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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K

(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File No. 0-23224





GREAT LAKES AVIATION, LTD.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Iowa                                                           |  | 42-1135319                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|1022 Airport Parkway, Cheyenne, WY       |  | 82001     
|(Address of principal executive offices) |  | (Zip Code)

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files).    Yes   ̈    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.  x

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of
the Exchange Act. (check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The aggregate market value of common stock held by non-affiliates of the registrant as of the last business day of registrants most
recently completed second fiscal quarter was approximately $4,325,000.

As of March 1, 2011 there were 14,291,970 shares
of Common Stock of the registrant issued and outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE

None.









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##### Table of Contents

GREAT LAKES AVIATION, LTD.

FORM 10-K

For the Fiscal Year Ended December 31, 2010

INDEX



|                           |  |                                                                                                              |    |  |    | 
|-------------------------- |  | ------------------------------------------------------------------------------------------------------------ | -- |  | -- | 
|Forward-Looking Statements |  |                                                                                                              | 1  | 
|                           | 
|PART I                     |  |                                                                                                              | 3  | 
|Item 1.                    |  | BUSINESS                                                                                                     |    |  | 3  | 
|Item 1A.                   |  | RISK FACTORS                                                                                                 |    |  | 13 | 
|Item 1B.                   |  | UNRESOLVED STAFF COMMENTS                                                                                    |    |  | 20 | 
|Item 2.                    |  | PROPERTIES                                                                                                   |    |  | 20 | 
|Item 3.                    |  | LEGAL PROCEEDINGS                                                                                            |    |  | 20 | 
|Item 4.                    |  | (REMOVED AND RESERVED)                                                                                       |    |  | 20 | 
|                           | 
|PART II                    |  |                                                                                                              | 21 | 
|Item 5.                    |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |    |  | 21 | 
|Item 6.                    |  | SELECTED FINANCIAL DATA                                                                                      |    |  | 21 | 
|Item 7.                    |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |    |  | 23 | 
|Item 7A.                   |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |    |  | 32 | 
|Item 8.                    |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |    |  | 34 | 
|Item 9.                    |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |    |  | 56 | 
|Item 9A.                   |  | CONTROLS AND PROCEDURES                                                                                      |    |  | 56 | 
|Item 9B.                   |  | OTHER INFORMATION                                                                                            |    |  | 57 | 
|                           | 
|PART III                   |  |                                                                                                              | 58 | 
|Item 10.                   |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |    |  | 58 | 
|Item 11.                   |  | EXECUTIVE COMPENSATION                                                                                       |    |  | 60 | 
|Item 12.                   |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               |    |  | 62 | 
|Item 13.                   |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                    |    |  | 66 | 
|Item 14.                   |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                       |    |  | 67 | 
|                           | 
|PART IV                    |  |                                                                                                              | 68 | 
|Item 15.                   |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |    |  | 68 | 
|                           | 
|SIGNATURES                 |  |                                                                                                              | 69 | 



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Forward-Looking Statements

This Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Great Lakes Aviation,
Ltd. (Great Lakes, we, our, its, it or the Company) notes that certain statements in this Form 10-K and elsewhere are forward-looking and provide other than historical information. Our management may also make oral, forward-looking statements from
time to time. These forward-looking statements include, among others, statements concerning our general business strategies, financing decisions, and expectations for funding expenditures and operations in the future. The words believe,
plan, continue, hope, estimate, project, intend, expect, anticipate and similar expressions reflected in such forward-looking statements are based on
reasonable assumptions, and none of the forward-looking statements contained in this Form 10-K or elsewhere should be relied on as predictions of future events. Such statements are necessarily dependent on assumptions, data, or methods that may be
incorrect or imprecise, and may be incapable of being realized. The risks and uncertainties that are inherent in these forward-looking statements could cause actual results to differ materially from those expressed in or implied by these statements.

As more fully described in this report, important factors that could cause results to differ materially from the expectations reflected in
any forward-looking statements include:



| | 1) | the receipt of sufficient passenger revenues on the routes that we serve;
| | -- | -------------------------------------------------------------------------



| | 2) | the continuance of the federal Essential Air Service program at current funding levels;
| | -- | ---------------------------------------------------------------------------------------



| | 3) | the ability to refinance debt maturing on June 30, 2011 on commercially reasonable terms;
| | -- | -----------------------------------------------------------------------------------------



| | 4) | the volatility and level of fuel costs;
| | -- | ---------------------------------------



| | 5) | the ability of our major creditor and lessor to exercise early termination provisions on seven Beechcraft 1900D aircraft upon 90 days notice;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | 6) | the effect of general economic conditions on business and leisure travel;
| | -- | -------------------------------------------------------------------------



| | 7) | dependence on connecting capacity at our hubs;
| | -- | ----------------------------------------------



| | 8) | the payments and restrictions resulting from our contractual obligations;
| | -- | -------------------------------------------------------------------------



| | 9) | the effect of rules regarding the effect of stock sales on the availability of net operating loss carryforwards;
| | -- | ----------------------------------------------------------------------------------------------------------------



| | 10) | the incidence of domestic or international terrorism and military actions;
| | --- | --------------------------------------------------------------------------



| | 11) | competition from other airlines and from ground transportation;
| | --- | ---------------------------------------------------------------



| | 12) | the incidence of labor disruptions or strikes;
| | --- | ----------------------------------------------



| | 13) | dependence on our key personnel;
| | --- | --------------------------------



| | 14) | the incidence of aircraft accidents;
| | --- | ------------------------------------



| | 15) | the level of regulatory and environmental costs;
| | --- | ------------------------------------------------



| | 16) | the incidence of technological failures or attacks;
| | --- | ---------------------------------------------------



| | 17) | maintenance costs related to aging aircraft;
| | --- | --------------------------------------------



| | 18) | the possibility of substantial numbers of shares being sold by our current investors;
| | --- | -------------------------------------------------------------------------------------



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| | 19) | the limited market for our securities;
| | --- | --------------------------------------



| | 20) | our ability to remediate timely any deficiencies in our internal controls;
| | --- | --------------------------------------------------------------------------



| | 21) | substantial numbers of shares being offered for sale;
| | --- | -----------------------------------------------------



| | 22) | consent requirements for equity issuances under our agreements with Raytheon;
| | --- | -----------------------------------------------------------------------------



| | 23) | no expectation of dividends; and
| | --- | --------------------------------



| | 24) | anti-takeover provisions in our charter documents and Iowa law.
| | --- | ---------------------------------------------------------------

See also Item 1A. Risk Factors, below for additional discussion of these factors.

Readers are cautioned not to attribute undue certainty on the forward-looking statements contained herein, which speak only as of the date hereof.
Changes may occur after that date, and we do not undertake to update any forward-looking statements except as required by law in the normal course of our public disclosure practices.



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PART I



|Item 1. | BUSINESS
|------- | --------

General

We were incorporated on October 25, 1979 as an Iowa corporation and became a publicly traded company in January 1994. We commenced scheduled air
service operations on October 12, 1981. Great Lakes Airlines currently operates hubs at Albuquerque, Billings, Denver, Las Vegas, Milwaukee, Ontario, CA and Phoenix.

We are a regional airline operating as an independent carrier and as a code share partner with United Air Lines, Inc. (United or United Airlines) and Frontier Airlines, Inc.
(Frontier or Frontier Airlines). Our code share agreements allow our mutual customers to purchase connecting flights through our code share partners and to share other benefits such as baggage transfer and frequent flyer
benefits (in certain instances), while we maintain our own branding on our planes and ticket counters and our own designator code on all our flights. As of March 1, 2011 we served 56 airports in 14 states with a fleet of six Embraer EMB-120
Brasilias and 32 Raytheon/Beech 1900D regional airliners.

General information about us and a current route map can be found at
www.flygreatlakes.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website after we have filed
such reports with, or furnished them to, the United States Securities and Exchange Commission. Information on our website is not incorporated into, nor a part of, this Form 10-K or our other securities filings.

Essential Air Service (EAS) Program

We derived approximately 48% of our total revenue from the EAS program in 2010, which is administered by the United States Department of Transportation (DOT). The EAS program was instituted
under the Airline Deregulation Act of 1978 (the Deregulation Act), which allowed airlines greater freedom to introduce, increase, and generally reduce or eliminate service to existing markets. Under the EAS program, certain communities
are guaranteed specified levels of essential air service. In order to promote the provision of essential air services, the DOT may authorize the payment of federal subsidies to compensate an air carrier that is providing essential air
services in otherwise unprofitable or minimally profitable markets. The EAS program has received 18 short-term Congressional extensions of the program. This most recent extension, signed by the President on March 31, 2011, expires on
May 31, 2011. The EAS program is authorized by Congress under the recurring FAA Reauthorization process. We will be posting updates on the status of Congressional events, as they relate to the EAS program, on our website at
www.flygreatlakes.com.

An airline serving a community that qualifies for essential air services is required to give the DOT
advance notice before the airline 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. EAS rates are normally set for two-year
periods for each city. Significant fluctuations in passenger traffic, fares and associated revenues, as well as fluctuations in fuel and other costs, may cause EAS routes to become unprofitable during these two-year terms. Near the end of the two
year term for EAS service to a particular city, the DOT will request for service proposals from the Company and potentially, competitive proposals from other airlines. Proposals, when requested, are evaluated on, among other things, the level of
service provided, the amount of subsidy requested, the fitness of the applicant, and comments from the communities served.

As of
March 1, 2011, we served 39 EAS communities on a subsidized basis. We have been deliberately reducing our reliance on EAS revenues in markets and hubs whereby EAS subsidy revenues represented an excessively high percentage of subsidy revenue
compared to expense. In January of 2010, we discontinued our St. Louis EAS hub operation and in February of 2011, we discontinued our Kansas City EAS hub operation. We expect to discontinue operations at our EAS hubs in Milwaukee, WI and Billings,
MT in April 2011 and



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May 2011, respectively. All four of these hubs were developed by the Company in recent years to serve EAS markets exclusively. Due to the substantial downsizing of connecting capacity at these
hubs, we determined that redeploying aircraft to hubs with greater connecting opportunities would offer the highest and best use of our aircraft and offer a greater number of passengers the ability to connect to the national and international air
transportation system.

For additional information regarding the EAS Program see Item 1A Risk Factors.

Essential Air Service (EAS) Program Activity

In January of 2010, our St. Louis EAS hub was closed and Ft. Leonard Wood, MO EAS service was transitioned to Kansas City.

In April of 2010, we discontinued service to Manhattan and Salina, KS from Kansas City, MO.

In
April of 2010, we opened a new hub in Las Vegas, NV to serve Merced, CA and Kingman, AZ.

On December 14, 2010, we transitioned Fort
Leonard Wood, MO EAS responsibilities to another carrier.

On January 18, 2011, the DOT selected another carrier to provide subsidized
EAS service at Ironwood, MI, and Manistee, MI. Service is expected to transition in April of 2011 at which time we will cease operations at our Milwaukee hub and discontinue service to Ironwood, MI, Manistee, MI and Rhinelander, WI.

On January 31, 2011 the DOT issued an order selecting another carrier to service Grand Island, NE. We expect to transition this service in June of
2011.

On February 3, 2011 the DOT issued an order selecting another carrier to service the seven Montana communities which we currently
serve. We anticipate the other carrier to commence service in May of 2011 at which time we will cease utilization of Billings as an EAS hub. Great Lakes viewed Denver as a better hub for these markets. However, the communities preferences were
to maintain service to Billings primarily due to the regional medical facilities that are located in Billings. These small markets, with very low load factors, that will be discontinued are: Glasgow, Glendive, Havre, Lewiston, Miles City, Sidney and
Wolf Point, MT.

On February 10, 2011 we transitioned Joplin, MO service to another carrier and ceased operations at our Kansas City, MO
hub.

United Airlines and Frontier Airlines Code Share Relationships

United Airlines. We have operated under ticket revenue proration code share agreements with United Airlines since April 1992. On May 1, 2001, we transitioned from a United Express
branded code share agreement to a unique code share agreement that provides United with code share marketable access to all seats on Great Lakes aircraft where the United code share product can provide our mutual customers connecting opportunities
and access to all of the benefits of the United product line including convenient baggage transfer and Uniteds frequent flyer program. The agreement provides Great Lakes the opportunity to establish code share relationships and interline
relationships with any other carriers at any Great Lakes hub. The current terms of the United code share agreement provides for the use of United Airlines flight designator codes on certain flights that connect with United flights at our Denver, CO,
Los Angeles, CA and Phoenix, AZ hubs.

Frontier Airlines. On May 3, 2001, we entered into a code share agreement with
Frontier, which was implemented July 9, 2001. While the Frontier agreement does not have a fixed termination date, it is terminable 180 days after written notice by either party. The Frontier agreement facilitates additional convenient access
to



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connecting seat inventories and makes available the entire Frontier product line to all Great Lakes communities. The Frontier flight designator code (F9) can be used on Great Lakes flights
connecting with Frontiers flights at our Albuquerque, NM, Denver, CO, Las Vegas, NV, Los Angeles, CA and Phoenix, AZ hubs.

Accordingly,
certain flights to and from our Denver, Los Angeles and Phoenix hubs carry both the United Airlines and Frontier Airlines flight designator codes and all flights throughout our route system carry the Great Lakes designator code.

During 2010, we estimate that approximately 35% of Great Lakes passenger traffic utilized the United code share product line and approximately 22%
of Great Lakes passenger traffic utilized the Frontier code share product line.

Interline Relationships

Since 1982, Great Lakes has developed and maintained various interline relationships with numerous domestic and international airlines. In recent years,
the airline industry has modified its interline ticketing and baggage agreements to move towards electronic processing of interline transactions and related customer services. Great Lakes is committed to being part of the airline industrys
mission to simplify the customer relationship. As a byproduct of this commitment, we have recently developed electronic ticketing (e-ticket) interline agreements with American Airlines, Continental Airlines, Frontier Airlines, United Airlines and
U.S. Airways. We intend to update our remaining paper ticket interline agreements with e-ticket processing procedures.



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Markets

Great Lakes expects that as of July 1, 2011, we will operate 222 weekday flights. Service scheduled to and from our five hubs will include: 144 flights at Denver, 8 flights at Albuquerque, 14 flights
at Phoenix, 8 flights at Los Angeles (LAX), and 8 flights at Las Vegas. Beginning July 2011, Great Lakes route map, reflecting anticipated scheduled service will be as follows:

LOGO

We frequently modify our routes. For a current map of routes being flown, please visit our website at
www.flygreatlakes.com.

Marketing

Our services are marketed primarily by means of our internet website, code-share partners websites, global distributions systems (travel agencies and travel agent websites) and our reservation
systems call center. Our promotional programs emphasize our close affiliation with our code share partners and, in particular, the opportunity for our passengers to participate in related customer service benefits, such as frequent flyer
programs.

Yield Management

We monitor our inventory and pricing of available seats utilizing yield management techniques. These processes enable our revenue control analysts to
examine our past traffic and pricing trends, and to estimate the optimal number of seats to make available for sale at various fares. The analysts then monitor each flight to adjust seat allocations and booking levels, with the objective of
maximizing total revenue for each flight.



6



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Charter, Freight and Contract Service

Great Lakes uses its Beechcraft 1900Ds and Embraer Brasilia aircraft to provide charter services to private individuals, corporations and athletic teams. We also carry freight and small packages on most
of our scheduled flights and provide contract services for other airlines. Combined revenues from our charter flights, freight and contract services were 1.5%, 1.5%, and 1.0% of our total revenues for the years ended December 31, 2010, 2009,
and 2008, respectively.

Seasonality

Seasonal factors, related to weather conditions and changes in passenger demand, generally affect our monthly passenger enplanements. We have historically shown a higher level of passenger enplanements in
the May through October period as compared with the November through April period for many of the cities served. These seasonal factors have generally resulted in reduced revenues, lower operating income, and reduced cash flow for us during the
November through April period. As a result of such factors, our revenues and earnings have shown a corresponding increase during the May through October period. Essential Air Service revenues are generated under subsidy per departure rates
established by the DOT and we realize revenue as departures are performed. Inherently, most of our EAS revenues, other than winter weather related cancellations, are not affected by seasonality. Certain EAS markets do receive summer season increased
departures which are eligible for subsidy revenue.

Competition

Great Lakes competes for passenger traffic with regional and major air carriers and ground transportation. We also compete with other regional air carriers to receive EAS subsidies for providing air
service to small communities. Our competition from other air carriers varies from location to location and, in certain areas, comes from regional and major carriers who serve airports in close proximity to destinations we serve.

Aircraft

As of March 1, 2011, our
fleet consisted of 32 Beechcraft Model 1900D 19-passenger aircraft and six Embraer Brasilia Model 120 30-passenger aircraft.

Beechcraft
1900D Aircraft. The 19 passenger Beechcraft 1900D aircraft are pressurized and weather radar equipped, and offer a 310-mile per hour cruising speed.

Embraer Brasilia Aircraft. The 30-passenger Embraer Brasilia aircraft are pressurized, weather radar equipped, configured with lavatories, staffed with a flight attendant, and offer a
330-mile per hour cruising speed.



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A summary of our operating aircraft as of December 31, 2010, 2009 and 2008 is as follows:



|                 |  |                 |    |  |                 |  |   |                 |  |  |                 |  |  |                 |   |  |                 |  |    |  |  |  |   | 
|---------------- |  | --------------- | -- |  | --------------- |  | - | --------------- |  |  | --------------- |  |  | --------------- | - |  | --------------- |  | -- |  |  |  | - | 
|                 |  | 2010            |    |  | 2009            |  |   | 2008            | 
|                 |  | Beechcraft1900D |    |  | EmbraerBrasilia |  |   | Beechcraft1900D |  |  | EmbraerBrasilia |  |  | Beechcraft1900D |   |  | EmbraerBrasilia | 
|Owned            |  |                 | 25 |  |                 |  | 4 |                 |  |  | 25              |  |  |                 | 4 |  |                 |  | 25 |  |  |  | 4 | 
|Operating leases |  |                 | 7  |  |                 |  | 2 |                 |  |  | 7               |  |  |                 | 2 |  |                 |  | 3  |  |  |  | 2 | 
|                 |  |                 |    |  |                 |  |   |                 |  |  |                 |  |  |                 |   |  |                 |  |    |  |  |  |   | 
|                 |  |                 | 32 |  |                 |  | 6 |                 |  |  | 32              |  |  |                 | 6 |  |                 |  | 28 |  |  |  | 6 | 
|                 |  |                 |    |  |                 |  |   |                 |  |  |                 |  |  |                 |   |  |                 |  |    |  |  |  |   | 

As of March 1, 2011, the average age of our aircraft was approximately 16 years.

Maintenance

We utilize Federal Aviation
Administration (FAA) approved maintenance programs developed by Great Lakes for periodic inspection and maintenance of our aircraft. We perform inspection and maintenance of our aircraft at our maintenance bases in Cheyenne, WY,
Farmington, NM and Williston, ND. Select components such as engine gas generators, power sections and avionics repairs and/or overhauls may be contracted with third parties certified to perform such maintenance. Line maintenance is also performed in
Denver, CO and Phoenix, AZ. Parts inventories are maintained at these locations to promote the mechanical dispatch reliability of the fleet. We also keep an inventory of spare engines and propellers for our fleet to allow for minimal downtime during
major overhauls. We operate a FAA certified repair station utilizing company-trained mechanics and repair personnel to perform overhaul and repair of selected aircraft components for our fleet of Beechcraft 1900D and Embraer Brasilia EMB-120
aircraft.

Fuel

We expect to
continue to be able to obtain fuel in quantities sufficient to meet our future requirements. We contract, both through intermediaries and directly with refiners, for the purchase of a significant portion of our aircraft fuel requirements. However,
standard industry contracts generally do not provide protection against fuel price increases and do not ensure availability of supply. Accordingly, an increase in the cost of fuel, if not accompanied by an equivalent increase in passenger revenues
or subsidies, could have a material adverse impact on our future operating results. During 2010, our average price of fuel, including taxes and into plane service fees, was $2.83 per gallon, as compared to $2.29 in 2009 and $3.58 in 2008. Based on
rates of consumption for 2010, a one cent increase or decrease in the per gallon price of fuel would increase or decrease our fuel expense by approximately $114,000 annually.

Liquidity and Financing

Raytheon Aircraft Credit Corporation

Our primary creditor and single largest shareholder is Raytheon Aircraft Credit Corporation (Raytheon). Our aircraft debt with Raytheon
consists of promissory notes (the Aircraft Notes), each secured by 1 of the 25 Beech 1900D aircraft security agreements. Each of the Aircraft Notes had an original principal amount of $2,116,574, for a total amount of $52,914,343, bears
interest at a fixed rate of 6.75% per annum, and provides for monthly payments with interest in arrears. At December 31, 2010 the principal balance outstanding on these Aircraft Notes was $35,324,205. The Aircraft Notes mature on
June 30, 2011, at which time a final payment of $1,306,675 is due for each aircraft or $32,666,871 for all 25 Beech 1900D aircraft. In order to satisfy this obligation we will need to secure alternative sources of financing, raise additional
sufficient capital to repay Raytheon, refinance the obligation with which to repay Raytheon, or achieve a combination of any or all of the foregoing that might be required to satisfy the terms of the Aircraft Notes.



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As of April 5, 2011, we have not extended the terms of the Aircraft Notes or secured alternative
sources of financing to satisfy these obligations. Raytheon has informed the Company that it does not intend to extend or refinance the obligations due on June 30, 2011. This raises substantial doubt as to our ability to continue operating as a
going concern.

Additional Raytheon debt consists of a Senior Note secured by four Embraer Brasalia aircraft, as well as all other assets of
the Company. The Senior Note had an original principal amount of $13,174,755 and bears interest at a fixed rate of 7.00%. Interest on the Senior Note is payable monthly in arrears on the last day of each month. At December 31, 2010 the
principal outstanding balance on the Senior Note was $8,063,668. The Senior Note provides for quarterly payments of principal on June 30, September 30, and December 30 each year until the note fully amortizes and matures on
December 30, 2015.

In September of 2008 prior to the economic financial crisis, the company engaged Raytheon to assemble short-term
three year leases for seven Beech 1900 D aircraft. Either party may terminate the leases, prior to lease expiration, upon 90 days notice. In the fourth quarter of 2008 and the first quarter of 2009, Great Lakes leased four Beechcraft 1900D aircraft
from Raytheon for a term of three years. In the second and third quarters of 2009, three additional Beechcraft 1900D aircraft, without engines, were leased from Raytheon for a term of three years. These three leased aircraft are equipped with six
engines from our inventory of eight company owned Pratt and Whitney PT6A-67D spare engines. These lease agreements have scheduled terminations from October 2011 through July 2012.

We opted to lease rather than purchase these aircraft on a short-term basis due to uncertainty related to possible changes to the EAS program at the time stemming from the initial FAA Reauthorization bill
drafts. The recession of 2008 and 2009 significantly impacted the airline industry, and substantial capacity reductions were made due to declines in passenger demand. Connecting capacity at small to medium hubs throughout the country was the first
place the airline industry went to reduce or eliminate financial losses. Our EAS hubs at St. Louis, Kansas City, Milwaukee and Billings were rendered impractical as a result of the reduced connectivity to the nations domestic air
transportation network at those EAS hub locations.

We have had ongoing discussions with Raytheon regarding the potential outcome of the EAS
program revisions. We could return a portion or all of the seven short-term leased aircraft if the passenger demand in non-EAS markets or new larger EAS communities with a higher level of passenger traffic were not available to support continued use
of the aircraft. Management represented to Raytheon at the time that the short-term leases were developed that our reasoning for the short-term commitment was due to our inability to forecast the outcome of potential EAS program revisions.

Raytheon has informed us that it may exercise its contractual rights to terminate the leases upon 90 days notice for any or all of the seven
aircraft we lease from Raytheon on or about April 15, 2011, depending on our progress on refinancing the debt due June 30, 2011. A termination notice dated April 15, 2011 would result in Great Lakes returning any or all of the seven
leased aircraft to Raytheon on July 15, 2011. We have had communications with Raytheon whereby the aircraft may be available to the Company for purchase. In particular, three of the leased aircraft are operated with Company owned engines and we
are leasing the airframes without engines, so these airframes may be able to be acquired at commercially reasonable prices.

If Congress were
to choose to eliminate the EAS program, the loss of all EAS revenue would adversely affect our business, financial condition, operating results and cash flows. It could also adversely affect our ability to refinance or secure alternative sources of
financing to satisfy our debt obligations.

For additional information regarding the EAS Program and Liquidity and Capital Resources see
Item 1A Risk Factors. For additional information regarding the our arrangements with Raytheon, see Item 7, Managements



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Discussion and Analysis of Financial Condition and Results of Operation  Liquidity and Capital Resources and Contractual Obligations and Notes 4 and 6 to the Companys financial
statements included in this Annual Report on Form 10-K.

Employees

At March 1, 2011, the Company had 759 full-time and 363 part-time active employees, as compared to 778 full-time and 397 part-time active employees at March 1, 2010.

The Companys pilots are represented by the United Transportation Union (UTU). The pilot collective bargaining agreement became
amendable on September 16, 2010. The Company and the UTU are currently engaged in contract mediation under the auspices of the National Mediation Board.

The Companys flight attendants are also represented by the UTU, and the Companys agreement with the flight attendants became amendable on April 1, 2002. The Company and the flight
attendants are currently engaged in contract mediation under the auspices of the National Mediation Board.

The Companys mechanics and
maintenance clerks are represented by the International Association of Machinists and Aerospace Workers (IAM). The collective bargaining agreements between the Company and the clerks and mechanics represented by IAM, District 143, became
amendable in 2002 and 2005, respectively. We are currently engaged in contract mediation under the auspices of the National Mediation Board.

