10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2005

Commission File Number 0-15495

Mesa Air Group, Inc.

(Exact name of registrant as specified in its charter)

Nevada	85-0302351
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
410 North 44th Street, Suite 700, Phoenix, Arizona (Address of principal executive offices)	85008 (Zip Code)

Registrant’s telephone number, including area code:

(602) 685-4000

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes o          No þ

      If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.     Yes o          No þ

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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.     o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Act Rule 12b-2).     Yes þ          No o

      Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).     Yes o          No þ

      The aggregate market value of the voting stock held by non-affiliates of the Registrant as of December 1, 2005: Common Stock, no par value: $305.6 million.

      On December 1, 2005, the Registrant had outstanding 29,086,346 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the registrant’s proxy statement for the 2006 annual meeting of stockholders

MESA AIR GROUP, INC.

2005 FORM 10-K REPORT

TABLE OF CONTENTS

		Page
		No.
PART I
Item 1.	Business		3
Item 1A.	Risk Factors		13
Item 1B.	Unresolved Staff Comments		20
Item 2.	Properties		20
Item 3.	Legal Proceedings		21
Item 4.	Submission of Matters to a Vote of Security Holders		22
PART II
Item 5.	Market Price for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities		23
Item 6.	Selected Financial Data		25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk		42
Item 8.	Financial Statements and Supplementary Data		43
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		75
Item 9A.	Controls and Procedures		75
Item 9B.	Other Information		77
PART III
Item 10.	Directors and Executive Officers of the Registrant		77
Item 11.	Executive Compensation		77
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		77
Item 13.	Certain Relationships and Related Transactions		77
Item 14.	Principal Accountant Fees and Services		77
PART IV
Item 15.	Exhibits, Financial Statement Schedules		77
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.14
Exhibit 10.15
Exhibit 10.34
Exhibit 10.36
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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PART I

Forward-Looking Statements

      This Form 10-K Report contains certain statements including, but not limited to, information regarding the replacement, deployment, and acquisition of certain numbers and types of aircraft, and projected expenses associated therewith; costs of compliance with Federal Aviation Administration regulations and other rules and acts of Congress; the passing of taxes, fuel costs, inflation, and various expenses to the consumer; the relocation of certain operations of Mesa; the resolution of litigation in a favorable manner and certain projected financial obligations. These statements, in addition to statements made in conjunction with the words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” and similar expressions, are forward-looking statements within the meaning of the Safe Harbor provision of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the future financial performance of Mesa and only reflect management’s expectations and estimates. The following is a list of factors, among others, that could cause actual results to differ materially from the forward-looking statements: changing business conditions in certain market segments and industries; changes in Mesa’s code-sharing relationships; the inability of America West, Delta Air Lines, US Airways or United Airlines to pay their obligations under the code-share agreements; the inability of United Airlines to successfully restructure and emerge from bankruptcy; the ability of Delta Air Lines to reject our code-share agreements in bankruptcy; the inability to transition the planes we currently fly under our code-share agreement with US Airways without undue cost and expense; an increase in competition along the routes Mesa operates or plans to operate; material delays in completion by the manufacturer of the ordered and yet-to-be delivered aircraft; availability and cost of funds for financing new aircraft; changes in general economic conditions; changes in fuel price; changes in regional economic conditions; Mesa’s relationship with employees and the terms of future collective bargaining agreements; the impact of current and future laws; additional terrorist attacks; Congressional investigations, and governmental regulations affecting the airline industry and Mesa’s operations; bureaucratic delays; amendments to existing legislation; consumers unwilling to incur greater costs for flights; unfavorable resolution of negotiations with municipalities for the leasing of facilities; and risks associated with the outcome of litigation. One or more of these or other factors may cause Mesa’s actual results to differ materially from any forward-looking statement. Mesa is not undertaking any obligation to update any forward-looking statements contained in this Form 10-K.

      All references to “we,” “our,” “us,” or “Mesa” refer to Mesa Air Group, Inc. and its predecessors, direct and indirect subsidiaries and affiliates.

Item 1. Business

General

      Mesa Air Group, Inc. (“Mesa” or the “Company”) is a holding company whose principle subsidiaries operate as regional air carriers providing scheduled passenger and airfreight service. As of September 30, 2005, the Company served 176 cities in 43 states, the District of Columbia, Canada and Mexico and operated a fleet of 182 aircraft with approximately 1,100 daily departures.

      Approximately 99% of our consolidated passenger revenues for the fiscal year ended September 30, 2005 were derived from operations associated with code-share agreements. Our subsidiaries have code-share agreements with America West Airlines, Inc. (“America West”), Midwest Airlines, Inc. (“Midwest Airlines”), United Airlines, Inc. (“United Airlines” or “United”) and US Airways, Inc. (“US Airways”). These code-share agreements allow use of the code-share partners’ flight designator code to identify flights and fares in computer reservation systems, permit use of logos, service marks, aircraft paint schemes and uniforms similar to the code-share partner and provide coordinated schedules and joint advertising. The remaining passenger revenues are derived from our independent operations. On October 1, 2005, we commenced flight operations as Delta Connection under a code-share agreement with Delta Air Lines, Inc. (“Delta”).

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      In addition to carrying passengers, we carry freight and express packages on our passenger flights and have interline small cargo freight agreements with many other carriers. We also have contracts with the U.S. Postal Service for carriage of mail to the cities we serve and occasionally operate charter flights when our aircraft are not otherwise used for scheduled service.

      Our airline operations are conducted by the following airline subsidiaries:

•  Mesa Airlines, Inc. (“Mesa Airlines”), a Nevada corporation, operates regional jet and turboprop aircraft as America West Express under a code-share agreement with America West, primarily at America West’s operations hubs located in Phoenix and Las Vegas; as US Airways Express under a code-share agreement with US Airways, primarily at US Airways’ hubs on the East Coast; and as United Express under a code-share agreement with United Airlines, at various United hubs across the country.

•  Air Midwest, Inc. (“Air Midwest”), a Kansas corporation, operates Beechcraft 1900D 19-seat turboprop aircraft as US Airways Express under a code-share agreement with US Airways at certain US Airways’ hubs on the East Coast as well as Kansas City. Air Midwest’s flights in Kansas City code-share with both Midwest Airlines and US Airways. Air Midwest operates as America West Express in Phoenix. Air Midwest also operates as Mesa Airlines in Albuquerque, New Mexico and in select Essential Air Service (“EAS”) markets. The Albuquerque flights and certain EAS markets are “Independent Operations” and are not subject to a code-sharing agreement with a major carrier.

•  Freedom Airlines, Inc. (“Freedom”), a Nevada corporation, commenced flight operations using ERJ-145 50-seat regional jets as Delta Connection on October 1, 2005 under a code-share agreement with Delta primarily between Orlando, Florida and designated outlying cities. Freedom previously operated Beechcraft 1900D 19-seat turboprop aircraft and CRJ-700 and 900 regional jets pursuant to the Company’s code-share agreement with America West.

      Unless the context indicates otherwise, the terms “Mesa,” “the Company,” “we,” “us,” or “our,” refer to Mesa Air Group, Inc. and its subsidiaries.

Corporate Structure

      Mesa is a Nevada corporation with its principal executive office in Phoenix, Arizona.

      In addition to operating the airline subsidiaries listed above, we also have the following other subsidiaries:

•  MPD, Inc., a Nevada corporation, doing business as Mesa Pilot Development and MPD, operates training programs for student pilots in conjunction with San Juan College in Farmington, New Mexico and Arizona State University in Tempe, Arizona.

•  Regional Aircraft Services, Inc., (“RAS”) a California corporation, performs aircraft component repair, certain overhaul services, and ground handling services, primarily to Mesa subsidiaries.

•  MAGI Insurance, Ltd., a Barbados, West Indies based captive insurance company, was established for the purpose of obtaining more favorable aircraft liability insurance rates.

•  Ritz Hotel Management Corp., a Nevada Corporation, was established to facilitate the Company’s acquisition and management of a Phoenix area hotel property used for crew-in-training accommodations.

•  Mesa Air Group — Airline Inventory Management, LLC (“MAG-AIM”), an Arizona Limited Liability Company, was established to purchase, distribute and manage Mesa’s inventory of spare rotable and expendable parts.

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Aircraft in Operation

      The following table sets forth our aircraft fleet (owned and leased) in operation by aircraft type as of September 30, 2005:

		Canadair		Canadair		Canadair		Embraer
		Regional		Regional		Regional		Regional
		Jet-200		Jet-700		Jet-900		Jet-145		Beechcraft		DeHavilland
		(CRJ-200)		(CRJ-700)		(CRJ-900)		(ERJ-145)		1900D		Dash 8-200		Total
US Airways Express			23		—		—		36		14		—		73
America West Express			18		—		37		—		2		6		63
United Express			15		15		—		—		—		10		40
Mesa Airlines			—		—		—		—		6		—		6
	Total		56		15		37		36		22		16		182

Code-Share Agreements

      Our airline subsidiaries have agreements with America West, Delta, US Airways, United Airlines and Midwest Airlines to use those carriers’ designation codes (commonly referred to as “code-share agreements”). These code-share agreements allow use of the code-share partner’s flight designator code to identify flights and fares in computer reservation systems, permit use of logos, service marks, aircraft paint schemes and uniforms similar to the code-share partner’s and provide coordinated schedules and joint advertising. Our passengers traveling on flights operated pursuant to code-share agreements receive mileage credits in the respective frequent flyer programs of our code-share partners, and credits in those programs can be used on flights operated by us.

      The financial arrangement with our code-share partners involves either a revenue-guarantee or pro-rate arrangement. The America West (regional jet and Dash-8), Delta (regional jet), United (regional jet and Dash-8), and US Airways (regional jet) code-share agreements are revenue-guarantee code-share agreements. Under the terms of these code-share agreements, the major carrier controls marketing, scheduling, ticketing, pricing and seat inventories. We receive a guaranteed payment based upon a fixed minimum monthly amount plus amounts related to departures and block hours flown in addition to direct reimbursement of expenses such as fuel, landing fees and insurance. Among other advantages, revenue-guarantee arrangements reduce the Company’s exposure to fluctuations in passenger traffic and fare levels, as well as fuel prices. The US Airways, Midwest Airlines and America West Beechcraft 1900D turboprop code-share agreements are pro-rate agreements, for which we receive an allocated portion of each passenger’s fare and pay all of the costs of transporting the passenger.

      The following table summarizes our available seat miles (“ASMs”) flown and revenue recognized under our code-share agreements for the years ended September 30, 2005 and 2004:

	Fiscal 2005								Fiscal 2004
					Passenger								Passenger
	ASM’s				Revenue				ASM’s				Revenue
	(In thousands)
America West (Revenue-Guarantee)		4,360,713	50	%	$	487,221	44	%		2,983,969	42	%	$	323,889	37	%
US Airways (Revenue-Guarantee)		2,401,808	28	%		316,072	29	%		2,471,476	35	%		304,290	35	%
United (Revenue-Guarantee)		1,748,466	20	%		260,541	24	%		1,269,454	18	%		171,493	20	%
US Airways (Pro-Rate)*		112,514	1	%		25,101	2	%		211,195	3	%		47,177	5	%
Mesa Airlines		71,257	1	%		8,590	1	%		94,269	1	%		9,568	1	%
America West (Pro-Rate)		20,991	—			5,025	—			21,372	—			4,558	1	%
Frontier (Revenue-Guarantee)		—	—			—	—			55,949	1	%		7,440	1	%
Total		8,715,749			$	1,102,550				7,107,684			$	868,415

*  Amount includes the ASM’s and Passenger Revenue associated with the Midwest Airlines (Pro-Rate) code-share agreement.

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America West Code-Sharing Agreement

Revenue-Guarantee

      As of September 30, 2005, we operated 37 CRJ-900 (a 38^th CRJ-900 entered service for America West in October), 18 CRJ-200, and six Dash-8 aircraft for America West under a revenue-guarantee code-share agreement. In exchange for providing flights and all other services under the agreement, we receive a fixed monthly minimum amount plus certain additional amounts based upon the number of flights flown and block hours performed during the month. America West also reimburses us for certain costs on an actual basis, including fuel costs, aircraft ownership and financing costs, landing fees, passenger liability and hull insurance, and aircraft property taxes, all as defined in the agreement. In addition, America West also provides, at no cost to Mesa, certain ground handling and customer service functions, as well as airport-related facilities and gates at America West hubs and cities where both carriers operate. We also receive a monthly payment from America West based on a percentage of revenue from flights that we operate under the code-share agreement. Under the amended code-share agreement, America West has the right to reduce the combined CRJ fleets utilized under the code-share agreement by one aircraft in any six-month period commencing in June 2006 (except during the calendar year 2007 in which 2 CRJ-200 can be eliminated in each six-month period). In addition, beginning in February 2007, America West may eliminate the Dash-8 aircraft upon 180 days prior written notice. The code-share agreement terminates on June 30, 2012 unless America West elects to extend the contract for two years or exercises options to increase fleet size. The code-share agreement is subject to termination prior to that date in various circumstances including:

•  If our flight completion factor or arrival performance in the Phoenix Hub falls below a specified percentage for a specified period of time, subject to notice and cure rights;

•  If either America West or we become insolvent, file for bankruptcy or fail to pay our debts as they become due, the non-defaulting party may terminate the agreement;

•  Failure by us or America West to perform the covenants, conditions or provisions of the code-sharing agreement, subject to 15 days notice and cure rights;

•  If we or America West fails to make a payment when due, subject to ten business days notice and cure rights; or

•  If we are required by the FAA or the U.S. Department of Transportation (“DOT”) to suspend operations and we have not resumed operations within three business days, except as a result of an emergency airworthiness directive from the FAA affecting all similarly equipped aircraft, America West may terminate the agreement.

      On September 16, 2005, the merger of US Airways Group, Inc., the parent company of US Airways, Inc., and America West Holdings, the parent company of America West Airlines, Inc. was completed. The new US Airways Group will operate under a single brand name of US Airways through two principal operating subsidiaries, US Airways, Inc. and America West Airlines, Inc. We will continue to provide regional jet airline services for US Airways Group pursuant to our code-share agreement with America West Airlines.

Pro-Rate

      Pursuant to a turboprop code-share agreement with America West, we operated two Beechcraft 1900D turboprop aircraft in the Phoenix hub under a pro-rate revenue-sharing arrangement as of September 30, 2005. We control scheduling, inventory and pricing. We are allocated a portion of each passenger’s fare based on a standard industry formula and are required to pay all costs of transporting the passenger. The pro-rate agreement terminates on March 31, 2012 unless America West elects to extend the contract for successive one-year periods. The pro-rate agreement could also be terminated prior to the termination under similar circumstances as the revenue-guarantee agreement.

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US Airways Code-Sharing Agreements

Revenue-Guarantee

      As of September 30, 2005, we operated 23 CRJ-200 and 36 ERJ-145 aircraft for US Airways under a code-sharing agreement. As a result of US Airways’ emergence from bankruptcy and their non-assumption of our code-share agreement, we began working with US Airways to provide for the orderly transition of these 59 jets to our United and Delta revenue-guarantee code-sharing arrangements. As of December 1, 2005, we had transitioned 32 of the 59 aircraft and operated 27 50-seat regional jets for US Airways under our code-sharing agreement. We expect to complete the transition of aircraft from US Airways to United in the first quarter of fiscal year 2006 and to Delta in the second quarter of fiscal year 2006. Under the jet code-share agreement, we provide US Airways Express service between US Airways hubs and cities designated by US Airways. In exchange for performing the flight services under the agreement, we receive from US Airways a fixed monthly minimum amount, plus certain additional amounts based upon the number of flights flown and block hours performed during the month. Additionally, certain costs incurred by us in performing the flight services are “pass-through” costs, whereby US Airways agrees to reimburse us for the actual amounts incurred for these items: insurance, property tax per aircraft, fuel and oil cost, catering cost and landing fees. We also receive a fixed profit margin based upon certain cost reimbursements under the agreement. In addition, US Airways also provides, at no cost to Mesa, certain ground handling and customer service functions, as well as, airport-related facilities and gates at US Airways hubs and cities.

Pro-Rate

      Pursuant to a turboprop code-sharing agreement with US Airways, we operated 14 Beechcraft 1900D turboprop aircraft under a pro-rate revenue-sharing arrangement as of September 30, 2005. We control scheduling, inventory and pricing subject to US Airways’ concurrence that such service does not adversely affect its other operations in the region. We are allocated a portion of each passenger’s fare based on a standard industry formula and are required to pay all the costs of transporting the passenger. Additionally, we are required to pay certain franchise, marketing and reservation fees to US Airways.

      US Airways may terminate the turboprop agreement at any time for cause upon not less than five days notice under any of the following conditions:

•  If we fail to utilize the aircraft as specified in the agreements.

•  If we fail to comply with the trademark license provisions of the agreement.

•  If we fail to perform the material terms, covenants or conditions of the code-sharing agreement.

•  Upon a change in our ownership or control without the written approval of US Airways.

      The turboprop code-share agreement terminates in October 2006, provided, however, most of the turboprop flying hub markets can be terminated by US Airways for any reason upon 180 days prior advance written notice.

United Code-Sharing Agreement

      As of September 30, 2005, we operated 15 CRJ-200, 15 CRJ-700 and 10 Dash-8 aircraft for United under a code-sharing arrangement. The code-share agreement provides that we can increase our fleet to 45 50-seat and 30 70-seat regional jet aircraft (15 of which would be replacements for 15 CRJ-200s). In exchange for performing the flight services under the agreement, we receive from United a fixed monthly minimum amount, plus certain additional amounts based upon the number of flights flown and block hours performed during the month. Additionally, certain costs incurred by us in performing the flight services are “pass-through” costs, whereby United agrees to reimburse us for the actual amounts incurred for these items: insurance, property tax per aircraft, fuel cost, oil cost, catering cost and landing fees. We also receive a profit margin based upon certain reimbursable costs under the agreement as well as our operational performance. The code-share agreement for (i) the ten Dash-8 aircraft terminates in July 2013 unless terminated by United by giving notice six months prior to April 30, 2010, (ii) the 15 50-seat CRJ-200s terminates no later

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than April 30, 2010, which can be accelerated up to two years at our discretion, (iii) the 15 70-seat regional jets (to be delivered upon the withdrawal of the 50-seat regional jets) terminates ten years from delivery date, but no later than October 31, 2018, and (iv) the remaining 15 70-seat regional jets terminates in three tranches between December 31, 2011 and December 31, 2013. The code-share agreement is subject to termination prior to these dates under various circumstances including:

•  If certain operational performance factors fall below a specified percentage for a specified time, subject to notice and cure rights;

•  Failure by us to perform the material covenants, agreements, terms or conditions of the code-share agreement or similar agreements with United, subject to thirty (30) days notice and cure rights; or

•  If either United or we become insolvent, file bankruptcy or fail to pay debts when due, the non-defaulting party may terminate the agreement.

Delta Code-Sharing Agreement

      On October 1, 2005, we commenced flight operations for Delta under a code-sharing agreement. Flight operations for Delta are performed by our wholly-owned subsidiary, Freedom Airlines. The code-share agreement provides that we increase our fleet to 30 50-seat regional jet aircraft. In exchange for performing the flight services and our other obligations under the agreement, we receive from Delta monthly compensation made up of a fixed monthly amount, plus certain additional amounts based upon number of block hours flown and departures during the month. Additionally, certain costs incurred by Freedom are pass-through costs, whereby Delta agrees to reimburse us for the actual amounts incurred for these items: landing fees, hull insurance, passenger liability costs, fuel costs, catering costs and property taxes. Aircraft rent/ownership expenses are also considered a pass-through cost, but are limited to a specified amount for each type of aircraft. We are eligible to receive additional compensation based upon our completion rate and on-time arrival rate each month. Further, for each semi-annual period during the term of the agreement, we are eligible to receive additional compensation from Delta based upon performance. The fixed rates payable to us by Delta under the code-sharing agreement have been determined through the term of such agreement and are subject to annual revision.

      The code-share agreement terminates on an aircraft-by-aircraft basis between 2017 and 2018. At the end of the term, Delta has the right to extend the agreement for additional one year successive terms on the same terms and conditions. Delta may terminate the code-sharing agreement at any time, with or without cause, upon twelve months prior written notice, provided such notice shall not be given prior to the earlier of (i) the sixth anniversary of the in-service date of the 30^th aircraft added to the Delta Connection fleet by the Company, or (ii) November 2012. However, Delta has not yet assumed our code-share agreement in its bankruptcy proceedings and could choose to terminate this agreement at any time prior to its emergence from bankruptcy.

      This agreement may be subject to early termination under various circumstances including:

•  If either Delta or we file for bankruptcy, reorganization or similar action or if either Delta or we make an assignment for benefit of creditors;

•  If either Delta or we commit a material breach of the code-share agreement, subject to 30 days notice and cure rights; or

•  Upon the occurrence of an event of force majeure that continues for a period of 30 or more consecutive days.

      In addition, Delta may immediately terminate the code-share agreement upon the occurrence of one or more of the following events:

•  If there is a change of control of Freedom or Mesa;

•  If there is a merger involving Freedom or Mesa;

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•  If we fail to maintain a specified completion rate with respect to the flights we operate for Delta during a specified period; or

•  If our level of safety is not reasonably satisfactory to Delta.

Fleet Plans and Aircraft Manufacturer Relationships

Interim Financing of Aircraft

      Upon delivery of an aircraft from the manufacturer it is our customary business practice to enter into an interim financing arrangement with the manufacturer until such time as permanent financing as an operating lease or debt can be arranged. Under interim financing arrangements, we take delivery and title of the aircraft prior to securing permanent financing and the acquisition of the aircraft is accounted for as a purchase with debt financing. Accordingly, we reflect the aircraft and debt under interim financing on our balance sheet during the interim financing period. The interim financing period can be for up to six months after delivery of the aircraft. This practice allows us to take delivery and begin operating aircraft quicker while arranging permanent financing, either as an operating lease or with debt, with an independent third party.

      At September 30, 2005, we had $54.6 million in notes payable to an aircraft manufacturer for two aircraft on interim financing. These interim financing agreements are six months in length and provide for monthly interest only payments at LIBOR plus three percent. The current interim financing agreement with the manufacturer provides for the Company to have a maximum of 15 aircraft on interim financing at a given time.

ERJ Program

      In June 1999, we entered into an agreement with Empresa Brasiliera de Aeronautica SA (“Embraer”) to acquire 36 Embraer ERJ-145 50-passenger regional jets. Mesa introduced the ERJ-145 aircraft into revenue service in the third quarter of fiscal 2000. As of September 30, 2005, we have taken delivery of all 36 ERJ-145s, which have been financed as operating leases with initial terms of 16.5 to 18 years. We also have options for 45 additional aircraft. In May 2005, our contract with Embraer was amended to extend the option exercise date to December 2005 for deliveries beginning in May 2007.

CRJ Program

      In August 1996, we entered into an agreement (the “1996 BRAD Agreement”) with Bombardier Regional Aircraft Division (“BRAD”) to acquire 32 CRJ-200 50-passenger regional jet aircraft. The 32 aircraft have been delivered and are currently under permanent financing as operating leases with initial terms ranging from 16.5 to 18.5 years. The Company has also entered into operating leases for 24 previously-operated CRJ-200s under both short and long-term leases.

      In May 2001, we entered into a second agreement with BRAD (the “2001 BRAD Agreement”) under which we committed to purchase a total of 15 CRJ-700s and 25 CRJ-900s. In January 2004, the Company exercised options to purchase 20 CRJ-900 aircraft (seven of which can be converted to CRJ-700 aircraft) reserved under the option provision of the 2001 BRAD Agreement. The transaction includes standard product support provisions, including training, preferred pricing on initial inventory provisioning, maintenance and technical publications. As of September 30, 2005, we have accepted delivery of 15 CRJ-700s and 37 CRJ-900 aircraft. The Company accepted its 38^th CRJ-900 in October 2005. We also have firm orders for seven additional CRJ-900s (which can be converted to CRJ-700s). In addition to the firm orders, we have an option to acquire an additional 72 CRJ-700 or CRJ-900 regional jets that are exercisable through 2009 and 40 CRJ-700 and CRJ-900 regional jets that are exercisable in 2010 and beyond. In conjunction with the 2001 BRAD Agreement, we had $15.0 million on deposit with BRAD, which was included with lease and equipment deposits at September 30, 2005.

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Beechcraft 1900D

      As of September 30, 2005, we owned 35 Beechcraft 1900D aircraft and were operating 22 of these aircraft. During fiscal year 2005, the Company leased four of its Beechcraft 1900D aircraft to Gulfstream International Airlines (“Gulfstream”), a regional turboprop air carrier based in Ft. Lauderdale, Florida for a term of five years. In January 2005, we entered into an agreement to lease ten of our Beechcraft 1900D aircraft to Big Sky Transportation Co. (“Big Sky”), a regional turboprop carrier based in Billings, Montana. As of September 30, 2005, we had leased nine aircraft to Big Sky and leased the tenth aircraft to Big Sky in the first quarter of fiscal 2006 for a term of five years.

Dash-8

      As of September 30, 2005, we operated 16 leased Dash-8 aircraft.

Marketing

      Our flight schedules are structured to facilitate the connection of our passengers with the flights of our code-share partners at their hub airports and to maximize local and connecting service to other carriers.

      Under the America West, Delta, US Airways and United revenue-guarantee code-share agreements, market selection, pricing and yield management functions are performed by our respective partners. The market selection process for our B1900 turboprop operations, outside the Essential Air Service program flights, includes an in-depth analysis on a route-by-route basis and is followed by a review and approval process in a joint effort with US Airways or America West, as the case may be, regarding the level of service and fares. We believe that this selection process enhances the likelihood of profitability in a given market.

      Under our code-share agreements, the code-share partner coordinates advertising and public relations within their respective systems. In addition, our traffic is impacted by the major airline partners’ advertising programs in regions outside those served by us, with the major partners’ customers becoming our customers as a result of through fares. Under pro-rate code-share arrangements, our passengers also benefit from through fare ticketing with the major airline partners and greater accessibility to our flights on computer reservation systems and in the Official Airline Guide.

      Our pro-rate agreements and independent flights are promoted through, and our revenues are generally believed to benefit from, listings in computer reservation systems, the Official Airline Guide and through direct contact with travel agencies and corporate travel departments. Our independent operations utilize SABRE, a computerized reservation system widely used by travel agents, corporate travel offices and other airlines. The reservation systems of our code-share partners are also utilized in each of our other operations through their respective code-share agreements. We also pay booking fees to owners of other computerized reservation systems based on the number of independent and pro-rate passengers booked by travel agents using such systems. We believe that we have good relationships with the travel agents serving our passengers.

Competition

      The airline industry is highly competitive and volatile. Airlines compete in the areas of pricing, scheduling (frequency and timing of flights), on-time performance, type of equipment, cabin configuration, amenities provided to passengers, frequent flyer plans, and the automation of travel agent reservation systems. Further, because of the Airline Deregulation Act, airlines are currently free to set prices and establish new routes without the necessity of seeking governmental approval. At the same time, deregulation has allowed airlines to abandon unprofitable routes where the affected communities may be left without air service.

      We believe that the Airline Deregulation Act facilitated our entry into scheduled air service markets and allows us to compete on the basis of service and fares, thus causing major carriers to seek out further contractual agreements with carriers like us as a way of expanding their respective networks. However, the Airline Deregulation Act makes the entry of other competitors possible, some of which may have substantial financial resources and experience, creating the potential for intense competition among regional air carriers in our markets.

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Fuel

      Historically, we have not experienced problems with the availability of fuel, and believe that we will be able to obtain fuel in quantities sufficient to meet our existing and anticipated future requirements at competitive prices. Standard industry contracts generally do not provide protection against fuel price increases, nor do they ensure availability of supply. However, our revenue-guarantee code-share agreements with America West, United and US Airways (regional jet) allow fuel used in the performance of the agreements to be reimbursed by our code-share partner, thereby reducing our exposure to fuel price fluctuations. In fiscal 2005, approximately 95% of our fuel purchases was associated with our America West, United and US Airways (regional jet) code-share agreements. A substantial increase in the price of jet fuel, to the extent our fuel costs are not reimbursed, or the lack of adequate fuel supplies in the future, could have a material adverse effect on our business, financial condition, results of operations and liquidity.

Maintenance of Aircraft and Training

      All mechanics and avionics specialists employed by us have the appropriate training and experience and hold the required licenses issued by the FAA. Using a combination of FAA-certified maintenance vendors and our own personnel and facilities, we maintain our aircraft on a scheduled and “as-needed” basis. We emphasize preventive maintenance and inspect our aircraft engines and airframes as required. We also maintain an inventory of spare parts specific to the aircraft types we fly. We provide periodic in-house and outside training for our maintenance and flight personnel and also take advantage of factory training programs that are offered when acquiring new aircraft.

Insurance

      We carry types and amounts of insurance customary in the regional airline industry, including coverage for public liability, passenger liability, property damage, product liability, aircraft loss or damage, baggage and cargo liability and workers’ compensation.

      As a result of the terrorist attacks on September 11, 2001, aviation insurers have significantly reduced the maximum amount of insurance coverage available to commercial air carriers for war-risk (terrorism) coverage, while at the same time, significantly increasing the premiums for this coverage as well as for aviation insurance in general. Given the significant increase in insurance costs, the federal government is currently providing insurance assistance under the Air Transportation Safety and System Stabilization Act. In addition, the federal government has issued war-risk coverage to U.S. air carriers that is generally renewable for 60-day periods. However, the availability of aviation insurance is not guaranteed and our inability to obtain such coverage at affordable rates may result in the grounding of our aircraft. Insurance costs are reimbursed under the terms of our revenue-guarantee code-share agreements.

Employees

      As of September 30, 2005, we employed approximately 4,600 employees. Approximately 2,600 of our employees are represented by various labor organizations. Our continued success is partly dependent on our ability to continue to attract and retain qualified personnel. Historically, we have had no difficulty attracting qualified personnel to meet our requirements.

      Relations between air carriers and labor unions in the United States are governed by the Railway Labor Act or RLA. Under the RLA, collective bargaining agreements generally contain “amendable dates” rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the National Mediation Board. Mesa Airline’s flight attendants are represented by the Association of Flight Attendants (“AFA”). Mesa Airline’s contract with the AFA becomes amendable in June 2006. Our pilots are represented by the Air Line Pilot Association (“ALPA”). Our contract with ALPA becomes amendable in September 2007.

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      Although not currently observing high turnover, pilot turnover at times is a significant issue among regional carriers when major carriers are hiring experienced commercial pilots away from regional carriers. The addition of aircraft, especially new aircraft types, can result in pilots upgrading between aircraft types and becoming unavailable for duty during the extensive training periods required. No assurances can be made that pilot turnover and unavailability will not be a significant problem in the future, particularly if major carriers expand their operations. Similarly, there can be no assurance that sufficient numbers of new pilots will be available to support any future growth.

      No other Mesa subsidiaries are parties to any other collective bargaining agreement or union contracts.

Essential Air Service Program

      The Essential Air Service (“EAS”) program administered by the DOT guarantees a minimum level of air service in certain communities, predicated on predetermined guidelines set forth by Congress. Based on these guidelines, the DOT subsidizes air service to communities that might not otherwise have air service. At September 30, 2005, we provided service to 24 such cities for an annualized subsidy of approximately $19 million. EAS rates are normally set for two-year contract periods for each city. There is no guarantee that we will continue to receive subsidies for the cities we serve. The DOT may request competitive proposals from other airlines at the end of the contract period for EAS service to a particular city. Proposals, when requested, are evaluated on, among other things, level of service provided, subsidy requested, fitness of the applicant and comments from the communities served. If the funding under this program is terminated for any of the cities served by us, in all likelihood we would not continue to fly in these markets, and as a result, we would be forced to find alternative uses for the Beechcraft 1900D 19-seat turboprop aircraft affected.

Regulation

      As an interstate air carrier, we are subject to the economic jurisdiction, regulation and continuing air carrier fitness requirements of the DOT. Such requirements include minimum levels of financial, managerial and regulatory fitness. The DOT is authorized to establish consumer protection regulations to prevent unfair methods of competition and deceptive practices, to prohibit certain pricing practices, to inspect a carrier’s books, properties and records, and to mandate conditions of carriage. The DOT also has the power to bring proceedings for the enforcement of air carrier economic regulations, including the assessment of civil penalties, and to seek criminal sanctions.

      We are subject to the jurisdiction of the FAA with respect to our aircraft maintenance and operations, including equipment, ground facilities, dispatch, communication, training, weather observation, flight personnel and other matters affecting air safety. To ensure compliance with its regulations, the FAA requires airlines to obtain an operating certificate, which is subject to suspension or revocation for cause, and provides for regular inspections.

      We are subject to various federal and local laws and regulations pertaining to other issues of environmental protocol. We believe we are in compliance with all governmental laws and regulations regarding environmental protection.

      We are also subject to the jurisdiction of the Federal Communications Commission with respect to the use of our radio facilities and the United States Postal Service with respect to carriage of United States mail.

      Local governments in certain markets have adopted regulations governing various aspects of aircraft operations, including noise abatement and curfews.

Available Information

      We maintain a website where additional information concerning our business can be found. The address of that website is www.mesa-air.com. We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the SEC.

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Item 1A.      Risk Factors

      The following risk factors, in addition to the information discussed elsewhere herein, should be carefully considered in evaluating us and our business:

Risks Related to Our Business

We are dependent on our agreements with our code-share partners.

      We depend on relationships created by our code-share agreements. We derive a significant portion of our consolidated passenger revenues from our revenue guarantee code-share agreements with America West, United Airlines, and US Airways. Our code-share partners have certain rights to cancel the applicable code-share agreement upon the occurrence of certain events or the giving of appropriate notice, subject to certain conditions. No assurance can be given that one or more of our code-share partners will not serve notice at a later date of their intention to cancel our code-sharing agreement, forcing us to stop selling those routes with the applicable partner’s code and potentially reducing our traffic and revenue.

      Our code-share agreement with America West allows America West, subject to certain restrictions, to reduce the combined CRJ fleets utilized under the code-share agreement by one aircraft in any six-month period commencing in June 2006 (except during the calendar year 2007 in which 2 CRJ-200 can be eliminated in each six-month period). In addition, beginning in February 2007, America West may eliminate the Dash-8 aircraft upon 180 days prior written notice. America West has used this provision to reduce the number of aircraft covered by the code-share agreement and there can be no assurance that, commencing in January 2007, they will not continue to further reduce the number of covered aircraft.

      In addition, because a majority of our operating revenues are currently generated under revenue-guarantee code-share agreements, if any one of them is terminated, our operating revenues and net income could be materially adversely affected unless we are able to enter into satisfactory substitute arrangements or, alternatively, fly under our own flight designator code, including obtaining the airport facilities and gates necessary to do so. For the year ended September 30, 2005, our America West code-share agreement accounted for 44% of our consolidated passenger revenues, our US Airways code-share agreement accounted for 31% of our consolidated passenger revenues and our United code-share agreement accounted for 24% of our consolidated passenger revenues. Following the transition of the 59 aircraft previously operated at US Airways, we currently anticipate that our America West code-share agreement will account for approximately 40% of our consolidated passenger revenues, our Delta code-share agreement will account for approximately 20% of our consolidated passenger revenues and our United code-share agreement will accont for approximately 35% of our consolidated passenger revenues. Any material modification to, or termination of, our code-share agreements with any of these partners could have a material adverse effect on our financial condition, the results of our operations and the price of our common stock. Should America West, Delta or United’s revenue-guarantee code-share agreements be terminated, we cannot assure you that we would be able to enter into substitute code-share arrangements, that any such arrangements would be as favorable to us as the current code-share agreements or that we could successfully fly under our own flight designator code.

      As a result of the US Airways’ emergence from bankruptcy and their non-assumption of our revenue-guarantee code-share agreement, we began working with US Airways to provide for the orderly transition of the aircraft flown under our US Airways code-share agreement. If we are unable to timely transition the jets flown under this agreement to other code-share arrangements, we may incur unexpected costs which could have a material adverse effect on our business, financial condition and results of operations.

If our code-share partners or other regional carriers experience events that negatively impact their financial strength or operations, our operations also may be negatively impacted.

      We are directly affected by the financial and operating strength of our code-share partners. Any events that negatively impact the financial strength of our code-share partners or have a long-term effect on the use of our code-share partners by airline travelers would likely have a material adverse effect on our business, financial condition and results of operations. In the event of a decrease in the financial or operational strength

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of any of our code-share partners, such partner may seek to reduce, or be unable to make, the payments due to us under their code-share agreement. In addition, they may reduce utilization of our aircraft. Although there are certain monthly guaranteed payment amounts, there are no minimum levels of utilization specified in the code-share agreements. UAL Corp., the parent company of our code-share partner United Airlines, has not emerged from reorganization under Chapter 11 of the U.S. Bankruptcy Code. Additionally, US Airways, which accounted for 31% of our consolidated passenger revenue for the fiscal year ended September 30, 2005, filed for bankruptcy protection. On September 16, 2005, the Bankruptcy court entered an order confirming the debtors (US Airways) plan of reorganization, which included the merger between US Airways Group and America West Holding Corporation, the parent company of America West Airlines. US Airways Group will operate under the single brand name of US Airways through two principal operating subsidiaries, US Airways, Inc. and America West Airlines, Inc. As a result of US Airways’ emergence from bankruptcy and their non-assumption of our revenue-guarantee code-share agreement, we expanded our regional jet revenue-guarantee code-share agreement with United and entered into a new revenue-guarantee code-share agreement with Delta and are currently working to transition the jets flown under the US Airways code-share agreement to the United and Delta arrangements. In addition, on September 14, 2005, Delta Air Lines filed for reorganization under Chapter 11 of the US Bankruptcy Code. Delta has not yet assumed our code-share agreement in its bankruptcy proceeding and could choose to terminate this agreement or seek to renegotiate the agreement on terms less favorable to us. If any of our other current or future code-share partners become bankrupt, our code-share agreement with such partner may not be assumed in bankruptcy and would be terminated. This and other such events could have a material adverse effect on our business, financial condition and results of operations. We may also experience additional costs that could adversely affect our operations if we experience any delay in the transition of aircraft flying under our US Airways code-share agreement to United or Delta. In addition, any negative events that occur to other regional carriers and that affect public perception of such carriers generally could also have a material adverse effect on our business, financial condition and results of operations.

Our code-share partners may expand their direct operation of regional jets thus limiting the expansion of our relationships with them.

      We depend on major airlines like America West, Delta, United Airlines and US Airways electing to contract with us instead of purchasing and operating their own regional jets. However, these major airlines possess the resources to acquire and operate their own regional jets instead of entering into contracts with us or other regional carriers. We have no guarantee that in the future our code-share partners will choose to enter into contracts with us instead of purchasing their own regional jets or entering into relationships with competing regional airlines. A decision by America West, Delta, United Airlines, or US Airways to phase out our contract-based code-share relationships or to enter into similar agreements with competitors could have a material adverse effect on our business, financial condition or results of operations. In addition to Mesa, Delta, US Airways and United Airlines have similar code-share agreements with other competing regional airlines.

If we experience a lack of labor availability or strikes, it could result in a decrease of revenues due to the cancellation of flights.

      The operation of our business is significantly dependent on the availability of qualified employees, including, specifically, flight crews, mechanics and avionics specialists. Historically, regional airlines have periodically experienced high pilot turnover as a result of air carriers operating larger aircraft hiring their commercial pilots. Further, the addition of aircraft, especially new aircraft types, can result in pilots upgrading between aircraft types and becoming unavailable for duty during the required extensive training periods. There can be no assurance that we will be able to maintain an adequate supply of qualified personnel or that labor expenses will not increase.

      At September 30, 2005, we had approximately 4,600 employees, a significant number of whom are members of labor unions, including ALPA and the AFA. Our collective bargaining agreement with ALPA becomes amendable in September 2007 and our collective bargaining agreement with the AFA becomes amendable in June 2006. The inability to negotiate acceptable contracts with existing unions as agreements expire or with new unions could result in work stoppages by the affected workers, lost revenues resulting from

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the cancellation of flights and increased operating costs as a result of higher wages or benefits paid to union members. We cannot predict which, if any, other employee groups may seek union representation or the outcome or the terms of any future collective bargaining agreement and therefore the effect, if any, on our business financial condition and results of operations. If negotiations with unions over collective bargaining agreements prove to be unsuccessful, following specified “cooling off” periods, the unions may initiate a work action, including a strike, which could have a material adverse effect on our business, financial condition and results of operations.

Increases in our labor costs, which constitute a substantial portion of our total operating costs, will cause our earnings to decrease.

      Labor costs constitute a significant percentage of our total operating costs. Under our code-share agreements, our reimbursement rates contemplate labor costs that increase on a set schedule generally tied to an increase in the consumer price index or the actual increase in the contract. We are responsible for our labor costs, and we may not be entitled to receive increased payments under our code-share agreements if our labor costs increase above the assumed costs included in the reimbursement rates. As a result, a significant increase in our labor costs above the levels assumed in our reimbursement rates could result in a material reduction in our earnings.

If new airline regulations are passed or are imposed upon our operations, we may incur increased operating costs and experience a decrease in earnings.

      Laws and regulations, such as those described below, have been proposed from time to time that could significantly increase the cost of our operations by imposing additional requirements or restrictions on our operations. We cannot predict what laws and regulations will be adopted or what changes to air transportation agreements will be effected, if any, or how they will affect us, and there can be no assurance that laws or regulations currently proposed or enacted in the future will not increase our operating expenses and therefore adversely affect our financial condition and results of operations.

      As an interstate air carrier, we are subject to the economic jurisdiction, regulation and continuing air carrier fitness requirements of the DOT, which include required levels of financial, managerial and regulatory fitness. The DOT is authorized to establish consumer protection regulations to prevent unfair methods of competition and deceptive practices, to prohibit certain pricing practices, to inspect a carrier’s books, properties and records, to mandate conditions of carriage and to suspend an air carrier’s fitness to operate. The DOT also has the power to bring proceedings for the enforcement of air carrier economic regulations, including the assessment of civil penalties, and to seek criminal sanctions.

      We are also subject to the jurisdiction of the FAA with respect to our aircraft maintenance and operations, including equipment, ground facilities, dispatch, communication, training, weather observation, flight personnel and other matters affecting air safety. To ensure compliance with its regulations, the FAA requires airlines to obtain an operating certificate, which is subject to suspension or revocation for cause, and provides for regular inspections.

      We incur substantial costs in maintaining our current certifications and otherwise complying with the laws, rules and regulations to which we are subject. We cannot predict whether we will be able to comply with all present and future laws, rules, regulations and certification requirements or that the cost of continued compliance will not significantly increase our costs of doing business.

      The FAA has the authority to issue mandatory orders relating to, among other things, the grounding of aircraft, inspection of aircraft, installation of new safety-related items and removal and replacement of aircraft parts that have failed or may fail in the future. A decision by the FAA to ground, or require time-consuming inspections of, or maintenance on, all or any of our turboprops or regional jets, for any reason, could negatively impact our results of operations.

      In addition to state and federal regulation, airports and municipalities enact rules and regulations that affect our operations. From time to time, various airports throughout the country have considered limiting the

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use of smaller aircraft, such as Embraer or Canadair regional jets, at such airports. The imposition of any limits on the use of our regional jets at any airport at which we operate could interfere with our obligations under our code-share agreements and severely interrupt our business operations.

lf additional security and safety measures regulations are adopted, we may incur increased operating costs and experience a decrease in earnings.

      Congress has adopted increased safety and security measures designed to increase airline passenger security and protect against terrorist acts. Such measures have resulted in additional operating costs to the airline industry. The Aviation Safety Commission’s report recommends the adoption of further measures aimed at improving the safety and security of air travel. We cannot forecast what additional security and safety requirements may be imposed on our operations in the future or the costs or revenue impact that would be associated with complying with such requirements, although such costs and revenue impact could be significant. To the extent that the costs of complying with any additional safety and security measures are not reimbursed by our code-share partners, our operating results and net income could be adversely affected.

If our operating costs increase as our aircraft fleet ages and we are unable to pass along such costs, our earnings will decrease.

      As our fleet of aircraft age, the cost of maintaining such aircraft, if not replaced, will likely increase. There can be no assurance that costs of maintenance, including costs to comply with aging aircraft requirements, will not materially increase in the future. Any material increase in such costs could have a material adverse effect on our business, financial condition and results of operations. Because many aircraft components are required to be replaced after specified numbers of flight hours or take-off and landing cycles, and because new aviation technology may be required to be retrofitted, the cost to maintain aging aircraft will generally exceed the cost to maintain newer aircraft. We believe that the cost to maintain our aircraft in the long-term will be consistent with industry experience for these aircraft types and ages used by comparable airlines.

      We believe that our aircraft are mechanically reliable based on the percentage of scheduled flights completed and as of September 30, 2005 the average age of our regional jet fleet is 3.2 years. However, there can be no assurance that such aircraft will continue to be sufficiently reliable over longer periods of time. Furthermore, any public perception that our aircraft are less than completely reliable could have a material adverse effect on our business, financial condition and results of operations.

Our fleet expansion program has required a significant increase in our leverage.

      The airline business is very capital intensive and, as a result, many airline companies are highly leveraged. For the year ended September 30, 2005, our debt service payments, including principal and interest, totaled $74.6 million and our aircraft lease payments totaled $206.2 million. We have significant lease obligations with respect to our aircraft and ground facilities, which aggregated approximately $2.5 billion at September 30, 2005. As of September 30, 2005, our growth strategy involves the acquisition of one more Bombardier regional jet during fiscal 2006. As of September 30, 2005, we had permanently financed all but two CRJ-700 and CRJ-900 aircraft delivered under the 2001 BRAD agreement. We may utilize interim financing provided by the manufacturer and have the ability to fund up to 15 aircraft at any one time under this facility. There are no assurances that we will be able to obtain permanent financing for future aircraft deliveries.

      There can be no assurance that our operations will generate sufficient cash flow to make such payments or that we will be able to obtain financing to acquire the additional aircraft necessary for our expansion. If we default under our loan or lease agreements, the lender/lessor has available extensive remedies, including, without limitation, repossession of the respective aircraft and, in the case of large creditors, the effective ability to exert control over how we allocate a significant portion of our revenues. Even if we are able to timely service

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our debt, the size of our long-term debt and lease obligations could negatively affect our financial condition, results of operations and the price of our common stock in many ways, including:

•  increasing the cost, or limiting the availability of, additional financing for working capital, acquisitions or other purposes;

•  limiting the ways in which we can use our cash flow, much of which may have to be used to satisfy debt and lease obligations; and

•  adversely affecting our ability to respond to changing business or economic conditions or continue our growth strategy.

Reduced utilization levels of our aircraft under the revenue-guarantee agreements would adversely impact our revenues and earnings.

      Even though our revenue-guarantee agreements require a fixed amount per month to compensate us for our fixed costs, if our aircraft are underutilized (including taking into account the stage length and frequency of our scheduled flights) we will lose the opportunity to receive a margin on the variable costs of flights that would have been flown if our aircraft were more fully utilized.

If we incur problems with any of our third-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.

      Our reliance upon others to provide essential services on behalf of our operations may result in the relative inability to control the efficiency and timeliness of contract services. We have entered into agreements with contractors to provide various facilities and services required for our operations, including aircraft maintenance, ground facilities, baggage handling and personnel training. It is likely that similar agreements will be entered into in any new markets we decide to serve. All of these agreements are subject to termination after notice. Any material problems with the efficiency and timeliness of contract services could have a material adverse effect on our business, financial condition and results of operations.

