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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

(MARK ONE)

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<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
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                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
                                       OR

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<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                          COMMISSION FILE NO. 0-23224

                            ------------------------

                           GREAT LAKES AVIATION, LTD.
             (Exact name of registrant as specified in its charter)

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<S>                                            <C>
                 IOWA                                       42-1135319
    (State or other jurisdiction of            (I.R.S. Employer Identification No.)
    Incorporation or organization)
</TABLE>

                    1022 AIRPORT PARKWAY, CHEYENNE, WY 82001
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (307)432-7000

        Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR
VALUE $.01

    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, and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

    The aggregate market value of voting stock held by nonaffiliates of the
registrant as of April 10, 2000 was approximately $6,917,570.

    As of April 10, 2000, there were 8,647,891 shares of Common Stock of the
registrant issued and outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Certain portions of the documents listed below have been incorporated by
reference into the indicated part of this Form 10-K.

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                   DOCUMENT INCORPORATED                      PART OF FORM 10-K
                   ---------------------                      -----------------
<S>                                                          <C>
Proxy Statement for 2000 Annual Meeting of Shareholders           Part III
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<PAGE>
                                FORM 10-K INDEX

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                                                                              PAGE
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PART I....................................................................      1
    Item 1.   BUSINESS....................................................      1
    Item 2.   PROPERTIES..................................................      8
    Item 3.   LEGAL PROCEEDINGS...........................................      8
    Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........      9

PART II...................................................................      9
    Item 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS.......................................      9
    Item 6.   SELECTED FINANCIAL DATA.....................................     10
    Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS.................................     11
    Item 7A.  QAUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK......................................................     18
    Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................     19
    Item 9.   CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURES.....................................     39

PART III..................................................................     39
    Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..........     39
    Item 11.  EXECUTIVE COMPENSATION......................................     39
    Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT................................................     39
    Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............     39

PART IV...................................................................     40
    Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
                8-K.......................................................     40

SIGNATURES................................................................     43

EXHIBIT INDEX.............................................................     44
</TABLE>

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                                     PART I

ITEM 1. BUSINESS

GENERAL

    Great Lakes Aviation, Ltd. ("Great Lakes") is a regional airline, which
during 1999 operated under the marketing identity United Express. The Company is
one of several companies operating as United Express under code sharing
agreements with United Air Lines, Inc. ("United"). While the Company does not
compete against other United Express carriers on routes that it serves, it does
compete with them to receive the right to serve additional markets under a
United agreement. On October 1, 1995 the Company began operating as Midway
Connection under a code sharing agreement with Midway Airlines Corporation
("Midway"). The Midway Agreement was terminated on May 16, 1997 and the Company
ceased operating as Midway Connection. On August 8, 1995, the Company began
operations in the Southwest United States and Mexico independently under its own
code as Great Lakes Airlines. This service was discontinued on May 16, 1997
although the Company continued to operate as Great Lakes Airlines on one route
in the Midwest until June 15, 1998. As of December 31, 1999, the Company's fleet
consisted of 40 Beechcraft Model 1900D 19-passenger aircraft and eight Embraer
Brasilia 30-passenger aircraft. The Company also has four Beechcraft Model 1900C
aircraft being used exclusively for freight operations. References herein to the
Company include Great Lakes and its wholly owned subsidiary, RDU, Inc.
RDU, Inc. currently has no activity and is not being utilized by the Company.

UNITED EXPRESS RELATIONSHIP

    The United Express operation serves 67 destinations in 14 states located in
the Upper Midwest, with hubs located at Chicago O'Hare, Denver and
Minneapolis/St. Paul, as of December 31, 1999. The Company became a "United
Express" carrier in 1992 under a code sharing agreement with United and is one
of the principal United Express regional carriers.

    The code sharing agreement with United expired in December 1997. The Company
believes its relationship with United is satisfactory, as evidenced by United's
selection, during 1998, of the Company as the United Express carrier for
additional routes serving the Denver airport. Since December 31, 1997, the
Company has been operating as if the principal day-to-day operational provisions
of the previous code sharing agreement are still effective. The Company and
United have entered into negotiations to renew the code sharing agreement. As
part of their negotiations, United has restructured its operating relationships
with certain of its United Express carriers, pursuant to which the Company has
provided service to Denver from 24 additional cities since April 23, 1998. As a
result of this restructuring, the Company is the only United Express carrier
providing service with 19 seat aircraft at the Chicago and Denver hubs. While
the Company expects a new code sharing agreement to be finalized on a mutually
advantageous basis, no assurance can be given that this actually will be
accomplished. Certain material provisions of the prior code sharing agreement
and related agreements (the "United Express Agreements") are described herein
because any new code sharing agreement may contain similar terms. Any failure to
enter into a new code sharing agreement with United, any material adverse change
in terms from the prior code sharing agreement, or any substantial decrease in
the number of routes served by the Company under this agreement could have a
material adverse effect on the Company's business. As a result of the code
sharing relationship with United, the Company's business is sensitive to events
and risks affecting United. If adverse events affect United's business, the
Company's business may also be adversely affected.

    The United Express Agreements entitle the Company to use United's "UA"
flight designator code to identify its code sharing flights and fares in
computer reservation systems, United's "Apollo" reservation system (including
United's automated check-in, ticketing and boarding pass, and advance seat
reservation and baggage tracing systems), to use the United Express logo and
aircraft exterior paint schemes and uniforms similar to those of United and to
otherwise advertise and market its association with United. United Express
passengers participate in United's "Mileage Plus" frequent flyer program and are
eligible

                                       1
<PAGE>
to receive a minimum of 500 United frequent flyer miles for each trip on a
United Express flight. The United Express Agreements also provide for
coordinated schedules and through fares. A through fare is a cost-saving fare
available to a prospective passenger who, in order to reach a particular
destination, transfers between the major carrier and that carrier's code sharing
partner. United establishes all through fares and the Company receives a portion
of the fares on a formula basis, subject to periodic adjustment.

    United provides a number of additional services to the Company. These
include publication of the fares, rules and related information that are part of
the Company's contracts of carriage for passengers and freight; publication of
the Company's code sharing flight schedules and related information using the
United "UA" flight designator code and flight numbers assigned by United;
provision of ticket handling services at United's ticketing locations; provision
of airport signage at airports where both the Company and United operate;
provision of United ticket stock and related documents; provision of expense
vouchers, checks and cash disbursements to passengers on code sharing flights of
Great Lakes inconvenienced by flight cancellations, diversions and delays; and
cooperation in the development and execution of advertising, promotion and
marketing efforts featuring United Express and the relationship between United
and the Company. The Company pays United a monthly fee based on the total number
of revenue passengers boarded on all of Great Lakes' United Express flights.
This fee varies depending on whether the passenger travels through United hubs
at Denver and Chicago, is carried to or from other airports served by United or
if the passenger is carried between cities only served by Great Lakes. The
Company also receives an incentive amount for each passenger that connects with
a United flight.

    With the exception of certain pre-approved destinations connecting with
Minneapolis/St. Paul or Detroit, the United Express Agreements require the
Company to obtain United's prior consent to operate as a United Express carrier
on all routes. Additionally, the United Express Agreements restrict the
Company's ability to decrease its service to Denver and Chicago O'Hare below
certain minimum levels. Great Lakes has the exclusive right to provide United
Express service to and from Detroit and Minneapolis/St. Paul and on existing
Great Lakes' routes to and from Chicago O'Hare and Denver. The United Express
Agreements, however, had prohibited the Company from entering into a code
sharing agreement with any other airline at Chicago, Denver, Des Moines,
Detroit, Minneapolis/St. Paul or Omaha. The code sharing agreement, however,
does not prohibit United from competing with Great Lakes, by initiating its own
service.

UNITED EXPRESS MARKETS

CHICAGO

    The Company's service to the Chicago O'Hare market is anchored by its 64
slots allocated by the FAA. A slot is a 30 minute interval during the period
from 6:45 a.m. to 9:14 p.m. during which an airline may operate either a
take-off or landing. Flights in this market are used primarily to provide
connecting opportunities with United flights. The Company's ability to increase
its passenger volume at Chicago O'Hare is limited by its allocation of slots,
and future increases in passenger volume are expected to come from increased
load factors, the acquisition of additional slots and the concentrated use at
O'Hare of currently operated larger aircraft. See "Slot Allocation" and
"Aircraft." During 1999, approximately 37 percent of the Company's passenger
traffic was carried to or from Chicago. During 1999, approximately 65 percent of
the Company's traffic at Chicago O'Hare connected with United, one percent
connected with other airlines and 34 percent traveled exclusively on a Great
Lakes flight ("on-line"). As of December 31, 1999, Great Lakes had 46 weekday
Chicago O'Hare departures serving 16 destinations located in Iowa, Illinois,
Indiana, Michigan, and Wisconsin.

DENVER

    The Company's primary strategy at Denver is to implement service in markets
where United and other major carriers have reduced service and to feed that
traffic to this United hub. The Company is in

                                       2
<PAGE>
negotiations with United as a part of the United code sharing agreement with
respect to the sharing of the expenses of operating at the new Denver airport.
During 1999, approximately 61 percent of the Company's passenger traffic was
carried to or from Denver. During 1999, approximately 70 percent of the
Company's traffic at Denver connected with United, 2 percent connected with
other carriers and 28 percent were on-line. As of December 31, 1999, the Company
had 94 weekday Denver departures serving 45 destinations located in Colorado,
Iowa, Kansas, Nebraska, North Dakota, South Dakota, Wyoming, New Mexico and
Texas.

MINNEAPOLIS/ST. PAUL

    As of December 31, 1999, Great Lakes had four weekday departures serving
four destinations located in Minnesota, North Dakota and South Dakota. During
1998, services in the Minneapolis/St. Paul markets were substantially reduced
and the remaining services are supported by the Essential Air Service Subsidy
program.

ESSENTIAL AIR SERVICE PROGRAM

    The Airline Deregulation Act of 1978 ("The Deregulation Act") allowed
airlines great freedom to introduce, increase and generally reduce or eliminate
service to existing markets. Under the Essential Air Service Program, which is
administered by the Department of Transportation (DOT), certain communities that
received scheduled air service prior to the passage of the Deregulation Act are
guaranteed specified levels of "essential air service." The DOT may authorize
federal subsidies to compensate a carrier providing essential air service in
otherwise unprofitable or minimally profitable markets. If these subsidies are
eliminated the Company may discontinue service to some or all of the subsidized
communities.

    At December 31, 1999, the Company served 30 essential air service
communities on a subsidized basis. The Company received $16.2 million,
$15.0 million, and $6.1 million in essential air service subsidies for the years
ended December 31, 1999, 1998 and 1997, respectively. An airline serving a
community that qualifies for essential air services is required to give the DOT
advance notice before it may terminate, suspend or reduce service. Depending on
the circumstances, the DOT may require the continuation of existing service
until a replacement carrier is found. The Company negotiated increases in rates
which went into effect in 1998, and added additional cities and flight
frequencies for which it receives subsidy revenue.

AIRCRAFT

GENERAL

    At December 31, 1999, the Company's fleet consisted of 44 Beechcraft 1900
aircraft and eight Embraer passenger aircraft, of which 40 Beechcraft 1900
aircraft and eight Embraer Brasilia aircraft were operated in scheduled
passenger service. The remaining four Beechcraft 1900C aircraft are being
utilized exclusively for scheduled mail and freight operations. The Beechcraft
1900 aircraft are pressurized, radar equipped and offer a 300-mile per hour
cruising speed for 19 passengers, plus cargo, with a range of 850 miles. The
Beechcraft 1900 aircraft is widely regarded by airlines as an efficient and
reliable aircraft for regional service. As of December 31, 1999, the Company
owned 28 of its Beechcraft 1900 aircraft and leased the remaining 16 under
agreements with remaining terms ranging from monthly to 12 years.

    The 30 passenger Embraer Brasilia aircraft are equipped with advanced
avionics, have stand-up cabins, restrooms, are staffed with a flight attendant
and offer a 330 mile per hour cruising speed with a range of 750 miles. As of
December 31, 1999, the Company owned four of its Embraer Brasilia aircraft and
leased the remaining four under agreements with remaining terms ranging from
three to 12 years.

                                       3
<PAGE>
SUMMARY OF AIRCRAFT ADDITIONS AND DELETIONS

    The table below shows the number and type of aircraft operated by the
Company on January 1, 1999 and December 31, 1999 and the number and type of
aircraft acquired or retired from the Company's fleet during the year ended
December 31, 1999.

<TABLE>
<CAPTION>
                                                                                                      DECEMBER 31,
                                                                                                          1999
                                             JANUARY 1,                             DECEMBER 31,   -------------------
                                                1999      ADDITIONS   RETIREMENTS       1999        OWNED      LEASED
                                             ----------   ---------   -----------   ------------   --------   --------
<S>                                          <C>          <C>         <C>           <C>            <C>        <C>
Beechcraft 1900C...........................       5          --             1             4           --          4
         1900D.............................      40          --            --            40           28         12
Embraer 120................................       8          --            --             8            4          4
                                                 --          --            --            --           --         --
  Total....................................      53          --             1            52           32         20
                                                 ==          ==            ==            ==           ==         ==
</TABLE>

    As of December 31, 1999, the average ages of the Company's owned and leased
aircraft were 5.3 and 4.2 years, respectively. As of December 31, 1998, the
average ages of the Company's owned and leased aircraft were 5.8 and 3.3 years,
respectively.

AIRCRAFT DEBT AND LEASES

    Raytheon Aircraft Corporation together with its financing affiliate
(collectively, "Raytheon") is the Company's primary aircraft supplier and
largest creditor. The Company has financed all of its Beechcraft 1900 aircraft
and one of its Brasilia aircraft under lease and debt agreements with Raytheon.
Raytheon has also provided a $5 million working capital line of credit and a
$5 million short-term loan, both of which are collateralized by all Beechcraft
spare parts and equipment and accounts receivable. The working capital line of
credit is due upon demand by Raytheon. In addition, as part of a short-term
financing in 1997, Raytheon was granted a ten year warrant, exercisable
commencing July 16, 1998, to purchase one million shares of the Company's common
stock at a price of $.75 per share. Raytheon has not exercised the warrant as of
the date of this filing.

    The Company has financed seven of its Brasilia aircraft through lease and
debt agreements with other unrelated entities (collectively, the "Brasilia
Agreements"). During 1997, all of the Brasilia Agreements went into default due
to non-payment of scheduled amounts due. All defaults under the Brasilia
Agreements were cured by March 31, 1998. Two Brasilia aircraft which the Company
had in its fleet at January 1, 1997, were returned to the lessor through the
exercise of the lessor's rights as a result of the default. The estimated lease
termination costs associated with these two returned aircraft were included in
Shutdown, and Other Nonrecurring Expenses in 1997. During 1998, the Company
negotiated a final settlement on these aircraft. The final costs are included in
Shutdown and other Nonrecurring Expenses for 1998.

    In the second quarter of 1998, the Company purchased six Beechcraft 1900D
aircraft that had been operated under operating leases. Raytheon provided the
financing for these acquisitions. As part of this agreement, Raytheon agreed to
accept the return of up to 14 of the Company's 1900C aircraft. The Company
returned seven leased 1900C aircraft and sold its seven owned Beechcraft 1900C
aircraft to Raytheon. In 1999, the Company returned an additional 1900 C
aircraft, The Company currently leases four 1900C aircraft from Raytheon under
month-to-month leases for use in contracted mail service In July, 1999, the
Company purchased from Raytheon 22 1900D aircraft through the issuance of notes
payable. These aircraft had previously been leased under short term operating
leases.

    During the first half of 1998, the Company disposed of two Brasilia aircraft
by an agreed upon termination of the underlying leases and transferring
possession to another carrier. In connection with the disposition of one of
these aircraft, the Company guaranteed the continued payment of certain purchase
incentive payments by an agency of the Brazilian government to the lessor, which
incentive payments had

                                       4
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previously been received by the Company. The Company obtained an opinion from
Brazilian counsel to the effect that the disposition by the Company would not
effect the obligations of the Brazilian Government agency to continue to make
these incentive payments. No assurance can be provided, however, the Brazilian
Government will honor its obligations.

