=============================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q



[X] QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE SECURITIES 
    EXCHANGE ACT OF 1934 
For the Quarterly period ended June 30, 1997 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
EXCHANGE ACT OF   1934 
For the transition period from ______________________ to______________________.


Commission File Number   0-27238



                         Western Pacific Airlines, Inc.
             (Exact Name of Registrant as Specified in Its Charter)
              Delaware                                      86-0758778
    (State or other jurisdiction                         (I.R.S. employer
 of incorporation or organization)                    identification number)

   2864 South Circle Drive, Suite 1100
       Colorado Springs, Colorado                            80906
(Address of principal executive offices)                  (Zip code)

       Registrant's telephone number, including area code: (719) 579-7737



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

    As of August 1, 1997 there  were  13,550,665  shares of Common  Stock of the
registrant issued and outstanding.

================================================================================


                                       1
<PAGE>

                         WESTERN PACIFIC AIRLINES, INC.

                                      INDEX

                          PART I. FINANCIAL INFORMATION

                                                                     Page Number

Item 1. Financial Information

       Consolidated Balance Sheets
                      June 30, 1997 and December 31, 1996                  3

       Consolidated Statements of Operations
               Three Months and Six Months ended June 30, 1997 and 1996    4

       Consolidated Statements of Cash Flows
               Six Months ended June 30, 1997 and 1996                     5

      Notes to Consolidated Financial Statements                           6

Item 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                    7


                           PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                 18

         Signatures                                                       19


                                       2
<PAGE>
<TABLE>

                         WESTERN PACIFIC AIRLINES, INC.
                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1997 AND DECEMBER 31, 1996

<CAPTION>
                                                                                                  JUNE 30, 1997       DEC. 31, 1996
                                                                                                  -------------       -------------

(Unaudited)
ASSETS

<S>                                                                                              <C>                 <C>
CURRENT ASSETS :
Cash and cash equivalents                                                                         $   6,320,049       $  12,076,034
Restricted cash and cash equivalents                                                                  7,888,144           8,314,887
Accounts receivable, net of allowance for uncollectible accounts
of $625,000 and $347,000 at June 30, 1997 and December 31, 1996, respectively                         3,021,897           3,217,450
Prepaid expenses and other                                                                            9,018,368           6,104,414
Prepaid maintenance                                                                                   8,757,326           6,819,841
Aircraft maintenance and engine reserves                                                             10,173,085           5,204,698
                                                                                                  -------------       -------------
Total Current Assets                                                                                 45,178,869          41,737,324

PROPERTY AND EQUIPMENT, NET                                                                          42,000,985          41,702,859

PREPAID MAINTENANCE, net of current portion                                                           9,396,965           7,983,560

MAINTENANCE RESERVES, net of current                                                                  7,347,113           7,495,345

AIRCRAFT AND ENGINE                                                                                  23,219,022          21,308,588

RESTRICTED CASH AND CASH EQUIVALENTS                                                                  1,507,495           2,638,158

OTHER                                                                                                   184,033             180,855
                                                                                                  -------------       -------------

                                                                                                  $ 128,834,482       $ 123,046,689
                                                                                                  =============       =============



LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES :
Accounts payable                                                                                  $  14,241,613          11,637,006
Accrued expenses                                                                                     22,038,652          21,947,117
Air traffic liability                                                                                27,218,283          15,617,460
Short term debt                                                                                       8,752,527          10,455,985
Current portion of long-term debt                                                                     1,111,589           1,007,757
Other                                                                                                   220,037              82,590
                                                                                                  -------------       -------------
Total Current Liabilities                                                                            73,582,701          60,747,915

LONG-TERM DEBT, net of current portion                                                               14,902,286          15,214,819

OTHER LIABILITIES                                                                                     1,371,543           1,396,735

MINORITY INTEREST                                                                                           -             2,239,033

COMMITMENTS AND CONTINGENCIES

PREFERRED STOCK (See note 2)                                                                         23,399,520                 - 


STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, no shares outstanding at June 30, 1997 and
December 31, 1996                                                                                           -                   - 
Common stock, $.001 par value, 13,527,977 and 13,381,894 issued and outstanding
at June 30, 1997 and December 31, 1996, respectively                                                     13,615              13,387
Common stock to be issued                                                                                   -               800,411
Deferred compensation                                                                                  (816,667)         (1,016,667)
Additional paid-in capital                                                                           82,361,941          80,265,823
Treasury stock, at cost                                                                                     -               (84,902)
Warrants                                                                                             10,273,896                 - 
Accumulated deficit                                                                                 (76,254,353)        (36,529,865)
                                                                                                  -------------       -------------
Total stockholders' equity                                                                           15,578,432          43,448,187
                                                                                                  -------------       -------------

                                                                                                  $ 128,834,482       $ 123,046,689
                                                                                                  =============       =============

See accompanying notes.

</TABLE>

                                       3
<PAGE>
<TABLE>

                         WESTERN PACIFIC AIRLINES, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS



                                                                       THREE MONTHS ENDED                  SIX MONTHS ENDED
<CAPTION> 
                                                               JUNE 30, 1997     JUNE 30, 1996     JUNE 30, 1997      JUNE 30, 1996
                                                               -------------     -------------     -------------      -------------
                                                                        (Unaudited)                             (Unaudited)
<S>                                                          <C>                <C>               <C>                <C>

OPERATING REVENUES :
Passenger                                                     $  42,450,646      $  38,265,095     $  76,773,195      $  71,052,167

Other                                                             1,487,076          1,048,547         2,981,609          1,967,078
                                                              -------------      -------------     -------------      -------------


Total Operating Revenues                                         43,937,722         39,313,642        79,754,804         73,019,245
                                                              -------------      -------------     -------------      -------------




OPERATING EXPENSES:
Salaries, wages and benefits                                     10,012,733          7,260,083        19,855,065         14,201,260
Aircraft lease                                                   10,767,127          9,114,763        20,647,464         16,871,833
Aircraft fuel and oil                                             8,259,102          6,804,195        17,424,294         12,676,821
Other rentals, landing and ground handling fees                   5,516,550          4,117,919        10,722,206          8,356,576
Advertising                                                       3,050,703          2,291,179         6,277,692          4,438,699
Insurance                                                         1,455,913          1,240,203         2,826,901          3,018,892
Maintenance materials and repairs                                 7,178,649          2,166,612        13,047,290          4,041,225
Agency commissions                                                2,642,916          1,354,798         4,076,318          2,419,615
Depreciation and amortization                                     1,447,208          1,076,759         2,905,652          1,851,652
Other operating                                                  12,137,340          3,869,824        18,751,351          8,299,682
                                                              -------------      -------------     -------------      -------------
                                                                 62,468,241         39,296,335       116,534,233         76,176,255
Total Operating Expenses                                      -------------      -------------     -------------      ------------- 

OPERATING INCOME (LOSS)                                         (18,530,519)            17,307       (36,779,429)        (3,157,010)
                                                              -------------      -------------     -------------      -------------

INTEREST INCOME., NET OF EXPENSE                                   (705,076)           503,626        (1,059,109)         1,234,729
                                                              -------------      -------------     -------------      -------------

NET INCOME (LOSS )BEFORE MINORITY INTEREST                      (19,235,595)           520,933       (37,838,538)        (1,922,281)

MINORITY INTEREST                                                 1,566,696                  -         2,355,295                  - 
                                                              -------------      -------------     -------------      -------------
NET INCOME (LOSS)                                             $ (17,668,899)     $     520,933     $ (35,483,243)     $  (1,922,281)
                                                              =============      =============     =============      =============


NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK                $ (20,924,463)     $     520,933     $ (38,960,697)     $  (1,922,281)
                                                              =============      =============     =============      =============

INCOME (LOSS ) PER COMMON SHARE AND COMMON                    $       (1.56)     $        0.04     $       (2.90)     $       (0.15)
SHARE EQUIVALENT                                              =============      =============     =============      =============




WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND COMMON SHARE EQUIVALENTS
OUTSTANDING                                                      13,437,629         13,248,129        13,437,629         13,248,129
                                                              =============      =============     =============      =============


                             See accompanying notes.

