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 December 31, 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 Identification No.)
of incorporated or organization)

    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 January 28,
2000 was 17,694,709.



<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       15




                           PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K                                 16




<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
FRONTIER AIRLINES, INC.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<S>                                                                               <C>              <C>

                                                                                   December 31,       March 31,
                                                                                       1999             1999
                                                                                  ---------------  ----------------
Assets
Current assets:
    Cash and cash equivalents                                                       $ 50,848,999      $ 47,289,072
    Short-term investments                                                            18,260,000          -
    Restricted investments                                                             4,000,000         4,000,000
    Trade receivables                                                                 12,148,082        16,930,038
    Maintenance deposits                                                              17,414,135        13,018,466
    Prepaid expenses and other assets                                                  6,575,918         5,439,834
    Inventories                                                                        2,148,344         1,203,916
    Deferred tax assets                                                                  968,850         6,041,576
    Deferred lease expenses                                                              185,727           285,636
                                                                                  ---------------  ----------------
            Total current assets                                                     112,550,055        94,208,538

Security, maintenance and other deposits                                              12,565,379        11,834,457
Property and equipment, net                                                           18,953,368         8,733,778
Deferred lease and other expenses                                                        145,124           267,762
Restricted investments                                                                 6,359,760         4,575,760
                                                                                  ===============  ================
                                                                                   $ 150,573,686     $ 119,620,295
                                                                                  ===============  ================

Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                                                $ 11,301,522      $ 14,011,238
    Air traffic liability                                                             27,533,095        28,887,692
    Other accrued expenses                                                            12,085,876        10,781,509
    Accrued maintenance expense                                                       19,576,257        14,933,568
    Current portion of obligations under capital leases                                  110,107           106,833
                                                                                  ---------------  ----------------
            Total current liabilities                                                 70,606,857        68,720,840

Accrued maintenance expense                                                            6,424,469         6,042,958
Deferred tax liability                                                                 1,269,150            30,928
Obligations under capital leases, excluding current portion                              357,912           434,920
                                                                                  ---------------  ----------------
            Total liabilities                                                         78,658,388        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; 17,693,709 and 16,141,172 shares
        issued and outstanding at December 31, 1999 and March 31, 1999                    17,693            16,141
    Additional paid-in capital                                                        66,302,012        58,054,844
    Unearned ESOP shares                                                              (1,143,750)         (609,375)
    Retained earnings (accumulated deficit)                                            6,739,343       (13,070,961)
                                                                                  ---------------  ----------------
            Total stockholders' equity                                                71,915,298        44,390,649
                                                                                  ---------------  ----------------
                                                                                   $ 150,573,686     $ 119,620,295
                                                                                  ===============  ================
See accompanying notes to financial statements.

</TABLE>



                                       1
<PAGE>







FRONTIER AIRLINES, INC.
Statements of Income
(Unaudited)
<TABLE>
<S>                                            <C>              <C>               <C>              <C>

                                                       Three Months Ended                Nine Months Ended
                                                 December 31,     December 31,     December 31,     December 31,
                                                    1999             1998              1999             1998
                                               ---------------  ----------------  ---------------  ----------------
Revenues:
    Passenger                                    $ 71,663,224      $ 49,112,767    $ 231,050,921     $ 146,175,655
    Cargo                                           1,767,542         1,279,175        4,686,118         3,250,994
    Other                                             543,143           301,646        1,576,332         1,007,405
                                               ---------------  ----------------  ---------------  ----------------

            Total revenues                         73,973,909        50,693,588      237,313,371       150,434,054
                                               ---------------  ----------------  ---------------  ----------------

Operating expenses:
    Flight operations                              32,338,722        19,894,445       88,599,352        56,526,799
    Aircraft and traffic servicing                 12,225,498         8,584,155       34,846,102        24,175,968
    Maintenance                                    10,752,059         9,178,653       36,649,604        27,317,001
    Promotion and sales                            10,204,796         8,365,827       34,681,764        23,788,720
    General and administrative                      3,577,780         1,989,114       11,436,318         5,025,693
    Depreciation and amortization                     780,732           438,380        1,988,384         1,154,354
                                               ---------------  ----------------  ---------------  ----------------

            Total operating expenses               69,879,587        48,450,574      208,201,524       137,988,535
                                               ---------------  ----------------  ---------------  ----------------

            Operating income                        4,094,322         2,243,014       29,111,847        12,445,519
                                               ---------------  ----------------  ---------------  ----------------

Nonoperating income (expense):
    Interest income                                 1,172,868           422,217        3,119,990         1,042,189
    Interest expense                                  (46,599)         (203,789)         (94,615)         (661,870)
    Other, net                                        (70,435)           (1,911)         (55,414)          (63,040)
                                               ---------------  ----------------  ---------------  ----------------

            Total nonoperating income, net          1,055,834           216,517        2,969,961           317,279
                                               ---------------  ----------------  ---------------  ----------------

Income before income tax expense                    5,150,156         2,459,531       32,081,808        12,762,798

Income tax expense                                  1,970,135               -         12,271,504               -

                                               ===============  ================  ===============  ================
Net income                                        $ 3,180,021       $ 2,459,531     $ 19,810,304      $ 12,762,798
                                               ===============  ================  ===============  ================

Earnings per share:
            Basic                                   $    0.18         $    0.17        $    1.15         $    0.93
                                               ===============  ================  ===============  ================
            Diluted                                 $    0.17         $    0.15        $    1.05         $    0.86
                                               ===============  ================  ===============  ================

