |                                             |                                       |         |         |      |   |         |         |   |   |         |         |  
|------------------------------------------------------ | ------------------------------------------- | ------------------------------------- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                       |                                             | Years Ended December 31,              |        
|                                                       |                                             |                                       |        
|                                                       |                                             | 2004                                  |         |         | 2003 |   |         | 2002    |  
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|                                                       |                                             | (In thousands, except per share data) |        
|Operating revenues:                                    |                                             |                                       |         |         |      |   |         |         |   |   |         |        
|                                                       | Regional airline services                   |                                       | $       | 631,504 |      |   | $       | 450,611 |   |   | $       | 325,386 |  
|                                                       | Other                                       |                                       |         | 3,944   |      |   |         | 6,159   |   |   |         | 6,182   |  
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Total operating revenues                               |                                             |                                       | 635,448 |         |      |   | 456,770 |         |   |   | 331,568 |        
|Operating expenses:                                    |                                             |                                       |         |         |      |   |         |         |   |   |         |        
|                                                       | Salaries, wages and benefits                |                                       |         | 105,143 |      |   |         | 83,316  |   |   |         | 69,086  |  
|                                                       | Aircraft fuel                               |                                       |         | 83,572  |      |   |         | 55,007  |   |   |         | 33,932  |  
|                                                       | Aircraft maintenance, materials and repairs |                                       |         | 23,545  |      |   |         | 14,116  |   |   |         | 13,276  |  
|                                                       | Aircraft rentals                            |                                       |         | 209,047 |      |   |         | 136,273 |   |   |         | 87,016  |  
|                                                       | Other rentals and landing fees              |                                       |         | 37,101  |      |   |         | 29,255  |   |   |         | 22,818  |  
|                                                       | Ground handling services                    |                                       |         | 65,877  |      |   |         | 44,622  |   |   |         | 23,422  |  
|                                                       | Depreciation                                |                                       |         | 3,153   |      |   |         | 2,912   |   |   |         | 6,141   |  
|                                                       | Government reimbursements                   |                                       |         |        |      |   |         | (1,114  | ) |   |         |        |  
|                                                       | Other                                       |                                       |         | 40,707  |      |   |         | 28,214  |   |   |         | 28,221  |  
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Total operating expenses                               |                                             |                                       | 568,145 |         |      |   | 392,601 |         |   |   | 283,912 |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Operating income                                       |                                             |                                       | 67,303  |         |      |   | 64,169  |         |   |   | 47,656  |        
|Operating income as a percentage of operating revenues |                                             |                                       | 10.6%   |         |      |   | 14.0%   |         |   |   | 14.4%   |        
|Nonoperating (expense) income                          |                                             |                                       |         |         |      |   |         |         |   |   |         |        
|                                                       | Interest income                             |                                       |         | 301     |      |   |         | 230     |   |   |         | 3,001   |  
|                                                       | Interest expense                            |                                       |         | (4,907  | )    |   |         | (7,387  | ) |   |         | (409    | )
|                                                       | Miscellaneous income, net                   |                                       |         | 428     |      |   |         | 387     |   |   |         | 80      |  
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Total nonoperating (expense) income                    |                                             |                                       | (4,178  | )       |      |   | (6,770  | )       |   |   | 2,672   |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Income before income taxes                             |                                             |                                       | 63,125  |         |      |   | 57,399  |         |   |   | 50,328  |        
|Income tax expense                                     |                                             |                                       | 22,400  |         |      |   | 22,332  |         |   |   | 19,543  |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Net income                                             |                                             | $                                     | 40,725  |         |      | $ | 35,067  |         |   | $ | 30,785  |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Basic earnings per share                               |                                             | $                                     | 1.86    |         |      | $ | 1.60    |         |   | $ | 1.41    |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Diluted earnings per share                             |                                             | $                                     | 1.86    |         |      | $ | 1.60    |         |   | $ | 1.41    |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Shares used in computing basic earnings per share      |                                             |                                       | 21,892  |         |      |   | 21,892  |         |   |   | 21,892  |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  
|Shares used in computing diluted earnings per share    |                                             |                                       | 21,911  |         |      |   | 21,892  |         |   |   | 21,892  |        
|                                                       |                                             |                                       |         |         |      |   |         |         |  



40



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##### Table of Contents



PINNACLE AIRLINES CORP.


CONSOLIDATED BALANCE SHEETS


|                                                                                             |                                                                                                                                             |                             |                                                |         |        |         |         |          |        |         |  
|-------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ---------------------------------------------- | ------- | ------ | ------- | ------- | -------- | ------ | ------- | -
|                                                                                             |                                                                                                                                             | December 31,                |                                               
|                                                                                             |                                                                                                                                             |                             |                                               
|                                                                                             |                                                                                                                                             | 2004                        |                                                |         | 2003   |        
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             |                                                                                                                                             | (In thousands, except share |                                               
|                                                                                             |                                                                                                                                             | data)                       |                                               
|ASSETS                                                                                      
|Current assets:                                                                              |                                                                                                                                             |                             |                                                |         |        |         |         |         
|Cash and cash equivalents                                                                    |                                                                                                                                             | $                           | 34,912                                         |         |        | $       | 31,523  |         
|                                                                                             | Receivables, principally from Northwest, net of allowances of
    $34 in 2004 and $146in 2003                                               |                             |                                                | 25,139  |        |         |         | 17,524   |       
|                                                                                             | Spare parts and supplies, net of allowances of $352 in 2004 and
    $2,606 in 2003                                                          |                             |                                                | 5,341   |        |         |         | 3,773    |       
|                                                                                             | Prepaid expenses and other assets                                                                                                           |                             |                                                | 5,644   |        |         |         | 6,810    |       
|                                                                                             | Deferred income taxes                                                                                                                       |                             |                                                | 860     |        |         |         | 2,549    |       
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             |                                                                                                                                             | Total current assets        |                                                |         | 71,896 |         |         |          | 62,179 |        
|Property and equipment:                                                                      |                                                                                                                                             |                             |                                                |         |        |         |         |         
|                                                                                             | Aircraft and rotable spares                                                                                                                 |                             |                                                | 35,837  |        |         |         | 32,779   |       
|                                                                                             | Other property and equipment                                                                                                                |                             |                                                | 16,161  |        |         |         | 14,081   |       
|                                                                                             | Office furniture and fixtures                                                                                                               |                             |                                                | 1,863   |        |         |         | 1,258    |       
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             |                                                                                                                                             |                             | 53,861                                         |         |        |         | 48,118  |         
|                                                                                             | Less accumulated depreciation                                                                                                               |                             |                                                | (14,445 | )      |         |         | (13,832  | )     
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             | Net property and equipment                                                                                                                  |                             |                                                | 39,416  |        |         |         | 34,286   |       
|                                                                                             | Other assets, primarily aircraft deposits with Northwest                                                                                    |                             |                                                | 21,111  |        |         |         | 14,019   |       
|                                                                                             | Goodwill, net of amortization of $4,027                                                                                                     |                             |                                                | 18,422  |        |         |         | 18,422   |       
|                                                                                             | Contractual rights acquired from Northwest                                                                                                  |                             |                                                | 15,115  |        |         |         |         |       
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             | Total assets                                                                                                                                |                             | $                                              | 165,960 |        |         | $       | 128,906  |       
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                            
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                                    
|Current liabilities:                                                                         |                                                                                                                                             |                             |                                                |         |        |         |         |         
|                                                                                             | Accounts payable                                                                                                                            |                             | $                                              | 16,983  |        |         | $       | 9,716    |       
|                                                                                             | Accrued expenses                                                                                                                            |                             |                                                | 15,083  |        |         |         | 11,332   |       
|                                                                                             | Line of credit with Northwest                                                                                                               |                             |                                                |        |        |         |         | 10,000   |       
|                                                                                             | Income taxes payable                                                                                                                        |                             |                                                | 1,633   |        |         |         | 5,596    |       
|                                                                                             | Other current liabilities, including $5,115 due Northwest for
    contractual rightsat December 31, 2004                                    |                             |                                                | 6,756   |        |         |         | 806      |       
|                                                                                             | Current portion of note payable to Northwest                                                                                                |                             |                                                |        |        |         |         | 12,000   |       
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             |                                                                                                                                             | Total current liabilities   |                                                |         | 40,455 |         |         |          | 49,450 |        
|Deferred income taxes                                                                        |                                                                                                                                             |                             | 7,105                                          |         |        |         | 6,400   |         
|Note payable and line of credit from Northwest refinanced
    subsequentto December 31, 2004 |                                                                                                                                             |                             | 125,000                                        |         |        |         | 120,000 |         
|Other liabilities                                                                            |                                                                                                                                             |                             | 948                                            |         |        |         | 1,438   |         
|Commitments and contingencies                                                                |                                                                                                                                             |                             |                                                |         |        |         |         |         
|Stockholders deficiency:                                                                    |                                                                                                                                             |                             |                                                |         |        |         |         |         
|                                                                                             | Preferred stock, par value $0.01 per share;
    1,000,000 shares authorized, no shares issued                                               |                             |                                                |        |        |         |         |         |       
|                                                                                             | Series A preferred stock, stated value $100 per share;
    one share authorized and issued                                                  |                             |                                                |        |        |         |         |         |       
|                                                                                             | Series common stock, par value $0.01 per share;
    5,000,000 shares authorized; no shares issued                                           |                             |                                                |        |        |         |         |         |       
|                                                                                             | Common stock, $0.01 par value; 40,000,000 shares
    authorized, 21,950,260 and 21,892,060 shares issued in 2004
    and 2003, respectively |                             |                                                | 220     |        |         |         | 219      |       
|                                                                                             | Additional paid-in capital                                                                                                                  |                             |                                                | 85,603  |        |         |         | 84,973   |       
|                                                                                             | Accumulated deficit                                                                                                                         |                             |                                                | (92,849 | )      |         |         | (133,574 | )     
|                                                                                             | Unearned compensation on restricted stock                                                                                                   |                             |                                                | (522    | )      |         |         |         |       
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             |                                                                                                                                             |                             | Total stockholders deficiency                 |         |        | (7,548  | )       |          |        | (48,382 | )
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        
|                                                                                             |                                                                                                                                             |                             | Total liabilities and stockholders deficiency |         | $      | 165,960 |         |          | $      | 128,906 |  
|                                                                                             |                                                                                                                                             |                             |                                                |         |        |        