We are at risk of loss and adverse publicity stemming from any accident involving any of our aircraft.

      If one of our aircraft were to crash or be involved in an accident, we could be exposed to significant tort liability.

      There can be no assurance that the insurance we carry to cover damages arising from any future accidents will be adequate. Accidents could also result in unforeseen mechanical and maintenance costs. In addition, any accident involving an aircraft that we operate could create a public perception that our aircraft are not safe, which could result in air travelers being reluctant to fly on our aircraft. To the extent a decrease in air travelers is associated with our operations not covered by our code-share agreements, such a decrease could have a material adverse affect on our business, financial condition or results of operations.

If we become involved in any material litigation or any existing litigation is concluded in a manner adverse to us, our earnings may decline.

      We are, from time to time, subject to various legal proceedings and claims, either asserted or unasserted. Any such claims, whether with or without merit, could be time-consuming and expensive to defend and could divert management’s attention and resources. There can be no assurance regarding the outcome of current or future litigation.

Our business would be harmed if we lose the services of our key personnel.

      Our success depends to a large extent on the continued service of our executive management team. We have employment agreements with certain executive officers, but it is possible that members of executive management may leave us. Departures by our executive officers could have a negative impact on our business,

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as we may not be able to find suitable management personnel to replace departing executives on a timely basis. We do not maintain key-man life insurance on any of our executive officers.

We may experience difficulty finding, training and retaining employees.

      Our business is labor intensive, we require large numbers of pilots, flight attendants, maintenance technicians and other personnel. The airline industry has from time to time experienced a shortage of qualified personnel, specifically pilots and maintenance technicians. In addition, as is common with most of our competitors, we have faced considerable turnover of our employees. Although our employee turnover has decreased significantly since September 11, 2001, our pilots, flight attendants and maintenance technicians often leave to work for larger airlines, which generally offer higher salaries and better benefit programs than regional airlines are financially able to offer. Should the turnover of employees, particularly pilots and maintenance technicians, sharply increase, the result will be significantly higher training costs than otherwise would be necessary. We cannot assure you that we will be able to recruit, train and retain the qualified employees that we need to carry out our expansion plans or replace departing employees. If we are unable to hire and retain qualified employees at a reasonable cost, we may be unable to complete our expansion plans, which could have a material adverse effect our financial condition, results of operations and the price of our common stock.

We may be unable to successfully launch or profitably operate our planned Hawaiian airline, which could negatively impact our business and operations.

      We have announced plans to form an independent inter-island Hawaiian airline with service expected to begin in the first quarter of 2006. Launching service in Hawaii will require ongoing investments of working capital by Mesa, significant management attention and focus, regulatory approval by state and federal regulators, location of suitable facilities and may involve a partnership or venture with financial investors.

      We have not had operations in Hawaii prior to this planned launch and we may be unable to begin service when planned, if at all, given the inherent risks in establishing and operating a new airline. If we are unable to begin service when planned or are unable to begin service at all, our operations may be negatively impacted. Additionally, given the costs and risks associated with operating an independent low fare regional jet airline, once service begins we may be unable to operate the Hawaiian airline profitably, which would negatively impact our financial results.

Risks Related to Our Industry

If competition in the airline industry increases, we may experience a decline in revenue.

      Increased competition in the airline industry as well as competitive pressure on our code-share partners or in our markets could have a material adverse effect on our business, financial condition and results of operation. The airline industry is highly competitive. The earnings of many of the airlines have historically been volatile. The airline industry is susceptible to price discounting, which involves the offering of discount or promotional fares to passengers. Any such fares offered by one airline are normally matched by competing airlines, which may result in lower revenue per passenger, i.e., lower yields, without a corresponding increase in traffic levels. Also, in recent years several new carriers have entered the industry, typically with low cost structures. In some cases, new entrants have initiated or triggered price discounting. The entry of additional new major or regional carriers in any of our markets, as well as increased competition from or the introduction of new services by established carriers, could negatively impact our financial condition and results of operations.

      Our reliance on our code-share agreements with our major airline partners for the majority of our revenue means that we must rely on the ability of our code-share partners to adequately promote their respective services and to maintain their respective market share. Competitive pressures by low-fare carriers and price discounting among major airlines could have a material adverse effect on our code-share partners and therefore adversely affect our business, financial condition and results of operations.

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      The results of operations in the air travel business historically fluctuate in response to general economic conditions. The airline industry is sensitive to changes in economic conditions that affect business and leisure travel and is highly susceptible to unforeseen events, such as political instability, regional hostilities, economic recession, fuel price increases, inflation, adverse weather conditions or other adverse occurrences that result in a decline in air travel. Any event that results in decreased travel or increased competition among airlines could have a material adverse effect on our business, financial condition and results of operations.

      In addition to traditional competition among airlines, the industry faces competition from ground and sea transportation alternatives. Video teleconferencing and other methods of electronic communication may add a new dimension of competition to the industry as business travelers seek lower-cost substitutes for air travel.

The airline industry is heavily regulated.

      Airlines are subject to extensive regulatory and legal compliance requirements, both domestically and internationally, that involve significant costs. In the last several years, the FAA has issued a number of directives and other regulations relating to the maintenance and operation of aircraft that have required us to make significant expenditures. FAA requirements cover, among other things, retirement of older aircraft, security measures, collision avoidance systems, airborne wind shear avoidance systems, noise abatement, commuter aircraft safety and increased inspection and maintenance procedures to be conducted on older aircraft.

      We incur substantial costs in maintaining our current certifications and otherwise complying with the laws, rules and regulations to which we are subject. We cannot predict whether we will be able to comply with all present and future laws, rules, regulations and certification requirements or that the cost of continued compliance will not significantly increase our costs of doing business, to the extent such costs are not reimbursed by our code-share partners.

      The FAA has the authority to issue mandatory orders relating to, among other things, the grounding of aircraft, inspection of aircraft, installation of new safety-related items and removal and replacement of aircraft parts that have failed or may fail in the future. A decision by the FAA to ground, or require time consuming inspections of or maintenance on, all or any of our aircraft, for any reason, could negatively impact our results of operations.

      In addition to state and federal regulation, airports and municipalities enact rules and regulations that affect our operations. From time to time, various airports throughout the country have considered limiting the use of smaller aircraft at such airports. The imposition of any limits on the use of our aircraft at any airport at which we operate could interfere with our obligations under our code-share agreements and severely interrupt our business operations.

      Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of airline operations or reduce revenues. If adopted, these measures could have had the effect of raising ticket prices, reducing revenue and increasing costs. In addition, as a result of the terrorist attacks in New York and Washington, D.C. in September 2001, the FAA has imposed more stringent security procedures on airlines and imposed security taxes on each ticket sold. We cannot predict what other new regulations may be imposed on airlines and we cannot assure you that laws or regulations enacted in the future will not materially adversely affect our financial condition, results of operations and the price of our common stock.

The airline industry has been subject to a number of strikes which could affect our business.

      The airline industry has been negatively impacted by a number of labor strikes. Any new collective bargaining agreement entered into by other regional carriers may result in higher industry wages and add increased pressure on us to increase the wages and benefits of our employees. Furthermore, since each of our code-share partners is a significant source of revenue, any labor disruption or labor strike by the employees of any one of our code-share partners could have a material adverse effect on our financial condition, results of operations and the price of our common stock.

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Risks Related to Our Common Stock

Provisions in our charter documents might deter acquisition bids for us.

      Our articles of incorporation and bylaws contain provisions that, among other things:

•  authorize our board of directors to issue preferred stock ranking senior to our common stock without any action on the part of the shareholders;

•  establish advance notice procedures for shareholder proposals, including nominations of directors, to be considered at shareholders’ meetings;

•  authorize a majority of our board of directors, in certain circumstances, to fill vacancies on the board resulting from an increase in the authorized number of directors or from vacancies;

•  restrict the ability of shareholders to modify the number of authorized directors; and

•  restrict the ability of stockholders to call special meetings of shareholders.

      In addition, Section 78.438 of the Nevada general corporation law prohibits us from entering into some business combinations with interested stockholders without the approval of our board of directors. These provisions could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders.

Our stock price may continue to be volatile and could decline substantially.

      The stock market has, from time to time, experienced extreme price and volume fluctuations. Many factors may cause the market price for our common stock to decline following this Form 10-K, including:

•  our operating results failing to meet the expectations of securities analysts or investors in any quarter;

•  downward revisions in securities analysts’ estimates;

•  material announcements by us or our competitors;

•  public sales of a substantial number of shares of our common stock following this Form 10-K;

•  governmental regulatory action; or

•  adverse changes in general market conditions or economic trends.

Item 1B. Unresolved Staff Comments

      None.

Item 2. Properties

      Our primary property consists of the aircraft used in the operation of our flights. The following table lists the aircraft owned and leased by the Company as of September 30, 2005.

		Number of Aircraft
				Interim						Operating on		Passenger
Type of Aircraft		Owned		Financing		Leased		Total		Sept. 30, 2005		Capacity
CRJ-200/100 Regional Jet			2		—		54		56		56		50
CRJ-700 Regional Jet			5		—		10		15		15		64
CRJ-900 Regional Jet			11		2		24		37		37		86
Embraer 145 Regional Jet			—		—		36		36		36		50
Beechcraft 1900D			35		—		—		35		22		19
Dash 8-200			—		—		16		16		16		37
Embraer EMB-120			—		—		2		2		—		30
	Total		53		2		142		197		182

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      See “Business — Airline Operations” and “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources” for a discussion regarding the Company’s aircraft fleet commitments.

      In addition to aircraft, we have office and maintenance facilities to support our operations. Our facilities are summarized in the following table:

						Approximate
Type	Location		Ownership			Square Feet
Headquarters		Phoenix, AZ		Leased			36,000
Training/Administration		Phoenix, AZ		Leased			27,000
Hangar/Office		Phoenix, AZ		Leased			22,000
Engine Shop & Commissary		Phoenix, AZ		Leased			25,000
RAS Office/Component Overhaul Facility		Phoenix, AZ		Leased			19,000
Customer Service Training/ Storage		Phoenix, AZ		Leased			10,000
Office (East Coast)		Charlotte, NC		Leased			5,500
Hangar		Charlotte, NC		Leased			30,000
Hangar		Columbia, SC			(1)		20,000
Hangar		Grand Junction, CO			(1)		25,000
Hangar/Office		Wichita, KS			(1)		20,000
Training/Administration		Farmington, NM			(1)		10,000
Hangar		Farmington, NM			(1)		24,000
Hangar/Office		Dubois, PA			(1)		23,000
Hangar		Little Rock, AR		Leased			10,000
Hangar		Philadelphia, PA		Leased			10,000
Hangar		Reading, PA			(1)		30,000
Hangar (RAS)		Reading, PA			(1)		32,000

(1)  Building is owned, underlying land is leased.

      We lease ticket counters, check-in and boarding and other facilities in the passenger terminal areas in the majority of the airports we serve and staff those facilities with our personnel. America West, US Airways and United also provide facilities, ticket handling and ground support services for us at certain airports.

      Our corporate headquarters and training/administrative facilities in Phoenix, Arizona are subject to long-term leases expiring on August 31, 2012 and November 1, 2012, respectively.

      We believe our facilities are suitable and adequate for our current and anticipated needs.

Item 3. Legal Proceedings

      We are involved in various legal proceedings and FAA civil action proceedings that the Company does not believe will have a material adverse effect upon the Company’s business, financial condition or results of operations, although no assurance can be given to the ultimate outcome of any such proceedings.

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

      None.

Executive Officers of the Registrant

      The following table sets forth the names and ages of the executive officers of the Company and certain additional information:

Name	Age		Position
Jonathan G. Ornstein		48	Chief Executive Officer
Michael J. Lotz		45	President and Chief Operating Officer
George Murnane III		47	Executive Vice President and Chief Financial Officer
Michael Ferverda		61	Senior Vice President — Operations
Brian S. Gillman		36	Vice President, General Counsel and Secretary
F. Carter Leake		43	Senior Vice President — Planning

      Jonathan G. Ornstein was appointed President and Chief Executive Officer of Mesa Air Group, Inc. effective May 1, 1998. Mr. Ornstein relinquished his position as President of the Company in June 2000. From April 1996 to his joining the Company as Chief Executive Officer, Mr. Ornstein served as President and Chief Executive Officer and Chairman of Virgin Express S.A./N.V., a European airline. From 1995 to April 1996, Mr. Ornstein served as Chief Executive Officer of Virgin Express Holdings, Inc. Mr. Ornstein joined Continental Express Airlines, Inc., as President and Chief Executive Officer in July 1994 and, in November 1994, was named Senior Vice President, Airport Services at Continental Airlines, Inc. Mr. Ornstein was previously employed by the Company from 1988 to 1994, as Executive Vice President and as President of the Company’s WestAir Holding, Inc. subsidiary.

      Michael J. Lotz, President and Chief Operating Officer, joined the Company in July 1998. In January 1999, Mr. Lotz became Chief Operating Officer. In August 1999, Mr. Lotz became the Company’s Chief Financial Officer and in January 2000 returned to the position of Chief Operating Officer. On June 22, 2000, Mr. Lotz was appointed President of the Company. Prior to joining the Company, Mr. Lotz served as Chief Operating Officer of Virgin Express, S.A./N.V., a position he held from October 1996 to June 1998. Previously, Mr. Lotz was employed by Continental Airlines, Inc., most recently as Vice President of Airport Operations, Properties and Facilities at Continental Express.

      George Murnane III, Executive Vice President and Chief Financial Officer, was appointed Executive Vice President of the Company effective December 2001 and Chief Financial Officer in January 2003. Mr. Murnane served as a director of the Company from June 1999 until October 2003. From 1996 to December 2001, Mr. Murnane was a Director and Executive Vice President of International Airline Support Group, Inc., a redistributor of aftermarket commercial aircraft spare parts and lessor and trader of commercial aircraft and engines, most recently as its Chief Operating Officer. From 1995 to 1996, Mr. Murnane served as Executive Vice President and Chief Operating Officer of Atlas Air, Inc., an air cargo company. From 1986 to 1996, he was an investment banker with the New York investment banking firm of Merrill Lynch & Co., most recently as a Director in the firm’s Transportation Group.

      Michael Ferverda, Senior Vice President — Operations joined the Company in 1990. He was appointed President of Freedom Airlines in May 2002 and Senior Vice President — Operations in February 2003. Prior to the appointments, Mr. Ferverda served as the Senior Vice President of Operations for Mesa Airlines, Inc. Mr. Ferverda has served the Company in various capacities including pilot, Flight Instructor/Check Airman, Assistant Chief Pilot, FAA Designated Examiner, FAA Director of Operations and Divisional Vice President. Mr. Ferverda was a pilot with Eastern Airlines from 1973 to 1989. Prior to joining Eastern Airlines, Mr. Ferverda served as an Aviator in the United States Navy. Mr. Ferverda is a graduate of Indiana University.

      Brian S. Gillman, Vice President, General Counsel and Secretary, joined the Company in February 2001. From July 1996 to February 2001, he served as Vice President, General Counsel and Secretary of Vanguard

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Airlines, Inc. in Kansas City, Missouri. From September 1994 to July 1996, Mr. Gillman was a corporate associate in the law firm of Stinson, Mag & Fizzell, P.C., Kansas City, Missouri. Mr. Gillman received his Juris Doctorate and B.B.A. in Accounting from the University of Iowa in 1994 and 1991, respectively.

      F. Carter Leake, Senior Vice President — Planning, joined the Company in January 2001. Mr. Leake served as Executive Vice-President of CCAir, Inc., a former wholly-owned subsidiary of the Company, commencing in January 2001 and was promoted to President of CCAir in October 2001. Mr. Leake served as Senior Vice President — East Coast Operations for Mesa Airlines from February 2003 until January 2005. In January 2005, Mr. Leake was appointed Senior Vice President — Planning of the Company. Prior to joining the Company, Mr. Leake served as a Director of Sales for Bombardier Regional Aircraft from November 1996 to January 2001. Previously, Mr. Leake was an analyst with SH&E, an aviation consulting firm in New York, and a US Air Force military pilot.

PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Market Price of Common Stock

      The following table sets forth, for the periods indicated, the high and low price per share of Mesa common stock for the two most recent fiscal years, as reported by NASDAQ. Mesa’s common stock is traded on the NASDAQ National Market System under the symbol “MESA.”

	Fiscal 2005				Fiscal 2004
Quarter	High		Low		High		Low
First	$	8.03	$	5.21	$	13.85	$	10.17
Second		7.93		6.29		12.45		7.48
Third		7.00		5.25		9.01		6.56
Fourth		8.66		6.76		8.12		5.10

      On December 1, 2005, we had 1,066 shareholders of record. We have never paid cash dividends on our common stock. The payment of future dividends is within the discretion of our board of directors and will depend upon our future earnings, if any, our capital requirements, bank financing, financial condition and other relevant factors.

Recent Sales of Unregistered Securities

      On February 7, 2002, in connection with an agreement entered into with Raytheon Aircraft Company (“Raytheon”), we granted Raytheon a warrant to purchase up to 233,068 shares of our common stock at a per share exercise price of $10. Raytheon must pay a purchase price of $1.50 per share underlying the warrant. The warrant is exercisable at any time over a three-year period following its date of issuance. Absent a default by us under the agreement with Raytheon in which case vesting is accelerated, the shares underlying the warrant vested (and are therefore purchasable by Raytheon) according to the following schedule: 13,401 shares in fiscal year 2001; 116,534 shares in fiscal year 2002; 58,267 shares in fiscal year 2003 and 44,866 shares in fiscal year 2004. As of December 1, 2004, Raytheon has exercised its option to purchase all of the components of the warrant. The sale of the warrant and the shares underlying the warrant were made pursuant to an exemption from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended.

      In June 2003, we completed the private placement of senior convertible notes due 2023, raising approximately $97.1 million net proceeds. At maturity, the principal amount of each note will be $1,000 and the aggregate amount due will be $252 million. These notes are convertible into shares of our common stock at a conversion rate of 39.727 shares per $1,000 in principal amount at maturity of the notes, which equals an initial conversion price of approximately $10.00 per share. This conversion rate is subject to adjustment in certain circumstances. Holders of these notes may convert their notes only if: (i) the sale price of our common

23

stock exceeds 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding quarter; (ii) prior to June 16, 2018, the trading price for these notes falls below certain thresholds; (iii) these notes have been called for redemption; or (iv) specified corporate transactions occur. We may redeem these notes, in whole or in part, beginning on June 16, 2008, at a redemption price equal to the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of these notes may require us to repurchase the notes on June 16, 2008 at a price of $397.27 per note plus accrued and unpaid cash interest, if any, on June 16, 2013 at a price of $540.41 per note plus accrued and unpaid cash interest, if any, and on June 16, 2018 at a price of $735.13 per note plus accrued and unpaid cash interest, if any.

      In February 2004, we completed the private placement of senior convertible notes due 2024, raising approximately $97.0 million net proceeds. At maturity, the principal amount of each note will be $1,000 and the aggregate amount due will be $171.4 million. These notes are convertible into shares of our common stock at a conversion rate of 40.3737 shares per $1,000 in principal amount at maturity of the notes, which equals an initial conversion price of approximately $14.45 per share. This conversion rate is subject to adjustment in certain circumstances. Holders of these notes may convert their notes only if: (i) the sale price of our common stock exceeds 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding quarter; (ii) prior to February 10, 2019, the trading price for these notes falls below certain thresholds; (iii) these notes have been called for redemption; or (iv) specified corporate transactions occur. We may redeem these notes, in whole or in part, beginning on February 10, 2009, at a redemption price equal to the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of the notes may require us to repurchase the notes on February 10, 2009 at a price of $583.4 per note plus accrued and unpaid cash interest, if any, on February 10, 2014 at a price of $698.20 per note plus accrued and unpaid cash interest, if any, and on February 10, 2019 at a price of $835.58 per note plus accrued and unpaid cash interest, if any.

      The following table sets forth information required regarding repurchases of common stock that we made during the three months ended September 30, 2005:

Issuer Purchases of Equity Securities

							Maximum Number
					Total Number of		of Shares That
	Total Number		Average Price		Shares Purchased as		May yet be
	of Shares		Paid per		Part of Publicly		Purchased Under
Period	Purchased		Share		Announced Plan(1)		the Plan
September 2005		115,123	$	7.91		911,132		1,382,400

(1)  Under resolutions adopted and publicly announced in December 1999, January 2001, October 2002, October 2004 and April 2005, our Board of Directors has authorized the repurchase, at management’s discretion, of up to an aggregate of approximately 9.4 million shares of our common stock. Subsequent to year end, the Company’s Board of Directors authorized the Company to purchase up to an additional 10 million shares of the Company’s outstanding common stock.

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Item 6. Selected Financial Data

Selected Financial Data and Operating Statistics

      The selected financial data as of and for each of the five years ended September 30, 2005, are derived from the Consolidated Financial Statements of the Company and its subsidiaries and should be read in conjunction with the Consolidated Financial Statements included elsewhere in this Form 10-K and the related notes thereto and “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.”

      In thousands of dollars except per share data and average fare amounts and as otherwise indicated.

		2005(1)			2004(2)			2003(3)			2002(4)			2001(5)
Consolidated Statement of Operations Data:
	Operating revenues	$	1,136,268		$	896,812		$	599,990		$	496,783		$	523,378
	Operating expenses		1,007,006			829,454			544,711			503,343			593,291
	Operating income (loss)		129,262			67,358			55,279			(6,560	)		(69,913	)
	Interest expense		44,466			25,063			12,664			7,983			14,419
	Income (loss) before income taxes		92,166			45,181			41,020			(16,405	)		(71,596	)
	Net income (loss)		56,867			26,282			25,305			(11,268	)		(48,225	)
Net income (loss) per share:
	Basic	$	1.95		$	0.83		$	0.80		$	(0.34	)	$	(1.50	)
	Diluted		1.35			0.66			0.76			(0.34	)		(1.50	)
Consolidated Balance Sheet Data:
	Working capital (deficit)	$	236,112		$	16,046		$	(57,380	)	$	27,483		$	6,399
	Total assets		1,167,671			1,121,537			716,936			399,161			496,616
	Long-term debt, excluding current portion		636,582			550,613			199,023			110,210			118,492
	Stockholders’ equity		176,670			128,904			111,973			86,758			102,742
Consolidated Operating Statistics:
	Passengers carried		13,088,872			10,239,915			6,444,459			5,118,839			4,789,180
	Revenue passenger miles (000)		6,185,864			5,035,165			2,814,480			1,986,164			1,796,058
	Available seat miles (“ASM”) (000)		8,715,749			7,107,684			4,453,707			3,459,427			3,289,216
	Block hours		571,339			513,881			393,335			352,323			383,310
	Average passenger journey in miles		473			492			436			388			375
	Average stage length in miles		389			390			337			298			268
	Load factor		71.0	%		70.8	%		63.2	%		57.4	%		54.6	%
	Break-even passenger load factor		53.3	%		53.6	%		46.3	%		60.1	%		63.8	%
	Revenue per ASM in cents		13.0			12.6			13.4			14.4			15.9
	Operating cost per ASM in cents		11.6			11.7			12.3			14.6			18.0
	Average yield per revenue passenger mile in cents		18.2			17.8			21.3			25.0			28.8
	Average fare	$	84.25		$	84.81		$	89.44		$	93.93		$	106.18
	Aircraft in service		182			180			150			124			118
	Cities served		176			181			163			147			153
	Number of employees		4,600			5,000			3,600			3,100			2,820

(1)  Net income in fiscal 2005 includes the net effect of reversing certain impairment and restructuring charges of $1.3 million (pretax).

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(2)	Net income in fiscal 2004 includes the net effect of impairment and restructuring charges of $11.9 million (pretax).
(3)	Net income in fiscal 2003 includes the effect of impairment and restructuring charges of $1.1 million (pretax) and the reversal of CCAir impairment and restructuring charges of $12.0 million (pretax).
(4)	Net loss in fiscal 2002 includes the effect of impairment and restructuring charges of $26.7 million (pretax).
(5)	Net loss in fiscal 2001 includes the effect of impairment and restructuring charges of $80.9 million (pretax).

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

      The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. The discussion should be read in conjunction with the Consolidated Financial Statements and the related notes thereto, and the Selected Financial Data and Operating Statistics contained elsewhere herein.

Executive Overview

General

      Mesa is a holding company whose principle subsidiaries operate as regional air carriers providing scheduled passenger and airfreight service. As of September 30, 2005, the Company served 176 cities in 43 states, the District of Columbia, Canada and Mexico and operated a fleet of 182 aircraft with approximately 1,100 daily departures.

      Approximately 99% of our consolidated passenger revenues for the fiscal year ended September 30, 2005 were derived from operations associated with code-share agreements. Our subsidiaries have code-share agreements with America West, Midwest Airlines, United Airlines and US Airways. The remaining passenger revenues are derived from our independent operations.

      In fiscal 2005, approximately 97% of our passenger revenue was associated with revenue-guarantee flying. The America West (regional jet and Dash-8), United (regional jet and Dash-8), and US Airways (regional jet) code-share agreements are revenue-guarantee flying agreements. Under the terms of these flying agreements, the major carrier controls marketing, scheduling, ticketing, pricing and seat inventories. Our role is simply to operate our fleet in the safest and most reliable manner in exchange for fees paid under a generally fixed payment schedule. We received a guaranteed payment based upon a fixed minimum monthly amount plus amounts related to departures and block hours flown in addition to direct reimbursement of expenses such as fuel, landing fees and insurance. Among other advantages, revenue-guarantee arrangements reduce the Company’s exposure to fluctuations in passenger traffic and fare levels, as well as fuel prices. In fiscal 2005, approximately 95% of our fuel purchases were reimbursed under revenue guarantee code-share agreements.

      In fiscal 2005, approximately 3% of our passenger revenue was associated with pro-rate and independent flying. The US Airways (Beechcraft 1900D turboprop), Midwest Airlines and America West (Beechcraft 1900D turboprop) code-share agreements are pro-rate agreements, for which we received an allocated portion of each passenger’s fare and we pay all of the costs of transporting the passenger.

      In addition to carrying passengers, we carry freight and express packages on our passenger flights and have interline small cargo freight agreements with many other carriers. We also have contracts with the U.S. Postal Service for carriage of mail to the cities we serve and occasionally operate charter flights when our aircraft are not otherwise used for scheduled service.

Fleet

      In fiscal 2005, we continued our regional jet fleet growth by growing from 129 regional jets at September 30, 2004 to 144 regional jets at September 30, 2005.

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      The Company also continued reducing the number of B1900 aircraft in service by leasing some of these aircraft to other operators. In October 2004, the Company entered into an agreement to lease four of its Beechcraft 1900D aircraft operated by Air Midwest to Gulfstream and in January 2005, we entered into another agreement to lease ten Beechcraft 1900D aircraft to Big Sky. As of September 30, 2005, we had leased nine aircraft to Big Sky pursuant to this agreement and subleased the tenth aircraft to Big Sky in the first quarter of fiscal 2006. As of September 30, 2005, we owned 35 Beechcraft 1900D aircraft and were operating 22 of these aircraft.

      Aircraft in Operation at September 30,

Type of Aircraft		2005		2004		2003
CRJ-200/100 Regional Jet			56		54		43
CRJ-700 Regional Jet			15		15		15
CRJ-900 Regional Jet			37		24		6
Embraer 145 Regional Jet			36		36		32
Beechcraft 1900D			22		35		42
Dash 8-200			16		16		12
	Total		182		180		150

Aircraft Financing

      In September 2005, the Company completed the permanent financing of 15 CRJ-900 regional jets through a sale and leaseback transaction. As a result of this transaction, which was structured as an off-balance sheet operating lease, approximately $400 million in both the asset and related debt were removed from the Company’s balance sheet.

      In October 2004, the Company permanently financed five CRJ-900 aircraft with $118.0 million in debt. The debt bears interest at the monthly LIBOR plus three percent and requires monthly principal and interest payments. The manufacturer has entered into an arrangement on the Company’s behalf to limit the Company’s variable interest rate exposure with respect to these aircraft. These aircraft had been originally acquired with interim financing from the manufacturer.

Code-Share Agreements

      In May 2005, the Company announced a code-share arrangement between the Company, Freedom, and Delta that provides for Freedom to become a Delta Connection partner. Under the terms of the agreement, Freedom commenced operations in October 2005 and will operate up to 30 50-seat regional jet aircraft on routes throughout Delta’s network. The arrangement required Mesa to partially reimburse Delta’s lease payments associated with Delta’s 30 Dornier Fairchild 328 jets throughout the term of the agreement in exchange for performing flight services under the agreement; however, the requirement to reimburse Delta for certain lease costs was terminated when Delta filed for bankruptcy protection. The code-share arrangement will terminate with respect to each aircraft, on an aircraft-by-aircraft basis, beginning in approximately twelve years. Delta may terminate the code-share agreement at any time, with or without cause, upon twelve months’ prior written notice following the sixth anniversary of the in-service date of the 30th aircraft added to the Delta Connection fleet. However, Delta has not yet assumed our code-share agreement in its bankruptcy proceedings and could choose to terminate our agreement at any time prior to its emergence from bankruptcy.

      In May 2005, the Company amended its code-sharing arrangement with United to allow the Company to put up to an additional 30 50-seat regional jet aircraft into the United Express system and extend the expiration dates under the existing code-share agreement with respect to certain aircraft. In connection with the amendment, the Company agreed to make three $10 million payments to United as follows: i) $10 million in June 2005, ii) $10 million in October 2005, and iii) $10 million in November 2005.

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      As of September 30, 2005, we operated 59 50-seat regional jets for US Airways. As a result of US Airways’ emergence from bankruptcy and their non-assumption of our code-share agreement, we began working with US Airways to provide for the transition of these 59 jets to our United and Delta code-sharing arrangements. As of December 1, 2005, we had transitioned 32 50-seat regional jets out of US Airways system. We expect to complete the transition of aircraft from US Airways to United in the first quarter of fiscal year 2006 and to Delta in the second quarter of fiscal year 2006.

Rotable Spare Parts Maintenance Agreements

      In August 2005, the Company entered into a ten-year agreement with AAR Corp. (the “AAR Agreement”), for the management and repair of certain of the Company’s CRJ-200, - -700, -900 and ERJ-145 aircraft rotable spare parts inventory. Under the agreement, AAR will purchase certain existing rotable spare parts inventory with $39.5 million in cash and $21.5 million in notes receivable to be paid over the next four years. Under the agreement, the Company is required to pay AAR a monthly fee based upon flight hours for the management of, access to and maintenance of the inventory. The agreement also contains certain minimum monthly payments that Mesa must make to AAR. At termination, the Company may elect to purchase the covered inventory at fair market value, but is not contractually obligated to do so. The AAR agreement is contingent upon the Company terminating an agreement for the Company’s CRJ-200 aircraft rotable spare parts inventory with GE Capital Aviation Services (“GECAS”), and including these rotables in the arrangement. The Company notified GECAS of its intent to cancel that agreement in August and terminated the agreement in November 2005.

Other Operations

      The Company announced its intention to establish an independent inter-island Hawaiian airline with service expected to begin in early to mid calendar 2006. The airline will be conducted using state-of-the-art new generation regional jets in a high quality, high frequency service, connecting the islands of Hawaii with service to the Hilo, Honolulu, Kona, Lihue and Maui (Kahului) markets. The aircraft are expected to be incremental to Mesa’s current fleet.

Summary of Financial Results

      Mesa Air Group recorded consolidated net income of $56.9 million in fiscal 2005, representing diluted earnings per share of $1.35. This compares to consolidated net income of $26.3 million or $0.63 per share in fiscal 2004 and consolidated net income of $25.3 million or $0.76 per share in fiscal 2003.

      The fiscal 2005 results included $1.7 million in net costs to return four non-operating Embraer 120 aircraft to the lessor, a $1.3 million gain from the reversal of reserves due to the early return of two Shorts 360 aircraft to the lessor, $1.0 million in proceeds from the settlement of a dispute with a vendor and net investment income of $2.3 million.

      The fiscal 2004 results included $12.4 million in costs to terminate the leases of seven Beechcraft 1900D aircraft, one-time compensation payments of $3.4 million, merger costs of $3.4 million related to our failed attempt to merge with Atlantic Coast Airlines, the reversal of certain restructuring liabilities of $0.5 million and net investment income of $0.6 million.

      The fiscal 2003 results included the reversal of $12.0 million in restructuring liabilities related to the closure of CCAir, $1.1 million in costs of returning Beechcraft 1900D aircraft to the manufacturer, a $4.1 million settlement with the DOT related to payments made to the Company under the Air Transportation Safety and System Stabilization Act, $1.0 million in TSA funds collected on the Company’s behalf by other airlines, a gain on the involuntary conversion of an aircraft of $1.3 million related to the crash of Flight 5481 and a net investment loss of $0.7 million.

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Results of Operations

      The following tables set forth selected operating and financial data of the Company for the years indicated below.

	Operating Data
	Years Ended September 30,
	2005			2004			2003
Passengers		13,088,872			10,239,915			6,444,459
Available seat miles (“ASM”)(000s)		8,715,749			7,107,684			4,453,707
Revenue passenger miles (000s)		6,185,864			5,035,165			2,814,480
Load factor		71.0	%		70.8	%		63.2	%
Yield per revenue passenger mile (cents)		18.2			17.8			21.3
Revenue per ASM (cents)		13.0			12.6			13.4
Operating cost per ASM (cents)		11.6			11.7			12.3
Average stage length (miles)		389			390			337
Number of operating aircraft in fleet		182			180			150
Gallons of fuel consumed		202,410,695			170,867,222			115,640,808
Block hours flown		571,339			513,881			393,335
Departures		391,086			353,083			296,921

Operating Expense Data

Years Ended

September 30, 2005, 2004 and 2003

	2005									2004							2003
							Cost								Cost								Cost
				Percent			per					Percent			per					Percent			per
	Amount			of Total			ASM			Amount		of Total			ASM		Amount			of Total			ASM
	(000s)			Revenues			(cents)			(000s)		Revenues			(cents)		(000s)			Revenues			(cents)
Flight operations	$	319,271			28.1	%		3.7		$	297,521		33.2	%		4.2	$	212,080			35.3	%		4.8
Fuel		304,256			26.8	%		3.5			194,510		21.7	%		2.7		113,370			18.9	%		2.5
Maintenance		198,695			17.5	%		2.3			163,463		18.2	%		2.3		118,517			19.8	%		2.6
Aircraft & traffic servicing		68,475			6.0	%		0.8			66,223		7.4	%		0.9		50,053			8.3	%		1.1
Promotion & sales		3,906			0.3	%		0.0			5,806		0.6	%		0.1		7,966			1.3	%		0.2
General & administrative		69,429			6.1	%		0.8			62,035		6.9	%		0.9		37,982			6.3	%		0.9
Depreciation & amortization		44,231			3.9	%		0.5			28,001		3.2	%		0.4		15,700			2.6	%		0.4
Impairment and restructuring charges (credits)		(1,257	)		(0.1	)%		(0.0	)		11,895		1.3	%		0.2		(10,957	)		(1.7	)%		(0.3	)
Total operating expenses		1,007,006			88.6	%		11.6			829,454		92.5	%		11.7		544,711			90.8	%		12.3
Interest expense		44,466			3.9	%		0.5			25,063		2.8	%		0.4		12,664			2.1	%		0.3
Other income (expense)		4,469			0.4	%		0.1			1,723		0.0	%		0.0		(2,758	)		(0.5	)%		(0.1	)

      Note: Numbers in the table above may not be recalculated due to rounding

Year Ended			Air Midwest/
September 30, 2005 (000’s)	Mesa		Freedom			Other		Elimination			Total
Total operating revenues	$	1,064,093	$	62,681		$	297,764	$	(288,270	)	$	1,136,268
Total operating expenses		925,783		70,163			255,909		(244,849	)		1,007,006
Operating income (loss)		138,310		(7,482	)		41,855		(43,421	)		129,262

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Year Ended	Mesa/		Air
September 30, 2004 (000’s)	Freedom		Midwest			Other		Elimination			Total
Total operating revenues	$	807,736	$	81,714		$	365,858	$	(358,496	)	$	896,812
Total operating expenses		725,975		91,349			313,243		(301,113	)		829,454
Operating income (loss)		81,761		(9,635	)		52,615		(57,383	)		67,358

Year Ended	Mesa/		Air
September 30, 2003 (000’s)	Freedom		Midwest			CCAir			Other		Elimination			Total
Total operating revenues	$	507,555	$	86,142		$	1,254		$	175,956	$	(170,917	)	$	599,990
Total operating expenses		462,018		95,533			(10,556	)		131,922		(134,206	)		544,711
Operating income (loss)		45,537		(9,391	)		11,810			44,034		(36,711	)		55,279

      All of the Company’s Beechcraft 1900D aircraft are owned by Mesa Airlines. As such, the associated aircraft and debt are recorded on the separate company financial statements of Mesa Airlines. These aircraft are operated by Air Midwest, and as a result, Mesa charges Air Midwest rent to offset its depreciation and interest cost. Prior impairment charges related to these aircraft are recorded on the separate company financial statements of Mesa Airlines.

Fiscal 2005 Versus Fiscal 2004

Operating Revenues

      In fiscal 2005, operating revenue increased by $239.5 million, or 26.7%, from $896.8 million to $1,136.3 million. The increase in revenue is primarily attributable to a $256.9 million increase in revenue associated with the operation of 15 additional regional jets flown by Mesa compared to 2004. Offsetting this increase was a decrease in passenger revenue of approximately $20.3 million at Air Midwest and Freedom. The decrease in passenger revenue at Air Midwest and Freedom was primarily due to reductions in capacity as the Company has leased nine B1900 aircraft to Big Sky and four B1900 aircraft to Great Lakes during fiscal 2005. However, EAS subsidies received by Air Midwest increased by $1.3 million as a result of additional markets served and higher subsidy rates on existing markets.

Operating Expenses

Flight Operations

      In fiscal 2005, flight operations expense increased $21.8 million or 7.3%, to $319.3 million from $297.5 million for fiscal 2004. On an ASM basis, flight operations expense decreased 11.9% to 3.7 cents per ASM in fiscal 2005 from 4.2 cents per ASM in fiscal 2004. This increase in total expense is primarily attributed to a $15.8 million increase in aircraft lease costs as a result of placing additional regional jets into service and an increase of $5.0 million in pilot and flight attendant wages due to growth in flight operations. The decrease on an ASM basis is due to the addition of larger regional jets at Mesa and the reduction in turboprop aircraft flown by Air Midwest.

Fuel

      In fiscal 2005, fuel expense increased $109.7 million or 56.4%, to $304.3 million from $194.5 million for fiscal 2004. On an ASM basis, fuel expense increased 29.6% to 3.5 cents per ASM in fiscal 2005 from 2.7 cents per ASM in fiscal 2004. Into-plane fuel cost increased 32% per gallon, resulting in a $62.3 million unfavorable price variance and consumption increased 18% resulting in a $47.4 million unfavorable volume variance. The increase in volume was due to the additional regional jets added to the fleet. In fiscal 2005, approximately 95% of our fuel costs were reimbursed by our code-share partners.

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Maintenance Expense

      In fiscal 2005, maintenance expense increased $35.2 million or 21.6%, to $198.7 million from $163.5 million for fiscal 2004. On an ASM basis, maintenance expense remained flat at 2.3 cents for fiscal 2005 and fiscal 2004. The increase is due to $5.5 million in additional aircraft heavy maintenance expense, a $6.6 million increase in component and rent expense, a $10.1 million increase in engine maintenance, and a $13.5 million increase in materials, repairs and servicing expenses. The increase is due to the increased fleet size and age of the Company’s aircraft.

Aircraft and Traffic Servicing

      In fiscal 2005, aircraft and traffic servicing expense increased by $2.3 million or 3.4%, to $68.5 million from $66.2 million for fiscal 2004. On an ASM basis, aircraft and traffic servicing expense decreased 11.1% to 0.8 cents per ASM in fiscal 2005 from 0.9 cents per ASM in fiscal 2004. The increase in expense is primarily related to an 11% increase in departures. The decrease on an ASM basis is due to the addition of larger regional jets at Mesa and the reduction in turboprop aircraft at Air Midwest.

Promotion and Sales

      In fiscal 2005, promotion and sales expense decreased $1.9 million or 32.7%, to $3.9 million from $5.8 million for fiscal 2004. On an ASM basis, promotion and sales expense decreased 100% to 0.0 cents per ASM in fiscal 2005 from 0.1 cents per ASM in fiscal 2004. The decrease in expense is due to a decline in booking and franchise fees paid by Air Midwest under our pro-rate agreements with our code-share partners, caused by a decline in passengers carried under these agreements. We do not pay these fees under our regional jet revenue-guarantee contracts.

General and Administrative

      In fiscal 2005, general and administrative expense increased $7.4 million or 11.9%, to $69.4 million from $62.0 million for fiscal 2004. On an ASM basis, general and administrative expense decreased 11.1% to 0.8 cents per ASM in fiscal 2005 from 0.9 cents per ASM in fiscal 2004. The increase in expense includes a $6.3 million increase in property taxes associated with increases in our fleet and a $2.6 million increase in bad debt expense as a result of increasing the Company’s allowance for doubtful receivables related to code share partners in bankruptcy. Offsetting these increases was a $1.6 million decrease in health insurance costs related to the timing and severity of claims.

Depreciation and Amortization

      In fiscal 2005, depreciation and amortization expense increased $16.2 million or 58.0%, to $44.2 million from $28.0 million for fiscal 2004. On an ASM basis, depreciation and amortization expense increased 25.0% to 0.5 cents per ASM in fiscal 2005 from 0.4 cents per ASM in fiscal 2004. The increase in expense is primarily due to the purchase of 13 regional jets in 2005.

Impairment and Restructuring Charges

      In fiscal 2005, we reversed $1.3 million in reserves for lease and lease return costs related to two Shorts 360 aircraft the Company returned to the lessor in January 2005.

      In fiscal 2004, we recognized an impairment charge of $12.4 million related to the early termination of leases on seven B1900D aircraft. We negotiated the terms of the early return with the majority of the aircraft lessors and took a charge that included $2.4 million for the present value of future lease payments, $2.4 million for the negotiated settlement of return conditions, $1.2 million for the cancellation of maintenance agreements, $0.8 million to reduce maintenance deposits to net realizable value and $4.5 million to reduce the value of rotable and expendable inventory to fair value less costs to sell. We purchased two of the aircraft from the lessors, which were subsequently scrapped. As a result, we also took a $1.1 million impairment charge for

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the difference between the buy out of the lease and the subsequent sale of the aircraft. These charges were offset by the reversal of $0.5 million of prior year restructuring charges.

Interest Expense

      In fiscal 2005, interest expense increased $19.4 million or 77.4%, to $44.5 million from $25.1 million for fiscal 2004. The increase in interest expense is primarily comprised of an increase of $14.6 million on interim and permanently financed aircraft debt, $1.2 million on the senior convertible notes that were issued in February 2004, $1.2 million on the inventory financing arrangement with GECAS and $1.1 million on the B1900 aircraft debt.

Other Income (Expense)

      In fiscal 2005, other income increased $2.7 million, or 159.4%, to $4.5 million from $1.7 million for fiscal 2004. In fiscal 2005, other income is primarily comprised of net investment income of $2.3 million from the Company’s portfolio of aviation related securities, $2.9 million of dividend income on marketable securities, $1.0 million income from a settlement of a dispute with a vendor and $1.7 million in net costs to return four non-operating EMB120 aircraft to the lessor.

      In fiscal 2004, other income was primarily comprised of investment income of $0.6 million related to the Company’s portfolio of aviation related securities.

Income Taxes

      In fiscal 2005, the Company’s effective income tax rate was 38.3% as compared to 41.8% in fiscal 2004. The decrease in rate from fiscal 2004 is due to certain payments to top executives in the prior year, a portion of which were not deductible for income taxes.

Fiscal 2004 Versus Fiscal 2003

Operating Revenues

      In fiscal 2004, operating revenue increased by $296.8 million, or 49.5%, from $600.0 million to $896.8 million. The increase in revenue is primarily attributable to a $300.2 million increase in revenue associated with the operation of 39 additional regional jets flown by Mesa and Freedom compared to 2003. Offsetting this increase was a decrease in passenger revenue of approximately $7.8 million at Air Midwest. The decrease in passenger revenue at Air Midwest was primarily due to a decline in passengers carried as a result of parking seven leased aircraft in the second quarter (the leases on these aircraft were subsequently early terminated, with five aircraft returned to the lessor and two purchased and resold). However, EAS subsidies received by Air Midwest increased by $3.6 million as a result of additional markets served and higher subsidy rates on existing markets.

Operating Expenses

Flight Operations

      In fiscal 2004, flight operations expense increased $85.4 million or 40.3%, to $297.5 million from $212.1 million for fiscal 2003. On an ASM basis, flight operations expense decreased 12.5% to 4.2 cents per ASM in fiscal 2004 from 4.8 cents per ASM in fiscal 2003. The increase in expense is consistent with the increased capacity from the regional jets added to Mesa and Freedom’s fleet during this period. The decrease on an ASM basis is due to the addition of larger regional jets at Mesa and Freedom and the reduction in turboprop aircraft at Air Midwest.

Fuel

      In fiscal 2004, fuel expense increased $81.1 million or 71.6%, to $194.5 million from $113.4 million for fiscal 2003. On an ASM basis, fuel expense increased 8.0% to 2.7 cents per ASM in fiscal 2004 from 2.5 cents

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per ASM in fiscal 2003. Into-plane fuel cost increased 16% per gallon, resulting in a $26.2 million unfavorable price variance and consumption increased 48% resulting in a $54.1 million unfavorable volume variance (excluding fuel used in other operations). The increase in volume was due to the additional regional jets added to the fleet. In fiscal 2004 approximately 92% of our fuel costs were reimbursed by our code-share partners.

Maintenance Expense

      In fiscal 2004, maintenance expense increased $44.9 million or 37.9%, to $163.5 million from $118.5 million for fiscal 2003. On an ASM basis, maintenance expense decreased 11.5% to 2.3 cents per ASM in fiscal 2004 from 2.6 cents per ASM in fiscal 2003. Mesa and Freedom’s maintenance expense increased $40.3 million primarily as a result of increases in the number of aircraft in their fleet, repair costs on certain rotable parts, headcount and engine overhaul expenses. Maintenance expenses in the Other segment increased $6.8 million due to increases in rotable repair expenses and certain purchasing related administrative expenses at our procurement company. These increases were offset by a $1.3 million decrease in maintenance expenses at CCAIR, due to its dissolution, and a $0.9 million decrease at Air Midwest as a result of reductions in its fleet. The decrease on an ASM basis is due to the lower maintenance costs associated with adding new jets into our fleet.

Aircraft and Traffic Servicing

      In fiscal 2004, aircraft and traffic servicing expense increased by $16.2 million or 32.3%, to $66.2 million from $50.1 million for fiscal 2003. On an ASM basis, aircraft and traffic servicing expense decreased 18.2% to 0.9 cents per ASM in fiscal 2004 from 1.1 cents per ASM in fiscal 2003. The increase in expense is primarily related to a 19% increase in regional jet departures. The decrease on an ASM basis is due to the efficiencies attained by adding additional regional jets at Mesa and Freedom and the reduction in turboprop aircraft at Air Midwest.