MAINTENANCE

    The FAA mandates periodic inspection and maintenance of commercial aircraft.
The Company performs most maintenance and inspection of its aircraft and engines
(except engine overhaul) using its own personnel. Heavy maintenance bases are
located at: Huron, South Dakota; Grand Island, Nebraska; and Spencer, Iowa.
Light maintenance is also performed in Denver, Colorado; Chicago, O'Hare; and
Cheyenne, Wyoming. The Company attempts to perform its maintenance at locations
where its aircraft are stored overnight to reduce maintenance costs and promote
a higher level of operating efficiency. Parts and supplies inventories are also
maintained at these locations to promote the mechanical dispatch reliability of
the fleet. The Company also maintains an inventory of spare engines and
propellers for its fleet to allow for minimal downtime during major overhauls.
The Company performs certain major maintenance overhauls to its fleet, which it
believes most other regional airlines have performed by outside contractors.

SLOT ALLOCATION

    Under slot rules in effect December 31, 1999 at Chicago O'Hare, scheduled
flights operated between 6:45 a.m. and 9:14 p.m. may be conducted only if an
airline has obtained a slot or slot exemption. As of December 31, 1999, the
Company was utilizing 64 slots and slot exemptions allocated to it by DOT/FAA.
The Company was also leasing slots from United under various short term
agreements.

    Outstanding slots at FAA slot-controlled airports are currently freely
exchanged between airlines and other persons, bought or sold (often with gates
or other on-ground assets), or leased. Slot values depend on several factors,
including the airport, the time of day, the number and availability of slots,
and whether they are commuter or air carrier slots. Interests in slots have also
been used by airlines as collateral to secure debt financing and other
obligations. The DOT and FAA must be advised of all slot transfers and must
determine that each such transfer will not be injurious to the Essential Air
Service Program. The transfer of a slot obtained in an FAA-administered lottery
is limited for two years after its acquisition to either transfer for other
lottery slots at the same airport or sales or leases to new entrants or
incumbent slot holders with a small number of slots.

    The FAA's slot regulations require the use of each slot at least 80 percent
of the time, measured on a bi-monthly basis. Failure to do so without a waiver
from the FAA (which is granted only in exceptional cases) subjects the slot to
recall by the FAA. In addition, the slot regulations provide that slots do not
represent a property right, but represent an operating privilege subject to FAA
control and that slots may be withdrawn by the FAA at any time without
compensation to meet the DOT's operational needs (such as providing slots for
international or essential air transportation or providing slots for new entrant
carriers).

    Since the creation of the slot system in 1968, and subsequent to the
adoption of the FAA's slot allocation, use and transfer regulations in 1985,
there have been and are currently pending several proposals introduced in
Congress and discussions within the DOT and the FAA regarding slots. In
August 1993, the National Commission To Ensure A Strong Competitive Airline
Industry recommended that the "FAA review the rule that limits operations at
'high density' airports with the aim of either removing these artificial limits
or raising them to the highest level consistent with safety requirements.

    In March 2000, Congress passed legislation that will phase out slot rules at
Chicago O'Hare by July 1, 2002. Small community air service is designed to be
the primary initial beneficiary of the rule change. The legislation requires the
Secretary of Transportation to use its authority to issue slot exemptions within
60 days of filing requests that meet the specific criteria outlined within the
legislation. Language within this legislation authorizes the Secretary to issue
exemptions for properly filed requests with operational

                                       5
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authority effective on or after May 1, 2000. The Company intends to utilize the
slot rule change initially to improve timing of service patterns to its existing
Chicago O'Hare markets.

YIELD MANAGEMENT

    The Company closely monitors its inventory and pricing of available seats
with a computerized yield management system. This system enables the Company's
revenue control analysts to examine the Company's past traffic and pricing
trends and to estimate the optimal allocation of seats by fare class (the number
of seats made available for sale at various fares). The analysts then monitor
each flight to adjust seat allocations and overbooking levels, with the
objective of maximizing the total revenue for each flight.

MARKETING

    The Company's services are marketed primarily by means of listings in
computerized reservation systems and the OFFICIAL AIRLINE GUIDE, advertising and
promotions, and through direct contact with travel agencies and corporate travel
departments. The Company's advertising and promotional programs emphasize the
Company's close affiliation with United, including coordinated flight schedules
and the right of the Company's passengers to participate in United's "Mileage
Plus" frequent flyer program.

COMPETITION

    The Company competes primarily with regional and major air carriers and
automobile transportation. The Company's competition from other air carriers
varies from location to location and, in certain areas, comes from regional and
major carriers who serve the same destinations as the Company but through
different hub and spoke systems. The domestic airline industry has undergone
major structural changes since the enactment of the Deregulation Act. Since that
time, there has been substantial consolidation and integration of both major and
regional carriers, including the acquisition or association of most regional
carriers by or with major carriers. Deregulation has made possible the rapid
entry of competitors into the Company's markets, and competitors are able to
adjust fares rapidly to improve their competitive position.

    Almost all markets are subject to a high degree of price competition both
from established carriers and low fare jet carriers. The Company believes,
however, that its ability to compete in its market areas is strengthened by its
code sharing relationships with United and United's substantial presence at
Chicago O'Hare and Denver which enhance the importance to Great Lakes of the
United "UA" flight designator code in the Upper Midwest. In May 1997, the
Company's scheduled operations at Minneapolis/St. Paul were substantially
reduced and the resources re-deployed to Chicago and Denver where United's
dominant position will generate considerably greater connecting traffic to the
Company's flights. The Company competes with other airlines by offering frequent
flights, flexible schedules and low fares. In addition, the Company's
competitive position benefits from the large number of participants in United's
"Mileage Plus" frequent flyer programs who fly regularly to or from the markets
served by the Company. The United Express Agreements do not prohibit United from
competing with the Company. The United Express Agreements require the Company to
obtain United's written consent before commencing service as a United Express
carrier on routes other than certain pre-approved routes.

    There can be no assurance that the Company will not experience increased
competition from existing competitors or from new entrants on one or more of the
Company's routes.

                                       6
<PAGE>
FUEL

    The Company has not experienced difficulty with fuel availability and
expects to continue to be able to obtain fuel in quantities sufficient to meet
its future requirements. The Company contracts directly with refiners for the
purchase of portions of its fuel. Standard industry contracts generally do not
provide protection against fuel price increases and do not ensure availability
of supply. The Company experienced the impact of rising fuel prices during late
1999 and early 2000. On February 1, 2000, a fuel surcharge was implemented on
passenger tickets that partially mitigates future effects of the Company's
higher fuel costs.

EMPLOYEES

    On December 31, 1999, the Company had 1,105 full-time and 238 part-time
employees as follows:

<TABLE>
<S>                                                           <C>
CLASSIFICATION:
Pilots......................................................     317
Station personnel...........................................     612
Maintenance personnel.......................................     302
Administrative and clerical personnel.......................      65
Flight attendants...........................................      22
Management..................................................      25
                                                               -----
    Total employees.........................................   1,343
                                                               =====
</TABLE>

    The Company's pilots are represented by the International Brotherhood of
Teamsters. Effective November 1, 1997, the Company and union reached an
agreement which becomes amendable October 30, 2000. During 1996 the flight
attendants voted to be represented by the Teamsters Union A collective
bargaining agreement was negotiated and became effective April 1, 1999. The
agreement becomes amendable April 1, 2002.

    The Company's mechanics are represented by the International Association of
Machinists ("IAM"). The current agreement became effective November 1, 1997 and
becomes amendable on November 1, 2000. During 1998, the Company's maintenance
clerks voted to be represented by IAM. A collective bargaining agreement was
negotiated and became effective March 1, 1999. The agreement becomes amendable
March 1, 2002.

    The Company believes that relations with its employees are satisfactory.

CHARTER AND FREIGHT SERVICE

    The Company uses available aircraft and from time to time leases four and
six passenger aircraft from an affiliated company to provide charter services to
private individuals, corporations and groups such as collegiate athletic teams.
The Company also carries freight, mail and small packages on most of its
scheduled flights. Revenues from its charter flights and freight deliveries were
4.4 percent, 3.3 percent and 1.8 percent of the Company's total revenues for the
years ended December 31, 1999, 1998 and 1997, respectively.

REGULATION

    In accordance with the provisions of the Federal Aviation Act of 1958, as
amended (the "1958 Act"), the Company is an air carrier subject to regulation by
the DOT, primarily with respect to economic matters, and is also subject to
regulation by the FAA with respect to certain safety related matters.

    The Deregulation Act eliminated many regulatory constraints so that airlines
became free to set fares and, with limited exceptions, to establish domestic
routes without the necessity of seeking government approval. The DOT is still
authorized to establish consumer protection regulations; to prohibit certain

                                       7
<PAGE>
pricing practices; to mandate conditions of carriage; and to make ongoing
determinations of a carrier's fitness, willingness and ability to properly and
lawfully provide air transportation. The DOT also has the power to bring
proceedings for the enforcement of its regulations under the 1958 Act, including
the assessment of civil penalties and the revocation of operating authority, and
to seek criminal sanctions.

    The Company holds an air carrier-operating certificate issued by the FAA
pursuant to Part 121 of its regulations. The Company, as a commuter air carrier,
is licensed under Part 298 of the Economic Regulations of the DOT. The Company
is subject to the jurisdiction of the FAA with respect to its aircraft
maintenance and operations, including equipment, ground facilities, dispatch,
communications, training, weather observation, flight personnel and other
matters affecting air safety. To ensure compliance with its regulations, the FAA
requires airlines to obtain an operating certificate and operations
specifications for the particular aircraft and types of operations conducted by
the carrier, all of which are subject to suspension or revocation for cause.

    The Company is subject to the jurisdiction of the Federal Communications
Commission regarding the use of its radio facilities. Local governments and
authorities in certain markets have adopted regulations governing various
aspects of aircraft operations, including noise abatement and curfews and use of
airport facilities. The Company believes that it is in compliance with all such
regulations.

    The FAA regulates the use of landing and take-off slots at Chicago O'Hare.
The FAA has the authority to revoke a carrier's slots for failure to comply with
FAA slot regulations.

INSURANCE

    The Company carries the types and amounts of insurance required by the DOT
and customary in the regional airline industry, including coverage for public
liability, property damage, aircraft loss or damage, baggage and cargo liability
and workers' compensation. The United Express Agreements require the Company to
maintain certain specified levels of insurance coverage. The Company believes
that the insurance is adequate as to amounts and risks covered. There can be no
assurance, however, that the limits of the Company's insurance will be
sufficient to cover any catastrophic loss.

ITEM 2. PROPERTIES

    The Company leases gate and ramp facilities at 65 airports where ticketing
is handled by Company personnel. Payments to airport authorities for ground
facilities are based on a number of factors, including the amount of space used
and flight volume. The Company also leases aircraft maintenance and hangar space
at four of the locations it serves.

    The Company leases approximately 15,000 square feet of space in Spencer,
Iowa for its administrative, flight operations and maintenance offices, in
addition to approximately 35,000 square feet of aircraft maintenance and hangar
space located adjacent thereto. The Company leases an additional 32,000 square
feet of space in Spencer for its certified repair station. Effective January 1,
2000, The Company entered into a lease in Cheyenne, Wyoming, for approximately
42,000 square feet of space for administration and maintenance needs. In 1999,
construction was begun on a leased facility in Cheyenne, Wyoming that the
Company intends to occupy in 2000. The facility will be approximately 54,000
square feet, and will be used for administrative, flight operations and
maintenance offices, maintenance and hangar space. The Company believes that it
has adequate facilities for the conduct of its current and planned operations.

ITEM 3. LEGAL PROCEEDINGS

    The Company is a defendant in a lawsuit arising from the collision of a
small aircraft with one of the Company's Beechcraft 1900 aircraft in Quincy,
Illinois on November 19, 1996. The collision occurred at the intersection of two
runways as the Company's aircraft was landing, and resulted in the death of all
ten passengers and the two crewmembers. The Company's insurance carrier is
providing for the Company's

                                       8
<PAGE>
defense in the lawsuit and the Company believes that all claims arising from the
accident will be adequately covered by insurance.

    The Company is a party to several routine pending legal proceedings, none of
which management believes are material to the Company.

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

    There were no matters submitted to a vote of the Company's shareholders
during the three-month period ended December 31, 1999.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

    The Company's Common Stock is traded under the symbol "GLUX" on the NASDAQ
SmallCap Market. The Company's Common Stock began trading on January 19, 1994,
the date of its initial public offering. The initial public offering price of
the Company's Common Stock was $11.00 per share. From January 19, 1994 until
August 27, 1998, the Company's Common Stock was listed on the NASDAQ National
Market System. Effective August 28, 1998 the Company's Common Stock is listed on
the NASDAQ SmallCap Market. The Company's Common Stock is currently listed on
the NASDAQ SmallCap Market.

    The following table sets forth the range of high and low sale prices for the
Company's Common Stock for each of the fiscal quarters for the past two years as
reported by the National Association of Securities Dealer's Bulletin Board.
These prices represent inter-dealer prices without adjustments for mark-up,
mark-down or commission and do not necessarily reflect actual transactions.

<TABLE>
<CAPTION>
STOCK QUOTATIONS                                                HIGH       LOW
----------------                                              --------   --------
<S>                                                           <C>        <C>
1999
  First quarter.............................................   $3.00      $1.88
  Second quarter............................................    3.00       2.06
  Third quarter.............................................    3.13       2.25
  Fourth quarter............................................    2.88       1.13

1998
  First quarter.............................................   $3.94      $1.56
  Second quarter............................................    3.38       2.19
  Third quarter.............................................    4.38       2.50
  Fourth quarter............................................    4.00       2.13
</TABLE>

    As of April 10, 2000, the Company had approximately 1,800 holders of its
Common Stock. The closing price of its common stock on April 10, 2000, as
reported by the NASDAQ SmallCap Market was $1.88 per share.

    The transfer agent for the Company's Common Stock is Norwest Bank Minnesota,
N.A., 161 North Concord Exchange, South St. Paul, Minnesota, 55075-0738,
telephone: (651) 450-4064.

    The Company has not paid any dividends on its Common Stock since its initial
public offering in January 1994 and expects that for the foreseeable future it
will follow a policy of retaining earnings in order to finance the continued
development of its business. Payment of dividends is within the discretion of
the Company's Board of Directors and will depend upon the earnings, capital
requirements and operating and financial condition of the Company, and any
applicable restrictive debt and lease covenants, among other factors.