41



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##### Table of Contents



PINNACLE AIRLINES CORP.


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(DEFICIENCY)


|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |      |      |   |   |         |          |  
|-------------------------- | ---------------------------------------------------------------------- | ----------------------------------------------- | --- | ---------- | ------- | - | -------- | ------------ |  | ------------ | ------------- | -------- | - | ----- | ---- | ---- | - | - | ------- | -------- | -
|                           |                                                                        |                                                 |     |            |         |   |          | Unearned     |  |              |              
|                           |                                                                        |                                                 |     | Additional |         |   | Retained |              |  | Compensation |               |          |  
|                           |                                                                        | Common                                          |     |            | Paid-In |   |          | Earnings     |  |              | on Restricted |          |   |      
|                           |                                                                        | Stock                                           |     |            | Capital |   |          | (Deficiency) |  |              | Stock         |          |   | Total |     
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     
|                           |                                                                        | (In thousands, except share and per share data) |    
|Balance, December 31, 2001 |                                                                        | $                                               | 219 |            |         | $ | 34,973   |              |  | $            | 20,459        |          |   | $     |     |      |   | $ | 55,651  |         
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     
|                           | Dividend to Northwest of spare parts and engines ($0.20 per
    share) |                                                 |     |           |         |   |          |             |  |              |               | (4,385   | ) |       |      |     |   |   |         | (4,385   | )
|                           | Net income                                                             |                                                 |     |           |         |   |          |             |  |              |               | 30,785   |   |       |      |     |   |   |         | 30,785   |  
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     
|Balance, December 31, 2002 |                                                                        |                                                 | 219 |            |         |   | 34,973   |              |  |              | 46,859        |          |   |       |     |      |   |   | 82,051  |         
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     
|                           | Contribution of capital by Northwest                                   |                                                 |     |           |         |   |          | 50,000       |  |              |               |         |   |       |      |     |   |   |         | 50,000   |  
|                           | Dividend to Northwest ($9.84 per share)                                |                                                 |     |           |         |   |          |             |  |              |               | (215,500 | ) |       |      |     |   |   |         | (215,500 | )
|                           | Net income                                                             |                                                 |     |           |         |   |          |             |  |              |               | 35,067   |   |       |      |     |   |   |         | 35,067   |  
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     
|Balance, December 31, 2003 |                                                                        |                                                 | 219 |            |         |   | 84,973   |              |  |              | (133,574      | )        |   |       |     |      |   |   | (48,382 | )       
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     
|                           | Restricted stock issuance  58,200 shares                              |                                                 |     | 1          |         |   |          | 630          |  |              |               |         |   |       |      | (631 | ) |   |         |         |  
|                           | Amortization of unearned compensation                                  |                                                 |     |           |         |   |          |             |  |              |               |         |   |       |      | 109  |   |   |         | 109      |  
|                           | Net income                                                             |                                                 |     |           |         |   |          |             |  |              |               | 40,725   |   |       |      |     |   |   |         | 40,725   |  
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     
|Balance, December 31, 2004 |                                                                        | $                                               | 220 |            |         | $ | 85,603   |              |  | $            | (92,849       | )        |   | $     | (522 | )    |   | $ | (7,548  | )       
|                           |                                                                        |                                                 |     |            |         |   |          |              |  |              |               |          |   |       |     