Weighted average shares of
  common stock outstanding
            Basic                                  17,585,736        14,697,983       17,195,012        13,726,675
                                               ===============  ================  ===============  ================
            Diluted                                19,053,879        16,117,426       18,778,260        14,875,968
                                               ===============  ================  ===============  ================

See accompanying notes to financial statements.
</TABLE>




                                       2
<PAGE>




FRONTIER AIRLINES, INC.
Condensed Statements of Cash Flows
For the Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<S>                                                                               <C>              <C>

                                                                                       1999             1998
                                                                                  ---------------  ----------------
Cash flows from operating activities:
    Net income                                                                      $ 19,810,304      $ 12,762,798
    Adjustments to reconcile net income to net cash
        provided by operating activities:
            Employee stock option plan compensation expense                              609,375           645,750
            Depreciation and amortization                                              2,210,930         1,640,062
            Loss on sale of equipment                                                   -                    6,793
            Deferred tax expense                                                       6,310,948          -
            Changes in operating assets and liabilities:
                Restricted investments                                                   500,000          (828,873)
                Trade receivables                                                      4,781,956         1,496,891
                Security, maintenance and other deposits                              (4,867,552)       (5,089,869)
                Prepaid expenses and other assets                                     (1,136,084)       (2,952,729)
                Inventories                                                             (944,428)          (27,767)
                Accounts payable                                                      (2,709,716)       (3,822,367)
                Air traffic liability                                                 (1,354,597)        1,391,317
                Other accrued expenses                                                 3,246,009           200,003
                Accrued maintenance expense                                            5,024,200         6,024,828
                                                                                  ---------------  ----------------
                      Net cash provided by operating activities                       31,481,345        11,446,837
                                                                                  ---------------  ----------------

Cash flows from investing activities:
    Increase in short-term investments                                               (18,260,000)          -
    Aircraft lease deposits, net                                                        (259,039)         (284,000)
    Increase in restricted investments                                                (2,284,000)       (1,120,000)
    Capital expenditures                                                             (12,207,973)       (2,447,096)
                                                                                  ---------------  ----------------
                     Net cash used by investing activities                           (33,011,012)       (3,851,096)
                                                                                  ---------------  ----------------

Cash flows from financing activities:
    Net proceeds from issuance of common stock                                         5,163,328        14,064,381
    Proceeds from short-term borrowings                                                 -                  179,664
    Principal payments on short-term borrowings                                         -                 (118,658)
    Principal payments on obligations under capital leases                               (73,734)          (40,100)
                                                                                  ---------------  ----------------
                    Net cash provided by financing activities                          5,089,594        14,085,287
                                                                                  ---------------  ----------------

                    Net increase in cash and cash equivalents                          3,559,927        21,681,028

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

Cash and cash equivalents, end of period                                            $ 50,848,999      $ 25,322,423
                                                                                  ===============  ================

See accompanying notes to financial statements.
</TABLE>

                                       3
<PAGE>








FRONTIER AIRLINES, INC.
Notes to Financial Statements
December 31, 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
     nine months ended December 31, 1999 are not  necessarily  indicative of the
     results that will be realized for the full year.

(2)  Income Tax Expense

     Income tax expense for the three and nine months  ended  December  31, 1999
     consists of:

                               Three months           Nine months
                                  ended                  ended
                             -----------------      -----------------

  Current expense                  700,842               5,960,556
  Deferred expense               1,269,293               6,310,948
                             =================      =================
                                 1,970,135              12,271,504
                             =================      =================





                                       4
<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
our 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;  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 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,
financing   necessary  to  purchase   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  RPM or  expense  per ASM can
significantly affect operating results. See "Risk Factors" in our 1999 Form 10-K
as they may be modified by the disclosures contained in this report.

General

       We are a  scheduled  airline  based in  Denver,  Colorado.  We  currently
operate  routes  linking our Denver hub to 20 cities in 17 states  spanning  the
nation  from  coast to coast.  At  present,  we use up to eight  gates at Denver
International  Airport ("DIA") for  approximately 90 daily flight departures and
arrivals.  During the nine months ended  December 31, 1999,  we added  Portland,
Oregon to our route system on June 14, 1999 and Orlando, Florida on September 9,
1999 and added  frequencies to certain existing markets we serve. On November 4,
1999 we added a second daily nonstop  flight  between DIA and Orlando,  Florida.
During the nine months ended  December 31, 1998, we added San Diego,  California
to our route system on July 31, 1998 and Atlanta,  Georgia,  Dallas/Forth Worth,
Texas,  and Las Vegas,  Neveda on December  17,  1998.  On November 1, 1998,  we
initiated  complimentary shuttle bus service between Boulder,  Colorado and DIA.
An additional flight is scheduled to commence on February 17, 2000 to Baltimore,
Maryland.

       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 22 leased jets as of January 28, 2000,  including 7 Boeing  737-200s and
15 larger Boeing 737-300s.  Of our 22 leased jets, 20 are presently in scheduled
service and 2 are in the process of  induction  and will be placed in  scheduled
service in February 2000.

       As a result of the  expansion  of our  operations  during the nine months
ended  December  31,  1999,  our  results  of  operations  are  not  necessarily
indicative of future  operating  results or comparable to the prior period ended
December 31, 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.

