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

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                  Form 10-Q



(Mark One)
      QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(D) OF THE  SECURITIES
      EXCHANGE ACT OF 1934
For the Quarterly period ended September 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     No

   As of November 1, 1997 there were  13,571,073  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

      Balance Sheets
            September 30, 1997 and December 31, 1996                     3

      Statements of Operations
            Three Months ended September 30, 1997 and 1996               4
            Nine Months ended September 30, 1997 and 1996

      Statements of Cash Flows
            Nine Months ended September 30, 1997 and 1996                5

      Notes to Financial Statements                                      6

Item 2.     Management's Discussion and Analysis of Financial 
            Condition and Results of Operations                          8
            


                          PART II. OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K                            15


      Signatures                                                        17



                                       2
<PAGE>

<TABLE>


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

                                                                                               SEPT. 30, 1997        DEC. 31, 1996
                                                                                               ----------------     ----------------

<CAPTION>
<S>                                                                                             <C>                 <C>
                                                                                                   (Unaudited)
                                     ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                                                                     $ 7,947,456         $ 12,076,034
     Restricted cash and cash equivalents                                                            5,545,110            8,314,887
     Accounts receivable, net of allowance for uncollectable accounts                               14,529,724            3,217,450
           of $428,000 and $347,000 at September 30, 1997 and December 31, 1996, respectively
     Prepaid expenses and other                                                                      7,855,116            6,104,414
     Prepaid maintenance                                                                             7,567,361            6,819,841
     Aircraft and engine reserves                                                                   11,134,756            5,204,698
                                                                                               ----------------     ----------------

               Total Current Assets                                                                 54,579,523           41,737,324

     PROPERTY AND EQUIPMENT, net                                                                    35,033,119           41,702,859

     AIRCRAFT AND ENGINE RESERVES                                                                    7,347,113            7,983,560

     PREPAID MAINTENANCE                                                                            13,482,377            7,495,345

     AIRCRAFT AND ENGINE DEPOSITS                                                                   19,224,733           21,308,588

     RESTRICTED CASH AND CASH EQUIVALENTS                                                            2,643,962            2,638,158

     OTHER                                                                                             113,065              180,855
                                                                                               ----------------     ----------------

                                                                                                 $ 132,423,892        $ 123,046,689
                                                                                               ================     ================

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
     Accounts payable                                                                             $ 27,018,002         $ 11,637,006
     Accrued expenses                                                                               22,179,343           21,947,117
     Air traffic liability                                                                          30,318,679           15,617,460
     Short-term financing                                                                           17,462,480           10,455,985
     Current portion of long-term debt                                                               1,228,633            1,007,757
     Other                                                                                             137,152               82,590
                                                                                               ----------------     ----------------

               Total Current Liabilities                                                            98,344,289           60,747,915

     LONG-TERM DEBT                                                                                 14,619,202           15,214,819

     OTHER LIABILITIES                                                                               1,951,385            1,396,735

     MINORITY INTEREST                                                                                       -            2,239,033

     PREFERRED STOCK                                                                                24,065,190                    -

STOCKHOLDERS' EQUITY (DEFICIT)
     Preferred stock, $.001 par value, no shares outstanding at September 30, 1997 and December 31, 1996     -                    -
     Common stock. $.001 par value, 13,550,665 and 13,381,894 issued and outstanding at
            September 30, 1997 and December 31, 1996, respectively                                      13,551               13,387
     Common stock to be issued                                                                               -              800,411
     Deferred compensation                                                                            (716,667)          (1,016,667)
     Additional paid-in capital                                                                     82,389,005           80,265,823
     Treasury stock, at cost                                                                                 -              (84,902)
     Warrants                                                                                       10,273,896                    -
     Accumulated deficit                                                                           (98,515,959)         (36,529,865)
                                                                                               ----------------     ----------------

               Total stockholders' equity (deficit)                                                 (6,556,174)          43,448,187
                                                                                               ----------------     ----------------

                                                                                                 $ 132,423,892        $ 123,046,689
                                                                                               ================     ================

                             See accompanying notes.
</TABLE>



                                       3
<PAGE>


<TABLE>


                                                                     WESTERN PACIFIC AIRLINES, INC.
                                                                 CONSOLIDATED STATEMENT OF OPERATIONS


                                                      THREE MONTHS ENDED                       NINE MONTHS ENDED
                                             SEPT. 30, 1997       SEPT. 30, 1996      SEPT. 30, 1997      SEPT. 30, 1996
                                             ----------------    -----------------    ----------------    ----------------
                                                         (Unaudited)                              (Unaudited)
<CAPTION>
<S>                                          <C>                 <C>                  <C>                <C>     

OPERATING REVENUES:
     Passenger Revenue                          $ 64,738,821         $ 44,374,767       $ 141,512,015       $ 115,426,934
     Other                                         1,592,597            1,146,092           4,574,208           3,113,170
                                             ----------------    -----------------    ----------------    ----------------

         Total operating revenues                 66,331,419           45,520,859         146,086,223         118,540,104
                                             ----------------    -----------------    ----------------    ----------------

OPERATING EXPENSES:
     Salaries, wages and benefits                 12,006,801            7,671,333          31,861,865          21,872,593
     Aircraft leases                              13,924,968           11,747,081          34,572,433          28,618,915
     Aircraft fuel and oil                        12,125,311            8,841,993          29,549,605          21,518,814
     Other rentals,landing and ground             11,035,721            4,288,427          21,757,927          12,645,003
        handling fees
     Advertising                                     533,061            2,105,384           6,810,752           6,544,083
     Insurance                                     1,799,352            1,238,764           4,626,253           4,257,656
     Maintenance materials and repairs             7,249,749            2,718,466          20,297,041           6,759,690
     Agency commissions                            3,688,253            1,631,491           7,764,570           4,051,106
     Depreciation and amortization                 1,514,635            1,358,172           4,420,287           3,209,824
     Other operating                              22,799,127            4,892,134          41,931,478          13,191,816
                                             ----------------    -----------------    ----------------    ----------------

         Total Operating Expenses                 86,676,978           46,493,245         203,592,211         122,669,500
                                             ----------------    -----------------    ----------------    ----------------

OPERATING LOSS                                   (20,345,559)            (972,386)        (57,505,988)         (4,129,396)

