FORM 10-K

                        SECURITIESAND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
        For the fiscal year ended March 31, 2000

[ ]     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
of incorporated or organization)            (I.R.S. Employer Identification No.)

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

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

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

Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, No Par Value
                                 Title of Class

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

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

Aggregate  market  value of Common Stock held by  non-affiliates  of the Company
computed by  reference to the last quoted price at which such stock sold on such
date as reported by the Nasdaq National Market as of June 15,2000: $181,263,088.

The number of shares of the Company's  Common Stock  outstanding  as of June 15,
2000 is 17,747,056.

Documents  incorporated  by  reference  -  Information  required  by Part III is
incorporated by reference to the Company's 2000 Proxy Statement.


<PAGE>



                                TABLE OF CONTENTS

                                                                           Page

PART I

         Item 1:  Business.....................................................3
         Item 2:  Properties .................................................12
         Item 3:  Legal Proceedings...........................................12
         Item 4:  Submission of Matters to a Vote of Security Holders.........13

PART II

         Item 5:  Market for Common Equity and Related Stockholder Matters....13
         Item 6:  Selected Financial Data.....................................16
         Item 7:  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations...............18
         Item 7A: Quantitative and Qualitative Disclosures About
                  Market Risk ................................................30
         Item 8:  Financial Statements........................................30

PART III

         Item 10: Directors and Executive Officers of the Registrant..........30
         Item 11: Executive Compensation......................................30
         Item 12: Security Ownership of Certain Beneficial Owners
                  and Management..............................................31
         Item 13: Certain Relationships and Related Transactions..............31

PART IV

         Item 14: Exhibits, Financial Statement Schedules and
                  Reports on Form 8-K.........................................31




<PAGE>

                                     PART I

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. Future events and
actual results,  financial and otherwise, could differ materially from those set
forth in or contemplated by the forward- looking statements herein.  These risks
and  uncertainties  include,  but are not limited to,  those  discussed in "Risk
Factors" below.

Item 1:  Business

General

       We are a  scheduled  airline  based in Denver,  Colorado.  As of June 15,
2000,  we  operate  routes  linking  our  Denver  hub to 21  cities in 17 states
spanning the nation from coast to coast.  We were organized in February 1994 and
we began flight  operations in July 1994 with two leased Boeing 737-200 jets. We
have since expanded our fleet to 24 leased jets, including seven Boeing 737-200s
and 17 larger  Boeing  737-300s.  We currently  use up to nine gates at our hub,
Denver International  Airport ("DIA"),  where we operate approximately 112 daily
system flight departures and arrivals.

       The  following  table lists the cities we serve as of June 15,  2000,  as
well as the dates we commenced service to those cities:

     El Paso, Texas                                        October 13, 1994
     Albuquerque, New Mexico                               October 13, 1994
     Omaha, Nebraska                                       January 16, 1995
     Chicago/Midway, Illinois                              September 25, 1995
     Phoenix, Arizona                                      September 25, 1995
     Los Angeles, California                               November 3, 1995
     Minneapolis/St. Paul, Minnesota                       November 13, 1995
     Salt Lake City, Utah                                  November 13. 1995
     San Francisco, California                             November 17, 1995
     Seattle, Washington                                   May 1, 1996
     Bloomington/Normal, Illinois                          January 6, 1997
     Boston, Massachusetts                                 September 16, 1997
     Baltimore, Maryland                                   November 16, 1997
     New York/LaGuardia, New York                          December 3, 1997
     San Diego, California                                 July 23, 1998
     Atlanta, Georgia                                      December 17, 1998
     Dallas/Fort Worth, Texas                              December 17, 1998
     Las Vegas, Nevada                                     December 17, 1998
     Portland, Oregon                                      June 14, 1999
     Orlando, Florida                                      September 9, 1999
     Kansas City, Missouri                                 June 15, 2000

       On November 1, 1998, we initiated  complimentary  shuttle service between
Boulder,  Colorado and DIA. We currently operate six daily round trip bus routes
between Boulder and DIA.

       In addition to implementing service to 3 new cities between April 1, 1999
and June 15, 2000, we also added additional flight  frequencies in the following
markets: Baltimore, Dallas/Fort Worth, San Francisco and Seattle.

       Our  senior   management  team  includes   executives  with   substantial
experience in the airline industry,  including  several  executives who occupied
similar  positions at a former  airline  called  Frontier  Airlines.  The former
Frontier  Airlines  served regional routes to and from Denver from 1950 to 1986.
There were various  occasions when the former  Frontier  Airlines served most of
the Company's  current and intended  markets with jet equipment  from its Denver
hub.

                                       3
<PAGE>

         Our  corporate  headquarters  are  located  at 12015 East 46th  Avenue,
Denver,   Colorado  80239.  Our   administrative   office  telephone  number  is
303-371-7400;  our reservations telephone number is 800-432-1359;  and our world
wide Web site address is www.frontierairlines.com.
Business Strategy and Markets

         Our business strategy is to provide air service at affordable fares  to
high volume markets from our Denver hub. Our strategy is based on the  following
factors:

o        Stimulate  demand by  offering  a  combination  of low  fares,  quality
         service and frequent  flyer credits in  Continental  Airlines'  OnePass
         program.

o        Expand our Denver hub  operation  and  increase  connecting  traffic by
         adding additional high volume markets to our current route system.

o        Continue filling gaps in flight frequencies to high volume markets from
         our Denver hub.

         In April 1999,  we were  named  "Best  Domestic  Low Fare  Carrier"  by
Entrepreneur  Magazine in the publication's sixth annual Business Travel Awards.
During our fiscal year 2000, we were also named Entrepreneur of the Year for the
services sector at Ernst & Young's 1999 Rocky Mountain  Entrepreneur of the Year
awards.

Route System History

         Our route system strategy encompasses  connecting our Denver hub to top
business  and  leisure  destinations.  We  currently  serve  17 of  the  top  25
destinations from Denver, as defined by the U.S.  Department of Transportation's
Origin and  Destination  Market  Survey.  In  addition,  as we bring  additional
aircraft  into our fleet and add new  markets  to our route  system,  connection
opportunities  increase.  During fiscal year 2000, connection  opportunities for
our passengers  connecting  through DIA increased from an average of 5.3 flights
to 5.9 flights.

Marketing and Sales

         Our sales  efforts are targeted to  price-sensitive  passengers in both
the leisure and  corporate  travel  markets.  In the  leisure  market,  we offer
discounted fares marketed through the Internet,  newspaper, radio and television
advertising  along with special  promotions.  We market these activities in both
our Denver hub and throughout our route system.

         To balance  the  seasonal  demand  changes  that  occur in the  leisure
market, we introduced several programs in late 1996 designed to capture a larger
share of the corporate market,  which tends to be less seasonal than the leisure
market.  These programs  include  negotiated fares for large companies that sign
contracts committing to a specified volume of travel,  future travel credits for
small and medium size businesses  contracting with us, and special discounts for
members of various trade and nonprofit associations. As of June 15, 2000, we had
signed contracts with over 4,600 companies.

         We  also  pursue  sales   opportunities  with  meeting  and  convention
arrangers and  government  travel  offices.  The primary tools we use to attract
this business include personal sales calls,  direct mail and  telemarketing.  In
addition,  we offer  air/ground  vacation  packages to many  destinations on our
route system under  contracts  with various tour  operators.  During fiscal year
2000,  Renaissance  Travel  Solutions,  which operated a private label "Frontier
Airlines Vacation" brand,  ceased operations.  In April 2000, we entered into an
agreement with  travelbyus.com  ltd., a Canadian travel  company,  to market and
sell private label  Frontier  Airlines  Vacation  products  effective June 2000.
These products  include air/land  inclusive  packages to vacation markets within
our route system, such as Las Vegas and Orlando, as well as ski destinations and
other destinations we serve.

         In 1995, we joined Continental  Airlines' OnePass program.  We selected
the OnePass program  because there was an established  membership base in Denver
and in other cities we served and planned to serve.

         Our  relationship  with travel  agencies is  important  to us and other
airlines. In November 1999, we matched an industry initiative and lowered travel
agent commissions from eight to five %. However,  unlike some other airlines, we
do not limit the earnings  potential of travel agents through a commission  cap.
We have  implemented  marketing  strategies  designed to maintain and  encourage
relationships  with travel agencies  throughout our route system. We communicate
with travel  agents  through  personal  visits by company  executives  and sales
managers, sales literature mailings, trade shows,  telemarketing and advertising
in various travel agent trade publications.

                                       4
<PAGE>

         We participate in the four major computer  reservation  systems used by
travel  agents to make airline  reservations:  Amadeus,  Galileo,  Worldspan and
Sabre. We maintain a reservations  center in Denver,  operated by our employees.
We also maintain an  "overflow"  center in Miami,  Florida,  staffed by contract
personnel,  which  assists our Denver  reservations  center  during peak booking
periods.  In March 2000, we announced our plans to open a new call center in Las
Cruces,  New Mexico.  The center,  scheduled to open in August 2000, will employ
approximately 100 full-time Frontier employees by the end of calendar year 2000,
and  will be  located  in a 12,000  square  foot  building  we are  leasing  and
renovating.  This new call center  will  replace  our  current  Miami  outsource
company.

         In January 1999, we renewed an agreement with  Electronic  Data Systems
("EDS") for  continued  and  enhanced  airline  customer  information  services,
including computerized reservations, passenger processing and telecommunications
services.  Since  early  1997,  we  have  made  greater  use  of  electronic  or
"paperless"  ticketing,  a lower cost  alternative  to ticketing  passengers  on
relatively  expensive ticket stock. During fiscal year 2000, we enabled all four
computer  reservation  systems  utilized by travel  agents to offer  e-ticketing
capabilities on our flights.

         Our  agreement  with EDS  enhances  our  ability  to  provide  Internet
bookings  through the EDS  SHARESweb  booking  engine.  In April 1999,  we began
offering "Spirit of the Web" fares via our Web site, which permits  customers to
make "close in" bookings beginning on Wednesdays for the following weekend. This
is intended to fill seats that might  otherwise go unfilled.  During fiscal year
2000, our  percentage of  Internet-related  revenue,  which includes our own Web
site and other Internet travel distributors, increased from 3.5% to 12.2%.

         In May 2000,  we unveiled a newly  designed  and enhanced Web site that
incorporates  booking  capabilities on each page of the site, an expanded "About
Frontier"  section,   exclusive  partner  offers,  a  new  "Frequently  Answered
Questions"  section and new real time flight  information.  We also announced in
May that we had  signed a letter of  intent to  purchase  EDS'  VIBE,  Versatile
Internet  Booking  Engine,  which will permit us to perform more advanced online
booking  capabilities,  such as online  discounts,  and  explore a  business  to
business corporate strategy.  We anticipate that VIBE will be operational by the
end of calendar 2000.

         In  order to gain  connecting  traffic  from  other  carriers,  we have
negotiated various types of interline agreements with approximately 130 domestic
and international airlines serving cities on our route system. Generally,  these
agreements  include joint ticketing and baggage services and other  conveniences
designed to expedite the connecting process.

Product Pricing

         We  generally  offer our seats at  discount  fares,  and  consider  our
service an affordable  alternative  to the higher fare,  larger  carriers.  Seat
inventories on each flight are managed  through a yield  management  system.  We
generally offer discounts with five levels of advance purchase requirements.  In
contrast to most carriers, our fares usually do not require travelers to include
a Saturday overnight stay in order to take advantage of these discount rates. We
also do not charge a premium for one-way fares and, generally,  our fares do not
require a round-trip purchase.

Competition

         The Airline Deregulation Act of 1978  (the "Deregulation Act") produced
a highly competitive  airline industry, freed of certain government  regulations
that for 40 years prior to the  Deregulation  Act had  dictated  where  domestic
airlines  could fly and how much they  could  charge for their  services.  Since
then,  smaller  carriers such as we have entered markets long dominated by large
airlines with substantially greater resources, such as United Airlines, American
Airlines, Northwest Airlines and Delta Air Lines.

         We  compete  principally  with United Airlines, the dominant carrier at
DIA, and its commuter affiliates with a total market share of approximately 72%.
This gives United a significant  competitive  advantage compared to us and other
carriers  serving DIA. We believe our current  market share at DIA  approximates
7%. We compete with United primarily on the basis of fares, fare flexibility and
the quality of our customer service.


                                       5
<PAGE>

         At the  present  time, four airports,  including  New York's  LaGuardia
Airport,  are  regulated  by  means  of  "slot"  allocations,   which  represent
government  authorization  to take off or land at a particular  airport within a
specified time period. FAA regulations require the use of each slot at least 80%
of the time and provide for  forfeiture  of slots in certain  circumstances.  We
were originally awarded six slots at LaGuardia.  At the present time, we utilize
four of those slots to operate two daily  round-trip  flights between Denver and
LaGuardia.

         Another airport that is regulated by slots is Ronald Reagan  Washington
National  Airport (DCA). In addition to slot  restrictions,  DCA is limited by a
perimeter  rule,  which limits flights to and from DCA to 1,250 miles.  In April
2000,  the  Wendell  H. Ford  Aviation  Investment  and  Reform Act for the 21st
Century  ("FAIR 21") was enacted.  FAIR 21 which  authorizes  the  Department of
Transportation  ("DOT") to grant up to 12 slot exemptions  beyond the 1,250 mile
DCA perimeter,  provided certain  specifications are met. These include that the
new service will provide air  transportation  with domestic  network benefits in
areas beyond the perimeter;  increase competition by new entrant air carriers or
in multiple markets;  not reduce travel options for communities  served by small
hub  airports and medium hub airports  within the  perimeter;  and not result in
meaningfully  increased travel delays.  We have filed an application  requesting
four slots to operate two daily non-stop flights between our Denver hub and DCA.
Eight other carriers also have filed  applications  seeking  "beyond  perimeter"
slots,  and  the  DOT has  indicated  a  decision  on the  award  of the 12 slot
exemptions will be made in early July 2000. If our application is successful, we
plan to  implement  service  between  Denver and DCA later this summer or in the
early fall.

Aircraft

         As of June 2000, we operate 24 leased  Boeing 737  twinjet aircraft  in
all-coach  seating  configurations.  The age of these aircraft,  their passenger
capacities and their lease expirations are shown in the following table:
<TABLE>
<S>                 <C>                 <C>                  <C>                      <C>

                                                              Approximate
                                                               Number of
Aircraft            No. of               Year of               Passenger                 Lease
Model               Aircraft            Manufacture              Seats                Expiration

B-737-200A             7                 1978-1983                119                  2001-2005
B-737-300             17                 1985-1998                136                  2002-2006
</TABLE>


         Stage 3 noise level requirements  mandated  that 100% of an  operator's
fleet  comply with Stage 3 by January 1, 2000.  Each of our aircraft has been in
compliance with Stage 3 on and after that date.

         In March 2000, we entered  into an agreement  to purchase 11 new Airbus
aircraft,  with options to purchase an additional nine new Airbus  aircraft.  To
the extent we  exercise  our  options to purchase  the nine  aircraft,  they are
replaced on a one-for-one  basis with additional  options to purchase new Airbus
aircraft,  up  to a  total  of  nine  additional  option  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 a complement to this purchase,  in April and May 2000, we signed two aircraft
lease  agreements  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 leased Airbus  aircraft
during the middle part of 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 new Airbus aircraft will result in significant  operating cost savings
and an improved product for our customers.

         We seek to lease additional  aircraft  from  time-to-time  in  order to
replace  aircraft with expiring  lease terms and to expand our service and route
system. However, the aircraft lease market is cyclical, and we cannot be certain
that additional aircraft will be available when we need or want to procure them,
or that they will be available at acceptable lease rates and terms.

Maintenance and Repairs

         All of our  aircraft   maintenance  and  repairs  are  accomplished  in
accordance  with the our  maintenance  program  approved  by the  United  States
Federal  Aviation   Administration  ("FAA").  Spare  or  replacement  parts  are
maintained by us primarily in Denver. Spare parts vendors supply us with certain
of these  parts,  and we purchase or lease  others from other  airline or vendor
sources.


                                       6
<PAGE>

       Since  August  1996,  we have  trained,  staffed and  supervised  our own
maintenance work force at Denver. We sublease a portion of Continental Airlines'
hangar at DIA where we  presently  perform our own  maintenance  through the "D"
check level. Other major maintenance,  such as major engine repairs, continue to
be  performed by outside FAA approved  contractors.  We also  maintain a smaller
maintenance facility at El Paso, Texas.

       Under our aircraft lease agreements,  we pay all expenses relating to the
maintenance  and operation of our  aircraft,  and we are required to pay monthly
maintenance reserve deposits to the lessors based on usage.  Maintenance reserve
deposits are applied against the cost of scheduled major maintenance.  Scheduled
major  maintenance  has  occurred or will occur for four of our  aircraft in the
fiscal year ending March 31, 2001. To the extent not used for major  maintenance
during the lease terms,  maintenance  reserve  deposits remain with the aircraft
lessors upon redelivery of the aircraft.

       Our monthly  completion factors for the years ending March 31, 2000, 1999
and 1998  ranged  from 96.7% to 99.7%,  from  97.6% to 99.8%,  and from 92.8% to
99.9%,  respectively.  The completion  factor is the percentage of our scheduled
flights that were  operated by us (i.e.,  not  canceled).  Flights not completed
were canceled principally as a result of mechanical  problems,  and, to a lesser
extent, weather. There can be no assurance that our aircraft will continue to be
sufficiently reliable over longer periods of time.

Fuel

       During the years ending March 31, 2000, 1999 and 1998, jet fuel accounted
for 15.3%, 11.6% and 14.1%,  respectively,  of our operating  expenses.  We have
arrangements  with major fuel  suppliers  for  substantial  portions of our fuel
requirements, and we believe that such arrangements assure an adequate supply of
fuel for current and anticipated future operations. However, we have not entered
into any agreements that fix the price of fuel over any period of time. Jet fuel
costs are  subject to wide  fluctuations  as a result of sudden  disruptions  in
supply beyond our control.  Therefore, we cannot predict the future availability
and cost of jet  fuel  with any  degree  of  certainty.  Fuel  prices  increased
significantly  in fiscal 2000. Our average fuel price per gallon including taxes
and into-plane  fees was 79.9(cent) for the year ended March 31, 2000,  with the
monthly  average price per gallon  during the same period  ranging from a low of
57.9(cent)  to a high of $1.02.  As of June 15,  2000,  the price per gallon was
94.1(cent).  Our average fuel price per gallon  including  taxes and  into-plane
fees was 55.4(cent) for the year ended March 31, 1999,  with the monthly average
price per gallon  during the same period  ranging from a low of  48.3(cent) to a
high of 62.3(cent).

       Newer aircraft are more fuel  efficient than our Boeing 737-200  aircraft
due to improved  aircraft  airframe  design and engine  technology.  Significant
increases  in the price of jet fuel such as those that  occurred  in fiscal 2000
result in a higher increase in our overall total costs than those of competitors
whose fleets have a larger  proportion  of fuel  efficient  aircraft such as our
Boeing 737-300 aircraft.  Increases in fuel prices or a shortage of supply could
have a material  adverse  effect on our operations  and financial  results.  Our
ability to pass on increased fuel costs to passengers through price increases or
fuel surcharges may be limited, particularly given our affordable fare strategy.

Insurance

       We carry $800 million per aircraft per occurrence in property  damage and
passenger and third-party  liability insurance,  and insurance for aircraft loss
or damage as required by our aircraft lease agreements,  and customary  coverage
for other business insurance. While we believe such insurance is adequate, there
can be no assurance  that such coverage will  adequately  protect us against all
losses which we might sustain. Our property damage and passenger and third-party
liability  insurance  coverage  exceeds the minimum amounts  required by the DOT
regulations.

Employees

       As of June 1, 2000 we had 2,126 employees,  including 1,643 full-time and
483  part-time  personnel.   Our  employees  included  233  pilots,  371  flight
attendants,   493  customer  service  agents,   295  ramp  service  agents,  188
reservations  agents,  334  mechanics  and  related  personnel,  and 212 general
management personnel. We consider our relations with our employees to be good.

       We  have   established  a  compensation   philosophy  that  we  will  pay
competitive wages compared to other airlines of similar size and other employers
with whom we compete for our labor supply.  Employees  have the  opportunity  to
earn above our established market rates through the payment of bonuses.


                                       7
<PAGE>

       Two of our  employee  groups  have  voted for union  representation:  our
pilots voted in November 1998 to be  represented by an  independent  union,  the
Frontier Airline Pilots Association, and our dispatchers voted in September 1999
to be represented by the Transport Workers Union. The first bargaining agreement
for the pilots,  which has a 5-year term,  was ratified and became  effective in
May 2000.  Negotiations are presently being conducted with the Transport Workers
Union,  representing our  dispatchers.  In addition since 1997 we have had union
organizing  attempts that were defeated by our flight  attendants,  ramp service
agents, mechanics, and stock clerks.

       We have  enhanced our  Retirement  Savings Plan [401(k)] by announcing an
increased matching contribution by the Company. Effective May 2000, participants
will  receive a 50% Company  match for  contributions  up to 10%.  This match is
discretionary  and  appoved  on an annual  basis by our Board of  Dircetors.  We
anticipate  that the match and  related  vesting  schedule  of 20% per year will
reduce our turnover rates.

