|FORM
      10-Q
      SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
      20549
|------------------------------------------------------------------------------------
|                                                                                    

||X| | QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
|--- | ---------------------------------------------------------------------------------------------------
|    | For the
      quarterly period ended December 31, 2004.                                            
|    |                                                                                                    
||_| | TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934          
|    |                                                                                                    

|Commission file
      number:   1-12805                     
|------------------------------------------------------------
|                                                            
|FRONTIER AIRLINES, INC.                                     
|(Exact
      name of registrant as specified in its charter)
|                                                            

|Colorado                                                            |  | 84-1256945                                
|------------------------------------------------------------------- |  | ------------------------------------------
|(State or other
      jurisdiction of incorporated or organization) |  | (I.R.S.
      Employer Identification No.)
|                                                                    |  |                                           
|7001 Tower Road,
      Denver, CO                                   |  | 80249                                     
|(Address of
      principal executive offices)                      |  | (Zip
  Code)                              
|                                                                    |  |                                           

|Issuers
      telephone number including area code: (720) 374-4200
      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 is an accelerated filer (as defined
      in Rule 12b-2 of the Exchange Act). Yes |X|  No |_|
      The number
      of shares of the Companys common stock outstanding as of January 28, 2005
      was 35,648,942.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|
|



|TABLE
      OF CONTENTSPART I.
      FINANCIAL INFORMATION
|----------------------------------------------------------

|              |                                                                 |   
|------------- | --------------------------------------------------------------- | --
|              |                                                                
|              |                                                                 |   
|Item
      1. | Financial Information                                           |   
|              |                                                                 |   
|              | Financial
      Statements                                      | 1 
|              |                                                                 |   
|Item 2.       | Managements Discussion and Analysis of Financial Condition and |   
|              | Results of Operations                                           | 8 
|              |                                                                 |   
|Item
    3.   | Quantitative and Qualitative Disclosures About Market Risk      | 34
|              |                                                                 |   
|Item 4.       | Controls and Procedures                                         | 35

|
|



|PART I. FINANCIAL INFORMATION
|-----------------------------
|                             
|FRONTIER AIRLINES, INC.      
|Balance Sheets               
|(Unaudited)                  

|                                                                              | December
      31,2004 |             | March
      31,2004 |  
|----------------------------------------------------------------------------- | ---------------------- | ----------- | ------------------- | -
|***Assets***                                                                  |                        |             |                     |  
|Current
      assets:                                                         |                        |             |                     |  
|                                                                              |                        |            
|Cash and cash equivalents                                                     | $                      | 148,989,204 |                     | $
|                                                                              |                        |            
|Short-term investments                                                        |                        |            |                     |  
|                                                                              |                        |            
|Restricted investments                                                        |                        | 29,028,912  |                     |  
|Receivables, net of allowance for doubtful
      accounts of $523,000        
|and $225,000 at December 31,
      2004 and March 31, 2004, respectively      |                        | 24,830,794  |                     |  
|                                                                              |                        |            
|Income tax receivable                                                         |                        | 88,370      |                     |  
|                                                                              |                        |            
|Security and other deposits                                                   |                        | 1,900,250   |                     |  
|                                                                              |                        |            
|Prepaid expenses and other assets                                             |                        | 18,842,843  |                     |  
|Inventories, net of allowance of $4,055,000
      and $2,991,000             
|                                                                              |                        |            
|at December 31, 2004 and March
      31, 2004, respectively                   |                        | 7,476,240   |                     |  
|                                                                              |                        |            
|Assets held for sale                                                          |                        | 1,502,027   |                     |  
|                                                                              |                        |            
|Deferred tax assets                                                           |                        | 6,782,322   |                     |  
|                                                                              |                        |             |                     |  
|                                                                              |                        |            
|                                                                              |                        |            
|Total
      current assets                                                    |                        | 239,440,962 |                     |  
|                                                                              |                        |            
|Property and equipment, net of accumulated depreciation of $69,288,000       
|                                                                              |                        |            
|and $55,316,000 at December 31, 2004 and March 31, 2004, respectively         |                        | 457,887,400 |                     |  
|                                                                              |                        |            
|                                                                              |                        |            
|Security
      and other deposits                                             |                        | 18,086,317  |                     |  
|                                                                              |                        |            
|Aircraft
      pre-delivery payments                                          |                        | 17,926,620  |                     |  
|                                                                              |                        |            
|Restricted investments                                                        |                        | 11,546,307  |                     |  
|                                                                              |                        |            
|Deferred
      loan expenses and other assets, net                            |                        | 5,133,324   |                     |  
|                                                                              |                        |            
|                                                                              |                        |             |                     |  
|                                                                              | $                      | 750,020,930 |                     | $
|                                                                              |                        |            
|                                                                              |                        |            
|                                                                              |                        |             |                     |  
|                                                                              |                        |            
|                                                                             
|***Liabilities and Stockholders
      Equity***                             
|Current
      liabilities:                                                   
|                                                                              |                        |            
|Accounts payable                                                              | $                      | 24,427,939  |                     | $
|                                                                              |                        |            
|Air traffic liability                                                         |                        | 86,980,503  |                     |  
|                                                                              |                        |            
|Other accrued expenses                                                        |                        | 48,717,064  |                     |  
|                                                                              |                        |            
|Current portion of long-term debt                                             |                        | 17,981,370  |                     |  
|Deferred revenue and other current
      liabilities                          |                        | 5,427,661   |                     |  
|                                                                              |                        |            
|                                                                              |                        |            
|                                                                              |                        |             |                     |  
|Total
      current liabilities                                               |                        | 183,534,537 |                     |  
|                                                                              |                        |            
|                                                                              |                        |            
|Long-term
      debt                                                          |                        | 287,152,505 |                     |  
|                                                                              |                        |            
|Deferred
      tax liabilities                                                |                        | 20,209,340  |                     |  
|                                                                              |                        |            
|Deferred
      revenue and other liabilities                                  |                        | 18,251,594  |                     |  
|                                                                              |                        |            
|                                                                              |                        |            
|                                                                              |                        |             |                     |  
|Total
      liabilities                                                       |                        | 509,147,976 |                     |  
|                                                                              |                        |            
|                                                                              |                        |             |                     |  
|                                                                              |                        |            
|Stockholders equity:                                                        
|Preferred stock, no par value, authorized
      1,000,000 shares; none issued |                        |            |                     |  
|Common stock, no par value, stated value of
      $.001 per share,           
|authorized 100,000,000;
      35,648,942 and 35,597,442 issued and           
|outstanding at December 31,
      2004 and March 31, 2004, respectively       |                        | 35,649      |                     |  
|                                                                              |                        |            
|Additional paid-in capital                                                    |                        | 185,179,583 |                     |  
|                                                                              |                        |            
|Unearned ESOP shares                                                          |                        |            |                     |  
|                                                                              |                        |            
|Other comprehensive income (loss)                                             |                        | 223,392     |                     |  
|                                                                              |                        |            
|Retained earnings                                                             |                        | 55,434,330  |                     |  
|                                                                              |                        |            
|                                                                              |                        |            
|                                                                              |                        |             |                     |  
|                                                                              |                        | 240,872,954 |                     |  
|                                                                              |                        |            
|                                                                              |                        |             |                     |  
|                                                                              | $                      | 750,020,930 |                     | $
|                                                                              |                        |             |                     |  
|                                                                              |                        |             |                     |  
|See
      accompanying to financial statements.                               |                        |             |                     |  
|                                                                              |                        |            

|- 1
      -
|-----------



|FRONTIER AIRLINES, INC. 
|------------------------
|Statements of Operations
|(Unaudited)             

|                                                        | Three Months Ended |   | Nine Months Ended |  
|------------------------------------------------------- | ------------------ | - | ----------------- | -
|
|Revenues:                                               |                    |   |                   |  
|Passenger                                               |                    | $ | 182,360,545       |  
|Passenger- regional partner                             |                    |   | 21,582,231        |  
|Cargo                                                   |                    |   | 1,188,514         |  
|Other                                                   |                    |   | 3,106,181         |  
|                                                        |                    |   |                   |  
|                                                        |                    |   |                   |  
|Total
      revenues                                    |                    |   | 208,237,471       |  
|                                                        |                    |   |                   |  
|                                                        |                   
|Operating
      expenses:                               |                   
|Flight operations                                       |                    |   | 32,545,417        |  
|Aircraft fuel expense                                   |                    |   | 53,806,536        |  
|Aircraft lease expense                                  |                    |   | 22,779,484        |  
|Aircraft and traffic servicing                          |                    |   | 32,287,621        |  
|Maintenance                                             |                    |   | 19,425,591        |  
|Promotion and sales                                     |                    |   | 18,738,362        |  
|General and administrative                              |                    |   | 12,827,674        |  
|Operating expenses - regional
    partner               |                    |   | 24,012,344        |  
|Aircraft lease and facility exit
      costs            |                    |   |                  |  
|(Gains) losses on sales of assets,
      net            |                    |   | (119,565          | )
|Impairment and other related
    charges                |                    |   | 658,424           |  
|Depreciation and amortization                           |                    |   | 6,559,021         |  
|                                                        |                    |   |                   |  
|                                                        |                    |   |                   |  
|Total
      operating expenses                          |                    |   | 223,520,909       |  
|                                                        |                    |   |                   |  
|                                                        |                    |   |                   |  
|Operating
      income (loss)                           |                    |   | (15,283,438       | )
|                                                        |                    |   |                   |  
|                                                        |                   
|Nonoperating income (expense):                          |                   
|Interest income                                         |                    |   | 1,049,917         |  
|Interest expense                                        |                    |   | (3,384,302        | )
|Loss on early extinquishment of
    debt                |                    |   |                  |  
|Emergency Wartime Supplemental                          |                   
|Appropriations Act
      compensation                   |                    |   |                  |  
|Other, net                                              |                    |   | 341,287           |  
|                                                        |                    |   |                   |  
|                                                        |                   
|Total
      nonoperating income (expense), net          |                    |   | (1,993,098        | )
|                                                        |                    |   |                   |  
|                                                        |                   
|Income
      (loss) before income tax (benefit) expense |                    |   | (17,276,536       | )
|                                                        |                    |   |                   |  
|Income
      tax (benefit) expense                      |                    |   | (6,218,492        | )
|                                                        |                    |   |                   |  
|                                                        |                    |   |                   |  
|Net
      income (loss)                                 |                    | $ | (11,058,044       | )
|                                                        |                    |   |                   |  
|                                                        |                   
|Earnings
      (loss) per share:                        |                   
|Basic                                                   |                    | $ | (0.31             | )
|                                                        |                    |   |                   |  
|Diluted                                                 |                    | $ | (0.31             | )
|                                                        |                    |   |                   |  
|                                                        |                   
|Weighted
      average shares of                        |                   
|common stock outstanding                                |                   
|Basic                                                   |                    |   | 35,623,855        |  
|                                                        |                    |   |                   |  
|Diluted                                                 |                    |   | 35,623,855        |  
|                                                        |                    |   |                   |  

|                                                     
|-----------------------------------------------------
|See accompanying
      notes to financial statements.

|- 2
      -
|-----------



|FRONTIER AIRLINES, INC.                                                                  
|-----------------------------------------------------------------------------------------
|Statements of Stockholders Equity and Other Comprehensive
      Income (Loss)           
|For
      the Year Ended March 31, 2004 and the Nine Months Ended December 31,
      2004
|(Unaudited)                                                                              

|
|
|

|                                    | Common
      Stock |        | Additionalpaid-incapital |   | UnearnedESOPshares |  | Accumulatedothercomprehensiveincome (loss) |             | Retainedearnings |   | Totalstockholdersequity |  
|----------------------------------- | ------------------ | ------ | ------------------------ | - | ------------------ |  | ------------------------------------------ | ----------- | ---------------- | - | ------------------------ | -
|
|
|                                    |                    |       
|                                    |                    |       
|Balances, March 31, 2003            |                    | 29,674 |                          | $ | 29,674             |  | $                                          | 96,424,525  |                  | $ |                         |  
|                                    |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|Net income                          |                    |       |                          |   |                   |  |                                            |            |                  |   |                         |  
|Other comprehensive loss -          |                   
|unrealized loss on derivative       |                    |        |                          |   |                    |  |                                           
|instruments, net of tax             |                    |       |                          |   |                   |  |                                            |            |                  |   |                         |  
|                                    |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|Total comprehensive income          |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|                                    |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|                                    |                    |        |                          |   |                    |  |                                           
|Sale of common stock, net of        |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|offering costs of $257,000          |                    | 5,050  |                          |   | 5,050              |  |                                            | 81,072,096  |                  |   |                         |  
|                                   
|Exercise of common stock options    |                    | 227    |                          |   | 227                |  |                                            | 1,000,487   |                  |   |                         |  
|Tax benefit from exercises of       |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|common stock options                |                    |       |                          |   |                   |  |                                            | 1,261,937   |                  |   |                         |  
|Equity adjustment for the repricing |                   
|of warrants issued in               |                   
|conjunction with a debt agreement   |                    |       |                          |   |                   |  |                                            | 116,701     |                  |   |                         |  
|Contribution of common stock        |                   
|to employees stock ownership        |                    |       |                          |   |                   |  |                                            |            |                  |   |                         |  
|plan                                |                    | 646    |                          |   | 646                |  |                                            | 5,202,640   |                  |   | (5,203,286               | )
|Amortization of employee stock      |                   
|compensation                        |                    |       |                          |   |                   |  |                                            |            |                  |   | 3,020,652                |  
|                                    |                    |       
|Balances, March 31, 2004            |                    | 35,597 |                          |   | 35,597             |  |                                            | 185,078,386 |                  |   | (2,182,634               | )
|                                    |                    |        |                          |   |                    |  |                                            |            
|Net loss                            |                    |       |                          |   |                   |  |                                            |            |                  |   |                         |  
|Other comprehensive income -        |                   
|unrealized gain on derivative       |                    |        |                          |   |                    |  |                                           
|instruments, net of tax             |                    |       |                          |   |                   |  |                                            |            |                  |   |                         |  
|                                    |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|Total comprehensive loss            |                    |       |                          |   |                   |  |                                            |            |                  |   |                         |  
|                                    |                    |        |                          |   |                    |  |                                            |             |                  |   |                          |  
|                                    |                    |        |                          |   |                    |  |                                           
|Exercise of common stock options    |                    | 52     |                          |   | 52                 |  |                                            | 336,775     |                  |   |                         |  
|                                    |                    |        |                          |   |                    |  |                                           
|Tax benefit from exercises of       |                    |        |                          |   |                    |  |                                           
|common stock options, net           |                    |       |                          |   |                   |  |                                            | (247,550    | )                |   |                         |  
|Amortization of employee stock      |                    |        |                          |   |                    |  |                                            |            
|compensation                        |                    |       |                          |   |                   |  |                                            |            |                  |   | 2,182,634                |  
|Capital contribution                |                    |       |                          |   |                   |  |                                            | 11,972      |                  |   |                         |  
|                                    |                    |       
|Balances, December 31, 2004         |                    | 35,649 |                          | $ | 35,649             |  | $                                          | 185,179,583 |                  | $ |                         |  
|                                    |                    |       
|                                    |                    |        |                          |   |                    |  |                                           

|                                                     
|-----------------------------------------------------
|See accompanying
      notes to financial statements.

|- 3
      -
|-----------



|                                                                                                                      
|----------------------------------------------------------------------------------------------------------------------
|FRONTIER AIRLINES, INC.For the Nine Months Ended December
      31, 2004 and 2003Statements of Cash
  Flows(Unaudited)
|                                                                                                                      

|                                                           | Nine
      Months Ended |  
|---------------------------------------------------------- | ----------------------- | -
|
|                                                           |                         |  
|                                                           |                         |  
|Cash flows from operating activities:                      |                         |  
|                                                           |                         |  
|Net income (loss)                                          |                         | $
|Adjustments to reconcile net income (loss)
      to        |                        
|net cash provided
      by (used in) operating activities: |                        
|ESOP
      compensation expense                            |                         |  
|Depreciation
      and amortization                        |                         |  
|Depreciation
      and amortization - regional partner     |                         |  
|Impairment
      recorded on long-lived assets             |                         |  
|Provision
      recorded on inventories                    |                         |  
|Accelerated
      amortization of deferred loan costs      |                         |  
|Deferred
      tax expense                                 |                         |  
|Unrealized
      derivative gain                           |                         |  
|Loss
      on disposal of equipment                        |                         |  
|Changes
      in operating assets and liabilities:         |                        
|Restricted
      investments                               |                         |  
|Receivables                                                |                         |  
|Income
      taxes receivable                              |                         |  
|Security
      and other deposits                          |                         |  
|Prepaid
      expenses and other assets                    |                         |  
|Inventories                                                |                         |  
|Deferred
      loan expenses and other assets              |                         |  
|Accounts
      payable                                     |                         |  
|Air
      traffic liability                                |                         |  
|Other
      accrued expenses                               |                         |  
|Deferred
      revenue and other liabilities               |                         |  
|                                                           |                         |  
|Net
      cash provided by (used in) operating activities  |                         |  
|                                                           |                         |  
|                                                           |                         |  
|Cash
      flows from investing activities:                |                        
|Decrease in short-term
investments                         |                         |  
|Aircraft lease and purchase deposits,
      net            |                         |  
|Decrease in restricted
investments                         |                         |  
|Proceeds from the sale of aircraft and
      equipment     |                         |  
|Capital expenditures                                       |                         |  
|                                                           |                         |  
|Net
      cash used in investing activities                |                         |  
|                                                           |                         |  
|                                                           |                         |  
|Cash
      flows from financing activities:                |                        
|Net proceeds from issuance of common
      stock           |                         |  
|Proceeds from long-term
borrowings                         |                         |  
|Payment of financing fees                                  |                         |  
|Principal payments on long-term
      borrowings           |                         |  
|                                                           |                         |  
|Net
      cash provided by financing activities            |                         |  
|                                                           |                         |  
|                                                           |                         |  
|                                                           |                         |  
|Net
      increase (decrease) in cash and cash equivalents |                         |  
|                                                           |                         |  
|Cash and
      cash equivalents, beginning of period       |                         |  
|                                                           |                         |  
|                                                           |                         |  
|Cash and
      cash equivalents, end of period             |                         | $
|                                                           |                         |  

|                                                     
|-----------------------------------------------------
|See accompanying
      notes to financial statements.