                                       9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

    The following consolidated statement of operations and consolidated balance
sheet data as of and for each of the years in the five-year period ended
December 31, 1999 are derived from the Company's consolidated financial
statements. The financial statements for the year ended December 31, 1999, 1998
and 1997 have been audited by KPMG LLP, and the financial statements for the
years ended 1996 and 1995 have been audited by Arthur Andersen LLP, independent
public accountants. The consolidated financial statements as of December 31,
1999 and 1998 and for each of the years in the three-year period ended
December 31, 1999 and the report thereon are included elsewhere in this
Form 10-K. The following selected financial data should be read in conjunction
with and are qualified in their entirety by the consolidated financial
statements and the notes thereto included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31
                                               -------------------------------------------------------------
                                                 1999         1998         1997         1996         1995
                                               ---------    ---------    ---------    ---------    ---------
                                               (IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<S>                                            <C>          <C>          <C>          <C>          <C>
STATEMENTS OF EARNINGS DATA:
  Passenger and public service revenues....    $122,890     $108,467     $ 81,335     $107,528      $81,215
  Other revenues...........................       8,480        5,565        2,455        2,142        2,981
                                               --------     --------     --------     --------      -------
      Total operating revenues.............     131,370      114,032       83,790      109,670       84,196
                                               --------     --------     --------     --------      -------
  Operating expenses
    Salaries, wages and benefits...........      33,037       29,106       22,091       27,801       21,407
    Aircraft fuel..........................      16,557       13,974       13,206       19,377       14,181
    Aircraft repairs.......................      17,478        9,426        7,041       13,248        9,229
    Commissions............................       5,796        5,560        5,553        7,704        6,211
    Depreciation and amortization..........       4,779        3,499        4,192        5,634        6,029
    Aircraft Rental........................      13,194       16,511       10,712       11,643        5,213
    Other rentals and landing fees.........       6,504        6,375        5,443        6,794        5,370
    Other operating expense................      25,316       22,922       19,968       25,871       17,315
    Shutdown and other non-recurring
      expenses.............................          --          146        9,234           --           --
                                               --------     --------     --------     --------      -------
      Total operating expenses.............     122,661      107,519       97,440      118,072       84,955
  Operating (loss) income..................       8,709        6,513      (13,650)      (8,402)        (759)
  Interest expense, net....................       5,974        3,485        4,621        5,875        7,282
  Loss on sale of assets...................           7          191           --           --           --
  Gain on sale of slots....................          --           --           --           --        3,850
                                               --------     --------     --------     --------      -------
  Income (loss) before income tax
    expense................................       2,728        2.837      (18,271)     (14,277)      (4,191)
  Income tax expense (benefit).............          --          115           --       (1,454)      (1,503)
                                               --------     --------     --------     --------      -------
  Net income (loss)........................    $  2,728     $  2,722     $(18,271)    $(12,823)     $(2,688)
                                               ========     ========     ========     ========      =======
  Net income (loss) per share: Basic.......    $   0.32     $   0.34     $  (2.41)    $  (1.69)     $ (0.35)
                                               ========     ========     ========     ========      =======
  Net income (loss) per share: Diluted.....    $   0.29     $   0.31     $  (2.41)    $  (1.69)     $ (0.35)
                                               ========     ========     ========     ========      =======
  Average number of common shares
    outstanding--Basic.....................       8,634        7,925        7,589        7,585        7,579
                                               ========     ========     ========     ========      =======
  Average number of common shares
    outstanding--Diluted...................       9,336        8,703        7,589        7,585        7,579
                                               ========     ========     ========     ========      =======
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                              ------------------------------------------------------------------
                                                1999           1998          1997          1996           1995
                                              ---------      --------      --------      ---------      --------
<S>                                           <C>            <C>           <C>           <C>            <C>
SELECTED OPERATING DATA:
  Available seat miles (000s)(1)............    526,095      489,213       438,272         678,304      566,290
  Revenue passengers carried................  1,057,798      873,186       676,015       1,101,265      805,190
  Revenue passenger miles (000s)(2).........    265,733      250,098       202,689         299,607      248,625
  Departures flown..........................    133,423      122,278       102,722         165,972      147,748
  Passenger load factor(3)..................      50.5%        51.1%         46.2%           44.2%        43.9%
  Break-even passenger load factor(4).......      49.1%        49.3%         59.5%           51.5%        49.5%
  Average yield per revenue passenger
    mile(5).................................  40.1 CENTS     37.4 CENTS    37.1 CENTS    34.7 CENTS     31.6 CENTS
  Operating cost per available seat
    mile(6).................................  23.3 CENTS     22.0 CENTS    22.2 CENTS    17.4 CENTS     15.0 CENTS
  Average passenger fare(7).................  $  100.83       107.26       $111.25          102.69      $ 97.58
  Average passenger trip length
    (miles)(8)..............................        251          286           300             296          309
  Aircraft in service (end of period).......         52           53            47              54           50
  Destinations served (end of period).......         67           71            51              86           73

BALANCE SHEET DATA:
Working capital (deficit)...................  $  (3,112)     $(3,025)      $(5,595)      $     603      $12,138
Total assets................................    148,876       72,281        63,758         118,109      140,715
Long-term debt, net of current maturities...     98,701       28,471        28,471          65,986       87,478
Stockholders' equity........................      8,619        5,850         1,127          18,740       34,202
</TABLE>

------------------------

(1) "Available seat miles" or "ASMs" represent the number of seats available for
    passengers in scheduled flights multiplied by the number of scheduled miles
    those seats are flown.

(2) "Revenue passenger miles" or "RPMs" represent the number of miles flown by
    revenue passengers.

(3) "Passenger load factor" represents the percentage of seats filled by revenue
    passengers and is calculated by dividing revenue passenger miles by
    available seat miles.

(4) "Break-even passenger load factor" represents the percentage of available
    seat miles which must be flown by revenue passengers at the average yield
    (net of commissions and fees) for airline operations to break even.

(5) "Average yield per revenue passenger mile" represents the average passenger
    revenue received for each mile a revenue passenger is carried.

(6) "Operating cost per available seat mile" represents operating expenses
    divided by available seat miles.

(7) "Average passenger fare" represents passenger revenue divided by the number
    of revenue passengers carried.

(8) "Average passenger trip length" represents revenue passenger miles divided
    by the number of revenue passengers carried.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

    The discussion and analysis throughout this filing contains certain
forward-looking terminology such as "believes," "anticipates," "will," and
"intends," or comparable terminology. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those projected. Potential purchasers of the Company's securities are
cautioned not to place undue reliance on such forward-looking statements which
are qualified in their entirety by the cautions and risks described herein and
in other reports filed by the Company with the Securities and Exchange
Commission.

                                       11
<PAGE>
    The Company began providing air charter service in 1979, and has provided
scheduled passenger service in the Upper Midwest since 1981. In April 1992, the
Company began operating as a United Express carrier under a cooperative
marketing agreement with United. As of December 31, 1999 the Company provided
passenger service to 67 destinations in 14 states with 486 scheduled departures
each weekday.

RESULTS OF OPERATIONS

COMPARISON OF 1999 TO 1998

    The following table sets forth certain financial and operating information
regarding the Company for the last three fiscal years:

<TABLE>
<CAPTION>
                                                                   FOR THE YEARS ENDED DECEMBER 31
                                     -------------------------------------------------------------------------------------------
                                                   1999                                1998                         1997
                                     ---------------------------------   ---------------------------------   -------------------
                                                                 %                                   %
                                                 CENTS        INCREASE               CENTS        INCREASE               CENTS
                                                  PER           FROM                  PER           FROM                  PER
                                      AMOUNT      ASM           1998      AMOUNT      ASM           1997      AMOUNT      ASM
                                     --------   --------      --------   --------   --------      --------   --------   --------
                                                                       (DOLLARS IN THOUSANDS)
<S>                                  <C>        <C>           <C>        <C>        <C>           <C>        <C>        <C>
Total Operating revenues...........  $131,370       --          15.2%    $114,032       --          36.1%    $ 83,790       --
                                     --------     ----                   --------     ----                   --------     ----
Salaries, wages & benefits.........    33,037      6.3 CENTS    13.5       29,107      5.9 CENTS    31.8       22,091      5.0 CENTS
Aircraft fuel......................    16,557      3.1          18.5       13,974      2.9           5.8       13,206      3.0
Aircraft maintenance
  materials and repairs............    17,478      3.3          85.1        9,426      1.9          33.9        7,041      1.6
Commissions........................     5,796      1.1           4.2        5,560      1.1           0.1        5,553      1.3
Depreciation and amortization......     4,779      0.9          36.6        3,499      0.7         (16.5)       4,192      1.0
Aircraft rental....................    13,194      2.5         (20.1)      16,511      3.4          54.1       10,712      2.4
Other rentals and landing fees.....     6,504      1.2           2.0        6,375      1.3          17.1        5,443      1.2
Other operating expense............    25,316      4.8          10.5       22,922      4.7          14.8       19,968      4.6
Shutdown and other non-recurring
  expenses.........................        --       --            --          146       --            --        9,234      2.1
                                     --------     ----         -----     --------     ----         -----     --------     ----
Total operating expenses...........   122,661     23.3          14.1      107,519     22.0          10.2       97,440     22.2
                                     --------     ----         -----     --------     ----         -----     --------     ----
Operating income (loss)............  $  8,709       --          34.1%    $  6,513       --            --      (13,650)      --
                                     ========     ====         =====     ========     ====         =====     ========     ====
Interest expense, net..............  $  5,974      1.1 CENTS    71.4%    $  3,485      0.7 CENTS   (29.6)%   $  4,620      1.1 CENTS
                                     ========     ====         =====     ========     ====         =====     ========     ====
</TABLE>

<TABLE>
<CAPTION>
                                                        CHANGE FROM                    CHANGE FROM
                                            1999           1998            1998           1997            1997
                                          --------      -----------      --------      -----------      --------
<S>                                       <C>           <C>              <C>           <C>              <C>
Available seat miles (000's)........      526,095         7.5%           489,213         11.6%          438,272
Revenue passenger miles (000's).....      265,733         6.3%           250,098         23.3%          202,689
Passenger load factor...............       50.5%        (0.6)pts          51.1%         4.9pts           46.2%
Average yield per revenue passenger
  mile..............................      40.1 CENTS    2.7 CENTS        37.4 CENTS    0.3 CENTS        37.1 CENTS
</TABLE>

    OPERATING REVENUES:  Operating revenues increased 15.2% to $131.4 million in
1999 from $114.0 million during 1998. The increase in operating revenues
resulted from the increase in revenue passenger miles flown by 6.3% to
265.7 million in 1999 from 250.1 million during 1998 and a 7.2% increase in
average yield per passenger mile to 40.1 CENTS in 1999 from 37.4 CENTS in 1998.
Capacity increased to 526.1 million ASMs in 1999 from 489.2 million ASMs during
1998. The additional capacity is a result of a full year's worth of service from
the expansion of service in the Denver markets in 1998. In addition, public
service revenue increased 8.0% to $16.2 million in 1999 from $15.0 million in
1998.

                                       12
<PAGE>
    OPERATING EXPENSES:  Total operating expenses increased 14.1% to
$122.7 million, or 23.3 cents per ASM, in 1999 from $107.5 million, or 22.0
cents per ASM in 1998. The increase is due to increasing fuel costs in 1999, as
well as higher maintenance materials and component repairs expense.

    Salaries, wages, and benefits expense increased to 6.3 cents per ASM during
1999, from 5.9 cents per ASM during 1998, primarily as a result of higher labor
rates under the union agreements with the Company's mechanics and flight crews
and the higher number of employees needed to support the increased level of
operations.

    Aircraft fuel expense per ASM increased to 3.2 cents in 1999 from 2.9 cents
in 1998 due to increasing oil prices during 1999.

    Aircraft maintenance and repairs expense increased to 3.3 cents per ASM
during 1999, from 1.9 cents per ASM in 1998. Maintenance materials expense in
1998 was favorably impacted by the use of certain inventoried parts, which had
been partially reserved in prior years. Additionally, certain aircraft acquired
in 1998 were under warranty, resulting in lower maintenance costs.

    Depreciation and amortization increased to 0.9 cents per ASM in 1999 from
0.7 cents per ASM in 1998, and aircraft rental decreased to 2.5 cents per ASM in
1999 from 3.4 cents per ASM in 1998 as a result of the purchase in July 1999 of
22 Beechcraft 1900D aircraft that had previously been leased.

    Other rentals and landing fee expenses decreased to 1.2 cents per ASM during
1999, from 1.3 cents per ASM in 1998.

    Other operating expenses increased to 4.8 cents per ASM in 1999 from 4.7
cents in 1998, reflecting higher general and administrative, marketing and
communications costs.

    Interest expense increased to $6.0 million in 1999 from $3.5 million in
1998, primarily as a result of the purchase in July 1999 of 22 additional
aircraft that had previously been financed as operating leases.

    INCOME TAX EXPENSE (BENEFIT):  No income tax provision was recorded for 1999
due to the fact that the Company is in a loss carry forward position and it is
more likely than not that the benefits will be not realized. The provision for
income taxes in 1998 represents state income taxes.

COMPARISON OF 1998 TO 1997

    OPERATING REVENUES:  Operating revenues increased 36.1% to 114.0% million in
1998 from $83.8 million during 1997. The increase in operating revenues resulted
from the increase in revenue passenger miles flown by 23.3% to 250.0 million in
1998 from 202.7 million during 1997 and to 489.2 million ASMs in 1998 from
438.3 million ASMs during 1997. The additional capacity is a result of the
expansion of service in the Denver markets. In addition, public service revenue
increased 145.9% to $15.0 million in 1998 from $6.1 million in 1997.

    OPERATING EXPENSES:  Total operating expenses increased 10.3% to
$107.5 million, or 22.0 cents per ASM, in 1998 from 97.4 million, or 22.2 cents
per ASM in 1197. The increase is due to the expansion of service during 1998
primarily from the Denver hub.

    Salaries, wages, and benefits expense increased to 5.9 cents per ASM during
1998, from 5.0 cents per ASM during 1997, primarily as a result of higher labor
rates under the union agreements with the Company's mechanics and flight crews
and the higher number of employees needed to support the increased level of
operations.

    Aircraft fuel expense per ASM decreased to 2.9 cents in 1998 from 3.0 cents
in 1997 due to generally lower oil prices during 1998 partially offset by fuel
taxes and into-plane costs at the Denver hub.

    Aircraft maintenance and repairs expense increased to 1.9 cents per ASM
during 1998, from 1.6 cents per ASM in 1997 pincipally due to the costs
associated with the introduction of additional aircraft into the fleet in 1998
and the timing of certain maintenance.

                                       13
<PAGE>
    Depreciation and amortization decreased to 0.7 cents per ASM during 1998
from 1.0 cents per ASM in 1997, and aircraft rental increased to 3.4 cents per
ASM in 1998 from 2.4 cents per ASM in 1997, due to the transition of the
Beechcraft fleet to the newer model 1900D and the conversion from notes to
leases on certain aircraft in early 1998.

    Other rentals and landing fee expenses increased to 1.3 cents per ASM during
1998, from 1.2 cents per ASM in 1997, as a result of higher facility costs at
certain locations that the Company began serving in 1998 as well as increased
costs at Denver due to a higher level of activity.

    Other operating expenses increased to 4.7 cents per ASM in 1998 from 4.6
cents in 1997, reflecting higher fixed expenses, including general and
administrative, marketing, and communications associated with the Company's
expansion. In addition, 1998 includes higher United program fees since a higher
percentage of the Company's flying was under the United Code in 1998 versus
1997.

    Shutdown and other nonrecurring expenses of 2.1 cents per ASM in 1997
represents the estimated costs associated with the voluntary shutdown and the
special charge for the write-down of the Brasilia aircraft. This expense
includes $7.9 million related to salaries and wages, aircraft maintenance
materials and repairs, aircraft ownership costs, facilities rental, and other
expenses directly related to the shutdown. The remaining $1.3 million for the
Brasilia aircraft elimination represents a reduction of the carrying value of
the aircraft to their estimated net realizable value, accrued estimated future
unrecoverable lease payments, accrued estimated lease termination costs, and a
reduction of the carrying value of the spare part inventories to net realizable
value, accrued estimated future unrecoverable lease payments, accrued estimated
lease termination costs, and a reduction of the carrying value of the spare part
inventories to net realizable value offset by the recognition of related
deferred purchase incentives on these aircraft. The 1998 nonrecurring expense
related to the reversal of an accrual made in 1997 for the disposal of certain
Brasilia aircraft, which was netted against the final settlement on two Brasilia
aircraft that were returned to the lessor in 1997.

    Interest expense decreased to $3.5 million in 1998 from $4.6 in 1997,
primarily as a result of the refinancing in late 1997, of the Company's
Beechcraft fleet, increasing the number of aircraft financed under operating
leases and decreasing the number financed under debt instruments.

    INCOME TAX EXPENSE (BENEFIT):  No income tax benefit was recorded for 1998
considering that the Company is in a loss carry forward position and it is more
likely than not that the benefits will be not realized. The provision for income
taxes in 1998 represents state income taxes estimated to be payable.