</TABLE>

                                       4
<PAGE>
<TABLE>

                                                 WESTERN PACIFIC AIRLINES, INC.
                                              CONSOLIDATED STATEMENT OF CASH FLOWS
                                        FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996


<CAPTION>

                                                                                     1997                          1996
                                                                             ----------------------        ----------------------
                                                                                  (Unaudited)                   (Unaudited)
<S>                                                                          <C>                           <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net Loss                                                                     $       (35,483,243)          $        (1,922,281)

  Adjustments to reconcile net loss to net cash used for operations -
     Depreciation and amortization                                                      2,905,652                     1,851,652   
     Gain on sales leaseback                                                               18,471                       (36,942) 
     Amortization of deferred management fee                                              200,000                       200,000
     Minority interest in loss of subsidiary                                          (2,239,033)                           -      
     Decrease (increase) in accounts receivables                                          195,553                   (1,351,047)
     Increase in prepaid expenses and deposits                                        (2,913,954)                   (5,829,245)
     Increase in prepaid maintenance                                                  (4,966,033)                           -  
     Increase in aircraft and engine reserves                                         (3,205,012)                   (3,933,673)
     Decrease (increase) in restricted cash and cash equivalents                        1,557,406                   (3,711,339) 
     Increase in aircraft deposits                                                    (1,910,434)                   (3,033,605)
     Increase in other assets                                                             (3,178)                     (144,031)
     Increase in accounts payable                                                       2,604,607                     1,335,937
     Increase (decrease) in accrued expenses                                               91,535                   (2,018,579) 
     Increase in air traffic liability                                                 11,600,823                     6,940,264  
     Increase (decrease) in other liabilities                                             112,255                       (1,849) 
                                                                             ----------------------        ----------------------
  
        Net cash used in operating activities                                         (31,434,585)                  (11,654,738)
                                                                             ----------------------        ----------------------
  
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                                 (3,978,440)                  (25,639,419)    
                                                                             ----------------------        ---------------------- 
                                                                                                          
        Net cash flows used in investing activities                                    (3,978,440)                  (25,639,419)
                                                                                                          

CASH FLOWS FROM FINANCING ACTIVITIES:
     Issuance of preferred stock, net of conversion of short-term debt                 18,399,520                           -     
     Issuance of warrants                                                               6,032,651                           -     
     Issuance of short term debt, net of principal payments                             3,296,542                           -    
     Increase in long term debt, net of principal paymen                                (208,701)                    16,441,856   
     Issuance costs related to initial public offering                                        -                        (287,390) 
     Issuance of Common Stock                                                           2,181,248                       806,672  
                                                                             ----------------------        ----------------------  
        Net cash flows from financing activities
                                                                                       29,701,260                    16,961,138
                                                                             ----------------------        ----------------------

DECREASE IN CASH AND CASH EQUIVALENTS                                                  (5,711,765)                  (20,333,019)  
                                                                                                                                  
                                                                                                                                  
CASH AND CASH EQUIVALENTS, beginning of period                                          12,076,034                   49,966,697  
                                                                              ----------------------       ----------------------   
CASH AND CASH EQUIVALENTS, end of period (1)                                                                                
                                                                              $          6,364,269        $          29,633,678
                                                                             ======================        ====================== 

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for income taxes                                                                  -                             80
                                                                             ======================        ======================
                                                                            


                                                    See accompanying notes.
</TABLE>

                                       5
<PAGE>

                         WESTERN PACIFIC AIRLINES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Preparation of Financial Statements

The accompanying  financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring  adjustments)  which are, in the opinion of
management,  necessary for a fair  presentation  of the  financial  position and
operating  results for the interim  periods.  The  organization  and business of
Western Pacific Airlines, Inc. ("Western Pacific"), accounting policies followed
by Western Pacific,  and other information are contained in the notes to Western
Pacific's  audited  financial  statements  filed  as part of  Western  Pacific's
December 31, 1996 Annual Report on Form 10-K.  This  quarterly  report should be
read in conjunction  with such annual report.  The results of operations for the
six months ended June 30, 1997 may not  necessarily be indicative of the results
for the entire fiscal year ending December 31, 1997.

2.    Preferred Stock and Warrants

Western  Pacific  has  authorized  the  issuance  of 200,000  shares of Series B
Convertible  Preferred  Stock,  with a par value of $100,  of which all  200,000
shares are issued and  outstanding  at June 30, 1997.  Western  Pacific has also
authorized the issuance of 10,000 shares of Series C Convertible Preferred Stock
with a stated value of $1,000 per share,  of which all 10,000  shares are issued
and outstanding at June 30, 1997.

On June 5,  1997,Western  Pacific  completed a private placement with a group of
institutional  investors (the "Private  Placement") whereby Western Pacific sold
(i) 10,000 shares of its Series C Convertible Preferred Stock, par value $.0.001
per share (the "Series C Preferred"),  (ii) warrants to purchase an aggregate of
213,333 shares of Western  Pacific's Common Stock at an exercise price of $11.25
per share (the  "A-Warrants"),  and (iii)  warrants to purchase an  aggregate of
111,110  shares  of  Western  Pacific's  Common  Stock at an  exercise  price of
$6.80625 per share (the  "B-Warrants,"  and together with the Series C Preferred
and the A-Warrants, the "Securities"), for an aggregate price of $10 million. In
connection with the Private Placement,  the Company issued an additional 256,198
B-Warrants and paid cash in the amount of $350,000 to GEM Investment Management,
Ltd. as a placement fee.

The Series C Preferred  has a stated  value of $1,000 per share,  with a premium
amount  accruing on such stated value at a rate of 8.0% per annum (the  "Premium
Accrual"). The Series C Preferred is nonvoting and ranks pari passu with Western
Pacific's  Series B Preferred  Stock (the  "Series B  Preferred").  The Series C
Preferred is subject to voluntary conversion at the option of the holders during
its three-year term, and will automatically  convert into Western Pacific Common
Stock on June 5,  2000.  The  conversion  price will be the lower of (i) a fixed
price (the  "Fixed  Price") of $6.1875  (110% of the  closing  bid price of West
Pac's Common Stock on June 4, 1997), or (ii) an amount which initially equaled a
10.0%  discount  (declining  over ten  months to 20.0%)  of the  average  of the
closing  bid  prices of  Western  Pacific  Common  Stock for the 20  consecutive
trading days preceding a notice of conversion.

The conversion price of the Series C Preferred is subject to possible upward and
downward performance adjustments. If, at the time of conversion, the closing bid
price of Western  Pacific Common Stock has increased by more than 45.0% over the
original Fixed Price (the "Upward Adjustment Threshold"),  the Fixed Price shall
automatically  increase  so that the  holders  of the Series C  Preferred  being
converted  gives up 60.0% of the  increase  in value of Western  Pacific  Common
Stock over the Upward Adjustment  Threshold.  Following September 3, 1997, if at
any date the closing bid price of West Pac Common Stock falls below 50.0% of the
Fixed  Price for a period of 20  consecutive  trading  days,  the  holders  of a
majority in interest of the Series C Preferred may request, within three days of
such date,  that Western Pacific reset the Fixed Price of the Series C Preferred
to equal such 20 day  average.  If West Pac  declines  the  request to reset the
Fixed  Price,  then the annual  Premium  Accrual on the Series C Preferred  will
increase from 8.0% to 11.0%, to be applied on a retroactive basis.

The Series C Preferred is subject to optional  redemptions  by Western  Pacific,
and, upon the occurrence of certain events,  must be redeemed by Western Pacific
at the amounts set forth in the Certificate of Designations.  In addition,  upon
certain  redemptions,  Western  Pacific is obligated to deliver  warrants to the
holders of the shares being redeemed providing for the issuance upon exercise of
a number of shares of Western  Pacific Common Stock which  otherwise  would have


                                       6
<PAGE>

been  issued  upon  conversion  of the Series C Preferred  being  redeemed.  The
warrants shall be substantially  in the form of the A-Warrants  described below,
shall expire on June 5, 2000 and shall be  exercisable  for a price equal to the
Fixed Price at the time of issuance of the warrants (as adjusted,  if necessary,
pursuant to the performance adjustment provisions described above). In addition,
at the option of two-thirds  of the holders of Series C Preferred,  the Series C
Preferred  must be  redeemed  by  Western  Pacific  for an  amount  equal to its
Liquidation  Preference  (without  the issuance of any  additional  warrants) if
Robert Peiser ceases to be employed as Western Pacific's Chief Executive Officer
at any time prior to May 31, 1998.