       All new employees are subject to pre-employment drug and alcohol testing.
Those  employees  who perform  safety  sensitive  functions  are also subject to
random drug testing.

       Training,  both initial and recurring, is required for many employees. We
train our pilots,  flight  attendants,  ground service  personnel,  reservations
personnel  and  mechanics.  FAA  regulations  require  pilots to be  licensed as
commercial  pilots,  with  specific  ratings  for  aircraft  to be flown,  to be
medically  certified  or  physically  fit,  and have recent  flying  experience.
Mechanics,  quality control  inspectors and flight  dispatchers must be licensed
and qualified for specific  aircraft.  Flight  attendants  must have initial and
periodic  competency,  fitness training and certification.  The FAA approves and
monitors our training  programs.  Management  personnel directly involved in the
supervision of flight operations,  training, maintenance and aircraft inspection
must meet experience standards prescribed by FAA regulations.

Government Regulation

       All  interstate air carriers are subject to regulation by the DOT and the
FAA under the Federal Aviation Act. The DOT's jurisdiction  extends primarily to
the economic aspects of air transportation, while the FAA's regulatory authority
relates  primarily  to  air  safety,   including   aircraft   certification  and
operations,  crew licensing and training,  maintenance  standards,  and aircraft
standards.  In general,  the amount of regulation  over domestic air carriers in
terms of market entry and exit,  pricing and  inter-carrier  agreements has been
greatly reduced subsequent to enactment of the Deregulation Act.

       U.S.  Department  of  Transportation.  We hold a  Certificate  of  Public
Convenience  and  Necessity  issued  by the DOT that  allows us to engage in air
transportation.  Pursuant to law and DOT regulation,  each United States carrier
must qualify as a United States  citizen,  which requires that its President and
at least  two-thirds  of its Board of Directors and other  managing  officers be
comprised of United States citizens;  that not more than 25% of its voting stock
may be owned by foreign nationals, and that the carrier not be otherwise subject
to foreign control.

       U.S.  Federal  Aviation   Administration.   We  also  hold  an  operating
certificate  issued  by the FAA  pursuant  to Part 121 of the  Federal  Aviation
Regulations.  The FAA has jurisdiction  over the regulation of flight operations
including the licensing of pilots and maintenance  personnel,  the establishment
of minimum standards for training and maintenance,  and technical  standards for
flight,  communications  and ground equipment.  We must have and we maintain FAA
certificates of  airworthiness  for all of our aircraft.  Our flight  personnel,
flight and emergency procedures, aircraft and maintenance facilities and station
operations are subject to periodic inspections and tests by the FAA.

       At the  present  time,  four  airports,  including  New York's  LaGuardia
Airport,  are  regulated  by  means  of  "slot"  allocations,   which  represent
government  authorization  to take off or land at a particular  airport within a
specified time period. FAA regulations require the use of each slot at least 80%
of the time and provide for  forfeiture of slots in certain  circumstances.  The
Company currently holds slots to serve the Denver-LaGuardia  market and provides
two daily round trip flights in that market.  FAIR 21 begins a phase out of slot
controls  at three of the four slot  controlled  airports,  including  LaGuardia
where slot restrictions are to be eliminated by January 1, 2007.

       The DOT and FAA also have authority  under the Aviation  Safety and Noise
Abatement  Act of 1979,  the Airport Noise and Capacity Act of 1990 ("ANCA") and
Clean Air Act of 1963 to monitor and regulate  aircraft engine noise and exhaust
emissions.  We are  required to comply  with all  applicable  FAA noise  control
regulations and with current exhaust emissions standards. All of our fleet is in
compliance with the FAA's Stage 3 noise level requirements.


                                       8
<PAGE>

       Railway Labor Act/National  Mediation Board. Our pilots organized in 1998
under an independent  union, the Frontier Airlines Pilots  Association,  and our
dispatchers  organized  in 1999 and are  represented  by the  Transport  Workers
Union.  Our labor  relations with respect to the pilots and  dispatchers are now
covered  under  Title  II of the  Railway  Labor  Act  and  are  subject  to the
jurisdiction of the National Mediation Board.

       Miscellaneous.  All air carriers are subject to certain provisions of the
Communications  Act of 1934  because of their  extensive  use of radio and other
communication  facilities,  and are  required  to obtain an  aeronautical  radio
license from the Federal  Communications  Commission ("FCC"). To the extent that
we are subject to FCC  requirements,  we take all necessary steps to comply with
those requirements.

Risk Factors

       In addition to the other  information  contained  in this Form 10-K,  the
following risk factors  should be considered  carefully in evaluating us and our
business.

We Will be Required to Secure New Aircraft Financing

       We have agreed to purchase certain new Airbus A319 and A318 aircraft  See
"Description of Business - Aircraft". In order to complete the purchase of these
aircraft we must secure acceptable aircraft  financing.  The amount of financing
required will depend on the number of aircraft  purchase options we exercise and
the amount of cash generated by operations prior to delivery of the aircraft. We
are exploring various  financing  alternatives,  including,  but not limited to,
domestic  and foreign bank  financing,  public debt  financing  such as enhanced
equipment trust  certificates,  and leveraged lease  arrangements.  We expect to
develop a financing plan and implement that plan coincident with the delivery of
the first purchased aircraft in calendar year 2002. See "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations - Liquidity and
Capital  Resources".  While we believe that such  financing will be available to
us, there can be no assurance that 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 result in delays in or our inability to take
delivery of Airbus aircraft we have agreed to purchase.

The Airline Industry is Seasonal and Cyclical

       Our  operations  primarily  depend  on passenger  travel demand,  and, as
such are  subject  to  seasonal  variations.  Our  weakest  travel  periods  are
generally during the quarters ending in June and December.  The airline industry
is  also a  highly  cyclical  business  with  substantial  volatility.  Airlines
frequently experience  short-term cash requirements.  This is caused by seasonal
fluctuations  in  traffic,  which  often  put a drain  on cash  during  off-peak
periods,  and various other  factors,  including  price  competition  from other
airlines,  national and international  events,  fuel prices and general economic
conditions, including inflation. Because a substantial portion of airline travel
is discretionary, our operating and financial results may be negatively impacted
by any  downturn  in  national or  regional  economic  conditions  in the United
States, and particularly in Colorado.  Airlines require substantial liquidity to
continue  operating  under most  conditions.  The airline  industry also has low
operating  profit  margins and  revenues  that vary to a  substantially  greater
degree  than do the related  costs.  Therefore,  a  significant  shortfall  from
expected  revenue levels could have a material adverse effect on our operations.
Working capital deficits are not uncommon in the airline industry since airlines
typically  have no  product  inventories  and  ticket  sales  not yet  flown are
reflected as current liabilities.

Increasing Number of Consolidations and Alliances Has Also Increased Competition

       The  U.S.   airline  industry has consolidated in recent years, and there
are additional  consolidations  presently proposed.  Consolidations have enabled
certain  carriers to expand their  international  operations  and increase their
presence in the U.S. domestic market. In addition,  many major domestic carriers
have formed alliances with domestic regional carriers and foreign carriers. As a
result, many of the carriers with which we compete in our markets are larger and
have substantially  greater resources than we have.  Continuing  developments in
the industry will affect our ability to compete in the various  markets in which
we operate.



                                       9
<PAGE>

We Are in a High Fixed Cost Business

         The airline  industry is  characterized by fixed costs that are high in
relation to revenues.  Accordingly, a shortfall from expected revenue levels can
have a material adverse effect on our profitability and liquidity.

Increases in Fuel Costs Affect Our Operating Costs

         Fuel is a major component of operating  expense for all airlines.  Both
the cost and  availability  of fuel are subject to many  economic and  political
factors and events  occurring  throughout  the world,  and fuel costs  fluctuate
widely.  Fuel accounted for 15.3% of our total  operating  expenses for the year
ended March 31,  2000.  We cannot  predict our future cost and  availability  of
fuel, and substantial  sustained  price  increases as have prevailed  during our
fiscal  year ended  March 31,  2000,  or the  unavailability  of  adequate  fuel
supplies,   could  have  a  material   adverse  effect  on  our  operations  and
profitability.  Because newer  aircraft are more fuel  efficient than our Boeing
737-200 aircraft a significant increase in the price of jet fuel would result in
a higher  increase  in our total  costs  than  those of  competitors  using more
fuel-efficient  aircraft.  In addition,  larger  airlines may have a competitive
advantage  because they pay lower prices for fuel. We intend generally to follow
industry  trends  by  raising  fares  in  response  to  significant  fuel  price
increases.  However,  our ability to pass on increased  fuel costs  through fare
increases may be limited by economic and competitive conditions.

We are Subject to Federal Regulatory Oversight

         We have  obtained the necessary  authority  from the DOT and the FAA to
conduct  flight  operations.  However,  the  continuation  of such  authority is
subject to continued compliance with applicable statutes,  rules and regulations
pertaining to the airline industry, including any new rules and regulations that
may be adopted in the future.  We believe that small and  start-up  airlines are
often subject to strict  scrutiny by FAA officials,  making them  susceptible to
regulatory demands that can negatively impact their operations. No assurance can
be given that we will be able to  continue to comply with all present and future
rules and regulations.  In addition, we can give no assurance about the costs of
compliance with such  regulations and the effect of such compliance costs on our
profitability. We also expect substantial FAA scrutiny as we transition from our
all Boeing to an all Airbus fleet.

         In May 1996 a relatively new domestic airline  sustained an accident in
which one of its  aircraft was  destroyed  and all persons on board were fatally
injured.  In June 1996, that airline agreed at the FAA's request to cease all of
its  flight  operations.  Although  the FAA,  after  an  intensive  and  lengthy
investigation,  allowed  that  airline  to  resume  its  operations,  should  we
experience  a similar  accident  it is  probable  that there would be a material
adverse effect on our business and results of operations.

We Experience High Costs at Denver International Airport

         DIA opened in March 1995, and Denver's-Stapleton  International Airport
was closed.  Financed  through revenue bonds,  DIA depends on landing fees, gate
rentals and other income from airlines,  the traveling  public and others to pay
debt service and support operations.  Our cost of operations at DIA will vary as
traffic  increases or diminishes at that airport.  However,  we believe that our
operating costs at DIA  substantially  exceed those that other airlines incur at
most hub airports in other cities.

We Have a Limited Number of Routes

         Because  of our  relatively  small  fleet  size and  limited  number of
routes, we are at a competitive disadvantage compared to other airlines, such as
United Airlines, that can spread their operating costs across more equipment and
routes  and retain  connecting  traffic  (and  revenue)  within  their much more
extensive route networks.

We Face Intense Competition and Market Dominance by United Airlines

         The  airline  industry  is  highly  competitive,  primarily  due to the
effects of the Airline  Deregulation Act of 1978 (the "Deregulation Act"), which
has substantially  eliminated  government  authority to regulate domestic routes
and fares and has  increased  the ability of airlines to compete with respect to
flight frequencies and fares. We compete with United Airlines in our Denver hub,
and we anticipate that we will compete  principally  with United Airlines in our
future  market  entries.  United  Airlines and its commuter  affiliates  are the
dominant carriers out of DIA,  accounting for approximately 72% of all passenger
boardings.  Additionally,  from July 1997 until  February  1998,  when it ceased
flight operations,  Western Pacific Airlines,  a low-fare carrier,  provided hub
service  at DIA.  This  additional  competition,  as well as  other  competitive
activities by United Airlines and other carriers, have had in the past and could
continue  to have a  material  adverse  effect on our  revenues  and  results of
operations.  Most of our current and potential  competitors  have  significantly
greater financial resources,  larger route networks and superior market identity
than we have.


                                       10
<PAGE>

We are Dependent on Our Chief Executive Officer

         We are dependent on the active  participation of Samuel D. Addoms,  our
President and Chief Executive Officer. The loss of his services could materially
and adversely affect our business and future  prospects.  We do not maintain key
person life insurance on any of our officers.

We Could Lose Airport and Gate Access

         We have not initially  encountered  barriers to airport or airport gate
access  other than cost.  However,  any  condition  that would deny or limit our
access  to the  airports  that  we  intend  to  utilize  in the  future  or that
diminishes the desire or ability of potential customers to travel between any of
those cities may have a materially adverse effect on our business.  In addition,
gates  may be  limited  at some  airports,  which  could  adversely  affect  our
operations.

There are Certain Risks Associated with Our Boeing 737 Aircraft

       A. Maintenance.  Under our aircraft lease agreements,  we are required to
bear all routine and major maintenance expenses. Maintenance expenses comprise a
significant  portion of our  operating  expenses.  In addition,  we are required
periodically to take aircraft out of service for heavy maintenance checks, which
can  adversely  affect  revenues.  We  also  may  be  required  to  comply  with
regulations and  airworthiness  directives  issued by the FAA, the cost of which
may be partially assumed by our aircraft lessors depending upon the magnitude of
the  expense.  There  can be no  assurance  that we will not incur  higher  than
anticipated  maintenance  expenses.  We believe that our leased  aircraft are in
compliance with all FAA-issued Airworthiness Directives ("ADs").  However, other
ADs are  presently  required to be  performed  in the future and there is a high
probability that additional ADs will be required.

       B. Local Noise  Regulations.  As a result of litigation and pressure from
airport area  residents,  airport  operators  have taken local  actions over the
years  to  reduce  aircraft  noise.  These  actions  have  included  regulations
requiring  aircraft  to meet  prescribed  decibel  limits by  designated  dates,
curfews  during  night  time  hours,   restrictions  on  frequency  of  aircraft
operations and various operational  procedures for noise abatement.  The Airport
Noise  and  Capacity  Act of 1990  ("ANCA")  recognized  the  right  of  airport
operators  with  special  noise  problems to  implement  local  noise  abatement
procedures as long as such  procedures do not  interfere  unreasonably  with the
interstate and foreign commerce of the national air transportation  system. ANCA
generally requires FAA approval of local noise restrictions on Stage 3 aircraft.
An agreement  between the City and County of Denver and another county  adjacent
to  Denver  specifies  certain  maximum  aircraft  noise  levels  at  designated
monitoring  points in the vicinity of DIA with  significant  payments payable by
Denver to the other  county for each  substantiated  noise  violation  under the
agreement.  Violation of these noise standards could result in increased landing
fees  at DIA  for  us,  as  well as  other  carriers  operating  at  DIA.  Noise
regulations  have not had a material  adverse  effect on our operations to date,
but regulations could be enacted in the future that would have such an effect.

We Have a Limited Number of Aircraft, and the Market for Aircraft Fluctuates

         We currently  schedule all of our aircraft in regular passenger service
with limited  spare  aircraft  capability  in the event one or more  aircraft is
removed  from  scheduled  service  for  unplanned  maintenance  repairs or other
reasons.  The  unplanned  loss  of  use of one or  more  of our  aircraft  for a
significant  period  of time  could  have a  materially  adverse  effect  on our
operations  and operating  results.  The market for leased  aircraft  fluctuates
based on worldwide  economic factors.  There can be no assurance that we will be
able to lease additional aircraft on satisfactory terms or when needed.

Our Relations With Our Employees is Very Important

          We believe we operate with lower personnel costs than many established
airlines,  principally due to lower base salaries and greater flexibility in the
utilization  of  personnel.  There can be no assurance  that we will continue to
realize these advantages over other air carriers for an extended period of time.
Our pilots are represented by an independent  labor union,  the Frontier Airline
Pilots  Association and our dispatchers are represented by the Transport Workers
Union.  In addition since 1997 we have had union  organizing  attempts that were
defeated by our flight  attendants,  ramp service agents,  mechanics,  and stock
clerks. The collective bargaining agreement we have entered into with our pilots
has increased our labor and benefit costs  effective in May 2000, and additional
unionization of our employees could increase our overall costs as well.

                                       11
<PAGE>

We Have Not Paid Dividends

         We have never declared or paid cash  dividends on our Common Stock.  We
currently  intend  to retain  any  future  earnings  to fund  operations  and to
continue development of our business and do not expect to pay any cash dividends
on our Common Stock in the foreseeable future.

Item 2:  Properties

         We  have  leased  approximately  47,000  square feet of office space in
Denver with terms ending  February 2001 and May 2001 at a current  annual rental
of  approximately  $720,000.  This facility  provides space for our reservations
center  together  with space for  administrative  activities,  including  senior
management,   purchasing,   accounting,  sales,  marketing,  advertising,  human
resources, maintenance and engineering and information technology systems.

         Beginning February 2001,  we will move our general and  administrative
functions  to  a  new  headquarters   facility  near  DIA.  The  new  lease  for
approximately  51,000  square  feet has a term of 12 years at an average  annual
rental of approximately  $686,000 plus operating and maintenance  expenses.  The
Denver reservations center will occupy a facility separate from the headquarters
at a location yet to be determined. Beginning August 2000, a second reservations
center  facility  will  commence  operations  in Las Cruces,  New  Mexico.  This
facility  is  approximately  12,000  square feet and is leased for a term of 122
months at an average annual rental of approximately  $132,000 plus operating and
maintenance expenses.

         Each of our airport locations requires  leased  space  associated  with
gate operations,  ticketing and baggage  operations.  We either lease the ticket
counters,  gates and airport office  facilities at each of the airports we serve
from the appropriate airport authority or sublease them from other airlines.

         We have agreed to enter into an airport  lease and facilities agreement
with the City and County of Denver (CCD) at DIA for ticket counter  space,  nine
gates and  associated  operations.  This  lease  will  expire  in 2010.  We also
sublease a portion of Continental Airlines' hangar at DIA until January 1, 2004.

Item 3:  Legal Proceedings

       In 1997, we filed a complaint with the U.S. Department of Justice ("DOJ")
alleging  that United  Airlines has engaged in  predatory,  anticompetitive  and
monopolistic  practices at DIA.  The  complaint  asks the agency to  investigate
eight separate counts of potential antitrust violations.  The eight counts range
from  "capacity  dumping" in markets  served by  competitors  to alleged  abuses
relating to United's  pricing  practices,  "exclusive  dealing"  with  corporate
customers and commuter  carriers,  and other tactics used by United to allegedly
drive competitors from its markets. In early 1998 we received and answered a DOJ
Civil  Investigative  Demand,  which requested  information and documents in our
possession  relating  to  possible  violations  of the  federal  antitrust  laws
concerning  monopolization  or  attempts to  monopolize  air  transportation  in
certain markets,  including certain Denver city-pair  markets.  To date, the DOJ
has not acted on our  complaint,  although  the DOJ has  filed a  federal  civil
antitrust  action  against  another  major U.S.  carrier with respect to certain
alleged anti-competitive practices against smaller carriers, not including us.

       In a related  matter,  the DOT, in response to complaints by us and other
smaller  airlines,  in April  1998  published  a number of  proposed  guidelines
designed to identify  predatory  practices in the airline  industry,  along with
enforcement  policies.  We are unable to predict what  actions,  if any, will be
taken either by the DOT or by Congress with respect to these issues.

       From time to time, we are engaged in routine litigation incidental to our
business.  Except as may be otherwise specifically discussed in this section, we
believe  there are no legal  proceedings  pending  in which we are a party or of
which any of our  property is the  subject  that are not  adequately  covered by
insurance maintained by us, or which if adversely decided, would have a material
adverse effect upon our business or financial condition.



                                       12
<PAGE>




Item 4:  Submission of Matters to a Vote of Security Holders

       During the fourth quarter of the year covered by this report,  we did not
submit any matters to a vote of our security holders through the solicitation of
proxies or otherwise.


                                     PART II

Item 5:  Market for Common Equity and Related Stockholder Matters

Price Range of Common Stock

       Until May 26, 1999,  our Common  Stock was traded on the Nasdaq  SmallCap
Market under the symbol  "FRNT."  Effective May 26, 1999, our Common Stock began
trading on the Nasdaq  National  Market,  also under the symbol  "FRNT." We were
able to move from the  SmallCap  Market to the  National  Market  because of our
ability  to meet  minimum  requirements  in areas such as net  tangible  assets,
market  capitalization,  public  float,  number of  shareholders  and  corporate
governance.

       The following  table shows the range of high and low bid prices per share
for our Common Stock for the periods indicated and as reported by Nasdaq through
June 15, 2000.  Market  quotations  listed here represent prices between dealers
and do not reflect retail  mark-ups,  mark-downs or commissions.  As of June 15,
2000 there were 657 holders of record of our Common Stock.

                                                         Price Range of
                                                          Common Stock

       Quarter Ended                                    High         Low

       June 30, 1998                                $ 3 7/8     $ 2 7/8
       September 30, 1998                             4 5/8       3
       December 31, 1998                              5 3/8       3
       March 31, 1999                                 10          4 15/16

       June 30, 1999                                  17 3/16     9 1/2
       September 30, 1999                             18 5/8      8 1/4
       December 31, 1999                              13 1/2      8 29/32
       March 31, 2000                                 11 5/16     9 3/8

       June 30, 2000 (through June 15, 2000)          15 15/32    11 1/2





                                       13
<PAGE>





Recent Sales of  Securities

       During the period April 1, 1999 through June 15, 2000, various holders of
warrants to purchase our Common  Stock  exercised  their  warrants and we issued
Common Stock as described below:


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


                                                   Number of Exercise        Warrant
       Warrant Holder                               Shares Issued             Price          Dates of Exercise
       --------------                               -------------             -----          -----------------

       Initial Public Offering Underwriter

       (and affiliates)                                 83,600               $5.525           4/1/99-5/18/99

       Secondary Offering Underwriters

       (and affiliates)                                147,764                $5.55           7/12/99-5/31/00

       Aircraft Lessor                                 395,000             $5.00-$7.19       5/6/99 & 6/16/99

       Financial Advisor                               548,000                $3.00               6/14/99
</TABLE>

       As of June 15, 2000,  we have granted  stock options to our employees and
directors to purchase up to 3,008,750 shares of Common Stock, 1,237,271 of which
options  have been  previously  exercised  and  975,979  of which are  currently
exercisable at exercise prices ranging from $1.00 to $13.82 per share.