LIQUIDITY AND CAPITAL RESOURCES

    As of December 31, 1999, the Company had reduced the balance on its Raytheon
short term notes to $8.6 million through cash payments of $282,000 and the
return of spare parts inventory of $945,000. The Company is heavily dependent on
Raytheon and United for its liquidity requirements, however neither Raytheon nor
United is under any current obligation to provide further financing to the
Company. The Company entered into an agreement on January 7, 2000 with Coast
Business Credit to provide the Company a $20 million revolving credit facility,
collateralized by accounts receivable. Under this agreement, Raytheon received
$5 million to be applied to short term notes, and further agreed to receive
certain aircraft parts as payment for the remaining line of credit balance.

    The Company's working capital deficit was $3.1 million at December 31, 1999
and $3.0 million at December 31, 1998. Net cash provided by operating activities
improved to $6.6 million in 1999, from a use of $1.8 million in 1998. In 1999,
the Company had used less cash in the current year to fund inventory levels. The
change in inventory along with increases in deferred lease payments and
increased depreciation as a result of aircraft purchases were the primary
contributors in improving operating cash flow.

                                       14
<PAGE>
    In late 1999, the Company incurred additional fuel expense due to rising
fuel prices that have carried over into 2000. On February 1, 2000, a fuel
surcharge was implemented on passenger tickets that partially mitigates future
effects of the Company's higher fuel costs.

    If the Company maintains its current aircraft fleet, aircraft maintenance
materials and repairs expense is expected to trend higher in the next few years
as the fleet ages.

    Raytheon is the Company's primary aircraft supplier and largest creditor.
The Company has financed all of its Beechcraft 1900 aircraft and one of its
Brasilia aircraft under related lease and debt agreements with Raytheon, and
Raytheon has also provided a $5 million working capital line of credit (payable
on demand and a $5 million short-term loan, payable on demand, and
collateralized by Beechcraft spare parts and equipment and accounts receivable.
On January 7, 2000, the Company entered into an agreement with Coast Business
Credit, a division of Southern Pacific Bank, for a $20 million revolving credit
facility. This credit facility bears interest at prime plus 0.5%, payable
monthly, and requires a minimum loan balance of $7,000,000. Borrowings under
this facility are payable on demand and are limited to certain eligible accounts
receivable. The line of credit agreement is effective through December 31, 2002.
The line of credit agreement contains various restrictive covenants which
require the Company to maintain minimum levels of tangible net worth and remain
current on all other outstanding debt obligations, among other matters. The
credit facility also limits additional indebtedness, capital expenditures and
dividends. The Company was in compliance with all such covenants at the
inception of the agreement. In connection with entering into this revolving
credit facility, the Company paid Raytheon $5 million on the short-term loan and
entered into an agreement, whereby, Raytheon would receive certain aircraft
parts as payment for the remaining line of credit balance.

    Effective August 31, 1997, the Company restructured its Raytheon aircraft
agreements. The restructuring resulted in a total of 30 Beechcraft 1900 aircraft
under operating leases of various terms with monthly lease payments ranging from
$18,000 to $40,000 per aircraft. The restructuring also cured all of the
defaults with Raytheon. The restructuring resulted in a net deferred gain of
$1.5 million, which will be recognized over the life of the lease agreements.

    The Company purchased 22 1900D aircraft through the issuance of notes
payable to Raytheon in July 1999, these aircraft had previously been leased on a
month to month basis. The Company currently leases four 1900C aircraft from
Raytheon under month-to-month leases for use in contracted mail service. In the
second quarter of 1998, the Company purchased six Beechcraft 1900D aircraft that
had been operated under operating leases. Raytheon provided the financing for
these acquisitions. As part of this agreement, Raytheon agreed to accept the
return of up to 14 of the Company's 1900C aircraft. The Company returned seven
leased 1900C aircraft and sold its seven owned Beechcraft 1900C aircraft to
Raytheon.

    In addition, the Company has financed seven of its Brasilia aircraft through
lease and debt agreements with other unrelated entities (collectively, the
"Brasilia Agreements"). During 1997, all of the Brasilia Agreements went into
default due to non-payment of scheduled amounts due. All defaults under the
Brasilia Agreements were cured as of March 31, 1998. Two Brasilia aircraft,
which the Company had in its fleet as of January 1, 1997, were returned to the
lessor through the exercise of the lessor's rights as a result of the default.
The lease costs associated with these two returned aircraft were included in
Excess Aircraft, Shutdown, and Other Non-recurring Expenses.

    Capital expenditures related to aircraft and equipment totaled
$76.7 million in 1999, $631,000 during 1998, and $1.1 million in 1997.

    Long-term debt, net of current maturities of $5.8 million, totaled
$98.7 million at December 31, 1999 compared to $28.5 million net of current
maturities of $3.0 million, at December 31, 1998. Long-term debt increased
$73.0 million from December 31, 1998 to December 31, 1999 principally due to the
purchase of 22 Beechcraft 1900D aircraft in July 1999. As of December 31, 1999,
the Company's long-term debt

                                       15
<PAGE>
instruments bear interest at rates ranging from 7.2 to 9.1 percent and are
payable monthly or quarterly through August 2012. All long-term debt as of
December 31, 1999 relates to the acquisition of aircraft and is collateralized
by 32 related aircraft. There are no financial covenants related to such
long-term debt. At this time, management expects that cash on hand, internally
generated cash flow, and borrowings available under credit agreements will be
adequate to meet the Company's operating and recurring cash needs for
foreseeable periods.

YEAR 2000 IMPACT

    Before the rollover of the year from 1999 to 2000, many installed computer
systems and software products were coded to accept only two digit date entries
and were unable to accept four digit date entries to distinguish 21(st) century
dates from the 20(th) century dates. As a result, computer systems and software
used by many companies prior to the rollover date required upgrading or
replacement to comply with such "Year 2000" requirements. The failure of the
Company, its vendors, suppliers or other critical third parties with whom the
Company conducts business to achieve Year 2000 compliance on a timely basis
could materially adversely affect the Company's business.

    As of April 10, 2000, the Company has not experienced and does not
anticipate any material adverse effects on its systems and operations as a
result of Year 2000 issues. Business is continuing as usual, and internal
systems will continue to be monitored for any likely disruptions. Further, as of
April 10, 2000, the Company has not experienced any operational difficulties as
a result of Year 2000 issues with its vendors, suppliers or other critical third
parties with whom the Company conducts business. However, Year 2000 compliance
has many elements and potential consequences, some of which may not be
foreseeable or may be realized in future periods. Consequently, there can be not
assurance that unforeseen circumstances may not arise, or that the Company will
not in the future identify equipment or systems which are not year 2000
compliant.

    Although the transition to the Year 2000 did not have any significant impact
on the Company or its systems and operations, the Company will continue to
monitor the impact of Year 2000 on its systems and those of its vendors,
suppliers and other critical third parties. The contingency plan s that were
developed for use in the event of Year 2000-related failures will be maintained
and generalized for ongoing business use.

    The Company has not spent, and does not anticipate spending in the future,
any material amounts relating to Year 2000 issues.

ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for derivative
instruments and all hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities at their fair values. Accounting for
changes in the fair value of a derivative depends on its designation and
effectiveness. For derivatives that qualify as effective hedges, the change in
fair value will have no impact on earnings until the hedged item affects
earnings. For derivatives that are not designated as hedging instruments, or for
the ineffective portion of a hedging instrument, the change in fair value will
affect current period earnings. At December 31, 1999, the Company had no
derivative instruments. This statement will become effective for the Company for
the first quarter ended March 31, 2001.

FREQUENT FLYER PROGRAM

    The Company's United Express passengers may earn miles in United's "Mileage
Plus" and frequent flyer program, and passengers may use mileage accumulated in
this program to obtain discounted or free tickets for trips that might include a
flight segment on one of the Company's flights. No revenues are

                                       16
<PAGE>
earned or collected on free tickets awarded to passengers under the program.
Awards earned under the frequent flyers program have an expiration date three
years from the date earned. The program also contains certain restrictions,
including blackout dates and capacity controlled bookings, which substantially
limit the use of awards on certain flights and during the busiest periods. The
Company continually monitors the number of free travel award reservations on its
flight segments to ensure that they are within the capacity restrictions defined
in the "Mileage Plus" program. The Company's yield management program and
related seat restrictions minimize the number of revenue passengers that may be
displaced on any individual flight segment. To date, the Company has not
experienced any material use of "Mileage Plus" and awards to obtain travel on
flights, and the incremental cost to the Company attributable to the exercise of
frequent flyer awards (consisting primarily of a minimal amount of additional
gate and passenger service expenses) has not been material. Awards used on the
Company's flights during the year ended December 31, 1999 represented
approximately 2.3% percent of the Company's total passengers. The Company
expects that this percentage will remain approximately the same for the
foreseeable future. Based on this low percentage, the availability on many of
the Company's flights of otherwise vacant seats, and on the program's
restrictions, the Company believes that the displacement, if any, of revenue
passengers by users of "Mileage Plus" and awards will not become material. The
Company continually monitors the number of awards redeemed and will accrue the
incremental costs associated with the "Mileage Plus" and program if they become
material.

EFFECTS OF INFLATION

    In late 1999, the Company incurred additional fuel expense due to rising
fuel prices that carried over into 2000.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
  PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996

CAUTIONARY FACTORS

    The Company wishes to caution shareholders and prospective investors that
the following important factors, among other identified in this Annual Report on
Form 10-K, could affect the Company's actual operating results, and that such
results could differ materially from those expressed in any forward-looking
statements made by the Company. The statements under this caption are intended
to serve as cautionary statements within the meaning of the Private Securities
Litigation Reform Act of 1996. The following information is not intended to
limit in any way the characterization of other statements or information under
other captions as cautionary statements for such purpose. The order in which
such factors appear below should not be construed to indicate their relative
importance or priority.

DEPENDENCE ON RELATIONSHIP WITH UNITED

    The Company generated approximately 94.5% of its revenues for the year ended
December 31, 1999 under the United Express Agreements described under
"Business--United Express Relationship". The United Express Agreements expired
on December 31, 1997. A failure to renew the United Express Agreements, any
termination or materially adverse modification of the agreements, or any
substantial decrease in the number of routes served by the Company under the
agreements would have a materially adverse effect on the Company's business. As
a result of the United Express Agreements, the Company's business is sensitive
to events and risks affecting United. If adverse events affect United's
business, the Company's business will also be adversely affected. The United
Express Agreements require the Company to comply with specific operating
performance standards and, with certain limited exceptions, restrict the ability
of the Company to merge with another company or dispose of its assets or
aircraft without first offering United a right of first refusal to acquire the
Company or such assets or aircraft. The United Express Agreements also prohibit
the Company from entering into similar arrangements with other carriers in
Chicago, Denver, Minneapolis-St. Paul, Detroit, Des Moines or Omaha without
United's prior

                                       17
<PAGE>
approval. The United Express Agreements require the Company to obtain United's
prior consent to operate as a United Express carrier in any market, except for
certain pre-approved markets connecting with Minneapolis-St. Paul or Detroit.

EFFECT OF GENERAL ECONOMIC CONDITIONS

    The airline industry is significantly affected by general economic
conditions. During recent recessions, most airlines reduced fares in an effort
to increase traffic. Economic and competitive conditions in the airline industry
have contributed to a number of bankruptcies and liquidations among airlines. A
worsening of current economic conditions, or an extended period of recession
nationally or regionally, would have a materially adverse effect on the
Company's operations.

FUEL COSTS

    Fuel is a major component of operating expense for all airlines. The
Company's cost of fuel varies directly with market conditions, and the Company
has no guaranteed long-term sources of supply nor has it hedged the cost of its
fuel needs at this time. During late 1999 and early 2000, the industry,
including the Company, experienced increased fuel prices. The Company intends
generally to follow industry trends by raising fares in response to significant
fuel price increases. However, the Company's ability to pass on increased fuel
costs through fare increases may be limited by economic and competitive
conditions. Accordingly, a reduction in the availability or an increase in the
price of fuel could have a materially adverse effect on the Company's cash flow
from operations and profitability.

SEASONALITY

    Historically, the Company has experienced lower passenger volumes during the
months of January through April and in November and December. This seasonality
can be attributed primarily to relatively difficult winter weather operating
conditions in the Company's principal area of operations, resulting in fewer
vacations and other discretionary trips and reduced business travel during these
months. These seasonal factors have generally resulted in reduced revenues,
increased operating losses and reduced cash flow for the Company during these
months.

CONTROL BY PRINCIPAL STOCKHOLDER

    Mr. Douglas G. Voss beneficially owns or controls approximately 55% of the
outstanding shares of the Company's common stock. On October 22, 1996, Mr. Voss
transferred approximately one-half of the shares of the Company's common stock
owned by him to his ex-spouse, Ms. Gayle R. Brandt, pursuant to the Marital
Dissolution Stipulation and Property Settlement. Ms. Brandt has granted
Mr. Voss an Irrevocable Proxy to vote such securities until June 28, 2010. In
addition, the terms of the United Express Agreements require that Mr. Voss
control at least 51% of the Company's outstanding voting stock. Accordingly,
Mr. Voss will continue to be in a position to control the management and affairs
of the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISKS ASSOCIATED WITH FINANCIAL STATEMENTS

    The risk inherent in the Company's market risk sensitive instruments and
positions is the potential loss arising from adverse changes in those factors.
The Company is susceptible to certain risks related to changes in the cost of
aircraft fuel and changes in interest rates. At December 31, 1999, the Company
does not have any derivative financial instruments.

                                       18
<PAGE>
AIRCRAFT FUEL

    Airline operators are dependent upon fuel to operate and therefore, are
impacted by changes in aircraft fuel prices. Great Lakes' earnings are affected
by changes in the price and availability of aircraft fuel. Aircraft fuel
represented approximately 14 percent of Great Lakes' operating expenses in 1999.
During 1999, the Company purchased approximately 18 million gallons of fuel at
an average cost per gallon of $.92. A one-cent change in the average cost of
aircraft fuel would impact the Company's aircraft fuel expense by approximately
$180,000 annually.

INTEREST RATES

    The Company's operations are very capital intensive, as the vast majority of
assets are flight equipment, which are long lived. Great Lakes' exposure to
market risk associated with changes in interest rates relates to its debt
obligations. The Company does have exposure to changes in cash flows resulting
from changes in interest rates as a significant portion of its long-term debt
has variable interest rates. Additionally, the Company is exposed to changes in
fair values of its debt obligations which carry fixed rates of interest. As
disclosed in Note 4 to the Consolidated Financial Statements the Company has
total long-term debt outstanding of $105 million before unamortized warrant
discount of $0.5 million at December 31, 1999.

<TABLE>
<CAPTION>
                                        FIXED      AVERAGE     VARIABLE     AVERAGE
                                         RATE       FIXED        RATE       VARIABLE
MATURITY                                AMOUNT       RATE       AMOUNT        RATE
--------                              ----------   --------   -----------   --------
<S>                                   <C>          <C>        <C>           <C>
2000................................  $1,146,893     8.96%    $ 4,704,172     7.55%
2001................................   1,252,827     8.96       5,846,810     7.55
2002................................   1,366,482     8.96       4,485,815     7.55
2003................................   1,454,482     8.96       4,840,766     7.55
2004................................     620,509     9.08       5,223,930     7.93
Thereafter..........................   2,023,866     9.08      72,070,669     7.93
</TABLE>

    In addition, the Company has a line of credit and other short-term notes
payable in a total amount of $8,573,000 at December 31, 1999. These credit
facilities rates of interest range between 7.75 percent to 8.50 percent.

    In January 2000, the Company entered into a 3-year revolving line of credit
agreement with Coast Business Credit. Borrowings under this agreement are
limited to 85% of the eligible accounts receivables to a maximum of
$20 million. This loan bears interest at 0.5% above the prime rate as published
in the Wall Street Journal, adjusted monthly.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The consolidated financial statements of the Company as of December 31, 1999
and 1998 together with Independent Auditors' Report are included in this
Form 10-K on the pages indicated below.

