FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, 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 June 30, 1999


[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934


                        Commission file number: 0-24126



                             FRONTIER AIRLINES, INC.
             (Exact name of registrant as specified in its charter)



           Colorado                                     84-1256945
 (State or other jurisdiction                        (I.R.S. Employer
of incorporated or organization)                    Identification No.)

    12015 E. 46th Avenue, Denver, CO                       80239
(Address of principal executive offices)                (Zip Code)


Issuer's telephone number including area code:  (303) 371-7400


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


The number of shares of the Company's  Common Stock  outstanding as of August 6,
1999 was 17,392,822.



<PAGE>



                                TABLE OF CONTENTS

                          PART I. FINANCIAL INFORMATION


                                                                       Page

Item 1.  Financial Information

         Financial Statements                                            1


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                             5

Item 3:  Quantitative and Qualitative Disclosures About Market Risk     14




                           PART II. OTHER INFORMATION


Item 2.  Changes in Securities and Use of Proceeds                      15

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




<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
FRONTIER AIRLINES, INC.
Balance Sheets
<TABLE>
<CAPTION>
<S>                                                                              <C>               <C>
                                                                                    June 30,          March 31,
                                                                                      1999              1999
                                                                                 ----------------  ----------------
                                                                                   (unaudited)
Assets
Current assets:
    Cash and cash equivalents                                                       $ 29,118,575      $ 47,289,072
    Short-term investments                                                            41,378,295          -
    Restricted investments                                                             4,000,000         4,000,000
    Trade receivables, net of allowance for doubtful accounts of $200,000             13,823,419        16,930,038
    Maintenance deposits                                                              16,166,808        13,018,466
    Prepaid expenses and other assets                                                  6,208,619         5,439,834
    Inventories                                                                        1,508,126         1,203,916
    Deferred tax assets                                                                1,461,224         6,041,576
    Deferred lease expenses                                                              252,327           285,636
                                                                                 ----------------  ----------------
            Total current assets                                                     113,917,393        94,208,538

Security, maintenance and other deposits                                              11,722,056        11,834,457
Property and equipment, net                                                            9,821,168         8,733,778
Deferred lease and other expenses                                                        226,888           267,762
Restricted investments                                                                 5,435,760         4,575,760
                                                                                 ================  ================
                                                                                   $ 141,123,265     $ 119,620,295
                                                                                 ================  ================

Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                                                $ 14,123,156      $ 14,011,238
    Air traffic liability                                                             34,407,679        28,887,692
    Other accrued expenses                                                            10,376,615        10,781,509
    Accrued maintenance expense                                                       18,394,830        14,933,568
    Current portion of obligations under capital leases                                  111,146           106,833
                                                                                 ----------------  ----------------
            Total current liabilities                                                 77,413,426        68,720,840

Accrued maintenance expense                                                            6,502,788         6,042,958
Deferred tax liability                                                                    30,928            30,928
Obligations under capital leases, excluding current portion                              409,890           434,920
                                                                                 ----------------  ----------------
            Total liabilities                                                         84,357,032        75,229,646
                                                                                 ----------------  ----------------

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 40,000,000 shares; 17,232,772 and 16,141,172
       shares issued and outstanding at June 30, 1999 and March 31, 1999                   17,233            16,141
    Additional paid-in capital                                                        62,609,808        58,054,844
    Unearned ESOP shares                                                                (406,250)         (609,375)
    Accumulated deficit                                                               (5,454,558)      (13,070,961)
                                                                                 ----------------  ----------------
            Total stockholders' equity                                                56,766,233        44,390,649
                                                                                 ----------------  ----------------
                                                                                   $ 141,123,265     $ 119,620,295
                                                                                 ================  ================
See accompanying notes to financial statements.
</TABLE>






<PAGE>



FRONTIER AIRLINES, INC.
Statements of Income
<TABLE>
<CAPTION>
<S>                                                                              <C>               <C>


                                                                                    Three Months Ended June 30,
                                                                                      1999              1998
                                                                                 ----------------------------------
                                                                                            (unaudited)
Revenues:
    Passenger                                                                       $ 75,974,913      $ 41,560,587
    Cargo                                                                              1,441,084         1,004,748
    Other                                                                                470,200           322,218
                                                                                 ----------------  ----------------

            Total revenues                                                            77,886,197        42,887,553
                                                                                 ----------------  ----------------

Operating expenses:
    Flight operations                                                                 25,884,383        17,853,706
    Aircraft and traffic servicing                                                    10,705,730         7,137,822
    Maintenance                                                                       13,550,252         8,727,868
    Promotion and sales                                                               11,830,919         7,126,460
    General and administrative                                                         3,687,623         1,278,559
    Depreciation and amortization                                                        574,211           338,449
                                                                                 ----------------  ----------------

            Total operating expenses                                                  66,233,118        42,462,864
                                                                                 ----------------  ----------------

            Operating income                                                          11,653,079           424,689
                                                                                 ----------------  ----------------

Nonoperating income (expense):
    Interest income                                                                      824,643           275,569
    Interest expense                                                                     (21,901)         (240,239)
    Other, net                                                                          (121,566)          (26,310)
                                                                                 ----------------  ----------------

            Total nonoperating income, net                                               681,176             9,020
                                                                                 ----------------  ----------------

Income before income tax expense
                                                                                      12,334,255           433,709

Income tax expense                                                                     4,717,852          -

                                                                                 ================  ================
Net income                                                                      $      7,616,403 $         433,709
                                                                                 ================  ================

Earnings per share:
            Basic                                                                      $    0.46         $    0.03
                                                                                 ================  ================
            Diluted                                                                    $    0.41         $    0.03
                                                                                 ================  ================

Weighted average shares of
  common stock outstanding                                                            16,539,582        12,513,827
                                                                                 ================  ================

Weighted average shares of common stock and
  common stock equivalents outstanding                                                18,470,832        13,689,997
                                                                                 ================  ================

See accompanying notes to financial statements.