Promotion and Sales

      In fiscal 2004, promotion and sales expense decreased $2.2 million or 27.1%, to $5.8 million from $8.0 million for fiscal 2003. On an ASM basis, promotion and sales expense decreased 50.0% to 0.1 cents per ASM in fiscal 2004 from 0.2 cents per ASM in fiscal 2003. The decrease in expense is due to a decline in booking and franchise fees paid by Air Midwest under the Company’s pro-rate agreements with its code-share partners, caused by a decline in passengers carried under these agreements. The Company does not pay these fees under its regional jet revenue-guarantee contracts.

General and Administrative

      In fiscal 2004, general and administrative expense increased $24.1 million or 63.3%, to $62.0 million from $38.0 million for fiscal 2003. On an ASM basis, general and administrative expense remained the same at 0.9 cents per ASM in fiscal 2004 and 2003. The increase in expense includes $3.4 million in costs associated with the failed merger with Atlantic Coast Airlines, Inc., $3.4 million in executive compensation as a result of the restructuring of employment contracts of top executives, a $6.1 million increase in bad debt expense as the Company increased its allowance for doubtful accounts by $4.3 million in fiscal 2004 (we reduced our allowance by $1.8 million in fiscal 2003), a $3.6 million increase in passenger liability insurance associated with increases in our fleet, a $1.2 million increase in property taxes associated with increases in our fleet, a $3.6 million increase in administrative wages and benefits and a $2.2 million increase in health insurance costs as a result of increased headcount.

Depreciation and Amortization

      In fiscal 2004, depreciation and amortization expense increased $12.3 million or 78.4%, to $28.0 million from $15.7 million for fiscal 2003. On an ASM basis, depreciation and amortization expense remained the same at 0.4 cents per ASM in fiscal 2004 and 2003. The increase in expense is primarily due to the purchase of 11 regional jets in 2004, the acquisition of two CRJ200 aircraft acquired as part of the purchase of Midway

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assets, depreciation of aircraft on interim financing and an increase in rotable aircraft inventory at Mesa and Freedom.

Impairment and Restructuring Charges

      In fiscal 2004, we recognized an impairment charge of $12.4 million related to the early termination of leases on seven B1900D aircraft. We negotiated the terms of the early return with the majority of the aircraft lessors and took a charge that included $2.4 million for the present value of future lease payments, $2.4 million for the negotiated settlement of return conditions, $1.2 million for the cancellation of maintenance agreements, $0.8 million to reduce maintenance deposits to net realizable value, $4.5 million to reduce the value of rotable and expendable inventory to fair value less costs to sell. We were forced to purchase two of the aircraft from the lessors, which were subsequently scrapped. As a result, we also took a $1.1 million impairment charge for the difference between the buy out of the lease and the subsequent sale of the aircraft. These charges were offset by the reversal of $0.4 million of prior year restructuring charges.

      In fiscal 2003, we recognized an additional impairment charge of $1.1 million related to the costs of returning Beechcraft 1900D aircraft to the manufacturer. We also reversed $7.4 million in restructuring charges for future aircraft leases related to CCAir aircraft that were returned to the lessor and $4.6 million in aircraft related return costs for these same aircraft.

Interest Expense

      In fiscal 2004, interest expense increased $12.4 million or 97.9%, to $25.1 million from $12.7 million for fiscal 2003. The increase in interest expense is primarily comprised of $8.6 million in interest on the senior convertible notes and an increase of $4.5 million in interest on interim and permanently financed aircraft debt. These increases were offset by a decrease of $1.3 million in interest expense on our B1900 debt due to aircraft returns and principal payments.

Other Income (Expense)

      In fiscal 2004, other income (expense) increased $4.5 million or 162%, to income of $1.7 million from expense of $2.8 million for fiscal 2003. In fiscal 2004, other income is primarily comprised of investment income of $0.6 million related to the Company’s portfolio of aviation related securities.

      In fiscal 2003, other expense is primarily comprised of the settlement with the DOT of $4.1 million related to payments made to us under the Air Transportation Safety and System Stabilization Act and $0.7 million in net investment related losses on our portfolio of aviation related securities. These expenses were offset by the gain on an involuntary conversion of an aircraft of $1.3 million related to the crash of Flight 5481 as well as $1.0 million for TSA funds collected on our behalf by US Airways and Frontier.

Minority Interest

      Amounts included in minority interest in fiscal 2003 reflect the after-tax portion of earnings of UFLY, LLC that are applicable to the minority interest partners. UFLY was dissolved in fiscal 2003.

Income Taxes

      In fiscal 2004, the Company’s effective income tax rate was 41.8% as compared to 38.3% in fiscal 2003. The increase in rate from fiscal 2003 is due to certain payments to top executives in the current year, a portion of which were not deductible for income taxes.

Liquidity and Capital Resources

Sources and Uses of Cash

      At September 30, 2005, we had cash, cash equivalents, and marketable securities (including restricted cash and held-to-maturity securities) of $280.4 million, compared to $241.1 million at September 30, 2004. In

34

fiscal 2005, we permanently financed 15 CRJ-900 aircraft through a sale/leaseback transaction, which resulted in proceeds on sale of $389.2 million. Proceeds from this transaction were used to retire $397.4 million in interim aircraft debt. We also improved our cash position through operations and receipt of a $22.8 million deposit from the pending sale of our existing regional jet spare parts inventory.

      Uses of cash included capital expenditures of $42.0 million, which was primarily attributable to aircraft modifications and provisioning of rotable inventory to support the additional jets, and the purchase of $11.2 million of the Company’s outstanding common stock.

      Our cash and cash equivalents and marketable securities are intended to be used for working capital, capital expenditures, acquisitions, and to fund our obligations with respect to regional jet deliveries.

      As of September 30, 2005, we had receivables of approximately $29.0 million (net of an allowance for doubtful accounts of $8.9 million), compared to receivables of approximately $30.7 million (net of an allowance for doubtful accounts of $7.1 million) as of September 30, 2004. The amounts include receivables due from our code-share partners, credits due from the aircraft manufacturer and passenger ticket receivables due through the Airline Clearing House. Accounts receivable from our code-share partners was 35.3% of total gross accounts receivable at September 30, 2005.

Operating Leases

      We have significant long-term lease obligations primarily relating to our aircraft fleet including 15 CRJ900 aircraft that were permanently financed as operating leases in September 2005. The leases are classified as operating leases and are therefore excluded from our consolidated balance sheets. At September 30, 2005, we leased 142 aircraft with remaining lease terms ranging from 1 to 18.5 years. Future minimum lease payments due under all long-term operating leases were approximately $2.5 billion at September 30, 2005.

3.625% Senior Convertible Notes due 2024

      In February 2004, we completed the private placement of senior convertible notes due 2024, which resulted in gross proceeds of $100.0 million ($97.0 million net). Cash interest is payable on the notes at the rate of 2.115% per year on the aggregate amount due at maturity, payable semiannually in arrears on February 10 and August 10 of each year, beginning August 10, 2004, until February 10, 2009. After that date, we will not pay cash interest on the notes prior to maturity, and the notes will begin accruing original issue discount at a rate of 3.625% until maturity. On February 10, 2024, the maturity date of the notes, the principal amount of each note will be $1,000. The aggregate amount due at maturity, including interest accrued from February 10, 2009, will be $171.4 million. Each of our wholly owned domestic subsidiaries guarantees the notes on an unsecured senior basis. The notes and the note guarantees are senior unsecured obligations and rank equally with our existing and future senior unsecured indebtedness. The notes and the note guarantees are junior to the secured obligations of our wholly owned subsidiaries to the extent of the collateral pledged.

      The notes are convertible into shares of our common stock at a conversion rate of 40.3737 shares per $1,000 in principal amount at maturity of the notes. This conversion rate is subject to adjustment in certain circumstances. Holders of the notes may convert their notes only if: (i) after March 31, 2004, the sale price of our common stock exceeds 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding quarter; (ii) on or prior to February 10, 2019, the trading price for the notes falls below certain thresholds; (iii) the notes have been called for redemption; or (iv) specified corporate transactions occur. We may redeem the notes, in whole or in part, beginning on February 10, 2009, at a redemption price equal to the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of the notes may require us to repurchase the notes on February 10, 2009 at a price of $583.40 per note plus accrued and unpaid cash interest, if any, on February 10, 2014 at a price of $698.20 per note plus accrued and unpaid cash interest, if any, and on February 10, 2019 at a price of $835.58 per note plus accrued and unpaid cash interest, if any.

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6.25% Senior Convertible Notes Due 2023

      In June 2003, we completed the private placement of senior convertible notes due 2023, which resulted in gross proceeds of $100.1 million ($96.9 million net). Cash interest is payable on the notes at the rate of 2.4829% per year on the aggregate amount due at maturity, payable semiannually in arrears on June 16 and December 16 of each year, beginning December 16, 2003, until June 16, 2008. After that date, we will not pay cash interest on the notes prior to maturity, and the notes will begin accruing original issue discount at a rate of 6.25% until maturity. On June 16, 2023, the maturity date of the notes, the principal amount of each note will be $1,000. The aggregate amount due at maturity, including interest accrued from June 16, 2008, will be $252 million. Each of our wholly owned domestic subsidiaries guarantees the notes on an unsecured senior basis. The notes and the note guarantees are senior unsecured obligations and rank equally with our existing and future senior unsecured indebtedness. The notes and the note guarantees are junior to the secured obligations of our wholly owned subsidiaries to the extent of the collateral pledged.

      The notes are convertible into shares of our common stock at a conversion rate of 39.727 shares per $1,000 in principal amount at maturity of the notes. This conversion rate is subject to adjustment in certain circumstances. Holders of the notes may convert their notes only if: (i) the sale price of our common stock exceeds 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding quarter; (ii) prior to June 16, 2018, the trading price for the notes falls below certain thresholds; (iii) the notes have been called for redemption; or (iv) specified corporate transactions occur. The Company may redeem the notes, in whole or in part, beginning on June 16, 2008, at a redemption price equal to the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of the notes may require the Company to repurchase the notes on June 16, 2008 at a price of $397.27 per note plus accrued and unpaid cash interest, if any, on June 16, 2013 at a price of $540.41 per note plus accrued and unpaid cash interest, if any, and on June 16, 2018 at a price of $735.13 per note plus accrued and unpaid cash interest, if any.

Interim and Permanent Aircraft Financing Arrangements

      At September 30, 2005, we had an aggregate of $54.6 million in notes payable to an aircraft manufacturer for delivered aircraft on interim financing. Under interim financing arrangements, we take delivery and title of the aircraft prior to securing permanent financing and the acquisition of the aircraft is accounted for as a purchase with debt financing. Accordingly, we reflect the aircraft and debt under interim financing on our balance sheet during the interim financing period. After taking delivery of the aircraft, it is our practice and our intention to subsequently enter into a sale and leaseback transaction with an independent third-party lessor. Upon permanent financing, the proceeds from the sale and leaseback transaction are used to retire the notes payable to the manufacturer. Any gain recognized on the sale and leaseback transaction is deferred and amortized over the life of the lease. At September 30, 2005, we had two aircraft on interim financing with the manufacturer. These interim financings agreements have a term of six months and provide for monthly interest only payments at LIBOR plus three percent. The current interim financing agreement with the manufacturer provides for us to have a maximum of 15 aircraft on interim financing at any one time. Our ability to obtain additional interim financing is contingent upon obtaining permanent financing for the aircraft already delivered. There are no assurances that we will be able to obtain permanent financing for future aircraft deliveries.

Other Indebtedness and Obligations

      In October 2004, the Company permanently financed five CRJ-900 aircraft with $118.0 million in debt. The debt bears interest at the monthly LIBOR plus three percent and requires monthly principal and interest payments.

      In January and March 2004, the Company permanently financed five CRJ-700 and six CRJ-900 aircraft with $254.7 million in debt. The debt bears interest at the monthly LIBOR plus three percent and requires monthly principal and interest payments.

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      In December 2003, we assumed $24.1 million of debt in connection with our purchase of two CRJ-200 aircraft in the Midway Chapter 7 bankruptcy proceedings. The debt, due in 2013, bears interest at the rate of 7% per annum through 2008, converting to 12.5% thereafter, with principal and interest due monthly.

      In August 2005, the Company entered into a ten-year agreement with AAR Corp. (the “AAR Agreement”), for the management and repair of certain of the Company’s CRJ-200, - -700, -900 and ERJ-145 aircraft rotable spare parts inventory. Under the agreement, AAR will purchase certain existing spare parts inventory for $39.5 million in cash and $21.5 million in notes receivable to be paid over the next four years. Under the agreement, the Company is required to pay AAR a monthly fee based upon flight hours for access to and maintenance of the inventory. The agreement also contains certain minimum monthly payments that Mesa must make to AAR. At termination, the Company may elect to purchase the covered inventory at fair value, but is not contractually obligated to do so. The AAR agreement is contingent upon the Company terminating an agreement for the Company’s CRJ-200 aircraft rotable spare parts inventory with GE Capital Aviation Services (“GECAS”), and including these rotables in the arrangement. The amount included in the consolidated balance sheet at September 30, 2005, represents deposits received from AAR pending the termination of the GECAS agreement. The Company notified GECAS of its intent to cancel that agreement in August and terminated the agreement in November 2005 (see note 8).

      In June 2004, the Company entered into an agreement with LogisTechs, Inc., a wholly-owned subsidiary of GECAS, whereby GECAS provided financing to the Company and the Company agreed to pay GECAS for the management and repair of certain of the Company’s CRJ-200 aircraft rotable spare parts inventory. Under the agreement, the Company received $15 million in cash and a $6 million promissory note receivable from GECAS. In August 2005, Mesa notified GECAS of its intent to terminate the agreement in order to enter into the AAR agreement, and as such, the Company is required to repay the 19.7 million of outstanding financing at September 30, 2005. The agreement was terminated and this amount was repaid in November 2005.

      As of September 30, 2005, we had $8.8 million in restricted cash on deposit collateralizing various letters of credit outstanding and the ACH funding of our payroll. We have entered into a $9.5 million letter of credit facility with a financial institution, of which $3.8 million is required to be secured.

Contractual Obligations

      As of September 30, 2005, we had $664.4 million of long-term debt (including current maturities). This amount consisted of $460.6 million in notes payable related to owned aircraft, $200.1 in aggregate principal amount of our senior convertible notes due 2023 and 2024 and $3.7 million in other miscellaneous debt.

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      The following table sets forth our cash obligations as of September 30, 2005.

			Payment Due by Period
Obligations			2006		2007		2008		2009		2010		Thereafter		Total
			(In thousands)
Long-term debt:
	Note payable related to CRJ700s and 900s(2)		$	39,273	$	38,991	$	38,707	$	38,423	$	38,102	$	349,655	$	543,151
	2003 senior convertible debt notes (assuming no conversions)			6,257		6,257		6,257		—		—		252,000		270,771
	2004 senior convertible debt notes (assuming no conversions)			3,625		3,625		3,625		1,813		—		171,409		184,097
	Notes payable related to B1900Ds			10,692		10,692		10,692		10,692		10,692		62,287		115,747
	Note payable related to CRJ200s(2)			3,000		3,000		3,000		3,000		3,000		20,866		35,866
	Note payable to manufacturer			941		1,823		—		—		—		—		2,764
	Mortgage note payable			41		109		109		109		109		1,037		1,514
	Other			61		25		25		25		25		25		186
		Total long-term debt		63,890		64,522		62,415		54,062		51,928		857,279		1,154,096
Short-term debt:
	Notes payable to manufacturer — interim financing(1)(2)			3,876		4,105		4,105		4,105		4,105		61,812		82,108
Payments under operating leases:
	Cash aircraft rental payments(2)			245,708		228,285		205,173		185,729		184,041		1,433,376		2,482,312
	Lease payments on equipment and operating facilities			1,578		1,351		1,392		961		947		2,154		8,383
		Total lease payments		247,286		229,636		206,565		186,690		184,988		1,435,530		2,490,695
	Future aircraft acquisition costs(3)			25,000		—		—		—		175,000		—		200,000
	Rotable inventory financing commitments(4)			18,379		587		563		540		2,241		—		22,310
	Minimum payments due under rotable spare parts maintenance agreement			19,129		22,787		26,158		28,922		31,969		172,295		301,260
	Contract initiation costs(5)			20,000		—		—		—		—		—		20,000
		Total	$	397,560	$	321,637	$	299,806	$	274,319	$	450,231	$	2,526,916	$	4,270,469

(1)	Represents the principal and interest on notes payable to the manufacturer for interim financed aircraft. These notes payable have a six-month maturity. For purposes of this schedule, we have assumed that aircraft on interim financing are converted to permanent financing as debt upon the expiration of the notes with future maturities included on this line.
(2)	Aircraft ownership costs, including depreciation and interest expense on owned aircraft and rental payments on operating leased aircraft, of aircraft flown pursuant to our guaranteed-revenue agreements are reimbursed by the applicable code-share partner.
(3)	Represents the estimated cost of commitments to acquire CRJ-900 aircraft.
(4)	Represents the principal and interest related to financed rotable inventory and includes amounts due as a result of the termination of the GECAS agreement.
(5)	Represents amounts due code share partners for contract modification payments.

Maintenance Commitments

      In January 1997, we entered into a 10-year engine maintenance contract with General Electric Aircraft Engines (“GE”) for its CRJ-200 aircraft. The agreement was subsequently amended in the first quarter of fiscal 2003. The amended contract requires a monthly payment based upon the prior month’s flight hours

38

incurred by the covered engines. The hourly rate increases over time based upon the engine overhaul costs that are expected to be incurred in that year and is subject to escalation based on changes in certain price indices. The contract also provides for a fixed number of engine overhauls per year. To the extent that the number of actual overhauls is less than the fixed number, GE is required to issue a credit to us for the number of events less than the fixed number multiplied by an agreed upon price. To the extent that the number of actual overhauls is greater than the fixed number, we are required to pay GE for the number of events greater than the fixed number multiplied by the same agreed upon price.

      In April 1997, we entered into a 10-year engine maintenance contract with Pratt & Whitney Canada Corp. (“PWC”) for our Dash 8-200 aircraft. The contract requires us to pay PWC for the engine overhaul upon completion of the maintenance based upon a fixed dollar amount per flight hour. The rate under the contract is subject to escalation based on changes in certain price indices.

      In April 2000, we entered into a 10-year engine maintenance contract with Rolls-Royce Allison (“Rolls-Royce”) for its ERJ aircraft. The contract requires us to pay Rolls-Royce for the engine overhaul upon completion of the maintenance based upon a fixed dollar amount per flight hour. The rate per flight hour is based upon certain operational assumptions and may vary if the engines are operated differently than these assumptions. The rate is also subject to escalation based on changes in certain price indices. The agreement with Rolls-Royce also contains a termination clause and look back provision to provide for any shortfall between the cost of maintenance incurred by the provider and the amount paid up to the termination date by us and includes a 15% penalty on such amount. We do not anticipate an early termination under the contract.

      In May 2002, we entered into a new six-year fleet management program with PWC to provide maintenance for our Beechcraft 1900D turboprop engines. The contract requires a monthly payment based upon flight hours incurred by the covered aircraft. The hourly rate is subject to annual adjustment based on changes in certain price indices and is guaranteed to increase by no less than 1.5% per year. Pursuant to the agreement, we sold certain assets of our Desert Turbine Services unit, as well as all spare PT6 engines to PWC for $6.8 million, which approximated the net book value of the assets. Pursuant to the agreement, we provided a working capital loan to PWC for the same amount, which is to be repaid through a reduced hourly rate being charged for maintenance. The agreement covers all of our Beechcraft 1900D turboprop aircraft and engines. The agreement also contains a termination clause and look back provision to provide for any shortfall between the cost of maintenance incurred by the provider and the amount paid up to the termination date by us and provides for return of a pro-rated share of the prepaid amount upon early termination. We do not anticipate an early termination under the contract.

Critical Accounting Policies and Estimates

      The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. In connection with the preparation of these financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, the allowance for doubtful accounts, medical claims reserve, valuation of assets held for sale and costs to return aircraft and a valuation allowance for certain deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Such historical experience and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

      We have identified the accounting policies below as critical to our business operations and the understanding of our results of operations. The impact of these policies on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. The discussion below is not intended to be a comprehensive list of our accounting policies. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to the Consolidated Financial Statements, which contains

39

accounting policies and other disclosures required by accounting principles generally accepted in the United States of America.

Revenue Recognition

      The America West, United and the US Airways regional jet code-share agreements are revenue-guarantee flying agreements. Under a revenue-guarantee arrangement, the major airline generally pays a fixed monthly minimum amount, plus certain additional amounts based upon the number of flights flown and block hours performed. The contracts also include reimbursement of certain costs incurred by us in performing flight services. These costs, known as “pass-through costs,” may include aircraft ownership cost, passenger and hull insurance, aircraft property taxes as well as, fuel, landing fees and catering. The contracts also include a profit component that may be determined based on a percentage of profits on the Mesa flown flights, a profit margin on certain reimbursable costs as well as a profit margin based on certain operational benchmarks. We recognize revenue under our revenue-guarantee agreements when the transportation is provided. The majority of the revenue under these contracts is known at the end of the accounting period and is booked as actual. We perform an estimate of the profit component based upon the information available at the end of the accounting period. All revenue recognized under these contracts is presented at the gross amount billed.

      Under the Company’s revenue-guarantee agreements with America West, US Airway and United, the Company is reimbursed under a fixed rate per block-hour plus an amount per aircraft designed to reimburse the Company for certain aircraft ownership costs. In accordance with Emerging Issues Task Force Issue No. 01-08, “Determining Whether an Arrangement Contains a Lease,” the Company has concluded that a component of its revenue under the agreement discussed above is rental income, inasmuch as the agreement identifies the “right of use” of a specific type and number of aircraft over a stated period of time. The amount deemed to be rental income during fiscal 2005 and 2004 was $235.5 million and $189.0 million, respectively, and has been included in passenger revenue on the Company’s consolidated statements of income.

      In connection with providing service under the Company’s revenue-guarantee agreement with US Airways, the Company’s fuel reimbursement is capped at $0.85 per gallon. Under this agreement, the Company has the option to purchase fuel from a subsidiary of US Airways at the capped rate. As a result, amounts included in revenue for fuel reimbursement and expense for fuel cost may not represent market rates for fuel for the Company’s US Airways flying. The Company purchased 67.4 million gallons, 68.1 million gallons and 55.3 million gallons of fuel under this arrangement in fiscal 2005, 2004 and 2003, respectively.

      The America West, US Airways and Midwest Airlines B1900D turboprop code-share agreements are pro-rate agreements. Under a prorate agreement, we receive a percentage of the passenger’s fare based on a standard industry formula that allocates revenue based on the percentage of transportation provided. Revenue from our pro-rate agreements and our independent operation is recognized when transportation is provided. Tickets sold but not yet used are included in air traffic liability on the consolidated balance sheets.

      We also receive subsidies for providing scheduled air service to certain small or rural communities. Such revenue is recognized in the period in which the air service is provided. The amount of the subsidy payments is determined by the United States Department of Transportation on the basis of its evaluation of the amount of revenue needed to meet operating expenses and to provide a reasonable return on investment with respect to eligible routes. EAS rates are normally set for two-year contract periods for each city.

Allowance for Doubtful Accounts

      Amounts billed by the Company under revenue guarantee arrangements are subject to our interpretation of the applicable code-share agreement and are subject to audit by our code-share partners. Periodically our code-share partners dispute amounts billed and pay amounts less than the amount billed. Ultimate collection of the remaining amounts not only depends upon Mesa prevailing under audit, but also upon the financial well-being of the code-share partner. As such, we periodically review amounts past due and records a reserve for amounts estimated to be uncollectible. The allowance for doubtful accounts was $8.9 million and $7.1 million at September 30, 2005 and 2004, respectively. If our actual ability to collect these receivables and

40

the actual financial viability of its partners is materially different than estimated, the Company’s estimate of the allowance could be materially understated or overstated.

Aircraft Leases

      The majority of the Company’s aircraft are leased from third parties. In order to determine the proper classification of a lease as either an operating lease or a capital lease, the Company must make certain estimates at the inception of the lease relating to the economic useful life and the fair value of an asset as well as select an appropriate discount rate to be used in discounting future lease payments. These estimates are utilized by management in making computations as required by existing accounting standards that determine whether the lease is classified as an operating lease or a capital lease. All of the Company’s aircraft leases have been classified as operating leases, which results in rental payments being charged to expense over the terms of the related leases. Additionally, operating leases are not reflected in the Company’s consolidated balance sheet and accordingly, neither a lease asset nor an obligation for future lease payments is reflected in the Company’s consolidated balance sheet.

Accrued Health Care Costs

      We are currently self-insured up to a cap for health care costs and as such, a reserve for the cost of claims that have not been paid as of the balance sheet date is estimated. Our estimate of this reserve is based upon historical claim experience and upon the recommendations of our health care provider. At September 30, 2005 and 2004, we accrued $2.6 million and $2.2 million, respectively, for the cost of future health care claims. If the ultimate development of these claims is significantly different than those that have been estimated, the accrual for future health care claims could be materially overstated or understated.

Accrued Worker’s Compensation Costs

      Beginning in fiscal 2005, we implemented a new worker’s compensation program. Under the program, we are self-insured up to a cap for worker’s compensation claims and as such, a reserve for the cost of claims that have not been paid as of the balance sheet date is estimated. Our estimate of this reserve is based upon historical claim experience and upon the recommendations of our third-party administrator. At September 30, 2005, we accrued $1.6 million for the cost of worker’s compensation claims. If the ultimate development of these claims is significantly different than those that have been estimated, the accrual for future worker’s compensation claims could be materially overstated or understated.

Long-lived Assets, Aircraft and Parts Held for Sale

      Property and equipment are stated at cost and depreciated over their estimated useful lives to their estimated salvage values using the straight-line method. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may be impaired. Under the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company records an impairment loss if the undiscounted future cash flows are found to be less than the carrying amount of the asset. If an impairment loss has occurred, a charge is recorded to reduce the carrying amount of the asset to fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Valuation of Deferred Tax Assets

      The Company records deferred tax assets for the value of benefits expected to be realized from the utilization of alternative minimum tax credit carryforwards and state and federal net operating loss carryforwards. We periodically review these assets for realizability based upon expected taxable income in the applicable taxing jurisdictions. To the extent we believe some portion of the benefit may not be realizable, an estimate of the unrealized portion is made and an allowance is recorded. At September 30, 2005, we had a valuation allowance for certain state net operating loss carryforwards because we believe we will not be able to generate sufficient taxable income in these jurisdictions in the future to realize the benefits of these recorded

41

deferred tax assets. We believe the Company will generate sufficient taxable income in the future to realize the benefits of its other deferred tax assets. This belief is based upon the Company having had pretax income in fiscal 2005, 2004 and 2003 and we have taken steps to minimize the financial impact of its unprofitable subsidiaries. Realization of these deferred tax assets is dependent upon generating sufficient taxable income prior to expiration of any net operating loss carryforwards. Although realization is not assured, management believes it is more likely than not that the remaining, recorded deferred tax assets will be realized. If the ultimate realization of these deferred tax assets is significantly different from our expectations, the value of its deferred tax assets could be materially overstated.

Recent Accounting Pronouncements

      On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payment,” requiring all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense in the consolidated financial statements based on their fair values. This standard is effective for fiscal years beginning after June 15, 2005. The Company intends to adopt FAS 123(R) beginning in its first quarter of fiscal 2006, which ends December 31, 2005, and intends to utilize the modified prospective transition method. Under the modified prospective transition method, option awards granted, modified, or settled after the date of adoption are required to be measured and accounted for in accordance with SFAS 123R. Unvested equity-classified awards that were granted prior to the effective date will continue to be accounted for in accordance with SFAS 123, and compensation amounts for awards that vest will now be recognized in the income statement as an expense. Adoption of the pronouncement is estimated to have a $0.5 million impact on after-tax earnings in fiscal 2006.

Item 7A — Quantitative and Qualitative Disclosures About Market Risk

      We have exposure to market risk associated with changes in interest rates related primarily to our debt obligations and short-term marketable investment portfolio. Certain of our debt obligations are variable in rate and therefore have exposure to changes in interest rates. A 10% change in interest rates would result in an approximately $0.4 million impact on interest expense. We also have investments in debt securities. If short-term interest rates were to average 10% more than they did in fiscal year 2005 interest income would be impacted by approximately $0.9 million.

      We have exposure to certain market risks associated with our aircraft fuel. Aviation fuel expense is a significant expense for any air carrier and even marginal changes in the cost of fuel greatly impact a carrier’s profitability. Standard industry contracts do not generally provide protection against fuel price increases, nor do they insure availability of supply. However, the America West, United and US Airways revenue-guarantee code-share agreements allow fuel costs to be reimbursed by the code-share partner, thereby reducing our overall exposure to fuel price fluctuations. In fiscal 2005, approximately 95% of our fuel requirements were associated with these contracts. Each one cent change in the price of jet fuel amounts to a $0.1 million change in annual fuel costs for that portion of fuel expense that is not reimbursed by our code-share partners.

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Item 8. Financial Statements and Supplementary Data

Consolidated Financial Statements

Page 44	—	Report of Independent Registered Public Accounting Firm.
Page 45	—	Consolidated Statements of Income — Years ended September 30, 2005, 2004 and 2003.
Page 46	—	Consolidated Balance Sheets — September 30, 2005 and 2004.
Page 47	—	Consolidated Statements of Cash Flows — Years ended September 30, 2005, 2004 and 2003.
Page 48	—	Consolidated Statements of Stockholders’ Equity — Years ended September 30, 2005, 2004 and 2003.
Page 49	—	Notes to Consolidated Financial Statements.

      All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not applicable, not required or the information has been furnished elsewhere.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Mesa Air Group, Inc.

Phoenix, Arizona

      We have audited the accompanying consolidated balance sheets of Mesa Air Group, Inc. and subsidiaries (the “Company”) as of September 30, 2005 and 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2005. 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 the standards of the Public Company Accounting Oversight Board (United States). 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, such consolidated financial statements present fairly, in all material respects, the financial position of Mesa Air Group, Inc. and subsidiaries at September 30, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2005, in conformity with accounting principles generally accepted in the United States of America.

      As discussed in Note 2, substantially all of the Company’s passenger revenue is derived from code-share agreements with United Airlines (“United”), America West Airlines, Inc. (“America West”), and US Airways, Inc (“US Airways”). UAL Corp., the parent company of United, has not emerged from reorganization under Chapter 11 of the U.S. Bankruptcy Code. Additionally, US Airways filed for bankruptcy protection and in September 2005 the bankruptcy court entered an order confirming US Airways’ plan of reorganization, which includes the merger between US Airways and America West. As a result of US Airways’ emergence from bankruptcy and their non-assumption of the Company’s code-share agreement, the Company expanded its regional jet code-share agreement with United and entered into a new code-share agreement with Delta Air Lines (“Delta”). In September 2005, Delta also filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Delta has not yet assumed the Company’s code-share agreement in its bankruptcy proceeding.

      We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of September 30, 2005, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 14, 2005 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

DELOITTE & TOUCHE LLP

Phoenix, Arizona

December 14, 2005

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PART 1. FINANCIAL INFORMATION

MESA AIR GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

			Years Ended September 30,
			2005			2004			2003
			(In thousands, except per share amounts)
Operating revenues:
	Passenger		$	1,102,550		$	868,415		$	577,582
	Freight and other			33,718			28,397			22,408
		Total operating revenues		1,136,268			896,812			599,990
Operating expenses:
	Flight operations			319,271			297,521			212,080
	Fuel			304,256			194,510			113,370
	Maintenance			198,695			163,463			118,517
	Aircraft and traffic servicing			68,475			66,223			50,053
	Promotion and sales			3,906			5,806			7,966
	General and administrative			69,429			62,035			37,982
	Depreciation and amortization			44,231			28,001			15,700
	Impairment and restructuring charges (credits)			(1,257	)		11,895			(10,957	)
		Total operating expenses		1,007,006			829,454			544,711
	Operating income			129,262			67,358			55,279
Other income (expense):
	Interest expense			(44,466	)		(25,063	)		(12,664	)
	Interest income			2,901			1,163			1,163
	Other income (expense)			4,469			1,723			(2,758	)
		Total other expense		(37,096	)		(22,177	)		(14,259	)
Income before income taxes				92,166			45,181			41,020
Income taxes				35,299			18,899			15,710
Income before minority interest				56,867			26,282			25,310
Minority interest in consolidated subsidiary				—			—			(5	)
Net income			$	56,867		$	26,282		$	25,305
Net income per common share — basic			$	1.95		$	0.83		$	0.80
Net income per common share — diluted			$	1.35		$	0.66		$	0.76

See accompanying notes to consolidated financial statements.

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MESA AIR GROUP, INC.

CONSOLIDATED BALANCE SHEETS

			September 30,
			2005			2004
			(In thousands, except
			share data)
ASSETS
Current assets:
	Cash and cash equivalents		$	143,428		$	173,110
	Marketable securities			128,162			58,522
	Restricted cash			8,848			9,484
	Receivables, net			28,956			30,744
	Income tax receivable			704			1,466
	Expendable parts and supplies, net			36,288			34,790
	Prepaid expenses and other current assets			98,267			43,907
	Deferred income taxes			8,256			8,855
		Total current assets		452,909			360,878
Property and equipment, net				642,914			697,425
Lease and equipment deposits				25,428			31,342
Deferred income taxes				—			5,342
Other assets				46,420			26,550
		Total assets	$	1,167,671		$	1,121,537
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current portion of long-term debt		$	27,787		$	21,850
	Short-term debt			54,594			230,969
	Accounts payable			52,608			46,821
	Air traffic liability			2,169			2,585
	Accrued compensation			3,829			7,284
	Deposit on pending sale of rotable spare parts			22,750			—
	Rotable spare parts financing liability			19,685			—
	Income taxes payable			2,863			456
	Other accrued expenses			30,512			34,867
		Total current liabilities		216,797			344,832
Long-term debt, excluding current portion				636,582			550,613
Deferred credits				97,497			71,451
Deferred income taxes				25,684			—
Other noncurrent liabilities				14,441			25,737
		Total liabilities		991,001			992,633
Commitments and contingencies (notes 2, 8, 9, 14 and 15)
Stockholders’ equity:
	Preferred stock of no par value, 2,000,000 shares authorized; no shares issued and outstanding			—			—
	Common stock of no par value and additional paid-in capital, 75,000,000 shares authorized; 28,868,167 and 30,066,777 shares issued and outstanding, respectively			97,894			108,173
	Retained earnings			80,542			23,675
	Unearned compensation on restricted stock			(1,766	)		(2,944	)
		Total stockholders’ equity		176,670			128,904
		Total liabilities and stockholders’ equity	$	1,167,671		$	1,121,537

See accompanying notes to consolidated financial statements.

46

MESA AIR GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Years Ended September 30,
			2005			2004			2003
			(In thousands)
Cash Flows from Operating Activities:
Net income			$	56,867		$	26,282		$	25,305
Adjustments to reconcile net income to net cash Flows provided by (used in) operating activities:
	Depreciation and amortization			44,231			28,001			15,519
	Tax benefit on stock compensation			160			137			449
	Impairment and restructuring charges (credits)			(1,257	)		11,895			(10,957	)
	Deferred income taxes			31,625			18,723			13,702
	Gain on involuntary conversion of aircraft.			—			—			(1,283	)
	Unrealized (gain) loss on investment securities			514			620			(255	)
	Amortization of deferred credits			(6,202	)		(6,243	)		(5,830	)
	Amortization of restricted stock awards			1,178			589			—
	Provision for (recovery of) doubtful accounts			6,915			4,315			(1,771	)
	Provision for obsolete expendable parts and supplies			1,195			1,269			1,639
	Department of Transportation settlement			—			—			4,154
	Minority interest			—			—			5
	Changes in assets and liabilities:
		Net (purchases) sales of investment securities		(70,154	)		(45,584	)		(4,786	)
		Receivables		6,709			(9,566	)		3,001
		Income tax receivables		762			(1,466	)		—
		Expendable parts and supplies		(2,693	)		(11,415	)		(5,445	)
		Prepaid expenses and other current assets		(53,234	)		(14,708	)		(2,472	)
		Accounts payable		5,787			4,921			14,881
		Income taxes payable		2,407			(440	)		386
		Cost to return aircraft held for sale		—			(2,392	)		(2,097	)
		Other accrued liabilities		(2,540	)		1,619			6,144
		NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		22,270			6,557			50,289
Cash Flows from Investing Activities:
Capital expenditures				(44,561	)		(50,283	)		(27,370	)
Acquisition of Midway				—			(9,160	)		—
Proceeds from the sale of flight equipment and expendable inventory				449			2,383			2,637
Proceeds from aircraft insurance				—			—			3,218
Change in restricted cash				636			(9,484	)		—
Change in other assets				(13,896	)		(1,181	)		935
Lease and equipment deposits				1,608			(5,491	)		(12,013	)
		NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(55,764	)		(73,216	)		(32,593	)
Cash Flows from Financing Activities:
Principal payments on long-term debt				(26,135	)		(16,859	)		(15,733	)
Principal payments on short-term debt				(2,776	)		—			—
Proceeds from senior convertible notes				—			100,000			100,112
Debt issuance costs				—			(3,009	)		(3,262	)
Proceeds from pending sale of rotable inventory (customer deposits)				22,750			—			—
Proceeds from financing rotable inventory				—			15,000			—
Proceeds from exercise of stock options and issuance of warrants				813			843			1,775
Common stock purchased and retired				(11,252	)		(10,921	)		(2,314	)
Proceeds from receipt of deferred credits				20,412			2,168			9,375
Distribution to minority interest shareholders				—			—			(972	)
		NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		3,812			87,222			88,981
		NET CHANGE IN CASH AND CASH EQUIVALENTS		(29,682	)		20,563			106,677
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR				173,110			152,547			45,870
CASH AND CASH EQUIVALENTS AT END OF YEAR			$	143,428		$	173,110		$	152,547
SUPPLEMENTAL CASH FLOW INFORMATION:
	Cash paid for interest		$	45,694		$	24,105		$	11,665
	Cash paid for income taxes			336			1,906			1,130
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
	Aircraft and engine delivered under interim financing provided by manufacturer		$	351,187		$	463,936		$	402,639
	Aircraft and engine debt permanently financed as operating lease			(397,432	)		(203,362	)		(207,034	)
	Short-term debt permanently financed as long-term debt			(127,355	)		(254,728	)		—
	Long-term debt assumed in Midway asset purchase			—			24,109			—
	Inventory and other credits received in conjunction with aircraft Financing			11,836			5,073			4,978
	Note receivable received in conjunction with financing of rotable inventory			—			6,000			—
	Return of aircraft for reduction of long-term debt and accrued interest			—			—			8,164

See accompanying notes to consolidated financial statements.

47

MESA AIR GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

							Retained			Unearned
							Earnings			Compensation
Years Ended September 30,	Number of			Common			(Accumulated			on Restricted
2005, 2004, and 2003	Shares			Stock			Deficit)			Stock			Total
	(In thousands, except number of shares)
Balance at October 1, 2002		31,989,886		$	114,670		$	(27,912	)	$	—		$	86,758
Exercise of stock options		270,088			1,465			—			—			1,465
Common stock purchased and retired		(555,349	)		(2,314	)		—			—			(2,314	)
Tax benefit — stock compensation		—			449			—			—			449
Amortization of warrants		—			134			—			—			134
Issuance of warrants		—			176			—			—			176
Net income		—			—			25,305			—			25,305
Balance at September 30, 2003		31,704,625			114,580			(2,607	)		—			111,973
Exercise of stock options		110,208			622			—			—			622
Common stock purchased and retired		(1,748,056	)		(10,921	)		—			—			(10,921	)
Restricted stock		—			3,533			—			(3,533	)		—
Amortization of restricted stock		—			—			—			589			589
Tax benefit — stock compensation		—			137			—			—			137
Amortization of warrants		—			135			—			—			135
Issuance of warrants		—			87			—			—			87
Net income		—			—			26,282			—			26,282
Balance at September 30, 2004		30,066,777			108,173			23,675			(2,944	)		128,904
Exercise of stock options		165,609			712			—			—			712
Common stock purchased and retired		(1,792,516	)		(11,252	)		—			—			(11,252	)
Issuance of restricted stock		428,297			—			—			—			—
Amortization of restricted stock		—			—			—			1,178			1,178
Tax benefit — stock compensation		—			160			—			—			160
Amortization of warrants		—			33			—			—			33
Issuance of warrants		—			68			—			—			68
Net income		—			—			56,867			—			56,867
Balance at September 30, 2005		28,868,167		$	97,894		$	80,542		$	(1,766	)	$	176,670

See accompanying notes to consolidated financial statements.

48

MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended September 30, 2005, 2004 and 2003

1. Summary of Significant Accounting Policies

Principles of Consolidation and Organization

      The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and include the accounts of Mesa Air Group, Inc. and its wholly-owned operating subsidiaries (collectively “Mesa” or the “Company”): Mesa Airlines, Inc. (“Mesa Airlines”), a Nevada corporation and certificated air carrier; Freedom Airlines, Inc. (“Freedom”), a Nevada corporation and certificated air carrier; Air Midwest, Inc. (“Air Midwest”), a Kansas corporation and certificated air carrier; CCAir, Inc. (“CCAir”), a Delaware corporation and certificated air carrier; MPD, Inc., a Nevada corporation, doing business as Mesa Pilot Development; Regional Aircraft Services, Inc. (“RAS”) a Pennsylvania company; Mesa Air Group — Airline Inventory Management, LLC (“MAG-AIM”), an Arizona Limited Liability Company; Ritz Hotel Management Corp., a Nevada Corporation; UFLY, LLC. (“UFLY”), a Delaware Limited Liability Company; and MAGI Insurance, Ltd. (“MAGI”), a Barbados, West Indies based captive insurance company. MPD, Inc. provides pilot training in coordination with a community college in Farmington, New Mexico and with Arizona State University in Tempe, Arizona. RAS performs aircraft component repair and overhaul services. UFLY was established in fiscal 2002 to make strategic investments in US Airways common stock. MAGI is a captive insurance company established for the purpose of obtaining more favorable aircraft liability insurance rates. CCAir ceased operations and was dissolved in fiscal 2003. UFLY distributed its assets and was subsequently dissolved in fiscal 2003. All significant intercompany accounts and transactions have been eliminated in consolidation.

      The Company is an independent regional airline serving 176 cities in 43 states, the District of Columbia, Canada and Mexico. At September 30, 2005, the Company operated a fleet of 182 aircraft and had over 1,100 daily departures. The Company’s airline operations are conducted by three regional airline subsidiaries primarily utilizing hub-and-spoke systems. Mesa Airlines operates as America West Express under a code-share agreement with America West Airlines, Inc. (“America West”), as United Express under a code-share relationship with United Airlines (“United”) and as US Airways Express under a code-share agreement with US Airways, Inc. (“US Airways”). On October 1, 2005, Freedom commenced flight operations as Delta Connection under a code-share agreement with Delta Air Lines (“Delta”). Air Midwest operates under code-share agreements with America West, US Airways and Midwest Airlines. Air Midwest also operates an independent division, doing business as Mesa Airlines, from Albuquerque, New Mexico and select Essential Air Service markets. Prior to ceasing operations, CCAir operated under a code-share agreement with US Airways as US Airways Express. Approximately 99% of the Company’s consolidated passenger revenues for 2005 were derived from operations associated with code-share agreements.

      The financial arrangement between Mesa and its code-share partners involve either a revenue-guarantee or pro-rate arrangement. Under a revenue-guarantee arrangement, the major airline generally pays a monthly guaranteed amount. The America West jet and Dash-8 code-share agreement, the United code-share agreement and the US Airways regional jet agreement are revenue-guarantee flying agreements. Under the terms of these flying agreements, the major carrier controls marketing, scheduling, ticketing, pricing and seat inventories. The Company receives a guaranteed payment based upon a fixed minimum monthly amount plus amounts related to departures and block hours flown plus direct reimbursement for expenses such as fuel, landing fees and insurance. Among other advantages, revenue-guarantee arrangements reduce the Company’s exposure to fluctuations in passenger traffic and fare levels, as well as fuel prices. The America West B1900 agreement, Midwest Airlines agreement and US Airways turboprop agreement are pro-rate agreements, for which the Company receives an allocated portion of the passengers’ fare and pays all of the costs of transporting the passenger.

      In addition to carrying passengers, the Company carries freight and express packages on its passenger flights and has interline small cargo freight agreements with many other carriers. Mesa also has contracts with

49

MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the U.S. Postal Service for carriage of mail to the cities it serves and occasionally operates charter flights when its aircraft are not otherwise used for scheduled service.

      Renewal of one code-share agreement with a code-share partner does not guarantee the renewal of any other code-share agreement with the same code-share partner. The agreements with America West expire in 2012; the revenue-guarantee agreements with Delta expire in January 2017 and January 2018; the pro-rate agreement with US Airways expires in October 2006; the agreement with United expires between 2011 and 2018; and the agreement with Midwest Airlines expires in 2006. Although the provisions of the code-share agreements vary from contract to contract, generally each agreement is subject to cancellation should the Company’s subsidiaries fail to meet certain operating performance standards, and breach other contractual terms and conditions.

Cash and Cash Equivalents

      The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Restricted Cash

      At September 30, 2005, the Company has $8.8 million in restricted cash on deposit with two financial institutions. In September 2004, we entered into an agreement with a financial institution for a $9.0 million letter of credit facility and to issue letters of credit for landing fees, workers compensation insurance and other business needs. Pursuant to the agreement, $3.8 million of outstanding letters of credit are required to be collateralized by amounts on deposit. The Company also must maintain $5.0 million on deposit with another financial institution to collateralize its direct deposit payroll. The change in restricted cash of $9.5 million was reclassified on the fiscal 2004 statement of cash flows from operating activities to investing activities.

Expendable Parts and Supplies

      Expendable parts and supplies are stated at the lower of cost using the first-in, first-out method or market, and are charged to expense as they are used. The Company provides for an allowance for obsolescence over the useful life of its aircraft after considering the useful life of each aircraft fleet, the estimated cost of expendable parts expected to be on hand at the end of the useful life and the estimated salvage value of the parts. The Company reviews the adequacy of this allowance on a quarterly basis.

Property and Equipment

      Property and equipment are stated at cost and depreciated over their estimated useful lives to their estimated salvage values, which are estimated to be 20% for flight equipment, using the straight line method.

      Estimated useful lives of the various classifications of property and equipment are as follows:

Buildings	30 years
Flight equipment	7-20 years
Equipment	5-12 years
Furniture and fixtures	3-5 years
Vehicles	5 years
Rotable inventory	Life of the aircraft or term of the lease, whichever is less
Leasehold improvements	Life of asset or term of lease, whichever is less

50

MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may be impaired. Under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company records an impairment loss if the undiscounted future cash flows are found to be less than the carrying amount of the asset. If an impairment loss has occurred, a charge is recorded to reduce the carrying amount of the asset to fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

      The Company currently flies B1900 aircraft in Essential Air Service markets (“EAS”). If the funding under this program is terminated for any of the cities served by us, in all likelihood we would not continue to fly in these markets, and as a result, we would be forced to find alternative uses for the Beechcraft 1900D 19-seat turboprop aircraft affected.