|- 4
      -
|-----------



|FRONTIER AIRLINES, INC.Notes to Financial
      StatementsDecember 31, 2004
|---------------------------------------------------------------------------
|                                                                           

|(1) | Basis
      of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The
      accompanying unaudited financial statements have been prepared in
      accordance with generally accepted accounting principles for interim
      financial information and the instructions to Form 10-Q and Regulation
      S-X. Accordingly, they do not include all of the information and footnotes
      required by generally accepted accounting principles for complete
      financial statements and should be read in conjunction with the Companys
      Annual Report on Form 10-K/A for the year ended March 31, 2004. In the
      opinion of management, all adjustments (consisting only of normal
      recurring adjustments) considered necessary for a fair presentation have
      been included. The results of operations for the three and nine months
      ended December 31, 2004 are not necessarily indicative of the results that
      will be realized for the full year.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Impairment and Other Related Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Inventories consist of expendable aircraft spare parts, supplies
      and aircraft fuel and are stated at the lower of cost or market.
      Inventories are accounted for on a first-in, first-out basis and are
      charged to expense as they are used. The Company monitors resale values for
      Boeing parts quarterly using estimates obtained from its vendors. At
      December 31, 2004, based on the results of sales of expendable parts compared
      to the book value of these parts, it was determined that an additional
      provision was not required. The Company evaluated our estimated usage of these
      parts and the current resale value at June 30, 2004 and September 30, 2004
      and recorded additional provisions of $326,000 and $937,000, respectively.
      The cost of WTI crude oil increased from $36.92 per barrel at June 30, 2004
      to $49.56 per barrel at September 30, 2004. The cost of WTI crude oil at
      December 31, 2004 was $43.69 and at January 28, 2005 it was $47.18. As a
      result of the increase in the cost of fuel, the Company have accelerated the
      dates that it would cease using the Boeing aircraft from September 2005 to
      mid-April 2005. The Company believes the decline in resale values of parts
      for the less fuel efficient Boeing 737-200 and Boeing 737-300 aircraft was
      due in part to increasing fuel prices during the past nine months. Because
      of the earlier termination date of the use of the Boeing aircraft, the
      estimated usage of these parts decreased, contributing to the amount of the
      additional provision recorded during the three months ended September 30, 2004.
      During the fiscal year ended March 31, 2004, the Company recorded a provision
      for excess Boeing expendable parts inventory totaling $618,000. The provision
      in 2004 was principally the result of declining resale values of excess
      Boeing expendable parts. As of December 31, 2004, the carrying value of
      Boeing expendable inventory totaled approximately $1,562,000.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company records
      impairment losses on long-lived assets used in operations when indicators
      of impairment are present and the undiscounted future cash flows estimated
      to be generated by those assets are less than the carrying amount of the
      assets. The Company monitors resale values for Boeing rotables quarterly using
      estimates obtained from its vendors. If an impairment occurs, the loss is
      measured by comparing the fair value of the asset to its carrying amount.
      During the nine months ended December 31, 2004, the Company recorded total impairment
      charges of $3,997,000 on the Company's Boeing spare parts as a result of further
      market declines coupled with the results of actual sales history. During the
      period from August 2004 through December 2004, the Company began selling
      its Boeing spare parts. The Company's analysis of these sales compared to
      the impaired value of these parts as of December 31, 2004 indicated that
      these parts were selling at approximately 90% of the carrying value which
      triggered the additional impairment in the third quarter. During the year
      ended March 31, 2004, the Company recorded an impairment charge of $3,047,000
      for engines and rotable parts that support the Boeing 737-300 aircraft. The
      impairment charge for rotables totaling $901,000 was principally the result of
      declining resale values for Boeing rotables. The impairment for the two
      Boeing 737-300 spare engines totaling $2,146,000 was the result of the Company's
      decision in the fourth quarter of fiscal 2004 to sell these remaining
      spare engines. The impairment was based on three separate quotes from
      third parties. As of December 31, 2004, the carrying value of Boeing spare
      parts, excluding one spare engine, totaled approximately $6,254,000.                                                                                                                                                                           

|- 5
      -
|-----------



|FRONTIER AIRLINES, INC.Notes to Financial
      StatementsDecember 31, 2004
|---------------------------------------------------------------------------
|                                                                           

| | The
      Company uses the criteria in SFAS No. 144 to determine when an asset is
      classified as held for sale. Upon classification as held for sale, the
      long-lived asset or asset group is measured at the lower of its carrying
      amount or fair value less cost to sell, depreciation is ceased and the
      asset or asset group is separately presented on the balance
    sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | The
      Company follows Accounting Principles Board Opinion No. 25, Accounting
      for Stock Issued to Employees (APB 25) and related
      Interpretations in accounting for its employee stock options and follows
      the disclosure provisions of Statement of Financial Accounting Standards
      No. 123 (SFAS 123). The Company applies APB 25 and related Interpretations
      in accounting for its plans. Accordingly, no compensation cost is
      recognized for options granted at a price equal to the fair market value
      of the Common Stock on the date of grant. Pro forma information regarding
      net income and earnings per share is required by SFAS 123, which also
      requires that the information be determined as if the Company has
      accounted for its employee stock options under the fair value method of
      that Statement. The fair value of each option grant was estimated on the
      date of grant using the Black-Scholes option valuation model. Had
      compensation cost for the Companys stock-based compensation plan been
      determined using the fair value of the options at the grant date, the
      Companys pro forma net income (loss) and earnings (loss) per share would
      be as follows:
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                               | Three Months Ended |  | Nine Months Ended |            
|---------------------------------------------- | ------------------ |  | ----------------- | -----------
|
|
|Net
      income (loss) as reported            |                    |  | $                 | (11,058,044
|Less: total compensation expense               |                    | 
|determined under fair value method, net of
tax |                    |  |                   | (547,061   
|                                               |                    |  |                   |            
|                                               |                    |  |                   |            
|Pro forma
      net income (loss) as reported  |                    |  | $                 | (11,605,105
|                                               |                    |  |                   |            
|                                               |                    |  |                   |            
|                                               |                    |  |                   |            
|Earnings
      (loss) per share, basic:        |                    | 
|As reported                                    |                    |  | $                 | (0.31      
|Pro forma                                      |                    |  | $                 | (0.33      
|                                               |                    |  |                   |            
|                                               |                    |  |                   |            
|Earnings
      (loss) per share, diluted:      |                    | 
|As reported                                    |                    |  | $                 | (0.31      
|                                               |                    |  |                   |            
|Pro forma                                      |                    |  | $                 | (0.33      
|                                               |                    |  |                   |            
|                                               |                    |  |                   |            

|                  | In
      December 2004, the FASB issued SFAS No. 123(R), Share-Based
      Payments. SFAS No. 123(R), revised FASB Statement No. 123,
      Accounting for Stock-Based Compensationand supersedes APB Opinion
      No. 25, Accounting for Stock Issued to Employees. SFAS No. 123(R)
      focuses primarily on the accounting for transactions in which an entity
      obtains employee services in share-based payment transactions. SFAS No.
      123(R) requires companies to recognize in the statement of operations the
      cost of employee services received in exchange for awards of equity
      instruments based on the grant-date fair value of those awards (with
      limited exceptions). SFAS No. 123(R) is effective as of the first
      reporting period that begins after June 15, 2005. Accordingly, we will
      adopt SFAS No. 123(R) in our second quarter of fiscal 2006.                                                                                                                                         
|----------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(1)               | During the nine months ended December 31, 2004
      the Companys Board of Directors approved that certain of the Companys
      stock options with exercise prices in excess of the stocks current market
      price be modified to accelerate vesting.  The purpose of the accelerated
      vesting is to enable the Company to avoid recognizing compensation expense in
      its Statement of Operations associated with these options in future periods
      upon adoption of SFAS No.123(R) in the second quarter of fiscal year 2006.
      As a result, a total of 671,500 options became immediately vested.
      These options originally became vested between October 2004 and March 2009.
      Exercise prices for these options ranged from $8.00 to $24.17 per share.
      There were 35 employees affected by the modification.  The total accelerated
      expense as a result of the modification is approximately $2,997,000, net of
      taxes, and is included in the pro forma numbers presented in the table above.
|                 
|                 
|Reclassifications
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                  | Certain
      prior year amounts have been reclassified to conform to the current year
      presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|- 6
      -
|-----------



|FRONTIER AIRLINES, INC.Notes to Financial
      StatementsDecember 31, 2004
|---------------------------------------------------------------------------
|                                                                           

|(3) | Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | During
      the nine months ended December 31, 2004, the Company borrowed $22,000,000
      for the purchase of one Airbus A318 aircraft. The aircraft loan has a term
      of 12 years and is payable in monthly installments of $169,000 as of
      December 31, 2004, including interest, payable in arrears, with a floating
      interest rate adjusted quarterly based on LIBOR plus a margin of 1.95% for
      an overall rate of 3.995% at December 31, 2004. At the end of the term,
      there is a balloon payment of $2,640,000. A security interest in the
      aircraft secures the loan.

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Stockholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The
      Company recorded an approximate $12,000 capital contribution paid to the
      Company in August 2004 as a result of recovering short-swing profits from
      a shareholder in accordance with Section 16(b) of the Securities Exchange
      Act of 1934. Section 16(b) provides that any profit realized by an insider
      (defined as an officer, director or principal shareholder of an issuer)
      from a purchase and sale, or any sale and purchase, of an equity security
      of the issuer within any period of less than nine months are recoverable
      by the issuer, irrespective of the intention of the insider in entering
      into such transaction.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|(5) | Stock
      Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | On
      September 9, 2004, the shareholders of the Company approved the Frontier
      Airlines, Inc. 2004 Equity Incentive Plan (the 2004 Plan). The 2004 Plan
      allows the Compensation Committee to grant stock options, stock
      appreciation rights, restricted stock or stock units, any or all of which
      may be made contingent upon the achievement of performance criteria.
      Subject to plan limits, the Compensation Committee has the discretionary
      authority to determine the size and timing of an award and the vesting
      requirements related to the award. The addition of performance-based
      requirements will be considered in light of the Companys total
      compensation program and the significant level of pay-for-performance
      requirements already incorporated into its compensation practices.

|- 7
      -
|-----------



|Item 2:  Managements Discussion and Analysis of
      Financial Condition and Results of Operations
      This
      report contains forward-looking statements within the meaning of Section
      21E of the Securities Exchange Act of 1934 that describe the business and
      prospects of Frontier Airlines, Inc. and the expectations of our company
      and management. All statements included in this report that address
      activities, events or developments that we expect, believe, intend or
      anticipate will or may occur in the future, are forward-looking
      statements. When used in this document, the words estimate,
      anticipate, project and similar expressions are intended to identify
      forward-looking statements. Forward-looking statements are inherently
      subject to risks and uncertainties, many of which cannot be predicted with
      accuracy and some of which might not even be anticipated. These risks and
      uncertainties include, but are not limited to: the timing of, and
      expense associated with, expansion and modification of our operations in
      accordance with our business strategy or in response to competitive
      pressures or other factors; failure of our new markets to perform as
      anticipated; the inability to obtain sufficient gates at Denver
      International Airport to accommodate the expansion of our operations;
      general economic factors and behavior of the fare-paying public and its
      potential impact on our liquidity; terrorist attacks or other incidents
      that could cause the public to question the safety and/or efficiency of
      air travel; operational disruptions, including weather; industry
      consolidation; the impact of labor disputes; enhanced security
      requirements; changes in the governments policy regarding relief or
      assistance to the airline industry; the economic environment of the
      airline industry generally; increased federal scrutiny of low-fare
      carriers generally that may increase our operating costs or otherwise
      adversely affect us; actions of competing airlines, such as increasing
      capacity and pricing actions of United Airlines (United) and other
      competitors and other actions taken by United either in or out of
      bankruptcy protection; the availability of suitable aircraft, which may
      inhibit our ability to achieve operating economies and implement our
      business strategy; the unavailability of, or inability to secure upon
      acceptable terms, debt or operating lease financing necessary to acquire
      aircraft which we have ordered; and uncertainties regarding aviation fuel
      prices. Because our business, like that of the airline industry generally, is
      characterized by high fixed costs relative to revenues, small fluctuations
      in our yield per available seat mile (RASM) or cost per available seat
      mile (CASM) can significantly affect operating results. These risks and
      factors are not exclusive, and we undertake no obligation to publicly
      update or revise any forward-looking statements to reflect events or
      circumstances that may arise after the date of this filing. Additional
      information regarding these and other factors may be contained in our SEC
      filings, including without limitation, our Form 10-K/A for our fiscal year
      ended March 31, 2004.
      General
      Now in our eleventh year of
      operations, we are a low cost, affordable fare airline operating in a hub
      and spoke model connecting cities coast to coast primarily through our hub
      at Denver International Airport (DIA). We are the second largest jet
      service carrier at DIA based on departures. As of January 28, 2005, we, in
      conjunction with Frontier JetExpress operated by Horizon Air Industries,
      Inc. (Horizon), operate routes linking our Denver hub to 42 U.S. cities
      spanning the nation from coast to coast and to five cities in Mexico. In
      April 2004, we began our first expansion of point-to-point routes outside
      of our DIA hub with three routes from our focus city Los Angeles,
      California and added an additional route in May 2004. During the nine
      months ended December 31, 2004, we began our first point-to-point routes
      to Cancun, Mexico and currently provide three weekly round-trip
      frequencies from Kansas City, Missouri; Salt Lake City, Utah; Austin,
      Texas and Nashville, Tennessee.
      We were organized in February
      1994 and began flight operations in July 1994 with two leased Boeing
      737-200 aircraft. We have since expanded our fleet in service to 45
      aircraft as of January 28, 2005 (32 of which we lease and 14 of which we
      own), consisting of four Boeing 737-300s, 34 Airbus A319s, and seven
      Airbus A318s. In May 2001, we began a fleet replacement plan to replace
      our Boeing aircraft with new purchased and leased Airbus jet aircraft, a
      transition we now expect to complete by mid-April 2005. As of November 1,
      2003, we no longer operate Boeing 737-200 aircraft. During the three and
      nine months ended December 31, 2004, we increased mainline capacity by
      24.9% and 31.7% over the prior comparable periods. In the three and nine
      months ended December 31, 2004, we increased mainline passenger traffic by
      23.4% and 31.1% over the prior comparable periods.
      In September 2003, we signed a
      12-year agreement with Horizon, under which Horizon operates nine 70-seat
      CRJ 700 aircraft under our Frontier JetExpress brand. The service began on
      January 1, 2004 with three aircraft in service and one spare aircraft and
      now consists of a total of eight aircraft in service and one operational
      spare aircraft. This service replaced our codeshare arrangement with Mesa
      Airlines which terminated on December 31, 2003. We reimburse Horizon for
      its expenses related to the operation plus a margin. The agreement
      provides for financial incentives, penalties and changes to the margin
      based on performance of Horizon and our financial performance. As of
      January 28, 2005, Frontier JetExpress provides service to Tucson, Arizona;
      Little Rock, Arkansas; Boise, Idaho; Billings, Montana; Omaha, Nebraska;
      Albuquerque, New Mexico; Oklahoma City, Oklahoma; El Paso, Texas and
      Spokane, Washington, and supplements our mainline service to San Jose,
      California and Austin, Texas.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- 8
      -
|-----------



|We currently use up to 18
      gates on Concourse A at DIA. Together with our regional jet codeshare
      partner, Frontier JetExpress, we use these 18 gates and share use of up to
      four common use regional jet parking positions to operate approximately
      198 daily system mainline flight departures and arrivals and 51 Frontier
      JetExpress daily system flight departures and arrivals.
      From the start of our 2005
      Fiscal Year on April 1, 2004 through January 28, 2005, we added departures
      from DIA to the following cities with commencement dates as
      follows:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|Destination                                       |  | Commencement
      Date
|------------------------------------------------- |  | -----------------------
|Washington, D.C.
      (Dulles International) (1) |  | April
      11, 2004   
|Anchorage, Alaska
      (2)                       |  | May 9,
  2004          
|Billings, Montana
      (3)                       |  | May 23,
    2004       
|Spokane, Washington
      (3)                     |  | May 23,
    2004       
|Philadelphia,
      Pennsylvania                  |  | May 23,
    2004       
|Nashville,
      Tennessee                        |  | June 20,
    2004      
|Little Rock,
      Arkansas (3)                   |  | October 10,
      2004 
|                                                  |  |                        

|(1)                                                                                                                                                                                                                                                                        | Service
      to be discontinued on February 1, 2005 .                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                           |                                                                                                         
|(2)                                                                                                                                                                                                                                                                        | Service
      is seasonal and was terminated on September 25, 2004 and will resume on
      May 8, 2005.
|                                                                                                                                                                                                                                                                           |                                                                                                         
|(3)                                                                                                                                                                                                                                                                        | Flights
      operated exclusively by Frontier JetExpress.                                              
|                                                                                                                                                                                                                                                                           |                                                                                                         
|On April 11, 2004, we began
      our first significant point-to-point non-hub routes from Los Angeles,
      California. We began non-stop service from Los Angeles International
      Airport (LAX) to the following cities with commencement dates as
      follows:
|                                                                                                                                                                                                                                                                          

|Destination                           |  | Commencement
      Date
|------------------------------------- |  | -----------------------
|Kansas City,
      Missouri           |  | April
      11, 2004   
|Minneapolis/St.
      Paul, Minnesota |  | April 11,
    2004     
|St. Louis,
      Missouri             |  | April 11,
    2004     
|Philadelphia,
      Pennsylvania      |  | May 23,
    2004       