Dividend Policy

       We have not  declared  or paid cash  dividends  on our Common  Stock.  We
currently  intend to retain  any  future  earnings  to fund  operations  and the
continued development of our business,  and, thus, do not expect to pay any cash
dividends on our Common Stock in the foreseeable future.  Future cash dividends,
if any,  will be determined by our Board of Directors and will be based upon our
earnings,  capital  requirements,  financial  condition and other factors deemed
relevant by the Board of Directors.

Rights Dividend Distribution

       In February 1997, our Board of Directors declared a dividend distribution
of one right (a  "Right")  for each  outstanding  share of our  Common  Stock to
shareholders  of record at the close of  business on March 15,  1997.  Except as
described below, each Right, when exercisable, entitles the registered holder to
purchase  from us one share of Common  Stock at a  purchase  price of $65.00 per
share (the "Purchase  Price"),  subject to adjustment.  The Rights expire at the
close of business  on  February  20,  2007,  unless we redeem or  exchange  them
earlier as  described  below.  The  description  and terms of the Rights are set
forth in a Rights  Agreement,  as amended  by  amendments  dated June 30,  1997,
December 5, 1997, and September 9, 1999 (as so amended, the "Rights Agreement").

       The Rights are  exercisable  upon the earlier of (i) 10 days  following a
public  announcement that a person or group of affiliated or associated  persons
other than us, our subsidiaries or any person receiving  newly-issued  shares of
Common Stock  directly from us or indirectly  via an  underwriter  in connection
with a public offering by us (an "Acquiring  Person") has acquired,  or obtained
the right to acquire,  beneficial  ownership  of 20% or more of the  outstanding
shares of Common Stock (the "Stock Acquisition  Date"), or (ii) 10 business days
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially  owning 20% or more of such outstanding shares
of Common Stock.

       If any person  becomes an  Acquiring  Person  other  than  pursuant  to a
Qualifying  Offer (as  defined  below),  each holder of a Right has the right to
receive,  upon  exercise,  Common  Stock (or,  in certain  circumstances,  cash,
property or other  securities of the Company)  having a value equal to two times
the  exercise  price of the Right.  Notwithstanding  any of the  foregoing,  all
Rights  that are  beneficially  owned by any  Acquiring  Person will be null and
void.  However,  Rights are not  exercisable in any event until such time as the
Rights are no longer redeemable by us as set forth below.

       A  "Qualifying  Offer"  means a tender  offer or  exchange  offer for, or
merger proposal involving, all outstanding shares of Common Stock at a price and
on terms determined by at least a majority of the Board of Directors who are not
our  officers or  employees  and who are not  related to the Person  making such
offer,  to be  fair  to  and in the  best  interests  of  the  Company  and  our
shareholders.

                                       14
<PAGE>

       If after the Stock  Acquisition Date we are acquired in a merger or other
business  combination  transaction  in which  the  Common  Stock is  changed  or
exchanged or in which we are not the surviving  corporation (other than a merger
that  follows  a  Qualifying  Offer) or 50% or more of the  Company's  assets or
earning  power is sold or  transferred,  each  holder of a Right  shall have the
right to receive, upon exercise,  common stock of the acquiring company having a
value equal to two times the exercise price of the Right.

       The Purchase Price  payable,  and the number of shares of Common Stock or
other securities or property  issuable,  upon exercise of the Rights are subject
to adjustment from time to time to prevent  dilution (i) in the event of a stock
dividend on, or a subdivision,  combination or  reclassification  of, the Common
Stock,  (ii) if  holders  of the  Common  Stock are  granted  certain  rights or
warrants to subscribe  for Common Stock or  convertible  securities at less than
the current market price of the Common Stock, or (iii) upon the  distribution to
holders  of the  Common  Stock of  evidences  of  indebtedness  or  assets or of
subscription rights or warrants.

       At any time until ten days following the Stock  Acquisition  Date, we may
redeem the Rights in whole at a price of $.01 per Right.  Upon the action of the
Board of Directors ordering  redemption of the Rights, the Rights will terminate
and the  only  right  of the  holders  of  Rights  will be to  receive  the $.01
redemption price.

       While the  distribution,  if any,  of the  Rights  will not be taxable to
shareholders  or to us,  shareholders  may,  depending  upon the  circumstances,
recognize  taxable income if the Rights become  exercisable for Common Stock (or
other  consideration)  of the  Company  or for  common  stock  of the  acquiring
company.




                                       15
<PAGE>





Item 6:  Selected Financial Data

       The following selected financial and operating data as of and for each of
the years ended March 31, 2000,  1999,  1998, 1997 and 1996 are derived from our
audited  financial  statements.  This data  should be read in  conjunction  with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," and the financial statements and the related notes thereto included
elsewhere in this Report.
<TABLE>
<S>                                              <C>              <C>          <C>          <C>           <C>

                                                                       Year Ended March 31,
                                                     2000         1999         1998         1997         1996
                                                 -----------------------------------------------------------------
                                                         (Amounts in thousands except per share amounts)
Statement of Operations Data:

Total operating revenues                             $329,820     $220,608     $147,142     $116,501      $70,393
Total operating expenses                              290,511      195,928      165,697      129,662       76,325
Operating income (loss)                                39,309       24,680      (18,554)     (13,161)      (5,933)
Income (loss) before income tax expense
  (benefit) and cumulative effect of change of
  accounting for maintenance checks                    43,415       25,086      (17,746)     (12,186)
Income tax expense (benefit)                           16,954      (5,480)         -            -            -
Income (loss) before cumulative effect of
  change in accounting for maintenance checks          26,460       30,566      (17,746)     (12,186)         -
Cumulative effect of change of method of
  accounting for maintenance checks                       549         -            -            -            -
Net income (loss)                                      27,010       30,566      (17,746)     (12,186)      (5,582)
Income  (loss)  per share  before  cumulative
  effect of a change in  accounting principle:
    Basic                                                1.53         2.14       (1.95)       (1.49)       (1.23)
    Diluted                                              1.40         1.98       (1.95)       (1.49)       (1.23)
Net income (loss) per share:
    Basic                                                1.56         2.14       (1.95)       (1.49)       (1.23)
    Diluted                                              1.43         1.98       (1.95)       (1.49)       (1.23)

Balance Sheet Data:
Cash, cash equivalents and
   short-term investments                             $83,611      $47,289       $3,641      $10,286       $7,527
Current assets                                        140,361       94,209       33,999       31,470       25,797
Total assets                                          187,546      119,620       50,598       44,093       30,990
Current liabilities                                    98,475       68,721       50,324       32,745       25,844
Long-term debt                                            329          435        3,566           56           92
Total liabilities                                     106,501       75,230       56,272       34,210       26,289
Stockholders' equity (deficit)                         81,045       44,391       (5,673)       9,883        4,701
Working capital (deficit)                              41,886       25,488      (16,325)      (1,275)         (47)

</TABLE>




                                       16
<PAGE>



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


                                                                       Year Ended March 31,
                                                    2000         1999         1998          1997         1996
                                                -------------------------------------------------------------------
Selected Operating Data:

Passenger revenue (000s) (2)                    $320,850      $214,311     $142,018      $113,758      $68,455
Revenue passengers carried (000s)                  2,284         1,664        1,356         1,180          758
Revenue passenger miles (RPMs) (000s) (3)      2,104,460     1,506,597    1,119,378       839,939      479,887
Available seat miles (ASMs) (000s) (4)         3,559,595     2,537,503    1,996,185     1,419,720      844,161
Passenger load factor (5)                          59.1%         59.4%        56.1%         59.2%        56.8%
Break-even load factor (6)                         51.1%         52.4%        63.1%         65.5%        61.5%
Block hours (7)                                   71,276        52,789       42,767        32,459       20,783
Departures                                        33,284        25,778       22,257        18,910       14,957
Average seats per departure                          129           125          124           118          112
Average stage length                                 829           787          723           636          504
Average length of haul                               921           905          826           712          633
Aircraft miles (000s)                             27,594        20,300       16,098        12,032        7,537
Average daily block hour utilization (8)             9.9           9.6          9.5          10.3          9.9
Yield per RPM (cents) (9)                          15.25         14.22        12.69         13.54        14.26
Total yield per RPM (cents) (10)                   15.67         14.64        13.14         13.87        14.67
Total yield per ASM (cents) (11)                    9.27          8.69         7.37          8.21         8.34
Expense per ASM (cents)                             8.16          7.72         8.30          9.13         9.04
Expense per ASM excluding fuel (cents)              6.91          6.82         7.13          7.61         7.65
Passenger revenue per block hour                  $4,502        $4,060       $3,321        $3,505       $3,294
Average fare (12)                                   $134          $123         $100           $92          $88
Average aircraft in service                         19.7          15.0         12.3           9.6          5.7
Aircraft in service at end of year                  23.0          17.0         14.0          10.0          7.0
Average age of aircraft at end of year              10.5          14.7         16.2          22.0         25.3
EBITDAR (000s) (13)                              $90,583       $58,848       $7,437        $4,576         $942
EBITDAR as a % of revenue                          27.5%         26.7%         5.1%          3.9%         1.3%

</TABLE>

(1)  Fiscal  2000  includes  income  of  $549,000  ($.03  per  share)  from  the
     cumulative effect of the change in the method of accounting for maintenance
     checks.
(2)  "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.
(3)  "Revenue  passenger  miles," or RPMs,  are  determined by  multiplying  the
     number  of  fare-paying  passengers  carried  by the  distance  flown.  (4)
     "Available  seat miles," or ASMs, are determined by multiplying  the number
     of seats available for passengers by the number of miles flown.
(5)  "Passenger load factor" is determined by dividing  revenue  passenger miles
     by available seat miles.
(6)  "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
(7)  "Block  hours"  represent  the time between  aircraft  gate  departure  and
     aircraft gate arrival.
(8)  "Average  daily block hour  utilization"  represents  the total block hours
     divided by the weighted average number of aircraft days in service.
(9)  "Yield per RPM" is  determined  by dividing  passenger  revenues by revenue
     passenger miles.
(10) "Total Yield per RPM" is determined by dividing  total  revenues by revenue
     passenger miles.
(11) "Total  Yield per ASM" is  determined  by  dividing  passenger  revenues by
     available seat miles.
(12) "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.
(13) "EBITDAR",  or  "earnings  before  interest,  income  taxes,  depreciation,
     amortization and aircraft rentals," is a supplemental financial measurement
     we  and  many  airline  industry  analysts  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.



                                       17
<PAGE>



Item 7:         Management's Discussion and Analysis of Financial Condition  and
Results of Operations Selected Operating Statistics

       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 years ended March 31, 2000, 1999
and 1998.  Pro forma  amounts  have been  provided for the years ended March 31,
1999 and 1998 assuming the new method of accounting  for  maintenance  checks is
applied retroactively.
<TABLE>
<S>                                   <C>          <C>       <C>           <C>          <C>           <C>

                                              2000                     1999                      1998
                                      ---------------------- -------------------------- --------------------------
                                         Per          %          Per            %           Per            %
                                        total        of         total          of          total          of
                                         ASM       Revenue       ASM         Revenue        ASM         Revenue
                                         ---       -------       ---         -------        ---         -------


Revenues:
    Passenger                            9.02         97.3%       8.44           97.1%         7.11         96.5%
    Cargo                                0.19          2.1%       0.19            2.2%         0.15          2.1%
    Other                                0.06          0.6%       0.06            0.7%         0.11          1.4%
                                      ----------- ---------- ------------  ------------ ------------- ------------
Total revenues                           9.27        100.0%       8.69          100.0%         7.37        100.0%

Operating expenses:
    Flight operations                    3.53         38.1%       3.12           35.9%         3.32         45.1%
    Aircraft and traffic servicing       1.38         14.8%       1.36           15.6%         1.56         21.1%
    Maintenance                          1.41         15.2%       1.42           16.3%         1.59         21.6%
    Promotion and sales                  1.29         14.0%       1.39           16.0%         1.45         19.7%
    General and administrative           0.46          5.0%       0.36            4.2%         0.32          4.3%
    Depreciation and amortization        0.10          1.0%       0.07            0.8%         0.06          0.9%
                                      ----------- ---------- ------------  ------------ ------------- ------------
Total operating expenses                 8.16         88.1%       7.72            8.8%         8.30        112.6%
                                      =========== ========== ============  ============ ============= ============

Total ASMs (000s)                      3,559,595               2,537,503                   1,996,185

Pro forma amounts:
  Maintenance                                                     1.49           17.1%         1.54         20.9%
  Total operating expenses                                        7.79           89.6%         8.25        111.9%


</TABLE>

                                       18
<PAGE>





       The following  selected  financial and operating data for the years ended
March 31, 2000,  1999, and 1998 have been adjusted on a pro forma basis assuming
the new method of accounting for maintenance checks is applied retroactively.

                                                    Year Ended March 31,
                                                      1999         1998
                                                  --------------------------
       Statement of Operations Data:
       Maintenance expenses (000s)                      37,821       30,692
       Total operating expenses (000s)                 197,659      164,598
       Net income (loss) (000s)                         29,510      (16,647)
       Net income (loss) per share:
           Basic                                          2.07        (1.83)
           Diluted                                        1.92        (1.83)

       Selected Operating Data:
       Break-even load factor                            52.9%        62.2%
       Expense per ASM (cents)                            7.79         8.25
       Expense per ASM excluding fuel (cents)             6.89         7.02


Results of  Operations - Year Ended March 31, 2000  Compared to Year Ended March
31, 1999

General

       We are a  scheduled  airline  based in  Denver,  Colorado.  We  currently
operate  routes  linking our Denver hub to 21 cities in 17 states  spanning  the
nation  from  coast  to  coast.  At  present,  we use up to 9  gates  at  Denver
International  Airport ("DIA") for approximately 112 daily flight departures and
arrivals.  During the year ended March 31, 2000, we added  Portland,  Oregon and
Orlando,  Florida to our route system.  On June 15, 2000 we commenced service in
the Kansas City, Missouri market.

       Organized in February 1994, we commenced flight  operations as a regional
carrier in July 1994 with two leased Boeing 737-200 jet aircraft.  We have since
expanded  our fleet to 24 leased jets as of June 2000,  including  seven  Boeing
737-200s and seventeen larger Boeing  737-300s.  During the year ended March 31,
2000, we added seven  additional  leased Boeing 737-300 aircraft and four Boeing
737-200A to our fleet and retired 5 Boeing 737-200 aircraft.

       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.

       During the fourth  quarter ended March 31, 2000, we changed our method of
accounting  for  maintenance  checks  from the accrue in  advance  method to the
direct expensing method.  The Company believes that the newly adopted accounting
principle  is  preferable  in the  circumstances  because  there has not been an
obligating  event prior to the  maintenance  checks actually being performed and
the  new  method  is  the  predominant  method  used  in the  airline  industry.
Fluctuations in these  maintenance  costs from period to period are not expected
to be  significant  given the maturity and current size of the Company's  fleet.
For  purposes  of  comparability,  the amounts for the year ended March 31, 1999
used in our  discussion  and  analysis  of  financial  condition  and results of
operations use the pro forma data included in the Selected Operating  Statistics
tables.

       As a result of the  expansion  of our  operations  during  the year ended
March 31, 2000,  our results of  operations  are not  necessarily  indicative of
future operating results or comparable to the prior year ended March 31, 1999.


                                       19
<PAGE>




Results of Operations

       We had net income of  $27,009,000 or $1.40 per diluted share for the year
ended March 31, 2000 as compared to pro forma net income of $29,510,000 or $1.92
per diluted share for the year ended March 31, 1999. During the year ended March
31, 2000, we reported a provision for income taxes,  which totaled  $16,954,000,
or  90(cent)  per  diluted  share.  During the year  ended  March 31,  1999,  we
eliminated  the  valuation  allowance  that  offset tax loss  carryforwards  and
recognized an income tax benefit.  The income tax benefit totaled  $5,480,000 or
36(cent)  per share.  During the year ended March 31,  2000,  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. We
also increased fares to partially offset increased fuel costs.

       Our cost per ASM for the year ended March 31, 2000 and pro forma cost per
ASM  for  the  year  ended  March  31,  1999  were  8.16(cent)  and  7.79(cent),
respectively,  or an increase of .37(cent) or 4.8%. Costs per ASM excluding fuel
for the  years  ended  March 31,  2000 and pro forma  costs per ASM for the year
ended  March 31,  1999  were  6.91(cent)  and  6.89(cent),  respectively,  or an
increase of .3%. Our cost per ASM increased during the year ended March 31, 2000
from  7.79(cent)  principally  because of overall  increases in the cost of fuel
which  accounted for .35(cent) per ASM,  aircraft  rentals  because of newer and
larger  aircraft of .05(cent) per ASM,  general and  administrative  expenses to
support  increased levels of operations and the number of personnel of .09(cent)
per ASM,  offset by a .08(cent)  reduction in cost per ASM in  maintenance  as a
result of conducting  certain heavy maintenance  checks in-house and a .10(cent)
decrease  in cost per ASM in  promotion  and  sales  expense  as a  result  of a
decrease in the travel agency  commission  rate from 8% to 5% in November  1999,
decreased advertising and communication expenses offset by an increase in credit
card fees associated with the increase in our average fare.

       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 year ended March 31,
2000, our break-even load factor was 51.1% compared to the passenger load factor
achieved of 59.1%.  For the year ended March 31, 1999, our pro forma  break-even
load factor was 52.9%  compared to the achieved  passenger load factor of 59.4%.
Our break-even load factor decreased from the prior comparable period largely as
a result of an increase in our average  fare to $134 during the year ended March
31,  2000 from $123  during the year ended  March 31,  1999,  an increase in our
total  yield per RPM from  14.64(cent)  for the year  ended  March  31,  1999 to
15.67(cent)  for the year ended  March 31,  2000  offset by an  increase  in our
expense per ASM to 8.16(cent) for the year ended March 31, 2000 from  7.79(cent)
for the year ended March 31, 1999.

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 years ended March 31, 2000 and 1999 was $134 and
$123, respectively.  We believe that the increase in the average fare during the
year ended March 31, 2000 over the prior comparable periods was largely a result
of our focus on  increasing  the number of  business  travelers,  an increase in
fares to offset increased fuel costs, and a general increase in fare levels.

       Passenger Revenues.  Passenger revenues totaled $320,850,000 for the year
ended March 31, 2000 compared to $214,311,000 for the year ended March 31, 1999,
or an increase of 49.7%. We carried  2,284,000  revenue  passengers for the year
ended March 31, 2000  compared to 1,664,000 for the year ended March 31, 1999 or
an increase of 37.3%. We had an average of 19.7 aircraft in our fleet during the
year ended March 31, 2000 compared to an average of 15 aircraft  during the year
ended March 31, 1999, an increase of 31.3%,  and ASMs increased by 1,022,092,000
or 40.3%. We believe that our passenger  traffic and related revenues during the
year ended March 31, 2000 were adversely affected by late deliveries of aircraft
and consumer concerns over the Year 2000 issue.


                                       20
<PAGE>

      Cargo  revenues,  consisting  of revenues  from freight and mail service,
totaled  $6,856,000  and $4,881,000 for the years ended March 31, 2000 and 1999,
respectively,   representing   2.1%  and  2.2%  of  total  operating   revenues,
respectively,  an increase of 40.5%.  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 $2,114,000 and $1,415,000 or .6% of total
operating  revenues  for each of the  years  ended  March  31,  2000  and  1999,
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 and
pro  forma  total  operating   expenses  were   $290,511,000  and  $197,659,000,
respectively, for the years ended March 31, 2000 and 1999, and represented 88.1%
and 89.6% of total  revenue,  respectively.  Operating  expenses  decreased as a
percentage  of revenue  during the year ended  March 31, 2000 as a result of the
49.7%  increase  in  passenger  revenues  attributable  to a 37.3%  increase  in
passengers and a 8.9% increase in the average fare offset by a 44.2% increase in
the average cost per gallon of fuel and a general wage rate increase  which went
into effect in January 2000.

       Flight  Operations.   Flight  operations  expenses  of  $125,536,000  and
$79,247,000  were 38.1% and 35.9% of total revenue for the years ended March 31,
2000 and 1999,  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 $44,402,000 for 55,568,000  gallons used and $22,758,000 for 41,082,000
gallons used resulted in an average fuel cost of 79.9(cent)  and  55.4(cent) per
gallon and represented 35.4% and 28.7% of total flight  operations  expenses for
the years ended March 31, 2000 and 1999, respectively. The average fuel cost per
gallon  increased  for the year ended March 31, 2000 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 each of the years ended March 31, 2000 and 1999
averaged  780 and 778  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.  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.  Approximately  65% of our  fleet  have had the
modification  completed  as of March 31,  2000.  Additionally,  5 aircraft  were
returned to their lessor  during the year ended March 31, 2000 and replaced with
4 aircraft with higher thrust engines that have a higher fuel burn rate.

