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**FORM 10-K  

                                         SECURITIES AND 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, 2002

[   ]    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.)

                  7001 Tower Road, Denver, CO                                             80249
              ------------------------------                                         -----------
           (Address of principal executive offices)                                     (Zip Code)

Registrant's telephone number including area code:  (720) 374-4200

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]

The 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 May 24, 2002 was
$494,576,286.

The number of shares of the Company's common stock outstanding as of May 24, 2002 is 29,544,581.

Documents incorporated by reference - Information required by Part III is incorporated by reference to the Company's
2002 Proxy Statement.

                                                  TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----

PART I

         Item 1:           Business..............................................................................3
         Item 2:           Properties ..........................................................................16
         Item 3:           Legal Proceedings....................................................................16
         Item 4:           Submission of Matters to a Vote of Security Holders..................................16

PART II

         Item 5:           Market for Common Equity and Related Stockholder Matters.............................17
         Item 6:           Selected Financial Data..............................................................19
         Item 7:           Management's Discussion and Analysis of Financial Condition and
                           Results of Operations................................................................21
         Item 7A:          Quantitative and Qualitative Disclosures About Market Risk...........................37
         Item 8:           Financial Statements.................................................................37
         Item 9:           Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.37

PART III

         Item 10:           Directors and Executive Officers of the Registrant..................................37
         Item 11:           Executive Compensation..............................................................37
         Item 12:           Security Ownership of Certain Beneficial Owners and Management......................38
         Item 13:           Certain Relationships and Related Transactions......................................38

PART IV

         Item 14:           Exhibits, Financial Statement Schedules and Reports on Form 8-K.....................38

                                                                - 55 -

                                                        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.  These risks and uncertainties include, but are not limited to: the
timing of, and expense associated with, expansion and modification of our operations in accordance with our business
strategy or in response to competitive pressures or other factors;  general economic factors and behavior of the
fare-paying public and its potential impact on our liquidity; increased federal scrutiny of low-fare carriers
generally that may increase our operating costs or otherwise adversely affect us; actions of competing airlines,
such as increasing capacity and pricing actions of United Airlines and other competitors; the availability  of
suitable aircraft,  which may inhibit our ability to achieve operating economies and implement our business strategy;
the unavailability of, or inability to secure upon acceptable terms, financing necessary to purchase aircraft which
we have ordered; issues relating to our transition to an Airbus aircraft fleet;  uncertainties regarding aviation
fuel price; uncertainties regarding future terrorist attacks on the United States or military actions that may be
taken; and uncertainties as to when and how fully consumer confidence in the airline industry will be restored,  if
ever.  Because our business, like that of the airline industry generally,  is characterized by high fixed costs
relative to revenues, small fluctuations in our yield per RPM or expense per ASM can significantly affect operating
results.

Share, per share and common stock information contained in this report has been retroactively adjusted or "restated"
to reflect a 50% common stock dividend to shareholders of record on February 19, 2001, which we paid on March 5,
2001.

**Item 1:  Business****General**

We are a scheduled passenger airline  based in  Denver,  Colorado.  As of May 24,  2002,  we, in conjunction  with
Frontier JetExpress operated by Mesa Air Group (“Mesa”), operate routes linking our Denver hub to 31 cities in 20
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 27 leased  jets and four
purchased Airbus aircraft,  including seven Boeing 737-200s, 17 larger Boeing 737-300s, and seven Airbus A319s.
Beginning in May 2001, we began a fleet replacement plan by which we will replace our Boeing aircraft with new
purchased and leased Airbus jet aircraft, a transition we expect to complete by approximately the second quarter of
calendar year 2006.  During fiscal year 2002, we advanced the return of one leased Boeing 737-300 aircraft to its
owner from April 2002 to September 2001, and two leased Boeing 737-200 aircraft from September and November 2004 to
November 2002 and January 2003, respectively.  We plan to accept delivery of an additional nine Airbus A319s during
our fiscal year ending March 31, 2003.  Including the anticipated  return of five Boeing aircraft, we plan to operate
a fleet of 16 Boeing 737-300s, three Boeing 737-200s and 16 Airbus A319s, or a total of 35 aircraft, by the end of
our fiscal year ending March 31, 2003.

       We currently use up to eleven gates at our hub,  Denver International Airport ("DIA"),  where we operate
approximately 140 daily system flight departures and arrivals.  Prior to the September 11, 2001 terrorist attacks,
we operated approximately 126 daily system flight departures and arrivals.  Following the terrorist attacks, we
reduced our service to approximately 103 daily system flight departures and arrivals.  On November 15, 2001, we
added an additional eight daily system flight departures and arrivals to our schedule, and we reinstated service to
Ronald Reagan Washington National Airport on December 12, 2001 with one daily round-trip.  As of March 31, 2002, we
restored our service to our pre-September 11, 2001 levels as well as added additional flights with the additional
capacity added since September 11, 2001.  We intend to continue to monitor passenger demand and other competitive
factors and adjust the number of flights we operate accordingly.

        During the fiscal year ended March 31, 2002 we added Houston, on May 16, 2001, Reno/Lake Tahoe, Nevada and
Austin, Texas on October 1, 2001, New Orleans, Louisiana on February  1, 2002,  Sacramento, California and Fort
Lauderdale, Florida on February 26, 2002.  During fiscal year 2002, we also added additional flight frequencies in
Albuquerque, New Mexico and Kansas City, Missouri.  We began service between Denver and Indianapolis, Indiana on May
23, 2002, and intend to begin service between Denver and Boise, Idaho and Tampa, Florida on June 24, 2002.

       In September 2001, we entered into a codeshare agreement with Mesa Air Group. Under the terms of the
agreement,  we will market and sell flights operated by Mesa as Frontier JetExpress. This codeshare began February
17, 2002 with service between Denver and San Jose, California, and with supplemental flights to our current service
between Denver and Houston, Texas. Effective April 7, 2002,  the codeshare was expanded to include service to St.
Louis, Missouri and Ontario, California.  On May 1, 2002, Frontier JetExpress began supplemental service between
Denver and San Diego, California and Minneapolis, Minnesota.  This codeshare is expected to expand to include the
operation by Mesa of at least five 50-passenger Bombardier CRJ-200 regional jets, providing service to new
destinations as well as additional frequencies to our current route system.

       Effective  July 9, 2001, we began a codeshare agreement with Great Lakes Aviation, Ltd. (“Great Lakes”) by
which Great Lakes provides daily service to seven regional markets from our Denver hub. The codeshare agreement
initially included Casper, Cody, Gillette, and Cheyenne, Wyoming; Amarillo, Texas; Santa Fe, New Mexico; and Hayden,
Colorado. Effective November 15, 2001, we expanded the codeshare agreement to include nine additional Great Lakes
cities including Laramie, Riverton, Rock Springs, and Worland, Wyoming; Cortez and Telluride, Colorado; Scottsbluff,
Nebraska; and Farmington, New Mexico and we commenced a Great Lakes codeshare to Sheridan, Wyoming, on October 31,
2001.  Effective December 14, 2001, an additional 20 cities were added including Page and Phoenix, Arizona; Alamosa
and Pueblo, Colorado; Dodge City, Garden City, Hays, and Liberal, Kansas; Dickinson and Williston, North Dakota;
Alliance, Chadron, Grand Island, Kearney, McCook, Norfolk, and North Platte, Nebraska;  Pierre, South Dakota; and
Moab and  Vernal, Utah. Service between Denver and Hayden, Colorado was removed from the codeshare agreement
effective December 13, 2001.

       Our President and Chief Operating Officer, Jeff Potter, assumed the additional title and responsibilities of
Chief Executive Officer on April 1, 2002, replacing Chairman and former Chief Executive Officer Sam Addoms who
retired as CEO but remains as Chairman of our Board of Directors.  During the past 12 months we have added several
new executive officers to our management team,  including our Vice President and Chief Financial Officer (October
2001);  our Vice President-Maintenance and Engineering (January  2002);  and our Vice President and General Counsel
(April 2002).  Each of these individuals has significant prior airline or aviation industry experience.

       Our corporate headquarters are located at 7001 Tower Road, Denver,  Colorado 80249. Our administrative office
telephone number is 720-374-4200;  our reservations telephone  number is  800-432-1359;  and our worldwide Web site
address is www.frontierairlines.com.

**September 11, 2001 Terrorist Attacks**

       On September  11, 2001, terrorists hijacked and used four commercial aircraft in terrorist attacks on the
United States.  As a result of these terrorist  attacks, the Federal Aviation Administration immediately suspended
all commercial airline flights on the morning of September 11. We resumed flight activity on September 14, 2001
with approximately a 20% reduction in our scheduled service.  As of March 31, 2002, we have fully restored service
to our  pre-September 11, 2001 levels as well as increased capacity by approximately 11.3% compared to our
pre-September 11, 2001 capacity.

**Air Transportation Safety and Stabilization Act**

       As a result of the September 11, 2001 terrorist  attacks on the United States,  on September 22, 2001 President
Bush signed into law the Air Transportation Safety and System Stabilization  Act (the “Act”).  The Act includes for
all U.S. airlines and air cargo carriers the following key provisions: (i) $5 billion in cash compensation, of
which $4.5 billion is available to commercial passenger airlines  and is  allocated  based on the lesser of each
airline's share of available  seat miles during  August 2001 or the direct and incremental losses (including  lost
revenues) incurred by the airline from September 11, 2001  through  December 31,  001; (ii) subject to certain
conditions, the availability of up to $10 billion in federal  government  guarantees of certain loans made to air
carriers for which credit is not reasonably available as determined by a newly established Air Transportation
Stabilization Board;  (iii) the authority of the Secretary of Transportation to reimburse air carriers (which
authority expires 180 days after the enactment of the Act) for increases in the cost of war risk insurance over the
premium in effect for the period September 4, 2001 to September 10, 2001; (iv) at the discretion of the Secretary of
Transportation, a $100 million limit on the liability of any air carrier to third parties with respect to acts of
terrorism committed on or to such air carrier during the 180 day period following enactment of the Act; and (v) the
extension of the due date for the payment by air carriers of certain payroll and excise taxes until November 15,
2001 and January 15, 2002, respectively.

**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 our
         frequent flyer program, EarlyReturns.
     o   Expand our Denver hub operation and increase connecting traffic by adding additional high volume markets to
         our current route system, as well as developing existing code sharing agreements with two commuter carriers
         and potentially developing new alliances with other carriers.
     o   Continue filling gaps in flight frequencies to current markets from our Denver hub.

       In September 2001,  Fortune magazine ranked us 41st on its 100 Fastest Growing Companies list and in April
2002, Entrepreneur Magazine ranked us one of two "Best Low-Fare Airlines."

**Route System Strategy**

         Our route system  strategy  encompasses connecting our Denver hub to top business and leisure destinations.
We currently serve 19 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.  Connection opportunities for our passengers
connecting through DIA increased from an average of 7.5 flights as of March 31, 2001 to 8.9 flights as of March 31,
2002, which includes connecting passengers from our commuter affiliate, Frontier JetExpress.

**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 Denver and in cities throughout
our route system.

         In order to increase connecting traffic,  we began two code share agreements,  one with Great Lakes in July
2001 and the other with Mesa Air Group, operating as Frontier JetExpress, in February 2002. We have also negotiated
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.

         To balance the seasonal demand changes that occur in the leisure market,  we have introduced programs over
the past several years that are 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 May 24, 2002, we had
signed contracts with over 8,400 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.

        Effective February 1, 2001, we commenced EarlyReturns, our own frequent flyer program. As of March 31, 2002,
there are approximately 276,000 EarlyReturns' members. We believe that our frequent flyer program offers some of the
most generous benefits in the industry, including  a free round trip after accumulating only 15,000 miles.
Additionally, members who earn 25,000 or more annual credited EarlyReturns flight miles attain Summit Level status,
which includes a 25% mileage bonus on each paid Frontier flight,  priority  check-in and  boarding, complimentary
on-board alcoholic beverages,  extra allowance on checked baggage and priority baggage handling, guaranteed
reservations on any Frontier  flight when  purchasing an  unrestricted coach class ticket at least 72 hours prior to
departure,  and access to an exclusive Summit customer service toll-free phone number.  Members earn one mile for
every mile flown on Frontier plus additional mileage with program  partners,  which  presently include Continental
Airlines, Midwest Express Airlines,  Virgin Atlantic Airways, Alamo, Hertz, National and Payless Car Rentals, Kimpton
Group Hotels and Citicorp Diners Club Inc. Effective September 2002, our frequent flyer reciprocal agreement with
Continental  Airlines will end. We do not anticipate that the  discontinuation  of this agreement will have a material
impact on our operations or financial performance.  To apply for the EarlyReturns program, customers may visit our
Web site at www.frontierairlines.com, obtain an EarlyReturns enrollment form at any of our airport counters or call
our EarlyReturns Service Center toll-free hotline at 866-26-EARLY, or our reservations at 800-4321-FLY.

         Our relationship with travel agencies is important to us and other airlines.  In March 2002, several of the
major airlines eliminated travel agency  “base” commissions but will continue to pay individually  negotiated
incentive commissions to select agents.  Effective June 1, 2002, we matched our competitors and have also eliminated
travel agency base commissions.  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.

         We  participate in the four major computer reservation systems used by travel agents to make airline
reservations:  Amadeus, Galileo, Worldspan and Sabre. We maintain reservations centers in Denver, Colorado and Las
Cruces, New Mexico, operated by our employees.  We opened the Las Cruces call center in August 2000,  replacing a
Miami, Florida contractor that had been providing reservation services for us.

         Our agreement with Electronic Data Systems enhances our ability to provide Internet bookings through the
EDS SHARES web 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 remain unused.  As a percentage of total flown revenue, the percentage of flown
revenue generated from our own Web site (www.frontierairlines.com) increased from 16% during March 2001 to 23%
during March 2002.

         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, and during fiscal year 2002, we increased the amount
of e-tickets as a percentage of total revenue to approximately 82%, up from 74% from the prior year.  E-ticketing
capabilities for our passengers in all four computer reservation systems used by travel agents were enabled during
fiscal year 2000.

**Product Pricing

         We generally offer our seats at discount fares on flights booked within 21 days of travel,  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 provide 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 fares.  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 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, we and other smaller carriers have entered
markets long dominated by larger 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.  During the month of March 2002,
United and its commuter affiliates had a total market share at DIA of approximately  62.7%.  This gives United a
significant competitive advantage compared to us and other carriers serving DIA.  We believe our current market
share, including our codeshare affiliates,  at DIA for the month of March 2002 approximated 11.2%. We compete with
United primarily on the basis of fares, fare flexibility and the quality of our customer service.

       At the present time, four domestic airports, including New York's LaGuardia Airport and Washington,  D.C.'s
National 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
high density exemption slots at LaGuardia, and at the present time, we utilize four of those slots to operate two
daily round-trip flights between Denver and LaGuardia.  In addition to slot restrictions, Washington National is
limited by a perimeter rule, which limits flights to and from Washington National to 1,250 miles. In April 2000, the
Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, or AIR 21 was enacted.  AIR 21 authorizes
the Department of Transportation (“DOT”) to grant up to 12 slot exemptions beyond the 1,250-mile Washington National
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 are presently
authorized to operate one daily round-trip flight between Denver and Washington National.  We are seeking authority
to operate a second  round-trip flight in this market but are unable to predict whether such authority will be
granted.

**Aircraft**

       As of May 24, 2002, we operate 24 Boeing 737 and seven Airbus A319 in all-coach seating configurations.  The
age of these aircraft, their passenger capacities and their lease expirations are shown in the following table:

                                                                   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
A319                    4                    2001-2002             132                    owned
A319                    3                    2001-2002             132                   2013-2014
--------------------------------------------------------------------------------------------------------------------

       In March 2000, we entered  into an agreement, as subsequently amended, to purchase up to 31 new Airbus
aircraft.  We have agreed to firm purchases of 17 of these aircraft, and have options to purchase up to an
additional 14 aircraft.  As a complement to this purchase order, in April and May 2000 we signed two agreements to
lease 16 new Airbus aircraft for delivery in our fiscal years 2002 through 2005.  During the year ended March 31,
2002, we took delivery of the first three purchased aircraft and first three leased aircraft. Based upon these firm
orders,  we expect to be operating up to 37 purchased and leased Airbus aircraft, assuming that we will exercise five
additional  Airbus  options,  by  approximately the second quarter of calendar year 2006. 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.  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.  The A319 and A318 aircraft are
configured with 132 and 114 passenger seats, respectively, with a 33-inch seat pitch.  We believe that operating
new Airbus aircraft will result in significant operating cost savings and an improved product for our customers.

**Maintenance and Repairs**

       All of our aircraft maintenance and repairs are accomplished in accordance with our maintenance program
approved by the FAA. We maintain spare or replacement parts primarily in Denver, Colorado.  Spare parts vendors
supply us with certain of these parts, and we purchase or lease others from other airline or vendor sources.

       Since mid-1996, we have trained, staffed and supervised our own maintenance work force at Denver, Colorado.
We sublease a portion of Continental Airlines' hangar at DIA where we currently perform our own maintenance through
the “D” check level.  Other major maintenance, such as major engine repairs, is performed by outside FAA approved
contractors.  We also maintain line maintenance facilities at El Paso, Texas and Phoenix, Arizona.

       Under our aircraft lease agreements, we pay all expenses relating to the maintenance  nd 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.  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, 2002, 2001, and 2000 ranged from 97.3% to
99.8%, from 98.6 to 99.8%, and from 96.7 to 99.7%, respectively.  The completion factor is the percentage of our
scheduled flights that were operated by us (i.e., not canceled). Canceled flights were principally as a result of
mechanical problems, and, to a lesser extent, weather. Maintenance management has recently implemented processes
and procedures that will assist in ensuring that our aircraft will continue to be sufficiently reliable over longer
periods of time.  These include the implementation of a multi-departmental product team designed to provide the
leadership and direction necessary to maintain and improve fleet costs and performance. The product team consists
of four core departments: engineering, quality control, reliability and production.  In addition, base maintenance
has established flowcharts to more efficiently utilize "C" check manpower and parts resources to ensure maintenance
schedules are maintained in a cost effective manner.  We also expect that our new Airbus aircraft will improve
aircraft reliability.

       In calendar years ended December 31, 1999, 2000 and 2001, our maintenance and engineering department received
the Federal Aviation Administration's highest award, the Diamond Certificate of Excellence, in recognition of 100
percent of our maintenance and engineering  employees completing advanced aircraft maintenance training programs.  The
Diamond Award recognizes advanced training for aircraft maintenance professionals throughout the airline industry.
We are the first part 121 domestic air carrier to achieve 100 percent participation in this training program by our
maintenance employees.

**Fuel**

       During the years ending  March 31, 2002, 2001, and 2000, jet fuel accounted for 14.3%, 18.1% and 15.3%,
respectively, of our operating expenses.  We have arrangements with major fuel suppliers for substantial  portions of
our fuel requirements, and we believe that these 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 decreased significantly in fiscal 2002. Our average fuel price per gallon including taxes
and into-plane fees was 87(cent)for the year ended March 31, 2002, with the monthly average price per gallon during the
same period ranging from a low of 72(cent)to a high of $1.01.  As of May 20,  2002, the price per gallon was 86(cent).  Our
average fuel price per gallon including taxes and into-plane fees was $1.07 for the year ended March 31, 2001, with
the monthly average price per gallon during the same period ranging from a low of 91.3(cent)to a high of $1.24.

       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 insurance limits of $800 million per aircraft per occurrence in property damage and passenger and
third-party liability insurance, and insurance for aircraft loss or damage with deductible amounts 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 that we
might sustain.  Our aircraft hull and liability coverage scheduled renewal date is June 7, 2002.

       Our aviation war risk underwriters issued (seven days notice of cancellation to us) immediately following the
events of September 11th.  On September 24, 2001, these underwriters reinstated war risk passenger liability
coverage but limited third party bodily injury and property damage to $50 million per occurrence.  A special
surcharge of $1.25 per passenger carried was established as the premium for this coverage.  At the same time,  the
FAA provided us supplemental third party war risk coverage from the $50 million limit to an estimated $1.6 billion
for us. The premium for this supplemental coverage is $7.50 per flight departure and is now set to expire on June
19, 2002, unless renewed by Congress.  Congress has been periodically renewing this coverage since its inception on
September 26, 2001. Absent a similar renewal on June 19, 2002,  we expect that the government premiums could be
substantially increased and coverage reduced to a higher deductible amount.

**Employees**

       As of May 24, 2002, we had 2,866 employees, including 2,269 full-time and 597 part-time personnel.  Our
employees included 353 pilots, 489 flight attendants, 581 customer service agents, 346 ramp service agents, 291
reservations agents, 358 mechanics and related personnel, and 448 general management and administrative 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 performance bonuses.

       Three 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, our dispatchers voted in September
1999 to be represented by the Transport Workers Union, and our mechanics voted in July 2001 to be represented by the
International Brotherhood of Teamsters.  The first bargaining agreement for the pilots, which has a 5-year term, was
ratified and became effective in May 2000. The first bargaining agreement for the dispatchers,  which has a 3-year
term, was ratified and became effective in September 2000.  We are in the process of negotiating the bargaining
agreement with the mechanics.  At this time we are unable to predict when the negotiations will be completed.  In
addition since 1997 we have had union organizing attempts that were defeated by our flight attendants, ramp service
agents, and stock clerks.  We have received official notification from  the National Mediation Board of a
representation application for flight attendants by the Association of Flight Attendants. An election has been
authorized and the results will be announced in June 2002.

       Effective  May 2000, we enhanced our 401(k) Retirement Savings Plan by announcing an increased matching
contribution by the Company.  Participants may receive a 50% Company match for contributions up to 10% of salary.
This match is discretionary and approved on an annual basis by our Board of Directors.  The Board of Directors has
approved the continuation of the match through the plan year ended December 31, 2002. We anticipate that the match
and related vesting schedule of 20% per year may serve to reduce our employee turnover rates.

       All new employees are subject to pre-employment drug testing.  Those employees who perform safety sensitive
functions are also subject to random drug and alcohol testing, and testing in the event of an accident.

       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**

       General.  All interstate air carriers are subject to regulation by the DOT the Federal Administration
Administration  (“FAA”)  and other state and federal government agencies.  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.  The DOT's  jurisdiction  extends primarily to the economic aspects of air
transportation,  such as certification and fitness,  insurance,  advertising,  computer reservation systems, deceptive
and unfair competitive  practices,  and consumer protection matters such as on-time  performance,  denied boarding and
baggage  liability.  It is also  authorized  to require  reports from air carriers and to  investigate  and  institute
proceedings to enforce its economic  regulations and may, in certain  circumstances,  assess civil  penalties,  revoke
operating  authority and seek criminal  sanctions.  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
air 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.

