Document:

<PAGE>

                                                                    EXHIBIT 10.1

             AMENDED AND RESTATED AIRCRAFT AND ENGINE USE AGREEMENT

         This Amended and Restated Aircraft Use Agreement (this "Agreement"), is
made as of the 1st day of January, 2004, by and between Kitty Hawk Aircargo,
Inc. ("Aircargo") and the Kitty Hawk Collateral Liquidating Trust, by Langdon
Asset Management, Inc., its Trust Manager (the "Trust").

         A.       Aircargo and the Trust entered into that certain Aircraft and
Engine Use Agreement dated as of September 30, 2002 (the "Original Agreement").

         B.       Aircargo and the Trust have determined to amend and restate
the Original Agreement in its entirety as set forth herein.

         C.       In consideration of the foregoing premises (which constitute
an integral part of this Agreement) and the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

         1.       Utilization of Airframes. Until the latest date shown on
Schedule A, Aircargo shall use the airframes identified on Schedule A (the
"Airframes") collectively, in total, a minimum of ***** block hours ("Block
Hours") per month (the "Minimum Airframe Usage"). Each Airframe shall be
available for use by Aircargo for purposes of this Agreement until the date set
forth opposite such Airframe on Schedule A (for each Airframe, the "Available to
Date"). Notwithstanding the foregoing, if for any reason during any month fewer
than four (4) heavy weight Airframes (the four current heavy weight Airframes
being N278US, N279US, N281KH and N284KH, and, collectively, the "Heavy Weight
Airframes") are available for Aircargo's use, the Minimum Airframe Usage for
such month will be reduced by ***** Block Hours for each of the four (4) heavy
weight Airframes not available for Aircargo's use. For purposes of determining
the Minimum Airframe Usage requirement in any month, the Available to Dates of
Airframes N278US and N279US set forth on Schedule A shall apply regardless of
whether Aircargo elects an Airframe Extension Option (as defined below) with
respect to such Airframes. In the event that any Airframe is not available for
use by Aircargo during any part of a month prior to the Available to Date
applicable to such Airframe, the Minimum Airframe Usage requirement for such
month shall be reduced by the number of Block Hours attributable to such
Airframe prorated for such part of the month for which such Airframe is
unavailable based on a thirty-day month.

         2.       Rates for Airframes. The Block Hour rate for utilization of
each of the Airframes shall be as follows:

<TABLE>
<CAPTION>
Airframe                 Rate per Block Hour
--------                 -------------------
<S>                      <C>
N278US                         $*****

N279US                         $*****

N281KH                         $*****

N284KH                         $*****
</TABLE>

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

<TABLE>
<CAPTION>
Airframe      Rate per Block Hour
--------      -------------------
<S>           <C>
N69739              $*****

N69740              $*****

N854AA              $*****

N855AA              $*****

N252US              $*****

N6809               $*****

N6827               $*****

N6833               $*****
</TABLE>

         3.       Modifications to Airframes. The Airframes shall be modified as
provided below. Such modifications shall be completed prior to the date required
by the rules and regulations of the Federal Aviation Administration:

                  a.       TCAS (traffic collision avoidance system) Avionics:
For any Airframe requiring the installation of TCAS avionics prior to the
Available to Date applicable to such Airframe, Aircargo will pay for the
installation of such TCAS avionics and the costs for the wiring of such Airframe
to accommodate the installation of the TCAS avionics. The Trust will reimburse
up to $***** of the costs incurred by Aircargo related to the installation of
the TCAS avionics for any such Airframe, including costs related to the
acquisition and installation of the TCAS avionics computer processor (the
"Computer Processor"), upon the receipt by the Trust of written demand for such
reimbursement from Aircargo. The Trust shall own the Computer Processor
following the installation of the TCAS avionics. In the event that Aircargo uses
any Airframe upon which TCAS avionics has been installed for less than *****
Block Hours following the installation of the TCAS avionics and prior to the
Available to Date applicable to such Airframe, Aircargo will, upon the receipt
by Aircargo of written demand notice from the Trust, reimburse the Trust the
lesser of: (i) ***** percent (*****%) of the actual cost of the Computer
Processor or (ii) $*****. If the Trust makes such demand and Aircargo pays the
Trust accordingly, ownership of the TCAS avionics will transfer to Aircargo. The
TCAS avionics shall include the Computer Processor, two (2) IVSI's, two (2)
antennas, a Mode S transponder, Radar Indication and related Control Head.

                  b.       RVSM (reduced vertical separation): For any Airframe
for which Aircargo requires the installation of an RVSM system prior to the
Available to Date applicable to such Airframe, the Trust will pay for the
installation of the RVSM system upon thirty (30) days written notice of demand
by Aircargo to install the RVSM system on such Airframe; provided, however, that
the Trust may, within a reasonable time, except as it pertains to an Airframe
upon which Aircargo has elected an Airframe Extension Option (as defined below),
in its sole discretion, elect not to install an RVSM system, at which time
Aircargo may elect to retire and remove the Airframe from Schedule A to this
Agreement. The cost of the parts of the RVSM system for which the Trust will be
obligated will not exceed $***** per Airframe.

                  c.       EGPWS/TAWS (enhanced ground proximity warning): For
any Airframe requiring the installation of an EGPWS/TAWS system prior to the
Available to Date applicable to such Airframe, the Trust will pay for the
installation of the EGPWS/TAWS system upon thirty

                                       2

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

(30) days written notice of demand by Aircargo to install the EGPWS/TAWS system
on such Airframe; provided, however, that the Trust may, within a reasonable
time, except as it pertains to an Airframe upon which Aircargo has elected an
Airframe Extension Option, in its sole discretion, elect not to install an
EGPWS/TAWS system at which time Aircargo may elect to retire and remove the
Airframe from Schedule A to this Agreement. The cost of the parts of the
EGPWS/TAWS system for which the Trust will be obligated will not exceed $*****
per Airframe.