In 2003, the Companys dispatchers voted to be represented by the International Brotherhood of Teamsters. Negotiations with the dispatchers are not
active at the present time.

Executive Officers of the Registrant

The following table provides information with respect to the Companys executive officers as of March 1, 2010.



|                     |  |     |  |                                                 
|-------------------- |  | --- |  | ------------------------------------------------
|Name                 |  | Age |  | Title                                           
|Douglas G. Voss      |  | 56  |  | Chairman of the Board of Directors and President
|Charles R. Howell IV |  | 53  |  | Chief Executive Officer                         
|Michael O. Matthews  |  | 54  |  | Vice President and Chief Financial Officer      
|Michael L. Tuinstra  |  | 57  |  | Treasurer                                       

Douglas G. Voss. Mr. Voss
co-founded the Company in 1979 and served in the position of Chief Executive Officer from the Companys inception until December 31, 2002. Mr. Voss has served as a director of the Company since the Companys inception and became
Chairman of the Board of Directors on December 31, 2002. Mr. Voss was initially licensed as a private pilot in 1974 and today holds both an Airline Transport Pilot Certificate and an Airframe and Powerplant Mechanic Certificates.
Mr. Voss is a graduate of Colorado Aero Tech. Mr. Voss has previously served the Company in the FAA Air Carrier Certificate required operational control positions of Director of Operations and Director of Maintenance.

Charles R. Howell IV. Mr. Howell became the Chief Executive Officer of the Company on December 31, 2002. Mr. Howell served as Chief
Operating Officer from August 2002 until December 31, 2002. Prior to joining the Company, Mr. Howell was the President and Chief Executive Officer of Corporate Airlines, Inc., a Nashville-based airline that he co-founded in 1996.

Michael O. Matthews.Mr. Matthews became the Vice President and Chief Financial Officer of the Company on March 28, 2005.Mr. Matthews joined the Company in November 2004 as Vice President of Finance. Prior to joining the Company, Mr. Matthews was employed as Director of Treasury for Budget Group, Inc. Prior to joining Budget Group, Inc. in 2000,
Mr. Matthews held management positions in the financial services industry including Newcourt Financial, MetLife Capital, Sanwa Business Credit and Societe Generale Financial Corporation.



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Michael L. Tuinstra. Mr. Tuinstra became the Companys Treasurer in January 2002. From
August 1998 to January 2002, Mr. Tuinstra served as the Companys Director of Purchasing and Inventory Control. From August 1998 until April 1999, Mr. Tuinstra was the Companys Budget and Financial Analyst.

Regulation

The U.S. Department of
Transportation (DOT) has continuous economic and fitness oversight of the Companys operations. The Companys economic authority is authorized under DOT Part 298 commuter air carrier certification regulations. The Deregulation
Act of 1978 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 authorized to establish consumer protection regulations in order to prohibit certain pricing practices, mandate conditions of carriage, and
make ongoing determinations of a carriers fitness, willingness, and ability to provide air transportation properly and lawfully. The DOT also has the power to bring proceedings to enforce its regulations and seek penalties, including the
assessment of civil penalties, the revocation of operating authority, and criminal sanctions.

We hold an air carrier operating certificate
issued by the Federal Aviation Administration (FAA) pursuant to Federal Aviation Regulation (FAR) Part 121. As a result, we are subject to the jurisdiction of the FAA with respect to our flight operations, aircraft maintenance, and
safety related matters, including, but not limited to, equipment, ground facilities, dispatch, communications, training, weather observation, flight personnel, and other matters affecting air safety. Our certificate is subject to suspension or
revocation for cause.

The Aviation and Transportation Security Act requires the adoption of certain security measures by airlines and
airports, including the screening of passengers and baggage. The security measures are being partially funded by a per flight segment tax on tickets. We are responsible for certain security costs above this level.

We are subject to the jurisdiction and regulations of the Federal Communications Commission regarding the use of our radio facilities. In addition, local
governments and authorities in certain markets have adopted regulations governing various aspects of aircraft operations, including noise abatement, curfews, and use of airport facilities. We believe that we are in compliance with all such
regulations.

We are subject to regulation under various environmental laws and regulations, including the Clean Air Act, the Clean Water Act
and Comprehensive Environmental Response, Compensation and Liability Act of 1980. In addition, many state and local governments have adopted environmental laws and regulations to which our operations are subject.

Insurance

Great Lakes carries the types
and amounts of insurance that are required by the DOT and are customary in the regional airline industry, including coverage for public liability, property damage, aircraft loss or damage, baggage and cargo liability, and workers compensation.

As a result of the September 11, 2001 terrorist attacks, aviation insurers have significantly increased premiums for all aviation
coverage, while dramatically reducing the amount of coverage available for war-risk occurrences. In response to the reduction in coverage, the Air Transportation Safety and System Stabilization Act (the Stabilization Act) provided U.S. air carriers
with the option to purchase certain war-risk liability insurance from the United States government on an interim basis at rates that are more favorable than those



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available in the private market. We have purchased this coverage and anticipate renewing it for as long as the coverage is available from the United States government. The airline and insurance
industries, together with the United States and other governments, are continuing to evaluate both the cost of aviation insurance and options for providing insurance coverage. We anticipate that we will follow industry practices with respect to
sources of insurance. We believe our insurance is adequate as to amounts and risks covered. There can be no assurance, however, that the limits of our insurance will be sufficient to cover any catastrophic loss, or that we will be able to renew
insurance at commercially reasonable rates.



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|ITEM 1A. | RISK FACTORS
|-------- | ------------

Investing in our common
stock involves a high degree of risk. You should consider carefully the risks described below and the other information included or incorporated by reference into this annual report, including our financial statements and the related notes, before
deciding to invest in our common stock. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently do not deem material may also impair our business operations. If any of the events
or circumstances described in the following risk factors actually occur, or if any unforeseen risk develops, our business, financial condition and results of operations could suffer, the trading price of our stock could decline, and you could lose
part or all of your investment.

Risks Related to Our Business

We depend on Essential Air Service revenue to justify a substantial portion of our capacity.

We receive Essential Air Service (EAS) revenue as compensation for essential air service provided by us to smaller communities. We received
$60.4 million of EAS revenue for the twelve month period ending December 31, 2010, representing approximately 48% of our total operating revenue, compared to $61.3 million of EAS revenue, or approximately 50% of our total operating revenue, for
the twelve month period ending December 31, 2009. We expect EAS revenue to decrease, in the near term, as a percentage of our revenue due to our deliberate desire to maximize the utilization of our aircraft and other resources by deploying our
resources to larger hubs offering more connecting opportunities to the domestic and international air transportation system. The total amount of EAS revenue ultimately received by us over an extended period is determined by, among other things,
overall funding levels of the EAS program by the U.S. Congress (which could be reduced), competitive bids by other carriers (which could cause us to lose EAS revenue to competitors), and our ability to optimize our schedules. EAS revenue awards
generally have a term of two years. The U.S. Department of Transportation, which administers the EAS program, has the right to cancel EAS revenue awards if it deems that the communities served by such arrangements are no longer eligible. In
addition, Congress could choose to reduce or eliminate the EAS program, in which case we would be required to seek other markets. Unplanned reduction of EAS revenue would adversely affect our business, financial condition, operating results and cash
flows.

There is current legislation in the U. S. Congress which may reduce the size of, or eliminate entirely, the EAS program. The
uncertainty surrounding the future of the EAS Program impedes our ability to obtain financing on commercially reasonable terms. This legislation is actively changing; on March 31, 2011 the President signed the 18th short-term extension bill to
continue the operations of the Federal Aviation Administration, including the EAS Program, through May 31, 2011. On April 1, 2011, the U. S. House of Representatives passed its version of the FAA Reauthorization and Reform Act (H.R. 658).
It will be forwarded to the U. S. Senate and House of Representative Conferees in an effort to assemble a merged bill with the U.S. Senate FAA Air Transportation Modernization and Safety Improvement Act (S.223). It is expected that the merged bill,
when completed, will then be presented to the U. S. Senate and U. S. House of Representatives for confirmation votes and ultimately sent to the President of the United States for his signature and enactment into law.

The U. S. Senate passed its version of their bill (S.223) in January of 2011. Significant differences exist between the U.S. Senate version of the FAA
Reauthorization legislation versus the U. S. House of Representatives version of the proposed legislation. Current language in the House bill phases out the EAS program in its entirety in 2013. The Senate bill maintains the existence of the EAS
program with some meaningful changes. Community eligibility changes in the Senate bill would reduce EAS program communities currently served by approximately 10 to 40 communities nationwide. This would be accomplished by changing mileage criteria
for a communitys proximity to medium or large hubs from 70 to 90 miles and by requiring a minimum of ten passengers to be enplaned daily at eligible EAS service points.

The Federal Government has also continued to maintain its operations and financial commitments through the use of short-term appropriation processes (Continuing Resolutions), the most recent of which is
scheduled to expire on April 8, 2011.

Due to the wide differences in the House and Senate bills, we cannot predict what the final
version of the FAA Reauthorization legislation will contain, or when it may be enacted. Furthermore, we cannot predict whether there will be appropriations necessary to maintain and sustain the EAS program in future years. The loss or the reduction
of EAS revenue would adversely affect our business, financial condition, operating results and cash flows. It will also adversely affect our ability to refinance or secure alternative sources of financing to satisfy our debt obligations.



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We have a significant amount of debt and other contractual obligations, including a $32.7 million
balloon payment due to Raytheon in June 2011.

Our aircraft notes secured by 25 Beechcraft 1900D aircraft mature on June 30,
2011, at which time a $32.7 million balloon payment is due. Our cash flows from operations are not expected to be sufficient to fund the balloon payment. In addition to our cash flows from operations, we will need to refinance the obligation with
Raytheon Aircraft Credit Corporation (Raytheon), our largest single shareholder, secure alternative sources of financing, raise additional capital through an equity offering, or achieve any combination thereof to be able to satisfy this
obligation on June 30, 2011. There is no assurance that we will be successful in refinancing the debt or obtaining additional financing, and, if available, there are no assurances that the financing will be at commercially acceptable terms.

The Company has not extended the terms of the aircraft notes or secured alternative sources of financing to satisfy these obligations as of
April 5, 2011. Raytheon has informed the Company that it does not intend to extend or refinance the obligations due on June 30, 2011. In the event that we are unable to obtain new financing, Raytheon may exercise remedies available to it,
including the foreclosure and taking of the 25 mortgaged aircraft. Raytheon would also have the right to accelerate the Companys $7.2 million senior note to Raytheon if the debt due June 30, 2011 goes into default. This raises substantial
doubt as to our ability to continue operating as a going concern as we have not generated sufficient cash from operations to be able to make a June 30, 2011 payment to Raytheon in the amount of $32.7 million. If these events occur, we would be
unable to fly our scheduled service, our passenger and EAS revenues would cease, and we would be forced to file for protection from our creditors.

Raytheon has informed us that it may exercise its contractual rights to terminate the leases upon 90 days notice for any or all of the seven aircraft we lease from Raytheon on or about April 15,
2011, depending on our progress on refinancing the debt due June 30, 2011. A termination notice dated April 15, 2011 would result in Great Lakes returning any or all of the seven leased aircraft to Raytheon on July 15, 2011. Even if
we are able to timely service our debt, the size of our long-term debt and lease obligations could negatively affect our business, financial condition, operating results and cash flows in many ways, including:



| |  |  | increasing the cost, or limiting the availability of, additional financing for working capital, acquisitions or other purposes;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | limiting the ways in which we can use our cash flow, much of which may have to be used to satisfy debt and lease obligations; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | adversely affecting our ability to respond to changing business or economic conditions.
| | - |  | ---------------------------------------------------------------------------------------

Airline industry conditions constantly change, and negative economic conditions in the United States may materially and adversely affect our
business and results of operations.

The airline industry is significantly affected by general economic conditions, and the global
economic recession has resulted in weaker demand for air travel in general. During recent recessions, most airlines have reduced fares in an effort to increase traffic and overall revenues. Economic and competitive conditions in the airline industry
have contributed to a number of airline bankruptcies in recent years. A worsening of current economic conditions, or an extended period of recession, whether nationally or regionally, would have a material adverse effect on our business, financial
condition, operating results and cash flows.

We depend on connecting capacity at our hubs and the activities of our code share partners
affect that capacity.

Our business depends on, and is sensitive to, events affecting the airline industry capacity at our connecting
hubs. The operations of other airlines with substantial business at those hubs, therefore, impact our business. Our code share partners United Airlines and Frontier Airlines operate a large percentage of the flights at Denver International Airport,
our largest hub. Changes in their business plans or models, employee strikes or job actions, or significant curtailment of services could have an adverse effect on our financial results.

Our code share agreement with United Airlines expires in May of 2011. We can make no assurances that this agreement will be renewed, or if renewed, at substantially the same terms as the current
agreement. We estimate that approximately 35% of our connecting passenger traffic utilizes the United Airlines code share product line. For the year ending December 31, 2010, approximately 17.6% ($22.1 million) of our total revenue was
generated from tickets purchased and fees paid which were associated with the United Airlines designator code.



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Our code share agreement with Frontier Airlines does not have a fixed termination date, but it is terminable
180 days after written notice by either party. We estimate that approximately 22% of our connecting passenger traffic utilizes the Frontier Airlines code share product line. For the year ending December 31, 2010, approximately 10.6% ($13.3
million) of our total revenue was generated from tickets purchased and fees paid which were associated with the Frontier Airlines designator code. While we are the only carrier serving the majority of the non-hub destinations we serve, we can make
no assurances that absent a code share agreement with United Airlines or Frontier Airlines, that passengers wishing to travel to these destinations would either: (i) purchase travel through our interline e-ticketing agreements established with
United Airlines, Frontier Airlines, Continental Airlines, U.S. Airways and American Airlines or (ii) purchase their travel directly through our own sales channels. Therefore, if the United Airlines code share agreement is not renewed or if the
Frontier Airline code share agreement is terminated, we cannot predict the effect this would have on our future total operating revenue.

An ownership change under IRS Section 382 could reduce, eliminate, or defer the utilization of our net operating loss
carryforwards.

At December 31, 2010, we had estimated net operating loss carryforwards (NOLs) of $46.4 million for
federal income tax purposes that expire beginning in 2020 and continuing through 2024. Section 382 of the Internal Revenue Code (Section 382) imposes limitations on a corporations ability to utilize NOLs if it experiences an
ownership change. Generally, an ownership change occurs if one or more shareholders, each of whom owns 5% or more in value of a corporations stock, increase their percentage ownership, in the aggregate, by more than 50% over the
lowest percentage of stock owned by such shareholders at any time during the preceding three-year period.

If we were to undergo an ownership
change as defined in Section 382, our NOLs generated prior to the ownership change would be subject to annual limitations, which could reduce, eliminate, or defer the utilization of these losses. Our NOLs available to offset future taxable
income could be severely limited and the NOLs may expire as a result of the limitation. If we were to experience an ownership change we may have to reduce or eliminate our deferred tax assets, incur future income taxes payable that could require
cash payments or a combination of both. The effect could be materially adverse to our financial statements and cash flows.

At this time, we
cannot predict if, or to what extent, the sale of the 5,371,980 shares which are offered by Raytheon under our registration statement on Form S-1 which became effective on October 20, 2009 or other future transactions in our shares would
constitute a change in ownership as defined by Section 382, and, therefore, affect the availability of our NOLs.

Our operations
could be negatively impacted by terrorist events or war activity.

Our operations are sensitive to changes in the economy and airline
industry that are caused by, or related to, past and future terrorist attacks. Such changes include, but are not limited to, the impact of additional airline and security charges on our costs, reduced customer demand for travel, the cost and
availability of war-risk and other aviation insurance (including the federal governments provision of third party war-risk coverage). War or other military action by the United States or other countries could have a significant effect on
passenger traffic and passenger revenue, which could adversely affect our business, financial condition, operating results and cash flows.

We compete for passenger traffic and EAS revenue with other air carriers and ground transportation.

We compete for passenger traffic with regional and major air carriers and ground transportation. We also compete with other regional air carriers to
receive EAS revenue for providing air service to small communities. Our competition from other air carriers varies from location to location and, in certain areas, comes from regional and major carriers who serve the same airports or larger airports
which are in close proximity to some of the destinations we serve.

Fuel prices or disruptions in fuel supplies could have a material
adverse effect on us.

Expenditures for fuel and related taxes represent one of the largest costs of operating our business. Our
operations depend on the availability of jet fuel supplies, and our results are significantly impacted by changes in jet fuel prices, which have been volatile in the last 36 months. Jet fuel prices increased in 2010 and continue to increase in
first quarter of 2011. We do not participate in fuel hedging instruments. Fuel prices could increase dramatically and supplies could be disrupted as a result of many factors outside of our control. Further volatility in jet fuel prices or
disruptions in fuel supplies could have a material adverse effect on our results of operations, financial condition and liquidity.



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Any labor disruption by our employees or those of our code share partners would adversely affect our
ability to conduct our business.

All of our pilots, flight attendants, mechanics and maintenance clerks, and dispatchers are
represented by unions. Collectively, these employees represented approximately 40% of our workforce as of December 31, 2010. The collective bargaining agreements became amendable in 2010 for the pilots, 2002 for the flight attendants, and 2005
for the mechanics. If we are unable to reach agreement with any of our unionized work groups on the terms of their collective bargaining agreements when they are up for renewal, we may be subject to work interruptions and/or stoppages, which could
adversely affect our business, financial condition, operating results and cash flows. A labor disruption or labor strike at either of our code share partners could have the same effects.

Our business could be harmed if we lose the services of our key personnel.

Our
business depends upon the efforts of our Chairman of the Board and President, Douglas G. Voss, and our other key management and operating personnel. We depend on the experience and industry knowledge of these individuals to execute our business
plans. If we experience turnover in our leadership and other key employees, our business, financial condition, operating results and cash flows could be materially adversely impacted.

We are at risk of losses stemming from an accident involving any of our aircraft.

If one of our aircraft were to be involved in a serious accident, we could be exposed to significant liability for loss of life or other damages. Though
we carry insurance against liability resulting from accidents, we cannot assure you of its adequacy in all circumstances. An accident could result in decreased revenues which could materially adversely affect our business, financial condition,
operating results and cash flows. In addition, depending on the circumstances, any accident involving a particular aircraft of the type that we operate could result in a negative perception of that type of aircraft by air travelers. This could
adversely affect our revenue whether or not our company was actually involved in the accident.

The airline industry is subject to
extensive government regulation, and new regulations, or changes in interpretations of current regulations, could increase our operating costs.

Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs. The Federal Aviation Administration (FAA) from time to time issues directives
and other regulations relating to the maintenance and operation of aircraft that may necessitate significant expenditures. Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly
increase the cost of airline operations and/or reduce our revenue. The Aviation and Transportation Security Act, which became law in November 2001, mandated the federalization of certain airport security procedures and imposed additional security
requirements on airports and airlines, most of which are funded by a per ticket tax on passengers and a tax on airlines.

In 2010 Congress
passed legislation, effective in July 2013, which may require the company to alter its minimum flight crew (pilot) hiring requirements for First Officers. The new legislation will require a minimum of 1,500 hours of piloting experience and Airline
Transport Pilot FAA certification. This Act is subject to further rulemaking and the FAA Administrator has been designated by Congress with the authority to grant exemptions to the new hiring standard subject to the development of specialized pilot
training programs. The airline industry has had a long history of recognizing regional airlines, such as Great Lakes, for providing initial FAR Part 121 pilot experience development.

With the most recent economic recession and the statutory retirement age for airline pilots increasing from age 60 to age 65, the airline industry has experienced a reduced level of pilot hiring as pilots
have been allowed to extend their careers. New student pilot certificates have decreased dramatically in the past three years and subsequently the pool of eligible pilots qualified to be new hires into the airline industry has been diminishing
significantly. The new federally mandated changes to hiring requirements, along with the current reduction of eligible and qualified pilot work force, could create a potentially serious regional airline pilot shortage. Depending on the outcome
of this rulemaking, the provisions could significantly negatively impact the supply of pilots available to conduct our flight operations.

We
incur substantial costs in maintaining our current certifications and otherwise complying with the laws, rules and regulations to which we are subject. We expect to continue incurring expenses to comply with the FAAs regulations, as well as
regulation by states, airports and municipalities that have jurisdiction over our operations.

In addition, proposed laws, regulations, taxes
and user fees, if enacted, may increase our operating expenses and otherwise affect our business. Examples of this are the recent proposals to impose substantial user fees on aviation (including airlines)



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to fund air traffic control system costs and upgrades to that system. Future regulatory action concerning climate change and aircraft emissions also could have a significant effect on the airline
industry, including the potential for increased fuel costs, carbon taxes or fees or a requirement to purchase carbon credits. We cannot predict whether these or other new regulations may be imposed on airlines and we cannot assure that laws or
regulations enacted in the future will not materially adversely affect our business, financial condition, operating results and cash flows.

We rely on technology and automated systems to operate our business, and a failure of these technologies or systems, or failures by their
operators, could harm our business.

We depend on technology and automated systems to operate our business, including our computerized
airline reservations system, our telecommunication systems, our website, our maintenance and engineering systems, our flight dispatching and crew management systems, our flight scheduling systems, and other technologies and systems. Disruption in,
changes to, or a breach of, these systems could result in the loss of important data, negatively affect our customer service, increase our expenses, delay or impede our flight and related operations, or otherwise adversely impact our business. We
may be vulnerable to external interruption in technology infrastructure on which we depend, such as power, telecommunications or the internet, whether due to large-scale events, such as natural disasters, or directed actions, including terrorist
attacks and system security attacks seeking to compromise or obtain financial data, infect systems with computer viruses or impair or disrupt functionality through denial of services.

Production of both types of aircraft which we fly has ceased.

As of
December 31, 2010, we operated a fleet of 32 Beechcraft Model 1900D 19-passenger aircraft and 6 Embraer Brasilia Model 120 30-passenger aircraft, neither of which of which are currently being manufactured. These aircraft types continue to
receive factory parts, manufacturing and engineering support. We may experience increased maintenance costs as our fleet ages.

Risks
Related to Our Securities

We are controlled by two principal stockholders.

Raytheon, our principal creditor, owns 5,371,980 shares of our outstanding common stock, representing approximately 37.6% of our outstanding shares.
Raytheon acquired the shares in consideration for concessions granted by Raytheon to our company pursuant to a restructuring agreement we entered into in 2002.

Our Chairman of the Board and President, Douglas G. Voss, beneficially owns or controls 4,160,247 shares of our outstanding common stock, representing approximately 29.1% of our outstanding shares.

As a result of the above-referenced ownership, Raytheon and Mr. Voss may be able to control our company and direct our affairs,
including the election of directors and approval of significant corporate transactions. This concentration of ownership could also delay, defer or prevent a change in control of our company, and make some transactions more difficult or impossible
without their support. These transactions might include proxy contests, tender offers, open market purchase programs or other share purchases that could give our stockholders the opportunity to realize a premium over the then-prevailing market price
of our securities. As a result, this concentration of ownership could depress the price of our securities.

The limited market for our
securities could make trading more difficult or more expensive.

Trading in our common stock is conducted on the Over-the-Counter
Bulletin Board, which was established for securities that do not meet NASDAQ listing requirements. We cannot assure you of an active public market for our common stock. Consequently, trading our common stock may be more difficult because of lower
trading volumes, transaction delays, and reduced security analyst and news media coverage. These factors also could contribute to lower prices and larger spreads in the bid and ask prices for our common stock than might otherwise prevail.



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The market price of our common stock may be subject to wide fluctuations.

The price of our common stock may fluctuate, depending on many factors, some of which are beyond our control and may not be related to our operating
performance. As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the stock. The price of our common stock will be determined in the marketplace and may be influenced by many factors,
including:



| |  |  | the extremely limited float in the public market;
| | - |  | ---------------------------------------------------



| |  |  | price and volume fluctuations in the overall stock market from time to time;
| | - |  | ----------------------------------------------------------------------------



| |  |  | significant volatility in the market price and trading volume of companies in the airline industry;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of financial market analysts;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | regulatory changes affecting the airline industry;
| | - |  | --------------------------------------------------



| |  |  | investor perceptions of our industry, in general, and our company, in particular;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | passenger concerns about the safety of air travel, in general, and public perceptions of our company, in particular;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | the operating and stock performance of comparable companies;
| | - |  | ------------------------------------------------------------



| |  |  | general economic conditions and trends;
| | - |  | ---------------------------------------



| |  |  | major catastrophic events;
| | - |  | --------------------------



| |  |  | loss of external funding sources;
| | - |  | ---------------------------------



| |  |  | sales of large blocks of our stock or sales by insiders; or departures of key personnel.
| | - |  | ----------------------------------------------------------------------------------------

A decline in the market price of our common stock could cause you to lose some or all of your investment and may adversely impact our ability to attract
and retain employees and raise capital. In addition, stockholders may initiate securities class action lawsuits if the market price of our stock drops significantly, which may cause us to incur substantial costs and could divert the time and
attention of our management.

We may be exposed to potential risks relating to our internal control over financial reporting and our
ability to have those controls remediated timely.

In the event we identify control deficiencies that we cannot remediate in a timely
manner, investors and others may lose confidence in the reliability of our financial statements, and the trading price of our common stock and our ability to obtain any necessary equity or debt financing could suffer.

A substantial number of shares are eligible for sale by our current investors and the sale of those shares could adversely affect our stock price.

If our existing common stockholders sell, or attempt to sell, substantial amounts of common stock in the public market, the market
price of our common stock could fall. We have registered for resale 5,371,980 shares of common stock under a registration statement on Form S-1 that was originally declared effective on October 20, 2009.

The issuance of additional equity securities in a future financing could require approval from Raytheon.