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Independent Auditors' Report................................     20

Consolidated Balance Sheets as of December 31, 1999 and
  1998......................................................     21

Consolidated Statements of Operations for the Years Ended
  December 31, 1999, 1998 and 1997..........................     22

Consolidated Statements of Stockholders' Equity for the
  Years Ended December 31, 1999, 1998 and 1997..............     23

Consolidated Statements of Cash Flows for the Years Ended
  December 31, 1999, 1998 and 1997..........................     24

Notes to Consolidated Financial Statements..................     26

Supplemental Schedule to Consolidated Financial Statements
  Schedule II--Valuation and Qualifying Accounts............     38
</TABLE>

                                       19
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Great Lakes Aviation, Ltd.:

    We have audited the accompanying consolidated balance sheets of Great Lakes
Aviation, Ltd. (an Iowa Corporation) and subsidiary as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1999. In connection with our audits of the consolidated financial
statements we have also audited the financial statement schedule. These
consolidated financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and the financial statement
schedule based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Great Lakes
Aviation, Ltd. and subsidiary as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

                                              /s/ KPMG LLP
                                          --------------------------------------
                                              KPMG LLP

Des Moines, Iowa
March 10, 2000

                                       20
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                  1999           1998
                                                              ------------   ------------
<S>                                                           <C>            <C>
                                         ASSETS
Current assets:
  Cash......................................................  $     83,957   $    188,987
  Accounts receivable (note 4)..............................    12,575,663      8,374,590
  Inventories, net (notes 1 and 4)..........................    17,975,354     18,458,254
  Prepaid expenses and other current assets.................       643,443        622,538
                                                              ------------   ------------
    Total current assets....................................    31,278,417     27,644,369

Property and equipment:
  Flight equipment (notes 2 and 4)..........................   122,250,002     45,532,765
  Other property and equipment..............................     5,187,840      4,553,503
  Less accumulated depreciation and amortization............   (12,073,477)    (7,967,934)
                                                              ------------   ------------
    Total property and equipment............................   115,364,365     42,118,334
                                                              ------------   ------------
Other assets................................................     2,233,234      3,018,555
                                                              ------------   ------------
                                                              $148,876,016   $ 72,781,258
                                                              ============   ============

                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Note payable and current maturities of long-term debt
    (note 4)................................................  $ 14,423,711   $ 13,647,109
  Accounts payable..........................................    12,727,479     12,250,863
  Accrued liabilities and unearned revenue..................     4,783,057      3,750,528
  Deferred lease payments...................................     2,456,624      1,020,780
                                                              ------------   ------------
    Total current liabilities...............................    34,390,871     30,669,280
                                                              ------------   ------------
Long-term debt, net of current maturities (note 4)..........    98,700,724     28,471,122
Deferred credits............................................     4,627,510      4,936,631
Deferred lease payments.....................................     2,537,529      2,854,329
Stockholders' equity: (note 4)
  Common stock, $.01 par value; 50,000,000 shares
    authorized, 8,637,440 and 8,590,843 shares issued and
    outstanding at December 31, 1999 and 1998...............        86,374         85,908
  Paid-in capital...........................................    31,609,841     31,568,800
  Accumulated deficit.......................................   (23,076,833)   (25,804,812)
                                                              ------------   ------------
      Total stockholders' equity............................     8,619,382      5,849,896
                                                              ------------   ------------
Commitments and contingencies (notes 3, 4, and 8)
                                                              $148,876,016   $ 72,781,258
                                                              ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       21
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                       DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                          1999           1998           1997
                                                      ------------   ------------   ------------
<S>                                                   <C>            <C>            <C>
Operating revenues:
  Passenger.........................................  $106,661,151   $ 93,440,953   $ 75,204,197
  Public service....................................    16,228,491     15,026,050      6,130,964
  Freight, charter, and other.......................     8,480,361      5,564,957      2,454,836
                                                      ------------   ------------   ------------
    Total operating revenues........................   131,370,003    114,031,960     83,789,997
                                                      ------------   ------------   ------------
Operating expenses:
  Salaries, wages, and benefits.....................    33,037,214     29,106,739     22,091,493
  Aircraft fuel.....................................    16,557,193     13,973,669     13,206,289
  Aircraft maintenance materials and repairs........    17,477,722      9,425,672      7,040,982
  Commissions.......................................     5,796,046      5,559,553      5,552,485
  Depreciation and amortization.....................     4,778,770      3,499,409      4,191,856
  Aircraft rental (note 3)..........................    13,194,042     16,511,288     10,712,135
  Other rentals and landing fees....................     6,503,750      6,374,889      5,442,825
  Other operating expense...........................    25,316,303     22,922,191     19,968,330
  Excess aircraft, shutdown and other non-recurring
    expenses (note 2)...............................            --        145,805      9,233,839
                                                      ------------   ------------   ------------
    Total operating expenses........................   122,661,040    107,519,215     97,440,234
                                                      ------------   ------------   ------------
    Operating income (loss).........................     8,708,963      6,512,745    (13,650,237)

Other expense:
  Interest expense, net.............................     5,974,213      3,485,357      4,620,424
  Loss on sale of assets and other property.........         6,771        190,578             --
                                                      ------------   ------------   ------------
    Income (loss) before income taxes...............     2,727,979      2,836,810    (18,270,661)
Income tax expense (benefit)........................            --        115,000             --
                                                      ------------   ------------   ------------
    Net income (loss)...............................  $  2,727,979   $  2,721,810   $(18,270,661)
                                                      ============   ============   ============

Net income (loss) per share
  Basic.............................................  $       0.32   $       0.34   $      (2.41)
  Diluted...........................................  $       0.29   $       0.31   $      (2.41)
Average shares outstanding
  Basic.............................................     8,634,204      7,924,719      7,588,792
  Diluted...........................................     9,335,991      8,702,792      7,588,792
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       22
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                 YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                      COMMON STOCK
                                 ----------------------     PAID-IN     ACCUMULATED
                                   SHARES       AMOUNT      CAPITAL       DEFICIT         TOTAL
                                 -----------   --------   -----------   ------------   ------------
<S>                              <C>           <C>        <C>           <C>            <C>
Balance at December 31, 1996...   7,586,326    $75,863    $28,919,765   $(10,255,961)  $ 18,739,667

Issuance of warrants...........          --         --        650,000             --        650,000
Issuance of common stock.......       2,795         28          7,606             --          7,634
Net loss.......................          --         --             --    (18,270,661)   (18,270,661)
                                  ---------    -------    -----------   ------------   ------------
Balance at December 31, 1997...   7,589,121     75,891     29,577,371    (28,526,622)     1,126,640

Issuance of common stock.......   1,001,722     10,017      1,991,429             --      2,001,446
Net income.....................          --         --             --      2,721,810      2,721,810
                                  ---------    -------    -----------   ------------   ------------
Balance at December 31, 1998...   8,590,843     85,908     31,568,800    (25,804,812)     5,849,896

Issuance of common stock.......      46,597        466         41,041             --         41,507
Net income.....................          --         --             --      2,727,979      2,727,979
                                  ---------    -------    -----------   ------------   ------------
Balance at December 31, 1999...   8,637,440    $86,374    $31,609,841   $(23,076,833)  $  8,619,382
                                  =========    =======    ===========   ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       23
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                 YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                           1999          1998           1997
                                                        -----------   -----------   ------------
<S>                                                     <C>           <C>           <C>
Operating activities:
  Net income (loss)...................................  $ 2,727,979   $ 2,721,810   $(18,270,661)

  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Write down of Brasilia assets and accrued disposal
      costs...........................................           --       145,805      1,299,431
    Depreciation and amortization.....................    4,778,770     3,499,409      4,888,896
    Loss on disposal of assets, net...................       (6,771)      190,578        312,291
    Change in current operating items:
      Accounts receivable, net........................   (4,201,073)   (3,822,074)     1,748,979
      Inventories, net................................     (965,654)   (6,846,326)    (1,797,983)
      Prepaid expenses and other current assets.......      (20,905)      195,249      1,633,016
      Deposits on flight equipment....................           --       (34,500)      (324,500)
      Accounts payable and accrued liabilities........    1,200,024     2,882,576     (1,582,275)
      Deferred lease payments.........................    2,439,351      (738,304)     5,255,598
      Other...........................................      606,625            --             --
                                                        -----------   -----------   ------------
        Net cash provided by (used in) operating
          activities..................................    6,558,346    (1,805,777)    (6,837,208)
                                                        -----------   -----------   ------------

Investing activities:
  Purchases of flight equipment and other property and
    equipment.........................................   (1,704,862)     (630,542)    (1,058,732)
  Proceeds from the sale of flight equipment..........       15,131         3,900      2,246,725
  Purchase of certificate of deposit..................           --            --     (2,246,725)
  Decrease (increase) in other assets.................       85,321      (490,874)       220,045
  Proceeds from certificate of deposit................           --     2,246,725             --
                                                        -----------   -----------   ------------
        Net cash provided by (used in) investing
          activities..................................   (1,604,410)    1,129,209       (838,687)
                                                        -----------   -----------   ------------

Financing activities:
  Proceeds from issuance of debt......................       20,456            --      4,300,000
  Repayment of long-term debt.........................   (3,988,130)   (2,200,021)    (3,302,288)
  Proceeds from short-term note payable and line of
    credit............................................      455,000     7,683,520             --
  Payments on short-term note payable and line of
    creidt............................................   (1,587,799)   (5,625,174)            --
  Proceeds from sale of common stock..................       41,507     1,001,446          7,634
                                                        -----------   -----------   ------------
        Net cash provided by (used in) financing
          activities..................................   (5,058,966)      859,771      1,005,346
                                                        -----------   -----------   ------------
        Net change in cash............................     (105,030)      183,203     (6,670,549)

Cash:
  Beginning of year...................................      188,987         5,784      6,676,333
                                                        -----------   -----------   ------------
  End of year.........................................  $    83,957   $   188,987   $      5,784
                                                        ===========   ===========   ============
Supplementary cash flow information:
  Cash paid during the year for:
    Interest..........................................  $ 5,445,242   $ 3,816,844   $  4,026,281
    Income taxes......................................           --            --             --
                                                        ===========   ===========   ============
</TABLE>

                                       24
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                           1999          1998           1997
                                                        -----------   -----------   ------------
<S>                                                     <C>           <C>           <C>
  Noncash transactions--
    Long-term debt issued in acquisition of Beechcraft
      1900D airliners.................................  $75,665,924   $        --   $         --
    Conversion of deferred lease payments to long-term
      debt............................................    1,320,307            --             --
    Inventory returned in exchange for reduction of
      line of credit..................................      944,554            --             --
                                                        -----------   -----------   ------------
                                                        $77,930,785   $        --   $         --
                                                        ===========   ===========   ============
    Reduction of notes payable through sale-leaseback
      transactions....................................  $        --   $        --   $ 40,633,798
    Issuance of warrant...............................           --            --        650,000
    Conversion of lease obligation to notes payable...           --            --        528,629
    Conversion of accounts payable to notes payable...           --            --      1,798,829
    Flight equipment exchanged for payment of notes
      payable.........................................           --            --        950,000
                                                        -----------   -----------   ------------
                                                        $        --   $        --   $ 44,561,256
                                                        ===========   ===========   ============
    Disposition of Beechcraft 1900C aircraft through
      like kind exchange..............................  $        --   $23,724,490   $         --
    Cancellation of long-term debt associated with
      Beechcrat 1900C aircraft........................           --    17,337,009             --
    Acquisition of Beechcraft 1900D aircraft through
      like kind exchange..............................           --    22,333,455             --
    Long-term debt issued in acquisition of Beechcraft
      1900D aircraft through like-kind exchange.......           --    20,379,451             --
    Common stock issued in exchange for reduction of
      accounts payable................................           --       750,000             --
    Common stock issued in exchange for termination of
      notes payable...................................           --       250,000             --
                                                        -----------   -----------   ------------
                                                        $        --   $84,774,405   $         --
                                                        ===========   ===========   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       25
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS

    CORPORATE ORGANIZATION

The consolidated financial statements include the accounts of Great Lakes
    Aviation, Ltd. (Great Lakes) and its wholly owned subsidiary, RDU Inc.
    (RDU), referred to collectively herein as the Company. All significant
    inter-company accounts and transactions have been eliminated in
    consolidation.

    BUSINESS

The Company operates as United Express under a cooperative marketing agreement
    (United Express Agreement) with United Airlines, Inc. (United) and provides
    service to 67 destinations in the Upper Midwest and West as of December 31,
    1999.

The United Express Agreement expired on December 31, 1997. In 1999 and 1998, the
    Company and United have been operating as if the principal day-to-day
    operational provisions of the previous code sharing agreement are still
    effective. The Company and United have entered into negotiations to renew
    the code sharing agreement and during 1998 the Company expanded the services
    provided as a United Express carrier at United's Denver hub. While the
    Company intends to obtain a new code sharing agreement containing
    satisfactory terms, no assurance can be given that this actually will be
    accomplished. Any failure to enter into a new code sharing agreement, any
    material adverse change in the terms from the prior code sharing agreement,
    or any substantial decrease in the number of routes served by the Company
    under this agreement could have a material adverse effect on the Company's
    business.

In 1997, the Company reported a substantial loss which affected the Company's
    liquidity position. Thereafter, the Company restructured and the extended
    the repayment terms of lease and debt agreements, and achieved improvements
    in its operating results and cash flows. The Company achieved profitable
    operating results in 1998 and 1999 and, in January 2000, the Company
    restructured the repayment terms of its short-term debt obligations with
    Raytheon Aircraft Corporation (see note 4). Additionally, the Company
    negotiated definitive agreements for the purchase of 22 Beechcraft 1900D
    aircraft that previously has been leased, and reconciled and established
    repayment terms on its trade payable account with Raytheon.

A subtantial portion of cash generated from operations is used to service the
    Company's outstanding indebtedness and all of the Company's assets have been
    pledged to secure this indebtedness. The Company's future operations are
    dependent on the attainment of certain objectives, including continued
    growth in revenues, net income and positive operating cash flows. There can
    be no assurance that these financial objectives will be achieved, and if or
    when needed, that the Company will be able to obtain any additional equity
    or debt financing, or that such financing, if obtained, would be on terms
    favorable to the Company.

Passenger revenues during 1999, 1998, and 1997 were derived 100 percent,
    99 percent and 84 percent from United Express operations, 0 percent,
    0 percent and 8 percent from Midway Connection and 0 percent, 1 percent and
    8 percent from Great Lakes Airlines operations. Approximately 68 percent,
    49 percent, and 50 percent of the United Express passengers connected with
    United for the years ended December 31, 1999, 1998, and 1997, respectively.

From October 1, 1995 to May 16, 1997, the Company operated as a "Midway
    Connection" carrier under a cooperative marketing agreement (Midway
    Connection Agreement) with Midway Airlines, Inc. (Midway) and served
    Raleigh/Durham from 14 destinations in eight states located along the East

                                       26
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS (CONTINUED)
    Coast. From August 1995 to May 16, 1997, the Company served nine destination
    in Arizona, New Mexico, and Mexico (collectively, the Southwest) as Great
    Lakes Airlines. The Midway Connection and Southwest operations were
    terminated on May 16, 1997 after the Company temporarily suspended flight
    operations (see note 2).

    USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
    accounting principles requires management to make estimates and assumptions
    that affect the reported amounts of assets and liabilities and disclosure of
    contingent assets and liabilities at the date of the financial statements
    and the reported amounts of revenues and expenses during the reporting
    period. Actual results could differ from those estimates.

    ACCOUNTS RECEIVABLE

Substantially all accounts receivable balances are due from various airlines,
    with approximately 60 percent of the December 31, 1999, balance and
    41 percent of the December 31, 1998, balance due from United. All
    receivables are pledged as collateral securing a $5,000,000 line of credit
    and a $5,000,000 short term note.