42



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PINNACLE AIRLINES CORP.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                 |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |       |        |         |        |       |         |        |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ----------------------------------------- | ----------------------------------------------- | ----- | ------ | ------- | ------- | ----- | ------ | ------- | ------ | ----- | ------- | ------ | -
|                                                 |                                                                                             | Years Ended December 31,                                |                                          
|                                                 |                                                                                             |                                                         |                                          
|                                                 |                                                                                             | 2004                                                    |                                           |                                                 | 2003  |        |         | 2002    |      
|                                                 |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |      
|                                                 |                                                                                             | (In thousands)                                          |                                          
|Operating activities                             |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |       |        |         |       
|                                                 | Net income                                                                                  |                                                         | $                                         | 40,725                                          |       |        | $       | 35,067  |       |        | $       | 30,785 |      
|                                                 | Adjustments to reconcile net income to cash provided by (used
    in) operating activities: |                                                         |                                           |                                                 |       |        |         |         |       |        |         |        |      
|                                                 |                                                                                             | Depreciation                                            |                                           |                                                 | 3,153 |        |         |         | 2,912 |        |         |        | 6,141 |        
|                                                 |                                                                                             | (Gain) loss on disposal of equipment and rotable spares |                                           |                                                 | (445  | )      |         |         | 225   |        |         |        | 43    |        
|                                                 |                                                                                             | Deferred income taxes                                   |                                           |                                                 | 2,394 |        |         |         | 1,885 |        |         |        | 1,019 |        
|                                                 |                                                                                             | Provision for spare parts and supplies obsolescence     |                                           |                                                 | 177   |        |         |         | 106   |        |         |        | 623   |        
|                                                 |                                                                                             | Other                                                   |                                           |                                                 | (217  | )      |         |         | (180  | )      |         |        | (145  | )      
|                                                 |                                                                                             | Amortization of unearned compensation                   |                                           |                                                 | 109   |        |         |         |      |        |         |        |      |        
|                                                 |                                                                                             | Changes in operating assets and liabilities:            |                                           |                                                 |       |        |         |         |       |        |         |        |       |        
|                                                 |                                                                                             |                                                         | Receivables, principally from Northwest   |                                                 |       | (7,575 | )       |         |       | 5,168  |         |        |       | (40,622 | )     
|                                                 |                                                                                             |                                                         | Spare parts and supplies                  |                                                 |       | (1,905 | )       |         |       | (954   | )       |        |       | (172    | )     
|                                                 |                                                                                             |                                                         | Prepaid expenses and other current assets |                                                 |       | 1,166  |         |         |       | 7,782  |         |        |       | (9,469  | )     
|                                                 |                                                                                             |                                                         | Aircraft deposits paid to Northwest       |                                                 |       | (7,350 | )       |         |       | (4,375 | )       |        |       | (8,925  | )     
|                                                 |                                                                                             |                                                         | Accounts payable and accrued expenses     |                                                 |       | 10,975 |         |         |       | (2,213 | )       |        |       | 3,676   |       
|                                                 |                                                                                             |                                                         | Other current liabilities                 |                                                 |       | 753    |         |         |       | (121   | )       |        |       | (398    | )     
|                                                 |                                                                                             |                                                         | Income taxes payable                      |                                                 |       | (3,963 | )       |         |       | 4,780  |         |        |       | 17,398  |       
|                                                 |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |      
|                                                 |                                                                                             |                                                         |                                           | Cash provided by (used in) operating activities |       |        | 37,997  |         |       |        | 50,082  |        |       |         | (46    | )
|Investing activities                             |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |       |        |         |       
|                                                 | Purchases of property and equipment                                                         |                                                         |                                           | (8,647                                          | )     |        |         | (10,894 | )     |        |         | (4,415 | )    
|                                                 | Proceeds from the sale of property and equipment                                            |                                                         |                                           | 1,057                                           |       |        |         |        |       |        |         |       |      
|                                                 | Purchase of contractual rights from Northwest                                               |                                                         |                                           | (10,000                                         | )     |        |         |        |       |        |         |       |      
|                                                 |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |      
|                                                 |                                                                                             |                                                         |                                           | Cash used in investing activities               |       |        | (17,590 | )       |       |        | (10,894 | )      |       |         | (4,415 | )
|Financing activities                             |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |       |        |         |       
|                                                 | Payments on long-term debt                                                                  |                                                         |                                           | (12,000                                         | )     |        |         | (18,000 | )     |        |         |       |      
|                                                 | Repayments on line of credit with bank                                                      |                                                         |                                           |                                                |       |        |         | (4,245  | )     |        |         |       |      
|                                                 | (Repayments) borrowings under line of credit with Northwest                                 |                                                         |                                           | (5,000                                          | )     |        |         | 10,000  |       |        |         |       |      
|                                                 | Advances from Northwest for manufacturer credits                                            |                                                         |                                           |                                                |       |        |         |        |       |        |         | 7,150  |      
|                                                 | Other financing activities                                                                  |                                                         |                                           | (18                                             | )     |        |         |        |       |        |         |       |      
|                                                 |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |      
|                                                 |                                                                                             |                                                         |                                           | Cash (used in) provided by financing activities |       |        | (17,018 | )       |       |        | (12,245 | )      |       |         | 7,150  |  
|Net increase in cash and cash equivalents        |                                                                                             |                                                         | 3,389                                     |                                                 |       |        | 26,943  |         |       |        | 2,689   |       
|Cash and cash equivalents at beginning of period |                                                                                             |                                                         | 31,523                                    |                                                 |       |        | 4,580   |         |       |        | 1,891   |       
|                                                 |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |      
|Cash and cash equivalents at end of period       |                                                                                             | $                                                       | 34,912                                    |                                                 |       | $      | 31,523  |         |       | $      | 4,580   |       
|                                                 |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |      
|Supplemental disclosure of cash flow information |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |       |        |         |       
|                                                 | Interest paid                                                                               |                                                         | $                                         | 5,920                                           |       |        | $       | 6,345   |       |        | $       | 357    |      
|                                                 | Income tax payments                                                                         |                                                         | $                                         | 23,970                                          |       |        | $       | 15,553  |       |        | $       | 1,024  |      
|Other non-cash transactions                      |                                                                                             |                                                         |                                           |                                                 |       |        |         |         |       |        |         |       
|                                                 | Dividends issued to Northwest                                                               |                                                         | $                                         |                                                |       |        | $       | 215,500 |       |        | $       | 4,385  |      
|                                                 | Capital contribution from Northwest applied to note payable                                 |                                                         | $                                         |                                                |       |        | $       | 50,000  |       |        | $       |       |      
|                                                 | Payment owed to Northwest for contractual rights                                            |                                                         | $                                         | 5,115                                           |       |        | $       |        |       |        | $       |       |      
|                                                 | Property acquired through a capital lease obligation                                        |                                                         | $                                         | 87                                              |       |        | $       |        |       |        | $       |       |      



43



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(All amounts in thousands, except per share data)


1.     Description of Business






2.     Significant Accounting
Policies




| |                            
| | ---------------------------
| | Principles of Consolidation





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                    
| | -------------------
| | Revenue Recognition







44



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




2.     Significant Accounting
Policies  (Continued)




| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts





| |                             
| | ----------------------------
| | Concentration of Credit Risk





| |                       
| | ----------------------
| | Property and Equipment





| |                         
| | ------------------------
| | Spare Parts and Supplies





| |            
| | -----------
| | Maintenance





| |         
| | --------
| | Warranty





| |                     
| | --------------------
| | Manufacturer Credits



45



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.     Significant Accounting
Policies  (Continued)








| |                  
| | -----------------
| | Aircraft Deposits





| |             
| | ------------
| | Income Taxes





| |         
| | --------
| | Goodwill







| |                                           
| | ------------------------------------------
| | Contractual Rights Acquired from Northwest





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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.     Significant Accounting
Policies  (Continued)




| |                   
| | ------------------
| | Earnings Per Share



|                                              |                                                                                  |                          |        |        |      |   |        |        |  |   |        |        | 
|--------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------ | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                              |                                                                                  | Years Ended December 31, |       
|                                              |                                                                                  |                          |       
|                                              |                                                                                  | 2004                     |        |        | 2003 |   |        | 2002   | 
|                                              |                                                                                  |                          |        |        |      |   |        |        | 
|Basic earnings per share:                     |                                                                                  |                          |        |        |      |   |        |        |  |   |        |       
|Net income                                    |                                                                                  | $                        | 40,725 |        |      | $ | 35,067 |        |  | $ | 30,785 |       
|Weighted average number of shares outstanding |                                                                                  |                          | 21,892 |        |      |   | 21,892 |        |  |   | 21,892 |       
|                                              |                                                                                  |                          |        |        |      |   |        |        | 
|Basic earnings per share                      |                                                                                  | $                        | 1.86   |        |      | $ | 1.60   |        |  | $ | 1.41   |       
|                                              |                                                                                  |                          |        |        |      |   |        |        | 
|Diluted earnings per share:                   |                                                                                  |                          |        |        |      |   |        |        |  |   |        |       
|Net income                                    |                                                                                  | $                        | 40,725 |        |      | $ | 35,067 |        |  | $ | 30,785 |       
|Share computation:                            |                                                                                  |                          |        |        |      |   |        |        |  |   |        |       
|                                              | Weighted average number of shares outstanding                                    |                          |        | 21,892 |      |   |        | 21,892 |  |   |        | 21,892 | 
|                                              | Assumed exercises of stock options                                               |                          |        | 19     |      |   |        |       |  |   |        |       | 
|                                              |                                                                                  |                          |        |        |      |   |        |        | 
|                                              | Weighted average number of shares outstanding for diluted
    earnings per share |                          |        | 21,911 |      |   |        | 21,892 |  |   |        | 21,892 | 
|                                              |                                                                                  |                          |        |        |      |   |        |        | 
|Diluted earnings per share                    |                                                                                  | $                        | 1.86   |        |      | $ | 1.60   |        |  | $ | 1.41   |       
|                                              |                                                                                  |                          |        |        |      |   |        |        | 





| |              
| | -------------
| | Stock Options





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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.     Significant Accounting
Policies  (Continued)




|                                                                                                |  |                          |        |  |      |   |        |      |  |   |        | 
|----------------------------------------------------------------------------------------------- |  | ------------------------ | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                                                                                |  | Years Ended December 31, |       
|                                                                                                |  |                          |       
|                                                                                                |  | 2004                     |        |  | 2003 |   |        | 2002 | 
|                                                                                                |  |                          |        |  |      |   |        |      | 
|Net income                                                                                      |  | $                        | 40,725 |  |      | $ | 35,067 |      |  | $ | 30,785 | 
|Add: Stock-based compensation expense included in reported net
    income, net of tax           |  |                          | 68     |  |      |   |       |      |  |   |       | 
|Deduct: Stock-based compensation expense determined under the
    fair value method, net of tax |  |                          | 991    |  |      |   | 121    |      |  |   |       | 
|                                                                                                |  |                          |        |  |      |   |        |      | 
|Pro forma net income                                                                            |  | $                        | 39,802 |  |      | $ | 34,946 |      |  | $ | 30,785 | 
|                                                                                                |  |                          |        |  |      |   |        |      | 
|Net income per common share  basic and diluted, as
    reported                                |  | $                        | 1.86   |  |      | $ | 1.60   |      |  | $ | 1.41   | 
|                                                                                                |  |                          |        |  |      |   |        |      | 
|Pro forma net income per common share  basic and
    diluted                                   |  | $                        | 1.82   |  |      | $ | 1.60   |      |  | $ | 1.41   | 
|                                                                                                |  |                          |        |  |      |   |        |      | 







| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.     Significant Accounting
Policies  (Continued)




| |                      
| | ---------------------
| | Financial Instruments









| |                  
| | -----------------
| | Segment Reporting





| |                     
| | --------------------
| | Comprehensive Income





| |                          
| | -------------------------
| | Significant Concentration





| |                 
| | ----------------
| | Reclassification



Use of Estimates




49



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                           
|-- | --------------------------
|3. | Airline Services Agreement





Reimbursement payments.