         4.       Aircraft Extension Option.

                  a.       Aircargo may elect, in its sole discretion, to extend
the Available to Date of any or all of Airframes N278US, N279US, N69739 and
N69740 by delivering written notice of such election to the Trust at any time
prior to November 1, 2004 ("Airframe Extension Option"). In the event that any
such notice of election is delivered by Aircargo to the Trust, Aircargo shall
specify in such notice whether Aircargo elects "Option A-Long Term Extension
Option" ("Option A Election") or "Option B-Short Term Extension Option" ("Option
B Election") for any Airframe for which such Airframe Extension Option is
permitted; provided, however, that for Airframe N278US no Option B Election
shall be permitted. In the event that an Option A Election or an Option B
Election is made for any Airframe for which an Airframe Extension Option is
permitted, such election shall be governed by the terms of such Airframe
Extension Option set forth on Schedule B to this Agreement. For purposes of any
Airframe Extension Option listed on Schedule B, the terms "Heavy C check
commitment" and "Light C check commitment" shall refer to the maximum amount
that the Trust shall be obligated to pay for maintenance under such Airframe
Extension Option. The Trust's obligation with respect to the installation of a
9-G Bulkhead on Airframe N69740 shall not exceed $*****.

                  b.       In the event that Aircargo elects an Airframe
Extension Option with respect to any Airframe pursuant to Section 4(a) above and
the Trust fulfills its obligation to perform the Heavy C check commitment or
Light C check commitment maintenance applicable to such Airframe Extension
Option, Aircargo shall pay to the Trust an amount equal to the rate per Block
Hour applicable to such Airframe multiplied by the number of actual Block Hours
that such Airframe was used by Aircargo in the manner provided in Section 6 of
this Agreement. Upon the expiration of the Extended Available to Date applicable
to any Airframe Extension Option, Aircargo shall make an additional payment to
the Trust if the total number of Block Hours that Aircargo used the relevant
Airframe prior to the Extended Available to Date is less than the minimum Block
Hours commitment applicable to such Airframe Extension Option. Such payment
shall be made within thirty (30) days after the Extended Available to Date for
such Airframe Extension Option. The payment shall be in an amount equal to the
Block Hour rate applicable to such Airframe multiplied by the number of Block
Hours by which the minimum Block Hours commitment exceeds the actual total Block
Hours such Airframe was used by Aircargo prior to the Extended Available to
Date.

         5.       Transfer of Engines and Rates for Engines.

                  a.       Aircargo and the Trust agree and affirm that on
September 15, 2003, each party transferred certain engines that each such party
owned for certain engines owned by the

                                       3

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

other party. Aircargo and the Trust further agree and affirm that the transfer
of such engines from each party to the other constituted a transfer of all
ownership rights in the transferred engines to the other party, effective as of
September 15, 2003, and that each party will transfer all documents of title or
other documents or instruments evidencing ownership of the transferred engines
to the other party no later than February 27, 2004. The engines so transferred
are set forth on Schedule C to this Agreement. Aircargo and the Trust agree that
this Agreement shall serve as a bill of sale for such engine transfers. To the
extent that any Aircargo engine that was transferred to the Trust was subject to
a lien in favor of a secured creditor prior to September 15, 2003, the Trust
affirms that such lien shall remain in place until satisfied. Schedule D to this
Agreement sets forth the engines owned by the Trust as of December 3, 2003 (the
"Engines"), and sets forth the Block Hour rate that Aircargo will pay for the
use of each of the Engines from January 1, 2004 to December 31, 2007 (the
Available to Date of such Engines) regardless of whether such Engines are
installed on one of the Airframes, on an Aircargo airframe or on the airframe of
a third party. In the event that Aircargo does not elect an Airframe Extension
Option prior to November 1, 2004 for any of the Airframes identified in Schedule
B to this Agreement, the Trust or Aircargo may remove up to three Engines from
Schedule D of the type corresponding to such Airframe from Schedule A as
follows:

<TABLE>
<CAPTION>
                                           NUMBER OF ENGINES
AIRFRAME             ENGINE TYPE          AVAILABLE FOR REMOVAL
---------------------------------------------------------------
<S>                  <C>                  <C>
 N278US                JT8D-15                     3
---------------------------------------------------------------
 N279US                JT8D-15                     3
---------------------------------------------------------------
 N69739                JT8D-9A                     3
---------------------------------------------------------------
 N69740                JT8D-9A                     3
---------------------------------------------------------------
</TABLE>

                  b.       Prior to December 31, 2007, Aircargo will use the
Engines collectively, in total and on a pooled basis, for a minimum of *****
percent (*****%) of the expected Block Hour life of the Engines set forth on
Schedule D ("Minimum Engine Block Hours"). Aircargo shall pay to the Trust an
amount equal to the rate per Block Hour applicable to each Engine multiplied by
the actual number of Block Hours that such Engine was used by Aircargo in the
manner provided in Section 6 below. In the event that the total actual number of
Block Hours used for all Engines between January 1, 2004 and December 31, 2007
do not exceed the Minimum Engine Block Hours, within thirty (30) days after
December 31, 2007, Aircargo shall pay to the Trust an amount equal to the
Weighted Average Engine Block Hour Rate (as provided on Schedule D to this
Agreement) multiplied by the number of hours by which the Minimum Engine Block
Hours exceeds the total actual Engine Block Hours used by Aircargo. In the event
that any Engine is removed from Schedule D to this Agreement in the manner
provided in Section 9 below, the Minimum Engine Block Hours shall be reduced by
the expected Block Hour life attributable to such removed engine as provided on
Schedule D.