      Interest related to deposits on aircraft purchase contracts is capitalized as part of the aircraft. The Company capitalized approximately $0.9 million, $1.0 million and $0.8 million of interest in fiscal 2005, 2004 and 2003, respectively.

Other Long-Term Assets

      Other long-term assets primarily consist of the capitalized costs associated with establishing financing for aircraft, contract incentive payments, prepaid maintenance, a note receivable received pursuant to the rotable spare parts financing and debt issuance costs associated with the senior convertible notes. The financing costs are amortized over the lives of the associated aircraft leases which are primarily 16-18.5 years. Contract incentive payments are amortized over the term or the modified term of the code share agreements. Prepaid maintenance is amortized over the six-year term of the related maintenance contract based upon the hours flown by the related aircraft. The debt issuance costs are amortized over the 20 year life of the senior convertible notes.

Air Traffic Liability

      Air traffic liability represents the cost of tickets sold but not yet used. The Company records the revenue associated with these tickets in the period the passenger flies.

Income Taxes

      Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company and its subsidiaries file a consolidated federal income tax return.

Notes Payable for Aircraft on Interim Financing

      Aircraft under interim financing are recorded as a purchase with interim debt financing provided by the manufacturer. As such, the Company reflects the aircraft in property and equipment and the debt financing in short-term debt on its balance sheet during the interim financing period. Upon permanent financing, the proceeds from the sale and leaseback transaction are used to retire the notes payable to the manufacturer. Any gain recognized on the sale and leaseback transaction is deferred and amortized over the life of the lease.

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MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred Credits

      Deferred credits consist of aircraft purchase incentives provided by the aircraft manufacturers and deferred gains on the sale and leaseback of interim financed aircraft. Purchase incentives include credits that may be used to purchase spare parts, pay for training expenses or reduce other aircraft operating costs. The deferred credits and gains are amortized on a straight-line basis as a reduction of lease expense over the term of the respective leases.

Revenue Recognition

      The America West, United and the US Airways regional jet code-share agreements are revenue-guarantee flying agreements. Under a revenue-guarantee arrangement, the major airline generally pays a fixed monthly minimum amount, plus certain additional amounts based upon the number of flights and block hours flown. The contracts also include reimbursement of certain costs incurred by Mesa in performing flight services. These costs, known as “pass-through costs,” may include aircraft ownership cost, passenger and hull insurance, aircraft property taxes as well as, fuel, landing fees and catering. The Company records reimbursement of pass-through costs as revenue. In addition, the Company’s code-share partners also provide, at no cost to Mesa, certain ground handling and customer service functions, as well as airport-related facilities and gates at their hubs and other cities. Pass-through costs provided by code-share partners are presented net in the Company’s financial statements, hence no amounts are recorded for revenue or expense for these items. The contracts also include a profit component that may be determined based on a percentage of profits on the Mesa flown flights, a profit margin on certain reimbursable costs as well as a profit margin based on certain operational benchmarks. The Company recognizes revenue under its revenue-guarantee agreements when the transportation is provided. The majority of the revenue under these contracts is known at the end of the accounting period and is booked as actual. The Company performs an estimate of the profit component based upon the information available at the end of the accounting period. All revenue recognized under these contracts is presented at the gross amount billed.

      In connection with providing service under the Company’s revenue-guarantee agreement with US Airways, the Company’s fuel reimbursement is capped at $0.85 per gallon. Under this agreement, the Company has the option to purchase fuel from a subsidiary of US Airways at the capped rate. As a result, amounts included in revenue for fuel reimbursement and expense for fuel cost may not represent market rates for fuel for the Company’s US Airways flying. The Company purchased 67.4 million gallons, 68.1 million gallons and 55.3 million gallons of fuel under this arrangement in fiscal 2005, 2004 and 2003, respectively.

      Under the Company’s revenue-guarantee agreements with America West, US Airway and United, the Company is reimbursed under a fixed rate per block-hour plus an amount per aircraft designed to reimburse the Company for certain aircraft ownership costs. In accordance with Emerging Issues Task Force Issue No. 01-08, “Determining Whether an Arrangement Contains a Lease,” the Company has concluded that a component of its revenue under the agreements discussed above is rental income, inasmuch as the agreement identifies the “right of use” of a specific type and number of aircraft over a stated period of time. The amount deemed to be rental income during fiscal 2005 and 2004 was $235.5 million and $189.0 million, respectively, and has been included in passenger revenue on the Company’s consolidated statements of income.

      The America West, US Airways, and Midwest Airlines turboprop code-share agreements are pro-rate agreements. Under a pro-rate agreement, the Company receives a percentage of the passenger’s fare based on a standard industry formula that allocates revenue based on the percentage of transportation provided. Revenue from the Company’s pro-rate agreements and the Company’s independent operation is recognized when transportation is provided. Tickets sold but not yet used are included in air traffic liability on the consolidated balance sheets.

52

MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company also receives subsidies for providing scheduled air service to certain small or rural communities. Such revenue is recognized in the period in which the air service is provided. The amount of the subsidy payments is determined by the United States Department of Transportation on the basis of its evaluation of the amount of revenue needed to meet operating expenses and to provide a reasonable return on investment with respect to eligible routes. EAS rates are normally set for two-year contract periods for each city.

Maintenance Expense

      The Company charges the cost of engine and aircraft maintenance to expense as incurred.

Minority Interest

      In 2001, the Company entered into an agreement to form UFLY for the purpose of making strategic investments in US Airways, Inc. In 2002, UFLY was capitalized with $5.0 million from the Company and $5.0 million from other members, which included Jonathan Ornstein, the Company’s Chairman and Chief Executive Officer. UFLY distributed its assets and was subsequently dissolved in fiscal 2003. The Company owned greater than 50% of UFLY in 2003 and therefore the financial results of UFLY are included in the consolidated financial results of the Company. Amounts included in the consolidated statements of operations as minority interest reflect the after-tax portion of earnings of UFLY that are applicable to the minority interest partners.

Earnings Per Share

      The Company accounts for earnings per share in accordance with SFAS No. 128, “Earnings per Share.” Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted net income per share reflects the potential dilution that could occur if outstanding stock options and warrants were exercised. In addition, dilutive convertible securities are included in the denominator while interest on convertible debt, net of tax, is added back to the numerator. A reconciliation of the numerator and denominator used in computing income per share is as follows:

	Years Ended September 30,
	2005		2004		2003
	(In thousands)
Share calculation:
Weighted average shares outstanding — basic		29,215		31,490		31,556
Effect of dilutive outstanding stock options and warrants		127		1,139		507
Effect of restricted stock		286		214		—
Effect of dilutive outstanding convertible debt due 2023		16,931		14,410		2,935
Weighted average shares outstanding — diluted		46,559		47,253		34,998
Adjustments to net income:
Net income	$	56,867	$	26,282	$	25,305
Interest expense on convertible debt, net of tax		6,097		5,027		1,144
Adjusted net income	$	62,964	$	31,309	$	26,449

      In September 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 04-08, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share.” EITF Issue No. 04-08 requires shares of common stock issuable upon conversion of contingently convertible debt

53

MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

instruments to be included in the calculation of diluted earnings per share whether or not the contingent conditions for conversion have been met, unless the inclusion of these shares is anti-dilutive. Previously, shares of common stock issuable upon conversion of contingently convertible debt securities were excluded from the calculation of diluted earnings per share if the contingency had not been met. The Company previously included its convertible notes due 2003 in the EPS calculation. The Company adopted the provisions of EITF Issue No. 04-08 in the first quarter of fiscal 2005, and as such, has now also included the 3.625% senior convertible notes due 2024 in the calculation of dilutive earnings per share. EITF Issue No. 04-08 required the restatement of prior period diluted earnings per share amounts. The 3.625% senior convertible notes due 2024 were issued in February 2004, thus the reported diluted earnings per share for the year ended September 30, 2004 have been restated to include the dilutive impact of the 3.625% senior convertible notes.

Stock Options

      The Company accounts for its stock-based compensation arrangements in accordance with the provisions of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. The Company has adopted only the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended, which permits pro-forma net earnings and pro-forma earnings per share disclosures for employee stock option grants made in fiscal 1996 and future years as if the fair value based measurement method defined in SFAS No. 123 had been applied. Warrants issued to non-employees are also accounted for under SFAS No. 123, at fair value on the measurement date.

      Had the compensation cost for the Company’s stock-based compensation plans been determined consistent with the measurement provisions of SFAS No. 123, the Company’s net income and net income per share would have been as indicated by the pro forma amounts below:

		2005			2004			2003
		(In thousands, except per share
		amounts)
Net income as reported		$	56,867		$	26,282		$	25,305
Stock option compensation expense determined under fair value based method, net of related tax effects			(968	)		(1,324	)		(2,082	)
	Pro forma	$	55,899		$	24,958		$	23,223
Income per share — basic:
	As reported	$	1.95		$	0.83		$	0.80
	Pro forma	$	1.91		$	0.79		$	0.74
Net income per share — diluted:
	As reported	$	1.35		$	0.66		$	0.76
	Pro forma	$	1.33		$	0.63		$	0.70

      The per share weighted-average fair value of stock options granted during 2005, 2004 and 2003 was $4.16, $6.77 and $3.29, respectively, on the grant date as determined by using the Black-Scholes option pricing model with the following weighted average assumptions: an expected dividend yield 0.0%, an expected life of 6.1 years, a risk-free interest rate of 4.2%, 4.1% and 4.3%, and volatility of 62.4%, 79.8% and 80.5% in 2005, 2004 and 2003, respectively.

Use of Estimates in the Preparation of Financial Statements

      The preparation of the Company’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and

54

MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Segment Reporting

      SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” requires disclosures related to components of a company for which separate financial information is available that is evaluated regularly by a company’s chief operating decision maker in deciding the allocation of resources and assessing performance. The Company has three airline operating subsidiaries, Mesa Airlines, Freedom Airlines and Air Midwest and various other subsidiaries organized to provide support for the Company’s airline operations. The Company has aggregated these operating segments into three reportable segments; Mesa Airlines, Air Midwest/ Freedom and Other. Mesa Airlines operates all of the Company’s regional jets and Dash-8 aircraft pursuant to revenue-guarantee code-share agreements. Air Midwest and Freedom primarily operate the Company’s Beech 1900D turboprop aircraft pursuant to pro-rate code-share agreements. The Other reportable segment includes Mesa Air Group, RAS, MPD, MAG-AIM and MAGI, all of which support Mesa’s operating subsidiaries.

Recent Accounting Pronouncements

      On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payment,” requiring all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense in the consolidated financial statements based on their fair values. This standard is effective for fiscal years beginning after June 15, 2005. The Company intends to adopt SFAS 123(R) beginning in its first quarter of fiscal 2006, which ends December 31, 2005, and intends to utilize the modified prospective transition method. Under the modified prospective transition method, option awards granted, modified, or settled after the date of adoption are required to be measured and accounted for in accordance with SFAS 123R. Unvested equity-classified awards that were granted prior to the effective date will continue to be accounted for in accordance with SFAS 123, and compensation amounts for awards that vest will be recognized in the income statement as expense. Adoption of the pronouncement is estimated to have a $0.5 million impact on after-tax earnings in fiscal 2006.

Reclassifications

      Certain reclassifications were made to the 2004 and 2003 financial statements to conform to the 2005 presentation.

2. Concentrations

      The Company has code-share agreements with America West, US Airways and United Airlines. Approximately 99%, 99% and 98% of the Company’s consolidated passenger revenue for the years ended September 30, 2005, 2004 and 2003, respectively, were derived from these agreements. Accounts receivable from the Company’s code-share partners were 35% and 59% of total gross accounts receivable at September 30, 2005 and 2004, respectively.

      Passenger revenue received from America West amounted to 44%, 38% and 44% of the Company’s total passenger revenue in fiscal 2005, 2004 and 2003, respectively. A termination of the America West revenue-guarantee code-share agreements would have a material adverse effect on the Company’s business prospects, financial condition, results of operations and cash flows.

      US Airways, which accounted for approximately 29%, 40% and 38% of the Company’s passenger revenue in fiscal 2005, 2004 and 2003, respectively, filed for Chapter 11 bankruptcy protection on September 12, 2004.

55

MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of September 30, 2005, we operated 59 50-seat regional jet aircraft for US Airways under a revenue-guarantee code-sharing agreement. As a result of US Airways’ emergence from bankruptcy and their non-assumption of our revenue-guarantee code-share agreement, the Company expanded its regional jet revenue-guarantee code-share agreement with United and entered into a new revenue-guarantee code-share agreement with Delta and the Company is currently working to transition the jets flown under the US Airways code-share agreement to the United and Delta arrangements. As of December 1, 2005, the Company had transitioned 32 of the 59 aircraft and operated 27 50-seat regional jets for US Airways under our code-sharing agreement. The Company expects to complete the transition of aircraft from US Airways to United in the first quarter of fiscal year 2006 and to Delta in the second quarter of fiscal year 2006. In addition, on September 14, 2005, Delta Air Lines filed for reorganization under Chapter 11 of the US Bankruptcy Code. Delta has not yet assumed the code-share agreement with the Company in its bankruptcy proceeding and could choose to terminate this agreement or seek to renegotiate the agreement on less favorable terms.

      United Airlines, a subsidiary of UAL Corp., accounted for approximately 24%, 20% and 1% of the Company’s passenger revenue in fiscal 2005, 2004 and 2003, respectively. A termination of the United agreement or the failure of United to successfully emerge from bankruptcy would have a material adverse effect on the Company’s business prospects, financial condition, results of operations and cash flows.

3. Marketable Securities

      The Company has a cash management program which provides for the investment of excess cash balances primarily in short-term money market instruments, US treasury securities, intermediate-term debt instruments, and common equity securities of companies operating in the airline industry.

      SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” requires that all applicable investments be classified as trading securities, available for sale securities or held-to-maturity securities. The Company currently has $128.2 million in marketable securities that include US Treasury notes, government bonds, corporate bonds and auction rate securities (“ARS”). These investments are classified as trading securities during the periods presented and accordingly, are carried at market value with changes in value reflected in the current period operations. Unrealized losses relating to trading securities held at September 30, 2005 and 2004, were $0.5 million and $1.7 million, respectively.

      The Company has determined that investments in auction rate securities should be classified as short-term investments. Previously, such investments had been classified as cash and cash equivalents. ARS generally have long-term maturities; however, these investments have characteristics similar to short-term investments because at predetermined intervals, generally every 28 days, there is a new auction process. As such, the Company classifies ARS as short-term investments. The balance of marketable securities at September 30, 2005 and 2004 includes investments in ARS of $46.7 million and $47.8 million, respectively. The Company reclassified ARS of $47.8 million as of September 30, 2004 that were previously included in cash and cash equivalents to short-term investments and included this amount in net purchases of investment securities in the consolidated statement of cash flows for fiscal 2004.

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MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4. Property and Equipment

      Property and equipment consists of the following:

	September 30,
	2005			2004
	(In thousands)
Flight equipment, substantially pledged	$	705,453		$	731,859
Other equipment		25,960			24,775
Leasehold improvements		2,883			2,620
Furniture and fixtures		1,117			1,087
Buildings		3,968			3,968
Vehicles		1,139			1,045
		740,520			765,354
Less accumulated depreciation and amortization		(97,606	)		(67,929	)
Net property and equipment	$	642,914		$	697,425

5. Short-Term Debt

      At September 30, 2005 and 2004, the Company had $54.6 million and $231.0 million, respectively, in notes payable to an aircraft manufacturer for aircraft on interim financing. Under interim financing arrangements, the Company takes delivery and title to the aircraft prior to securing permanent financing and the acquisition of the aircraft is accounted for as a purchase with debt financing. Accordingly, the Company reflects the aircraft and debt under interim financing on its balance sheet during the interim financing period. After taking delivery of the aircraft, it is the Company’s intention to permanently finance the aircraft as an operate lease through a sale and leaseback transaction with an independent third-party lessor. Upon permanent financing, the proceeds are used to retire the notes payable to the manufacturer. Any gain recognized on the sale and leaseback transaction is deferred and amortized over the life of the lease. The Company had two aircraft on interim financing with the manufacturer at September 30, 2005. These interim financings agreements are six months in length and provide for monthly interest only payments at LIBOR plus three percent. The current interim financing agreement with the manufacturer provides for the Company to have a maximum of 15 aircraft on interim financing at a given time.

6. Deposit on Pending Sale of Rotable Spare Parts

      In August 2005, the Company entered into a ten-year agreement with AAR Corp. (the “AAR Agreement”), for the management and repair of certain of the Company’s CRJ-200, - -700, -900 and ERJ-145 aircraft rotable spare parts inventory. Under the agreement, AAR will purchase certain existing spare parts inventory for $39.5 million in cash and $21.5 million in notes receivable to be paid over the next four years. Under the agreement, the Company is required to pay AAR a monthly fee based upon flight hours for access to and maintenance of the inventory. The agreement also contains certain minimum monthly payments that Mesa must make to AAR. At termination, the Company may elect to purchase the covered inventory at fair value, but is not contractually obligated to do so. The AAR agreement is contingent upon the Company terminating an agreement for the Company’s CRJ-200 aircraft rotable spare parts inventory with GE Capital Aviation Services (“GECAS”), and including these rotables in the arrangement. The amount included in the consolidated balance sheet at September 30, 2005, represents deposits received from AAR pending the termination of the GECAS agreement. The Company notified GECAS of its intent to cancel that agreement in August and terminated the agreement in November 2005 (see note 8).

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7. Deferred Credits

      The Company accounts for purchase incentives provided by aircraft manufacturers as deferred credits. These credits are amortized over the life of the related lease as a reduction of lease expense, which is included in flight operations in the statements of operations. Purchase incentives include credits that may be used to purchase spare parts, pay for training expenses or reduce other aircraft operating costs. Deferred credits also include deferred gains on the sale and leaseback of interim financed aircraft. These deferred gains are also amortized over the life of the related leases as a reduction of lease expense, which is included in flight operations in the statements of operations.

8. Rotable Spare Parts Financing Liability

      In June 2004, the Company entered into an agreement with LogisTechs, Inc., a wholly-owned subsidiary of GECAS, whereby GECAS provided financing to the Company and the Company agreed to pay GECAS for the management and repair of certain of the Company’s CRJ-200 aircraft rotable spare parts inventory. Under the agreement, the Company received $15 million in cash and a $6 million promissory note receivable from GECAS. In August 2005, Mesa notified GECAS of its intent to terminate the agreement in order to enter into the AAR agreement, and as such, the Company is required to repay the 19.7 million of outstanding financing at September 30, 2005. The agreement was terminated and this amount was repaid in November 2005.

9. Long-Term Debt

      In October 2004, the Company permanently financed five CRJ-900 aircraft with $118.0 million in debt. The debt bears interest at the monthly LIBOR plus three percent and requires monthly principal and interest payments. These aircraft had originally been financed with interim debt financing from the manufacturer.

      In December 2003, we assumed $24.1 million of debt in connection with the purchase of two CRJ-200 aircraft in the Midway Chapter 7 bankruptcy proceedings. The debt, due in 2013, bears interest at the rate of 7% per annum through 2008, converting to 12.5% thereafter, with principal and interest due monthly.

      In January and March 2004, the Company permanently financed five CRJ-700 and six CRJ-900 aircraft with $254.7 million in debt. The debt bears interest at the monthly LIBOR plus three percent and requires monthly principal and interest payments.

      In February 2004, the Company completed the private placement of senior convertible notes (the “February 2004 Notes”) due 2024, which resulted in gross proceeds of $100.0 million ($97.0 million net). Cash interest is payable on these notes at the rate of 2.115% per year on the aggregate amount due at maturity, payable semiannually in arrears on February 10 and August 10 of each year, beginning August 10, 2004, until February 10, 2009. After that date, the Company will not pay cash interest on these notes prior to maturity, and they will begin accruing original issue discount at a rate of 3.625% until maturity. On February 10, 2024, the maturity date of these notes, the principal amount of each note will be $1,000. The aggregate amount due at maturity, including interest accrued from February 10, 2009, will be $171.4 million. Each of the Company’s wholly-owned domestic subsidiaries guarantees these notes on an unsecured senior basis. The February 2004 Notes and the note guarantees are senior unsecured obligations and rank equally with the Company’s existing and future senior unsecured and unsubordinated indebtedness. These notes and the note guarantees are junior to any secured obligations of the Company and any of its wholly owned subsidiaries to the extent of the collateral pledged.

      The February 2004 Notes are convertible into shares of the Company’s common stock at a conversion rate of 40.3737 shares per $1,000 in principal amount at maturity of the notes. This conversion rate is subject to adjustment in certain circumstances. Holders of these notes may convert their notes only if: (i) the sale price of the Company’s common stock exceeds 110% of the accreted conversion price for at least 20 trading

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MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

days in the 30 consecutive days ending on the last trading day of the preceding quarter; (ii) on or prior to February 10, 2019, the trading price for these notes falls below certain thresholds; (iii) these notes have been called for redemption; or (iv) specified corporate transactions occur. The Company may redeem these notes, in whole or in part, beginning on February 10, 2009, at a redemption price equal to the sum of the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of these notes may require the Company to repurchase the notes on February 10, 2009 at a price of $583.40 per note plus accrued and unpaid cash interest, if any, on February 10, 2014 at a price of $698.20 per note plus accrued and unpaid cash interest, if any, and on February 10, 2019 at a price of $835.58 per note plus accrued and unpaid cash interest, if any. The Company has filed a shelf registration statement with the U.S. Securities and Exchange Commission covering the resale of the February 2004 Notes and the shares of common stock issuable upon conversion thereof. The Company plans to use the net proceeds from the sale of these notes for working capital and to fund its obligations with respect to regional jet deliveries.

      In June 2003, the Company completed the private placement of senior convertible notes (the “June 2003 Notes”) due 2023, which resulted in gross proceeds of $100.1 million ($97.1 million net). Cash interest is payable on these notes at a rate of 2.4829% per year on the aggregate amount due at maturity, payable semiannually in arrears on June 16 and December 16 of each year, beginning December 16, 2003, until June 16, 2008. After that date, the Company will not pay cash interest on these notes prior to maturity, and the notes will begin accruing compounded interest at a rate of 6.25% until maturity. On June 16, 2023, the maturity date of these notes, the principal amount of each note will be $1,000. The aggregate amount due at maturity, including interest accrued from June 16, 2008, will be $252 million. The June 2004 Notes and the note guarantees are senior unsecured obligations and rank equally with the Company’s existing and future senior unsecured indebtedness. These notes and the note guarantees are junior to any secured obligations of the Company and any of its wholly owned subsidiaries to the extent of the collateral pledged.

      The June 2003 Notes are convertible into shares of the Company’s common stock at a conversion rate of 39.727 shares per $1,000 in principal amount at maturity of the notes. This conversion rate is subject to adjustment in certain circumstances. Holders of these notes may convert their notes only if: (i) the sale price of the Company’s common stock exceeds 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding quarter; (ii) prior to June 16, 2018, the trading price for these notes falls below certain thresholds; (iii) these notes have been called for redemption; or (iv) specified corporate transactions occur. The Company may redeem these notes, in whole or in part, beginning on June 16, 2008, at a redemption price equal to the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of these notes may require the Company to repurchase the notes on June 16, 2008 at a price of $397.27 per note plus accrued and unpaid cash interest, if any, on June 16, 2013 at a price of $540.41 per note plus accrued and unpaid cash interest, if any, and on June 16, 2018 at a price of $735.13 per note plus accrued and unpaid cash interest, if any. As the sale price of our common stock exceeded 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive trading day period ending September 30, 2003, these notes became convertible September 30, 2003.

      Repayment of the February 2004 and June 2003 Notes (collectively, the “Notes”) is jointly and severally guaranteed on an unconditional basis by the Company’s wholly owned domestic subsidiaries. Except as otherwise specified in the indentures pursuant to which the Notes were issued, there are no restrictions on the ability of such subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances. General provisions of applicable state law, however, may limit the ability of any subsidiary to pay dividends or make distributions to the Company in certain circumstances.

      Separate financial statements of the Company’s subsidiaries are not included herein because the aggregate assets, liabilities, earnings, and equity of the subsidiaries are substantially equivalent to the assets, liabilities, earnings, and equity of the Company on a consolidated basis; the subsidiaries are jointly and

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MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

severally liable for the repayment of the Notes; and the separate financial statements and other disclosures concerning the subsidiaries are not deemed by the Company to be material to investors.

      Long-term debt consists of the following:

	September 30,
	2005			2004
	(In thousands)
Notes payable to bank, collateralized by the underlying aircraft, due 2019	$	348,452		$	248,135
Senior convertible notes due June 2023		100,112			100,112
Senior convertible notes due February 2024		100,000			100,000
Notes payable to manufacturer, principal and interest due monthly through 2011 at variable rates of interest ranging from 3.64% to 6.57% at September 30, 2005, collateralized by the underlying aircraft.		87,949			93,900
Note payable to financial institution due 2013, principal and interest due monthly at 7% per annum through 2008 converting to 12.5% thereafter, collateralized by the underlying aircraft.		24,181			25,758
Note payable to manufacturer, principal due semi-annually, interest at 7% due quarterly through 2007		2,578			3,363
Mortgage note payable to bank, principal and interest at 71/2% due monthly through 2009		923			961
Other		174			234
Total debt		664,369			572,463
Less current portion		(27,787	)		(21,850	)
Long-term debt	$	636,582		$	550,613

      Principal maturities of long-term debt for each of the next five years and thereafter are as follows:

	Years Ending
	September 30,
	(In thousands)
2006	$	27,787
2007		30,050
2008		29,536
2009		31,741
2010		42,087
Thereafter		503,168

10. Common Stock Purchase and Retirement

      In December 1999, the Company’s Board of Directors authorized the Company to purchase up to 10%, or approximately 3.4 million shares of the Company’s then-outstanding common stock. In January 2001, October 2002, October 2004 and April 2005, the Board of Directors amended its original purchase plan and authorized the purchase of one million, two million, two million and one million additional shares of common stock, respectively. As of September 30, 2005, the Company has acquired and retired approximately 8.0 million shares of its outstanding common stock at an aggregate cost of approximately $48.0 million, leaving approximately 1.4 million shares available for purchase under the current Board authorizations. Purchases are made at management’s discretion based on market conditions and the Company’s financial resources. Subsequent to year end, the Company’s Board of Directors authorized the Company to purchase up to an additional 10 million shares of the Company’s outstanding common stock.

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11. Income Taxes

      Income tax expense consists of the following:

		Years Ended September 30,
		2005		2004		2003
		(In thousands)
Current:
	Federal	$	1,720	$	—	$	777
	State		1,954		176		1,231
			3,674		176		2,008
Deferred:
	Federal		28,905		16,765		13,278
	State		2,720		1,958		424
			31,625		18,723		13,702
		$	35,299	$	18,899	$	15,710

      The difference between the actual income tax expense and the statutory tax expense (computed by applying the U.S. federal statutory income tax rate of 35 percent to income or loss before income taxes) is as follows:

		Years Ended September 30,
		2005			2004			2003
		(In thousands)
Computed “expected” tax expense		$	32,258		$	15,813		$	14,357
Increase (reduction) in income taxes resulting from:
	State taxes, net of federal taxes		3,029			2,134			966
	Nondeductible compensation		6			987			—
	Other		(356	)		45			387
	Increase (decrease) in valuation allowance		362			(80	)		—
		$	35,299		$	18,899		$	15,710

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MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Elements of deferred income tax assets (liabilities) are as follows:

			September 30,
			2005			2004
			(In thousands)
Deferred tax assets:
	Net operating loss carryforwards		$	31,396		$	47,707
	Deferred credits			26,549			15,271
	Other accrued expenses			5,839			5,115
	Deferred gains			2,992			3,133
	Allowance for doubtful receivables			3,392			2,710
	Alternative minimum tax			3,638			1,918
	Unrealized trading (gains) losses			197			664
	Expendable parts			822			567
	Intangibles			374			474
	Other			3,655			237
	Valuation allowance			(362	)		—
		Total deferred tax assets	$	78,492		$	77,796
Deferred tax liabilities:
	Property and equipment		$	(92,289	)	$	(62,923	)
	Other			(3,631	)		(676	)
		Total deferred tax liabilities	$	(95,920	)	$	(63,599	)

      Deferred tax assets include benefits expected to be realized from the utilization of alternative minimum tax credit carryforwards of approximately $3.6 million that do not expire and federal net operating loss carryforwards of approximately $80.7 million that expire in years 2017 through 2024. The Company also has state net operating loss carryforwards of approximately $78.4 million that expire in years 2006 through 2019. During 2005, the Company established a valuation allowance of $0.4 million for certain state net operating loss carryforwards that are expected to expire unutilized in the future. Realization of the remaining deferred tax assets is dependent upon generating sufficient taxable income prior to expiration of any net operating loss carryforwards. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax asset, net of the valuation allowance provided, will be realized.

12. Stockholders’ Equity

      In March 2004, the Company granted 428,297 shares of restricted stock to the Company’s Chief Executive Officer and the Company’s President and Chief Operating Officer. The restricted stock shares vest in one-third increments over a three-year period beginning on April 1, 2004. The shares under the grant were issued in March 2005. To recognize the transaction, the Company recorded deferred compensation of $3.5 million in stockholders’ equity. The deferred compensation is amortized on a straight-line basis over the vesting period of the grants.

      In February 2004, the Company completed the private placement of senior convertible notes due February 2024. At maturity, the principal amount of each note will be $1,000 and the aggregate amount due will be $171.4 million. These notes are convertible into shares of the Company’s common stock at a conversion rate of 40.3737 shares per $1,000 in principal amount at maturity of the notes, which equals an initial conversion price of approximately $14.45 per share. This conversion rate is subject to adjustment in certain

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MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

circumstances. Holders of these notes may convert their notes only if: (i) the sale price of the Company’s common stock exceeds 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive days ending on the last trading day of the preceding quarter; (ii) on or prior to February 10, 2019, the trading price for these notes falls below certain thresholds; (iii) these notes have been called for redemption; or (iv) specified corporate transactions occur. The Company may redeem these notes, in whole or in part, beginning on February 10, 2009, at a redemption price equal to the sum of the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of these notes may require the Company to repurchase the notes on February 10, 2009 at a price of $583.40 per note plus accrued and unpaid cash interest, if any, on February 10, 2014 at a price of $698.20 per note plus accrued and unpaid cash interest, if any, and on February 10, 2019 at a price of $835.58 per note plus accrued and unpaid cash interest, if any.

      In June 2003, the Company completed the private placement of senior convertible notes due June 2023. At maturity, the principal amount of each note will be $1,000 and the aggregate amount due will be $252 million. These notes are convertible into shares of the Company’s common stock at a conversion rate of 39.727 shares per $1,000 in principal amount at maturity of the notes which equals an initial conversion price of approximately $10.00 per share. This conversion rate is subject to adjustment in certain circumstances. Holders of these notes may convert their notes only if: (i) the sale price of our common stock exceeds 110% of the accreted conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding quarter; (ii) prior to June 16, 2018, the trading price for these notes falls below certain thresholds; (iii) these notes have been called for redemption; or (iv) specified corporate transactions occur. The Company may redeem these notes, in whole or in part, beginning on June 16, 2008, at a redemption price equal to the issue price, plus accrued original issue discount, plus any accrued and unpaid cash interest. The holders of these notes may require the Company to repurchase the notes on June 16, 2008 at a price of $397.27 per note plus accrued and unpaid cash interest, if any, on June 16, 2013 at a price of $540.41 per note plus accrued and unpaid cash interest, if any, and on June 16, 2018 at a price of $735.13 per note plus accrued and unpaid cash interest, if any.

      In February 2002, the Company entered into an agreement with Raytheon Aircraft Company (the “Raytheon Agreement”) to, among other things, reduce the operating costs of the Company’s Beechcraft 1900D fleet. In connection with the Raytheon Agreement and subject to the terms and conditions contained therein, Raytheon agreed to provide up to $5.5 million in annual operating subsidy payments to the Company contingent upon the Company remaining current on its payment obligations to Raytheon. Approximately $5.3 million, $5.3 million and $6.0 million was recorded as a reduction to flight operations during 2005, 2004 and 2003, respectively. In return, the Company granted Raytheon a warrant to purchase up to 233,068 shares of our common stock at a per share exercise price of $10. The Company recorded the issuance of the warrant at a value of $0.4 million within stockholders’ equity as a debit and credit to common stock. The contra equity value of the warrant was being amortized to expense over the vesting period of three years. Raytheon must pay a purchase price of $1.50 per common share underlying the warrant. The warrant was exercisable at any time over a three-year period following its date of purchase. Raytheon is completely vested in the 233,068 shares of common stock underlying the warrant.. As of September 30, 2005, Raytheon has exercised its option to purchase all components of the warrant.

      At September 30, 2005, the Company sponsored the following stock-based compensation plans:

      In March 1993, and December 1994, the Company adopted stock option plans for outside directors. These plans originally provided for the grant of options to purchase up to 450,000 shares of the Company’s common stock at fair value on the date of grant. At September 30, 2005, there were 52,000 options outstanding under this plan. There are no options available for grant under this plan.

      In July 1998, the Company adopted a second stock option plan for outside directors. This plan, as amended, provides for the grant of options to purchase up to 275,000 shares of the Company’s common stock at fair value on the date of the grant. On February 11, 2003 an additional 200,000 options were

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MESA AIR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

approved by the stockholders to be granted under this plan. At September 30, 2005, there were 235,739 options outstanding and 92,299 options available for future grants under this plan.

      In April 1996, the Company adopted an employee stock option plan under the new management incentive program (the “1996 Stock Option Plan”) that provides for the granting of options to purchase up to 2,800,000 shares of the Company’s common stock at the fair value on the date of grant. On July 24, 1998, an additional 1,500,000 options were approved by the stockholders to be granted under this plan. At September 30, 2005, there were 2,140,308 options outstanding. No future grants will be made under this plan.

      In June 1998, the Company adopted a Key Officer Stock Option Plan for compensating the Company’s Chief Executive Officer and Chief Operating Officer, which provided for the grant of options to purchase up to 1,600,000 shares of the Company’s common stock at the fair value on the date of grant. At September 30, 2005 there were 1,112,533 options outstanding. There are no options available for grant under this plan.

      In June 1999, the Company adopted the 1999 Non-Qualified Stock Option Plan in connection with the CCAir merger. At September 30, 2005, there were 49,712 options outstanding and there are no options available for future grants under this plan.

      In October 2001, the Company adopted a Key Officer Stock Option Plan for compensating the Company’s Chief Executive Officer and Chief Operating Officer, which provided for the grant of options to purchase up to 2,000,000 shares of the Company’s common stock at the fair value on the date of grant. At September 30, 2005 there were 1,000,000 options outstanding and 1,000,000 options available for future grants under this plan.

      In February 2005, the Company’s shareholders approved the adoption of the 2005 Employee Stock Incentive Plan. The plan provides for the grant of options to purchase up to 1,500,000 shares of common stock to officers and key employees. At September 30, 2005, there were 615,650 options outstanding and 1,256,892 options available for future grants under this plan, which includes 372,542 options authorized but not issued under the 1996 Option Plan.

      Generally, options granted to employees vest over a three-year period and options granted to directors vest immediately upon grant or six months following the grant.

      Transactions involving stock options under these plans are summarized as follows:

	2005					2004					2003
				Weighted					Weighted					Weighted
				Average					Average					Average
	Shares			Exercise		Shares			Exercise		Shares			Exercise
	(000)			Price		(000)			Price		(000)			Price
Outstanding at beginning of year		4,572		$	7.05		4,376		$	6.73		3,843		$	7.10
Granted		947			6.58		430			9.89		1,019			4.96
Exercised		(166	)		4.75		(110	)		5.58		(270	)		5.42
Canceled/ Forfeited		(147	)		8.07		(124	)		6.95		(216	)		6.51
Outstanding at end of year		5,206		$	6.99		4,572		$	7.20		4,376		$	6.73
Exercisable at end of year		3,765		$	7.04		3,161		$	7.13		2,485		$	7.47

      At September 30, 2005, the range of exercise prices for the aforementioned options was $2.31 to $12.56.

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      The following table summarizes information concerning options outstanding at September 30, 2005:

	Stock Options Outstanding						Stock Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
	Number		Remaining		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life		Price		Exercisable		Price
$ 1.73 - $ 3.45		28,723		2.0 Years	$	2.44		26,256	$	2.37
$ 3.46 - $ 5.18		1,204,455		5.5 Years		4.57		959,357		4.50
$ 5.19 - $ 6.90		1,580,592		6.2 Years		6.09		889,068		5.99
$ 6.91 - $ 8.63		1,820,568		4.2 Years		8.12		1,441,168		8.23
$ 8.64 - $10.35		92,956		5.9 Years		9.59		86,489		9.57
$10.36 - $12.08		359,280		4.6 Years		11.23		313,082		11.18
$12.09 - $13.80		119,368		3.8 Years		12.51		49,502		12.46
Options at September 30, 2005		5,205,942		5.2 Years		6.99		3,764,922		7.04

13. Benefit Plans

      The Company has a 401(k) plan covering the employees of Mesa Airlines, Freedom, Air Midwest and the airline support operations (the “Mesa Plan”). Under the Mesa Plan, employees may contribute up to 15 percent of their annual compensation. Employer contributions are made at the discretion of the Board of Directors. During fiscal 2005, the Company made matching contributions of 25 percent of employee contributions up to 10 percent of annual employee compensation. Employees are eligible to participate in the plan upon completion of one year of service. The employee vests 20% per year in employer contributions. Employees become fully vested in employer contributions after completing six years of employment. The Company has the right to terminate the 401(k) plan at any time. Contributions by the Company to the Mesa Plan for the years ended September 30, 2005, 2004 and 2003 were approximately $0.9 million, $0.8 million and $0.7 million, respectively.

14. Lease Commitments

      At September 30, 2005, the Company leased 142 aircraft under non-cancelable operating leases with remaining terms of up to 18.5 years. The aircraft leases require the Company to pay all taxes, maintenance, insurance and other operating expenses. The Company has the option to terminate certain of the leases at various times throughout the lease. Aggregate rental expense under all operating leases totaled approximately $194.7 million, $183.5 million and $130.2 million for the years ended September 30, 2005, 2004 and 2003, respectively.

      Future minimum lease payments under non-cancelable operating leases are as follows:

	Years Ending
	September 30,
	(In thousands)
2006	$	247,286
2007		229,636
2008		206,565
2009		186,690
2010		184,988
Thereafter		1,435,530

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      In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”), which requires the consolidation of variable interest entities. The majority of the Company’s leased aircraft are owned and leased through trusts whose sole purpose is to purchase, finance and lease these aircraft to the Company; therefore, they meet the criteria of a variable interest entity. However, since these are single owner trusts in which the Company does not participate, the Company is not at risk for losses and is not considered the primary beneficiary. As a result, the Company is not required to consolidate any of these trusts or any other entities in applying FIN 46. Management believes that the Company’s maximum exposure under these leases is the remaining lease payments.

      Under the Company’s leveraged lease agreements, the Company typically agree to indemnify the equity/owner participant against liabilities that may arise due to changes in benefits from tax ownership of the respective leased aircraft. The terms of these contracts range up to 18.5 years. The Company did not accrue any liability relating to the indemnification to the equity/owner participant because the probability of this occurring is remote.

      As of September 30, 2005, we owned 35 Beechcraft 1900D aircraft and were operating 22 of these aircraft. During fiscal year 2005, the Company leased four of its Beechcraft 1900D aircraft to Gulfstream International Airlines, a regional turboprop air carrier based in Ft. Lauderdale, Florida for a term of five years. In January 2005, we entered into an agreement to lease ten of our Beechcraft 1900D aircraft to Big Sky Transportation Co. (“Big Sky”), a regional turboprop carrier based in Billings, Montana. As of September 30, 2005, we had leased nine aircraft to Big Sky and leased the tenth aircraft to Big Sky in the first quarter of fiscal 2006 for a term of five years.

15. Commitments and Contingencies

      In May 2005, the Company amended its code-sharing arrangement with United to allow the Company to put up to an additional 30 50-seat regional jet aircraft into the United Express system. The first of these aircraft were put into service in October 2005. The agreement with respect to the additional 30 50-seat regional jet aircraft expires in April 2010. Additionally, the expiration dates under the existing code-share agreement with respect to certain aircraft were extended. The code-share agreement for (i) the ten Dash-8 aircraft terminates in July 2013, and United Airlines’ right to terminate earlier will not begin until April 2010, (ii) the 15 50-seat CRJ-200s now terminates in April 2010, (iii) the 15 70-seat regional jets (to be delivered upon the withdrawal of the 50-seat regional jets) terminates on the earlier of ten years from delivery date or October 2018 and (iv) the remaining 15 70-seat regional jets terminates in three tranches between December 2011 and December 2013. In connection with the amendment, the Company paid three $10 million payments to United as follows: i) $10 million was paid in June 2005, ii) $10 million was paid in October 2005, and iii) $10 million was paid in November 2005. Amounts paid are recorded as a deferred charge and included in other assets on the balance sheet. The deferred charge is being amortized over the term of the code-share agreement as a reduction of passenger revenue. Amortization of $0.2 million was recorded in fiscal 2005.

      In May 2005, the Company announced a code-share arrangement between the Company, Freedom, and Delta that provides for Freedom to become a Delta Connection partner. Under the terms of the agreement, Freedom commenced operations in October 2005 and will operate up to 30 50-seat regional jet aircraft on routes throughout Delta’s network. The arrangement required Mesa to partially reimburse Delta’s lease payments associated with Delta’s 30 Dornier Fairchild 328 jets throughout the term of the agreement in exchange for performing flight services under the agreement; however, the requirement to reimburse Delta for certain lease costs was terminated when Delta filed for bankruptcy protection. The code-share arrangement will terminate with respect to each aircraft, on an aircraft-by-aircraft basis, beginning in approximately twelve years. Delta may terminate the code-share agreement at any time, with or without cause, upon twelve months’ prior written notice following the sixth anniversary of the in-service date of the 30th aircraft added to the Delta

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Connection fleet. However, Delta has not yet assumed our code-share agreement in its bankruptcy proceedings and could choose to terminate this agreement at any time prior to its emergence from bankruptcy.

      As of September 30, 2005, the Company had firm orders with Bombardier Aerospace, Inc. for eight CRJ-900 aircraft (seven of which can be converted to CRJ-700s). In addition to the firm orders, Mesa has an option to acquire an additional 72 CRJ-700 and CRJ-900 regional jets that are exercisable through 2009 and 40 CRJ-700 and CRJ-900 regional jets that are exercisable in 2010 and beyond. In conjunction with this purchase agreement, Mesa had $15.0 million on deposit with BRAD that was included in lease and equipment deposits at September 30, 2005. The remaining deposits are expected to be returned upon completion of permanent financing on each of the last five aircraft ($3.0 million per aircraft).

      The Company accrues for potential income tax contingencies when it is probable that a liability has been incurred and the amount of the contingency can be reasonably estimated. The Company’s accrual for income tax contingencies is adjusted for changes in circumstances and additional uncertainties, such as amendments to existing tax law, both legislated and concluded through the various jurisdictions’ tax court systems. At September 30, 2005, the Company had an accrual for income tax contingencies of approximately $2.9 million. If the amounts ultimately settled are greater than the accrued contingencies, the Company would record additional income tax expense in the period in which the assessment is determined. To the extent amounts are ultimately settled for less than the accrued contingencies, or the Company determines that a liability is no longer probable, the liability is reversed as a reduction of income tax expense in the period the determination is made.

      In August 2005, the Company entered into a ten-year agreement with AAR, for the management and repair of certain of the Company’s CRJ-200, -700, -900 and ERJ-145 aircraft rotable spare parts inventory. Under the agreement, the Company is required to pay AAR a monthly fee based upon flight hours for access to and maintenance of the inventory. The agreement also contains certain minimum monthly payments that Mesa must make to AAR. At termination, the Company may elect to purchase the covered inventory at fair value, but is not contractually obligated to do so. The agreement is contingent upon the Company terminating an agreement for the Company’s CRJ-200 aircraft rotable spare parts inventory with GECAS, and including these rotables in the arrangement. The Company notified GECAS of its intent to cancel that agreement in August and terminated the agreement in November 2005.

      Future minimum payments under the agreement are as follows:

	Years Ending
	September 30,
	(In thousands)
2006	$	19,129
2007		22,787
2008		26,158
2009		28,922
2010		31,969
Thereafter		172,295

      The Company also has long-term contracts for the performance of engine maintenance on some of its aircraft. A description of each of these contracts is as follows:

      In January 1997, the Company entered into a 10-year engine maintenance contract with General Electric Aircraft Engines (“GE”) for its CRJ-200 aircraft. The agreement was subsequently amended in the first quarter of fiscal 2003. The amended contract requires a monthly payment based upon the prior month’s flight hours incurred by the covered engines. The hourly rate increases over time based upon the engine overhaul costs that are expected to be incurred in that year and is subject to escalation based on

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changes in certain price indices. Maintenance expense is recognized based upon the product of flight hours flown and the rate in effect for the period. The contract also provides for a fixed number of engine overhauls per year. To the extent that the number of actual overhauls is less than the fixed number, GE is required to issue to Mesa a credit for the number of events less than the fixed number multiplied by an agreed upon price. To the extent that the number of actual overhauls is greater than the fixed number, Mesa is required to pay GE for the number of events greater than the fixed number multiplied by the same agreed upon price. Any adjustments payments or credits are recognized in the period they occur.

      In April 1997, the Company entered into a 10-year engine maintenance contract with Pratt & Whitney Canada Corp. (“PWC”) for its Dash 8-200 aircraft. The contract requires Mesa to pay PWC for the engine overhaul upon completion of the maintenance based upon a fixed dollar amount per flight hour. The rate under the contract is subject to escalation based on changes in certain price indices.

      In April 2000, the Company entered into a 10-year engine maintenance contract with Rolls-Royce Allison (“Rolls-Royce”) for its ERJ aircraft. The contract requires Mesa to pay Rolls-Royce for the engine overhaul upon completion of the maintenance based upon a fixed dollar amount per flight hour. The rate per flight hour is based upon certain operational assumptions and may vary if the engines are operated differently than these assumptions. The rate is also subject to escalation based on changes in certain price indices. The agreement with Rolls-Royce also contains a termination clause and look back provision to provide for any shortfall between the cost of maintenance incurred by the provider and the amount paid up to the termination date by the Company and includes a 15% penalty on such amount. The Company does not anticipate an early termination under the contract.

      In May 2002, the Company entered into a six-year fleet management program with PWC to provide maintenance for the Company’s Beechcraft 1900D turboprop engines. The contract requires a monthly payment based upon flight hours incurred by the covered aircraft. The hourly rate is subject to annual adjustment based on changes in certain price indices and is guaranteed to increase by no less than 1.5% per year. Pursuant to the agreement, the Company sold certain assets of its Desert Turbine Services unit, as well as all spare PT6 engines to PWC for $6.8 million, which approximated the net book value of the assets. Pursuant to the agreement, the Company provided a working capital loan to PWC for the same amount, which is to be repaid through a reduced hourly rate being charged for maintenance. The agreement covers all of the Company’s Beechcraft 1900D turboprop aircraft and engines. The agreement also contains a termination clause and look back provision to provide for any shortfall between the cost of maintenance incurred by the provider and the amount paid up to the termination date by the Company and provides for return of a pro-rated share of the prepaid amount upon early termination. The Company does not anticipate an early termination under the contract.