If we were to issue additional equity securities in the future, other than pursuant to certain benefits plans and other excepted issuances, such issuance
would require approval from Raytheon under our 2007 agreement. Raytheon has such rights while debt is outstanding under our 2007 agreement. In addition, Raytheon has certain rights to purchase a specified number of shares in any new offering,
subject to certain exceptions. While we have no plans to issue securities in a manner that would require the consent of Raytheon, we could elect to do so in the future. Such issuances would dilute the holdings of existing common stockholders.

We do not anticipate paying cash dividends on our shares of common stock in the foreseeable future.

We have never declared or paid any cash dividends on our shares of common stock. We intend to retain any future earnings to fund the operation and
expansion of our business and, therefore, we do not anticipate paying cash dividends on our shares of common stock in the foreseeable future. In addition, we are prohibited from paying dividends without Raytheons consent under our 2007
restructuring agreement. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for investors in our common stock for the foreseeable future.



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Provisions in our charter documents, including our ability to issue preferred stock without
stockholder approval, and provisions of Iowa law could delay or prevent the acquisition of our company by a third party.

Our articles
of incorporation authorize the issuance of shares of preferred stock. Our board of directors, without any action by our stockholders, is authorized to designate and issue preferred stock in such classes or series as it deems appropriate and
establish the rights and privileges of such shares, including liquidation and voting rights. Our ability to designate and issue preferred stock having preferential rights over our common stock could adversely affect the voting power and other rights
of holders of common stock. The existence of this preferred stock could make it more difficult or discourage an attempt to obtain control of our company by means of a tender offer, merger, proxy contest, or otherwise. At present, we have no plans to
issue any preferred stock.

Other provisions of our articles of incorporation and bylaws and of Iowa law could make it more difficult for a
third party to acquire our company or to change management, even if doing so would be beneficial to our stockholders. For example, Section 409.1110 of the Iowa Business Corporation Act prohibits publicly held Iowa corporations to which it
applies from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder unless the business combination is approved in a
prescribed manner. This provision could discourage others from bidding for our common stock and could, as a result, reduce the likelihood of an increase in our stock price that would otherwise occur if a bidder sought to buy our stock.



19



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|Item 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



|Item 2. | PROPERTIES
|------- | ----------

Aircraft

We operate a total of 38 aircraft consisting of 32 19-passenger Beechcraft 1900D aircraft and six 30-passenger Embraer Brasilia aircraft. The average age
of our fleet is approximately 16 years. Twenty-five of the Beechcraft 1900D aircraft are owned and seven are leased. Four of the Embraer Brasilia aircraft are owned and two are leased. All of our owned aircraft are pledged as security for our loan
agreements with Raytheon.

Ground Facilities

We lease approximately 94,000 square feet of space for maintenance, operations, and administration in Cheyenne, Wyoming.

On September 1, 2008 we entered into a lease for an approximate 120,000 square foot hangar and aircraft maintenance facility in Farmington, NM.

At March 1, 2011 we leased gate, terminal and ramp facilities at 56 airports where ticketing and passenger loading and unloading are handled by
Great Lakes personnel.



|Item 3. | LEGAL PROCEEDINGS
|------- | -----------------

We are a party to
ongoing legal claims and assertions arising in the ordinary course of business. Management believes that the resolution of these matters will not have a material adverse effect on our financial position, results of operations, or cash flows.



|Item 4. | (Removed and Reserved.)
|------- | -----------------------



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##### Table of Contents

PART II



|Item 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | -------------------------------------------------------------------------------------------------------------

Our Common Stock is traded under the symbol GLUX.OB on the Over-the-Counter Bulletin Board (the OTCBB). The following table sets
forth the range of high and low sale prices for our Common Stock for each of the fiscal quarters for the past two years as reported on the OTCBB. These prices represent inter-dealer prices without adjustments for mark-up, mark-down, or commission
and do not necessarily reflect actual transactions.



|                 |  |      |      |  |     |   |      | 
|---------------- |  | ---- | ---- |  | --- | - | ---- | 
|Stock Quotations |  | High |      |  | Low |  
|2010:            |  |      |      |  |     |   |      | 
|First quarter    |  | $    | 1.50 |  |     | $ | 1.20 | 
|Second quarter   |  |      | 1.69 |  |     |   | 1.36 | 
|Third quarter    |  |      | 1.61 |  |     |   | 1.05 | 
|Fourth quarter   |  |      | 2.50 |  |     |   | 1.35 | 
|                 |  |     
|2009:            |  |      |      |  |     |   |      | 
|First quarter    |  | $    | 1.90 |  |     | $ | 1.02 | 
|Second quarter   |  |      | 1.85 |  |     |   | 1.10 | 
|Third quarter    |  |      | 1.59 |  |     |   | 0.25 | 
|Fourth quarter   |  |      | 1.55 |  |     |   | 1.00 | 

As of March 1, 2011, we had
approximately 297 record holders of our Common Stock.

The transfer agent for our Common Stock is Wells Fargo Bank Minnesota, N.A., 161 North
Concord Exchange, South St. Paul, Minnesota 55075-0738, telephone: (651) 450-4064.

We have not paid any dividends on our Common Stock
since our initial public offering in January 1994. We expect that, for the foreseeable future, we will follow a policy of retaining earnings in order to finance the continued development of our business. Payment of dividends is within the discretion
of our Board of Directors and will depend, among other factors, upon the earnings, capital requirements, operating and financial condition of Great Lakes, and any applicable restrictive debt and lease covenants. In addition, under our March 9,
2007 Amended and Restated Restructuring Agreement with Raytheon, we have agreed not to pay dividends.

There were no sales of unregistered
securities of the Company during the fiscal year ended December 31, 2010.

See Item 12 with respect to securities authorized for
issuance under equity compensation plans.



|Item 6. | SELECTED FINANCIAL AND OPERATING DATA
|------- | -------------------------------------

The following statement of operations and balance sheet data as of, and for each of the years in the five-year period ended December 31, 2010 have
been derived from our audited financial statements. The financial statements as of December 31, 2010 and 2009, and for each of the years in the three-year period ended December 31, 2010, and the audit 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 financial statements and the notes thereto included elsewhere in this Form 10-K.



21



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|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------ | -
|                                                                                         |  | Year Ended December 31,                                      |        
|                                                                                         |  | 2010 (9)                                                     |         |   | 2009 |   |         | 2008 |  |   | 2007    |   |  | 2006 |       
|                                                                                         |  | (in thousands, except per share and selected operating data) |        
|Statement of Operations Data:                                                            |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Passenger revenues                                                                       |  | $                                                            | 63,066  |   |      | $ | 58,737  |      |  | $ | 75,719  |   |  | $    | 73,283 |   |  | $ | 62,477 |  
|Public service revenues                                                                  |  |                                                              | 60,398  |   |      |   | 61,258  |      |  |   | 39,250  |   |  |      | 24,149 |   |  |   | 23,851 |  
|Freight, charter, and other                                                              |  |                                                              | 1,937   |   |      |   | 1,849   |      |  |   | 1,187   |   |  |      | 728    |   |  |   | 1,286  |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Total operating revenues                                                                 |  |                                                              | 125,401 |   |      |   | 121,844 |      |  |   | 116,156 |   |  |      | 98,160 |   |  |   | 87,614 |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Operating expenses:                                                                      |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Salaries, wages and benefits                                                             |  |                                                              | 32,847  |   |      |   | 31,500  |      |  |   | 26,834  |   |  |      | 22,505 |   |  |   | 20,993 |  
|Aircraft fuel                                                                            |  |                                                              | 31,374  |   |      |   | 26,631  |      |  |   | 38,556  |   |  |      | 24,913 |   |  |   | 19,517 |  
|Aircraft maintenance, material, and repairs                                              |  |                                                              | 16,066  |   |      |   | 16,925  |      |  |   | 13,774  |   |  |      | 13,781 |   |  |   | 11,585 |  
|Depreciation and amortization                                                            |  |                                                              | 5,300   |   |      |   | 5,641   |      |  |   | 5,606   |   |  |      | 5,632  |   |  |   | 5,744  |  
|Aircraft rental                                                                          |  |                                                              | 2,294   |   |      |   | 2,066   |      |  |   | 968     |   |  |      | 620    |   |  |   | 1,666  |  
|Other rentals and landing fees                                                           |  |                                                              | 5,717   |   |      |   | 6,646   |      |  |   | 5,162   |   |  |      | 4,225  |   |  |   | 4,566  |  
|Other operating expense                                                                  |  |                                                              | 21,160  |   |      |   | 20,490  |      |  |   | 18,411  |   |  |      | 15,949 |   |  |   | 14,707 |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Total operating expenses                                                                 |  |                                                              | 114,758 |   |      |   | 109,899 |      |  |   | 109,311 |   |  |      | 87,625 |   |  |   | 78,778 |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Operating income                                                                         |  |                                                              | 10,643  |   |      |   | 11,945  |      |  |   | 6,845   |   |  |      | 10,535 |   |  |   | 8,836  |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Interest expense, net                                                                    |  |                                                              | (1,910  | ) |      |   | (2,160  | )    |  |   | (2,336  | ) |  |      | (2,319 | ) |  |   | (3,540 | )
|Gain on extinguishment of debt and deferred leases                                       |  |                                                              |        |   |      |   |        |      |  |   |        |   |  |      | 412    |   |  |   | 10,498 |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Income before income taxes                                                               |  |                                                              | 8,733   |   |      |   | 9,785   |      |  |   | 4,509   |   |  |      | 8,628  |   |  |   | 15,794 |  
|Income tax benefit (expense)                                                             |  |                                                              | (3,680  | ) |      |   | (4,003  | )    |  |   | (2,568  | ) |  |      | 9,585  |   |  |   | (115   | )
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Net income                                                                               |  | $                                                            | 5,053   |   |      | $ | 5,782   |      |  | $ | 1,941   |   |  | $    | 18,213 |   |  | $ | 15,679 |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|                                                                                         |  |                                                              |         |   |     
|Net income per share:                                                                    |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Basic                                                                                    |  | $                                                            | 0.35    |   |      | $ | 0.40    |      |  | $ | 0.14    |   |  | $    | 1.29   |   |  | $ | 1.11   |  
|Diluted                                                                                  |  |                                                              | 0.35    |   |      |   | 0.40    |      |  |   | 0.13    |   |  |      | 1.26   |   |  |   | 1.09   |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|                                                                                         |  |                                                              |         |   |     
|Average number of common shares outstanding:                                             |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Basic                                                                                    |  |                                                              | 14,292  |   |      |   | 14,292  |      |  |   | 14,237  |   |  |      | 14,077 |   |  |   | 14,072 |  
|Diluted                                                                                  |  |                                                              | 14,446  |   |      |   | 14,442  |      |  |   | 14,414  |   |  |      | 14,446 |   |  |   | 14,380 |  
|                                                                                         |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|                                                                                         |  |                                                              |         |   |     
|Balance Sheet Data:                                                                      |  |                                                              |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        |  
|Working capital (deficit)                                                                |  | $                                                            | (18,778 | ) |      | $ | 9,647   |      |  | $ | 3,086   |   |  | $    | 3,764  |   |  | $ | (3,462 | )
|Total assets                                                                             |  |                                                              | 84,350  |   |      |   | 84,644  |      |  |   | 86,217  |   |  |      | 92,049 |   |  |   | 82,312 |  
|Long-term debt (including current installments) and long-term debt classified as current |  |                                                              | 43,988  |   |      |   | 51,779  |      |  |   | 59,411  |   |  |      | 67,202 |   |  |   | 75,523 |  
|Stockholders equity (deficit)                                                           |  |                                                              | 28,941  |   |      |   | 23,887  |      |  |   | 17,385  |   |  |      | 15,364 |   |  |   | (2,872 | )



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|                                             |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|-------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                             |  | Year Ended December 31, |        
|                                             |  | 2010                    |         |   | 2009 |   |         | 2008 |  |   | 2007    |   |  | 2006 |        
|Selected Operating Data (unaudited):         |  |                         |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Available seat miles (in thousands) (1)      |  |                         | 388,162 |   |      |   | 401,068 |      |  |   | 360,636 |   |  |      | 318,524 |   |  |   | 283,272 |  
|Revenue passenger miles (in thousands) (2)   |  |                         | 149,131 |   |      |   | 134,077 |      |  |   | 154,655 |   |  |      | 157,144 |   |  |   | 132,251 |  
|Revenue passengers carried                   |  |                         | 499,439 |   |      |   | 481,668 |      |  |   | 569,846 |   |  |      | 578,773 |   |  |   | 504,666 |  
|Departures flown                             |  |                         | 82,802  |   |      |   | 92,517  |      |  |   | 82,477  |   |  |      | 68,360  |   |  |   | 61,806  |  
|Passenger load factor (3)                    |  |                         | 38.4    | % |      |   | 33.4    | %    |  |   | 42.9    | % |  |      | 49.3    | % |  |   | 46.7    | %
|Average yield per revenue passenger mile (4) |  |                         | 42.3    | ¢ |      |   | 43.8    | ¢    |  |   | 49.0    | ¢ |  |      | 46.6    | ¢ |  |   | 47.2    | ¢
|Revenue per available seat mile (5)          |  |                         | 32.3    | ¢ |      |   | 30.4    | ¢    |  |   | 32.2    | ¢ |  |      | 30.8    | ¢ |  |   | 30.9    | ¢
|Operating cost per available seat mile (6)   |  |                         | 29.6    | ¢ |      |   | 27.4    | ¢    |  |   | 30.3    | ¢ |  |      | 27.5    | ¢ |  |   | 27.8    | ¢
|Average passenger fare (7)                   |  | $                       | 126.27  |   |      | $ | 121.94  |      |  | $ | 132.88  |   |  | $    | 126.62  |   |  | $ | 123.80  |  
|Average passenger trip length (miles) (8)    |  |                         | 299     |   |      |   | 278     |      |  |   | 271     |   |  |      | 272     |   |  |   | 262     |  
|Aircraft in service (end of period)          |  |                         | 38      |   |      |   | 38      |      |  |   | 34      |   |  |      | 31      |   |  |   | 31      |  
|Destinations served (end of period)          |  |                         | 58      |   |      |   | 62      |      |  |   | 59      |   |  |      | 44      |   |  |   | 37      |  



|(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 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) | Average yield per revenue passenger mile represents the average passenger revenue received for each mile a revenue passenger is carried.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Revenue per available seat mile represents the average total operating revenue received for each available seat mile.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(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.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(9) | The working capital deficit of $18.8 million, at December 31, 2010, is due to our aircraft notes for 25 Beechcraft 1900D aircraft maturing on June 30, 2011
which requires a $32.7 million balloon payment. This debt is included in current notes payable and current maturities of long-term debt.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
|------- | ------------------------------------------------------------------------------------

Overview

The discussion and analysis throughout this report 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 Great Lakes 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.
See Forward-Looking Statements at the front of this report.



23



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Great Lakes began providing air charter service in 1979, and has provided scheduled passenger service since
1981. We provide scheduled local services to our hubs under the Great Lakes brand. Connecting code share products are available to both United and Frontier Airlines at selected hubs. As of March 1, 2011, we provided passenger service to 56
airports in 14 states.

Financial Highlights

We had operating revenue of $125.4 million for the year ending December 31, 2010, a 2.9 percent increase compared to operating revenue of $121.8 million for the year ending December 31, 2009.
The increase in operating revenue is due to passenger revenue increasing $4.3 million, offset by public service revenue decreasing $0.9 million. The $4.3 million increase in passenger revenue in 2010 can be attributed to (i) a 3.7 percent
(approximately 18,000) increase in passenger enplanements, and (ii) a 3.6 percent (approximately $4.33) increase in average fares.

We
had operating income of $10.6 million for the year ending December 31, 2010, a 10.9 percent decrease compared to operating income of $11.9 million for the year ending December 31, 2009. The decrease in operating income is mostly
attributable to increases in fuel prices resulting in a $4.7 million increase in fuel cost in 2010.

We had net income of $5.1 million for the
year ending December 31, 2010, a 12.6 percent decrease compared to net income of $5.8 million for the year ending December 31, 2009. The decrease in net income is primarily a result of the increase in fuel costs.

Results of Operations

(dollars in thousands)



|                                                     |  |                                  |         |  |             |  |      |                               |  |  |        |   |  |             |         |  |                               |  |      |        |  |  |             |    |  |   |         |  |  |  |      |  
|---------------------------------------------------- |  | -------------------------------- | ------- |  | ----------- |  | ---- | ----------------------------- |  |  | ------ | - |  | ----------- | ------- |  | ----------------------------- |  | ---- | ------ |  |  | ----------- | -- |  | - | ------- |  |  |  | ---- | -
|                                                     |  | For the Years Ended December 31, |        
|                                                     |  | 2010                             |         |  | 2009        |  |      | 2008                          | 
|                                                     |  | Amount                           |         |  | CentsperASM |  |      | % Increase(decrease)from 2009 |  |  | Amount |   |  | CentsperASM |         |  | % Increase(decrease)from 2008 |  |      | Amount |  |  | CentsperASM |   
|Operating revenues:                                  |  |                                  |         |  |             |  |      |                               |  |  |        |   |  |             |         |  |                               |  |      |        |  |  |             |    |  |   |         |  |  |  |      |  
|Passenger                                            |  | $                                | 63,066  |  |             |  |      |                               |  |  | 7.4    | % |  | $           | 58,737  |  |                               |  |      |        |  |  | (22.4       | )% |  | $ | 75,719  |  |  |  |      |  
|Public service                                       |  |                                  | 60,398  |  |             |  |      |                               |  |  | (1.4   | ) |  |             | 61,258  |  |                               |  |      |        |  |  | 56.1        |    |  |   | 39,250  |  |  |  |      |  
|Other                                                |  |                                  | 1,937   |  |             |  |      |                               |  |  | 4.8    |   |  |             | 1,849   |  |                               |  |      |        |  |  | 55.8        |    |  |   | 1,187   |  |  |  |      |  
|                                                     |  |                                  |         |  |             |  |      |                               |  |  |        |   |  |             |         |  |                               |  |      |        |  |  |             |    |  |   |         |  |  |  |      |  
|Total operating revenues                             |  |                                  | 125,401 |  |             |  |      |                               |  |  | 2.9    | % |  |             | 121,844 |  |                               |  |      |        |  |  | 4.9         | %  |  |   | 116,156 |  |  |  |      |  
|                                                     |  |                                  |         |  |             |  |      |                               |  |  |        |   |  |             |         |  |                               |  |      |        |  |  |             |    |  |   |         |  |  |  |      |  
|Salaries, wages, and benefits                        |  |                                  | 32,847  |  |             |  | 8.5  | ¢                             |  |  | 4.3    | % |  |             | 31,500  |  |                               |  | 7.9  | ¢      |  |  | 17.4        | %  |  |   | 26,834  |  |  |  | 7.4  | ¢
|Aircraft fuel                                        |  |                                  | 31,374  |  |             |  | 8.1  |                               |  |  | 17.8   |   |  |             | 26,631  |  |                               |  | 6.6  |        |  |  | (30.9       | )  |  |   | 38,556  |  |  |  | 10.7 |  
|Aircraft maintenance materials and component repairs |  |                                  | 16,066  |  |             |  | 4.1  |                               |  |  | (5.1   | ) |  |             | 16,925  |  |                               |  | 4.2  |        |  |  | 22.9        |    |  |   | 13,774  |  |  |  | 3.8  |  
|Depreciation and amortization                        |  |                                  | 5,300   |  |             |  | 1.4  |                               |  |  | (6.0   | ) |  |             | 5,641   |  |                               |  | 1.4  |        |  |  | 0.6         |    |  |   | 5,606   |  |  |  | 1.6  |  
|Aircraft rental                                      |  |                                  | 2,294   |  |             |  | 0.6  |                               |  |  | 11.0   |   |  |             | 2,066   |  |                               |  | 0.5  |        |  |  | 113.4       |    |  |   | 968     |  |  |  | 0.3  |  
|Other rentals and landing fees                       |  |                                  | 5,717   |  |             |  | 1.5  |                               |  |  | (14.0  | ) |  |             | 6,646   |  |                               |  | 1.7  |        |  |  | 28.7        |    |  |   | 5,162   |  |  |  | 1.4  |  
|Other operating expense                              |  |                                  | 21,160  |  |             |  | 5.5  |                               |  |  | 3.3    |   |  |             | 20,490  |  |                               |  | 5.1  |        |  |  | 11.3        |    |  |   | 18,411  |  |  |  | 5.1  |  
|                                                     |  |                                  |         |  |             |  |      |                               |  |  |        |   |  |             |         |  |                               |  |      |        |  |  |             |    |  |   |         |  |  |  |      |  
|Total operating expenses                             |  |                                  | 114,758 |  |             |  | 29.7 | ¢                             |  |  | 4.4    | % |  |             | 109,899 |  |                               |  | 27.5 | ¢      |  |  | 0.5         | %  |  |   | 109,311 |  |  |  | 30.3 | ¢
|                                                     |  |                                  |         |  |             |  |      |                               |  |  |        |   |  |             |         |  |                               |  |      |        |  |  |             |    |  |   |         |  |  |  |      |  
|Operating income                                     |  | $                                | 10,643  |  |             |  |      |                               |  |  |        |   |  | $           | 11,945  |  |                               |  |      |        |  |  |             |    |  | $ | 6,845   |  |  |  |      |  
|                                                     |  |                                  |         |  |             |  |      |                               |  |  |        |   |  |             |         |  |                               |  |      |        |  |  |             |    |  |   |         |  |  |  |      |  



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|                                         |  |      |         |   |                              |  |      |      |  |  |                              |   |  |      |       |    |  |  |         |  
|---------------------------------------- |  | ---- | ------- | - | ---------------------------- |  | ---- | ---- |  |  | ---------------------------- | - |  | ---- | ----- | -- |  |  | ------- | -
|                                         |  | 2010 |         |   | Increase/(decrease)from 2009 |  |      | 2009 |  |  | Increase/(decrease)from 2008 |   |  | 2008 |      
|Available seat miles (thousands)         |  |      | 388,162 |   |                              |  | (3.2 | )%   |  |  | 401,068                      |   |  |      | 11.2  | %  |  |  | 360,636 |  
|Revenue passenger miles (thousands)      |  |      | 149,131 |   |                              |  | 11.2 | %    |  |  | 134,077                      |   |  |      | (13.3 | )% |  |  | 154,655 |  
|Passenger load factor                    |  |      | 38.4    | % |                              |  | 15.0 | %    |  |  | 33.4                         | % |  |      | (22.1 | )% |  |  | 42.9    | %
|Average yield per revenue passenger mile |  |      | 42.3    | ¢ |                              |  | (3.4 | )%   |  |  | 43.8                         | ¢ |  |      | (10.6 | )% |  |  | 49.0    | ¢
|Revenue per available seat mile          |  |      | 32.3    | ¢ |                              |  | 6.3  | %    |  |  | 30.4                         | ¢ |  |      | (5.6  | )% |  |  | 32.2    | ¢
|Cost per available seat mile             |  |      | 29.6    | ¢ |                              |  | 8.0  | %    |  |  | 27.4                         | ¢ |  |      | (9.6  | )% |  |  | 30.3    | ¢

Comparison of 2010 to 2009

Passenger Revenues. Passenger revenues increased 7.4% from 2009. The increase in passenger revenues was largely due to an
11.2% increase in revenue passenger miles offset by a 3.4% reduction in average yield per revenue passenger mile.

Public Service
Revenues. Public service revenues earned through the Essential Air Service program decreased 1.4% to $60.4 million in 2010, as compared to $61.3 million in 2009. The decrease in public service revenues was mainly attributable to a net
decrease in communities served by us under the Essential Air Service Program, partially offset by an increase in service renewals supporting higher subsidy levels. In January of 2010, we exited the St. Louis EAS hub and transitioned EAS service to
Ft. Leonard Wood, MO to our Kansas City EAS hub. In April of 2010, we also discontinued EAS service to Manhattan and Salina KS, from our Kansas City EAS hub. The discontinuation of these EAS routes, offset by increases in other public service
revenues, resulted in a net decrease of $0.9 million of EAS revenue in 2010 as compared to 2009.

In February 2011, the Company transitioned
EAS service to Joplin MO. Additionally, the Company expects to transition current EAS service and discontinue service to Ironwood MI, Manistee, MI, Rhinelander, WI, Grand Island, NE, and all seven communities currently serviced in Montana.

We deliberately chose to exit these markets. No single route is significant to our operations and we have the ability to redeploy capacity to
other markets. Due to the substantial downsizing of connecting capacity at these EAS hubs, we determined that redeploying aircraft to hubs with greater connecting opportunities would offer the highest and best use of our aircraft.

Other Revenues. Other revenues increased 4.8% to $1.9 million in 2010. This increase was mainly due to ground handling services provided to
other carriers who served the same locations in which we had ongoing operations, offset in part by a decrease in cargo revenue and charter income.

Operating Expenses. Total operating expenses increased 4.4%, or $4.9 million from the previous year, primarily related to fuel costs. Fuel costs increased 17.8 %, or $4.7 million, from
6.6 cents per ASM in 2009 to 8.1 cents per ASM in 2010.

Salaries, wages, and benefits increased 4.3% to $32.8 million, which was primarily
attributable to increasing insurance benefit costs and pay rate increases.

Aircraft fuel expense was $31.4 million, or 8.1 cents per ASM, in
2010, an increase of $4.7 million. In comparison, our aircraft fuel expense for 2009 was $26.6 million, or 6.6 cents per ASM. The average cost of fuel increased from $2.29 per gallon in 2009 to $2.83 per gallon in 2010. The effect of the $0.54
increase in cost per gallon increased our total fuel cost by $6.1 million in 2010. The 17.8% increase in our aircraft fuel expense is attributable to the 23.6% increase in the average cost of fuel per gallon, partially offset by a 4.7%



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decrease in consumption resulting from the 3.2% decrease in ASMs. At 2010 rates of consumption, a one cent increase or decrease in the per gallon price of fuel will increase or decrease our fuel
expense by approximately $114,000 annually.