         6.       Monthly Payments.

                  a.       On or about the 10th day of each month after January
2004, Aircargo will provide to the Trust a schedule of the number of Block Hours
that each Airframe and each Engine was used in the immediately preceding month
and will pay to the Trust an amount equal to the applicable Block Hour rate for
each Airframe and each Engine multiplied by the actual

                                       4

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

number of Block Hours that each such Airframe and each such Engine was used in
the immediately preceding month.

                  b.       If for any month Aircargo fails to achieve the
Minimum Airframe Usage, then on the date that payment for actual usage for the
month is required under Section 6(a) above, Aircargo shall pay to the Trust an
amount equal to $***** multiplied by the number of Block Hours by which the
Minimum Airframe Usage exceeds the total actual number of Block Hours that the
Airframes were used in the immediately preceding month.

         7.       Maintenance. Aircargo will perform line maintenance of the
Airframes and Engines in accordance with Aircargo's current maintenance program.
Airframe maintenance shall be limited to "A" checks, "B" checks and Aircargo's
responsibility for repairs or incidental replacement of parts and rotables shall
not exceed $***** per Airframe for any such check or other event. If such repair
or incidental replacement of parts and rotables should exceed $***** and the
Trust elects not to pay the excess above $***** or a mutually agreed upon amount
of the excess above $*****, then that Airframe, at Aircargo's option, can be
deemed not available for Aircargo's use. . In the event that an Engine requires
more than $***** in Engine maintenance in order to remain in serviceable
condition and the Trust elects not to pay the excess above $***** or a mutually
agreed upon amount of the excess above $*****, then Aircargo may elect to
perform such maintenance at its own cost by electing to buy such Engine from the
Trust at a core value of $***** for 9A Engines and $***** for -15 Engines.

Aircargo shall be required to make any repairs, replacements or improvements to
any Airframe that are necessary as the result of an Airworthiness Directive or
Service Bulletin or similar requirement issued by any regulating body, such
amount not to exceed $***** per Airframe subject to cost sharing with the Trust
as reflected in Section 3, Section 4 and Schedule B. If such repair,
replacements or improvements to any Airframe that are necessary as a result of
an Airworthiness Directive or Service Bulletin or similar requirement issued by
an regulating body exceeds $***** other than those items subject to cost sharing
with the Trust as reflected in Section 3 and Section 4 and Schedule B, and the
Trust elects not to pay the excess above $***** or a mutually agreed upon amount
of the excess above $*****, then the Airframe, at Aircargo's option, can be
deemed not available for Aircargo's use.

         8.       Insurance. Aircargo shall cause the Airframes and Engines to
be covered by hull and liability insurance in accordance with Aircargo's current
fleet plan insurance program. Policies relating to such insurance shall show the
Trust as a loss payee and an additional insured; provided, however, that, for
any Airframe removed from Schedule A and for any Engines mounted on such
Airframe, Aircargo's obligation to insure the Airframe and such Engines shall
terminate upon the Trust's receipt of the Deliverables (as defined below).
Following the execution of this Agreement, each Airframe identified on Schedule
A shall be insured by Aircargo in an amount equal to that set forth opposite
such Airframe on Schedule E to this Agreement.

         9.       Removal of Engines and Airframes. In the event the Trust or
Aircargo elects to remove an Engine from Schedule D to this Agreement for any
reason, the Trust or Aircargo shall deliver written notice of removal of such
Engine from Schedule D at least sixty (60) days prior to

                                       5

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

the removal of such Engine. An Engine removed from Schedule D shall be referred
to as a "Terminated Engine." Within sixty (60) days of the receipt of such
notice, Aircargo shall deliver, other than in cases where Aircargo has elected
to buy an Engine as described under Section 7, physical possession of the
Terminated Engine to a place within the United States designated by the Trust,
and shall deliver for such Terminated Engine: (i) a current certificate of
airworthiness and (ii) all technical records, including, but not limited to,
current maintenance and operations records (all of the foregoing, for any
Terminated Engine, the "Deliverables"). In the event that Aircargo proposes to
deliver to the Trust free and clear title to an engine that is not owned by the
Trust in lieu of a Terminated Engine, Aircargo shall convey an engine of similar
type and condition (determined by a comparison of engine disc profiles and
limiters) to the Trust. The Trust shall pay the cost of all shipping and other
expenses required for the delivery of such Terminated Engine to the Trust;
provided, however, that Aircargo shall remove the Engine from any Airframe at
its own expense. In the event that any Airframes are removed from Schedule A
pursuant to the terms of this Agreement, the same procedure for the removal of
Terminated Engines shall apply to the removal of such Airframes.

         10.      Operation of Aircraft. Aircargo may operate the Airframes and
Engines in such types of service as Aircargo deems appropriate; provided,
however, that Aircargo shall not "Dry Lease" any of the Airframes or Engines.