INTEREST INCOME, NET OF EXPENSE                     (637,486)              62,061          (1,315,595)          1,296,790
                                             ----------------    -----------------    ----------------    ----------------

NET LOSS BEFORE MINORITY INTEREST                (20,983,045)            (910,325)        (58,821,583)         (2,832,606)

MINORITY INTEREST                                          -                    -           2,242,405                   -
                                             ----------------    -----------------    ----------------    ----------------

NET LOSS                                       $ (20,983,045)          $ (910,325)      $ (56,579,178)       $ (2,832,606)
                                             ================    =================    ================    ================

NET LOSS ATTRIBUTABLE TO COMMON STOCK          $ (22,837,605)          $ (910,325)      $ (61,911,191)       $ (2,832,606)
                                             ================    =================    ================    ================

LOSS PER COMMON SHARE AND                            $ (1.68)             $ (0.07)            $ (4.59)            $ (0.21)
                                             ================    =================    ================    ================
    COMMON SHARE EQUIVALENT

WEIGHTED AVERAGE NUMBER OF COMMON                 13,566,456           13,356,066          13,475,418          13,286,723
                                             ================    =================    ================    ================
   SHARES AND COMMON SHARE EQUIVALENTS
   OUTSTANDING

                                           See accompanying notes.

</TABLE>



                                       4
<PAGE>


<TABLE>

                                        WESTERN PACIFIC AIRLINES, INC.
                                   CONSOLIDATED STATEMENT OF CASH FLOWS
                               FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997

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

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net Loss                                                                $ (56,579,178)        $ (2,832,606)

  Adjustments to reconcile net loss to net cash used for operations -
     Depreciation and amortization                                           4,420,287            3,209,824
     Write-down of property and equipment                                    7,149,191                    -
     Loss (Gain) on sale leaseback                                              18,471              (55,413)
     Amortization of deferred management fee                                   300,000              300,000
     Minority interest in loss of subsidiary                                (2,242,405)                   -
     Increase in accounts receivable                                       (11,312,274)            (476,321)
     Increase in prepaid expenses and deposits                              (1,750,702)          (2,428,125)
     Increase in prepaid maintenance                                        (6,734,552)          (9,181,468)
     Increase in aircraft and engine reserves                               (5,293,611)          (6,902,130)
     Decrease (increase) in restricted cash and cash equivalents             2,763,973           (3,281,954)
     Decrease (increase) in aircraft deposits                               (1,916,145)          (2,296,507)
     Decrease (increase) in other assets                                        67,790           (1,323,677)
     Increase in accounts payable                                           15,380,996            3,803,278
     Increase in accrued expenses                                              232,226            1,214,985
     Increase in air traffic liability                                      14,701,219            7,423,817
     Increase in other liabilities                                             609,212              536,696
                                                                        ---------------       --------------

         Net cash used in operating activities                             (40,185,502)         (12,289,601)
                                                                        ---------------       --------------


CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment, net                                 (4,899,738)         (29,336,909)
    Proceeds of (payments on) production and option deposits                 4,000,000           (5,800,000)
                                                                        ---------------       --------------

        Net cash flows provided by (used in) investing activities             (899,738)         (35,136,909)
                                                                        ---------------       --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Issuance of preferred stock, net                                       18,399,520                    -
     Issuance of warrants                                                    6,032,651                    -
     Increase in short term debt, net                                       11,478,008                    -
     Increase in long term debt, net                                          (374,741)          16,241,017
     Issuance costs related to initial public offering                               -             (362,223)
     Issuance of common stock                                                1,421,224              870,058
                                                                        ---------------       --------------

        Net cash flows from financing activities                            36,956,662           16,748,852
                                                                        ---------------       --------------

DECREASE IN CASH AND CASH EQUIVALENTS                                       (4,128,578)         (30,677,658)

CASH AND CASH EQUIVALENTS, beginning of period                              12,076,034           49,966,697
                                                                        ---------------       --------------

CASH AND CASH EQUIVALENTS, end of period                                   $ 7,947,456         $ 19,289,039
                                                                        ===============       ==============

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

                                          See accompanying notes.


</TABLE>



                                       5
<PAGE>



                        WESTERN PACIFIC AIRLINES, INC.

                        NOTES TO 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. (the "Company"),  accounting policies
followed by the Company, and other information are contained in the notes to the
Company's audited financial  statements filed as part of the Company'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 nine
months ended September 30, 1997 may not necessarily be indicative of the results
for the entire fiscal year ending December 31, 1997.

2. CHAPTER 11 REORGANIZATION

     On October 5, 1997,  the Company filed a petition (the "filing") for relief
under Chapter 11 of the U.S.  Bankruptcy  Code (the "Code") in Denver,  Colorado
(Case No. 97-24701-SBB). Under Chapter 11, certain claims against the Company in
existence  prior to the filing of the  petition  for relief are stayed while the
Company continues business operations as debtor-in-possession.

     In the Chapter 11 case, substantially all liabilities as of the date of the
filing are subject to resolution under a plan of  reorganization to be developed
and voted upon by the Company's creditors and confirmed by the Bankruptcy Court.
Schedules have been filed by the Company with the Bankruptcy Court setting forth
the assets and  liabilities of the Company as of the date of the filing as shown
by the Company's  accounting  records.  Differences between amounts shown by the
Company and claims filed by creditors  will be  investigated  and resolved.  The
ultimate amount and settlement  terms for such liabilities are subject to a plan
of  reorganization  as yet to be developed,  and accordingly,  are not presently
determinable.

     Under  the  Code,  the  Company  may  elect to  assume  or  reject  leases,
employment  contracts,  service  contracts,  and  other  executory  pre-petition
contracts,  subject to Bankruptcy  Court review.  The Company  cannot  presently
determine or reasonably  estimate the ultimate  liability  which may result from
the filing of claims for any rejected  contracts and no provisions have yet been
made for these items.

     The  Bankruptcy  Court has authorized the Company to use the cash generated
by its  operations  to continue to fund its business  obligations  on an interim
basis,  and to pay  necessary  operating  costs.  The various  Bankruptcy  Court
rulings  authorize the Company to use cash so that it can conduct its operations
on an interim basis. The Company expects to fund its working capital and capital
expenditure  requirements  through cash generated by the Company's receipts from
operations, sales of assets, and through debtor-in-possession credit facilities.
However,  there can be no assurance that the Company will be able to obtain such
debtor in possession  credit  facilities or, if obtained,  that such  facilities
will be sufficient to enable the Company to meet its liquidity requirements. The
Company's   financing   requirements  for  long-term   growth,   future  capital
expenditures,   and  debt  service   cannot  be  determined   until  a  plan  of
reorganization is developed and confirmed by the Bankruptcy Court.