The  parties  mutually  agreed  that if Western  Pacific  redeems  one series of
preferred stock due to certain mandatory or optional redemption provisions and a
similar  provision  does not apply to the other series of preferred  stock,  the
holders  of  the  other  series  of   preferred   stock  will,   under   certain
circumstances, be entitled to participate in such redemption.

The A-Warrants are convertible  into shares of Western Pacific Common Stock at a
price of $11.25 per share (subject to certain  adjustments),  and expire on June
5, 2002. The B-Warrants are  convertible  into shares of Western  Pacific Common
Stock at a price of $6.8025  per share  (subject  to certain  adjustments),  and
expire on June 5, 2000.  The exercise  price of the  B-Warrants is subject to an
upward  performance  adjustment  providing  that if at the time of exercise  the
closing bid price of Western  Pacific  Common  Stock has  increased by more than
45.0% over $6.8025 (the "Warrant  Threshold  Level"),  the exercise  price shall
automatically increase so that the holder of the B-Warrant being exercised gives
up 60.0% of the  increase  in value of  Western  Pacific  Common  Stock over the
Warrant Threshold Level.

The $10 million in gross proceeds received by Western Pacific has been allocated
between the Series C and the  warrants  based on the  respective  fair values of
each instrument,  or approximately $7.4 million for the Series C Preferred Stock
and approximately $1.6 million for the warrants.  In addition,  $1.0 million was
allocated  to paid in capital as a result of a minimum  discount of 10% from the
market price of the  Company's  Common Stock  available to the  purchasers  upon
conversion  of the Series C Preferred  into Common Stock.  The initial  carrying
amount of the Series C was  increased by the  accretion  of $2.6  million  ($1.6
million  related to the warrants and $1.0 million  related to the fixed discount
upon conversion) so that the carrying amount was equal to the redemption  amount
($10.0  million)  at the first  possible  conversion  date which was the date of
issuance of the Series C Preferred.

                                       7
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

CERTAIN   STATEMENTS   CONTAINED  IN  THIS  DOCUMENT  CONTAIN  "FORWARD  LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE  SECURITIES  LITIGATION REFORM ACT
OF 1995. SUCH FORWARD LOOKING  STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS
AND  UNCERTAINTIES.  WESTERN  PACIFIC'S  ACTUAL  ACTIONS OR  RESULTS  MAY DIFFER
MATERIALLY  FROM THOSE  DISCUSSED IN THE FORWARD  LOOKING  STATEMENTS.  SPECIFIC
FACTORS  THAT MIGHT  CAUSE SUCH A  DIFFERENCE  INCLUDE,  BUT ARE NOT LIMITED TO,
AVAILABILITY  OF  ADEQUATE  WORKING  CAPITAL,  COMPETITIVE  REACTION  TO WESTERN
PACIFIC'S  EXPANSION  PLANS,  RISE  IN FUEL  COSTS,  REGULATORY  ACTIONS  BY THE
DEPARTMENT OF  TRANSPORTATION  OR THE FEDERAL  AVIATION  ADMINISTRATION,  FUTURE
INCIDENTS  SIMILAR TO THE GULF WAR, FUTURE AIRLINE  ACCIDENTS  (PARTICULARLY  IF
INVOLVING A LOW COST CARRIER),  ABILITY TO EFFECTIVELY INTEGRATE WESTERN PACIFIC
AND FRONTIER  INTO A COMBINED  CARRIER AND GENERAL  ECONOMIC  CONDITIONS  IN THE
UNITED STATES. SEE ADDITIONAL DISCUSSION UNDER "RISK FACTORS."

OVERVIEW

    Western  Pacific  commenced  operations  on April 12, 1994 as a  development
stage  enterprise  organized  to  operate  a  low-fare,  medium-haul,  scheduled
passenger  airline  from  its hub at the  Colorado  Springs  Airport.  From  its
inception  until it  commenced  flight  operations  on April 28,  1995,  Western
Pacific's  activities  were  limited to start-up  activities  including  raising
capital,  recruiting key operating personnel,  developing computerized passenger
reservation  and  information  systems,   negotiating  aircraft  facilities  and
aircraft leases,  contracting ground handling and aircraft maintenance services,
conducting pilot and flight attendant training and obtaining FAA certification.

    Western  Pacific  began flight  operations on April 28, 1995 with two Boeing
737-300 aircraft and provided six daily round-trips between Colorado Springs and
five cities.  Thereafter,  Western Pacific  continued to add aircraft and cities
and on June 29, 1997,  moved a  significant  portion of its  operation to Denver
International  Airport ("DIA").  Western Pacific had 19 aircraft providing up to
48  round-trips  between  Denver or Colorado  Springs  and 18 cities  across the
United States at August 1, 1997.

    On June 30, 1997,  Western Pacific  entered into a definitive  agreement and
plan of merger with  Frontier  Airlines,  Inc.  ("Frontier"),  pursuant to which
Frontier  will merge with and into the Company,  with Western  Pacific being the
surviving  corporation  in the  merger.  It is  intended  that the  merger  will
constitute a tax free  reorganization for federal income tax purposes.  Also, on
June 30, 1997, Western Pacific and Frontier entered into a Codeshare  Agreement,
which became  effective on August 1, 1997.  Pursuant to the terms and conditions
of the merger agreement, at the effective time of the merger, subject to certain
adjustments and certain  circumstances,  Frontier  shareholders will receive .75
shares  of  common  stock  of  Western  Pacific  for  each  share  of  Frontier.
Consummation of the merger is subject to the satisfaction of certain conditions,
including,  among others,  approval by the  shareholders of both Western Pacific
and  Frontier  of the merger and  certain  regulatory  approvals.  The merger is
anticipated to close in late October or November 1997.

    The following chart  indicates  Western  Pacific's  changes in service since
December 31, 1996.

WESTERN PACIFIC AIRLINES, INC.
                               Total      Number
                               Number    of Round
 As of Month End            of Aircraft   Trips     Service Changes
 ---------------            -----------   -----     ---------------
                              
February 1997.............       15         37      Added additional service to
                                                    all cities except Houston, 
                                                    Miami, and Seattle, and
                                                    withdrew service from
                                                    Ontario(CA), San Antonio,   
                                                    Nashville, and Las Vegas
April 1997................       15         33      Withdrew service from Miami
May 1997..................       16         33
June 1997.................       18         40      Moved the bulk of flight 
                                                    operations from Colorado
                                                    Springs to Denver 
                                                    International Airport
July 1997.................       19         40
August 1997...............       19         48      Began codesharing service 
                                                    with Frontier

                                       8
<PAGE>

    Western Pacific anticipates delivery of one additional used 737-300 aircraft
in November 1997 and one new 737-300  aircraft in December  1997. On February 6,
1997 Western Pacific  initiated a major schedule  change whereby  available seat
miles  ("ASMs")  were  increased  by 21% and  average  hours of  daily  aircraft
utilization were increased by 19% by scheduling  overnight flights, and reducing
connection times. On June 29, 1997, the Company initiated another major schedule
change,  increasing  ASM's  by  32.7%  and  moving  the  bulk  of the  Company's
operations to Denver International Airport.



During 1996, Western Pacific assisted in the start-up of an affiliated  regional
carrier,  Mountain Air Express ("MAX") to carry traffic into and out of Colorado
ski markets and other smaller travel  markets that cannot  support  frequent jet
service.  MAX,  which  commenced  flight  operations  on December 15, 1996, is a
separate  operating  company with its own operating  certificate and management.
Western  Pacific's  present  ownership in MAX is approximately 57% of the voting
stock.  MAX also moved the bulk of its  operations  to DIA,  effective  June 29,
1997,  when MAX began  offering  up to 27 flights per day from DIA and one daily
flight from Colorado Springs.

The following  chart  indicates  MAX's routes  served since it commenced  flight
operations on December 15, 1996.


MOUNTAIN AIR EXPRESS, INC.