         11.      Force Majeure. In the event that, through no action or
inaction on the part of Aircargo, Aircargo's fleet of 727 airframes or JT8D
engines (regardless of whether such airframes or engines are owned by Aircargo
or by the Trust) become unavailable for operation for service, the Minimum
Airframe Usage, Minimum Engine Usage and Block Hour commitment under any
Airframe Extension Option will be modified in the following manner:

                  a.       If Aircargo's fleet of 727 airframes or JT8D engines
become unavailable for a period of 180 days or less (a "Temporary Period"), then
the Available To Date of all Airframes and Engines will be extended by a number
of days equal to the length of the Temporary Period and Aircargo will continue
to be obligated to perform its obligations under the Agreement.

                  b.       If Aircargo's fleet of 727 airframes or JT8D engines
become unavailable for a period exceeding 180 days (a "Permanent Period"), then
Aircargo's obligations under the Minimum Airframe Usage, the Minimum Engine
Usage and any elected Airframe Extension Option will be terminated and Aircargo
shall be obligated only to pay any outstanding amounts due to the Trust related
to actual Airframe or actual Engine usage prior to the date of the event causing
the unavailability of such airframes or engines.

                  c.       Upon the occurrence of an event causing either a
Temporary Period or a Permanent Period of unavailability, all payments under
this Agreement shall be suspended following payment by Aircargo for the actual
Block Hour usage of any Airframes or Engines during the month in which such
event occurs. If such event causes a Temporary Period, then payments shall
resume pursuant to the terms of this Agreement at such time as either or both of
Aircargo's fleet of 727 airframes or JT8D engines again become available for
use.

                                       6

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

KITTY HAWK AIRCARGO, INC.                KITTY HAWK COLLATERAL LIQUIDATING TRUST

/s/ ROBERT W. ZOLLER, JR.                /s/ GLEN LANGDON
-------------------------                ---------------------------
By:                                      By: Langdon Asset Management, Inc.
                                         as Trust Manager
                                         Title: Glen Langdon, President

Title: President

                                       7

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

                                   SCHEDULE A

<TABLE>
<CAPTION>
AIRFRAMES                                              AVAILABLE TO DATE:
---------                                              ------------------
<S>                                                   <C>
N278US                                                December 31, 2004

N279US                                                December 31, 2004

N281KH                                                December 31, 2006

N284KH                                                March 31, 2006 (1)

N69739                                                December 31, 2004

N69740                                                December 31, 2004

N854AA                                                December 31, 2006

N855AA                                                September 30, 2004

N6827                                                 September 30, 2005

N252US                                                December 31, 2005

N6833                                                 June 30, 2006

N6809                                                 December 31, 2004
</TABLE>

(1)This Airframe will require a C check during the second quarter of 2004 and
such C check will be governed in accordance with the terms of the Original
Agreement.

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

                                   SCHEDULE B

AIRFRAME N278US:

<TABLE>
<S>                                                        <C>
OPTION A - LONG TERM EXTENSION OPTION
--------------------------------------------------------------------------------------
Trust Heavy C check commitment:                                                 $*****
--------------------------------------------------------------------------------------
Extended Available to date:                                          December 31, 2007
--------------------------------------------------------------------------------------
Trust TCAS avionics commitment:                                                 $*****
--------------------------------------------------------------------------------------
Trust RVSM costs commitment:                               Cost of parts up to  $*****
--------------------------------------------------------------------------------------
Trust TAWS cost commitment:                                Costs of parts up to $*****
--------------------------------------------------------------------------------------
Trust 9G Bulkhead cost commitment:                                                 N/A
--------------------------------------------------------------------------------------
Aircargo minimum Block Hours commitment:                                         *****
--------------------------------------------------------------------------------------
</TABLE>

Note:  there is no Short Term Extension Option available for N278US.

<TABLE>
<S>                                                         <C>
AIRFRAME N279US:
---------------------------------------------------------------------------------------
OPTION A - LONG TERM EXTENSION OPTION
---------------------------------------------------------------------------------------
Trust Heavy C check commitment:                                                  $*****
---------------------------------------------------------------------------------------
Extended Available to date:                                           December 31, 2007
---------------------------------------------------------------------------------------
Trust TCAS avionics commitment:                                                  $*****
---------------------------------------------------------------------------------------
Trust RVSM costs commitment:                                 Cost of parts up to $*****
---------------------------------------------------------------------------------------
Trust TAWS cost commitment:                                 Costs of parts up to $*****
----------------------------------------------------------------------------------------
Trust 9G Bulkhead cost commitment:                                                  N/A
---------------------------------------------------------------------------------------
Aircargo minimum Block Hours commitment:                                          *****
---------------------------------------------------------------------------------------
OPTION B - SHORT TERM EXTENSION OPTION
---------------------------------------------------------------------------------------
Trust Light C check commitment:                                                  $*****
---------------------------------------------------------------------------------------
Extended Available to date:                                           December 31, 2006
---------------------------------------------------------------------------------------
Trust TCAS avionics commitment:                                                  $*****
----------------------------------------------------------------------------------------
Trust RVSM cost commitment:                                  Cost of parts up to $*****
---------------------------------------------------------------------------------------
Trust TAWS cost commitment:                                 Costs of parts up to $*****
---------------------------------------------------------------------------------------
Trust 9G Bulkhead cost commitment:                                                  N/A
---------------------------------------------------------------------------------------
Aircargo minimum Block Hours commitment:                                          *****
---------------------------------------------------------------------------------------
</TABLE>

AIRFRAME N69739:

<TABLE>
<S>                                                         <C>
OPTION A - LONG TERM EXTENSION OPTION

---------------------------------------------------------------------------------------
Trust Light C check commitment:                                                  $*****
---------------------------------------------------------------------------------------
Extended Available to date:                                               June 30, 2008
---------------------------------------------------------------------------------------
Trust TCAS avionics commitment:                                                  $*****
---------------------------------------------------------------------------------------
Trust RVSM cost commitment:                                  Cost of parts up to $*****
---------------------------------------------------------------------------------------
Trust TAWS cost commitment:                                 Costs of parts up to $*****
---------------------------------------------------------------------------------------
Trust 9G Bulkhead cost commitment:                                                  N/A
---------------------------------------------------------------------------------------
Aircargo minimum Block Hours commitment:                                          *****
---------------------------------------------------------------------------------------
</TABLE>

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

<TABLE>
<S>                                                         <C>
OPTION B - SHORT TERM EXTENSION OPTION
---------------------------------------------------------------------------------------
Trust Light C check commitment:                                                  $*****
---------------------------------------------------------------------------------------
Extended Available to date:                                               June 30, 2007
---------------------------------------------------------------------------------------
Trust TCAS avionics commitment:                                                  $*****
---------------------------------------------------------------------------------------
Trust RVSM cost commitment:                                  Cost of parts up to $*****
---------------------------------------------------------------------------------------
Trust TAWS cost commitment:                                 Costs of parts up to $*****
---------------------------------------------------------------------------------------
Trust 9G Bulkhead cost commitment:                                                  N/A
---------------------------------------------------------------------------------------
Aircargo minimum Block Hours commitment:                                          *****
---------------------------------------------------------------------------------------
</TABLE>

AIRFRAME N69740:

<TABLE>
<S>                                                         <C>
OPTION A - LONG TERM EXTENSION OPTION
---------------------------------------------------------------------------------------
Trust Light C check commitment:                                                  $*****
---------------------------------------------------------------------------------------
Extended Available to date:                                               June 30, 2008
---------------------------------------------------------------------------------------
Trust TCAS avionics commitment:                                                  $*****
---------------------------------------------------------------------------------------
Trust RVSM cost commitment:                                  Cost of parts up to $*****
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Trust TAWS cost commitment:                                 Costs of parts up to $*****
---------------------------------------------------------------------------------------
Trust 9G Bulkhead cost commitment:                                               $*****
---------------------------------------------------------------------------------------
Aircargo minimum Block Hours commitment:                                          *****
---------------------------------------------------------------------------------------
OPTION B - SHORT TERM EXTENSION OPTION
---------------------------------------------------------------------------------------
Trust Light C check commitment:                                                  $*****
---------------------------------------------------------------------------------------
Extended Available to date:                                               June 30, 2007
---------------------------------------------------------------------------------------
Trust TCAS avionics commitment:                                                  $*****
---------------------------------------------------------------------------------------
Trust RVSM cost commitment:                                  Cost of parts up to $*****
---------------------------------------------------------------------------------------
Trust TAWS cost commitment:                                 Costs of parts up to $*****
---------------------------------------------------------------------------------------
Trust 9G Bulkhead cost commitment:                                               $*****
---------------------------------------------------------------------------------------
Aircargo minimum Block Hours commitment:                                          *****
---------------------------------------------------------------------------------------
</TABLE>

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

                                   SCHEDULE C

<TABLE>
<CAPTION>
 NO.                  TRUST ENGINE TRANSFERRED                             AIRCARGO ENGINE TRANSFERRED
 ---                  ------------------------                             ---------------------------
<S>                   <C>                                                  <C>
 1                            695270                                                655968

 2                            687662                                                674498

 8                            657394                                                696629

 11                           700579                                                707329 (9A)

 17                           665294                                                665348

 18                           665899                                                665230

 20                           648989                                                665676

 23                           656066                                                648784

 24                           665591                                                653365

 27                           653835                                                654158

 35                           654677                                                653897

 36                           654422                                                653619
</TABLE>

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

                                   SCHEDULE D
               Engines Owned by the Trust as of December 31, 2003

<TABLE>
<Caption>
                                                                                                              AMENDED
                                            FLIGHT          BLOCK                                              BLOCK      COST/REV
                     ENGINE                  HOUR           HOUR                      LIMITER                  HOUR       (BH LIFE
                      S/N                    LIFE           LIFE              LIMITER  TYPE        REMAINING   RATE        * RATE)
<S>                 <C>             <C>  <C>            <C>                   <C>     <C>          <C>         <C>      <C>