     In the event that the Company is unable to obtain confirmation of a plan of
reorganization,  the Company may liquidate its business either in its Chapter 11
case or by converting its Chapter 11 case to a Chapter 7 liquidation.

3. COLLATERAL ACCOUNT

     On September  12, 1997,  the Company  borrowed the  principal  amount ("the
Note") of $10.0 million from Bank One, Texas, N.A. (the "Bank").  All amounts of
outstanding  principal and interest accrued on the note are due and payable upon
the earlier of (i) March 11, 1998, or (ii) within seven days of demand therefore
by the Bank.  Additionally,  all amounts of principal  outstanding  in excess of
$5.0 million were due and payable within seven days of the closing of the merger
between the Company and  Frontier  Airlines,  Inc.  (See Note 4). The Note bears


                                       6
<PAGE>

interest at the  Company's  option,  at either (i) the Bank's prime rate or (ii)
the Bank's Eurodollar rate plus one and one eighth percent (1.125%).  Actions to
collect on the note are stayed by the Chapter 11 proceedings.

     Hunt  Petroleum   Corporation  ("HPC"),  the  parent  corporation  of  Hunt
Petroleum of Texas,  Inc.  ("HPTI"),  a stockholder of the Company,  (i) entered
into a guaranty ("Guaranty"), whereby it guaranteed the repayment of all amounts
owing  under  the  Note,  and (ii)  entered  into an  indemnification  agreement
("Indemnification  Agreement")  whereby it agreed to indemnify  the Bank for any
liabilities  that might arise in connection with the Note. GFI Company  ("GFI"),
another stockholder of the Company,  entered into a contribution  agreement with
HPC, whereby it agreed to contribute 50% of all amounts payable by HPC under the
Guaranty or Indemnification  Agreement.  In addition, the Company entered into a
reimbursement  agreement  with  HPC and  GFI,  whereby  the  Company  agreed  to
reimburse  HPC or GFI,  as the case may be, for any  amounts  incurred  and paid
under the Guaranty or the Indemnification Agreement.

     As security for the Note,  the Company  entered  into a security  agreement
with the Bank,  whereby it granted the Bank a security interest in certain trade
accounts  receivable.  A further security interest was granted to HPC and GFI in
the  same  trade  accounts  receivable  and in  the  Company's  interest  in the
satellite  airport  terminal  at the  Colorado  Springs,  Colorado  airport.  In
addition,  the  Company  agreed to assign  certain  payments  relating  to trade
accounts receivable to (i) the Bank and (ii) HPC and GFI.

     As  consideration  for the Guaranty  and the  Contribution  Agreement,  the
Company entered into a registration  rights  agreement with GFI and HTPI.  Under
the registration rights agreement, the Company agreed to register on demand: (i)
all shares of the  Company's  common stock  currently  owned by GFI or HPTI,  or
which HPTI or GFI has the right to acquire  upon the  exercise of any  warrants,
options,  or convertible  securities;  and (ii) any additional  shares of Common
Stock HPTI or GFI may acquire  from (i) the  Company,  (ii) an  affiliate of the
Company,  or (iii)  any  "joint  filer"  of HPTI or GFI,  as the case may be, as
determined  for purposes of Section 13(d) under the  Securities  Exchange Act of
1934,  as amended,  for a period of five (5) years  commencing  on September 11,
1997 and ending on September 11, 2002.  Any securities of the Company which were
previously  subject  to  registration  rights on the part of HPTI or GFI are not
subject to the registration rights agreement.

4. TERMINATION OF MERGER

     On June 30, 1997, the Company entered into a definitive  agreement and plan
of merger with Frontier Airlines, Inc. ("Frontier"),  pursuant to which Frontier
would merge with and into the  Company,  with Western  Pacific as the  surviving
corporation  after the merger.  Also, on June 30, 1997, the Company and Frontier
entered into a code share Agreement which became effective on August 1, 1997. On
September  29, 1997,  Western  Pacific and  Frontier  announced in a joint press
release that the parties had  terminated  the agreement and plan of merger.  The
two  companies  also  announced  the  termination  of their  current  code share
agreement, effective November 16, 1997. The reasons cited for the termination of
the merger were the amount of time involved in  consummating  the merger and its
toll on employee morale, financial performance, and operations of both airlines.
Cultural  differences  and the  contrast in  scheduling  philosophies  were also
noted.

5. NON-RECURRING CHARGES

     The Company  incurred  $8.8 million in  non-recurring  charges in the three
months  ended  September  30, 1997.  These  charges  relate to the  write-off of
certain  capitalized costs relating to facilities in Colorado  Springs,  such as
the auxiliary  concourse at the Colorado  Springs  airport,  its investment in a
maintenance hangar at Colorado Springs,  leasehold  improvements at the Colorado
Springs airport and at the Company's headquarters building; costs related to the
terminated merger with Frontier; costs related to certain software whose use has
been discontinued;  estimated loss on the sale of an aircraft; and investment in
Colorado Springs Car Rental, Inc., a Thrifty car rental franchisee. For the nine
months  ended  September  30,  1997,  the  Company  incurred  $12.2  million  in
non-recurring charges,  including the charges noted above, plus certain one-time
costs  related to the move of the Company's  operations to Denver  International
Airport  ("DIA");  write-off  of  deposits  for a bus  shuttle to be used at the
Company's  Colorado Springs  airport;  and certain costs related to new uniforms
for the in-flight department.