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|In August 2004, we terminated
      non-stop service between LAX and Minneapolis/St. Paul and reduced non-stop
      service to St. Louis and Kansas City to adjust for seasonal demand and
      poor operating results. We terminated service to St. Louis in October
      2004. We plan to terminate the remaining non-stop service between LAX and
      Kansas City and LAX and Philadelphia on February 23, 2005.
      On July 3, 2004, we began our
      first point-to-point non-hub routes to Mexico with one weekly round-trip
      frequency to Cancun, Mexico from Kansas City and from Salt Lake City. We
      increased service to Cancun from Kansas City to three weekly round-trip
      frequencies in November 2004 and began three weekly round-trip frequencies
      from Nashville and Austin in November 2004. We intend to discontinue
      service between Austin and Cancun on March 18, 2005. We have received
      approval from the U.S. Department of Transportation (DOT) for
      authorization to serve Cancun from St. Louis. Pending approval from the
      government of Mexico, we intend to begin service on February 25, 2005 and
      will operate three weekly round-trip frequencies.
      We began Frontier JetExpress
      service to Little Rock, Arkansas from our DIA hub with two daily
      round-trip frequencies and terminated our service to Ontario, California
      on October 10, 2004.
      Our filings with the
      Securities and Exchange Commission are available at no cost on our
      website, www.frontierairlines.com, in the Investor Relations folder
      contained in the section titled About Frontier. These reports include
      our annual report on Form 10-K, our quarterly reports on Form 10-Q,
      current reports on Form 8-K, Section 16 reports on Forms 3, 4 and 5, and
      any related amendments or other documents, and are made available as soon
      as reasonably practicable after we file the materials with the SEC.

|- 9
      -
|-----------



|Our corporate headquarters are
      located at 7001 Tower Road, Denver, Colorado 80249. Our administrative
      office telephone number is 720-374-4200 and our reservations telephone
      number is 800-432-1359.
      Overview
      We intend to continue our
      focused growth strategy, which includes a fleet transition from a Boeing
      fleet to an all Airbus fleet that we expect to complete by mid-April 2005.
      One of the key elements of this strategy is to produce cost savings
      because crew training is standardized for aircraft of a common type,
      maintenance issues are simplified, spare parts inventory is reduced, the
      Airbus aircraft are more fuel efficient and crew scheduling is more
      efficient. As of January 28, 2005, we have remaining firm purchase
      commitments for 13 Airbus aircraft and intend to lease as many as ten
      additional A318 or A319 aircraft from third party lessors over the next
      three years. We intend to use these additional aircraft to either replace
      Boeing aircraft being retired, provide service to new markets and/or to
      add frequencies to existing markets that we believe are underserved.
      The airline industry continues
      to be intensely competitive. We expect competition will remain intense.
      Business and leisure travelers continue to reevaluate their travel budgets
      and remain highly price sensitive. Increased competition has prompted
      aggressive strategies from competitors through discounted fares and sales
      promotions. Additionally, the intense competition has created financial
      hardships for some of our competitors that have been forced to reduce
      capacity, seek debt restructuring and wage and salary concessions, or have
      been forced into bankruptcy protection.
      We believe we have a proven
      management team and a strong company culture and will continue to focus on
      differentiating the product and service we provide to our passengers. We
      intend for our product and service to be affordable, flexible,
      accommodating, and comfortable. Our product begins with the Airbus
      aircraft, which offer a comfortable passenger cabin that we configure with
      one-class of comfortable seating, superb leg room, and in-seat 24
      channel live television entertainment. Augmenting our product is our
      team of dedicated employees who strive to offer friendly customer
      service and keep operations running efficiently, which we believe leads to
      lower operating costs.
      Quarter
      in Review
      During the three months ended
      December 31, 2004, we had a net loss of $11,058,000. This was driven by
      rising fuel costs and a decline in our average fare as we continue to
      operate in a highly competitive environment. We have seen a sharp rise in
      fuel costs since January 2004, and fuel costs may continue to increase.
      Our average fuel cost per gallon was $1.64 during the three months ended
      December 31, 2004 compared to $1.03 during the three months ended December
      31, 2003, an increase of 59.2%. The average cost of fuel for the three
      months ended December 31, 2004 includes an unrealized derivative loss of
      $3,202,000 or 9.8¢ per gallon compared to an unrealized gain of $64,000 or
      less than 1 cent per gallon reflected in the average cost of fuel for the
      three months ended December 31, 2003.
      Fleet
      and Operational Upgrades
      In October 2004, the Federal
      Aviation Administration authorized us to conduct Category II and limited
      Category III instrument approaches with our Airbus fleet. This reduces the
      previous landing minimums from 200 feet decision height and 1,800 feet
      runway visual range (RVR) to 100 feet decision height and 1,200 feet RVR
      for Category II approaches and 100 feet decision height and 1,000 feet RVR
      for Category III approaches. In six months, the approach minimums for
      Category III will be further reduced to 700 feet RVR and by October 2005
      we anticipate authority to conduct Category III approaches to 300 feet
      RVR. We expect these new landing minimum criteria to substantially reduce
      the number of diversions required because of low visibility, a condition
      that occurs with some regularity at a number of the cities we
      serve.
      We have entered into separate
      agreements with CFMI and Airbus to increase the engine thrust and maximum
      take-off weight on ten of our owned A319 aircraft to improve the
      operational performance of these aircraft. This sub-fleet of ten aircraft
      is comprised of eight aircraft that are currently in service and two
      aircraft that will be delivered in the summer of 2005. The agreement with
      CFMI calls for an increase in the maximum rated thrust from a base of
      22,000 to 23,500 pounds per engine. The agreement with Airbus calls for an
      increase in the maximum take-off weight from a base of 70 tons to 75.5
      tons. The improved operational performance will allow us to serve longer
      haul markets (i.e., Denver to Anchorage) while carrying a full passenger
      load. We expect the modifications on the eight aircraft currently in our
      fleet to be completed by March 2005. The two aircraft scheduled for
      delivery in the summer of 2005 will be delivered from the factory with the additional thrust and take-off weight upgrades in place.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|- 10 -
|------



|Highlights from
      the Quarter
|---------------------------------
|                                 

| |  | We took
      delivery of one new Airbus A319 aircraft, one new Airbus A318 aircraft and
      retired one Boeing B737 aircraft, for a net increase of two aircraft and a
      fleet total of 46 available for revenue service by quarters end.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                  
| |  | We
      announced plans to double service year-over-year to Mexico during the peak
      travel seasons of December 2004 and March/April 2005.                                                                                                  
| |   |                                                                                                                                                                                                                                                  
| |  | We
      completed pilots Category II/III initial trainings, which allows our
      Airbus pilots to land in reduced visibility and saves the airline from
      costly diversions and delays.                                                  
| |   |                                                                                                                                                                                                                                                  
| |  | We
      received authorization to fly from St. Louis, Missouri to Cancun, Mexico,
      with plans to begin service in February 2005.                                                                                                           
| |   |                                                                                                                                                                                                                                                  
| |  | We became
      the official airline of Intrawest Colorado, parent company to Colorados
      Favorite Ski Resorts, Winter Park/Mary Jane and Copper Mountain resorts
      in Colorado.                                                      
| |   |                                                                                                                                                                                                                                                  
| |  | We
      continued our legacy as a community leader by officially partnering with
      three local charities: Volunteers of America, Colorado Make-a-Wish
      Foundation, and the Childrens Hospital.                                        

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Delivery of one of our new
      Airbus aircraft scheduled for September 2004 was delayed as it sustained
      minor damage during a test flight. Our need to assess the damage and
      determine what, if any, repairs were needed delayed the delivery of this
      aircraft. As a result of this delay, we removed this aircraft from our
      flight schedule, resulting in a reduction in our ASMs. While we took
      delivery of this aircraft at the end of October 2004, it had not been
      built into our flight schedule until December 2004. In the interim, we
      used it as a spare aircraft, for ad hoc charters, and for additional
      segments during the Thanksgiving holiday.

|- 11
      -
|------------



|Results
      of Operations
      The following table provides
      certain of our financial and operating data for the three and nine months
      ended December 31, 2004 and 2003.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                      

|                                                        | Three Months EndedDecember 31, |           | Nine Months Ended December 31, |  
|------------------------------------------------------- | ------------------------------ | --------- | ------------------------------ | -
|                                                        | 2004                           |           | 2003                           |  
|                                                        |                                |          
|Selected
      Operating Data:                          |                                |           |                                |  
|Passenger
      revenue (000s) (1)                      |                                |           |                                |  
|Mainline                                                | $                              | 182,361   |                                | $
|Regional Partner
      (2)                              |                                | 21,582    |                                |  
|System
Combined                                         |                                | 203,943   |                                | $
|Revenue
      passengers carried (000s)                 |                                |           |                                |  
|Mainline                                                |                                | 1,644     |                                |  
|Regional Partner
      (2)                              |                                | 221       |                                |  
|System
Combined                                         |                                | 1,865     |                                |  
|Revenue
      passenger miles (RPMs) (000s) (3)         |                                |           |                                |  
|Mainline                                                |                                | 1,625,146 |                                |  
|Regional Partner
      (2)                              |                                | 129,301   |                                |  
|System
Combined                                         |                                | 1,754,447 |                                |  
|Available
      seat miles (ASMs) (000s) (4)            |                                |           |                                |  
|Mainline                                                |                                | 2,267,686 |                                |  
|Regional Partner 
      (2)                             |                                | 185,673   |                                |  
|System
Combined                                         |                                | 2,453,359 |                                |  
|Passenger
      load factor (5)                         |                                |           |                                |  
|Mainline                                                |                                | 71.7      | %                              |  
|Regional Partner
      (2)                              |                                | 69.6      | %                              |  
|System
Combined                                         |                                | 71.5      | %                              |  
|Mainline
      break-even load factor (6)               |                                | 76.0      | %                              |  
|Mainline
      block hours (7)                          |                                | 45,725    |                                |  
|Mainline
      departures                               |                                | 18,136    |                                |  
|Mainline
      average seats per departure              |                                | 130       |                                |  
|Mainline
      average stage length                     |                                | 962       |                                |  
|Mainline
      average length of haul                   |                                | 989       |                                |  
|Mainline
      average daily block hour utilization (8) |                                | 10.7      |                                |  
|Yield per RPM
      (cents) (9) (10)                    |                                |           |                                |  
|Mainline                                                |                                | 11.10     |                                |  
|Regional Partner
      (2)                              |                                | 16.69     |                                |  
|System
Combined                                         |                                | 11.51     |                                |  
|Total yield
      per RPM (cents) (11)                  |                                |           |                                |  
|Mainline                                                |                                | 11.49     |                                |  
|Regional Partner
      (2)                              |                                | 16.69     |                                |  
|System
Combined                                         |                                | 11.87     |                                |  
|Yield per ASM
      (cents) (10) (12)                   |                                |           |                                |  
|Mainline                                                |                                | 7.95      |                                |  
|Regional Partner
      (2)                              |                                | 11.62     |                                |  
|System
Combined                                         |                                | 8.23      |                                |  
|Total yield
      per ASM (cents) (13)                  |                                |           |                                |  
|Mainline                                                |                                | 8.23      |                                |  
|Regional Partner
      (2)                              |                                | 11.62     |                                |  
|System
Combined                                         |                                | 8.49      |                                |  

|- 12
      -
|------------



|                                                        | Three Months Ended December 31, |        | Nine Months Ended December 31, |  
|------------------------------------------------------- | ------------------------------- | ------ | ------------------------------ | -
|                                                        | 2004                            |        | 2003                           |  
|                                                        |                                 |       
|Selected
      Operating Data (continued):              |                                 |        |                                |  
|Cost per ASM
      (cents)                              |                                 |        |                                |  
|Mainline                                                |                                 | 8.80   |                                |  
|Regional Partner
      (2)                              |                                 | 12.93  |                                |  
|System
Combined                                         |                                 | 9.11   |                                |  
|Mainline fuel
      expense per ASM (cents)             |                                 | 2.37   |                                |  
|Mainline cost
      per ASM excluding                   |                                 |        |                                |  
|fuel
      (cents) (14)                                 |                                 | 6.43   |                                |  
|Mainline
      average fare (15)                        | $                               | 102.92 |                                | $
|Mainline
      average aircraft in service              |                                 | 46.4   |                                |  
|Mainline
      aircraft in service at end of period     |                                 | 46.0   |                                |  
|Mainline
      average age of aircraft at end of period |                                 | 2.8    |                                |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Passenger revenue
      includes revenues for non-revenue passengers, charter revenues,
      administrative fees, and revenue recognized for unused tickets that are
      greater than one year from issuance date. The incremental revenue from
      passengers connecting from regional flights to mainline flights is
      included in our mainline passenger revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | In September 2003, we
      signed a 12-year agreement with Horizon, under which Horizon operates up
      to nine 70-seat CRJ 700 aircraft under our Frontier JetExpress brand. The
      service began on January 1, 2004 and replaced our codeshare with Mesa
      Airlines which terminated on December 31, 2003. In accordance with
      Emerging Issues Task Force No. 01-08, Determining Whether an Arrangement
      Contains a Lease (EITF 01-08), we have concluded that the Horizon
      agreement contains leases as the agreement conveys the right to use a
      specific number and specific type of aircraft over a stated period of
      time. Therefore, we record revenues and expenses related to the Horizon
      agreement gross. Under the Mesa agreement, we recorded JetExpress revenues
      reduced by related expenses net in other revenues. JetExpress operations
      under the Mesa agreement from April 1, 2003 to December 31, 2003 are not
      included in regional partner statistics in 2003 as the Mesa arrangement
      was effective prior to May 28, 2003, the effective date of EITF
      01-08.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Amounts
      included in other revenues for Mesa for the three and nine months ended
      December 31, 2004 and 2003 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                            | Three
      Months Ended December 31, |   |      | Nine
      Months Ended December 31, |           
|------------------------------------------- | ------------------------------------- | - | ---- | ------------------------------------ | ----------
|                                            | 2004                                  |   | 2003 |                                      |           
|                                            |                                       |  
|Mesa revenues
      (000s)                  | $                                     |  |      | $                                    | 7,513,000 
|Mesa expenses
      (000s)                  |                                       |  |      |                                      | (7,149,000
|                                            |                                       |  
|Net amount
      included in other revenues | $                                     |  |      | $                                    | 364,000   
|                                            |                                       |  

| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Mesas revenue passenger
      miles (RPMs) and available seat miles (ASMs) for the three and nine months
      ended December 31, 2004 and 2003 were as follows:
| |                                                                                                                                                                  

|                       | Three Months Ended December 31, |  | Nine Months Ended December 31, | 
|---------------------- | ------------------------------- |  | ------------------------------ | 
|                       | 2004                            |  | 2003                           | 
|                       |                                 | 
|Mesa RPMs
      (000s) |                                |  | 43,634                         | 
|Mesa ASMs
      (000s) |                                |  | 54,577                         | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Revenue passenger
      miles, or RPMs, are determined by multiplying the number of fare-paying
      passengers carried by the distance flown.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(4) | Available seat miles, or ASMs, are determined by multiplying the
      number of seats available for passengers by the number of miles
      flown.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(5) | Passenger load factor is determined by dividing revenue passenger
      miles by available seat miles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(6) | Mainline
      break-even load factor is the passenger load factor for our mainline
      operations that will result in operating revenues being equal to operating
      expenses, net of certain adjustments, assuming constant yield per RPM and
      no change in ASMs. Break-even load factor as presented above may be deemed
      a non-GAAP financial measure under regulations issued by the Securities
      and Exchange Commission. We believe that presentation of break-even load
      factor calculated after certain adjustments is useful to investors because
      the elimination of special or unusual items allows a meaningful
      period-to-period comparison. Furthermore, in preparing operating plans and
      forecasts we rely on an analysis of break-even load factor exclusive of
      these special and unusual items. Our presentation of non-GAAP results
      should not be viewed as a substitute for our financial or statistical
      results based on GAAP, and other airlines may not necessarily compute
      break-even load factor in a manner that is consistent with our
      computation.