Aircraft maintenance, materials, and component repair expense was $16.1 million, or 4.1 cents per
ASM, in 2010, a decrease of $0.9 million from 2009. In comparison, our aircraft maintenance, materials, and repairs expense for 2009 was $16.9 million, or 4.2 cents per ASM. The 5.1% decrease in 2010 aircraft maintenance was primarily attributable
to the accelerated maintenance expenses associated with the preparation of six Company owned Beechcraft 1900D spare engines for installation on three Raytheon aircraft leased without engines during 2009.

Depreciation and amortization expense was $5.3 million during 2010 and $5.6 million during 2009. The decrease was primarily attributable to a reduction
of depreciation on items becoming fully depreciated.

Aircraft rental expense was $2.3 million during 2010, an increase of 11.0% compared to
$2.1 million during 2009. The increase was primarily attributable to the addition of four 1900D aircraft leases during 2009 from Raytheon.

Other rentals and landing fees decreased 14.0% to $5.7 million in 2010 from $6.6 million in 2009. The decrease in other rentals and landing fees expenses
is mostly attributable to a retroactive annual rate adjustment from Denver International Airport whereby we received a net credit of $1.1 million, which was $0.6 million more than 2009. Additionally, we had a 10.5% decrease in departures flown,
primarily attributable to the discontinuation of service to our former St. Louis hub, whereby we incurred less landing fee expense.

Other
operating expenses increased 3.3% in 2010 to $21.2 million, or 5.5 cents per ASM from $20.5 million or 5.1 cents per ASM in 2009. The increase in other operating expenses is primarily due to an increase of approximately $0.9 million in passenger
related expenses, $0.6 million in pilot training and associated lodging expenses and $0.2 million for other expenses. These were offset by reductions for professional fees of $0.5 million, deicing fluid expense of $0.3 million and contract
maintenance of $0.2 million.

Interest Expense. Interest expense was $1.9 million during 2010, a decrease of 11.6% from $2.2
million in 2009. The decrease was mostly the result of interest on the lower principal portion of long-term debt balance, partially offset by a reduction in deferred debt restructuring gain amortization in interest expense related to the
restructured Raytheon debt in 2002.

Income Tax Expense.We had income tax expense of $3.7 million in 2010
compared to $4.0 million in 2009. The provision for income taxes, as a percentage of income before taxes, increased to 42.1 percent in 2010 from 40.9 percent in 2009. The 2010 rate includes $0.1 million for the impact of changes in rates due to
state apportionment of income factor changes and $0.1 million charge related to an increase of valuation allowances on state NOLs which were previously expected to be utilized prior to expiration.

As of December 31, 2010, we had approximately $46.4 million of federal net operating loss carryforwards, and $16.9 million in state net operating
loss carryforwards, which will be available to offset future taxable income. A valuation allowance of approximately $624,608 remained at December 31, 2010 for state net operating loss carryforwards that may not be utilized before they expire.

Comparison of 2009 to 2008

Passenger Revenues. Passenger revenues decreased 22.4% from 2008. The decrease in passenger revenues was due to the 10.6% decrease in
average yield per revenue passenger mile.



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Public Service Revenues. Public service revenues earned through the Essential Air Service
program increased 56.1% to $61.3 million in 2009, as compared to $39.3 million in 2008. The increase in public service revenues was attributable to a net increase of two communities served by us under the Essential Air Service Program, as well as a
full year of results from the net 16 communities added during 2008.

Other Revenues. Other revenues increased 55.8% to $1.8
million in 2009. This increase was mainly due to ground handling services provided to other carriers who served the same locations in which we had ongoing operations.

Operating Expenses. Total operating expenses increased 0.5%, or $0.6 million from the previous year, primarily related to departure and capacity growth in short-haul EAS markets. Fuel costs
decreased 4.1 cents per ASM, from 10.7 cents per ASM in 2008 to 6.6 cents per ASM in 2009. These resulted in a decrease in operating expenses per ASM from 30.3 cents in 2008 to 27.4 cents in 2009.

Salaries, wages, and benefits increased 17.4% to $31.5 million, which was primarily attributable to company-wide increases in staffing levels and hours
worked as a result of a 11.2% increase in ASMs and 12.2% increase in departures flown during 2009. The average number of pilots and other employees increased in 2009 compared to 2008 by 24.2% and 16.3%, respectively.

Aircraft fuel expense was $26.6 million, or 6.6 cents per ASM, in 2009, a decrease of $11.9 million. In comparison, our aircraft fuel expense for 2008
was $38.6 million, or 10.7 cents per ASM. The average cost of fuel decreased from $3.58 per gallon in 2008 to $2.29 per gallon in 2009. The effect of the $1.29 decrease in cost per gallon decreased our total fuel cost by $14.0 million in 2009. The
30.9% decrease in our aircraft fuel expense is attributable to the 36.0% decrease in the average cost of fuel per gallon, partially offset by a 10.1% increase in consumption resulting from the 11.2% increase in ASMs. At 2009 rates of consumption, a
one cent increase or decrease in the per gallon price of fuel will increase or decrease our fuel expense by approximately $120,000 annually.

Aircraft maintenance, materials, and component repair expense was $16.9 million, or 4.2 cents per ASM, in 2009, an increase of $3.2 million from 2008. In
comparison, our aircraft maintenance, materials, and repairs expense for 2008 was $13.8 million, or 3.8 cents per ASM. The 22.9% increase in 2009 aircraft maintenance was primarily attributable to aircraft component overhaul activity, flight hours
used in the Term Cost Plan Agreement (the FMP contract) and increased parts usage associated with the seven additional aircraft placed in service in late 2008 through mid-year 2009.

Depreciation and amortization expense was $5.6 million during 2009 and 2008.

Aircraft rental
expense was $2.1 million during 2009, an increase of 113.4% compared to $1.0 million during 2008. The increase was primarily attributable to the addition of seven 1900D aircraft leases (three aircraft in 2008 and four aircraft in 2009) from
Raytheon, offset by the return of two aircraft which had been leased from another carrier in 2008.

Other rentals and landing fees increased
28.7% to $6.6 million in 2009 from $5.2 million in 2008. The increase in other rentals and landing fees expenses is mostly attributable to the 12.2% increase in departures flown and additional cities served.

Other operating expenses increased 11.3% in 2009 to $20.5 million, from $18.4 million in 2008. The increase in other operating expenses is primarily due
to an increase of approximately $0.7 million in pilot training and associated lodging expenses as a result of increased capacity. Other increases include approximately $0.5 million for contract airline handling, $0.4 million for professional
services, $0.3 million for contract maintenance and $0.2 million for other expenses resulting from expanded operations.



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Interest Expense. Interest expense was $2.2 million during 2009 compared to $2.3 million in
2008 due to declining average debt balances.

Income Tax Expense.We had income tax expense of $4.0 million in
2009 compared to $2.6 million in 2008. The provision for income taxes, as a percentage of income before taxes, decreased to 40.9 percent in 2009 from 56.9 percent in 2008. The 2009 rate includes $0.1 million for the impact of changes in rates due to
state apportionment of income factor changes, offset by $0.1 million for changes related to the release of valuation allowances on state NOLs which are now expected to be utilized prior to expiration. The higher 2008 rate included a $0.5 million
(17.9 % of the effective tax rate) tax expense related to NOLs expiring unused.

As of December 31, 2009, we had approximately $56.6
million of federal net operating loss carryforwards, and $23.2 million in state net operating loss carryforwards, which will be available to offset future taxable income. A valuation allowance of approximately $513,000 remained at December 31,
2009 for state net operating loss carryforwards that may not be utilized before they expire.

Liquidity and Capital Resources

Net cash provided by operating activities was $10.6 million at December 31, 2010 compared to $8.3 million at December 31, 2009.
We had negative working capital of $18.8 million and a current ratio of 0.6:1 at December 31, 2010, compared to working capital of $9.6 million and a current ratio of 1.6:1 at December 31, 2009. The decrease in working capital, at
December 31, 2010, is primarily due to our aircraft notes for 25 Beechcraft 1900D aircraft, which have a June 30, 2011 maturity and require a $32.7 million balloon payment, being included in current notes payable and current maturities of
long-term debt.

Our principal creditor and largest single shareholder, Raytheon, holds the Companys aircraft notes secured by 25
Beechcraft 1900D aircraft which mature on June 30, 2011. A $32.7 million balloon payment for all 25 aircraft notes is due upon maturity of the notes. In order to satisfy this obligation we will need to generate sufficient cash from operations
to repay the obligation, secure alternative sources of financing with which to repay Raytheon, raise additional capital sufficient to repay Raytheon, refinance the obligation with Raytheon, or achieve a combination of any or all of the foregoing to
satisfy the terms of the aircraft notes.

It is managements plan to obtain new financing with a different lender. Furthermore, it is
managements intention to continue the operations of the business in the normal course. As of April 5, 2011, we have not extended the terms of the Aircraft Notes or secured alternative sources of financing to satisfy these obligations.
Further, we have not generated sufficient cash from operations to be able to make a June 30, 2011 payment to Raytheon in the amount of $32.7 million. Raytheon has informed the Company that it does not intend to extend or refinance the
obligations due on June 30, 2011. In the event that we are unable to obtain new financing, Raytheon may exercise remedies available to it, including the foreclosure and taking of the 25 mortgaged aircraft and causing the $7.2 million Senior
Note to become due and payable. If these events occur, we would be unable to fly our scheduled service, our passenger and EAS revenues would cease, and we would be forced to file for protection from our creditors.

Raytheon has informed the Company that it may exercise its contractual rights to terminate upon 90-days notice the leases for any or all of the seven
aircraft the Company leases from Raytheon on or about April 15, 2011, depending on the Companys progress on refinancing the debt due June 30, 2011. A termination notice dated April 15, 2011 would result in Great Lakes returning
any or all of the seven leased aircraft to Raytheon on July 15, 2011. By that time, Great Lakes will have refinanced the debt due June 30, 2011, or will be in default thereunder. We have had communications with Raytheon whereby the
aircraft may be available to the Company for purchase. In particular, three of the leased aircraft are operated with Company owned engines and we are leasing the airframes without engines, so these airframes may be able to be acquired at
commercially reasonable prices.



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Failure to successfully implement a refinancing plan or otherwise address this liquidity issue within the
timeframe permitted will have a material adverse effect on our business, results of operations, and financial position. This raises substantial doubt as to our ability to continue operating as a going concern.

For additional information regarding Liquidity and Capital Resources see Item 1A Risk Factors.

Operating Activities. Net cash provided by operating activities for the year ended December 31, 2010 was $10.6 million as compared to
$8.3 million for the year ended December 31, 2009.

Investing Activities.Net cash used in investing activities for
the year ended December 31, 2010 was $2.8 million for the purchase of flight equipment and other property and equipment. Net cash used in investing activities for the year ended December 31, 2009 was $1.3 million.

Financing Activities. Cash used in financing activities for the year ended December 31, 2010 was $6.4 million. During the year ended
December 31, 2010, we repaid $6.4 million on our notes payable.

Contractual Obligations

The following table summarizes our major contractual payment obligations as of December 31, 2010:



|                                           |  |          |            |  |           |   |           |           |  |   |            |  |  |       |   |  |  |   |            | 
|------------------------------------------ |  | -------- | ---------- |  | --------- | - | --------- | --------- |  | - | ---------- |  |  | ----- | - |  |  | - | ---------- | 
|                                           |  | 2011 (1) |            |  | 2012-2013 |   |           | 2014-2015 |  |   | After 2015 |  |  | Total |  
|Long-term debt - contractual               |  | $        | 37,820,224 |  |           | $ | 3,555,543 |           |  | $ | 2,012,103  |  |  | $     |  |  |  | $ | 43,387,870 | 
|Contractual interest on long-term debt (2) |  |          | 1,667,809  |  |           |   | 639,300   |           |  |   | 129,284    |  |  |       |  |  |  |   | 2,436,393  | 
|                                           |  |          |            |  |           |   |           |           |  |   |            |  |  |       |   |  |  |   |            | 
|Total debt                                 |  |          | 39,488,033 |  |           |   | 4,194,843 |           |  |   | 2,141,387  |  |  |       |  |  |  |   | 45,824,263 | 
|Aircraft lease obligations                 |  |          | 2,187,032  |  |           |   | 959,387   |           |  |   |           |  |  |       |  |  |  |   | 3,146,419  | 
|                                           |  |          |            |  |           |   |           |           |  |   |            |  |  |       |   |  |  |   |            | 
|Total lease obligations                    |  |          | 2,187,032  |  |           |   | 959,387   |           |  |   |           |  |  |       |  |  |  |   | 3,146,419  | 
|                                           |  |          |            |  |           |   |           |           |  |   |            |  |  |       |   |  |  |   |            | 
|Total Obligations                          |  | $        | 41,675,065 |  |           | $ | 5,154,230 |           |  | $ | 2,141,387  |  |  | $     |  |  |  | $ | 48,970,682 | 
|                                           |  |          |            |  |           |   |           |           |  |   |            |  |  |       |   |  |  |   |            | 



|(1) | Approximately $32 million of aircraft debt associated with the Raytheon Aircraft Notes matures on June 30, 2011. This table does not contemplate refinancing of
debt obligations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The amounts shown represent contractual interest payable on the notes and exclude total adjustments of $599,945, for all periods, recorded under ASC 470-60-15 to the
carrying value of the notes in the financial statements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See discussion below for contractual interest obligations.

Contractual Interest Expense

Due to the
amortization of the deferred gain on forgiveness of debt associated with our 2002 Restructuring Agreement with Raytheon, in accordance with procedures set forth in ASC Section 470-60-15 (originally pursuant to SFAS No. 15- Accounting by
Debtors and Creditors for Troubled Debt Restructurings), our recorded interest expense will be significantly less than the contractual interest expense throughout the terms of the Raytheon notes. During 2010, our contractual interest expense for
all long-term debt obligations was $3.2 million. In 2010, we amortized $1.3 million of the deferred gain on forgiven debt associated with the Raytheon 2002 Restructuring Agreement in accordance with ASC Section 470-60-15. As a result, our net
interest expense on long-term debt obligations, as reflected on the financial statements, was $1.9 million.



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The projected contractual interest expense on our long-term obligations (based on the interest rate stated
in the debt instruments) for the next five years and thereafter is as follows:



|           |  |                               |           |  |                          |  |       |  
|---------- |  | ----------------------------- | --------- |  | ------------------------ |  | ----- | -
|Maturity   |  | Fixed RateContractualInterest |           |  | AverageFixedInterestRate | 
|2011       |  | $                             | 1,667,809 |  |                          |  | 6.823 | %
|2012       |  |                               | 378,842   |  |                          |  | 7.000 | %
|2013       |  |                               | 260,458   |  |                          |  | 7.000 | %
|2014       |  |                               | 125,415   |  |                          |  | 7.000 | %
|2015       |  |                               | 3,869     |  |                          |  | 7.000 | %
|Thereafter |  |                               |          |  |                          |  |      | %

In comparison, after applying the
amortization of the deferred gain on forgiven debt amounts against our contractual interest expense, our reportable interest expense using ASC 470-60-15 for long-term obligations that are due in the five subsequent years and thereafter is estimated
to be as follows:



|           |  |                                                                |           |  |                                                                      |  |       |  
|---------- |  | -------------------------------------------------------------- | --------- |  | -------------------------------------------------------------------- |  | ----- | -
|Maturity   |  | Fixed Rate Interestadjusted for DeferredDebt RestructuringGain |           |  | Avg. Fixed Interest 
Rateadjusted for DeferredDebt
RestructuringGain | 
|2011       |  | $                                                              | 1,067,864 |  |                                                                      |  | 4.369 | %
|2012       |  |                                                                | 378,842   |  |                                                                      |  | 7.000 | %
|2013       |  |                                                                | 260,458   |  |                                                                      |  | 7.000 | %
|2014       |  |                                                                | 125,415   |  |                                                                      |  | 7.000 | %
|2015       |  |                                                                | 3,869     |  |                                                                      |  | 7.000 | %
|Thereafter |  |                                                                |          |  |                                                                      |  |      | %

Critical Accounting Policies and
Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States
requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements; revenues and expenses during the reporting period; and related disclosures of contingent
assets and liabilities in the financial statements and the accompanying notes. Actual results could differ from those estimates.

The United
States Securities and Exchange Commission (the SEC) has defined a companys most critical accounting policies as the ones that are most important to the portrayal of our financial condition and results and that require us to make
our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified our critical accounting policies as including those addressed below.
We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions. See Note 3, Summary of Significant Accounting Policies and Procedures, in the Notes to the Financial Statements for additional
discussion of these items. Management believes that its estimates and assumptions are reasonable, based on information presently available; however, changes in these estimates, judgments, and assumptions will occur as a result of future events.
Accordingly, actual results could differ from amounts estimated.



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Depreciation and Residual Values On Aircraft. In accounting for long-lived assets, we make
estimates about the expected useful lives, projected residual values, and the potential for impairment. Estimates of useful lives and residual values of aircraft are based on actual industry experience with the same or similar aircraft types and
anticipated utilization of the aircraft. Changing market prices of new and used aircraft, government regulations, and changes in our maintenance program or operations could result in changes to these estimates.

Accounting for Maintenance Deposits. We have evaluated the maintenance deposits on account which relate to two Brasilia aircraft and amount
to approximately $2 million at December 31, 2010 and determined that, based on historical and forecasted usage of the aircraft, that all amounts on deposit are probable of being returned as a result of the maintenance expected to be performed
on the aircrafts components prior to the leased aircrafts lease expiration (April 2013). If amounts paid on deposit are probable of being returned, as a result of the maintenance expected to be performed on the aircrafts components
prior to lease expiration, we will treat that amount paid as a refundable deposit. If, based on historical and forecasted usage of the aircraft, we do not expect an amount paid to be returned, we will expense that amount as maintenance expense at
the time that expense is incurred. We will continue to evaluate our maintenance deposit account as the leases progress toward lease termination, and make the determination if any maintenance deposits should be expensed if it becomes less than
probable that the deposits will be returned.

Inventories. Inventories are comprised primarily of expendable spare aircraft
parts, fuel, materials, and supplies relating to flight equipment, which are recorded at the lower of cost (average cost) or market. Expendable spare aircraft parts are subject to reserves for obsolescence.

Aircraft Valuation and Impairments. In accordance with ASC Section 360-10-35 (originally Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed of) long-lived assets, such as property, plant, equipment and aircraft, subject to amortization, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted
future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of
the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposal
group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. An impairment loss is recognized to the extent that the carrying amount exceeds the assets fair value.

Income Taxes. We account for income taxes using the asset and liability method. Under that method, deferred income taxes are
recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and tax bases of existing assets and
liabilities and net operating losses (NOLs) and tax credit carryforwards. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The tax net operating loss carryforwards (NOLs) that have been
generated are due in large part to the accelerated depreciation of property and equipment over a shorter useful life for tax purposes. Our NOLs will expire between 2020 and 2024. The book basis of property and equipment is approximately $45.9
million greater than the tax basis at December 31, 2010, all of which is expected to reverse during periods in which NOLs are available. Approximately $12.0 million ($624,000 tax effected) of state NOLs are expected to expire unused and
accordingly a valuation allowance has been provided for these deferred tax assets. Based upon the



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projections for future taxable income over the periods in which the deferred tax assets become deductible, the Company believes it is more likely than not that it will realize the benefits of
most of the deductible temporary differences and NOLs. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Liability Accruals and Reserves. We are obligated under various agreements relating to employee health and welfare, injuries,
tax and fee remittances, and other contractual matters, some of which involve estimates of the ultimate amounts due and impacts of insurance coverage. Changes in the estimates and assumptions could occur and would result in actual results being
different than those estimated.

Effects of Inflation

We are subject to inflationary pressures from labor agreements, fuel price escalations, and increased operating costs at airports served by us. We attempt to counteract the effects of inflation through
fare increases, subsidy increases and capacity adjustments.

Environmental Matters

In the normal course of our operations, we are subject to various federal, state, local and foreign laws and regulations relating to environmental
protection matters. These laws and regulations govern such matters as environmental reporting, storage and disposal of materials and chemicals and aircraft noise. We are, and expect in the future to be, involved in various environmental matters and
conditions at, or related to, our properties. We are not currently subject to any environmental cleanup orders or actions imposed by regulatory authorities. We are not aware of any active material environmental investigation related to our assets or
properties.

Off Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained
or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing,
liquidity, market risk or credit risk support to the company, or that engages in leasing, hedging or research and development arrangements with the company.

We have no off-balance sheet arrangements of the types described in the four categories above that we believe may have a material current or future effect on our financial condition, liquidity or results
of operations.



|Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Market Risks

We are susceptible to certain risks related to changes in the cost of
aircraft fuel and changes in interest rates. As of December 31, 2010, we did not have any derivative financial instruments.

Aircraft
Fuel

Due to the airline industrys dependency on aircraft fuel for operations, airline operators including Great Lakes are impacted
by changes in aircraft fuel prices. Aircraft fuel represented approximately 27.3% of our operating expenses in 2010. At 2010 rates of consumption, a one cent increase or decrease in the per gallon price of fuel would increase or decrease our fuel
expense by approximately $114,000 annually.



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Interest Rates

Our operations are very capital intensive because the vast majority of our assets consist of flight equipment, which is financed primarily with long-term debt. At December 31, 2010, all of the
Companys long-term debt was financed with fixed interest rates, thereby eliminating our current exposure to increases in interest rates.



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|Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

The financial statements of the Company as of December 31, 2010, 2009 and 2008, together with the Report of the Companys Independent Registered Public Accounting Firm, are included in this Form
10-K on the pages indicated below.



|                                                                                        |  |  |    | 
|--------------------------------------------------------------------------------------- |  |  | -- | 
|Report of Independent Registered Public Accounting Firm                                 |  |  | 35 | 
|                                                                                        | 
|Balance Sheets as of December 31, 2010 and 2009                                         |  |  | 36 | 
|                                                                                        | 
|Statements of Income for the Years Ended December 31, 2010, 2009 and 2008               |  |  | 37 | 
|                                                                                        | 
|Statements of Stockholders Equity for the Years Ended December 31, 2010, 2009 and
2008 |  |  | 38 | 
|                                                                                        | 
|Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and
2008           |  |  | 39 | 
|                                                                                        | 
|Notes to Financial Statements                                                           |  |  | 40 | 

Supporting schedules are omitted because
they are inapplicable, not required, or the information is presented in the financial statements or notes thereto.



34



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors

Great
Lakes Aviation, Ltd.:

We have audited the accompanying balance sheets of Great Lakes Aviation, Ltd. (the Company) as of December 31,
2010 and 2009, and the related statements of income, stockholders equity, and cash flows for each of the years in the three-year period ended December 31, 2010. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 financial statements referred to above present fairly, in all material respects, the financial position of Great Lakes Aviation, Ltd. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for
each of the years in the three-year period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the
financial statements, the Company has $38.4 million of debt payments and maturities due in 2011, including a one-time payment in the amount of $32.7 million due on June 30, 2011. The Companys cash flows from operations are not sufficient
to fund these debt obligations, which raises substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are also described in note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ KPMG LLP

Denver, Colorado

April 5, 2011



35



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GREAT LAKES AVIATION, LTD.

Balance Sheets

December 31, 2010 and 2009



|                                                                 |  |                  |             |   |                  |   |             |  
|---------------------------------------------------------------- |  | ---------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                 |  | December 31,2010 |             |   | December 31,2009 |  
|Assets                                                           |  |                  |             |   |                  |   |             |  
|Current assets:                                                  |  |                  |             |   |                  |   |             |  
|Cash                                                             |  | $                | 5,716,105   |   |                  | $ | 4,327,538   |  
|Accounts receivable                                              |  |                  | 9,100,412   |   |                  |   | 9,528,102   |  
|Inventories                                                      |  |                  | 6,591,209   |   |                  |   | 6,372,757   |  
|Prepaid expenses and other current assets                        |  |                  | 2,037,525   |   |                  |   | 1,079,131   |  
|Deferred income taxes                                            |  |                  | 3,770,873   |   |                  |   | 4,012,275   |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Total current assets                                             |  |                  | 27,216,124  |   |                  |   | 25,319,803  |  
|                                                                 |  |                  |             |   |                  |   |             |  
|                                                                 |  |                 
|Property and equipment:                                          |  |                  |             |   |                  |   |             |  
|Flight equipment                                                 |  |                  | 114,415,177 |   |                  |   | 112,728,482 |  
|Other property and equipment                                     |  |                  | 9,485,938   |   |                  |   | 8,821,022   |  
|Less accumulated depreciation and amortization                   |  |                  | (70,714,717 | ) |                  |   | (65,650,280 | )
|                                                                 |  |                  |             |   |                  |   |             |  
|Total property and equipment                                     |  |                  | 53,186,398  |   |                  |   | 55,899,224  |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Maintenance deposits                                             |  |                  | 2,024,444   |   |                  |   | 1,562,568   |  
|Other assets                                                     |  |                  | 1,923,459   |   |                  |   | 1,862,089   |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Total assets                                                     |  | $                | 84,350,425  |   |                  | $ | 84,643,684  |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Liabilities and Stockholders Equity                             |  |                  |             |   |                  |   |             |  
|                                                                 |  |                 
|Current liabilities:                                             |  |                  |             |   |                  |   |             |  
|Notes payable and current maturities of long-term debt           |  | $                | 38,420,169  |   |                  | $ | 7,791,492   |  
|Accounts payable                                                 |  |                  | 3,233,965   |   |                  |   | 3,589,133   |  
|Accrued interest, unearned revenue and other liabilities         |  |                  | 4,340,469   |   |                  |   | 4,292,574   |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Total current liabilities                                        |  |                  | 45,994,603  |   |                  |   | 15,673,199  |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Long-term debt, net of current maturities                        |  |                  | 5,567,646   |   |                  |   | 43,987,815  |  
|Other long-term liabilities                                      |  |                  |            |   |                  |   | 152,866     |  
|Deferred income taxes                                            |  |                  | 3,812,182   |   |                  |   | 860,251     |  
|Deferred credits                                                 |  |                  | 35,435      |   |                  |   | 82,272      |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Total liabilities                                                |  |                  | 55,409,866  |   |                  |   | 60,756,403  |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Preferred stock; $0.01 par value; Authorized: 25,000,000 shares. |  |                  |             |   |                  |   |             |  
|No shares issued or outstanding                                  |  |                  |            |   |                  |   |            |  
|Common stock; $0.01 par value; Authorized: 50,000,000 shares.    |  |                  |             |   |                  |   |             |  
|Issued and outstanding: 14,291,970 shares                        |  |                  | 142,920     |   |                  |   | 142,920     |  
|Paid-in capital                                                  |  |                  | 33,568,669  |   |                  |   | 33,568,669  |  
|Accumulated deficit                                              |  |                  | (4,771,030  | ) |                  |   | (9,824,308  | )
|                                                                 |  |                  |             |   |                  |   |             |  
|Total stockholders equity                                       |  |                  | 28,940,559  |   |                  |   | 23,887,281  |  
|Commitments and contingencies                                    |  |                  |             |   |                  |   |             |  
|                                                                 |  |                  |             |   |                  |   |             |  
|Total liabilities and stockholders equity                       |  | $                | 84,350,425  |   |                  | $ | 84,643,684  |  
|                                                                 |  |                  |             |   |                  |   |             |  

See accompanying notes to financial statements.