1                   648784-7B       7B       988            1,197               T-1    CYCLE           912     *****        *****
2                   649583-7B       7B   Unserviceable  unserviceable           C-7    DATE             19     *****    Unservicable
3                   653365-7B       7B     2,967            3,595               C-12   DATE             47     *****        *****
4                   653619-7B       7B     1,199            1,453               C-8    DATE             19     *****        *****
5                   653897-7B       7B       821              994               C-5    DATE             13     *****        *****
6                   654305-7B       7B       307              372               C-3    CYCLE           321     *****        *****
7                   654368-7B       7B       455              551               T-4    CYCLE           449     *****        *****
8                   654792-7B       7B       421              510               C-5    CYCLE           420     *****        *****
9                   654914-7B       7B       789              956               C-9    CYCLE           739     *****        *****
10                  657315-7B       7B       649              787               C-6    CYCLE           618     *****        *****
11                  657666-7B       7B       698              845               T-4    CYCLE           660     *****        *****
12                  649269-9A       9A     2,504            3,002               C-11   DATE             38     *****        *****
13                  665188-9A       9A     2,372            2,844               C-7    DATE             36     *****        *****
14                  665356-9A       9A       864            1,036               C-11   HOURS           930     *****        *****
15                  665676-9A       9A     3,163            3,792               C-7    DATE             48     *****        *****
16                  666031-9A       9A     3,163            3,792               C-8    DATE             48     *****        *****
17                  687788-9A       9A     1,977            2,370               C-8    DATE             31     *****        *****
18                  655968-15       15     5,133            5,760               C-11   DATE             46     *****        *****
19                  657070-15       15     2,798            3,141               C-4    HOURS         2,910     *****        *****
20                  674498-15       15     1,674            1,878               C-12   DATE             15     *****        *****
21                  685501-15       15     1,785            2,004               C-7    DATE             16     *****        *****
22                  687659-15       15     3,347            3,757               C-9    DATE             30     *****        *****
23                  687698-15       15     5,246            5,888               C-3    CYCLE         2,545     *****        *****
24                  688689-15       15     4,686            5,259               C-7    DATE             42     *****        *****
25                  696499-15A      15A    5,428            6,000               T-1    HOURS         5,428     *****        *****
26                  696629-15       15     2,120            2,379               C-11   DATE             19     *****        *****
27                  700377-15       15     4,408            4,947               T-1    CYCLE         2,147     *****        *****
28                  700451-15       15     1,932            2,169               T-1    HOURS         2,044     *****        *****
29                  700522-15       15     1,243            1,395               C-3    HOURS         1,243     *****        *****
30                  702952-15       15     1,562            1,753               C-8    DATE             14     *****        *****
                                          64,702           74,425                                                      $    *****

Postal Engines, NO FLY

                    654158-7B       7B                                          C-9    DATE                    *****
                    654979-7B       7B                                          C-10   DATE                    *****
                    665452-9A       9A                                          T-2    HOURS         1,881     *****
</TABLE>

<TABLE>
<S>                                       <C>        <C>
                                                     Actual 2003 Flight hour (*****) & Block hour (*****) data =
        BH/FH Conversion factor (average)   *****    *****.

        MINIMUM ENGINE BLOCK HOURS          *****     Pool rate:               *****%

WEIGHTED AVERAGE ENGINE BLOCK HOUR RATE:  $ *****    (TOTAL COST/TOTAL BH's)
</TABLE>

ENGINE TYPE AVERAGES

<TABLE>
<CAPTION>
                     AVG BLK HR          AVG FLT HR            AVG CYC     BLK HR / FLT HR    FLT HR/CYC
                       MONTH               MONTH                MONTH          RATIO             RATIIO
                       -----               -----                -----          -----             ------
<S>                  <C>                 <C>                    <C>        <C>                <C>
JT8D-7B                 *****               *****                *****         *****             *****
JT8D-9A                 *****               *****                *****         *****             *****
JT8D-15                 *****               *****                *****         *****             *****
</TABLE>

NOTES
                   - Postal Engines per Settlement Agreement

                   - Postal Engines per Settlement Agreement approved to fly.

                   Engine time limited to 48 months (1.1.03 - 12.31.07)

                   Engine hours limited to 48 month estimate

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"

<PAGE>

                                   SCHEDULE E

<TABLE>
<CAPTION>
AIRFRAMES                                              AVAILABLE TO DATE:
---------                                              ------------------
<S>                                                    <C>
 N278US                                                      $*****

 N279US                                                      $*****

 N281KH                                                      $*****

 N284KH                                                      $*****

 N69739                                                      $*****

 N69740                                                      $*****

 N854AA                                                      $*****

 N855AA                                                      $*****

  N6827                                                      $*****

 N252US                                                      $*****

 N6833                                                       $*****

 N6809                                                       $*****
</TABLE>

         Confidential Treatment has been requested by Kitty Hawk, Inc. for
         certain portions of this document. Confidential portions have been
         filed separately with the Securities and Exchange Commission. Omitted
         portions are indicated in this agreement with "*****"<PAGE>

                                                                    EXHIBIT 10.7

                  EMPLOYMENT AND SEVERANCE AGREEMENT AMENDMENT;
                     NOTICE OF TERMINATION, RESIGNATION, AND
                       OTHER SEVERANCE RELATED AGREEMENTS

                                   RECITATIONS

The parties to this EMPLOYMENT AND SEVERANCE AGREEMENT AMENDMENT; NOTICE OF
TERMINATION, RESIGNATION, AND OTHER SEVERANCE RELATED AGREEMENTS (this
"Severance Agreement") are Kitty Hawk, Inc. ("Kitty Hawk" or the "Company") and
Jack Andrew "Drew" Keith ("Keith", "Drew Keith", or "Participant").

Whereas, Kitty Hawk and Keith are parties to the EMPLOYMENT AND SEVERANCE
AGREEMENT (the "Agreement") dated effective October 3, 2002, a copy of which is
attached as Exhibit A; and

Whereas, Kitty Hawk and Keith are parties to the INCENTIVE STOCK OPTION
AGREEMENT - KITTY HAWK 2003 LONG TERM EQUITY INCENTIVE PLAN (the "Stock Option")
having a Date of Grant of July 30, 2003, a copy of which is attached as Exhibit
B; and,

Whereas, capitalized terms used herein will have the meaning ascribed to them in
the Agreement or the Stock Option unless otherwise defined herein; and,

Whereas, unless specifically modified, amended or provided for in this Severance
Agreement, the benefits, rights and obligations of the parties will continue to
be governed by the Agreement and the Stock Option; and,

Whereas, the Agreement and the Stock Option will continue to survive as amended
by this Severance Agreement; and,

Whereas, in order to minimize the disruption to Kitty Hawk's ongoing business
and provide for a smooth transition of Keith's corporate responsibilities to a
successor, Kitty Hawk and Keith have reached certain other agreements regarding
Keith's severance of employment from Kitty Hawk as set-forth herein;

Now; therefore, in consideration of the mutually acceptable terms and conditions
herein, Kitty Hawk and Keith agree as follows:

                                  Keith's Initials             /s/ DK

                                  Kitty Hawk's CEO Initials    /S/ RWZ

                                  Page 1 of 5

<PAGE>

                  EMPLOYMENT AND SEVERANCE AGREEMENT AMENDMENT

3.6 TERMINATION. The written notice requirement to terminate the Agreement is
amended to require 60 days in lieu of 30 days.