      The Company is also involved in various legal proceedings and FAA civil action proceedings that the Company does not believe will have a material adverse effect upon its business, financial condition or results of operations, although no assurance can be given to the ultimate outcome of any such proceedings.

16. Financial Instruments

      The carrying amount of cash and cash equivalents, receivables, accounts payable, accrued compensation and other liabilities approximates fair value due to the short maturity periods of these instruments. The fair value of the Company’s marketable securities is based on quoted marked prices. The Company’s variable rate long-term debt had a carrying value of approximately $436.4 million at September 30, 2005, which approximates fair value because these borrowings have variable interest rate terms that approximate market interest rates for similar debt instruments. The Company’s fixed rate long-term debt, having a carrying value of approximately $228.0 million at September 30, 2005, had a fair value of approximately $193.9 million. The Company uses a financial model to calculate the fair value of its senior convertible debt.

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17. Impairment and Restructuring Charges (Credits)

Beechcraft 1900D Impairment and Restructuring Charges

      In fiscal 2003, the Company returned the three remaining B1900D aircraft permitted under its agreement with Raytheon, and as a result of additional costs required of meeting the return conditions of these and previous aircraft, the Company recorded an additional impairment charge of $1.1 million.

      In the fiscal 2004, the Company recognized an impairment and restructuring charge of $12.4 million related to the planned early return of seven leased B1900D aircraft with lease expirations between December 2004 and September 2005. The Company negotiated the terms of the early return with the aircraft lessors and took a charge that included $2.4 million for the present value of future lease payments, $2.4 million for the negotiated settlement of return conditions, $1.2 million for the cancellation of maintenance agreements, $1.1 million for the difference between the buyout option of two aircraft and the proceeds from the subsequent sale of the aircraft, $0.8 million to reduce maintenance deposits to net realizable value and $4.5 million to reduce the value of rotable and expendable inventory to fair value less costs to sell.

CCAir Impairment and Restructuring

      In fiscal 2002, as a result of the inability of CCAir to reduce its operating costs and its continued history of operating losses, as well as receiving a notification by US Airways of their intent to cancel CCAir’s pro-rate contract effective November 3, 2002, management at CCAir elected to cease operations on the effective date of US Airway’s cancellation. As a result, the Company took an impairment and restructuring charge of $19.8 million in fiscal 2002. At the time of the shutdown, it was the Company’s intention to maintain the legal entity of CCAir as well as its operating certificate with the possibility of either restructuring the airline and operating it under amended labor agreements in the future or affecting a sale of CCAir.

      In fiscal 2003, CCAir surrendered its operating certificate to the FAA and filed articles of dissolution with the State of Delaware. As a result of these events and CCAir’s lack of liquidity, it became clear that CCAir would be unable to pay any of its obligations. In fiscal 2003, in light of CCAir’s inability to pay its obligations and the resulting dissolution, the Company reversed approximately $12 million of the restructuring charges recorded in fiscal 2002. The reversal of these charges was precipitated by the dissolution of CCAir and the Company’s subsequent determination, after consultation with counsel, that the Company should not be held legally responsible for the obligations incurred solely by CCAir and not guaranteed by the Company. Including these charges and reversals, CCAir had after tax net income of $8.3 million in fiscal 2003.

      In fiscal 2004, the Company reversed approximately $0.5 million of the restructuring charges recorded in fiscal 2002 as the recorded liabilities were no longer needed.

Shorts 360 Impairment

      In fiscal 2002, the Company’s sublease of two Shorts 360 aircraft the Company had been subleasing to an operator in Europe expired and the Company did not anticipate the lease to be renewed. As a result, the Company took a charge for $3.6 million to accrue for the remaining lease payments and the future costs of returning these aircraft to the lessor.

      In fiscal 2005, the Company entered into an agreement with the lessor for the early return of these two aircraft. The agreement included the elimination of the aircraft return conditions and called for a $1.3 million payment. As a result, the Company reduced its reserve for the costs to return these aircraft to the agreed upon amount.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The changes in the impairment and restructuring charges for the three fiscal years ended September 30, 2005 are as follows:

	Reserve						Reversal				Non-		Reserve								Non-		Reserve
	Oct. 1,						of		Cash		Cash		Sept. 30,			(Provision)			Cash		Cash		Sept. 30,
Description of Charge	2002			Provision			Charges		Utilized		Utilized		2003			Reversal			Utilized		Utilized		2004
Restructuring:
Severance and other	$	(658	)	$	—		$	—	$	110	$	—	$	(548	)	$	482		$	66	$	—	$	—
Costs to return aircraft		(8,107	)		(1,050	)		4,593		2,097		250		(2,217	)		(2,400	)		2,400		—		(2,217	)
Aircraft lease payments		(9,238	)		—			7,414		120		516		(1,188	)		(2,398	)		2,542		594		(450	)
Cancellation of maintenance agreement		—			—			—		—		—		—			(1,179	)		1,179		—		—
Impairment:
Impairment of surplus inventory		—			—			—		—		—		—			(4,517	)		—		4,517		—
Impairment of maintenance deposits		—			—			—		—		—		—			(823	)		—		823		—
Impairment of aircraft and other property		—			—			—		—		—		—			(1,060	)		—		1,060		—
Total	$	(18,003	)	$	(1,050	)	$	12,007	$	2,327	$	766	$	(3,953	)	$	(11,895	)	$	6,187	$	6,994	$	(2,667	)

[Continued from above, first column repeated]

	Reserve							Non-		Reserve
	Sept. 30,			(Provision)		Cash		Cash		Sept. 30,
Description of Charge	2004			Reversal		Utilized		Utilized		2005
Restructuring:
Costs to return aircraft	$	(2,217	)	$	1,187	$	1,030	$	—	$	—
Aircraft lease payments		(450	)		70		144		224		(12	)
Total	$	(2,667	)	$	1,257	$	1,174	$	224	$	(12	)

      The reserve balance above is included in other accrued expenses on the accompanying consolidated balance sheets.

18. Related Party Transactions

      In February 1999, the Company entered into an agreement with Barlow Capital, LLC (“Barlow”), whereby Barlow would provide financial advisory services related to aircraft leases, mergers and acquisitions, and certain other financing arrangements. Under this agreement, the Company paid fees totaling $0.6 million, $2.5 million and $1.3 million to Barlow in fiscal 2005, 2004 and 2003, respectively, for arranging for leasing companies to participate in the Company’s various aircraft financings. At September 30, 2004, Jonathan Ornstein, the Company’s Chairman of the Board and Chief Executive Officer, and George Murnane III, the Company’s Executive Vice President and Chief Financial Officer were each members of Barlow and each held a 25% membership interest therein. Messrs. Ornstein and Murnane disposed of their membership interest at the end of the first quarter of fiscal 2005. Distributions to the members of Barlow were determined by the members on a year-to-year basis. Substantially all of Barlow’s revenues were derived from its agreement with the Company.

      On September 9, 1998, the Company entered into an agreement with International Airline Support Group (“IASG”) whereby the Company would consign certain surplus airplane parts to IASG to sell on the open market. IASG in turn would submit proceeds from such sales to the Company less a market-based fee.

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During fiscal 2003, the Company paid IASG approximately $0.4 million in commissions on sales of surplus aircraft parts. During 2003, IASG provided consultation on determining the fair value of the Company’s surplus inventory. Mr. Ronald Fogleman, a member of the Company’s Board of Directors, and Mr. Murnane were members of the board of directors of IASG during fiscal 2003 and Mr. Murnane was an executive officer of IASG before joining the Company. Messrs. Fogleman and Murnane resigned from the Board of Directors of IASG in mid 2003. In September 2003, IASG ceased operations and any inventory remaining at IASG was moved to another consignment firm.

      The Company provides reservation services to Europe-By-Air, Inc. The Company billed Europe-By-Air approximately $57,000, $57,000 and $61,000 for these services during fiscal 2005, 2004 and 2003, respectively. At September 30, 2004, the Company had receivables from Europe-By-Air of $24,000. There were no amounts due as of September 30, 2005. Mr. Ornstein is a major shareholder of Europe-By-Air.

      The Company uses the services of the law firm of Baker & Hostetler and Piper Rudnick for labor related legal services. The Company paid the firms an aggregate of $0.3 million, $0.2 million and $0.3 million for legal-related services in 2005, 2004 and 2003, respectively. Mr. Joseph Manson, a member of the Company’s Board of Directors, is a partner with Baker & Hostetler and a former partner with Piper Rudnick.

      During fiscal 2001, the Company established Regional Airline Partners (“RAP”), a political interest group formed to pursue the interests of regional airlines, communities served by regional airlines and manufacturers of regional airline equipment. RAP has been involved in various lobbying activities related to maintaining funding for the Essential Air Service program under which the Company operates certain of its B1900 aircraft. Mr. Maurice Parker, a member of the Company’s Board of Directors, is the Executive Director of RAP. During 2005, 2004 and 2003, the Company paid RAP’s operating costs totaling approximately $312,000, $241,000 and $200,000, respectively. Included in these amounts are the wages of Mr. Parker, which amounted to $120,000, $87,000 and $94,000 in fiscal 2005, 2004 and 2003, respectively. Since inception, the Company has financed 100% of RAP’s operations.

      In September 2001, the Company entered into an agreement to form UFLY, LLC (“UFLY”), for the purpose of making strategic investments in US Airways, Inc. UFLY had investment gains of $28,000 during fiscal 2003. Mr. Ornstein was a shareholder/owner and managing member of UFLY. Mr. Ornstein received no additional compensation from the Company or UFLY for his role as managing member of UFLY. UFLY’s assets were distributed and UFLY was dissolved in fiscal 2003.

      In fiscal 2003, Durango Pro-Focus used the services of the Company for pilot training. The Company billed Durango Pro-Focus $25,000 and $45,000 in fiscal year 2004 and 2003, respectively, for pilot training services. In 2004, Durango Pro-Focus was dissolved. Amounts due from Durango Pro-Focus of $70,000 were written off in fiscal 2004. Mr. Fogleman was the President and Chief Executive Officer of Durango Pro-Focus.

      The Company will enter into future business arrangements with related parties only where such arrangements are approved by a majority of disinterested directors and are on terms at least as favorable as available from unaffiliated third parties.

19. Segment Reporting

      SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” requires disclosures related to components of a company for which separate financial information is available that is evaluated regularly by a company’s chief operating decision maker in deciding the allocation of resources and assessing performance. The Company has three airline operating subsidiaries, Mesa Airlines, Freedom Airlines and Air Midwest, as well as various other subsidiaries organized to provide support for the Company’s airline operations. In fiscal 2005, the Company aggregated these subsidiaries into three reportable segments: Mesa Airlines, Air Midwest/ Freedom and Other. Mesa Airlines operates all of the Company’s regional jets and Dash-8 aircraft pursuant to revenue-guarantee code-share agreements. Air Midwest and Freedom

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primarily operate the Company’s Beech 1900 turboprop aircraft pursuant to pro-rate code-share agreements. The Other reportable segment includes Mesa Air Group (the holding company), RAS, MPD, MAG-AIM, MAGI and Ritz Hotel Management Corp., all of which support Mesa’s operating subsidiaries. Prior to October 2004, the Company operated regional jets in both Mesa and Freedom. In October 2004, the Company completed its transition of regional jets from Freedom into Mesa and transferred a B1900D aircraft from Air Midwest into Freedom. As such, the Company has aggregated Freedom with Air Midwest beginning in the first quarter of fiscal 2005. Operating revenues in the Other segment are primarily sales of rotable and expendable parts to the Company’s operating subsidiaries.

      Mesa Airlines provides passenger service with regional jets under revenue-guarantee contracts with America West, United and US Airways. Mesa Airlines also previously operated under a code-share agreement with Frontier Airlines, Inc., which terminated in December 2003. Mesa Airlines also provides passenger service with Dash-8 aircraft under revenue-guarantee contracts with United and America West. As of September 30, 2005, Mesa Airlines operated a fleet of 160 aircraft — 108 CRJs, 36 ERJs and 16 Dash-8s.

      Air Midwest and Freedom provide passenger service with Beechcraft 1900D aircraft under pro-rate contracts with America West, US Airways and Midwest, as well as independent operations under the brand name of Mesa Airlines. As of September 30, 2005, Air Midwest and Freedom operated a fleet of 22 Beechcraft 1900D turboprop aircraft.

      CCAir provided passenger service with Dash-8 and Jetstream 31 turboprop aircraft under pro-rate revenue contracts with US Airways. CCAir ceased operations on November 3, 2002.

      The Other category consists of Mesa Air Group, RAS, MPD, MAG-AIM, MAGI and Ritz Hotel Management Corp. Mesa Air Group performs all administrative functions not directly attributable to any specific operating company. These administrative costs are allocated to the operating companies based upon specific criteria including headcount, available seat miles (“ASM’s”) and other operating statistics. MPD operates pilot training programs in conjunction with San Juan College in Farmington, New Mexico and Arizona State University in Tempe, Arizona. Graduates of these training programs are eligible to be hired by the Company’s operating subsidiaries. RAS primarily provides repair services to the Company’s operating subsidiaries. MAGI is a captive insurance company located in Barbados. MAG-AIM is the Company’s inventory procurement and sales company.

				Air
				Midwest/
Year Ended September 30, 2005 (000’s)	Mesa			Freedom			Other			Eliminations			Total
Total operating revenues	$	1,064,093		$	62,681		$	297,764		$	(288,270	)	$	1,136,268
Depreciation and amortization		39,718			232			4,666			(385	)		44,231
Operating income (loss)		138,310			(7,482	)		41,855			(43,421	)		129,262
Interest expense		(33,202	)		—			(11,838	)		574			(44,466	)
Interest income		2,859			13			603			(574	)		2,901
Income (loss) before income tax		113,001			(7,838	)		30,424			(43,421	)		92,166
Income tax (benefit)		43,280			(3,002	)		(11,652	)		(16,631	)		35,299
Total assets		1,328,180			10,705			320,631			(491,845	)		1,167,671
Capital expenditures (including non-cash)		376,181			49			19,518			—			395,748

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Mesa/			Air
Year Ended September 30, 2004 (000’s)	Freedom			Midwest			Other			Eliminations			Total
Total operating revenues	$	807,736		$	81,714		$	365,858		$	(358,496	)	$	896,812
Depreciation and amortization		24,749			432			2,820			—			28,001
Operating income (loss)		81,761			(9,635	)		52,615			(57,383	)		67,358
Interest expense		(16,564	)		(139	)		(8,645	)		285			(25,063	)
Interest income		851			6			591			(285	)		1,163
Income (loss) before income tax		67,311			(9,830	)		45,082			(57,382	)		45,181
Income tax (benefit)		28,156			(4,112	)		18,858			(24,003	)		18,899
Total assets		1,054,028			17,196			403,238			(352,923	)		1,121,537
Capital expenditures (including non-cash)		474,449			243			39,527			—			514,219

	Mesa/			Air
Year Ended September 30, 2003 (000’s)	Freedom			Midwest			CCAir			Other			Eliminations			Total
Total operating revenues	$	507,555		$	86,142		$	1,254		$	175,956		$	(170,917	)	$	599,990
Depreciation and amortization		12,453			709			—			2,538			—			15,700
Operating income (loss)		45,537			(9,391	)		11,810			44,034			(36,711	)		55,279
Interest expense		(10,997	)		—			(173	)		(1,720	)		226			(12,664	)
Interest income		837			4			4			593			(275	)		1,163
Income (loss) before income tax and minority interest		28,855			(6,817	)		13,486			42,253			(36,757	)		41,020
Income tax (benefit)		11,051			(2,611	)		5,165			16,183			(14,078	)		15,710
Total assets		610,228			19,073			441			310,095			(222,901	)		716,936
Capital expenditures (including non- cash)		408,467			121			—			21,421			—			430,009

20. Valuation and Qualifying Accounts

			Additions/
			Subtractions
	Balance at		Charged to
	Beginning		Costs and						Balance at
	of Year		Expenses			Deductions			End of Year
	(In thousands)
Allowance for Obsolescence Deducted from Expendable Parts and Supplies
September 30, 2005	$	1,481	$	1,195		$	(529	)	$	2,147
September 30, 2004		1,906		1,269			(1,694	)		1,481
September 30, 2003		267		1,639			—			1,906
Allowance for Doubtful Accounts Deducted from Accounts Receivable
September 30, 2005	$	7,077	$	6,915		$	(5,137	)	$	8,855
September 30, 2004		4,681		4,315			(1,919	)		7,077
September 30, 2003		12,799		(1,771	)		(6,347	)		4,681

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

21. Selected Quarterly Financial Data (Unaudited)

      The following table presents selected unaudited quarterly financial data (in thousands):

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
2005(1)(3)
Operating revenues	$	264,804	$	263,816	$	298,578	$	309,070
Operating Income		28,290		28,405		36,763		35,804
Net income		13,876		10,848		17,135		15,008
Net income per share — basic	$	0.47	$	0.37	$	0.59	$	0.52
Net income per share — diluted	$	0.32	$	0.26	$	0.40	$	0.36

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
2004(2)(3)
Operating revenues	$	187,553	$	209,664	$	239,586	$	260,009
Operating Income		11,597		6,708		22,785		26,268
Net income		4,134		1,769		9,658		10,721
Net income per share — basic	$	0.13	$	0.06	$	0.31	$	0.35
Net income per share — diluted	$	0.12	$	0.05	$	0.25	$	0.25

(1)	First quarter amounts include the reversal of certain Shorts aircraft restructuring charges of $1.3 million (pretax).
(2)	Second quarter amounts include restructuring charges of $11.3 million (pretax), third quarter amounts include restructuring charges of $1.1 million, and fourth quarter amounts include the reversal of certain CCAir restructuring charges of $0.4 million (pretax).
(3)	The sum of quarterly earnings per share may not equal annual earnings per share due to rounding.

74

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

      There were no disagreements with accountants on accounting and financial disclosure.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

      In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-K, the Company’s management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Based on their evaluation of these disclosure controls and procedures, the Company’s chairman of the board and chief executive officer and the Company’s executive vice president and chief financial officer have concluded that the disclosure controls and procedures were effective as of the date of such evaluation to ensure that material information relating to the Company, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Annual Report on Form 10-K was being prepared. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2005, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting.

      The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) and Rule 15d-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the chief executive officer and chief financial officer, an evaluation was conducted of the effectiveness of internal control over financial reporting based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management concluded that the Company maintained effective internal control over financial reporting as of September 30, 2005. Management’s assessment of the effectiveness of internal control over financial reporting as of September 30, 2005 has been audited by Deloitte & Touche, LLP, an independent registered public accounting firm, as stated in their report that is included herein.

75

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Mesa Air Group, Inc.

Phoenix, Arizona

      We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Mesa Air Group, Inc. and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of September 30, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

      A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

      In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of September 30, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2005, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

      We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended September 30, 2005 of the Company and our report dated December 14, 2005 expressed an unqualified opinion and includes an explanatory paragraph relating to the Company’s significant code-sharing agreements.

DELOITTE & TOUCHE LLP

Phoenix, Arizona

December 14, 2005

76

Item 9B. Other Information

      None.

PART III

      All items in Part III are incorporated herein by reference as indicated below to our definitive proxy statement for our 2006 annual meeting of stockholders anticipated to be held February 7, 2006, which will be filed with the SEC, except for information relating to executive officers under the heading “Executive Officers of the Registrant,” which can be found in Part I following Item 4.

Item 10. Directors and Executive Officers of the Registrant

      The information required by Item 10 is incorporated herein by reference to the information contained under the headings “Election of Directors” and “Executive Officers” as set forth in our definitive proxy statement for our 2006 annual meeting of stockholders.

Item 11. Executive Compensation

      The information required by Item 11 relating to our directors is incorporated herein by reference to the information under the heading “Compensation of Directors” and the information relating to our executive officers is incorporated herein by reference to the information under the heading “Executive Compensation” as set forth in our definitive proxy statement for our 2006 annual meeting of stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

      The information required by Item 12 is incorporated herein by reference to the information under the headings “Election of Directors”, “Equity Compensation Plan Information”, and “Security Ownership of Certain Beneficial Owners and Management” as set forth in our definitive proxy statement for our 2006 annual meeting of stockholders.

Item 13. Certain Relationships and Related Transactions

      The information required by Item 13 is incorporated herein by reference to the information under the heading “Certain Relationships and Related Transactions” as set forth in our definitive proxy statement for our 2006 annual meeting of stockholders.

Item 14. Principal Accountants Fees and Services

      Information regarding principal accounting fees and services is incorporated herein by reference to the information under the heading “Disclosure Of Audit And Non-Audit Fees” contained in the Proxy Statement for our 2006 annual meeting of stockholders.

PART IV

Item 15. Exhibits and Financial Statement, Schedules

      (A) Documents filed as part of this report:

      1. Reference is made to Item 8 hereof.

      2. Exhibits

77

      The following exhibits are either filed as part of this report or are incorporated herein by reference from documents previously filed with the Securities and Exchange Commission:

Exhibit
Number			Description	Reference
	3	.1	Articles of Incorporation of Registrant dated May 28, 1996	Filed as Exhibit 3.1 to Registrant’s Form 10-K for the fiscal year ended September 30, 1996, incorporated herein by Reference
	3	.2	Bylaws of Registrant as amended	Filed as Exhibit 3.2 to Registrant’s Form 10-K for the fiscal year ended September 30, 1996, incorporated herein by Reference
	4	.1	Form of Common Stock certificate	Filed as Exhibit 4.5 to Amendment No. 1 to Registrant’s Form S-18, Registration No. 33-11765 filed March 6, 1987, incorporated herein by reference
	4	.2	Form of Common Stock certificate (issued after November 12, 1990)	Filed as Exhibit 4.8 to Form S-1, Registration No. 33-35556 effective December 6, 1990, incorporated herein by reference
	4	.3	Indenture dated as of June 16, 2003 between the Registrant, the guarantors signatory thereto and U.S. Bank National Association, as Trustee, relating to Senior Convertibles Notes due 2023	Filed as Exhibit 4.1 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.4	Registration Rights Agreement dated as of June 16, 2003 between the Registrant, the subsidiaries of the Registrant listed on the signature pages thereto, and Merrill Lynch & Co., as representatives of the Initial Purchasers of Senior Convertibles Notes due 2023	Filed as Exhibit 4.2 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.5	Form of Guarantee (Exhibit A-2 to Indenture filed as Exhibit 4.3 above)	Filed as Exhibit 4.3 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.6	Form of Senior Convertible Note due 2023 (Exhibit A-1 to Indenture filed as Exhibit 4.3 above)	Filed as Exhibit 4.3 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.7	Indenture, dated as of February 10, 2004 between Mesa Air Group, Inc., the guarantors named therein and U.S. Bank National Association, as Trustee, relating to Senior Convertible Notes due 2024	Filed as Exhibit 4.1 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	4	.8	Registration Rights Agreement dated as of February 10, 2004 between Mesa Air Group, Inc., the subsidiaries of Mesa Air Group, Inc. listed on the signature pages thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, As Initial Purchaser of the Senior Convertible Notes due 2024	Filed as Exhibit 4.2 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	4	.9	Form of Guarantee (included in Exhibit 4.7)	Filed as Exhibit 4.1 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	4	.10	Form of Senior Convertible Notes due 2024 (included in Exhibit 4.7)	Filed as Exhibit 4.1 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	10	.1	1998 Key Officer Stock Option Plan	Filed as Appendix A to Registrant’s Definitive Proxy Statement, dated June 17, 1998 and incorporated herein by reference

78

Exhibit
Number			Description	Reference
	10	.2	2001 Key Officer Stock Option Plan, as amended	Filed as Exhibit 5.2 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.3	Outside Directors’ Stock Option Plan, as amended	Filed as Exhibit 5.3 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.4	1996 Employee Stock Option Plan, as amended	Filed as Exhibit 5.4 to Form 10-K for fiscal year ended September 30, 2003 and Incorporated herein by reference
	10	.5	2005 Employee Stock Incentive Plan	Filed herewith
	10	.6	Deferred Compensation Plan, adopted July 13, 2001	Filed herewith
	10	.7	2005 Deferred Compensation Plan, adopted February 7, 2005	Filed herewith
	10	.8	Form of Directors’ and Officers’ Indemnification Agreement	Filed as Exhibit 10.1 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.9	Code Share and Revenue Sharing Agreement, dated as of March 20, 2001, by and between Mesa Airlines, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.1 to Form 10-Q for the period ended March 31, 2001, incorporated herein by reference
	10	.10	First Amendment to Code Share and Revenue Sharing Agreement dated as of April 27, 2001, by and between Mesa Airlines, Inc. and America West, Inc.	Filed as Exhibit 10.10 to Form 10-K for Fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.11	Second Amendment to Code Share and Revenue Sharing Agreement dated as of October 24, 2002, by and between Mesa Airlines, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.4 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.12	Third Amendment to Code Share and Revenue Sharing Agreement dated as of December 2, 2002, by and between Mesa Airlines, Inc., Freedom Airlines, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.5 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.13	Fourth Amendment to Code Share and Revenue Sharing Agreement dated as of September 5, 2003, by and between Mesa Airlines, Inc., Freedom Airlines, Inc., Air Midwest, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.6 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.14(1)	Fifth Amendment to Code Share and Revenue Sharing Agreement dated as of January 28, 2005, by and between Mesa Airlines, Inc.,Freedom Airlines, Inc., Air Midwest, Inc. and America West, Inc.	Filed herewith

79

Exhibit
Number			Description	Reference
	10	.15(1)	Sixth Amendment to Code Share and Revenue Sharing Agreement dated as of July 27, 2005, by and between Mesa Airlines, Inc., Freedom Airlines, Inc., Air Midwest, Inc. and America West, Inc.	Filed herewith
	10	.16	Service Agreement dated as of November 11, 1997 between Mesa Airlines, Inc. and US Airways, Inc.	Filed as Exhibit 10.86 to Form 10-K for fiscal year ended September 30, 1998 and incorporated herein by reference
	10	.17	First Amendment to Service Agreement dated as of November 24, 1999, by and between Mesa Airlines, Inc. and US Airways, Inc.	Filed as Exhibit 10.15 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.18	Second Amendment to Service Agreement dated as of October 6, 2000, by and between Mesa Airlines, Inc. and US Airways, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.16 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.19	Third Amendment to Service Agreement dated as of October 17, 2002, by and between Mesa Airlines, Inc. and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.17 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.20	Fourth Amendment to Service Agreement dated as of October 17, 2002, by and between Mesa Airlines, Inc. and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.18 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.21	Fifth Amendment to Service Agreement dated as of October 17, 2002, by and between Mesa Airlines, Inc., and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.19 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.22	Sixth Amendment to Service Agreement dated as of August 14, 2003, by and between Mesa Airlines, Inc., and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.13 to the Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.23	Seventh Amendment to Service Agreement dated as of November 24, 2003, by and between Mesa Airlines, Inc., and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.3 to the Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference
	10	.24	Service Agreement between US Airways, Inc. and Air Midwest, Inc. dated as of May 14, 2003 (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.14 to the Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.25(1)	Amended and Restated United Express Agreement dated as of January 28, 2004, between United Airlines, Inc. and Mesa Air Group, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.17 to the Form 10-K for the year ended September 30, 2004 and incorporated herein by reference

80

Exhibit
Number			Description	Reference
	10	.26	Amendment to United Express Agreement, dated as of June 3, 2005, between Mesa Air Group, Inc. and United Airlines, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.1 to the Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference
	10	.27	Delta Connection Agreement, dated May 3, 2005, between Mesa Air Group, Inc. and Delta Air Lines, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.2 to the Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference
	10	.28	Reimbursement Agreement dated May 3, 2005, between Mesa Air Group, Inc. and Delta Air Lines, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.3 to the Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference.
	10	.29	Master Purchase Agreement between Bombardier, Inc. and the Registrant Dated May 18, 2001 (Certain portions deleted Pursuant to confidential treatment)	Filed as exhibit 10.1 to the Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by reference
	10	.30	Agreement between the Registrant and Barlow Capital, LLC, as amended	Filed as Exhibit 10.23 to Registrant’s Form 10-K for fiscal year ended September 30, 2001 and incorporated herein by reference
	10	.31	Employment Agreement dated as of March 31, 2004, between the Registrant and Jonathan G. Ornstein	Filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference
	10	.32	Employee Agreement, dated as of March 31, 2004, between the Registrant and Michael J. Lotz	Filed as Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference
	10	.33	Employment Agreement, dated as of December 6, 2001 between the Registrant and George Murnane III, as amended	Filed as Exhibit 10.27 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference and incorporated herein by reference
	10	.34	Employment Agreement, dated April 30, 2005, entered into by and between the Registrant and Brian Gillman	Filed herewith
	10	.35	Three Gateway Office Lease between Registrant and DMB Property Ventures Limited Partnership, dated October 16, 1998, as amended, including Amendments 1 through 4	Filed as Exhibit 10.29 to Registrant’s Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.36(1)	Amendments Number 5 through 8 to Three Gateway Office Lease between Registrant and DMB Property Ventures Limited Partnership, dated October 16, 1998	Filed herewith
	18	.1	Letter regarding change in accounting principle	Filed as exhibit 18.1 to Registrant’s Form 10-K for fiscal year ended September 30, 2000 and incorporated herein by reference
	21	.1	Subsidiaries of the Registrant	Filed herewith
	23	.1	Consent of Independent Registered Public Accounting Firm	Filed herewith
	31	.1	Certification Pursuant to Rule 13a-14(a)/ 15d-14(a) of the Securities Exchange Act of 1934, as amended	Filed herewith

81

Exhibit
Number			Description	Reference
	31	.2	Certification Pursuant to Rule 13a-14(a)/ 15d-14(a) of the Securities Exchange Act of 1934, as amended	Filed herewith
	32	.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
	32	.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

(1)  The Company has sought confidential treatment of portions of the referenced exhibits.

82

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.

MESA AIR GROUP, INC.

By:  /s/ JONATHAN G. ORNSTEIN

Jonathan G. Ornstein

Chairman and Chief Executive Officer

(Principal Executive Officer)

By:  /s/ GEORGE MURNANE III

George Murnane III

Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: December 14, 2005

POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints JONATHAN G. ORNSTEIN, BRIAN S. GILLMAN and GEORGE MURNANE III, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him in his name, place and stead, in any and all capacities, to sign any and all amendments to this Form 10-K Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith with the Securities and Exchange Commission, granting onto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises as fully and to all intent and purposes as he might or could do in person hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

      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.

/s/ JONATHAN G. ORNSTEIN Jonathan G. Ornstein	Chairman of the Board, Chief Executive Officer and Director	December 14, 2005
/s/ DANIEL J. ALTOBELLO Daniel J. Altobello	Director	December 14, 2005
/s/ RONALD R. FOGLEMAN Ronald R. Fogleman	Director	December 14, 2005
/s/ MAURICE A. PARKER Maurice A. Parker	Director	December 14, 2005
/s/ JOSEPH L. MANSON Joseph L. Manson	Director	December 14, 2005
/s/ ROBERT BELESON Robert Beleson	Director	December 14, 2005
/s/ PETER F. NOSTRAND Peter F. Nostrand	Director	December 14, 2005

83

EXHIBIT INDEX

Exhibit
Number			Description	Reference
	3	.1	Articles of Incorporation of Registrant dated May 28, 1996	Filed as Exhibit 3.1 to Registrant’s Form 10-K for the fiscal year ended September 30, 1996, incorporated herein by Reference
	3	.2	Bylaws of Registrant as amended	Filed as Exhibit 3.2 to Registrant’s Form 10-K for the fiscal year ended September 30, 1996, incorporated herein by Reference
	4	.1	Form of Common Stock certificate	Filed as Exhibit 4.5 to Amendment No. 1 to Registrant’s Form S-18, Registration No. 33-11765 filed March 6, 1987, incorporated herein by reference
	4	.2	Form of Common Stock certificate (issued after November 12, 1990)	Filed as Exhibit 4.8 to Form S-1, Registration No. 33-35556 effective December 6, 1990, incorporated herein by reference
	4	.3	Indenture dated as of June 16, 2003 between the Registrant, the guarantors signatory thereto and U.S. Bank National Association, as Trustee, relating to Senior Convertibles Notes due 2023	Filed as Exhibit 4.1 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.4	Registration Rights Agreement dated as of June 16, 2003 between the Registrant, the subsidiaries of the Registrant listed on the signature pages thereto, and Merrill Lynch & Co., as representative of the Initial Purchasers of Senior Convertibles Notes due 2023	Filed as Exhibit 4.2 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.5	Form of Guarantee (Exhibit A-2 to Indenture filed as Exhibit 4.3 above)	Filed as Exhibit 4.3 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.6	Form of Senior Convertible Note due 2023 (Exhibit A-1 to Indenture filed as Exhibit 4.3 above)	Filed as Exhibit 4.3 to Form 10-Q for the quarterly period ended June 30, 2003, incorporated herein by reference
	4	.7	Indenture, dated as of February 10, 2004 between Mesa Air Group, Inc., the guarantors named therein and U.S. Bank National Association, as Trustee, relating to Senior Convertible Notes due 2024	Filed as Exhibit 4.1 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	4	.8	Registration Rights Agreement dated as of February 10, 2004 between Mesa Air Group, Inc., the subsidiaries of Mesa Air Group, Inc. listed on the signature pages thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Initial Purchaser of the Senior Convertible Notes due 2024	Filed as Exhibit 4.2 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	4	.9	Form of Guarantee (included in Exhibit 4.7).	Filed as Exhibit 4.1 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	4	.10	Form of Senior Convertible Notes due 2024 (included in Exhibit 4.7).	Filed as Exhibit 4.1 to Form S-3 filed on May 7, 2004, incorporated herein by reference
	10	.1	1998 Key Officer Stock Option Plan	Filed as Appendix A to Registrant’s Definitive Proxy Statement, dated June 17, 1998 and incorporated herein by reference

84

Exhibit
Number			Description	Reference
	10	.2	2001 Key Officer Stock Option Plan, as amended	Filed as Exhibit 5.2 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.3	Outside Directors’ Stock Option Plan, as amended	Filed as Exhibit 5.3 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.4	1996 Employee Stock Option Plan, as amended	Filed as Exhibit 5.4 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.5	2005 Employee Stock Incentive Plan	Filed herewith
	10	.6	Deferred Compensation Plan, adopted July 13, 2001	Filed herewith
	10	.7	2005 Deferred Compensation Plan, adopted February 7, 2005	Filed herewith
	10	.8	Form of Directors’ and Officers’ Indemnification Agreement	Filed as Exhibit 10.1 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.9	Code Share and Revenue Sharing Agreement, dated as of March 20, 2001, by and between Mesa Airlines, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.1 to Form 10-Q for the period ended March 31, 2001 and incorporated herein by reference
	10	.10	First Amendment to Code Share and Revenue Sharing Agreement dated as of April 27, 2001, by and between Mesa Airlines, Inc. and America West, Inc.	Filed as Exhibit 10.10 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.11	Second Amendment to Code Share and Revenue Sharing Agreement dated as of October 24, 2002, by and between Mesa Airlines, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.4 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.12	Third Amendment to Code Share and Revenue Sharing Agreement dated as of December 2, 2002, by and between Mesa Airlines, Inc., Freedom Airlines, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.5 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.13	Fourth Amendment to Code Share and Revenue Sharing Agreement dated as of September 5, 2003, by and between Mesa Airlines, Inc., Freedom Airlines, Inc., Air Midwest, Inc. and America West, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.6 to Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.14(1)	Fifth Amendment to Code Share and Revenue Sharing Agreement dated as of January 28, 2005, by and between Mesa Airlines, Inc., Freedom Airlines, Inc., Air Midwest, Inc. and America West, Inc.	Filed herewith

85

Exhibit
Number			Description	Reference
	10	.15(1)	Sixth Amendment to Code Share and Revenue Sharing Agreement dated as of July 27, 2005, by and between Mesa Airlines, Inc., Freedom Airlines, Inc., Air Midwest, Inc. and America West, Inc.	Filed herewith
	10	.16	Service Agreement dated as of November 11, 1997, between Mesa Airlines, Inc. and US Airways, Inc.	Filed as Exhibit 10.86 to Form 10-K for fiscal year ended September 30, 1998 and incorporated herein by reference
	10	.17	First Amendment to Service Agreement dated as of November 24, 1999, by and between Mesa Airlines, Inc. and US Airways, Inc.	Filed as Exhibit 10.15 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.18	Second Amendment to Service Agreement dated as of October 6, 2000, by and between Mesa Airlines, Inc. and US Airways, Inc. (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.16 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.19	Third Amendment to Service Agreement dated as of October 17, 2002, by and between Mesa Airlines, Inc. and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.17 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.20	Fourth Amendment to Service Agreement dated as of October 17, 2002, by and between Mesa Airlines, Inc. and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.18 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.21	Fifth Amendment to Service Agreement dated as of October 17, 2002, by and between Mesa Airlines, Inc., and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.19 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.22	Sixth Amendment to Service Agreement dated as of August 14, 2003, by and between Mesa Airlines, Inc., and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.13 to the Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.23	Seventh Amendment to Service Agreement dated as of November 24, 2003, by and between Mesa Airlines, Inc., and US Airways (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.3 to the Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference
	10	.24	Service Agreement between US Airways, Inc. and Air Midwest, Inc. dated as of May 14, 2003 (Certain portions deleted pursuant to confidential treatment.)	Filed as Exhibit 10.14 to the Form 10-K for fiscal year ended September 30, 2003 and incorporated herein by reference
	10	.25(1)	Amended and Restated United Express Agreement dated as of January 28, 2004 between United Airlines, Inc. and Mesa Air Group, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.17 to the Form 10-K for the year ended September 30, 2004 and incorporated herein by reference

86

Exhibit
Number			Description	Reference
	10	.26	Amendment to United Express Agreement, dated as of June 3, 2005, between Mesa Air Group, Inc. and United Airlines, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.1 to the Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference
	10	.27	Delta Connection Agreement , dated May 3, 2005, between Mesa Air Group, Inc. and Delta Air Lines, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.2 to the Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference
	10	.28	Reimbursement Agreement, dated May 3, 2005, between Mesa Air Group, Inc. and Delta Air Lines, Inc. (Certain portions deleted pursuant to confidential treatment.)	Previously filed as Exhibit 10.3 to the Form 10-Q for the quarter ended June 30, 2005 and incorporated herein by reference
	10	.29	Master Purchase Agreement between Bombardier, Inc. and the Registrant dated May 18, 2001 (Certain portions deleted Pursuant to confidential treatment)	Filed as exhibit 10.1 to the Form 10-Q for the quarter ended June 30, 2001 and incorporated herein by reference
	10	.30	Agreement between the Registrant and Barlow Capital, LLC, as amended	Filed as Exhibit 10.23 to Registrant’s Form 10-K for fiscal year ended September 30, 2001 and incorporated herein by reference
	10	.31	Employment Agreement dated as of March 31, 2004, between the Registrant and Jonathan G. Ornstein	Filed as Exhibit 10.1 to the Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference
	10	.32	Employee Agreement, dated as of March 31, 2004, between the Registrant and Michael J. Lotz	Filed as Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference
	10	.33	Employment Agreement, dated as of December 6, 2001 between the Registrant and George Murnane III, as amended	Filed as Exhibit 10.27 to Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.34	Employment Agreement, dated April 30, 2005, entered into by and between the Registrant and Brian Gillman	Filed herewith
	10	.35	Three Gateway Office Lease between Registrant and DMB Property Ventures Limited Partnership, dated October 16, 1998, as amended, including Amendments 1 through 4	Filed as Exhibit 10.29 to Registrant’s Form 10-K for fiscal year ended September 30, 2002 and incorporated herein by reference
	10	.36(1)	Amendments Number 5 through 8 to Three Gateway Office Lease between Registrant and DMB Property Ventures Limited Partnership, dated October 16, 1998	Filed herewith
	18	.1	Letter regarding change in accounting principle	Filed as exhibit 18.1 to Registrant’s Form 10-K for fiscal year ended September 30, 2000 and incorporated herein by reference
	21	.1	Subsidiaries of the Registrant	Filed herewith
	23	.1	Consent of Independent Registered Public Accounting Firm	Filed herewith
	31	.1	Certification Pursuant to Rule 13a-14(a)/ 15d-14(a) of the Securities Exchange Act of 1934, as amended	Filed herewith

87

Exhibit
Number			Description	Reference
	31	.2	Certification Pursuant to Rule 13a-14(a)/ 15d-14(a) of the Securities Exchange Act of 1934, as amended	Filed herewith
	32	.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
	32	.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

(1)  The Company has sought confidential treatment of portions of the referenced exhibits.