       Transportation  Security  Administration.  On November 19, 2001, in response to the terrorist acts of September
11, 2001,  the President of the United States signed into law the Aviation and  Transportation  Security Act (“ATSA”).
The ATSA created the  Transportation  Security  Administration  (“TSA”),  an agency within the DOT, to oversee,  among
other  things,  aviation  and  airport  security.  The ATSA  provided  for the  federalization  of airport  passenger,
baggage,  cargo,  mail and  employee  and  vendor  screening  processes.  The ATSA also  enhanced  background  checks,
provided  federal air marshals  aboard  flights,  improved  flight deck  security,  and enhanced  security for airport
perimeter  access.  The ATSA also  requires  that all checked  baggage be screened by explosive  detection  systems by
December 31, 2002.

       U.S. Federal Aviation  Administration.  The FAA's regulatory  authority  relates primarily to flight operations
and air safety, including aircraft certification and operations,  crew licensing and training,  maintenance standards,
and  aircraft   standards.   The  FAA  also  oversees  aircraft  noise  regulation,   ground   facilities,   dispatch,
communications,  weather  observation,  and flight and duty time. The FAA has the authority to suspend  temporarily or
revoke  permanently  the authority of an airline or its licensed  personnel for failure to comply with FAA regulations
and to assess civil and criminal  penalties  for such  failures.  We hold an operating  certificate  issued by the FAA
pursuant  to Part  121 of the  Federal  Aviation  Regulations.  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  LaGuardia and Washington  National,  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  currently  hold  slots  to  serve  the  Denver-LaGuardia  and
Denver-Washington National market and provide two and one daily round trip flights in those markets, respectively.

       Environmental  Matters.  The Aviation  Safety and Noise  Abatement Act of 1979,  the Airport Noise and Capacity
Act of 1990 and Clean Air Act of 1963  oversee  and  regulate  airlines  with  respect to  aircraft  engine  noise and
exhaust  emissions.  We are required to comply with all  applicable  FAA noise  control  regulations  and with current
exhaust  emissions  standards.  Our  fleet is in  compliance  with the  FAA's  Stage 3 noise  level  requirements.  In
addition,  various  elements of our operation and maintenance of our aircraft are subject to monitoring and control by
federal and state  agencies  overseeing  the use and disposal of hazardous  materials  and storm water  discharge.  We
believe we are currently in substantial compliance with all material requirements of such agencies.

       Railway  Labor   Act/National   Mediation   Board.   Three  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,  our dispatchers  voted in September 1999 to be represented by the Transport  Workers Union,  and
our  mechanics  voted in July  2001 to be  represented  by the  International  Brotherhood  of  Teamsters.  The  first
bargaining  agreement  for the pilots,  which has a 5-year term,  was ratified and became  effective in May 2000.  The
first  bargaining  agreement  for the  dispatchers,  which has a 3-year term,  was  ratified  and became  effective in
September  2000. We are in the process of negotiating  the first  bargaining  agreement with the mechanics.  Our labor
relations  with  respect to the these unions are now covered  under Title II of the Railway  Labor Act and are subject
to the jurisdiction of the National Mediation Board.

       Miscellaneous.  We are  also  subject  to  regulation  or  oversight  by  other  federal  and  state  agencies.
Antitrust  laws are enforced by the U.S.  Department  of Justice and the Federal  Trade  Commission.  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.  The Immigration and Naturalization  Service,  the U.S. Customs Service and the Animal and
Plant Health Inspection  Service of the U.S.  Department of Agriculture each have jurisdiction over certain aspects of
our aircraft, passengers, cargo and operations.

**Risk Factors**

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

**We may be subject to terrorist attacks or other acts of war.**

       On September 11, 2001,  four  commercial  aircraft were hijacked by terrorists and crashed into The World Trade
Center in New York City, the Pentagon in Northern  Virginia and a field in  Pennsylvania.  These  terrorists'  attacks
resulted in an  overwhelming  loss of life and  extensive  property  damage.  Immediately  after the attacks,  the FAA
closed U.S.  airspace,  prohibiting  all flights to, from and within the United States of America.  Airports  reopened
on September 13, 2001, except for Washington D.C. Ronald Reagan  International  Airport,  which partially  reopened on
October 4, 2001.

       The terrorist  attacks,  subsequent  closing of the U.S.  airspace,  and the fear created  among  consumers had
significant  negative economic impacts on the airline  industry.  Primary effects were substantial loss of revenue and
flight disruption costs,  increased  security and insurance costs,  increased  concerns about the potential for future
terrorist  attacks,  airport shutdowns and flight  cancellations and delays due to additional  screening of passengers
and baggage,  security breaches and perceived safety threats,  and significantly  reduced passenger traffic and yields
due to the subsequent drop in demand for air travel.

       In recent  months,  industry-wide  demand for air travel has  increased,  but has not yet returned to levels in
place prior to the September 11 terrorist  attacks.  Given the magnitude and unprecedented  nature of the September 11
attacks,  it is uncertain  what long-term  impact these events will have on the airline  industry in general and on us
in  particular.  Factors that could affect the our  operating  results and financial  condition in the future  include
continued  weakness in demand for air travel,  increased costs due to new security  measures and the potential for new
or additional government mandates for security related measures,  increased insurance premiums,  uncertainty about the
continued  availability of war risk coverage or other insurances,  and the eventual reinstatement of flights that many
competitors eliminated after September 11.

       In addition,  although the entire industry is substantially enhancing security equipment and procedures,  it is
impossible to guarantee  that  additional  terrorist  attacks or other acts of war will not occur.  Given the weakened
state of the airline  industry,  should additional  terrorist  attacks or acts of war occur,  particularly in the near
future,  it can be  expected  that the  impact  of those  attacks  on the  industry  may be  similar  in nature to but
substantially greater than those resulting from the September 11 terrorist attacks.

**Our insurance  costs have increased  substantially  as a result of the September 11th terrorist  attacks,  and further
increases in insurance costs would harm our business.**

       Following the September 11 terrorist  attacks,  aviation  insurers  dramatically  increased  airline  insurance
premiums and  significantly  reduced the maximum amount of insurance  coverage  available to airlines for liability to
persons other than  passengers for claims  resulting from acts of terrorism,  war or similar events to $50 million per
event and in the  aggregate.  We  previously  carried  $1.5  billion in coverage  per event in war risk  coverage.  In
light of this  development,  under the  Stabilization  Act, the government has provided  domestic airlines with excess
war risk coverage above $50 million up to an estimated $1.6 billion per event for us.

       Aviation  insurers could increase  their  premiums even further in the event of additional  terrorist  attacks,
hijackings,  airline crashes or other events adversely  affecting the airline  industry.  Furthermore,  the excess war
risk  coverage  provided by the  government  is  currently  scheduled  to be in force until June 19,  2002.  While the
government  may extend the deadline for when it will stop  providing  excess war risk  coverage,  we cannot assure you
that any  extension  will occur,  or if it does,  how long the extension  will last. We expect that if the  government
stops providing excess war risk coverage to the airline  industry,  the premiums charged by aviation insurers for this
coverage will be substantially  higher than the premiums  currently charged by the government.  Significant  increases
in insurance premiums would harm our financial condition and results of operations.

**We may not be able to obtain or secure new aircraft financing.**

         We have  agreed to  purchase a number of new  Airbus  A319 and A318  aircraft.  We have  secured a  financing
commitment  for the first four  purchased  aircraft,  of which three were delivered to us during the fiscal year ended
March 31,  2002 and the other in May 2002.  To  complete  the  purchase  of the  remaining  aircraft,  we must  secure
aircraft  financing,  which  we may not be able to  obtain  on  terms  acceptable  to us,  if at all.  The  amount  of
financing  required will depend on the number of aircraft  purchase options we exercise,  the required down payment on
mortgaged  financed  aircraft and the extent of leasing compared to purchasing the aircraft.  We are exploring various
financing  alternatives,  including,  but not limited to,  domestic and foreign bank  financing,  a public offering of
equity  or  debt  securities,  debt  financing  such  as  enhanced  equipment  trust  certificates,   leveraged  lease
arrangements  or  government  guaranteed  financing.  There  can be no  guaranty  that  additional  financing  will be
available when required or on acceptable  terms.  The inability to secure the financing could have a material  adverse
effect on us and result in delays in or our  inability  to take  delivery  of Airbus  aircraft  that we have agreed to
purchase, further impairing the Company's strategies for long-term growth.

**The airline industry is seasonal and cyclical, resulting in unpredictable liquidity and earnings.**

         Because the airline  industry is seasonal and cyclical,  our  liquidity  and earnings  will  fluctuate and be
unpredictable.  Our  operations  primarily  depend on passenger  travel  demand and 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.  These
requirements  are caused by seasonal  fluctuations in traffic,  which often reduce 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.  A majority of our  customers  use our services on a
discretionary  basis.  Accordingly,  our operating and financial  results are likely to 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.  Working
capital deficits are not uncommon in the airline industry because airlines  typically have no product  inventories and
ticket sales to  passengers  who have not yet flown are  reflected as current  liabilities.  Therefore,  a significant
shortfall from expected revenue levels could have a material adverse effect on our operations.

         We,  like many in the  industry,  are seeing a negative  impact to  passenger  traffic  caused by the slowing
economy as well as the events of September 11. The impact has been more  prevalent  with our business  traffic,  which
is higher yield  traffic  that books closer to the date of  departure,  than with our leisure  customers.  Even though
the slowing  economy has impacted us, we believe that the larger,  more  established  carriers are being impacted to a
greater  extent as the  discretionary  business  travelers who typically fly these carriers are looking for affordable
alternatives  similar to the service we provide.  The larger  carriers may reduce their  "close-in"  fare structure to
more  aggressively  compete for this traffic.  Aggressive  pricing tactics by our major  competitors has had and could
also have an impact in the future on the leisure component.

**We are in a high fixed cost business, and any unexpected decrease in revenues could harm us.**

         The airline  industry is  characterized  by low profit margins and high fixed costs  primarily for personnel,
fuel,  aircraft  ownership costs and other rents.  The expenses of an aircraft flight do not vary  significantly  with
the number of  passengers  carried and, as a result,  a  relatively  small  change in the number of  passengers  or in
pricing  could have a  disproportionate  effect on the  airline's  operating and  financial  results.  Accordingly,  a
shortfall from expected revenue levels can have a material adverse effect on our profitability and liquidity.

We have a significant amount of fixed obligations and we will incur significantly more fixed obligations, which
could increase the risk of failing to meet payment obligations.

         As of March  31,  2002,  maturities  of our  long-term  debt were  $3,226,000  in 2003,  $3,426,000  in 2004,
$3,656,000  in  2005,  $3,913,000  in  2006,  $4,169,000  in 2007  and an  aggregate  of  $51,668,000  for  the  years
thereafter.  In addition to long-term debt, we have a significant  amount of other fixed  obligations  under operating
leases related to our aircraft,  airport  terminal space,  other airport  facilities and office space. As of March 31,
2002,  future minimum lease payments under  noncancelable  operating  leases were  approximately  $78,609,000 in 2003,
$74,550,000 in 2004,  $69,669,000 in 2005,  $55,783,000 in 2006,  $69,798,000 in 2007 and an aggregate of $357,895,000
for the years  thereafter.  As of March 31, 2002, we had  commitments  of  approximately  $420,000,000  to purchase 14
additional  aircraft over the next four years,  including  estimated  amounts for  contractual  price  escalations and
spare  parts to  support  these  aircraft.  We will  incur  additional  debt and other  fixed  obligations  as we take
delivery of new aircraft and other equipment and continue to expand into new markets.

**Increases in fuel costs affect our operating costs and competitiveness.**

         We cannot predict our future cost and  availability  of fuel,  which affects our ability to compete.  Fuel is
a major component of our operating  expenses.  Both the cost and  availability of fuel are influenced by many economic
and political factors and events occurring in oil producing  countries  throughout the world, and fuel costs fluctuate
widely.  Fuel  accounted  for  14.3%  of our  total  operating  expenses  for the  year  ended  March  31,  2002.  The
unavailability  of adequate fuel supplies could have a material  adverse  effect on our operations and  profitability.
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 strict  federal  regulations,  and  compliance  with  federal  regulations  increases  our costs and
decreases our revenues.**

         Airlines are subject to extensive  regulatory  and legal  requirements  that involve  significant  compliance
costs. In the last several years,  Congress has passed laws, and the DOT and FAA have issued  regulations  relating to
the operation of airlines that have required  significant  expenditures.  For example,  the President  signed into law
the Aviation and  Transportation  Security Act in November of 2001. This law federalizes  substantially all aspects of
civil  aviation  security and  requires,  among other  things,  the  implementation  of certain  security  measures by
airlines and airports,  including a requirement that all passenger  baggage be screened for explosives by December 31,
2002.  Funding for airline and airport  security  under the law is primarily  provided by a new $2.50 per  enplanement
ticket tax effective  February 1, 2002,  with authority  granted to the TSA to impose  additional fees on air carriers
if necessary.  In addition,  the acquisition,  installation and operation of the required baggage screening systems by
airports  will result in capital  expenses and costs by those  airports  that will likely be passed on to the airlines
through  increased  use and landing  fees.  It is  impossible  to  determine at this time exactly what the cost impact
will be of the increased security measures imposed by the ATSA.

         In addition,  although we have obtained the necessary  authority  from the DOT and the FAA to conduct  flight
operations  and are currently  obtaining  such  authority  from the FAA with respect to our Airbus  aircraft,  we must
maintain this authority by our 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
the FAA strictly  scrutinizes  smaller airlines like ours,  which makes us susceptible to regulatory  demands that can
negatively  impact our  operations.  We may not be able to continue  to comply  with all present and future  rules and
regulations.  In  addition,  we cannot  predict  the costs of  compliance  with  these  regulations  and the effect of
compliance on our  profitability,  although these costs may be material.  We also expect  substantial  FAA scrutiny as
we transition  from our Boeing fleet to an all Airbus fleet.  In 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.  Shortly
thereafter,  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.  On February 17, 2002, the ATSA imposed a base security  infrastruture  fee on commercial  operators in an
amount equal to the calendar year ended 2000 airport security expenses.

**We experience high costs at DIA, which may impact our results of operations.**

         We operate our hub of flight  operations from DIA where we experience  high costs.  DIA opened in March 1995,
and Stapleton  International  Airport was closed.  Financed  through revenue bonds,  DIA depends on landing fees, gate
rentals,  income from airlines,  the traveling  public,  and other fees to generate  income to service its debt and to
support  its  operations.  Our  cost of  operations  at DIA will  vary as  traffic  increases  or  diminishes  at that
airport.  We believe that our operating  costs at DIA  substantially  exceed those that other  airlines  incur at most
hub airports in other cities,  which  decreases  our ability to compete with other  airlines with lower costs at their
hub airports.

**We have a limited number of routes, which limits our market share and ability to compete.**

         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 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 hub in
Denver,  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 62.7%
of all passenger  boardings for the month of March 2002. Fare wars,  "capacity  dumping" in which a competitor  places
additional  aircraft on selected routes,  and other  activities  could adversely  affect us. The future  activities of
United  Airlines and other  carriers  may 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.

**We could lose airport and gate access thereby decreasing our competitiveness.**

         We could  encounter  barriers to airport  slot or airport  gate access that would deny or limit our access to
the airports that we currently use or intend to use in the future.  A slot is an  authorization  to schedule a takeoff
or landing at the  designated  airport  within a specific time window.  The FAA must be advised of all slot  transfers
and can disallow any such transfer.  In the United  States,  the FAA currently  regulates  slot  allocations at O'Hare
International  Airport in Chicago,  JFK and LaGuardia  Airport in New York City, and Ronald Reagan National Airport in
Washington  D.C. We use LaGuardia  Airport and Ronald Reagan  National  Airport in our current  operations.  The FAA's
slot  regulations  require  the use of each slot at least 80% of the time,  measured  on a monthly  basis.  Failure to
comply  with  these  regulations  may result in a recall of the slot by the FAA.  In  addition,  the slot  regulations
permit the FAA to  withdraw  the slots at any time  without  compensation  to meet the DOT's  operational  needs.  Our
ability to increase  slots at the  regulated  airports is affected by the number of slots  available  for takeoffs and
landings.

         In addition,  the number of gates available to us at some airports may be limited to the restricted  capacity
or by disruptions  caused by major renovation  projects.  Available gates may not provide for the best overall service
to our  customers,  and may prevent us from  scheduling  our flights  during peak or opportune  times.  Any failure to
obtain gate access at the airports that we serve could  adversely  affect our  operations.  These barriers may in turn
materially adversely affect our business and competitiveness.

**Our transition to an Airbus fleet creates risks.**

         We currently  operate 24 Boeing aircraft and seven Airbus aircraft.  Our long-term  strategy is to transition
our fleet so that we are  operating  only  Airbus  aircraft  by the second  calendar  quarter of 2006.  One of the key
elements of this strategy is to produce cost savings  because crew training is  standardized  for aircraft of a common
type,  maintenance  issues are  simplified,  spare parts  inventory  is reduced,  and  scheduling  is more  efficient.
However,  issues will be raised during our transition  period with respect to providing crews with  sufficient  flight
time that may be difficult  to address,  especially  as the number of Boeing  aircraft we operate are reduced to small
numbers.  We may be faced with  retiring  these  Boeing  aircraft  in advance  of the end of the lease  agreements  in
place  of these aircraft, thus resulting in significant early-termination costs.

         In addition,  once we are operating only Airbus aircraft,  we will be dependent on a single  manufacturer for
future aircraft  acquisitions or deliveries,  spare parts or warranty service.  Should Airbus be unable to perform its
obligations  under  existing  purchase  agreements,  or be unable to provide future  aircraft or services,  whether by
fire,  strike or other event that affects its ability to fulfill  contractual  obligations or manufacture  aircraft or
spare  parts,  we  would  have to find  another  supplier  for our  aircraft.  Currently,  Boeing  is the  only  other
manufacturer  from whom we could purchase or lease alternate  aircraft.  If we were forced to acquire Boeing aircraft,
we would need to address  fleet  transition  issues,  including  substantial  costs  associated  with  retraining  our
employees,  acquiring  new spare  parts,  and  replacing  our  manuals.  In addition,  the fleet  efficiency  benefits
described above may no longer be available.

         Finally,  once we are operating only Airbus aircraft we will be particularly  vulnerable to any problems that
might be  associated  with these  aircraft.  Our business  would be  significantly  disrupted  if a FAA  airworthiness
directive or service  bulletin were issued,  resulting in the grounding of all Airbus  aircraft of the type we operate
while the defect is being  corrected.  Our business  could also be harmed if the public avoids flying Airbus  aircraft
due to an adverse  perception about the aircraft's  safety or dependability,  whether real or perceived,  in the event
of an accident or other incident involving an Airbus aircraft of the type we fly.

**Our maintenance expenses may be higher than we anticipate.**

         We may incur higher than  anticipated  maintenance  expenses.  We bear all routine and major  maintenance  on
our owned  aircraft.  Additionally,  under our leased 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  increase costs and reduce revenue.  We also may be required to comply with  regulations  and  airworthiness
directives  the FAA issues,  the cost of which our  aircraft  lessors may only  partially  assume  depending  upon the
magnitude of the expense.  Although we believe that our  purchased  and leased  aircraft are  currently in  compliance
with all FAA issued airworthiness  directives,  there is a high probability that additional  airworthiness  directives
will be required in the future necessitating additional expense.

**Our landing fees may increase because of local noise abatement procedures.**

         Compliance  with  local  noise  abatement  procedures  may lead to  increased  landing  fees.  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  recognized  the right of
airport  operators  with  special  noise  problems  to  implement  local  noise  abatement  procedures  as long as the
procedures do not interfere  unreasonably with the interstate and foreign commerce of the national air  transportation
system.

         An agreement  between the City and County of Denver and another county adjacent to Denver  specifies  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.  DIA has  incurred  such
payment  obligations and likely will incur such  obligations in the future,  which it will pass on to us and other air
carriers serving DIA by increasing landing fees.  Additionally,  noise regulations could be enacted in the future that
would increase our expenses and have a material adverse effect on our operations.

**We have a limited number of aircraft, and any unexpected loss of any aircraft could disrupt and harm our operations.**

       Because we have a limited  number of aircraft,  if any of our aircraft  unexpectedly  are taken out of service,
our  operations  may be  disrupted.  We can  schedule  all of our  aircraft  for  regular  passenger  service and only
maintain  limited  spare  aircraft  capability  should one or more  aircraft  be removed  from  scheduled  service for
unplanned  maintenance  repairs or for other  reasons.  The unplanned loss of use of one or more of our aircraft for a
significant  period of time  could  have a  material  adverse  effect  on our  operations  and  operating  results.  A
replacement  aircraft  may not be  available  or we may not be  able to  lease  or  purchase  additional  aircraft  on
satisfactory  terms or when  needed.  The  market for  leased or  purchased  aircraft  fluctuates  based on  worldwide
economic factors that we cannot control.

**Our labor costs may increase.**

       We believe we operate with lower personnel  costs than many larger,  established  airlines,  principally due to
lower base salaries and greater  flexibility in the utilization of personnel,  however,  these costs may increase.  We
may not be able to  continue to realize  these  advantages  over other air  carriers  for an extended  period of time.
Three  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,  our dispatchers  voted in September
1999 to be represented by the Transport  Workers Union,  and our mechanics voted in July 2001 to be represented by the
International  Brotherhood of Teamsters.  The first bargaining  agreement for the pilots, which has a 5-year term, was
ratified and became  effective in May 2000. The first  bargaining  agreement for the  dispatchers,  which has a 3-year
term,  was  ratified  and  became  effective  in  September  2000.  We are in the  process  of  negotiating  the first
bargaining  agreement  with the  Mechanics.  At this  time we are  unable to  predict  when the  negotiations  will be
completed.  In  addition,  since  1997 we have  had  union  organizing  attempts  that  were  defeated  by our  flight
attendants,  ramp service  agents,  and stock  clerks.  We recently  received a letter signed by certain of our flight
attendants  indicating that they are pursuing union  representation.  We have received official  notification from the
National  Mediation  Board of a  representation  application  for  flight  attendants  by the  Association  of  Flight
Attendants.  An  election  has been  authorized  and the  results  will be  announced  in June  2002.  The  collective
bargaining  agreement we have entered into with our pilots  increased our labor and benefit costs  effective May 2000,
and additional unionization of our employees could increase our overall costs.