|- 13
      -
|------------



|                                                                                                                       
|-----------------------------------------------------------------------------------------------------------------------
|A
      reconciliation of the components of the calculation of the mainline
      break-even load factor is as follows:

|                                                                   |  |                    |         |                   
|------------------------------------------------------------------ |  | ------------------ | ------- | ------------------
|
|
|                                                                   |  | **(In thousands)** |         | **(In thousands)**
|                                                                   |  |                    |         |                   
|Net
      (income) loss                                            |  | $                  | 11,058  |                   
|Income tax (expense) benefit                                       |  |                    | 6,218   |                   
|Passenger revenue                                                  |  |                    | 182,361 |                   
|Revenue - regional partner                                         |  |                    | 21,582  |                   
|Charter revenue                                                    |  |                    | (2,006  | )                 
|Operating expenses - regional partner                              |  |                    | (24,012 | )                 
|                                                                   |  |                    |         |                   
|Passenger revenue - mainline (excluding charter
      and          | 
|regional partner revenue)                                          | 
|required to break even (based on GAAP
      amounts)               |  | $                  | 195,201 |                   
|Non-GAAP adujstments:                                              | 
|Emergency Wartime Supplemental
      Appropriations                | 
|Act
      compensation, net of bonuses                             |  |                    |        |                   
|Aircraft and facility lease
      exit costs, net of bonuses       |  |                    |        |                   
|                                                                   |  |                    |         |                   
|Early retirement of debt costs,
      net of bonuses               |  |                    |        |                   
|                                                                   |  |                    |         |                   
|Losses on sales of assets, net
      of bonuses                    |  |                    |        |                   
|                                                                   |  |                    |         |                   
|Impairment and other related
      charges                         |  |                    | (658    | )                 
|                                                                   |  |                    |         |                   
|Unrealized derivative gain
      (loss), net of bonuses            |  |                    | (3,202  | )                 
|Passenger
      revenue- mainline (excluding charter and           | 
|regional partner
    revenue)                                      | 
|required to break-even (based on
      adjusted amounts)           |  | $                  | 191,341 |                   
|                                                                   |  |                    |         |                   
|                                                                   |  |                    |         |                   
|The
      calculation of the break-even load factor is as follows:
|                                                                  

|                                                             |  |   |           |  
|------------------------------------------------------------ |  | - | --------- | -
|
|
|
|
|Calculation of mainline break-even load factor using         |  |   |           |  
|GAAP amounts:                                                | 
|Passenger revenue- mainline (excluding charter
      and     | 
|regional partner revenue) required to break
      even       | 
|(based on GAAP amounts) ($000s)                              |  | $ | 195,201   |  
|Mainline yield per RPM (cents)                               |  |   | 11.10     |  
|                                                             |  |   |           |  
|Mainline revenue passenger miles (000s) to break
      even  | 
|assuming constant yield per RPM                              |  |   | 1,758,921 |  
|                                                             |  |   |           |  
|Mainline available seat miles (000s)                        |  |   | 2,267,686 |  
|                                                             |  |   |           |  
|Mainline break-even load factor using GAAP
      amounts     |  |   | 77.6      | %
|                                                             |  |   |           |  
|Calculation of mainline break-even load factor using         | 
|Non-GAAP amounts:                                            | 
|Passenger revenue (excluding charter and
    regional        | 
|partner revenue) required to break even
      (based on      | 
|adjusted amounts) ($000s)                                    |  | $ | 191,341   |  
|Mainline yield per RPM (cents)                               |  |   | 11.10     |  
|                                                             |  |   |           |  
|Mainline revenue passenger miles (000s) to
    break         | 
|even assuming constant yield per
    RPM                     |  |   | 1,724,139 |  
|                                                             |  |   |           |  
|Mainline available seat miles (000s)                        |  |   | 2,267,686 |  
|                                                             |  |   |           |  
|Mainline break-even load factor using non-GAAP
      amounts |  |   | 76.0      | %
|                                                             |  |   |           |  

|(7) | Mainline
      block hours represent the time between aircraft gate departure and
      aircraft gate arrival.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Mainline average daily
      block hour utilization represents the total block hours divided by the
      number of aircraft days in service, divided by the weighted average of
      aircraft in our fleet during that period. The number of aircraft includes
      all aircraft on our operating certificate, which includes scheduled
      aircraft, as well as aircraft out of service for maintenance and
      operational spare aircraft, and excludes aircraft removed permanently from
      revenue service or new aircraft not yet placed in revenue
    service.
|(9) | Yield per RPM is
      determined by dividing passenger revenues (excluding charter revenue) by
      revenue passenger miles.                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|- 14
      -
|------------



|(10) | For
      purposes of these yield calculations, charter revenue is excluded from
      passenger revenue. These figures may be deemed non-GAAP financial measures
      under regulations issued by the Securities and Exchange Commission. We
      believe that presentation of yield excluding charter revenue is useful to
      investors because charter flights are not included in RPMs or ASMs.
      Furthermore, in preparing operating plans and forecasts, we rely on an
      analysis of yield exclusive of charter revenue. Our presentation of
      non-GAAP financial measures should not be viewed as a substitute for our
      financial or statistical results based on GAAP. The calculation of
      passenger revenue excluding charter revenue is as follows:
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                                      | Three
      Months Ended December 31, |         | Nine
      Months Ended December 31, |  
|----------------------------------------------------- | ------------------------------------- | ------- | ------------------------------------ | -
|                                                      | **2004**                              |         | **2003**                             |  
|                                                      |                                       |         |                                      |  
|Passenger
      revenues - mainline, as reported      | $                                     | 182,361 |                                      | $
|Less: charter revenue                                 |                                       | 2,006   |                                      |  
|                                                      |                                       |         |                                      |  
|Passenger
      revenues - mainline excluding charter |                                       | 180,355 |                                      |  
|Add: Passenger revenues - regional partner            |                                       | 21,582  |                                      |  
|                                                      |                                       |         |                                      |  
|Passenger
      revenues, system combined             | $                                     | 201,937 |                                      | $
|                                                      |                                       |         |                                      |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Total
      yield per RPM is determined by dividing total revenues by revenue
      passenger miles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(12) | Yield
      per ASM is determined by dividing passenger revenues (excluding charter
      revenue) by available seat miles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(13) | Total
      yield per ASM is determined by dividing total revenues by available seat
      miles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(14) | This may
      be deemed a non-GAAP financial measure under regulations issued by the
      Securities and Exchange Commission. We believe the presentation of
      financial information excluding fuel expense is useful to investors
      because we believe that fuel expense tends to fluctuate more than other
      operating expenses, it facilitates comparison of results of operations
      between current and past periods and enables investors to better forecast
      future trends in our operations. Furthermore, in preparing operating plans
      and forecasts, we rely, in part, on trends in our historical results of
      operations excluding fuel expense. However, our presentation of non-GAAP
      financial measures should not be viewed as a substitute for our financial
      results determined in accordance with GAAP.
|(15) | Mainline
      average fare excludes revenue included in passenger revenue for charter
      and non-revenue passengers, administrative fees, and revenue recognized
      for unused tickets that are greater than one year from issuance date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|- 15
      -
|------------



|The following table provides
      our operating revenues and expenses for our mainline operations expressed
      as cents per total mainline ASMs and as a percentage of total mainline
      operating revenues, as rounded, for the three and nine months ended
      December 31, 2004 and 2003. Regional partner revenues, expenses and ASMs
      were excluded from this table to provide comparable amounts to the prior
      period presented.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                 | Three Months Ended December 31, |  |            | Nine Months Ended December 31, |  |            
|-------------------------------- | ------------------------------- |  | ---------- | ------------------------------ |  | -----------
|                                 |                                 |  |            |                                |  |            
|                                 | 2004                            |  |            | 2003                           |  |            
|                                 |                                 |  |            |                                |  |            
|                                 | PertotalASM                     |  | %ofRevenue |                                |  | PertotalASM
|                                
|                                
|                                 |                                 |  |            |                                |  |            
|Revenues:                        |                                 |  |            |                                |  |            
|Passenger - mainline             | 8.04                            |  | 97.7       | %                              |  | 8.77       
|Cargo                            | 0.05                            |  | 0.6        | %                              |  | 0.11       
|Other                            | 0.14                            |  | 1.7        | %                              |  | 0.13       
|                                 |                                 |  |            |                                |  |            
|Total
      revenues             | 8.23                            |  | 100.0      | %                              |  | 9.01       
|                                 |                                 |  |            |                                |  |            
|                                 |                                 |  |            |                                |  |            
|Operating
      expenses:        |                                 |  |            |                                |  |            
|Flight operations                | 1.44                            |  | 17.5       | %                              |  | 1.44       
|Aircraft fuel expense            | 2.37                            |  | 28.8       | %                              |  | 1.51       
|Aircraft lease expense           | 1.00                            |  | 12.2       | %                              |  | 0.95       
|Aircraft and traffic servicing   | 1.42                            |  | 17.3       | %                              |  | 1.63       
|Maintenance                      | 0.86                            |  | 10.4       | %                              |  | 0.95       
|Promotion and sales              | 0.83                            |  | 10.0       | %                              |  | 0.96       
|General and administrative       | 0.56                            |  | 6.9        | %                              |  | 0.53       
|Aircraft lease and facility exit |                                 |  |            |                                |  |            
|costs                            |                                |  |           |                                |  |           
|Losses on sales of assets, net   |                                |  |           |                                |  |           
|Impairment and other related     |                                 |  |            |                                |  |            
|charges                          | 0.03                            |  | 0.4        | %                              |  |           
|Depreciation and amortization    | 0.29                            |  | 3.5        | %                              |  | 0.35       
|                                 |                                 |  |            |                                |  |            
|Total
      operating expenses   | 8.80                            |  | 107.0      | %                              |  | 8.32       
|                                 |                                 |  |            |                                |  |            

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Three Months ended December 31, 2004 and
      2003
      General
      We had a net loss of
      $11,058,000 or 31¢ per diluted share for the three months ended December
      31, 2004 as compared to net income of $5,456,000, or 14¢ per diluted share
      for the three months ended December 31, 2003. Included in our net loss for
      the three months ended December 31, 2004 were the following special items
      on a pre-tax basis: a write down of $658,000 of the carrying value of
      Boeing rotable spare parts and an unrealized loss on fuel hedges of
      $3,202,000. These items, net of income taxes, increased our net loss by 7¢
      per diluted share. Included in our net income for the three months ended
      December 31, 2003 on a pre-tax and profit sharing basis was a special item
      for the write-off of deferred loan costs of $1,073,000 associated with the
      prepayment of the remaining principal of the government guaranteed loan.
      This item, net of income taxes and profit sharing, reduced net income by
      2¢ per diluted share.
      Our mainline passenger yield
      per RPM was 11.10¢ and 12.01¢ for the three months ended December 31, 2004
      and 2003, respectively, or a decrease of 7.6%. Our mainline average fare
      was $102.92 for the three months ended December 31, 2004 as compared to
      $103.85 for the three months ended December 31, 2003, a decrease of .9%.
      Our mainline length of haul was 989 and 912 miles for the three months
      ended December 31, 2004 and 2003, respectively, or an increase of 8.4%.
      Our mainline passenger revenue per available seat mile (RASM) for the
      three months ended December 31, 2004 and 2003 was 7.95¢ and 8.71¢,
      respectively, a decrease of 8.7%. We believe that our average fare during
      the quarter ended December 31, 2004 was negatively impacted as a result of
      aggressive pricing actions by our competitors in all of the markets we
      serve and is systemic across the entire industry.