       Aircraft lease expenses totaled  $47,945,000 (14.5% of total revenue) and
$32,958,000  (14.9% of total  revenue)  for the years  ended  March 31, 2000 and
1999,  respectively,  or an  increase of 45.5%.  The  increase is largely due to
higher lease expenses for larger and newer Boeing 737-300  aircraft added to the
fleet which  resulted in the increase in the average  number of aircraft to 19.7
from 15, or 31.3%,  for the year ended  March 31,  2000.  The average age of our
fleet  decreased  from 14.7 years as of March 31, 1999 to 10.5 years as of March
31, 2000.

       Aircraft insurance expenses totaled $2,689,000 (.8% of total revenue) for
the year ended March 31, 2000.  Aircraft  insurance  expenses for the year ended
March 31,  1999 were  $2,425,000  (1.1% of total  revenue).  Aircraft  insurance
expenses were .13(cent) and .16(cent) per RPM for the years ended March 31, 2000
and 1999,  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  $15,392,000 and $10,653,00 or 4.8% and 5% of passenger revenue for each
of the years ended March 31, 2000 and 1999,  or an increase of 44.5%.  Pilot and
flight  attendant  compensation  increased  principally  as a result  of a 31.3%
increase  in the  average  number of  aircraft  in  service,  general  wage rate
increases,  and a 35% increase 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 such periods 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.

                                       21
<PAGE>

       Aircraft and Traffic  Servicing.  Aircraft and traffic servicing expenses
were  $48,955,000  and  $34,451,000  (an  increase of 42.1%) for the years ended
March 31, 2000 and 1999, respectively,  and represented 14.8% and 15.6% 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 year ended  March 31, 2000 we served 21
cities  compared  to 19 cities  during  the year  ended  March 31,  1999,  or an
increase of 10.5%.  Three of the four cities  added  during the year ended March
31, 1999 were not added until mid-December 1998.  Aircraft and traffic servicing
expenses were $1,471 for the year ended March 31, 2000 as compared to $1,336 per
departure  for the year  ended  March  31,  1999,  or an  increase  of $135.  An
additional  DIA revenue credit above amounts  previously  estimated and accrued,
for its  fiscal  year ended  December  31,  1997  totaled  $371,000  (or $11 per
departure)  and was  included  as an offset to aircraft  and  traffic  servicing
expenses  during the year ended March 31,  1999.  After  adjusting  the cost per
departure  for these  credits  for the year ended March 31,  1999,  the cost per
departure  would have been $1,347 and the cost per  departure for the year ended
March 31, 2000 would have been a $124 increase over the prior comparable period.
Aircraft and traffic servicing  expenses  increased as a result of a drop in the
completion  factor for the year ended  March 31,  2000 to 98.6% from 99% for the
year ended  March 31,  1999 and late  deliveries  of  aircraft  which  increased
interrupted  trip expenses.  We also had expenses  associated  with the Boulder,
Colorado-DIA shuttle bus service, which is complimentary to our passengers,  and
a general wage rate increase which was effective in January 2000.

       Maintenance.  Maintenance  expenses for the year ended March 31, 2000 and
pro forma maintenance  expenses for the year ended March 31, 1999 of $50,239,000
and  $37,821,000,  respectively,  were 15.2% and 17.1% of total  revenue.  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 are accrued
monthly.  Maintenance  cost per block hour for the year ended March 31, 2000 and
pro forma  maintenance cost per block hour for the year ended March 31, 1999 was
$704 and $717 per block  hour,  respectively.  Maintenance  cost per block  hour
decreased  during the year ended March 31, 2000 as a result of a decrease in the
average  age of our  aircraft  and  as a  result  of  conducting  certain  heavy
maintenance  checks in-house,  which,  prior to March 1999, had been outsourced.
Additionally,  maintenance  costs per block hour have decreased as certain fixed
costs are spread over a larger  fleet.  These cost savings were offset by higher
than usual borrowed parts fees during the year ended March 31, 2000.  During the
years ended March 31, 2000 these fees were approximately  $1,439,000 compared to
$349,000  during the years  ended  March 31,  1999 or $20 and $7 per block hour,
respectively. During the year ended March 31, 2000, we increased our spare parts
inventory in an effort to mitigate this expense in the future.

       Promotion and Sales. Promotion and sales expenses totaled $46,014,000 and
$35,217,000  and were 14% and 16% of total revenue for the years ended March 31,
2000   and   1999,    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 year
ended March 31, 2000 over the prior comparable period largely as a result of the
increase in revenue and a decrease in travel agency commissions.

       During the year ended March 31, 2000,  promotion  and sales  expenses per
passenger  decreased  to $20.15 from  $21.16 for the year ended March 31,  1999.
Promotion  and sales  expenses  decreased  largely as a result of a decrease  in
travel agency  commissions from 8% to 5% effective in November 1999 matching the
decrease instituted by our competitors.  Travel agency commissions and interline
service charges and handling fees, as a percentage of passenger revenue,  before
non-revenue  passengers,  administrative fees and breakage (revenue from expired
tickets),  decreased to 4.4% for the year ended March 31, 2000 from 5.6% for the
year ended March 31, 1999. The decrease in travel agency  commissions was offset
by  increased  commission  expense  associated  with the increase in our average
fare.  During the years ended March 31, 1999 and 2000, we added four and two new
markets,  respectively,  thereby experiencing a decrease in advertising expenses
per passenger  which are generally  higher when opening new markets.  During the
year ended March 31, 2000 we had an  increase  in  computer  reservations  costs
associated  with  the  expansion  of  our  travel  agency  electronic  ticketing
capabilities.  With increased  activity on our web site, our calls per passenger
have decreased.  Because of this web site activity as well as a decrease in long
distance rates, we experienced a decrease in communications  expense. These cost
savings  were  offset by an increase  in credit  card fees  associated  with the
increase in our average fare from $123 for the year ended March 31, 1999 to $134
for the year ended March 31, 2000. We believe that  promotion and sales expenses
per passenger  will continue to decrease but there can be no assurance that this
will occur.

                                       22
<PAGE>

       General and Administrative.  General and administrative  expenses for the
years  ended  March  31,  2000  and 1999  totaled  $16,327,000  and  $9,264,000,
respectively, and were 5.0% and 4.2% of total revenue, 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,  training  and human  resources  and  other  expenses
associated with these  departments.  Employee health benefits,  accrued vacation
and bonus expenses,  general insurance expenses including worker's compensation,
and write-offs  associated with credit card and check fraud are also included in
general and  administrative  expenses.  We  experienced  increases  in our human
resources, training and IT expenses as a result of an increase in employees from
approximately  1,502 in March 1999 to  approximately  2,067 in March 2000, or an
increase  of 37.6%.  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. We increased general and
administrative  personnel in general because many of these areas were considered
to be under  staffed in prior  years as we strived  for  profitability.  We also
experienced  personnel increases in the area of aircraft procurement as a result
of the  purchase  and lease  agreements  for Airbus  aircraft  and the number of
aircraft we brought into our fleet during the year ended March 31, 2000. Because
of the increase in personnel,  our health insurance benefit expenses and accrued
vacation expense  increased  accordingly.  During the years ended March 31, 2000
and 1999, we accrued for employee  performance  bonuses totaling  $2,605,000 and
$1,829,000, respectively, or .8% of total revenue for each of these years.

       Depreciation and Amortization.  Depreciation and amortization expenses of
$3,440,000 and $1,659,000, an increase of 107.4% were approximately 1.0% and .9%
of total  revenue for the years  ended  March 31,  2000 and 1999,  respectively.
These  expenses  include  depreciation  of  office  equipment,   ground  station
equipment,   and  other  fixed  assets.   Amortization  of  start-up  and  route
development  costs are not  included  as these  expenses  have been  expensed as
incurred.  Depreciation  expense increased over the prior year as a result of an
increase  in our spare  parts  inventory  including  a spare  engine,  leasehold
improvements  associated  with  11 (6  additional  and 5  replacement)  aircraft
brought into our fleet during the year, ground handling equipment, and computers
to  support  new  employees  as well as  replacement  computers  for those  with
outdated technology.

       Nonoperating Income (Expense). Net nonoperating income totaled $4,105,000
for the year ended March 31, 2000  compared to $406,000 for the year ended March
31, 1999.  Interest income  increased from  $1,556,000 to $4,335,000  during the
year  ended  March 31,  2000 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
$119,000 during the year ended March 31, 2000 from $701,000 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  $568,000 during the year ended March 31, 1999. In January 1999, we paid
the note in full.  Other,  net  nonoperating  expense was  $110,000 for the year
ended March 31, 2000 compared to other, net nonoperating  income of $449,000 for
the year ended March 31,  1999.  Other,  net  nonoperating  expense for the year
ended  March 31,  1999  includes  $486,000 of  unamortized  deferred  loan costs
associated  with the senior  secured  notes that remained at the time we prepaid
the debt.

       Income Tax Expense  (benefit):  During the year ended March 31, 2000,  we
had income tax expense totaling $16,954,000,  or 39% of income before income tax
expense and cumulative  effect of change in method of accounting for maintenance
checks. During the year ended March 31, 1999 we recognized an income tax benefit
of  $5,480,000  primarily  attributable  to  the  probable  realization  of  our
remaining income tax loss carryforwards for which a valuation allowance had been
previously  recorded.  As a result of our profitability for the year ended March
31, 1999 a valuation allowance was no longer considered necessary.

                                       23
<PAGE>

       Cumulative  Effect of Change in Method of Accounting for Overhaul  Costs:
During the year ended March 31, 2000,  we changed our method of  accounting  for
maintenance  checks from the accrual to the direct expense method which resulted
in a credit of $549,000 net of income taxes of  $351,000.  Assuming  this method
was used during the year ended March 31, 1999,  we would have had  $1,731,000 of
additional   maintenance  expense,  and  net  income  would  have  decreased  by
$1,056,000, or 6(cent) per share.

Results of  Operations - Year Ended March 31, 1999  Compared to Year Ended March
31, 1998

General

       During the year ended  March 31,  1999 we  operated  routes  linking  our
Denver  hub to 19  cities  in 15  states.  We used up to seven  gates at  Denver
International  Airport ("DIA") for  approximately 92 daily flight departures and
arrivals.  During the year ended March 31, 1999, we added  Atlanta,  Georgia and
Dallas/Ft.  Worth,  Texas to our route  system  and  re-entered  the San  Diego,
California and Las Vegas,  Nevada markets. On June 14, 1999 we commenced service
in the Denver-Portland,  Oregon market. During the year ended March 31, 1999, we
added two additional  leased Boeing 737-300  aircraft and one Boeing 737-200A to
our fleet.

       On June 30, 1997,  we signed an Agreement and Plan of Merger ("the Merger
Agreement")  providing  for our  merger  (the  "Merger")  with  Western  Pacific
Airlines.  Pursuant to the Merger Agreement,  a "code share" marketing  alliance
between us and Western  Pacific  went into  effect on August 1, 1997,  in effect
integrating  the route  networks of the two airlines.  On September 29, 1997, we
both  mutually  agreed to  terminate  the Merger  Agreement  and the  code-share
arrangement.  The  separation  of the two  carriers  required us to  implement a
costly  restructuring  of our  flight  schedule  and route  system to  support a
stand-alone   operation  competing  against  both  Western  Pacific  and  United
Airlines,  the dominant air carrier at DIA. On October 5, 1997,  Western Pacific
filed for  protection  under  Chapter 11 of the U.S.  Bankruptcy  Code.  Western
Pacific  ceased  operations  on February 4, 1998.  The Merger  Agreement and our
competition  with Western Pacific  adversely  affected our results of operations
for the year ended March 31, 1998.

       As a result of the  expansion  of our  operations  and the  cessation  of
service by Western  Pacific during the year ended March 31, 1999, our results of
operations  are not  necessarily  indicative  of  future  operating  results  or
comparable to the prior year ended March 31, 1998.

Results of Operations

       We had net income of  $30,566,000 or $1.98 per diluted share for the year
ended March 31, 1999 as compared to a net loss of $17,746,000 or $1.95 per share
for the year ended  March 31,  1998.  During the year  ended  March 31,  1999 as
compared to the prior comparable period, we experienced higher fares as a result
of increases in business  travelers,  decreased  competition  as a result of the
demise of Western  Pacific,  and an increase  in the average  length of haul and
stage  length.  Our cost per ASM  declined to  7.72(cent)  during the year ended
March 31, 1999 from 8.30(cent) for the prior comparable period, principally as a
result of lower fuel prices and improved operating efficiencies and economies of
scale as our fixed costs were spread across a larger base of operations.

       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 year ended March 31,
1999, our break-even load factor was 52.4% compared to the passenger load factor
achieved of 59.4%. For the year ended March 31, 1998, our break-even load factor
was  63.1%  compared  to the  achieved  passenger  load  factor  of  56.1%.  Our
break-even load factor decreased from the prior  comparable  period largely as a
result of an increase  in our  average  fare to $123 during the year ended March
31,  1999 from $100  during the year ended  March 31,  1998,  an increase in our
total  yield per RPM from  13.15(cent)  for the year  ended  March  31,  1998 to
14.64(cent) for the year ended March 31, 1999, and a decrease in our expense per
ASM to 7.72(cent) for the year ended March 31, 1999 from 8.30(cent) for the year
ended March 31, 1998.

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.

                                       24
<PAGE>

       Our average fare for the years ended March 31, 1999 and 1998 was $123 and
$100, respectively.  We believe that the increase in the average fare during the
year ended March 31, 1999 over the prior comparable  period was largely a result
of  our  focus  on  increasing  the  number  of  business  travelers,  decreased
competition as a result of the demise of Western Pacific, and an increase in the
average  length of haul and stage length.  The average  length of haul increased
from 825 miles for the year ended March 31, 1998 to 905 miles for the year ended
March 31,  1999.  We also  experienced  higher  average  fares in certain of our
markets as a result of accommodating  Northwest Airlines  passengers during that
carrier's pilot strike in August and September 1998.

       Passenger Revenues.  Passenger revenues totaled $214,311,000 for the year
ended March 31, 1999 compared to $142,018,000 for the year ended March 31, 1998,
or an increase of 50.9%. We carried  1,664,000  revenue  passengers for the year
ended March 31, 1999  compared to 1,356,000 for the year ended March 31, 1998 or
an increase of 22.7%.  We had an average of 15 aircraft in our fleet  during the
year ended March 31, 1999  compared  to an average of 12.3  aircraft  during the
year ended March 31, 1998, an increase of 22%, and ASMs increased 541,318,000 or
27.1%.

       Cargo  revenues,  consisting  of revenues  from freight and mail service,
totaled  $4,881,000  and $3,009,000 for the years ended March 31, 1999 and 1998,
respectively,   representing   2.2%  and  2.0%  of  total  operating   revenues,
respectively, or an increase of 62.2%. 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 $1,415,000 and $2,115,000 or .6% and 1.4%
of total operating revenues for each of the years ended March 31, 1999 and 1998,
respectively. Other revenues were higher during the year ended March 31, 1998 as
a result of ticket  handling fees  associated with the code share agreement with
Western  Pacific.  Ticket  handling fees are earned by the ticketing  airline to
offset  ticketing costs incurred on segments  ticketed on the flight operated by
our code  share  partner.  We  recognized  approximately  $1,007,000  in  ticket
handling fees  associated  with our code share  agreement  with Western  Pacific
during the year ended March 31,  1998.  The costs that  offset this  revenue are
included in sales and promotion expenses.

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
$195,928,000  and  $165,697,000  for the years ended March 31, 1999 and 1998 and
represented 88.8% and 112.6% of total revenue, respectively.  Operating expenses
decreased as a percentage of revenue  during the year ended March 31, 1999 as we
experienced  significantly lower fuel prices and improved operating efficiencies
and  economies  of scale as our fixed costs were spread  across a larger base of
operations.

       Flight  Operations.   Flight  operations   expenses  of  $79,247,000  and
$66,288,000  were 35.9% and 45.1% of total revenue for the years ended March 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.

       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 $22,758,000 for 41,082,000  gallons used and $23,332,000 for 33,098,000
gallons used resulted in an average fuel cost of 55.4(cent)  and  70.5(cent) per
gallon and represented 28.7% and 35.2% of total flight  operations  expenses for
the years ended March 31, 1999 and 1998, respectively. The average fuel cost per
gallon decreased for the years ended March 31, 1999 and 1998 from the comparable
prior period due to an overall decrease 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 each of the years ended March 31, 1999 and 1998
averaged 778 and 774 gallons per block hour, respectively.

                                       25
<PAGE>

       Aircraft lease expenses totaled  $32,958,000 (14.9% of total revenue) and
$24,330,000  (16.5% of total  revenue)  for the years  ended  March 31, 1999 and
1998,  respectively,  or an  increase of 35.5%.  The  increase is largely due to
higher lease expenses for larger and newer Boeing 737-300  aircraft added to the
fleet  which  resulted in the  increase in the average  number of aircraft to 15
from 12.3, or 22%, for the years ended March 31, 1999, respectively.

Aircraft  insurance  expenses totaled $2,425,000 (1.1% of total revenue) for the
years ended March 31,  1999 and 1998 offset by a profit  commission  of $153,000
for the  policy  period  ended June 6, 1998.  The profit  commission  was earned
because we had no aircraft hull  insurance  claims  during the 1997-1998  policy
year.  Aircraft  insurance  expenses  for the year  ended  March  31,  1998 were
$2,989,000 (2% of total revenue).  Aircraft  insurance  expenses  decreased as a
percentage  of  revenue  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  $10,653,000 and $8,708,000 or 5% and 6.1% of passenger revenue for each
of the years ended March 31, 1999 and 1998,  or an increase of 22.3%.  Pilot and
flight  attendant  compensation  increased  principally  as a  result  of a  22%
increase  in the  average  number of  aircraft  in  service,  general  wage rate
increases,  and an  increase  of 23.4% 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  $34,147,000  and  $30,685,000  (an  increase of 11.3%) for the years ended
March 31, 1999 and 1998, respectively,  and represented 15.5% and 20.9% of total
revenue.  These include all expenses  incurred at airports served by us, as well
as station  operations  administration  and flight  operations  ground equipment
maintenance.  Station expenses include landing fees, facilities rental,  station
labor and ground handling expenses.  Station expenses as a percentage of revenue
decreased  during the year ended  March 31,  1999 over the year ended  March 31,
1998 as a result of our rental costs (in particular, the gate rentals at DIA and
other cities where we added  additional  frequencies),  which are largely  fixed
costs,  remaining  relatively  constant as compared to the  increase in revenue.
Additionally,  we began our own  ground  handling  operations  at DIA  effective
September  1,  1998  which  is more  cost  effective  than  using a third  party
contractor.  Aircraft and traffic  servicing  expenses  will  increase  with the
addition of new cities to our route system.

       Maintenance.  Maintenance  expenses of $36,090,000 and  $31,791,000  were
16.4% and 21.6% of total  revenue  for the years  ended March 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.  Effective  March 1999, we began to conduct certain
aircraft  heavy  maintenance   checks  in-house  which  we  expect  will  reduce
maintenance  expenses in future years.  During the quarter ended March 31, 1999,
we reduced our accrued  maintenance  expenses for these heavy maintenance checks
by  approximately  $1,100,000 as a result of the reduced costs  associated  with
performing these heavy maintenance  checks in-house.  Maintenance cost per block
hour was $684 and $743 per block  hour for the years  ended  March 31,  1999 and
1998,  respectively.  Maintenance  costs per block hour decreased as a result of
six new  aircraft we added to our fleet  during the past two years,  by bringing
certain aircraft heavy maintenance checks in-house, the fixed rental cost of the
hangar facility being spread over a larger aircraft fleet offset by FAA mandated
corrosion inspections on our 737-200s.  The newer aircraft require fewer routine
repairs and are generally  covered by a warranty period of  approximately  up to
three  years on standard  Boeing  components.  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 $35,621,000 and
$29,329,000  and were 16.1% and 19.9% of total revenue for the years ended March
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. Our
promotion and sales expenses for the year ended March 31, 1998 included expenses
as a result of the code share  agreement  with Western  Pacific,  under which we
incurred additional communications,  computer reservation, and interline service
charges and handling  fees for the code share  agreement.  These  expenses  were
offset,  in part, by interline  handling fees earned which are included in other
revenues.  We did not have any code share agreements during the year ended March
31,  1999  that had as large of an  impact  on our  expenses  as the code  share
agreement  with Western  Pacific.  Promotion and sales  expenses  decreased as a
percentage  of  revenue  for the year  ended  March  31,  1999  over  the  prior
comparable period largely as a result of the increase in revenue.

                                       26
<PAGE>

       Promotion  and sales  expenses  per  passenger  decreased  to $21.41 from
$21.63 for year ended March 31, 1999, as a result of the elimination of expenses
related to the code share  agreement  with Western  Pacific  offset by increased
reservation  costs and an increase in credit card fees. The costs of reservation
expenses  increased  as  a  result  of  outsourcing  part  of  our  reservations
requirements.  These  increased costs were offset by a decrease in travel agency
commissions.  During April 1998, we reduced travel agency commissions to 8% from
10%,  matching an 8%  commission  instituted by our  competitors  in the fall of
1997.  Additionally,  our direct  sales,  which are not subject to  commissions,
increased as a percentage of passenger  revenue.  Travel agency  commissions and
interline  service  charges and  handling  fees,  as a  percentage  of passenger
revenue,  before  non-revenue  passengers,   administrative  fees  and  breakage
(revenue from expired  tickets),  decreased to 5.6% for the year ended March 31,
1999 from 7.6% for the year ended March 31, 1998.