**We have not paid cash dividends and do not expect to pay any in the foreseeable future.**

         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**

Aircraft
--------

       As of May 24, 2002, we operate 24 Boeing 737 and seven Airbus A319 in all-coach seating configurations.
The age of these aircraft, their passenger capacities and their lease expirations are shown in the following table:

                                                                   Approximate
                                                                   Number of
Aircraft               No. of                Year                  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
A319                     4                    2001-2002             132                    owned
A319                     3                    2001-2002             132                   2013-2014
--------------------------------------------------------------------------------------------------------------------

Facilities
----------

       In January  2001,  we moved our general and  administrative  offices to a new  headquarters  facility near DIA,
where we lease  approximately  70,000 square feet of space for a lease term of 12 years at an average annual rental of
approximately $965,000 plus operating and maintenance expenses.

       The Denver  reservations  facility  relocated in July 2001 to a 16,000  square foot  facility,  also in Denver,
which we have leased for a 10-year lease term at an average  annual rental of  approximately  $140,000 plus  operating
and maintenance  expenses.  In August 2000, we established a second  reservations  center facility 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 $129,000 plus operating and maintenance expenses.

       We have entered into an airport  lease and  facilities  agreement  expiring in 2010 with the City and County of
Denver at DIA for ticket  counter  space,  nine gates and  associated  operations  at a current  annual rental rate of
approximately  $5,717,000  for these  facilities.  We also sublease a portion of Continental  Airlines'  hangar at DIA
until January 1, 2004 for an annual rental of approximately $1,234,000.

       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.  Total annual rent expense for
these  facilities,  excluding  DIA is  approximately  $6,245,000  based on rents  paid  for the  month of March  2002.
Additionally,  we lease  maintenance  facilities in El Paso, Texas and Phoenix,  Arizona at a current annual rental of
approximately $201,000 for these facilities

**Item 3:  Legal Proceedings**

       From time to time, we are engaged in routine  litigation  incidental  to our business.  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
affect upon our business or financial condition.

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

       During the fourth  quarter of the fiscal 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**

       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 May 24, 2002.  Market  quotations  listed here  represent  prices between
dealers and do not reflect retail  mark-ups,  markdowns or commissions.  As of May 24, 2002, there were 881 holders of
record of our common stock.

                                                                 Price Range of
                                                                 Common Stock
                                                                 --------------
                     Quarter Ended                             High         Low
                     -------------                             ----         ---

                     June 30, 2000                           $ 10.34      $ 7.49
                     September 30, 2000                        12.96        9.71
                     December 31, 2000                         20.63       12.92
                     March 31, 2001                            25.50        9.94

                     June 30, 2001                             16.71       10.31
                     September 30, 2001                        15.78        6.77
                     December 31, 2001                         17.40        8.00
                     March 31, 2002                            23.75       17.02

                     June 30, 2001 (through May 24, 2001)      17.95       14.82

**Recent Sales of Securities**

       During the period  April 1, 2001  through  May 24,  2002,  holders of warrants  to  purchase  our common  stock
exercised their warrants and we issued common stock as described below:

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

       Private placement warrant holder                 525,000               $2.50          December 13, 2001

**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.  On March 5, 2001, we paid a fifty percent stock dividend to  shareholders
of record of common stock on February 19, 2001.

**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 (as so amended,  the "Rights
Agreement").  As a result of the fifty  percent  stock  dividend we paid on March 5, 2001,  there are  currently  0.67
Rights associated with each outstanding share of common stock.

       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.

       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 Right,  and the number of Rights  associated with each share of common stock,  are all
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.

**Item 6:  Selected Financial Data**

       The  following  selected  financial  and  operating  data as of and for each of the years ended March 31, 2002,
2001,  2000,  1999,  and 1998  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.

                                                                               Year Ended March 31,
                                                         2002          2001          2000          1999          1998
                                                    ------------------------------------------------------------------------
                                                                    (Amounts in thousands except per share amounts)
 **Statement of Operations Data:**
   Total operating revenues                          $   445,075   $   472,876   $   329,820   $   220,608    $   147,142
   Total operating expenses                              428,689       392,155       290,511       195,928        165,697
   Operating income (loss)                                16,386        80,721        39,309        24,680       (18,554)
   Income (loss) before income tax expense
     (benefit) and cumulative effective change
     in accounting                                        24,832        88,332        43,415        25,086       (17,746)
   Income tax expense (benefit)                            8,282        33,465        16,954        (5,480)         -
   Income (loss) before cumulative effect of
     change in accounting                                 16,550        54,868        26,460        30,566       (17,746)
   Cumulative effect of change of method of
     change in accounting                                    -             -             549          -             -
   Net income (loss)                                      16,550        54,868        27,010        30,566       (17,746)
   Income (loss) per share before cumulative
     effect of a change in accounting:
       Basic                                                0.58          2.02          1.02          1.43         (1.30)
       Diluted                                              0.56          1.90          0.93          1.32         (1.30)
   Net income (loss) per share:
       Basic                                                0.58          2.02          1.04          1.43         (1.30)
       Diluted                                              0.56          1.90          0.95          1.32         (1.30)

 **Balance Sheet Data:**
   Cash and cash equivalents                         $    87,555    $  109,251    $   67,851   $    47,289    $     3,641
   Current assets                                        192,048       199,794       140,361        94,209         33,999
   Total assets                                          413,685       295,317       187,546       119,620         50,598
   Current liabilities                                   152,064       136,159        98,475        68,721         50,324
   Long-term debt                                         66,898           204           329           435          3,566
   Total liabilities                                     244,552       150,538       106,501        75,230         56,272
   Stockholders' equity (deficit)                        169,133       144,779        81,045        44,391        (5,673)
   Working capital (deficit)                              39,984        63,635        41,886        25,488       (16,325)

                                                                               Year Ended March 31,
                                                          2002         2001          2000          1999          1998
                                                    -----------------------------------------------------------------------
**Selected Operating Data:**
Passenger revenue (000s) (2)                         $    435,946   $  462,609    $  320,850   $   214,311   $   142,018
Revenue passengers carried (000s)                           3,069        3,017         2,284         1,664         1,356
Revenue passenger miles (RPMs) (000s) (3)               2,756,965    2,773,833     2,104,460     1,506,597     1,119,378
Available seat miles (ASMs) (000s) (4)                  4,592,298    4,260,461     3,559,595     2,537,503     1,996,185
Passenger load factor (5)                                   60.0%        65.1%         59.1%         59.4%         56.1%
Break-even load factor (1) (6)                              57.6%        52.7%         51.1%         52.4%         63.1%
Block hours (7)                                            92,418       83,742        71,276        52,789        42,767
Departures                                                 41,736       38,556        33,284        25,778        22,257
Average seats per departure                                   132          132           129           125           124
Average stage length                                          834          837           829           787           723
Average length of haul                                        898          919           921           905           826
Average daily block hour utilization (8)                      9.1          9.4           9.9           9.6           9.5
Yield per RPM (cents) (9)                                   15.78        16.66         15.23         14.19         12.68
Total yield per RPM (cents) (10)                            16.14        17.05         15.67         14.64         13.14
Yield per ASM (cents) (11)                                   9.47        10.85          9.00          8.42          7.11
Total yield per ASM (cents) (12)                             9.69        11.10          9.27          8.69          7.37
Expense per ASM (cents) (1)                                  9.33         9.20          8.16          7.72          8.30
Expense per ASM excluding fuel (cents) (1)                   8.00         7.54          6.91          6.82          7.13
Passenger revenue per block hour                     $      4,717   $    5,524    $    4,502   $     4,060   $     3,321
Average fare (13)                                    $        132   $      146    $      134   $       123   $       100
Average Aircraft in service                                  27.8         24.5          19.7          15.0          12.3
Aircraft in service at end of year                           30.0         25.0          23.0          17.0          14.0
Average age of aircraft at end of year                       10.6         11.4          10.5          14.7          16.2
EBITDAR (000s) (14)                                  $    100,403   $  147,179    $   90,583   $    58,848   $     7,437
EBITDAR as a % of revenue                                   22.6%        31.1%         27.5%         26.7%          5.1%

(1)  The  write-down  of  the  carrying  values  of  the  Boeing  737-200  aircraft  parts  totaling  $1,512,000,  the
     stabilization  act  compensation  of  $12,703,000,  and the  unusual  item for the  early  lease  termination  of
     $4,914,000 , during the year ended March 31, 2002,  have been excluded  from the  calculation  of the  break-even
     load factor, expense per ASM and expense per ASM excluding fuel.
(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 number of aircraft days in service,
     divided by the weighted average of aircraft in our fleet during that period.  The number of aircraft includes
     all aircraft on our operating certificate, which includes scheduled aircraft, as well as aircraft out of
     service for maintenance and operation spare aircraft.
(9)  "Yield per RPM" is determined by dividing  passenger  revenues  (excluding  charter revenue) by revenue passenger
     miles.
(10) "Total yield per RPM" is determined by dividing total revenues by revenue passenger miles.
(11) "Yield per ASM" is  determined by dividing  passenger  revenues  (excluding  charter  revenue) by available  seat
     miles.
(12) "Total yield per ASM" is determined by dividing passenger revenues by available seat miles.
(13) "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.
(14) "EBITDAR",  or "earnings before interest,  income taxes,  depreciation,  amortization and aircraft rentals," is a
     supplemental  financial  measurement  many  airline  industry  analysts  and  we use  in  the  evaluation  of our
     business.  However,  EBITDAR should only be read in conjunction  with all of our financial  statements  appearing
     elsewhere  herein,  and should not be construed as an  alternative  either to operating  income (as determined in
     accordance  with generally  accepted  accounting  principles) as an indicator of our operating  performance or to
     cash  flows  from  operating   activities  (as  determined  in  accordance  with  generally  accepted  accounting
     principles)  as a measure of liquidity.  Our  calculation  of EBITDAR may not be  comparable to similarly  titled
     measures reported by other companies.

**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, 2002, 2001,
and 2000.

                                                     2002                      2001                      2000
                                           ---------------------------------------------------------------------------------
                                            Per             %            Per           %            Per             %
                                            total           of           total         of           total           of
                                            ASM             Revenue      ASM           Revenue      ASM             Revenue
                                            ---             -------      ---           -------      ---             -------
  Revenues:

      Passenger                             9.49            97.9%        10.86         97.8%        9.02            97.3%
      Cargo                                 0.14             1.5%         0.18          1.6%        0.19             2.1%
      Other                                 0.05             0.6%         0.06          0.6%        0.06             0.6%
                                           ---------------------------------------------------------------------------------
  Total revenues                         9.68           100.0%        11.10        100.0%        9.27           100.0%

  Operating expenses:

      Flight operations                     4.16            42.9%         4.21         37.9%        3.53            38.1%
      Aircraft and traffic servicing        1.53            15.8%         1.42         12.8%        1.38            14.8%
      Maintenance                           1.53            15.8%         1.54         13.9%        1.41            15.2%
      Promotion and sales                   1.29            13.4%         1.31         11.8%        1.29            14.0%
   General and administrative            0.57             5.9%         0.59          5.3%        0.46             5.0%
      Depreciation and amortization         0.25             2.6%         0.13          1.2%        0.10             1.0%
                                           ----------------------------------------------------------------------------------

  Total operating expenses                  9.33            96.4%         9.20         82.9%        8.16            88.1%
                                          ===================================================================================

**Results of Operations - Year Ended March 31, 2002 Compared to Year Ended March 31, 2001****General**

       We are a scheduled  airline based in Denver, Colorado.  We were organized in February 1994 and we began flight
operations  in July 1994 with two  leased  Boeing  737-200  aircraft.  We have since  expanded  our fleet to 27 leased
aircraft and four purchased Airbus A319 aircraft, comprised of seven Boeing 737-200s, 17 Boeing 737-300s,  and seven
Airbus A319s

       Beginning in May 2001,  we began a fleet  replacement  plan by which we will replace our Boeing  aircraft  with
new purchased and leased Airbus jet aircraft,  a transition we expect to complete by approximately  the second quarter
of calendar  year 2006,  assuming  early lease returns of five of our Boeing  aircraft.  We advanced the return of one
leased Boeing 737-300  aircraft to its owner from April 2002 to September 2001 and two leased Boeing 737-200  aircraft
from September and November 2004 to November 2002 and January 2003.

       During the fiscal year ended March 31, 2002 we added  Houston,  on May 16, 2001,  Reno/Lake  Tahoe,  Nevada and
Austin,  Texas,  on October 1, 2001,  New Orleans,  Louisiana on February 1, 2002,  Sacramento,  California,  and Fort
Lauderdale, Florida on February 26, 2002.

       Small  fluctuations in our yield per revenue  passenger mile ("RPM") or expense per available seat mile ("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.

**Impact of the September 11, 2001 Terrorist Attacks and Our Response**

     Among the effects  experienced by us from the September 11, 2001 terrorist  attacks have been significant  flight
disruption  costs  caused by the  FAA's  temporary  grounding  of the U.S.  airline  industry's  fleet,  significantly
increased  security,  insurance and other costs,  significantly  higher ticket refunds and significantly  reduced load
factors.  These and other  associated  factors  affected our results of operations  particularly  during the last four
months of 2001.

       Immediately  following  the  terrorist  attacks on  September  11, 2001,  we took  several  steps to reduce our
operating  expenses.  We reduced our capacity by  approximately  20%. We also reduced our costs by offering  voluntary
leaves of absences  and early  retirements,  and by  furloughs,  totaling  approximately  405  employees;  by reducing
salaries for our officers by 20 to 40%,  reducing the salaries of 650 other  employees by three to 15%; by eliminating
food service  provided on our flights;  by deferring  nonessential  capital  spending and  significantly  reducing all
nonessential  operating  expenses.  We also have  generally  experienced  lower fuel prices since the end of September
2001.  These cost  savings  were  offset by  increased  security  costs and  higher  insurance  premiums.  We have not
altered the Airbus  delivery  schedule and our intent is to continue with the fleet  transition plan in place prior to
September 11, 2001.

       As of March  31,  2002,  we have  fully  restored  service  to our  pre-September  11,  2001  levels as well as
increased  capacity by  approximately  11.3%.  As of May 24, 2002,  we had recalled  approximately  390 employees as a
result of the  increases  in  capacity,  that  were  phased in  beginning  November  15,  2001,  additional  personnel
requirements for enhanced security  measures,  and maintenance  personnel to provide heavy  maintenance  checks on the
additional  aircraft that will fly the increased  schedule.  In mid December 2001, we restored  essentially all of our
pre  September  11, 2001 food service.  During the three months ended  December 31, 2001,  we reinstated  salaries for
all employees  except pilots,  director level employees and officers.  Pilots,  officers and director level employees'
salaries were reinstated to their pre-September 11, 2001 levels effective January 1, 2002.

       After the events of September  11, 2001,  many  domestic  airlines  began  working with the FAA to increase the
security of aircraft flight decks. A variety of security  enhancements  were introduced,  ranging from Level 1 through
Level 4.  Level 4 has the most  comprehensive  enhancements.  We also began  exploring  additional  security  measures
and, working with our aircraft  manufacturers and the FAA,  developed enhanced flight deck door security measures that
are consistent  with Level 2. All of our Boeing  aircraft are currently  Level 2 compliant.  Our seven Airbus aircraft
are at least Level 2 compliant and,  pending FAA  approvals,  will be Level 4 compliant by  approximately  April 2003.
The federal  government has established  funds from which  participating  airlines are reimbursed to some extent,  not
yet  determined,  for the additional  flight  security  enhancements.  We intend to participate in that  reimbursement
program.

       After  September 11, 2001,  and with the  subsequent  decline in the flying  public's  confidence in air travel
safety and security,  we implemented  several marketing programs designed to assist in restoring  consumer  confidence
in air travel.  These  initiatives  have helped us  experience a slow but steady  increase in load factors and booking
levels.  Some of these initiatives were as follows:

o        Marketing  programs that used direct mail, Internet fare sales, travel agent promotions and enhanced frequent
         flyer program benefits;
o        A community  relations  outreach  program  called Seats for Sharing that offered  complimentary seats to eligible
         non-profit organizations, including schools and religious organizations;
o        Communication  programs that included letters to various school  administrators and employee-led  visits to
         local schools,  as well as increased unpaid media efforts designed to educate and inform the public on increased
         security;
o        An employee  campaign that increased  employee reduced rate "buddy" passes, designed to enable employees to
         encourage their friends and family members to fly again.

       As a result of the September 11 terrorist  attacks,  expansion of our operations,  transition  costs associated
with our fleet  replacement  plan during the year ended March 31,  2002,  the  slowing  economy,  and hail storms that
damaged  five of our  aircraft  earlier in the year,  we do not believe our results of  operations  for the year ended
March 31, 2002 are indicative of future operating results or comparable to the year ended March 31, 2001.

**Results of Operations**

       We had net income of  $16,550,000  or 56(cent)per  diluted  share for the year ended  March 31, 2002 as compared
to net income of  $54,868,000  or $1.90 per diluted share for the year ended March 31, 2001, a decrease of $38,318,000
or 69.9%.  On September  11, 2001,  the FAA  temporarily  suspended  all  commercial  airline  flights as a result of
the terrorist  attacks on the United States.  As a result of this suspension,  we cancelled 407 scheduled flights until
we resumed  operations  on September  14,  2001.  After we resumed  operations, we cancelled 303 additional scheduled
flights through  September 30, 2001 as a result of diminished  consumer demand.  During the year ended March 31, 2002,
our daily average aircraft block hour utilization  decreased to 9.1 from 9.4 during the prior comparable  period ended
March 31, 2001,  as we reduced  approximately  18.2% of departures  originally  scheduled  during that period.  Due to
high fixed costs,  we continued to incur a  significant  portion of our normal  operating  expenses  during the period
from September 11, 2001 through December 31, 2001 and incurred operating losses.

       As a result,  we recognized  $12,703,000 of the federal grant we received under the Act, which  compensates for
direct and  incremental  losses  incurred by air carriers  from  September  11, 2001 through the end of calendar  year
2001. Our fiscal year net income included an after-tax gain of $7,749,000  from the Federal grant program;  a $922,000
write-down,  net of taxes,  for the  carrying  value of spare parts that support our Boeing  737-200A  aircraft and an
unusual  charge of  $2,998,000,  net of taxes,  for the early return of two Boeing  737-200  aircraft.  Without  these
unusual items, we would have reported net income of $12,721,000, or $0.43 per diluted common share.

       During the year ended March 31, 2002,  we took  delivery of our first six Airbus  aircraft.  Because this was a
new aircraft type for us, we were required by the FAA to demonstrate  that our crews were  proficient in flying Airbus
aircraft and that we were capable of properly  maintaining  the aircraft  and related  maintenance  records  before we
placed these aircraft in scheduled  passenger  service.  This process took longer than we originally  had  anticipated
and, as a result,  we were required to cancel scheduled  flights that the first aircraft was scheduled to perform.  We
believe that this delay in receiving  necessary FAA approval,  adversely  affected our passenger revenues and our cost
per ASM during the year ended March 31, 2002.

       Our costs per ASM for the year ended March 31, 2002 was  9.33(cent)and for the year ended March 31, 2001 was
9.20(cent), or an increase of .13(cent) or 1.4%. Costs per ASM excluding fuel for the years ended March 31, 2002 and
2001 were 8.00(cent)and 7.54(cent), respectively, or an increase of .46(cent)or 6.1%. Our cost per ASM increased
during the year ended March 31, 2002 over the prior comparable year principally because of the decreased aircraft
utilization and shorter stage lengths during that period.  These expenses were impacted by the terrorist attacks and
the hail damage to five of our aircraft, or approximately 20% of our fleet, during the year ended March 31, 2002.
During the year ended March 31, 2002, we wrote down the carrying value of spare parts that support the Boeing 737-200
aircraft by $1,512,000 as a result of diminished demand for that aircraft type, resulting in an increase of .03(cent)
per ASM for the period. We incurred short-term lease expenses for substitute aircraft to minimize the number of flight
cancellations while the hail damage to our aircraft was being repaired, additional maintenance expenses for the repair
of the hail damage, and interrupted trip expenses as a result of the number of flight cancellations related to the
aircraft out of service for repair.  During April 2001, the Denver area also experienced an unusual blizzard, which
caused flight cancellations as well as expenses associated with deicing our aircraft.  We estimate that the total
adverse impact on our cost per ASM associated with these unusual weather conditions was .04(cent), or approximately
$1,893,000, for the year ended March 31, 2002.  During the year ended March 31, 2002, we incurred approximately
$4,511,000 in transition expenses associated with the induction of the Airbus aircraft, which had an adverse effect
on our CASM of approximately .10(cent)per ASM.  These include crew salaries; travel, training and induction team
expenses; and depreciation expense.  An increase in pilots' salaries effective  in May 2001 also contributed to the
increase in cost per ASM during the year ended March 31, 2002.  Additionally, due to the flight cancellations as a
result of the September 11 terrorist attacks and these weather conditions, our ASMs were less than we had planned,
which caused our fixed costs to be spread over fewer ASMs and, we believe, distorted our cost per ASM for the period.

       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, 2002,  our  break-even  load factor was 57.6%  compared to our achieved  passenger  load factor of 60.0%.  For the
year ended March 31, 2001,  our break-even  load factor was 52.7%  compared to the passenger  load factor  achieved of
65.1%.  Our  break-even  load factor  increased  for the year ended March 31,  2002 from the prior  comparable  period
largely as a result of a decrease  in our  average  fare to $132 during the year ended March 31, 2002 from $146 during
the year ended  March 31,  2001,  compounded  by an  increase in our expense per ASM to 9.33(cent)for the year ended
March 31, 2002 from 9.20(cent)for the year ended March 31, 2001.

**Revenues**

       Fare pricing  policies  have a  significant  impact on our  revenues.  Because of the  elasticity  of passenger
demand,  we believe that  increases in fares may at certain  levels  result in a decrease in passenger  demand in many
markets.  We cannot  predict  future fare levels,  which  depend to a  substantial  degree on actions of  competitors.
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.

       Effective  February  17,  2002,  the DOT began to  provide  security  services  through  the newly  established
Transportation  Security  Agency and assumed many of the contracts and overseeing  those security  vendors that we and
other  carriers use to provide  airport  security  services.  Additionally,  the DOT will reimburse us, as well as all
other air carriers,  for certain security services  provided by our own personnel.  In order to be able to provide and
fund these security  services,  the DOT has imposed a $2.50 security  service fee per passenger  segment flown, not to
exceed $5.00 for one-way  travel or $10.00 for a round trip,  on tickets  purchased on and after  February 1, 2002. We
are unable to predict the effect that these additional fees may have on future fare or passenger traffic levels.

       Our  average  fare for the year ended  March 31,  2002 was $132 and for the year ended March 31, 2001 was $146.
We believe that the decrease in the average fare during the year ended March 31, 2002 from the prior  comparable  year
was  principally a result of the slowing  economy.  During the year ended March 31, 2001, we  experienced  an increase
in the number of passengers that a major competitor  directed to us because of delays and  cancellations  that airline
experienced.  We  estimate  that the  additional  passenger  traffic  received  from that  airline  had the  effect of
increasing our load factor and average fare for the year ended March 31, 2001 by  approximately  .6 load factor points
and .9%, respectively.