                                       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  LITIGIATION REFORM ACT
OF 1995. SUCH FORWARD LOOKING  STATEMENTS ARE SUBJECT TO KNOWN AND UNKNOWN RISKS
AND  UNCERTAINITIES.  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,
WHETHER A PLAN OF REORGANIZATION WILL BE DEVELOPED OR CONFIRMED, AVAILABILITY OF
ADEQUATE WORKING CAPITAL,  COMPETITIVE REACTION TO WESTERN PACIFIC'S OPERATIONS,
RISE IN FUEL COSTS,  REGULATORY  ACTIONS BY THE DEPARTMENT OF  TRANSPORTATION OR
THE FEDERAL  AVIATION  ADMINISTRATION,  POLITITCAL  INSTABILITY,  FUTURE AIRLINE
ACCIDENTS  (PARTICULARLY IF INVOLVING A LOW FARE CARRIER),  AND GENERAL ECONOMIC
CONDITIONS IN THE UNITED STATES. SEE ADDITIONAL DISCUSSION UNDER "RISK FACTORS".

OVERVIEW

        On June 30, 1997,  the Company  entered into a definitive  agreement and
plan of merger with  Frontier  Airlines,  Inc.  ("Frontier"),  pursuant to which
Frontier  would  merge  with and  into the  Company,  with  the  Company  as the
surviving  corporation after the merger. Also, on June 30, 1997, the Company and
Frontier entered into a code-share agreement which became effective on August 1,
1997. On September 29, 1997,  Western Pacific and Frontier  announced in a joint
press release that the parties had  terminated the agreement and plan of merger.
The two companies  also announced the  termination  of their current  code-share
agreement, effective November 16, 1997. The reasons cited for the termination of
the merger were the amount of time involved in  consummating  the merger and its
toll on employee morale, financial performance, and operations of both airlines.
Cultural  differences  and the  contrast in  scheduling  philosophies  were also
noted.

     On October 3, 1997,  four directors of the Company  resigned from its Board
of  Directors.   The  resigning   directors  included  Ivan  Irwin,  Jr.,  Glenn
Stinchcomb,  Clayton I.  Bennett,  and James R.  Wikert.  In  addition,  Messrs.
Bennett and Wikert also  resigned  from the Board of Directors of the  Company's
subsidiary,  Mountain Air Express,  effective October 3, 1997. The reasons cited
for the resignation  were potential  conflicts of interest between the Directors
and their other business interests.

     On October 5, 1997,  the Company  filed a petition for relief under Chapter
11 of the Code in Denver,  Colorado.  The filing  enabled  the Company to obtain
protection from creditors in order to conduct its operations while attempting to
develop a reorganization  plan and seeking  financing  necessary to fund it. The
Bankruptcy  Court has  authorized  the Company to use the cash  generated by the
Company to fund its business  obligations on an interim basis. While the Company
would have preferred to reorganize its  operations  without  resorting to filing
for bankruptcy  protection,  it viewed the filing as the only viable alternative
given the adverse impact on the business of inadequate liquidity. The Company is
actively  seeking  debtor-in-possession   financing  to  assist  it  in  funding
operations and ultimately a plan of reorganization.

   The Company  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.  The Company 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,  the
Company  continued  to add  aircraft  and cities and on June 29,  1997,  moved a
significant portion of its operation to Denver International Airport ("DIA"). On
October 10, 1997,  Western Pacific announced that it was terminating jet service
into and out of Colorado  Springs,  effective October 20, 1997. After that date,
air  service  between  Colorado  Springs  and DIA would be  provided  by Western
Pacific's code-share partner,  Mountain Air Express, on turboprop aircraft. This
announcement  also  included  the  termination  of  service to  Houston,  Texas,
effective  October  20,  1997 and the  termination  of service to  Indianapolis,
Indiana,  effective  November  16,  1997.  The  following  chart  indicates  the
Company's changes in service since December 31, 1996.

                                       8
<PAGE>








                       TOTAL    NUMBER
                      NUMBER     OF 
                       OF       ROUND
AS OF MONTH END     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   operations   from
                                        Colorado Springs to Denver International
                                        Airport
July 1997.........      19        40
August 1997.......      19        40    Began code-sharing service with Frontier
October 1997......      19        35    Withdrew  service from Colorado  Springs
                                        and Houston

The Company has previously announced that on November 16, 1997, it will withdraw
service to Indianapolis and terminate the code-share agreement with Frontier.

     During 1996, the Company 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.  The Company  owns 57% of  outstanding  stock of MAX.  MAX filed for
protection under Chapter 11 of the Code on November 6, 1997 in Denver,  Colorado
(Case #97-26584-SBB).

RESULTS OF OPERATIONS

WESTERN PACIFIC AIRLINES

OPERATING REVENUES

   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.  The Company's fares are generally
non-refundable.  Prior to  completing  the  total  conversion  of the  Company's
reservations to the SABRE computerized  reservations system ("CRS") on April 25,
1997,  changes in travel plans could only be made prior to  scheduled  departure
for a $50 change fee,  plus any fare  increase.  After the  conversion to SABRE,
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. 

   The chart  presented  below  compares the Company's  passenger load factor to
the  incremental  growth in capacity as measured by available  seat miles (ASM).
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,  October, January, February, April and May. The Company's load
factor decreased 3.4 percentage  points for the quarter ended September 30, 1997
from the quarter ended June 30, 1997, due to a combination of factors  including
the  37.3%  increase  in  capacity  and  issues  with  the  Frontier  code-share
agreement.  The  Company's  load factor  increased  3.8  percentage  points when
comparing  the quarter ended  September 30, 1997 to the quarter ended  September
30, 1996. This increase can be attributed to the effects of shifting most of the
Company's  operations  to the  larger  DIA  hub on  June  29,  1997;  aggressive
promotions  such as "Peak Paks",  and a promotion with King Soopers,  a Colorado
grocery  store  chain;   and  increased   frequencies  to  increase   connecting
opportunities.
<TABLE>
<CAPTION>
                                                       Total          Increase
                                        Passenger    Available       (Decrease)
Operating Period                       Load Factor   Seat Miles     in Capacity
----------------                       -----------   ----------     -----------
                                                      (OOOs)   
<S>                                    <C>         <C>                <C>
                                                      
Quarter ended September 30, 1996          57.5%       745,821             ---%
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%
Quarter ended September 30, 1997          61.3%     1,037,728            36.0%

</TABLE>

   Passenger  revenue per revenue passenger mile (RPM) or yield may increase due
to a combination of factors,  including increases in average fares and decreases


                                       9
<PAGE>

in discounted fares as a percentage of total fares. However, in periods when the
Company introduces promotional fares in new markets or uses promotional fares to
stimulate   additional  travel  in  existing  markets,   the  Company  generally
experiences a decrease in passenger  revenue per RPM. The Company  believes that
the  negative  impact of entering  new markets and the use of  discounted  fares
should  decrease as the Company  increases its overall revenue base and customer
awareness.  For the quarter  ended  September 30, 1997,  the Company  produced a
yield of 9.45(cent)  which is a 14.2% increase from the prior quarter  primarily
as a result  of the move of most of the  Company's  operations  to DIA,  and the
expanded schedule which allows more connecting opportunities.