    INVENTORIES

Inventories consist of flight equipment spare parts and fuel and are stated at
    the lower of average cost or market. An allowance for depreciation is
    provided at rates which depreciate the cost of flight equipment spare parts,
    less estimated residual value, over the estimated useful lives of the
    related aircraft. The accumulated allowances were $8,733,827 and $8,057,377,
    respectively, at December 31, 1999 and 1998. Expendable parts are charged to
    maintenance expense as used. Inventories consisting of Beech aircraft spare
    parts and equipment were pledged as collateral securing a $5,000,000 line of
    credit and a $5,000,000 short term note.

    PROPERTY AND EQUIPMENT

Property and equipment is stated at cost and depreciated on a straight-line
    basis for financial reporting purposes over estimated useful lives of
    14-20 years for flight equipment and 3-10 years for other property and
    equipment. Leasehold improvements are amortized over the shorter of the life
    of the lease or the life of the asset. Accelerated methods of depreciation
    are used for tax reporting purposes. All owned aircraft are pledged to
    collateralize outstanding obligations.

Maintenance and repairs, including periodic aircraft overhauls, are expensed as
    incurred.

    OTHER ASSETS

Approximately $1,475,500 of long-term deposits on aircraft operating leases at
    December 31, 1999 and 1998, were included in other assets.

                                       27
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS (CONTINUED)
    DEFERRED LEASE PAYMENTS

During 1997, the Company failed to make scheduled payments on several leases and
    subsequently renegotiated substantially all of their lease agreements. The
    renegotiated leases contain higher monthly payments and or longer payment
    terms than the original agreements. The unpaid rentals have been accrued and
    expensed in the period to which they related and are being amortized over
    the new lease terms of the aircraft as a reduction in future operating
    costs.

    DEFERRED CREDITS

The Company has received various incentives in the form of interest rate
    subsidies and spares parts in connection with the acquisition of new
    aircraft. Incentives are being amortized as a reduction of rent expense or
    interest expense over the term of the related agreement.

    REVENUE RECOGNITION

Passenger revenues are recorded as income when the respective services are
    rendered. Liability for unused tickets issued by the Company is recorded as
    unearned revenue. The Company also receives public service subsidy revenues
    for serving certain communities that do not generate sufficient traffic to
    fully support profitable air service, which are recorded as income as the
    agreed upon air service is furnished by the Company.

    FREQUENT FLYER AWARDS

The Company operates under a code-sharing agreement with United, and
    participates in its frequent flyer program. The Company has not deferred any
    revenue or accrued for incremental costs for mileage accumulation relating
    to these programs, as the impact has not been material.

    INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred
    tax assets and liabilities are recognized for the future tax consequences
    attributable to differences between the financial statement carrying amounts
    of existing assets and liabilities and their respective tax bases and
    operating loss and tax credit carry forwards. Deferred tax assets and
    liabilities are measured using enacted tax rates expected to apply to
    taxable income in the years in which those temporary differences are
    expected to be recovered or settled. The effect of a change in tax rates on
    deferred tax assets and liabilities is recognized in income in the period
    that includes the enactment date.

    INCOME/LOSS PER SHARE

Basic income (loss) per share have been computed by dividing net income (loss)
    by the weighted-average number of shares of common stock outstanding during
    each of the years presented. Diluted income (loss) per share have been
    calculated by also including in the computation the impact of the issuance
    of common stock pursuant to the exercise of outstanding warrants and the
    effect of those employee stock options granted to employees as potential
    common stock that would be dilutive. Since the Company had suffered a net
    loss in the year ended December 31, 1997, the effects of potential common
    stock issuance's were not included in the calculation, as their effects
    would be anti-dilutive.

                                       28
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS (CONTINUED)
    STOCK OPTION PLANS

The Company has elected the pro forma disclosure option of Statement of
    Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
    Compensation". The Company will continue applying the accounting treatment
    prescribed by the provisions of APB Opinion No. 25, "Accounting for Stock
    Issued to Employees". Pro forma net income (loss) and pro forma net income
    (loss) per share have been provided as if SFAS No. 123 were adopted for all
    stock-based compensation plans.

    FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates, methods, and assumptions are set forth below:

    Cash, accounts receivable, accounts payable and accrued liabilities:

    The carrying amount approximates fair value because of the short-term nature
       of these instruments.

Long-term debt:

    Based upon the Company's concentration of long-term debt with the
       manufacturer of aircraft, the fair value of long-term debt was not
       reasonably determinable.

(2) SHUTDOWN AND OTHER NONRECURRING EXPENSES

Under terms of a consent order (the Order) with the Federal Aviation
    Administration (FAA), the Company temporarily suspended its flight
    operations on May 16, 1997 and resumed flight operations on a limited basis
    on May 23, 1997 (the Shutdown). Under terms of the Order, the Company was
    assessed a civil penalty of $1,000,000, of which $700,000 of the civil
    penalty was waived since the Company complied with all terms of the Order
    for a one year period ending May 23, 1998. The Order, among other things,
    required the Company inspect each aircraft and demonstrate to the FAA's
    satisfaction that the Company has sufficient equipment, qualified personnel,
    manuals, systems and financial resources to safely conduct operations. The
    Company's results for 1997 reflect a charge of $300,000 for the penalty
    paid.

Subsequent to the Shutdown, the Company incurred continuing operating expenses,
    (including significant maintenance expenses, grounded aircraft rental and
    depreciation, Brasilia disposal and lease termination costs, employee
    related costs and certain other costs) related to the shutdown. When flight
    operations were resumed, on a reduced basis on May 23, 1997, the Company
    terminated its flight operations as Midway Connection and as Great Lakes
    Airlines in the Southeastern and Southwestern United States, respectively.
    The costs related to the Shutdown and termination of operations in those
    areas in the amount of $9,233,839 are included as shutdown and other
    nonrecurring expenses.

In connection with the reduced flight operations discussed above, the Company
    identified seven Embraer Brasilia 30 passenger aircraft (Brasilia) as being
    excess, which were not needed by the Company to conduct its core United
    Express operation. The Company's intent was to dispose of seven Brasilia
    aircraft (including two aircraft which were returned to the lessor in
    June 1997). Consistent with the intent to dispose of these Brasilia
    aircraft, the Company reduced the carrying value of owned aircraft to their
    estimated net realizable value, accrued future lease payments estimated to
    be unrecoverable,

                                       29
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                           DECEMBER 31, 1999 AND 1998

(2) SHUTDOWN AND OTHER NONRECURRING EXPENSES (CONTINUED)
    accrued estimated lease termination costs, and reduced the carrying value of
    the related Brasilia spare part inventories to their net realizable value at
    December 31, 1997.

In February 1998, the Company entered into an agreement to sell all of their
    remaining Brasilia aircraft and their Brasilia spare part inventories and
    began negotiating with the lessors and creditors for release of the Brasilia
    aircraft. In April 1998, due to the expanded service into the Denver market,
    the Company determined that they had a continued need for five of their
    Brasilia aircraft, and began negotiating with the other party for a
    modification of the agreement. The agreement to sell all the Brasilia
    aircraft was modified and the Company disposed of only two aircraft and
    utilizes the remaining Brasilia aircraft in its operations. As a result of
    the modification in the agreement to sell Brasilia aircraft, the Company
    reversed, in 1998, an accrual of $543,933 that was made in 1997 for the
    intended disposal of three Brasilia aircraft that did not occur. Offsetting,
    this reversal was an additional accrual of $689,738 needed for a final
    settlement reached regarding two Brasilia aircraft that were returned to a
    lessor in 1997, resulting in a net non-recurring charge of $145,805 in 1998.

(3) FLIGHT EQUIPMENT AND OTHER LEASE COMMITTMENTS

The Company's airline fleet consisted of Beechcraft Model 1900 (Beechcraft)
    19-passenger and Embraer Brasilia 30-passenger aircraft summarized as
    follows at December 31:

<TABLE>
<CAPTION>
                                                             1999                                 1998
                                              ----------------------------------   ----------------------------------
                                              BEECHCRAFT   BEECHCRAFT              BEECHCRAFT   BEECHCRAFT
                                                1900C        1900D      BRASILIA     1900C        1900D      BRASILIA
                                              ----------   ----------   --------   ----------   ----------   --------
<S>                                           <C>          <C>          <C>        <C>          <C>          <C>
Owned.......................................      --           28           4          --            6           4
Operating leases............................       4           12           4           5           34           4
                                                  --           --          --          --           --          --
                                                   4           40           8           5           40           8
                                                  ==           ==          ==          ==           ==          ==
</TABLE>

The Company returned two Brasilia aircraft to a lessor in June 1997. In addition
the Company entered into a short-term note agreement in August 1997 with the
lessor which covered unpaid rentals due at that time. In 1998, the Company's
lease agreement was terminated, and in February 1999, the Company reached an
agreement with the lessor for lease termination costs and the unpaid balance of
the short-term note. The settlement agreement called for a total cash payment of
$850,000 which was paid in 1999.

During 1998, the Company exchanged seven owned Beechcraft 1900C aircraft with
    Raytheon for six Beechcraft 1900D aircraft. The transaction was treated as a
    non monetary exchange and as such the loss on the disposal of the seven
    Beechcraft 1900C aircraft was included in the basis of the six Beechcraft
    1900D aircraft. The resulting basis of the six Beechcraft 1900D aircraft did
    not exceed their fair market value.

On April 23, 1998, the Company received twenty-two Beechcraft 1900D aircraft
    from Raytheon. The Company was paying $30,007 a month for each aircraft as
    rent to Raytheon. In July 1999, the Company entered into a written agreement
    with Raytheon to purchase these aircraft through the issuance of notes
    payable to Raytheon.

                                       30
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(3) FLIGHT EQUIPMENT AND OTHER LEASE COMMITTMENTS (CONTINUED)

As of December 31, 1999 lease commitments for aircraft and other property were
    as follows:

<TABLE>
<CAPTION>
                             BEECHCRAFT
                                1990           BRASILIA       OTHER            TOTAL
                             -----------      -----------   ----------      ------------
<S>                          <C>              <C>           <C>             <C>
2000...................      $ 6,816,000      $ 2,709,888   $1,505,000      $ 11,030,888
2001...................        6,816,000        2,709,888      334,000         9,859,888
2002...................        6,816,000        2,709,888      229,000         9,754,888
2003...................        6,816,000        2,467,788      211,000         9,494,788
2004...................        6,816,000        1,741,488      168,000         8,725,488
Thereafter.............       43,718,000       14,149,590           --        57,867,590
                             -----------      -----------   ----------      ------------
                             $77,798,000      $26,488,530   $2,447,000      $106,733,530
                             ===========      ===========   ==========      ============
</TABLE>

(4) NOTES PAYABLE AND LONG-TERM DEBT

Raytheon Aircraft Corp. and its financing affiliates (collectively, "Raytheon")
    is the Company's primary aircraft supplier and largest creditor. The Company
    has financed all of its Beechcraft 1900 aircraft and one of its Brasilia
    aircraft and pursuant to lease and debt agreements with Raytheon, and
    Raytheon has also extended the Company a total $10 million through a line of
    credit and a short-term note payable to finance the Company's operating cash
    needs (collectively, the "Raytheon Agreements"). The line of credit and a
    short-term note payable as extended, are payable on demand. On January 7,
    2000, the Company entered into an agreement with Coast Business Credit for a
    $20 million revolving credit facility. In connection with entering into the
    revolving credit facility, the Company paid Raytheon $5 million on the
    short-term notes and entered into an agreement with Raytheon, whereby
    Raytheon would receive certain aircraft parts, valued at the current
    replacement cost, as payment for the remaining line of credit balance.

In January 2000, the Company entered into an agreement with a lending
    institution for a $20 million revolving credit facility. This credit
    facility bears interest at prime plus 0.5%, payable monthly, and requires a
    minimum loan balance of $7,000,000. Borrowings under this facility are
    payable on demand and are limited to certain eligible accounts receivable
    ($7,751,000 maximum availability at inception). The line of credit agreement
    is effective through December 31, 2002. The line of credit agreement
    contains various restrictive covenants which require the Company to maintain
    minimum levels of tangible net worth and remain current on all other
    outstanding debt obligations, among other matters. The credit facility also
    limits additional indebtedness, capital expenditures and dividends. The
    Company was in compliance with all such covenants at the inception of the
    agreement.

                                       31
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(4) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
Notes payable and current maturities of long-term debt consist of the following
    at December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                        1999          1998
                                                     -----------   -----------
<S>                                                  <C>           <C>
Term note to Raytheon(A)...........................  $ 5,000,000   $ 5,000,000
Line of credit with Raytheon(B)....................    3,572,647     4,800,000
Other short-term note(C)...........................           --       850,000
Current maturities of long-term debt...............    5,851,064     2,997,109
                                                     -----------   -----------
                                                     $14,423,711   $13,647,109
                                                     ===========   ===========
</TABLE>

------------------------

(A) The Company entered into a short-term note with Raytheon in July 1997 which
    is payable on demand. The interest rate is variable and based on the prime
    lending rate. The rate charged at December 31, 1999 and 1998 was
    8.50 percent and 8.50 percent, respectively. The note is secured by accounts
    receivable and Beech aircraft spare parts and equipment and is
    cross-collaterialized with the other Raytheon agreements.

(B) The Company entered into a $2.5 million line of credit with Raytheon that
    was later amended and increased to $5.0 million. The line of credit expired
    on March 31, 1997, and is due upon demand. The interest rate is variable and
    based on the prime lending rate. The rate charged at December 31, 1999 and
    1998 was 8.50 percent and 8.50 percent, respectively. The note is secured by
    accounts receivable and Beech aircraft spare parts and inventory and is
    cross-collaterialized with the other Raytheon agreements.

(C) A short-term note payable relating to aircraft the Company leased in 1997.
    The amount was repaid in 1999.

Long-term debt, including unamortized warrant consists of the following at
    December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                        1999          1998
                                                    ------------   -----------
<S>                                                 <C>            <C>
Raytheon(D).......................................  $ 97,151,706   $22,551,187
Other long-term notes(E)..........................     7,887,582     8,917,044
                                                    ------------   -----------
                                                     105,039,288    31,468,231
Less current maturities of long-term debt.........     5,851,064     2,997,109
                                                    ------------   -----------
                                                    $ 99,188,224   $28,471,122
                                                    ============   ===========
</TABLE>

------------------------

(D) The Raytheon notes consist of 29 term notes in 1999 and seven term notes in
    1998. As discussed in note 3, the Company exchanged seven aircraft for six
    aircraft during 1998. In connection with this exchange, seven of the term
    notes outstanding at December 31, 1997 were terminated and six new term
    notes were entered into in 1998. On July 1, 1999, the Company entered into
    22 term notes to purchase 22 1900D Beechcraft airliners. The outstanding
    notes at December 31, 1999 require monthly payments ranging from $30,000 to
    $84,500, including interest, with total payments on these notes
    approximating $984,500 per month. The interest rates on the notes range from
    7.15 percent to 8.5 percent as of December 31, 1999, and December 31, 1998.
    Seven of the term notes bear interest at variable rates and 22 of the term
    notes bear a fixed interest rate for 50 months, and become variable

                                       32
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(4) NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
    for the remainder of their term. The notes mature from October 2001 to
    August 2012 and are collateralized by aircraft.

(E) Other long-term notes consist of four term notes which require monthly or
    quarterly payments including interest. The interest rates on the notes are
    approximately 9.05 percent at December 31, 1999 and 1998. Three of these
    notes are collateralized by aircraft.