                       Total      Number
                       Number    of Round
 As of Month End    of Aircraft    Trips    Service Changes
 ---------------    -----------    -----    ---------------
                      
December  1996           4       up to 23   Initiated service to Steamboat
                                            Springs/Hayden, Aspen/Snowmass, 
                                            Crested Butte/Gunnison, and       
                                            Telluride/Montrose, Colorado
January 1997             4       up to 23   Added service to Durango, Colorado
April 1997               4          19      Added service to Casper & Cheyenne, 
                                            Wyoming; Grand Junction and Fort
                                            Collins, Colorado; Oklahoma City and
                                            Tulsa, Oklahoma; Sante Fe, 
                                            New Mexico; and Kansas City,
                                            Missouri; withdrew service from 
                                            Steamboat Springs/Hayden, Telluride/
                                            Montrose, and Durango,Colorado.     
June 1997                4          28      Initiated service to Albuquerque;
                                            Discontinued service to Cheyenne and
                                            Casper, Wyoming; and Ft. Collins,
                                            Colorado and Sante Fe, New Mexico; 
                                            Added service to other existing
                                            markets.
August 1997              5          28      Initiated service to Salt Lake City,
                                            Utah.



In  November  1996,  Colorado  Springs Car Rental,  Inc.,  a Thrifty  Rent-A-Car
franchisee and a 100% owned subsidiary of Western Pacific,  commenced operations
from its base in Colorado Springs.

RESULTS OF OPERATIONS

Operating Revenues

WESTERN PACIFIC AIRLINES

    Airline  revenue is primarily a function of the number of  passengers  flown
and the fares charged by the airline.  Passenger  ticket sales are recognized as
revenue  when the  transportation  is  provided.  Western  Pacific's  fares  are
generally  non-refundable.  Prior to completing the total  conversion of Western
Pacific's reservations to a computerized reservation system ("CRS") on April 25,
1997,  changes in travel plans could be made only prior to  scheduled  departure
for a $50  change  fee,  plus any fare  increase.  After the  change to the CRS,
tickets not used remain a liability of the airline,  until used to pay for other
flights or until the ticket expires, generally after one year.

    During the fourth quarter of 1996,  Robert A. Peiser joined Western  Pacific
as  President  and  Chief   Executive   Officer,   Mark  J.  Coleman  as  Senior
Vice-President   of   Marketing   and   Planning,   and  George  E.  Leonard  as
Vice-President of Finance and Chief Financial Officer. Under this new management
team,  Western  Pacific began the first quarter of 1997 with a large increase in


                                       9
<PAGE>

capacity  and very low  levels of  advanced  bookings.  There  were  substantial
traffic  improvements during the last two weeks of March, but the full impact of
the new marketing  initiatives  implemented by the new management  team were not
felt until April. Western Pacific's load factor increased 8.2 percentage points,
when  comparing  the quarter  ended June 30, 1997 to the quarter  ended June 30,
1996, due to its entry into the CRS along with advertising  initiatives put into
place by the new management  team,  including "Peak Paks",  "Pack USA's",  and a
promotion  with King  Soopers,  a Colorado  grocery  store chain,  and increased
frequencies to increase connecting opportunities.

    The chart presented below compares Western  Pacific's  passenger load factor
to the incremental  growth in capacity as measured by available seat miles (ASM)
for the quarters of 1997 and 1996,  commencing  from the quarter  ended June 30,
1996. The airline industry is extremely seasonal,  with the highest load factors
typically  occurring in the summer months, and the lowest load factors occurring
during September through October and January,  February,  April and May. Western
Pacific's  load factor  increased 16.0  percentage  points for the quarter ended
June  30,  1997  from  the  quarter  ended  March  31,  1997,  primarily  due to
seasonality,  its entry into the CRS, and the advertising initiatives previously
noted.

                                        Passenger       Total        Increase/
                                        Load           Available    (Decrease)
Operating Period                        Factor         Seat Miles    In Capacity
----------------                        ------         ----------    ----------
                                                         (000s)
Quarter ended June 30,1996               56.5%           622,519        ---%
Quarter ended September 30, 1996         57.5            745,821        19.8
Quarter ended December 31, 1996          60.1            673,607        (9.7)
Quarter ended March 31, 1997             48.7            758,592        12.6
Quarter ended June 30, 1997              64.7            763,118          .6


 Passenger revenue per revenue passenger mile (RPM) or yield may increase in the
third quarter of 1997 due to a combination  of factors,  including  increases in
average fares and decreases in discounted  introductory fares as a percentage of
total fares.  However,  in periods when Western Pacific  introduces  promotional
fares to  stimulate  additional  travel in  existing  markets,  Western  Pacific
generally experiences a decrease in passenger revenue per RPM as is reflected in
the decline in the passenger  revenue per RPM during the second  quarter of 1997
when Western Pacific introduced "Peak Pacs", "Pack USAs", travel agents' "Love A
Fares", and the promotion with King Soopers. As noted previously, new management
joined  Western  Pacific in the fourth  quarter of 1996.  At December  31, 1996,
there were very low levels of advance  bookings  for the first two  quarters  of
1997. The management of Western Pacific determined,  therefore, that promotional
fares were needed to stimulate  the market.  Western  Pacific  believes that the
short-term  negative  impact on yields of  entering  new  markets and the use of
discounted  fares  should  decrease  as Western  Pacific  increases  its overall
revenue base,  customer  awareness and expands into the Denver  market.  For the
quarter  ended June 30, 1997,  Western  Pacific  produced a yield of  8.27(cent)
which is a 3.9% decrease from that  experienced  for the prior quarter.  Western
Pacific's yield during the quarter ended June 30, 1997 was 22.0% below the yield
experienced during the second quarter of 1996 for the reasons described above.



                                       10
<PAGE>


                                             Revenue      Average      Passenger
                                  Passenger  Passenger    Segment      Revenue
Operating Period                  Revenue    Miles        Fare         Per RPM
----------------                  -------    -----        ----         ------- 
                                   (000's)   (000's)                    (cents)
Quarter ended June 30, 1996         38,265   351,547     $ 91.89         10.60
Quarter ended September 30, 1996    44,375   428,509       90.98         10.36
Quarter ended December 31, 1996     33,909   404,689       74.37          8.38
Quarter ended March 31, 1997        32,045   369,557       77.54          8.61
Quarter ended June 30, 1997         40,594   493,465       76.39          8.27
 

    Western  Pacific's  operating  break-even  load factor during the twenty-six
months of its  operations  has ranged from a high of 104.8% in May 1995 to 56.4%
for the quarter ended June 30, 1996.  For the quarter  ended June 30, 1997,  the
operating  break-even load factor was 88.4%.  Western Pacific's cost per ASM for
the second quarter of 1997 was 7.55(cent)  including one time expenses primarily
related to the move to DIA.  Without these one time charges,  Western  Pacific's
cost per ASM for the  quarter  ended June 30,  1997 was  7.09(cent).  This cost,
without the one time charges,  represents an increase of .97(cent) or 14.7% from
the prior quarter  resulting  from the fees  associated  with Western  Pacific's
entry into the Sabre Computerized  Reservation Systems ("CRS"),  and the expense
associated  with  reaccomodations  of passengers  related to an unusually  heavy
spring snowstorm which hit Colorado Springs on April 24, 1997. It is anticipated
that the higher costs  associated  with the CRS systems will be more than offset
by increased  revenue,  particularly  when the full effect of Western  Pacific's
move to DIA is considered.  The cost per ASM for the quarter ended June 30, 1997
was a 12.4%  increase,  after one time charges,  compared to the second  quarter
ended  June 30,  1996  for the  reasons  noted  previously,  as well as  heavier
maintenance expense on Western Pacific's aircraft due to the shorter maintenance
cycles  caused by Western  Pacific's  increased  aircraft  utilization  and more
aircraft  having been through "C" check.  The  operating  break even load factor
increased by 14.6 percentage points from the prior quarter based on higher costs
as well as the reduction in yield quarter over quarter as explained above. There
can be no assurance  that any  incremental  passenger  revenue  generated in the
future  as  Western  Pacific  expands  its  fleet  will be  sufficient  to cover
incremental  costs or that,  ultimately,  as a result of these or other factors,
Western Pacific's operating break-even load factor will decrease.