<PAGE>

FRONTIER AIRLINES, INC.
Statement of Cash Flows

                                                                                    Three Months Ended June 30,
                                                                                      1999              1998
                                                                                 ----------------------------------
                                                                                            (unaudited)
Cash flows from operating activities:
    Net income                                                                       $ 7,616,403        $  433,709
    Adjustments to reconcile net income to net cash
        provided by operating activities:
            Employee stock ownership plan compensation expense                           203,125
            Depreciation and amortization                                                648,393           521,294
            Changes in operating assets and liabilities:
                Trade receivables                                                      3,106,619         2,373,625
                Security, maintenance and other deposits                              (3,632,357)       (3,323,636)
                Prepaid expenses and other assets                                       (768,785)       (1,223,944)
                Inventories                                                             (304,210)         (237,527)
                Deferred income tax expense                                            4,580,352                 -
                Accounts payable                                                         111,918        (3,221,120)
                Air traffic liability                                                  5,519,987           919,620
                Other accrued expenses                                                  (404,894)       (1,067,365)
                Accrued maintenance expense                                            3,921,092         1,894,524
                                                                                 ----------------  ----------------

                     Net cash provided (used) by operating activities                 20,597,643        (2,930,820)
                                                                                 ----------------  ----------------

Cash flows used by investing activities:
    Increase in short-term investments                                               (41,378,295)       (4,932,533)
    Aircraft lease deposits                                                              596,416                 -
    Increase in restricted investments                                                  (860,000)                -
    Capital expenditures                                                              (1,661,600)         (328,162)
                                                                                 ----------------  ----------------
                     Net cash used by investing activities                           (43,303,479)       (5,260,695)
                                                                                 ----------------  ----------------

Cash flows from financing activities:
    Net proceeds from issuance of common stock                                         4,556,056        13,676,508
    Proceeds from short-term borrowings                                                        -           179,663
    Principal payments on obligations under capital leases                               (20,717)          (10,451)
                                                                                 ----------------  ----------------
                    Net cash provided by financing activities                          4,535,339        13,845,720
                                                                                 ----------------  ----------------

                    Net (decrease) increase in cash and cash equivalents             (18,170,497)        5,654,205

Cash and cash equivalents, beginning of period                                        47,289,072         3,641,395
                                                                                 ----------------  ----------------

Cash and cash equivalents, end of period                                            $ 29,118,575       $ 9,295,600
                                                                                 ================  ================

See accompanying notes to financial statements.

</TABLE>


<PAGE>


FRONTIER AIRLINES, INC.
Notes to Financial Statements
June 30, 1999


(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 1999 Annual
     Report  on  Form  10-K.  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  months  ended June 30, 1999 are not  necessarily  indicative  of the
     results that will be realized for the full year.







<PAGE>


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.  ("Frontier"  or the  "Company")  and the
expectations  of  our  Company  and  management.  All  statements,   other  than
statements of historical facts, 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
its business  strategy or in response to competitive  pressures or other factors
such as our commencement of passenger service and ground handling  operations at
several airports and assumption of maintenance and ground handling operations at
DIA with  our own  employees;  general  economic  factors  and  behavior  of the
fare-paying  public and the  federal  government,  suspension  of the  carrier's
operations and 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 and other competitors;  the availability of Boeing 737 aircraft,  which
may  inhibit  our  ability to achieve  operating  economies  and  implement  our
business strategy; 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 RPM or
expense per ASM can significantly  affect operating results.  See "Risk Factors"
in our 1999 Form 10-K.

General

       We are a  scheduled  airline  based in  Denver,  Colorado.  We  currently
operate  routes  linking our Denver hub to 19 cities in 15 states  spanning  the
nation  from  coast to coast.  At  present,  we use up to seven  gates at Denver
International  Airport ("DIA") for  approximately 92 daily flight departures and
arrivals.  During the quarter ended June 30, 1999, we added Portland,  Oregon to
our  route  system  on June 14,  1999 and added  frequencies  to San  Francisco,
California, New York (LaGuardia),  and Seattle, Washington. On November 1, 1998,
we initiated  complimentary  shuttle service between Boulder,  Colorado and DIA.
Service to Orlando,  Florida is scheduled to commence September 9, 1999 with one
daily nonstop flight and a second daily flight commencing on November 4, 1999.

       Organized in February 1994, we commenced flight  operations as a regional
carrier in July 1994 with two leased Boeing  737-200 jet aircraft.  We currently
operate 19 leased jets as of August 6 1999,  including 7 Boeing  737-200s and 12
larger Boeing 737-300s.

       As a result of the expansion of our  operations  during the quarter ended
June 30, 1999,  our results of  operations  are not  necessarily  indicative  of
future operating results or comparable to the prior quarter ended June 30, 1998.

       Small  fluctuations  in  our  yield  per  RPM  or  expense  per  ASM  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.

Results of Operations

       We had net income of $7,616,000 or $.41 per diluted share for the quarter
ended June 30,  1999 as  compared  to net income of $433,709 or $.03 per diluted
share for the quarter  ended June 30,  1998.  During the quarter  ended June 30,
1999, we reported a provision for income taxes which totaled  $4,718,000 or $.26
per diluted  share.  During the  quarter  ended June 30, 1999 as compared to the
prior comparable period, we experienced higher fares as a result of increases in
business  travelers  and a general  increase  in fare  levels.  Our cost per ASM
increased to 8.12(cent)  during the quarter ended June 30, 1999 from  7.80(cent)
for the prior  comparable  period  principally  as a result of an  unanticipated
engine repair expense due to a premature failure,  which accounted for .18(cent)
of expense per ASM, and our accrual for a potential  employee  performance bonus
under a new program adopted this year,  which accounted for .09(cent) of expense
per ASM.  Our expense per ASM for the quarter  ended June 30, 1999  adjusted for
these items would have been 7.85(cent).

       An airline's  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 quarter ended June 30,
1999, our  break-even  load factor was 52% compared to the passenger load factor
achieved of 62%. For the quarter ended June 30, 1998, our break-even load factor
was 61.3% compared to the achieved  passenger load factor of 62%. Our break-even
load factor decreased from the prior comparable period largely as a result of an
increase in our average fare to $133 during the quarter ended June 30, 1999 from
$108 during the quarter  ended June 30, 1998, an increase in our total yield per
RPM from  12.71(cent) for the quarter ended June 30, 1998 to 15.38(cent) for the
quarter  ended June 30,  1999  offset by an  increase  in our expense per ASM to
8.12(cent)  for the quarter ended June 30, 1999 from  7.80(cent) for the quarter
ended June 30, 1998.

       The  following  table  provides  certain of our  quarterly  financial and
operating data for the fifteen months of operations ended June 30, 1999.