88 EX-10.5 2 p71603exv10w5.txt EXHIBIT 10.5 Exhibit 10.5 2005 EMPLOYEE STOCK INCENTIVE PLAN OF MESA AIR GROUP, INC. SECTION 1. PURPOSE OF PLAN The purpose of this 2005 Employee Stock Incentive Plan (this "Plan") of Mesa Air Group, Inc., a Nevada corporation (the "Company"), is to enable the Company and any subsidiary corporation (as the term is defined in Code Section 424(f), hereinafter each a "Subsidiary" or the plural "Subsidiaries") to attract, retain and motivate their officers and other key employees, and to further align the interests of such persons with those of the stockholders of the Company by providing for or increasing the proprietary interest of such persons in the Company. SECTION 2. ADMINISTRATION OF PLAN 2.1 Composition of Committee. This Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"), as appointed from time to time by the Board of Directors. The Board of Directors shall fill vacancies on, and from time to time may remove or add members to, the Committee. The Committee shall act pursuant to a majority vote or unanimous written consent. The Board of Directors, in its sole discretion, may exercise any authority of the Committee under this Plan in lieu of the Committee's exercise thereof. Notwithstanding the foregoing, with respect to any Award that is not intended to satisfy the conditions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the "Code"), the Committee may appoint one or more separate committees (any such committee, a "Subcommittee") composed of one or more directors of the Company (who may but need not be members of the Committee) and may delegate to any such Subcommittee(s) the authority to grant Awards, as defined in Section 5.1 hereof, under the Plan to Eligible Persons, to determine all terms of such Awards, and/or to administer the Plan or any aspect of it. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee. The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute agreements or other documents evidencing Awards made under this Plan or other documents entered into under this Plan on behalf of the Committee or the Company. 2.2 Powers of the Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things necessary or desirable, in its sole discretion, in connection with the administration of this Plan, including, without limitation, the following: (a) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; provided that, unless the Committee shall specify otherwise, for purposes of this Plan (i) the term "fair market value" shall mean, as of any date, the closing price for a Share (as defined in Section 3.1) reported for the last trading day prior to such date by the Nasdaq Stock Market (or such other stock exchange or quotation system on which Shares are then listed or quoted) or, if no Shares are traded on the Nasdaq Stock Market (or such other stock exchange or quotation system) on the date in question, then for the next preceding date for which Shares traded on the Nasdaq Stock Market (or such other stock exchange or quotation system); and (ii) the term "Company" shall mean the Company and its Subsidiaries, unless the context otherwise requires; (b) to determine which persons are Eligible Persons (as defined in Section 4), to which of such Eligible Persons, if any, Awards shall be granted hereunder and the timing of any such Awards, and to grant Awards; (c) to grant Awards to Eligible Persons and determine the terms and conditions thereof, including the number of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events (including events which the Board or the Committee determine constitute a change of control), whether such Award complies with Code Section 409A and Notice 2005-1 or other factors; (d) to establish, verify the extent of satisfaction of, adjust, reduce or waive any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; (e) to prescribe and amend the terms of the agreements or other documents evidencing Awards made under this Plan (which need not be identical); (f) to determine whether, and the extent to which, adjustments are required pursuant to Section 10; (g) to interpret and construe this Plan, any rules and regulations under this Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and (h) to make all other determinations deemed necessary or advisable for the administration of this Plan. 2.3 Determinations of the Committee. All decisions, determinations and interpretations by the Committee regarding this Plan shall be final and binding on all Eligible Persons and Participants. The Committee shall consider such factors as it deems relevant to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any director, officer or employee of the Company and such attorneys, consultants and accountants as it may select. SECTION 3. STOCK SUBJECT TO PLAN 3.1 Aggregate Limits. The aggregate number of shares of the Company's Common Stock, no par value ("Shares"), issued pursuant to all Awards granted under this Plan shall not exceed 1,500,000; plus, the number of shares equal to the number of shares subject to awards granted under the Company's 1996 Stock Option Plan but ultimately which are not issued under such plan as a result of the cancellation, expiration or forfeiture of such awards (such Shares being known as the "1996 Plan Shares"). The aggregate number of Shares available for issuance under this Plan and the number of Shares subject to outstanding Options or other Awards shall be subject to adjustment as provided in Section 10. The Shares issued pursuant to this Plan may be Shares that either were reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares. 3.2 Additional Limits. The aggregate number of Shares subject to Options granted under this Plan during any calendar year to any one Eligible Person shall not exceed 150,000 (taking into account the number of shares associated with an Option granted and then cancelled during such calendar year). The aggregate number of Shares issued or issuable under all Awards granted under this Plan, other than Options, during any calendar year to any one Eligible Person shall not exceed 50,000 (taking into account the number of shares associated with the Awards other than Options granted and then cancelled during such calendar year). The foregoing limitations of this Section 3.2 shall not apply to the extent that they are no longer required in order for compensation in connection with grants of Awards under this Plan to be treated as "performance-based compensation" under Code Section 162(m) and, if no longer required, a change in such limitation shall not be subject to stockholder approval as required under Section 13 hereof. The aggregate number of Shares that may be issued pursuant to the exercise of ISOs granted under this Plan shall not exceed 1,500,000 (provided that such Shares shall not include the 1996 Plan Shares), which number shall be calculated and adjusted pursuant to Section 3.3 and Section 10 only to the extent that such calculation or adjustment will not affect the status of any Option intended to qualify as an ISO under Code Section 422, or whether this Plan meets the requirements under Code Section 422(b)(1). For the avoidance of all doubt, the 1996 Plan Shares may not be issued pursuant to the exercise of ISOs granted under the Plan. 3.3 Issuance of Shares. For purposes of Section 3.1, the aggregate number of Shares issued under this Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award and shall not include Shares subject to Awards that have been canceled, expired or forfeited or Shares subject to Awards that have been delivered (either actually or constructively by attestation) to or retained by the Company in payment or satisfaction of the purchase price or exercise price of an Award. SECTION 4. PERSONS ELIGIBLE UNDER PLAN Any person who is an employee or prospective employee of the Company or any of its Subsidiaries shall be 2 eligible to be considered for the grant of Awards hereunder; provided that the Award to such prospective employee is conditioned on the prospective employee's commencement of employment (an "Eligible Person"). The status of the chairman of the Board of Directors as an "employee" shall be determined by the Committee. SECTION 5. PLAN AWARDS 5.1 Award Types. The Committee, on behalf of the Company, is authorized under this Plan to enter into certain types of arrangements with Eligible Persons and to confer certain benefits on them. The following arrangements or benefits are authorized under this Plan if their terms and conditions are not inconsistent with the provisions of this Plan: Options, Performance Shares and Restricted Stock. Such arrangements and benefits are sometimes referred to herein as "Awards." The authorized types of arrangements and benefits for which Awards may be granted are defined as follows: (a) Options: An Option is a right granted under Section 6 to purchase a number of Shares at such exercise price, at such times, and on such other terms and conditions as are specified in the agreement or terms and conditions or other document evidencing the Award (the "Option Document"). Options intended to qualify as Incentive Stock Options ("ISOs") pursuant to Code Section 422 and Options not intended to qualify as ISOs ("Nonqualified Options") may be granted under Section 6. (b) Performance Shares. Performance Shares is an award made under Section 8, to receive a number of Shares, the payment of which is contingent upon achieving certain Committee established performance standards derived from the Qualifying Performance Criteria described in Section 9.2 hereof. Once the conditions for the Performance Shares are met, the Performance Shares shall be payable either in cash or Shares (or both) by reference to the fair market value of the Shares enumerated in the Performance Shares at such time as determined by the Committee in the Award. (c) Restricted Stock: A Restricted Stock is an award or issuance of Shares under Section 7, subject to certain restrictions and the risk of forfeiture and terms as are expressed in the agreement or other document evidencing the Award. 5.2 Grants of Awards. An Award may consist of one such arrangement or benefit or two or more of them in tandem, and the terms as established by the Committee for all Awards granted hereunder may include performance standards derived from the Qualifying Performance Criteria, and the receipt of any Award may be contingent on performance standards derived from the Qualifying Performance Criteria. SECTION 6. OPTIONS The Committee may grant an Option or provide for the grant of an Option, either from time to time in the discretion of the Committee or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition within the control of the recipient of the Award or within the control of others. 6.1 Option Document. Each Option Document shall contain provisions regarding (a) the number of Shares that may be issued upon exercise of the Option, (b) the purchase price of the Shares and the means of payment for the Shares, (c) the term of the Option, (d) such terms and conditions on the vesting and/or exercisability of an Option as may be determined from time to time by the Committee, (e) restrictions on the transfer of the Option and forfeiture provisions and (f) such further terms and conditions, in each case not inconsistent with this Plan as may be determined from time to time by the Committee. Option Documents evidencing ISOs shall contain such terms and conditions as may be necessary to qualify, to the extent determined desirable by the Committee, with the applicable provisions of Section 422 of the Code. 6.2 Option Price. The purchase price per share of the Shares subject to each Option granted under this Plan shall equal or exceed 100% of the fair market value of a Share on the date the Option is granted. 6.3 Option Term. The "Term" of each Option granted under this Plan, including any ISOs, shall be 10 years from the date of its grant, unless the Committee provides for a lesser term. 3 6.4 Option Vesting. Options granted under this Plan shall be exercisable at such time and in such installments during the period prior to the expiration of the Option's Term as determined by the Committee. The Committee shall have the right to make the timing of the ability to exercise any Option granted under this Plan subject to continued employment, the passage of time and/or such performance requirements as deemed appropriate by the Committee. 6.5 Termination of Employment other than as a Result of Death or Disability. An ISO of any Participant who shall cease to be an Employee other than as a result of his death or disability shall be exercisable only to the extent exercisable on the date of termination of employment (i.e., to the extent vested) and must be exercised on or before the option expiration date specified in the Option Agreement but is no event later than the date that is three (3) months following the date of termination of employment. To the extent any ISO is not exercisable on the date of termination of employment (i.e., to the extent not vested) such ISO shall terminate on the date of termination of employment. To the extent any ISO is not exercised within the time period provided, such ISO shall terminate as of the date of expiration of such time period. Nothing in the Plan shall be construed as imposing any obligation on the Company to continue the employment of any Participant or shall interfere or restrict in any way the rights of the Company to discharge any Employee at any time for any reason whatsoever, with or without cause. 6.6 Payment of Exercise Price. The exercise price of an Option shall be paid in the form of one of more of the following, as the Committee shall specify, either through the terms of the Option Document or at the time of exercise of an Option: (a) cash or certified or cashiers' check, (b) shares of capital stock of the Company that have been held by the Participant for such period of time as the Committee may specify, (c) other property deemed acceptable by the Committee, (d) a reduction in the number of Shares or other property otherwise issuable pursuant to such Option, (e) payment under an arrangement with a broker selected or approved by the Company where payment is made pursuant to an irrevocable commitment by the broker to deliver to the Company proceeds from the sale of the Shares issuable upon exercise of the Option, or (f) any combination of (a) through (d). 6.7 No Option Repricing. Without the approval of stockholders, the Company shall not reprice any Options. For purposes of this Plan, the term "reprice" shall mean lowering the exercise price of previously awarded Options within the meaning of Item 402(i) under Securities and Exchange Commission Regulation S-K (including canceling previously awarded Options and regranting them with a lower exercise price). SECTION 7. RESTRICTED STOCK AWARDS The Committee is authorized to make Awards of Restricted Stock to Participants in such amounts and subject to such terms and conditions as may be determined by the Committee. All Awards of Restricted Stock shall be evidenced by a Restricted Stock Award Agreement. 7.1 Issuance and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination of such times, under such circumstances, in such installments, upon the satisfaction of continued employment, standards derived from the Qualifying Performance Criteria, lapse of time, certain acceleration events like death or disability or otherwise, as the Committee determines at the time of the grant of the Award or thereafter. 7.2 Forfeiture. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment during the applicable restriction period or upon failure to satisfy a standard derived from the Qualifying Performance Criteria during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and re-acquired by the Company; provided, however, that the Committee may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock. 7.3 Certificates for Restricted Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing shares of Restricted Stock are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions 4 applicable to such Restricted Stock. SECTION 8. PERFORMANCE SHARES The Committee is authorized to grant Performance Shares to Participants on such terms and conditions as may be determined by the Committee. The Committee shall have the complete discretion to determine the number of Performance Shares granted to each Participant. All Awards of Performance Shares shall be evidenced by an Award Agreement. 8.1 Right to Payment. A grant of Performance Shares gives the Participant the right to a number of Shares, contingent upon certain performance standards established by the Committee and derived from the Qualifying Performance Criteria, and certain other terms and conditions as may be established by the Committee. Once the conditions and terms for the performance Shares have been met, the Performance Shares shall be payable by the Company either in cash or Shares (or both) by reference to the fair market value of the Shares enumerated in the Performance Shares and the timing of such payment of cash or Shares shall be set forth in the Award for the Performance Shares by the Committee. 8.2 Other Terms. The time period for the measurement of any performance standard or criteria shall be any time period established by the Committee, but under no circumstance shall a Performance Shares be granted after the expiration of the Plan, and the applicable performance associated with such Performance Share must begin before the expiration of this Plan. The cash or Shares paid with respect to Performance Shares may be paid in a lump sum or in installments following the close of the performance period or, in accordance with procedures established by the Committee, on a deferred basis. SECTION 9. OTHER PROVISIONS APPLICABLE TO AWARDS 9.1 Transferability. Unless the agreement or other document evidencing an Award (or an amendment thereto authorized by the Committee) expressly states that the Award is transferable as provided hereunder, no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner prior to the vesting or lapse of any and all restrictions applicable thereto. 9.2 Qualifying Performance Criteria. For purposes of this Plan, the term "Qualifying Performance Criteria" shall mean any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole, to a business unit or subsidiary, or based on comparisons of any of the performance measures relative to other companies, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified by the Committee in the Award: (a) cash flow, (b) earnings per share or increases of same, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital or investment, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) pre-tax or after-tax profit levels expressed in either absolute dollars, (p) revenues or revenue growth, (q) economic or cash value added, (r) results of customer satisfaction surveys, (s) other measures of performance, quality, safety, productivity or process improvement, (t) market share, (u) overhead or other expense reduction, (v) departure or on-time arrival performance, and (w) baggage handling. These factors may have a minimum performance standard, a target performance standard and a maximum performance standard. The Committee shall appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report to stockholders for the applicable year. 9.3 Dividends. Unless otherwise provided by the Committee, no adjustment shall be made in Shares issuable 5 under Awards on account of cash dividends that may be paid or other rights that may be issued to the holders of Shares prior to their issuance under any Award. The Committee shall specify whether dividends or dividend equivalent amounts shall be paid to any Participant with respect to the Shares subject to any Award that have not vested or been issued or that are subject to any restrictions or conditions on the record date for dividends. 9.4 Documents Evidencing Awards. Except for ISOs prior to the effective date of the Plan as set forth in Section 17, the Committee shall, subject to applicable law, determine the date an Award is deemed to be granted, which for purposes of this Plan shall not be affected by the fact that an Award is contingent on subsequent stockholder approval of this Plan. The Committee or, except to the extent prohibited under applicable law, its delegate(s) may establish the terms of agreements or other documents evidencing Awards under this Plan and may, but need not, require as a condition to any such agreement's or document's effectiveness that such agreement or document be executed by the Participant and that such Participant agree to such further terms and conditions as specified in such agreement or document. The grant of an Award under this Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in this Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the agreement or other document evidencing such Award. 9.5 Tandem Stock or Cash Rights. At the time an Award is granted or by subsequent action, the Committee may, but need not, provide that an Award shall contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by reference to the value of the Award. 9.6 Financing. The Committee may in its discretion provide financing to a Participant in a principal amount sufficient to pay the purchase price of any Award and/or to pay the amount of taxes required by law to be withheld with respect to any Award. Any such loan shall be subject to all applicable legal requirements and restrictions pertinent thereto, including Regulation U promulgated by the Federal Reserve Board. The grant of an Award shall in no way obligate the Company or the Committee to provide any financing whatsoever in connection therewith. 9.7 Compliance with Code Section 409A. Notwithstanding any language to the contrary in this Plan, the Committee will ensure that the terms and conditions of any Awards issued will comply with the applicable provision of Code Section 409A or the regulations or other pronouncements thereunder. 9.8 Additional Restrictions on Awards. Either at the time an Award is granted or by subsequent action, the Committee may, but need not, impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by a Participant of any Shares issued under an Award, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participants, and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers. SECTION 10. CHANGES IN CAPITAL STRUCTURE 10.1 Corporate Actions Unimpaired. The existence of outstanding Awards (including any Options) shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges, or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issuance of Shares or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Shares or other securities of the Company or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. Further, except as expressly provided herein or by the Committee, (a) the issuance by the Company of shares of stock of any class of securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, (b) the payment of a dividend in property other than Shares, or (c) the occurrence of any similar transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to Options or other Awards theretofore granted or the purchase price per Share, unless the Committee 6 shall determine in its sole discretion that an adjustment is necessary to provide equitable treatment to a Participant. 10.2 Adjustments Upon Certain Events. If the outstanding Shares or other securities of the Company, or both, for which the Award is then exercisable or as to which the Award is to be settled shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, recapitalization, or reorganization, the Committee may appropriately and equitably adjust the number and kind of Shares or other securities which are subject to the Plan or subject to any Awards theretofore granted, and the exercise or settlement prices of such Awards, so as to maintain the proportionate number of Shares or other securities without changing the aggregate exercise or settlement price, provided, however, that such adjustment shall be made so as to not affect the status of any Award intended to qualify as an ISO or as "performance based compensation" under Section 162(m) of the Code. SECTION 11. MERGERS AND LIQUIDATION Except as limited by the provisions of Code Section 422 of the Code and the terms of any individual Award, if the company is the surviving corporation in any merger or consolidation, all Awards shall remain in force, and any: (1) Option granted under the Plan shall remain outstanding pursuant to the terms of the Plan and the Award; and (2) Restricted Stock granted under the Plan shall continue to be outstanding pursuant to the terms of the Award and this Plan. Except to the extent otherwise provided in an Award document, by the Board, or as limited by Code Section 422, dissolution or liquidation of the Company shall cause every unvested Option, Restricted Stock or other Award for which there remains contingencies, conditions and unmet performance standards to terminate. Except as limited by Code Section 422, a merger or consolidation in which the Company is not the surviving corporation shall also cause every unvested Option, Restricted Stock or other Award for which there remains contingencies, conditions and unmet performance standards to terminate unless specifically provided otherwise in an Award document or by the Board. SECTION 12. TAXES 12.1 Withholding Requirements. The Committee may make such provisions or impose such conditions as it may deem appropriate for the withholding or payment by a Participant of any taxes that the Committee determines are required in connection with any Award granted under this Plan, and a Participant's rights in any Award are subject to satisfaction of such conditions. 12.2 Payment of Withholding Taxes. Notwithstanding the terms of Section 12.1, the Committee may provide in the agreement or other document evidencing an Award or otherwise that all or any portion of the taxes required to be withheld by the Company or, if permitted by the Committee, desired to be paid by the Participant, in connection with the exercise, vesting, settlement or transfer of any other Award shall be paid or, at the election of the Participant, may be paid by the Company by withholding shares of the Company's capital stock otherwise issuable or subject to such Award, or by the Participant delivering previously owned shares of the Company's capital stock, in each case having a fair market value equal to the amount required or elected to be withheld or paid, or by a broker selected or approved by the Company paying such amount pursuant to an irrevocable commitment by the broker to deliver to the Company proceeds from the sale of the Shares issuable under the Award. Any such election is subject to such conditions or procedures as may be established by the Committee and may be subject to approval by the Committee. SECTION 13. AMENDMENTS OR TERMINATION The Board may amend, alter or discontinue this Plan or any agreement or other document evidencing an Award made under this Plan but, except as provided pursuant to the anti-dilution adjustment provisions of Section 10.2, no such amendment shall, without the approval of the stockholders of the Company: (a) change the maximum number of shares of Common Stock for which Awards may be granted under this Plan; (b) reduce the price at which Options may be granted below the price provided for in Section 6.2; 7 (c) reduce the exercise price of outstanding Options; (d) extend the term of this Plan; (e) change the class of persons eligible to be Eligible Persons or Participants; or (f) increase the number of shares that are eligible for non-Option Awards. The Board may amend, alter or discontinue the Plan or any agreement evidencing an Award made under the Plan, but no amendment or alteration shall be made which would impair the rights of any Award holder, without such holder's consent, under any Award theretofore granted; provided that no such consent shall be required if the Committee determines in its sole discretion and prior to the date of any change in control, recapitalization, stock dividend, stock split, reorganization, merger, consolidation or similar type transaction that such amendment or alteration either is required or advisable in order for the Company, the Plan, or any Award granted, to satisfy any law or regulation or to meet the requirements of any accounting standard. SECTION 14. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. This Plan, the grant and exercise of Awards thereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to all applicable federal, state and foreign laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant's name or deliver any Shares prior to the completion of any registration or qualification of such Shares under any federal, state or foreign law or any ruling or regulation of any government body which the Committee shall determine to be necessary or advisable. This Plan is intended to constitute an unfunded arrangement for the Eligible Persons. No Option shall be exercisable unless a registration statement with respect to the Option is effective or the Company has determined that such registration is unnecessary. Unless the Awards and Shares covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person receiving an Award and/or Shares pursuant to any Award may be required by the Company to give a representation in writing that such person is acquiring such Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. SECTION 15. NO RIGHT TO COMPANY EMPLOYMENT Nothing in this Plan or as a result of any Award granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual's employment at any time. The agreements or other documents evidencing Awards may contain such provisions as the Committee may approve with reference to the effect of approved leaves of absence. SECTION 16. LIABILITY OF COMPANY The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant, an Eligible Person or other persons as to: (a) The Non-Issuance of Shares. The non-issuance or sale of shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) Tax Consequences. Any tax consequence expected, but not realized, by any Participant, Eligible Person or other person due to the receipt, exercise or settlement of any Option or other Award granted hereunder. SECTION 17. EFFECTIVENESS AND EXPIRATION OF PLAN This Plan shall be effective on the date the Company's stockholders adopt this Plan, and no ISOs shall be granted prior to the Company's stockholders adoption of this Plan. All Awards granted under this Plan are subject 8 to, and may not be exercised before the approval of this Plan by the stockholders. Stockholder approval of the Plan shall be by the affirmative vote of the holders of a majority of the outstanding shares of the Company present, or represented by proxy, and entitled to vote, at a meeting of the Company's stockholders or by written consent in accordance with the laws of the State of Delaware; provided that if such approval by the stockholders of the Company is not forthcoming, all Awards previously granted under this Plan shall be void. No Awards shall be granted pursuant to this Plan more than 10 years after the effective date of this Plan. SECTION 18. INCENTIVE STOCK OPTIONS Notwithstanding anything in the Plan to the contrary, it is the intention of the Company and the Committee that all terms and provisions relating to Incentive Stock Options of this Plan shall be consistent with the requirements of Code Section 422 and the applicable regulations thereunder, as of the effective date of this plan, and to the extent any term or provision of this Plan relating to Incentive Stock Options is inconsistent with Code Section 422 and the applicable regulations thereunder at that date, the term or provision shall be read, interpreted or substituted so as to be consistent with the applicable provision of Code Section 422 or the regulations thereunder. SECTION 19. NON-EXCLUSIVITY OF PLAN Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases. SECTION 20. GOVERNING LAW This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the State of Nevada and applicable federal law. The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration. Any reference in this Plan or in the agreement or other document evidencing any Award to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability. SECTION 21. MISCELLANEOUS MATTERS 21.1 Annulment of Awards. The grant of any Award under the Plan payable in cash is provisional until cash is paid in settlement thereof. The grant of any Award payable in Shares is provisional until the Participant becomes entitled to the certificates in settlement thereof. In the event the employment of a Participant is terminated for cause (as defined below), any Award which is provisional shall be annulled as of the date of such termination for cause. For the purpose of this Section 21.1, the term "terminated for cause" means any discharge for violation of the policies and procedures of the Company or any Subsidiary or for other job performance or conduct which is detrimental to the best interests of the Company or a Subsidiary. 21.2 Securities Law Restrictions. No Shares shall be issued under the Plan unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable Federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares is then listed, and any applicable Federal or state securities law. The Committee may cause a legend or legends to be put on any such certificates to refer to those restrictions. Further, without limiting the foregoing, each person exercising an Option or Performance Shares or receiving Restricted Stock may be required by the Company to give a representation in writing that he or she is acquiring Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof (regardless of whether such option and Shares covered by the Plan are registered under the Securities Act of 1933, as amended). As a condition of transfer of the certificate evidencing Shares, the Committee may obtain such other agreements or undertakings, if any, that it may deem necessary or appropriate to assume compliance with any provisions of the Plan or any law or regulation. Certificates for Shares delivered under 9 the Plan may be subject to such stock transfer orders and other restrictions as the Board may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable Federal or state securities laws. The Board may cause a legend or legends to be put on any such certificate to refer to those restrictions. 21.3 Award Agreement. Each Participant receiving an Award under the Plan shall enter into an, Award Agreement with the Company in a form specified by the Committee agreeing to the terms and conditions of the Award and such related matters as the Committee, in its sole discretion, shall determine. 21.4 Costs of Plan. The costs and expenses of administering the Plan shall be borne by the Company. 21.5 Tax Reimbursement Payments to Participants. The Committee, pursuant to the terms of the agreements or other documents pursuant to which specific Awards are made under the 2005 Plan, may agree to reimburse Participants for some or all of the federal, state and local income taxes associated with the grant or exercise of an Award or the receipt of the cash or Shares from an Award (including any additional tax imposed due to Code Section 409A), or the 20% excise tax on any "excess parachute payments" under Code Sections 280G and Code Section 4999, and may agree to reimburse such Participants for some or all the additional federal, state and local income tax associated with the payments made under this Section 21.5. 21.6 Government Regulations. The Plan and the granting and exercise of Options and Performance Shares hereunder, and the obligations of the Company to sell and deliver Shares under such Options and Performance Shares, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 21.7 Interpretation. If any provision of the Plan is held invalid for any reason, such holding shall not affect the remaining provisions of the Plan, but instead the Plan shall be construed and enforced as if such provisions had never been included in the Plan. Headings contained in the Plan are for convenience only and shall in no manner be construed as part of this Plan. Any reference to the masculine, feminine or neuter gender shall be a reference to such other gender as is appropriate. DATED this 8th day of February, 2005 MESA AIR GROUP, INC. By: ------------------------------------ Its: Chairman & Chief Executive Officer ATTESTED BY: - ------------------------------------- Secretary 10 EX-10.6 3 p71603exv10w6.txt EXHIBIT 10.6 Exhibit 10.6 MESA AIR GROUP, INC. DEFERRED COMPENSATION PLAN ARTICLE I DEFINITIONS 1.1 DEFINITIONS. The following terms when capitalized herein shall have the meanings assigned below. (a) Account. The bookkeeping account established and maintained under the Plan for each Participant to reflect amounts credited under the Plan for the benefit of each Participant, and any earnings or losses thereon. (b) Board. The Board of Directors of Mesa Air Group, Inc. (c) Code. The Internal Revenue Code of 1986, as amended from time to time. (d) Committee. The Deferred Compensation Committee responsible for the administration of the Plan, as selected by the Board. (e) Company. Mesa Air Group, Inc. (f) Contribution. The amount contributed to the Plan by the Company on behalf of a Participant, as determined in the sole discretion of the Committee or, if applicable, pursuant to a specific provision contained in an employment agreement between the Participant and the Company. (g) Designated Beneficiary. The beneficiary designated by the Participant to receive the Participant's benefit under this Plan in the event of the Participant's death. (h) Eligible Employee. Any employee of the Company who is a member of the management or highly compensated group of employees of the Company under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), as determined by the Committee, in its discretion. (i) ERISA. The Employee Retirement Income Security Act of 1974, as amended. (j) Investment Fund. The separate funds in which amounts allocable to Participants and held in the Trust may be invested in accordance with Article IV. (k) Participant. Each Eligible Employee of the Company who is selected by the Committee to participate in this Plan. (l) Plan. The Mesa Air Group, Inc. Deferred Compensation Plan, as set forth herein, as amended from time to time. (m) Plan Year. The twelve-month period ending on December 31 of each year, except that the first Plan Year will be a short Plan Year commencing on the Effective Date and ending on the first December 31 following the Effective Date. (n) Trust. The Deferred Compensation Trust in which amounts deferred under this Plan, and any earnings thereon, are held, as provided in Article V and the Deferred Compensation Trust Agreement. (o) Trustee. The trustee or trustees of the Trust. (p) Valuation Date. The last day of each calendar quarter of each Plan Year, and such other dates as the Committee determines necessary or appropriate to value the Accounts of Participants. ARTICLE II PARTICIPATION AND CONTRIBUTIONS 2.1 ELIGIBILITY FOR PARTICIPATION. Each Eligible Employee shall be eligible to be selected to participate in the Plan. The Committee, in its sole discretion, shall select which Eligible Employees will participate in the Plan. Notwithstanding the foregoing, a Participant shall include any Eligible Employee whose employment contract with the Company specifically provides that such Eligible Employee will be a participant in the Plan. 2.2 TERMINATION OF PARTICIPATION. Participation in the Plan shall terminate on the earliest of the date on which a Participant ceases to be an Eligible Employee, the date on which a Participant terminates employment with the Company, or the date on which the Plan terminates. 2.3 AMOUNT OF CONTRIBUTION . The Committee, in its sole discretion, shall determine the amounts that will be contributed on behalf of each Participant, and the times at which such amounts will be contributed to the Plan. Notwithstanding the foregoing, a Participant's employment contract with the Company may specifically provide the amounts that will be contributed on behalf of such Participant. 2 ARTICLE III VESTING AND DISTRIBUTION OF BENEFITS 3.1 VESTING. A Participant always shall be 100% vested in his or her Account under the Plan. 3.2 DISTRIBUTION OF BENEFITS. (a) Voluntary Termination of Employment. Distribution of a Participant's vested Account shall commence within an administratively reasonable period of time after the last day of the Plan Year in which the Participant voluntarily terminates employment with the Company or at such later time as determined by the Participant. Distribution shall be made in one of the following forms as elected by the Participant at any time prior to termination of employment. The Participant may elect to receive a distribution in substantially equal quarterly installments over a maximum period of fifteen years of not less than [$6,000] (with any remaining balance in the Participant's Account of less than $6,000 to be paid in the final installment) or in one lump sum distribution which shall be paid within an administratively reasonable period of time after the last day of the Plan Year in which the Participant terminates employment with the Company or at such later time as determined by the Participant. Any lump sum distribution elected by the Participant shall be equal to the balance credited to the Participant's Account as of the Valuation Date immediately preceding such distribution. If no election is made by the Participant, the distribution shall be made in substantially equal quarterly installments over a fifteen-year period. To the extent the Account is paid in installment payments, amounts remaining in the Plan (and, if applicable, in the Trust) shall continue to be credited with earnings, and those earnings shall be divided by the number of remaining installment payments and distributed in substantially equal amounts along with the remaining installments. Payment of benefits under this Section shall be a complete discharge of the Company's obligation under the Plan with respect to that Participant. Any election by the Participant with respect to the form or timing of his distribution must be made while he still is employed by the Company. (b) Involuntary Termination of Employment. Regardless of the form of distribution elected by the Participant, distribution of a Participant's entire Vested Account who has been involuntarily terminated shall occur within twelve months following the date of termination of employment unless the Committee, in its sole and absolute discretion, provides otherwise in writing. (c) Death of Participant. Upon the death of a Participant while employed with the Company, the Participant's Designated Beneficiary shall be paid the vested balance credited to the Participant's Account under this Plan. Distribution to the 3 Designated Beneficiary shall commence within an administratively reasonable period of time after the last day of the Plan Year in which the Participant dies. Distribution shall be made in one of the following forms as elected by the Participant at any time prior to his or her death. The Participant may elect to receive a distribution in substantially equal quarterly installments over a maximum period of fifteen years of not less than [$6,000] (with any remaining balance of less than $6,000 to be paid in the final installment) or in one lump sum distribution which shall be paid within an administratively reasonable period of time after the last day of the Plan Year in which the Participant dies. Absent an election by the Participant, the distribution shall be made in substantially equal quarterly installments over a fifteen-year period. Any lump sum distribution elected by the Participant shall be equal to the balance credited to the Participant's Account as of the Valuation Date immediately preceding such distribution. To the extent the Account is paid in installment payments to the Designated Beneficiary, amounts remaining in the Plan (and, if applicable, in the Trust) shall continue to be credited with earnings, and those earnings shall be divided by the number of remaining installment payments and distributed in substantially equal amounts along with the remaining installments. Payment of benefits under this Section shall be a complete discharge of the Company's obligation under the Plan with respect to that Participant and the Designated Beneficiary. If a Participant dies while his or her Account is being distributed under Section 3.2(a) above, the Participant's Designated Beneficiary shall be paid the remaining installment distributions owing as of the Participant's death. 3.3 HARDSHIP DISTRIBUTIONS. Distribution may be made to a Participant in the event of a hardship. "Hardship" is defined as an immediate and heavy financial need of the Participant. The Participant or Designated Beneficiary may request such distribution from the Committee. The Committee shall determine, on a case by case basis in its sole and absolute discretion, whether a hardship has occurred which would permit a distribution to be made and its decision shall be binding on the Participant. ARTICLE IV FUNDING, INVESTMENT, AND VALUATION OF ACCOUNTS 4.1 PLAN ACCOUNTS ARE UNFUNDED AND MAY BE HELD IN TRUST. (a) All amounts payable in accordance with this Plan shall constitute a contractual general unsecured obligation of the Company. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Company, to the extent not paid from the assets of the Trust established pursuant to Section 4.1(b) below. 4 (b) The Company, shall establish a grantor trust for the benefit of Participants under the Plan. The assets placed in the Trust shall be comprised of all or any portion of amounts in Accounts and shall be held separate and apart from other Company funds, and shall be used exclusively for the purposes set forth in the Plan and Trust, subject to the following conditions: (i) the Company shall be treated as "grantor" of the Trust; and (ii) the Trust agreement shall provide that its assets may be used upon the insolvency of the Company to satisfy claims of the Company's general creditors, and that the rights of such general creditors are enforceable by them under federal and state law. (c) In the event that a Trust is established pursuant to this Section 4.1(b), the amounts contributed in the form of Contributions shall be transferred by the Company to such Trust, as directed by the Committee. 4.2 ACCOUNT INVESTMENT. Each Participant may direct the investment of the amounts allocable to the Participant's Account under the Plan which are held in the Trust into one or more of the Investment Funds offered by the Committee. 4.3 ACCOUNT INVESTMENT. Each Participant may direct the investment of the amounts allocable to the Participant's Account under the Plan into one or more of the Investment Funds offered by the Committee. 4.4 INVESTMENT FUNDS. The Committee may designate one or more Investment Funds for the investment of Participant's Accounts. The Committee may change the designation of Investment Funds from time to time, in its sole discretion. The Committee shall determine, from time to time, the manner in which Participants may provide investment instructions for their Accounts under the Plan. 4.5 INDIVIDUAL RECORDS. The Committee shall maintain, or cause to be maintained, records showing the individual balances of each Participant's Account and the amounts allocable to each Participant under this Plan (and, if applicable, under the Trust); provided, however, the Committee may delegate this responsibility to another administrator. At least once a year, each Participant shall be furnished with a statement setting forth the balance credited to his or her Account under the Plan. 5 4.6 VALUATIONS. (a) Except as provided in Section 4.4, on each Valuation Date each Participant's Account shall be allocated its proportionate share of the increase or decrease (including earnings) in the fair market value of that portion of any Investment Fund or interest under Section 4.4 which is allocable to the Participant's Account, as well as any brokerage or other investment expenses. All other expenses of the Trust shall be paid by the Company. (b) Immediately after any gain or loss or earnings are allocated to a Participant's Account under the Trust in accordance with Section 4.6(a), an equal amount of gain or loss or earnings shall be credited to the Participant's Account under the Plan. ARTICLE V ADMINISTRATION 5.1 MODIFICATION, AMENDMENT, AND TERMINATION. The Board reserves the right to modify, amend in whole or in part, discontinue benefit accrual under, or terminate the Plan at any time. However, no modification or amendment shall adversely affect the right of any eligible employee to receive the benefits accrued and the vested balance to the credit of such eligible employee's Account as of the date of such modification, discontinuance, amendment, or termination. 10.2 ADMINISTRATION AND INTERPRETATION. Full power and authority to construe, interpret and administer the Plan shall be vested in the Committee. Any interpretation of the Plan by the Committee or any administrative act by the Committee shall be final and binding on all Participants. The Committee shall, from time to time, establish rules and regulations for the administration of the Plan and the transaction of its business and shall maintain or cause to be maintained all records which it shall deem necessary for purposes of the Plan. 5.3 NO CONTRACT OF EMPLOYMENT. The establishment of the Plan (and the establishment of any Trust) shall not be construed as conferring any legal rights upon any person for a continuation of employment, nor shall it interfere with the rights of the Company to discharge any employee and to treat such employee without regard to the effect which such treatment might have upon such employee as a Participant in the Plan. 5.4 FACILITY OF PAYMENT. In the event that the Committee shall find that a Participant is unable to care for his or her affairs because of illness or accident, the Committee may direct that any benefit payment due to such Participant, unless a claim shall have been made therefor by a duly appointed legal representative, be paid to such Participant's 6 spouse, child, or other blood relative, or to a person with whom such Participant resides, and any such payment so made shall be a complete discharge of the liabilities of the Company and the Plan and the Trust therefor. 5.5 WITHHOLDING AND TAX CONSEQUENCES. The Company and the Trustee shall have the right to deduct from each payment to be made under the Plan and the Trust any required withholding or other taxes. In the event the Internal Revenue Service determines that the value of all or any portion of the benefits accrued under this Plan are taxable to Participants in any year prior to the year of actual distribution, the Committee may authorize distribution of a portion of a Participant's Account in an amount sufficient to satisfy such tax liability. The Company shall not be responsible for the ordinary income taxes attributable to distributions from the Plan. 5.6 NONALIENATION. Subject to any applicable law, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void, nor shall any such benefit be in any manner liable for or subject to garnishment, attachment, execution of levy, or liability for or subject to the debts, contracts, liabilities, engagements or torts of a Participant. 5.7 CONSTRUCTION. The Plan shall be construed, regulated and administered under the laws of the State of Colorado. When used herein the masculine pronoun shall include the feminine pronoun, and the singular shall include the plural, where appropriate. 5.8 CLAIMS PROCEDURE. Any Participant, beneficiary, or his duly authorized representative may file a claim for a Plan benefit to which the claimant believes that he or she is entitled. Such a claim must be in writing and delivered or mailed to the Committee. The Committee shall have full discretion to deny or grant a claim in whole or in part. 5.9 UNFUNDED PLAN. The Company shall not be required to fund its obligations under this Plan in any manner, whether by purchase of insurance or endowment contracts, or contributions to a trust fund, or deposits in an escrow account, or otherwise; and if the Company does choose to do so, then the Participant shall not have any right or interest in such contract, trust (other than the Participants right to the funds held in a trust created under Section 4.1), or account but may look only to the Company's unsecured promise to pay in accordance with the provisions of this Plan. Nothing contained in this Plan will be deemed to create a trust of any kind or to create any fiduciary relationship. 7 IN WITNESS WHEREOF, Mesa Air Group, Inc. has approved this Plan effective July 13, 2001. Mesa Air Group, Inc. By: ------------------------------------ Title: --------------------------------- Date: ---------------------------------- 8 EX-10.7 4 p71603exv10w7.txt EXHIBIT 10.7 Exhibit 10.7 MESA AIR GROUP, INC. 2005 DEFERRED COMPENSATION PLAN ARTICLE I DEFINITIONS 1.1 Definitions. The following terms when capitalized herein shall have the meanings assigned below. (a) Account. The bookkeeping account established and maintained under the Plan for each Participant to reflect amounts credited under the Plan for the benefit of each Participant and any earnings or losses thereon. (b) Board. The Board of Directors of Mesa Air Group, Inc. (c) Code. The Internal Revenue Code of 1986, as amended from time to time. (d) Committee. The Deferred Compensation Committee responsible for the administration of the Plan, as selected by the Board. (e) Company. Mesa Air Group, Inc. (f) Contribution. The amount contributed to the Plan by the Company on behalf of a Participant, as determined in the sole discretion of the Committee or, if applicable, pursuant to a specific provision contained in an employment agreement between the Participant and the Company. (g) Designated Beneficiary. The beneficiary designated by the Participant to receive the Participant's benefit under this Plan in the event of the Participant's death. (h) Eligible Employee. Any employee of the Company who is a member of the management or highly compensated group of employees of the Company under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), as determined by the Committee, in its discretion. (i) ERISA. The Employee Retirement Income Security Act of 1974, as amended. (j) First Eligible Payment Date. The first date that is more than 6 months after the date a Participant terminates (including by death) employment with the Company. 1 (k) Investment Fund. The separate funds in which amounts allocable to Participants and held in the Trust may be invested in accordance with Article IV. (l) Participant. Each Eligible Employee of the Company who is selected by the Committee to participate in this Plan. (m) Plan. The Mesa Air Group, Inc. Deferred Compensation Plan, as set forth herein, as amended from time to time. (n) Plan Year. The twelve-month period ending on December 31 of each year. (o) Trust. The Deferred Compensation Trust in which amounts deferred under this Plan, and any earnings thereon, may be held, as provided in Article V and any Deferred Compensation trust agreement. (p) Trustee. The trustee or trustees of the Trust. (q) Valuation Date. The last day of each calendar quarter of each Plan Year, and such other dates as the Committee determines necessary or appropriate to value the Accounts of Participants. ARTICLE II PARTICIPATION AND CONTRIBUTIONS 2.1 Eligibility for Participation. Each Eligible Employee shall be eligible to be selected to participate in the Plan. The Committee, in its sole discretion, shall select which Eligible Employees will participate in the Plan. Notwithstanding the foregoing, a Participant shall include any Eligible Employee whose employment contract with the Company specifically provides that such Eligible Employee will be a participant in the Plan. 2.2 Termination of Participation. Participation in the Plan shall terminate on the date on which a Participant terminates employment with the Company. 2.3 Amount of Contribution. The Committee, in its sole discretion, shall determine the amounts that will be contributed on behalf of each Participant, and the times at which such amounts will be contributed to the Plan. Notwithstanding the foregoing, a Participant's employment agreement may specify the amounts that will be contributed on behalf of such Participant, as well as the dates of any such contributions. 2 ARTICLE III VESTING AND DISTRIBUTION OF BENEFITS 3.1 Vesting. A Participant shall always be 100% vested in his or her Account under the Plan. 3.2 Distribution of Benefits. (a) Termination of Employment. Distribution of a Participant's vested Account shall commence within an administratively reasonable period of time after such Participant's First Eligible Payment Date. Distribution shall be made in one of the following forms as elected by the Participant at the time an initial contribution is made to the Plan on behalf of the Participant. The Participant may elect, at such time, to receive a distribution in substantially equal quarterly installments over a maximum period of fifteen years of not less than $6,000 per installment (with any remaining balance in the Participant's Account of less than $6,000 to be paid in the final installment) or in one lump sum distribution which shall be paid within an administratively reasonable period of time after such Participant's First Eligible Payment Date, subject to the provisions of section 3.2(d) hereof. Any lump sum distribution elected by the Participant shall be equal to the balance credited to the Participant's Account as of the Valuation Date immediately preceding such distribution. If no election is made by the Participant, the distribution shall be made in substantially equal quarterly installments over a fifteen-year period. To the extent the Account is paid in installment payments, amounts remaining in the Plan (and, if applicable, in the Trust) shall continue to be credited with earnings, and those earnings shall be divided by the number of remaining installment payments and distributed in substantially equal amounts along with the remaining installments. Payment of benefits under this Section shall be a complete discharge of the Company's obligation under the Plan with respect to that Participant. Any election by the Participant with respect to the form or timing of his distribution must be made within thirty (30) days of the Company's notification to the Participant of his or her initial selection as a Participant. (b) Death of Participant. Upon the death of a Participant while employed with the Company, the Participant's Designated Beneficiary shall be paid the vested balance credited to the Participant's Account under this Plan. Distribution to the Designated Beneficiary shall commence within an administratively reasonable period of time after such Participant's First Eligible Payment Date. Distribution shall be made in one of the following 3 forms as elected by the Participant within 30 days of his or her selection as a Participant. The Participant may elect to receive a lump sum distribution or a distribution in substantially equal quarterly installments over a maximum period of fifteen years. (c) A Participant may elect one form of distribution in the event of death and a different form of distribution in the event of termination of employment, provided that all elections relating to such forms of distribution shall be made within thirty (30) days of the Company's notification to the Participant of his or her initial selection as a Participant. (d) Notwithstanding any other provision hereof, no distribution may be made to any Participant who is a "specified employee" (within the meaning of section 409A of the Code) prior to the date that is 6 months after the date such employee terminates employment with the Company. ARTICLE IV FUNDING, INVESTMENT, AND VALUATION OF ACCOUNTS 4.1 Plan Accounts Are Unfunded and May be Held in Trust. (a) All amounts payable in accordance with this Plan shall constitute a contractual general unsecured obligation of the Company. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Company, to the extent not paid from the assets of any Trust established pursuant to Section 4.1(b) below. (b) The Company may establish a grantor trust for the benefit of all or some of the Participants under the Plan. Any assets placed in the Trust shall be comprised of all or any portion of amounts in Accounts and shall be held separate and apart from other Company funds, and shall be used exclusively for the purposes set forth in the Plan and Trust subject to the following conditions: (i) the Company shall be treated as "grantor" of the Trust for federal income tax purposes; and (ii) the Trust agreement shall provide that its assets may be used upon the insolvency of the Company to satisfy claims of the Company's general creditors, and that the rights of such general creditors are enforceable by them under federal and state law. (c) In the event that a Trust is established pursuant to this Section 4.1(b), the amounts contributed in the form of Contributions shall be transferred by the Company to such Trust, as directed by the Committee. 4 4.2 Account Investment. Each Participant may direct the investment of the amounts allocable to the Participant's Account under the Plan, whether or not such amounts are held in a Trust, into one or more of the Investment Funds offered by the Committee. 4.3 Investment Funds. The Committee may designate one or more Investment Funds for the investment of Participant's Accounts. The Committee may change the designation of Investment Funds from time to time, in its sole discretion. The Committee shall determine from time to time the manner in which Participants may provide investment instructions for their Accounts under the Plan. 4.4 Individual Records. The Committee shall maintain, or cause to be maintained, records showing the individual balances of each Participant's Account and the amounts allocable to each Participant under this Plan (and, if applicable, under the Trust); provided, however, the Committee may delegate this responsibility to another administrator. At least once a year, each Participant shall be furnished with a statement setting forth the balance credited to his or her Account under the Plan. 4.5 Valuations. (a) Except as provided in Section 4.3, on each Valuation Date each Participant's Account shall be allocated its proportionate share of the increase or decrease (including earnings) in the fair market value of that portion of any Investment Fund or interest under Section 4.3 which is allocable to the Participant's Account, as well as any brokerage or other investment expenses. All other expenses of the Trust shall be paid by the Company. (b) In the event that a Trust is established under section 4.1 hereof, immediately after any gain or loss or earnings are allocated to a Participant's Account under the Trust in accordance with Section 4.5(a), an equal amount of gain or loss or earnings shall be credited to the Participant's Account under the Plan. ARTICLE V ADMINISTRATION 5.1 Modification, Amendment, and Termination. The Board reserves the right to modify, amend in whole or in part, discontinue benefit accrual under, or terminate the Plan at any time. However, no modification or amendment shall adversely affect the right of any Participant to receive the benefits accrued and the vested balance to the credit of such Participant's Account as of the date of such 5 modification, discontinuance, amendment, or termination, without the written consent of the affected Participant. In the event of any termination of the Plan, distributions shall be made to Participants only in accordance with the provisions of section 3.2 hereof and the termination of the Plan shall not result in any acceleration of such distributions. 5.2 Administration and Interpretation. Full power and authority to construe, interpret, and administer the Plan shall be vested in the Committee. Any interpretation of the Plan by the Committee or any administrative act by the Committee shall be final and binding on all Participants. The Committee shall, from time to time, establish rules and regulations for the administration of the Plan and the transaction of its business and shall maintain or cause to be maintained all records which it shall deem necessary for purposes of the Plan. 5.3 No Contract of Employment. The establishment of the Plan (and the establishment of any Trust) shall not be construed as conferring any legal rights upon any person for a continuation of employment, nor shall it interfere with the rights of the company to discharge any employee and to treat such employee without regard to the effect which such treatment might have upon such employee as a Participant in the Plan. 5.4 Facility of Payment. In the event that the Committee shall find that a Participant is unable to care for his or her affairs because of illness or accident, the Committee may direct that any benefit payment due to such Participant, unless a claim shall have been made therefore by a duly appointed legal representative, be paid to such Participant's spouse, child, or other blood relative, or to a person with whom such Participant resides, and any such payment so made shall be in complete discharge of the liabilities of the Company, the Plan, and the Trust therefor. 5.5 Withholding and Tax Consequences. The Company and the Trustee shall have the right to deduct from each payment to be made under the Plan and the Trust any required withholding or other taxes. In the event the Internal Revenue Service determines (pursuant to section 409A of the Code or otherwise) that the value of all or any portion of the benefits accrued under this Plan are taxable to Participants in any year prior to the year of actual distribution, the Committee may authorize distribution of a portion of a Participant's Account in an amount sufficient to satisfy such tax liability. The Company shall not be responsible for any income taxes (or additions to tax imposed by section 409A of the Code) attributable to distributions from the Plan. 5.6 Nonalienation. Subject to any applicable law, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void, nor shall any such benefit be in any manner liable for or subject to garnishment, 6 attachment, execution of levy, or liability for or subject to the debts, contracts, liabilities, engagements or torts of a Participant. 5.7 Construction. The Plan shall be construed, regulated and administered under the laws of the State of Arizona. When used herein the masculine pronoun shall include the feminine pronoun, and the singular shall include the plural, where appropriate. 5.8 Claims Procedure. Any Participant, beneficiary, or his duly authorized representative may file a claim for a Plan benefit to which the claimant believes that he or she is entitled. Such a claim must be in writing and delivered or mailed to the Committee. The Committee shall have full discretion to deny or grant a claim in whole or in part. 5.9 Unfunded Plan. The Company shall not be required to fund its obligations under this Plan in any manner, whether by purchase of insurance or endowment contracts, or contributions to a trust, or deposits in an escrow account or otherwise; and if the Company does choose to do so, then the Participant shall not have any right or interest in such contract, trust (other than the Participant's right to the funds held in a trust created under Section 4.1), or account but may look only to the Company's unsecured promise to pay in accordance with the provisions of this Plan. Nothing contained in this Plan will be deemed to create a trust of any kind or to create any fiduciary relationship. IN WITNESS WHEREOF, Mesa Air Group, Inc. has approved this Plan effective February 7, 2005. MESA AIR GROUP, INC. By: ------------------------------------ Its: ----------------------------------- 7 EX-10.14 5 p71603exv10w14.txt EXHIBIT 10.14 Exhibit 10.14 * TEXT OMITTED AND FILED SEPARATELY CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTION 200.80(B)(4), 200.83 AND 240.24b-2 FIFTH AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT THIS FIFTH AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT ("Fifth Amendment") is made and entered into as of January 28, 2005 (the "Effective Date"), among AMERICA WEST AIRLINES, INC., a Delaware corporation ("AWA"), MESA AIRLINES, INC., a Nevada corporation ("Mesa"), AIR MIDWEST, INC., a Kansas corporation ("AM"), and FREEDOM AIRLINES, INC., a Nevada corporation ("Freedom"). Mesa, AM and Freedom are referred to collectively as the "Mesa Group". RECITALS: A. AWA and the Mesa Group are parties to that certain Code Share and Revenue Sharing Agreement, dated to be effective February 1, 2001, as amended by that certain First Amendment to Code Share and Revenue Sharing Agreement, dated to be effective April 27, 2001, that certain Second Amendment to Code Share and Revenue Sharing Agreement, dated to be effective October 24, 2002 ("Second Amendment"), that certain Third Amendment to Code Share and Revenue Sharing Agreement, dated to be effective January 29, 2003 ("Third Amendment"), and that certain Fourth Amendment to Code Share and Revenue Sharing Agreement and Release, dated to be effective September 5, 2003 (collectively, the "Code Share Agreement"). All capitalized terms used herein, but not otherwise defined herein, shall have the meanings given to such terms in the Code Share Agreement. B. The Code Share Agreement requires the Mesa Group to provide certain Flight Services for AWA, pursuant to the terms and conditions of the Code Share Agreement. C. The Mesa Group and AWA desire to amend the Code Share Agreement pursuant to the terms and conditions of this Fifth Amendment. D. The Mesa Group and AWA desire to terminate certain Subcontracting of Services and allow for Subcontracting of Services under limited circumstances. NOW, THEREFORE, in consideration of the promises, covenants, representations and warranties hereinafter set forth, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, AWA and the Mesa Group agree as set forth below. AMENDMENTS: 1. The parties agree that Section 2.2.2(b) of the Code Share Agreement is amended in its entirety as follows: (b) AWA shall have the options to expand the CRJ Fleet from the Option Aircraft. On or before each option "Exercise Date" (as set forth on Exhibit A), AWA, by written notice to Mesa (the "Option Notice"), shall have the option to require Mesa to increase the CRJ Subfleet by the addition of the applicable CRJ Aircraft (as set forth on Exhibit A) in the applicable "In Service Months" (as set for on Exhibit A) (each, a "Fleet Expansion Option"). Each Option Notice shall specify whether AWA is selecting either a CRJ Model 700 or 900. If the Option Notice does not specify the CRJ Model, then AWA shall be deemed to have selected a CRJ Model 900. The Fleet Expansion Options are separate and individual options and may be exercised or not exercised on a separate and individual basis. If AWA does not exercise a Fleet Expansion Option timely, then the applicable Option Aircraft shall not be added to the CRJ Subfleet and shall not be placed into Flight Services. The Aircraft that are the subject of each exercise of a Fleet Expansion Option shall be added to the Fleet by Mesa in the applicable In Service Months. Mesa shall provide AWA with at least 90 days prior written notice of the week each Option Aircraft will be placed into Flight Service under this Agreement and at least 60 days' prior written notice of the Scheduled Delivery Date for each Option Aircraft that is the subject of each exercised Fleet Expansion Option. 2. The parties agree that Section 8.1 of the Code Share Agreement is amended in its entirety as follows: Term. The term of this Agreement (the "Term") commences on the Effective Date retroactive to the Contract Date (the "Commencement Date") and shall expire at 11:59 p.m., Phoenix time, on June 30, 2012 ("Expiration Date"), unless earlier terminated as provided in this Agreement. Notwithstanding the foregoing to the contrary, if any of the Option Aircraft is added to the CRJ Subfleet pursuant to Section 2.2.2(b), then the Expiration Date shall be extended to 11:59 p.m., Phoenix time, on the date eight (8) years after the last day of the In Service Month (as set forth on Exhibit A) for the last Option Aircraft added to the CRJ Subfleet. By way of example, if AWA adds the Option Aircraft with the December 2006 In Service Month and does not add any of the remaining seven Option Aircraft from January 2007 through July 2007, the Expiration Date shall be extended to 11:59 p.m., Phoenix time, on December 31, 2014. AWA, by written notice to Mesa at least 180 days prior to the Expiration Date, may further extend the Expiration Date for two years, expiring at 11:59 p.m., Phoenix time, on either (i) June 30, 2014; or (ii) the date ten (10) years after the last day of the In Service Month for the last Option Aircraft added to the CRJ Subfleet, if applicable. Unless AWA 2 does not exercise any of the Fleet Expansion Options, Mesa and AWA shall execute an amendment to this Section 8.1 following the Exercise Date for the last Option Aircraft specifying the revised Expiration Date. 3. The parties agree that the second page of Exhibit A of the Code Share Agreement is amended in its entirety as set forth in Exhibit 1 to this Fifth Amendment. AGREEMENTS: 4. 900 Election Notice. Mesa acknowledges: (i) receipt of AWA's 900 Election Notice dated April 29, 2004, rejecting the twelve (12) CRJ Model 900s pursuant to Section 2.2.5(e) of the Code Share Agreement; and (ii) as a result thereof, the twelve (12) CRJ Model 900s scheduled to be delivered into Flight Services from April 2005 to November 2005, pursuant to the Delivery Schedule, will not be added to the CRJ Subfleet and will not be placed into Flight Services. 5. Termination of Consent to Subcontracting. AWA and the Mesa Group agree that AWA's consent to subcontracting granted to both Freedom and AM pursuant to the Code Share Agreement is terminated, except as set forth in Section 6 below. Notwithstanding the preceding sentence, (i) Freedom's assumption relating to the CRJ 700 Services (as set forth in Section 2 of the Second Amendment) and relating to the CRJ 900 Services (as set forth in Section 2 of the Third Amendment) shall remain in effect for all CRJ 700 Services and CRJ 900 Services previously provided by Freedom pursuant to the Code Share Agreement and (ii) AM's assumption relating to the AM Services shall remain in effect for all AM Services previously provided by AM pursuant to the Code Share Agreement. AM confirms and acknowledges that for all AM Services previously provided by AM pursuant to the Code Share Agreement, AM assumed and agreed to be bound by all of the liabilities, obligations, and duties of Mesa applicable to the AM Services. Nothing in this Section 5 shall prohibit Mesa, after the Effective Date of this Fifth Amendment, from seeking AWA's consent for the Subcontracting of Services pursuant to Section 2.1 of the Code Share Agreement. 6. Consent to Subcontracting for Beech 1900s. The consent to subcontracting granted to AM and Freedom shall remain in effect only for the limited circumstance in which irregular operations make a Flight for which a Dash 8 Aircraft is scheduled to be used by Mesa subject to cancellation ("Swap Flight"), and AM or Freedom is available to provide Flight Services for the Swap Flight (and avoid cancellation of the Swap Flight) using a Beech 1900 Aircraft. For such Swap Flights, Freedom and AM assume and agree to discharge, 3 perform, and satisfy on behalf of Mesa all the obligations, liabilities and duties of Mesa under the Code Share Agreement relating to the provision of these Flight Services, in the time and manner required by the Code Share Agreement, to the same extent Mesa is required to perform and satisfy such obligations, liabilities and duties under the Code Share Agreement. AWA shall make payments for the Swap Flights to Mesa for negotiated activity costs for the Beech 1900 Aircraft, which shall include de-icing expenses (if any), fuel costs, landing fees, security outside AWA Service locations (if any), the B1900 station cost per departure (as set forth in Exhibit B to the Code Share Agreement), the Beech 1900 flight crew cost per block hour and dispatcher cost per departure (as set forth in Exhibit C to the Code Share Agreement), and the Beech 1900 maintenance cost per block hour and maintenance cost per departure (as set forth in Exhibit D to the Code Share Agreement). Payments for the Swap Flights shall not include any fixed monthly costs relating to the Beech 1900 Aircraft. 7. Effect. Except as set forth in this Fifth Amendment, all of the terms and conditions of the Code Share Agreement shall remain in full force and effect and be applicable to this Fifth Amendment. 8. Counterparts. This Fifth Amendment may be executed in counterparts, all of which when taken together shall be one and the same document. 9. Entire Agreement. This Fifth Amendment constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. [SIGNATURES APPEAR ON NEXT PAGE] 4 AMERICA WEST AIRLINES, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- MESA AIRLINES, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- FREEDOM AIRLINES, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- AIR MIDWEST, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- 5 Exhibit 1 6 EXHIBIT A OPTION CRJ-700/900 DELIVERY SCHEDULE