                                                              Operating
                                              Operating       Break-Even
 Operating Period                            Cost Per ASM    Load Factor
 ----------------                            ------------    -----------
                                               (cents)

Quarter ended June 30, 1996.............          6.31          56.4%
Quarter ended September 30, 1996........          6.23          58.7
Quarter ended December 31, 1996.........          8.28          96.2
Quarter ended March 31, 1997............          6.58          73.8
Quarter ended June 30, 1997.............          7.55          88.4

MOUNTAIN AIR EXPRESS

     Mountain Air Express  commenced flight operations on December 15, 1996. The
determination of MAX's revenues is currently  governed by an Alliance  Agreement
between MAX and Western  Pacific and the number of passengers  flown.  Under the
Alliance Agreement,  all of MAX's marketing,  scheduling,  and pricing decisions
are made by Western  Pacific.  In return,  MAX  receives  an agreed  amount from
Western  Pacific,  ranging from $86.54 to $126.17 for the quarter ended June 30,
1997, for each passenger segment flown. The agreed amount may be renegotiated by
MAX in the event of certain  occurrences,  such as  decreases in load factors or
increases  in fuel prices.  MAX also  expects its revenue to be  seasonal,  with
higher load  factors in the winter and summer,  and reduced  load factors in the
spring and fall.


                                       11
<PAGE>
<TABLE>

                                                                 Total              Passenger        Operating
                                           Passenger           Available            Revenue          Break-Even
Operating Period                           Load Factor         Seat Miles           Per RPM          Load Factor
----------------                           -----------         ----------           -------          -----------
<S>                                        <C>                <C>                  <C>              <C>                     
                                                                 (000s)             (cents) 
Dec. 15 - Dec. 31, 1996................       44.4%              1,250               43.39             674.0%
Quarter ended March 31, 1997...........       28.3               12,215              65.84              50.4
Quarter ended June 30, 1997............       23.8               21,481              25.43              89.2
</TABLE>

The decrease in load factor for the quarter ended June 30, 1997 from the quarter
ended March 31, 1997 is due primarily to  seasonality  and additional new cities
which were added to the schedule and later  dropped as the markets did not prove
to be successful. The decrease in the passenger revenue per RPM or yield for the
quarter  ended  June 30,  1997  from the  prior  quarter  can be  attributed  to
adjustments  made to the agreed amounts by Western  Pacific in the first quarter
of 1997. The increase in the operating  break-even load factor percentage is due
to the decrease in yield.

Operating Expenses

WESTERN PACIFIC AIRLINES

    The following  table shows the  components  of operating  cost per available
seat mile (shown in cents):
<TABLE>


                                                       Three Months     Three Months      Six Months     Six Months
                                                            Ended           Ended            Ended          Ended
                                                       June 30, 1997    June 30,1996    June 30, 1997   June 30,1996
                                                       -------------    ------------    -------------   ------------
<S>                                                    <C>              <C>             <C>             <C>
                                                          (cents)          (cents)         (cents)         (cents)
 Salaries, wages and benefits                              1.13             1.16             1.13           1.20
 Aircraft lease expense                                    1.29             1.46             1.26           1.42
 Aircraft fuel and oil                                     1.03             1.09             1.09           1.07
 Other rentals, landing, and ground handling fees           .68              .66              .65            .70
 Advertising and public relations                           .16              .37              .29            .37
 Insurance expense                                          .16              .20              .15            .25
 Maintenance materials and repairs                          .79              .35              .77            .34
 Agency and cargo commissions                               .35              .22              .27            .20
 Depreciation and amortization                              .18              .17              .18            .16
 Other operating expenses                                  1.32              .62             1.05            .70
                                                           ----              ---             ----            ---
 Total                                                     7.09             6.31             6.84           6.41
                                                           ====             ====             ====           ====
</TABLE>

    All costs  shown above for the second  quarter of 1997 and six months  ended
June 30, 1997 have been adjusted for the $3.4 million in  non-recurring  charges
and start-up costs related to DIA.

    Salaries,  wages  and  benefits  decreased  by .03  cents per ASM or 3% when
comparing  the quarter  ended June 30, 1997 to the quarter  ended June 30, 1996.
This  decrease can be  attributed  to a 23% increase in ASMs,  with only a 16.8%
increase in full-time  equivalent (FTE) personnel.  Salary,  wages, and benefits
decreased by .07 cents or 6% when  comparing  the six months ended June 30, 1997
to the six months ended June 30, 1996 due to 28%  increase in ASMs,  with only a
21.0% increase in FTE personnel.

    Aircraft  lease expense  decreased .17 cents per ASM, or 12% for the quarter
ended June 30, 1997 from the quarter ended June 30, 1996. Aircraft lease expense
decreased  .16 cents or 11% for the six months  ended June 30, 1997 from the six
months ended June 30, 1996. At June 30, 1996,  the Company  leased two 727-200's
for the summer  travel  period  only.  The lease rates for these  aircraft  were
inclusive of crew,  insurance and fuel. At June 30, 1996, Western Pacific had 16
leased  aircraft  (including the two mentioned  above),  while at June 30, 1997,
Western Pacific had 17 leased  aircraft,  and one owned aircraft whose costs are
accounted for in depreciation expense.  However,  three of the eighteen aircraft
were added in the second  quarter of 1997 with two  delivered in late June 1997.
The increase in the number of ASMs for the quarter  ended June 30, 1997 from the
quarter ended June 30, 1996 is due primarily to the increased utilization of the
existing aircraft.

     Aircraft  fuel and oil  expense  decreased  by .06 cents per ASM or 6% when
comparing  the quarter  ended June 30, 1997 to the quarter  ended June 30, 1996.
This  decrease  reflects  the  effect of a 4.2 cent per  gallon or 6% fuel price


                                       12
<PAGE>

increase over the period.  Aircraft fuel and oil expense  increased by .02 cents
per ASM or 2% when  comparing  the six  months  ended  June 30,  1997 to the six
months ended June 30, 1996.  This  increase in expense is due to an average fuel
price 3.0 cents per gallon higher over the period.  Western  Pacific has entered
into a fuel hedging agreement with Mercury Aviation Services,  whereby the first
10,000  barrels of fuel used in each of the months of October 1997 to March 1998
will be at a fixed price of  62.64(cent)per  gallon  before taxes and into plane
fees, or 79.96(cent) after taxes and fees.
     Other rentals,  landing,  airport and ground handling fees increased by .02
cents  per ASM or 3% when  comparing  the  quarter  ended  June 30,  1997 to the
quarter  ended June 30, 1996.  This  increase  was because of  increased  flight
simulator time rental due to increased  hiring of pilots  required by the higher
utilization  schedule and planned  aircraft  deliveries,  and  increased  ground
handling rates at certain airports. Other rentals,  landing, airport, and ground
handling fees decreased by .05 cents per ASM or 7% when comparing the six months
ended June 30,  1997 to the six months  ended June 30,  1996 due to fixed  costs
such as  station  rents  which  do not  increase  proportionately  with  ASMs as
additional flights are added.

     Advertising  expense  decreased by .21 cents per ASM or 57% when  comparing
the  quarter  ended June 30,  1997 to the  quarter  ended June 30,  1996,  after
deduction  of  $1.8  million  in  launch  advertising  expense  related  to  the
commencement of Western Pacific's  operations at DIA. Without the elimination of
the DIA launch advertising, advertising expense increased .04 cents or 10%. This
increase is due to the high number of promotional fares advertised in the second
quarter of 1997 such as "Pack USA",  as well as the roll-out of the  advertising
for the Denver market. Advertising expense decreased by .08 cents per ASM or 22%
when  comparing  the six months ended June 30, 1997 to the six months ended June
30, 1996 due to promotions  offered in conjunction with the introduction of four
new cities to Western Pacific's route system in 1996.

     Insurance  expense decreased by .04 cents per ASM or 25% when comparing the
quarter  ended June 30, 1997 to the quarter  ended June 30, 1996,  and .10 cents
per ASM or 40% when  comparing  the six months  ended  June 30,  1997 to the six
months ended June 30, 1996. These decreases reflect a premium reduction obtained
by Western  Pacific due to fewer aircraft in service than  originally  projected
for the policy year.