<TABLE>
<CAPTION>
<S>                                  <C>             <C>              <C>              <C>             <C>

                                                                    Quarter Ended
                                   --------------------------------------------------------------------------------

                                       June 30,      September 30,    December 31,       March 31,      June 30,
                                         1998            1998            1998              1999           1999

     Passenger revenue (1)           $41,561,000      $55,502,000     $49,113,000      $68,135,000     $75,975,000
     Revenue passengers carried          368,000          420,000         373,000          503,000         553,000
     Revenue passenger
         miles (RPMs)(2)             337,555,000      387,810,000     338,691,000      442,541,000     506,247,000
     Available seat miles
       (ASMs)(3)                     544,557,000      609,111,000     632,754,000      751,081,000     815,961,000
     Passenger load factor (4)             62.0%            63.7%           53.5%            58.9%           62.0%
     Break-even load factor (5)            61.3%            52.3%           50.8%            48.3%           52.0%
     Block hours (6)                      11,255           12,543          13,325           15,666          16,785
     Average daily block hour
       utilization (7)                     10.27            10.27            9.57            10.24           10.80
     Yield per RPM (cents) (8)             12.31            14.31           14.50            15.40           15.01
     Total yield per RPM (cents) (9)       12.71            14.66           14.97            15.86           15.38
     Total yield per ASM (cents) (10)       7.88             9.33            8.01             9.34            9.55
     Expense per ASM (cents)                7.80             7.73            7.66             7.71            8.12
     Passenger revenue per
       block hour                      $3,692.67        $4,424.94       $3,685.78        $4,349.23       $4,526.36
     Average fare (11)                      $108             $125            $124             $131            $133
     Average aircraft in service            14.0             14.0            14.4             17.0            18.0
     EBITDAR (12)                     $8,328,000      $17,713,000     $10,886,132      $21,923,000     $22,479,000
     EBITDAR as a % of revenue             19.4%            31.2%           21.5%            31.2%           28.9%
     Operating income                   $425,000       $9,778,000      $2,243,000      $12,234,000     $11,653,000
     Net income                         $434,000       $9,870,000      $2,460,000      $17,802,000      $7,616,000
</TABLE>
<PAGE>

(1)  "Passenger   revenue"   includes   revenues  for  non-revenue   passengers,
     administrative  fees,  and revenue  recognized  for unused tickets that are
     greater than one year from issuance date.
(2)  "Revenue  passenger  miles,"  or  RPMs,  are  determined by multiplying the
     number of fare-paying  passengers  carried by the distance  flown.
(3)  "Available seat miles," or ASMs, are determined by  multiplying  the number
     of seats available for passengers by the number of miles flown.
(4)  "Passenger  load  factor" is determined by dividing revenue passenger miles
     by available seat miles.
(5)  "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
(6)  "Block  hours"  represent  the time  between  aircraft  gate departure  and
     aircraft gate arrival.
(7)  "Average daily block hour utilization" represents  the  total  block  hours
     divided by the weighted average number of aircraft days in service.
(8)  "Yield per RPM" is  determined  by dividing  passenger  revenues by revenue
     passenger  miles.
(9)  "Total Yield per RPM" is determined  by dividing  total revenues by revenue
     passenger miles.
(10) "Total  Yield  per  ASM"  is  determined  by dividing passenger revenues by
     available seat miles.
(11) "Average  fare"  excludes  revenue   included  in  passenger   revenue  for
     non-revenue  passengers,  administrative  fees, and revenue  recognized for
     unused tickets that are greater than one year from issuance date.
(12) "EBITDAR",  or  "earnings  before  interest,  income  taxes,  depreciation,
     amortization and aircraft rentals," is a supplemental financial measurement
     many  airline  industry  analysts  and  we use  in  the  evaluation  of our
     business.  However,  EBITDAR should only be read in conjunction with all of
     our financial  statements  appearing  elsewhere  herein,  and should not be
     construed as an  alternative  either to operating  income (as determined in
     accordance with generally accepted  accounting  principles) as an indicator
     of our operating performance or to cash flows from operating activities (as
     determined in accordance with generally accepted accounting  principles) as
     a measure of liquidity.

       The  following  table  provides  our  operating   revenues  and  expenses
expressed as cents per total available seat miles ("ASM") and as a percentage of
total operating revenues,  as rounded, for the year ended March 31, 1999 and the
quarters ended June 30, 1999 and 1998.
<TABLE>
<CAPTION>
<S>                                     <C>           <C>        <C>           <C>        <C>            <C>

                                         Year Ended March 31,                Quarters Ended June 30,
                                        -----------------------  -------------------------------------------------
                                                1999                      1999                     1998
                                        -----------------------  -----------------------  ------------------------
                                           Per           %          Per           %           Per           %
                                          total         of         total         of          total         of
                                           ASM        Revenue       ASM        Revenue        ASM        Revenue


      Revenues:
          Passenger                        8.44         97.2%       9.31        97.5%         7.63         96.9%
          Cargo                            0.19          2.2%       0.18         1.9%         0.18          2.3%
          Other                            0.06          0.6%       0.06         0.6%         0.06          0.8%
                                        -----------  ----------  -----------  ----------  ------------  ----------
      Total revenues                       8.69        100.0%       9.55       100.0%         7.88        100.0%


      Operating expenses:
          Flight operations                3.12         35.9%       3.17        33.2%         3.28         41.6%
          Aircraft and traffic servicing   1.35         15.5%       1.31        13.7%         1.31         16.6%
          Maintenance                      1.42         16.4%       1.66        17.4%         1.60         20.4%
          Promotion and sales              1.40         16.1%       1.45        15.2%         1.31         16.6%
          General and administrative       0.36          4.2%       0.45         4.7%         0.23          3.0%
          Depreciation and amortization    0.07          0.7%       0.08         0.8%         0.06          0.8%
                                        ===========  ==========  ===========  ==========  ============  ==========
      Total operating expenses             7.72         88.8%       8.12        85.0%         7.80         99.0%
                                        ===========  ==========  ===========  ==========  ============  ==========

      Total ASMs (000s)                  2,537,503                  815,961                   544,557
</TABLE>


Revenues

       Our revenues are highly sensitive to changes in fare levels. Fare pricing
policies have a significant impact on our revenues. Because of the elasticity of
passenger  demand,  we believe that increases in fares will 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.  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  in  leisure  travel  markets
depending  on  the  markets'   locations  and  when  they  are  most  frequently
patronized.