                                       5
<PAGE>

Results of Operations

       We had net income of  $19,810,000 or $1.05 per diluted share for the nine
months  ended  December  31, 1999 as compared  to net income of  $12,763,000  or
86(cent) per diluted  share for the nine months ended  December 31, 1998. We had
net income of  $3,180,000  or 17(cent)  per diluted  share for the three  months
ended  December 31, 1999 as compared to net income of $2,460,000 or 15(cent) per
diluted share for the three months ended December 31, 1998. During the three and
nine months ended  December 31, 1999,  we reported a provision  for income taxes
which totaled  $1,970,000  and  $12,272,000 or 10(cent) and 65(cent) per diluted
share,  respectively.  During the three and nine months ended December 31, 1998,
we had the  benefit of tax loss  carryforwards  that  offset tax expense for the
period.  During the three and nine months ended December 31, 1999 as compared to
the  prior  comparable  periods,  we  experienced  higher  fares as a result  of
increases  in the number of business  travelers  and a general  increase in fare
levels.  Our cost per ASM increased to  7.96(cent)  during the nine months ended
December  31,  1999 from  7.72(cent)  principally  because  of our  accrual  for
potential employee performance bonuses, which accounted for .08(cent) of expense
per ASM,  and an  overall  increase  in the  cost of fuel  which  accounted  for
 .22(cent)  per ASM,  offset by a decrease  of  .13(cent)  of expense  per ASM in
maintenance  expenses as a result of bringing certain aircraft heavy maintenance
checks in-house which were previously outsourced to third party vendors.

       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 nine months ended
December  31,  1999,  our  break-even  load  factor  was 51.1%  compared  to the
passenger load factor achieved of 59.3%.  For the nine months ended December 31,
1998,  our break-even  load factor was 54.4% compared to the achieved  passenger
load  factor of 59.6%.  Our  break-even  load  factor  decreased  from the prior
comparable period largely as a result of an increase in our average fare to $132
during the nine months ended  December 31, 1999 from $119 during the nine months
ended December 31, 1998, an increase in our total yield per RPM from 14.14(cent)
for the nine months ended December 31, 1998 to  15.29(cent)  for the nine months
ended  December  31,  1999  offset  by an  increase  in our  expense  per ASM to
7.96(cent) for the nine months ended  December 31, 1999 from  7.72(cent) for the
nine months ended December 31, 1998.

       The  following  table sets forth certain of our quarterly  financial  and
operating data for the 15 months of operations ended December 31, 1999.
<TABLE>
<CAPTION>
<S>                             <C>                  <C>              <C>             <C>              <C>

                                                      Selected Financial and Operating Data

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

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

Passenger revenue (1)               $49,113,000       $68,136,000      $75,975,000       $83,413,000       $71,663,000
Revenue passengers carried              373,000           503,000          553,000           617,000           509,000
Revenue passenger miles (RPMs)(2)   338,691,000       442,541,000      506,247,000       575,476,000       470,484,000
Available seat miles (ASMs)(3)      632,754,000       751,081,000      815,961,000       900,524,000       900,328,000
Passenger load factor (4)                 53.5%             58.9%            62.0%             63.9%             52.3%
Break-even load factor (5)                50.8%             48.3%            52.0%             52.7%             48.5%
Block hours (6)                          13,325            15,666           16,785            17,987            17,660
Average daily block hour
  utilization (7)                          9.57             10.24            10.80             10.80             10.62
Yield per RPM (cents) (8)                 14.50             15.40            15.01             14.49             15.23
Total yield per RPM (cents) (9)           14.97             15.86            15.38             14.85             15.72
Total yield per ASM (cents) (10)           8.01              9.34             9.55              9.49              8.22
Expense per ASM (cents)                    7.66              7.71             8.12              8.01              7.76
Expense per ASM (excluding
  fuel) (cents)                            6.73              6.91             7.14              6.83              6.49
Passenger revenue per
  block hour                          $3,685.78         $4,349.23        $4,526.36         $4,637.40         $4,057.93
Average fare (11)                          $124              $131             $133              $130              $135
Average aircraft in service                14.4              17.0             18.0              19.1              19.7
EBITDAR (12)                        $10,886,000       $21,923,000      $22,479,000       $25,779,000       $17,348,000
EBITDAR as a % of revenue                 21.5%             31.2%            28.9%             30.2%             23.5%
Operating income                     $2,243,000       $12,234,000      $11,653,000       $13,364,000        $4,094,000
Net income                           $2,460,000       $17,802,000       $7,616,000        $9,014,000        $3,180,000
</TABLE>

                                       6
<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 total 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 three and nine  months  ended
December 31, 1999 and 1998.
<TABLE>
<S>                           <C>        <C>        <C>        <C>        <C>         <C>        <C>        <C>

                               For the three months ended December 31,     For the nine months ended December 31,
                                     1999                  1998                   1999                  1998
                              --------------------  --------------------  ---------------------- --------------------
                                Per         %         Per         %          Per          %         Per        %
                               total        of       total        of        total        of        total       of
                                ASM      Revenue      ASM      Revenue       ASM       Revenue      ASM     Revenue


Revenues:
    Passenger                     7.96      96.9%      7.76       96.9%      8.83         97.4%     8.18       97.2%
    Cargo                         0.20       2.4%      0.20        2.5%      0.18          2.0%     0.18        2.1%
    Other                         0.06       0.7%      0.05        0.6%      0.06          0.6%     0.06        0.7%
                               =========  =========  =========  =========  ==========  ========== ========== =========
Total revenues                    8.22     100.0%      8.01      100.0%      9.07        100.0%     8.42      100.0%
                               =========  =========  =========  =========  ==========  ========== ========== =========