       Passenger  Revenues.  Passenger  revenues  totaled  $435,946,000  for the year ended March 31, 2002 compared to
$462,609,000  for the year ended March 31, 2001, or a decrease of 5.8%, on increased  capacity of 331,837,000  ASMs or
7.8%. The number of revenue  passengers  carried was 3,069,000 for the year ended March 31, 2002 compared to 3,017,000
for the year ended  March 31,  2001 or an increase  of 1.7%.  We had an average of 27.8  aircraft in our fleet  during
the year ended  March 31, 2002  compared  to an average of 24.5  aircraft  during the year ended  March 31,  2001,  an
increase of 13.5%.  RPMs for the year ended March 31, 2002 were  2,756,965,000  compared to 2,773,833,000 for the year
ended March 31,  2001,  a decrease of .6%. We believe  that our  cancelled  flights due to the  terrorist  attacks and
weather had an adverse effect on our revenue during the period.

       Cargo  revenues,  consisting of revenues from freight and mail service,  totaled  $6,624,000 and $7,517,000 for
the years  ended  March 31,  2002 and 2001,  respectively,  representing  1.5% and 1.6% of total  operating  revenues,
respectively,  a decrease of 11.9%.  We believe that our cargo  revenues have been impacted by the slowing  economy as
well as the flight cancellations as a result of the terrorist attacks,  and the resulting  limitations placed on cargo
service as a result of the  terrorist  attacks.  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  $2,505,000 and $2,751,000 or .6% of total  operating  revenues for each of the years ended March 31, 2002 and
2001, respectively.

**Operating Expenses**

       Operating  expenses include those related to flight operations,  aircraft and traffic  servicing,  maintenance,
promotion and sales,  general and  administrative  and depreciation and  amortization.  Total operating  expenses were
$428,689,000 and  $392,155,000,  respectively,  for the years ended March 31, 2002 and 2001, and represented 96.4% and
82.9% of total revenue,  respectively.  Operating  expenses increased as a percentage of revenue during the year ended
March 31, 2002 as a result of the 5.8% decrease in passenger  revenues,  associated  with the slowing  economy and the
September 11  terrorist  attacks.  For a  discussion  of steps we have taken to reduce our expenses as a result of the
September 11, 2001 terrorist attacks, see " Liquidity and Capital Resources" below.

       Flight  Operations.  Flight operations  expenses of $191,041,000 and $179,453,000 were 42.9% and 37.9% of total
revenue for the years ended March 31, 2002 and 2001,  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.  Included  in  flight  operations  expenses  during  the  year  ended  March  31,  2002  are
approximately $2,315,000 for Airbus training and related travel 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  $61,226,000 for 70,530,000 gallons  used and  $71,083,000  for
66,724,000 gallons used resulted in an average fuel cost of 87(cent)and $1.07 per gallon and represented 32.1% and
39.6% of total flight operations expenses for the years ended March 31, 2002 and 2001, respectively.  Fuel prices are
subject to change weekly,  as we do not purchase  supplies in advance for  inventory.  Fuel  consumption  for the year
ended March 31, 2002 and 2001 averaged 763 and 797 gallons per block hour,  respectively.  Fuel consumption  decreased
from the prior  comparable  periods  because of a  decrease  in our load  factors,  the more  fuel-  efficient  Airbus
aircraft  added to our fleet and a newly  developed  fuel  conservation  program  implemented  in  August  2001.  Fuel
consumption also decreased  during the year ended March 31, 2002 from the prior comparable  period also as a result of
decreased use of the Boeing  737-200  aircraft,  which have a higher fuel burn rate than the Boeing 737-300 and Airbus
A319 aircraft.  We do not hedge our fuel expense exposure.

       Aircraft lease expenses  totaled  $64,990,000  (14.6% of total revenue) and $61,194,000  (13% of total revenue)
for the years ended  March 31, 2002 and 2001,  respectively,  or an increase of 6.2%.  The  increase is largely due to
an  increase  in the average  number of  aircraft  to 27.8 from 24.5,  or 13.5%,  during the year ended March 31, 2002
compared  to the same  period in 2001.  During  the year  ended  March 31,  2002,  to  minimize  the  number of flight
cancellations  while our aircraft were being repaired following hail damage, we incurred  short-term lease expenses of
$630,000 for aircraft to partially  replace  capacity of the damaged  aircraft.  During the year ended March 31, 2002,
we also added our first three  owned  Airbus  aircraft  to our fleet.  These  aircraft  do not have  associated  lease
expense.

         Aircraft  insurance  expenses  totaled  $5,324,000 (1.2% of total revenue) for the year ended March 31, 2002.
Aircraft  insurance  expenses  for the year ended  March 31, 2001 were  $3,241,000  (.7% of total  revenue).  Aircraft
insurance expenses were .19(cent)and .12(cent)per RPM for the years ended March 31, 2002 and 2001, respectively.
Aircraft insurance expenses during the year ended March 31, 2002 have not been fully impacted by the result of the
terrorist attacks on September 11, 2001. Our aviation war risk underwriters issued immediately following the events of
September  11, seven days notice of  cancellation  to us. On September 24, 2001,  these  underwriters  reinstated  war
risk  passenger  liability  coverage  but limited  third party bodily  injury and  property  damage to $50 million per
occurrence.  A special  surcharge of $1.25 per passenger  carried was  established  as the premium for this  coverage.
At the same time,  the FAA provided us  supplemental  third party war risk coverage from the $50 million limit to $1.6
billion.  The premium for this  supplemental  coverage is $7.50 per flight  departure and is now set to expire on June
19, 2002, unless renewed by Congress.

       Pilot and flight attendant  salaries before payroll taxes and benefits  totaled  $32,042,000 and $22,475,000 or
7.4% and 4.9% of passenger  revenue for each of the years ended March 31, 2002 and 2001,  or an increase of 42.6%.  In
November 1998, our pilots voted to be represented by an independent  union, the Frontier  Airline Pilots  Association.
The first  bargaining  agreement  for the pilots,  which has a 5-year term,  was  ratified  and made  effective in May
2000. In May 2001, we agreed to reconsider  the current rates of pay under our  collective  bargaining  agreement with
our pilots in part because  several  pilot  unions at other air carriers  received  wage  increases,  which caused our
pilot salaries to be substantially  below those paid by certain of our  competitors.  We submitted a revised pilot pay
proposal to the Frontier  Airline Pilots  Association,  and its members  accepted this proposal and was made effective
May 2001.  Pilot and flight  attendant  compensation  also  increased  as a result of a 13.5%  increase in the average
number of aircraft  in service,  an increase of 10.4% in block  hours,  a general  wage  increase in flight  attendant
salaries,  and additional  crews required  replacing  those  attending  training on the Airbus  equipment.  During the
three months ended  December 31, 2001,  FAPA agreed to an 11% decrease in salaries for all pilots in lieu of furloughs
as a result of the September 11, 2001 terrorist  attacks.  The pilot salary levels were reinstated  effective  January
1, 2002.

       Aircraft and Traffic  Servicing.  Aircraft and traffic servicing  expenses were $70,202,000 and $60,408,000 (an
increase  of 16.3%) for the years  ended March 31, 2002 and 2001,  respectively,  and  represented  15.8% and 12.8% 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  reaccommodate
passengers as well as hotel,  meal and other incidental  expenses.  Aircraft and traffic  servicing  expenses increase
with the addition of new cities and  departures to our route  system.  During the year ended March 31, 2002, we served
30 cities  compared to 23 during the year ended March 31, 2001,  or an increase of 30.4%.  During the year ended March
31, 2002,  our  departures  increased to 41,736 from 38,556 or 8.2%.  Aircraft and traffic  servicing  expenses  were
$1,682 per  departure  for the year ended March 31, 2002 as compared to $1,567 per  departure for the year ended March
31, 2001,  or an increase of $115 per  departure.  Aircraft and traffic  servicing  expenses  increased as a result of
expenses  associated  with  deicing in April  2001 as a result of an  unusual  spring  blizzard,  a general  wage rate
increase and an increase in  interrupted  trip expenses as a result of the number of flight  cancellations  related to
the aircraft out of service for repair of hail damage.  Additionally,  our security expenses  increased  substantially
during the year ended March 31,  2002,  or  approximately  119.7%  greater than those  incurred  during the year ended
March 31, 2001, as a result of the September 11, 2001  terrorist  attacks.  Additionally,  due to the number of flight
cancellations  as a result of  weather  conditions,  as well as the  September  11  terrorist  attacks,  the number of
departures  were less than we had  planned,  which caused our fixed costs to be spread over fewer  departures  thereby
increasingour expenses per departure for the year ended March 31, 2002.

       Effective  February  17,  2002,  the DOT began  providing  security  services  through  the  newly  established
Transportation  Security  Agency or assumed many of the contracts and overseeing  those  security  vendors that we and
other  carriers use to provide  airport  security  services.  Additionally,  the DOT will reimburse us, as well as all
other air carriers,  for certain security services  provided by our own personnel.  In order to be able to provide and
fund these security  services,  the DOT has imposed a $2.50 security  service fee per passenger  segment flown, not to
exceed $5.00 for one-way  travel or $10.00 for a round trip,  on tickets  purchased on and after  February 1, 2002. In
anticipation  that these fees will not be  adequate to cover the costs of the TSA, a security  infrastructure  fee has
been  assessed to all air carriers in an amount equal to the  security  fees paid by each carrier  during the calendar
year ended  December 31,  2000.  The security  infrastructure  fee is expected to be far less than the security  costs
that have been  assumed  by TSA.  As a result of these  actions,  we expect  our  expenses  associated  with  security
services to be  significantly  reduced after February 17, 2002.  During the years ended March 31, 2002 and 2001, total
security related expenses approximated $3,871,000 and $1,762,000, respectively.

       Maintenance.   Maintenance  expenses  for  the  years  ended  March  31,  2002  and  2001  of  $70,227,000  and
$65,529,000, respectively, were 15.8% and 13.9% of total revenue, an increase of 7.2%. 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  checks  expense  are  accrued  monthly.
Maintenance  costs  per block  hour for the years  ended  March 31,  2002 and 2001 were $760 and $783 per block  hour,
respectively.  Maintenance  cost per  block  hour  decreased  during  the year  ended  March  31,  2002 from the prior
comparable  year as a result of decreased  utilization of our Boeing 737-200  aircraft which are older and more costly
to maintain than our other  aircraft.  Additionally,  we added 6 new Airbus  aircraft that are less costly to maintain
than our older Boeing aircraft.  These  maintenance  savings were offset or distorted by several  factors.  During the
year ended March 31,  2002,  we  incurred  approximately  $881,000  for Airbus  training or $10 per block hour.  Also,
during the year ended March 31, 2002,  we decreased  the number of our  departures  as a result of decreased  consumer
demand  for air  travel  and  reduced  the  utilization  of our  Boeing  737-200  aircraft,  which are more  costly to
maintain.  We  also  incurred  increased  costs  in  personnel,  training  and  information  technology  expenses  for
implementation  of  new  maintenance  and  engineering   software  and  in  preparation  for  the  Airbus  transition.
Additionally,  due to the flight  cancellations  as a result of the  September  11  terrorist  attacks and the adverse
spring weather  conditions,  our block hours were less than we had planned,  which caused our fixed costs to be spread
over fewer block hours and, we believe, distorted our cost per block hour for the year ended March 31, 2002.

       Promotion and Sales.  Promotion and sales  expenses  totaled  $59,459,000  and  $55,881,000  and were 13.4% and
11.8% of total  revenue  for the  years  ended  March 31,  2002 and  2001,  respectively.  These  include  advertising
expenses,   telecommunications  expenses,  wages  and  benefits  for  reservationists  and  reservations  supervision,
marketing  management and sales  personnel,  credit card fees,  travel agency  commissions  and computer  reservations
costs.

       During the year ended March 31,  2002,  promotion  and sales  expenses per  passenger  increased to $19.37 from
$18.52 for the year ended March 31, 2001.  Promotion  and sales  increased  per  passenger  over the prior  comparable
year  largely as a result of  increased  advertising  for  additional  fare sales  offered  during the year as well as
advertising  in the new cities we entered this year.  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 3% for the year ended March 31,  2002,  compared to 3.5% for the year
ended March 31, 2001 as a result of the cap we put on commissions  effective  September 2001. With increased  activity
on our web site, our calls per passenger have  decreased.  Because of the increase in web site activity,  as well as a
decrease in long distance  rates,  we  experienced a decrease in  communications  expense.  In July 2000, we opened an
additional  reservations  facility in Las Cruces, New Mexico and simultaneously  terminated an outsourcing  agreement,
which reduced our cost of reservations.

       General and  Administrative.  General and  administrative  expenses for the years ended March 31, 2002 and 2001
totaled $26,174,000 and $25,429,000, and were 5.9% and 5.3% of total revenue,  respectively.  During the years, ended
March  31,  2002  and  2001,  we  accrued  for  employee  performance  bonuses  totaling  $2,521,000  and  $7,009,000,
respectively,  which were .6% and 1.5% of total  revenue,  a decrease  of 64%.  General  and  administrative  expenses
include the wages and  benefits  for several of our  executive  officers and various  other  administrative  personnel
including legal, accounting,  information technology,  aircraft procurement,  corporate  communications,  training and
human resources and other expenses  associated with these  departments.  Employee health  benefits,  accrued  vacation
and bonus expenses,  general  insurance  expenses  including  worker's  compensation,  and write-offs  associated with
credit card and check fraud are also included in general and  administrative  expenses.  We  experienced  increases in
our human  resources,  training  and  information  technology  expenses as a result of an increase in  employees  from
approximately  2,360 in March 2001 to  approximately  2,700 in March 2002,  an increase  of 14.4%.  Also,  the cost of
health  insurance  premiums  increased to $4,239,000  during the year ended March 31, 2002 from $2,166,000  during the
prior comparable  period, an increase of 95.7%.  Because of the increase in personnel,  our health insurance  benefits
expenses and accrued vacation expense  increased  accordingly.  During the year ended March 31, 2002, we also incurred
start-up  costs  associated  with the  implementation  of our  in-house  revenue  accounting  department  which  began
processing effective with April 2002 sales and revenue.

       Depreciation  and  Amortization.  Depreciation  and  amortization  expenses of $11,587,000 and  $5,455,000,  an
increase of 112.4%,  were  approximately  2.6% and 1.2% of total  revenue for the years ended March 31, 2002 and 2001,
respectively.  These expenses  include  depreciation of aircraft and aircraft  components,  office  equipment,  ground
station  equipment  and  other  fixed  assets.  Depreciation  expense  increased  over the  prior  year as a result of
depreciation  expense  associated  with our first three purchased  aircraft,  an increase in our spare parts inventory
including  spare  engines and parts for the Airbus  fleet,  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  $8,447,000 for the year ended March 31, 2002
compared to $7,611,000 for the year ended March 31, 2001.  Interest  income  decreased to $4,388,000  from  $7,897,000
during the year ended March 31,  2002 from the prior year due to a decrease in cash  balances as a result of cash used
for pre-delivery  payments for future purchases of aircraft,  spare parts inventories largely for the new Airbus fleet
and a decrease in interest  rates.  Interest  expense  increased to $3,383,000  for the year ended March 31, 2002 from
$94,000 as a result of interest  expense  associated with the financing of the first three  purchased  Airbus aircraft
received in May, August and September 2001.

       During the year ended March 31, 2002,  we  negotiated  early lease  terminations  on two of our Boeing  737-200
aircraft resulting in a pre-tax charge of $4,914,000 representing the advance payment amounts we agreed upon.

       During the year ended March 31, 2002,  we  recognized  $12,703,000  of the federal grant as a result of the Act
to offset direct and  incremental  losses we experienced  as a result of the terrorist  attacks on September 11, 2001.
We received a total of $17,538,000 as of December 31, 2001; the remaining  $4,835,000  represents  amounts received in
excess of estimated  allowable  direct and  incremental  losses  incurred from September 11, 2001 to December 31, 2001
and is included as a deferred liability on our balance sheet.

       Income Tax Expense.  We accrued  income taxes of  $8,282,000  and  $33,465,000  at 38.7% of taxable  income for
each of the years ended March 31, 2002 and 2001,  respectively.  During the year ended March 31,  2002,  we recorded a
credit to income tax  expense  totaling  $1,327,000.  During  the year ended  March 31,  2001,  we accrued  income tax
expense  at the rate of 38.7%  which  was  greater  than  the  actual  effective  tax  rate of 37.6%  determined  upon
completion  and filing of the income tax  returns in December  2001.  During the year ended  March 31,  2002,  we also
recorded a $441,000  reduction to income tax expense as a result of a review and  revision of state tax  apportionment
factors used in filing our amended state tax returns for 2000.

**Results of Operations - Year Ended March 31, 2001 Compared to Year Ended March 31, 2000**

       We had net income of  $54,868,000  or $1.90 per diluted  share for the year ended March 31, 2001 as compared to
net income of $27,009,000 or 95(cent)per diluted share for the year ended March 31,  2000.  During the year ended March
31, 2001,  as compared to the prior  comparable  period,  we  experienced  higher  average fares and load factors as a
result of  increases  in the number of business  travelers,  a general  increase in fare  levels  including  increases
intended  to offset  increased  fuel  costs,  and an  increase  in the number of  passengers  that a major  competitor
directed to us because of an increase in the number of delays and cancellations that airline  experienced.  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.

       Our costs per ASM for the years ended  March 31, 2001 and 2000  were  9.20(cent)and  8.16(cent), respectively,
or an increase of 1.04(cent)or 12.7%.  Costs per ASM excluding fuel for the years ended March 31, 2001 and 2000
were 7.54(cent)and6.91(cent), respectively, or an  increase of .63(cent)or 9.1%. Our cost per ASM increased during
the year ended March 31, 2001 principally because of increases in the cost of fuel which accounted for .42(cent)per
ASM, aircraft rentals for newer and larger aircraft of .09(cent)per ASM, maintenance expense of .13(cent), and general
and administrative expenses primarily due to accrued bonuses for all employees resulting from increased profitability
and a higher level of employee benefits of .13(cent)per ASM. A general wage rate increase effective in January 2000
and an increase in pilots' salaries effective in May 2000 also contributed to the increase in cost per ASM during the
year ended March 31, 2001.  During the year ended March 31,  2001, two of our aircraft underwent unusually extensive
maintenance checks. This was the first time we were required to perform an annual maintenance check on these aircraft
since they entered our fleet.  During the year ended March 31,  2001, we also performed "D"checks on two of our aircraft
for which reserves paid to the lessor were not adequate to fully recover the expenses.

         For the year ended March 31, 2001,  our break-even  load factor was 52.7% compared to our achieved  passenger
load  factor of 65.1%.  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%.  Our break-even  load factor  increased  over the prior  comparable  period
largely as a result of an  increase  in our cost per ASM to 9.20(cent)for the year ended March 31, 2001 from 8.16(cent)
for the year ended March 31,  2000, offset by an increase in our average fare to $146 during the year ended March 31,
2001 from $134 during the year ended March 31, 2000, and an increase in our total yield per RPM from 15.67(cent)for
the year ended March 31, 2000 to 17.05(cent)for the year ended March 31, 2001.

**Revenues**

       Our average  fares for the years ended  March 31,  2001 and 2000 were $146 and $134,  respectively.  We believe
that the  increase in the average  fare  during the year ended March 31, 2001 over the prior  comparable  period was a
result of  increases  in the number of business  travelers,  a general  increase in fare  levels  including  increases
intended  to offset  increased  fuel  costs,  and an  increase  in the number of  passengers  that a major  competitor
directed  to us because  of an  increase  in the  number of delays and  cancellations  that  airline  experienced.  We
estimate that the additional  passenger  traffic  received from that airline had the effect of increasing  each of our
average fare and load factor by approximately .9% and .6%, respectively, for the year ended March 31, 2001.

       Passenger  Revenues.  Passenger  revenues  totaled  $462,609,000  for the year ended March 31, 2001 compared to
$320,850,000  for the year ended March 31, 2000, or an increase of 44.2%,  which  exceeded the 19.7%  increase in ASMs
of 700,866,000.  The number of revenue  passengers carried was 3,017,000 for the year ended March 31, 2001 compared to
2,284,000  for the year ended  March 31,  2000 or an  increase  of 32.1%.  We had an average of 24.5  aircraft  in our
fleet  during the year ended March 31, 2001  compared to an average of 19.7  aircraft  during the year ended March 31,
2000, an increase  24.4%.  RPMs for the year ended March 31, 2001 were  2,773,833,000  compared to  2,104,460,000  for
the year ended March 31,  2000,  an increase of 31.8%.  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.

       Cargo  revenues,  consisting of revenues from freight and mail service,  totaled  $7,517,000 and $6,856,000 for
the years  ended  March 31,  2001 and 2000,  respectively,  representing  1.6% and 2.1% of total  operating  revenues,
respectively,  an increase of 9.6%.  During July 2000 we performed  an audit of our contract  cargo sales and services
provider.  The audit  disclosed  that for a 15 month period  between  January 1, 1999 and March 31, 2000 both cash and
credit card sales were  remitted to us by our  services  provider,  even  though we had  collected  for the cash sales
directly from our customer.  We therefore  adjusted cargo revenue  downward  $423,000  during the year ended March 31,
2001.  Had the  adjustment  been  recorded  during the year ended March 31,  2000  instead of the year ended March 31,
2001,  cargo  revenue  would  have been  $7,940,000  and  $6,433,000  for the  years  ended  March 31,  2001 and 2000,
respectively, an increase of 23.4%.

       Other  revenues,  comprised  principally  of interline  handling  fees,  liquor sales and excess  baggage fees,
totaled  $2,751,000 and $2,114,000 or .6% of total  operating  revenues for each of the years ended March 31, 2001 and
2000, respectively.

**Operating Expenses**

       Total operating expenses were $392,155,000 and $290,511,000,  respectively,  for the years ended March 31, 2001
and  2000,  and  represented  82.9%  and 88.1% of total  revenue,  respectively.  Operating  expenses  decreased  as a
percentage  of revenue  during the year ended March 31, 2001 as a result of the 44.2%  increase in passenger  revenues
attributable  to a 32.1%  increase in passengers and a 9.0% increase in the average fare offset by a 33.9% increase in
the average  cost per gallon of fuel,  a general  wage rate  increase  which  became  effective  in January  2000,  an
increase  in  pilots'  salaries  effective  in May  2000,  and an  increase  in  accrued  bonuses  based on  increased
profitability.