                                               Revenue     Average    Passenger
                                  Passenger   Passenger     Segment    Revenue
Operating Period                   Revenue     Miles         Fare      Per RPM
----------------                   -------     -----         ----      -------
                                   (000's)      (000's)               (cents)

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
Quarter ended September 30, 1997   60,073      636,023        80.18     9.45


   The Company's operating  break-even load factor during the twenty nine months
of its  operations has fallen from a high of 104.8% in May 1995 to 58.7% for the
quarter ended  September  30, 1996.  Historically,  as the  Company's  fleet has
expanded,  the  incremental  passenger  revenue  generated  from the  additional
capacity  has  covered  the  incremental  costs of the  expansion,  as well as a
portion of the Company's existing fixed costs,  resulting in a steady decline in
the  operating  break-even  load  factor.  The  Company's  cost  per  ASM  after
non-recurring  charges for the quarter ended  September 30, 1997  increased from
the prior quarter, while the cost per ASM before these non-recurring charges was
6.88(cent)  for the quarter ended  September 30, 1997, a decrease from the prior
quarter's cost per ASM before non-recurring charges of 7.09(cent). This decrease
is a function of the 37.7% increase in ASMs over the quarter ended September 30,
1997 from the prior  quarter.  There can be no  assurance  that any  incremental
passenger  revenue generated in the future as the Company expands its fleet will
be sufficient to cover  incremental  costs or that,  ultimately,  as a result of
these or other  factors,  the Company's  operating  break-even  load factor will
decrease.

                                       Operating     Operating
                                       Cost Per      Break-Even
Operating Period                       ASM (cents)   Load Factor
----------------                       -----------   -----------            
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%
Quarter ended September 30, 1997           7.70         86.4%
 

MOUNTAIN AIR EXPRESS

     Mountain Air Express  commenced flight operations on December 15, 1996. The
determination  of MAX's  revenues  had been  governed by an  Alliance  Agreement
between  MAX and the  Company  and the  number of  passengers  flown.  Under the
Alliance Agreement,  all of MAX's marketing,  scheduling,  and pricing decisions
were made by the  Company.  In return,  MAX  received an agreed  amount from the
Company for each passenger flown. The Alliance Agreement between the Company and
Mountain Air Express is in the process of being rejected by the Company pursuant
to a court order by the United States  Bankruptcy  Court.  Effective October 22,
1997, MAX is paid $200,000 per week to fly the Company's  connecting  passengers
between  Colorado  Springs and DIA,  and will be paid a pro rate  portion of the
passenger  fare for  passengers  connecting in other  cities.  MAX's load factor
increased for the quarter ended September 30, 1997 as compared to prior quarters
due to the Company's  transfer of some of their service to Oklahoma City, Tulsa,
and  Kansas  City to MAX,  and the  larger  Denver  marketplace.  MAX  filed for
protection under Chapter 11 of the Code in Denver, Colorado on November 6, 1997.




                                       10
<PAGE>





                                   Passenger   Total      Passenger   Operating
                                     Load     Available    Revenue   Break Even
Operating Period                     Factor  Seat Miles    Per RPM   Load Factor
----------------                     ------  ----------    -------   -----------
                                     (000's)

December 15 - December 31, 1996      44.4%     1,250        43.39      67.4%
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%
Quarter ended Sept. 30, 1997         55.9%    34,585        23.11      72.5%


OPERATING EXPENSES

WESTERN PACIFIC AIRLINES

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


                                                          THREE MONTHS       THREE MONTHS         NINE MONTHS       NINE MONTHS
                                                             ENDED              ENDED               ENDED              ENDED
                                                         SEPT. 30, 1997     SEPT 30, 1996       SEPT. 30, 1997     SEPT. 30, 1996
                                                         --------------     -------------       --------------     --------------
                                                            (cents)           (cents)             (cents)           (cents)
<S>                                                       <C>                 <C>               <C>                <C>

 Salaries, wages and benefits...........................       .98               1.03               1.07               1.13
 Aircraft lease expense ................................      1.25               1.57               1.26               1.48
 Aircraft fuel and oil .................................      1.11               1.19               1.10               1.11
 Other rentals, landing, and ground handling fees.......       .98                .58                .78                .65
 Advertising and public relations.......................       .05                .28                .20                .34
 Insurance expense .....................................       .15                .17                .15                .22
 Maintenance materials and repairs......................       .61                .36                .71                .35
 Agency and cargo commissions...........................       .36                .22                .30                .21
 Depreciation and amortization..........................       .14                .18                .17                .17
 Other operating expenses...............................      1.25                .66               1.12                .68
                                                              ----               ----               ----               ----
 Total .................................................      6.88               6.23               6.86               6.34
                                                              ====               ====               ====               ====
</TABLE>

   All costs shown above have been adjusted by $8.8 million for the three months
ended  September 30, 1997 and $12.2 million for the nine months ended  September
30, 1997 for  non-recurring  charges  related to the  Company's  termination  of
service to various cities,  primarily  Colorado  Springs,  and one-time costs of
commencing service at Denver International Airport.

   Salaries,  wages  and  benefits  decreased  by .05  cents  per ASM or 5% when
comparing  the quarter ended  September 30, 1997 to the quarter ended  September
30, 1996. This decrease can be attributed to a 36% increase in ASMs, with only a
25% increase in full-time  equivalent  personnel  (FTE).  Salaries,  wages,  and
benefits  decreased  by .06 cents per ASM or 5% when  comparing  the nine months
ended  September  30, 1997 to the nine months ended  September  30,  1996.  This
decrease can also be  attributed  to the increase in ASMs over the period noted,
with a proportionally smaller increase in FTEs.