    Maintenance  materials and repairs expense increased by .44 cents per ASM or
126% when  comparing  the quarter  ended June 30, 1997 to the quarter ended June
30, 1996 and .43 cents per ASM or 126% when  comparing the six months ended June
30, 1997 to the six months  ended June 30,  1996.  These  increases  reflect the
amortization of airframe "C" maintenance  checks and engine overhauls  performed
on  Western  Pacific's  fleet,  as well as a  shorter  maintenance  cycle due to
Western  Pacific's  increased  aircraft  utilization.  Western  Pacific uses the
deferral  method of accounting  for "C" check  maintenance  and engine  overhaul
costs.

    Agency  and  cargo  commissions  increased  .13  cents  per ASM or 59%  when
comparing the quarter ended June 30, 1997 to the quarter ended June 30, 1996 and
 .07 cents per ASM or 35% when  comparing  the six months  ended June 30, 1997 to
the six months ended June 30, 1996. As anticipated, agency and cargo commissions
increased as a percentage of total  expenses,  as Western  Pacific  entered into
agreements  with several of the  industry's CRS systems in March of 1997 so that
seats on Western  Pacific's  flights could be booked  directly by a travel agent
without  the need to  telephone  Western  Pacific's  reservation  office.  These
agreements have given Western  Pacific's  flights  increased  exposure to travel
agents, who now account for 60% of Western Pacific's flight booking activity.

    Depreciation  and  amortization  increased  by .01  cents per ASM or 6% when
comparing the quarter ended June 30, 1997 to the quarter ended June 30, 1996 and
 .02 cents per ASM or 13% when  comparing  the six months  ended June 30, 1997 to
the six months ended June 30, 1996.  The increase can be  attributed  to Western
Pacific's maintenance hangar and new concourse at Colorado Springs Airport.

    Other  operating  expenses  increased  by .70  cents  per ASM or  113%  when
comparing the quarter ended June 30, 1997 to the quarter ended June 30, 1996 and
 .35 cents per ASM or 50% when  comparing  the six months  ended June 30, 1997 to
the six months ended June 30, 1996. Excluded from this calculation were one time
charges related to the commencement of operations at DIA, new uniforms,  and the
write-off of deposits  made on trams  originally  intended to be used at the new
concourse at Colorado  Springs of $803,000.  Other  operating  expenses  include
property  taxes,  telecommunication  and  utilities  charges,  professional  and
consulting   services,   supplies  and  minor  equipment   (excluding   aircraft
maintenance supplies), credit card processing fees, bad debt expense, travel and
incidental expense, and passenger  reaccommodation and baggage delivery charges.


                                       13
<PAGE>

While some of these types of costs,  such as credit card processing fees and bad
debt expense will vary with the increase in ASM's,  others such as supplies will
not. Significant increases or new charges in this category for the quarter ended
June 30, 1997 from the quarter  ended June 30, 1996 include $1.1 million for CRS
fees;  $1.2 million for reservation  overflow  capacity,  temporary  reservation
agents,  and  reservation  consultants;  $1.1 million in fees for the outsourced
Information Technology functions; $.7 million in reaccommodation charges related
to Western  Pacific's  schedule  changes and  operational  performance;  and $.2
million in payments to an outside revenue accounting (ticket) processor. The CRS
fees and the expenses of processing  revenue are additional  distribution  costs
related to Western Pacific's move into the SABRE multi-host  reservation system,
which are  offset by the  additional  revenue  generated  as a result of a wider
distribution  system. The fees paid for temporary  reservation agents,  overflow
capacity and consultants  are expected to decrease as Western Pacific  increases
its reservation capacity. The fees paid to reaccommodate passengers may increase
in the third  quarter as Western  Pacific  adjusts to its August 1 code  sharing
schedule, but are expected to decrease for the fourth quarter as Western Pacific
adjusts to its new flight schedule.

MOUNTAIN AIR EXPRESS

    The following  table shows the  components  of operating  cost per available
seat mile (shown in cents):


                                                 Three months      Three months
                                                    ended             ended
                                                 June 30, 1997    Mar. 31, 1997
                                                -------------     -------------
                                                      (cents)        (cents)
Salaries, wages and benefits                            6.62           10.03
Aircraft lease expense                                  4.21            4.87
Aircraft fuel and oil                                   1.97            3.45
Other rentals, landing, and ground handling             1.55            4.09
fees
Advertising and public relations                         .00             .01
Insurance expense                                       1.19            1.82
Maintenance materials and repairs                       2.93            1.42
Depreciation and amortization                            .27             .30
Other operating expenses                                3.94            7.19
Total                                                  22.68           33.18

The  decrease  in the cost per ASM for the  quarter  ended June 30,  1997 can be
attributed to the 76% increase in ASM's from the prior quarter.

BALANCE SHEET FLUCTUATION ANALYSIS (CONSOLIDATED)

     Western  Pacific's  prepaid  expenses  and  other  current  assets  account
increased  by $2.9  million or 48% during  the six months  ended June 30,  1997.
Approximately   $1.0  million  of  this   increase  is  prepaid   travel  agency
commissions,  $.7  million in  deferred  loan fees,  $.4  million in  additional
prepaid  insurance,  $.4 million is prepaid CRS fees, and $.2 million related to
costs relating to the merger with Frontier.

     Western  Pacific's  current  and  long-term  prepaid  maintenance  accounts
increased  by $3.4  million or 23% during  the six months  ended June 30,  1997,
while maintenance reserves increased by $4.8 million or 38% during the same time
period.   Western   Pacific  follows  the  deferral  method  of  accounting  for
maintenance  events,  whereby costs for "C" checks on Western Pacific's fleet of
aircraft are  capitalized  when the event occurs and  amortized  over the period
until the next scheduled maintenance event.

     Western  Pacific's air traffic liability account increased by $11.6 million
or 74%  during  the six  months  ended June 30,  1997.  This  increase  resulted
primarily  from an increase in the number of bookings  due to  seasonality,  the
move into DIA at June 29,  1997,  and  various  special  promotions  offered  by
Western Pacific.

 LIQUIDITY AND CAPITAL RESOURCES

WESTERN PACIFIC

    From  Western  Pacific's  inception on April 12, 1994 through June 30, 1997,
its preoperating and development  costs, as well as its operating costs since it
commenced flight  operations,  have been funded primarily with the proceeds from


                                       14
<PAGE>

private sales of its equity  securities,  the proceeds  from its initial  public
offering, and the issuance of debt, as well as from operating revenues.  Western
Pacific  has  received  net  proceeds  from  the sale of its  equity  securities
aggregating  approximately  $76.8 million.  During the six months ended June 30,
1997, Western Pacific's operating  activities resulted in a cash flow deficit of
$31.6  million.  These cash flow  deficits have been funded  primarily  with the
proceeds from the issuance of Western  Pacific's equity  securities as discussed
in Notes to Consolidated Financial Statements. At June 30, 1997, Western Pacific
had cash and cash  equivalents of $14.2 million,  including  restricted cash and
cash equivalents of $7.9 million.  Western Pacific had a working capital deficit
at June 30, 1997 of $28.4 million.

    Cash flow used in investing  activities  totaled $4.0 million during the six
months  ended June 30, 1997 and $25.6  million for the six months ended June 30,
1996. Capital expenditures in the first six months of 1997 consisted of aircraft
improvements and miscellaneous equipment.  Capital expenditures in the first six
months of 1996  consisted  primarily  of the  purchase of a used Boeing  737-300
aircraft.

    Western  Pacific  expects to incur  approximately  $1.6  million for capital
expenditures during 1997 and 1998 for aircraft modifications, including Heads Up
Display  and Wind Shear  avoidance  systems,  aircraft  fleet  induction  costs,
reservation  and  information   system   improvements  and  facility   leasehold
improvements.  An additional  $.5 million in payments will be made to The Boeing
Company for interest payments on deferred  pre-delivery payments on new aircraft
that have not yet been  delivered.  In addition,  Western Pacific is required to
post a cash  deposit or other type of  financial  bond of up to $3.0  million to
secure  gates,  ramp,  and office space at DIA at the rate of $.25 million every
other month beginning in July 1997.