       Advertising expenses of $3,900,000 were 1.8% of passenger revenue for the
year ended March 31, 1999,  compared to $3,048,000 or 2.2% of passenger  revenue
for the year  ended  March 31,  1998.  As new  cities  are  added to our  flight
schedule,  advertising and marketing  promotions are designed and implemented to
increase  awareness of our new service,  name and brand  awareness.  Advertising
expenses  decreased  as a  percentage  of  revenue  largely  as a result  of the
increase in the average fare. Additionally, during the year ended March 31, 1998
we competed with Western Pacific for the low fare market which required a higher
volume of advertising.

       General and Administrative.  General and administrative  expenses for the
years  ended  March  31,  1999  and  1998  totaled  $9,163,000  and  $6,353,000,
respectively,  and were  4.2% and 4.3% of  total  revenue,  respectively.  These
expenses  include the wages and benefits for our executive  officers and various
other  administrative  personnel.  Legal and accounting  expenses,  supplies and
other  miscellaneous  expenses are also included in this  category.  Included in
general  and  administrative  expenses  for the year ended  March 31,  1999 were
accrued  bonuses and  related  payroll  taxes for our  employees  which  totaled
approximately  $1,830,000.  This  was the  first  time we  paid  bonuses  to our
employees. Included in general and administrative expenses during the year ended
March 31, 1998 were unusual expenses of approximately  $500,000  associated with
the terminated Merger Agreement with Western Pacific.

       Depreciation and Amortization.  Depreciation and amortization expenses of
$1,659,000 and $1,251,000  were  approximately  .8% and .9% of total revenue for
the years ended March 31, 1999 and 1998,  respectively.  These expenses  include
depreciation  of office  equipment,  ground station  equipment,  and other fixed
assets. Amortization of start-up and route development costs are not included as
these expenses have been expensed as incurred.

       Nonoperating  Income (Expense).  Net nonoperating income totaled $406,000
for the year ended March 31, 1999  compared to $808,000 for the year ended March
31, 1998.  Interest income increased from $722,000 to $1,556,000 during the year
ended March 31, 1999 from the prior comparable period due to an increase in cash
balances  as a result of the sale of Common  Stock in April 1998 and an increase
in cash from operating activities.  Interest expenses increased to $701,000 from
$324,000  during the year ended March 31, 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
$568,000  and  $263,000  during  the  years  ended  March  31,  1999  and  1998,
respectively.  See Note 4 to the Financial  Statements.  Other, net nonoperating
expense was  $449,000 for the year ended March 31, 1999  compared to other,  net
nonoperating  income of $410,000 for the year ended March 31, 1998.  Other,  net
nonoperating  expense  for the year ended March 31,  1999  includes  $486,000 of
unamortized  deferred loan and warrant costs  associated with the senior secured
notes that remained at the time we prepaid the debt.

       Income Tax Benefit:  We  recognized  an income tax benefit of  $5,480,000
primarily  attributable to the probable  realization of our remaining income tax
loss carryforwards for which a valuation allowance had been previously recorded.
As a result of our profitability for the year ended March 31, 1999 and projected
taxable income for the year ending March 31, 2000, a valuation  allowance was no
longer considered necessary.

                                       27
<PAGE>

       Expenses per ASM. Our expenses per ASM for the years ended March 31, 1999
and 1998 were  7.72(cent)  and  8.30(cent),  respectively,  or a decrease of 7%.
Expenses  per ASM  decreased  from the  prior  comparable  period as a result of
economies  of  scale  as  fixed  costs  were  spread  across  a  larger  base of
operations,  a decrease in fuel  prices,  and the  increase in average  ASMs per
aircraft as we added aircraft with greater seating capacity  compared to earlier
fleet  additions.  Expenses  per ASM  excluding  fuel  for the year  ended  were
6.82(cent) and 7.13(cent), respectively, or a decrease of 4.3%. 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 year
ended March 31, 1999 were 125 as compared to 124 seats per aircraft for the year
ended March 31, 1998, with the increase in our Boeing 737-300 aircraft.

Liquidity and Capital Resources

       Our balance sheet  reflected  cash and cash  equivalents  and  short-term
investments  of  $83,611,000  and  $47,289,000  at  March  31,  2000  and  1999,
respectively.  At March 31, 2000,  total  current  assets were  $140,361,000  as
compared to  $98,475,000  of total  current  liabilities,  resulting  in working
capital of $41,886,000. 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 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 year ended March 31, 2000.

       Cash provided by operating  activities  for the year ended March 31, 2000
was  $54,707,000.  This was  primarily  attributable  to our net  income for the
period  adjusted for non-cash  charges,  the utilization of deferred tax assets,
increases  in  air  traffic  liability,   other  accrued  expenses  and  accrued
maintenance  expenses,  offset  by  increases  in trade  receivables,  security,
maintenance and other deposits, prepaid expenses and inventories.  Cash provided
by operating activities for the year ended March 31, 1999 was $35,956,000.  This
was  primarily  attributable  to our net  income  for the  period  adjusted  for
non-cash charges,  increases in accounts payable,  air traffic liability,  other
accrued  expenses  and  accrued  maintenance  expense,  offset by  increases  in
restricted  investments,  trade  receivables,  security,  maintenance  and other
deposits, prepaid expenses and inventories.

       Cash used by  investing  activities  for year  ended  March 31,  2000 was
$39,370,000.   We  invested  $15,760,000  in  short-term  investments,   net  of
maturities,  comprised of  government-backed  agencies and commercial paper with
maturities  of one year or less.  During the year  ended  March 31,  2000,  cash
security  deposits  for  aircraft  totaling  $2,491,000  were  returned to us or
replaced  with letters of credit.  During the year ended March 31, 2000, we made
cash security  deposits  totaling $200,000 in connection with an Airbus aircraft
lease and $6,400,000 in down payments  associated  with a purchase  agreement 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,  $1,206,000 in cash security deposits were returned to us during the year
ended March 31, 2000. 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 year ended
March 31, 2000.  Additionally,  we secured 10 aircraft delivered during the year
ended March 31, 2000 with letters of credit  totaling  $3,640,000 and restricted
investments  increased by this amount to collateralize the letters of credit. We
used  $16,361,000  for  capital  expenditures  for rotable  aircraft  components
including  a  spare  CFM  engine,  maintenance  equipment  and  tools,  aircraft
leasehold  improvements,  and computer equipment during the year ended March 31,
2000.  Cash used by investing  activities  for the year ended March 31, 1999 was
$6,801,000.  We used  $4,313,000 for capital  expenditures  for ground  handling
equipment,  rotable  aircraft  components,  maintenance  equipment  and aircraft
leasehold  costs and  improvements.  We used cash of $944,000 for initial  lease
acquisition  security deposits for one aircraft  delivered during the year ended
March 31,  1999 and for three  fiscal  year 2000  deliveries.  Additionally,  we
secured two aircraft  delivered in December  1998 with letters of credit and for
one  aircraft  delivered  in April  1999  totaling  $1,544,000.  Our  restricted
investments increased $1,544,000 to collateralize the letters of credit.

                                       28
<PAGE>

       Cash provided by financing  activities for the years ended March 31, 2000
and 1999 was $5,224,000  and  $14,493,000,  respectively.  During the year ended
March 31, 2000, we received $5,324,000 from the exercise of common stock options
and warrants.  During the year ended March 31, 1999, 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 our Common Stock at a purchase price of
$3.75 per share.  This warrant expires in April 2002.  Additionally,  during the
year ended March 31, 1999,  we received  $1,900,000  from the exercise of common
stock options and warrants.

       As of June 15, 2000 we lease 24 Boeing 737 type aircraft under  operating
leases with expiration dates ranging from 2001 to 2006.  Under these leases,  we
were  required  to make cash  security  deposits  or issue  letters of credit to
secure  the lease  obligations.  At March 31,  2000,  we had made cash  security
deposits and had arranged for issuance of letters of credit totaling  $3,258,000
and $7,284,000, respectively.  Accordingly, our restricted cash balance includes
$7,284,000 that collateralize the outstanding  letters of credit.  Additionally,
we make deposits for maintenance of these aircraft.  At March 31, 2000 and 1999,
we had made maintenance deposits of $26,912,000 and $18,673,000, respectively.

       In  March  2000,  we entered  into an agreement to purchase 11 new Airbus
aircraft,  with options to purchase an additional nine new Airbus  aircraft.  To
the extent we  exercise  our  options to purchase  the nine  aircraft,  they are
replaced on a one-for-one  basis with additional  options to purchase new Airbus
aircraft,  up  to a  total  of  nine  additional  option  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.
The  aggregate  additional  amounts  due  under  this  purchase  commitment  and
estimated  amounts for  buyer-furnished  equipment  and spare parts for both the
purchased and leased aircraft was  approximately  $347,000,000 at March 31,2000.
Under the terms of the purchase  agreement,  we are  required to make  scheduled
pre-delivery   payments.   These  payments  are   non-refundable   with  certain
exceptions.  As of March 31, 2000,  the Company has made  pre-delivery  payments
totaling  $6,400,000  to  secure  these  aircraft  and  option  aircraft.  As  a
complement to this purchase,  in April and May 2000 we signed two aircraft lease
agreements to lease 16 new Airbus  aircraft.  As of March 31, 2000, we have made
deposits  totaling  $200,000 to secure these  aircraft.  Upon  completion of our
fleet  transition,  we expect  our owned and  leased  fleet to be  comprised  of
approximately two-thirds A319 aircraft and one-third A318 aircraft. We expect to
take  delivery of our first  leased  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 new Airbus
aircraft  will  result in  significant  operating  cost  savings and an improved
product for our  customers.  In order to complete the purchase of these aircraft
we must secure acceptable aircraft  financing.  The amount of financing required
will  depend on the number of  aircraft  purchase  options we  exercise  and the
amount of cash  generated by operations  prior to delivery of the  aircraft.  We
continue to explore various  financing  alternatives,  including but not limited
to, domestic and foreign bank financing,  public debt financing such as enhanced
equipment trust  certificates,  and leveraged lease  arrangements.  We expect to
develop a financing plan and implement that plan coincident with the delivery of
the first purchased  aircraft in 2002. While we believe that such financing will
be available to us, there can be no assurance  that  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  result  in delays in or our
inability to take delivery of Airbus aircraft we have agreed to purchase.

       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  which 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  which we  believe  has  reduced  our  maintenance
expenses.  Effective  November 5, 1999 we reduced travel agency commissions from
8% to 5% in response  to our  competitors.  Effective  in August  2000,  our new
reservations  center located in Las Cruces, New Mexico will open. We believe the
cost of operating  this facility will be lower than that charged by the contract
provider we currently  use for these  services.  We are in the process of adding
additional procedures when making reservations to reduce credit card fraud.

       In November  1998,  our pilots voted to be  represented by an independent
union,  the  Frontier  Airline  Pilots  Association.   In  September  1999,  our
dispatchers  elected to be represented by the Transport Workers Union. The first
bargaining  agreement for the pilots,  which has a 5-year term, was ratified and
made effective in May 2000. Negotiations are underway with the Transport Workers
Union for a contract with the  dispatchers.  In addition  since 1997 we have had
union  organizing  attempts  that were  defeated  by our  employees:  our flight
attendants, ramp service agents, mechanics, and stock clerks.

                                       29
<PAGE>

       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.

Item 7A:  Quantitative and Qualitative Disclosures About Market Risk

       The 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 effect that such an
adverse  change may have an  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,  2000.
Based on fiscal year 200 actual fuel usage, such an increase would have resulted
in an increase to aircraft  fuel expense of  approximately  $4,442,000 in fiscal
year 2000.  Comparatively,  based on projected fiscal year 2001 fuel usage, such
an  increase   would  result  in  an  increase  to  aircraft   fuel  expense  of
approximately  $5,343,000 in fiscal year 2001.  The increase in exposure to fuel
price  fluctuations  in fiscal  year 2001 is due to the  increase of our average
aircraft fleet size during the year ended March 31, 2000, projected increases to
our fleet during the year ended March 31, 2001 and related gallons purchased.

       Our average  cost per gallon of fuel for the period  ended March 31, 2000
increased  44.4% over the average  cost for the year ended March 31,  1999.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations - Operating Expenses".

Item 8:  Financial Statements

       Our financial  statements are filed as a part of this report  immediately
following the signature page.

                                    PART III

Item 10:  Directors and Executive Officers of the Registrant.

       The information required by this Item is incorporated herein by reference
to the data under the heading  "Election of Directors" in the Proxy Statement to
be used in connection with the solicitation of proxies for our annual meeting of
shareholders to be held on September 7, 2000. We will file the definitive  Proxy
Statement with the Commission on or before July 31, 2000.

Item 11.  Executive Compensation.

       The information required by this Item is incorporated herein by reference
to the data under the heading "Executive Compensation" in the Proxy Statement to
be used in connection with the solicitation of proxies for our annual meeting of
shareholders to be held on September 7, 2000. We will file the definitive  Proxy
Statement with the Commission on or before July 31, 2000.


                                       30
<PAGE>

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

       The information required by this Item is incorporated herein by reference
to the data under the heading "Voting  Securities and Principal Holders Thereof"
in the Proxy Statement to be used in connection with the solicitation of proxies
for our annual meeting of  shareholders to be held on September 7, 2000. We will
file the  definitive  Proxy  Statement with the Commission on or before July 31,
2000.

Item 13.  Certain Relationships and Related Transactions.

       The information required by this Item is incorporated herein by reference
to the data under the heading  "Related  Transactions" in the Proxy Statement to
be used in connection with the solicitation of proxies for our annual meeting of
shareholders to be held on September 7, 2000. We will file the definitive  Proxy
Statement with the Commission on or before July 31, 2000.

                                     PART IV

Item 14(a):  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

Exhibit
Numbers       Description of Exhibits

 3.1          Amended and Restated Articles of Incorporation of the Company.(12)

 3.2          Amended Bylaws of the Company (June 9, 1997). (5)

 4.1          Specimen Common Stock certificate of the Company. (1)

 4.2          The Amended and Restated  Articles of Incorporation and Amended By
              laws of the Company are included as Exhibits 3.1 and 3.2.

 4.3          Form of Warrant. (1)

 4.3          Rights Agreement, dated as of February 20, 1997, between  Frontier
              Airlines,   Inc.  and  American  Securities Transfer & Trust, Inc,
              including the form of Rights Certificate and the Summary of Rights
              attached  thereto as Exhibits A and B,  respectively, incorporated
              by reference to Frontier Airlines, Inc. Registration  Statement on
              Form 8-A dated March 11, 1997. (6)

 4.4(a)       Amendment to Rights Agreement dated June 30, 1997. (5)

 4.4(b)       Amendment to Rights Agreement dated December 5, 1997. (13)

 4.4(c)       Third Amendment to Rights Agreement dated September 9, 1999. (15)

10.1          Office Lease. (1)

10.2          Office Lease Supplements and Amendments. (5)

10.2(a)       Addendum to Office Lease (10)

10.2(b)       Office Lease Supplements and Amendments (13)

10.2(c)       Lease Amendment dated  as  of  January 12, 2000  between  Highline
              Group, LLC,landlord, and Frontier Airlines, Inc., tenant. 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. (16)


                                       31
<PAGE>

10.2(d)       Lease Amendment dated as of April 1, 2000 between  Highline Group,
              LLC, landlord, and Frontier Airlines,  Inc.,  tenant.  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. (16)

10.3          1994 Stock Option Plan. (1)

10.4          Amendment No. 1 to 1994 Stock Option Plan. (2)

10.4(a)       Amendment No. 2 to 1994 Stock Option Plan (5)

10.5          Registration Rights Agreement. (1)

10.6          Sales Agreement. (1)

10.7          Airport  Use  and   Facilities   Agreement,  Denver  International
              Airport.  (2)

10.8          Aircraft Lease Agreement dated as of July 26, 1994. (2)

10.8(a)       Assignment and Assumption Agreements dated as of March 28,1997 and
              March  20, 1997  between  USAirways, Inc. and First Security Bank,
              National Association ("Trustee") and Frontier Airlines, Inc.  (5)

10.8(b)       Amendment No. 1,  dated June 5, 1997, to Lease  Agreement dated as
              of July 26,1994 between Frontier Airlines, Inc. and First Security
              Bank, National Association. (5)

10.9          Code Sharing Agreement. (5)

10.10         Aircraft Lease Agreement dated as of October 20, 1995 (MSN 23177).
              (3)

10.10(a)      Aircraft   Lease  Extension  and  Amendment  Agreement dated as of
              October 1, 1999.  Portions of this  Exhibit  have  been   excluded
              from  the  publicly available  document and   an   order  granting
              confidential treatment of the excluded material has been received.
              (15)

10.11         Aircraft Lease Agreement dated as of October 20, 1995 (MSN 23257).
              (3)

10.11(a)      Aircraft  Lease  Extension  and  Amendment  Agreement  dated as of
              October 1, 1999.  (15)

10.12         Aircraft Lease Agreement dated as of May 1, 1996. (3)

10.13         Aircraft Lease Agreement dated as of June 3, 1996. (3)

10.13(a)      Amendment  No.1 to Aircraft  Lease  Agreement  dated as of June 3,
              1996.(10)

10.14         Aircraft Lease  Agreement  dated as of June 12, 1996.  Portions of
              this  Exhibit  have  been  excluded from  the  publicly  available
              document and  an  order  granting  confidential  treatment  of the
              excluded material has been received.  (3)

10.15         Operating  Lease  Agreement  dated  November 1, 1996  between  the
              Company and First Security Bank,  National  Association.  Portions
              of  this  Exhibit  have  been excluded from the publicly available
              document  and  an  order  granting  confidential  treatment of the
              excluded material has been received.  (4)

10.16         Aircraft Lease Agreement (MSN 28760) dated as of December 12, 1996
              between the Company and Boullion  Aircraft Holding  Company,  Inc.
              Portions of this  Exhibit  have been  excluded  from the  publicly
              available document and an order granting confidential treatment of
              the excluded material has been received. (4)


                                       32
<PAGE>

10.16(a)      Amendment No. 1 to  Aircraft  Lease   Agreement  (MSN 28760) dated
              May 20, 1997. 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. (5)

10.17         Aircraft Lease Agreement (MSN 28662) dated as of December 12, 1996
              between the Company and Boullion  Aircraft Holding  Company,  Inc.
              Portions of this  Exhibit  have been  excluded  from the  publicly
              available document and an order granting confidential treatment of
              the excluded material has been received. (4)

10.17(a)      Amendment No. 1 to  Aircraft  Lease  Agreement  (MSN 28662)  dated
              May 20, 1997. 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. (5)

10.18         Aircraft  Lease  Agreement  (MSN 28563) dated as of March 25, 1997
              between  the Company and  General  Electric  Capital  Corporation.
              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. (5)

10.19         Space  and  Use Agreement with Continental  Airlines,  as amended.
              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. (5)

10.19(a)      Space  and  Use  Agreement with Continental Airlines.  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. (16)

10.20         Letter of Understanding with Continental Airlines dated  August 16
              1996.  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.  (5)

10.21         Service Agreement between Frontier Airlines, Inc and Greenwich Air
              Services,  Inc. dated May 19, 1997.  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.  (5)

10.22         Agreement  between  Frontier Airlines,  Inc. and Dallas Aerospace,
              Inc.  dated  April 17, 1997.  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.  (5)

10.23         General  Services  Agreement  between Frontier  Airlines, Inc. and
              Tramco, Inc. dated as of August 6, 1996. (5)

10.24         General  Terms Engine Lease Agreement  between  Frontier Airlines,
              Inc. and Terandon Leasing Corporation dated as of August 15, 1996,
              as assigned to U.S. Bancorp  Leasing and Financial on February 19,
              1997. 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. (5)

10.25         Lease  Agreement  between  Frontier  Airlines,  Inc. and  Aircraft
              Instrument  and  Radio  Company, Inc,  dated  December  11,  1995.
              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. (5)

10.26         Agreement and  Plan of  Merger  between Western Pacific  Airlines,
              Inc. and Frontier Airlines, Inc. dated June 30, 1997.  (5)


                                       33
<PAGE>

10.26(a)      Agreement dated as of  September 29, 1997 between  Western Pacifi
              Airlines, Inc. and Frontier Airlines, Inc. (7)

10.27         Security  Agreement  with Wexford Management LLC dated December 2,
              1997. (8)

10.28         Amended and Restated Warrant Agreement with Wexford Management LLC
              dated as of February 27, 1998. (12)

10.29         Amended  and  Restated R egistration Rights Agreement with Wexford
              Management LLC dated as of February 27, 1998. (12)

10.30         Securities Purchase  Agreement  with B III Capital Partners,  L.P.
              dated as of April 24, 1998. (9)

10.31         Registration Rights  Agreement  with B III Capital  Partners, L.P.
              dated as of April 24, 1998. (12)

10.32         Warrant  Agreement with The Seabury Group, LLC dated as of May 26,
              1998. (12)

10.33         Registration Rights Agreement with The Seabury Group, LLC dated as
              of May 26, 1998. (12)

10.34         Aircraft Lease Agreement (MSN  21613) dated as of August 10,  1998
              between the Company and nterlease Aviation Investors, L.L.C. (10)

10.35         Aircraft Lease Agreement (MSN 28738) dated as of November 23, 1998
              among first Security Bank, National  Association,  Lessor,  Heller
              Financial  Leasing,  Inc.,  Owner  participant,  and  the Company,
              Lessee. (11).