Payments based on pre-set rates.


Margin payments.








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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                         
|-- | ----------------------------------------
|3. | Airline Services Agreement  (Continued)





|   |                                
|-- | -------------------------------
|4. | Other Agreements with Northwest



Aircraft and Spare Engine Lease Agreements.


Manufacturer Benefits Agreement.


Sublease and Facilities Use Agreements.


Information Technology Support Agreement.


Family Assistance Services Agreement.


Ground Handling Agreement.


51



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                              
|-- | ---------------------------------------------
|4. | Other Agreements with Northwest  (Continued)



Preferential Pilot Hiring Agreement.


Sublease of Saab Aircraft.




|   |                                        
|-- | ---------------------------------------
|5. | Change in Ownership and Public Offering







6.     Note Payable and
Dividends to Northwest




52



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.     Note Payable and
Dividends to Northwest  (Continued)




|                                        |                                         |   |        |        | 
|--------------------------------------- | --------------------------------------- | - | ------ | ------ | 
|Net receivables due from Northwest      |                                         | $ | 59,632 |       
|Less: Income taxes payable to Northwest |                                         |   | 26,843 |       
|                                        | Net deferred taxes payable to Northwest |   |        | 1,843  | 
|                                        | Dividend to Northwest                   |   |        | 15,500 | 
|                                        |                                         |   |       
|Cash payment to the Company             |                                         | $ | 15,446 |       
|                                        |                                         |   |       







7.     Lines of Credit










53



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




7.     Lines of
Credit  (Continued)




8.     Summary of Revenue from
Regional Airline Services






|                                                    |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |   |         |        |   |   |         |         |  
|--------------------------------------------------- | ------------------------------------------- | ------------------------ | ------- | ------- | ------------ | - | ------- | ------- |  | - | ---------- | ------- |  | ------------ | ------- | ------- | ----- | - | ------- | ------ | - | - | ------- | ------- | -
|                                                    |                                             | Years Ended December 31, |        
|                                                    |                                             |                          |        
|                                                    |                                             | 2004                     |         |         | 2003         |  
|                                                    |                                             |                          |         |         |              |  
|                                                    |                                             | Reimbursed               |         |         | Unreimbursed |   |         | Total   |  |   | Reimbursed |         |  | Unreimbursed |         |         | Total |  
|                                                    |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|                                                    |                                             | (In thousands)           |        
|Operating revenues:                                 |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |   |         |        |   |   |         |        
|Regional airline services                           |                                             | $                        | 423,911 |         |              | $ | 207,593 |         |  | $ | 631,504    |         |  | $            | 296,257 |         |       | $ | 154,354 |        |   | $ | 450,611 |        
|Other revenue                                       |                                             |                          |        |         |              |   | 3,944   |         |  |   | 3,944      |         |  |              |        |         |       |   | 6,159   |        |   |   | 6,159   |        
|                                                    |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Total operating revenues                            |                                             |                          | 423,911 |         |              |   | 211,537 |         |  |   | 635,448    |         |  |              | 296,257 |         |       |   | 160,513 |        |   |   | 456,770 |        
|Operating expenses:                                 |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |   |         |        |   |   |         |        
|                                                    | Salaries, wages and benefits                |                          |         |        |              |   |         | 105,143 |  |   |            | 105,143 |  |              |         |        |       |   |         | 83,316 |   |   |         | 83,316  |  
|                                                    | Aircraft fuel                               |                          |         | 83,061  |              |   |         | 511     |  |   |            | 83,572  |  |              |         | 54,731  |       |   |         | 276    |   |   |         | 55,007  |  
|                                                    | Aircraft maintenance, materials and repairs |                          |         | 11,842  |              |   |         | 11,703  |  |   |            | 23,545  |  |              |         | 6,548   |       |   |         | 7,568  |   |   |         | 14,116  |  
|                                                    | Aircraft rentals                            |                          |         | 209,047 |              |   |         |        |  |   |            | 209,047 |  |              |         | 136,273 |       |   |         |       |   |   |         | 136,273 |  
|                                                    | Other rentals and landing fees              |                          |         | 18,651  |              |   |         | 18,450  |  |   |            | 37,101  |  |              |         | 16,512  |       |   |         | 12,743 |   |   |         | 29,255  |  
|                                                    | Government reimbursements                   |                          |         |        |              |   |         |        |  |   |            |        |  |              |         | (1,000  | )     |   |         | (114   | ) |   |         | (1,114  | )
|                                                    | Ground handling services                    |                          |         | 47,533  |              |   |         | 18,344  |  |   |            | 65,877  |  |              |         | 33,223  |       |   |         | 11,399 |   |   |         | 44,622  |  
|                                                    | Depreciation                                |                          |         |        |              |   |         | 3,153   |  |   |            | 3,153   |  |              |         |        |       |   |         | 2,912  |   |   |         | 2,912   |  
|                                                    | Other                                       |                          |         | 11,386  |              |   |         | 29,321  |  |   |            | 40,707  |  |              |         | 9,600   |       |   |         | 18,614 |   |   |         | 28,214  |  
|                                                    |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Total operating expenses                            |                                             |                          | 381,520 |         |              |   | 186,625 |         |  |   | 568,145    |         |  |              | 255,887 |         |       |   | 136,714 |        |   |   | 392,601 |        
|                                                    |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Operating income                                    |                                             | $                        | 42,391  |         |              | $ | 24,912  |         |  | $ | 67,303     |         |  | $            | 40,370  |         |       | $ | 23,799  |        |   | $ | 64,169  |        
|                                                    |                                             |                          |         |         |              |   |         |         |  |   |            |         |  |              |         |         |       |  
|Operating income as a percent of operating revenues |                                             |                          | 10.0    | %       |              |   | 11.8    | %       |  |   | 10.6       | %       |  |              | 13.6    | %       |       |   | 14.8    | %      |   |   | 14.0    | %      



|                                |  |                          |         |  |      |   |         |      |  |   |         | 
|------------------------------- |  | ------------------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                |  | Years Ended December 31, |        
|                                |  |                          |        
|                                |  | 2004                     |         |  | 2003 |   |         | 2002 | 
|                                |  |                          |         |  |      |   |         |      | 
|Regional jets (CRJs)            |  | $                        | 631,504 |  |      | $ | 450,611 |      |  | $ | 285,505 | 
|Turboprops                      |  |                          |        |  |      |   |        |      |  |   | 39,881  | 
|                                |  |                          |         |  |      |   |         |      | 
|Total regional airline services |  | $                        | 631,504 |  |      | $ | 450,611 |      |  | $ | 325,386 | 
|                                |  |                          |         |  |      |   |         |      | 

54



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.     Related Party Transactions






|                               |  |                          |         |  |      |   |         |      |  |   |         |  
|------------------------------ |  | ------------------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- | -
|                               |  | Years Ended December 31, |        
|                               |  |                          |        
|                               |  | 2004                     |         |  | 2003 |   |         | 2002 | 
|                               |  |                          |         |  |      |   |         |      | 
|Revenue:                       |  |                          |         |  |      |   |         |      |  |   |         |  
|Regional airline services      |  | $                        | 631,504 |  |      | $ | 450,611 |      |  | $ | 325,386 |  
|Other revenue                  |  |                          | 950     |  |      |   | 2,020   |      |  |   | 3,087   |  
|Expenses:                      |  |                          |         |  |      |   |         |      |  |   |         |  
|Aircraft fuel                  |  |                          | 83,061  |  |      |   | 53,909  |      |  |   | 27,247  |  
|Aircraft rentals               |  |                          | 209,047 |  |      |   | 136,283 |      |  |   | 79,260  |  
|Other rentals and landing fees |  |                          | 11,250  |  |      |   | 11,250  |      |  |   | 9,063   |  
|Ground handling services       |  |                          | 46,112  |  |      |   | 32,069  |      |  |   | 14,584  |  
|Other                          |  |                          | 394     |  |      |   | 275     |      |  |   | 344     |  
|Interest expense (income)      |  |                          | 4,765   |  |      |   | 7,176   |      |  |   | (2,937  | )