Operating expenses:
    Flight operations             3.59      43.7%      3.15       39.3%      3.39         37.3%     3.17       37.5%
    Aircraft and traffic
      servicing                   1.36      16.5%      1.36       16.9%      1.33         14.7%     1.35       16.1%
    Maintenance                   1.19      14.5%      1.45       18.1%      1.40         15.4%     1.53       18.2%
    Promotion and sales           1.13      13.8%      1.32       16.5%      1.32         14.6%     1.33       15.8%
    General and
      administrative              0.40       4.8%      0.31        3.9%      0.44          4.8%     0.28        3.3%
    Depreciation and
      amortization                0.09       1.1%      0.07        0.9%      0.08          0.9%     0.06        0.8%
                              =========  =========  =========  =========  ==========  ========== ========== =========
Total operating expenses          7.76      94.4%      7.66       95.6%      7.96         87.7%     7.72       91.7%
                              =========  =========  =========  =========  ==========  ========== ========== =========

Total ASMs (000s)               900,328               632,754              2,616,813              1,786,422
</TABLE>


                                       7
<PAGE>


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.

       Our average fare for the nine months ended December 31, 1999 and 1998 was
$132 and $119,  respectively.  We believe  that the increase in the average fare
during the nine months ended December 31, 1999 over the prior comparable periods
was largely a result of our focus on increasing the number of business travelers
and a general  increase  in fare  levels.  Additionally,  during the nine months
ended December 31, 1998, we honored  certain  Western  Pacific  Airlines  flight
coupons at a  significantly  reduced fare,  which depressed the average fare for
the  period.  Western  Pacific  Airlines  operated  out of DIA  until it  ceased
operations on February 4, 1998.

       Passenger Revenues.  Passenger revenues totaled $231,051,000 for the nine
months ended  December  31, 1999  compared to  $146,176,000  for the nine months
ended  December  31,  1998,  or an  increase  of 58.1%.  The  number of  revenue
passengers  carried was  1,679,000  for the nine months ended  December 31, 1999
compared to 1,161,000 for the nine months ended December 31, 1998 or an increase
of 44.6%. We had an average of 18.9 aircraft in our fleet during the nine months
ended December 31, 1999 compared to an average of 14.4 aircraft  during the nine
months ended December 31, 1998, an increase of 31.3%, and an increase in ASMs of
830,391,000  or 46.5%.  RPMs for the nine months  ended  December  31, 1999 were
1,552,207,000  compared to 1,064,060,000  for the nine months ended December 31,
1998, an increase of 45.9%.  We believe that our  passenger  traffic and related
revenues during the nine months ended December 31, 1999 were adversely  affected
by late deliveries of aircraft and consumer concerns over the Year 2000 issue.

       Cargo  revenues,  consisting  of revenues  from freight and mail service,
totaled  $4,686,000  and  $3,251,000 for the nine months ended December 31, 1999
and  1998,  respectively,  representing  2.0% and 2.2%,  respectively,  of total
operating  revenues  and an increase  of 44.1%.  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  $1,576,000 and  $1,007,000,  or .7% of
total operating revenues,  for the nine months ended December 31, 1999 and 1998,
an increase of 56.5%.

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
$208,202,000  and  $137,989,000  for the nine months ended December 31, 1999 and
1998 and  represented  87.7%  and  91.7%  of  revenue,  respectively.  Operating
expenses  decreased  as a  percentage  of revenue  during the nine months  ended
December  31,  1999 as a result  of the 58.1%  increase  in  passenger  revenues
attributable  to a 44.6%  increase  in  passengers  and a 10.9%  increase in the
average  fare  offset  by an  increase  in the cost of fuel and an  accrual  for
potential employee performance  bonuses.  Total operating expenses for the three
months ended December 31, 1999 and 1998 were  $69,880,000  and  $48,451,000  and
represented  94.5%  and  95.6%  of  revenue,  respectively.  Operating  expenses
increased as a percentage of revenue  during the three months ended December 31,
1999 principally as a result of an increase in the cost of fuel .

       Flight  Operations.   Flight  operations   expenses  of  $58,610,000  and
$39,836,000  were 24.7% and 26.5% of total  revenue  for the nine  months  ended
December  31,  1999  and  1998,  respectively.  Flight  operations  expenses  of
$20,861,000 and $14,011,000  were 28.2% and 27.6% of total revenue for the three
months  ended  December  31,  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.


                                       8
<PAGE>

       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
expense  of  $29,990,000  for  40,928,000   gallons  used  and  $16,691,000  for
28,964,000  gallons  used  resulted in an average  fuel cost of  73.3(cent)  and
57.6(cent)  per gallon,  for the nine months  ended  December 31, 1999 and 1998,
respectively.  Aircraft fuel expense represented 51.2% and 41.9% of total flight
operations  expenses  or 12.6% and 11.1% of total  revenue  for the nine  months
ended  December  31,  1999 and 1998,  respectively.  Aircraft  fuel  expense  of
$11,478,000  for 13,524,000  gallons used and $5,883,000 for 10,343,000  gallons
used resulted in an average fuel expense of 84.9(cent) and 56.9(cent) per gallon
for the three months ended  December 31, 1999 and 1998,  respectively.  Aircraft
fuel costs represented  55.0% and 42.0% of total flight operations  expenses for
the three months ended  December 31, 1999 and 1998,  respectively,  or 15.5% and
11.6% of total revenue.  The average fuel cost per gallon increased for the nine
months  ended  December  31,  1999 from the  comparable  prior  period due to an
overall  increase in the cost of fuel.  Fuel prices are subject to change weekly
as we do not purchase  supplies in advance for inventory.  Fuel  consumption for
the nine months ended  December  31, 1999 and 1998  averaged 781 and 780 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,
offset by fuel efficiencies  with the increase in more fuel efficient  aircraft.
The  requirement  for increased  flap speed settings will be lifted when a fleet
modification is completed,  which is required to be completed by August 1, 2000.
Fuel  consumption for the three months ended December 31, 1999 and 1998 averaged
766 and 776 gallons per block hour,  respectively.  Fuel  consumption  decreased
over the  prior  comparable  period  as a result  of an  increase  in more  fuel
efficient  aircraft  and  completion  of  approximately  one  half of the  fleet
modification requirement.