36



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##### Table of Contents

GREAT LAKES AVIATION, LTD.

Statements of Income

Years Ended December 31, 2010, 2009, and 2008



|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|---------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                   |  | 2010 |             |   | 2009 |   |             | 2008 | 
|Operating revenues:                                                                |  |      |             |   |      |   |             |      |  |   |             |  
|Passenger                                                                          |  | $    | 63,065,692  |   |      | $ | 58,736,610  |      |  | $ | 75,719,222  |  
|Public service                                                                     |  |      | 60,398,036  |   |      |   | 61,258,859  |      |  |   | 39,250,276  |  
|Freight, charter, and other                                                        |  |      | 1,936,602   |   |      |   | 1,849,162   |      |  |   | 1,187,148   |  
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Total operating revenues                                                           |  |      | 125,400,330 |   |      |   | 121,844,631 |      |  |   | 116,156,646 |  
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|                                                                                   |  |      |            
|Operating expenses:                                                                |  |      |             |   |      |   |             |      |  |   |             |  
|Salaries, wages, and benefits                                                      |  |      | 32,846,739  |   |      |   | 31,500,185  |      |  |   | 26,833,757  |  
|Aircraft fuel                                                                      |  |      | 31,374,203  |   |      |   | 26,630,846  |      |  |   | 38,556,174  |  
|Aircraft maintenance, materials, and repairs                                       |  |      | 16,065,583  |   |      |   | 16,925,204  |      |  |   | 13,774,409  |  
|Depreciation and amortization                                                      |  |      | 5,300,217   |   |      |   | 5,640,649   |      |  |   | 5,606,241   |  
|Aircraft rental                                                                    |  |      | 2,294,100   |   |      |   | 2,066,334   |      |  |   | 967,710     |  
|Other rentals and landing fees                                                     |  |      | 5,717,207   |   |      |   | 6,646,086   |      |  |   | 5,162,310   |  
|Other operating expense                                                            |  |      | 21,159,510  |   |      |   | 20,489,441  |      |  |   | 18,410,838  |  
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Total operating expenses                                                           |  |      | 114,757,559 |   |      |   | 109,898,745 |      |  |   | 109,311,439 |  
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Operating income                                                                   |  |      | 10,642,771  |   |      |   | 11,945,886  |      |  |   | 6,845,207   |  
|Other expense:                                                                     |  |      |             |   |      |   |             |      |  |   |             |  
|Interest expense net of interest income of $6,104, $7,949 and $85,550 respectively |  |      | (1,909,642  | ) |      |   | (2,160,483  | )    |  |   | (2,336,322  | )
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Total other expense                                                                |  |      | (1,909,642  | ) |      |   | (2,160,483  | )    |  |   | (2,336,322  | )
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Income before income taxes                                                         |  |      | 8,733,129   |   |      |   | 9,785,403   |      |  |   | 4,508,885   |  
|Income tax expense                                                                 |  |      | (3,679,851  | ) |      |   | (4,003,519  | )    |  |   | (2,567,541  | )
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Net income                                                                         |  | $    | 5,053,278   |   |      | $ | 5,781,884   |      |  | $ | 1,941,344   |  
|                                                                                   |  |      |             |   |      |   |             |      |  |   |             |  
|Net income per share:                                                              |  |      |             |   |      |   |             |      |  |   |             |  
|Basic                                                                              |  | $    | 0.35        |   |      | $ | 0.40        |      |  | $ | 0.14        |  
|Diluted                                                                            |  |      | 0.35        |   |      |   | 0.40        |      |  |   | 0.13        |  
|Average shares outstanding:                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Basic                                                                              |  |      | 14,291,970  |   |      |   | 14,291,970  |      |  |   | 14,237,325  |  
|Diluted                                                                            |  |      | 14,445,732  |   |      |   | 14,442,357  |      |  |   | 14,414,207  |  

See accompanying notes to financial
statements.



37



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GREAT LAKES AVIATION, LTD.

Statements of Stockholders Equity

Years Ended December 31, 2010, 2009, and 2008



|                                                                            |  |              |            |  |        |   |         |                 |  |   |            |  |  |       |             |   |  |   |            | 
|--------------------------------------------------------------------------- |  | ------------ | ---------- |  | ------ | - | ------- | --------------- |  | - | ---------- |  |  | ----- | ----------- | - |  | - | ---------- | 
|                                                                            |  | Common stock |            |  |        |   |         | Accumulated     |  |   |            | 
|                                                                            |  | Shares       |            |  | Amount |   |         | Paid-in capital |  |   | deficit    |  |  | Total |            
|                                                                            |  |              |            |  |       
|Balance at December 31, 2007                                                |  |              | 14,091,970 |  |        | $ | 140,920 |                 |  | $ | 33,490,669 |  |  | $     | (18,267,974 | ) |  | $ | 15,363,615 | 
|                                                                            |  |              |            |  |       
|Issuance of common stock                                                    |  |              | 200,000    |  |        |   | 2,000   |                 |  |   | 78,000     |  |  |       |            |   |  |   | 80,000     | 
|Net income and comprehensive income                                         |  |              |           |  |        |   |        |                 |  |   |           |  |  |       | 1,941,344   |   |  |   | 1,941,344  | 
|                                                                            |  |              |            |  |        |   |         |                 |  |   |            |  |  |       |             |   |  |   |            | 
|Balance at January 1, 2009                                                  |  |              | 14,291,970 |  |        |   | 142,920 |                 |  |   | 33,568,669 |  |  |       | (16,326,630 | ) |  |   | 17,384,959 | 
|                                                                            |  |              |            |  |       
|Cumulative effect of change in accounting for maintenance deposits (Note 2) |  |              |           |  |        |   |        |                 |  |   |           |  |  |       | 720,438     |   |  |   | 720,438    | 
|                                                                            |  |              |            |  |        |   |         |                 |  |   |            |  |  |       |             |   |  |   |            | 
|Revised balance at January 1, 2009                                          |  |              | 14,291,970 |  |        |   | 142,920 |                 |  |   | 33,568,669 |  |  |       | (15,606,192 | ) |  |   | 18,105,397 | 
|                                                                            |  |              |            |  |       
|Net income and comprehensive income                                         |  |              |           |  |        |   |        |                 |  |   |           |  |  |       | 5,781,884   |   |  |   | 5,781,884  | 
|                                                                            |  |              |            |  |        |   |         |                 |  |   |            |  |  |       |             |   |  |   |            | 
|Balance at December 31, 2009                                                |  |              | 14,291,970 |  |        |   | 142,920 |                 |  |   | 33,568,669 |  |  |       | (9,824,308  | ) |  |   | 23,887,281 | 
|                                                                            |  |              |            |  |       
|Net income and comprehensive income                                         |  |              |           |  |        |   |        |                 |  |   |           |  |  |       | 5,053,278   |   |  |   | 5,053,278  | 
|                                                                            |  |              |            |  |        |   |         |                 |  |   |            |  |  |       |             |   |  |   |            | 
|Balance at December 31, 2010                                                |  |              | 14,291,970 |  |        | $ | 142,920 |                 |  | $ | 33,568,669 |  |  |       | (4,771,030  | ) |  | $ | 28,940,559 | 
|                                                                            |  |              |            |  |        |   |         |                 |  |   |            |  |  |       |             |   |  |   |            | 

See accompanying notes to financial statements.



38



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##### Table of Contents

GREAT LAKES AVIATION, LTD.

Statements of Cash Flows

Years Ended December 31, 2010, 2009, and 2008



|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                 |  | 2010 |            |   | 2009 |   |            | 2008 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                       |  | $    | 5,053,278  |   |      | $ | 5,781,884  |      |  | $ | 1,941,344  |  
|Adjustments to reconcile net income to net cash provided by operating activities |  |      |            |   |      |   |            |      |  |   |            |  
|Depreciation and amortization                                                    |  |      | 5,300,217  |   |      |   | 5,640,649  |      |  |   | 5,606,241  |  
|Loss on items beyond economic repair                                             |  |      | 178,341    |   |      |   | 148,481    |      |  |   | 135,691    |  
|Amortization of deferred debt restructuring gain                                 |  |      | (1,344,610 | ) |      |   | (1,517,335 | )    |  |   | (1,685,890 | )
|Deferred tax expense                                                             |  |      | 3,193,333  |   |      |   | 3,570,531  |      |  |   | 2,590,489  |  
|Change in current operating items:                                               |  |      |            |   |      |   |            |      |  |   |            |  
|Accounts receivable                                                              |  |      | 427,690    |   |      |   | (1,030,144 | )    |  |   | (1,810,354 | )
|Inventories                                                                      |  |      | (218,452   | ) |      |   | (2,100,496 | )    |  |   | 844,734    |  
|Prepaid expenses and other current assets                                        |  |      | (958,394   | ) |      |   | (293,608   | )    |  |   | 440,897    |  
|Maintenance deposits                                                             |  |      | (461,876   | ) |      |   | (403,931   | )    |  |   |           |  
|Other assets                                                                     |  |      | (61,370    | ) |      |   | (238,420   | )    |  |   | (517,007   | )
|Accounts payable                                                                 |  |      | (355,168   | ) |      |   | (128,368   | )    |  |   | 259,703    |  
|Accrued interest, unearned revenue and other liabilities                         |  |      | 47,895     |   |      |   | (570,919   | )    |  |   | 126,632    |  
|Other long-term liabilities                                                      |  |      | (152,866   | ) |      |   | (558,196   | )    |  |   | (402,262   | )
|Deferred credits                                                                 |  |      | (46,837    | ) |      |   | (46,838    | )    |  |   | (46,837    | )
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                        |  |      | 10,601,181 |   |      |   | 8,253,290  |      |  |   | 7,483,381  |  
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Purchase of flight equipment and other property and equipment                    |  |      | (2,765,732 | ) |      |   | (1,306,097 | )    |  |   | (2,008,522 | )
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash flows used in investing activities                                      |  |      | (2,765,732 | ) |      |   | (1,306,097 | )    |  |   | (2,008,522 | )
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Repayment of notes payable and long-term debt                                    |  |      | (6,446,882 | ) |      |   | (6,114,139 | )    |  |   | (6,105,120 | )
|Proceeds from the issuance of common stock                                       |  |      |           |   |      |   |           |      |  |   | 80,000     |  
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                            |  |      | (6,446,882 | ) |      |   | (6,114,139 | )    |  |   | (6,025,120 | )
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                             |  |      | 1,388,567  |   |      |   | 833,054    |      |  |   | (550,261   | )
|                                                                                 |  |      |           
|Cash and Cash Equivalents:                                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Beginning of year                                                                |  |      | 4,327,538  |   |      |   | 3,494,484  |      |  |   | 4,044,745  |  
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|End of year                                                                      |  | $    | 5,716,105  |   |      | $ | 4,327,538  |      |  | $ | 3,494,484  |  
|                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|Supplementary cash flow information:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Cash paid during the year for interest (contractual)                             |  | $    | 3,260,357  |   |      | $ | 3,692,657  |      |  | $ | 4,107,762  |  
|Cash paid during the year for income taxes                                       |  | $    | 660,226    |   |      | $ | 299,950    |      |  | $ | 30,200     |  

See accompanying notes to financial
statements.



39



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##### Table of Contents

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



|Note 1. | Business
|------- | --------

Great Lakes Aviation, Ltd.
(Great Lakes, the Company, we or us) is a regional airline operating as an independent carrier and as a code share partner with United Air Lines, Inc. (United Airlines or United) and Frontier Airlines, Inc. (Frontier Airlines or Frontier). The
Company and United operate under a code share agreement that expires May 1, 2011. Terms of the agreement provide for the Company to implement United Airlines code sharing for destinations the Company currently services to and from Billings, MT,
Denver, CO, Ontario, CA and Phoenix, AZ hubs.

The Company operates under a similar code share agreement with Frontier. While the Frontier
agreement does not have a fixed termination date, it is terminable 180 days after written notice by either party. The Frontier agreement provides for the use of Frontiers flight designator code on the Companys flights connecting with
Frontiers flights in Albuquerque, NM, Billings, MT, Denver, CO, Milwaukee, WI, and Phoenix, AZ.

Currently, we estimate that
approximately 35% of Great Lakes connecting passenger traffic utilizes the United code share product line and approximately 22% of Great Lakes connecting passenger traffic utilizes the Frontier code share product line.

Approximately 48%, 50%, and 34% of the Companys total revenue during 2010, 2009, and 2008, respectively, were generated by services provided under
the Essential Air Service (EAS) program administered by the United States Department of Transportation (DOT). The EAS program is authorized by Congress under the recurring FAA Reauthorization process. The EAS program has received 18 short-term
Congressional extensions of the program. This most recent extension, signed by the President on March 31, 2011, expires on May 31, 2011. Currently, the U. S. House of Representatives is working to pass its version of the FAA
Reauthorization and Reform Act (H.R. 658) so that it may be forwarded to the U. S. Senate and House of Representative Conferees in an effort to assemble a merged bill with the U.S. Senate FAA Air Transportation Modernization and Safety Improvement
Act (S.223). It is expected that the merged bill, when completed, will then be presented to the U. S. Senate and U. S. House of Representatives for confirmation votes and ultimately sent to the President of the United States for his signature and
enactment into law.

Significant differences exist between the U.S. Senate version of the FAA Reauthorization legislation versus the U. S.
House of Representatives version of the proposed legislation. Current draft language in the House bill phases out the EAS program in its entirety in 2013. The Senate bill maintains the existence of the EAS program with some meaningful changes.
Community eligibility changes are promulgated that would reduce EAS program communities served anywhere from approximately 10 to 40 communities nationwide. This would be accomplished by extending mileage criteria to a communitys proximity to
medium or large hubs from 70 to 90 miles and by requiring a minimum of ten passengers to be enplaned daily at eligible EAS service points. Due to the wide differences in the draft versions of the House and Senate bills, forecasting the outcome of
the conference committee report and the resulting impact on the capacity that the Company dedicates to EAS and the corresponding revenue stream associated with the EAS program, is not possible.

The Company provides charter air services to private individuals, corporations, and athletic teams. The Company also carries cargo on most of the
Companys scheduled flights and in certain locations, provides ground handling for other carriers.

As of December 31, 2010, the
Company served fifteen states at 58 airports. The company operates hubs at Albuquerque, NM, Denver, CO, Las Vegas, NV, Milwaukee, WI, Ontario, CA, Phoenix, AZ, and Billings, MT. In January of 2010, the Company ceased its operations at its St. Louis,
MO EAS hub. In April of 2010, we discontinued service to Manhattan and Salina, KS from Kansas City, MO. In April of 2010, we opened a new hub in Las Vegas, NV to serve Merced, CA and Kingman, AZ. On December 14, 2010, we transitioned Fort
Leonard Wood, MO service to another carrier. In February of 2011 the Company ceased its operations at its Kansas City, MO EAS hub and transitioned Joplin, MO service to another carrier



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



There have been additional changes to operations since December, 31, 2010. On January 18, 2011, the
DOT selected another carrier to provide subsidized EAS service at Ironwood, MI, and Manistee, MI. Service is expected to transition in April of 2011 at which time we will cease operations at our Milwaukee EAS hub and discontinue service to Ironwood,
MI, Manistee, MI and Rhinelander, WI. On January 31, 2011 the DOT issued an order selecting another carrier to service Grand Island, NE. We expect to transition this service in June of 2011. On February 3, 2011 the DOT issued an order
selecting another carrier to service the seven Montana communities which we currently serve. We anticipate the other carrier to commence service in May of 2011 at which time we will cease operations at our Billings, MT EAS hub and discontinue
serving Glasgow, Glendive, Havre, Lewiston, Miles City, Sidney and Wolf Point, MT.

Liquidity

The Company has historically used debt to finance the purchase of its aircraft. At December 31, 2010, the Company has $38.4 million of long-term debt
payments or debt maturity debt payments due in 2011 (see Note 6). At December 31, 2010, the largest portion of the Companys long-term debt was held by the Companys principal creditor and largest single shareholder, Raytheon Aircraft
Credit Corporation (Raytheon). The notes which were used to finance the purchase of aircraft are secured by 25 Beechcraft 1900D aircraft and mature on June 30, 2011. A $32.7 million balloon payment for all 25 aircraft notes is due upon maturity
of the notes. The Companys cash flows from operations will not be sufficient to fund the balloon payment at June 30, 2011. The Company will need to secure alternative sources of financing with which to repay Raytheon, raise additional
capital sufficient to repay Raytheon, refinance the obligation with Raytheon, or achieve a combination of any or all of the foregoing to satisfy the terms of the aircraft notes. A default on the aircraft notes could also result in other Raytheon
debt being declared in default and subject to acceleration of the maturity of that debt.

It is managements plan to obtain new financing
with a different lender. Furthermore, it is managements intention to continue the operations of the business in the normal course.

As
of April 5, 2011, the Company has not refinanced the obligation or secured alternative sources of financing to satisfy the obligations. Raytheon has informed the Company that it does not intend to extend or refinance the obligations due on
June 30, 2011. In addition, Raytheon has informed the Company that it may exercise its contractual rights to terminate the leases upon 90-days notice for any or all of the seven aircraft the Company leases from Raytheon on or about
April 15, 2011, depending on the Companys progress on refinancing the debt due June 30, 2011. A termination notice dated April 15, 2011 would result in Great Lakes returning any or all of the seven leased aircraft to Raytheon on
July 15, 2011. By that time, Great Lakes will have refinanced the debt due June 30, 2011, or will be in default thereunder. There is no assurance that the Company will be successful in refinancing this debt or obtaining additional
financing, and if available, there are no assurances that the financing will be at commercially acceptable terms. Failure to successfully implement a refinancing plan or otherwise address this liquidity issue within the timeframe permitted may have
a material adverse effect on our business, results of operations, and financial position. These conditions and circumstances cast substantial doubt as to the Companys ability to continue operating as a going concern.



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



Additionally, if Congress were to choose to eliminate or substantially reduce the EAS program, the loss
of all or a substantial portion of the Companys EAS revenue would adversely affect our business, financial condition, operating results and cash flows. It could also adversely affect our ability to refinance or secure alternative sources of
financing to satisfy our debt obligations.



|NOTE 2. | Change in Accounting for Maintenance Deposits
|------- | ---------------------------------------------

In June 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-3, Accounting by Lessees for Maintenance Deposits (EITF 08-3), included in ASC Subtopic 840-10. This
issue applies to the lessees accounting for maintenance deposits paid by a lessee under an arrangement accounted for as a lease that are refunded only if the lessee performs specified maintenance activities. EITF 08-3 is effective for fiscal
years beginning after December 15, 2008, and interim periods within those fiscal years. The Company adopted the provisions of EITF 08-3 as of January 1, 2009 in its June 30, 2009 Form 10-Q. The Company determined that two of its
leased aircraft have maintenance deposit provisions within the scope of ASC Subtopic 840-10. The cumulative effect of the change in accounting for nonrefundable maintenance deposits as of January 1, 2009 increased maintenance deposits by $1.1
million, decreased long-term deferred tax assets by $0.4 million and decreased accumulated deficit by $0.7 million as of January 1, 2009.

The Company is required to make maintenance deposit payments for two of its Embraer EMB-120 Brasilia leased aircraft. At January 1, 2009, the
Company had made maintenance deposits of approximately $1.1 million and as of December 31, 2010, the Companys maintenance deposits were approximately $2.0 million. See Note 3(h) Summary of Significant Accounting Policies and Procedures
 Maintenance Depositsfor the Companys accounting policy. As of December 31, 2010, the Company has evaluated the maintenance deposits on account and determined that, based on historical and forecasted usage of the aircraft, that
all amounts on deposit are probable of being returned to the Company as a result of the maintenance expected to be performed on the aircrafts components. The Company will continue to evaluate its maintenance deposit account as the leases
progress towards lease expiration in April of 2013, and make the determination if any existing or future maintenance deposits should be expensed if it becomes less than probable that the deposits will be returned.



|Note 3. | Summary of Significant Accounting Policies and Procedures
|------- | ---------------------------------------------------------

(a) Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Companys
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets; the salvage value of fixed assets; the valuation of deferred tax
assets, fixed assets, maintenance deposits and inventory; and reserves for employee benefit obligations and other contingencies.

(b) Cash and Cash Equivalents. Cash and cash equivalents include highly liquid investments with original maturities of three
months or less that are readily convertible into cash. Cash equivalents are not subject to significant risk from fluctuations in interest rates and as a result, the carrying amount of cash equivalents approximates fair value. To preserve capital and
maintain liquidity, we invest with financial institutions we deem to be of sound financial condition, and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific
financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution.



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



(c) Accounts Receivable. Substantially all accounts receivable balances
are due from various airlines, credit card companies, or the United States government. The table below shows the composition and approximate percentages attributable to our receivables at December 31, 2010 and 2009.



|                          |  |              |     |   |      |  |     |  
|------------------------- |  | ------------ | --- | - | ---- |  | --- | -
|                          |  | December 31, |    
|                          |  | 2010         |     |   | 2009 | 
|United Airlines           |  |              | 10  | % |      |  | 8   | %
|Frontier Airlines         |  |              | 10  |   |      |  | 9   |  
|Other Airlines            |  |              | 1   |   |      |  | 9   |  
|Credit card companies     |  |              | 14  |   |      |  | 13  |  
|United States government  |  |              | 62  |   |      |  | 59  |  
|Other                     |  |              | 3   |   |      |  | 2   |  
|                          |  |              |     |   |      |  |     |  
|Total accounts receivable |  |              | 100 | % |      |  | 100 | %

All receivables are
pledged as collateral under the Companys debt agreements.

(d) Inventories. Inventories consist of
expendable spare parts, fuel, materials, and supplies relating to flight equipment. Inventories are stated at the lower of average cost or market. Expendable parts are charged to maintenance expense as used. Inventories consisting of expendable
spare parts and equipment are pledged as collateral for the Raytheon notes.

(e) Property and Equipment. Property
and equipment includes aircraft and major parts relating to such aircraft. Property is stated at cost and depreciated on a straight-line basis for financial reporting purposes over estimated useful lives of 10 to 20 years for flight equipment and 3
to 10 years for other property and equipment. The estimated lives used to record depreciation on the Companys aircraft may be affected by the revenue generating capability of the aircraft, technology, policies regarding EAS subsidies
promulgated by the DOT, and changes in strategy by the Company. In accounting for long-lived assets, we make estimates about the expected useful lives and projected residual values. Estimates of useful lives and residual values of aircraft are based
on actual industry experience with the same or similar aircraft types and anticipated utilization of the aircraft. Changing market prices of new and used aircraft, government regulations, and changes in our maintenance program or operations could
result in changes to these estimates. 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 as
collateral for the Raytheon notes.

(f) Impairment of Long Lived Assets. In accordance with
ASC Section 360-10-35, (originally Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed of) long-lived assets, such as
property, plant, equipment, and aircraft, subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value
less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. An impairment loss
is recognized to the extent that the carrying amount exceeds the assets fair value.



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



(g) Other Assets. Other assets consist primarily of deposits with
financial institutions, bonding companies, facilities lessors, aircraft lessors and others to secure the payment of fixed obligations. Deposits related to long-term facility leases were $1.0 million and $1.0, and aircraft lessors were $0.4 million
and $0.4 million at December 31, 2010 and 2009, respectively.

(h) Maintenance Deposits. For two of
its aircraft, the Company pays its lessor maintenance deposits that are refunded only if the Company performs specified maintenance activities. These maintenance deposits are accounted for in accordance with ASC subtopic 840-10, whereby the deposits
are capitalized until such time as the maintenance event occurs, or the Company determines it is no longer probable that an amount on deposit with its lessor will be returned to reimburse the costs of the maintenance activities incurred by the
lessee. When an amount on deposit is less than probable of being returned, it shall be recognized as additional expense. The Company has evaluated the maintenance deposits on account and determined that, based on historical and forecasted usage of
the aircraft, that all amounts on deposit are probable of being returned as a result of the maintenance expected to be performed on the aircrafts components prior to the leased aircrafts lease expiration.