10.     Leases




55



---



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.     Leases  (Continued)








|         |  |               |    |                  |              |  |     |      |  |  |      |  |  |  |    | 
|-------- |  | ------------- | -- | ---------------- | ------------ |  | --- | ---- |  |  | ---- |  |  |  | -- | 
|         |  |               |    | Fleet Size as of |             
|         |  | Standard      |    |                  | December 31, | 
|         |  | Seating       |    |                  |              | 
|Aircraft |  | Configuration |    |                  | 2004         |  |     | 2003 |  |  | 2002 | 
|         |  |               |    |                  |              |  |     |      |  |  |      | 
|CRJ 200  |  |               | 50 |                  |              |  | 42  |      |  |  | 35   |  |  |  | 33 | 
|CRJ 440  |  |               | 44 |                  |              |  | 75  |      |  |  | 41   |  |  |  | 18 | 
|         |  |               |    |                  |              |  |     |      |  |  |      | 
|         |  |               |    |                  |              |  | 117 |      |  |  | 76   |  |  |  | 51 | 
|         |  |               |    |                  |              |  |     |      |  |  |      | 



|                                            |  |                |    |  |                  |   |           |              |  |   |        |  
|------------------------------------------- |  | -------------- | -- |  | ---------------- | - | --------- | ------------ |  | - | ------ | -
|                                            |  | Capital Leases |    |  | Operating Leases |  
|                                            |  |                |    |  |                  |  
|                                            |  | Non-aircraft   |    |  | Aircraft         |   |           | Non-aircraft | 
|                                            |  |                |    |  |                  |   |           |              | 
|2005                                        |  | $              | 46 |  |                  | $ | 253,356   |              |  | $ | 5,720  |  
|2006                                        |  |                | 27 |  |                  |   | 253,165   |              |  |   | 5,715  |  
|2007                                        |  |                |   |  |                  |   | 248,095   |              |  |   | 5,426  |  
|2008                                        |  |                |   |  |                  |   | 247,092   |              |  |   | 4,744  |  
|2009                                        |  |                |   |  |                  |   | 245,758   |              |  |   | 4,496  |  
|Thereafter                                  |  |                |   |  |                  |   | 1,965,600 |              |  |   | 27,811 |  
|                                            |  |                |    |  |                  |   |           |              | 
|                                            |  |                | 73 |  |                  |   | 3,213,066 |              |  |   | 53,912 |  
|Sublease rental income                      |  |                |   |  |                  |   | (18,966   | )            |  |   | (322   | )
|                                            |  |                |    |  |                  |   |           |              | 
|Total minimum operating lease payments      |  |                | 73 |  |                  | $ | 3,194,100 |              |  | $ | 53,590 |  
|                                            |  |                |    |  |                  |   |           |              | 
|Less amount representing interest           |  |                | 4  |  |                  |   |           |              |  |   |        |  
|                                            |  |                |    |  |                  |   |           |              | 
|Present value of net minimum lease payments |  | $              | 69 |  |                  |   |           |              |  |   |        |  
|                                            |  |                |    |  |                  |   |           |              | 



|                       |  |      |         |   |      |   |         |      |  |   |         |  
|---------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                       |  | 2004 |         |   | 2003 |   |         | 2002 | 
|                       |  |      |         |   |      |   |         |      | 
|Gross rental expense   |  | $    | 233,947 |   |      | $ | 160,723 |      |  | $ | 106,548 |  
|Sublease rental income |  |      | (7,811  | ) |      |   | (8,181  | )    |  |   | (5,831  | )
|                       |  |      |         |   |      |   |         |      | 
|Net rental expense     |  | $    | 226,136 |   |      | $ | 152,542 |      |  | $ | 100,717 |  
|                       |  |      |         |   |      |   |         |      | 



56



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11.     Accrued Expenses




|                        |  |      |        |  |      |   |        | 
|----------------------- |  | ---- | ------ |  | ---- | - | ------ | 
|                        |  | 2004 |        |  | 2003 |  
|                        |  |      |        |  |      |  
|Compensation            |  | $    | 6,016  |  |      | $ | 4,397  | 
|Taxes other than income |  |      | 6,605  |  |      |   | 4,678  | 
|Insurance costs         |  |      | 1,795  |  |      |   | 1,848  | 
|Other                   |  |      | 667    |  |      |   | 409    | 
|                        |  |      |        |  |      |  
|                        |  | $    | 15,083 |  |      | $ | 11,332 | 
|                        |  |      |        |  |      |  



|    |               
|--- | --------------
|12. | Other Expenses



|                              |  |      |        |  |      |   |        |      |  |   |        | 
|----------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                              |  | 2004 |        |  | 2003 |   |        | 2002 | 
|                              |  |      |        |  |      |   |        |      | 
|Passenger liability insurance |  | $    | 2,682  |  |      | $ | 2,427  |      |  | $ | 4,317  | 
|Hull and other insurance      |  |      | 2,785  |  |      |   | 1,664  |      |  |   | 1,479  | 
|Property and other taxes      |  |      | 6,884  |  |      |   | 5,635  |      |  |   | 4,657  | 
|Crew training expense         |  |      | 5,124  |  |      |   | 2,515  |      |  |   | 4,243  | 
|Crew overnight accommodations |  |      | 6,250  |  |      |   | 3,517  |      |  |   | 3,567  | 
|Other                         |  |      | 16,982 |  |      |   | 12,456 |      |  |   | 9,958  | 
|                              |  |      |        |  |      |   |        |      | 
|                              |  | $    | 40,707 |  |      | $ | 28,214 |      |  | $ | 28,221 | 
|                              |  |      |        |  |      |   |        |      | 

13.     Income Taxes








57



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




13.     Income
Taxes  (Continued)




|                           |                                |              |        |        |      |   |        |        |  
|-------------------------- | ------------------------------ | ------------ | ------ | ------ | ---- | - | ------ | ------ | -
|                           |                                | December 31, |       
|                           |                                |              |       
|                           |                                | 2004         |        |        | 2003 |  
|                           |                                |              |        |        |      |  
|Deferred tax assets:       |                                |              |        |        |      |   |        |       
|                           | Asset valuation reserves       |              | $      | 292    |      |   | $      | 1,136  |  
|                           | Vacation pay                   |              |        | 983    |      |   |        | 692    |  
|                           | Other accruals                 |              |        | 133    |      |   |        | 721    |  
|                           |                                |              |        |        |      |  
|                           | Total deferred tax assets      |              |        | 1,408  |      |   |        | 2,549  |  
|                           | Deferred tax liabilities:      |              |        |        |      |   |        |        |  
|                           | Prepaid insurance              |              |        | (408   | )    |   |        |       |  
|                           | Tax over book depreciation     |              |        | (7,245 | )    |   |        | (6,400 | )
|                           |                                |              |        |        |      |  
|                           | Total deferred tax liabilities |              |        | (7,653 | )    |   |        | (6,400 | )
|                           |                                |              |        |        |      |  
|Net deferred tax liability |                                | $            | (6,245 | )      |      | $ | (3,851 | )     
|                           |                                |              |        |        |      |  



|          |         |      |        |        |      |   |        |        |  |   |        |        | 
|--------- | ------- | ---- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|          |         | 2004 |        |        | 2003 |   |        | 2002   | 
|          |         |      |        |        |      |   |        |        | 
|Current:  |         |      |        |        |      |   |        |        |  |   |        |       
|          | Federal |      | $      | 19,179 |      |   | $      | 17,293 |  |   | $      | 16,107 | 
|          | State   |      |        | 827    |      |   |        | 3,154  |  |   |        | 2,417  | 
|          |         |      |        |        |      |   |        |        | 
|          |         |      | 20,006 |        |      |   | 20,447 |        |  |   | 18,524 |       
|Deferred: |         |      |        |        |      |   |        |        |  |   |        |       
|          | Federal |      |        | 2,511  |      |   |        | 1,454  |  |   |        | 909    | 
|          | State   |      |        | (117   | )    |   |        | 431    |  |   |        | 110    | 
|          |         |      |        |        |      |   |        |        | 
|          |         |      | 2,394  |        |      |   | 1,885  |        |  |   | 1,019  |       
|          |         |      |        |        |      |   |        |        | 
|          |         | $    | 22,400 |        |      | $ | 22,332 |        |  | $ | 19,543 |       
|          |         |      |        |        |      |   |        |        | 