       Aircraft lease expenses totaled  $34,661,000 (14.6% of total revenue) and
$23,387,000 (15.6% of total revenue) for the nine months ended December 31, 1999
and 1998, respectively,  or an increase of 48.2%. The increase is largely due to
higher lease  expenses for larger newer  Boeing  737-300  aircraft  added to the
fleet and an increase in the  average  number of aircraft to 18.9 from 14.4,  or
23.8%, for the nine months ended December 31, 1999 and 1998, respectively.

       Aircraft insurance expenses totaled $1,963,000 (.8% of total revenue) for
the nine months ended  December 31, 1999.  Aircraft  insurance  expenses for the
nine months ended  December 31, 1998 were  $1,774,000  (1.2% of total  revenue).
Aircraft  insurance  expenses were  .13(cent) and .17(cent) per RPM for the nine
months  ended  December  31,  1999 and 1998,  respectively.  Aircraft  insurance
expenses  decreased per RPM as a result of  competitive  pricing in the aircraft
insurance  industry and our  favorable  experience  rating since we began flight
operations in July 1994.

       Pilot and flight  attendant  salaries  before  payroll taxes and benefits
totaled  $11,142,000 and $7,570,000,  or 4.8% and 5.2% of passenger  revenue for
the nine months ended December 31, 1999 and 1998, or an increase of 47.2%. Pilot
and flight attendant  compensation  increased principally as a result of a 23.8%
increase  in the  average  number of  aircraft  in  service,  general  wage rate
increases,  and an  increase  of 41.2% 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 exceptions.

       Aircraft and Traffic  Servicing.  Aircraft and traffic servicing expenses
were  $34,846,000  and  $24,176,000  (an  increase of 44.1%) for the nine months
ended December 31, 1999 and 1998, respectively,  and represented 14.7% and 16.1%
of total revenue.  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.  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  will  increase  with the
addition  of new  cities to our  route  system.  During  the nine  months  ended
December  31,  1999 we served 20 cities  compared  to 18 cities  during the nine
months  ended  December  31,  1998,  or an increase of 11.1%.  Three of the four
cities added during the nine months ended December 31, 1998 were not added until
mid-December  1998.  Aircraft  and traffic  servicing  expenses  were $1,415 and
$1,325 per  departure  for the nine  months  ended  December  31, 1999 and 1998,
respectively,  or an increase of $90.  During the nine months ended December 31,
1998,  DIA  issued  a  credit  memo  of  $331,000  (or  $18  per  departure)  in
anticipation  of the revenue credit to be distributed to its signatory  carriers
for its fiscal year ended  December 31,  1998.  DIA has not issued a credit memo
for its fiscal year ended  December 31, 1999. An additional  DIA revenue  credit
for its fiscal year ended December 31, 1997 above amounts  previously  estimated
and accrued,  totaling  $371,000 (or $20 per departure) was included in aircraft
and traffic  servicing  expenses during the nine months ended December 31, 1998.
After  adjusting  the cost per  departure  for these credits for the nine months
ended December 31, 1998,  the cost per departure  would have been $1,363 and the
cost per departure for the nine months ended December 31, 1999 would have been a
$52 increase over the prior comparable  period.  Aircraft and traffic  servicing
expenses  increased as a result of a drop in the completion  factor for the nine
months  ended  December  31, 1999 to 98.5% from 99.2% for the nine months  ended
December  31, 1998 which  increased  interrupted  trip  expenses,  and  expenses
associated  with  the  Boulder,  Colorado-DIA  shuttle  bus  service,  which  is
complimentary  to our passengers.  The increase in aircraft and traffic expenses
was offset by savings 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.


                                       9
<PAGE>

       Maintenance.  Maintenance  expenses of $36,650,000 and  $27,317,000  were
15.4% and 18.2% of total revenue for the nine months ended December 31, 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 $699  and  $736  for the nine  months  ended  December  31,  1999 and  1998,
respectively. During the nine months ended December 31, 1999, we incurred higher
than usual borrowed  parts fees.  During the nine months ended December 31, 1999
these fees were  approximately  $1,303,000  compared to $222,000 during the nine
months  ended  December  31,  1998 or $25 and $6 per block  hour,  respectively.
During the three months ended  December 31, 1999,  we increased  our spare parts
inventory  in an effort to mitigate  this expense in the future.  We  anticipate
that we will be required to make  additional  spare  parts  acquisitions  in the
future.  During the nine months ended  December 31,  1998,  we were  outsourcing
certain  aircraft heavy  maintenance  checks.  Effective March 1999, we began to
conduct the majority of these checks  in-house  which we expect will continue to
reduce maintenance expenses in future periods.  Additionally,  maintenance costs
per block hour have  decreased  as certain  fixed costs are spread over a larger
fleet.  Maintenance  expenses totaled  $10,752,000 and $9,179,000 and were 14.5%
and 18.1% of total  revenues for the three  months  ended  December 31, 1999 and
1998,  respectively.  Maintenance  cost per block hour was $609 and $689 for the
three months ended  December 31, 1999 and 1998,  respectively.  During the three
months ended  December 31, 1999, a previous  accrual  recorded  during the three
months ended June 30, 1999  totaling  $1,340,000  for an engine  repair  expense
estimate  as a  result  of a  premature  failure  was  reversed  as  the  engine
manufacturer  agreed to repair the engine at no cost to us. Maintenance cost per
block hour for the three  months  ended  December  31, 1999 would have been $685
without this adjustment.