                              NOTICE OF TERMINATION

Kitty Hawk hereby terminates Keith's employment without material breach
effective December 31, 2003 pursuant to 3.6 TERMINATION., B. of the Agreement.
Keith hereby waives written notice as required pursuant to 6.3 NOTICES. of the
Agreement.

                                   RESIGNATION

Pursuant to notice of Termination given herein by Kitty Hawk, the amendments to
the Agreement as provided herein, and the other agreements reached in this
Severance Agreement, Keith resigns all positions he holds within Kitty Hawk,
Aircargo, and Cargo effective December 31, 2003 as provided in 3.6 TERMINATION.,
B. of the Agreement. Kitty Hawk hereby waives its right, if any, to a separate
letter of resignation as contemplated in 3.6 TERMINATION., B. of the Agreement.

                       OTHER SEVERANCE RELATED AGREEMENTS

CONSULTANT PERIOD: from January 1, 2004 through February 29, 2004 Keith will be
available to the Company as a full-time (or as needed) consultant and will
assist Kitty Hawk as directed by Kitty Hawk's President and CEO. As compensation
for this Consultant Period, Keith will receive all of the compensation, benefits
and rights afforded him as provided in the Agreement, as amended herein, for the
60-day notice period. The 60-day notice period provided in the Agreement, as
amended herein, and this Consultant Period are coterminous. During this
Consultant Period, Keith will adhere to and be subject to the Kitty Hawk Team
Member Guide (a copy of which has previously been provided to Keith).

STOCK OPTION: as additional consideration, Kitty Hawk agrees to provide that
Participant's Termination of Service (whereby Drew Keith is the Participant to
the Stock Option as defined therein) as it pertains to the Stock Option, will be
6 p.m. on June 1, 2004 in lieu of an earlier date certain as provided in the
Stock Option absent this Severance Agreement.

UNUSED VACATION: for the avoidance of doubt, Keith will be paid on or before
February 29, 2004 for any earned but unused vacation as of December 31, 2003.

                                  Keith's Initials             /s/ DK
                                                               ------------

                                  Kitty Hawk's CEO Initials    /s/ RWZ
                                                               ------------

                                  Page 2 of 5

<PAGE>

SEVERANCE AGREEMENT TERM: the term of this Severance Agreement will be January
1, 2004 through 6 p.m. June 1, 2004.

KEITH'S ADDITIONAL CONSIDERATION TO KITTY HAWK: in return for the additional
consideration provided to Keith in this Severance Agreement, Keith agrees to and
states:

1.       Keith will not bring, continue or maintain any legal proceedings of any
         nature whatsoever against the Company before any court, administrative
         agency, arbitrator or any other tribunal or forum by reason any such
         claims, demands, liabilities and/or causes of action, arising out of,
         relating to or resulting from Keith's employment or termination from
         employment (except for a claim of willful breach of the Agreement, the
         Stock Option or this Severance Agreement), and that if any agency or
         court assumes jurisdiction of any complaint, claim, or action against
         the Company on Keith's behalf, Keith will direct that agency or court
         to withdraw from or dismiss the matter with prejudice, unless it is a
         claim for willful breach of the Agreement, the Stock Option or this
         Severance Agreement.

2.       While Keith understands that Keith has had the following obligations
         since Keith began his employment with the Company, Keith confirms that
         he shall not disclose any of the Company's trade secrets or other
         confidential, proprietary or restricted information and shall not make
         use of such trade secrets or confidential, proprietary or restricted
         information in any fashion at any time.

3.       Keith further agrees and promises that during the term of this
         Severance Agreement and for period of one (1) year from June 1, 2004 he
         will not influence or attempt to influence customers or suppliers of
         the Company or any of its present or future subsidiaries or affiliates,
         either directly or indirectly, to divert their business to any
         individual, partnership, firm, corporation or other entity then in
         competition with the business of the Company, or any subsidiary or
         affiliate of the Company.

4.       Keith further agrees not to knowingly make any unsubstantiated
         statements that defame or disparage the Company or its products,
         services, officers, Team Members (as defined in the Team Member Guide),
         advisors or other business contacts. Keith shall not represent,
         suggest, or hold himself out as being currently associated or
         affiliated with the Company in any way. Keith shall not make contact
         with or engage in communications about the Company or its operations
         with the media, current or former Team Members of the Company, or
         current or former customers of the Company, provided, however, that if
         Keith is contacted by the media, current or former Team Members of the
         Company, current or former customers of the Company, the general
         public, or any other individual or entity, Keith shall not suggest or
         imply that Keith is privy to current information about the Company, and
         shall not comment about the current or prospective operations of the
         Company. Keith acknowledges and agrees that any breach of this
         non-defamation provision shall entitle the Company to immediately
         terminate payment of the additional

                                  Keith's Initials             /s/ DK
                                                               ------------

                                  Kitty Hawk's CEO Initials    /s/ RWZ
                                                               ------------

                                  Page 3 of 5

<PAGE>

         consideration provided to Keith as described in this Severance
         Agreement, and to sue Keith for breach of this Agreement for the
         immediate recovery of any damages caused by such breach and to prevent
         further statements that defame the Company or any of its products.
         services, officers, Team Members, advisors or other business contacts.