10.36         Aircraft Sublease Agreement (MSN 28734) dated as  of  December 14,
              1998  between  Indigo  Pacific  AB,  Sublessor,  and  the Company,
              Sublessee. (11)

10.37         Aircraft Lease Agreement (MSN 23004) dated as of February 26, 1999
              between First Security Bank, N.A.,  Lessor, and Frontier Airlines,
              Inc.,  Lessee.  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. (13)

10.38         Aircraft Lease Agreement (MSN 23007) dated as of February 26, 1999
              between First Security Bank,  N.A.  Lessor  and Frontier Airlines,
              Inc.,  Lessee.  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. (13)

10.39         Aircraft  Lease  Agreement (MSN 26440)  dated as of March 15, 1999
              between Indigo Aviation AB (publ),  Lessor, and Frontier Airlines,
              Inc.,  Lessee.  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. (13)

10.40         Aircraft  Lease  Agreement (MSN 24569)  dated as of April 16, 1999
              between C.I.T. Leasing Corporation, Lessor, and Frontier Airlines,
              Inc.,  Lessee.  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. (13)

10.41         Aircraft  Lease   Agreement  (MSN 24856)  dated as of June 2, 1999
              between Indigo Aviation  AB  (publ), Lessor and Frontier Airlines,
              Inc.,  Lessee.  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. (13)

10.42         Severance  Agreement  dated March 10, 1999 between the Company and
              Samuel D. Addoms. (13)

10.43         Space and Use Agreement between Continental Airlines, Inc. and the
              Company. (13)


                                       34
<PAGE>

10.44         Aircraft Sublease Agreement (MSN 23039) dated as of July 21,  1999
              between Kommanditbolaget Flygplant 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. (14)

10.45         Aircraft Sublease Agreement (MSN 23040) dated as of July 21,  1999
              between Kommanditbolaget Flygplant 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. (14)

10.46         Aircraft  Sublease  Agreement (MSN 26442)  dated as of October 11,
              1999  between  Indigo  Aviation AB (publ),  Lessor,  and  Frontier
              Airlines,  Inc.,  Lessee.  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. (15)

10.47         Aircraft Lease Agreement (MSN 25256) dated as  of  January 7, 2000
              between   Aviation   Financial   Services,   Inc.    Lessor,   and
              Frontier Airlines,  Inc.,  Lessee.   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. (16)

10.48         Aircraft Lease Agreement (MSN 25159) dated as  of  January 7, 2000
              between   Aviation   Financial   Services,   Inc.    Lessor,   and
              Frontier Airlines,  Inc.,  Lessee.   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. (16)

10.49         Aircraft Lease Agreement (MSN 25264) dated as  of  January 7, 2000
              between   Aviation   Financial   Services,   Inc.    Lessor,   and
              Frontier Airlines,  Inc.,  Lessee.   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. (16)

10.50         Aircraft Lease Agreement (MSN 25263) dated as  of  January 7, 2000
              between   Aviation   Financial   Services,   Inc.    Lessor,   and
              Frontier Airlines,  Inc.,  Lessee.   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. (16)

10.51         Airbus  A318/A319  Purchase  Agreement  dated as of March 10, 2000
              between AVSA,  S.A.R.L.,  Seller,  and  Frontier  Airlines,  Inc.,
              Buyer.  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. (16)

10.52         Aircraft  Lease  Common  Terms  Agreement  dated as  of April  20,
              2000 between General  Electric  Capital  Corporation and  Frontier
              Airlines, Inc.  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. (16)

10.53         Aircraft Lease Agreement dated as of April 20, 2000 between
              Aviation Financial Services, Inc., Lessor, and Frontier  Airlines,
              Inc., Lessee, in respect of Fifteen Airbus A319 Aircraft. 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. (16)

10.54         Aircraft Lease Agreement dated as of May 25, 2000 between Frontier
              Airlines,   Inc.,   Lessee,   and   International   Lease  Finance
              Corporation, Lessor,  in respect  to one  Airbus   A318  aircraft.
              Portions  of this exhibit have been  excluded  from  the  publicly
              available document and an  application  for  an    order  granting
              confidential treatment of theexcluded material has been made. (16)


                                       35
<PAGE>

10.55         Lease  dated  as   of May 5, 2000 for Frontier Center One, LLC, as
              landlord, and Frontier Airlines, Inc., as tenant. 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. (16)

10.56         Operating  Agreement of Frontier  Center One, LLC, dated as of May
              10,  2000  between  Shea  Frontier  Center,  LLC,  and 7001 Tower,
              LLC, and  Frontier  Airlines,  Inc.  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. (16)

10.57         Standard  Industrial  Lease  dated April 27, 2000, between Mesilla
              Valley Business Park, LLC, landlord, and Frontier Airlines,  Inc.,
              tenant.  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. (16)

10.58         Aircraft Lease Agreement dated as of May 25, 2000 between Frontier
              Airlines,Inc.,Lessee, and International Lease Finance Corporation,
              Lessor,  in respect to one Boeing  737-300  aircraft.  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. (16)

18.1          Letter re: change in accounting principle. (16)

23.1          Consent of KPMG LLP  (16)

27.1          Financial Data Schedule (16)


(1)      Incorporated by reference from the Company's  Registration Statement on
         Form SB-2,  Commission File No. 33-77790-D,  declared effective May 20,
         1994.
(2)      Incorporated  by reference  from the  Company's  Annual  Report on Form
         10-KSB, Commission File No. 0-4877, filed on June 29, 1995.
(3)      Incorporated  by reference  from the  Company's  Annual  Report on Form
         10-KSB, Commission File No. 0-4877, filed on June 24, 1996.
(4)      Incorporated by reference from the Company's  Quarterly  Report on Form
         10-QSB, Commission File No. 0-4877, filed on February 13, 1997.
(5)      Incorporated  by reference  from the  Company's  Annual  Report on Form
         10-KSB, Commission File No. 0-24126, filed July 14, 1997.
(6)      Incorporated  by reference from the Company's  Report on Form 8-K filed
         on March 12, 1997.
(7)      Incorporated  by  reference from the Company's Report on Form 8-K filed
         on October 1, 1997.
(8)      Incorporated  by reference from the Company's  Report on Form 8-K filed
         on December 12,  1997.
(9)      Incorporated  by reference from the  Company's Report on Form 8-K filed
         on May 4, 1998.
(10)     Incorporated  by  reference  from  the  Company's  Report on Form 10-Q,
         Commission File No. 0-24126, filed on November 13, 1998.
(11)     Incorporated  by  reference  from the  Company's  Report on Form  10-Q,
         Commission File No. 0-24126, filed on February 12, 1999.
(12)     Incorporated  by reference  from the  Company's  Report on Form 10-K/A,
         Commission file No. 0-24126, filed July 9, 1998.
(13)     Incorporated  by  reference  from  the Company's Report on Form 10-KSB,
         Commission File No. 0-24126, filed [DATE].
(14)     Incorporated by reference  from  the  Company's  Report  on  Form 10-Q,
         Commission File No. 0-24126, filed on August 10, 1999.
(15)     Incorporated by reference  from  the  Company's  Report  on  Form 10-Q,
         Commission File No. 0-24126, filed on November 10, 1999.
(16)     Filed Herewith.


                                       36
<PAGE>
Item 14(b):  Reports on Form 8-K.

       No  reports  on  Form  8-K  were filed during the quarter ended March 31,
       2000.


                                       37
<PAGE>

                                   SIGNATURES

       Pursuant  to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          FRONTIER AIRLINES, INC.


Date:  June 26, 2000                      By: /s/ Steve B. Warnecke
                                          --------------------------------------
                                          Steve B. Warnecke, Vice President  and
                                          Chief Financial Officer

Date: June 26, 2000                       By: /s/ Elissa A. Potucek
                                          --------------------------------------
                                          Elissa  A.  Potucek,  Vice  President,
                                          Controller,  Treasurer  and  Principal
                                          Accounting Officer

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

Date: June 26, 2000                       /s/ Samuel D. Addoms, Director
                                          --------------------------------------
                                          Samuel D. Addoms, Director

Date: June 26, 2000                       /s/ William B. McNamara, Director
                                          --------------------------------------
                                          William B. McNamara, Director

Date: June 26, 2000                       --------------------------------------
                                          Paul Stephen Dempsey, Director

Date: June 26, 2000                       /s/ B. LaRae Orullian, Director
                                          --------------------------------------
                                          B. LaRae Orullian, Director

Date: June 26, 2000                       /s/  D. Dale Browning, Director
                                          --------------------------------------
                                          D. Dale Browning, Director

Date: June 26, 2000                       /s/  James B. Upchurch, Director
                                          --------------------------------------
                                          James B. Upchurch, Director



<PAGE>








                                           Independent Auditors' Report

The Board of Directors and
   Stockholders

Frontier Airlines, Inc.:


We have audited the accompanying balance sheets of Frontier Airlines, Inc. as of
March 31, 2000 and 1999, and the related statements of operations, stockholders'
equity,  and cash  flows for each of the years in the  three-year  period  ended
March  31,  2000.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Frontier Airlines,  Inc., as of
March 31, 2000 and 1999,  and the results of its  operations  and its cash flows
for each of the  years  in the  three-year  period  ended  March  31,  2000,  in
conformity with generally accepted accounting principles.

As  discussed in Note 1 to the  financial  statements,  the Company  changed its
method of accounting for maintenance checks in 2000.

                                          KPMG LLP

Denver, Colorado
May 31, 2000
                                      F-1
<PAGE>


FRONTIER AIRLINES, INC.
Balance Sheets
March 31, 2000 and 1999
<TABLE>
<S>                                                                             <C>             <C>

                                                                                    March 31,        March 31,
                                                                                      2000             1999
                                                                                 ---------------- ----------------
Assets
Current assets:

    Cash and cash equivalents                                                         67,850,933       47,289,072
    Short-term investments                                                            15,760,000            -
    Restricted investments                                                             4,000,000        4,000,000
    Trade   receivables,   net  of  allowance  for  doubtful
    accounts of $170,819 and $199,960 at March 31, 2000 and 1999                      22,190,835       16,930,038
    Maintenance deposits (note 5)                                                     19,637,128       13,018,466
    Prepaid expenses (note 2)                                                          7,386,851        5,439,834
    Inventories                                                                        2,235,183        1,203,916
    Deferred tax assets (note 7)                                                       1,136,194        6,041,576
    Deferred lease and other expenses                                                    163,527          285,636
                                                                                 ---------------- ----------------
            Total current assets                                                     140,360,651       94,208,538

Security, maintenance and other deposits (note 5)                                     17,613,122       11,834,457
Property and equipment, net (note 3)                                                  21,654,262        8,733,778
Deferred lease and other expenses                                                        104,243          267,762
Restricted investments                                                                 7,813,760        4,575,760
                                                                                 ---------------- ----------------
                                                                               $     187,546,038 $    119,620,295
                                                                                 ================ ================

Liabilities and Stockholders' Equity
Current liabilities:

    Accounts payable                                                                  14,407,913       14,011,238
    Air traffic liability                                                             44,518,837       28,887,692
    Other accrued expenses (note 4)                                                   17,542,019       10,781,509
    Accrued maintenance expense (note 5)                                              21,893,316       14,933,568
    Current  portion of  obligations  under  capital  leases (note 5)                    113,029          106,833
                                                                                ---------------- ----------------
            Total current liabilities                                                 98,475,114       68,720,840

Accrued maintenance expense (note 5)                                                   7,214,167        6,042,958
Deferred tax liability (note 7)                                                          483,514           30,928
Obligations under capital leases,  excluding current portion                             328,702          434,920
(note 5)
                                                                                 ---------------- ----------------
            Total liabilities                                                        106,501,497       75,229,646
                                                                                 ---------------- ----------------

Stockholders' equity

    Preferred  stock,  no par  value,  authorized  1,000,000
       shares; none issued and outstanding                                                  -                -
    Common  stock,  no par value,  stated value of $.001 per
       share, authorized 40,000,000 shares; 17,732,273 and
       16,141,172 shares issued and outstanding at March 31, 2000 and                     17,732           16,141
       1999

    Additional paid-in capital                                                        67,946,230       58,054,844
    Unearned ESOP shares (note 10)                                                      (857,713)        (609,375)
    Retained earnings (accumulated deficit)                                           13,938,292      (13,070,961)
                                                                                 ---------------- ----------------
                                                                                      81,044,541       44,390,649
                                                                                 ---------------- ----------------
Commitments and contingencies (notes 5, 12 and 13)                             $     187,546,038 $    119,620,295
                                                                                 ================ ================
See accompanying notes to financial statements.

</TABLE>
                                      F-2
<PAGE>



FRONTIER AIRLINES, INC.
Statements of Operations
Years Ended March 31, 2000, 1999 and 1998
<TABLE>
<S>                                                          <C>               <C>                <C>


                                                                     2000              1999              1998
Revenues:
    Passenger                                                 $    320,850,271  $     214,311,312 $     142,018,392
    Cargo                                                            6,855,882          4,881,066         3,008,919
    Other                                                            2,113,802          1,415,332         2,115,326
                                                                ----------------  ----------------  ----------------
           Total revenues                                          329,819,955        220,607,710       147,142,637
                                                                ----------------  ----------------  ----------------

Operating expenses:
    Flight operations                                              125,536,174         79,247,347        66,288,125
    Aircraft and traffic servicing                                  48,954,728         34,450,562        31,042,855
    Maintenance                                                     50,238,538         36,090,052        31,790,600
    Promotion and sales                                             46,013,812         35,216,787        28,971,107
    General and administrative                                      16,327,410          9,263,538         6,352,977
    Depreciation and amortization                                    3,440,069          1,659,429         1,251,364
                                                               ----------------  ----------------  ----------------
         Total operating expenses                                  290,510,731        195,927,715       165,697,028
                                                                ----------------  ----------------  ----------------

            Operating income (loss)                                 39,309,224         24,679,995      (18,554,391)
                                                                ----------------  ----------------  ----------------

Nonoperating income (expense):
    Interest income                                                  4,334,688          1,556,047           722,380
    Interest expense                                                  (119,496)          (700,635)         (324,167)
    Other, net                                                        (109,798)          (448,917)          409,808
                                                               ----------------  ----------------  ----------------
            Total nonoperating income, net                           4,105,394            406,495           808,021
                                                                ----------------  ----------------  ----------------

Income (loss) before  ncome tax expense (benefit)
    and cumulative effect of change in method of
    accounting for maintenance checks                               43,414,618         25,086,490       (17,746,370)

Income tax expense (benefit)
                                                                    16,954,374         (5,479,570)          -
                                                                ----------------  ----------------  ----------------

Income (loss) before cumulative effect of
  change in accounting principle                                    26,460,244         30,566,060       (17,746,370)

Cumulative effect of change in method of
  accounting for maintenance checks                                    549,009            -                 -

                                                                ----------------  ----------------  ----------------
Net income (loss)                                                   27,009,253         30,566,060       (17,746,370)
                                                                ================  ================  ================

(continued)

                                      F-3
<PAGE>



FRONTIER AIRLINES, INC.

Statements of Operations, continued

Years Ended March 31, 2000, 1999 and 1998



                                                                     2000              1999             1998
                                                                    ------            ------           ------
Earnings (loss) per share:
  Basic:
    Income (loss) before cumulative effect of a
      change in accounting principle                                     $1.53             $2.14          ($1.95)
    Cumulative effect of change in method of
      accounting for maintenance checks                                   0.03                 -               -
                                                                ----------------  ---------------- ----------------
    Net income (loss)                                                    $1.56             $2.14          ($1.95)
                                                                ================  ================ ================

  Diluted:
    Income (loss) before cumulative effect of a
      change in accounting principle                                     $1.40             $1.98          ($1.95)
    Cumulative effect of change in method of
      accounting for maintenance checks                                   0.03                 -               -
                                                                ----------------  ---------------- ----------------
    Net income (loss)                                                    $1.43             $1.98          ($1.95)
                                                                ================  ================ ================

  Pro forma amounts assuming the new method of accounting for maintenance checks
    is applied retroactively:

      Net income (loss)                                                            $  29,510,374    $(16,647,306)
        Earnings (loss) per share:
            Basic                                                                          $2.07          ($1.83)
                                                                                  ================ ================
            Diluted                                                                        $1.92          ($1.83)
                                                                                  ================ ================

Weighted average shares of
  common stock outstanding
            Basic                                                   17,329,400        14,257,661        9,095,220
                                                                ================  ================ ================
            Diluted                                                 18,856,688        15,401,435        9,095,220
                                                                ================  ================ ================

See accompanying notes to financial statements.
</TABLE>

F-4
<PAGE>



FRONTIER AIRLINES, INC.

Statements of Stockholders' Equity

Years Ended March 31, 2000, 1999 and 1998

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



                                         Common Stock                                         Retained
                                 ----------------------------- Additional      Unearned       earnings          Total
                                                   Stated       paid-in          ESOP       (accumulated     stockholders'
                                    Shares          value       capital         shares        deficit)          equity
                                 --------------  ------------ -------------   ------------  --------------   -------------
Balances,
    March 31, 1997                   8,844,375      $  8,844   $ 35,764,710        -        $ (25,890,651)   $  9,882,903
Exercise of common stock
    options                            409,188           409        434,948        -              -               435,357
Warrants issued in conjunction
    with debt                          -              -           1,754,926        -              -             1,754,926
Net loss                               -              -               -            -          (17,746,370)    (17,746,370)
                                 --------------  ------------ -------------   ------------  --------------   -------------
Balances,
    March 31, 1998                   9,253,563         9,253     37,954,584        -          (43,637,021)     (5,673,184)
Sale of common stock, net of
    offering costs of $525,059       4,363,001         4,363     13,650,331        -              -            13,654,694
Contribution of common stock to
    employees stock ownership
    plan                               275,000           275      1,457,975   (1,458,250)         -               -
Amortization of employee stock
  compensation                         -              -            -             848,875          -               848,875
Exercise of common stock
    warrants                          1,796,400         1,797     4,360,022        -              -             4,361,819
Exercise of common stock
    options                             453,208           453       631,932        -              -               632,385
Net income                             -              -            -               -           30,566,060      30,566,060
                                 --------------  ------------ -------------   ------------  --------------   -------------
Balances,
    March 31, 1999
                                    16,141,172        16,141     58,054,844     (609,375)    (13,070,961)      44,390,649
Exercise of common stock
    warrants                         1,147,726         1,148      4,758,969        -              -             4,760,117
Exercise of common stock
    options                            343,375           343        563,712        -              -               564,055
Tax benefit from exercises of
  common stock options and
  warrants                             -              -           3,425,055        -              -             3,425,055
Contribution of common stock to
    employees stock ownership
    plan                               100,000          100       1,143,650    (1,143,750)        -               -
Amortization of employee stock
  compensation                         -              -            -              895,412         -               895,412
Net income                             -              -            -               -          27,009,253       27,009,253
                                 --------------  ------------ -------------   ------------  --------------   -------------
Balances,
    March 31, 2000                  17,732,273     $ 17,732     $67,946,230      (857,713)   $13,938,292       81,044,541
                                 ==============  ============ =============   ============  ==============   =============

See accompanying notes to financial statements.
</TABLE>
                                      F-5
<PAGE>

FRONTIER AIRLINES, INC.