       Flight  Operations.  Flight operations expenses of $179,453,000 and $125,536,000 were 37.9% and 38.1% of total
revenue for the years ended March 31, 2001 and 2000,  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 costs of $71,083,000  for 66,724,000  gallons used and  $44,402,000  for 55,568,000  gallons used
resulted in an average fuel cost of $1.07 and 79.9(cent)per gallon  and represented 39.6% and 35.4% of total flight
operations  expenses  for the years  ended  March 31, 2001 and 2000,  respectively.  The average  fuel cost per gallon
increased  for the year ended  March 31,  2001 from the  comparable  prior  period due to an overall  increase  in the
market  price of fuel.  Fuel  prices are  subject  to change  weekly as we do not  purchase  supplies  in advance  for
inventory.  Fuel  consumption for the years ended March 31, 2001 and 2000 averaged 797 and 780 gallons per block hour,
respectively.  Fuel consumption  increased over the prior comparable  period because of an increase in our load factor
from 59.1% to 65.1%.  Additionally,  we returned  five aircraft to the lessor during the year ended March 31, 2000 and
replaced them with four aircraft that are larger and have a greater fuel burn rate.

       Aircraft lease expenses  totaled  $61,194,000  (13% of total revenue) and $47,945,000  (14.5% of total revenue)
for the years ended March 31, 2001 and 2000,  respectively,  or an increase of 27.6%.  The increase is principally due
to an  increase in the average  number of aircraft to 24.5 from 19.7,  or 24.4%,  during the year ended March 31, 2001
compared to the same period in 2000.

Aircraft insurance expenses totaled $3,241,000 (.7% of total revenue) for the year ended March 31, 2001.  Aircraft
insurance expenses for the year ended March 31, 2000 were $2,689,000 (.8% of total revenue). Aircraft insurance
expenses were .12(cent)and .13(cent)per RPM for the years ended March 31, 2001 and 2000, 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  $22,475,000 and $15,392,000 or
4.9% and 4.8% of  passenger  revenue  for each of the years  ended  March 31,  2001 and 2000,  or an  increase of 46%.
Pilot and flight attendant  compensation  increased  principally as a result of a 24.4% increase in the average number
of aircraft in service,  general wage rate  increases,  and a 17.5%  increase in block hours.  In November  1998,  our
pilots  voted to be  represented  by an  independent  union,  the  Frontier  Airline  Pilots  Association.  The  first
bargaining agreement for the pilots, which has a 5-year term, was ratified and made effective in May 2000.

       Aircraft and Traffic  Servicing.  Aircraft and traffic servicing  expenses were $60,408,000 and $48,955,000 (an
increase  of 23.4%) for the years  ended March 31, 2001 and 2000,  respectively,  and  represented  12.8% and 14.8% of
total  revenue.  During the year ended March 31, 2001, we served 23 cities  compared to 21 during the year ended March
31,  2000,  or an increase of 9.5%.  During the year ended March 31,  2001,  our  departures  increased to 38,556 from
33,284 or 15.8%.  Aircraft  and traffic  servicing  expenses  were $1,567 per  departure  for the year ended March 31,
2001 as  compared to $1,471 per  departure  for the year ended March 31,  2000,  or an increase of $96 per  departure.
Aircraft and traffic  servicing  expenses  increased as a result of a general wage rate increase  effective in January
2000,  contract  ground  handling  services in certain of the cities we serve as a result of increased  frequencies in
existing  markets and  introduction of service to new cities,  and increased per passenger  charges as a result of the
greater number of passengers we carried.  These  increases  were offset by a decrease in interrupted  trip expenses as
a result of an  improvement  in our  completion  factor  from 98.6% for the year ended March 31, 2000 to 99.2% for the
year ended March 31, 2001.

       Maintenance.   Maintenance  expenses  for  the  years  ended  March  31,  2001  and  2000  of  $65,529,000  and
$50,239,000,  respectively,  were  13.9% and 15.2% 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 expenses are accrued monthly.  Maintenance  costs
per  block  hour for the  years  ended  March 31,  2001 and 2000  were  $783 and $705 per  block  hour,  respectively.
Maintenance  cost per block hour increased as a result of increased  facilities  rentals to satisfy  additional  space
requirements  for the increase in aircraft  coupled with an increase in the number of aircraft  simultaneously  out of
service for heavy  maintenance,  and a general wage rate increase  effective January 2000.  Because of the increase in
the number of aircraft out of service for heavy maintenance,  our average daily block hour utilization  decreased from
9.9 for the year  ended  March 31,  2000 to 9.4 for the year ended  March 31,  2001.  During the year ended  March 31,
2001, two of our aircraft experienced  unusually extensive  maintenance checks.  During the year ended March 31, 2001,
we  also  performed  "D"  checks  on two of our  aircraft  for  which  maintenance  reserves  paid to the  lessor  for
reimbursement  of these events did not cover the associated  expense.  These were the first occasions we were required
to perform annual  maintenance  checks on these aircraft since they entered our fleet.  Additionally,  during the year
ended March 31, 2001, we accrued an additional  $1,276,000  ($15 per block hour) for engine  reserves based on revised
cost estimates and a revised schedule of engine  overhauls.  We also incurred  increased costs in personnel,  training
and  information  technology  expenses  for  implementation  of  new  maintenance  and  engineering  software  and  in
preparation  for the Airbus  aircraft  transition.  In January 2001, a lease for spare aircraft parts expired,  and we
purchased these parts for $2,500,000.  During the year ended March 31, 2001, we incurred  $1,241,000 of lease expenses
associated with this lease, included in maintenance expenses, or $15 per block hour.

       Promotion and Sales.  Promotion and sales  expenses  totaled  $55,881,000  and  $46,014,000  and were 11.8% and
14.0% of total  revenue  for the years  ended  March 31, 2001 and 2000,  respectively.  Promotion  and sales  expenses
decreased as a  percentage  of revenue for the nine months ended  December 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,  2001,  promotion  and sales  expenses per  passenger  decreased to $18.52 from
$20.15 for the year ended March 31, 2000.  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 3.5% for the year ended  March 31,  2001,  compared  to 4.4% for the year ended  March 31,  2000.  The  decrease in
travel agency  commissions  was offset by increased  commission  expense  associated  with the increase in our average
fares  as we do not  cap  commissions.  With  increased  activity  on our web  site,  our  calls  per  passenger  have
decreased.  Because  of the  increase  in web  site  activity,  as  well as a  decrease  in long  distance  rates,  we
experienced a decrease in  communications  expense.  In July 2000, we opened an  additional  reservations  facility in
Las  Cruces,  New  Mexico  and  simultaneously  terminated  an  outsourcing  agreement,  which  reduced  our  cost  of
reservations.  These cost savings were offset by an increase in credit card fees  associated  with the increase in our
average fare from $134 for the year ended March 31, 2000 to $146 for year ended March 31, 2001.

       General and  Administrative.  General and  administrative  expenses for the years ended March 31, 2001 and 2000
totaled $25,429,000 and $16,327,000,  and were 5.3% and 5.0% of total revenue,  respectively.  During the years, ended
March  31,  2001  and  2000,  we  accrued  for  employee  performance  bonuses  totaling  $7,009,000  and  $2,605,000,
respectively,  which  were  1.5% and .8% of total  revenue,  an  increase  of  169.1%.  Employee  performance  bonuses
increased  over the prior  comparable  period as a result of our increased  profitability  and an  enhancement  to the
bonus program.  We experienced  increases in our human resources,  training and information  technology  expenses as a
result of an increase  in  employees  from  approximately  2,067 in March 2000 to 2,362 in March 2001,  an increase of
14.3%.  We also  experienced  personnel  increases  for  aircraft  procurement  as a result of the  purchase and lease
agreements  for Airbus  aircraft.  Because of the increase in personnel,  our health  insurance  benefit  expenses and
accrued vacation  expense  increased  accordingly.  During the year ended March 31, 2001, our accrued vacation expense
increased  as a result of the  increase  in pilot  salaries  and  vacation  benefits  due to a  collective  bargaining
agreement concluded with the pilots' union effective in May 2000.

       Depreciation  and  Amortization.  Depreciation  and  amortization  expenses of $5,455,000  and  $3,440,000,  an
increase  of 58.6%,  were  approximately  1.2% and 1.0% of total  revenue for the years ended March 31, 2001 and 2000,
respectively.  These expenses include  depreciation of office  equipment,  station ground  equipment,  and other fixed
assets.  Depreciation  and  amortization  expenses  increased  over the prior year as a result of an  increase  in our
spare parts inventory including a spare engine,  leasehold improvements  associated with 14 aircraft (eight additional
and six  replacement)  added to our fleet  during the past 21 months,  ground  handling  equipment,  and  computers to
support new employees as well as replacement computers for those with dated technology.

       Nonoperating  Income (Expense).  Net nonoperating  income totaled  $7,611,000 for the year ended March 31, 2001
compared to $4,105,000 for the year ended March 31, 2000.  Interest  income  increased  from  $4,335,000 to $7,897,000
during the year ended  March 31,  2001 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.

       Income Tax  Expense  (Benefit).  We accrued  income  taxes of  $33,465,000  and  $16,954,000  at 39% of taxable
income during the years ended March 31, 2001 and 2000, respectively

       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  routine  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.

**Liquidity and Capital Resources**

       Our liquidity  depends to a large extent on the number of  passengers  who fly with us and the fares we charge.
Also,  we depend on financing to acquire many of our aircraft,  including 14 aircraft  scheduled for delivery by 2005.
We incurred  $72,000,000  in debt during the year ended March 31, 2002 to finance  three Airbus  aircraft.  We seek to
control our operating costs, but our airline, like other airlines, has many fixed costs.

       We had cash and cash  equivalents and short-term  investments of $89,555,000 and $111,251,000 at March 31, 2002
and 2001,  respectively.  At March 31, 2002,  total current assets were  $192,048,000  as compared to  $152,064,000 of
total current  liabilities,  resulting in working  capital of  $39,984,000.  At March 31, 2001,  total current  assets
were  $199,794,000  as  compared  to  $136,159,000  of total  current  liabilities,  resulting  in working  capital of
$63,635,000.  The  decrease  in our cash and working  capital  from March 31, 2001 is largely a result of cash used by
investing activities,  principally as a result of a net increase in pre-delivery  payments totaling  $16,148,000,  the
purchase of our first three Airbus aircraft and spare parts for the new Airbus fleet.

       Cash  provided  by  operating  activities  for  the  year  ended  March  31,  2002  was  $40,294,000.  This  is
attributable  to our net income for the  period,  increase in  deferred  tax  expense,  and  increases  in air traffic
liability,  other  accrued  expenses,  accrued  maintenance  expenses,  and  deferred  rent,  offset by  increases  in
restricted  investments,  security,  maintenance  and other  deposits,  and  inventories,  and  decreases  in accounts
payable.  Also,  included in cash provided by  operations  is  $4,835,000  of amounts  received in excess of allowable
direct and  incremental  losses  reimbursable  under the Act incurred  from  September  11, 2001 to December 31, 2001.
This amount also is included as a liability  on our balance  sheet as of March 31,  2002.  Cash  provided by operating
activities  for the year  ended  March 31,  2001 was  $72,526,000.  This is  attributable  to our net  income  for the
period,  decreases in  receivables  and increases in accrued  expenses,  income taxes payable and accrued  maintenance
expense,  offset by increases in restricted  investments,  security,  maintenance and other deposits,  and inventories
and decreases in accounts payable and air traffic liability.

       Cash used by investing  activities for the year ended March 31, 2002 was  $134,529,000.  Net aircraft lease and
purchase deposits  increased by $17,483,000.  During the year ended March 31, 2002, we exercised  purchase options for
three Airbus A319 aircraft,  and advanced their delivery dates from the third and fourth calendar  quarters of 2004 to
May and June 2002,  which required  deposits of  $9,603,000.  Additionally,  we amended the purchase  agreement to add
two additional firm Airbus A319 aircraft,  for delivery in December 2002, which required  additional deposits in March
2002 of  $3,602,000.  We also used  $118,183,000  for the purchase of our first three Airbus  aircraft and to purchase
rotable  aircraft  components to support the Airbus fleet,  as well as a spare engine for the Boeing fleet,  leasehold
improvements for our new reservations  center,  computer  software for the new maintenance and accounting  systems and
other  general  equipment  purchases.  Cash  used by  investing  activities  for the year  ended  March  31,  2001 was
$34,339,000.  We  had  maturities  of  $13,760,000  in  short-term  investments,   net  of  purchases,   comprised  of
certificates  of deposit and  government-backed  agencies with  maturities of one year or less.  During the year ended
March 31, 2001, we made cash security deposits and aircraft  pre-delivery  payments totaling $22,811,000 and increased
restricted  investments by $3,331,000  associated with two leased Boeing 737-300  aircraft  delivered  during the year
ended March 31, 2001, the 16 Airbus  aircraft we have agreed to lease with delivery dates  beginning in June 2001, and
the 12 Airbus  aircraft we have  agreed to  purchase  with  delivery  dates  which began in May 2001.  During the year
ended March 31, 2001, we used $21,957,000 for capital  expenditures for rotable aircraft components  including initial
provisioning  for aircraft  components and certain buyer  furnished  equipment for the Airbus  aircraft  deliveries in
2001;  maintenance  equipment and tools;  aircraft  leasehold costs and improvements;  computer equipment and software
for  enhancements to our internet  booking site and our reservation  system,  a replacement  maintenance  system;  and
leasehold  improvements to our new reservations  center in Las Cruces, New Mexico, and our new headquarters in Denver,
Colorado.

       Cash  provided by  financing  activities  for the years ended March 31,  2002 and 2001,  were  $72,538,000  and
$3,213,000,  respectively.  During the year ended March 31, 2002, we borrowed  $72,000,000  to finance the purchase of
our first three Airbus  aircraft,  of which  $1,942,000  was repaid  during the year ended March 31, 2002.  During the
years  ended March 31, 2002 and 2001,  we received  $3,184,000  and  $3,326,000,  respectively,  from the  exercise of
common stock  options and  warrants.  In April 1998,  we issued a warrant to purchase  1,075,393  shares of our common
stock at a purchase  price of $2.50 per share.  During the years  ended March 31,  2002 and 2001,  the warrant  holder
purchased 525,000 and 550,393 shares,  respectively,  of our common stock under this warrant resulting in net proceeds
to us of $1,312,000 and $1,376,000, respectively.

**Contractual Obligations**

       The following table summarizes our contractual obligations as of March 31, 2002:

                                             Less than             1-3              4-5              After
                                               1 year             years            years            5 years               Total
                                           -----------------------------------------------------------------------------------------------

Long-term debt (1)                         $  3,226,000      $    7,082,000     $  8,081,000     $ 51,669,000       $   70,058,000
Capital lease obligations                       153,000              68,000           -                 -                  221,000
Operating leases (2) (4)                     78,609,000         144,219,000      125,581,000      357,895,000          706,304,000
Unconditional purchase obligations (3)      196,000,000         210,200,000           -                 -              406,200,000
                                           -----------------------------------------------------------------------------------------------
Total contractual cash obligations         $287,087,000         375,971,000      147,552,000      433,133,000        1,243,743,000
                                           ===============================================================================================

(1)  In May 2001,  we entered  into a credit  agreement to borrow up to  $72,000,000  for the purchase of three Airbus
     aircraft with a maximum  borrowing of $24,000,000  per aircraft.  Each aircraft loan has a term of 120 months and
     is payable in equal  monthly  installments,  including  interest,  payable in arrears.  The aircraft  secures the
     loans.  The credit  agreement  contains  certain  events of default,  including  events of default for failure to
     make payments when due or to comply with  covenants in the  agreement.  As of March 31, 2002, we had  $70,058,000
     of debt  outstanding for purchase of these three Airbus  aircraft.  Each loan provides for monthly  principal and
     interest  payments  ranging from  $207,579 to $218,109,  bears  interest  with rates ranging from 6.05% to 6.71%,
     averaging 6.43% for the three aircraft loans,  with maturities in May, August,  and September 2011, at which time
     a balloon payment totaling  $10,200,000 is due with respect each aircraft loan.

(2)  As of March 31, 2002,  we lease three Airbus 319 type aircraft and 24 Boeing 737 type  aircraft  under  operating
     leases with  expiration  dates  ranging  from 2002 to 2014.  Under  these  leases,  we are  required to make cash
     security  deposits  or issue  letters  of credit  representing  approximately  two months of lease  payments  per
     aircraft.  At March 31,  2002,  we had made cash  security  deposits  and had arranged for issuance of letters of
     credit  totaling  $5,293,000 and $9,487,000,  respectively.  Accordingly,  our restricted  cash balance  includes
     $9,487,000 that  collateralizes the outstanding  letters of credit.  Additionally,  we make deposits to cover the
     cost of major  scheduled  maintenance  overhauls  of these  aircraft.  These  deposits are based on the number of
     flight hours flown and/or  flight  departures  and are not included as an obligation  in the above  schedule.  At
     March 31, 2002,  we had  remaining  unused  maintenance  deposits of  $51,055,000  classified  as an asset on our
     balance sheet.

     As a complement  to our Airbus  purchase  agreement,  in April and May 2000 we signed two  agreements to lease 16
     new Airbus  aircraft,  for a term of 12 years,  three of which had been  delivered to us as of March 31, 2002. As
     of March 31, 2002,  we had made cash  security  deposits on the  remaining 13 aircraft we agreed to lease and had
     arranged  for  issuance of letters of credit  totaling  $400,000 and  $2,471,000,  respectively,  to secure these
     leases

     We also lease office and hangar  space,  spare  engines and office  equipment  for our  headquarters  and airport
     facilities,  and certain other  equipment  with  expiration  dates ranging from 2002 to 2014. In addition we also
     lease  certain  airport  gate  facilities  on  a  month-to-month   basis.  Amounts  for  leases  that  are  on  a
     month-to-month basis are not included as an obligation in the above schedule.

     We  expect,  in the near  future,  to embark on a program to expand our gates,  ticket  counter  and back  office
     facilities at DIA.  The actual cost of completing such a plan has yet to be determined.

(3)  We have  adopted  a fleet  replacement  plan to phase  out our  Boeing  737  aircraft  and  replace  them  with a
     combination  of Airbus A319 and A318  aircraft.  In March 2000,  we entered into an  agreement,  as  subsequently
     amended,  to purchase up to 31 new Airbus aircraft.  Included in the purchase  commitment  amount are amounts for
     spare aircraft  components to support the aircraft.  We are not under any  contractual  obligations  with respect
     to spare  parts.  We have agreed to firm  purchases of 17 of these  aircraft,  and have options to purchase up to
     an  additional 14 aircraft.  During the year ended March 31, 2002, we took delivery of the first three  purchased
     aircraft.  Under the terms of the purchase  agreement,  we are required to make scheduled  pre-delivery  payments
     for these  aircraft.  These payments are  non-refundable  with certain  exceptions.  As of March 31, 2002, we had
     made  pre-delivery  payments on future  deliveries  totaling  $44,659,000  to secure  these  aircraft  and option
     aircraft.  We expect to be operating up to 37  purchased  and leased  Airbus  aircraft,  by the first  quarter of
     calendar 2005.

     As  discussed  previously,  we have  secured a financing  commitment  for the first three  purchased  Airbus A319
     aircraft.  We have  recently  signed a term sheet with a European  bank to provide debt  financing for two of our
     seven A319  aircraft  scheduled  for delivery  from Airbus in fiscal year 2003,  one of which was financed in May
     2002.  The  terms  permit  us to  borrow  up to  $51,100,000  over a period  of 120  months  at either a fixed or
     floating  interest  rate with a $7,600,000  balloon  payment due at  maturity.  We are also in  discussions  with
     several  other  European  banks  for  the  debt  financing  of the  remaining  fiscal  year  2003  A319  aircraft
     deliveries.  The additional  amount of financing  required will depend on the number of aircraft purchase options
     we exercise and our cash position  prior to delivery of the aircraft.  While we believe that such  financing will
     be available to us, there can be no assurance,  particularly in view of the September 11 terrorist attacks,  that
     financing  will be available  when  required,  or on acceptable  terms.  The  inability to secure such  financing
     could  result in delays in or our  inability  to take  delivery of Airbus  aircraft  we have agreed to  purchase,
     which would have a material adverse effect on us.

**Commercial Commitments**

       As we enter new markets,  increase the amount of space leased,  or add leased  aircraft,  we are often required
to provide the lessor with a letter of credit,  bond, or cash security  deposits.  These  generally  approximate up to
three  months of rent and  fees.  As of March  31,  2002,  we had  outstanding  letters  of  credit,  bonds,  and cash
security  deposits  totaling  $12,636,000,   $2,351,000,  and  $5,937,000,   respectively.  In  order  to  meet  these
requirements,  we have a credit  agreement with a financial  institution,  for up to $1,500,000,  which expires August
31, 2002, and another credit  agreement  with a second  financial  institution  for up to  $20,000,000,  which expires
November  30,  2002.  These  credit  lines can be used  solely  for the  issuance  of standby  letters of credit.  Any
amounts drawn under the credit agreements are fully  collateralized  by certificates of deposit,  which are carried as
restricted  investments  on our balance  sheet.  As of March 31, 2002,  we have drawn  $12,636,000  under these credit
agreements  for  standby  letters  of credit  that  collateralize  certain  leases.  In the event  that  these  credit
agreements are not renewed beyond their present  expiration  dates,  the certificates of deposit would be redeemed and
paid to the various lessors as cash security  deposits in lieu of standby  letters of credit.  As a result there would
be no  impact  on our  liquidity  if these  agreements  were not  renewed.  In the  event  that the  surety  companies
determined  that  issuing  bonds on our  behalf  were a risk they were no longer  willing to  underwrite,  we would be
required to collateralize  certain of these lease  obligations  with either cash security  deposits or standby letters
of credit, which would decrease our liquidity.

       We use Airlines  Reporting  Corporation to provide  reporting and  settlement  services for travel agency sales
and other related  transactions.  In order to maintain the minimum bond (or irrevocable  letter of credit) coverage of
$100,000,  ARC requires  participating  carriers to meet, on a quarterly basis,  certain  financial tests such as, but
not limited to, net profit margin  percentage,  working capital ratio, and percent of debt to debt plus equity.  As of
March 31, 2002,  we met these  financial  tests and  presently  are only  obligated  to provide the minimum  amount of
$100,000 in coverage to ARC.  If we were to fail the minimum  testing  requirements,  we would be required to increase
our bonding  coverage to four times the weekly  agency net cash sales  (sales net of refunds and agency  commissions).
Based on net cash  sales  remitted  to us for the  week  ended  May 10,  2002,  the  coverage  would be  increased  to
$1,834,000  if we failed the tests.  If we were unable to increase  the bond amount as a result of our then  financial
condition,  we could be  required  to issue a letter of credit  that  would  restrict  cash in an amount  equal to the
letter of credit.