(i) Revenue Recognition.Revenue generated from passenger, cargo, and other activities are recorded as revenue either
when the respective services are rendered or when the time for use of the ticket has expired, one year after the date of issuance, and are net of excise taxes, passenger facility charges and security fees. Unused tickets issued by the Company are
recorded in the accompanying balance sheets as unearned revenue.

The Company also receives public service subsidy revenues for
providing air service to certain communities that do not generate sufficient traffic to fully support profitable air service under the EAS program. With respect to awarded EAS subsidy cases, the Company records revenues based on departures performed
at departure rates that were approved by the DOT during the term of service agreement.

(j) Code Share
Relationships. At December 31, 2010, the Company operated under code share agreements with United Airlines and Frontier Airlines. These code share agreements are prorate agreements whereby the passengers fare is split between the
two carriers based on the distance traveled by the passenger on each airline. Revenue from these code share agreements is recorded as passenger revenue when the services are rendered. The Company also participates in Uniteds Mileage
Plus frequent flyer program. If a customer books travel on United which includes a segment on Great Lakes, the United customer earns points in their United frequent flier account for the miles flown on the Great Lakes segment. When a United
frequent flier customer earns sufficient points to earn an award, he or she can choose whether to redeem those points on a United flight connecting with a Great Lakes flight. Our participation in Uniteds frequent flyer program does not require
us to issue tickets in exchange for frequent flyer awards. Award redemption can only be facilitated through United on United flights in conjunction with a Great Lakes flight. Tickets sold to passengers on Great Lakes ticket stock for Great Lakes
flight segments (ZK designator) are not eligible to accrue United frequent flyer credits. The Company accounts for the incremental cost to fly United frequent flyer passengers at the time of service since the Company does not have sufficient
information to estimate future awards expected to be redeemed on a Great Lakes segment, and an estimated frequent flyer liability would be insignificant in the aggregate given the historical volume of awards used for flights including Great Lakes
segments.

(k) Income Taxes. The Company accounts for income taxes using the asset and liability method. Under
that method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



between the financial statement carrying amounts and tax basis of existing assets and liabilities and net operating losses and tax credit carryforwards. A valuation allowance is provided to the
extent that it is more likely than not that deferred tax assets will not be realized. The effect on deferred taxes from a change in tax rates is recognized in income in the period that includes the enactment date.

(l) Income Per Share. Basic income per share has been computed by dividing the net income for a particular year by the
weighted average number of shares of common stock outstanding during such year. Diluted earnings per share reflects the potential dilution of securities that could share in earnings.

(m) Stock Option Plans. For the years ending December 31, 2010, 2009 and 2008 there were no stock-based compensation
awards granted.

(n) Aircraft Maintenance. The Company operates under an FAA-approved continuous inspection and
maintenance program. The Company accounts for maintenance activities on the direct expense method. Under this method, major airframe overhaul maintenance costs are recognized as expense as maintenance services are performed. Routine maintenance and
repairs are charged to operations as incurred. Major Beechcraft 1900D engine maintenance for most of our 1900D engines is performed under a long-term power-by-the-hour (PBTH) contract. Under the PBTH contract, the Company pays a service provider a
fixed amount per flight hour (subject to fixed nominal annual rate increases) in exchange for required maintenance and repairs under the predefined maintenance program. The expense over the life of the contract is recognized at a level rate per hour
during the minimum, non-cancelable term of the agreement.

Maintenance and repairs, including periodic aircraft overhauls, are
expensed as incurred or when the component is placed in service. Major modifications that extend the life or improve the usefulness of aircraft are capitalized and depreciated over their estimated useful life.

(o) Fair Value of Financial Instruments. Fair value estimates, methods, and assumptions of financial instruments 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 on the Companys
concentration of long-term debt with one aircraft creditor, who is also a significant stockholder of the company, the fair value of long-term debt was not reasonably determinable.

(p) Recent Accounting Pronouncements. In January 2010, the FASB issued Accounting Standards Update (ASU)
No. 2010-06, Fair Value Measurements and Disclosures (Topic 820)  Improving Disclosures about Fair Value Measurements, which amends ASC 820 to require the disclosure of additional information related to fair value measurement and
provide clarification to existing requirements for fair value measurement disclosure. ASU 2010-06 was effective for the Company beginning January 1, 2010. The Companys disclosures conform to the requirements of ASU 2010-06. Refer to Note
10 for additional discussion of fair value measurements.

On September 23, 2009, the FASB ratified ASU No. 2009-13,
Multiple Deliverable Revenue Arrangements a consensus of the FASB Emerging Issues Task Force.ASU No. 2009-13 updates the current guidance pertaining to multiple-element revenue arrangements included in ASC Subtopic 605-25,
which originated primarily from EITF 00-21, also titled Revenue Arrangements with Multiple Deliverables. This ASU establishes a new selling price hierarchy to use when allocating the sales price of a multiple element arrangement
between delivered and undelivered



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



elements. This ASU is generally expected to result in revenue recognition for more delivered elements than under current rules. Additionally, the new guidance will require entities to disclose
more information about their multiple-element revenue arrangements. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is
permitted. The Company expects that the adoption of ASU 2009-13 in 2011 will not have a material impact on its consolidated financial statements.



|Note 4. | Leases
|------- | ------

Aircraft Leases

At December 31, 2010 and 2009 the Company operated two leased Embraer Brasilia Model 120 aircraft, which are accounted for under
operating lease agreements that expire in April 2013. In addition to scheduled future minimum lease payments, the Company is required to make supplemental rent payments to cover the cost of major scheduled maintenance overhauls of these aircraft
which are reimbursable to the Company at the time maintenance overhauls are completed. These supplemental rentals are based on the number of flight hours flown and/or flight departures and are recorded as maintenance deposits. See Note 3(h)
Summary of Significant Accounting Policies and Procedures  Maintenance Depositsfor the Companys accounting policy. The lease agreements also require the Company to pay taxes, maintenance, insurance, and other operating expenses
applicable to the leased property. During the years ended December 31, 2010, 2009 and 2008 supplemental rent payments were $486,848, $589,377 and $588,133, respectively.

At December 31, 2010, the Company operated seven Beechcraft 1900D aircraft leased from Raytheon which are accounted for under operating lease agreements which expire from October 2011 through July
2012. Either party may early terminate the leases upon 90 day notice. In addition, Raytheon has informed the Company that it may exercise its contractual rights to terminate the leases upon 90 day notice for any or all of the seven aircraft the
Company leases from Raytheon on or about April 15, 2011, depending on the Companys progress on refinancing the debt due June 30, 2011. A termination notice dated April 15, 2011 would result in Great Lakes returning any or all of
the seven leased aircraft to Raytheon on July 15, 2011. Four of the aircraft were complete with engines and three aircraft were without engines. The lease agreements require the Company to pay taxes, maintenance, insurance, and other operating
expenses applicable to the leased property. In addition to scheduled future minimum lease payments, the Company is required to make payments to cover the cost of components related to leased engines, attached to four of the leased aircraft, as these
components usable life cycle is consumed. During the years ended December 31, 2010, 2009 and 2008 engine consumption fees were $313,997, $314,462 and $27,322, respectively.

The lease agreements described above contain aircraft return provisions which require specified time remaining between scheduled maintenance events, as mandated by our FAA-approved maintenance program for
major components of the aircraft. In the event that the aircraft are returned and do not meet the specified times remaining for each identified component, we are subject to compensate the lessor for components that are below the specified times
remaining when the aircraft is returned. The Company plans to satisfy its lease return obligations by (a) performing maintenance (either internally or by contracting a third-party service provider) to return the aircraft to the level of
maintenance required by the contract, (b) paying cash to compensate the lessor if the aircraft is returned with less flight time remaining than specified under the lease, or (c) swapping owned components (or other leased components) for
leased components (engines) with sufficient time remaining on them. As the end of the lease term approaches, the Company re-evaluates the lease return conditions to determine if it is necessary to accrue any incremental amounts expected to become
due, and makes accruals if supplemental payments to the lessor become probable and estimable.



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



Other Leases

The Company leases office and hangar space, spare engines and office equipment for its headquarters, reservation facilities, airport facilities, and certain other equipment. The Companys headquarter
lease provides for three five year renewal options making this facility available to the Company through the year 2020. The Company also leases certain airport gate facilities on a month-to-month basis.

At December 31, 2010, commitments under non-cancelable operating leases (excluding aircraft supplemental rent requirements and assuming the aircraft
leases are not terminated early) with terms in excess of one year were as follows:



|           |  |          |           |  |       |   |   |       |  |   |           | 
|---------- |  | -------- | --------- |  | ----- | - | - | ----- |  | - | --------- | 
|           |  | Aircraft |           |  | Other |   |   | Total | 
|2011       |  | $        | 2,187,032 |  |       | $ |  |       |  | $ | 2,187,032 | 
|2012       |  |          | 834,387   |  |       |   |  |       |  |   | 834,387   | 
|2013       |  |          | 125,000   |  |       |   |  |       |  |   | 125,000   | 
|2014       |  |          |          |  |       |   |  |       |  |   |          | 
|2015       |  |          |          |  |       |   |  |       |  |   |          | 
|Thereafter |  |          |          |  |       |   |  |       |  |   |          | 
|           |  |          |           |  |       |   |   |       |  |   |           | 
|           |  | $        | 3,146,419 |  |       | $ |  |       |  | $ | 3,146,419 | 
|           |  |          |           |  |       |   |   |       |  |   |           | 

Facilities rental expense under operating leases, including month-to-month leases, for the years ended December 31,
2010, 2009 and 2008 was $2.8 million, $3.9 million, and $3.1 million, respectively.



|Note 5. | Accrued Liabilities
|------- | -------------------

Accrued liabilities
consisted of the following balances at December 31, 2010 and 2009:



|                          |  |      |           |  |      |   |           | 
|------------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                          |  | 2010 |           |  | 2009 |  
|Accrued expenses          |  | $    | 297,547   |  |      | $ | 272,937   | 
|Unearned revenue          |  |      | 1,810,263 |  |      |   | 1,882,106 | 
|Accrued property taxes    |  |      | 63,766    |  |      |   | 62,049    | 
|Accrued payroll           |  |      | 2,168,893 |  |      |   | 2,075,482 | 
|                          |  |      |           |  |      |   |           | 
|Total accrued liabilities |  | $    | 4,340,469 |  |      | $ | 4,292,574 | 
|                          |  |      |           |  |      |   |           | 



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



|Note 6. | Notes Payable and Long-Term Debt
|------- | --------------------------------

The
following table sets forth, as of December 31, 2010 and December 31, 2009, the carrying amount of the Companys long-term debt and the current maturities of long term debt. The carrying amount of the debt includes the principal
payments contractually required under the debt agreements and the unamortized deferred debt restructuring gain. In 2002, the Company restructured its debt. The debt restructuring was accounted for as a troubled debt restructuring, which resulted in
the Company recording a deferred gain that is being amortized into income as a decrease to interest expense over the remaining term of the debt:



|                                                          |  |                  |             |   |                  |   |            |  
|--------------------------------------------------------- |  | ---------------- | ----------- | - | ---------------- | - | ---------- | -
|                                                          |  | December 31,2010 |             |   | December 31,2009 |  
|Long-term debt:                                           |  |                  |             |   |                  |   |            |  
|Raytheon Aircraft Notes - principal                       |  | $                | 35,324,205  |   |                  | $ | 40,368,310 |  
|Raytheon Senior Note - principal                          |  |                  | 8,063,665   |   |                  |   | 9,466,440  |  
|Raytheon Aircraft Notes deferred debt restructuring gains |  |                  | 599,945     |   |                  |   | 1,944,557  |  
|                                                          |  |                  |             |   |                  |   |            |  
|Total long-term debt                                      |  |                  | 43,987,815  |   |                  |   | 51,779,307 |  
|Less:                                                     |  |                  |             |   |                  |   |            |  
|Current maturities of Raytheon Aircraft Notes - principal |  |                  | (35,324,205 | ) |                  |   | (5,044,108 | )
|Current maturities of Raytheon Senior Note - principal    |  |                  | (2,496,019  | ) |                  |   | (1,402,772 | )
|Current portion of deferred debt restructuring gains      |  |                  | (599,945    | ) |                  |   | (1,344,612 | )
|                                                          |  |                  |             |   |                  |   |            |  
|Total current portion                                     |  |                  | (38,420,169 | ) |                  |   | (7,791,492 | )
|                                                          |  |                  |             |   |                  |   |            |  
|Total long-term portion                                   |  | $                | 5,567,646   |   |                  | $ | 43,987,815 |  
|                                                          |  |                  |             |   |                  |   |            |  

As of December 31, 2010, the Raytheon debt consisted of 25 Aircraft Notes secured by 25 Beechcraft model 1900D aircraft
(the Aircraft Notes) and a Senior Note secured by four Embraer Brasilia EMB 120 aircraft and substantially all of the other assets of the Company (the Senior Note) (collectively, the Raytheon Notes). Each of the
Aircraft Notes bears interest at a fixed rate of 6.75% per annum, and provides for monthly payments in arrears. The Aircraft Notes mature on June 30, 2011, at which time a final payment of $1.3 million will be due for each aircraft ($32.7
million in total). The Aircraft Notes are accounted for as a current maturity of long-term debt as the notes mature within the next 12 months. The Senior Note bears interest at a rate of 7.00% per annum. Interest on the Senior Note is payable
monthly in arrears on the 30th day of each month. The Senior Note provides for payments of principal on June 30, September 30, and December 30 of each year until the note matures on December 30, 2015.

The debt agreement requires the Company to prepay amounts outstanding under the Companys notes held by Raytheon in an amount equal to 70% of the
excess cash for any fiscal year. Excess cash means as at the end of any fiscal year an amount equal to (i) the sum of the Companys cash, cash equivalents and short term instruments, minus (ii) a minimum
of $3.0 million plus 4% of the difference in revenue for the current year and revenue for the year ending December 31, 2006 of $87.6 million. Based on the Companys financial results for the year ending December 31, 2009 the
Company was not required to make an additional prepayment. In January of 2011, the Company made a mandatory prepayment of debt, applied to the Senior Note, in an amount of $843,247 due to the December 31, 2010 financial results.

The amount of long-term debt also includes deferred debt restructuring gains related to the aircraft notes pursuant to ASC Section 470-60-15. This
additional debt is being amortized as a reduction of interest expense over the remaining term of the debt. Due to the amortization of the deferred debt restructuring gains on the Companys restructured debt obligations to Raytheon, the
Companys interest expense will be significantly less than the contractual interest expense throughout the terms of the Raytheon Aircraft Notes. During 2010, the Companys contractual interest expense for all long-term debt was $3.3
million. The Company amortized $1.3 million, $1.5 million and $1.7 million of deferred debt restructuring gains for the year ending December 31, 2010, 2009 and 2008, respectively. The Companys net interest expense on long-term debt
obligations, as reflected in the financial statements, net of interest income, was $1.9 million, $2.2 million and $2.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



Contractual Debt Payments. As of December 31, 2010, the long-term debt obligations
due in the five subsequent years and thereafter under their contractual terms were as follows:



|                                 |  |                  |            |  |       |   |           |       |  |   |            | 
|-------------------------------- |  | ---------------- | ---------- |  | ----- | - | --------- | ----- |  | - | ---------- | 
|                                 |  | Beechcraft1900Ds |            |  | Other |   |           | Total | 
|2011                             |  | $                | 35,324,205 |  |       | $ | 2,496,019 |       |  | $ | 37,820,224 | 
|2012                             |  |                  |           |  |       |   | 1,652,772 |       |  |   | 1,652,772  | 
|2013                             |  |                  |           |  |       |   | 1,902,772 |       |  |   | 1,902,772  | 
|2014                             |  |                  |           |  |       |   | 1,902,772 |       |  |   | 1,902,772  | 
|2015                             |  |                  |           |  |       |   | 109,330   |       |  |   | 109,330    | 
|Thereafter                       |  |                  |           |  |       |   |          |       |  |   |           | 
|                                 |  |                  |            |  |       |   |           |       |  |   |            | 
|                                 |  |                  | 35,324,205 |  |       |   | 8,063,665 |       |  |   | 43,387,870 | 
|                                 |  |                  |           
|Additional carrying value        |  |                  |            |  |       |   |           |       |  |   |            | 
|Deferred debt restructuring gain |  |                  | 599,945    |  |       |   |          |       |  |   | 599,945    | 
|                                 |  |                  |            |  |       |   |           |       |  |   |            | 
|                                 |  | $                | 35,924,150 |  |       | $ | 8,063,665 |       |  | $ | 43,987,815 | 
|                                 |  |                  |            |  |       |   |           |       |  |   |            | 



|Note 7. | Income Taxes
|------- | ------------

The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment. The tax net operating loss carryforwards (NOLs) that have been generated are due to historic operating losses that the Company had in previous years. The Companys NOLs
expire between 2020 and 2024. The book basis of property and equipment is approximately $45.9 million greater than the tax basis at December 31, 2010, all of which is expected to reverse during periods in which NOLs are available. Approximately
$12.0 million ($625,000 tax effected) of state NOLs are expected to expire unused and accordingly a valuation allowance has been provided for these deferred tax assets. Based upon the projections for future taxable income over the periods in which
the deferred tax assets become deductible, the Company believes it is more likely than not that it will realize the benefits of most of the deductible temporary differences and NOLs. The amount of the deferred tax asset considered realizable,
however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

The
Companys estimated net operating loss carryforwards for federal income tax purposes totaling approximately $46.4 million at December 31, 2010, expire in years 2020 through 2024 as follows (in thousands):



|                   |  |        |        | 
|------------------ |  | ------ | ------ | 
|Year of Expiration |  | Amount |       
|2020               |  |        | 17,882 | 
|2021               |  |        | 22,526 | 
|2023               |  |        | 4,011  | 
|2024               |  |        | 2,055  | 
|                   |  |        |        | 
|                   |  | $      | 46,474 | 
|                   |  |        |        | 

In order for the Company to utilize these NOLs prior to expiration, the Company would need to generate taxable income of
$44.8 million during the next 10 years, or approximately $4.4 million per year. The Company had taxable income of $10.0 million in 2010 and $10.6 million in 2009.



49



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



Income tax expense (benefit) for the years ended December 31, 2010, 2009 and 2008 is presented
below:



|                              |  |         |         |   |          |   |           |       |  |   |           | 
|----------------------------- |  | ------- | ------- | - | -------- | - | --------- | ----- |  | - | --------- | 
|                              |  | Current |         |   | Deferred |   |           | Total | 
|Year ended December 31, 2010: |  |         |         |   |          |   |           |       |  |   |           | 
|U.S. Federal                  |  | $       | 232,586 |   |          | $ | 2,740,756 |       |  | $ | 2,973,342 | 
|State and local               |  | $       | 253,932 |   |          |   | 452,577   |       |  | $ | 706,509   | 
|                              |  |         |         |   |          |   |           |       |  |   |           | 
|                              |  | $       | 486,518 |   |          | $ | 3,193,333 |       |  | $ | 3,679,851 | 
|                              |  |         |         |   |          |   |           |       |  |   |           | 
|Year ended December 31, 2009: |  |         |         |   |          |   |           |       |  |   |           | 
|U.S. Federal                  |  | $       | 200,909 |   |          | $ | 3,127,525 |       |  | $ | 3,328,434 | 
|State and local               |  |         | 232,079 |   |          | $ | 443,006   |       |  | $ | 675,085   | 
|                              |  |         |         |   |          |   |           |       |  |   |           | 
|                              |  | $       | 432,988 |   |          | $ | 3,570,531 |       |  | $ | 4,003,519 | 
|                              |  |         |         |   |          |   |           |       |  |   |           | 
|Year ended December 31, 2008: |  |         |         |   |          |   |           |       |  |   |           | 
|U.S. Federal                  |  | ($      | 43,301  | ) |          | $ | 2,197,034 |       |  | $ | 2,153,733 | 
|State and local               |  |         | 20,353  |   |          | $ | 393,455   |       |  | $ | 413,808   | 
|                              |  |         |         |   |          |   |           |       |  |   |           | 
|                              |  | ($      | 22,948  | ) |          | $ | 2,590,489 |       |  | $ | 2,567,541 | 
|                              |  |         |         |   |          |   |           |       |  |   |           | 

The federal statutory tax rate of 35% differs from the Companys effective income tax rate for the years ended
December 31, 2010, 2009, and 2008 as follows:



|                                                            |  |      |           |  |      |   |           |      |  |   |           |  
|----------------------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---- |  | - | --------- | -
|                                                            |  | 2010 |           |  | 2009 |   |           | 2008 | 
|                                                            |  |      |          
|Income tax expense at the federal statutory income tax rate |  | $    | 3,056,595 |  |      | $ | 3,424,891 |      |  | $ | 1,578,110 |  
|State income tax expense, net of federal income tax benefit |  |      | 280,601   |  |      |   | 428,787   |      |  |   | 293,105   |  
|Book expenses not deductible for tax purposes               |  |      | 164,025   |  |      |   | 134,800   |      |  |   | 110,939   |  
|Increase (Decrease) in valuation allowance                  |  |      | 111,950   |  |      |   | (117,192  | )    |  |   | (90,000   | )
|Expiration of NOLs unused                                   |  |      |          |  |      |   |          |      |  |   | 459,792   |  
|Impact of changes in rates                                  |  |      | 66,680    |  |      |   | 132,756   |      |  |   | 52,877    |  
|Other                                                       |  |      |          |  |      |   | (523      | )    |  |   | 162,718   |  
|                                                            |  |      |           |  |      |   |           |      |  |   |           |  
|Income tax expense                                          |  | $    | 3,679,851 |  |      | $ | 4,003,519 |      |  | $ | 2,567,541 |  
|                                                            |  |      |           |  |      |   |           |      |  |   |           |  

Deferred tax assets (liabilities) as of December 31, 2010 and 2009, were as follows:



|                                      |  |      |             |   |      |   |             |  
|------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                      |  | 2010 |             |   | 2009 |  
|Deferred tax assets:                  |  |      |             |   |      |   |             |  
|Net operating loss carryforwards      |  | $    | 17,063,218  |   |      | $ | 20,799,921  |  
|Alternative minimum tax carryforwards |  |      | 642,537     |   |      |   | 426,020     |  
|Deferred debt restructuring gain      |  |      | 229,405     |   |      |   | 743,524     |  
|Inventory reserve                     |  |      | 858,462     |   |      |   | 911,787     |  
|Deferred revenue                      |  |      | 692,202     |   |      |   | 719,644     |  
|Other reserves                        |  |      | 306,200     |   |      |   | 367,551     |  
|Other                                 |  |      | 1,755       |   |      |   |            |  
|                                      |  |      |             |   |      |   |             |  
|Total gross deferred tax assets       |  |      | 19,793,779  |   |      |   | 23,968,447  |  
|Less: valuation allowance             |  |      | (624,608    | ) |      |   | (512,808    | )
|                                      |  |      |             |   |      |   |             |  
|Net deferred tax assets               |  |      | 19,169,171  |   |      |   | 23,455,639  |  
|Deferred tax liabilities:             |  |      |             |   |      |   |             |  
|Property and equipment                |  |      | (18,988,799 | ) |      |   | (20,303,615 | )
|Other                                 |  |      | (221,681    | ) |      |   |            |  
|                                      |  |      |             |   |      |   |             |  
|Total deferred tax (liability) asset  |  | $    | (41,309     | ) |      | $ | 3,152,024   |  
|                                      |  |      |             |   |      |   |             |  



50



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##### Table of Contents

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



The Company files income tax returns in the U.S., and various state and local jurisdictions. The Company
is not currently under examination by the IRS. Federal tax returns remain subject to examination for three years after a tax net operating loss is utilized, accordingly the tax returns may remain subject to audit beyond the original statute of
limitations State jurisdictions also remain subject to examination.

The Company believes that its income tax filing positions and
deductions related to tax periods subject to examination will be sustained upon audit and does not anticipate any adjustments that will result in a material adverse effect on the Companys financial condition, results of operations, or cash
flows. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740-10-25.



|Note 8. | Employee Benefit Plans
|------- | ----------------------

The Company
maintains a qualified 401(k) employee savings plan for the benefit of substantially all of the Companys employees. The Company matches up to 4% of participating employees contributions. Company contributions, net of forfeitures, totaled
$340,630 in 2010, $294,594 in 2009, and $254,055 in 2008.

In 1993, the Company adopted the Great Lakes Aviation, Ltd. 1993 Stock Option Plan
and the Great Lakes Aviation, Ltd. 1993 Director Stock Option Plan (collectively, the Plans). The Plans permitted the grant of stock options in the aggregate of 1,300,000 shares of the Companys common stock to key employees, officers, and
directors of the Company. Pursuant to their terms, both Plans expired on October 31, 2003, and no options have been granted after October 31, 2003. However, all outstanding options remain in effect until such outstanding options have
either expired or been cancelled.

Options granted under the Plans become 20% vested upon the completion of 12 continuous months of employment
from the date of grant, with additional 20% vesting in each subsequent 12-month period of employment over a continuous five-year period. The options expire 10 years from the date of grant. Options are forfeited upon termination from employment for
reasons other than retirement, death, or disability.

During the year ended December 31, 2010, there were no options granted. The Company
did not realize any tax deductions related to the exercise of stock options during 2010, 2009 or 2008. The Company will record such deductions to additional paid in capital when realized. The aggregate intrinsic value for options outstanding and
exercisable at December 31, 2010 and 2009 was $262,148 and $210,541 respectively. There was no unrecognized compensation cost from unvested stock options at the implementation date of ASC Section 718-10-25 (originally pursuant to SFAS
123(R)-Share Based Payment).