|                                         |  |      |        |   |      |  |      |      |  |   |        |  |  |   |      |   |   |   |        |  |  |  |      |  
|---------------------------------------- |  | ---- | ------ | - | ---- |  | ---- | ---- |  | - | ------ |  |  | - | ---- | - | - | - | ------ |  |  |  | ---- | -
|                                         |  | 2004 |        |   | 2003 |  |      | 2002 | 
|                                         |  |      |        |   |      |  |      |      | 
|                                         |  | $    |        |   | %    |  |      | $    |  |   | %      |  |  | $ |      |   | % |  
|                                         |  |      |        |   |      |  |      |      |  |   |        |  |  |   |      |   |   |  
|Income tax expense at statutory rate     |  | $    | 22,094 |   |      |  | 35.0 | %    |  | $ | 20,090 |  |  |   | 35.0 | % |   | $ | 17,615 |  |  |  | 35.0 | %
|State income taxes, net of federal taxes |  |      | 1,279  |   |      |  | 2.0  | %    |  |   | 2,239  |  |  |   | 3.9  | % |   |   | 1,817  |  |  |  | 3.6  | %
|Decrease in estimate of 2003 taxes       |  |      | (1,063 | ) |      |  | (1.6 | )%   |  |   |       |  |  |   |     |   |   |   |       |  |  |  |     |  
|Other                                    |  |      | 90     |   |      |  | 0.1  | %    |  |   | 3      |  |  |   | 0.0  | % |   |   | 111    |  |  |  | 0.2  | %
|                                         |  |      |        |   |      |  |      |      |  |   |        |  |  |   |      |   |   |  
|Income tax expense                       |  | $    | 22,400 |   |      |  | 35.5 | %    |  | $ | 22,332 |  |  |   | 38.9 | % |   | $ | 19,543 |  |  |  | 38.8 | %
|                                         |  |      |        |   |      |  |      |      |  |   |        |  |  |   |      |   |   |  



|    |                         
|--- | ------------------------
|14. | Stock-Based Compensation



58



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|    |                                       
|--- | --------------------------------------
|14. | Stock-Based Compensation  (Continued)





|                                   |  |               |     |                  |                |   |       |               |                  |  |                |  |  |   |       | 
|---------------------------------- |  | ------------- | --- | ---------------- | -------------- | - | ----- | ------------- | ---------------- |  | -------------- |  |  | - | ----- | 
|                                   |  | 2004          |     |                  | 2003           |  
|                                   |  |               |     |                  |                |  
|                                   |  |               |     | Weighted Average |                |   |       |               | Weighted Average | 
|                                   |  | Stock Options |     |                  | Exercise Price |   |       | Stock Options |                  |  | Exercise Price | 
|                                   |  |               |     |                  |                |   |       |               |                  |  |                | 
|Outstanding at beginning of year   |  |               | 858 |                  |                | $ | 14.00 |               |                  |  |               |  |  | $ |      | 
|Granted                            |  |               | 32  |                  |                |   | 10.23 |               |                  |  | 858            |  |  |   | 14.00 | 
|Exercised                          |  |               |    |                  |                |   |      |               |                  |  |               |  |  |   |      | 
|Forfeited                          |  |               | 131 |                  |                |   | 14.00 |               |                  |  |               |  |  |   |      | 
|                                   |  |               |     |                  |                |   |       |               |                  |  |                | 
|Outstanding at end of year         |  |               | 759 |                  |                | $ | 13.84 |               |                  |  | 858            |  |  | $ | 14.00 | 
|                                   |  |               |     |                  |                |   |       |               |                  |  |                | 
|Options exercisable at end of year |  |               | 182 |                  |                | $ | 14.00 |               |                  |  |               |  |  | $ |      | 
|                                   |  |               |     |                  |                |   |       |               |                  |  |                | 











|    |                      
|--- | ---------------------
|15. | Employee Benefit Plan



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|    |                                    
|--- | -----------------------------------
|15. | Employee Benefit Plan  (Continued)







|                   |  |               |                 | 
|------------------ |  | ------------- | --------------- | 
|Years of Service   |  | Company Match |                
|                   |  |               |                
|6 months  5 years |  |               | 25% of first 5% | 
|6  9 years        |  |               | 40% of first 6% | 
|10  12 years      |  |               | 60% of first 7% | 
|13 or more years   |  |               | 70% of first 7% | 



|                      |  |               |                            | 
|--------------------- |  | ------------- | -------------------------- | 
|Employee Contribution |  | Company Match |                           
|                      |  |               |                           
|First 3%              |  |               | Dollar for dollar, or 100% | 
|Next 3%               |  |               | Matched at 67%             | 





|    |                              
|--- | -----------------------------
|16. | Commitments and Contingencies

Employees.


Legal Proceedings.


Purchase Commitments.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|    |                                            
|--- | -------------------------------------------
|16. | Commitments and Contingencies  (Continued)





Self-Insurance.


Financings and Guarantees.


Regulatory Matters.


General Guarantees and Indemnifications.








Other contingencies.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|    |                                     
|--- | ------------------------------------
|17. | Quarterly Financial Data (Unaudited)



|                                                       |  |                     |         |   |         |   |         |              |  |   |             |   |  |   |         |  
|------------------------------------------------------ |  | ------------------- | ------- | - | ------- | - | ------- | ------------ |  | - | ----------- | - |  | - | ------- | -
|                                                       |  | Three Months Ended, |        
|                                                       |  |                     |        
|                                                       |  | March 31            |         |   | June 30 |   |         | September 30 |  |   | December 31 |  
|                                                       |  |                     |         |   |         |   |         |              |  |   |             |  
|2004                                                   |  |                     |         |   |         |   |         |              |  |   |             |   |  |   |         |  
|Operating revenue                                      |  | $                   | 133,879 |   |         | $ | 152,173 |              |  | $ | 168,086     |   |  | $ | 181,310 |  
|Operating income                                       |  |                     | 14,344  |   |         |   | 16,910  |              |  |   | 18,525      |   |  |   | 17,524  |  
|Net income                                             |  |                     | 8,054   |   |         |   | 9,698   |              |  |   | 12,649      |   |  |   | 10,324  |  
|Basic and diluted income per share                     |  | $                   | 0.37    |   |         | $ | 0.44    |              |  | $ | 0.58        |   |  | $ | 0.47    |  
|Operating income as a percentage of operating revenues |  |                     | 10.7    | % |         |   | 11.1    | %            |  |   | 11.0        | % |  |   | 9.7     | %

|                                                       |  |                     |         |   |         |   |         |              |  |   |             |   |  |   |         |  
|------------------------------------------------------ |  | ------------------- | ------- | - | ------- | - | ------- | ------------ |  | - | ----------- | - |  | - | ------- | -
|                                                       |  | Three Months Ended, |        
|                                                       |  |                     |        
|                                                       |  | March 31            |         |   | June 30 |   |         | September 30 |  |   | December 31 |  
|                                                       |  |                     |         |   |         |   |         |              |  |   |             |  
|2003                                                   |  |                     |         |   |         |   |         |              |  |   |             |   |  |   |         |  
|Operating revenue                                      |  | $                   | 100,562 |   |         | $ | 109,449 |              |  | $ | 119,665     |   |  | $ | 127,094 |  
|Operating income                                       |  |                     | 14,339  |   |         |   | 15,697  |              |  |   | 16,571      |   |  |   | 17,562  |  
|Net income                                             |  |                     | 8,024   |   |         |   | 8,499   |              |  |   | 8,738       |   |  |   | 9,806   |  
|Basic and diluted income per share                     |  | $                   | 0.37    |   |         | $ | 0.39    |              |  | $ | 0.40        |   |  | $ | 0.45    |  
|Operating income as a percentage of operating revenues |  |                     | 14.3    | % |         |   | 14.3    | %            |  |   | 13.8        | % |  |   | 13.8    | %









|    |                 
|--- | ----------------
|18. | Subsequent Event







62



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


18.                        Subsequent
Event  (Continued)








| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | during a quarter (and only during such quarter) if the closing
    price of the Companys common stock exceeds 120% of the
    conversion price of the Notes (initially $15.86 per share)
    for at least 20 of the last 30 trading days of the preceding
    quarter;
|
| |  | during a five day period after the Notes have traded for a five
    day period at a price that is less than 98% of the equivalent
    value that could be realized upon conversion of the Notes;                                                                       
|
| |  | if the Company calls the Notes for redemption;                                                                                                                                                                                                                         
|
| |  | if a change of control or other specified corporate transactions
    or distributions to holders of the Companys common stock
    occurs (and in some instances, the Company may also owe an
    additional premium upon a change in control); and                    
|
| |  | during the 10 trading days prior to the maturity date of
    February 15, 2025.                                                                                                                                                                                        



63



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP





64



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Disclosure Controls and Procedures.