<PAGE>

       Our average fare for the  quarters  ended June 30, 1999 and 1998 was $133
and $108,  respectively,  an increase of 23.2%.  We believe that the increase in
the  average  fare  during  the  quarter  ended  June 30,  1999  over the  prior
comparable  period was largely a result of our focus on increasing the number of
business travelers and a general increase in fare levels.  Additionally,  during
the quarter ended June 30, 1998, we honored  certain  Western  Pacific  Airlines
flight coupons at a significantly reduced fare, which depressed the average fare
for the quarter by approximately  $6. Western Pacific  Airlines  operated out of
DIA until it ceased operations on February 4, 1998.

       Passenger  Revenues.  Passenger  revenues  totaled  $75,975,000  for  the
quarter ended June 30, 1999 compared to  $41,561,000  for the quarter ended June
30,  1998,  or an increase of 82.8%.  Passenger  revenue  includes  revenues for
non-revenue passengers,  administrative fees, and revenue recognized for tickets
that are not used within one year from their  issue  dates.  We carried  553,000
revenue  passengers  for the quarter ended June 30, 1999 compared to 368,000 for
the quarter ended June 30, 1998 or an increase of 50.3%. We had an average of 18
aircraft  in our fleet  during the quarter  ended June 30,  1999  compared to an
average of 14 aircraft  during the quarter  ended June 30, 1998,  an increase of
28.6%, and ASMs increased  271,404,000 or 49.8%. RPMs for the quarter ended June
30, 1999 were 506,247,000 compared to 337,555,000 for the quarter ended June 30,
1998, an increase of 50%.

       Cargo  revenues,  consisting  of revenues  from freight and mail service,
totaled $1,441,000 and $1,005,000 for the quarters ended June 30, 1999 and 1998,
representing  1.9% and 2.3% of total  operating  revenues,  respectively,  or an
increase of 43.4%. 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,  comprised principally of interline handling fees, liquor
sales and excess baggage fees,  totaled  $470,000 and $322,000 or .6% and .8% of
total  operating  revenues  for the  quarters  ended  June 30,  1999  and  1998,
respectively.

Operating Expenses

       Operating expenses include those related to flight  operations,  aircraft
and  traffic   servicing,   maintenance,   promotion  and  sales,   general  and
administrative and depreciation and amortization.  Total operating expenses were
$66,233,000  and  $42,463,000  for the quarters ended June 30, 1999 and 1998 and
represented  85% and 99% of  total  revenue,  respectively.  Operating  expenses
decreased as a percentage of revenue during the quarter ended June 30, 1999 as a
result of the 82.8%  increase  in  passenger  revenues  attributable  to a 50.3%
increase in passengers and a 23.2% increase in the average fare.

       Flight  Operations.   Flight  operations   expenses  of  $25,884,000  and
$17,854,000  were 33.2% and 41.6% of total  revenue for the quarters  ended June
30, 1999 and 1998, respectively. Flight operations expenses include all expenses
related  directly to the  operation of the aircraft  including  fuel,  lease and
insurance expenses, pilot and flight attendant compensation, in-flight catering,
crew overnight  expenses,  flight dispatch and flight operations  administrative
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
costs of $7,955,000  for  13,129,000  gallons used and  $5,191,000 for 8,667,000
gallons used resulted in an average fuel cost of 60.6(cent)  and  59.9(cent) per
gallon and represented 30.7% and 29.1% of total flight  operations  expenses for
the quarters ended June 30, 1999 and 1998,  respectively.  The average fuel cost
per gallon  increased for the quarters  ended June 30, 1999 from the  comparable
prior period due to an overall increase in the market price of fuel. Fuel prices
are  subject to change  weekly,  as we do not  purchase  supplies in advance for
inventory.  Fuel  consumption  for the  quarters  ended  June 30,  1999 and 1998
averaged  782 and 770  gallons per block hour,  respectively.  Fuel  consumption
increased  over the prior  comparable  period  because of  increased  flap speed
settings  mandated by the FAA which  required more fuel to maintain air speed at
normal  operating levels as well as the need to carry additional fuel because of
increased storm activity. The requirement for increased flap speed settings will
be lifted whan a fleet  modification is completed,  which is required to be done
by August 1, 2000.

       Aircraft lease expenses totaled  $10,374,000 (13.3% of total revenue) and
$7,591,000  (17.7% of total  revenue) for the  quarters  ended June 30, 1999 and
1998,  respectively,  or an  increase of 36.7%.  The  increase is largely due to
higher lease  expenses  for larger and newer  Boeing 737  aircraft  added to the
fleet and an increase in the average number of aircraft to 18 from 14, or 28.6%,
for the quarters ended June 30, 1999 and 1998, respectively.

       Aircraft insurance expenses  totaled  $605,000 (.8% of total revenue) and
$647,000  (1.5% of total revenue) for the quarters ended June 30, 1999 and 1998,
respectively.  Aircraft  insurance expenses were .12(cent) and .19(cent) per RPM
for the quarters ended June 30, 1999 and 1998, respectively.  Aircraft insurance
expenses  decreased per RPM as a result of  competitive  pricing in the aircraft
insurance  industry,  our  favorable  experience  rating  since we began  flight
operations  in July 1994 and  economies  of scale due to the  increase  in fleet
size.

       Pilot and flight  attendant  salaries  before  payroll taxes and benefits
totaled $3,452,000 and $2,316,000 or 4.5% and 5.6% of passenger revenue for each
of the quarters ended June 30, 1999 and 1998, or an increase of 49.1%. Pilot and
flight  attendant  compensation  increased  principally  as a result  of a 28.6%
increase  in the  average  number of  aircraft  in  service,  general  wage rate
increases,  and an  increase  of 49.1% in block  hours.  We pay pilot and flight
attendant salaries for training consisting of approximately six and three weeks,
respectively,  prior to  scheduled  increases  in  service  which  can cause the
compensation  expense during that period to appear high in  relationship  to the
average number of aircraft in service.  When we are not in the process of adding
aircraft  to our  system,  pilot  and  flight  attendant  expense  per  aircraft
normalizes.  With a scheduled passenger operation, and with salaried rather than
hourly crew compensation,  our expenses for flight operations are largely fixed,
with flight catering and fuel expenses the principal exception.