    The State of Colorado General Assembly  recently amended certain portions of
the state economic  development  law. The amendments  concern the  circumstances
under which  proceeds of the  aviation tax levied at airports in Colorado may be
used for economic development  purposes.  The amendments were designed to assist
airlines in expanding their intrastate and regional service.  In connection with
those  amendments,  the General Assembly also appropriated up to $5.5 million in
aviation fuel tax dollars for economic  development  purposes  during the fiscal
year  beginning  July 1, 1997.  Such  amounts are  available  to the to Colorado
Economic Development  Commission to promote economic development associated with
aviation in Colorado.  The Colorado Economic  Development  Commission  solicited
proposals from airports  across the state for the use of such funds for economic
development purposes.  The City and County of Denver,  Colorado,  applied to the
Colorado Economic  Development  Commission to use up to $5.5 million of aviation
fuel tax dollars, to the extent collected at DIA, for the purpose of providing a
loan guarantee fund for the benefit of Western Pacific.  No other city submitted
an application to the Colorado Economic Development Commission for participation
in the program. This application has been approved in its current form, and will
allocate up to $5.5 million in fuel tax proceeds (or such lesser amount as shall
be actually collected at DIA during the fiscal year beginning July 1, 1997) into
a fund to be used for the purpose of providing a loan  guarantee for the benefit
of  Western  Pacific.  Western  Pacific  has had  preliminary  discussions  with
potential  lenders,  but no definitive  commitment has been issued by any lender
for the benefit of Western  Pacific.  No assurance  exists that any loan will be
made to Western Pacific.

    At August 1, 1997, Western Pacific operated nineteen aircraft, with eighteen
under  operating  leases with original  terms of either five or ten years.  Rent
expense  under these leases is recognized  on a  straight-line  basis over their
respective  lease  terms.  The amount  charged to  aircraft  lease  expense  was
approximately  $20.6 million and $16.9 million for the six months ended June 30,
1997 and 1996, respectively. Future minimum rental payments under these eighteen
operating leases over their respective remaining terms, are approximately $399.6
million,  of which  $25.0  million  will be paid during the  remainder  of 1997.
During 1997,  Western Pacific expects to incur  approximately  $33.5 million for
aircraft  maintenance  reserve  deposits,  aircraft lease security  deposits and
aircraft  heavy   maintenance  (net  of  reserves  and  lessor   contributions).
Additionally,  Western  Pacific owns one  aircraft,  with minimum  principal and
interest payments of $2.6 million due during 1997.

      Cash flow provided by financing activities totaled $29.7 million and $17.0
million  during the six months  ended June 30, 1997 and 1996,  respectively.  On
June 5,  1997,Western  Pacific  completed  a private  placement  with a group of
institutional  investors (the "Private  Placement") whereby Western Pacific sold
(i) 10,000 shares of its Series C Convertible Preferred Stock, par value $.0.001
per share (the "Series C Preferred"),  (ii) warrants to purchase an aggregate of
213,333 shares of Western  Pacific's Common Stock at an exercise price of $11.25
per share (the  "A-Warrants"),  and (iii)  warrants to purchase an  aggregate of
111,110  shares  of  Western  Pacific's  Common  Stock at an  exercise  price of
$6.80625 per share (the  "B-Warrants,"  and together with the Series C Preferred


                                       15
<PAGE>

and the A-Warrants,  the  "Securities"),  for an aggregate purchase price of $10
million.  In addition,  in connection with the Private Placement Western Pacific
issued an additional  256,198 B-Warrants and paid cash in the amount of $350,000
to GEM Investment Management, Ltd. as a placement fee. See additional discussion
under notes to Consolidated Financial Statements.

         On April 25, 1997, Western Pacific entered into a revised Aviation Fuel
Management  Agreement (the "Fuel Management  Agreement") with Mercury Air Group,
Inc.  ("Mercury"),  whereby  Mercury has agreed to provide  certain  fuel supply
services to Western Pacific.  Western Pacific also executed a promissory note in
favor of Compass Bank in the principal sum of $6.0 million (the "Compass Note").
The Compass Note  provides  that  Western  Pacific may borrow funds from Compass
Bank in order to pay amounts due and owing under the Fuel Management  Agreement.
Payment of all amounts due and owing from Western  Pacific to Compass Bank under
the  Compass  note is  guaranteed  by Mercury.  In  consideration  of  Mercury's
entering into the Fuel  Management  Agreement and its agreement to guarantee the
obligations of Western  Pacific  arising  pursuant to the Compass Note, on April
25, 1997 Western Pacific issued  warrants to Mercury to purchase  200,000 shares
of Western Pacific's Common Stock (the "Mercury  Warrants") at an exercise price
of $6.875 per share. The Mercury  Warrants become  exercisable upon issuance and
expire  on April  25,  2000.  With  respect  to  Mercury  Warrants  that  remain
unexercised  on July 28,  1998,  Western  Pacific may become  obligated to issue
additional  shares of Common  Stock to  Mercury  (or to make  cash  payments  to
Mercury)  to the  extent  that the  highest  average  trading  price of  Western
Pacific's Common Stock (as reported on Nasdaq during any 20 consecutive  trading
days during the three month period  ending July 28, 1998) does not meet at least
a 20% target return level, as set forth in the Mercury Warrants. Western Pacific
drew down $3.7 million on this credit line on April 28, 1997,  and the remaining
$2.3 million available during the month of May 1997.

    Western  Pacific  is  actively  seeking  arrangements  that will allow it to
increase its liquidity. Western Pacific has taken certain short term measures to
conserve its cash  resources.  Western  Pacific has  contracted to outsource its
Information  Technology function to Perot Systems Corporation.  This transaction
allows Western  Pacific to issue common stock in lieu of cash for certain of the
required monthly service fees.  Western Pacific is also working with the City of
Colorado  Springs to issue Special  Facility Bonds to repay Western  Pacific for
the costs of  construction  of the new  concourse at Colorado  Springs  Airport.
There can be no assurance  that these bonds will  actually be sold,  nor at what
price.  Western  Pacific  continues to seek other methods of raising  additional
capital,  including  the  sale  and  leaseback  of its one  owned  aircraft  and
additional equity or debt offerings.  Although  management believes that Western
Pacific will be able to secure such  additional  capital,  if Western Pacific is
unable to do so,  cash flow from  operations  might not be  sufficient  to cover
Western Pacific's financial obligations during the next twelve months.

MOUNTAIN AIR EXPRESS

    At June 30, 1997, MAX was in a cash overdraft  position totaling $.1 million
and had a working capital deficit of $2.4 million.  MAX raised $4.2 million from
the private sale of its preferred stock during 1996,  including $.1 million from
Western  Pacific.  MAX's loss from  operations for the six months ended June 30,
1997  totaled  $5.4  million,  and $3.3  million for the period  from  inception
through  December  31,  1996.  This  loss was  funded  by MAX's  sale of  equity
securities  and a loan from Western  Pacific of $2.1  million.  Western  Pacific
provided MAX with a $1.5 million letter of credit prior to MAX's commencement of
flight operations, which MAX has drawn down completely.

    MAX  incurred  $1.1  million  in  investing  activities,  primarily  for the
purchase of property and equipment,  and aircraft  acquisition  since inception.
These activities were financed by the proceeds of the sale of equity  securities
and a loan from Western Pacific. MAX expects to incur approximately $4.0 million
for investing  activities  in 1997:  $3.3 million for aircraft  acquisition  and
lease payments on current aircraft,  and $0.7 million for capital  expenditures.
MAX expects to finance these payments through cash flow from  operations,  third
party  financings,  and the sale of equity  securities.  Western  Pacific has no
further  commitment to MAX to provide any future  financing or capital.  MAX may
renegotiate  the agreed amount it is receiving per segment from Western  Pacific
on a quarterly basis if certain events occur,  such as increases in the price of
fuel or  shortfalls  in MAX's  load  factor  from its plan.  Western  Pacific is
currently  using MAX to  supplement  service on some of its shorter  haul routes
such as Tulsa,  Oklahoma City, and Kansas City,  bringing  additional revenue to
MAX,  and freeing  Western  Pacific's  aircraft  to add service in higher  yield
markets.