   Aircraft  lease  expense  decreased .32 cents per ASM, or 20% for the quarter
ended September 30, 1997 from the quarter ended September 30, 1996. The decrease
is due to the wet lease of two Boeing 727 aircraft during the period of mid-June
through  September 5, 1996 which increased the Company's cost for the quarter by
 .30 cents per ASM for this quarter which did not occur in 1997.  Aircraft  lease
expense  decreased .22 cents per ASM, or 14% for the nine months ended September
30, 1997 when  comparing  the nine months ended  September  30, 1997 to the nine
months  ended  September  30,  1996.  This  decrease  is due to the  wet  leases
described  above as well as the 32%  increase in ASMs for the nine months  ended
September  30, 1997 from the nine  months  ended  September  30, 1996 with a 27%
increase in the number of leased aircraft over the comparable periods.

     Aircraft  fuel and oil  expense  decreased  by .08 cents per ASM or 7% when
comparing  the quarter ended  September 30, 1997 to the quarter ended  September
30, 1996. This decrease  reflects the effect of a 5.3 cent per gallon or 7% fuel


                                       11
<PAGE>

price decrease over the period.  Aircraft fuel and oil expense  decreased by .01
cents per ASM or 1% when  comparing the nine months ended  September 30, 1997 to
the nine months ended  September 30, 1997, on a decrease of 1.1 cents per gallon
over the same time period.

     Other rentals,  landing,  airport and ground handling fees increased by .40
cents per ASM or 69% when comparing the quarter ended  September 30, 1997 to the
quarter ended  September 30, 1996.  This increase was primarily due to increased
flight  simulator  rental time due to increased hiring of pilots required by the
higher utilization  schedule,  and increased ground handling,  rent, and landing
fees at DIA. Other rental,  landing,  airport and ground handling fees increased
by .13 cents per ASM or 20% when  comparing the nine months ended  September 30,
1997 to the nine months ended  September 30, 1996.  This increase was due to the
increased  simulator  rental  time  previously  noted,  both  for the  increased
utilization  schedule,  and for new aircraft deliveries that occurred during May
and June 1997.

     Advertising  expense  decreased by .23 cents per ASM or 82% when  comparing
the quarter ended  September  30, 1997 to the quarter ended  September 30, 1996.
This decrease was intentional,  due to the large amount of advertising placed in
the second quarter when the Company began service to Denver. Advertising expense
decreased  by .14  cents per ASM or 41% when  comparing  the nine  months  ended
September  30, 1997 to the nine  months  ended  September  30,  1996,  after the
deduction of $1.8 million in launch  advertising  related to the commencement of
the Company's  operations at DIA. Without this adjustment,  advertising cost per
ASM for the nine months ended September 30, 1997 was .27 cents per ASM, or a 21%
reduction from the comparable period in 1996. This reduction was due to the cost
of advertising for seven new cities for which service was added during the first
nine months of 1996, with only one city (Denver) added during 1997.

     Insurance  expense decreased by .02 cents per ASM or 12% when comparing the
quarter ended  September 30, 1997 to the quarter ended  September 30, 1996,  and
 .07 cents per ASM or 32% when comparing the nine months ended September 30, 1997
to the nine months ended  September 30, 1996.  This decrease  reflects a premium
reduction  obtained  by the  Company  due to  fewer  aircraft  in  service  than
originally projected for the policy year.

   Maintenance  materials and repairs expense  increased by .25 cents per ASM or
69% when  comparing  the quarter  ended  September 30, 1997 to the quarter ended
September 30, 1996, and .36 cents per ASM or 103% when comparing the nine months
ended  September  30, 1997 to the nine months ended  September  30,  1996.  This
increase reflects the amortization of airframe "C" maintenance checks and engine
overhauls  performed on the Company's  fleet,  as well as a shorter  maintenance
cycle due to the Company's increased aircraft utilization.  The Company uses the
deferral  method of accounting  for "C" check  maintenance  and engine  overhaul
costs.

   Agency  and  cargo  commissions  increased  by .14  cents per ASM or 64% when
comparing  the quarter ended  September 30, 1997 to the quarter ended  September
30,  1996,  and .09 cents per ASM or 43% when  comparing  the nine months  ended
September 30, 1997 to the nine months ended  September 30, 1996. As anticipated,
agency and cargo commissions increased as a percentage of total expenses, as the
Company  entered into  agreements  with several of the  industry's  computerized
reservation  systems  ("CRS")  in March of 1997 so that  seats on the  Company's
flights could be booked directly by a travel agent without the need to telephone
the Company's  reservation  office.  These  agreements  have given the Company's
flights  increased  exposure  to travel  agents,  who now account for 60% of the
Company's flight booking activity.

   Depreciation  and  amortization  decreased  .04  cents  per  ASM or 22%  when
comparing  the quarter ended  September 30, 1997 to the quarter ended  September
30, 1996; and remained at .17 cents per ASM when comparing the nine months ended
September 30, 1996 to the nine months ended  September 30, 1995. The increase in
ASMs was  directly  proportional  to the increase in assets for the nine months,
while the increase in ASMs for the quarter  ended  September 30, 1997 was larger
than the increase in assets.

   Other operating expenses increased by .59 cents per ASM or 89% when comparing
the quarter ended September 30, 1997 to the quarter ended September 30, 1996 and
 .44 cents per ASM or 65% when comparing the nine months ended September 30, 1997
to the nine months ended September 30, 1996. Excluded from this calculation were
one time charges  related to the write-off of  capitalized  costs related to the
merger with Frontier,  capitalized  facility costs in Colorado Springs, 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
auxiliary  concourse  at Colorado  Springs.  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


                                       12
<PAGE>



                                      


incidental expense,  and passenger  reaccomodation and baggage delivery charges.
While some of these  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 nine months ended
September  30, 1997 from the nine months ended  September  30, 1996 include $3.0
million for CRS fees;  $2.2 million for the  outsourced  Information  Technology
functions;  $3.3 million in  reaccommodation  charges  related to the  Company's
schedule changes and operational performance;  and $.5 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 the Company's
move  into the  SABRE  multi-host  reservation  system,  and are  offset  by the
additional revenue generated as a result of the wider  distribution  system. The
fees paid to  reaccommodate  passengers  are expected to decrease as the Company
adjusts to its new flight schedule on November 16.