       Aircraft and Traffic  Servicing.  Aircraft and traffic servicing expenses
were $10,706,000 and $7,138,000 (an increase of 50%) for the quarters ended June
30,  1999 and  1998,  respectively,  and  represented  13.7%  and 16.6% of total
revenue. Aircraft and traffic servicing expenses will increase with the addition
of new cities to our route  system.  During the  quarter  ended June 30, 1999 we
served 19 cities and 14 during the quarter  ended June 30, 1998,  or an increase
of 35.7%. These include all expenses incurred at airports served by us including
landing fees, as well as station operations administration and flight operations
ground equipment maintenance.  Station expenses include landing fees, facilities
rental,  station labor, ground handling expenses,  and interrupted trip expenses
associated  with delayed or cancelled  flights.  Interrupted  trip  expenses are
amounts paid to other airlines to protect  passengers as well as hotel, meal and
other incidental  expenses.  Aircraft and traffic servicing expenses were $1,348
and  $1,291  per  departure  for the  quarters  ended  June 30,  1999 and  1998,
respectively,  or an increase of $57. During the quarter ended June 30, 1998, an
additional  DIA revenue  credit above amounts  estimated  and accrued,  totaling
$371,000 for the calendar  year ended  December  31,  1997,  was recorded  which
approximated  $67 per departure.  After adjusting the cost per departure for the
quarter ended June 30, 1998 for this credit,  the cost per departure  would have
been $1,359 and the cost per departure for the quarter ended June 30, 1999 would
have been a $10 decrease from the prior comparable period.  Aircraft and traffic
servicing expenses decreased as a result of conducting our own ground operations
at DIA beginning  September 1, 1998 rather than having them performed by a third
party contractor. This savings was offset by increased interrupted trip expenses
as a result of a drop in the  completion  factor for the quarter  ended June 30,
1999 to 98.4%  from  99.1% for the  quarter  ended  June 30,  1998 and  expenses
associated with the Boulder, Colorado-DIA shuttle service which is complimentary
to our passengers.

       Maintenance. Maintenance expenses of $13,550,00 and $8,728,000 were 17.4%
and  20.4% of total  revenue  for the  quarters  ended  June 30,  1999 and 1998,
respectively.  These include all labor,  parts and supplies  expenses related to
the maintenance of the aircraft.  Routine  maintenance is charged to maintenance
expense as incurred  while major engine  overhauls and heavy  maintenance  check
expense is accrued  monthly.  Maintenance  cost per block hour was $807 and $775
for the quarters ended June 30, 1999 and 1998, respectively.  During the quarter
ended June 30, 1999, we incurred an  unanticipated  engine  repair  expense as a
result of a premature  failure totaling  $1,500,000.  Maintenance cost per block
hour would have been $718  excluding  this engine repair  expense,  and we would
have experienced a 7.4% decrease in the cost per block hour.  During the quarter
ended June 30,  1998 we were  outsourcing  certain  aircraft  heavy  maintenance
checks. Effective March 1999, we began to conduct these checks in-house which we
expect  will  continue  to  reduce  maintenance   expenses  in  future  periods.
Additionally,  we believe that these costs will  continue to normalize as we add
additional aircraft to our fleet.

       Promotion and Sales. Promotion and sales expenses totaled $11,831,000 and
$7,126,000 and were 15.2% and 16.6% of total revenue for the quarters ended June
30,  1999  and  1998,   respectively.   These  include   advertising   expenses,
telecommunications   expenses,   wages  and  benefits  for  reservationists  and
reservations  supervision as well as marketing  management and sales  personnel,
credit card fees,  travel agency  commissions and computer  reservations  costs.
Promotion  and sales  expenses  decreased  as a  percentage  of revenue  for the
quarter ended June 30, 1999 over the prior comparable period largely as a result
of the increase in revenue.

       Promotion and sales expenses per passenger were $21.39 and $19.36 for the
quarters  ended  June 30,  1999 and  1998,  respectively.  Promotion  and  sales
expenses increased largely as a result of increases in travel agency commissions
and credit card fees  associated with the increase in our average fare from $108
for the quarter ended June 30, 1998 to $133 for the quarter ended June 30, 1999.
We also experienced an increase in reservation  costs as a result of outsourcing
more of our reservation  requirements  offset by a decrease in advertising costs
per passenger.

       General and Administrative.  General and administrative  expenses for the
quarters  ended  June 30,  1999  and 1998  totaled  $3,688,000  and  $1,279,000,
respectively,  and were  4.7% and 3.0% of  total  revenue,  respectively.  These
expenses  include the wages and benefits for several of our  executive  officers
and various other  administrative  personnel including legal,  accounting,  MIS,
aircraft procurement,  corporate  communications,  and human resources and other
expenses  associated with these departments.  Employee health benefits,  accrued
vacation and bonus expenses, and general insurance expenses are also included in
general and  administrative  expenses.  Included  in general and  administrative
expenses  for the quarter  ended June 30, 1999 was an accrual of $742,000  for a
potential  employee  performance bonus under a new program adopted this year. We
also  experienced  increases in our human resources and MIS expenses as a result
of an increase in employees from approximately 950 in June 1998 to approximately
1,640 in June 1999.  In  addition  to the usual  increases  in crew and  station
personnel  associated  with additional  aircraft and cities,  we had significant
increases  in  maintenance  personnel  as a result  of  bringing  certain  heavy
maintenance  checks  in-house  which  began in March  1999 and  ground  handling
personnel  for our own ramp  operations  at DIA which began in  September  1998.
Because of the increase in personnel,  our health insurance benefit expenses and
accrued vacation expense  increased  accordingly.  During the quarter ended June
30, 1998, we relieved  approximately  $240,000 of our employee health  insurance
liability that was determined to be overfunded  with a  corresponding  credit to
general and administrative expenses.

       Depreciation and Amortization.  Depreciation and amortization expenses of
$574,000 and $338,000 were approximately .8% for each of the quarters ended June
30, 1999 and 1998.  These expenses  include  depreciation  of office  equipment,
ground station equipment,  and other fixed assets.  Amortization of start-up and
route development costs is not included, as these expenses have been expensed as
incurred.