       Promotion and Sales. Promotion and sales expenses totaled $34,682,000 and
$23,789,000  and were 14.6% and 15.8% of total revenue for the nine months ended
December 31, 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.

       During the nine months  ended  December  31,  1999,  promotion  and sales
expenses per passenger increased to $20.65 from $20.49 for the nine months ended
December 31, 1998. 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 $119 for the nine months  ended  December 31,
1998 to $132 for the nine months ended  December 31, 1999. We had an increase in
computer  reservations  costs associated with the expansion of our travel agency
electronic ticketing capabilities,  an increase in reservation costs as a result
of outsourcing  more of our  reservation  requirements,  offset by a decrease in
advertising  costs per passenger.  We are hopeful that this expansion for travel
agent electronic  ticketing capability will increase travel agency sales. During
the three months  ended  December 31,  1999,  promotion  and sales  expenses per
passenger  decreased to $20.03 from $22.44 for the three  months ended  December
31, 1998.  During the three months ended  December 31, 1998,  we added three new
markets and none during the three months ended December 31, 1999; therefore,  we
experienced a decrease in  advertising  expenses per  passenger.  With increased
activity on our web site,  our calls per  passenger  and the length of calls per
passenger  have  decreased.  Because of this web site  activity,  we experienced
decreases in communications  and wages and benefits for  reservationists as well
as contract reservation services. These cost savings were partially offset by an
increase  in credit card fees as a result of the  increase in the average  fare.
During November 1999, we reduced travel commissions to 5% from 8%, matching a 5%
commission  instituted  by  our  competitors.  Travel  agency  commissions  as a
percentage of passenger revenue, before non-revenue  passengers,  administrative
fees and  breakage  (revenue  from expired  tickets),  decreased to 4.3% for the
three months ended December 31, 1999 from 5% for the three months ended December
31, 1998.  We believe that  promotion  and sales  expenses  per  passenger  will
continue to decrease but there can be no assurance that this will occur.


                                       10
<PAGE>

       General and Administrative.  General and administrative  expenses for the
nine months ended December 31, 1999 and 1998 totaled  $11,436,000 and $5,026,000
and  represented  4.8% and 3.3% of total  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,  IT  including  costs  associated  with Y2K,  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
nine months ended  December 31, 1999 was an accrual of $2,183,000  for potential
employee performance bonuses and represented .9% of total revenues. This expense
was not  accrued  during  the nine  months  ended  December  31,  1998.  We also
experienced  increases in our human resources and MIS expenses as a result of an
increase in employees from approximately 1,240 in December 1998 to approximately
1,950 in  December  1999,  or an  increase  of 57.3%.  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.
Because of the increase in personnel,  our health insurance benefit expenses and
accrued vacation expense increased accordingly.

       Depreciation and Amortization.  Depreciation and amortization expenses of
$1,988,000 and $1,154,000 were  approximately  .8% of total revenue for the nine
months ended December 31, 1999 and 1998. These expenses include  depreciation of
office  equipment,  ground  station  equipment,  and other  fixed  assets of the
Company.

       Nonoperating Income (Expense). Net nonoperating income totaled $2,970,000
for the nine months ended  December  31, 1999  compared to $317,000 for the nine
months ended December 31, 1998.  Interest  income  increased from  $1,042,000 to
$3,120,000  during the nine months ended December 31, 1999 from the prior 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 expense  decreased to $95,000 during the nine months ended December 31,
1999 from $662,000 in the prior period.  In December 1997, we sold $5,000,000 of
10% senior notes.  In connection  with this  transaction,  we issued warrants to
purchase  1,750,000 shares of Common Stock to the lender.  Interest expense paid
in cash and the accretion of the warrants and deferred loan expenses  associated
with the senior  secured  notes  totaled  $562,000  during the nine months ended
December 31, 1998. In January 1999, we paid the note in full.

       Income Tax Expense:  We accrued  income taxes of $12,272,000 at 38.25% of
pre-tax income during the nine months ended  December 31, 1999.  During the nine
months ended  December 31,  1998,  we had the benefit of tax loss  carryforwards
that offset tax expense for the period.

       Expenses per ASM. Our expenses per ASM for the nine months ended December
31, 1999 and 1998 were 7.96(cent) and 7.72(cent),  respectively,  or an increase
of 3%. Our cost per ASM increased during the nine months ended December 31, 1999
from  7.72(cent)  principally  because of our  accrual  for  potential  employee
performance  bonuses,  which  accounted for .08(cent) of expense per ASM, and an
overall  increase  in the cost of fuel which  accounted  for  .22(cent)  per ASM
offset by a decrease of .13(cent) of expense per ASM in maintenance  expenses as
a result of bringing  certain  aircraft heavy  maintenance  checks in-house that
were previously outsourced to third party vendors.

Liquidity and Capital Resources

       Our balance sheet  reflected  cash and cash  equivalents  and  short-term
investments  of $69,109,000  and  $47,289,000 at December 31, 1999 and March 31,
1999, respectively. At December 31, 1999, total current assets were $112,550,000
and total current liabilities were $70,607,000,  resulting in working capital of
$41,943,000.  At March 31, 1999, total current assets were $94,209,000 and total
current   liabilities  were   $68,721,000,   resulting  in  working  capital  of
$25,488,000.  The  increase in our  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 nine months ended December 31, 1999.