       In  attempting  to maximize the  efficiency  of our fleet  replacement  plan; we continue to endeavor to return
certain  leased B737  aircraft to their owners on dates before the  currently  scheduled  lease  expiration  dates for
these  aircraft.  We returned  one Boeing  aircraft  during the year ended March 31,  2002.  If we early  return these
aircraft from service and are unable to sublease  these aircraft to third parties,  we may incur  additional  expense,
or pay the lessor all or a portion of the remaining  lease  payments,  that could result in a charge against  earnings
in the period in which the  agreement is entered  into.  We have entered into an agreement to early return two 737-200
aircraft to the  lessor,  for which we have  recorded an unusual  charge or  approximately  $3,000,000,  net of income
taxes, against earnings in our year ended March 31, 2002.

**Critical Accounting Policies**

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

       Critical  accounting  policies are defined as those that are both  important to the  portrayal of our financial
condition  and results,  and require  management  to exercise  significant  judgments.  Our most  critical  accounting
policies are described  briefly below. For additional  information  about these and our other  significant  accounting
policies, see Note 1 of the Notes to the Financial Statements.

 **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 overhaul 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.  The Company also
accrues for major airframe  maintenance  checks,  landing gear overhauls and engine  overhauls on its owned  aircraft.
Accrued  maintenance  expense expected to be incurred beyond one year is classified as long-term.  The amounts accrued
for  maintenance  are based on  estimates  of the time  required to complete  the  procedures  and cost of parts used.
Additional maintenance accruals may be required of these estimates prove to be inadequate.

**Revenue Recognition**

         Passenger,  cargo,  and other  revenues  are  recognized  when the  transportation  is  provided or after the
tickets  expire,  one year after  date of  issuance,  and are net of excise  taxes,  passenger  facility  charges  and
security  fees.  Revenues  that have been  deferred  are  included in the  accompanying  balance  sheet as air traffic
liability.

**New Accounting Standards**

         In June 2001, the Financial  Accounting  Standards  Board ("FASB") issued  Statement of Financial  Accounting
Standards No. 141,  "Business  Combinations"  which requires the use of the purchase  method and eliminates the option
of using the  pooling-of-interests  method  of  accounting  for all  business  combinations.  The  provisions  in this
statement apply to all business combinations  initiated after June 30, 2001, and all business  combinations  accounted
for using the  purchase  method  for  which  the date of  acquisition  is July 1,  2001,  or  later.  This  accounting
pronouncement presently has no impact on the Company as it does not have any business combinations planned.

        In June 2001,  the FASB issued  Statement of  Financial  Accounting  Standards  No. 142,  "Goodwill  and Other
Intangible  Assets" (SFAS 142) which  requires that all  intangible  assets  acquired,  other than those acquired in a
business  combination,  be initially  recognized  and measured  based on the asset's fair value.  Goodwill and certain
identifiable  intangible  assets are not to be amortized  under SFAS 142, but instead are reviewed for  impairment  at
least annually in accordance  with the provisions of this  statement.  We are required to adopt the provisions of SFAS
142  effective  April  1,  2002.  This  accounting  pronouncement  will  have no  impact  on us as we do not  have any
intangible assets on our balance sheet.

         In June 2001, the FASB issued  Statement of Financial  Accounting  Standards No. 143,  "Accounting  for Asset
Retirement  Obligations"  (SFAS 143), which addresses  financial  accounting and reporting for obligations  associated
with the retirement of tangible  long-lived  assets and the associated  asset  retirement  costs. The standard applies
to  legal  obligations  associated  with the  retirement  of  long-lived  assets  that  result  from the  acquisition,
construction,  development  and/or  normal use of the asset.  SFAS 143 requires that the fair value of a liability for
an asset  retirement  obligation be recognized in the period in which it is incurred if a reasonable  estimate of fair
value can be made. The fair value of the liability is added to the carrying  amount of the  associated  asset and this
additional  carrying  amount is depreciated  over the life of the asset.  The liability is accreted at the end of each
period through  charges to operating  expense.  If the obligation is settled for other than the carrying amount of the
liability,  it will  recognize a gain or loss on  settlement.  We do not expect the impact of adopting  SFAS 143 to be
significant.

         In October 2001, the FASB issued  Statement of Financial  Standards No. 144,  Accounting  for the Impairment
or Disposal of Long-Lived  Assets (SFAS 144), which addressed  financial  accounting and reporting for the impairment
or disposal of long-lived  assets.  While SFAS 144  supersedes  SFAS 121, Accounting for the Impairment of Long-Lived
Assets  and for  Long-Lived  Assets  to be  Disposed  of,  it  retains  many  of the  fundamental  provisions  of that
Statement.  SFAS 144 also  supersedes  the accounting  and reporting  provisions of APB Opinion No. 30,  Reporting the
Results of  Operations-Reporting  the Effects of Disposal of A Segment of a Business,  and Extraordinary,  Unusual and
Infrequently  Occurring  Events and  Transactions,  for the disposal of a segment of a business.  We do not expect the
impact of adopting SFAS 144 to be significant.

**September 11, 2001 Terrorist Attacks and Fiscal Year 2003 First Quarter Outlook**

       The impact of the terrorist  attacks of September 11, 2001 and their aftermath on us and the domestic  economy,
and the  sufficiency of our financial  resources to absorb that impact will depend on a number of factors,  including:
(i) the  magnitude  and duration of the adverse  impact of the  terrorist  attacks on the economy in general,  and the
airline industry in particular;  (ii) our ability to reduce our operating costs and conserve our financial  resources,
taking into  account  the  increased  costs we will incur as a  consequence  of the  attacks,  (iii) the higher  costs
associated  with new  airline  security  directives  and any other  increased  regulation  of air  carriers;  (iv) the
significantly  higher  costs of aircraft  insurance  coverage  including  coverage  for claims  caused by acts of war,
terrorism,  sabotage,  hijacking and other similar perils,  and the extent to which such insurance will continue to be
available;  (v) our ability to raise  additional  financing;  (vi) the price and availability of jet fuel, in light of
current industry  conditions;  (vii) the extent of the benefits  received by us under the Act, taking into account any
challenges to and  interpretations  or amendments of the Act or regulations  issued pursuant  thereto;  and (viii) the
timing and health of an economic recovery or the lack thereof.

       Further terrorist  attacks using commercial  aircraft in flight could result in another grounding of our fleet,
and could result in additional  reductions in load factor and yields,  along with increased  ticket refunds,  security
and other costs. The worldwide  aviation  insurance market may not be able to sustain another  terrorist attack of the
same  magnitude  as the  events of  September  11  without  further  material  increases  in  premiums  or  cutback in
coverages.  In addition,  terrorist attacks not involving commercial aircraft,  or the general increase in hostilities
relating to reprisals  against  terrorist  organizations  or  otherwise,  could  result in decreased  load factors and
yields for airlines, including us, and increased costs.

       Our load  factor  for  April  2002 was 61.6%  compared  to 67.9% in April  2001.  As of May 15,  2002,  advance
booking  levels were up 5.2 and 7.5 points in May and June,  respectively,  compared to the same date and for the same
periods  last year.  Yields  appear to be headed for another  year over year  significant  decline in our first fiscal
quarter  ending June 30,  2002,  as our  competitors  continue  to  discount  their fares or we match those lower fare
levels.

       Due principally to the lack of  predictability  of future industry traffic and yields, we continue to be unable
to fully estimate the impact on us of the events of September 11 and their  consequences,  and the  sufficiency of our
financial resources to absorb that impact.

       We are  assessing  our  liquidity  position in light of our aircraft  purchase  commitments  and other  capital
needs,  the  economy,  the events of  September  11, and other  uncertainties  surrounding  the airline  industry.  We
believe  it  may  be  appropriate  to  enhance  our  liquidity,   and  are  actively   considering  several  financing
alternatives.  In that regard,  we filed a shelf  registration  with the SEC in April 2002 that would allow us to sell
equity or debt  securities  from time to time as market  conditions  permit,  or a public  offering  of equity or debt
securities.  In addition,  we may pursue  domestic or foreign bank  financing,  public debt financing such as enhanced
equipment trust  certificates,  leveraged  lease  arrangements or government  guaranteed  financing.  We have recently
signed a term sheet with a European bank to provide debt  financing  for two of our seven A319 aircraft  scheduled for
delivery from Airbus in fiscal year 2003. We are also in  discussions  with several other  European banks for the debt
financing of the remaining five A319 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 year ended March 31,
2002.  Based on fiscal year 2002 actual fuel usage,  such an increase  would have  resulted in an increase to aircraft
fuel expense of  approximately  $6,482,000  in fiscal year 2002.  Comparatively,  based on projected  fiscal year 2003
fuel usage,  such an increase  would result in an increase to aircraft  fuel expense of  approximately  $8,574,000  in
fiscal year 2003.  The increase in exposure to fuel price  fluctuations  in fiscal year 2003 is due to the increase of
our average  aircraft  fleet size during the year ended March 31,  2002,  projected  increases to our fleet during the
year ended March 31, 2003 and related gallons purchased.

       Our average cost per gallon of fuel for the period ended March 31, 2002  decreased  18.7% over the average cost
for the year ended March 31, 2001.

       We will be susceptible to market risk associated  with changes in interest rates on expected  future  long-term
debt obligations to fund the purchases of our Airbus aircraft.

**Item 8:  Financial Statements**

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

**Item 9:  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

       Not applicable.

                                                    **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 6, 2002. We will file the definitive  Proxy Statement with the
Commission on or before July 31, 2002.

**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 6, 2002. We will file the definitive  Proxy Statement with the
Commission on or before July 31, 2002.

**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  6, 2002.  We will file the
definitive Proxy Statement with the Commission on or before July 31, 2002.

**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 6, 2002. We will file the  definitive  Proxy  Statement with
the Commission on or before July 31, 2002.

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

Exhibit
Numbers           Description of Exhibits
-------           -----------------------

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

    3.2           Amended and restated Bylaws of the Company (September 9, 1999). (14)

    4.1           Specimen common stock certificate of the Company. (1)

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

    4.3           Form of Warrant. (1)

    4.4           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. (7)

    4.4(d)        Fourth Amendment to Rights Agreement dated May 30, 2001. (19)

   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 order granting  confidential  treatment of the excluded  material has been received.
                  (16)

   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 order granting  confidential  treatment of the excluded  material has been received.
                  (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)

   10.11(b)       Aircraft  Lease  Extension  and  Amendment  Agreement  (MSN 23257) dated as of  September  29, 2000,
                  between General Electric Capital Corporation and Frontier Airlines, Inc. (17)

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

   10.12(a)       Aircraft  Lease  Extension  and  Amendment  Agreement  (MSN 22733) dated as of  September  29, 2000,
                  between Polaris Holding Company and Frontier Airlines, Inc. (17)

   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)

   10.13(b)       Aircraft  Lease  Extension  and  Amendment  Agreement  (MSN 22734) dated as of  September  29, 2000,
                  between Polaris Holding Company and Frontier Airlines, Inc. (17)

   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)

   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 order granting  confidential
                  treatment of the excluded material has been received.  (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 order granting  confidential
                  treatment of the excluded material has been received.  (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 order granting  confidential  treatment of the excluded material has been
                  received.  (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 order granting  confidential  treatment of the
                  excluded material has been received.  (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 order  granting  confidential
                  treatment of the excluded material has been received.  (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
                  order granting confidential treatment of the excluded material has been received.  (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 order
                  granting confidential treatment of the excluded material has been received.  (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 order granting  confidential  treatment of the excluded  material has been received.
                  (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 order granting  confidential  treatment of the excluded  material has been received.
                  (5)

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

   10.26(a)       Agreement  dated as of  September  29, 1997  between  Western  Pacific  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 Registration 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
                  Interlease 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 order granting confidential treatment of the excluded material has
                  been received. (13)

   10.37(a)       Amendment No. 2 dated as of February 14, 2002 between  Wells Fargo Bank  Northwest,  N.A.  (formerly
                  First  Security Bank National  Association),  as Lessor and Frontier  Airlines,  Inc., as Lessee and
                  Triton  Aviation  Finance to the  Aircraft  Lease  Agreement  (MSN 23004)  dated as of February  26,
                  1999.  Portions of this  exhibit have been  excluded  from the  publicly  available  document and an
                  application for confidential treatment of the excluded Material has been made. (22)

   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 order granting confidential treatment of the excluded material has
                  been received. (13)

   10.38(a)       Amendment No. 2 dated as of February 14, 2002 between  Wells Fargo Bank  Northwest,  N.A.  (formerly
                  First  Security Bank National  Association),  as Lessor and Frontier  Airlines,  Inc., as Lessee and
                  Triton  Aviation  Finance to the  Aircraft  Lease  Agreement  (MSN 23004)  dated as of February  26,
                  1999.  Portions of this  exhibit have been  excluded  from the  publicly  available  document and an
                  application for confidential treatment of the excluded Material has been made. (22)

   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 order granting  confidential  treatment of the excluded material
                  has been received. (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 order granting  confidential  treatment of the
                  excluded material has been received. (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 order granting  confidential  treatment of the excluded material
                  has been received. (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)

   10.44          Aircraft  Sublease  Agreement  (MSN  23039)  dated  as of July  21,  1999  between  Kommanditbolaget
                  Flygplanet XIV, Sublessor,  and Frontier Airlines,  Inc.,  Sublessee.  Portions of this exhibit have
                  been excluded from the publicly available document and an order granting  confidential  treatment of
                  the excluded material has been received. (14)

   10.45          Aircraft  Sublease  Agreement  (MSN  23040)  dated  as of July  21,  1999  between  Kommanditbolaget
                  Flygplanet XII, Sublessor,  and Frontier Airlines,  Inc.,  Sublessee.  Portions of this exhibit have
                  been excluded from the publicly available document and an order granting  confidential  treatment of
                  the excluded material has been received. (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 order granting  confidential  treatment of the excluded
                  material has been received. (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 order granting  confidential  treatment of the
                  excluded material has been received. (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 order granting  confidential  treatment of the
                  excluded material has been received. (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 order granting  confidential  treatment of the
                  excluded material has been received. (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 order granting  confidential  treatment of the
                  excluded material has been received. (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 order granting confidential treatment of the excluded material has been received. (16)

   10.51(a)       Amendment  No. 1 to Airbus  A318/319  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 order granting  confidential  treatment of the excluded
                  material has been received. (17)

   10.51(b)       Amendment  No. 1 to Airbus  A318/319  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 order granting  confidential  treatment of the excluded
                  material has been received. (18)

   10.51(c)       Amendment  No. 3 to Airbus  A318/319  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. (20)

   10.51(d)       Amendment  No. 3 to Airbus  A318/319  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. (22)

   10.51(e)       Amendment  No. 3 to Airbus  A318/319  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. (23)

   10.51(f)       Amendment  No. 3 to Airbus  A318/319  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. (23)

   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 order granting  confidential  treatment of the excluded material
                  has been received. (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 15 Airbus A319 Aircraft.  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. (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 order  granting
                  confidential treatment of the excluded material has been received. (16)

   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 order granting confidential treatment of the excluded material has been received. (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 order granting  confidential  treatment of the
                  excluded material has been received. (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 order  granting  confidential  treatment  of the excluded
                  material has been received. (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 aircraft.  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. (16)

   10.59          Aircraft Lease Agreement dated as of August 14, 2000 between Frontier Airlines,  Inc., Lessee, and International
                  Lease Finance Corporation, Lessor, in respect to one Boeing 737-300  aircraft (MSN 26301).  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. (17)

   10.60          General Terms Agreement No. 6-13616 between CFM International and Frontier Airlines, 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. (17)

   10.61          Lease Agreement dated as of December 15, 2000 between Gateway Office Four, LLC, Lessor, and Frontier Airlines,
                  Inc., Lessee. (18)

   10.62          Code Share Agreement dated as of May 3, 2001 between Frontier Airlines, Inc. and Great Lakes Aviation, Ltd.
                  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. (19)

   10.62(a)       Amendment No. 1 to the Codeshare  Agreement dated as of May 3, 2001 between Frontier Airlines,  Inc.
                  and Great Lakes  Aviation,  Ltd.  Portions  of the  exhibit  have been  excluded  from the  publicly
                  available  document and an application for confidential  treatment of the excluded material has been
                  made (22)

   10.63          Credit Agreement Dated as of May 9, 2001 between PK Finance and Frontier Airlines, Inc. Portions of this
                  exhibit have been excluded form the publicly available document and an order granting confidential treatment
                  of the excluded material has been received. (19)

   10.64          Mortgage and Security Agreement dated as of May 9, 2001 between PK Finance and Frontier Airlines, Inc.  (19)

   10.65          Codeshare Agreement between Mesa Airlines, Inc. and Frontier Airlines, Inc. (21)

   10.65(a)       Amendment  No. 1 to the  Codeshare  Agreement  dated as of September 4, 2001 between Mesa  Airlines,
                  Inc. and Frontier  Airlines,  Inc.  Portions of this  exhibit have been  excluded  from the publicly
                  available  document and an  application  for  confidential  treatment of thee excluded  material has
                  been made. (22)

   10.66          Employee  Stock  Ownership  Plan of  Frontier  Airlines,  Inc. as amended  and  restated,  effective
                  January 1, 1997 and executed February 5, 2002. (22)

   10.66(a)       Amendment of the Employee Stock Ownership Plan of Frontier  Airlines,  Inc. as amended and restated,
                  effective January 1, 1997 and executed February 5, 2002 for EGTRRA. (22)

   10.67          Director  Compensation  Agreement  between  Frontier  Airlines,  Inc.  and  Samuel D.  Addoms  dated
                  effective April 1, 2002.  (23)

   23.1           Consent of KPMG LLP (23)

   (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 on
         July 9, 1998.
   (13)  Incorporated  by reference  from the Company's  Annual  Report on Form 10-K,  Commission  File No.,  0-24126,
         filed on June 22, 1999.
   (14)  Incorporated  by reference from the Company's  Quarterly  Report on Form 10-Q,  Commission  File No. 0-24126,
         filed on August 10, 1999.
   (15)  Incorporated  by reference from the Company's  Quarterly  Report on Form 10-Q,  Commission  File No. 0-24126,
         filed on November 10, 1999.
   (16)  Incorporated  by reference from the Company's  Report on Form 10-K,  Commission  File No.  0-24126,  filed on
         June 26, 2000.
   (17)  Incorporated by reference from the Company's  Quarterly Report on Form 10-Q,  Commission File No. 0-24126
         filed on November 2, 2000.
   (18)  Incorporated by reference from the Company's  Quarterly  Report on Form 10-Q,  Commission File No. 0-24126,
         filed on February 7, 2001.
   (19)  Incorporated by reference from the Company's Report on Form 10-KSB, Commission File No. 0-24126, filed on
         June 8, 2001.
   (20)  Incorporated  by reference from the Companys  Quarterly  Report on Form 10-Q,  Commission  File No. 0-24126
         filed on August 3, 2001.
   (21)  Incorporated  by reference from the Company's Quarterly Report on Form 10-Q, Commission File No. 0-24126
         filed on November 14, 2001.
   (22)  Incorporated  by reference from the Company's  Quarterly  Report on Form 10-Q, Commission File No.0-24126
         filed on February 14, 2002.
   (23)  Filed herewith.

**Item 14(b):  Reports on Form 8-K.**

       During the quarter ended March 31, 2001, a report on Form 8-K was filed on January 22, 2001.

                                                         41

                                                   **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:  May 30, 2002                                  By: /s/ Paul H. Tate
                                                        -----------------------------------------------------------
                                                     Paul H. Tate, Vice President and
                                                     Chief Financial Officer

Date:  May 30, 2002                                  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:  May 30, 2002                                  By:  /s/ Jeffery S. Potter
                                                         ----------------------------------------------------------
                                                     Jeffery S. Potter, Director

Date:  May 30, 2002                                  By:   /s/ Samuel D. Addoms
                                                          ---------------------------------------------------------
                                                     Samuel D. Addoms, Director

Date:  May 30, 2002                                  By:   /s/ William B. McNamara
                                                          ---------------------------------------------------------
                                                     William B. McNamara, Director

Date:  May 30, 2002                                  By:  /s/ Paul Stephen Dempsey
                                                          ---------------------------------------------------------
                                                     Paul Stephen Dempsey, Director

Date:  May 30, 2002                                  By:   /s/ B. LaRae Orullian
                                                          ---------------------------------------------------------
                                                     B. LaRae Orullian, Director

Date:  May 30, 2002                                  By:  /s/ D. Dale Browning
                                                     --------------------------------------------------------------
                                                     D.   Dale Browning, Director

Date:  May 30, 2002                                  By:  /s/  James B. Upchurch
                                                     --------------------------------------------------------------
                                                     James B. Upchurch, Director

**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,  2002 and
2001, and the related statements of income, stockholders' equity,  and cash flows for each of the years
in the three-year  period ended March 31, 2002. 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 auditing  standards  generally accepted in the United States of
America.  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, 2002 and 2001, and the results of its
operations and its cash flows for each of the years in the three-year period ended March 31,  2002,  in
conformity with accounting principles generally accepted in the United States of America.