                                       16
<PAGE>

RISK FACTORS

The following issues and  uncertainties,  among others,  should be considered in
evaluating Western Pacific's future performance.

History  of  Operating  Losses,  Availability  of  Working  Capital  and  Future
Financing  Sources.  Neither  Western  Pacific nor  Mountain  Air  Express  have
generated  positive cash flow  consistently  since their respective  inceptions.
Western Pacific had net losses of $1.4 million,  $10.5 million and $23.7 million
for the  years  ended  December  31,  1994,  1995,  and 1996,  respectively  and
experienced  a net loss of $35.5 million for the six month period ended June 30,
1997.  At June 30, 1997,  Western  Pacific had a  consolidated  working  capital
deficit of $28.4 million and an available  cash  position of $6.4 million.  Such
available cash may vary significantly from month to month, as well as during the
course  of a  month.  The  airline  industry  is  extremely  capital  intensive,
especially  for a growing  carrier,  with  purchase  or lease  payments  for new
aircraft  and  extensive  maintenance  requirements  for the  existing  fleet of
aircraft. Since inception,  Western Pacific has actively searched for additional
sources of capital. Western Pacific is continuing to evaluate additional sources
of  working  capital  and  financing  sources,  but there is no  assurance  that
additional  sources  of  capital  will be  available  at  acceptable  rates  and
conditions.  If Western Pacific is unable to raise additional  capital,  current
cash balances plus cash flow from  operations may be  insufficient  to cover its
financial obligations as they come due during the next twelve months.

Low Margin  Business  and High  Operating  Leverage.  The  airline  industry  is
characterized  by low gross profit margins and high fixed costs. The expenses of
each flight do not vary significantly with the number of passengers carried and,
therefore,  a  relatively  small  change in the number of  passengers  or in the
pricing or traffic mix could have a  disproportionate  effect on  operating  and
financial  results.  Accordingly,  a minor shortfall in expected  revenue levels
could have a material  adverse effect on Western  Pacific's  growth or financial
performance.

Entry  into the  Denver  Market.  Although  Western  Pacific's  operations  were
originally based in Colorado Springs,  in late June 1997 Western Pacific moved a
substantial  portion  of its  flight  operations  to  DIA.  The  move to DIA was
prompted  by a number of  factors  including,  pricing  competition  at DIA from
Frontier  and United  Airlines,  which  Western  Pacific's  management  believed
reduced the incentive for  passengers to travel from Denver to Colorado  Springs
in order to use  Western  Pacific as an  alternative  carrier.  Western  Pacific
incurred  significant  one time costs to effectuate the move to DIA.  Management
believes  that  the  move  to DIA  will  make  Western  Pacific  a  more  viable
competitive  entity,  allowing  it  to  offer  low  fare  alternatives  at  DIA.
Nevertheless,  there can be now assurance that  anticipated  benefits  resulting
from Western  Pacific's  move to DIA will allow  management  to operate  Western
Pacific on a profitable basis.

Integration  of the  Businesses.  The  proposed  merger of Western  Pacific  and
Frontier involves the integration of two companies that have previously operated
independently.  There can be no assurance that Western Pacific and Frontier will
not encounter  difficulties in integrating their operations and work forces. Any
delays or unexpected  costs incurred in connection with such  integration  could
have a material adverse effect on the business,  operating  results or financial
condition  of Western  Pacific,  as the  surviving  corporation  of the  merger.
Furthermore,  there can be no assurance that the  operations,  managements,  and
personnel  of the  two  companies  will be  compatible  or  that  the  surviving
corporation will not experience the loss of key personnel.

Government Regulations;  Consumer concern about operating safety. All commercial
airlines are subject to extensive  regulation by the United States Department of
Transportation  ("DOT") and the Federal  Aviation  Administration  ("FAA").  The
continuation  of  Western  Pacific's  ability to operate  its  business  will be
subject to continued compliance with applicable statutes,  rules and regulations
pertaining  to the airline  industry,  including  any new rules and  regulations
relating  to  protection  of  the  environment,   radio  communications,   labor
relations,  equal employment opportunity,  taxation, and other matters.  Western
Pacific  believes  that the  highly  publicized  safety  issues  that led to the
Federal Aviation  Administration  grounding of ValuJet in June 1996, have caused
some  consumers  to  question  the  operating  safety of all low cost  airlines.
Western  Pacific has passed rigorous  National  Aeronautical  Safety  Inspection
Program ("NASIP") audits conducted by the FAA and an independently  commissioned
comprehensive  safety audit conducted by the Flight Safety Foundation.  However,
there is no assurance that the DOT or FAA will not take more restrictive actions
against Western  Pacific because of its low cost status.  Any changes enacted by
Congress,  the DOT or the FAA could reduce revenues, or increase operating costs
which could have a material  adverse effect on Western  Pacific or cause Western
Pacific to temporarily or permanently cease operations.

                                       17
<PAGE>

Impact of new excise tax legislation.  Presently, domestic air transportation is
subject to a 10% excise tax. The U.S.  Congress has recently passed  legislation
that  changes  this tax  beginning  October  1, 1997 to 9% plus $1.00 per flight
segment through September 30, 1998 when the tax becomes 8% plus $2.00 per flight
segment. Further changes will be made until January 1, 2002 when the tax becomes
7.5% plus  $3.00 per flight  segment.  It is  anticipated  that this tax will be
borne  disproportionately  by the low  fare  carriers,  and  less  by the  major
carriers. It is uncertain if these increases in taxes can be passed along to the
passengers, or if some portion of them will be borne by the Company.

Unionization of Employee Groups.  Western Pacific's  mechanics voted to join the
International  Brotherhood of Teamsters  union in May 1996. No other work groups
are currently represented by, or have voted to be represented by, a labor union.
While the  mechanics'  action has not altered  Western  Pacific's  work rules or
increased  Western  Pacific's costs,  there can be no assurance that such action
will not result in future  changes or that other  employee  groups will not vote
for union representation, nor that labor costs for those groups represented by a
union will not increase.

Competition.  The airline  industry is highly  competitive.  Other airlines that
presently serve Western Pacific's routes in competition with Western Pacific are
larger and have greater name  recognition  and resources  than Western  Pacific.
Western  Pacific may also face  competition  from other airlines which may begin
serving the markets that Western  Pacific  currently  serves (such as DIA or the
Colorado Springs  airport) or may serve in the future,  and competition from new
low-cost  airlines  that  may  be  formed  to  compete  in the  low-fare  market
(including those formed by other major airlines) and from ground  transportation
alternatives.

General  State  of  United  States  Economy.  The  airline  industry  is  highly
susceptible  to general  changes in the economic  climate,  particularly  in the
leisure travel segment of the market.  Any downturn in the economy of the United
States could have an adverse effect on Western Pacific's business.

PART II.  OTHER INFORMATION


EXHIBITS AND REPORTS ON FORM 8-K.

(a) The following exhibits are filed herewith. Exhibit numbers refer to item 601
     of Regulation S-K.
                                  EXHIBIT INDEX

              
              Exhibit No.                                Description of Exhibit
              -----------                                ----------------------

                27      -- Financial Data Schedule
-----------------------------


(b)  Form 8-K's filed during the quarter:


                                       18
<PAGE>

         (i) The  Company  filed a report on Form 8-K for an event dated June 6,
         1997,  reporting under Item 5 the creation and private placement of the
         Company's  Series C Preferred  Stock and  warrants  to purchase  common
         stock.

         (ii) The Company filed a report on Form 8-K for an event dated June 30,
         1997,  reporting  under Item 5 the Agreement and Plan of Merger between
         the Company and Frontier Airlines Inc.


                                       19
<PAGE>


         SIGNATURES

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

                                                  WESTERN PACIFIC AIRLINES, INC.


                                                        By: /s/ ROBERT A. PEISER
                                                                Robert A. Peiser
                                           President and Chief Executive Officer

                                                           Date: August 14, 1997

                                                       By: /s/ GEORGE E. LEONARD
                                                               George E. Leonard
                              Vice President Finance and Chief Financial Officer

                                                           Date: August 14, 1997

                                       20