       Cash provided by operating  activities for the nine months ended December
31, 1999 was $31,481,000. This is attributable to our net income for the period,
the  utilization  of  deferred  tax  assets,  decreases  in  trade  receivables,
increases in other accrued expenses and accrued maintenance expenses,  offset by
increases in security,  maintenance  and other  deposits,  prepaid  expenses and
inventories and decreases in accounts  payable and air traffic  liability.  Cash
provided by operating activities for the nine months ended December 31, 1998 was
$11,447,000.  This is attributable to our net income for the period,  a decrease
in receivables and increases in air traffic  liability,  other accrued  expenses
and accrued maintenance expenses, offset by increases in restricted investments,
security,  maintenance and other deposits and prepaid expenses and other assets,
and decreases in accounts payable.


                                       11
<PAGE>

       Cash used in investing  activities for the nine months ended December 31,
1999 was $33,011,000. We invested $18,260,000 in short-term investments,  net of
maturities,  comprised of  government-backed  agencies and commercial paper with
maturities of one year or less.  During the nine months ended December 31, 1999,
cash security deposits for aircraft  totaling  $2,491,000 were returned to us or
replaced with letters of credit. During the nine months ended December 31, 1999,
we made cash security  deposits totaling $200,000 in connection with a letter of
intent on an Airbus lease and  $2,550,000  in down  payments  associated  with a
letter of intent to purchase  Airbus  aircraft.  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, $1,024,000 in cash security deposits were returned to
us during the six months ended September 30, 1999. Other cash security  deposits
were replaced with letters of credit and these  deposits were returned to us. We
also received  $625,000 in cash security  deposits for aircraft  returned to the
lessor during the nine months ended December 31, 1999. Additionally,  we secured
five  aircraft  delivered  during the nine months  ended  December 31, 1999 with
letters of credit totaling  $2,284,000 and restricted  investments  increased by
this amount to  collateralize  the letters of credit.  We used  $12,208,000  for
capital  expenditures  for  rotable  aircraft  components  including a spare CFM
engine,   maintenance   equipment  and  tools,   aircraft  leasehold  costs  and
improvements,  and computer  equipment during the nine months ended December 31,
1999.  Cash used by investing  activities for the nine months ended December 31,
1998 was  $3,851,000.  We used  $2,447,000 for capital  expenditures  for ground
handling equipment, rotable aircraft components and aircraft leasehold costs and
improvements.  We used cash of $284,000 for initial lease  acquisition  security
deposits  for  one  Boeing   737-200   aircraft   delivered  in  October   1998.
Additionally, we secured two aircraft delivered in December 1998 with letters of
credit totaling  $1,120,000,  and our restricted  investments  increased by this
amount to collateralize the letters of credit.

       Cash provided by financing activities for the nine months ended December,
1999 and 1998 was  $5,090,000  and  $14,085,000,  respectively.  During the nine
months  ended  December 31, 1999,  we received  $5,163,000  from the exercise of
Common Stock  options and  warrants.  During the nine months ended  December 31,
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.  We issued a warrant to this investor to purchase 716,929 shares of
Common Stock of the Company at a purchase price of $3.75 per share. This warrant
expires in April 2002.  Additionally,  during the nine months ended December 31,
1998, we received $208,000 from the exercise of Common Stock options.

       We  operate 20 Boeing  737 type  aircraft  under  operating  leases  with
expiration dates ranging from 2000 to 2006. Under these leases, we were required
to make cash  security  deposits or issue  letters of credit to secure the lease
obligations.  At December 31, 1999, we had made cash  security  deposits and had
outstanding letters of credit totaling $3,058,000 and $5,928,000,  respectively.
Our  restricted  cash  balance  includes   $5,928,000  that  collateralizes  the
outstanding letters of credit. Additionally, we make deposits for maintenance of
these  aircraft.   At  December  31,  1999,  we  had  maintenance   deposits  of
$23,508,000.

       In October  1999,  we signed a letter of intent to purchase 11 new Airbus
aircraft,  with options to purchase an additional nine new Airbus aircraft. This
order  contemplates  a fleet  replacement  plan by which we will  phase  out our
Boeing 737 aircraft and replace them with a combination  of Airbus A319 and A318
aircraft.  As of January 28, 2000, we have made deposits totaling  $2,550,000 to
secure these  aircraft.  As a complement to this purchase,  in November 1999, we
signed two letters of intent to lease 16 new Airbus aircraft. When combined with
the purchase  agreement and upon completion of our fleet  transition,  we expect
our  fleet  to be  comprised  of  approximately  two-thirds  A319  aircraft  and
one-third A318 aircraft. We expect to take delivery of our first Airbus aircraft
during  the  middle  part of  calendar  2001  and  plan to  complete  our  fleet
transition  by the end of 2004.  The A319 and A318  aircraft  will be configured
with 132 and 114 passenger  seats,  respectively,  with a 32-inch seat pitch. We
believe that operating  newer Airbus  aircraft will result in  significant  cost
savings and an  improved  product for our  customers.  In order to complete  the
purchase  of the  Airbus  aircraft,  it  will  be  necessary  for  us to  secure
acceptable  aircraft  financing.  While we believe that such  financing  will be
available to us, there can be no assurance  that the financing will be available
when required,  or on acceptable  terms.  The inability to secure such financing
could have a material adverse effect on us and could  result in delays in or our
inability to take delivery of purchased Airbus aircraft.