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



A summary of the option activity under all stock option plans during the year ended December 31,
2010 is presented below:



|                                         |  |        |         |  |                                        |   |      |                                                   |  |  |   | 
|---------------------------------------- |  | ------ | ------- |  | -------------------------------------- | - | ---- | ------------------------------------------------- |  |  | - | 
|                                         |  | Shares |         |  | WeightedWeighted AverageExercise Price |   |      | Weighted AverageRemaining ContractualLife (Years) | 
|                                         |  |        |        
|Outstanding at January 1, 2010           |  |        | 230,000 |  |                                        | $ | 0.48 |                                                   |  |  |   | 
|Granted                                  |  |        |        |  |                                        |   |     |                                                   |  |  |   | 
|Canceled                                 |  |        | 20,000  |  |                                        |   | 1.06 |                                                   |  |  |   | 
|Exercised                                |  |        |        |  |                                        |   |     |                                                   |  |  |   | 
|                                         |  |        |         |  |                                        |   |      |                                                   |  |  |   | 
|Outstanding at December 31, 2010         |  |        | 210,000 |  |                                        | $ | 0.51 |                                                   |  |  | 2 | 
|                                         |  |        |         |  |                                        |   |      |                                                   |  |  |   | 
|                                         |  |        |        
|Options exercisable at December 31, 2010 |  |        | 210,000 |  |                                        | $ | 0.51 |                                                   |  |  | 2 | 
|                                         |  |        |         |  |                                        |   |      |                                                   |  |  |   | 



|Note 9. | Income Per Share
|------- | ----------------

The following table
provides a reconciliation of the numerators and denominators of the basic and diluted income per share computations for the periods presented:



|                                                             |  |                   |           |  |                     |  |            |                |  |   |                   |  |  |                     |           |  |                |  |            |                   |  |   |                     |  |  |                |           |  |  |  |            |  |  |   |       |  
|------------------------------------------------------------ |  | ----------------- | --------- |  | ------------------- |  | ---------- | -------------- |  | - | ----------------- |  |  | ------------------- | --------- |  | -------------- |  | ---------- | ----------------- |  | - | ------------------- |  |  | -------------- | --------- |  |  |  | ---------- |  |  | - | ----- | -
|                                                             |  | 2010              |           |  | 2009                |  |            | 2008           | 
|                                                             |  | Income(numerator) |           |  | Shares(denominator) |  |            | Pershareamount |  |   | Income(numerator) |  |  | Shares(denominator) |           |  | Pershareamount |  |            | Income(numerator) |  |   | Shares(denominator) |  |  | Pershareamount |          
|Basic income per share attributable to common stockholders   |  | $                 | 5,053,278 |  |                     |  | 14,291,970 |                |  | $ | 0.35              |  |  | $                   | 5,781,884 |  |                |  | 14,291,970 |                   |  | $ | 0.40                |  |  | $              | 1,941,344 |  |  |  | 14,237,325 |  |  | $ | 0.14  |  
|Effect of dilutive securities: Stock options                 |  |                   |          |  |                     |  | 153,762    |                |  |   |                  |  |  |                     |          |  |                |  | 150,387    |                   |  |   |                    |  |  |                |          |  |  |  | 176,882    |  |  |   | (0.01 | )
|                                                             |  |                   |           |  |                     |  |            |                |  |   |                   |  |  |                     |           |  |                |  |            |                   |  |   |                     |  |  |                |           |  |  |  |            |  |  |   |       |  
|Diluted income per share attributable to common stockholders |  | $                 | 5,053,278 |  |                     |  | 14,445,732 |                |  | $ | 0.35              |  |  | $                   | 5,781,884 |  |                |  | 14,442,357 |                   |  | $ | 0.40                |  |  | $              | 1,941,344 |  |  |  | 14,414,207 |  |  | $ | 0.13  |  
|                                                             |  |                   |           |  |                     |  |            |                |  |   |                   |  |  |                     |           |  |                |  |            |                   |  |   |                     |  |  |                |           |  |  |  |            |  |  |   |       |  

For the years ended December 31, 2010, 2009 and 2008, there were no stock options excluded from the calculation of
diluted earnings per share.

Under the terms of the Companys debt agreements with Raytheon, the Company is prohibited from paying
dividends.



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##### Table of Contents

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



|Note 10. | Fair Value Measurements
|-------- | -----------------------

A fair value
hierarchy that prioritizes the inputs used to measure fair value has been established by ASC 820, Fair Value Measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs
used to measure fair value are as follows:



|        |  |                                                                                                                                                                                                                                                                                                                                 
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.                                                                                                                                                                                       
|        | 
|Level 2 |  | Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar
assets and liabilities in markets that are not active; and other inputs that are observable or can be corroborated by observable market data.
|        | 
|Level 3 |  | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.                                                                                                                                                                                 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of
the inputs used following the fair value hierarchy set forth by the Financial Accounting Standards Board (the FASB).

Our
financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and long-term debt including the current portion. The carrying values of cash, accounts receivable, accounts payable and accrued liabilities
approximate their fair values. These are considered Level 1 measurements. The carrying value of our long term debt including the current portion reflects original cost net of unamortized deferred debt restructuring gain and was $43.4 million and
$49.8 million as of December 31, 2010 and December 31, 2009, respectively. For additional information, see Note 6 Long-Term Debt.

All of the Companys fixed rate debt is comprised of Raytheon Aircraft Notes and Senior Debt (see Note 6). There is not an active market for the
Companys notes. Additionally because the Companys concentration of long-term debt is with one creditor, who is also a significant stockholder of the Company, the fair value of long-term debt cannot be reasonably determined. If the fair
value of the long-term debt was able to be determined, it would be a Level 3 measurement and would take into consideration inputs which include the future expected cash flows, the probability of early redemption, the probably of default on the part
of the Company including overall creditworthiness, the interest rate of the debt and the prevailing interest rate in the market for similar financial instrument.



|Note 11. | Transactions with Affiliates
|-------- | ----------------------------

The Company
rents two six-passenger aircraft and a vehicle from Iowa Great Lakes Flyers, Inc., a corporation solely owned by Douglas G. Voss, the Companys Chairman and major stockholder. Total payments for the leases were $28,500 in 2010, $28,500 in 2009,
and $28,500 in 2008. As of December 31, 2010, Mr. Douglas Voss controlled 4,160,247 shares of common stock of the Company, representing an approximate 29.1% interest in the Companys outstanding common stock.

As of December 31, 2010, Raytheon owned 5,371,980 shares of common stock of the Company, representing an approximate 37.6% interest in the
Companys outstanding common stock.

The Company made cash payments to Raytheon, consisting of principal and interest payments on debt,
lease payments, lease deposits, and supplemental lease fees, of approximately $11.7 million, $11.7 million and $10.5 million in 2010, 2009 and 2008, respectively.



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Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



|Note 12. | Commitments and Contingencies
|-------- | -----------------------------

Litigation. The Company is a party to ongoing legal claims and assertions arising in the ordinary course of business. Management
believes that the resolution of these matters will not have a material adverse effect on the Companys financial position, results of operations, or cash flows.

Union Agreements. As of March 1, 2011, approximately 40 percent of the Companys employees are subject to union agreements.

The Companys pilots are represented by the United Transportation Union (UTU). The pilot collective bargaining agreement became
amendable on September, 16 2010. The Company and the UTU are currently engaged in contract mediation under the auspices of the National Mediation Board.

The Companys flight attendants are also represented by the UTU, and the Companys agreement with the flight attendants became amendable on April 1, 2002. The Company and the flight
attendants are currently engaged in contract mediation under the auspices of the National Mediation Board.

The Companys mechanics and
maintenance clerks are represented by the International Association of Machinists and Aerospace Workers (IAM). We are currently engaged in contract mediation under the auspices of the National Mediation Board.



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##### Table of Contents

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2010 and December 31, 2009



|Note 13. | Selected Quarterly Financial Data (unaudited)
|-------- | ---------------------------------------------

The following table presents selected quarterly unaudited financial data for quarters during the year ended December 31, 2010 and 2009 (in thousands, except for per share information):



|                                    |  |         |        |   |         |   |        |         |  |   |         |  |  |       |        |  |  |   |         | 
|----------------------------------- |  | ------- | ------ | - | ------- | - | ------ | ------- |  | - | ------- |  |  | ----- | ------ |  |  | - | ------- | 
|                                    |  | First   |        |   | Second  |   |        | Third   |  |   | Fourth  |  |  | Total |       
|2010                                |  | Quarter |        |   | Quarter |   |        | Quarter |  |   | Quarter |  |  | Year  |       
|Operating revenues                  |  | $       | 28,784 |   |         | $ | 31,026 |         |  | $ | 33,450  |  |  | $     | 32,140 |  |  | $ | 125,400 | 
|Operating income                    |  |         | 154    |   |         |   | 3,049  |         |  |   | 4,778   |  |  |       | 2,662  |  |  |   | 10,643  | 
|Net income                          |  |         | (205   | ) |         |   | 1,424  |         |  |   | 2,693   |  |  |       | 1,141  |  |  |   | 5,053   | 
|Net income per share                |  |         |        |   |         |   |        |         |  |   |         |  |  |       |        |  |  |   |         | 
|Basic                               |  | $       | (0.01  | ) |         | $ | 0.10   |         |  | $ | 0.19    |  |  | $     | 0.08   |  |  | $ | 0.35    | 
|Diluted                             |  |         | (0.01  | ) |         |   | 0.10   |         |  |   | 0.19    |  |  |       | 0.08   |  |  |   | 0.35    | 
|Weighted average shares outstanding |  |         |        |   |         |   |        |         |  |   |         |  |  |       |        |  |  |   |         | 
|Basic                               |  |         | 14,292 |   |         |   | 14,292 |         |  |   | 14,292  |  |  |       | 14,292 |  |  |   | 14,292  | 
|Diluted                             |  |         | 14,292 |   |         |   | 14,446 |         |  |   | 14,449  |  |  |       | 14,450 |  |  |   | 14,446  | 
|                                    |  |         |        |   |        
|2009                                |  | Quarter |        |   | Quarter |   |        | Quarter |  |   | Quarter |  |  | Year  |       
|Operating revenues                  |  | $       | 27,951 |   |         | $ | 29,837 |         |  | $ | 32,029  |  |  | $     | 32,027 |  |  | $ | 121,844 | 
|Operating income                    |  |         | 777    |   |         |   | 3,322  |         |  |   | 4,571   |  |  |       | 3,275  |  |  |   | 11,945  | 
|Net income                          |  |         | 93     |   |         |   | 1,597  |         |  |   | 2,487   |  |  |       | 1,605  |  |  |   | 5,782   | 
|Net income per share                |  |         |        |   |         |   |        |         |  |   |         |  |  |       |        |  |  |   |         | 
|Basic                               |  | $       | 0.01   |   |         | $ | 0.11   |         |  | $ | 0.17    |  |  | $     | 0.11   |  |  | $ | 0.40    | 
|Diluted                             |  |         | 0.01   |   |         |   | 0.11   |         |  |   | 0.17    |  |  |       | 0.11   |  |  |   | 0.40    | 
|Weighted average shares outstanding |  |         |        |   |         |   |        |         |  |   |         |  |  |       |        |  |  |   |         | 
|Basic                               |  |         | 14,292 |   |         |   | 14,292 |         |  |   | 14,292  |  |  |       | 14,292 |  |  |   | 14,292  | 
|Diluted                             |  |         | 14,455 |   |         |   | 14,500 |         |  |   | 14,423  |  |  |       | 14,438 |  |  |   | 14,442  | 

The above financial data includes
normal recurring adjustments and reflects all adjustments that 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.



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##### Table of Contents

|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.



|Item 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of
Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures that is designed to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of December 31, 2010,
our disclosure controls and procedures were effective.

Managements Annual Report On Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting, as defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures
that:



| |  |  | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting (ICFR) as
of December 31, 2010. Management assessed the effectiveness of our ICFR based on the criteria for effective ICFR established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers. Based on this assessment, management believes that as of December 31, 2010, our internal control over financial
reporting was effective based on those criteria.



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Changes in Internal Control Over Financial Reporting

During the Companys most recent fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rule
13a-15(f) or 15d-15(f) under the Securities Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



|Item 9B. | OTHER INFORMATION
|-------- | -----------------

Not applicable.



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PART III



|Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------

Our Directors

The following table and narrative provide information concerning the members
of our board of directors as of March 1, 2011. Our directors are elected by a plurality of the votes cast. Each director has been appointed to serve until the next annual meeting of shareholders and until their respective successors are elected
and duly qualified. There are no familial relationships between any director or officer.



|                             |  |     |    |  |                      |                                                                                |                       |                                                                                |               |  |      | 
|---------------------------- |  | --- | -- |  | -------------------- | ------------------------------------------------------------------------------ | --------------------- | ------------------------------------------------------------------------------ | ------------- |  | ---- | 
|Name                         |  | Age |    |  | Principal Occupation |                                                                                | Position with Company |                                                                                | DirectorSince | 
|Douglas G. Voss              |  |     | 56 |  |                      | Chairman of the Board of Directors and President of Great Lakes Aviation, Ltd. |                       | Chairman of the Board of Directors and President of Great Lakes Aviation, Ltd. |               |  | 1979 | 
|A.L. Maxson(1)               |  |     | 75 |  |                      | Financial Consultant                                                           |                       | Director                                                                       |               |  | 2010 | 
|Vernon A. Mickelson(1)(2)(3) |  |     | 84 |  |                      | Business Consultant                                                            |                       | Director                                                                       |               |  | 1994 | 
|A.R. Moulton, III(1)         |  |     | 68 |  |                      | Financial Consultant                                                           |                       | Director                                                                       |               |  | 2005 | 
|Ivan L. Simpson(1)(2)(3)     |  |     | 60 |  |                      | Airline Transport Pilot for American Airlines                                  |                       | Director                                                                       |               |  | 1997 | 



|(1) | Member of the audit committee.
|--- | ------------------------------

|(2) | Member of the compensation committee.
|--- | -------------------------------------

|(3) | Member of the nominating committee.
|--- | -----------------------------------

Douglas
G. Voss.Mr. Voss co-founded the Company in 1979 and served in the position of Chief Executive Officer from the Companys inception until December 31, 2002. Mr. Voss has served as a director of the Company since the
Companys inception and became Chairman of the Board of Directors on December 31, 2002. Mr. Voss was initially licensed as a private pilot in 1974 and today holds both an Airline Transport Pilot Certificate and an Airframe and
Powerplant Mechanic Certificates. Mr. Voss is a graduate of Colorado Aero Tech. Mr. Voss has previously served the Company in the FAA Air Carrier Certificate required operational control positions of Director of Operations and Director of
Maintenance. He is uniquely qualified to serve as our Chairman based on his rich experience with our Company as our founder and longtime leader.

A.L. Maxson. Mr. Maxson became a director of the Company in August 2010. He previously served as the Companys Chief Financial Officer and a director from 1993-1997. Mr. Maxson began
his career in the aviation industry in 1966 when he joined Southern Airways, Inc. as its Controller and was made Chief Financial Officer shortly thereafter. Southern Airways, Inc. was ultimately merged with North Central Airlines Inc. to create
Republic Airlines Inc., where Mr. Maxson also served as Chief Financial Officer. Mr. Maxson became Vice President Financial Planning for Northwest Airlines, Inc. upon that companys acquisition of Republic Airlines, Inc. in 1986.
Mr. Maxson remained with Northwest Airlines, Inc. until 1991, and was self-employed as a financial consultant during the period from 1991 to December of 1993. Since 1997, Mr. Maxson has been self-employed as a financial consultant.
Mr. Maxson serves as one of our independent directors and our audit committee financial expert, and he brings to our board his financial expertise and industry perspective.

Vernon A. Mickelson. Mr. Mickelson became a director of the Company in January 1994. For more than the past 20 years, Mr. Mickelson has been self-employed as a business consultant. He
provided services to the Company concerning matters involving FAA regulatory compliance and maintenance quality control from 1988



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to 1994. Mr. Mickelson has worked in the aviation industry since 1949, primarily in the field of aircraft manufacturing and maintenance. From 1969 to 1988, Mr. Mickelson was employed by
the FAA in Flight Standards as principal inspector and supervisor of FAA maintenance and avionics inspectors assigned in the states of Indiana and Iowa. In his career, he has held or holds several FAA maintenance certificates and FAA designations in
aircraft maintenance in addition to holding a commercial pilots certificate. Mr. Mickelson is a graduate of Spartan School of Aeronautics (1948-49), specializing in aircraft maintenance. Mr. Mickelson brings his long history with our
industry and his more than 21 years as a business consultant to his role as one of our independent directors.

A.R. Moulton, III.Mr. Moulton became a director of the Company in September 2005. Until 2010 Mr. Moulton was a Managing Director of Airline Capital Associates, a consulting firm serving the commercial air transport sector. During his career at Airline
Capital Associates he served as a financial advisor to manufacturing companies, financial institutions, and labor unions, providing advice on all aspects of the commercial air transportation industry. Prior to joining Airline Capital Associates in
1990, Mr. Moulton was a Senior Vice President and head of Bank of New Englands loan production office in New York City from June 1988 to June 1990. Prior to joining Bank of New England, Mr. Moulton was a Vice President at Morgan
Guaranty Trust Company from April 1974 to June 1988. Mr. Moulton is qualified to serve on our board as one of our independent directors through his combination of over 35 years as a commercial banker and financial consultant, giving him
financial and industry experience.

Ivan L. Simpson. Mr. Simpson became a director of the Company in 1997. Mr. Simpson
co-founded the Company in 1979, and served in various operational roles through 1987, including Chief Pilot and Vice President and Director of Operations. He has been employed as an Airline Transport Pilot for American Airlines since 1987.
Mr. Simpson holds an Airline Transport Pilot Certificate and is Type rated in the Boeing 757/767 and MD80 aircraft. Mr. Simpson brings a deep knowledge of our Company and our industry to his work as one of our independent directors.

Our Executive Officers

Pursuant to General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, information regarding our executive officers
was provided in Part I of our Form 10-K under separate caption.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than 10% of a registered class of our
equity securities to file reports of ownership and changes in ownership with the SEC. Such officers, directors and shareholders are required by the SEC to furnish us with copies of all such reports. To our knowledge, based solely on a review of
copies of reports filed with the SEC during the last fiscal year and furnished to the registrant with respect to its most recent fiscal year, all applicable Section 16(a) filing requirements were met on a timely basis.

Code of Ethics

We have adopted a code
of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our code of ethics satisfies the requirements of Item 406(b) of
Regulation S-K. Our code of ethics is posted on the Companys web site at www.flygreatlakes.com and is available in print upon written request to our Corporate Secretary at Great Lakes Aviation, Ltd., 1022 Airport Parkway, Cheyenne, WY
82001. We intend to disclose any amendments to or waivers from a provision of our code of ethics that requires disclosure on our website at www.flygreatlakes.com.



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Audit Committee Matters

We have an audit committee that was established in accordance with Section 3(a)(58)(A) of the Exchange Act, comprised of A.L. Maxson, Vernon A. Mickelson, A.R. Moulton, III and Ivan L. Simpson. Under
NASDAQ Marketplace Rules that would apply if our common stock was listed on NASDAQ, each member of the audit committee would be required to (i) be independent as defined under Rule 5605(a)(2) of the NASDAQ Marketplace Rules; (ii) meet the
criteria for independence set forth in Rule 10A-3 under the Exchange Act; (iii) not have participated in the preparation of the financial statements of our company or any current subsidiary of our company at any time during the past three
years, and (iv) be able to read and understand fundamental financial statements, including a companys balance sheet, income statement, and cash flow statement. Our companys board of directors has determined that each member of the
audit committee would meet these requirements, except that Mr. Maxson is not independent under the specific standards applicable to audit committee members in Rule 10A-3 due to the consulting services he has provided to our company from time to
time. The audit committee, Mr. Maxson abstaining, has considered this issue and has approved Mr. Maxsons consulting services under its charter and Mr. Maxsons service on the audit committee.

The functions of the audit committee include oversight of the integrity of our financial statements, our compliance with legal and regulatory
requirements, and the performance, qualifications and independence of our independent auditors. Our audit committee is directly responsible for the appointment, retention, compensation, evaluation, termination and oversight of the work of any
independent auditor engaged for the purpose of preparing or issuing an audit report or related work.

In addition, our board of directors has
determined that Mr. Maxson qualifies as our audit committee financial expert under the rules of the SEC. Our audit committee charter is posted on our web site at www.flygreatlakes.com and is available in print upon written request to our
Corporate Secretary at Great Lakes Aviation, Ltd., 1022 Airport Parkway, Cheyenne, WY 82001.



|Item 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

Summary Compensation Table

The following table sets forth information concerning the compensation of our named executive officers for the fiscal years ended December 31, 2010 and 2009:



|                                                 |  |      |      |  |           |  |         |          |  |  |                             |  |  |           |       |  |  |  |         | 
|------------------------------------------------ |  | ---- | ---- |  | --------- |  | ------- | -------- |  |  | --------------------------- |  |  | --------- | ----- |  |  |  | ------- | 
|Name and Principal Position                      |  | Year |      |  | Salary($) |  |         | Bonus($) |  |  | All OtherCompensation($)(a) |  |  | Total ($) |      
|                                                 |  |      |      |  |          
|Charles R. Howell IV                             |  |      | 2010 |  |           |  | 155,000 |          |  |  |                            |  |  |           | 3,100 |  |  |  | 158,100 | 
|Chief Executive Officer                          |  |      | 2009 |  |           |  | 155,000 |          |  |  |                            |  |  |           | 3,100 |  |  |  | 158,100 | 
|                                                 |  |      |      |  |          
|Michael O. Matthews                              |  |      | 2010 |  |           |  | 150,000 |          |  |  |                            |  |  |           | 6,000 |  |  |  | 156,000 | 
|Vice President and Chief Financial Officer       |  |      | 2009 |  |           |  | 150,000 |          |  |  |                            |  |  |           | 6,000 |  |  |  | 156,000 | 
|                                                 |  |      |      |  |          
|Douglas G. Voss                                  |  |      | 2010 |  |           |  | 175,000 |          |  |  |                            |  |  |           |      |  |  |  | 175,000 | 
|Chairman of the Board of Directors and President |  |      | 2009 |  |           |  | 175,000 |          |  |  |                            |  |  |           |      |  |  |  | 175,000 | 



|(a) | Represents matching contributions made by the company on behalf of Mr. Howell and Mr. Matthews under our 401(k) retirement savings plan. These matching
contributions are subject to vesting in accordance with the terms of the plan. See discussion below under Retirement Savings Plan.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Employment Agreement

On December 31, 2002, we entered into a two-year employment agreement with Mr. Voss under which he serves as Chairman of the Board of Directors. The agreement specifies a base salary of $120,000
annually and entitles him to participate in the Companys compensation and benefit plans. Subsequent to entering into this agreement, we have amended the compensatory arrangements under the agreement to increase the annual base salary payable
thereunder. The agreement provides that it may be terminated by either party upon six months notice. In addition, under the agreement, if we terminate Mr. Voss without cause, or if he terminates because of the companys breach of the
agreement, he would receive his regular base pay for the remainder of the contract period. Our company and Mr. Voss have agreed to continue operating under this agreement indefinitely, until such time as a new agreement becomes effective.

We currently do not have any other employment agreements with our executive officers, and do not have any other arrangements between our
company and our executive officers in connection with termination of employment, change of control of our company, or any changes to the executive officers responsibilities following a change of control.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning the outstanding equity awards held by our named executive officers as of December 31, 2010:



|                     |  |                                                                |         |     |                                                                  |  |   |                        |  |                      |  |           
|-------------------- |  | -------------------------------------------------------------- | ------- | --- | ---------------------------------------------------------------- |  | - | ---------------------- |  | -------------------- |  | ----------
|                     |  | Option Awards                                                 
|Name                 |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable |         |     | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable |  |   | OptionExercisePrice($) |  | OptionExpirationDate
|Charles R. Howell IV |  |                                                                | 200,000 | (a) |                                                                  |  |  |                        |  | 0.40                 |  | 12/30/2012
|Michael O. Matthews  |  |                                                                |        |     |                                                                  |  |  |                        |  | N/A                  |  | N/A       
|Douglas G. Voss      |  |                                                                |        |     |                                                                  |  |  |                        |  | N/A                  |  | N/A       



|(a) | These options vested as to 100,000 shares on each of December 31, 2003 and December 31, 2004.
|--- | ---------------------------------------------------------------------------------------------

Retirement Savings Plan

We provide a
401(k) Retirement Savings Plan in which our employees, including the executive officers, may participate. The plan permits all employees to set aside a portion of their income into the 401(k) Retirement Savings Plan and the company matches one
hundred percent (100%) of the first four percent (4%) contributed by an employee up to the statutory maximum. Employee contributions are vested immediately, while matching contributions by the company vest 20% after two years of service
with the company, and 20% for each year of service thereafter until fully vested. The participation of the executive officers is on the same terms as any other participant in the plan.

Director Compensation

Our directors who are not employees of the company were paid a
director fee consisting of a quarterly retainer fee of $1,000, $1,000 per day for each board conference attended and $1,000 for each board or committee meeting attended, plus reimbursement for all out-of-pocket expenses incurred on behalf of the
company.