In connection with the refinancing of the Company's long-term notes, short term
    note agreements, and the restructuring of the Company's lease agreements,
    the Company issued Raytheon a warrant to purchase one million shares of the
    Company's stock, at the then current market price of the stock. The warrant
    is exercisable for ten years beginning July 16, 1998 at a price of $.75 per
    share. Accordingly, the Company has recorded a discount equal to the
    estimated fair value of the warrant on the date of issuance ($650,000),
    which is being amortized as additional interest expense over the weighted
    average life of the debt and lease agreements to which it relates. As of
    December 31, 1999, the remaining unamortized discount is $487,500, and is
    included above as a component of long-term debt.

During 1998, the Company issued 1,000,000 shares of the Company's common stock
    to two investors through a private placement. One investor was an unrelated
    party and paid $1,000,000 cash for 500,000 shares of the Company's common
    stock. Iowa Great Lakes Flyers (IGLF), an entity controlled by the President
    and Chief Executive Officer of the Company received the remaining 500,000
    shares of the Company's common stock and $406,721 in cash from the Company
    in exchange for cancellation of accounts payable and a note payable totaling
    $1,406,721 to IGLF.

As of December 31, 1999, the long-term debt obligations (before unamortized
    warrant discount of $487,500) due in the five subsequent years and
    thereafter were as follows:

<TABLE>
<CAPTION>
                               BEECHCRAFT
                                  1900S          BRASILIAS        OTHER           TOTAL
                               -----------      -----------      --------      ------------
<S>                            <C>              <C>              <C>           <C>
2000.....................      $ 3,852,365      $ 1,989,789      $ 8,909       $  5,851,064
2001.....................        4,921,929        2,166,162       11,547          7,099,638
2002.....................        3,717,398        2,136,966           --          5,854,364
2003.....................        4,840,766        1,454,482           --          6,295,248
2004.....................        5,223,930          620,509           --          5,844,439
Thereafter...............       72,070,669        2,023,866           --         74,094,535
                               -----------      -----------      -------       ------------
                               $94,627,327      $10,391,505      $20,456       $105,039,288
                               ===========      ===========      =======       ============
</TABLE>

(5) INCOME TAXES

Income taxes for the year ended December 31, 1998 consisted of current state
    income taxes of $115,000.

                                       33
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(5) INCOME TAXES (CONTINUED)

The federal statutory tax rate differs from the Company's effective income tax
    rate for the years ended December 31 as follows:

<TABLE>
<CAPTION>
                                                             1999          1998          1997
                                                           --------      --------      --------
<S>                                                        <C>           <C>           <C>
Federal statutory rate...............................        34.0%         34.0%        (34.0)%
State income taxes, net of federal benefit...........          --           4.5          (4.0)
Change in valuation allowance........................       (34.0)%       (34.0)%        38.0%
                                                            -----         -----         -----
                                                               --%          4.5%           --%
                                                            =====         =====         =====
</TABLE>

Deferred tax assets (liabilities) as of December 31 were as follows:

<TABLE>
<CAPTION>
                                                          1999             1998
                                                      ------------      -----------
<S>                                                   <C>               <C>
Deferred tax assets
  Net operating loss carry forwards.............      $ 10,363,000      $ 9,056,000
  Accrued liabilities and other.................         6,190,000        3,850,000
                                                      ------------      -----------
    Total gross deferred tax asset..............        16,553,000       12,906,000
    Less valuation allowance....................       (12,017,000)      (9,098,000)
                                                      ------------      -----------
    Total deferred tax asset....................         4,536,000        3,808,000
Deferred tax liabilities
  Property and equipment........................        (4,536,000)      (3,808,000)
                                                      ------------      -----------
    Total deferred tax asset (liability)........      $         --      $        --
                                                      ============      ===========
</TABLE>

The Company has net operating loss carry forwards for federal income tax
    purposes totaling approximately $29,608,000 at December 31, 1999, expiring
    in years from 2005 through 2019. The net change in total valuation allowance
    for the years ended December 31, 1999 and 1998 was a increase (decrease) of
    $2,919,000 and $(306,000), respectively.

(6) EMPLOYEE BENEFIT PLANS

    401(K)

The Company maintains a qualified 401(k) employee savings plan for the benefit
    of substantially all employees. The Company matches up to 4 percent of
    participating employees' contributions. Company contributions totaled
    $337,000 in 1999, $268,000 in 1998 and $276,000 in 1997.

    STOCK OPTION PLANS

The Company has adopted The Great Lakes Aviation, Ltd. Option Plan and the 1993
    Director Stock Option Plan (the Plans). The Plans permit the grant of
    qualified incentive stock options or non-qualified stock options covering in
    the aggregate 600,000 shares of the Company's common stock to be granted to
    key employees, officers, and directors of the Company. Options outstanding
    under the Plans become exercisable one-fifth in years one through five from
    the date of grant. The options expire after ten years from the date of
    grant. Options are forfeited upon termination for reasons other than
    retirement, death or disability.

                                       34
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(6) EMPLOYEE BENEFIT PLANS (CONTINUED)
The Company applies APB Opinion No. 25 and related interpretations in accounting
    for the Plans, both of which are fixed stock option plans. Accordingly, no
    compensation cost has been recognized for the Plans. Had compensation cost
    for the Company's fixed stock option plans been determined consistent with
    SFAS No. 123, the Company's net income (loss) and income (loss) per share
    would have been impacted as follows:

<TABLE>
<CAPTION>
                                                 YEARS ENDED DECEMBER 31,
                                          --------------------------------------
                                             1998         1997          1997
                                          ----------   ----------   ------------
<S>                                       <C>          <C>          <C>
Net income (loss) as reported...........  $2,727,979   $2,721,810   $(18,270,661)
Pro forma net income (loss).............  $2,571,000   $2,643,717   $(18,294,508)
Basic income (loss) per share as
  reported..............................  $     0.32   $     0.34   $      (2.41)
Pro forma basic income (loss) per
  share.................................  $     0.30   $     0.33   $      (2.41)
Diluted income (loss) per share as
  reported..............................  $     0.29   $     0.31   $      (2.41)
Pro forma diluted income (loss) per
  share.................................  $     0.28   $     0.30   $      (2.41)
</TABLE>

The fair value of each option grant is estimated on the date of grant using the
    Black-Scholes option-pricing model. The following weighted-average
    assumptions were applied in determining pro forma compensation cost:

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                   ------------------------------
                                                     1999       1998       1997
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Risk-free interest rate..........................     5.10%      5.77%      6.63%
Expected dividend yield..........................        0%         0%         0%
Expected option life.............................        5          5          5
Expected Stock price volatility..................    93.20%     89.68%     77.81%
</TABLE>

A summary of the status of the Company's fixed option plans as of December 31,
    1999, 1998, and 1997 and changes during the years ended on those dates is
    presented below:

<TABLE>
<CAPTION>
                                              1999                   1998                   1997
                                      --------------------   --------------------   --------------------
                                                 WEIGHTED-              WEIGHTED-              WEIGHTED-
                                                  AVERAGE                AVERAGE                AVERAGE
                                                 EXERCISE               EXERCISE               EXERCISE
                                       SHARES      PRICE      SHARES      PRICE      SHARES      PRICE
                                      --------   ---------   --------   ---------   --------   ---------
<S>                                   <C>        <C>         <C>        <C>         <C>        <C>
Outstanding at beginning of year....  330,000      $3.26       68,000     $6.43      189,500     $4.48
Granted.............................   50,000      $2.75      277,000     $2.77       10,000     $1.41
Forfeited...........................  (70,000)     $2.82      (15,000)    $2.75     (131,500)    $3.90
                                      -------                --------               --------
Outstanding at end of year..........  310,000      $3.27      330,000     $3.26       68,000     $5.15
                                      =======                ========               ========
Options exercisable at year end.....   90,800      $4.43       40,800     $6.09       28,600     $6.43
Weighted-average fair value of
  options granted during the year...    $2.03                   $2.05                  $0.92
</TABLE>

                                       35
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(6) EMPLOYEE BENEFIT PLANS (CONTINUED)
A summary of stock options outstanding and exercisable as of December 31, 1999
    are as follows:

<TABLE>
<CAPTION>
                                         OPTIONS OUTSTANDING
                           -----------------------------------------------        OPTIONS EXERCISABLE
                                            WEIGHTED                         ------------------------------
                                            AVERAGE           WEIGHTED                         WEIGHTED
                             NUMBER      REMAINING LIFE   AVERAGE EXERCISE     NUMBER      AVERAGE EXERCISE
RANGE OF EXERCISE PRICES   OUTSTANDING      (YEARS)            PRICE         EXERCISABLE        PRICE
------------------------   -----------   --------------   ----------------   -----------   ----------------
<S>                        <C>           <C>              <C>                <C>           <C>
      $1.41                   10,000          6.5              $ 1.41           4,000           $ 1.41
      $2.75                  242,000          8.6              $ 2.75          38,400           $ 2.75
  $3.875-$5.785               48,000          5.5              $ 4.71          38,400           $ 4.71
      $11.00                  10,000          3.0              $11.00          10,000           $11.00
                             -------                                           ------
                             310,000                                           90,800
                             =======                                           ======
</TABLE>

    EMPLOYEE STOCK PURCHASE PLAN

The Company maintains an employee stock purchase plan. Under the plan, certain
    employees are eligible to purchase an aggregate of not more than 125,000
    shares of the Company's common stock at 95 percent of the lower of the fair
    market value at the beginning or the end of the calendar year in which the
    shares are purchased. In 2000 and 1999, 10,451 and 46,597 shares were
    purchased with 1999 and 1998 payroll withholdings, respectively.

(7) INCOME (LOSS) PER SHARE

The following tables provide a reconciliation of the numerators and denominators
    of the basic and diluted income per share computations for the periods
    presented:
<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                           --------------------------------------------------------------------------------------------------
                                             1999                                       1998                         1997
                           ----------------------------------------   ----------------------------------------   ------------
                              INCOME         SHARES       PER-SHARE      INCOME         SHARES       PER-SHARE      INCOME
                           (NUMERATOR)    (DENOMINATOR)    AMOUNT     (NUMERATOR)    (DENOMINATOR)    AMOUNT     (NUMERATOR)
                           ------------   -------------   ---------   ------------   -------------   ---------   ------------
<S>                        <C>            <C>             <C>         <C>            <C>             <C>         <C>
Basic income (loss) per
  share
  Net income attributed
    to Common
    shareholders.........   $2,727,979      8,634,204       $0.32      $2,721,810      7,924,719       $0.34     $(18,270,661)
                                                            =====                                      =====
Effect of dilutive
  securities
  Stock warrants.........           --        695,542                          --        754,343                          --
  Stock options..........           --          6,245                          --         23,730                          --
                            ----------      ---------                  ----------      ---------                 ------------
Diluted income (loss) per
  share
  Net income attributed
    to common
    shareholders.........   $2,727,978      9,335,991       $0.29      $2,721,810      8,702,792       $0.31     $(18,270,661)
                            ==========      =========       =====      ==========      =========       =====     ============

<CAPTION>
                           YEARS ENDED DECEMBER 31,
                           -------------------------
                                     1997
                           -------------------------
                              SHARES       PER-SHARE
                           (DENOMINATOR)    AMOUNT
                           -------------   ---------
<S>                        <C>             <C>
Basic income (loss) per
  share
  Net income attributed
    to Common
    shareholders.........    7,588,792      $(2.41)
                                            ======
Effect of dilutive
  securities
  Stock warrants.........           --
  Stock options..........           --
                             ---------
Diluted income (loss) per
  share
  Net income attributed
    to common
    shareholders.........    7,588,792      $(2.41)
                             =========      ======
</TABLE>

Antidilutive options excluded from the above calculations totaled 300,000
    options at December 31, 1999 (with a weighted average exercise price of
    $3.34) and 320,000 options at December 31, 1998 (with a weighted average
    exercise price of $3.32).

                                       36
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(8) COMMITMENTS AND CONTINGENCIES

In connection with the acquisition of the Brasilia aircraft, the Brazilian
    government has provided a financing subsidy to the Company in the form of
    semiannual payments directly to the Company. The Company has deferred those
    payments and amortized the payments over the term of the financing on a
    straight-line basis. For those seven Brasilia aircraft which the Company
    disposed of, the remaining deferred amount related to those aircraft was
    included as a reduction of the net book value of the owned Brasilia aircraft
    and as a reduction the estimated lease termination costs on leased Brasilia
    aircraft. The Company transferred the right to receive future subsidy
    payments in connection with the termination of certain leases. The remaining
    subsidy payments are not collaterialized or otherwise secured against the
    credit risk of the Brazilian government.

The Company leases certain small aircraft used in its charter operations. In
    1999 five Beechcraft Model 1900 19-passenger aircraft used in airline
    operations were financed under operating leases from a company owned by
    Great Lakes' president and majority stockholder. Total payments under these
    leases and other previous leases in prior years that the Company had with
    other entities that are owned by the Company's president were $1,232,000 in
    1999, $1,186,000 in 1998, and $830,000 in 1997.

    LITIGATION

The Company is a defendant in a lawsuit arising from the collision of a small
    aircraft with one of the Company's Beechcraft 1900 aircraft in Quincy,
    Illinois on November 19, 1996. The collision occurred at the intersection of
    two runways as the Company's aircraft was landing, and resulted in the death
    of all ten passengers and the two crewmembers. The Company's insurance
    carrier is providing for the Company's defense in the lawsuit and the
    Company believes that all claims arising from the accident will be
    adequately covered by insurance.

The Company is a party to other ongoing legal claims and assertions arising in
    the ordinary course of business. In the opinion of management, the
    resolution of these matters will not have a material adverse effect on the
    Company's financial position, results of operations, or cash flows.

                                       37
<PAGE>
                   GREAT LAKES AVIATION, LTD. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(9) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following presents selected quarterly unaudited financial data for each of
    the years ended December 31, 1999 and 1998 (in thousands, except for per
    share information):

<TABLE>
<CAPTION>
                                                 FIRST      SECOND     THIRD      FOURTH
                                                QUARTER    QUARTER    QUARTER    QUARTER      YEAR
                                                --------   --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>        <C>
                     1999
----------------------------------------------
Operating revenues............................  $30,183    $33,300    $36,694    $31,193    $131,370
Operating income..............................      145      2,979      5,326        259       8,709
Net income (loss).............................     (747)     2,034      3,412     (1,971)      2,728
                                                =======    =======    =======    =======    ========
Net income (loss) per share
  Basic.......................................  $ (0.09)   $  0.24    $  0.40    $ (0.23)   $   0.32
  Diluted.....................................  $ (0.09)   $  0.22    $  0.36    $ (0.23)   $   0.29

Weighted average shares outstanding
  Basic.......................................    8,624      8,624      8,637      8,637       8,634
  Diluted.....................................    8,624      9,352      9,365      8,637       9,336

                     1998
----------------------------------------------
Operating revenues............................  $18,861    $27,457    $36,184    $31,530    $114,032
Operating income (loss).......................   (3,021)     2,624      5,782      1,128       6,513
Net (loss)....................................   (3,878)     1,793      4,861        (54)      2,722
                                                =======    =======    =======    =======    ========
Net income (loss) per share
  Basic.......................................  $ (0.51)   $  0.24    $  0.61    $ (0.01)   $   0.34
  Diluted.....................................  $ (0.51)   $  0.22    $  0.56    $ (0.01)   $   0.31

Weighted average shares outstanding
  Basic.......................................    7,589      7,591      7,917      8,591       7,925
  Diluted.....................................    7,589      8,328      8,690      8,591       8,703
</TABLE>

For 1999 and 1998 the first and fourth quarters reflect a net loss, the effect
    of stock options and stock warrants are not included in the calculation of
    earnings per share because their effects are anti-dulitive. As a result, the
    total of the four quarters' diluted earnings per share will not equal the
    diluted earnings per share for the year.

The above financial data includes normal recurring adjustments and reflects all
    adjustments which are, in the opinion of management, necessary for a fair
    presentation of such financial data. The Company's business is seasonal and,
    accordingly, interim results are not indicative of results for a full year.