Option CRJ-7/900 --------- Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 *Jun-06 [*] *Jul-06 [*] *Aug-06 [*] Sep-06 [*] Oct-06 [*] Nov-06 [*] Dec-06 [*] Jan-07 [*] Feb-07 [*] Mar-07 [*] Apr-07 [*] May-07 [*] Jun-07 [*] Jul-07 * --- Totals * ===

Note: [*] *[*] 7 EX-10.15 6 p71603exv10w15.txt EXHIBIT 10.15 Exhibit 10.15 * TEXT OMITTED AND FILED SEPARATELY CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTION 200.80(B)(4), 200.83 AND 240.24b-2 SIXTH AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT AND SETTLEMENT AGREEMENT THIS SIXTH AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT AND SETTLEMENT AGREEMENT ("Sixth Amendment") is made and entered into as of July 27, 2005 (the "Effective Date"), between AMERICA WEST AIRLINES, INC., a Delaware corporation ("AWA"), MESA AIRLINES, INC., a Nevada corporation ("Mesa"), AIR MIDWEST, INC., a Kansas corporation ("AM"), and FREEDOM AIRLINES, INC., a Nevada corporation ("Freedom"). Mesa, AM and Freedom are referred to collectively as the "Mesa Group"). RECITALS: A. AWA and the Mesa Group are parties to that certain Code Share and Revenue Sharing Agreement, dated to be effective February 1, 2001, as amended by that certain First Amendment to Code Share and Revenue Sharing Agreement, dated to be effective April 27, 2001, that certain Second Amendment to Code Share and Revenue Sharing Agreement, dated to be effective October 24, 2002, that certain Third Amendment to Code Share and Revenue Sharing Agreement, dated to be effective January 29, 2003, that certain Fourth Amendment to Code Share and Revenue Sharing Agreement and Release, dated to be effective September 5, 2003 (the "Fourth Amendment"), and that certain Fifth Amendment to Code Share and Revenue Agreement, dated to be effective January 28, 2005 (collectively, the "Code Share Agreement"). All capitalized terms used herein, but not otherwise defined herein, shall have the meanings given to such terms in the Code Share Agreement. B. The Code Share Agreement requires the Mesa Group to provide certain Flight Services and Other Services for AWA, pursuant to the terms and conditions of the Code Share Agreement. C. The Mesa Group and AWA desire to amend the Code Share Agreement pursuant to the terms and conditions of this Sixth Amendment. D. The Mesa Group and AWA desire to settle certain amounts payable to each other pursuant to the Code Share Agreement. NOW, THEREFORE, in consideration of the promises, covenants, representations and warranties hereinafter set forth, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, AWA and the Mesa Group agree as set forth below: AMENDMENTS: 1. The parties agree that Section 2.2.2(f) of the Code Share Agreement is amended in its entirety as follows: CRJ 900 Put Option. AWA agrees that Mesa may add to the CRJ Subfleet and place into Flight Services [*] CRJ Model 900s that, pursuant to Exhibit A, were scheduled to be placed into Flight Services in [*] (the "Put CRJ 900s") on [*]. Each Put CRJ 900 shall be marked with AWA's livery and shall be configured with all coach seating in a manner required by AWA, at Mesa's sole cost and expense, upon being placed into Flight Services. Notwithstanding anything contained in Section 7.2 to the contrary, AWA shall not be required to pay "Ownership" Guaranteed Non-Maintenance Costs for each of the Put CRJ 900s for a period of 30 days after each Put CRJ 900 commences Flight Services. 2. The parties agree that Section 2.2.6 of the Code Share Agreement is amended by deleting the parenthetical "(other than overhead)" in the last sentence and replacing it with the following: "(other than Overhead and Crew RON)". 3. The parties agree that Section 2.6.3 of the Code Share Agreement is amended in its entirety as follows: 2.6.3 Location. Mesa shall maintain maintenance bases as follows: (i) one in Grand Junction, Colorado for Dash 8s; (ii) one in Phoenix, Arizona for CRJ Model 200s; (iii) one in Phoenix, Arizona for CRJ Model 900s; and (iv) commencing on or after December 1, 2005, one in a mutually acceptable location on the East Coast for CRJ Model 900s (the "Maintenance Bases"). In addition, Mesa intends to provide CRJ Model 200 and 900 maintenance at certain outstation or Mesa provided maintenance bases (the "Outstation Bases"). Each Schedule prepared by AWA shall provide for not less than 20% of the Dash 8s, 33% of the CRJ Model 200s, and 33% of the CRJ Model 900s to remain overnight at the applicable Maintenance Bases and Outstation Bases each night. AWA and Mesa intend that 20% to 25% of the CRJ will be maintained at the Maintenance Bases and the balance will be maintained at the Outstation Bases in order to reach the 33% overnight threshold. One aircraft shall remain overnight for 10 hours and the remainder for at least 8 hours. Mesa shall not relocate any Maintenance Base without prior written consent of AWA, which consent may be withheld if the new location fails to meet AWA's schedule requirements. Each CRJ Maintenance Base shall be staffed and equipped to maintain a fleet of up to 25 aircraft. Mesa shall add maintenance bases as necessary to provide the Flight Services and Other Services at locations which meet 2 AWA's maintenance base requirements and are approved by AWA. AWA, by providing Mesa with at least 180 days' prior written notice, may require Mesa to close any Maintenance Base. Upon Mesa assigning to AWA all of its rights, title and interest in the lease of the Maintenance Base that is closed (together with any required landlord consent), AWA shall reimburse Mesa for all actual out-of-pocket costs and expenses incurred by Mesa in closing such Maintenance Bases. 4. The parties agree that Section 5 of the Code Share Agreement is amended by adding the following new paragraph 5.7: 5.7 Performance Penalties Waiver. Mesa and AWA agree that neither Mesa nor AWA shall be required to pay any performance penalties or bonuses, pursuant to Sections 5.1 through 5.4, based on Mesa's provision of Flight Services for the period of [*]. If AWA exercises its right to slot substitutions pursuant to that certain Slot Substitution Agreement, dated July 27, 2005, between AWA and Mesa (the "Substitution Agreement"), then, for the purposes of calculating performance penalties and bonuses for the applicable year, month, Six Month Period or Calendar Quarter, as applicable, pursuant to Sections 5.1 through 5.4, the Flight Services and AWA flight operations occurring on any date on which AWA exercises its rights under the Substitution Agreement shall not be included. For example only, if AWA exercised its rights under the Substitution Agreement on August 15, 2005, then the Flight Services and AWA flight operations on such day shall not be used in calculating the DOT Complaint Rate and AWA's DOT Complaint Rate for calendar year 2005, the MBR for the month of August, 2005, the OTP Rate Threshold and OTP Rate for the Six Month Period between July 1, 2005 and December 31, 2005, and the FCF Threshold and FCF for the Calendar Quarter commencing July 1, 2005 and expiring on September 30, 2005. 5. The parties agree that the Code Share Agreement is amended by adding the following as a new Section 7.1.9: 7.1.9 Actual costs invoiced to and paid by Mesa for the maintenance of CRJs at the Outstation Bases, including depreciation of parts, equipment and tooling and Mesa on-site personnel costs (net of any discounts or promotions and provided a good faith estimate of the general scope and costs for the Outstation Bases was initially pre-approved, in writing, by AWA's scheduling and planning group). 3 6. The parties agree that the Code Share Agreement is amended by adding the following as a new last paragraph to Section 7.2: Notwithstanding anything above to the contrary, subsequent to December 31, 2004, AWA shall be entitled to a credit equal to the sum of: (i) the greater of $[*] per day that an applicable CRJ is out of Flight Services for the performance of the Reliability Improvement Program ("RIMP") or the actual ownership reimbursement received by Mesa from Bombardier for the applicable CRJ undergoing such RIMP work; plus (ii) an amount equal to a per diem allocation of Crew RON and Engine and APU Depreciation chargeable by Mesa as Guaranteed Maintenance Costs for the CRJ undergoing such RIMP work, based on the number of days the CRJ is out of service for RIMP work. 7. The parties agree that Exhibit C of the Code Share Agreement is amended by: (i) deleting the reference to $[*] in the "Ownership" line under the CRJ 200 column and replacing such number with a reference to Note 5; (ii) replacing the CRJ 200 A/C Ownership Schedule attached as page 2 to Exhibits C and D with page 2, attached hereto; and (iii) adding the following Note 5: [*] AGREEMENTS: 8. Settlement Amounts. AWA and Mesa agree to the following settlement of certain outstanding liabilities, duties and obligations contained in the Code Share Agreement and disputes between Mesa and AWA: 8.1 AWA and Mesa agree that, pursuant to Section 19 of the Fourth Amendment, the Reimbursement Payment is $[*]; 8.2 AWA and Mesa agree that Mesa shall reimburse AWA for Mesa's overcharge of "overhead costs" for spare aircraft, pursuant to Section 2.2.6, in an amount equal to $[*]; 8.3 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in settlement of outstanding CRJ Model 200 Ownership costs payable through [*], pursuant to Section 7.2(a); 8.4 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] for actual outstation maintenance costs incurred by Mesa for the periods of [*] through [*] (the "Outstation Costs"); 8.5 AWA and Mesa agree that Mesa shall pay to AWA the sum of $[*] in settlement of all performance penalties incurred by Mesa, pursuant to Sections 5.1 through 5.4, through [*]; 4 8.6 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in settlement of all transition costs incurred by Mesa in connection with the elimination of CRJ Model 700s, pursuant to Section 2.3.3; 8.7 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in settlement of all turn costs payable by AWA for CRJ Model 900s at the Phoenix Hub, pursuant to Exhibit B, for the period of [*]; 8.8 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in settlement of disputed sums due for the provision of Flight Services to Guadalajara, Mexico (the "GDC Services"); and 8.9 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] for RIMP work performed by Mesa between March 1, 2004 and December 31, 2004 (the "RIMP Work"). The net amount due pursuant to Sections 7.1 through 7.9, above, from AWA to Mesa is $[*], which sum shall be paid by AWA to Mesa within three (3) business days after the Effective Date. 9. Releases. 9.1 The Mesa Group fully and finally release, acquit and forever discharge AWA and its parent companies and subsidiaries from any and all claims or demands for: (i) the Reimbursement Payment; (ii) CRJ Model 200 Ownership costs through and including June 30, 2005; (iii) Outstation Costs through December 31, 2004; (iv) costs and expenses incurred in connection with the RIMP Work; (v) reimbursement of actual out-of-pocket costs and expenses incurred in connection with the elimination of CRJ Model 700s from the Fleet; (vi) turn costs for CRJ Model 900s pursuant to Exhibit B for the periods of October 1, 2004 through June 30, 2005; and (vii) payment for the GDC Services. 9.2 AWA fully and finally releases, acquits and forever discharges Mesa and its parent company and subsidiaries from any and all claims and demands for: (i) reimbursement of improperly charged overhead costs prior to the Effective Date pursuant to Section 2.2.6; (ii) performance penalties pursuant to Sections 5.1 through 5.4 for all periods prior to December 31, 2004; and (iii) Crew RON costs charged for spare aircraft prior to July 1, 2005. 10. Tail N937/TSA Expenses. AWA and Mesa agree that: (i) no amount is payable by AWA to Mesa for CRJ Model 900 tail number N937 for the month of June, 2005; and (ii) no payment is due to AWA for the double billed TSA expenses. 11. Effect. Except as set forth in this Sixth Amendment, all of the terms and conditions of the Code Share Agreement shall remain in full force and effect and be applicable to this Sixth Amendment. 5 12. Counterparts. This Sixth Amendment may be executed in counterparts, all of which when taken together shall be one and the same document. 13. Entire Agreement. This Sixth Amendment constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. [SIGNATURES APPEAR ON NEXT PAGE] 6 AMERICA WEST AIRLINES, INC. By: ------------------------------------ Name: ---------------------------------- Title: ---------------------------------- MESA AIRLINES, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- FREEDOM AIRLINES, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- AIR MIDWEST, INC. By: ------------------------------------ Name: ---------------------------------- Title: ---------------------------------- 7 Exhibit C - Page 2 CRJ-200 A/C Ownership Schedule

Monthly Tail # Amount - -------------- ------- 1 7178 $[*] 2 7218 $[*] 3 7228 $[*] 4 7231 $[*] 5 7260 $[*] 6 7264 $[*] 7 7275 $[*] 8 7278 $[*] 9 7286 $[*] 10 7291 $[*] 11 7302 $[*] 12 7305 $[*] 13 7314 $[*] 14 7318 $[*] 15 7325 $[*] 16 7337 $[*] 17 7353 $[*] 18 7358 $[*] Agreed Rate(1) $[*]

(1) [*] EX-10.34 7 p71603exv10w34.txt EXHIBIT 10.34 Exhibit 10.34 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of April 30, 2005 by and between MESA AIR GROUP, INC., a Nevada corporation (the "Company"), and Brian S. Gillman (the "Executive"). WITNESSETH: 1. EMPLOYMENT The Company hereby employs the Executive, and the Executive hereby accepts such employment, upon the terms and subject to the conditions set forth in this Agreement. 2. TERM Subject to the provisions for termination as hereinafter provided, the term of employment under this Agreement shall begin on the date hereof and shall continue for a term of three years, provided, however, that if the Company fails to give one hundred eighty days written notice prior to the date of termination, the term of this Agreement shall automatically be extended for additional one hundred eighty day periods. 3. COMPENSATION 3.1 Base Salary. The Company shall pay to the Executive as basic compensation for all services rendered by the Executive during the term of this Agreement as basic annualized salary of $125,000 through September 30, 2005, and 130,000 through September 30, 2006, and $135,000 for the remainder of the Agreement, or such other sum in excess of that amount as the parties may agree on from time to time or as provided in the last sentence of this Section 3.1 (as in effect from time to time, the "Base Salary"), payable bi-weekly or in other more frequent installments, as determined by the Company. The Company shall have no authority to reduce the Executive's Base Salary in effect from time to time. In addition, the Company, in its discretion, may award a bonus or bonuses to the Executive in addition to the bonuses provided for in Section 3.2, provided, however, such discretionary bonus shall not be included in the definition of "Base Salary." Annually, the Company shall review the Base Salary and increase it as it deems appropriate. 3.2 Bonuses. In addition to the Base Salary to be paid pursuant to Section 3.1, the Company shall pay the Executive as incentive compensation a bonus. The bonus will be a minimum of thirty (30%) of Base Salary, which will be paid quarterly if Company is profitable. In addition, Executive shall be eligible to receive and the Company shall pay to the Executive an additional bonus (including the minimum bonus) in the aggregate of 31% to 100% of the Executive's Base Salary at such time that the Board grants similar bonuses to other executives of the Company. -1- 3.3 Stock Option/Restricted Stock Award. Each year during the term of this Agreement on the anniversary date of this Agreement, the Company shall issue options of not fewer than 20,000 shares of common stock of the Company (adjusted appropriately for any stock dividend, stock split, spin-off, reorganization, or similar transaction) or restricted stock or other equity equivalent with a similar vesting schedule in an amount designed to achieve the same underlying value to the Executive. With respect to Stock Options, the underlying shares of Common Stock of which will be registered on Form S-8 or any successor form, at an exercise price per share, which is no greater than the market price on the grant date The term will be for a term of ten years from the date of grant and, except as otherwise provided (but in no event shall the vesting schedule be more restrictive than as set forth in this Agreement), shall vest one-third annually. 3.4 Other Benefits. The Executive shall be entitled to such fringe benefits including, but not limited to, medical and other insurance benefits (for the Executive and his family), positive space airline travel benefits on the Company's airline, as may be provided from time to time by the Company to other senior management of the Company. The Company will use its commercially reasonable efforts to obtain from other airlines the same benefits for the Executive as the Company provides to executive officers of other airlines. 3.5 Expenses. The Company shall reimburse the Executive, in accordance with the Company's policies and practices for senior management, for all reasonable expenses incurred by the Executive in the performance of the Executive's duties under this Agreement. 3.6 Reimbursement. The Company shall reimburse Executive for his out-of-pocket costs incurred in connection with the retention of professionals by Executive to provide Executive with income tax, estate planning, and investment advisory services. The maximum amount of reimbursable expenses for such purposes shall be $1,000 for each calendar year during the term of this Agreement. The Company shall reimburse Executive for such costs promptly after Executive submits an invoice to Company. In order to preserve Executive's rights to confidentiality, Executive may satisfy the requirement of submitting an invoice by providing the Company with a copy of the facing page of the invoice showing the fees and expenses for the services rendered and the general nature of the services rendered but without any detail concerning the substance of the services rendered. 3.7 Other Incentive and Benefit Plans. The Executive shall be eligible to participate, in accordance with the terms of such plans as they may be adopted, amended and administered from time to time, in incentive, bonus, benefit or similar plans, including without limitation, any stock option, bonus or other equity ownership plan, any short, mid or long term incentive plan and any other bonus, pension or profit sharing plans established by the company from time to time. -2- 4. DUTIES The Executive is engaged as the Vice President, General Counsel and Secretary of the Company. The Executive's duties and responsibilities shall be commensurate with those customarily associated with the Vice President and General Counsel of a publicly traded Company, including such other duties as from time to time may be assigned by the Chairman of the Board, Chief Executive Officer or by the directors. 5. VACATIONS AND DAYS OFF The Executive shall be entitled to vacations with pay and to such personal and sick leave with pay in accordance with the policy of the Company as may be established from time to time by the Company and applied to other senior officers of the Company. In no event shall the Executive be entitled to less than three week's annual vacation. Unused vacation days may be carried over from one year to the next for the length of the Agreement. 6. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC. 6.1 Death. If the Executive dies during the term of Executive's employment, the Company shall pay to the estate of the Executive within 30 days after the date of death such Base Salary and any cash bonus compensation earned pursuant to the provisions of this Agreement or any incentive compensation plan then in effect but not yet paid, as would otherwise have been payable to the Executive up to the end of the month in which the Executive's death occurs. After receiving the payment provided in this Section 6.1, the Executive and the Executive's estate shall have no further rights under this Agreement (other than those rights already accrued). 6.2 Disability. During any period of disability, illness or incapacity during the term of this Agreement which renders the Executive at least temporarily unable to perform the services required under this Agreement, the Executive shall receive the Base Salary payable under Section 3.1 of this Agreement plus any cash bonus compensation earned pursuant to the provisions of this Agreement or any incentive compensation plan then in effect but not yet paid, less any cash benefits received by him under any disability insurance carried by or provided by the Company. Upon the Executive's "Permanent Disability" (as defined below), which Permanent Disability continues during the payment periods specified herein, the Company shall pay to the Executive for the period of time specified below an amount (the "Disability Payment") equal to the (i) sum of (A) the Base Salary paid in the same bi-weekly or other period installments as in effect at the time of the Executive's Permanent Disability plus (B) an amount equal to the Minimum Bonus payable to the Executive under Section 3.2 of this Agreement or the minimum amount of any similar bonus or incentive plans or programs then in effect if greater than the Minimum Bonus in respect of the fiscal year during which the Executive's Permanent Disability occurred, which amount, in any event, shall be paid in pro rata equal bi-weekly installments over the period of time specified below (ii) reduced by the amount of any -3- monthly payments under any policy of disability income insurance paid for by the Company which payments are received during the time when any Disability Payment is being made to the Executive following the Executive's Permanent Disability. For so long as the Executive's Permanent Disability continues, the Disability Payment shall be paid by the company to the Executive in equivalent installments at the same time or times as would have been the case for payment of Base Salary over the unexpired term of this Agreement if the Executive had not become permanently disabled and had remained employed by the Company hereunder, but in no case shall such period be less than 24 months. The Executive may be entitled to receive payments under any disability income insurance which may be carried by or provided by the Company from time to time. Upon "Permanent Disability" (as that terms is defined in Section 6.2(ii) below) of the Executive, except as provided in this Section 6.2 all rights of the Executive under this Agreement (other than rights already accrued or the Executive's rights under Section 3.7 shall terminate). (ii) The term "Permanent Disability" as used in this Agreement shall mean, the inability of the Executive, as determined by the Board of Directors of the Company, by reason of physical or mental disability to perform the duties required of him under this Agreement for a period of one hundred and eighty (180) days in any 210-day period. Successive periods of disability, illness or incapacity is due to the same or related cause and commences less than three months from the ending of the previous period of disability. Upon such determination, the Board of Directors may terminate the Executive's employment under this Agreement upon ten (10) days' prior written notice. If any determination of the Board of Directors with respect to permanent disability is disputed by the Executive, the parties hereto agree to abide by the decision of a panel of three physicians. The Executive and Company shall each appoint one member, and the third member of the panel shall be appointed by the other two members. The Executive agrees to make himself available for an submit to examinations by such physicians as may be directed by the Company. Failure to submit to any such examination shall constitute a breach of a material part of this Agreement. 7. OTHER TERMINATIONS 7.1 By the Executive. (i) The Executive may terminate the Executive's employment hereunder upon giving at least ninety (90) days' prior written notice. In addition, the Executive shall have the right to terminate the Executive's employment hereunder on the conditions and at the times provided for in Section 7.4 of this Agreement. (ii) If the Executive gives notice pursuant to the first sentence of Section 7.1(i) above, the Company shall have the right (but not the obligation) to relieve the Executive, in whole or in part, of the Executive's duties under this Agreement, or direct the Executive to no longer perform such duties, or direct that the Executive should no longer report to work, or any combination of the foregoing. In any such event, the Executive shall be entitled to receive only the Base Salary not yet paid, as would otherwise have been payable to the Executive up to the end of the month specified as the month of -4- termination in the termination notice. If the Executive gives notice pursuant to the first sentence of Section 7.1(i) above but specifies a termination date in excess of ninety (90) days from the date of such notice, the Company shall have the right (but not the obligation) to accelerate the termination date to any date prior to the date specified in the notice that is in excess of ninety (90) days from the date of the notice, and the Company shall have the right (but not the obligation) to relieve the Executive, in whole or in part, of the Executive's duties under this Agreement, or direct the Executive to no longer perform such duties, or direct that the Executive should no longer report to work, or any combination of the foregoing; provided, however, that in any such event the Executive shall be entitled to receive the Base Salary, as would otherwise have been payable to the Executive up to the end of the month of the termination date properly selected by the Company. If the Executive gives notice pursuant to the first sentence of Section 7.1(i), upon receiving the payments provided for under this Section 7.1, all rights of the Executive under this Agreement (other than rights already accrued or the Executive's rights under Section 3.7) shall terminate. 7.2 Termination for "Good Cause." (i) Except as otherwise provided in this Agreement, the Company may terminate the employment of the Executive hereunder only for "good cause," which shall mean the termination of employment of Employee because of Employee's personal dishonesty, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties (including failure to travel to the Company's headquarters to the extent necessary to complete his duties), willful violation of any material law, rule or regulation resulting in the Company's detriment or reflecting upon the Company's integrity (other than traffic infractions or similar minor offenses) or a material breach by the Employee of the terms of this Agreement and failure to cure such breach within thirty (30) days after receipt of written notice from the Company specifying the nature of such breach or to pay compensation to the Company deemed reasonable by the Company if the breach cannot be cured. (ii) If the employment of the Executive is terminated for good cause under Section 7.2(i) of this Agreement, the Company shall pay to the Executive any Base Salary earned prior to the effective date of termination but not yet paid and any such cash bonus compensation earned pursuant to the provisions of this Agreement or any incentive compensation plan then in effect but not paid to the Executive prior to the effective date of such termination. Under such circumstances, such payments shall be in full and complete discharge of any and all liabilities or obligations of the Company to the Executive hereunder, and the Executive shall be entitled to no further benefits under this Agreement (other than rights already accrued or the Executive's rights under Section 3.7). (iii) Termination of the employment of the Executive, other than as expressly specified above in Section 7.2(i) for good cause, shall be deemed to be termination of employment "Without Good Cause." 7.3 Termination Without Good Cause. (i) Notwithstanding any other provision of this Agreement, the Company shall have the right to terminate the -5- Executive's employment Without Good Cause pursuant to the provisions of this Section 7.3. If the Company shall terminate the employment of the Executive Without Good Cause effective on a date earlier than the termination date provided for in Section 2 (with the effective date of termination as so identified by the Company being referred to herein as the "Accelerated Termination Date"), the Executive, shall receive a lump sum cash payment equal to a sum of (1) the number of years (or fractions thereof) remaining in the then unexpired term of this Agreement or three, whichever is greater, multiplied by the sum of (A) the Base Salary and (B) the highest annual bonus amount received by Executive during the preceding three years or the minimum amount of any similar bonus or incentive plans or programs then in effect if greater than foregoing in respect to the fiscal year during which the Executive's termination Without Good Cause occurs plus (C) any other cash or other bonus compensation earned prior to the date of such termination pursuant to the terms of all incentive compensation plans then in effect other than any such plan relating to annual incentive cash bonuses or any similar bonus or incentive plans or programs then in effect; and (2) the additional payments necessary to discharge certain tax liabilities (the "Gross Ups"), as the term is defined in Section 11 of this Agreement, provided that, notwithstanding such termination of employment, the Executive's covenants set forth in Section 9 are intended to and shall remain in full force and effect and provided further that in the event of such termination, the Company shall have the right (but not the obligation) to relieve the Executive, in whole or in part, of the Executive's duties under this Agreement, or direct the Executive to no longer perform such duties, or direct that the Executive no longer be required to report to work, or any combination of the foregoing. (ii) The parties agree that, because there can be no exact measure of the damage that would occur to the Executive as a result of a termination by the Company of the Executive's employment Without Good Cause, the payments and benefits paid and provided pursuant to this Section 7.3 shall be deemed to constitute liquidated damages and not a penalty for the Company's termination of the Executive's employment Without Good Cause. 7.4 Termination by Executive For Good Reason. (i) The Executive shall be entitled to terminate his employment hereunder for Good Reason within one-year of the occurrence of an event constituting Good Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following circumstances without the Executive's consent: (1) assignment of the Executive to any duties substantially inconsistent with his position or duties contemplated by this Agreement or a substantial reduction of his duties contemplated by this Agreement; (2) the removal of any titles of the Executive specified in Section 4 of this Agreement; (3) any breach of the Company's obligation under this Agreement or any failure by the company to carry out any of its material obligations hereunder, and the failure to cure such breach or failure within seven days after written notice of such breach or failure has been delivered to the Company by the Executive; (4) a Change of Control (as hereinafter defined); or (5) the relocation of the Executive or his office, facilities, personnel, or equipment; provided, however, it shall not constitute "Good Reason" if the Executive or his office, facilities, personnel, or equipment are relocated to any future location of the Company's corporate headquarters -6- and the relocated corporate headquarters is in a metropolitan area with a population of at least 1,000,000 people. (ii) For purposes of this Agreement, a "Change in Control" shall mean the first to occur of: (1) a change in control of the Company of a nature that is required, pursuant to the Securities Exchange Act of 1934 (the "1934 Act"), to be reported in response to Item 1(a) of a Current Report on Form 8-K or Item 6(e) of Schedule 14A under the 1934 Act (in each case under this Agreement, references to provisions of the 1934 Act and the rules and regulations promulgated thereunder being understood to refer to such law, rules and regulations as the same are in effect on April 1, 1998; or (2) the acquisition of "beneficial Ownership" (as defined in Rule 13d-3 under the 1934 Act) of the Company's securities comprising 25% or more of the combined voting power of the Company's outstanding securities by any "person" (as that term is used in Section 13(d) and 14(d)(2) of the 1934 Act and the rules and regulations promulgated thereunder, but not including any trustee or fiduciary acting in that capacity for an employee benefit plan sponsored by the Company) and such person's "affiliates" and "associates" (as those terms are defined under the 1934 Act), but excluding any ownership by the Executive and his affiliates and associates; or (3) the closing of a sale of all or substantially all of the assets of the Company; (4) the Company's adoption of a plan of dissolution or liquidation; or (5) the closing of a merger or consolidation involving the Company in which the Company is not the surviving corporation or if, immediately following such merger or consolidation, less than seventy-five percent (75%) of the surviving corporation's outstanding voting stock is held or is anticipated to be held by persons who are stockholders of the Company immediately prior to such merger or consolidation. (iii) If an event constituting Good Reason occurs, the Executive shall have the right, exercisable for a period of one year thereafter by delivering a written statement to that effect to the Company, to immediately terminate this Agreement and upon such a determination the Executive shall have the right to receive and the Company shall be obligated to pay to Executive in cash a lump sum payment in an amount equal to the sum of (1) three times (a) the Base Salary then in effect, plus (B) the highest annual bonus amount received by Executive during the preceding three years or the minimum amount of any similar bonus or incentive plans or programs then in effect if greater than the foregoing in respect to the fiscal year during which the Executive's termination Without Good Cause occurs plus (C) any other cash or other bonus compensation earned prior to the date of such termination pursuant to the terms of all incentive compensation plans then in effect other than any such plan relating to annual incentive cash bonuses or any similar bonus or incentive plans or programs then in effect; and (2) the Gross Up (the sum of the foregoing amounts other than the Gross Up being referred to as the "Good Reason Termination Payment"). If the Executive fails to exercise his rights under this Section 7.4(iii) within one year following an event constituting Good Reason, such rights shall expire and be of no further force or effect. 7.5 Intentions Regarding Certain Stock and Benefit Plans. Except as otherwise provided herein, upon any termination of the Executive's employment Without Good Cause or upon the exercise by the Executive of his rights to terminate his employment for Good Reason, it is the intention of the parties that any and all vesting or performance requirements or conditions affecting any outstanding restricted stock, performance stock, stock option, stock appreciation right, bonus, award, right, grant or any other incentive compensation under the Mesa Air Group Employee Stock Option Plan or any other similar incentive plan, under this Agreement, or otherwise received, shall be deemed to be fully satisfied and any risk of forfeiture with respect thereto shall be deemed to have lapsed. 7.6 Certain Rights Mutually Exclusive. The provisions of Section 7.3 and Section 7.4 are mutually exclusive, provided, however, that if within one year following commencement of an 7.4 payout there shall be a Change of Control as defined in Section 7.4(ii), then the Executive shall be entitled to the amount payable to the Executive under Section 7.4(iii) reduced by the amount that the Executive has received under Section 7.3 up to the date of the Change in Control. The triggering of the lump sum payment requirement of Section 7.4 shall cause the provisions of Section 7.3 to become inoperative. 8. DISCLOSURE The Executive agrees that during and after the term of the Executive's employment by the Company, the Executive will disclose and disclose only to the Company all ideas, methods, plans, developments or improvements known by him which relate directly or indirectly to the business of the Company, whether acquired by the Executive before or during the Executive's employment by the Company. Nothing in this Section 8 shall be construed as requiring any such communication where the idea, plan, method or development is lawfully protected from disclosure as a trade secret of a third party or by any other lawful prohibition against such communication. 9. CONFIDENTIALITY The Executive agrees to keep in strict secrecy and confidence any and all information the Executive assimilates or to which the Executive has access during the Executive's employment by the Company and which has not been publicly disclosed and is not a matter of common knowledge in the fields of work of the Company, including but not limited to information regarding the Company's trade secrets, business plans, -8- marketing plans or programs, any non-public financial information, including forecasts, statistics relating to routes and markets, contracts, customers, compensation arrangements and business opportunities (collectively, the "Confidential Information"). The Executive agrees that both during and after the term of the Executive's employment by the Company, the Executive will not, without the prior written consent of the Company, disclose any Confidential Information to any third person, partnership, joint venture, company, corporation or other organization. The foregoing covenants shall not be breached to the extent that any such Confidential Information becomes a matter of general knowledge other than through a breach by a person with an obligation to the Company to maintain such confidentiality (and the Executive knows that such person had an obligation to keep such information confidential), including but not limited to the Executive's obligation to the Company under this Section 9. 10. SPECIFIC PERFORMANCE The Executive agrees that damages at law will be an insufficient remedy to the Company if the Executive violates the terms of Section 8 or Section 9 of this Agreement and that the Company would suffer irreparable damage as a result of such violation. Accordingly, it is agreed that the Company shall be entitled, upon application to a court of competent jurisdiction, to obtain injunctive relief to enforce the provisions of such Sections, which injunctive relief shall be in addition to any other rights or remedies available to the Company. 11. PAYMENT OF EXCISE TAXES 11.1 Payment of Excise Taxes. If the Executive is to receive any (1) Good Reason Termination Payment under Section 7.4 of this Agreement, (2) any benefit or payment under Section 6 as a result of or following the death or Permanent Disability of the Executive, (3) any benefit or payment under Section 7.3 as a result of or following any termination of employment hereunder Without Good Cause, (4) any benefit or payment under the Plans as a result of a Change in Control, following the death or Permanent Disability of the Executive or following the termination of employment hereunder Without Good Cause (such sections being referred to as the "Covered Sections" and the benefits and payments to be received thereunder being referred to as the "Covered Payments"), the Executive shall be entitled to receive the amount described below to the extent applicable: If any Covered Payment(s) under any of the Covered Sections or by the Company under another plan or agreement (collectively, the "Payments") are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (as amended from time to time, the "Code"), or any successor or similar provision of the Code (the "Excise Tax"), the Company shall pay the Executive an additional cash amount (the "Gross Up") such that the net amount retained by the Executive after deduction of any Excise Tax on the Payments and the federal income tax and Excise Tax on any amounts paid under this Section 11 shall be equal to the Payments. The Gross-Up shall not include the amount of state or federal income tax owed by the Executive on the amount of the Payments excluding any state or federal income tax on the Gross-Up. -9- 11.2 Certain Adjustment Payments. For purposes of determining the Gross Up, the Executive shall be deemed to pay the federal income tax at the highest marginal rate of taxation (currently 39.6%) in the calendar year in which the payment to which the Gross Up applies is to be made. The determination of whether such Excise Tax is payable and the amount thereof shall be made upon the opinion of tax counsel selected by the Company and reasonably acceptable to the Executive. The Gross Up, if any, that is due as a result of such determination shall be paid to the Executive in cash in a lump sum within thirty (30) days of such computation. If such opinion is not finally accepted by the Internal Revenue Service upon audit or otherwise, then appropriate adjustments shall be computed (without interest but with Gross Up, if applicable) by such tax counsel based upon the final amount of the Excise Tax so determined; any additional amount due the Executive as a result of such adjustment shall be paid to the Executive by his or her Company in cash in a lump sum within thirty (30) days of such computation, or any amount due the Executive's Company as a result of such adjustment shall be paid to the Company by the Executive in cash in a lump sum within thirty (30) days of such computation. 12. MISCELLANEOUS 12.1 Waiver of Breach. The waiver by either party to this Agreement of a breach of any of the provisions of this Agreement by the other party shall not be construed as a waiver of any subsequent breach by such other party. 12.2 Compliance With Other Agreements. The Executive represents and warrants that the execution of this Agreement by him and the Executive's performance of the Executive's obligations hereunder will not conflict with, result in the breach of any provision of or the termination of or constitute a default under any Agreement to which the Executive is a party or by which the Executive is or may be bound. 12.3 Binding Effect Assignment. The rights and obligations of the Company under this Agreement shall insure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is a personal employment contract and the rights, obligations and interests of the Executive hereunder may not be sold, assigned, transferred, pledged or hypothecated. 12.4 Entire Agreement. This Agreement contains the entire agreement and supersedes all prior agreements and understandings, oral or written, with respect to the subject matter hereof. This Agreement may be changed only by an agreement in writing signed by the party against whom any waiver, change, amendment, modification or discharge is sought. 12.5 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. -10- 12.6 No Duty to Mitigate. The Executive shall be under no duty to mitigate any loss of income as result of the termination of his employment hereunder and any payments due the Executive upon termination of employment shall not be reduced in respect to any other employment compensation received by the Executive following such termination. 12.7 Arizona Law. This Agreement shall be construed pursuant to and governed by the substantive laws of the State of Arizona (except that any provision of Nevada law shall not apply if the law of a state or jurisdiction other than Arizona would otherwise apply). 12.8 Severability. Any provision of this Agreement which is determined by a court of competent jurisdiction to be prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. In any such case, such determination shall not affect any other provision of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect. In any provision or term of this Agreement is susceptible to two or more constructions or interpretations, one or more of which would render the provision or term void or unenforceable, the parties agree that a construction or interpretation which renders the term or provision valid shall be favored. 12.9 Deduction for Tax Purposes. The Company's obligations to make payments under this Agreement are independent of whether any or all of such payments are deductible expenses of the company for federal income tax purposes. 12.10 Enforcement. If, within ten (10) days after demand to comply with the obligations of one of the parties to this Agreement served in writing on the other, compliance or reasonable assurance of compliance is not forthcoming, and the party demanding compliance engages the services of an attorney to enforce rights under this Agreement, the prevailing party in any action shall be entitled to recover all reasonable costs and expenses of enforcement (including reasonable attorneys' fees and reasonable expenses during investigation, before and at trial and in appellate proceedings if litigation ensues), directly or indirectly resulting from or arising out of a breach by the other party of their respective obligations hereunder. The parties' costs of enforcing this Agreement shall include prejudgment interest. Additionally, if any party incurs any out-of-pocket expenses in connection with the enforcement of this Agreement, all such amounts shall accrue interest at ten percent (10%) per annum (or such lower rate as may be required to avoid any limit imposed by applicable law) commencing thirty (30) days after any such expenses are incurred. 12.11 Notices. All notices which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by telecopy or similar electronic transmission method; one working day after it is sent, if sent by recognized -11- expedited delivery service; and three days after it is sent, if mailed, first class mail, certified mail, return receipt requested, with postage prepaid. In each case notice shall be sent to: To the Company c/o Mesa Airlines, Inc. 410 North 44th Street, Ste 700 Phoenix, AZ 85008 Attn: Chief Executive Officer Telephone: (602) 685-4000 To the Executive at the Executive's last known address, or to such other address as either party may specify by written notice to the other. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. MESA AIR GROUP, INC. By: /s/ ------------------------------------ Michael Lotz, President (Date) By: /s/ ------------------------------------ Brian S. Gillman (Date) -12- EX-10.36 8 p71603exv10w36.txt EXHIBIT 10.36 EXHIBIT 10.36 * TEXT OMITTED AND FILED SEPARATELY CONFIDENTIAL TREATMENT REQUESTED UNDER 17C.F.R. SECTION 200.80(B)(4), 200.83 AND 240.24B-2 LEASE AMENDMENT FIVE CMD 177 A (8/98) (EXTENSION AND EXPANSION/CO-TERMINOUS) THIS LEASE AMENDMENT FIVE ("Amendment") is made and entered into as of the 11th day of October, 2002 by and between CMD REALTY INVESTMENT FUND IV, L.P. an Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a Nevada corporation ("Tenant"). A. Landlord and Tenant are the current parties to that certain lease ("Original Lease") dated October 16, 1998, for premises currently known as Suite 700 (the "Premises"; sometimes referred to herein as the "Original Premises") in the building (the "Building") known as Three Gateway, located at 410 N. 44th Street, Phoenix, Arizona (the "Property"), which lease has heretofore been amended by documents described and dated as follows: First Amendment to Lease dated March 9. 1999, Second Amendment to Lease dated November 8, 1999, Letter Agreement dated May 10, 2000, Lease Amendment Three dated November 7, 2000, Lease Amendment Four dated May 15, 2001, Lease Term Adjustment Confirmation dated January 3, 2001, Letter from Mesa Air dated May 30, 2001 and Parking Letter dated March 21, 2002 (collectively, and as amended herein, the "Lease"). B. Tenant has requested that additional space in the Property be added to the Premises, and that the term of the Lease be extended, and Landlord is willing to grant the same, all on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the parties do hereby agree as follows: 1. TERM EXTENSION. The term of the Lease is hereby modified such that the current term will expire and a new extended term ("Extended Term") will commence on September 1, 2002 (the "Extension Date") and continue until August 31, 2012 (the "New Expiration Date"), unless sooner terminated in accordance with the terms of the Lease. Based on a recent re-measurement of the Building, the size of the Original Premises shall, as of the Extension Date, be deemed to be 21,172 rentable square feet, the size of the Property shall be deemed to be 221,409 rentable square feet and Tenant's share with respect to the Original Premises shall be deemed to be nine and 56/100 percent (9.56%). 2. ADDITIONAL PREMISES. The space known as Suites 1120 and 1140 (collectively, the "Additional Premises"), the approximate location of which is shown on Exhibit A hereto, and which shall be deemed to contain a total of 5,152 square feet of rentable area for purposes hereof, shall be added to and become a part of the Premises, commencing on July 15, 2005 or such earlier date as the Novellus Lease may be terminated as further described in Section 3 below ("Additional Premises Commencement Date"), and continuing co-terminously with the New Expiration Date, as the same may be extended from time to time, subject to the terms and conditions set forth hereinafter. 3. NOVELLUS SUBLEASE. The parties acknowledge and agree that: (i) Tenant is subleasing the Additional Premises pursuant to a Sublease dated 10/15/02, ("Novellus Sublease") from Novellus Systems, Inc. ("Novellus"), that will terminate on July 14, 2005 or such earlier date on which the lease between Novellus and Landlord ("Novellus Lease") is terminated (as contemplated in the Consent to Sublease dated 9/19/02 between Landlord, Tenant and Novellus), (ii) the Additional Premises Commencement Date herein shall be advanced to such earlier date on which the Sublease and Novellus Lease are terminated, and (iii) in such event, the Base Rent for the Additional Premises shall be $[*] per month through July 14, 2005. If the Additional Premises Commencement Date is advanced to an earlier date under this Section due to an earlier termination of the Novellus Lease, the New Expiration Date herein shall not be changed. Tenant shall execute a confirmation of the Additional Premises Commencement Date as adjusted herein in such form as Landlord may reasonably request; any failure to respond within thirty (30) days after requested shall be deemed an acceptance of the date set forth in Landlord's confirmation. Tenant acknowledges that Landlord may elect to invoice and require that Tenant pay directly to Landlord all sub rentals under the Novellus Sublease and that Novellus has consented to such direct payment under Paragraph 3(c) of the Consent to Sublease. 4. BASE RENT. a. Original Premises. The base or minimum monthly rent for the Original Premises shall be as set forth in the following schedule: Original Premises Base Rent Schedule