Statements of Cash Flows

Years ended March 31, 2000, 1999, and 1998
<TABLE>
<S>                                                             <C>               <C>                <C>
-------------------------------------------------------------------------------------------------------------------

                                                                        2000              1999             1998
Cash flows from operating activities:                                  ------            ------           ------

    Net income (loss)                                            $      27,009,253 $      30,566,060 $   (17,746,370)
    Adjustments to reconcile net income (loss) to net cash
        provided (used) by operating activities:
            Employee stock ownership plan compensation expense             895,412           848,875         -
            Depreciation and amortization                                3,725,697         2,705,255        1,749,097
            Loss on sale of equipment                                     -                    3,867           10,334
            Deferred tax expense (benefit)                               5,459,468        (6,010,648)        -
            Changes in operating assets and liabilities:

                Restricted investments                                     402,000          (425,301)      (2,372,326)
                Trade receivables                                        5,260,797)       (5,268,715)      (4,209,981)
                Security, maintenance and other deposits                (8,288,288)       (6,968,057)      (3,583,327)
                Prepaid expenses                                        (1,947,017)       (1,596,140)        (393,823)
                Inventories                                             (1,031,267)          (39,606)        (167,208)
                Note receivable                                           -                 -                  11,740
                Accounts payable                                           396,675           346,488        5,619,217
                Air traffic liability                                   15,631,145         9,977,251        5,851,809
                Other accrued expenses                                  10,084,065         5,758,840        1,839,597
                Accrued maintenance expense                              8,130,957         6,057,944        5,233,104
                                                                   ----------------  ---------------- ----------------
            Net cash provided (used) by operating activities            55,207,303        35,956,113      (8,158,137)
                                                                   ----------------  ---------------- ----------------

Cash flows from investing activities:

    Increase in short-term investments, net                            (15,760,000)         -                -
    Aircraft lease and purchase deposits, net                           (4,109,039)        (944,000)         207,500
    Increase in restricted investments                                  (3,640,000)      (1,544,000)      (1,500,000)
    Capital expenditures                                               (16,360,553)      (4,313,065)      (2,355,266)
                                                                   ----------------  ---------------- ----------------
            Net cash used in investing activities                      (39,869,592)      (6,801,065)      (3,647,766)
                                                                   ----------------  ---------------- ----------------

Cash flows from financing activities:

    Net proceeds from issuance of common stock and warrants              5,324,172        15,549,810          435,357
    Proceeds from issuance of senior secured notes                        -                 -               5,000,000
    Principal payments on senior secured notes                            -                 (941,841)        -
    Cash payments for debt issuance costs                                 -                 -                (227,500)
    Proceeds from short-term borrowings                                   -                  179,664          202,810
    Principal payments on short-term borrowings                           -                 (179,664)        (212,622)
    Principal payments on obligations under capital leases                (100,022)         (115,340)         (37,200)
                                                                   ----------------  ---------------- ----------------
            Net cash provided by financing activities                    5,224,150        14,492,629        5,160,845
                                                                   ----------------  ---------------- ----------------

            Net increase (decrease) in cash and cash equivalents        20,561,861        43,647,677       (6,645,058)

Cash and cash equivalents, beginning of year                            47,289,072         3,641,395       10,286,453
                                                                   ----------------  ---------------- ----------------

Cash and cash equivalents, end of year                           $      67,850,933 $      47,289,072 $      3,641,395
                                                                   ================  ================ ================

See accompanying notes to financial statements.
</TABLE>
                                      F-6
<PAGE>

FRONTIER AIRLINES, INC.

Notes to Financial Statements

March 31, 2000


 (1)    Nature of Business and Summary of Significant Accounting Policies

        Nature of Business

        Frontier Airlines, Inc. (the "Company") was incorporated in the State of
        Colorado on February 8, 1994.  Denver-based  Frontier Airlines serves 20
        cities  coast to coast  with a fleet of 23 Boeing  737 jets and  employs
        approximately  2,000  aviation  professionals.   The  Company  commenced
        airline operations on July 5, 1994.

        Airline  operations  have high fixed costs and are highly  sensitive  to
        various factors including the actions of competing  airlines and general
        economic factors.

        Preparation of Financial Statements

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

        Cash and Cash Equivalents

        For  financial  statement  purposes,  the  Company  considers  cash  and
        short-term investments with an original maturity of three months or less
        to be cash equivalents.

        Short-term investments

        Short-term  investments  consist  of  government-backed   agencies  with
        maturities  of one year or less.  These  investments  are  classified as
        held-to-maturity  and are carried at amortized  cost which  approximates
        fair value.  Held-to-maturity  securities are those  securities in which
        the  Company  has the  ability  and  intent to hold the  security  until
        maturity. Interest income is recognized when earned.

        Supplemental Disclosure of Cash Flow Information

        Noncash Financing and Investment Activities:
        During the year ended March 31, 1998, the Company issued warrants to its
        lender in connection  with its  $5,000,000  senior secured notes with an
        estimated fair market value totaling $1,645,434,  and issued warrants to
        its financial  advisor in connection with debt and equity financing with
        an estimated fair market value totaling $109,492.  Also during the years
        ended March 31, 1999 and 1998, the Company entered into capital lease

                                      F-7
<PAGE>


FRONTIER AIRLINES, INC.

Notes to Financial Statements, continued




(1)     Nature of Business and Summary of Significant Accounting Policies
        (continued)

        agreements totaling $504,900 and $97,000, respectively.  During the year
        ended March 31,  1998,  the  Company  exchanged  a note  receivable  for
        certain property and equipment totaling $47,000.

        Interest and Taxes Paid During the Year:

        Cash paid for interest totaled $119,496, $302,503, and $184,999, for the
        years ended March 31, 2000, 1999 and 1998, respectively. During the year
        ending March 31, 2000,  the Company paid  approximately  $3,005,000  for
        income taxes. No income taxes were paid during the years ended March 31,
        1999 and 1998.

        Restricted Investments

        Restricted  investments  include  certificates  of deposit  which secure
        certain  letters of credit issued  primarily to companies  which process
        credit card sale transactions,  certain airport authorities and aircraft
        lessors.  Restricted  investments are carried at cost,  which management
        believes approximates market value.  Maturities are for one year or less
        and the Company intends to hold restricted investments until maturity.

        Valulation and Qualifying Accounts

        The  allowance  for  doubtful  accounts was  approximately  $171,000 and
        $200,000 at March 31, 2000 and 1999,  respectively.  Provisions  for bad
        debts net of recoveries totaled $873,000, $386,000, and $267,000 for the
        years ended March 31, 2000,  1999 and 1998.  Deductions from the reserve
        totaled $902,000,  $330,000,  and $200,000 for the years ended March 31,
        2000, 1999, and 1998, respectively.

        Inventories

        Inventories consist of expendable parts,  supplies and aircraft fuel and
        are stated at the lower of cost or market. Inventories are accounted for
        on a  first-in,  first-out  basis and are charged to expense as they are
        used.

        At March 31, 2000, the Company has an aircraft  parts  agreement for its
        Boeing 737  aircraft  with an aircraft  parts  supplier.  The Company is
        required to pay a monthly  consignment  fee to the lessor,  based on the
        value of the consigned  parts, and to replenish any such parts when used
        with a like part. At March 31, 2000 and 1999, the Company held consigned
        parts  and  supplies  in the  amount  of  approximately  $5,788,000  and
        $8,902,000,  respectively,  which  are  not  included  in the  Company's
        balance sheet.

F-8
<PAGE>


(1)     Nature of Business and Summary of Significant Accounting Policies
        (continued)

        Property and Equipment

        Property and equipment are carried at cost. Major additions, betterments
        and renewals are capitalized.  Depreciation and amortization is provided
        for on a straight-line basis to estimated residual values over estimated
        depreciable lives as follows:

        Flight equipment                         5-10 years
        Improvements to leased aircraft          Life of improvements or term of
        Ground property, equipment, and
        leasehold improvements                   3-5 years or term of lease


        Assets  utilized  under capital  leases are amortized over the lesser of
        the lease  term or the  estimated  useful  life of the  asset  using the
        straight-line  method.  Amortization  of capital  leases is  included in
        depreciation expense.

        Maintenance

        Routine maintenance and repairs are charged to operations as incurred.

        Under  the  terms of its  aircraft  lease  agreements,  the  Company  is
        required  to make  monthly  maintenance  deposits  and a  liability  for
        accrued  maintenance  is  established  based on usage.  The deposits are
        applied against the cost of major airframe  maintenance checks,  landing
        gear  and  engine  overhauls.   Deposit  balances   remaining  at  lease
        termination  remain  with the lessor  and any  remaining  liability  for
        maintenance   checks  is   reversed   against   the   deposit   balance.
        Additionally,  a provision is made for the estimated  costs of scheduled
        major  overhauls  required  to  be  performed  on  leased  aircraft  and
        components  under the provisions of the aircraft lease agreements if the
        required  monthly  deposit  amounts are not adequate to cover the entire
        cost of the scheduled maintenance.  Accrued maintenance expense expected
        to be incurred beyond one year is classified as long-term.

        Effective  April 1, 1999,  the Company  changed its method of accounting
        for  required  periodic  maintenance  checks from the  accrue-in-advance
        method to the direct  expensing  method.  The Company  believes that the
        newly adopted  accounting  principle is preferable in the  circumstances
        because there has not been an obligating  event prior to the maintenance
        checks actually being  performed,  and the new method is the predominant
        method used in the airline  industry.  Fluctuations in these maintenance
        costs from period to period are not expected to be significant given the
        maturity  and  current  size of the  Company's  fleet.  Previously,  the
        Company  accrued-in-advance  for maintenance checks and major overhauls,
        including  the costs for scheduled  major  airframe,  landing gear,  and
        engine overhauls. The Company continues to utilize the accrue-in-advance
        method for
                                      F-9
<PAGE>

(1)     Nature of Business and Summary of Significant Accounting Policies
        (continued)


        scheduled major airframe,  landing gear and engine overhauls because the
        Company's   aircraft  lease  agreements  require  the  Company  to  make
        non-refundable monthly deposits with the lessors for such costs.

        The cumulative effect of the change, calculated as of April 1, 1999, was
        to increase net income by $549,009 or $.03 per diluted share. The effect
        of the change was to  decrease  net income for the year ended  March 31,
        2000 by  $247,713  or $.01 per  diluted  share.  Had the new  method  of
        accounting  been used,  net income  (loss) for the years ended March 31,
        1999 and 1998 would have been $29,510,374 and $(16,647,306) or $1.92 and
        ($1.83) per diluted share, respectively.

        Revenue Recognition

        Passenger,   cargo,   and  other  revenues  are   recognized   when  the
        transportation  is provided or after the tickets expire,  and are net of
        excise  taxes.  Revenues  which have been  deferred  are included in the
        accompanying balance sheet as air traffic liability.

        Passenger Traffic Commissions and Related Expenses

        Passenger traffic commissions and related expenses are expensed when the
        transportation  is  provided  and the  related  revenue  is  recognized.
        Passenger  traffic  commissions and related  expenses not yet recognized
        are included as a prepaid expense.

        Frequent Flyer Awards

        The Company allows its  passengers to accumulate  mileage on Continental
        Airlines' OnePass frequent flyer program.  The cost of providing mileage
        on the  OnePass  program  is based on an agreed  upon  rate per  mileage
        credit, which is paid to Continental Airlines on a monthly basis.

        Income (Loss) Per Common Share

        Basic EPS excludes the effect of potentially  dilutive securities and is
        computed by dividing income (loss)  available to common  stockholders by
        the weighted-average number of common shares outstanding for the period.
        Diluted EPS reflects the  potential  dilution of  securities  that could
        share in earnings.  Common  options and warrants  were excluded from the
        computation of diluted loss per share in 1998 as their effect would have
        been anti-dilutive.

                                      F-10
<PAGE>



(1)     Nature of Business and Summary of Significant Accounting Policies
        (continued)

        Income Taxes

        The Company  accounts  for income  taxes  using the asset and  liability
        method. Under that method,  deferred income taxes are recognized for the
        tax   consequences  of  "temporary   differences"  by  applying  enacted
        statutory tax rates  applicable to future years to  differences  between
        the  financial  statement  carrying  amounts  and tax bases of  existing
        assets and  liabilities.  A valuation  allowance  for net  deferred  tax
        assets is provided  unless  realizability  is judged by management to be
        more likely than not. The effect on deferred  taxes from a change in tax
        rates is  recognized in income in the period that includes the enactment
        date.

        Fair Value of Financial Instruments

        The  Company  estimates  the  fair  value  of its  monetary  assets  and
        liabilities  based upon existing  interest  rates related to such assets
        and  liabilities  compared to current rates of interest for  instruments
        with a similar nature and degree of risk. The Company estimates that the
        carrying   value  of  all  of  its  monetary   assets  and   liabilities
        approximates fair value as of March 31, 2000.

        Stock Based Compensation

        The  Company  follows   Accounting   Principles  Board  Opinion  No.  25
        Accounting  for  Stock  Issued  to  Employees  ("APB  25")  and  related
        Interpretations in accounting for its employee stock options and follows
        the disclosure provisions of Statement of Financial Accounting Standards
        No. 123 (SFAS No. 123).  Under APB 25, because the exercise price of the
        Company's  employee  stock  options  equals  the  market  price  of  the
        underlying Common Stock on the date of grant, no compensation expense is
        recognized.  The Company has included the pro forma disclosures required
        by SFAS No. 123 in Note 9.

        Impairment of Long-Lived Assets

        The  Company  records  impairment  losses on  long-lived  assets used in
        operations   when   indicators  of   impairment   are  present  and  the
        undiscounted future cash flows estimated to be generated by those assets
        are less than the assets' carrying amount.

        Impact of Recently Issued Accounting Standards

        In June 1998, the FASB issued SFAS No. 133,  Accounting  for  Derivative
        Instruments   and   Hedging   Activities.   SFAS   No.  133  establishes
        accounting  and  reporting standards for derivative  instruments and for
        hedging  a ctivities.   SFAS No. 133 is effective for periods  beginning
        after  June 15, 2000.  The adoption of SFAS No. 133 would have no effect
        on the Company's financial statements based on present activity.

                                      F-11
<PAGE>

(1)     Nature of Business and Summary of Significant Accounting Policies
        (continued)

        Reclassifications

        Certain  prior year  amounts  have been  reclassified  to conform to the
        current year presentation.

(2)     Prepaid Expenses and Other Assets

        The  March  31,  2000 and 1999  prepaid  expenses  and  other  assets is
        comprised of the following:

                                                       2000             1999
                                                      ------           ------
        Prepaid aircraft rentals                    $ 2,652,672       $1,509,917
        Prepaid passenger traffic commissions         1,529,129        1,575,320
        Prepaid fuel                                    929,940          337,062
        Other prepaid expenses and other assets       2,275,110        2,017,535
                                                 -------------------------------

                                                    $ 7,386,851      $ 5,439,834
                                                 ===============================

(3)     Property and Equipment, Net

        As of March 31, 2000 and 1999  property and  equipment  consisted of the
        following:

                                                      2000            1999
                                                     ------          ------
        Flight equipment and
           improvements to leased aircraft     $     20,891,239 $      7,204,878
        Ground property, equipment
           and leasehold improvements                 6,571,776        6,186,490
                                                 ---------------  --------------
                                                     27,463,015       13,391,368
        Less accumulated depreciation
           and amortization                           5,808,753        4,657,590
                                                 ---------------  --------------

               Property and equipment, net     $     21,654,262 $      8,733,778
                                                 ===============  ==============

        Property and equipment  includes  certain office equipment under capital
        leases.  At March 31, 2000 and 1999,  office  equipment  recorded  under
        capital  leases was $602,149 and $785,847 and  accumulated  amortization
        was $163,428 and $154,942, respectively.

                                      F-12
<PAGE>



(4)      Other Accrued Expenses

        The March 31, 2000 and 1999 other  accrued  expenses is comprised of the
        following:

                                                   2000               1999
                                                  ------             ------

        Income taxes payable                     $ 5,483,264     $     524,591
        Accrued salaries and benefits              5,505,449         4,802,772
        Federal excise taxes payable               3,664,429         3,372,907
        Other                                      2,888,877         2,081,239
                                          -------------------------------------

                                                 $17,542,019       $10,781,509
                                          =====================================

(5)     Lease Commitments

        Aircraft Leases

        At March 31, 2000, the Company  operated 23 aircraft which are accounted
        for under  operating  lease  agreements  with initial terms ranging from
        16.5  months  to 8 years.  Certain  leases  allow for  renewal  options.
        Security  deposits related to leased aircraft at March 31, 2000 and 1999
        totaled   $3,257,789  and  $5,548,750  and  are  included  in  security,
        maintenance  and other deposits on the balance sheet.  Letters of credit
        issued to certain  aircraft lessors in lieu of cash deposits and related
        restricted  investments  to secure these  letters of credit at March 31,
        2000 and 1999 totaled $7,284,000 and $3,644,000, respectively.

        In addition to scheduled  future minimum lease payments,  the Company is
        required  to make  monthly  maintenance  deposits  and a  liability  for
        accrued  maintenance is established based on usage. The lease agreements
        require  the  Company to pay taxes,  maintenance,  insurance,  and other
        operating expenses applicable to the leased property.  At March 31, 2000
        and  1999,  aircraft   maintenance   deposits  totaled  $26,911,635  and
        $18,672,825,  respectively, and are reported as a component of security,
        maintenance and other deposits on the balance sheet.

        Any  cash  deposits  paid  to  aircraft  lessors  for  future  scheduled
        maintenance  costs to the extent not used  during the lease term  remain
        with the lessors,  and any remaining liability for maintenance checks is
        reversed against the deposit balance. Maintenance deposits are unsecured
        and may be subject to the risk of loss in the event the  lessors are not
        able to satisfy their obligations under the lease agreements.

                                      F-13
<PAGE>



(5)     Lease Commitments (continued)

        Other Leases

        The Company leases an office and hangar space,  spare engines and office
        equipment  for  its  headquarters,   airport  facilities,   and  certain
        equipment.  The Company also leases certain airport gate facilities on a
        month-to-month basis.

        At March 31, 2000, commitments under capital and noncancelable operating
        leases (excluding maintenance deposit requirements) with terms in excess
        of one year were as follows:

                                                 Capital          Operating
                                                 Leases            Leases
                                                ---------       ------------
        Year ended March 31:

            2001                                   $153,320     $    66,657,710
            2002                                    153,320          61,411,677
            2003                                    153,320          56,172,369
            2004                                     44,322          47,005,434
            2005                                          -          28,323,323
            Thereafter                                    -           4,668,121
                                               -------------  ------------------

              Total minimum lease payments          504,282       $ 264,238,634
                                                              ==================
        Less amount representing interest            62,551
                                               -------------

            Present value of obligations
              under capital leases                  441,731

        Less current portion of obligations
            under capital leases                    113,029
                                               -------------

            Obligations under capital leases,
              excluding current portion           $ 328,702
                                               =============

        The  obligations  under capital  leases have been  discounted at imputed
        interest rates ranging from 10% to 13%.

        Rental expense under operating leases,  including month-to-month leases,
        for the years  ended  March  31,  2000,  1999 and 1998 was  $65,201,876,
        $46,099,140 and $36,573,509, respectively.

                                      F-14
<PAGE>



 (6)    Senior Secured Notes

        In December  1997,  the Company sold  $5,000,000  of 10% senior  secured
        notes to  Wexford  Management  LLC  ("Wexford").  The notes were due and
        payable in full on December 15, 2001 with interest payable  quarterly in
        arrears.  The notes were secured by  substantially  all of the assets of
        the Company.  The Wexford  agreement  contained  restrictions  primarily
        related  to liens on assets  and  required  prior  written  consent  for
        expenditures outside the ordinary course of business. In connection with
        this  transaction,  the  Company  issued  Wexford  warrants  to purchase
        1,750,000  shares  of  Common  Stock at $3.00  per  share.  The  Company
        determined  the value of the warrants to be $1,645,434  and recorded the
        value as a discount on notes payable and as equity in additional paid-in
        capital.  The balance of the notes were to be accreted to its face value
        over the  term of the  notes  and  included  as  interest  expense.  The
        effective interest rate on the notes was approximately 18.2% considering
        the value of the warrants

        During the year  ended  March 31,  1999,  Wexford  exercised  all of the
        warrants described above. As permitted under the terms of the agreement,
        Wexford  elected to tender debt for the warrant  exercise price first by
        application of accrued unpaid interest and the remainder by reducing the
        principal  balance of the notes. The total amount of $5,250,000 from the
        exercise was  comprised of the  following:  payment of accrued  interest
        totaling  $134,971,  then to the outstanding  principal balance totaling
        $4,058,159,  and the remaining  balance in cash to the Company  totaling
        $1,056,870.  In January 1999, the Company paid the remaining  balance of
        the note in full which  totaled  $941,841,  thereby  terminating  all of
        Wexford's security interests in the Company's assets.

        The discount  amortized to interest  expense prior to the pay-off of the
        notes  totaled  $199,975 and $113,454 for the years ended March 31, 1999
        and 1998,  respectively.  Upon the  exercise of the warrants by Wexford,
        $1,094,042 of  unamortized  discount was charged to  additional  paid-in
        capital.  The  remaining  unamortized  discount and other  deferred loan
        costs totaled  $485,846 at the repayment  date and were charged to other
        nonoperationg expense.

                                      F-15
<PAGE>



 (7)    Income Taxes

        Income tax expense (benefit) for the years ended March 31, 2000 and 1999
consists of:
<TABLE>
<S>                                         <C>                <C>                  <C>

                                                Current            Deferred              Total
                                               ---------          ----------            ------
        Year ended March 31, 2000:

          U.S. Federal                           $9,785,064        $ 4,726,153        $ 14,511,217
          State and local                         1,811,343            631,814           2,443,157
                                            -----------------  ------------------  ------------------
                                                $11,596,407        $ 5,357,967        $ 16,954,374
                                            =================  ==================  ==================

        Year ended March 31, 1999:

          U.S. Federal                            $531,077       $ (5,244,134)       $ (4,713,057)
          State and local                             -              (766,513)           (766,513)
                                            -----------------  ------------------  ------------------
                                                  $531,077       $ (6,010,647)       $ (5,479,570)
                                            =================  ==================  ==================
</TABLE>

        There was no income tax expense or benefit in 1998.