                                       38
<PAGE>
                    GREAT LAKES AVIATION LTD. AND SUBSIDIARY
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                               CHARGED TO
                                     BALANCE AT   CHARGED TO      OTHER                    BALANCE AT
CLASSIFICATION                       BEGINNING    COSTS AND     ACCOUNTS-    DEDUCTIONS-     END OF
YEAR ENDED DECEMBER 31               OF PERIOD     EXPENSES    DESCRIBE(1)   DESCRIBE(2)     PERIOD
----------------------               ----------   ----------   -----------   -----------   ----------
<S>                                  <C>          <C>          <C>           <C>           <C>
1999
Inventory Reserves.................  $8,057,327   $  676,500   $       --    $       --    $8,733,827

1998
Inventory Reserves.................  $3,513,000   $1,027,817   $3,516,510    $       --    $8,057,327

1997
Inventory Reserves.................  $3,082,000   $2,172,000   $       --    $1,741,000    $3,513,000
</TABLE>

------------------------

(1) Balance sheet adjustment related to Brasilia aircraft inventory.

(2) Deductions related to scrapped parts and the results of physical
    inventories.

All other schedules for which provision is made in the applicable accounting
    regulations of the Securities and Exchange Commission have been omitted as
    not required, not applicable or the information required has been included
    elsewhere in the financial statements and related notes.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors of the Company is incorporated herein by
  reference to the descriptions set forth under the caption "Executive Officers"
  and "Election of Directors" in the Proxy Statement for Annual Meeting of
  Shareholders to be held May 19, 2000 (the "2000 Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive compensation is incorporated herein by reference
  to the information set forth under the caption "Executive Compensation" in the
  2000 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information regarding security ownership of certain beneficial owners and
  management of the Company is incorporated herein by reference to the
  information set forth under the caption "Security Ownership of Certain
  Beneficial Owners and Management" in the 2000 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding certain relationships and transactions between the Company
  and related parties is incorporated herein by reference to the information set
  forth under the caption "Certain Relationships and Related Transactions" in
  the 2000 Proxy Statement.

                                       39
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a) REPORTS ON FORM 8-K. During the fourth quarter ended December 31, 1999
and during the period from the end of that quarter to the date of this Annual
Report, the Company filed no reports on Form 8-K with the Securities and
Exchange Commission.

    (b) EXHIBITS

<TABLE>
    <C>     <S>
     3.1    Amended and Restated Articles of Incorporation.(1)

     3.2    Amended and Restated Bylaws.(1)

     4.1    Specimen Common Stock Certificate.(1)

    10.1    Promissory Note payable to Raytheon in the amount of
              $3,445,000, dated December 30, 1992, together with related
              security agreement.(1)

    10.2    Schedule identifying other Promissory Notes payable to
              Raytheon Aircraft Credit Corporation, which are
              substantially identical in all material respects to
              Exhibit 10.1.(1)

    10.3    Form of Aircraft Lease Agreement dated March 6, 1990, by and
              between Raytheon Aircraft Credit Corporation and the
              Company.(1)

    10.4    United Express Agreement, dated February 28, 1992, by and
              between United Air Lines, Inc. and the Company (certain
              portions deleted pursuant to request for confidential
              treatment).(1)

    10.5    Standard Ground Handling Agreement, dated April 3, 1991, by
              and between United Air Lines, Inc. and the Company.(1)

    10.6    United Express Fare Revenue Sharing Agreement, dated
              February 28, 1992, by and between United Air Lines, Inc.
              and the Company (certain portions deleted pursuant to
              request for confidential treatment).(1)

    10.7    Letter Agreement, dated April 21, 1995, amending the United
              Express Agreement (certain portions deleted pursuant to
              request for confidential treatment).(2)

    10.8    United Express Interline Agreement, dated February 28, 1992,
              by and between United Air Lines, Inc. and the Company.(1)

    10.9    O'Hare License Agreement, dated April 1, 1991, by and
              between United Air Lines, Inc. and the Company (certain
              portions deleted pursuant to request for confidential
              treatment).(1)

    10.10   Hector International Airport Terminal License Agreement,
              dated September 8, 1994, by and between United Air Lines,
              Inc. and the Company (certain portions deleted pursuant to
              request for confidential treatment).(1)

    10.11   Airport/Airport Facilities Lease Agreement, dated November
              1, 1989, by and between Minneapolis-St. Paul Airport and
              the Company.(1)

    10.12   Great Lakes Aviation, Ltd. 1993 Stock Option Plan.(1)

    10.13   1993 Director Stock Option Plan.(1)

    10.14   Great Lakes Aviation, Ltd. Employee Stock Purchase Plan.(1)

    10.15   Facilities Lease Agreement, dated February 18, 1992, by and
              between the City of Spencer, Iowa and the Company.(1)

    10.16   Agreement in Principle, dated August 29, 1991, by and
              between United Air Lines, Inc. and the Company (certain
              portions deleted pursuant to request for confidential
              treatment).(1)
</TABLE>

                                       40
<PAGE>
<TABLE>
    <C>     <S>
    10.17   Fifth Amendment to the Agreement in Principle, dated
              November 12, 1993, by and between United Air Lines, Inc.
              and the Company (certain portions deleted pursuant to
              request for confidential treatment).(1)

    10.18   Aircraft Finance Agreement, dated March 1, 1994, by and
              between Raytheon Aircraft Credit Corporation and the
              Company.(2)

    10.19   Aircraft Finance Agreement, dated March 1, 1994, by and
              between Raytheon Aircraft Credit Corporation and the
              Company.(2)

    10.20   Negotiable Promissory Note dated March 30, 1996, from the
              Company to Raytheon Aircraft Credit Corporation.(5)

    10.21   Negotiable Promissory Note, dated July 31, 1996, from the
              Company to Raytheon Aircraft Credit Corporation.(5)

    10.22   Consent Order entered into by the Company and the Federal
              Aviation Administration on May 23, 1997.(4)

    10.23   Warrant Agreement, dated July 23, 1997, by and between
              Raytheon Aircraft Credit Corporation and the Company.(3)

    10.24   $4,000,000 Negotiable promissory Note entered into between
              registrant and Raytheon Aircraft Credit Corporation, dated
              July 11, 1997, and amended July 31, 1997 and January 8,
              1998.(6)

    10.25   Pledge and Assignment Agreement entered into between
              registrant and Raytheon Aircraft Credit Corporation, dated
              July 11, 1997.(6)

    10.26   Agreement Pertaining to Loans and Leases entered into
              between registrant and Raytheon Aircraft Credit
              Corporation, dated July 11, 1997.(6)

    10.27   Security Agreement and Encumbrance Against All Carrier
              Aircraft, Engines, Propellers, Appliances and Spare Parts
              entered into between registrant and Raytheon Aircraft
              Credit Corporation, dated July 11, 1997.(6)

    10.28   $1,000,000 Negotiable Promissory Note entered into between
              registrant and Raytheon Aircraft Credit Corporation dated
              January 1, 1998.(6)

    10.29*  Loan and Security Agreement, dated as of December 31, 1999,
              between Coast Business Credit, a division of Southern
              Pacific Bank and the Company.

    10.30*  Amendment Number One to Loan and Security Agreement, dated
              as of January 7, 2000, between Coast Business Credit, a
              division of Southern Pacific Bank and the Company.

    10.31*  Side Letter, dated as of January 5, 2000, regarding
              Representations and Warranties respecting Sections 5.17
              and 5.18 of Loan and Security Agreement, dated as of
              December 31, 1999, between Coast Business Credit, a
              division of Southern Pacific Bank and the Company.

    10.32*  Security Agreement and Encumbrance Against Air Carrier
              Aircraft Spare Parts, dated as of December 31, 1999
              between Coast Business Credit, a division of Southern
              Pacific Bank and the Company.

    10.33*  Intercreditor Agreements, dated December 31, 1999, by and
              among Coast Business Credit, a division of Southern
              Pacific Bank, Raytheon Aircraft Credit Corporation and the
              Company.

    23.1*   Consent of KPMG LLP

    27*     Financial Data Schedule Statement regarding computation of
              per share earnings.
</TABLE>

------------------------

*   Filed herewith.

                                       41
<PAGE>
(1) Incorporated by reference to the Company's Registration Statement on
    Form S-1, Registration No. 33-71180 (the "Form S-1").

(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1995.

(3) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1996.

(4) Incorporated by reference to the Company's Form 8-K, File Number 97616934,
    filed May 23, 1997.

(5) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1997.

(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
    the quarter ended March 31, 1998.

                                       42
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of section 13 or 15(d) 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.

<TABLE>
<S>                                                    <C>  <C>
                                                       GREAT LAKES AVIATION, LTD.

                                                       By              /s/ DOUGLAS G. VOSS
                                                            -----------------------------------------
                                                                         Douglas G. Voss,
                                                              PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dated: April 11, 2000
</TABLE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
    has been signed below by the following persons on behalf of the registrant
    and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                    <S>                              <C>
                 /s/ DOUGLAS G. VOSS
     -------------------------------------------       President, Chief Executive       April 11, 2000
                   Douglas G. Voss                       Officer and Director

                /s/ THOMAS J. AHMANN
     -------------------------------------------       Vice President, Chief Financial  April 11, 2000
                  Thomas J. Ahmann                       Officer

                /s/ RICHARD A. HANSON
     -------------------------------------------       Vice President, Controller       April 11, 2000
                  Richard A. Hanson

               /s/ VERNON A. MICKELSON
     -------------------------------------------       Director                         April 11, 2000
                 Vernon A. Mickelson

                 /s/ GAYLE R. BRANDT
     -------------------------------------------       Director                         April 11, 2000
                   Gayle R. Brandt

                 /s/ IVAN L. SIMPSON
     -------------------------------------------       Director                         April 11, 2000
                   Ivan L. Simpson
</TABLE>

                                       43
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
    <C>     <S>
     3.1    Amended and Restated Articles of Incorporation.(1)

     3.2    Amended and Restated Bylaws.(1)

     4.1    Specimen Common Stock Certificate.(1)

    10.1    Promissory Note payable to Raytheon in the amount of
              $3,445,000, dated December 30, 1992, together with related
              security agreement.(1)

    10.2    Schedule identifying other Promissory Notes payable to
              Raytheon Aircraft Credit Corporation, which are
              substantially identical in all material respects to
              Exhibit 10.1.(1)

    10.3    Form of Aircraft Lease Agreement dated March 6, 1990, by and
              between Raytheon Aircraft Credit Corporation and the
              Company.(1)

    10.4    United Express Agreement, dated February 28, 1992, by and
              between United Air Lines, Inc. and the Company (certain
              portions deleted pursuant to request for confidential
              treatment).(1)

    10.5    Standard Ground Handling Agreement, dated April 3, 1991, by
              and between United Air Lines, Inc. and the Company.(1)

    10.6    United Express Fare Revenue Sharing Agreement, dated
              February 28, 1992, by and between United Air Lines, Inc.
              and the Company (certain portions deleted pursuant to
              request for confidential treatment).(1)

    10.7    Letter Agreement, dated April 21, 1995, amending the United
              Express Agreement (certain portions deleted pursuant to
              request for confidential treatment).(2)

    10.8    United Express Interline Agreement, dated February 28, 1992,
              by and between United Air Lines, Inc. and the Company.(1)

    10.9    O'Hare License Agreement, dated April 1, 1991, by and
              between United Air Lines, Inc. and the Company (certain
              portions deleted pursuant to request for confidential
              treatment).(1)

    10.10   Hector International Airport Terminal License Agreement,
              dated September 8, 1994, by and between United Air Lines,
              Inc. and the Company (certain portions deleted pursuant to
              request for confidential treatment).(1)

    10.11   Airport/Airport Facilities Lease Agreement, dated November
              1, 1989, by and between Minneapolis-St. Paul Airport and
              the Company.(1)

    10.12   Great Lakes Aviation, Ltd. 1993 Stock Option Plan.(1)

    10.13   1993 Director Stock Option Plan.(1)

    10.14   Great Lakes Aviation, Ltd. Employee Stock Purchase Plan.(1)

    10.15   Facilities Lease Agreement, dated February 18, 1992, by and
              between the City of Spencer, Iowa and the Company.(1)

    10.16   Agreement in Principle, dated August 29, 1991, by and
              between United Air Lines, Inc. and the Company (certain
              portions deleted pursuant to request for confidential
              treatment).(1)

    10.17   Fifth Amendment to the Agreement in Principle, dated
              November 12, 1993, by and between United Air Lines, Inc.
              and the Company (certain portions deleted pursuant to
              request for confidential treatment).(1)

    10.18   Aircraft Finance Agreement, dated March 1, 1994, by and
              between Raytheon Aircraft Credit Corporation and the
              Company.(2)
</TABLE>

                                       44
<PAGE>
<TABLE>
    <C>     <S>
    10.19   Aircraft Finance Agreement, dated March 1, 1994, by and
              between Raytheon Aircraft Credit Corporation and the
              Company.(2)

    10.20   Negotiable Promissory Note dated March 30, 1996, from the
              Company to Raytheon Aircraft Credit Corporation.(5)

    10.21   Negotiable Promissory Note, dated July 31, 1996, from the
              Company to Raytheon Aircraft Credit Corporation.(5)

    10.22   Consent Order entered into by the Company and the Federal
              Aviation Administration on May 23, 1997.(4)

    10.23   Warrant Agreement, dated July 23, 1997, by and between
              Raytheon Aircraft Credit Corporation and the Company.(3)

    10.24   $4,000,000 Negotiable promissory Note entered into between
              registrant and Raytheon Aircraft Credit Corporation, dated
              July 11, 1997, and amended July 31, 1997 and January 8,
              1998.(6)

    10.25   Pledge and Assignment Agreement entered into between
              registrant and Raytheon Aircraft Credit Corporation, dated
              July 11, 1997.(6)

    10.26   Agreement Pertaining to Loans and Leases entered into
              between registrant and Raytheon Aircraft Credit
              Corporation, dated July 11, 1997.(6)

    10.27   Security Agreement and Encumbrance Against All Carrier
              Aircraft, Engines, Propellers, Appliances and Spare Parts
              entered into between registrant and Raytheon Aircraft
              Credit Corporation, dated July 11, 1997.(6)

    10.28   $1,000,000 Negotiable Promissory Note entered into between
              registrant and Raytheon Aircraft Credit Corporation dated
              January 1, 1998.(6)

    10.29*  Loan and Security Agreement, dated as of December 31, 1999,
              between Coast Business Credit, a division of Southern
              Pacific Bank and the Company.

    10.30*  Amendment Number One to Loan and Security Agreement, dated
              as of January 7, 2000, between Coast Business Credit, a
              division of Southern Pacific Bank and the Company.

    10.31*  Side Letter, dated as of January 5, 2000, regarding
              Representations and Warranties respecting Sections 5.17
              and 5.18 of Loan and Security Agreement, dated as of
              December 31, 1999, between Coast Business Credit, a
              division of Southern Pacific Bank and the Company.

    10.32*  Security Agreement and Encumbrance Against Air Carrier
              Aircraft Spare Parts, dated as of December 31, 1999
              between Coast Business Credit, a division of Southern
              Pacific Bank and the Company.

    10.33*  Intercreditor Agreement, dated December 31, 1999, by and
              among Coast Business Credit, a division of Southern
              Pacific Bank, Raytheon Aircraft Credit Corporation and the
              Company.

    23.1*   Consent of KPMG LLP

    27*     Financial Data Schedule Statement regarding computation of
              per share earnings.
</TABLE>

------------------------

*   Filed herewith.

(1) Incorporated by reference to the Company's Registration Statement on
    Form S-1, Registration No. 33-71180 (the "Form S-1").

(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1995.

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<PAGE>
(3) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1996.

(4) Incorporated by reference to the Company's Form 8-K, File Number 97616934,
    filed May 23, 1997.

(5) Incorporated by reference to the Company's Annual Report on Form 10-K for
    the year ended December 31, 1997.

(6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
    the quarter ended March 31, 1998.

                                       46