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 15, 2002

**FRONTIER AIRLINES, INC.****Balance Sheets****March 31, 2002 and 2001**
                                                                            2002                     2001
                                                                 ------------------------ ------------------------
Assets
------
Current assets:
    Cash and cash equivalents                                           $ 87,555,189            $ 109,251,426
    Short-term investments                                                 2,000,000                2,000,000
    Restricted investments                                                11,574,000                9,100,000
    Receivables, net of allowance for doubtful accounts of $155,000
      and $368,000 at March 31, 2002 and 2001,respectively                35,391,857               32,380,943
    Maintenance deposits                                                  36,046,157               30,588,195
    Prepaid expenses                                                      11,013,602               10,849,080
    Inventories                                                            6,604,378                4,072,335
    Deferred tax asset                                                     1,788,078                1,506,218
    Other current assets                                                      74,952                   45,621
                                                                 ------------------------ ------------------------
            Total current assets                                         192,048,213              199,793,818
Security, maintenance and other deposits                                  65,591,608               45,680,373
Property and equipment, net                                              142,861,771               38,100,126
Restricted investments                                                    12,660,210               11,683,660
Other assets                                                                 523,134                   58,621
                                                                 ------------------------ ------------------------
                                                                 $       413,684,936      $       295,316,598
                                                                 ======================== ========================

Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
    Accounts payable                                                    $ 20,152,888             $ 21,623,067
    Air traffic liability                                                 64,123,083               62,663,237
    Other accrued expenses                                                22,060,082               18,236,479
    Accrued maintenance expense                                           37,527,906               33,510,531
    Refundable stabilization act compensation                              4,835,381                 -
    Current portion of long-term debt                                      3,225,651                 -
    Current portion of obligations under capital leases                      138,604                  125,552
                                                                 ------------------------ ------------------------
            Total current liabilities                                    152,063,595              136,158,866
Long-term debt                                                            66,832,018                 -
Accrued maintenance expense                                               15,796,330               12,175,225
Deferred tax liability                                                     6,716,815                1,999,553
Deferred rent                                                              3,077,326                 -
Obligations under capital leases, excluding current portion                   65,559                  203,863
                                                                 ------------------------ ------------------------
            Total liabilities                                            244,551,643              150,537,507
                                                                 ------------------------ ------------------------

Stockholders' equity:
    Preferred stock, no par value, authorized 1,000,000 shares;
        none issued
    Common stock, no par value, stated value of $.001 per share,
        authorized 100,000,000 and 40,000,000 shares at
        March 31, 2002 and March 31, 2001, respectively;
        29,421,331 and 28,194,602 issued and outstanding at
        March 31, 2002 and March 31, 2001, respectively                       29,422                   28,195
    Additional paid-in capital                                            85,867,486               77,606,918
    Unearned ESOP shares                                                 (2,119,670)              (1,662,087)
    Retained earnings                                                     85,356,055               68,806,065
                                                                 ------------------------ ------------------------
            Total stockholders' equity                                   169,133,293              144,779,091
                                                                 ------------------------ ------------------------

Commitments and contingencies (notes 5 and 13)
                                                                 $       413,684,936      $       295,316,598
                                                                 ======================== ========================
See accompanying notes to financial statements.

**FRONTIER AIRLINES, INC.****Statements of Income****Years Ended March 31, 2002, 2001 and 2000**
                                                         2002                      2001                     2000
                                                         ----                      ----                     ----
Revenues:
    Passenger                                        $435,945,581              $462,608,847            $ 320,850,271
    Cargo                                               6,623,665                 7,516,867                6,855,882
    Other                                               2,505,479                 2,750,713                2,113,802
                                                ------------------------- ------------------------ -------------------------

            Total revenues                            445,074,725               472,876,427              329,819,955
                                                ------------------------- ------------------------ -------------------------
Operating expenses:
    Flight operations                                 191,040,814               179,453,300              125,536,174
    Aircraft and traffic servicing                     70,201,825                60,408,236               48,954,728
    Maintenance                                        70,227,020                65,529,428               50,238,538
    Promotion and sales                                59,458,779                55,880,717               46,013,812
    General and administrative                         26,173,864                25,428,753               16,327,410
    Depreciation and amortization                      11,586,703                 5,454,673                3,440,069
                                                ------------------------- ------------------------ -------------------------

            Total operating expenses                  428,689,005               392,155,107              290,510,731
                                                ------------------------- ------------------------ -------------------------

            Operating income                           16,385,720                80,721,320               39,309,224
                                                ------------------------- ------------------------ -------------------------

Nonoperating income (expense):
    Interest income                                     4,388,249                 7,897,282                4,334,688
    Interest expense                                   (3,382,695)                  (94,393)                (119,496)
    Stabilization act compensation                     12,703,007                      -                         -
    Aircraft lease termination                         (4,913,650)                     -                         -
    Other, net                                           (348,329)                 (191,771)                (109,798)
                                                ------------------------- ------------------------ -------------------------
            Total nonoperating income, net              8,446,582                 7,611,118                4,105,394
                                                ------------------------- ------------------------ -------------------------

Income before income tax expense and
    cumulative effect of change in method of
    accounting for maintenance checks                  24,832,302                88,332,438               43,414,618

Income tax expense                                      8,282,312                33,464,665               16,954,374
                                                ------------------------- ------------------------ -------------------------

Income before cumulative effect of change in
    method of accounting for maintenance checks        16,549,990                54,867,773               26,460,244

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

                                                ------------------------- ------------------------ -------------------------
  Net income                                    $      16,549,990         $      54,867,773        $      27,009,253
                                                ========================= ======================== =========================

(continued)

**FRONTIER AIRLINES, INC.****Statements of Income, continued****Years Ended March 31, 2002, 2001 and 2000**
                                                           2002                    2001                    2000
                                                           ----                    ----                    ----

Earnings per share:
  Basic:
    Income before cumulative effect of change in
      method of accounting for maintenance checks         $0.58                   $2.02                   $1.02
    Cumulative effect of change in method of
      accounting for maintenance checks                     -                       -                      0.02
                                                -------------------------- --------------------- -------------------------
    Net income                                            $0.58                   $2.02                   $1.04
                                                ========================== ===================== =========================

  Diluted:
    Income before cumulative effect of change in
      method of accounting for maintenance checks         $0.56                   $1.90                   $0.93
    Cumulative effect of change in method of
      accounting for maintenance checks                     -                       -                      0.02
                                                -------------------------- --------------------- -------------------------
    Net income                                            $0.56                   $1.90                   $0.95
                                                ========================== ===================== =========================

Weighted average shares of
  common stock outstanding

            Basic                                      28,603,861                27,152,099               25,994,100
                                                ========================== ===================== =========================
            Diluted
                                                       29,515,150                28,842,783               28,285,032
                                                ========================== ===================== =========================

See accompanying notes to financial statements.

**FRONTIER AIRLINES, INC.****Statements of Stockholders' Equity****Years Ended March 31, 2002, 2001 and 2000**
                                                                                               Retained
                                      Common stock            Additional        Unearned       earnings          Total
                                               Stated           paid-in           ESOP        (accumulated     stockholders'
                                  Shares         value           capital          shares        deficit)         equity
                               -----------------------------------------------------------------------------------------------------

**Balances, March 31, 1999**        24,211,758     $  24,212       $ 58,046,773    $   (609,375)   $(13,070,961)  $ 44,390,649
Exercise of common stock
    warrants                     1,721,589         1,722          4,758,395            -              -          4,760,117
Exercise of common stock
    options                        515,063           515            563,540            -              -            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 150,000           150          1,143,600      (1,143,750)          -              -
Amortization of employee stock
    compensation                      -               -            -                895,412           -            895,412                                                                                                      -
Net income                            -               -            -                   -         27,009,253     27,009,253
                                ----------------------------------------------------------------------------------------------------
**Balances, March 31, 2000**        26,598,410     $  26,599       $ 67,937,363    $   (857,713)   $ 13,938,292   $ 81,044,541
Exercise of common stock
    warrants                       583,030           583          1,450,570            -              -          1,451,153
Exercise of common stock
    options                        879,025           879          1,884,366            -              -          1,885,245
Tax benefit from exercises of
    common stock options and
    warrants                          -               -           4,129,336            -              -          4,129,336
Contribution of common stock to
    employees stock ownership plan 135,000           135          2,216,115      (2,216,250)          -              -
Amortization of employee stock
    compensation                      -               -            -              1,411,876           -          1,411,876
Adjustment for fractional shares
    from stock dividend               (863)           (1)           (10,832)           -              -            (10,833)
Net Income                            -               -            -                   -         54,867,773     54,867,773
                                ----------------------------------------------------------------------------------------------------
**Balances, March 31, 2001**        28,194,602     $  28,195       $ 77,606,918    $ (1,662,087)   $ 68,806,065   $144,779,091
Exercise of common stock
    warrants                       525,000           525          1,311,975            -              -          1,312,500
Exercise of common stock
    options                        528,711           529          1,870,516            -              -          1,871,045
Tax benefit from exercises of
    common stock options and
    warrants                          -               -           2,252,023            -              -          2,252,023
Contribution of common stock to
    employees stock ownership plan 173,018           173          2,826,054      (2,826,227)          -             -
Amortization of employee stock
    compensation                      -               -            -               2,368,644          -          2,368,644
Net income                            -               -            -                             16,549,990     16,549,990
                                ----------------------------------------------------------------------------------------------------
**Balances, March 31, 2002**        29,421,331     $  29,422       $ 85,867,486    $ (2,119,670)   $ 85,356,055   $169,133,293
                                ====================================================================================================

See accompanying notes to financial statements.

**FRONTIER AIRLINES, INC.****Statements of Cash Flows****Years ended March 31, 2002, 2001, and 2000**

--------------------------------------------------------------------------------------------------------
                                                                2002                     2001                     2000
                                                                ----                     ----                     ----
Cash flows from operating activities:
    Net income                                             $  16,549,990             $ 54,867,773             $ 27,009,253
    Adjustments to reconcile net income to net cash
      provided by operating activities:
        Employee stock ownership plan compensation expense     2,368,644                1,411,876                  895,412
        Depreciation and amortization                         11,670,818                5,618,200                3,725,697
        Impairment recorded on fixed assets                    1,511,642                    -                        -
        Loss on disposal of equipment                            323,000                   56,800                    -
        Deferred tax expense                                   4,435,402                1,146,015                5,459,468
        Changes in operating assets and liabilities:
           Restricted investments                             (4,588,250)              (5,639,400)                 402,000
           Receivables                                          (758,891)              (6,060,773)              (5,260,797)
           Security, maintenance and other deposits           (7,885,865)             (16,207,351)              (8,288,288)
           Prepaid expenses                                     (164,522)              (3,462,229)              (1,947,017)
           Inventories                                        (2,532,043)              (1,837,152)              (1,031,267)
           Accounts payable                                   (1,470,179)               7,215,154                  396,675
           Air traffic liability                               1,459,846               18,144,400               15,631,145
           Other accrued expenses                              3,823,603                  694,460               10,084,065
           Accrued maintenance expense                         7,638,480               16,578,273                8,130,957
           Refundable stabilization act compensation           4,835,381                    -                        -
           Deferred rent                                       3,077,326                    -                        -
                                                      ------------------------- ------------------------ ------------------------
Net cash provided by operating
activities                                                    40,294,382               72,526,046               55,207,303
                                                      ------------------------- ------------------------ ------------------------

Cash flows from investing activities:
    Increase (decrease) in short-term investments, net             -                   13,760,000              (15,760,000)
    Increase in aircraft lease and purchase deposits, net    (17,483,332)             (22,810,967)              (4,109,039)
    Decrease (increase) in restricted investments              1,137,700               (3,330,500)              (3,640,000)
    Capital expenditures                                    (118,182,990)             (21,957,336)             (16,360,553)
                                                      ------------------------- ------------------------ ------------------------
           Net cash used in investing activities            (134,528,622)             (34,338,803)             (39,869,592)
                                                      ------------------------- ------------------------ ------------------------

Cash flows from financing activities:
    Net proceeds from issuance of common stock and warrants     3,183,545               3,325,566                5,324,172
    Proceeds from long-term debt                               72,000,000                   -                        -
    Payment of financing fees                                    (577,959)                  -                        -
    Principal payments on long-term debt                       (1,942,331)                  -                        -
    Principal payments on obligations under capital leases       (125,252)               (112,316)                (100,022)
                                                      ------------------------- ------------------------ ------------------------
           Net cash provided by financing activities           72,538,003               3,213,250                5,224,150
                                                      ------------------------- ------------------------ ------------------------

           Net (decrease) increase in cash and
           cash equivalents                                   (21,696,237)             41,400,493               20,561,861

Cash and cash equivalents, beginning of period                 109,251,426             67,850,933               47,289,072
                                                      ------------------------- ------------------------ ------------------------

Cash and cash equivalents, end of period                     $  87,555,189           $109,251,426             $ 67,850,933
                                                      ========================= ======================== ========================

See accompanying notes to financial statements.

**FRONTIER AIRLINES, INC.****Notes to Financial Statements****March 31, 2002****(1)    Nature of Business and Summary of Significant Accounting Policies**

        Nature of Business

        Frontier Airlines,  Inc.  ("Frontier" or the "Company") provides air transportation for passengers
        and  freight.  Frontier  was  incorporated  in the  State of  Colorado  on  February  8,  1994 and
        commenced  operations on July 5, 1994.  Denver-based  Frontier currently serves 28 cities coast to
        coast  with a fleet of 24  Boeing  737 and 6 Airbus  A319  jets and  employs  approximately  2,800
        aviation professionals.

        Airline  operations  have high fixed  costs  relative  to  revenues  and are highly  sensitive  to
        various factors including the actions of competing  airlines and general economic  factors.  Small
        fluctuations  in  yield  per  revenue  passenger  mile or  expense  per  available  seat  mile can
        significantly affect operating results.

        Preparation of Financial Statements

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

        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.  These  investments are stated
        at cost, which approximates fair value.

        Short-term Investments

        Short-term  investments  consist of certificates  of deposit with maturities  between three months
        and one year. 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.

**FRONTIER AIRLINES, INC.**
Notes to Financial Statements, continued
-------------------------------------------------------------------------------------------------------------------

        Supplemental Disclosure of Cash Flow Information

        Cash Paid During the Year for:
                                                         2002                   2001                      2000
                                                         ----                   ----                      ----
                              Interest            $   3,081,370           $      94,393              $    119,496
                              Taxes               $   8,838,909           $  21,926,000              $  3,005,000

        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  fair value.  Maturities  are for one year or less and the Company  intends
        to hold restricted investments until maturity.

        Valuation and Qualifying Accounts

        The allowance for doubtful accounts was approximately  $155,000 and $368,000 at March 31, 2002
        and  2001,   respectively.   Provisions  for  bad  debts  net  of  recoveries   totaled  $450,000,
        $1,179,000,  and  $873,000  for the years  ended  March  31,  2002,  2001 and 2000,  respectively.
        Deductions from the allowance for doubtful accounts totaled $663,000,  $982,000,  and $902,000 for
        the years ended March 31, 2002, 2001, and 2000, respectively.

        Accrued  maintenance  expense was approximately  $53,324,000 and $45,686,000 at March 31, 2002 and
        2001,   respectively.   Provisions  for  accrued   maintenance   expenses   totaled   $22,168,000,
        $24,970,000,  and  $22,811,000  for the years ended March 31, 2002,  2001 and 2000,  respectively.
        Deductions from accrued maintenance expense totaled $14,530,000,  $8,391,000,  and $14,681,000 for
        the years ended March 31, 2002, 2001 and 2000, 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 had an aircraft  parts  agreement for its Boeing 737 aircraft with
        an aircraft  parts  supplier that  terminated  in January 2001.  The Company was 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,  the  Company  held
        consigned parts and supplies in the amount of  approximately  $5,788,000 which are not included in
        the Company's balance sheet.

        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:

                  Aircraft                                    25 years
                  Capitalized software                        3 years
                  Flight equipment                            5-10 years
                  Improvements to leased aircraft             Life of improvements or term of lease,
                                                              whichever is less
                  Ground property, equipment, and
                    leasehold improvements                    3-5 years or term of lease

        Residual  values for aircraft are at 25% of the aircraft cost,  residual  values for engines range
        in  amounts  up to 48% of the  engine's  cost and  residual  values  for major  rotable  parts are
        generally 10% of the asset's cost,  except when a guaranteed  residual  value or other  agreements
        exist to better  estimate the residual  value.  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.

        Manufacturers' Credits

        The Company  receives  credits in  connection  with its  purchase of  aircraft,  engines and other
        rotable  parts.  These credits are deferred  until the  aircraft,  engines and other rotable parts
        are  delivered  and then  applied on a pro-rata  basis as a  reduction  to the cost of the related
        equipment.

        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
        overhauls 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.  The  Company  also  accrues for major  airframe  maintenance
        checks,  landing gear overhauls and engine  overhauls on its owned aircraft.  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  periodic  maintenance  checks  and  overhauls,  including  the  costs for
        scheduled  airframe,  landing  gear,  and  engine  overhauls.  The  Company  continues  to utilize
        the  accrue-in-advance  method for scheduled major airframe and maintenance  checks,  landing gear
        overhauls  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 $.02 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.

        Advertising Costs

        The  Company  expenses  the costs of  advertising  as  promotion  and sales in the year  incurred.
        Advertising  expense was  $9,086,752,  $6,076,501,  and  $4,437,149  for the years ended March 31,
        2002, 2001, and 2000, respectively.

        Development Costs

        Development  costs  related to the  preparation  of  operations  for new routes  are  expensed  as
        incurred.

        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.  Unearned  revenues  have been  deferred  and
        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

        In February  2001,  the Company  established  EarlyReturns,  a frequent flyer program to encourage
        travel on its airline and customer loyalty.

        The Company  accounts for the  EarlyReturns  program  under the  incremental  cost method  whereby
        travel  awards are valued at the  incremental  cost of carrying  one  passenger  based on expected
        redemptions.  Those  incremental  costs are based on  expectations of expenses to be incurred on a
        per passenger  basis and include food and  beverages,  fuel,  liability  insurance,  and ticketing
        costs.  The  incremental  costs do not  include  a  contribution  to  overhead,  aircraft  cost or
        profit.  The Company  does not record a  liability  for mileage  earned by  participants  who have
        not reached the level to become  eligible for a free travel  award.  The Company  believes this is
        appropriate  because the large  majority  of these  participants  are not  expected to earn a free
        flight  award.  The Company does not record a liability  for the expected  redemption of miles for
        non-travel awards since the cost of these awards to the Company is negligible.

        As of March 31, 2002 and 2001, the Company  estimated that  approximately  4,600 and 20 round-trip
        flight  awards,  respectively,  were  eligible for  redemption  by  EarlyReturns  members who have
        mileage credits  exceeding the 15,000-mile  free round-trip  domestic ticket award  threshold.  Of
        these  earned  awards,  the  Company  expected  that  approximately  84%  would be  redeemed.  The
        difference  between the round-trip  awards  outstanding  and the awards expected to be redeemed is
        the estimate of awards which will (1) never be redeemed,  or (2) be redeemed for  something  other
        than a free trip.  As of March 31,  2002 the Company had  recorded a  liability  of  approximately
        $65,000 and none as of March 31, 2001 for these rewards.

        Common Stock

        On March 5, 2001,  the Company  distributed  a fifty  percent stock  dividend to  shareholders  of
        record on February 19, 2001.  All share and per share data  presented in the financial  statements
        and notes thereto have been restated to give effect to this stock dividend.

        Earnings  Per Common Share

        Basic  earnings per common share  excludes the effect of  potentially  dilutive  securities and is
        computed by dividing income by the  weighted-average  number of common shares  outstanding for the
        period.  Diluted  earnings per common share  reflects the potential  dilution of  securities  that
        could share in earnings.

        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, 2002
        and 2001.

        Stock Based Compensation

        The Company  follows  Accounting  Principles  Board Opinion No. 25 "Accounting for Stock Issued to
        Employees"  ("APB 25") and related  Interpretations  in accounting  for its employee stock options
        and follows the  disclosure  provisions  of Statement of Financial  Accounting  Standards  No. 123
        (SFAS 123).  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 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.  During the year ended  March 31,  2002,  the
        Company wrote down the carrying value of spare parts that support the Boeing  737-200  aircraft by
        $1,512,000 as a result of diminished  demand for that  aircraft  type,  the write down is included
        in  maintenance  expenses.  The amount of the write down was based on prevailing  market values at
        that time.

        New Accounting Standards

        In June 2001, the Financial  Accounting  Standards  Board ("FASB")  issued  Statement of Financial
        Accounting  Standards  No. 141,  "Business  Combinations"  which  requires the use of the purchase
        method and  eliminates the option of using the  pooling-of-interests  method of accounting for all
        business  combinations.  The  provisions  in this  statement  apply to all  business  combinations
        initiated  after June 30, 2001,  and all business  combinations  accounted  for using the purchase
        method  for  which  the  date  of  acquisition  is  July  1,  2001,  or  later.   This  accounting
        pronouncement  presently  has  no  impact  on  the  Company  as it  does  not  have  any  business
        combinations planned.

        In June 2001, the FASB issued Statement of Financial  Accounting  Standards No. 142, "Goodwill and
        Other  Intangible  Assets" (SFAS 142) which requires that all intangible  assets  acquired,  other
        than those acquired in a business  combination,  be initially recognized and measured based on the
        asset's fair value.  Goodwill and certain  identifiable  intangible assets are not to be amortized
        under SFAS 142, but instead are reviewed for impairment at least  annually in accordance  with the
        provisions  of this  statement.  The  Company  is  required  to adopt the  provisions  of SFAS 142
        effective April 1, 2002. This  accounting  pronouncement  will have no impact on the Company as it
        does not have any intangible assets on its balance sheet.

        In June 2001, the FASB issued  Statement of Financial  Accounting  Standards No. 143,  "Accounting
        for Asset Retirement  Obligations" (SFAS 143), which addresses financial  accounting and reporting
        for obligations  associated with the retirement of tangible  long-lived  assets and the associated
        asset  retirement  costs.  The  standard  applies  to  legal   obligations   associated  with  the
        retirement  of  long-lived  assets  that result from the  acquisition,  construction,  development
        and/or  normal use of the asset.  SFAS 143  requires  that the fair  value of a  liability  for an
        asset  retirement  obligation  be recognized in the period in which it is incurred if a reasonable
        estimate  of fair value can be made.  The fair  value of the  liability  is added to the  carrying
        amount of the associated  asset and this additional  carrying amount is depreciated  over the life
        of the asset.  The  liability is accreted at the end of each period  through  charges to operating
        expense.  If the obligation is settled for other than the carrying  amount of the  liability,  the
        Company  will  recognize a gain or loss on  settlement.  The Company does not expect the impact of
        adopting SFAS 143 to be significant.

        In October 2001, the FASB issued  Statement of Financial  Standards No. 144,  "Accounting  for the
        Impairment or Disposal of Long-Lived  Assets" (SFAS 144),  which  addresses  financial  accounting
        and reporting  for the  impairment or disposal of  long-lived  assets.  While SFAS 144  supersedes
        SFAS 121,  "Accounting  for the Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be
        Disposed  of", it retains many of the  fundamental  provisions  of that  Statement.  SFAS 144 also
        supersedes the accounting and reporting  provisions of APB Opinion No. 30,  "Reporting the Results
        of  Operations-Reporting  the Effects of Disposal of A Segment of a Business,  and  Extraordinary,
        Unusual and Infrequently  Occurring Events and  Transactions",  for the disposal of a segment of a
        business.  The Company does not expect the impact of adopting SFAS 144 to be significant.