Managements Report on Internal Control over Financial
Reporting.


Internal Control 
Integrated Framework






| |                                           
| | ------------------------------------------
| | /s/ Philip H. Trenary                     
| |                                           
| | Philip H. Trenary                         
| | President and Chief Executive Officer     
|
| | /s/ Peter D. Hunt                         
| |                                           
| | Peter D. Hunt                             
| | Vice-President and Chief Financial Officer

65



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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant






|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation






|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions






|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services






PART IV







|         |                                        
|-------- | ---------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules



| |     |                     
| | --- | --------------------
| | (a) | Financial Statements



|   |                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------
|1. | The following financial statements are included in Part II,
    Item 8. Financial Statements and Supplementary Data:



|     |  |                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------
|i)   |  | Consolidated Statements of Income for the Years Ended
    December 31, 2004, 2003, and 2002                              
|    
|ii)  |  | Consolidated Balance Sheets as of December 31, 2004 and 2003                                                             
|    
|iii) |  | Consolidated Statements of Stockholders Equity
    (Deficiency) for the Years Ended December 31, 2004, 2003
    and 2002
|    
|iv)  |  | Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2004, 2003 and 2002                           
|    
|v)   |  | Notes to Consolidated Financial Statements                                                                               



|                                                                                                                                                                                         |  |    
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Public Accounting Firm on
    Financial Statement Schedule                                                                                              |  | S-1
|                                                                                                                                                                                        
|Schedule II  Valuation and Qualifying Accounts                                                                                                                                          |  | S-2
|All schedules have been omitted because they are inapplicable,
    not required, or the information is included elsewhere in the
    consolidated financial statements or notes thereto.



|   |                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Exhibits: See accompanying Exhibit Index included after the
    signature page of this report for a list of the exhibits filed
    or furnished with or incorporated by reference in this report.

66



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SIGNATURES






| |                        
| | -----------------------
| | Pinnacle Airlines Corp.
| | (Registrant)           



| |     |                      
| | --- | ---------------------
| | By: | /s/ Philip H. Trenary

| |                                             
| | --------------------------------------------
| |                                             
| | Name: Philip H. Trenary                     
| | Title: President and Chief Executive Officer





|                                                       |  |                                                                                   |  | 
|------------------------------------------------------ |  | --------------------------------------------------------------------------------- |  | 
|Signature                                              |  | Title                                                                            
|                                                       |  |                                                                                  
|                                                      
|/s/ Philip H. TrenaryPhilip
    H. Trenary             |  | President, Chief Executive Officer and Director
    (Principal Executive Officer)
|                                                      
|/s/ Peter D. HuntPeter
    D. Hunt                     |  | Vice President and Chief Financial Officer
    (Principal Accounting Officer)    
|                                                      
|/s/ Stephen E. GormanStephen
    E. Gorman             |  | Chairman, Director                                                               
|                                                      
|/s/ Donald J. BreedingDonald
    J. Breeding           |  | Director                                                                         
|                                                      
|/s/ J. Timothy GriffinJ.
    Timothy Griffin           |  | Director                                                                         
|                                                      
|/s/ Robert D.
    Isom, Jr.Robert
    D. Isom, Jr.     |  | Director                                                                         
|                                                      
|/s/ James E.
    McGehee, Jr.James
    E. McGehee, Jr. |  | Director                                                                         
|                                                      
|/s/ Robert A. PeiserRobert
    A. Peiser               |  | Director                                                                         

67



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|                                                           |  |          |  | 
|---------------------------------------------------------- |  | -------- |  | 
|Signature                                                  |  | Title   
|                                                           |  |         
|                                                          
|/s/ Thomas S.
    Schreier, Jr.Thomas
    S. Schreier, Jr. |  | Director
|                                                          
|/s/ R. Philip ShannonR.
    Philip Shannon                 |  | Director
|                                                          
|/s/ Nicholas R.
    TomassettiNicholas
    R. Tomassetti   |  | Director

68



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Index of Exhibits




|        |    |             |  |                                                                                                                                                                                                                                                                    
|------- | -- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 3  | .1*         |  | Amended and Restated Certificate of Incorporation of the
    registrant                                                                                                                                                                                            
|        | 3  | .1.1*       |  | Second Amended and Restated Certificate of Incorporation of the
    registrant                                                                                                                                                                                     
|        | 3  | .2*         |  | Certificate of Designations for Series A preferred stock of
    the registrant                                                                                                                                                                                     
|        | 3  | .3*         |  | Bylaws of the registrant                                                                                                                                                                                                                                           
|        | 3  | .3.1*       |  | Amended and Restated Bylaws, dated January 14, 2003, of the
    registrant                                                                                                                                                                                         
|        | 4  | .1*         |  | Specimen Stock Certificate                                                                                                                                                                                                                                         
|        | 4  | .2*         |  | Rights Agreement between the registrant and EquiServe Trust
    Company, N.A., as Rights Agent                                                                                                                                                                     
|        | 4  | .3(a)       |  | Indenture, 3.25% Senior Convertible Notes due 2025, dated
    as of February 8, 2005, by and between Pinnacle Airlines
    Corp. and Deutsche Bank Trust Company                                                                                                   
|        | 4  | .4(a)       |  | Registration Rights Agreement made pursuant to the Purchase
    Agreement dated February 3, dated as of February 8,
    2005, by and among Pinnacle Airlines Corp., Merrill Lynch,
    Pierce, Fenner & Smith Incorporated and Raymond
    James & Associates, Inc.
|        | 10 | .2*         |  | Sublease Agreement between Pinnacle Airlines, Inc. and Northwest
    Airlines, Inc.                                                                                                                                                                                
|        | 10 | .2.1*       |  | First Amendment to Sublease Agreement between Pinnacle Airlines,
    Inc. and Northwest Airlines, Inc.                                                                                                                                                             
|        | 10 | .3*         |  | Engine Lease Agreement between Pinnacle Airlines, Inc. and
    Northwest Airlines, Inc.                                                                                                                                                                            
|        | 10 | .3.1*       |  | First Amendment to Engine Lease Agreement between Pinnacle
    Airlines, Inc. and Northwest Airlines, Inc.                                                                                                                                                         
|        | 10 | .4*         |  | Promissory Note issued by Pinnacle Airlines, Inc. to Northwest
    Airlines, Inc.                                                                                                                                                                                  
|        | 10 | .5*         |  | Guarantee of Promissory Note issued by registrant to Northwest
    Airlines, Inc.                                                                                                                                                                                  
|        | 10 | .6*         |  | Revolving Credit Facility dated as of January 14, 2003
    between Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                                                                            
|        | 10 | .6.1*       |  | First Amendment dated as of February 5, 2003 to Revolving
    Credit Facility dated as of January 14, 2003 between
    Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                        
|        | 10 | .6.2*       |  | Second Amendment dated as of November 28, 2003 to Revolving
    Credit Facility dated as of January 14, 2003 between
    Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                      
|        | 10 | .6.3(b)     |  | Third Amendment dated as of December 13, 2004 to Revolving
    Credit Facility dated as of January 14, 2003 between
    Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                       
|        | 10 | .6.4(a)     |  | Fourth Amendment dated as of February 8, 2005 to Revolving
    Credit Facility dated as of January 14, 2003 between
    Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                       
|        | 10 | .7*         |  | Guaranty dated as of January 14, 2003 issued by registrant
    to Northwest Airlines, Inc.                                                                                                                                                                         
|        | 10 | .8*         |  | Pinnacle Airlines Corp. 2003 Stock Incentive Plan                                                                                                                                                                                                                  
|        | 10 | .9*         |  | Non-Qualified Stock Option Agreement for options granted under
    the Pinnacle Airlines Corp. 2003 Stock Incentive Plan                                                                                                                                           
|        | 10 | .10*        |  | Pinnacle Airlines, Inc. Annual Management Bonus Plan                                                                                                                                                                                                               
|        | 10 | .11*        |  | Amended and Restated Sublease Agreement dated as of
    January 14, 2003 between Pinnacle Airlines, Inc. and
    Northwest Airlines, Inc. (SBN Facilities)                                                                                                         
|        | 10 | .12*        |  | Sublease Agreement dated as of August 1, 2002 between
    Pinnacle Airlines, Inc. and Northwest Airlines, Inc. (TYS
    Facilities)                                                                                                                                
|        | 10 | .13*        |  | Amended and Restated Facilities Use Agreement between Pinnacle
    Airlines, Inc. and Northwest Airlines, Inc. (DTW Facilities)                                                                                                                                    
|        | 10 | .14*        |  | Amended and Restated Facilities Use Agreement between Pinnacle
    Airlines, Inc. and Northwest Airlines, Inc. (MEM Facilities)                                                                                                                                    