|- 16
      -
|------------



|Our mainline CASM for the
      three months ended December 31, 2004 and 2003 was 8.80¢ and 8.32¢, an
      increase of .48¢ or 5.8%. Mainline CASM excluding fuel for the three
      months ended December 31, 2004 and 2003 was 6.43¢and 6.81¢, a decrease of
      .38¢, or 5.6%. Included in mainline CASM excluding fuel for the three
      months ended December 31, 2004 and 2003 were special items totaling .03¢
      and less than .01¢, respectively. Mainline CASM excluding fuel and special
      items for the three months ended December 31, 2004 and 2003 was 6.40¢ and
      6.81¢, a decrease of .41¢, or 6.0%. Our mainline CASM excluding fuel and
      special items decreased during the three months ended December 31, 2004 as
      a result of a decrease in traffic and servicing costs of .21¢, a decrease
      in the maintenance cost per ASM of .09¢ as a result of the reduction in
      our Boeing fleet that were replaced with new Airbus A319 and A318
      aircraft, and a decrease in promotion and sales expenses of .13¢, offset
      by an increase of .03¢ in general and administrative expenses.
      Included in general and administrative expenses for the three months ended
      December 31, 2004 were transition costs associated with our new passenger
      solution to power our reservations and check-in capabilities of .05¢ per
      mainline ASM. Mainline CASM excluding fuel and special items also
      decreased as a result of an increase in our daily block hour utilization
      and economies of scale associated with lower increases in indirect costs
      as compared to the 24.9% increase in mainline ASMs over the prior
      comparable. Included in mainline CASM for the three months ended December
      31, 2003 was .02¢ per ASM for profit sharing bonuses. As a result of our
      net loss for the three months ended December 31, 2004, we did not accrue
      for bonuses.
      An airlines mainline
      break-even load factor is the passenger load factor that will result in
      operating revenues being equal to operating expenses, assuming constant
      revenue per passenger mile and expenses. For the three months ended
      December 31, 2004, our mainline break-even load factor adjusted for
      special items was 76.0% compared to our achieved mainline passenger load
      factor of 71.7%. Our mainline break-even load factor adjusted for special
      items for the three months ended December 31, 2003, was 68.0% compared to
      our achieved mainline passenger load factor of 72.5%. Our mainline
      break-even load factor increased from the prior comparable period
      primarily as a result of the increase in fuel costs.
      During the three months ended
      December 31, 2004, our mainline average daily block hour utilization
      increased to 10.7 from 10.3, an increase of 3.9%, for the three months
      ended December 31, 2003. The calculation of our block hour utilization
      includes all aircraft that are on our operating certificate, which
      includes scheduled aircraft, as well as aircraft out of service for
      maintenance and operational spare aircraft, and excludes aircraft removed
      permanently from revenue service or new aircraft not yet placed in revenue
      service. It also excludes Frontier JetExpress aircraft operated by
      Horizon. During the three months ended December 31, 2004, we reduced our
      average daily block hour utilization to 10.7 from 11.7 from the three
      months ended June 30, 2004. We have reduced our utilization as a result of
      accelerating the retirement of our Boeing aircraft to April 2005 and our
      response to excess industry capacity in several of our connecting markets.
      Small fluctuations in our RASM
      or CASM can significantly affect operating results because we, like other
      airlines, have high fixed costs in relation to revenues. Airline
      operations are highly sensitive to various factors, including the actions
      of competing airlines and general economic factors, which can adversely
      affect our liquidity, cash flows and results of operations.
      Revenues
      Our revenues are highly
      sensitive to changes in fare levels. Competitive fare pricing policies
      have a significant impact on our revenues. Because of the elasticity of
      passenger demand, we believe that increases in fares may at certain levels
      result in a decrease in passenger demand in many markets. We cannot
      predict future fare levels, which depend to a substantial degree on
      actions of competitors and the economy. When sale prices or other price
      changes are initiated by competitors in our markets, we believe that we
      must, in most cases, match those competitive fares in order to maintain
      our market share. Passenger revenues are seasonal depending on the
      markets locations.
      Mainline Passenger
      Revenues. Mainline passenger revenue totaled $182,361,000 for the
      three months ended December 31, 2004 compared to $159,175,000 for the
      three months ended December 31, 2003, an increase of 14.6%. Mainline
      passenger revenue includes revenues for reduced rate standby passengers,
      administrative fees, revenue recognized for tickets that are not used
      within one year from their issue dates, and revenue recognized from our
      co-branded credit card arrangement. We carried 1,644,000 mainline revenue
      passengers during the three months ended December 31, 2004 compared to
      1,444,000 in the three months ended December 31, 2003, an increase of
      13.9%. We had an average of 46.4 mainline aircraft in service during the
      three months ended December 31, 2004 compared to an average of 38.2
      mainline aircraft during the three months ended December 31, 2003, an
      increase of 21.5%. Mainline ASMs increased to 2,267,686,000 for the three
      months ended December 31, 2004 from 1,815,751,000 for the three
      months ended December 31, 2003, an increase of 24.9%. Our mainline average
      fare was $102.92 for the three months ended December 31, 2004 as compared
      to $103.85 for the three months ended December 31, 2003, a decrease of
      .9%. Our mainline length of haul was 989 and 912 miles for the three
      months ended December 31, 2004 and 2003, respectively, or an increase of
      8.4%, causing some downward pressure on our yield.
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|Passenger Revenues 
      Regional Partner. Regional partner revenues, consisting of revenues
      from Frontier JetExpress operated by Horizon, totaled $21,582,000 for the
      three months ended December 31, 2004 and none for the three months ended
      December 31, 2003. The incremental revenue from passengers connecting
      to/from regional flights to mainline flights is included in our mainline
      passenger revenue. For the three months ended December 31, 2003, revenues
      of $7,513,000 from regional jet operations were netted against related
      expenses and included in Other revenues. See footnote (2) in Selected
      Financial Data, which explains the different accounting methods for our
      Frontier JetExpress operations with Horizon and Mesa.
      Cargo Revenues.
        Cargo revenues totaled $1,189,000 and $2,036,000 for the three
      months ended December 31, 2004 and 2003, representing .6% and 1.3% of
      total mainline revenues, respectively, or a decrease of 41.6%. During the
      three months ended June 30, 2004, we determined that carrying mail for the
      United States Postal Service was not profitable and we terminated our
      contract effective July 1, 2004. This adjunct to the passenger business is
      highly competitive and depends heavily on aircraft scheduling, alternate
      competitive means of same day delivery service and schedule reliability.
      Other Revenues. Other revenues, comprised principally of interline handling
      fees, liquor sales, LiveTV sales and excess baggage fees, totaled
      $3,106,000 and $2,350,000, representing 1.7% and 1.4% of total mainline
      revenues for the three months ended December 31, 2004 and 2003,
      respectively, an increase of 32.2%. Other revenues increased over the
      prior comparable period as a result of increased revenues from in-flight
      services associated with the increase in passengers and coupled with an
      increase in the fees for these services. Other revenues during the three
      months ended December 31, 2003 included the net revenue from our regional
      jet operations totaling $364,000. Revenues and expenses associated with
      our JetExpress operations are now reported separately and are not included
      in Other revenues. This decrease in other revenues was offset by
      increases in other passenger related revenues of LiveTV sales, liquor and
      excess baggage fees.
      Operating Expenses
      Mainline operating expenses
      include those related to flight operations, aircraft and traffic
      servicing, maintenance, promotion and sales, general and administrative
      and depreciation and amortization. Total mainline operating expenses for
      the three months ended December 31, 2004 and 2003 were $199,509,000 and
      $151,021,000 and represented 107.0% and 92.3% of total mainline revenues,
      respectively, an increase of 32.1%. Operating expenses increased as a
      percentage of revenue during the three months ended December 31, 2004
      largely a result of a 59.2% increase in our aircraft fuel cost per gallon
      for the three months ended December 31, 2004 as compared to the three
      months ended December 31, 2003.
      Salaries, Wages and
      Benefits.  We record salaries, wages and benefits within the
      specific expense category identified in our statement of operations for
      which they are relevant. Salaries, wages and benefits totaled $52,013,000
      and $41,168,000, an increase of 26.3%, and were 27.9% and 25.2% of total
      mainline revenues for the three months ended December 31, 2004 and 2003,
      respectively. Salaries, wages and benefits increased over the prior
      comparable periods largely as a result of overall wage increases and an
      increase in the number of employees to support our continued ASM growth as
      well as the ASM growth that we expect for the remainder of fiscal year
      2005. Our mainline ASMs increased 24.9% for the three months ended
      December 31, 2004 as compared to the three months ended December 31, 2003.
      Our employees increased from approximately 3,800 in December 2003 to
      approximately 4,500 in December 2004, or 18.4%. We pay pilot and flight
      attendant salaries for training, consisting of approximately six weeks for
      each prior to scheduled increases in service, which can cause the
      compensation expense during such periods to appear high in relationship to
      the average number of aircraft in service. We do not anticipate hiring any
      more pilots for the next nine months.
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|Flight Operations.
        Flight operations expenses of $32,545,000 and $26,097,000 were
      17.5% and 16.0% of total mainline revenues for the three months ended
      December 31, 2004 and 2003, respectively, an increase of 24.7%. Flight
      operations expenses include all expenses related directly to the operation
      of the aircraft excluding depreciation of owned aircraft and lease
      expenses and including insurance expenses, pilot and flight attendant
      compensation, in-flight catering, crew overnight expenses, flight dispatch
      and flight operations administrative expenses.
      Aircraft insurance expenses
      totaled $2,398,000 (1.3% of total mainline revenues) for the three months
      ended December 31, 2004. Aircraft insurance expenses for the three months
      ended December 31, 2003 were $2,429,000 (1.5% of total mainline revenues).
      Aircraft insurance expenses were .15¢ and .18¢ per mainline RPM for the
      three months ended December 31, 2004 and 2003, respectively. Aircraft
      insurance decreased per mainline RPM as a result of a 25% decrease in our
      basic hull and liability insurance rates effective June 7, 2004. The FAA
      currently provides war risk coverage at a less expensive rate as compared
      to the coverage that was previously provided by commercial underwriters.
      The current FAA war risk policy is in effect until August 31, 2005. We do
      not know whether the government will extend the coverage beyond August
      2005, and if it does, how long the extension will last. We expect that if
      the government stops providing excess war risk coverage to the airline
      industry, the premiums charged by aviation insurers for this coverage will
      be substantially higher than the premiums currently charged by the
      government or the coverage will not be available from reputable
      underwriters.
      Pilot and flight attendant
      salaries before payroll taxes and benefits totaled $18,599,000 and
      $13,596,000 or 10.2% and 8.5% of mainline passenger revenue for the three
      months ended December 31, 2004 and 2003, an increase of 36.8%. Pilot and
      flight attendant compensation for the three months ended December 31, 2004
      also increased as a result of a 21.5% increase in the average number of
      mainline aircraft in service, an increase of 26.0% in mainline block
      hours, a general wage increase in flight attendant and pilot salaries and
      additional crew required to replace those who were attending training on
      the Airbus equipment. We pay pilot and flight attendant salaries for
      training, consisting of approximately six weeks for each, prior to
      scheduled increases in service, which can cause the compensation expense
      during such periods to appear high in relationship to the average number
      of aircraft in service.
      Aircraft Fuel Expenses.Aircraft fuel expenses include both the direct cost of fuel, including
      taxes, as well as the cost of delivering fuel into the aircraft. Aircraft
      fuel expenses of $53,807,000 for 32,725,000 gallons used and $27,487,000
      for 26,790,000 gallons used resulted in an average fuel expense of $1.64
      and $1.03 per gallon for the three months ended December 31, 2004 and
      2003, respectively. Aircraft fuel expenses represented 28.8% and 16.8% of
      total mainline revenues for the three months ended December 31, 2004 and
      2003, respectively. The average fuel cost per gallon increased 59.2% over
      the prior comparable period. Fuel prices are subject to change weekly, as
      we purchase a very small portion in advance for inventory. The results of
      operations for the three months ended December 31, 2004 include an
      unrealized derivative loss of $3,202,000 and a realized gain of
      approximately $1,948,000 in cash payments received from a counter-party
      recorded as a net increase in fuel expense. The results of operations for
      the three months ended December 31, 2003 include an unrealized derivative
      gain of $64,000 and a realized gain of approximately $488,000 in cash
      payments received from a counter-party recorded as a net increase in fuel
      expense. Fuel consumption for the three months ended December 31, 2004 and
      2003 averaged 716 and 738 gallons per mainline block hour, respectively,
      or a decrease of 3.0%. Fuel consumption per mainline block hour decreased
      because of the more fuel-efficient Airbus aircraft added to our fleet
      coupled with the reduction in our Boeing fleet, which has higher fuel burn
      rates.
      Aircraft Lease Expense.Aircraft lease expenses totaled $22,780,000 (12.2% of total mainline
      revenues) and $17,247,000 (10.5% of total mainline revenues) for the three
      months ended December 31, 2004 and 2003, respectively, an increase of
      32.1%. The average number of leased aircraft increased to 32.4 from 25.4,
      an increase of 27.6%. Aircraft lease expense increased as a result of more
      aircraft leased and a higher percentage of leased aircraft compared to
      owned aircraft during the three months ended December 31, 2004 compared to
      the aircraft leased during the three months ended December 31,
      2003.
      Aircraft and Traffic
      Servicing.  Aircraft and traffic servicing expenses were
      $32,288,000 and $29,626,000 (an increase of 9.0%) for the three months
      ended December 31, 2004 and 2003, respectively, and represented 17.3% and
      18.1% of total mainline revenues. Aircraft and traffic servicing expenses
      include all expenses incurred at airports including landing fees,
      facilities rental, station labor, ground handling expenses, and
      interrupted trip expenses associated with delayed or cancelled flights.
      Aircraft and traffic servicing expenses will increase with the addition of
      new cities to our route system. As of December 31, 2004, we served 40
      cities with mainline only service compared to 38 cities as of December 31,
      2003, or an increase of 5.3%. During the three months ended December 31,
      2004, our mainline departures increased to 18,136 from 15,726, an increase
      of 15.3%. Aircraft and traffic servicing expenses decreased $104 per
      mainline departure from $1,884 per mainline departure to $1,780 per
      mainline departure for the three months ended December 31, 2004 a decrease
      of 5.5%. Aircraft and traffic servicing expenses decreased per mainline
      departure principally as a result of better on-time performance and less
      expenses paid for delayed or misconnected flights. During the three months
      ended December 31, 2004 we no longer carried U.S. mail and our ground
      handling expenses decreased accordingly.
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|Maintenance.
        Maintenance expenses of $19,426,000 and $17,323,000 were 10.4%
      and 10.6% of total mainline revenues for the three months ended December
      31, 2004 and 2003, respectively, an increase of 12.1%. These include all
      labor, parts and supplies expenses related to the maintenance of the
      aircraft. Maintenance is charged to maintenance expense as incurred.
      Maintenance cost per block hour was $425 and $477 for the three months
      ended December 31, 2004 and 2003, respectively, a decrease of 10.9%.
      Maintenance cost per mainline block hour decreased as a result of a
      decrease in our Boeing fleet coupled with the additional new Airbus
      aircraft that are less costly to maintain than our older Boeing aircraft.
      Our mainline average age of aircraft was 2.8 years as of December 31, 2004
      as compared to 4.2 years as of December 31, 2003. The owned Airbus fleet
      comprising about 34.0% of our total Airbus fleet is new and we are
      experiencing lower maintenance costs as compared to the older aircraft
      that are in our fleet. Maintenance reserves are required to be paid on a
      monthly basis to lessors of our leased Boeing and Airbus fleet and are
      expensed monthly as incurred. As the Airbus aircraft age, they will
      require more maintenance and maintenance expenses per block hour will
      increase.
      Promotion and Sales.Promotion and sales expenses totaled $18,738,000 and $17,324,000 for
      the three months ended December 31, 2004 and 2003, and were 10.0% and
      10.6% of total mainline respectively, an increase of 8.2%. These expenses
      include advertising expenses, telecommunications expenses, wages and
      benefits for reservation agents and related supervision as well as
      marketing management and sales personnel, credit card fees, travel agency
      commissions and computer reservations costs. During the three months ended
      December 31, 2004, promotion and sales expenses per mainline passenger
      decreased to $11.40 from $12.00 for the three months ended December 31,
      2003, a decrease of 5.0%.
      General and
      Administrative.  General and administrative expenses for the
      three months ended December 31, 2004 and 2003 totaled $12,828,000 and
      $9,561,000 (an increase of 34.2%) and were 6.9% and 5.8% of total mainline
      revenues, respectively. General and administrative expenses include the
      wages and benefits for several of our executive officers and various other
      administrative personnel including legal, accounting, information
      technology, aircraft procurement, corporate communications, training and
      human resources and other expenses associated with these departments.
      Employee health benefits, accrued vacation and bonus expenses, general
      insurance expenses including workers compensation, and write-offs
      associated with credit card and check fraud are also included in general
      and administrative expenses. Our employees increased from approximately
      3,800 in December 2003 to approximately 4,500 in December 2004, an
      increase of 18.4%. Accordingly, we experienced increases in our human
      resources, training, information technology, health insurance benefit
      expenses, and workers compensation insurance. During the three months
      ended December 31, 2003, we accrued $819,000 for employee performance
      bonuses, or .5% of total mainline revenue. Bonuses are based on
      profitability. As a result of our pre-tax loss for the three months ended
      December 31, 2004, we did not accrue bonuses.
      Regional Partner
      Expense.  Regional partner expense for the three months ended
      December 31, 2004 totaled $24,012,000 and was 111.3% of total regional
      partner revenues. Regional partner expenses include all direct costs
      associated with Frontier JetExpress operated by Horizon. Horizon began
      service January 1, 2004 and replaced the JetExpress service formerly
      provided by Mesa. During the three months ended December 31, 2003,
      $7,149,000 in Mesa expenses were netted against related revenues and
      included in Other revenues. See footnote (2) in Selected Financial
      Data, which explains the different accounting methods for our Frontier
      JetExpress operations for Horizon and Mesa.
      Impairment and other
      related charges.During the three months ended December 31, 2004, we
      recorded an additional impairment and other related charges totaling
      $658,000 on the carrying value of our Boeing 737 rotable parts as a result
      of further market declines and actual sales history. The cost of WTI crude
      oil increased from $36.92 per barrel at June 30, 2004 to $43.69 per barrel
      at December 31, 2004. As of January 28, 2005 the cost of WTI crude oil was
      $47.18 per barrel. As a result of the desire to minimize the maintenance
      overhaul costs on Boeing aircraft and to eliminate the near term need for
      hiring additional pilots, we have accelerated the dates that we would
      cease using the Boeing aircraft from September 2005 to mid April 2005.
      During the period from August 2004 through December 2004, we began selling
      our Boeing spare parts. Our analysis of these sales compared to
      the impaired value of these parts as of December 31, 2004 indicated that
      we were selling these rotable parts at approximately 90% of the carrying
      value. As a result we recorded an additional impairment totaling
      $658,000.
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|Depreciation and
      Amortization.  Depreciation and amortization expenses of
      $6,559,000 and $6,295,000 were approximately 3.5% and 3.9% of total
      mainline revenues for the three months ended December 31, 2004 and 2003,
      respectively, an increase of 4.2%. These expenses include depreciation of
      aircraft and aircraft components, office equipment, ground station
      equipment, and other fixed assets. Depreciation expense increased over the
      prior year largely as a result of an increase in the average number of
      Airbus A319 and A318 aircraft owned from 12.8 during the three months
      ended December 31, 2003 to 14.0 during the three months ended December 31,
      2004, an increase of 9.4%.
      Nonoperating Income
      (Expense).Net nonoperating expense totaled $1,993,000 for the three
      months ended December 31, 2004 compared to net nonoperating expense of
      $3,769,000 for the three months ended December 31, 2003. Interest income
      increased to $1,050,000 from $590,000 during the three months ended
      December 31, 2004 from the prior comparable period as a result of an
      increase in average invested cash coupled with an increase in interest
      rates.
      Interest expense
      increased to $3,384,000 for the three months ended December 31, 2004 from
      $3,196,000 for the three months ended December 31, 2003. The increase in
      interest expense is associated with an increase in purchased aircraft from
      12.8 to 14.0 as a result of interest expense associated with the financing
      of an additional aircraft purchased since December 31, 2003 coupled with
      an increase in interest rates.
      Nine
      Months ended December 31, 2004 and 2003
      General
      We had a net loss of
      $19,714,000 or 55¢ per diluted share for the nine months ended December
      31, 2004 as compared to net income of $18,387,000 or 53¢ per diluted share
      for the nine months ended December 31, 2003. Included in our net loss for
      the nine months ended December 31, 2004 were the following special items
      before the effect of income taxes: a net loss of $485,000 on the sale
      of two Airbus A319 aircraft in sale-leaseback transactions and other sales
      of assets, a write down of $5,260,000 of the carrying value of Boeing
      spare parts, and an unrealized gain on fuel hedges of $432,000. These
      items, net of income taxes, increased our net loss by 10¢ per diluted
      share. Included in our net income for the nine months ended December 31,
      2003 were the following special items on a pre-tax and profit sharing
      basis: $15,024,000 of compensation received under the Appropriations Act;
      an unrealized derivative gain of $539,000 offset by the write-off of
      deferred loan costs of $9,816,000 associated with the prepayment of all of
      the government guaranteed loan; a charge for Boeing aircraft and facility
      lease exit costs of $5,372,000; and a loss of $1,937,000 on the sale of
      one Airbus aircraft in a sale-leaseback transaction and from the sale of a
      spare engine and other spare parts. These items, net of income taxes and
      profit sharing, reduced net income by 3¢ per diluted share.
      Our mainline passenger yield
      per RPM was 10.87¢ and 12.12¢ for the nine months ended December 31, 2004
      and 2003, respectively, or a decrease of 10.3%. Our mainline average fare
      was $101.14 for the nine months ended December 31, 2004 as compared to
      $103.94 for the nine months ended December 31, 2003, a decrease of 2.7%.
      Our length of haul was 990 and 911 miles for the nine months ended
      December 31, 2004 and 2003, respectively, or an increase of 8.7%. Our
      mainline passenger revenue per available seat mile (RASM) for the nine
      months ended December 31, 2004 and 2003 was 7.81¢ and 8.75¢, respectively,
      a decrease of 10.7%.
      Our mainline CASM for the nine
      months ended December 31, 2004 and 2003 was 8.30¢ and 8.39¢ a decrease of
      .09¢, or 1.1%. Mainline CASM excluding fuel for the nine months ended
      December 31, 2004 and 2003 was 6.28¢ and 6.93¢, a decrease of .65¢, or
      9.4%. Included in mainline CASM excluding fuel for the nine months ended
      December 31, 2004 and 2003 were special items totaling .08¢ and .13¢,
      respectively. Mainline CASM excluding fuel and special items for the nine
      months ended December 31, 2004 and 2003 was 6.20¢ and 6.80¢, a decrease of
      .60¢, or 8.8%. Our mainline CASM excluding fuel and special items
      decreased during the nine months ended December 31, 2004 as a result of a
      decrease in the mix of leased versus purchased aircraft. During the nine
      months ended December 31, 2003 leased aircraft represented 71.0% of our
      fleet and during the nine months ended December 31, 2004, leased aircraft
      represented 68.7% of our fleet, which generated a corresponding decrease
      of .08¢ in aircraft lease expense, a decrease in traffic and servicing
      costs of .14¢, a decrease in the maintenance cost per ASM of .16¢ as a
      result of the reduction in our Boeing fleet that were replaced with new
      Airbus A319 aircraft, and a decrease in promotion and sales expenses of
      .09¢. Included in mainline CASM for the three months ended December 31,
      2003 was .06¢ per ASM for profit sharing bonuses. Mainline CASM also
      decreased as a result of an increase in our daily block hour utilization
      and economies of scale associated with lower increases in indirect costs
      as compared to the 31.7% increase in mainline ASMs over the prior
      comparable period.
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|An airlines mainline
      break-even load factor is the passenger load factor that will result in
      operating revenues being equal to operating expenses, assuming constant
      revenue per passenger mile and expenses. For the nine months ended
      December 31, 2004, our mainline break-even load factor adjusted for
      special items was 74.4% compared to our achieved mainline passenger load
      factor of 71.8%. Our mainline break-even load factor adjusted for special
      items for the nine months ended December 31, 2003, was 67.1% compared to
      our achieved passenger load factor of 72.1%. Our mainline break-even load
      factor increased from the prior comparable period as a result of a
      decrease in our mainline RASM to 7.81¢ during the nine months ended
      December 31, 2004 from 8.75¢ during the nine months ended December 31,
      2003, partially offset by a decrease in our mainline CASM.
      During the nine months ended
      December 31, 2004, our mainline average daily block hour utilization
      increased to 11.2 from 10.2 for the nine months ended December 31, 2003,
      an increase of 9.8%.
      Revenues
      Mainline Passenger
      Revenues. Mainline passenger revenues totaled $539,971,000 for the
      nine months ended December 31, 2004 compared to $458,130,000 for the nine
      months ended December 31, 2003, an increase of 17.9%. We carried 4,978,000
      mainline revenue passengers during the nine months ended December 31, 2004
      compared to 4,127,000 during the nine months ended December 31, 2003, an
      increase of 20.6%. We had an average of 44.4 mainline aircraft in our
      fleet during the nine months ended December 31, 2004 compared to an
      average of 36.9 mainline aircraft during the nine months ended December
      31, 2003, an increase of 20.3%. Mainline ASMs increased to 6,862,911,000