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The following table sets forth information concerning the compensation of our non-employee directors for
fiscal year 2010:



|                    |  |                               |        |  |                          |           |          |  |        | 
|------------------- |  | ----------------------------- | ------ |  | ------------------------ | --------- | -------- |  | ------ | 
|Name                |  | Fees Earned orPaid in
Cash($) |        |  | All OtherCompensation($) |           | Total($) | 
|                    |  |                               |       
|James R. Link       |  |                               | 5,000  |  |                          |          |          |  | 5,000  | 
|                    |  |                               |       
|A.L Maxson          |  |                               | 6,000  |  |                          | 13,463(a) |          |  | 19,463 | 
|                    |  |                               |       
|Vernon A. Mickelson |  |                               | 19,000 |  |                          |          |          |  | 19,000 | 
|                    |  |                               |       
|A.R. Moulton, III   |  |                               | 12,000 |  |                          |          |          |  | 12,000 | 
|                    |  |                               |       
|Ivan L. Simpson     |  |                               | 12,000 |  |                          |          |          |  | 12,000 | 

Messrs. Mickelson, Moulton and
Simpson received $4,000 in quarterly retainer fees and $5,000 for five audit committee meetings, Mr. Maxson received $1,000 for quarterly retainer fees and $3,000 for three audit committee meetings and Mr. Link received $2,000 for
quarterly retainer fees and $2,000 for two audit committee meetings. Messrs. Mickelson and Simpson received $2,000 for two compensation committee meetings and Messrs. Link and Moulton received $1,000 for one compensation committee meeting.
Mr. Mickelson received $8,000, Messrs. Maxson and Moulton received $2,000 and Mr. Simpson $1,000 for conferences.



|(a) | Mr. Maxson received consulting fees of $13,463 prior to becoming a board member in August of 2010.
|--- | --------------------------------------------------------------------------------------------------

The following table sets forth information concerning the outstanding stock options held by our non-employee directors as of December 31, 2010:



|                    |  |                                                                |  |                                                                  |  |                        |  |                     
|------------------- |  | -------------------------------------------------------------- |  | ---------------------------------------------------------------- |  | ---------------------- |  | --------------------
|                    |  | Option Awards                                                 
|Name                |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable |  | Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable |  | OptionExercisePrice($) |  | OptionExpirationDate
|                    |  |                                                                |  |                                                                 
|A. L. Maxson        |  |                                                               |  |                                                                 |  | N/A                    |  | N/A                 
|                    |  |                                                                |  |                                                                 
|Vernon A. Mickelson |  |                                                               |  |                                                                 |  | N/A                    |  | N/A                 
|                    |  |                                                                |  |                                                                 
|A.R. Moulton, III   |  |                                                               |  |                                                                 |  | N/A                    |  | N/A                 
|                    |  |                                                                |  |                                                                 
|Ivan L. Simpson     |  | 5,000(a)                                                       |  |                                                                 |  | 1.31                   |  | 5/17/2011           
|                    |  |                                                                |  |                                                                 
|                   |  | 5,000(b)                                                       |  |                                                                 |  | 0.31                   |  | 5/17/2012           



|(a) | These options vested in their entirety on May 17, 2002.
|--- | -------------------------------------------------------

|(b) | These options vested in their entirety on May 17, 2003.
|--- | -------------------------------------------------------



|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

The following table sets forth certain information known to us regarding beneficial ownership of the common stock as of March 1, 2011, by
(i) each person known to the Company to own beneficially 5% or more of the common stock, (ii) each director of the Company, (iii) each executive officer of the Company named in the summary compensation table, and (iv) all
directors and executive officers of the Company as a group. The percentage of beneficial ownership is based on 14,291,970 shares outstanding as of March 1, 2011. Any shares



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that are subject to an option or a warrant exercisable within 60 days are reflected in the following table and are deemed to be outstanding for the purpose of computing the percentage of common
stock owned by the option or warrant holder but are not deemed to be outstanding for the purpose of computing the percentage of common stock owned by any other person. Unless otherwise indicated, each person in the table has sole voting and
investment power as to the shares shown, and none of the listed shares has been pledged as security. Unless otherwise indicated, the address for each listed shareholder is c/o Great Lakes Aviation, Ltd., 1022 Airport Parkway, Cheyenne, Wyoming
82001.



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|                                                                                 |  |                                               |           |     |                                |  |      |  
|-------------------------------------------------------------------------------- |  | --------------------------------------------- | --------- | --- | ------------------------------ |  | ---- | -
|Name and Address of Beneficial Owner                                             |  | Amount and Nature 
ofBeneficial Ownership (1) |           |     | Percentage ofCommon Stock 
(1) | 
|                                                                                 |  |                                              
|Raytheon Aircraft Credit Corporation10511 E. Central AvenueWichita, Kansas 67206 |  |                                               | 5,371,980 |     |                                |  | 37.6 | %
|                                                                                 |  |                                              
|Douglas G. Voss                                                                  |  |                                               | 4,160,247 | (2) |                                |  | 29.1 | %
|                                                                                 |  |                                              
|Iowa Great Lakes Flyers, Inc.10400 Milliron RoadCheyenne, Wyoming 82009          |  |                                               | 1,710,247 | (3) |                                |  | 12.0 | %
|                                                                                 |  |                                              
|Gayle R. Brandt256 Emerald Meadows DriveArnolds Park, Iowa 51331                 |  |                                               | 1,420,753 | (4) |                                |  | 9.9  | %
|                                                                                 |  |                                              
|Charles R. Howell IV                                                             |  |                                               | 200,000   | (5) |                                |  | 1.4  | %
|                                                                                 |  |                                              
|Ivan L. Simpson15239 215th Ave.Spirit Lake, Iowa 51360                           |  |                                               | 20,450    | (6) |                                |  | *    |  
|                                                                                 |  |                                              
|Vernon A. Mickelson1209 3rd Avenue WestSpencer, Iowa 51301                       |  |                                               | 17,000    |     |                                |  | *    |  
|                                                                                 |  |                                              
|A.L. Maxson                                                                      |  |                                               | 2,000     |     |                                |  | *    |  
|                                                                                 |  |                                              
|Michael O. Matthews                                                              |  |                                               |          |     |                                |  |     |  
|                                                                                 |  |                                              
|A.R. Moulton, III                                                                |  |                                               |          |     |                                |  |     |  
|                                                                                 |  |                                              
|All directors and executive officers as a group (8 persons)                      |  |                                               | 4,399,697 | (7) |                                |  | 30.3 | %



|* | Represents less than 1%.
|- | ------------------------



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##### Table of Contents

|(1) | The securities beneficially owned by a person are determined in accordance with the definition of beneficial ownership as set forth in the
regulations of the SEC and, accordingly, may include securities owned by or for, among others, the spouse, children, or certain other relatives of such person, as well as other securities as to which the person has or shares voting or investment
power or has the right to acquire within 60 days of March 31, 2011. The same shares may be beneficially owned by more than one person.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Voss is the beneficial owner of 4,160,247 shares. The 1,710,247 shares owned by Iowa Great Lakes Flyers, Inc. are included in the shares reported by
Mr. Voss.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Beneficial ownership of these shares of Common Stock is shared with Douglas G. Voss.
|--- | ------------------------------------------------------------------------------------

|(4) | According to Ms. Brandts most recent amendment to Schedule 13D, filed on September 23, 2010.
|--- | ---------------------------------------------------------------------------------------------

|(5) | Represents 200,000 shares subject to currently exercisable options.
|--- | -------------------------------------------------------------------

|(6) | Includes 10,000 shares subject to currently exercisable options.
|--- | ----------------------------------------------------------------

|(7) | Includes an aggregate of 210,000 shares subject to currently exercisable options.
|--- | ---------------------------------------------------------------------------------

Equity Compensation Plan Information

The following table provides information as of
December 31, 2010 with respect to compensation plans under which the Companys equity securities are authorized for issuance.



|                                                           |  |                                                                                          |         |  |                                                                             |   |      |                                                                                                                                        |  |  |   | 
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- | ------- |  | --------------------------------------------------------------------------- | - | ---- | -------------------------------------------------------------------------------------------------------------------------------------- |  |  | - | 
|Plan Category                                              |  | Number of securitiesto be issued
uponexercise ofoutstanding options,warrants, and
rights |         |  | Weighted-average exerciseprice 
of outstanding options,warrants, and rights |   |      | Number of securitiesremaining 
available forfuture issuance under equitycompensation plans (excludingsecurities reflected incolumn (a) | 
|                                                           |  |                                                                                          |        
|Equity compensation plans approved by security holders     |  |                                                                                          | 210,000 |  |                                                                             | $ | 0.51 |                                                                                                                                        |  |  |  | 
|                                                           |  |                                                                                          |        
|Equity compensation plans not approved by security holders |  |                                                                                          |        |  |                                                                             |   |     |                                                                                                                                        |  |  |  | 
|                                                           |  |                                                                                          |         |  |                                                                             |   |      |                                                                                                                                        |  |  |   | 
|                                                           |  |                                                                                          |        
|Total                                                      |  |                                                                                          | 210,000 |  |                                                                             | $ | 0.51 |                                                                                                                                        |  |  |  | 



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|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------

Review and Approval or Ratification of Transactions with Related Persons

The audit
committee of our board of directors is responsible for reviewing any proposed transaction with a related person. In May 2007, our board of directors amended our audit committee charter to include a policy providing for the review and approval of
related person transactions requiring disclosure under Rule 404(a) of Regulation S-K. This policy states that the audit committee is responsible for reviewing and approving or disapproving all proposed interested transactions, which are defined as
any transaction, arrangement or relationship in which (a) the amount involved may be expected to exceed $120,000 in any fiscal year, (b) the Company will be a participant, and (c) a related person has a direct or indirect material
interest. A related person is defined as an executive officer, director or nominee for director, or a greater than five percent beneficial owner of the Companys common stock, or an immediate family member of the foregoing. The policy deems
certain interested transactions to be pre-approved, including the employment and compensation of executive officers and compensation paid to directors. All future transactions between our company and its executive officers, directors and principal
shareholders and their affiliates will be approved by the audit committee pursuant to the foregoing policy.

Transactions with Related
Persons

Raytheon Aircraft Credit Corporation. As of March 1, 2011, Raytheon Aircraft Credit Corporation (Raytheon)
owned 5,371,980 shares of our common stock, representing an approximate 37.6% interest in our outstanding common stock. We issued the shares to Raytheon in December 2002 as partial consideration for a series of transactions that included
restructured financing terms for aircraft promissory notes, termination of aircraft operating leases, aircraft purchases, aircraft returns, modified aircraft operating leases and other debt restructuring. Raytheon is our principal creditor. As of
March 1, 2011, Raytheon held promissory notes with a principal amount totaling approximately $49.0 million pursuant to our 2002 Restructuring Agreement. See Note 6 to the financial statements of our Form 10-K for a complete description of the
Restructuring Agreement, including the continuing rights and obligations of the parties.

At March 1, 2011 the Company operated seven
Beechcraft 1900D aircraft leased from Raytheon, four complete with engines and three without engines, which are accounted for under operating lease agreements. The lease agreements require the Company to pay taxes, maintenance, insurance, and other
operating expenses applicable to the leased property. In addition to scheduled future minimum lease payments, the Company is required to make payments to cover the cost of components related to leased engines, attached to four of the leased
aircraft, as these components usable life cycle is consumed. During the years ended December 31, 2010 and 2009, engine consumption fees were $313,997 and $314,462 respectively.

Other than as set forth above, we have no transactions requiring disclosure under Item 404(a).

Director Independence

Our companys board of directors is comprised of a majority of
independent directors as defined in Rule 5605(a)(2) of the Marketplace Rules of the NASDAQ Stock Market. Our independent directors are A.L. Maxson, Vernon A. Mickelson, A.R. Moulton, III and Ivan L. Simpson. James R. Link, a former
director who died in May 2010, was also an independent director. Douglas G. Voss, our Chairman and President, is not an independent director. Our board of directors has an audit committee, compensation committee and nominating committee. Our
nominating committee consists of members who are independent as defined in the applicable Marketplace Rules of the NASDAQ Stock Market. Each member of the compensation committee is a non-employee director as defined in Rule 16b-3 of the Exchange Act
and is an outside director as defined in Section 162(m) of the Internal Revenue Code, and each member of our audit committee is independent as defined in Exchange Rule 10A-3 except Mr. Maxson. (See Item 10, Audit Committee Matters.)



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|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The firm of KPMG LLP has been our independent auditors since 1998. Fees paid to KPMG LLP during the last two fiscal years were as follows:

Audit Fees. Fees for audit services rendered by KPMG LLP for the years ended December 31, 2010 and 2009 were $303,590 and $383,440,
respectively. Audit services consisted primarily of the audit and quarterly reviews of our financial statements, consents, assistance with and review of documents filed with the SEC, work performed by tax professionals in connection with the audit
and quarterly reviews, accounting and financial reporting consultations, and research work necessary to comply with generally accepted accounting principles.

Audit-Related Fees. Fees for audit-related services provided during the years ended December 31, 2010 and 2009 were $50,800 and $50,800, respectively. Audit-related services consisted
primarily of professional services provided with respect to yearly audits of our 401(k) employee savings plan and Passenger Facility Charge audits.

Tax Fees. Fees for tax services billed during the years ended December 31, 2010 and 2009 were $0 and $0, respectively.

All Other Fees. During the fiscal year 2010 and fiscal year 2009, no other services were provided by KPMG LLP to the company.

Audit Committee Pre-Approval Policies and Procedures

The charter of our audit committee
provides that the audit committee is responsible for the pre-approval of all auditing services and permitted non-audit services to be performed for our company by the independent auditors, subject to the requirements of applicable law. The
procedures for pre-approving all audit and non-audit services provided by the independent auditors include the committee reviewing a budget for audit services, audit-related services, tax services, and other services. The budget includes a
description of, and a budgeted amount for, particular categories of non-audit services that are anticipated at the time the budget is submitted. Committee approval would be required to exceed the budgeted amount for a particular category of services
or to engage the independent auditors for any services not included in the budget. Budgeted amounts were not exceeded in 2010. The audit committee periodically monitors the services rendered by, and actual fees paid to, the independent auditors to
ensure that such services are within the parameters approved by the committee. The text of the audit committee charter is posted on our web site at www.flygreatlakes.com. The audit committee pre-approved all of the services we received from
KPMG LLP during fiscal year 2010.



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PART IV



|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



|(a) | The following documents are filed as a part of this report:
|--- | -----------------------------------------------------------



| | (1) | Financial statements of the Company included in Item 8, Financial Statements and Supplementary Data:
| | --- | ------------------------------------------------------------------------------------------------------



| | (i) | Report of Independent Registered Public Accounting Firm
| | --- | -------------------------------------------------------



| | (ii) | Balance Sheets as of December 31, 2010 and 2009
| | ---- | -----------------------------------------------



| | (iii) | Statements of Income for the Years Ended December 31, 2010, 2009 and 2008
| | ----- | -------------------------------------------------------------------------



| | (iv) | Statements of Stockholders Equity for the Years Ended December 31, 2010, 2009 and 2008
| | ---- | ---------------------------------------------------------------------------------------



| | (v) | Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
| | --- | -----------------------------------------------------------------------------



| | (vi) | Notes to Financial Statements
| | ---- | -----------------------------

Supporting
schedules are omitted because they are inapplicable, not required, or the information is presented in the financial statements or notes thereto.



| | (2) | The exhibits filed as part of this report and exhibits incorporated herein by reference to other documents are listed in the Exhibit Index to this Annual Report on Form
10-K (pages E-1 through E-3).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | An Exhibit Index is contained on page E-1.
|--- | ------------------------------------------



|(c) | Not Applicable.
|--- | ---------------



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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.



|                     |  |  |  |                            |  |                                             
|-------------------- |  |  |  | -------------------------- |  | --------------------------------------------
|                     |  |  |  | GREAT LAKES AVIATION, LTD.
|                     |  |  | 
|Dated: April 5, 2011 |  |  |  | By:                        |  | /s/ Charles R. Howell IV                    
|                     |  |  |  |                            |  | Charles R. Howell IV                        
|                     |  |  |  |                            |  | Chief Executive Officer                     
|                     |  |  |  |                            |  | (Principal Executive Officer)               
|                     |  |  | 
|                     |  |  |  | By:                        |  | /s/ Michael O. Matthews                     
|                     |  |  |  |                            |  | Michael O. Matthews                         
|                     |  |  |  |                            |  | Vice President and Chief Financial Officer  
|                     |  |  |  |                            |  | (Principal Accounting and Financial Officer)



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##### Table of Contents

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Douglas G. Voss, Charles R. Howell IV, and Michael O. Matthews, and each of them
individually, as his or her true and lawful agent, proxy, and attorney-in-fact, with full power of substitution and resubstitution for such individual and in such individuals name, place, and stead, in any and all capacities, to act on, sign,
and file with the Securities and Exchange Commission any and all amendments to this report together with all schedules and exhibits thereto and to take any and all actions that may be necessary or appropriate in connection therewith, and each such
individual hereby approves, ratifies, and confirms all that such agents, proxies, and attorneys-in-fact, any of them, or any of his or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

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.



|                         |  |                                                                                         |  |              
|------------------------ |  | --------------------------------------------------------------------------------------- |  | -------------
|Signature                |  | Title                                                                                   |  | Date         
|                         |  |                                                                                        
|/s/ Douglas G. Voss      |  | Chairman of the Board and President                                                     |  | April 5, 2011
|Douglas G. Voss          |  |                                                                                         |  |              
|                         |  |                                                                                        
|/s/ Charles R. Howell IV |  | Chief Executive Officer                                                                 |  | April 5, 2011
|Charles R. Howell IV     |  | (Principal Executive Officer)                                                           |  |              
|                         |  |                                                                                        
|/s/ Michael O. Matthews  |  | Vice President and
Chief Financial Officer (Principal Accounting
and Financial Officer) |  | April 5, 2011
|Michael O. Matthews      |  |                                                                                         | 
|                         |  |                                                                                        
|/s/ Vernon A. Mickelson  |  | Director                                                                                |  | April 5, 2011
|Vernon A. Mickelson      |  |                                                                                         |  |              
|                         |  |                                                                                        
|/s/ Ivan L. Simpson      |  | Director                                                                                |  | April 5, 2011
|Ivan L. Simpson          |  |                                                                                         |  |              
|                         |  |                                                                                        
|/s/ Albert L. Maxson     |  | Director                                                                                |  | April 5, 2011
|Albert L. Maxson         |  |                                                                                         |  |              
|                         |  |                                                                                        
|/s/ Allan R. Moulton III |  | Director                                                                                |  | April 5, 2011
|Allan R. Moulton III     |  |                                                                                         |  |              



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EXHIBIT INDEX



|      |  |                                                                                                                                                                                                                                                                                                                                                       
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1   |  | Amended and Restated Articles of Incorporation. (1)                                                                                                                                                                                                                                                                                                   
|      | 
|3.2   |  | Amended and Restated Bylaws. (1)                                                                                                                                                                                                                                                                                                                      
|      | 
|4.1   |  | Specimen Common Stock Certificate. (2)                                                                                                                                                                                                                                                                                                                
|      | 
|10.1  |  | Great Lakes Aviation, Ltd. 1993 Stock Option Plan. (2)                                                                                                                                                                                                                                                                                                
|      | 
|10.2  |  | Great Lakes Aviation, Ltd. 1993 Director Stock Option Plan. (2)                                                                                                                                                                                                                                                                                       
|      | 
|10.3  |  | Amended and Restated Restructuring Agreement dated as of March 9, 2007 by and between the Company and Raytheon Aircraft Credit Corporation, including First Amendment to Amended and
Restated Restructuring Agreement, entered into as of March 23, 2007, by and between Raytheon Aircraft Credit Corporation and the Company. (12)                   
|      | 
|10.4  |  | Senior Note, dated as of March 9, 2007, issued by the Company to Raytheon Aircraft Credit Corporation. (8)                                                                                                                                                                                                                                            
|      | 
|10.5  |  | First Amendment to Security Agreement dated as of March 9, 2007, by and between the Company and Raytheon Aircraft Credit Corporation. (8)                                                                                                                                                                                                             
|      | 
|10.6  |  | Form of Amended and Restated Promissory Note relating to 1900D aircraft, dated as of March 9, 2007, issued by the Company to Raytheon Aircraft Credit Corporation.
(8)                                                                                                                                                                                
|      | 
|10.7  |  | Security Agreement, dated December 31, 2002, by and between Raytheon Aircraft Credit Corporation and the Company. (3)                                                                                                                                                                                                                                 
|      | 
|10.8  |  | Fifth Amendment to Security Agreement, dated as of March 9, 2007 by and between Raytheon Aircraft Credit Corporation and the Company. (8)                                                                                                                                                                                                             
|      | 
|10.9  |  | Amended and Restated Security Agreement, dated December 31, 2002 by and between Raytheon Aircraft Credit Corporation and the Company. (3)                                                                                                                                                                                                             
|      | 
|10.10 |  | Form of First Amendment to Amended and Restated Security Agreement relating to 1900D aircraft, date as of March 9, 2007, by and between the Company and Raytheon Aircraft Credit
Corporation. (8)                                                                                                                                                     
|      | 
|10.11 |  | Employment Agreement, dated December 31, 2002, by and between Douglas G. Voss and the Company. (3)                                                                                                                                                                                                                                                    
|      | 
|10.12 |  | Code Share and Regulatory Cooperation and Marketing Agreement, dated February 1, 2001, by and between United Air Lines, Inc. and the Company. (4)                                                                                                                                                                                                     
|      | 
|10.13 |  | Code Share Agreement, dated May 3, 2001, by and between Frontier Airlines, Inc. and the Company, as amended on February 8, 2002. Portions of this Exhibit have been excluded
from the publicly available document, and the SEC has granted the Companys application for confidential treatment of the excluded material. (4)                         
|      | 
|10.14 |  | Amendment to Code Share and Regulatory Cooperation and Marketing Agreement by and between United Air Lines, Inc. and the Company effective July 18, 2003. Portions of this Exhibit
have been excluded from the publicly available document, and the SEC has granted the Companys application for confidential treatment of the excluded material. (5)
|      | 
|10.15 |  | Group A Engine Overhaul Note executed on December 31, 2003 by the Company and delivered to Raytheon Aircraft Credit Corporation. (6)                                                                                                                                                                                                                  
|      | 
|10.16 |  | Amended and Restated Term Cost Plan Agreement dated July 19, 2006 by and between Pratt & Whitney Canada Corp. and the Company. Portions of this Exhibit have been excluded
from the publicly available document, and the SEC has granted the Companys application for confidential treatment of the excluded material. (7)                          
|      | 
|10.17 |  | Second Amendment to Amended and Restated Restructuring Agreement, entered into as of June 30, 2007, by and between Raytheon Aircraft Credit Corporation and the
Company. (9)                                                                                                                                                                          
|      | 
|10.18 |  | Third Amendment to Amended and Restated Restructuring Agreement, entered into as of July 30, 2007, by and between Raytheon Aircraft Credit Corporation and the
Company. (9)                                                                                                                                                                           
|      | 
|10.19 |  | Second Amendment to Code Share and Regulatory Cooperation and Marketing Agreement by and between United Air Lines, Inc. and the Company, dated November 1,
2007. (10)                                                                                                                                                                                 



E-1



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                                                                                              
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.20 |  | Form of Aircraft Lease by and between Raytheon Aircraft Credit Corporation and the Company. (11)                                                                                                                                                                                                                                                             
|      | 
|10.21 |  | Amendment No. 2 to Code Share Agreement, dated July 1, 2009 by and between Frontier Airlines, Inc. and the Company. Portions of this Exhibit have been excluded from the publicly
available document, and the SEC has granted the Companys application for confidential treatment of the excluded material. (13)                                            
|      | 
|10.22 |  | Third Amendment to Code Share and Regulatory Cooperation and Marketing Agreement by and between United Air Lines, Inc. and the Company, dated October 29, 2010. Portions of this
Exhibit have been excluded from the publicly available document, and the SEC has granted the Companys application for confidential treatment of the excluded material. (14)
|      | 
|14    |  | Code of Ethics. Available on the Companys web site.                                                                                                                                                                                                                                                                                                         
|      | 
|23    |  | Consent of KPMG LLP.                                                                                                                                                                                                                                                                                                                                         
|      | 
|24    |  | Powers of Attorney. (included in signature page)                                                                                                                                                                                                                                                                                                             
|      | 
|31.1  |  | Certification pursuant to Rule 13a-14(a) of Chief Executive Officer.                                                                                                                                                                                                                                                                                         
|      | 
|31.2  |  | Certification pursuant to Rule 13a-14(a) of Chief Financial Officer (Principal Accounting and Financial Officer).                                                                                                                                                                                                                                            
|      | 
|32.1  |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Executive Officer.                                                                                                                                                                                                          
|      | 
|32.2  |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Financial Officer.                                                                                                                                                                                                          



|(1) | Incorporated by reference to the Companys Registration Statement on Form S-1/A, Registration No. 333-159256, as filed September 3, 2009.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to the Companys Registration Statement on Form S-1, Registration No. 033-71180.
|--- | ----------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to the Companys Annual Report on Form 10-K for the year ended December 31, 2002. (File No. 000-23224)
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2003. (File No. 000-23224)
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2003. (File No. 000-23224)
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2004. (File No. 000-23224)
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2006. (File No. 000-23224)
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (File No. 000-23224)
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2007. (File No. 000-23224)
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2007. (File No. 000-23224)
|---- | ---------------------------------------------------------------------------------------------------------------------------------------

|(11) | Incorporated by reference to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as amended. (File No. 000-23224)
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Incorporated by reference to the Companys Registration Statement on Form S-1/A, Registration No. 333-159256, as filed July 14, 2009.
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|(13) | Incorporated by reference to the Companys Registration Statement on Form S-1/A, Registration No. 333-159256, as filed September 30, 2009.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------



E-2



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##### Table of Contents

|(14) | Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, as amended December 20, 2010. (File
No. 000-23224)
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



E-3