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|        |    |          |             |                                                                                                                                                                                                                                
|------- | -- | -------- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |          |            
|Number  |    |          | Description
|        |    |          |            
|        | 10 | .15*     |             | Amended and Restated Facilities Use Agreement between Pinnacle
    Airlines, Inc. and Northwest Airlines, Inc. (MSP Facilities)                                                                                                
|        | 10 | .16     |             | Management Compensation Agreement dated as of January 14,
    2003 between Pinnacle Airlines, Inc. and Philip H. Trenary                                                                                                       
|        | 10 | .17      |             | Intentionally omitted                                                                                                                                                                                                          
|        | 10 | .18*     |             | Lease Guaranty issued by the registrant to Northwest Airlines,
    Inc.                                                                                                                                                        
|        | 10 | .19*     |             | Sublease Guaranty issued by the registrant to Northwest
    Airlines, Inc.                                                                                                                                                     
|        | 10 | .20*     |             | Airline Services Agreement dated as of March 1, 2002 among
    the registrant, Pinnacle Airlines, Inc. and Northwest Airlines,
    Inc.                                                                                        
|        | 10 | .21*     |             | Airline Services Agreement dated as of January 14, 2003
    among the registrant, Pinnacle Airlines, Inc. and Northwest
    Airlines, Inc.                                                                                     
|        | 10 | .21.1*   |             | Amendment No. 1 dated as of September 11, 2003 to the
    Airline Services Agreement dated as of January 14, 2003
    among the registrant, Pinnacle Airlines, Inc. and Northwest
    Airlines, Inc.                           
|        | 10 | .21.2*   |             | Amendment No. 2 dated as of November 26, 2003 to the
    Airline Services Agreement dated as of January 14, 2003
    among the registrant, Pinnacle Airlines, Inc. and Northwest
    Airlines, Inc.                            
|        | 10 | .21.3(b) |             | Amendment No. 3 dated as of August 20, 2004 to the
    Airline Services Agreement dated as of January 14, 2003
    among the registrant, Pinnacle Airlines, Inc. and Northwest
    Airlines, Inc.                              
|        | 10 | .21.4(b) |             | Amendment No. 4 dated as of December 13, 2004 to the
    Airline Services Agreement dated as of January 14, 2003
    among the registrant, Pinnacle Airlines, Inc. and Northwest
    Airlines, Inc.                            
|        | 10 | .22*     |             | Amended and Restated Ground Handling Agreement between Pinnacle
    Airlines, Inc. and Northwest Airlines, Inc.                                                                                                                
|        | 10 | .23*     |             | Amended and Restated Information Technology Services Agreement
    between Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                                
|        | 10 | .24*     |             | Amended and Restated Family Assistance Services Agreement
    between Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                                     
|        | 10 | .25*     |             | Amended and Restated Manufacturer Benefits Agreement between
    Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                                          
|        | 10 | .26*     |             | Form of Amended and Restated Preferential Hiring Agreement
    between Pinnacle Airlines, Inc. and Northwest Airlines, Inc.                                                                                                    
|        | 10 | .27(a)   |             | Purchase Agreement, Senior Convertible Notes due 2025, dated as
    of February 3, 2005, by and among, Pinnacle Airlines Corp.,
    Merrill Lynch, Pierce, Fenner & Smith Incorporated and
    Raymond James & Associates, Inc.
|        | 21 | .1*      |             | List of Subsidiaries                                                                                                                                                                                                           
|        | 23 | .1       |             | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                       
|        | 31 | .1       |             | Rule 13a-14(a) Certification of Chief Executive Officer                                                                                                                                                                        
|        | 31 | .2       |             | Rule 13a-14(a) Certification of Chief Financial Officer                                                                                                                                                                        
|        | 32 |          |             | Section 1350 Certifications of Chief Executive Officer and
    Chief Financial Officer                                                                                                                                         






| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| | * | Incorporated by reference to the Companys Registration
    Statement Form S-1 (Registration No. 333-83359), as
    amended



| |   |                                                        
| | - | -------------------------------------------------------
| |  | Management contract or compensatory plan or arrangement



|    |  |                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------
|(a) |  | Incorporated by reference to the Companys Current Report
    on Form 8-K, filed on February 8, 2004.  
|   
|(b) |  | Incorporated by reference to the Companys Current Report
    on Form 8-K/A filed on December 16, 2004.

70



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












| |                      
| | ---------------------
| | /s/ Ernst & Young LLP





S-1



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##### Table of Contents





|                                         |                                        |              |   |            |  |            |   |            |  |                |   |   |  |  |   |        |      |  |   |       | 
|---------------------------------------- | -------------------------------------- | ------------ | - | ---------- |  | ---------- | - | ---------- |  | -------------- | - | - |  |  | - | ------ | ---- |  | - | ----- | 
|                                         |                                        |              |   | Additions  |  |            |   |           
|                                         |                                        |              |   |            |  |            |   |           
|                                         |                                        | Balance at   |   | Charged to |  | Charged to |   |            |  |               
|                                         |                                        | Beginning of |   | Costs and  |  | Other      |   |            |  | Balance at End
|Description                              |                                        | Period       |   | Expenses   |  | Accounts   |   | Deductions |  | of Period     
|                                         |                                        |              |   |            |  |            |   |            |  |               
|Year Ended December 31, 2004             |                                        |              |   |            |  |            |   |            |  |                |   |   |  |  |   |        |      |  |   |      
|Allowances deducted from asset accounts: |                                        |              |   |            |  |            |   |            |  |                |   |   |  |  |   |        |      |  |   |      
|                                         | Allowance for doubtful accounts        |              | $ | 146        |  |            | $ | 422        |  |                | $ |  |  |  | $ | (534   | )    |  | $ | 34    | 
|                                         | Allowance for obsolete inventory parts |              |   | 2,606      |  |            |   | 177        |  |                |   |  |  |  |   | (2,431 | )(1) |  |   | 352   | 
|Year Ended December 31, 2003             |                                        |              |   |            |  |            |   |            |  |                |   |   |  |  |   |        |      |  |   |      
|Allowances deducted from asset accounts: |                                        |              |   |            |  |            |   |            |  |                |   |   |  |  |   |        |      |  |   |      
|                                         | Allowance for doubtful accounts        |              |   | 536        |  |            |   |           |  |                |   |  |  |  |   | (390   | )    |  |   | 146   | 
|                                         | Allowance for obsolete inventory parts |              |   | 2,603      |  |            |   | 106        |  |                |   |  |  |  |   | (103   | )(1) |  |   | 2,606 | 
|Year Ended December 31, 2002             |                                        |              |   |            |  |            |   |            |  |                |   |   |  |  |   |        |      |  |   |      
|Allowances deducted from asset accounts: |                                        |              |   |            |  |            |   |            |  |                |   |   |  |  |   |        |      |  |   |      
|                                         | Allowance for doubtful accounts        |              |   | 310        |  |            |   | 226        |  |                |   |  |  |  |   |       |      |  |   | 536   | 
|                                         | Allowance for obsolete inventory parts |              |   | 1,980      |  |            |   | 686        |  |                |   |   |  |  |   | (63    | )(1) |  |   | 2,603 | 






|    |                            
|--- | ---------------------------
|(1) | Dispositions and write-offs

S-2