      for the nine months ended December 31, 2004 from 5,212,198,000 for the
      nine months ended December 31, 2003, an increase of 31.7%. Mainline RPMs
      for the nine months ended December 31, 2004 were 4,928,415,000 compared to
      3,760,480,000 for the nine months ended December 31, 2003, an increase of
      31.1%. Our mainline RASM decreased from 8.75¢ to 7.81¢, a decrease of
      10.7%. Our mainline average fare was $101.14 for the nine months ended
      December 31, 2004 as compared to $103.94 for the nine months ended
      December 31, 2003, a decrease of 2.7%. Our mainline length of haul was 990
      and 911 miles for the nine months ended December 31, 2004 and 2003,
      respectively, or an increase of 8.7%, causing some downward pressure on
      our yield.
      Passenger Revenues 
      Regional Partner. Regional partner revenues, consisting of revenues
      from Frontier JetExpress operated by Horizon, totaled $62,618,000 for the
      nine months ended December 31, 2004, and none for the nine months ended
      December 31, 2004. For the nine months ended December 31, 2003, revenues
      of $25,155,000 from regional jet operations, were netted against related
      expenses and included in Other revenues. See footnote (2) in Selected
      Financial Data, which explains the different accounting methods for our
      Frontier JetExpress operations for Horizon and Mesa.
      Cargo Revenues.
        Cargo revenues totaled $3,862,000 and $6,094,000 for the nine
      months ended December 31, 2004 and 2003, respectively, representing .7%
      and 1.3% of total mainline revenues, a decrease of 36.6%. During the nine
      months ended December 31, 2004, we determined that carrying mail for the
      United States Postal Service was not profitable and we terminated our
      contract effective July 1, 2004.
      Other Revenues. Other revenues totaled $8,643,000 and $7,323,000, or 1.6% of
      total mainline revenues for each of the nine months ended December 31,
      2004 and 2003, respectively, an increase of 18.0%. During the nine months
      ended December 31, 2003, we netted our revenues from regional jet
      operations against related expenses resulting in net revenue of $1,970,000
      and included it in Other revenues. This decrease in other revenues was
      offset by increases in other passenger related revenues of LiveTV sales,
      liquor and excess baggage fees.
      Operating Expenses
      Total mainline operating
      expenses were $569,911,000 and $437,044,000 for the nine months ended
      December 31, 2004 and 2003 and represented 103.2% and 92.7% of total
      mainline revenues, respectively. Operating expenses increased as a
      percentage of revenue during the nine months ended December 31, 2004
      largely a result of a 40.4% increase in our aircraft fuel cost per gallon
      for the nine months ended December 31, 2004 as compared to the nine months
      ended December 31, 2003.
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|Salaries, Wages and
      Benefits.  Salaries, wages and benefits totaled $149,401,000 and
      $117,822,000 and were 27.0% and 25.0% of total mainline revenues for the
      nine months ended December 31, 2004 and 2003, respectively, an increase of
      26.8%. Salaries, wages and benefits increased over the prior comparable
      periods largely as a result of overall wage increases, and an increase in
      the number of employees to support our ASM growth of 31.7% during the nine
      months ended December 31, 2004.
      Flight
      Operations.   Flight operations expenses of $96,107,000 and
      $75,418,000 were 17.4% and 16.0% of total mainline revenues for the nine
      months ended December 31, 2004 and 2003, respectively, an increase of
      27.4%.
      Aircraft insurance expenses
      totaled $7,678,000 (1.4% of total mainline revenues) for the nine months
      ended December 31, 2004. Aircraft insurance expenses for the nine months
      ended December 31, 2003 were $7,433,000 (1.6% of total mainline revenues).
      Aircraft insurance expenses were .16¢ and .20¢ per mainline RPM for the
      nine months ended December 31, 2004 and 2003, respectively.
      Pilot and flight attendant
      salaries before payroll taxes and benefits totaled $52,770,000 and
      $38,760,000 or 9.8% and 8.5% of mainline passenger revenue for the nine
      months ended December 31, 2004 and 2003, an increase of 36.1%. Pilot and
      flight attendant compensation for the nine months ended December 31, 2004
      also increased as a result of a 20.3% increase in the average number of
      mainline aircraft in service, respectively, an increase of 32.4% in
      mainline block hours, respectively, a general wage increase in flight
      attendant and pilot salaries and additional crew required to replace those
      who were attending training on the Airbus equipment. We pay pilot and
      flight attendant salaries for training, consisting of approximately six
      weeks each, prior to scheduled increases in service, which can cause the
      compensation expense during such periods to appear high in relationship to
      the average number of aircraft in service.
      Aircraft Fuel
      Expenses. Aircraft fuel expenses of $138,525,000 for 99,483,000
      gallons used and $75,988,000 for 76,745,000 gallons used resulted in an
      average fuel cost of $1.39 and 99.0¢ per gallon, for the nine months ended
      December 31, 2004 and 2003, respectively. Aircraft fuel expenses
      represented 25.1% and 16.1% of total mainline revenues for the nine months
      ended December 31, 2004 and 2003, respectively. The results of operations
      for the nine months ended December 31, 2004 include an unrealized net
      derivative gain of $432,000 and a realized net gain of $2,490,000 in cash
      payments received from a counter-party recorded as a decrease in fuel
      expense. The results of operations for the nine months ended December 31,
      2003 include an unrealized derivative gain of $539,000 and a realized net
      gain of $515,000 in cash payments recorded as a decrease in fuel expense.
      Fuel consumption for the nine months ended December 31, 2004 and 2003
      averaged 727 and 743 gallons per mainline block hour, respectively, or a
      decrease of 2.2%. Fuel consumption per mainline block hour decreased as a
      result of the increase in Airbus aircraft coupled with the reduction in
      our Boeing fleet, which has higher fuel burn rates.
      Aircraft Lease
      Expense.Aircraft lease expenses totaled $63,978,000 (11.6% of
      total mainline revenues) and $52,359,000 (11.1% of total mainline
      revenues) for the nine months ended December 31, 2004 and 2003,
      respectively, an increase of 22.2%. The average number of leased aircraft
      increased 16.4% from 26.2 to 30.5 during the nine months ended December
      31, 2004.
      Aircraft and Traffic
      Servicing.  Aircraft and traffic servicing expenses were
      $95,209,000 and $79,701,000 (an increase of 19.5%) for the nine months
      ended December 31, 2004 and 2003, respectively, and represented 17.2% and
      16.9% of total mainline revenues. During the nine months ended December
      31, 2004, our mainline departures increased to 54,723 from 45,414 for the
      nine months ended December 31, 2003, or 20.5%. Aircraft and traffic
      servicing expenses were $1,740 per mainline departure for the nine months
      ended December 31, 2004 as compared to $1,755 per mainline departure for
      the nine months ended December 31, 2003, or a decrease of $15 per mainline
      departure.
      Maintenance.
        Maintenance expenses of $57,582,000 and $52,322,000 were 10.4%
      and 11.1% of total mainline revenues for the nine months ended December
      31, 2004 and 2003, respectively, an increase of 10.1%. Maintenance cost
      per mainline block hour for the nine months ended December 31, 2004 and
      2003 were $421 and $506, respectively, a decrease of 16.8%.
      Promotion and
      Sales.Promotion and sales expenses totaled $57,827,000 and
      $48,313,000 and were 10.5% and 10.3% of total mainline revenues for the
      nine months ended December 31, 2004 and 2003, respectively, an increase of
      19.7%. During the nine months ended December 31, 2004, promotion and sales
      expenses per mainline passenger decreased to $11.62 compared to $11.71 for
      the nine months ended December 31, 2003.
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|General and
      Administrative.  General and administrative expenses for the nine
      months ended December 31, 2004 and 2003 totaled $35,155,000 and
      $28,281,000 (an increase of 24.3%) and were 6.4% and 6.0% of total
      mainline revenues for the nine months ended December 31, 2004 and 2003,
      respectively. During the nine months ended December 31, 2003, we accrued
      for employee performance bonuses totaling $3,242,000, or .7% of total
      mainline revenue.
      Regional Partner
      Expense.   Regional partner expense for the nine months
      ended December 31, 2004 totaled $68,874,000 and was 110.0% of total
      regional partner revenue. Regional partner expenses include all direct
      costs associated with Frontier JetExpress operated by Horizon. Horizon
      began service January 1, 2004 and replaced the JetExpress service formerly
      provided by Mesa. During the nine months ended December 31, 2003,
      $23,185,000 in Mesa expenses were netted against related revenues and
      included in other revenues. See footnote (2) in Selected Financial Data,
      which explains the different accounting methods for our Frontier
      JetExpress operations for Horizon and Mesa.
      Aircraft Lease and
      Facility Exit Costs .During the nine months ended December 31,
      2003, we ceased using three of our Boeing 737-200 leased aircraft, two of
      which had lease terminations in October 2003 and one with a lease
      termination date in October 2005. In August 2003, we closed our
      maintenance facility in El Paso Texas, which had a lease termination date
      in August 2007. As a result of these transactions, we recorded a pre-tax
      charge of $5,372,000. This amount recognizes the remaining fair value of
      the lease payments and the unamortized leasehold improvements on the
      aircraft and facility.
      Losses on Sale of
      Assets, Net.   During the nine months ended December 31,
      2004 and 2003 we incurred losses on the sale of assets of $485,000 and
      $1,937,000, respectively. During the nine months ended December 31, 2004,
      we incurred a loss totaling $489,000 on the sale-leaseback of two Airbus
      A319 aircraft. Additionally, we began to sell our excess Boeing spare
      parts during the nine months ended December 31, 2004. During the nine
      months ended December 31, 2003, we incurred losses totaling $1,937,000 on
      the sale of assets. We incurred a loss of $1,238,000 on the sale-leaseback
      of an Airbus A319 aircraft and a loss of $483,000 on the sale of an
      aircraft engine.
      Impairment and other
      related charges. During the nine months ended December 31, 2004,
      we recorded additional impairments and other related charges totaling
      $5,260,000 on the carrying value of our Boeing 737 expendable inventory,
      rotable parts and a spare engine as a result of further market declines
      and the results of actual sales. Included in this amount are estimated
      selling costs that we expect to pay on the sale of our assets held for
      sale totaling $541,000. The cost of WTI crude oil increased from $36.92
      per barrel at June 30, 2004 to $43.69 per barrel at December 31, 2004. As
      of January 28, 2005 the cost of WTI crude oil was $47.18 per barrel. We
      believe the decline in resale values of parts for the less fuel efficient
      Boeing 737 aircraft was due in part to increasing fuel prices during the
      past three months.
      Depreciation and
      Amortization.   Depreciation and amortization expenses of
      $19,784,000 and $17,353,000 were approximately 3.6% and 3.7% of total
      mainline revenues for the periods ended the three months ended December
      31, 2004 and 2003, respectively, an increase of 14.0%.
      Nonoperating Income
      (Expense).Net nonoperating expense totaled $6,826,000 for the
      nine months ended December 31, 2004 compared to net nonoperating expense
      totaling $4,607,000 for the nine months ended December 31, 2003.
      Interest income increased to
      $2,406,000 from $1,528,000 during the nine months ended December 31, 2004
      from the prior period. Interest expense decreased to $9,405,000 for the
      nine months ended December 31, 2004 from $11,065,000 for the nine months
      ended December 31, 2003. Interest expense for the nine months ended
      December 31, 2003 included the interest expense associated with a
      $70,000,000 government guaranteed loan we obtained in February 2002 and
      subsequently repaid in December 2003.
      Offsetting these nonoperating
      expenses during the nine months ended December 31, 2003 was pre-tax
      compensation of $15,024,000 as a result of payments under the
      Appropriations Act for expenses and revenue foregone related to aviation
      security. We received a total of $15,573,000 in May 2003, of which we paid
      $549,000 to Mesa for the revenue passengers Mesa carried as Frontier
      JetExpress.
      Income Tax Expense. We recorded an income tax benefit of $10,802,000 during
      the nine months ended December 31, 2004 at a 35.5% rate, compared to
      income tax expense of $11,510,000 for the nine months ended December 31,
      2003, at a 38.5% rate. During the year ended March 31, 2004, our tax
      expense was at a federal rate of 35.0% plus the blended state rate of 2.6%
      (net of federal benefit) and was decreased by the tax effect of permanent
      differences of 1.8%. The benefit was offset by $38,000 in taxes expensed
      during the nine months ended December 31, 2004 for prior
      periods.
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|Liquidity and Capital Resources
      Our liquidity depends to a
      large extent on the number of passengers who fly with us, the fares we
      charge, our operating and capital expenditures, our financing activities,
      and the cost of fuel. We depend on lease or mortgage-style financing to
      acquire all of our aircraft, including 23 additional Airbus aircraft that
      as of January 28, 2005 are scheduled for delivery through March 2008.
      We had cash, cash equivalents
      and short-term investments of $148,989,000 and $190,609,000 at December
      31, 2004 and March 31, 2004, respectively. At December 31, 2004, total
      current assets were $239,441,000 as compared to $183,535,000 of total
      current liabilities, resulting in working capital of $55,906,000. At March
      31, 2004, total current assets were $269,733,000 as compared to
      $181,659,000 of total current liabilities, resulting in working capital of
      $88,074,000. The decrease in our working capital from March 31, 2004 is
      largely a result of capital expenditures and debt principal
      payments.
      Cash used in operating
      activities for the nine months ended December 31, 2004 was $17,217,000.
      This is attributable to our net loss adjusted for non-cash charges and
      credits and changes in working capital accounts. Our restricted
      investments increased largely as a result of increased collateral
      requirements for our bankcard processor associated with the increase in
      our air traffic liability and an increase in collateral for our workers
      compensation insurance. Prepaid expenses increased principally as a result
      of an increase in fuel deposits due to the increase in the price of fuel
      and an increase in fuel consumption associated with the increase in block
      hours flown. Inventories increased as a result of an increase in the value
      of our fuel inventory and for the increase in the number of aircraft in
      our fleet. Our air traffic liability increased as a result of the growth
      of our business associated with the increase in the number of aircraft in
      our fleet and the associated increase in the number of passengers we
      carried. Our accrued expenses increased as a result of increases in
      employee benefits associated with the increase in the number of employees,
      increases in health care expenses, and increases in passenger related
      taxes associated with our increase in revenue and passengers carried. Cash
      provided by operating activities for the nine months ended December 31,
      2003 was $107,455,000. This is attributable to our net income adjusted for
      reconciling items to net cash and cash equivalents. Our air traffic
      liability increased as a result in the growth of our business associated
      with the increase in the number of aircraft in our fleet coupled with the
      increase in the number of passengers we carried in excess of our increased
      capacity. Our accrued liabilities increased as a result of increases in
      employee benefits associated with the increase in the number of employees
      and increases in health care expenses, the bonus accrual for our employees
      as a result of our profitability and increases in passenger related taxes
      associated with our increase in revenue and passengers carried. During the
      nine months ended December 31, 2003 we received an income tax refund from
      the Internal Revenue Service totaling $26,574,000.
      Cash used in investing
      activities for the nine months ended December 31, 2004 was $29,531,000.
      Net aircraft lease and purchase deposits decreased by $8,483,000 during
      the period. Capital expenditures were $121,202,000 for the nine months
      ended December 31, 2004 and included the purchase of one Airbus A318
      aircraft, two Airbus A319 aircraft and one spare engine that were
      delivered to us and that we sold in sale-leaseback transactions.
      Additionally, capital expenditures included the purchase of LiveTV
      equipment, rotable aircraft components, aircraft improvements and ground
      equipment. We applied pre-delivery payments totaling $6,412,000 for the
      purchase of an Airbus A318 aircraft to the purchase of that aircraft, and
      the pre-delivery deposits totaling $14,716,000 for the two Airbus A319
      aircraft were returned to us upon sale of the aircraft. We received
      $71,722,000 from the sale of the two new A319 aircraft that we sold in
      sale-leaseback transactions, two spare engines that we sold in
      sale-leaseback transactions, one spare engine for our Boeing fleet and
      other Boeing spare parts. Cash used in investing activities for the nine
      months ended December 31, 2003 was $125,615,000. Net aircraft lease and
      purchase deposits decreased by $799,000 during this period. We used
      $160,985,000 for the purchase of four additional Airbus aircraft, aircraft
      leasehold improvements, ground equipment to support increased below-wing
      operations, and computer equipment, including scanning equipment for our
      new mail transportation requirements. During the nine months ended
      December 31, 2003, we took delivery of four purchased Airbus A318 aircraft
      and applied their respective pre-delivery payments to the purchase of
      those aircraft. Additionally, we completed a sale-leaseback transaction on
      one of our purchased aircraft that was delivered to us in September 2003,
      generating cash proceeds of approximately $4,374,000 from the sale and the
      return of the pre-delivery payments relating to the purchase commitment.
      We agreed to lease the aircraft over a 12 year term.
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|Cash provided by financing
      activities for the nine months ended December 31, 2004 was $7,129,000.
      During the nine months ended December 31, 2004, we borrowed $22,000,000
      for the purchase of one Airbus A318 aircraft and paid $14,253,000 of debt
      principal payments on our 14 owned aircraft. Cash provided by financing
      activities for the nine months ended December 31, 2003 was $99,603,000.
      During the nine months ended December 31, 2003, we completed a public
      offering of 5,050,000 shares of our common stock. We received $81,077,000,
      net of offering expenses, from the sale of these shares. In July 2003, we
      received an income tax refund from the Internal Revenue Service totaling
      $26,574,000 and prepaid $10,000,000 on our government guaranteed loan upon
      receipt of this refund. In September 2003, we used $48,418,000 of the
      proceeds from the stock offering to prepay a portion of the government
      guaranteed loan. Both prepayments were required by the loan agreement. In
      December 2003, we repaid the remaining loan balance due of $11,582,000.
      During the nine months ended December 31, 2003, we borrowed $98,500,000 to
      finance the purchase of Airbus aircraft, of which $9,675,000 was paid as
      principal payments during the respective periods. During the nine months
      ended December 31, 2004 and 2003, we received $349,000 and $940,000 from
      the exercise of common stock options, respectively.
      Expansion plans at DIA, our
      primary hub for operations, have been placed on hold. In the interim, we
      have gained temporary rights to two gates, and permanent rights to one
      gate, previously used by United on the east end of Concourse A. We are
      currently obligated to return the two temporary gates to United in October
      2005. DIA has also completed construction of two temporary gates on the
      west end of Concourse A. We are currently using all five of these
      temporary gates. Our future growth may require us to work with DIA and the
      City and County of Denver to develop access to additional gates and other
      airport facilities. Should the construction of additional facilities be
      required to meet our growth needs, it is likely we would be obligated to
      lease the additional facilities, thereby increasing our overall rates and
      charges paid to the airport. Because our overall rates and charges will be
      based on the final project costs as well as the number of passengers and
      gross weight landed at the airport, it is impossible at this time to
      determine the amount of future rates and charges at DIA will be.
      As part of the lease
      restructure between the City and County of Denver and United, we believe
      that United has been provided certain concessions and reductions in the
      rents, rates and charges arising from their lease of facilities at DIA.
      The City and County of Denver has indicated that it will seek to prevent
      the reduced rates and charges being paid by United from increasing the
      rates and charges being paid by other airlines. However, the City and
      County of Denver has also made it clear that in certain circumstances it
      will have no choice but to increase rates and charges being paid by other
      airlines in order to comply with their own cash flow, reserve account and
      bond financing requirements. It is also possible that the structure of
      Uniteds lease at DIA may be the subject of further modifications in the
      course of Uniteds bankruptcy process. Because we are the second largest
      airline operating out of DIA, we may incur a larger impact of any increase
      in rates and charges imposed by DIA as the result of the existing or
      future relief granted to United at DIA. At this time, we cannot quantify
      what the increase in our rates and charges would be, if any, due to the
      concessions being provided to United.
      In April 2004, we entered into
      a services agreement with Sabre, Inc. for its SabreSonic
      passenger solution to power our reservations and check-in capabilities
      along with a broad scope of technology for streamlining our operations and
      improving revenues. This solution replaces Electronic Data Systems
      Shares, a system we have used since our inception in 1994. With
      SabreSonic, we will have access to real-time passenger data
      including the customers history with Frontier and any EarlyReturns
      frequent flyer activity, current travel plans and any changes made to an
      existing reservation. The data can be accessed by our customer service
      agents via an open-source, Windows-based interface at all customer touch
      points including the website, reservations, the ticket counter and the
      gate, providing a seamless customer service experience from the time the
      customer books the ticket until they arrive at their final destination.
      During the nine months ended December 31, 2004 we incurred approximately
      $1,185,000 in costs associated with this transition. We expect to complete
      implementation of SabreSonic in our fiscal fourth quarter 2005. We
      estimate that the remaining transition costs for the implementation, which
      includes training of our customer service and reservation agents, to be
      approximately $1,400,000 and will fall in the fourth quarter of our fiscal
      year ended March 31, 2005.
      In July 2003, the
      International Brotherhood of Teamsters filed an application with the
      National Mediation Board (NMB) for an accretion of the Companys
      aircraft appearance agents and maintenance cleaners into the mechanics
      union. On October 9, 2003, the NMB issued a decision that the aircraft
      appearance agents and maintenance cleaners should be accreted into the
      mechanics union. We appealed this decision, and in February 2004 the NMB
      denied the appeal. Negotiations with these two employee groups began in
      May 2004.
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|On July 22, 2004, the NMB
      reported that our 20 materials specialists elected not to join the
      International Brotherhood of Teamsters (IBT) Union. On July 30, 2004,
      the IBT filed an allegation of election interference with the NMB,
      requesting a new election. We believe the IBTs allegations are without
      merit and we will file our response with the NMB in the near future. Our
      materials specialists are part of the materials management group, which is
      under the finance department. Materials specialists are involved in the
      receiving, shipping, transporting, issuing, handling and relocating of
      parts and equipment to the appropriate internal customers. The NMB ruled
      in our favor and found that we did not interfere and a new election was
      not needed.
      During the nine months ended
      December 31, 2004, we entered into an agreement with two vendors to market
      and sell all of our Boeing 737-200 and certain Boeing 737-300 spare parts
      inventories. We have completed the process of transferring the initial
      inventory package to these vendors. The inventories include all of the
      Boeing 737-200 expendables and rotables and certain spares that support
      the Boeing 737-300 fleet. We began to actively sell these parts in August
      2004. During the three months ended December 31, 2004, our impairment for
      the rotables included estimated selling costs totaling $541,000 for the
      Boeing 737 rotables held for sale. As we continue to have Boeing parts
      available for sale to these vendors, we will be required to reflect the
      fair value of the rotables less selling costs. As of December 31, 2004, we
      have recognized $748,000 in gross proceeds resulting in a net gain on our
      expendable and rotable inventory totaling approximately $27,000.
      We have been assessing our
      liquidity position in light of our aircraft purchase commitments and other
      capital requirements, the economy, our competition, and other
      uncertainties surrounding the airline industry. Prior to applying for a
      government guaranteed loan under the Stabilization Act, we filed a shelf
      registration with the Securities and Exchange Commission in April 2002
      that allows us to sell equity or debt securities from time to time as
      market conditions permit. In September 2003, we completed a public
      offering of 5,050,000 shares of our common stock. As of December 31, 2004,
      there is $64,150,000 remaining on the shelf registration. Although the
      stock offering has improved our liquidity, we may need to continue to
      explore avenues to enhance our liquidity if our current economic and
      operating environment doesnt improve. We intend to continue to
      examine domestic or foreign bank aircraft financing, bank lines of credit
      and aircraft sale-leasebacks, the sale of equity or debt securities, and
      other transactions as necessary to support our capital and operating
      needs. For further information on our financing plans and activities and
      commitments, see Contractual Obligations and Commercial
      Commitments below.
      Contractual Obligations
      The following table summarizes
      our contractual obligations as of December 31, 2004:
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                          | Less
      than1 year |             | 1-3years |   | 4-5years    |  | After5
      years |             | Total |  
|----------------------------------------- | --------------------- | ----------- | -------- | - | ----------- |  | ------------------ | ----------- | ----- | -
|                                          |                       |             |          |   |             |  |                    |             |       |  
|Long-term
      debt (1)                  | $                     | 17,981,000  |          | $ | 39,076,000  |  | $                  | 43,625,000  |       | $
|Operating
      leases (2)                |                       | 129,161,000 |          |   | 249,600,000 |  |                    | 238,165,000 |       |  
|Unconditional purchase obligations (3)(4) |                       | 87,652,000  |          |   | 329,761,000 |  |                    | 59,905,000  |       |  
|                                          |                       |             |          |   |             |  |                    |             |       |  
|Total
      contractual cash obligations  | $                     | 234,794,000 |          | $ | 618,437,000 |  | $                  | 341,695,000 |       | $
|                                          |                       |             |          |   |             |  |                    |             |       |  
|                                          |                       |             |          |   |            
|                                          |                       |             |          |   |            