MOUNTAIN AIR EXPRESS

The following  table shows the  components of operating  cost per available seat
mile (shown in cents):
                                     THREE MONTHS   THREE MONTH    THREE MONTHS
                                         ENDED         ENDED          ENDED
                                   SEPT. 30, 1997  JUNE 30, 1997  MARCH 31, 1997
                                   --------------  -------------  --------------
 
 Salaries, wages and benefits.........    5.23          6.62         10.03
 Aircraft lease expense ..............    2.64          4.21          4.87
 Aircraft fuel and oil ...............    1.69          1.97          3.45
 Other rentals, landing, and              
     ground handling fees.............    2.64          1.55          4.09
 Insurance expense ...................     .66          1.19          1.82
 Maintenance materials and repairs....    2.58          2.93          1.42
 Depreciation and amortization........     .17           .27           .30
 Other operating expenses.............    2.86          3.94          7.20
                                         -----         -----         -----
 Total ...............................   18.47         22.68         33.18
                                         =====         =====         =====
                                         

  The decrease in the cost per ASM for the quarter ended  September 30, 1997 can
be attributed to the 61% increase in ASM's from the prior quarter.

BALANCE SHEET FLUCTUATION ANALYSIS

     The Company's  accounts  receivable  increased by $11.3 million  during the
nine months  ended  September  30, 1997 due to $9.5 million due from the Airline
Clearing  House and $1.1  million due from the Airlines  Reporting  Corporation.
Both of these  receivables  are a reflection of the Company joining the CRSs and
the timing of the  payments  that are made.  The  Company's  aircraft and engine
reserves,  both current and long term, increased by $5.3 million during the nine
months ended  September  30, 1996.  These  reserves  reflect the increase in the
number of aircraft in the Company's fleet, as well as the increased utilization.
Property and  equipment  decreased by $6.7 million  during the nine months ended
September  30, 1997, as a result of the Company's  decision to  discontinue  jet
service to Colorado Springs and therefore, the Company wrote down certain assets
such as the hangar,  auxiliary concourse, and leasehold improvements at Colorado
Springs.

      The Company's  accounts payable increased by $15.4 million during the nine
months ended  September  30, 1997. As  previously  noted,  the Company filed for
Chapter 11 protection under the United States Federal Bankruptcy Code on October
5, 1997.

      The Company's  air traffic  liability  account  increased by $14.7 million
during  the nine  months  ended  September  30,  1996.  This  increase  resulted
primarily  from  advance  reservations  made for travel not yet taken due to the
increase in the number of flights from  December 31, 1996 to September  30, 1997
and promotions offered by the Company.

    LIQUIDITY AND CAPITAL RESOURCES

   During the nine months ended  September  30, 1997,  the  Company's  operating
activities  resulted  in a cash flow  deficit of $40.2  million,  which has been
funded  primarily  with short term  borrowings and funds raised from two private


                                       13
<PAGE>

placements  of preferred  stock.  At September 30, 1997 the Company had cash and
cash equivalents of $7.9 million, restricted cash of $5.6 million, and a working
capital deficit of $43.8 million. At December 31, 1996, the Company had cash and
cash  equivalents  of $12.1  million,  restricted  cash of $8.3  million,  and a
working capital deficit of $19.0 million.

   Cash flow used in investing  activities  totaled $.9 million  during the nine
months  ended  September  30,  1997,  of which $4.9  million was for new capital
expenditures, offset by $4.0 million in proceeds from a production deposit. Cash
flows from investing  activities totaled $35.1 million for the nine months ended
September  30,  1996,  consisting  primarily  of the  purchase  of a used Boeing
737-300 aircraft.

   At September 30, 1997, the Company operated nineteen aircraft,  with eighteen
under  operating  leases with terms of either five or ten years.  The  Company's
nineteenth  aircraft,  which it owned,  was sold by the  Company on  November 4,
1997, realizing net proceeds of approximately $5.4 million in cash from the sale
and a loss of $1.3  million  which is included in the third  quarter  loss.  The
Company  has entered  into an  agreement  with the new owner of the  aircraft to
continue to use the  aircraft  for one month.  The Company  has  negotiated  for
delivery of one  additional  used  aircraft in November  1997 and must decide if
delivery  will be  accepted  by November  21,  1997.  The Company is party to an
aircraft  purchase  agreement with the Boeing Company  providing for delivery of
two new Boeing 737-300 aircraft, one in December 1997 and the second in November
1998. The Company has tentatively  agreed to sell these delivery  positions to a
third party.  Additionally,  the Company  leases up to four spare engines at any
time under  operating  leases with terms  ranging from  several  months to three
years.

   Cash flow provided by financing activities totaled $37.0 million for the nine
months  ended  September  30, 1997 and $16.7  million for the nine months  ended
September 30, 1996. See Note 3 of Notes to the Consolidated Financial Statements
for a discussion of the collateral account.

   Under the Code,  the Company has the exclusive  right,  for 120 days from the
filing date, or until February 2, 1998, to present a reorganization  plan to the
Bankruptcy Court. This date may be extended by the Bankruptcy Court.  During the
60 day  period  from the filing  date,  no  payments  need to be made on real or
personal  property leases,  including  aircraft  leases,  except as specifically
agreed or ordered by the court.  With  respect  to  aircraft  and real  property
leases,  the  Company  must  commence  payments  at the end of the 60 day period
unless  otherwise agreed between the Company and the lessor.  Additionally,  the
contractual  payments  deferred under  aircraft  leases during the first 60 days
must  generally be brought  current  within the 60 day period for real  property
leases (unless  otherwise agreed) or by the later end of the 60 day period or 30
days from the due date of the  payment for  aircraft  leases  (unless  otherwise
agreed).  The Company  estimates  that its  aircraft  leases  alone will require
approximately  $10.1  million to be brought  current on  December  4, 1997.  The
Company is actively seeking  debtor-in-possession  ("DIP")  financing which will
allow  it  to  continue   operations   and  to  assist  in  funding  a  plan  of
reorganization.  If the Company is unable to secure such financing,  it may sell
assets  or find  other  financing  mechanisms  to  generate  cash.  There  is no
assurance  that the Company will be able to secure DIP financing or raise enough
funds to allow it to obtain  confirmation  of a plan of  reorganization.  If the
Company is unable to obtain  confirmation  of a plan,  the assets of the Company
will be liquidated.