        Reclassifications

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

**(2)     Air Transportation Safety and System Stabilization Act**

        As a result of the September 11, 2001  terrorist  attacks on the United  States,  on September 22,
        2001 President Bush signed into law the Air  Transportation  Safety and System  Stabilization  Act
        (the "Act").  The Act includes for all U.S.  airlines  and air cargo  carriers the  following  key
        provisions:  (i) $5  billion  in  cash  compensation,  of  which  $4.5  billion  is  available  to
        commercial  passenger  airlines and is allocated  based on the lesser of each  airline's  share of
        available  seat miles during  August 2001 or the direct and  incremental  losses  (including  lost
        revenues)  incurred by the airline  from  September  11, 2001  through  December  31,  2001;  (ii)
        subject  to certain  conditions,  the  availability  of up to $10  billion  in federal  government
        guarantees of certain loans made to air carriers for which credit is not  reasonably  available as
        determined by a newly established Air Transportation  Stabilization  Board; (iii) the authority of
        the  Secretary of  Transportation  to reimburse  air carriers  (which  authority  expires 180 days
        after the enactment of the Act) for increases in the cost of war risk  insurance  over the premium
        in effect for the period  September 4, 2001 to September 10, 2001;  (iv) at the  discretion of the
        Secretary of  Transportation,  a $100 million  limit on the  liability of any air carrier to third
        parties with respect to acts of terrorism  committed on or to such air carrier  during the 180 day
        period  following  enactment of the Act; and (v) the  extension of the due date for the payment by
        air  carriers of certain  payroll and excise  taxes until  November 15, 2001 and January 15, 2002,
        respectively.

        The Company was eligible to receive up to  approximately  $20,200,000  from the $5 billion in cash
        compensation,  of  which  $17,538,388  was  received  as of March  2002.  The  Company  recognized
        $12,703,007  of the grant  during the year ended March 31, 2002 which is included in  nonoperating
        income and expense.  The remaining  $4,835,381  represents amounts received in excess of estimated
        allowable  direct and  incremental  losses  incurred from September 11, 2001 through  December 31,
        2001 and is included as a liability on the balance sheet as of March 31, 2002.

**(3)    Property and Equipment, Net**

        As of March 31, 2002 and 2001 property and equipment consisted of the following:

                                                                                 2002                        2001
                                                                                 ----                        ----

         Aircraft, spare aircraft parts, and improvements to
           leased aircraft                                           $       142,590,544          $       32,770,377
         Ground property, equipment and leasehold improvements                20,989,272                  12,704,749
         Construction in progress                                              1,829,400                   3,665,614
                                                                    ------------------------       -----------------------
                                                                             165,409,216                  49,140,740
         Less:  accumulated depreciation and amortization                     22,547,445                  11,040,614
                                                                    ------------------------       -----------------------

                Property and equipment, net                          $       142,861,771          $       38,100,126
                                                                    ========================       =======================

        Property and equipment  includes  certain office  equipment and software under capital leases.  At
        March 31,  2002 and 2001,  office  equipment  and  software  recorded  under  capital  leases were
        $602,149 in both years and  accumulated  amortization  was  $400,843 and  $302,204,  respectively.
        At March 31,  2002 and 2001,  construction  in progress  includes  capitalized  software  totaling
        approximately $642,000 and $900,000,  respectively,  and Airbus flight equipment not yet placed in
        service totaling approximately $1,187,000 and $2,800,000, respectively.

**(4)      Other Accrued Expenses**

        The March 31, 2002 and 2001 other accrued expenses is comprised of the following:

                                                                      2002                       2001
                                                                      ----                       ----

                    Accrued salaries and benefits                $   11,857,466             $   11,769,806
                    Federal excise taxes payable                      6,383,350                  2,720,977
                    Other                                             3,819,266                  3,745,696
                                                              ------------------------   ------------------------

                                                                 $   22,060,082             $   18,236,479
                                                              ========================   ========================

 **(5)    Lease Commitments**

        Aircraft Leases

        At March 31, 2002 and 2001,  the  Company  operated 27 and 25  aircraft,  respectively,  which are
        accounted for under  operating  lease  agreements  with initial terms ranging from 2.7 years to 12
        years.  Certain  leases  allow for  renewal  options.  During the year ended March 31,  2001,  the
        Company entered into aircraft leases for 16 Airbus aircraft with lease terms of  approximately  12
        years.  Delivery dates began in June 2001 and end in October 2004.  Security  deposits  related to
        leased  aircraft  and  future  leased  aircraft  deliveries  at March  31,  2002 and 2001  totaled
        $5,293,189  and  $3,957,789  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, 2002 and 2001
        totaled $9,282,700 and $7,526,000, respectively.

        During the year ended March 31, 2002, the Company  negotiated  early lease  terminations on two of
        its  Boeing  737-200  aircraft  resulting  in a charge of  $4,913,650,  representing  the  payment
        amounts  due to  terminate  the lease  early.  The lease  expiration  dates  were  accelerated  to
        November  2002 and  January  2003 from the  original  lease  return  dates of  September  2004 and
        November 2004, 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,  2002 and 2001,  aircraft  maintenance
        deposits  totaled  $51,055,190 and $42,255,002,  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.  No reserves have been accrued as the Company views this
        potential event as remote.

        Other Leases

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

        At March 31,  2002,  commitments  under  noncancelable  operating  leases  (excluding  maintenance
        deposit requirements) with terms in excess of one year were as follows:

                                                                                 Operating
                                                                                  Leases
                                                                                  -------
                               Year ended March 31:
                               2003                                            $ 78,609,278
                               2004                                              74,549,991
                               2005                                              69,669,143
                               2006                                              55,782,987
                               2007                                              69,797,645
                               Thereafter                                       357,895,002
                                                                        ----------------------------

                                     Total minimum lease payments              $706,304,046
                                                                        ============================

        Rental  expense under  operating  leases,  including  month-to-month  leases,  for the years ended
        March 31, 2002, 2001 and 2000 was $86,603,234, $80,781,897 and $65,201,876, respectively.

 **(6)    Long-term Debt**

        In May 2001,  the Company  entered  into a credit  agreement to borrow up to  $72,000,000  for the
        purchase of three Airbus  aircraft with a maximum  borrowing of  $24,000,000  per  aircraft.  Each
        aircraft  loan has a term of 120 months and is payable in equal  monthly  installments,  including
        interest  payable  in  arrears.  The loans are  secured  by the  aircraft.  During  the year ended
        March 31, 2002,  the Company had borrowed  $72,000,000  for the purchase of these three  aircraft.
        Each loan  provides  for  monthly  principal  and  interest  payments  ranging  from  $207,579  to
        $218,109,  bears  interest with rates ranging from 6.05% to 6.71%,  averaging  6.43% for the three
        aircraft  loans,  with  maturities  in May,  August,  and  September  2011,  at which time balloon
        payments  totaling  $10,200,000  are due with respect to each aircraft loan. As of March 31, 2002,
        the Company had $70,057,669 of debt outstanding secured by these three Airbus aircraft.

        Maturities of long-term debt are as follows:

                                   2003                         $   3,225,651
                                   2004                             3,425,845
                                   2005                             3,656,209
                                   2006                             3,912,662
                                   2007                             4,168,783
                                   Thereafter                      51,668,519
                                                           ---------------------------
                                                                $  70,057,669
                                                           ===========================

 **(7)    Income Taxes**

        Income tax expense (benefit) for the years ended March 31, 2002, 2001, and 2000 consists of:

                                                Current                Deferred                 Total
                                               ---------              ----------               -------
                 Year ended March 31, 2002:
                   U.S. Federal              $ 4,714,262             $ 3,971,594            $ 8,685,856
                   State and local              (867,353)                463,809               (403,544)
                                    ---------------------- --------------------------- ---------------------
                                             $ 3,846,909             $ 4,435,403            $ 8,282,312
                                    ====================== =========================== =====================

                 Year ended March 31, 2001:
                   U.S. Federal              $28,441,039             $ 1,008,515            $29,449,554
                   State and local             3,877,611                 137,500              4,015,111
                                    ---------------------- --------------------------- ---------------------
                                             $32,318,650             $ 1,146,015            $33,464,665
                                    ====================== =========================== =====================

                 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
                                    ====================== =========================== =====================

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

                                                              2002               2001              2000
                                                              ----               ----              ----
             Income tax expense
               at the statutory rate                          35%                 35%               35%
             State and local income tax, net of
               federal income tax benefit                     (3%)                 3%                3%
             Nondeductible expenses                            1%                  -                 1%
                                                        ----------------- ------------------ -----------------
                                                               33%                38%               39%
                                                        ================= ================== =================

        The tax effects of temporary  differences  that give rise to significant  portions of the deferred
        tax assets (liabilities) at March 31, 2002 and 2001 are presented below:

                                                                            2002                    2001
                                                                            ----                    ----
               Deferred tax assets:
                   Accrued vacation and health insurance
                     liability not deductible for tax purposes            1,719,555              1,053,095
                   Accrued workers compensation liability
                     not deductible for tax purposes                        483,879                302,131
                   Deferred rent not deductible for tax
                     purposes                                             1,157,725                   -
                   Impairment recorded on fixed assets not
                     deductible for tax purposes                            564,317                   -
                   Other                                                    207,479                150,992
                                                                 --------------------------- -----------------------
                     Total gross deferred tax assets                      4,132,955              1,506,218
                                                                 =========================== =======================
               Deferred tax liabilities:
                   Equipment depreciation and amortization               (8,438,857)            (1,999,553)
                   Prepaid commissions                                     (622,835)                  -
                                                                 --------------------------- -----------------------
                     Total gross deferred tax liabilities                (9,061,692)            (1,999,553)
                                                                 =========================== =======================
                     Net deferred tax liabilities                        (4,928,737)              (493,335)
                                                                 =========================== =======================

        The net deferred tax assets  (liabilities)  are  reflected in the  accompanying  balance  sheet as
        follows:

                                                                            2002                   2001
                                                                            ----                   ----

                Current deferred tax assets                           $   1,788,078          $   1,506,218
                Non-current deferred tax liabilities                     (6,716,815)            (1,999,553)
                                                                  -------------------------  ---------------------
                  Net deferred tax assets                             $  (4,928,737)         $    (493,335)
                                                                  =========================  ======================

        During  the year ended  March 31,  2002,  the  Company  recorded  a credit to income  tax  expense
        totaling  $1,327,000.  During  the year ended  March 31,  2001,  the  Company  accrued  income tax
        expense  at the rate of 38.7%  which  was  greater  than the  actual  effective  tax rate of 37.6%
        determined  upon  completion  and filing of the income tax  returns in December  2001.  During the
        year ended March 31, 2002,  the Company also  recorded a $441,000  reduction to income tax expense
        as a result  of a review  and  revision  of state tax  apportionment  factors  used in filing  the
        amended state tax returns for 2000.

**(8)     Warrants and Stock Purchase Rights**

        In October 1995, the Company issued to each of two Boeing  737-300  aircraft  lessors a warrant to
        purchase  150,000  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  105,000 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  82,500  shares  of  Common  Stock at an  aggregate
        purchase  price of $385,000.  During May and June 1999,  aircraft  lessors  exercised  all 592,500
        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 May 1998,  the Company  issued to its financial  advisor,  in  connection  with debt and equity
        financings,  a warrant to purchase  822,000  shares of the  Company's  Common  Stock at a purchase
        price of $2.00 per share.  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 shares of its Common Stock,  the Company
        issued a warrant to an  institutional  investor to purchase  1,075,393  shares of its Common Stock
        at a  purchase  price of $2.50 per share.  During the years  ended  March 31,  2002 and 2001,  the
        institutional  investor  exercised 525,000 and 550,394 warrants,  respectively,  with net proceeds
        to the Company totaling $1,312,500 and $1,375,984.

        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.  There are  currently  0.67 rights
        associated  with  each   outstanding   share  of  Common  Stock.  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  6,375,000  shares of Common Stock for
        issuance  pursuant to the exercise of options.  With certain  exceptions,  options  issued through
        March 31,  2002  generally  vest over a  five-year  period  from the date of grant and expire from
        March 9,  2004 to March 31, 2012.  At March 31, 2002,  1,088,075  options are  available for grant
        under the plan.

        A summary of the Plan's stock option  activity and related  information  for the years ended March
        31, 2002, 2001 and 2000 is as follows:

                                                 2002                          2001                          2000
                                    ------------------------------------------------------------------------------------------
                                                       Weight-                       Weight-                       Weight-
                                                       Average                       Average                       Average
                                                       Exercise                      Exercise                      Exercise
                                         Options        Price          Options        Price          Options        Price
                                    ------------------------------------------------------------------------------------------
         Outstanding-beginning of year  2,203,444      $6.07          2,629,469       $3.61          2,694,531      $2.23
         Granted                          579,300     $14.95            517,500      $11.56            450,000      $8.94
         Exercised                       (528,711)     $3.45           (879,025)      $2.18           (515,062)     $1.09
         Surrendered                     (184,000)    $11.27            (64,500)      $5.95               -           -
                                    ------------------------------------------------------------------------------------------
                                        2,070,033      $8.78          2,203,444       $6.07          2,629,469      $3.61
                                    ==========================================================================================

         Exercisable at end of year       831,834      $6.65            911,945       $3.16          1,459,469      $1.85

        Exercise prices for options  outstanding  under the plan as of March 31, 2002 ranged from $.667 to
        $24.168 per option share.  The  weighted-average  remaining  contractual  life of those options is
        7.3 years. A summary of the  outstanding  and  exercisable  options at March 31, 2002,  segregated
        by exercise price ranges, is as follows:
                                                                           Weighted-
                                                                            Average
                                                        Weighted           Remaining                          Weighted-
          Exercise Price               Options           Average           Contractual      Exerciserable      Average
             Range                   Outstanding      Exercise Price      Life (in years)      Options      Exercise Price
  ----------------------------------------------------------------------------------------------------------------------------

         $ 0.667 - $ 3.374            481,233           $1.75                 4.5             322,234          $1.39
         $ 5.417 - $ 8.834            733,000            6.49                 7.4             314,200           6.03
         $ 10.001 - $ 14.80           564,000           12.41                 8.6              96,600          11.48
         $15.140 - $19.461            167,500           17.22                 9.2              16,500          17.57
         $21.200 - $24.168            124,300           21.93                 9.7              82,300          21.77
                                    ------------------------------------------------------------------------------------------
                                    2,070,033           $8.78                 7.3             831,834          $6.65
                                    ==========================================================================================

        The  Company   applies  APB  25  and  related   Interpretations   in  accounting  for  its  plans.
        Accordingly,  no compensation  cost is recognized for options granted at a price equal to the fair
        market value of the Common  Stock.  Pro forma  information  regarding  net income and earnings per
        share is required by SFAS 123,  which also requires that the  information  be determined as if the
        Company  has  accounted  for its  employee  stock  options  under  the fair  value  method of that
        Statement.  The  fair  value  for  these  options  was  estimated  at the  date of  grant  using a
        Black-Scholes  option  pricing model with the  following  weighted-average  assumptions  for 2002,
        2001 and 2000,  respectively:  risk-free  interest  rates of  4.47%,  6.02%  and  5.98%,  dividend
        yields of 0%, 0% and 0%;  volatility  factors of the expected market price of the Company's common
        stock of 83.75%,  56.78% and 61.38%,  and a  weighted-average  expected life of the options of 2.6
        years,  2.7  years,  and  3.5  years.  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 and earnings per share would be as follows:

                                                       2002                   2001                    2000
                                                       ----                   ----                    ----
           Net income:
             As reported                         $   16,549,990         $   54,867,773          $   27,009,253
             Pro forma                           $   14,424,422         $   53,527,821          $   26,230,907
           Earnings per share, basic:
             As reported                         $         0.58         $         2.02          $         1.04
             Proforma                            $         0.50         $         1.97          $         1.01
           Earnings per share, diluted:
             As reported                         $         0.56         $         1.90          $         0.95
             Proforma                            $         0.49         $         1.86          $         0.93

**(10)    Retirement 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 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.

        During the years ended March 31, 2002,  2001 and 2000, the Company  contributed  173,018,  135,000
        and  150,000  shares,  respectively  to the plan.  Total  Company  contributions  to the ESOP from
        inception  through March 31, 2002 totaled 1,194,831 shares.  The Company  recognized  compensation
        expense  during the years  ended  March 31,  2002,  2001 and 2000 of  $2,368,644,  $1,411,876  and
        $895,412, respectively, related to its contribution to the ESOP.

        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 $11,000 for calendar  year 2002 and $10,500 for calendar  years 2001
        and  2000,  under  the  Internal  Revenue  Code.  Participants  are  immediately  vested  in their
        voluntary contributions.

        The Company's  Board of Directors  have elected to match 50% of  participant  contributions  up to
        10% of  salaries  from May 2000  through  December  2002.  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.  During the years  ended  March 31,  2002,  2001,  and 2000,  the
        Company  recognized  compensation  expense  associated  with the matching  contributions  totaling
        $2,087,984,  $1,286,611 and $513,758,  respectively.  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.

        Retirement Health Plan

        In  conjunction  with the  Company's  collective  bargaining  agreement  with its pilots,  retired
        pilots and their  dependents  may retain  medical  benefits  under the terms and conditions of the
        Health and Welfare Plan for Employees of Frontier  Airlines,  Inc.  ("the Plan") until age 65. The
        cost of retiree  medical  benefits are continued  under the same  contribution  schedule as active
        employees.  The following  table  provides a  reconciliation  of the changes in the Plan's benefit
        obligations and fair value of assets for the year ended March 31, 2002 and 2001.

                         Reconciliation of benefit obligation:
                                                                          2002                    2001
                                                                          ----                    ----
                         Obligation at beginning of period            $  344,348            $       -
                           Service cost                                  402,866                 327,073
                           Interest cost                                  25,288                  24,273
                           Benefits paid                                  (4,627)                   -
                           Net actuarial gain                             (9,713)                 (6,998)
                                                                     --------------------------------------------
                         Obligation at end of period                  $  758,162            $    344,348
                                                                     ============================================

        The following is a statement of funded status as of March 31:
                                                                          2002                    2001
                                                                          ----                    ----

                          Funded status                               $ (758,162)             $ (344,348)
                            Unrecognized net actuarial gain              (16,711)                 (6,998)
                                                                     --------------------------------------------
                          Accrued benefit liability                   $ (774,873)             $ (351,346)
                                                                     ============================================

**(11)    Earnings Per Share**

        The following table sets forth the computation of basic and diluted earnings per share:

                                                                  2002              2001             2000
                                                            ----------------------------------------------------
        Numerator:
          Income before cumulative effect of change in
            method of accounting for maintenance checks       $16,549,990       $54,867,773      $26,460,244
          Cumulative effect of change in method of
            accounting for maintenance checks                       -                 -              549,009
                                                            ----------------------------------------------------
          Net income                                          $16,549,990       $54,867,773      $27,009,253
                                                            ====================================================
        Denominator:
          Weighted average shares outstanding,
            basic                                              28,603,861        27,152,099       25,994,100
          Dilutive effect of employee stock options               911,289         1,260,094        1,521,439
          Dilutive effect of warrants                                -              430,590          769,493
                                                            ----------------------------------------------------
          Adjusted weighted-average shares
            outstanding, diluted
                                                               29,515,150        28,842,783       28,285,032
                                                            ====================================================
        Basic earnings per share:
          Income before cumulative effect of change in
            method of accounting for maintenance checks              0.58              2.02             1.02
          Cumulative effect of change in method of
            accounting for maintenance checks                         -                 -               0.02
                                                            ----------------------------------------------------
        Basic earnings per share                                     0.58              2.02             1.04
                                                            ====================================================
        Diluted earnngs per share:
        Before cumulative effect of
            change in accounting principle                           0.56              1.90             0.93
        Cumulative effect of change in
            accounting principle                                      -                 -               0.02
                                                            ----------------------------------------------------
        Diluted earnings per share                                   0.56              1.90             0.95
                                                            ====================================================

        For the  years  ending  March  31,  2002,  2001  and  2000,  the  Company  has  excluded  from its
        calculations  of diluted  earnings per share,  326,800,  97,500 and 247,500  options and warrants,
        with  exercise  prices  ranging  from  $15.14 to $24.17,  $15.19 to  $24.17,  and $8.55 to $11.05,
        respectively,  because the  exercise  price of the options and  warrants was less than the average
        market price of the common shares for the respective year.

**(12)    Concentration of Credit Risk**

        The  Company  does not  believe it is  subject to any  significant  concentration  of credit  risk
        relating  to  receivables.  At  March  31,  2002  and  2001,  64.9%  and  79.5%  of the  Company's
        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,  the United  States Postal  Service,  and the
        Internal  Revenue  Service.  Receivables  related to tickets sold are short-term,  generally being
        settled shortly after sale or in the month following ticket usage.

 **(13)   Commitments and Contingencies**

        From time to time, we are engaged in routine  litigation  incidental  to our business.  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 affect upon our business or financial condition.

        In March 2000,  the  Company  entered  into an  agreement  with AVSA,  S.A.R.L.,  as  subsequently
        amended,  to purchase up to 31 new Airbus  aircraft.  We have  agreed to firm  purchases  of 17 of
        these  aircraft,  and have options  remaining to purchase up to an additional 14 aircraft.  During
        the year ended March 31,  2002,  we took  delivery of three of these  aircraft.  The  remaining 14
        firm  aircraft are scheduled to be delivered in calendar  years 2002 through  2005.  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
        $420,000,000  at March 31,  2002.  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,  2002,  the  Company  has  made  pre-delivery  payments  totaling
        $44,658,899  to secure these  aircraft and option  aircraft.  Pre-delivery  payments due in fiscal
        year  2003  approximate  $38,124,359.  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 except for the three initial Airbus aircraft.

**(14)     Selected Quarterly Financial Data (Unaudited)**

                                            First                 Second                 Third                Fourth
                                           Quarter                Quarter               Quarter               Quarter
        2002
        ----
        Revenues                     $    123,316,357        $   116,006,211        $   92,556,856        $   113,195,301
                                     ===================     ===================    ==================    ===================
        Operating expenses           $    112,010,797        $   114,035,857        $   95,849,342        $   106,793,009
                                     ===================     ===================    ==================    ===================
        Net income                   $      7,739,597        $     7,278,583        $      908,623        $       623,187
                                     ===================     ===================    ==================    ===================
        Earnings per share:
          Basic                                  0.27                   0.26                  0.03                   0.02
                                     ===================     ===================    ==================    ===================
          Diluted                                0.26                   0.24                  0.03                   0.02
                                     ===================     ===================    ==================    ===================
        2001
        ----
        Revenues                     $    112,808,744        $   131,082,878        $  114,212,036        $   114,772,769
                                     ===================     ===================    ==================    ===================
        Operating expenses           $     87,435,488        $   100,489,658        $   99,549,616        $   104,680,345
                                     ===================     ===================    ==================    ===================
        Net income                   $     16,448,242        $    20,193,576        $   10,284,653        $     7,941,302
                                     ===================     ===================    ==================    ===================
        Earnings per share:
          Basic                                  0.62                   0.75                  0.38                   0.28
                                     ===================     ===================    ==================    ===================
          Diluted                                0.57                   0.69                  0.35                   0.27
                                     ===================     ===================    ==================    ===================******
```