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | At
      December 31, 2004, we had 14 loan agreements for nine Airbus A319 aircraft
      and five Airbus A318 aircraft. Two of the loans have a term of 10 years
      and are payable in equal monthly installments, including interest, payable
      in arrears. These loans require monthly principal and interest payments of
      $215,000 and $218,000, bear interest with rates of 6.71% and 6.54%, with
      maturities in May and August 2011, at which time a balloon payment
      totaling $10,200,000 is due with respect to each loan. The remaining 12
      loans have interest rates based on LIBOR plus margins that adjust
      quarterly or semi-annually. At December 31, 2004, interest rates for these
      loans ranged from 3.375% to 4.72%. Each of these loans has a term of 12
      years, and each loan has balloon payments ranging from $2,640,000 to
      $7,770,000 at the end of the term. All of the loans are secured by the
      aircraft.

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|(2) | As of
      December 31, 2004, we lease 25 Airbus A319 type aircraft, two Airbus A318
      aircraft, and seven Boeing 737 type aircraft under operating leases with
      expiration dates ranging from 2005 to 2016. Two of the Boeing 737 type
      aircraft are no longer in service, one is being stored until the lease
      return date of October 2005, one will be returned to its lessor in
      February 2005. Under all of our leases, we have made cash security
      deposits or arranged for letters of credit representing approximately two
      months of lease payments per aircraft. At December 31, 2004, we had made
      cash security deposits of $15,085,000 and had arranged for letters of
      credit of $2,034,000 collateralized by restricted cash balances.
      Additionally, we are required to make additional rent payments to cover
      the cost of major scheduled maintenance overhauls of these aircraft. These
      additional rent payments are based on the number of flight hours flown
      and/or flight departures and are not included as an obligation in the
      table above.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | During
      the fiscal year ended March 31, 2004, we entered into additional aircraft
      lease agreements for two Airbus A318 aircraft and 18 Airbus A319 aircraft.
      Three of the aircraft leases were a result of sale-leaseback transactions
      of three new Airbus aircraft. As of December 31, 2004, we have taken
      delivery of ten of these aircraft. The remaining ten aircraft are
      scheduled for delivery beginning in October 2004 through February 2007. As
      of December 31, 2004, we have made $2,230,000 in security deposit payments
      for future leased aircraft deliveries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | We also
      lease office and hangar space, spare engines and office equipment for our
      headquarters and airport facilities, and certain other equipment with
      expiration dates ranging from 2005 to 2014. In addition, we lease certain
      airport gate facilities on a month-to-month basis. Amounts for leases that
      are on a month-to-month basis are not included as an obligation in the
      table above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | As of
      December 31, 2004, we have remaining firm purchase commitments for 13
      additional aircraft and two spare engines, which have scheduled delivery
      dates beginning in May 2005 and continuing through 2008. Included in the
      purchase commitments are the remaining amounts due Airbus and amounts for
      spare aircraft components to support the additional purchase and leased
      aircraft. We are not under any contractual obligations with respect to
      spare parts. Under the terms of the purchase agreement, we are required to
      make scheduled pre-delivery payments for these aircraft. These payments
      are non-refundable with certain exceptions. As of December 31, 2004, we
      had made pre-delivery payments on future deliveries totaling $17,927,000
      to secure these aircraft.                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | We have
      entered into loan agreements for the debt financing for one of our A319
      aircraft scheduled for delivery from Airbus in fiscal year 2006. The terms
      of these agreements permit us to borrow up to $24,500,000 per aircraft at
      80% of the appraised base value of the aircraft, whichever is less, over a
      period of 12 years at floating interest rates with a balloon payment equal
      to 20% of the original loan amount due at maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | We have
      signed a letter of intent for the sale-leaseback of one owned and three
      spare engines scheduled for delivery between October 2004 and February
      2006. In October 2004, we completed the sale-leaseback of two of these
      engines with proceeds totaling $12,186,000 from the sale of these two
      engines. The terms of this agreement allow us to sell each spare engine to
      the buyer at the time of delivery, and then lease the engines back for a
      period of ten years commencing on the delivery date. The agreement will
      provide financing for an additional two spare engines which we expect we
      will order at some point in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(4) | In
      October 2002, we entered into a purchase and 12-year services agreement
      with LiveTV to bring DIRECTV AIRBORNE satellite programming to every
      seatback in our Airbus fleet. We have agreed to the purchase of 46 units.
      As of December 31, 2004, we have purchased 40 units and have made deposits
      toward the purchase of six additional units. The table above includes the
      remaining purchase commitment amounts for the six units on which we have
      made partial payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|Commercial Commitments
      As we enter new markets,
      increase the amount of space we lease, or add leased aircraft, we are
      often required to provide the airport authorities and lessors with a
      letter of credit, bonds or cash security deposits. These generally
      approximate up to three months of rent and fees. We also provide letters
      of credit for our workers compensation insurance. As of December 31,
      2004, we had outstanding letters of credit, bonds, and cash security
      deposits totaling $13,160,000, $1,504,000, and $19,987,000, respectively.
      In order to meet these requirements, we have a letter of credit agreement
      with a financial institution for up to $20,000,000, which expires December
      1, 2005. This facility can be used only for the issuance of standby
      letters of credit. Any amounts drawn under this facility are fully
      collateralized by certificates of deposit, which are carried as restricted
      investments on our balance sheet. As of December 31, 2004, we have
      utilized $12,410,000 under this credit agreement for standby letters of
      credit that collateralize certain leases. In the event that this facility
      is not renewed beyond their present expiration dates, the certificates of
      deposit would be redeemed and paid to the various lessors as cash security
      deposits in lieu of standby letters of credit. As a result, there would be
      no impact on our liquidity if these agreements were not renewed. In the
      event that the surety companies determined that issuing bonds on our
      behalf were a risk they were no longer willing to underwrite, we would be
      required to collateralize certain of these lease obligations with either
      cash security deposits or standby letters of credit, which would decrease
      our liquidity.