ADDITIONAL PROVISIONS: Kitty Hawk and Keith further agree and so state:

1.       This Severance Agreement does not constitute an admission of any kind
         by the Company or Keith, but simply an agreement which offers certain
         additional consideration to which Keith would not otherwise be entitled
         in return for Keith agreeing to the terms of and signing this Severance
         Agreement. Keith further understands and agrees that if Keith breaches
         a material term or condition of this Severance Agreement, Keith will
         automatically forfeit all of the additional consideration provided to
         him in this Severance Agreement. If Keith violates this Severance
         Agreement after receiving any additional consideration as provided
         herein, Keith agrees that Keith will forfeit and/or immediately return
         the additional consideration to the Company. In any action brought to
         enforce any provisions of the Agreement, the Stock Option, or this
         Severance Agreement, in addition to any other relief granted, the
         prevailing party shall recover its reasonable costs of enforcement
         including, but without limitations to costs and reasonable attorney
         fees incurred.

2.       The Company agrees not to make any unsubstantiated statements that
         defame Keith. The Company shall not make contact with or engage in
         communications about Kieth with (i) the media, current or former Team
         Members of the Company, or (ii) current or former advisors or business
         contacts of the Company. The Company acknowledges and agrees that any
         breach of this non-defamation provision shall entitle Keith to sue the
         Company for breach of this Severance Agreement and seek immediate
         recovery of any damages caused by such breach and to prevent the
         Company from further statements that defame Keith or any of Keith's
         products, services, or future employer.

3.       Keith acknowledges and agrees that Keith has been advised that this
         Severance Agreement is a final and binding legal document, and that
         Keith has had sufficient time and opportunity to consult with an
         attorney and/or tax consultant of his own choosing before signing this
         Severance Agreement, and that in signing this Severance Agreement,
         Keith has acted voluntarily of his own free will and has not relied
         upon any representation made by the Company or any of its agents, Team
         Members or representatives regarding the subject matter or effect of
         this Severance Agreement. Keith further agrees not to voluntarily make
         the terms and conditions or the circumstances surrounding this
         Severance Agreement known to anyone other than the attorney and/or tax
         consultant from whom Keith receives counseling, as referred above, and
         his spouse. However, before disclosing such information to these
         individuals, Keith will obtain their agreement not to disclose such
         information. If any

                                  Keith's Initials             /s/ DK
                                                               --------------

                                  Kitty Hawk's CEO Initials    /s/ RWZ
                                                               --------------

                                  Page 4 of 5

<PAGE>

         provision of this Severance Agreement is breached by Keith, Keith
         understands that Keith will be required to return to the Company the
         additional consideration given to him pursuant to this Severance
         Agreement.

4.       Keith understands that if Keith elects to revoke this Severance
         Agreement, Keith understands that Keith will not be entitled to the
         additional consideration described in this Severance Agreement.

5.       Keith acknowledges and agrees that all applicable requirements of state
         law governing or affecting the validity of compromises, settlements and
         releases are specifically incorporated herein as fully as if set forth
         at length.

6.       Keith also understands that if Keith signs this Severance Agreement,
         Keith will then have seven (7) days to revoke it, in writing, if Keith
         so chooses. However, if Keith elects to revoke this Severance
         Agreement, Keith understands that Keith will not be entitled to the
         additional consideration provided in this Severance Agreement. Keith
         realizes this Severance Agreement is not effective or enforceable until
         the seven (7) day period expires.

KEITH IS ENTERING INTO THIS SEVERANCE AGREEMENT FREELY AND VOLUNTARILY AND KEITH
IS SATISFIED THAT KEITH HAS BEEN GIVEN SUFFICIENT OPPORTUNITY TO CONSIDER IT.
KEITH HAS CAREFULLY READ AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS SEVERANCE
AGREEMENT. KEITH UNDERSTANDS THAT THIS SEVERANCE AGREEMENT, TAKEN TOGETHER WITH
THE AGREEMENT AND STOCK OPTION, SET FORTH THE ENTIRE AGREEMENT BETWEEN KEITH AND
THE COMPANY. KEITH REPRESENTS THAT NO OTHER STATEMENTS, PROMISES, OR COMMITMENTS
OF ANY KIND, WRITTEN OR ORAL, HAVE BEEN MADE TO KEITH BY THE COMPANY TO CAUSE
KEITH TO ACCEPT THIS SEVERANCE AGREEMENT. KEITH ACKNOWLEDGES ACCEPTANCE OF THIS
SEVERANCE AGREEMENT BY SIGNATURE BELOW:

/s/ Jack Andrew "Drew" Keith                                         2/18/2004
-------------------------------------------                          -----------
Jack Andrew "Drew" Keith                                             Date

Agreed to and accepted on behalf of Kitty Hawk, Inc.:

/s/ Bob Zoller, President and CEO                                    2/17/2004
------------------------------------------                           -----------
Bob Zoller, President and CEO                                        Date

                                  Keith's Initials             /s/ DK
                                                               --------------

                                  Kitty Hawk's CEO Initials    /s/ RWZ
                                                               --------------

                                  Page 5 of 5

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