                                       12
<PAGE>

       Principally  to provide  for  capacity  growth  pending  delivery  of our
purchased and leased Airbus  aircraft,  we have entered into operating leases to
lease two Boeing 737-300 aircraft and a letter of intent to lease two additional
such aircraft.  Two of these  aircraft were  delivered in January 2000,  will be
placed into service in mid-February and have lease terms of 44 months from their
delivery  dates.  The second two  aircraft,  one of which will  replace  another
aircraft  whose  lease  expires,  will  have 48  month  lease  terms  commencing
approximately  March and April, 2000. It is expected that these aircraft will be
placed in service during April and May, 2000.

       In November  1998,  our pilots voted to be  represented by an independent
union,  the  Frontier  Airlines  Pilots  Association.  In  September  1999,  our
dispatchers elected to be represented by the Transport Workers Union of America.
The  resulting  impact of these unions on labor costs is unknown at this time as
the first bargaining agreements have not been negotiated.

       The International Association  of Machinists  has filed an application to
represent  our  ramp  service  agents.  The  National  Mediation  Board  ("NMB")
certified this election and the ballots will be counted at the office of the NMB
in Washington D.C. on February 4, 2000. The Association of Flight  Attendants on
January 20, 2000 filed an  application  to represent our flight  attendants.  No
election has yet been certified.

       We are exploring  various means to increase revenues and reduce expenses.
We have added  electronic  ticketing  capabilities  for travel  agencies that we
anticipate  will increase travel agency sales. 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  previously  been  provided by an  independent  contractor.
Ground  handling  equipment  required 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. Effective November 5, we reduced travel
agency commissions from 8% to 5% in response to our competitors.

       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 four 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  at least  eight  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.


                                       13
<PAGE>

       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  agreement  of CCD and a  majority-in-interest  of the  signatory
airlines resolve the issue,  there is a possibility that the 1995 Agreement,  or
any  rate-making  methodology  unilaterally  imposed by CCD, could be subject to
litigation.  In these  circumstances,  there is  uncertainty as to the rates and
charges  that we will  be  required  to pay for  Concourse  A  facilities  after
February  2000. If the  rate-making  methodology is not amended or the rates are
increased,  it could have a material  adverse effect on our business and results
of  operations.  A  majority-in-interest  of the  airlines,  as  required by the
airline lease, has agreed to an amendment of certain  rate-making  provisions to
the lease, which  significantly  reduces the impact of the AABS costs to us. CCD
has  indicated  it  will  agree  to the  terms  of  these  proposed  changes  in
rate-making  methodology,  and is in the process of preparing a lease  amendment
which reflects such changes.  We expect a satisfactory  resolution of this issue
in the near term. However, the possibility  continues to exist that if agreement
on this amendment is not finalized, CCD may impose a resolution.

       Our goal is to continue to lease or purchase 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.  During the nine months
ended  December  31,  1999 we added  routes to  Portland,  Oregon  and  Orlando,
Florida.  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  October  1999,  the  U.S.  Senate  approved  the  Air  Transportation
Improvement  Act.  Among  other  matters,  this Act  calls for  additional  slot
allocations  (one slot is one take-off or landing right) at Washington's  Ronald
Reagan National  Airport  ("DCA"),  New York's  LaGuardia  Airport and Chicago's
O'Hare International  Airport. In addition, the bill calls for exemptions to the
perimeter rule at DCA, which currently  limits  non-stop  flights into or out of
DCA to a maximum of 1,250 miles. Our present intent is to request  permission to
provide  service  between  Denver  and DCA if access  becomes  available  to us.
However, there can be no assurance that this bill will be passed.

       We  believe  that  our  existing  cash  balances  coupled  with  improved
operating  results  are and  will be  adequate  to fund our  operations  for the
foreseeable  future.  However,  as discussed above, we will require financing in
order to fund our intended purchase of Airbus A319 and A318 aircraft.

Year 2000 Compliance

       We undertook  actions  intended to permit our computer  systems and other
equipment to properly  process and function on and after January 1, 2000.  These
actions  were  generally  described  in our 10-Q  report for the  quarter  ended
September 30, 1999. As of January 28, 2000, we have not experienced any material
Year 2000 systems or equipment failures, either by our suppliers or us. However,
Year 2000 compliance has many elements and potential consequences, some of which
may not be foreseeable or may be realized in future  periods.  Therefore,  there
can be no assurance that unforeseen circumstances may not arise, or that we will
not in the  future  identify  equipment  or  systems  which  are not  Year  2000
compliant.

       In connection with our Year 2000 compliance  efforts we utilized existing
resources (with the exception of four temporary  personnel) and required limited
use of outside consultants,  incurring  approximately $200,000 of expenses as of
December 31, 1999.




                                       14
<PAGE>

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.


                                       15
<PAGE>


                           PART II. OTHER INFORMATION


Item 6:       Exhibits and Reports on Form 8-K

Exhibit
Numbers

       (a)      Exhibits

                27.1     Financial Data Schedule (1)

       (1)      Filed herewith.


       (b)      Reports on Form 8-K

                None.






                                       16
<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:  January 31, 2000                      By: /s/ Steve B. Warnecke
                                             -----------------------------------
                                             Steve B. Warnecke,  Vice  President
                                             and Chief Financial Officer

Date:  January 31, 2000                      By: /s/ Elissa A. Potucek
                                             -----------------------------------
                                             Elissa A. Potucek,  Vice President,
                                             Controller, Treasurer and Principal
                                             Accounting Officer