       Nonoperating  Income (Expense).  Net nonoperating income totaled $681,000
for the  quarter  ended June 30, 1999  compared to $9,000 for the quarter  ended
June 30, 1998.  Interest  income  increased from $276,000 to $825,000 during the
quarter ended June 30, 1999 from the prior comparable  period due to an increase
in cash  balances  as a result of an  increase  in cash  provided  by  operating
activities  and  proceeds  from stock  option and  warrant  exercises.  Interest
expenses  decreased to $22,000 from  $240,000  during the quarter ended June 30,
1999 from the prior year.  In December  1997,  we sold  $5,000,000 of 10% senior
notes.  In connection  with this  transaction,  we issued the lender warrants to
purchase 1,750,000 shares of Common Stock. Interest expense paid in cash and the
accretion of the warrants and deferred loan expenses  associated with the senior
secured  notes  totaled  $234,000  during the quarter  ended June 30,  1998.  In
January  1999, we paid the note in full.  Other,  net  nonoperating  expense was
$122,000 for the quarter ended June 30, 1999 compared to other, net nonoperating
income of $26,000 for the quarter ended June 30, 1998.

       Income Tax Expense:  We accrued  income taxes of  $4,718,000 at 38.25% of
taxable income during the quarter ended June 30, 1999.  During the quarter ended
June 30, 1998, the Company had tax loss carryforwards that offset taxable income
for the period.

       Expenses per ASM.  Our  expenses per ASM for the quarters  ended June 30,
1999 and 1998 were  8.12(cent) and 7.80(cent),  respectively,  or an increase of
4.1%.  Our cost  per ASM  increased  during  the  quarter  ended  June 30,  1999
principally  as a result of an  unanticipated  engine  repair  expense  due to a
premature  failure  which  accounted  for  .18(cent)  of expense per ASM and our
accrual for a potential  employee  performance bonus under a new program adopted
this year,  which  accounted  for .09(cent) of expenses per ASM. Our expense per
ASM for the quarter ended June 30, 1999 adjusted for these items would have been
7.85(cent). Expenses per ASM excluding fuel for the quarters ended June 30, 1999
and 1998 were 7.14(cent) and 6.84(cent),  respectively,  or an increase of 4.4%.
Expenses  per  ASM  are  influenced  to a  degree  by  the  amount  of  aircraft
utilization and by aircraft  seating  configuration.  For example,  with the 108
seat  all  coach  seating  configuration  selected  by us on five of our  Boeing
737-200  aircraft,  the expenses per ASM for us are higher by 11% when  compared
with the 120 seat  alternative  used by many  carriers.  Our  average  seats per
aircraft  for the quarter  ended June 30, 1999 were 126 as compared to 124 seats
per aircraft for the quarter ended June 30, 1998, as a result of the increase in
the number of our Boeing 737-300 aircraft.


Liquidity and Capital Resources

       Our balance sheet  reflected  cash and cash  equivalents  and  short-term
investments of $70,497,000  and $47,289,000 at June 30, 1999 and March 31, 1999,
respectively.  At June 30,  1999,  total  current  assets were  $113,917,000  as
compared to  $77,413,000  of total  current  liabilities,  resulting  in working
capital of $36,504,000. At March 31, 1999, total current assets were $94,209,000
as compared to  $68,721,000 of total current  liabilities,  resulting in working
capital of $25,488,000. The increase in our present working capital is largely a
result  of cash  flows  provided  by  operating  activities  and  proceeds  from
exercises of common stock options and warrants during the quarter ended June 30,
1999.

       Cash provided by operating activities for the quarter ended June 30, 1999
was  $20,598,000.  This is  attributable  to our  net  income  for  the  period,
decreases  in  trade  receivables,  utilization  of  deferred  tax  assets,  and
increases in air traffic liability and accrued maintenance  expenses,  offset by
increases in security, maintenance and other deposits and prepaid expenses. Cash
used by operating activities for the quarter ended June 30, 1998 was $2,931,000.
This was attributable to increases in security,  maintenance and other deposits,
prepaid  expenses and other assets and  decreases in accounts  payable and other
accrued  expenses,  offset by net income and decreases in trade  receivables and
increases in air traffic liability and accrued maintenance expenses.

       Cash used by investing activities for the quarter ended June 30, 1999 was
$43,303,000.  We invested  $41,378,000  in short-term  investments  comprised of
government-backed  agencies  with  maturities  of one year or less.  During  the
quarter  ended June 30, 1999,  cash  security  deposits  for  aircraft  totaling
$596,000 were  returned to us. We had issued to certain of our aircraft  lessors
warrants to purchase 395,000 shares of our Common Stock at an aggregate purchase
price of $2,391,600.  During May 1999 and June 1999,  aircraft lessors exercised
all of  these  warrants  and we  received  $2,391,600.  To the  extent  that the
aircraft lessors were able to realize certain profit margins on their subsequent
sale of our Common  Stock,  they were  required  to refund a portion of the cash
security  deposits they were  holding.  As a result of their sales of our Common
Stock, $486,000 in cash security deposits were returned to us during the quarter
ended June 30, 1999. Other cash security  deposits were replaced with letters of
credit and these  deposits  were  returned to us.  Additionally,  we secured two
aircraft delivered during the quarter ended June 30, 1999 with letters of credit
totaling   $860,000.   Our   restricted   investments   increased   $860,000  to
collateralize the letters of credit. We used $1,662,000 for capital expenditures
for rotable  aircraft  components,  maintenance  equipment  and tools,  aircraft
leasehold costs and improvements,  and computer  equipment for the quarter ended
June 30, 1999. Cash used in investing  activities for the quarter ended June 30,
1998 was $5,261,000.  We invested $4,933,000 in short-term investments comprised
of  government-backed  agencies  with  maturities  of one year or less.  We used
$328,000 for capital  expenditures for rotable aircraft  components and aircraft
leasehold costs and improvements during the quarter ended June 30, 1998.

       Cash  provided by financing  activities  for the quarters  ended June 30,
1999 and 1998 was $4,536,000 and $13,846,000,  respectively.  During the quarter
ended June 30, 1999,  we received  $4,556,000  from the exercise of Common Stock
options and warrants.  During the quarter ended June 30, 1998, we sold 4,363,001
shares of our  Common  Stock  through a private  placement  to an  institutional
investor.   Gross  proceeds  to  us  from  the  transaction  were  approximately
$14,180,000,  of which we received  net  proceeds of  approximately  $13,650,000
after offering costs.  We issued a warrant to this investor to purchase  716,929
shares of our Common Stock at a purchase price of $3.75 per share.  This warrant
expires in April 2002.