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|We have a contract with a
      bankcard processor that requires us to pledge a certificate of deposit
      equal to a certain percentage of our air traffic liability associated with
      bankcard customers. As of December 31, 2004, that amount totaled
      $26,659,000. The amount is adjusted quarterly in arrears based on our air
      traffic liability associated with bankcard transactions. As of January 28,
      2005, we can decrease the amount by approximately $1,315,000.
      We use the Airline Reporting
      Corporation (ARC) to provide reporting and settlement services for
      travel agency sales and other related transactions. In order to maintain
      the minimum bond (or irrevocable letter of credit) coverage of $100,000,
      ARC requires participating carriers to meet, on a quarterly basis, certain
      financial tests such as, but not limited to, working capital ratio, and
      percent of debt to debt plus equity. As of December 31, 2004, we met these
      financial tests and presently are only obligated to provide the minimum
      amount of $100,000 in coverage to ARC. If we were to fail the minimum
      testing requirements, we would be required to increase our bonding
      coverage to four times the weekly agency net cash sales (sales net of
      refunds and agency commissions). Based on net cash sales remitted to us
      for the week ended January 28, 2005, the coverage would be increased to
      $5,644,000 if we failed the tests. If we were unable to increase the bond
      amount as a result of our then financial condition, we could be required
      to issue a letter of credit that would restrict cash in an amount equal to
      the letter of credit.
      In November 2002, we initiated
      a fuel hedging program comprised of swap and collar agreements. Under a
      swap agreement, we receive the difference between a fixed swap price and a
      price based on an agreed upon published spot price for jet fuel. If the
      index price is higher than the fixed price, we receive the difference
      between the fixed price and the spot price. If the index price is lower,
      we pay the difference. A collar agreement has a cap price, a primary floor
      price, and, in the case of a three-way collar, a secondary floor price.
      When the hedged products index price is above the cap, we receive the
      difference between the index and the cap. When the hedged products index
      price is below the primary floor but above the secondary floor, we pay the
      difference between the index and the primary floor. However, when the
      price is below the secondary floor, we are only obligated to pay the
      difference between the primary and secondary floor prices. When the price
      is between the cap price and the primary floor, no payments are
      required.
      On May 21, 2004, we entered
      into a two-way collar agreement that hedges approximately 25% of our
      expected fuel requirements in the quarters ended December 31, 2004 and
      March 31, 2005. The collar uses West Texas Intermediate crude oil as its
      basis. The cap price is set at $39.00 per barrel, and the floor is set at
      $34.85 per barrel.  On November 12, 2004, we entered into a two-way collar
      agreement that hedges approximately 27% of our expected fuel requirements
      for the  quarter ended June 30, 2005. This collar uses Gulf Coast Jet A as
      its basis. The cap price is set at $1.34 per gallon, and the floor is set
      at $1.20 per gallon. The unrealized net gain on these derivative contracts
      at December 31, 2004 was $432,000.
      In March 2003, we entered into
      an interest rate swap agreement with a notional amount of $27,000,000 to
      hedge a portion of our LIBOR based borrowings. Under the interest rate
      swap agreement, we are paying a fixed rate of 2.45% and receive a variable
      rate based on the three month LIBOR.
      Effective January 1, 2003, we
      entered into an engine maintenance agreement with GE Engine Services, Inc.
      (GE) covering the scheduled and unscheduled repair of our aircraft
      engines used on most of our Airbus aircraft, subsequently modified in
      September 2004. The agreement is for a 12-year period from the effective
      date for our owned aircraft or December 31, 2014, whichever comes first,
      and for each leased aircraft, the term coincides with the initial lease
      term of 12 years. This agreement precludes us from using another third
      party for such services during the term. This agreement requires monthly
      payments at a specified rate multiplied by the number of flight hours the
      engines were operated during that month. The amounts due based on flight
      hours are not included in table above. As of December 31, 2004, the
      agreement covers 14 purchased Airbus aircraft and all of our leased Airbus
      aircraft with the exception of two. The costs under this agreement for our
      purchased aircraft for the nine months ended December 31, 2004 and 2003
      were approximately $1,930,000 and $1,224,000, respectively. For our
      leased aircraft, the lessors pay GE directly for the repair of aircraft
      engines in conjunction with this agreement from reserve accounts
      established under the applicable lease documents.
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|Critical
      Accounting Policies
      The preparation of financial
      statements in conformity with accounting principles generally accepted in
      the United States of America requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.
      Critical accounting policies
      are defined as those that are both important to the portrayal of our
      financial condition and results, and require management to exercise
      significant judgments. Our most critical accounting policies are described
      briefly below.
      Revenue Recognition
      Passenger, cargo, and other
      revenues are recognized when the transportation is provided or after the
      tickets expire, one year after date of issuance, and are net of excise
      taxes, passenger facility charges and security fees. Revenues that have
      been deferred are included in the accompanying balance sheets as air
      traffic liability. In limited circumstances, we grant credit for tickets
      that have expired. We do not recognize as revenue the amount of credits
      estimated to be granted after the date a ticket expires.
      Inventories
      Inventories consist of
      expendable aircraft spare parts, supplies and aircraft fuel and are stated
      at the lower of cost or market. Inventories are accounted for on a
      first-in, first-out basis and are charged to expense as they are used.
      During the fiscal year ended March 31, 2004, we recorded a provision for
      excess Boeing expendable parts inventory totaling $618,000. The provision
      in 2004 was principally the result of declining resale values of excess
      Boeing expendable parts. We monitor resale values for Boeing parts
      quarterly using estimates obtained from our vendors. We evaluated our
      estimated usage of these parts and the current resale value at June 30,
      2004 and September 30, 2004 and recorded additional provisions of $326,000
      and $937,000, respectively.  The cost of WTI crude oil increased from $36.92
      per barrel at June 30, 2004 to $49.56 per barrel at September 30, 2004. The
      cost of WTI crude oil at December 31, 2004 was $43.69 and at January 28, 2005
      it was $47.18. Partially as a result of the increase in the cost of fuel, we
      have accelerated the dates that we would cease using the Boeing aircraft from
      September 2005 to mid-April 2005. We believe the decline in resale values
      of parts for the less fuel efficient Boeing 737-200 and Boeing 737-300
      aircraft was due in part to increasing fuel prices during the past nine
      months. Because of the earlier termination date of the use of the Boeing
      aircraft, our estimated usage of these parts decreased, contributing to
      the amount of the additional provision recorded during the three months
      ended September 30, 2004. At December 31, 2004, based on the results of
      sales of our expendable parts compared to the book value of these parts,
      it was determined that an additional provision was not required. As of
      December 31, 2004, we have recognized $171,000 in gross proceeds resulting
      in a net gain on our expendable inventory totaling approximately $90,000. As
      of December 31, 2004, the carrying value of our Boeing expendable inventory
      totaled approximately $1,562,000.
      Impairment of Long-Lived Assets
      We record
      impairment losses on long-lived assets used in operations when indicators
      of impairment are present and the undiscounted future cash flows estimated
      to be generated by those assets are less than the carrying amount of the
      assets. We monitor resale values for Boeing rotables quarterly using
      estimates obtained from our vendors. If an impairment occurs, the loss is
      measured by comparing the fair value of the asset to its carrying amount.
      During the nine months ended December 31, 2004, we recorded total impairment
      charges of $3,997,000 on the Company's Boeing spare parts as a result of further
      market declines coupled with the results of actual sales history. During the
      period from August 2004 through December 2004, we began selling
      our Boeing spare parts. Our analysis of these sales compared to
      the impaired value of these parts as of December 31, 2004 indicated that
      these parts were selling at approximately 90% of the carrying value which
      triggered the additional impairment in the third quarter. During the year
      ended March 31, 2004, we recorded an impairment charge of $3,047,000
      for engines and rotable parts that support the Boeing 737-300 aircraft. The
      impairment charge for rotables totaling $901,000 was principally the result of
      declining resale values for Boeing rotables. The impairment for the two
      Boeing 737-300 spare engines totaling $2,146,000 was the result of our
      decision in the fourth quarter of fiscal 2004 to sell these remaining
      spare engines. The impairment was based on three separate quotes from
      third parties. As of December 31, 2004, the carrying value of Boeing spare
      parts, excluding one spare engine, totaled approximately $6,254,000.
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|We use the criteria in SFAS
      No. 144 to determine when an asset is classified as held for sale. Upon
      classification as held for sale, the long-lived asset or asset group is
      measured at the lower of its carrying amount or fair value less cost to
      sell, depreciation is ceased and the asset or asset group is separately
      presented on the balance sheet.
      Aircraft Maintenance
      We operate under an
      FAA-approved continuous inspection and maintenance program. We account for
      maintenance activities on the direct expense method. Under this method,
      major overhaul maintenance costs are recognized as expense as maintenance
      services are performed, as flight hours are flown for nonrefundable
      maintenance payments required by lease agreements, and as the obligation
      is incurred for payments made under service agreements. Routine
      maintenance and repairs are charged to operations as incurred. Prior to
      fiscal year 2003, we accrued for major overhaul costs on a per-flight-hour
      basis in advance of performing the maintenance services.
      Effective January 1, 2003, we
      and GE executed a 12-year engine services agreement covering the scheduled
      and unscheduled repair of Airbus engines. Under the terms of the services
      agreement, we agreed to pay GE a fixed rate per-engine-hour, payable
      monthly, and GE assumed the responsibility to overhaul our engines on
      Airbus aircraft as required during the term of the services agreement,
      subject to certain exclusions. We believe the fixed rate per-engine hour
      approximates the periodic cost we would have incurred to service those
      engines. Accordingly, these payments are expensed as the obligation is
      incurred.
      Derivative Instruments
      We account for derivative
      financial instruments in accordance with the provisions of Statement of
      Financial Accounting Standards No. 133, Accounting for Derivative
      Instruments and Hedging Activities(SFAS 133). SFAS 133 requires us to
      measure all derivatives at fair value and to recognize them in the balance
      sheet as an asset or liability. For derivatives designated as cash flow
      hedges, changes in fair value of the derivative are generally reported in
      other comprehensive income (OCI) and are subsequently reclassified into
      earnings when the hedged item affects earnings. Changes in fair value of
      derivative instruments not designated as hedging instruments and
      ineffective portions of hedges are recognized in earnings in the current
      period.
      We enter into derivative
      transactions to hedge the interest payments associated with a portion of
      our LIBOR-based borrowings and fuel purchases. We designate certain
      interest rate swaps as qualifying cash flow hedges. We also enter into
      derivative transactions to reduce exposure to the effect of fluctuations
      in fuel prices. These transactions are accounted for as trading
      instruments under SFAS 133. As a result, we record these instruments at
      fair market value and recognizes realized and unrealized gains and losses
      in aircraft fuel expense.
      Customer Loyalty Program
      In February 2001, we
      established EarlyReturns, a frequent flyer program to encourage
      travel on our airline and customer loyalty. We account for the
      EarlyReturns program under the incremental cost method whereby
      travel awards are valued at the incremental cost of carrying one passenger
      based on expected redemptions. Those incremental costs are based on
      expectations of expenses to be incurred on a per passenger basis and
      include food and beverages, fuel, liability insurance, and ticketing
      costs. The incremental costs do not include a contribution to overhead,
      aircraft cost or profit. We do not record a liability for mileage earned
      by participants who have not reached the level to become eligible for a
      free travel award. We believe this is appropriate because the large
      majority of these participants are not expected to earn a free flight
      award. We do not record a liability for the expected redemption of miles
      for non-travel awards since the cost of these awards to us is negligible.
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|Co-Branded Credit Card Arrangement
      We entered into a co-branded
      credit card arrangement with a Mastercard issuing bank in March 2003. The
      terms of this affinity agreement provide that we will receive a fixed fee
      for each new account, which varies based on the type of account, and a
      percentage of the annual renewal fees that the bank receives. We receive
      an increased fee for new accounts solicited by us. We also receive fees
      for the purchase of frequent flier miles awarded to the credit card
      customers.
      During the year ended March
      31, 2003, we received a $10,000,000 advance from the issuing bank for fees
      expected to be earned under the program. This advance was recorded as
      deferred revenue when it was received. Fees earned as credit cards are
      issued or renewed, and as points are awarded to the credit card customers
      are applied against this advance. In November 2004, we had earned all of
      the initial advance and earned an additional $1,933,000 as of December 31,
      2004.
      We account for all fees
      received under the co-branded credit card program by allocating the fees
      between the portion that represents the estimated value of the subsequent
      travel award to be provided, and the portion which represents a marketing
      fee to cover marketing and other related costs to administer the program.
      This latter portion (referred to as the marketing component) represents
      the residual after determination of the value of the travel component. The
      component representing travel is determined by reference to an equivalent
      restricted fare, which is used as a proxy for the value of travel of a
      frequent flyer mileage award. The travel component is deferred and
      recognized as revenue over the estimated usage period of the frequent
      flyer mileage awards of 20 months. We record the marketing component of
      the revenue earned under this agreement as a reduction of sales and
      promotion expenses in the month received.
      Because of our limited history
      with our frequent flier program, we have estimated the period over which
      the frequent flier mileage awards will be used based on industry averages
      adjusted downward to take into account that most domestic airlines require
      25,000 frequent flyer miles for a domestic round-trip ticket, whereas we
      require only 15,000 frequent flyer miles for a domestic round-trip ticket.
      New Accounting
      Standards
      In September 2004, the
      Emerging Issues Task Force reached consensus on Issue No. 04-08, or EITF
      04-08, The Effect of Contingently Convertible Debt on Diluted Earnings
      per Share, which requires the dilutive effect of contingently convertible
      debt instruments to be included in earnings per share. Accordingly, the
      shares issuable upon conversion of contingently convertible debt
      instruments are to be considered in the diluted earnings per share
      calculation, regardless of whether the contingent conditions for their
      conversion are satisfied, so long as they are dilutive. EITF 04-08 will be
      effective for reporting periods ending after December 15, 2004 and is not
      expected to have an impact on our diluted earnings per share.
      In December 2004, the FASB
      issued SFAS No. 123(R), Share-Based Payments. SFAS No. 123(R),
      revised FASB Statement No. 123, Accounting for Stock-Based Compensationand supersedes APB Opinion No. 25, Accounting for Stock Issued to
      Employees. SFAS No. 123(R) focuses primarily on the accounting for
      transactions in which an entity obtains employee services in share-based
      payment transactions. SFAS No. 123(R) requires companies to recognize in
      the statement of operations the cost of employee services received in
      exchange for awards of equity instruments based on the grant-date fair
      value of those awards (with limited exceptions). SFAS No. 123(R) is
      effective as of the first reporting period that begins after June 15,
      2005. Accordingly, we will adopt SFAS No. 123(R) in our second quarter of
      fiscal 2006. We are currently evaluating the provisions of SFAS No. 123(R)
      and have not yet determined the impact that its adoption will have on our
      results of operations or financial position.
      Item 3:  Quantitative and Qualitative Disclosures
      About Market Risk
      Our earnings are affected by
      changes in the price and availability of aircraft fuel. Market risk is
      estimated as a hypothetical 10 percent change in the average cost per
      gallon of fuel for the year ended March 31, 2004. Based on fiscal year
      2004 actual fuel usage, such a change would have had the effect of
      increasing or decreasing our aircraft fuel expense by approximately
      $10,886,000 in fiscal year 2004. Comparatively, based on projected fiscal
      year 2005 fuel usage, including fuel required for our regional partner,
      such a change would have the effect of increasing or decreasing our
      aircraft fuel expense by approximately $15,448,000 in fiscal year 2005,
      excluding the effects of our fuel hedging arrangements. The increase in
      exposure to fuel price fluctuations in fiscal year 2005 is due to the
      increase of our average aircraft fleet size projected for the year ending
      March 31, 2005 and related gallons expected to be purchased.
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|In September 2003, we entered
      into a swap agreement with a notional volume of 630,000 gallons per month
      for the period from January 1, 2004 to June 30, 2004. The fixed price of
      the swap was 74.50 cents per gallon and the agreement was estimated to
      represent 7% of our fuel purchases for that period. The results of
      operations for the nine months ended December 31, 2003 include an
      unrealized derivative gain of $539,000 that is included in fuel expense
      and a realized net gain of $515,000 in cash settlements received from a
      counter-party recorded as a decrease in fuel expense. On May 21, 2004, we
      entered into an additional derivative transaction that is designed to
      economically hedge approximately 25% of our projected fuel requirements in
      the quarters ending December 31, 2004 and March 31, 2005. On November 12,
      2004, we entered into a two-way collar agreement that hedges approximately
      27% of our expected fuel requirements for the quarter ended June 30, 2005.
      This collar uses Gulf Coast Jet A as its basis. The additional derivative
      transaction is a collar agreement that uses West Texas Intermediate crude
      oil as its basis. The cap price is set at $39.00 per barrel, and the floor
      is set at $34.85 per barrel. The results of operations for the nine months
      ended December 31, 2004 include an unrealized derivative gain of $432,000
      that is included in fuel expense and a realized net gain of $2,490,000 in
      cash settlements received from a counter-party recorded as a decrease in
      fuel expense with respect to these two agreeements.
      Interest
      We are susceptible to market
      risk associated with changes in variable interest rates on long-term debt
      obligations we incurred and will incur to finance the purchases of our
      Airbus aircraft. Interest expense on 86.8% of the debt on our owned Airbus
      A319 and A318 aircraft is subject to interest rate adjustments every three
      to nine months based upon changes in the applicable LIBOR rate. A change
      in the base LIBOR rate of 100 basis points (1.0 percent) would have the
      effect of increasing or decreasing our annual interest expense by
      $2,648,000, assuming the loans outstanding that are subject to interest
      rate adjustments at December 31, 2004 totaling $264,788,000 are
      outstanding for the entire period.
      In March 2003, we entered into
      an interest rate swap agreement with a notional amount of $27,000,000 to
      hedge a portion of our LIBOR based borrowings. Under the interest rate
      swap agreement, we are paying a fixed rate of 2.45% and receive a variable
      rate based on the three month LIBOR over the term of the swap that expires
      in March 2007. As of December 31, 2004, we had hedged approximately 10.2%
      of our variable interest rate loans. As of December 31, 2004, the fair
      value of the swap agreement is an asset of $225,000.
      Item 4.    Controls and Procedures
      As of the end of the
      period covered by this report, we conducted an evaluation, under the
      supervision and with the participation of our management, including our
      Chief Executive Officer and Chief Financial Officer, of the effectiveness
      of the design and operation of our disclosure controls and procedures
      pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that
      evaluation, our Chief Executive Officer and Chief Financial Officer
      concluded that our disclosure controls and procedures are effective.
      Disclosure controls and procedures are controls and procedures that are
      designed to ensure that information required to be disclosed in our
      reports filed or submitted under the Exchange Act is recorded, processed,
      summarized and completely and accurately reported within the time periods
      specified in the Securities and Exchange Commissions rules and
      forms.
      There have been no
      significant changes in our internal controls or in other factors that
      could significantly affect internal controls subsequent to the date we
      carried out this evaluation.
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|PART II. OTHER INFORMATION
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|                          
|Item
      6:             
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|SIGNATURES
      Pursuant to the
      requirements of the Exchange Act of 1934, the registrant has duly caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                                     
|----------------------- |  | ----------------------------------------------------
|                        |  | FRONTIER
      AIRLINES, INC.                       
|                        |  |                                                     
|Date:  February 8, 2005 |  | By:                                                 
|                        |  | Paul H.
      Tate, Vice President and              
|                        |  | Chief
      Financial Officer                       
|                        |  |                                                     
|Date:  February 8, 2005 |  | By:                                                 
|                        |  | Elissa A.
      Potucek, Vice President, Controller,
|                        |  | Treasurer
      and Principal Accounting Officer    

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