        The  differences  between the Company's  effective rate for income taxes
        and the federal statutory rate are shown in the following table:

                                                2000         1999        1998
                                               ------       ------      ------
         Income tax benefit (expense)
           at the statutory rate               (35%)         (35%)        34%
         (Increase) decrease in valuation
           allowance                             -            60%        (34%)
         State and local income tax, net of
           federal income tax benefit           (3%)         (3%)          -
         Nondeductible expenses                 (1%)           -           -
                                            ----------   -----------  ----------
                                               (39%)         22%           -
                                            ==========   ===========  ==========


                                      F-16
<PAGE>



 (7)    Income Taxes, continued

        The tax effects of temporary  differences  that give rise to significant
        portions  of the  deferred  tax  assets at March  31,  2000 and 1999 are
        presented below:
<TABLE>
<S>                                                   <C>                    <C>
                                                             2000                1999
        Deferred tax assets:                                ------              ------
            Accrued vacation and health
              insurance liability not
              deductible for tax purposes                     $1,041,000           $ 654,000
            Accrued maintenance not
              deductible for tax purposes                     -                      212,000
            Net operating loss carryforwards                                       4,548,000
            AMT credit carryforward                           -                      525,000
            Start-up cost deferred for
              tax purposes                                    -                       55,000
            Inventory reserves                                   134,000           -
            Other                                                136,000             103,000
                                                      -------------------  ------------------

               Total gross deferred tax assets                 1,311,000           6,097,000

        Deferred tax liabilities:
            Equipment depreciation and
              amortization                                     (556,000)            (86,000)
            Book/tax difference on warrant
              treatment                                        (102,000)           -
                                                      -------------------  ------------------

               Total gross deferred tax liabilities            (658,000)            (86,000)

                                                      -------------------  ------------------
            Net deferred tax assets                           $ 653,000          $6,011,000
                                                      ===================  ==================

        The net deferred tax assets are reflected in accompanying  balance sheet
as follows:

                                                             2000                1999
                                                            ------              ------
        Current deferred tax assets                          $1,136,194          $6,041,576
        Non-current deferred tax liabilities                   (483,514)            (30,928)
                                                      -------------------  ------------------

          Net deferred tax assets                              $652,680          $6,010,648
                                                      ===================  ==================
</TABLE>
                                      F-17
<PAGE>


 (7)    Income Taxes, continued

        The  Company  recognized  an income tax  benefit of  $5,479,570  in 1999
        attributable  to the probable  realization  of its remaining  income tax
        loss  carryforwards for which a valuation  allowance had previously been
        recorded.  As of March  31,  1999 the  Company  had net  operating  loss
        carryforwards of approximately  $11,891,000 and alternative  minimum tax
        credits of  approximately  $525,000  which were fully utilized to reduce
        federal regular income taxes during the year ended March 31, 2000.

(8)     Warrants and Stock Purchase Rights

        At  completion  of the  Company's  initial  public  offering in 1994, an
        underwriter  acquired options to purchase up to 110,000 shares of Common
        Stock  exercisable at a price equal to $5.525 per share. As of March 31,
        2000,  all 110,000  options have been exercised with net proceeds to the
        Company totaling $607,750.

        The  underwriters in a secondary  public offering by the Company in 1995
        received a warrant to purchase  168,500  shares of Common Stock at $5.55
        per share.  The underwriters had an option to exercise the warrants as a
        cashless exercise,  which has the effect of reducing the total number of
        warrants  issued  to them.  As of March 31, 2000, 142,697 warrants  were
        exercised with net proceeds to the Company totaling  $209,069 and 36,571
        warrants  were retired  pursuant to the cashless  exercise  option.  The
        remaining  warrants issued to the  underwriters in the secondary  public
        offerings expire on September 18, 2000.

        In  October  1995,  the  Company  issued to each of two  Boeing  737-300
        aircraft  lessors a warrant to purchase  100,000  shares of Common Stock
        for an aggregate  purchase price of $500,000.  In June 1996, the Company
        issued two warrants to a Boeing 737-200 lessor,  each warrant  entitling
        the lessor to purchase  70,000  shares of Common  Stock at an  aggregate
        exercise  price of $503,300 per  warrant.  In  connection  with a Boeing
        737-300  aircraft  delivered in August 1997,  the Company  issued to the
        lessor a  warrant  to  purchase  55,000  shares  of  Common  Stock at an
        aggregate purchase price of $385,000. During May and June 1999, aircraft
        lessors  exercised all 395,000 warrants with net proceeds to the Company
        totaling  $2,391,600.  To the extent that the aircraft lessors were able
        to realize certain profit margins on their subsequent sale of the stock,
        they were  required  to refund a portion of the cash  security  deposits
        they were  holding.  As a result of their sale of the  Company's  Common
        Stock, $1,024,000 in cash security deposits were returned to the Company
        during the year ended March 31, 2000.

        In February  1998, in  connection  with the  $5,000,000  senior notes as
        discussed  in Note 6, the  Company  issued a  warrant  to the  lender to
        purchase  1,750,000  shares of the Company's  Common Stock at a purchase
        price of $3.00 per share.  During the year ended  March 31,  1999,  this
        warrant was exercised in its entirety.

                                      F-18
<PAGE>



(8)     Warrants and Rights Dividend, continued

        In May 1998, the Company issued to its financial advisor,  in connection
        with debt and equity financings, a warrant to purchase 548,000 shares of
        the Company's Common Stock at a purchase price of $3.00 per share, which
        warrant  expires in May 2003. Of the 548,000  warrants  issued,  116,450
        were  attributable to the issuance of the senior secured notes discussed
        in Note 6. The Company  recorded a value of $109,492 for these  warrants
        and  recorded  the value as equity in  additional  paid in  capital  and
        deferred loan costs. During the year ended March 31, 2000, the financial
        advisor  exercised the warrant with net proceeds to the Company totaling
        $1,644,000.

        In April 1998,  in  connection  with a private  placement  of  4,363,001
        shares  of  its  Common  Stock,  the  Company  issued  a  warrant  to an
        institutional investor to purchase 716,929 shares of its Common Stock at
        a purchase  price of $3.75 per  share,  which  warrant  expires in April
        2002.

        In  February   1997,   the  Board  of  Directors   declared  a  dividend
        distribution  of one Common Stock  purchase  right for each share of the
        Company's  Common  Stock  outstanding  on March  15,  1997.  Each  right
        entitles a  shareholder  to purchase one share of the  Company's  Common
        Stock at a purchase  price of $65.00 per full common  share,  subject to
        adjustment.  The rights are not currently exercisable,  but would become
        exercisable  if certain  events  occurred  relating to a person or group
        acquiring or attempting to acquire 20 percent or more of the outstanding
        shares of the Company's  Common Stock. The rights expire on February 20,
        2007,  unless  redeemed by the Company  earlier.  Once the rights become
        exercisable, each holder of a right will have the right to receive, upon
        exercise, Common Stock (or, in certain circumstances,  cash, property or
        other  securities of the Company)  having a value equal to two times the
        exercise price of the right.

 (9)    Stock Option Plan

        The Company has a stock  option plan  whereby the Board of  Directors or
        its  Compensation  Committee may grant options to purchase shares of the
        Company's  Common Stock to  employees,  officers,  and  directors of the
        Company.

        Under the plan,  the Company  has  reserved an  aggregate  of  4,250,000
        shares of Common Stock for issuance pursuant to the exercise of options.
        With certain exceptions, options issued through March 31, 2000 generally
        vest over a  five-year  period  from the date of grant and  expire  from
        March 9, 2004 to March 7, 2010. At March 31, 2000, 1,291,250 options are
        available for grant under the plan.

                                      F-19
<PAGE>



(9)     Stock Option Plan, continued

        A summary of the Plan's  stock option  activity and related  information
        for the years ended March 31, 2000, 1999 and 1998 is as follows:
<TABLE>
<S>                                        <C>           <C>         <C>         <C>           <C>         <C>

                                                   2000                    1999                    1998
                                           --------------------------------------------------------------------------
                                                         Weighted-                Weighted-               Weighted-
                                                          Average                  Average                 Average
                                                         Exercise                 Exercise                 Exercise
                                             Options       Price      Options       Price      Options      Price
                                           --------------------------------------------------------------------------
          Outstanding-beginning of year       1,796,354    $1.58       1,532,062    $1.56       1,911,250   $1.85
          Granted                               300,000   $13.41         717,500    $5.94          30,000   $2.77
          Exercised                            (343,375)   $1.64        (453,208)   $1.34        (409,188)  $1.06
          Surrendered                           -            -             -          -          (180,000)  $7.40
          Re-issued                             -            -             -          -           180,000   $3.00
                                           --------------------------------------------------------------------------

                                              1,752,979    $5.41       1,796,354    $3.35       1,532,062   $1.56
                                          ==========================================================================

          Exercisable at end of year            972,979    $2.78       1,103,020    $1.70       1,761,250   $1.39
</TABLE>

        Exercise prices for options  outstanding  under the plan as of March 31,
        2000 ranged from $1.00 to $16.57 per option share. The  weighted-average
        remaining contractual life of those options is 7 years. A summary of the
        outstanding  and  exercisable  options at March 31, 2000,  segregated by
        exercise price ranges, is as follows:
<TABLE>
<S>        <C>               <C>            <C>            <C>                 <C>            <C>

           ---------------------------------------------------------------------------------------------------
                                                               Weighted-
                                                                Average
                                               Weighted-       Remaining                        Weighted-
           Exercise Price       Options         Average       Contractual      Exercisable       Average
                Range         Outstanding   Exercise Price  Life (in years)      Options      Exercise Price
           ---------------------------------------------------------------------------------------------------

           $ 1.00 - $ 2.50      555,562          $1.14            3.9              555,562         $1.14
           $ 3.00 - $ 5.06      542,417           3.53            7.5              306,417          3.36
           $ 8.13 - $13.82      540,000           9.32            9.2              111,000          9.39
           $16.07 - $16.57      115,000          16.50            9.2                   -          -
                          -----------------------------------------------------------------------------------
                              1,752,979          $5.41            7.0              972,979         $2.78
                          ===================================================================================

</TABLE>

                                      F-20
<PAGE>



(9)     Stock Option Plan, continued

        The  Company  applies  APB  Opinion 25 and  related  Interpretations  in
        accounting  for  its  plans.   Accordingly,   no  compensation  cost  is
        recognized for options granted at a price equal to the fair market value
        of the Common  Stock.  Pro forma  information  regarding  net income and
        earnings per share is required by SFAS No. 123, which also requires that
        the  information  be  determined as if the Company has accounted for its
        employee  stock options  granted  subsequent to March 31, 1995 under the
        fair value method of that  Statement.  The fair value for these  options
        was estimated at the date of grant using a Black-Scholes  option pricing
        model with the following weighted-average assumptions for 2000, 1999 and
        1998, respectively:  risk-free interest rates of 5.98%, 5.36% and 6.42%,
        dividend  yields of 0%, 0% and 0%;  volatility  factors of the  expected
        market price of the Company's Common Stock of 61.38%, 69.25% and 64.33%,
        and a weighted-average expected life of the options of 3.5 years for the
        year ended  March 31,  2000 and 3.7 years for the year  ended  March 31,
        1999 and  1998.  Had  compensation  cost for the  Company's  stock-based
        compensation plan been determined using the fair value of the options at
        the grant date,  the  Company's pro forma net income (loss) and earnings
        (loss) per share would be as follows:
<TABLE>
<S>       <C>                                            <C>                   <C>                  <C>

                                                         1999                  1998                  1997
          Net Income:                                   ------                ------                ------
            As reported                                  $ 27,009,253          $ 30,566,060         $(17,746,370)
            Pro forma                                    $ 26,230,907          $ 30,263,570         $(17,842,594)
          Earnings (loss) per share, basic:
            As reported                                     $    1.56             $    2.14           $    (1.95)
            Proforma                                        $    1.51             $    2.12           $    (1.96)
          Earnings (loss) per share, diluted:
            As reported                                     $    1.43             $    1.98           $    (1.95)
            Proforma                                        $    1.39             $    1.96           $    (1.96)
</TABLE>

 (10)   Benefit Plans

        Employee Stock Ownership Plan

        The Company has  established  an Employee  Stock  Ownership  Plan (ESOP)
        which  inures to the  benefit of each  employee of the  Company,  except
        those employees covered by a collective  bargaining  agreement that does
        not provide for participation in the ESOP. Company  contributions to the
        ESOP are  discretionary  and may vary from year to year. In order for an
        employee to receive an allocation of Company Common Stock from the ESOP,
        the  employee  must be employed on the last day of the ESOP's plan year,
        with certain exceptions.  The Company's annual contribution to the ESOP,
        if any, will be allocated among the eligible employees of the Company as
        of the end of each plan year in proportion to the relative  compensation
        (as defined in the ESOP)  earned that plan year by each of the  eligible
        employees.  The ESOP does not provide for contributions by participating
        employees. Employees will vest in contributions made to the ESOP based

                                      F-21
<PAGE>

(10)    Benefit Plans, continued

        upon their years of service  with the  Company.  A year of service is an
        ESOP plan year  during  which an  employee  has at least  1,000 hours of
        service. Vesting generally occurs at the rate of 20% per year, beginning
        after the first year of service,  so that a participating  employee will
        be fully vested after five years of service. Distributions from the ESOP
        will  not  be  made  to  employees  during  employment.   However,  upon
        termination  of  employment  with the  Company,  each  employee  will be
        entitled to receive the vested portion of his or her account balance.

        Total Company contributions to the ESOP from inception through March 31,
        1998 totaled 216,209 shares.  During the years ended  March 31, 2000 and
        1999,  the  Company  contributed  100,000 and 275,000 shares to the plan
        and none  during  the year ended  March 31, 1998. The Company recognized
        compensation expense during the year ended March 31, 2000  and  1999  of
        $895,412 and $848,875, respectively,  related to its contribution to the
        ESOP and none during the year ended March 31, 1998.

        Retirement Savings Plan

        The  Company  has  established  a  Retirement   Savings  Plan  (401(k)).
        Participants   may   contribute   from  1%  to  15%  of  pre-tax  annual
        compensation.  Annual individual pre-tax  participant  contributions are
        limited to $10,500 for calendar  year 2000,  $10,000 for calendar  years
        1999 and 1998 and  $9,500  for  calendar  year 1997  under the  Internal
        Revenue Code.  Participants  are  immediately  vested in their voluntary
        contributions.

        Effective  April 1999,  for the plan year ending  December 31, 1999, the
        Company's  Board  of  Directors  elected  to  match  25% of  participant
        contributions  from April 1999 through  April 2000.  Effective May 2000,
        for the plan year ending  December  31,  2000,  the  Company's  Board of
        Directors elected to match 50% of participant contributions up to 10% of
        salaries  from May 2000  through  December  2000.  The  Company  had not
        matched  any  contributions  made prior to April 1999.  Future  matching
        contributions,  if any,  will be  determined  annually  by the  Board of
        Directors.  In order to receive the matching contribution,  Participants
        must be  employed  on the last day of the plan year.  Participants  will
        vest in  contributions  made to the 401(k)  upon their  years of service
        with the Company. A year of service is a 401(k) plan year during which a
        participant  has at least  1,000  hours of  service.  Vesting  generally
        occurs at the rate of 20% per year,  beginning  after the first  year of
        service,  so that a Participant will be fully vested after five years of
        service.   Upon  termination  of  employment  with  the  Company,   each
        participant will be entitled to receive the vested portion of his or her
        account balance.

                                      F-22
<PAGE>



 (11)   Concentration of Credit Risk

        The  Company  does  not  believe  it  is  subject  to  any   significant
        concentration of credit risk relating to trade receivables. At March 31,
        2000 and 1999, 69.7% and 70% of the Company's trade  receivables  relate
        to tickets sold to individual passengers through the use of major credit
        cards,  travel agencies approved by the Airlines Reporting  Corporation,
        tickets  sold by  other  airlines  and  used by  passengers  on  Company
        flights,  or the United States Postal  Service.  These  receivables  are
        short-term,  generally  being settled shortly after sale or in the month
        following ticket usage.

 (12)   Commitments and Contingencies

        The Company is party to legal  proceedings and claims which arise during
        the  ordinary  course of  business.  In the opinion of  management,  the
        ultimate  outcome  of these  matters  will not have a  material  adverse
        effect upon the Company's financial position or results of operations.

        In March 2000, the Company entered into an agreement with AVSA, S.A.R.L.
        to  purchase  11 new  Airbus  aircraft,  with  options  to  purchase  an
        additional  nine new Airbus  aircraft.  To the extent  that the  Company
        exercises options to purchase the nine aircraft,  they are replaced on a
        one-for-one  basis  with  additional  options  to  purchase  new  Airbus
        aircraft, up to a total of nine additional option aircraft.  The 11 firm
        aircraft are  scheduled  to be delivered in calendar  years 2002 through
        2004.  The  aggregate   additional   amounts  due  under  this  purchase
        commitment and estimated amounts for buyer-furnished equipment and spare
        parts for both the  purchased  and  leased  aircraft  (see Note 13)  was
        approximately   $347,000,000 at March 31, 2000. Under the terms  of  the
        purchase  agreement,   the  Company  is  required  to   make   scheduled
        pre-delivery  payments.  These payments are non-refundable  with certain
        exceptions.  As of March 31,  2000,  the Company  has made  pre-delivery
        payments  totaling  $6,400,000  to  secure  these  aircraft  and  option
        aircraft.  Pre-delivery  payments  due in fiscal  year 2001  approximate
        $5,000,000.  After  pre-delivery  payments,  the  balance  of the  total
        purchase price must be paid upon delivery of each aircraft.  In order to
        complete the purchase of these  aircraft,  it will be necessary  for the
        Company to secure  financing.  The  amount of  financing  required  will
        depend on the number of  aircraft  purchase  options  exercised  and the
        amount  of  cash  generated  by  operations  prior  to  delivery  of the
        aircraft. At this time, the type of financing has not been determined.

                                      F-23
<PAGE>



(13)    Subsequent Events

        During May 2000, the Company entered into an aircraft lease for a Boeing
        737 aircraft with a lease term of approximately three years beginning in
        June 2000.

        During April 2000 and May 2000, the Company entered into aircraft leases
        for 16 Airbus  aircraft  with  lease  terms of  approximately  12 years.
        Delivery dates begin in June 2001 and end in October 2004.

        During April and May 2000,  the Company entered  into two leases for its
        new general  office  and  call  center  facilities,  with lease terms of
        approximately 10 and 12 years, respectively.

        Total commitments under these noncancelable  operating leases (excluding
        maintenance deposit requirements) are approximately as follows:

        Year ended March 31,
          2001                            $    2,221,000
          2002                                 8,434,000
          2003                                18,651,000
          2004                                31,064,000
          2005                                44,204,000
          thereafter                         479,891,000
                                       ------------------
                                          $  584,465,000
                                       ==================




                                      F-24
<PAGE>


(14)    Selected Quarterly Financial Data (Unaudited)
<TABLE>
<S>                                          <C>                <C>               <C>               <C>


                                                   First              Second            Third             Fourth
                                                quarter (1)        quarter (1)       quarter (1)         quarter
2000

Revenues                                         $  77,886,197      $  85,453,265     $  73,973,909     $  92,506,584
                                              =================  ================= ================= =================
Operating expenses                               $  66,120,957      $  72,350,177     $  69,964,227     $  82,075,370
                                              =================  ================= ================= =================
Net income, before cumulative effect of
  change in accounting principle                 $   7,728,564      $   8,752,522     $   3,095,381     $   6,883,777
Cumulative effect of change in method of
  accounting for maintenance checks                    549,009          -                 -                 -
                                              -----------------  ----------------- ----------------- -----------------
Net income                                       $   8,277,573      $   8,752,522     $   3,095,381     $   6,883,777
                                              =================  ================= ================= =================

Earnings per share:
  Basic:
    Income before cumulative effect
       of a change in accounting principle       $        0.47      $        0.50     $        0.18     $        0.39
    Cumulative effect of change in method
      of accounting for maintenance checks                0.03          -                 -                 -
                                              -----------------  ----------------- ----------------- -----------------
    Net income                                   $        0.50      $        0.50     $        0.18     $        0.39
                                              =================  ================= ================= =================

  Diluted:
    Income before cumulative effect
      of change in accounting principle          $        0.42      $        0.46     $        0.16     $        0.36
    Cumulative effect of change in method
      of accounting for maintenance checks                0.03           -                 -                 -
                                              -----------------  ----------------- ----------------- -----------------
    Net income                                   $        0.45      $        0.46     $        0.16     $        0.36
                                              =================  ================= ================= =================


1999

Revenues                                         $  42,887,553      $  56,852,913     $  50,693,588     $  70,173,656
                                              =================  ================= ================= =================
Operating expenses                               $  42,462,864      $  47,075,097     $  48,450,574     $  57,939,180
                                              =================  ================= ================= =================
Net Income                                       $     433,709      $   9,869,558     $   2,459,531     $  17,803,262
                                              =================  ================= ================= =================
Earnings per share:
  Basic                                          $        0.03      $        0.71     $        0.17     $        1.01
                                              =================  ================= ================= =================
  Diluted                                        $        0.03      $        0.64     $        0.15     $        0.93
                                              =================  ================= ================= =================
</TABLE>

(1)     Income  before  the  cumulative  effect of the  change in the  method of
        accounting  for  maintenance  checks  for the first,  second,  and third
        quarters  of the year  ended  March 31,  2000  differs  from the  amount
        previously reported on Form 10-Q by $112,161, ($261,358), and ($84,640),
        respectively, because the change in method of accounting for maintenance
        checks was applied retroactively to April 1, 1999 (Note 1).

                                      F-25