       We operate  19 Boeing  737 type  aircraft  under  operating  leases  with
expiration dates ranging from 1999 to 2006. Under these leases, we were required
to make cash  security  deposits or issue  letters of credit to secure the lease
obligations.  At  June  30,  1999,  we  had  made  cash  security  deposits  and
outstanding letters of credit totaling  $4,952,000 and $4,504,000  respectively.
Accordingly, our restricted cash balance includes $4,504,000 which collateralize
the  outstanding  letters  of  credit.   Additionally,   we  make  deposits  for
maintenance of these aircraft.  At June 30, 1999, we had maintenance deposits of
$22,296,405.

       Two of our  leased  aircraft are  not compliant  with  FAA  Stage 3 noise
regulations.  As their leases expire in the fall of 1999 we are replacing  these
aircraft with Stage 3 compliant aircraft.  We have entered into lease agreements
to lease two  Boeing  737-200  advanced  aircraft  to  replace  these  aircraft.
However, delivery delays could cause us to temporarily reduce our fleet size and
therefore adversely affect our revenues.

       We are exploring  various means to increase revenues and reduce expenses.
We have performed ad hoc charters and will consider them in the future depending
on  the  availability  of our  fleet.  We are  considering  revenue  enhancement
initiatives  with new  marketing  alliances.  We began our own  ground  handling
operations at DIA effective September 1, 1998, a function that had been provided
by an  independent  contractor.  Ground  handling  equipment  required  by us to
perform these  operations  necessitated  capital  expenditures of  approximately
$800,000.  Effective March 1, 1999, we began to conduct  certain  aircraft heavy
maintenance  checks  in-house that we expect will reduce  maintenance  expenses.
Other  potential  expense  reduction  programs  include the  installation  of an
upgraded  flight  operations,   maintenance,   and  parts  inventory  management
information  system which we expect will be fully  operational by the end of the
fiscal year ending March 31, 2000, and an in-house revenue accounting system.

       We currently sublease  from  Continental  Airlines, on a preferential-use
basis,  four  departure  gates on Concourse A at DIA. In addition,  we use, on a
non-preferential  use basis, another three gates under the direct control of the
City and County of Denver  ("CCD").  Our sublease  with  Continental  expires on
February 29, 2000, as does Continental's lease with CCD for these four gates and
an additional six gates it leases on Concourse A.  Continental  has an option to
renew its lease for five years and reduce its lease  obligation  to three  gates
and related space.  United  Airlines,  which  occupies all of DIA's  Concourse B
gates,  has a right of first  refusal  on any of the ten  Continental  gates for
which  Continental  does not renew its lease,  and has stated its  intention  to
occupy four gates on Concourse A.  Continental's  lease and lease renewal option
for  gates  on  Concourse  A, as well as  United's  right of  first  refusal  on
Continental's  Concourse A gates,  are provided for in a 1995 agreement  between
CCD,  Continental and United (the "1995 Agreement").  We have requested of CCD a
lease,  effective  March 1, 2000, for the four gates we currently  sublease from
Continental  and an  additional  five  gates  contiguous  to  those  we now use.
However,  our request is  contingent  upon the  implementation  of a rate making
methodology  for DIA terminal  facilities  that  remedies what we consider to be
unfair and discriminatory aspects of the current methodology,  as established by
the  1995  Agreement.   Under  the  present   methodology  costs  related  to  a
non-functioning  Concourse A automated  baggage system and associated  equipment
and space  ("AABS") are  allocated  exclusively  to Concourse A, causing  rental
rates on Concourse A to be higher than those on DIA's  Concourse C. Our sublease
for Concourse A gates with Continental, which expires in February 2000, provides
that Continental  pays, on our behalf,  a significant  portion of the AABS costs
that would otherwise be payable by us under the current rate-making methodology.

       CCD  has  indicated that it is considering  alternative means of treating
AABS costs upon  expiration of the  Continental  lease in February 2000. CCD and
the signatory airlines at DIA, including us, are discussing  possible changes to
the rate-making methodology to deal with the AABS costs, although CCD has stated
that  absent  an  agreement  with a  majority-in-interest  of the DIA  signatory
airlines, CCD will unilaterally impose a solution to the issue. Unless the issue
is  resolved  by  agreement  of all or at least a majority  in  interest  of the
affected parties, there is a significant possibility that the 1995 Agreement, or
any  rate-making  methodology  unilaterally  imposed by CCD,  will be subject to
litigation.  In these  circumstances,  there is uncertainty  with respect to the
number and location of gate  facilities  at DIA that will be available to us, as
well  as the  rates  and  charges  that  we will  be  required  to pay for  such
facilities  after  February  2000. If we were required to operate at fewer gates
than we have  requested or if the  ratemaking  methodology is not amended or the
rates are increased, it could have a material adverse effect on our business and
results of operations.

       Our goal is to continue to lease additional  aircraft to serve additional
cities and to add flights on existing routes from Denver. We added routes to San
Diego,  California,  Atlanta,  Georgia,  Dallas/Ft.  Worth, Texas and Las Vegas,
Nevada during the year ended March 31, 1999, and Portland, Oregon effective June
14, 1999.  Service to Orlando,  Florida is  scheduled  to commence  September 9,
1999,  with one daily  nonstop  flight and a second daily flight  commencing  on
November 4, 1999. We believe that expanding our route system would  facilitate a
greater  volume of connecting  traffic as well as a stable base of local traffic
and  offset  the  impact of higher  DIA-related  operating  costs  through  more
efficient gate  utilization.  Expansion of our operations will entail the hiring
of  additional  employees to staff flight and ground  operations in new markets,
and significant  initial costs such as deposits for airport and aircraft leases.
Because of the expansion of our  business,  and  competition  within the airline
industry that often  requires  quick reaction by management to changes in market
conditions, we may require additional capital to further expand our business.

       In February 1997,  United Airlines  commenced  service using its low fare
United "Shuttle" between Denver and Phoenix,  Arizona,  and in October 1997 such
service to Salt Lake City was added by United.  These are both  markets in which
we provide service,  in addition to other markets where United Airlines provides
flights.  We commenced  service  between  Denver and Las Vegas in December 1998,
another  market in which United  provides  service with United  "Shuttle".  This
competition,  as well as  other  competitive  activities  by  United  and  other
carriers,  have had and could continue to have an adverse effect on our revenues
and results of operations.

       Except for the year ended March 31,  1999 and the quarter  ended June 30,
1999, we have incurred  substantial  operating  losses since our  inception.  In
addition,   we  have  substantial   contractual   commitments  for  leasing  and
maintaining  aircraft.  We believe that our existing cash balances  coupled with
improved  operating  results are and will be adequate to fund our  operations at
least through March 31, 2000.