OUTLOOK: ISSUES AND UNCERTAINTIES

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

     EMERGENCE FROM BANKRUPTCY  PROTECTION.  The Company is currently  operating
under  protection of the Code. On or before the 60th day from the filing date of
October 5, 1997,  the Company  must agree to  commence  payments on its real and
personal  property  leases and bring most  payments  deferred  during the 60 day
period current at that time, unless otherwise agreed by the lessor.  The Company
has the exclusive  right for the first 120 days after the filing date to present
a reorganization plan which must thereafter be approved by the Bankruptcy Court.
The Company will likely  require  debtor-in-possession  financing to emerge from
Chapter 11  protection.  There can be no assurance  that such  financing will be
obtained or that if obtained, the amount will be sufficient to allow the Company
to continue operations.

     HISTORICAL  LOSSES.  The Company began scheduled flight operations on April
28, 1995.  During the period from the Company's  inception through September 30,
1997,  the Company  incurred net losses  totaling $92.0 million and has had only
two profitable  quarters in its history.  Given the Company's  limited operating
history,  there can be no assurances  that the Company will be profitable in the
future.

                                       14
<PAGE>

     CONSUMER CONCERN ABOUT OPERATING SAFETY CONDITIONS AT START-UP AND BANKRUPT
CARRIERS.  The highly  publicized safety issues that led to the Federal Aviation
Administration (FAA) grounding of ValuJet have caused some consumers to question
the  operating  safety of all  start-up  airlines.  Though the Company  passed a
rigorous National  Aeronautical Safety Inspection audit conducted by the FAA and
passed an independently commissioned comprehensive safety audit conducted by the
Flight Safety Foundation,  there is no assurance that the FAA will not take more
restrictive  actions  against  the  Company  because  of its being in Chapter 11
bankruptcy  procedures.  Such actions by the FAA could increase  operating costs
and reduce future earnings potential.

   RISING FUEL COSTS. At the Company's  current  consumption rate, each one cent
increase in the price of fuel  increases the  Company's  monthly fuel expense by
approximately $40,000. Some carriers have begun to assess a fuel surcharge to be
added to their  base fares to cover  these  increased  costs.  The  Company  has
considered  this  alternative,  but there can be no  assurance  that the Company
would be able to pass along any increases in the price of fuel to its consumers.
Currently, the Company is prepaying for its fuel requirements with cash.

     UNIONIZATION OF EMPLOYEE GROUPS. The Company'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 union. While
the mechanics'  action has not altered the Company's work rules or increased the
Company'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.  The Company  currently has no contract with its mechanics or
any other labor group.

     COMPETITION.  The airline  industry is highly  competitive.  Other airlines
that presently  serve the Company's  routes in competition  with the Company are
larger and have greater name  recognition  and resources  than the Company.  The
Company may also face  competition  from other  airlines which may begin serving
the markets that the Company  currently  serves 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.   The   Company's   hub  is   located  at  Denver
International  Airport,  where  United  Airlines  presently  has 64%  (based  on
September 1997 enplanements) of the market.

     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 the Company's business.


EXHIBITS AND REPORTS ON FORM 8-K.

(a)    Documents filed with this Report:

   1. Financial  Statements.  The financial  statements  filed as a part of this
report are listed in Item 1,  "Financial  Statements  and  Supplementary  Data,"
herein.

   2. Financial Statement Schedules.

   3. Exhibits.  The following  exhibits are filed herewith or  incorporated  by
reference as indicated. Exhibit numbers refer to Item 601 of Regulation S-K.
                                EXHIBIT INDEX
         Exhibit
           No.                      Description of Exhibit
         *10.82 --  Aircraft  Lease  Agreement  dated June  27,1997  between the
                Company and Wilmington Trust Company (MSN 28871).
         *10.83 --  Aircraft  Lease  Agreement  dated May 15,  1997  between the
                Company and KG Aircraft Leasing Co., Ltd. (MSN 24060).
         *10.84 -- Aircraft  Lease  Agreement  dated March 26, 1997  between the
                Company and Wilmington Trust Company (MSN 28868).
         *10.85 -- Aircraft Lease Agreement dated June 27, 1997 between the
                Company and Bouillioun Portfolio Finance, Inc. (MSN 28869).
         *10.86 -- Aircraft  Lease  Agreement  dated June 26,  1997  between the
                Company and GATX Third Aircraft Corporation (MSN 28870).


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<PAGE>

         *10.87 -- Lease Agreement dated March 18, 1996 and amended and restated
                as of July 7, 1997 between the Company and First  Security Bank,
                National Association.
         *10.88 -- Engine  Lease  Agreement  dated May 21,  1996 and amended and
                restated  as of July 7,  1997  between  the  Company  and  First
                Security Bank, National Association.
         *10.89 -- Aircraft Lease Novation  Agreement  dated July 9,1997 between
                the Company and First Security Bank, National Association.
         *10.90 -- Engine Lease  Novation  Agreement  dated July 9, 1997 between
                the Company and First Security Bank, National Association.
           27    -- Financial Data Schedule

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

   * Portions of these  documents have been redacted and filed  separately  with
the  Commission as part of a request by the Company for  confidential  treatment
pursuant to Rule 406 under the Securities Act of 1933, as amended.

 (b)The  Company  filed the  following  reports on Form 8-K  during the  quarter
    ended September 30, 1997:

  
 1) The  Company  filed a report on Form 8-K for an event  dated  September  12,
    1997,  reporting  under  Item  5 the  detail  of  the  pro  forma  financial
    information for the combined Western Pacific Airlines and Frontier company.

 2) The  Company  filed a report on Form 8-K for an event  dated  September  19,
    1997,  reporting  under Item 5 the loan to the Company of $10.0 million from
    Bank One Texas,  which was guaranteed by Hunt Petroleum  Corporation and GFI
    Company.

 3) The  Company  filed a report on Form 8-K for an event  dated  September  29,
    1997, reporting under Item 5 the termination of the merger agreement between
    Frontier Airlines and the Company.

 4) The Company  filed a report on Form 8-K for an event dated  October 3, 1997,
    reporting  under Item 5 the  resignation  of four  members of the  Company's
    Board of Directors.

 5) The Company  filed a report on Form 8-K for an event dated  October 5, 1997,
    reporting  under Item 3 that the Company had filed a voluntary  petition for
    relief under Chapter 11 of the United States Bankruptcy Code.




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<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:   November 14, 1997.

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

                                       Date:   November 14, 1997.




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