Year 2000 Compliance

       We began operations in July 1994, and our operations depend predominantly
on third party computer  systems.  Because of our limited  resources  during our
start-up,  the most cost effective way to establish our computer  systems was to
outsource  or to use  manual  systems.  Internal  systems we  developed  and any
software we acquired are limited and were  designed or  purchased  with the Year
2000 taken into consideration.

       We have  designated an employee  committee  that is  responsible  for (1)
identifying  and  assessing  Year  2000  issues,  (2)  modifying,  upgrading  or
replacing  computer  systems,  (3) testing internal and third party systems and,
(4)  developing  contingency  plans in the event that a system or systems  fail.
This committee  periodically reports to management regarding progress being made
in addressing the Year 2000 issue. Management,  in turn, periodically reports to
the Board of Directors on the issue.

       We rely on third party business and government  agencies to provide goods
and services which are critical to our  operations,  including the FAA, the DOT,
local airport  authorities  including DIA, utilities,  communication  providers,
financial  institutions  including credit card companies and fuel suppliers.  We
are reviewing,  and have initiated formal communications with, these third party
service providers to determine their Year 2000 readiness, the extent to which we
are vulnerable to any failure by such third parties to remediate their Year 2000
problems and to resolve such issues to the extent practicable.

       All  internal  systems  are in the testing and  remediation  phases.  The
customer  reservations  and  ticketing  system  and the credit  card  processing
system, for example, have already been tested and remediated.  These systems are
outsourced  and the third party  provider  absorbed the costs of  modifying  and
testing these  systems.  Our general  accounting  and payroll  systems have been
upgraded to new versions that are  certified as being Year 2000  compliant at an
insignificant  cost to us.  Our crew and  dispatch  training  records,  aircraft
maintenance  records  and  inventory  control  are in the final  stages of being
automated  from manual  systems to computer  systems that are certified as being
Year 2000 compliant.  The Boeing Company has verified that the computer  systems
on the aircraft  type operated by us are or will be Year 2000  compliant  before
the year  2000.  We plan to  complete  the  testing  and  remediation  phases by
September 30, 1999, and the contingency planning phase by October 31, 1999.

       We have utilized  existing resources with the exception of four temporary
personnel and have incurred  appoximately  $100,000 of expenses to implement our
Year 2000 project as of June 30,  1999.  The total  remaining  costs of the Year
2000 project are expected to be  insignificant  and will be funded  through cash
from  operations.  The costs and the dates on which we anticipate  completion of
the Year 2000 project are based on our best estimates. There can be no guarantee
that these estimates will be achieved and actual results could differ materially
from those anticipated.

       Despite our efforts to address  Year 2000  issues,  we could  potentially
experience  disruptions or suspension of our operations (which we believe is the
most  reasonably  likely worse case  scenario),  including  those resulting from
non-compliant systems used by third party businesses and governmental  entities.
Our business,  financial  condition or results of operations could be materially
adversely  affected  by the  failure of our  systems or those  operated by third
parties upon which our business relies.

Item 3:  Quantitative and Qualitative Disclosures About Market Risk

       The  significant  risk inherent in our market risk sensitive  position is
the  potential  loss  arising  from an  adverse  change  in the price of fuel as
described below. The sensitivity analysis presented does not consider either the
effects  that such an adverse  change may have on overall  economic  activity or
additional action management may take to mitigate our exposure to such a change.
Actual results may differ from the amounts disclosed. At the present time, we do
not  utilize  fuel  price  hedging   instruments   to  reduce  our  exposure  to
fluctuations in fuel prices.

       Our  earnings are  affected by changes in the price and  availability  of
aircraft fuel. Market risk is estimated as a hypothetical 10 percent increase in
the average  cost per gallon of fuel for the fiscal  year ended March 31,  1999.
Based on fiscal  year 1999  actual  fuel  usage,  such an  increase  would  have
resulted in an increase to aircraft fuel expense of approximately  $2,300,000 in
fiscal year 1999. Comparatively, based on projected fiscal year 2000 fuel usage,
such an  increase  would  result in an  increase  to  aircraft  fuel  expense of
approximately  $3,100,000 in fiscal year 2000.  The increase in exposure to fuel
price  fluctuations  in  fiscal  year  2000 is due to our plan to  increase  our
average aircraft fleet size and related gallons purchased.



<PAGE>


                           PART II. OTHER INFORMATION


Item 2:        Changes in Securities and Use of Proceeds

               During the quarter, we issued an aggregate of 1,091,600 shares of
               our  Common  Stock  pursuant  to  the  exercise  of  warrants  as
               discussed in "Liquidity and Capital  Resources" above. The shares
               were issued pursuant to an exemption by reason of Section 4(2) of
               the Securities Act of 1933. A Registration  Statement on Form S-3
               covering the resale of these shares has been  declared  effective
               by the Securities and Exchange Commission.




Item 6:        Exhibits and Reports on Form 8-K

Exhibit Numbers

(a)      Exhibits

10.44          Aircraft Sublease Agreement (MSN 23039) dated as of July 21, 1999
               between Kommanditbolaget Flygplanet XIV, Sublessor, and  Frontier
               Airlines,  Inc.,  Sublessee.  Portions  of this exhibit have been
               excluded from the publicly available  document and an application
               for  an  order  granting  confidential  treatment of the excluded
               material has been made.

10.45          Aircraft Sublease Agreement (MSN 23040) dated as of July 21, 1999
               between Kommanditbolaget Flygplanet XII, Sublessor, and  Frontier
               Airlines,  Inc.,  Sublessee.  Portions  of this exhibit have been
               excluded from the publicly  available document and an application
               for an order granting  confidential  treatment  of  the  excluded
               material has been made.

27.1           Financial Data Schedule

(b)      Reports on Form 8-K

          None.





<PAGE>



                                   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:  August 10, 1999                    By: /s/ Samuel D. Addoms
                                         ---------------------------------------
                                         Samuel D. Addoms, Principal Executive
                                         Officer and Principal Financial Officer


Date:  August 10, 1999                    By: /s/ Elissa A. Potucek
                                         ---------------------------------------
                                         Elissa A. Potucek, Vice President,
                                         Controller, Treasurer and Principal
                                         Accounting Officer