Original Premises Period Monthly Base Rent ------ ----------------- Extension Date - August 31,2004 $[*] September 1,2004 - August 31,2005 $[*] September 1, 2005 - August 31, 2007 $[*] September 1, 2007 - August 31, 2009 $[*] September 1, 2009 - New Expiration Date $[*]

b. Additional Premises. The base or minimum monthly rent for the Additional Premises shall be as set forth in the following schedule: Additional Premises Base Rent Schedule

Additional Premises Period Monthly Base Rent ------ ------------------- July 15, 2005 - August 31, 2005 $[*] September 1, 2005 - August 31, 2007 $[*] September 1, 2007 - August 31, 2009 $[*] September 1, 2009 - New Expiration Date $[*]

5. ADDITIONAL RENT; TENANT'S SHARE. As of the Extension Date with respect to the Original Premises and as of the Additional Premises Commencement Date with respect to the Additional Premises, the Expense Stop shall be the actual Building operating costs for the calendar year 2003. On the Additional Premises Commencement Date, all other rentals or other charges based or computed on the square footage of the Premises, including without limitation, real estate taxes, insurance costs, operating or other expenses of the Property, shall be increased proportionately to reflect the rentable square footage of the Additional Premises, such that Tenant's share thereof shall be increased [*] percent ([*]%) with respect to the Additional Premises, for a total of [*] percent ([*]%) with respect to the entire Premises including the Additional Premises. 6. SEPARATE OR COMBINED BILLINGS. The minimum or base rentals and all other rentals and charges respecting the Additional Premises are sometimes herein called the "Additional Premises Rent". Landlord may compute and bill the Additional Premises Rent (or components thereof) separately or treat the Additional Premises and Premises as one unit for computation and billing purposes. In either event, any default respecting any separate billing shall be a default with respect to the entire Premises and Lease. 7. PRORATIONS. If the Extension Date or Additional Premises Commencement Date occurs other than on the beginning of the applicable payment period under the Lease, Tenant's obligations for base or minimum rentals, operating expenses and real estate taxes and other such charges shall be prorated on a per diem basis. 8. PARKING. Commencing as of the Extension Date with respect to the Original Premises and the Additional Premises Commencement Date with respect to the Additional Premises, Tenant shall have the parking rights set forth in Exhibit F attached hereto. 9. SIGNAGE. During the Extended Term Tenant shall continue to have the signage rights set forth in Section 21 of the Original Lease. 10. OTHER TERMS; CERTAIN PROVISIONS DELETED. On the Extension Date with respect to the Original Premises, and with respect to the Additional Premises on the Additional Premises Commencement Date, all terms and conditions then or thereafter in effect under the Lease shall apply, except as expressly provided to the contrary herein. Without limiting the generality of the preceding sentence, Sections 9, 10 and 11 of Lease Amendment Four and Sections 15 and 16 of Lease Amendment Three are incorporated herein by reference. However, notwithstanding the foregoing to the contrary, this Amendment is intended to supersede any rights of Tenant under the Lease to expand (except as set forth in Exhibits D and E attached hereto), reduce or relocate the Premises, or extend or renew the term of the Lease (except as set forth in Exhibit C attached hereto), or terminate the Lease early, and all such provisions are hereby deleted. 11. CONDITION OF ORIGINAL PREMISES; ALLOWANCE. Tenant has been occupying the Original Premises, and agrees to accept the same "AS IS" without any agreements, representations, understandings or obligations on the part of Landlord to perform or pay for any alterations, repairs or improvements, except that Landlord shall provide an allowance ("Allowance") as provided in Section 1.b of Exhibit B towards the "Cost of the Work" for permanent leasehold improvements ("Work") that Tenant may wish to perform in the Original Premises in accordance with the Work Letter attached hereto as Exhibit B. There shall be no postponement of the Extension Date or abatement of Rent as a result of any such Work under any circumstances. 12. CONDITION OF ADDITIONAL PREMISES. Tenant is occupying the Additional Premises pursuant to the Novellus Sublease and Consent to Sublease referred to in Section 3 above, and has inspected, or had an opportunity to inspect, the Additional Premises (and portions of the Property, Systems and Equipment providing access to or serving the Additional Premises), and agrees to accept the same "as is" on the Additional Premises Commencement Date without any agreements, representations, understandings or obligations on the part of Landlord to perform any alterations, repairs or improvements. 13. ALLOWANCE FOR ADDITIONAL PREMISES. Notwithstanding Section 12 to the contrary, Landlord shall provide an allowance ("Allowance") as provided in Section 1.b of Exhibit B to be used towards reasonable, direct out-of-pocket costs of designing and performing permanent leasehold improvements in the Additional Premises during the first twelve (12) months of the term of the Novellus Sublease. Tenant shall engage its own designers and contractors, and Landlord shall reimburse Tenant based on Tenant's submission of a customary tenant's affidavit respecting the work, invoices, paid receipts and other reasonable evidence of payment, and the submission of customary architect's certificates, lien waivers and affidavits of payment, all reasonably satisfactory to Landlord, all as further provided in Exhibit B. Any unused portion of the Allowance shall belong to Landlord. Such work shall be subject to Exhibit B and the applicable provisions of the Novellus Sublease and Consent to Sublease, including without limitation obtaining the consent of Novellus and Landlord to all alterations to the Additional Premises, which consent shall not be unreasonably withheld. Any personal property, trade fixtures or equipment, including, but not limited to, modular or other furniture, and cabling or other items for communications or computer systems, whether or not shown on any plan approved by Landlord, shall be provided by Tenant, at Tenant's sole cost, except as otherwise provided in Exhibit B with respect to cabling. 14. REAL ESTATE BROKERS. Tenant represents and warrants that Tenant has not dealt with any broker, agent or finder in connection with this Amendment except for Cushman and Wakefield of Arizona, Inc., and agrees to indemnify and hold Landlord, and its employees, agents and affiliates harmless from all damages, judgments, liabilities and expenses (including reasonable attorneys' fees) arising from any claims or demands of any other broker, agent or finder with whom Tenant has dealt for any commission or fee alleged to be due in connection with this Amendment. 15. OFFER. The submission and negotiation of this Amendment shall not be deemed an offer to enter the same by Landlord. Tenant's execution of this Amendment constitutes a firm offer to enter the same which may not be withdrawn for a period of thirty (30) days after delivery to Landlord. During such period, Landlord may proceed in reliance thereon and permit Tenant to enter the Additional Premises, but such acts shall not be deemed an acceptance. Such acceptance shall be evidenced only by Landlord signing and delivering this Amendment to Tenant. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above. LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL] an Illinois limited partnership By: CMD/Fund IV GP Investments, L.P., an Illinois limited partnership, its general partner By: CMD REIM IV, Inc., an Illinois corporation, its general partner By: /s/ -------------------------------------- Lee Moreland, Vice President TENANT: MESA AIR GROUP, INC. [SEAL] A Nevada corporation By: /s/ -------------------------------------- Name: Mike Lotz Its; President & COO CERTIFICATE I, ______________________, as ______________________________________of the aforesaid Tenant, hereby certify that the individual(s) executing the foregoing Lease on behalf of Tenant was/were duly authorized to act in his/their capacities as set forth above, and his/their action(s) are the action of Tenant. (Corporate Seal) ------------------------------------------ EXHIBIT A FLOOR PLATE SHOWING ADDITIONAL PREMISES (FLOOR PLAN) EXHIBIT B CMD 108G (12/00) MODERATE WORK TENANT PERFORMANCE WORK LETTER This Exhibit is a "Work Letter" to the foregoing document (referred to herein for convenience as the "Lease Document"). All references to "Premises" hereunder shall mean either the Original Premises and/or the Additional Premises, it being understood and agreed that Tenant may allocate use of the Allowance between the Original Premises and/or the Additional Premises as Tenant shall determine in its reasonable discretion. I. Basic Arrangement a. Tenant to Arrange for Work. Tenant desires to engage one or more contractors to perform certain improvements (the "Work," as further defined in Section VII) to or for the Premises under the Lease Document. Tenant shall arrange for the Work to be planned and performed strictly in accordance with the provisions of this Exhibit and applicable provisions of the Lease Document. Tenant shall pay when due all costs for or related to the Plans and Work whatsoever ("Costs of the Work"), and Landlord shall reimburse certain such costs up to the Allowance, as further described below. b. Allowance and, Landlord's Costs and Administrative Fee. Landlord shall provide up to $[*] (the "Allowance") towards the Costs of the Work relating to permanent leasehold improvements (provided the portion of the Allowance available for the Plans shall be limited to ten percent (10%), and shall exclude planning for furniture, fixtures and equipment). Tenant shall pay Landlord's out-of-pocket costs, if any, for architectural and engineering review of the Plans and any Engineering Report, and all revisions thereof, and an administrative fee ("Administrative Fee") equal to $[*]of the other Costs of the Work for Landlord's time in reviewing the Plans and Work and coordinating with Tenant's Contractors. Landlord may, if feasible, also charge Tenant for any extra costs reasonably incurred by Landlord as a result of the Work, including but not limited to, any additional after-hours security for the Property common areas due to after-hours construction activity, and costs of any after-hours HVAC consumed in or for the Premises during the Work (based on actual usage as determined by the Building's energy management system); provided, however, that Tenant's contractors shall not be charged for parking (provided that parking by such contractors shall not exceed ten (10) spaces), freight elevator access or loading dock access. The foregoing items may be charged against the Allowance, and if the Allowance shall be insufficient, Tenant shall pay Landlord for such amounts as additional Rent within thirty (30) days after billing. If all or any portion of the Allowance shall not be used for the purposes permitted herein within twelve (12) months after the Commencement Date set forth in the Lease Document, Landlord shall be entitled to the savings and Tenant shall receive no credit therefor; provided that Landlord shall use up to $[*] of any remaining portion of the Allowance that has not been used for the purposes permitted above by the time required herein, to reimburse Tenant's reasonable, direct, out-of pocket costs incurred for having its telecommunications vendor install and connect telecommunications cables in the Premises. Landlord shall make such reimbursement to Tenant, out of any such remaining portion of the Allowance, within thirty (30) days after the following events have occurred: (x) Tenant shall have provided Landlord with paid invoices and other evidence of such costs reasonably satisfactory to Landlord (including lien waivers if applicable), within twelve (12) months days after the Commencement Date has occurred, and (y) Tenant shall not be in Default. Notwithstanding anything to the contrary contained herein, any personal property, trade fixtures or business equipment, including, but not limited to, modular or other furniture, and cabling for communications or computer systems (except as otherwise provided above with respect to cabling), whether or not shown on the Approved Plans, shall be provided by Tenant, at Tenant's sole cost, and the Allowance shall not be used for such purposes. Any cabling remaining in the Premises upon the expiration or earlier termination of the Lease shall become the property of Landlord (without payment by Landlord). All disconnections made by Tenant of any cabling shall be made properly such that, among other things, such cabling is reusable. c. Funding and Disbursement. Landlord shall fund and disburse the Allowance within thirty (30) days after the Work has been completed in accordance with the Approved Plans in accordance with the provisions hereof, and Tenant has submitted all invoices, architect's certificates, a Tenant's affidavit, complete unconditional lien waivers and affidavits of payment by all Tenant's Contractors, and such other evidence as Landlord may reasonably require that the cost of the Work has been paid and that no architect's, mechanic's, materialmen's or other such liens have been or may be filed against the Property or the Premises arising out of the design or performance of such Work. Landlord may issue checks to fund the Allowance jointly or separately to Tenant, its general contractor, and any other of Tenant's Contractors. II. Planninq. The term "Plans" herein means a "Space Plan," as the same may be superseded by any "Construction Drawings," prepared and approved pursuant to this Section (and as such terms are further defined in Section VII). In the event of any inconsistency between the Space Plan and Construction Drawings, or revisions thereto, as modified to obtain permits, the latest such item approved by Landlord shall control. The term "Approved Plans" herein means the Plans (and any revisions thereof) as approved by Landlord in writing in accordance with this Section. a. Tenant's Planners. Tenant shall engage a qualified, licensed architect ("Architect"), subject to Landlord's prior written approval. To the extent required by Landlord or appropriate in connection with preparing the Plans, Tenant shall also engage one or more qualified, licensed engineering firms, e.g. mechanical, electrical, plumbing, structural and/or HVAC ("Engineers"), all of whom shall be designated or approved by Landlord in writing. The term "Tenant's Planners" herein shall refer collectively or individually, as the context requires, to the Architect or Engineers engaged by Tenant, and approved or designated by Landlord in writing in accordance with this Exhibit. b. Space Plan, Construction Drawings and Engineering Report. Tenant shall promptly hereafter cause the Architect to submit three (3) sets of a "Space Plan" (as defined in Section VII) to Landlord for approval. Landlord shall, within three (3) working days after receipt thereof, either approve said Space Plan, or disapprove the same advising Tenant of the reasons for such disapproval; Landlord agrees to not unreasonably withhold its approval, as further provided in subsection c below. In the event Landlord disapproves said Space Plan, Tenant shall modify the same, taking into account the reasons given by Landlord for said disapproval, and shall submit three (3) sets of the revised Space Plan to Landlord. The parties shall continue such process in the same time frames until Landlord grants approval. To the extent required by Landlord or the nature of the Work and as further described in Section VII, Tenant shall, after Landlord's approval of the Space Plan: (i) cause the Architect to submit to Landlord for approval "Construction Drawings" (including, as further described in Section VII below, sealed mechanical, electrical and plumbing plans prepared by a qualified, licensed Engineer approved or designated by Landlord), and (ii) cause the Engineers to submit for Landlord's approval a report (the "Engineering Report") indicating any special heating, cooling, ventilation, electrical, heavy load or other special or unusual requirements of Tenant, including calculations. Landlord shall, within five (5) working days after receipt thereof (or such longer time as may be reasonably required in order to obtain any additional architectural, engineering or HVAC report or due to other special or unusual features of the Work or Plans), either approve the Construction Drawings and Engineering Report, or disapprove the same advising Tenant of the reasons for disapproval (and Landlord's agrees that any such disapproval shall be on a reasonable basis, as further provided in subsection c below). If Landlord disapproves of the Construction Drawings or Engineering Report, Tenant shall modify and submit revised Construction Drawings, and a revised Engineering Report, taking into account the reasons given by Landlord for disapproval. The parties shall continue such process in the same time frames until Landlord grants approval. Construction Drawings shall include a usable computer aided design (CAD) file. c. Tenant's Planning Responsibility and Landlord's Approval. Tenant has sole responsibility to provide all information concerning its space requirements to Tenant's Planners, to cause Tenant's Planners to prepare the Plans, and to obtain Landlord's final approval thereof (including all revisions). Tenant and Tenant's Planners shall perform independent verifications of all field conditions, dimensions and other such matters), and Landlord shall have no liability for any errors, omissions or other deficiencies therein. Landlord shall not unreasonably withhold approval of any Plans or Engineering Report submitted hereunder, if they provide for a customary office layout, with finishes and materials generally conforming to building standard finishes and materials (or upgrades) currently being used by Landlord at the Property, are compatible with the Property's shell and core construction, and if no material modifications will be required for the Property's Systems and Equipment (as hereinafter defined), and will not require any structural modifications to the Property, whether required by heavy loads or otherwise, and will not create any potentially dangerous conditions, potentially violate any codes or other governmental requirements, potentially interfere with any other occupant's use of its premises, or potentially increase the cost of operating the Property. "Systems and Equipment" shall mean any plant, machinery, transformers, duct work, cable, wires, and other equipment, facilities, and systems designed to supply light, heat, ventilation, air conditioning and humidity or any other services or utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sprinkler. communications, alarm, security, or fire/life/safety systems or equipment, or any elevators, escalators or other mechanical, electrical, electronic, computer or other systems or equipment for the Property, except to the extent that any of the same serves Tenant or any other tenant exclusively. d. Governmental Approval of Plans; Building Permits. Tenant shall cause Tenant's Contractors (as defined in Section III) to apply for any building permits, inspections and occupancy certificates required for or in connection with the Work. If the Plans must be revised in order to obtain such building permits, Tenant shall promptly notify Landlord, promptly arrange for the Plans to be revised to satisfy the building permit requirements, and shall submit the revised Plans to Landlord for approval as a Change Order under Paragraph e below. Landlord shall have no obligation to apply for any zoning, parking or sign code amendments, approvals, permits or variances, or any other governmental approval, permit or action. If any such other matters are required, Tenant shall promptly seek to satisfy such requirements (if Landlord first approves in writing), or shall revise the Plans to eliminate such requirements and submit such revised Plans to Landlord for approval in the manner described above. e. Changes After Plans Are Approved. If Tenant shall desire, or any governmental body shall require, any changes, alterations, or additions to the Approved Plans, Tenant shall submit a detailed written request or revised Plans (the "Chance Order") to Landlord for approval. If reasonable and practicable and generally consistent with the Plans theretofore approved, Landlord shall not unreasonably withhold approval. All costs in connection therewith, including, without limitation, construction costs, permit fees, and any additional plans, drawings and engineering reports or other studies or tests, or revisions of such existing items, shall be included in the Costs of the Work under Section I. In the event that the Premises are not constructed in accordance with the Approved Plans, Tenant shall not be permitted to occupy the Premises until the Premises reasonably comply in all respects therewith; in such case, the Rent shall nevertheless commence to accrue and be payable as otherwise provided in the Lease Document. III. Contractors and Contracts. Tenant shall engage to perform the Work such contractors, subcontractors and suppliers ("Tenant's Contractors") as Landlord customarily engages or recommends for use at the Property; provided, Tenant may substitute other licensed, bonded, reputable and qualified parties capable of performing quality workmanship. Such substitutions may be made only with Landlord's prior written approval, which shall not be unreasonably withheld or delayed. Such approval shall be granted, granted subject to specified conditions, or denied within three (3) working days after Landlord receives from Tenant a written request for such substitution, containing a reasonable description of the proposed party's background, finances, references, qualifications, and other such information as Landlord may request. For Work involving any mechanical, electrical, plumbing, structural, demolition or HVAC matters, or any Work required to be performed outside the Premises or involving Tenant's entrance, Landlord may require that Tenant select Tenant's Contractors from a list of such contractors (provided that Landlord's gives Tenant at least 3 choices for each trade) or else, for any trade as to which Landlord is unable to give Tenant a choice of 3 Contractors, Tenant may choose its own Contractor for such trade, subject to Landlord's approval which shall not be unreasonably withheld or delayed. All contracts shall contain insurance, indemnity and other provisions consistent herewith. Each contract and subcontract shall guarantee to Tenant and Landlord the replacement or repair, without additional charge, of all defects or deficiencies in accordance with its contract within one (1) year after completion of such work or the correction thereof. The correction of such work shall include, without additional charge, all additional expenses and damages in connection with such removal or replacement of all or any part of Tenant's Work, and/or the Property and/or common areas, or work which may be damaged or disturbed thereby. Tenant shall give Landlord copies of all contracts and subcontracts promptly after the same are entered. IV. Insurance and Indemnity. In addition to any insurance which may be required under the Lease Document, Tenant shall either secure, pay for and maintain, or cause Tenant's Contractors to secure, pay for and maintain during the continuance of construction and fixturing work within the Property or Premises, reasonable amounts of customary and appropriate insurance with responsible, licensed insurers, for all insurable risks and liabilities relating to the Work, including commercial general liability with contractual liability coverage ("CGL"), and full replacement value property damage (including installation floater coverage). The CGL policy shall be endorsed to include, as additional insured parties, Landlord, the property management company for the Property, and Landlord's agents, partners, affiliates. All policies shall include a waiver of subrogation in favor of the parties required to be additional insureds hereunder. Such insurance shall be primary to any insurance carried independently by said additional insured parties (which shall be excess and non-contributory). Certificates for such insurance, and the endorsements required hereunder, shall be delivered to Landlord before construction is commenced or any contractor's equipment or materials are moved onto the Property. Landlord shall not be liable in any way for any injury, loss or damage which may occur to any decorations, fixtures, personal property, installations or other improvements or items of work installed, constructed or brought upon the Premises by or for Tenant or Tenant's Contractors, all of the same being at Tenant's sole risk. In the event that during the course of Tenant's Work any damage shall occur to the construction and improvements being made by Tenant, then Tenant shall repair the same at Tenant's cost. Tenant hereby agrees to protect, defend, indemnify and hold Landlord and its employees, agents, and affiliates harmless from all liabilities, losses, damages, claims, demands, and expenses (including attorneys' fees) arising out of or relating to the Plans or Work. V. Performance of Work a. Conditions to Commencing Work. Before commencing any Work, Tenant shall: (i) obtain Landlord's written approval of Tenant's Planners and the Plans, as described in Section II, (ii) obtain and post all necessary governmental approvals and permits as described in Section II, and provide copies thereof to Landlord, (iii) obtain Landlord's written approval of Tenant's Contractors, and provide Landlord with copies of the contracts as described in Section III, and (iv) provide evidence of insurance to Landlord as described in Section IV. b. Compliance and Standards. Tenant shall cause the Work to comply in all respects with the following: (i) the Approved Plans, (ii) the Property Code of the City and State in which the Property is located and Federal, State, County, City or other laws, codes, ordinances, rules, regulations and guidance, as each may apply according to the rulings of the controlling public official, agent or other such person, (iii) applicable standards of the National Board of Fire Underwriters (or successor organization) and National Electrical Code, (iv) applicable manufacturer's specifications, and (v) any work rules and regulations as Landlord or its agent may have adopted for the Property, including any Rules attached as an Exhibit to the Lease Document. Tenant shall use only new, first-class materials in the Work, except where explicitly shown in the Approved Plans. Tenant's Work shall be performed in a thoroughly safe, first-class and workmanlike manner, and shall be in good and usable condition at the date of completion. In case of inconsistency, the requirement with the highest standard protecting or favoring Landlord shall govern. c. Property Operations, Dirt, Debris, Noise and Labor Harmony. Tenant and Tenant's Contractors shall make all efforts and take all proper steps to assure that all construction activities do not interfere with the operation of the Property or with other occupants of the Property. Tenant's Work shall be coordinated under Landlord's direction with any other work and other activities being performed for or by other occupants in the Property so that Tenant's Work will not interfere with or delay the completion of any other work or activity in the Property. Construction equipment and materials are to be kept within the Premises, and delivery and loading of equipment and materials shall be done at such locations and at such time as Landlord shall direct so as not to burden the construction or operation of the Property. Tenant's Contractors shall comply with any work rules of the Property and Landlord's requirements respecting the hours of availability of elevators and manner of handling materials, equipment and debris. Demolition must be performed after 6:00 p.m. and on weekends, or as otherwise required by Landlord or the work rules for the Property. Construction which creates noise, odors or other matters that may bother other occupants may be rescheduled by Landlord at Landlord's sole discretion. Delivery of materials, equipment and removal of debris must be arranged to avoid any inconvenience or annoyance to other occupants. The Work and all cleaning in the Premises must be controlled to prevent dirt, dust or other matter from infiltrating into adjacent occupant, common or mechanical areas. Tenant shall conduct its labor relations and relations with Tenant's Planners and Contractors, employees, agents and other such parties so as to avoid strikes, picketing, and boycotts of, on or about the Premises or Property. If any employees of the foregoing parties strike, or if picket lines or boycotts or other visible activities objectionable to Landlord are established, conducted or carried out against Tenant or such parties in or about the Premises or Property, Tenant shall immediately close the Premises and remove or cause to be removed all such parties until the dispute has been settled. d. Removal of Debris. Tenant's Contractors shall be required to remove from the Premises and dispose of, at least once a day and more frequently as Landlord may reasonably direct, all debris and rubbish caused by or resulting from the Work, and shall not place debris in the Property's waste containers. If required by Landlord, Tenant shall sort and separate its waste and debris for recycling and/or environmental law compliance purposes. Upon completion of Tenant's Work, Tenant's Contractors shall remove all surplus materials, debris and rubbish of whatever kind remaining within the Property which has been brought in or created by Tenant's Contractors in the performance of Tenant's Work. If any of Tenant's Contractors shall neglect, refuse or fail to remove any such debris, rubbish, surplus material or temporary structures within 48 hours after notice to Tenant from Landlord with respect thereto, Landlord may cause the same to be removed by contract or otherwise as Landlord may determine expedient, and bill the cost thereof to Tenant. e. Completion and General Requirements. Tenant shall take all actions necessary to cause Tenant's Planners to prepare the Approved Plans, and to cause Tenant's Contractors to obtain permits or other approvals, diligently commence and prosecute the Work to completion, and obtain any inspections and occupancy certificates for Tenant's occupancy of the Premises by the Commencement Date set forth in the Lease Document. Any delays in the foregoing shall not serve to abate or extend the time for the Commencement Date or commencement of Rent under the Lease Document, except to the extent of one (1) day for each day that Landlord delays approvals required hereunder beyond the times permitted herein without good cause, provided substantial completion of the Work and Tenant's ability to reasonably use the Premises by the Commencement Date (or by such later date when Tenant would otherwise have substantially completed the Work) is actually delayed thereby. Tenant shall impose on and enforce all applicable terms of this Exhibit against Tenant's Planners and Tenant's Contractors. Tenant shall notify Landlord upon completion of the Work (and record any notice of completion contemplated by law). To the extent reasonably appropriate based on the nature of the Work, Tenant shall provide Landlord with "as built" drawings no later than thirty (30) days after completion of the Work. f. Landlord's Role and Rights. The parties acknowledge that neither Landlord nor its managing agent is an architect or engineer, and that the Work will be designed and performed by independent architects, engineers and Tenant's Contractors engaged by Tenant. Landlord and its managing agent shall have no responsibility for construction means, methods or techniques or safety precautions in connection with the Work, and do not guarantee that the Plans or Work will be free from errors, omissions or defects, and shall have no liability therefor. Landlord's approval of Tenant's Plans and contracts, and Landlord's designations, lists, recommendations or approvals concerning Tenant's Planners and Contractors shall not be deemed a warranty as to the quality or adequacy thereof or of the Plans or the Work, or the design thereof, or of its compliance with laws, codes and other legal requirements. Tenant shall permit access to the Premises, and inspection of the Work, by Landlord and Landlord's architects, engineers, contractors and other representatives, at all times during the period in which the Work is being planned, constructed and installed and following completion of the Work. If Tenant fails to perform the Work as required herein or the materials supplied fail to comply herewith or with the specifications approved by Landlord, and Tenant fails to cure such failure within two (2) business days after notice by Landlord, Landlord shall have the right, but not the obligation, to order Tenant or any of Tenant's Contractors who violate the requirements imposed on Tenant or Tenant's Contractors in performing the Work to cease the Work and remove its equipment and employees from the Property. Landlord shall have the right, but not the obligation, to perform, on behalf of and for the account of Tenant, subject to reimbursement by Tenant, any work required to cure or complete any Work which has violated this Exhibit or which pertains to patching of the Work (and which Tenant has failed to cure within ten (10) days after notice from Landlord), or involves Work outside the Premises, or affects the base building core or structure or Systems and Equipment for the Property. VI. HVAC Balancing, As a final part of the Work, Tenant shall cause its contractor to perform air balancing tests and adjustments on all areas of the Premises served by the air handling system that serves the areas in which the Work is performed (including any original space and any additional space being added to the Premises in connection herewith). Landlord shall not be responsible for any disturbance or deficiency created in the air conditioning or other mechanical, electrical or structural facilities within the Property or Premises as a result of the Work. If such disturbances or deficiencies result, and Tenant's contractor does not properly correct the same, Landlord reserves the right, after fifteen (15) days notice to Tenant, to correct the same and restore the services to Landlord's reasonable satisfaction, at Tenant's reasonable expense. VII. Certain Definitions a. "Space Plan" herein means, to the extent required by the nature of the Work, detailed plans (including any so-called "pricing plans"), including a fully dimensioned floor plan and drawn to scale, showing: (i) demising walls, interior walls and other partitions, including type of wall or partition and height, and any demolition or relocation of walls, and details of space occupancy and density, (ii) doors and other openings in such walls or partitions, including type of door and hardware, (iii) electrical and computer outlets, circuits and anticipated usage therefore, (iv) any special purpose rooms, any sinks or other plumbing facilities, heavy items, and any other special electrical, HVAC or other facilities or requirements, including all special loading and related calculations, (v) any space planning considerations to comply with fire or other codes or other governmental or legal requirements, (vi) finish selections, and (vii) any other details or features requested by Architect, Engineer or Landlord, or otherwise required, in order for the Space Plan to serve as a basis for Landlord to approve the Work, and for Tenant to contract and obtain permits for the Work, or for the Space Plan to serve as a basis for preparing Construction Drawings. b. "Construction Drawings" herein means, to the extent required by the nature of the Work, fully dimensioned architectural construction drawings and specifications, and any required engineering drawings, specifications and calculations (including mechanical, electrical, plumbing, structural, air-conditioning, ventilation and heating), and shall include any applicable items described above for the Space Plan, and any other details or features requested by Architect, Engineer or Landlord in order for the Construction Drawings to serve as a basis for Landlord to approve the Work, and for Tenant to contract and obtain permits for the Work. c. "Work" herein means: (i) the improvements and items of work shown on the final Approved Plans (including changes thereto), and (ii) any preparation or other work required in connection therewith, including without limitation, structural or mechanical work, additional HVAC equipment or sprinkler heads, or modifications to any building mechanical, electrical, plumbing or other systems and equipment or relocation of any existing sprinkler heads, either within or outside the Premises required as a result of the layout, design, or construction of the Work or in order to extend any mechanical distribution, fire protection or other systems from existing points of distribution or connection, or in order to obtain building permits for the work to be performed within the Premises (unless Landlord requires that the Plans be revised to eliminate the necessity for such work). VIII. Liens. Tenant shall pay all costs for the Plans and Work when due. Tenant shall keep the Property, Premises and this Lease free from any mechanic's, materialman's, architect's, engineer's or similar liens or encumbrances, and any claims therefor, or stop or violation notices, in connection with the Plans and Work. Tenant shall give Landlord notice at least ten (10) days prior to the commencement of any Work (or such additional time as may be necessary under applicable Laws), to afford Landlord the opportunity of posting and recording appropriate notices of non-responsibility. Tenant shall remove any such claim, lien or encumbrance, or stop or violation notices of record, by bond or otherwise within thirty (30) days after notice by Landlord. If Tenant fails to do so, Landlord may pay the amount (or any portion thereof) or take such other action as Landlord deems necessary to remove such claim, lien or encumbrance, or stop or violation notices, without being responsible for investigating the validity thereof. The amount so paid and costs incurred by Landlord shall be deemed additional Rent under the Lease Document payable upon demand, without limitation as to other remedies available to Landlord. IX. Miscellaneous a. Interpretation; Original Lease. If this Work Letter is attached as an Exhibit to an amendment to an existing lease ("Original Lease"), whether such amendment adds space, relocates the Premises or makes any other modifications, the term "Lease Document" herein shall refer to such amendment, or the Original Lease as amended, as the context implies. By way of example, in such case, references to the "Premises" and "Commencement Date" herein shall refer, respectively, to such additional or relocated space and the effective date for delivery thereof under such amendment, unless expressly provided to the contrary herein. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Lease Document. b. General Matters. This Exhibit is intended to supplement and be subject to the provisions of the Lease Document, including, without limitation, those provisions requiring that any modification or amendment be in writing and signed by authorized representatives of both parties. This Exhibit shall not apply to any additional space added to the Premises at any time, whether by any options or rights under the Lease Document or otherwise, or to any portion of the Premises in the event of a renewal or extension of the Term of the Lease Document, whether by any options or rights under the Lease Document or otherwise, unless expressly so provided in the Lease Document or any amendment or supplement thereto. The Lease Document and this Exhibit are not intended to create any third-party beneficiaries; without limiting the generality of the foregoing, no Tenant Contractors or Tenant Planners shall have any legal or beneficial interest in the Allowance. The rights granted in this Exhibit are personal to Tenant as named in the Lease Document, and are intended to be performed for such Tenant's occupancy of the Premises. Under no circumstance whatsoever shall any assignee or subtenant have any rights under this Exhibit. Any remaining obligations of Landlord under this Exhibit not theretofore performed shall concurrently terminate and become null and void if Tenant subleases or assigns the Lease Document with respect to all or any portion of the Premises, or seeks or proposes to do so (or requests Landlord's consent to do so), or if Tenant or any current or proposed affiliate thereof issues any written statement indicating that Tenant will no longer move its business into, or that Tenant will vacate and discontinue its business from, the Premises or any material portion thereof. Any termination of Landlord's obligations under this Exhibit pursuant to the foregoing provisions shall not serve to terminate or modify any of Tenant's obligations under the Lease Document. In addition, notwithstanding anything to the contrary contained herein, Landlord's obligations under this Exhibit, including obligations to perform any work, or provide any Allowance or rent credit, shall be subject to the condition that Tenant shall be in compliance with the material terms of the Lease (including all terms providing for the timely payment of rent), and shall not have committed a violation under the Lease by the time that Landlord is required to perform such work or provide such Allowance or rent credit. EXHIBIT C CMD 116B (1/02) MARKET RATES EXTENSION OPTION 1. OPTION TO EXTEND. Subject to the other provisions hereof, Landlord hereby grants Tenant one option ("Extension Option") to extend the current Term of the Lease for an additional period of five (5) consecutive years from the expiration of the prior period ("Extension Period"), on the same terms and conditions then in effect under this Lease immediately prior to the Extension Period, except as modified by the "Market Rates, Terms and Conditions" further described below, and Tenant shall have no further option to extend. Tenant may exercise the Extension Option only by giving Landlord written notice thereof ("Tenant's Exercise Notice") no earlier than twelve (12) and no later than nine (9) full calendar months prior to commencement of the subject Extension Period. Tenant's Exercise Notice shall be unconditional and irrevocable (except as expressly provided herein). 2. MARKET RATES, TERMS AND CONDITIONS; DISAGREEMENT. Within thirty (30) days after receiving Tenant's Exercise Notice, Landlord shall provide Tenant with notice ("Landlord's Notice") of the Market Rates, Terms and Conditions. The term "Market Rates, Terms and Conditions" herein shall mean Landlord's good faith determination of the Base Rent and other terms and conditions that a comparable, ready and willing landlord, and a comparable, ready and willing tenant, would mutually accept on a negotiated arm's length basis for a lease extension for the Premises for the subject Extension Period in the 44th Street submarket, taking into account when the Extension Period will commence and expire, the location, quality and age of the Building, the location, size, configuration and use of the Premises, the method of determining rentable area, that the Premises constitutes non-sublease, unencumbered, non-equity space, and any other relevant term or provision in making such determination; provided, that if the then current Market Rates, Terms and Conditions include leasehold improvements or an allowance therefore or any other economic concessions or incentives, then Landlord shall, at its option, either provide such items or Landlord shall adjust the Base Rent to take into account any items which Landlord has elected not to provide. If the Market Rates, Terms and Conditions determined by Landlord are not acceptable to Tenant, then Tenant may, no later than fifteen (15) days after Landlord's Notice, either: (a) revoke its exercise of the Extension Option by notice ("Tenant Revocation Notice") to Landlord, in which case the Extension Option and Tenant's exercise thereof shall thereupon be null and void, or (b) leave Tenant's Exercise Notice irrevocably and unconditionally in effect and provide notice ("Arbitration Request Notice") of Tenant's desire to arbitrate in accordance with this Exhibit. If Tenant fails to provide a Tenant Revocation Notice or Arbitration Request Notice within the time required herein, then Tenant shall be deemed to have unconditionally and irrevocably exercised the Extension Option and accepted the Market Rates, Terms and Conditions in Landlord's Notice. 3. ARBITRATION. If Tenant provides an Arbitration Request Notice within the time required herein, each party shall within the next fifteen (15) days, at its own cost and expense, give notice ("Arbitration Appointment Notice") to the other party appointing a licensed commercial real estate broker with at least seven (7) years of full-time experience leasing comparable office space in comparable buildings in the same market area to determine the Base Rent component ("Base Rent Component") of the Market Rates, Terms and Conditions, including any fixed increases in such Base Rent Component, taking into account the other provisions of this Exhibit, and the other components of the Market Rates. Terms and Conditions contained in Landlord's Notice (such as whether such Market Rates, Terms and Conditions include leasehold improvements or other economic concessions, or a base year or stop level for Taxes or Expenses). If a party does not appoint such a broker within such fifteen (15) day period, and so fails for an additional fifteen (15) day period following further notice from the other party requesting such appointment, and giving notice of the name of its broker, the single broker appointed shall be the sole broker and shall reasonably and in good faith determine the Base Rent Component. If the two brokers are appointed by the parties as stated herein, they shall meet promptly and attempt to determine the Base Rent Component. If they are unable to agree on the Base Rent Component within fifteen (15) days after the second broker has been appointed, they shall elect a third broker meeting the standards set forth above, and who has not previously acted in any capacity for either party, within fifteen (15) days thereafter. Each of the parties hereto shall bear one-half of the cost of appointing the third broker and of paying the third broker's fee. Within fifteen (15) days after the selection of the third broker, a majority of the brokers shall determine the Base Rent Component. If a majority of the brokers are unable to determine the Base Rent Component within such period, each broker shall thereupon submit his final determination in writing, the three determinations shall be added together and the total divided by three, and the resulting quotient shall be the Base Rent Component, subject to the following provisions. If the low or high determination are more than ten (10) percent lower and/or higher than the middle determination, the low determination and/or the high determination shall be disregarded. If only one determination is disregarded, the remaining two determinations shall be added together and their total divided by two, and the resulting quotient shall be the Base Rent Component. If both the low determination and the high determination are disregarded as provided herein, the middle determination shall be the Base Rent Component. If, for any reason, the Base Rent Component has not been resolved by the commencement of the Extension Period, Tenant shall commence paying Base Rent, Taxes, Expenses and other sums in accordance with Landlord's Notice on the commencement of the Extension Period, subject to retroactive and prospective adjustment after the matter is resolved. An arbitration decision made in accordance with this Exhibit shall be final and binding on the parties. Tenant and the brokers shall be required to keep all matters pertaining to the arbitration strictly confidential and shall be required to sign such confidentiality agreements as Landlord reasonably requires. 4. GENERAL MATTERS. If Tenant validly exercises the Extension Option, Tenant shall execute an amendment ("Extension Amendment") to confirm the extension of the Term, within fifteen (15) days after Landlord reasonably prepares and provides the same to Tenant. The Extension Option herein shall, at Landlord's election, be conditioned on the Lease being in full force and effect, and Tenant not then being in default beyond any applicable cure period under the Lease, at the time Tenant seeks to exercise the Extension Option, or at any time thereafter and prior to commencement of the Extension Period. If Tenant shall fail to properly and timely exercise the Extension Option, then the Extension Option shall thereupon terminate. STRICT COMPLIANCE AND TIMELINESS IN GIVING TENANT'S NOTICES AND SIGNING THE EXTENSION AMENDMENT HEREUNDER IS OF THE ESSENCE OF THIS PROVISION. The rights granted in this Exhibit are personal to Tenant as named in this Lease document. Under no circumstance whatsoever shall the assignee under a complete or partial assignment of the Lease document, or a subtenant under a sublease of the Premises, have any right to exercise the rights of Tenant under this Exhibit. If Tenant shall sublease or assign the Lease with respect to all or any portion of the Premises, then immediately upon such sublease or assignment Tenant's rights under this Exhibit shall concurrently terminate and become null and void. EXHIBIT D CMD 117C (1/02) VACANT/OCCUPIED EXPANSION SPACES RIGHT OF OFFER 1. RIGHT OF OFFER. Landlord hereby grants Tenant a right of offer ("Right Of Offer") to lease all rentable space on the 4th (fourth) floor of the Property that is not currently included in the Premises (collectively referred to herein as the "Expansion Space"), all on and subject to the following provisions; provided, this Right of Offer and Landlord's obligation to provide a "Landlord Notice" shall be in effect commencing on the Extension Date. 2. LANDLORD'S NOTICE OF EXPANSION TERMS. While this Right of Offer is in effect, landlord shall notify Tenant in writing ("landlord's Notice"): (i) as to any currently available portions of the Expansion Space, when Landlord enters or intends to enter negotiations with a third party to lease the Expansion Space (and landlord's good faith determination of whether negotiations have been entered or are about to be entered shall be conclusive and binding upon the parties), or (ii) as to any currently unavailable portions of the Expansion Space, when such areas become available, or (iii), at Landlord's option, at any time prior thereto or thereafter, but in any event prior to leasing the Expansion Space to another party. Landlord's Notice shall set forth the terms ("Expansion Terms") on which landlord proposes to lease the Expansion Space to Tenant, including, but not limited to, a date for the commencement of the lease thereof ("Expansion Space Commencement Date"), and the other items as further set forth below. a. Expansion Space Commencement Date Within First 180 Days. If the Expansion Space Commencement Date will occur within the first 180 days after the Extension Date set forth in Section 1 of this Amendment, landlord's Notice shall set forth "Expansion Terms" as follows: (i) an Expansion Space Commencement Date, (ii) an expiration date therefor, which shall be co-terminous with the Extended Term of this Lease (as the same may be extended pursuant to Exhibit C), (iii) rentable area, (iv) monthly Base Rent and scheduled increases therein (which shall be the same rates per square foot of rentable area as contained in Section 4 of this Amendment then in effect with respect to the Original Premises hereunder), (v) Tenant's Share of operating costs applicable to the Expansion Space (any so-called Expense Stop shall be the same as set forth in Section 5 of this Amendment), and (vi) that the space shall be provided in "as is" condition at the time possession is delivered, except that Landlord shall provide an allowance ("Expansion Allowance") towards Tenant's reasonable direct out-of pocket costs of designing and performing permanent leasehold improvements to the Expansion Space of up to $[*] times the number of square feet of usable area of the subject Expansion Space. b. Expansion Space Commencement Date After 180 Days. If the Expansion Space Commencement Date will occur more than 180 days after the Extension Date set forth in Section 1 of this Amendment, then Landlord's Notice shall set forth "Expansion Terms" on which landlord proposes to lease the Expansion Space to Tenant, including, but not limited to, an Expansion Space Commencement Date, and an expiration date therefor or whether the term therefor will be co-terminous with the Term of this Lease, rentable area, monthly base rent and any scheduled increases therein, Tenant's share of taxes, expenses and other such items (and any base year or stop level therefor), any tenant improvements or allowance therefor, and any other terms and conditions, as determined in landlord's good faith discretion, taking into account any "Comparable Expansions" as described in Paragraph 4 below, and any comparable expansion terms generally being provided for comparable tenants of comparable financial condition for comparable non-sublease space in comparable buildings in the vicinity for time periods that are substantially the same as the period of time during which the Expansion Space will be leased to Tenant. c. General Terms. Except as set forth in Landlord's Notice, the Expansion Terms shall be deemed to include the same terms then in effect on the Expansion Space Commencement Date, and thereafter scheduled to be in effect, under the Lease (with any matters in the Lease based on square footage adjusted proportionately to reflect the rentable area of the Expansion Space and Landlord's then-current Building standard ratios and policies). 3. TENANT'S NOTICE AND FINANCIAL INFORMATION; CONFIRMATION OR DISAGREEMENT CONCERNING MARKET TERMS. Within five (5) days after Landlord's Notice, Tenant shall deliver to Landlord either: (a) a notice ("Tenant's Acceptance Notice") accepting Landlord's determination of the Expansion Terms set forth in Landlord's Notice, or (b) a notice ("Tenant's Expansion Terms Notice") of Tenant's good faith determination of the Expansion Terms and reasons therefor; provided that Tenant shall have the right to send a Tenant's Expansion Terms Notice only if the expansion is pursuant to 2.b above. Tenant's Acceptance Notice or Tenant's Expansion Terms Notice shall include financial information for Tenant's business comparable to the information provided in connection with entering into this Lease document. If Landlord determines in good faith that Tenant's financial condition is worse than the condition that Landlord accepted when the parties entered into this Lease document, Landlord may withdraw Landlord's Notice and the Right of Offer, or provide a new Landlord's Notice with reasonably modified Expansion Terms or reasonable additional security requirements taking into account Tenant's financial condition. 4. LETTER OF INTENT AND EXPANSION DOCUMENTATION. If Tenant provides a timely Tenant's Expansion Terms Notice, the parties shall seek to agree on the Expansion Terms in the form of a non-binding letter of intent ("Letter of Intent") during the period ("Negotiation Period") ending ten (10) days after Landlord's Notice. In connection with such negotiations, Landlord shall at Tenant's request, provide copies of the pages containing the basic economic provisions from any comparable negotiated expansions at the Property (with the names and suite numbers of the other tenants covered over) that are reasonably relevant to the determination of Market Rates, Terms and Conditions as described in Paragraph 2.b above ("Comparable Expansions"), as reasonable determined by Landlord. If Tenant delivers a timely Tenant's Acceptance Notice, or if the parties enter into the Letter of Intent concerning the Expansion Terms during the Negotiation Period, then the parties shall seek to agree on and enter into a mutually acceptable formal written expansion amendment to the Lease ("Expansion Documentation") setting forth the final and definitive Expansion Terms and other mutually acceptable provisions for the Expansion Space during the period ("Documentation Period") ending ten (10) days after Landlord's Notice. Once Tenant provides either Tenant's Acceptance Notice or Tenant's Expansion Terms Notice exercising Tenant's Right of Offer, Landlord shall have no further obligation to provide a Landlord's Notice respecting the Expansion Space included in Landlord's Notice (provided, this Right of Offer shall continue to apply to any portions of the Expansion Space that were not included in Landlord's Notice as further provided below). If Tenant fails to validly exercise such Right Of Offer, or fails to sign and deliver the Expansion Documentation to Landlord, strictly in accordance with the terms hereof, such Right Of Offer shall be deemed to have lapsed and expired as to the Expansion Space that was included in Landlord's Notice, and Landlord may thereafter freely lease all or a portion of the Expansion Space that was included in Landlord's Notice to any other party, at any time, on any terms, in Landlord's sole discretion; provided, despite Tenant's waiver, this Right of Offer shall continue to apply to any portions of the Expansion Space that were not included in Landlord's Notice as further provided below; and further provided, despite Tenant's waiver, this Right of Offer shall: (a) continue to apply to any portions of the Expansion Space that were not included in Landlord's Notice as further provided below, and (b) apply again to the Expansion Space (or such portion thereof as may have been included in Landlord's Notice) if Landlord fails to enter into a lease document for the Expansion Space (or such portion thereof, as the case may be) within six (6) months after Tenant waives this Right of Offer as to such area. TIME PERIODS AND STRICT COMPLIANCE IN GIVING TENANT'S NOTICE AND IN TENANT'S SIGNING AND DELIVERING THE EXPANSION DOCUMENTATION, ARE OF THE ESSENCE OF THIS RIGHT OF OFFER. 5. OFFERING PORTIONS OF EXPANSION SPACE; ADJUSTMENTS TO EXPANSION SPACE; PRIOR RIGHTS. This Right Of Offer shall apply only with respect to the entire Expansion Space, and may not be exercised with respect to only a portion thereof (unless only a portion of the Expansion Space shall be included in Landlord's Notice). If only a portion of the Expansion Space shall be included in Landlord's Notice, this Right of Offer shall apply to such portion, and shall thereafter apply to such other portions of the Expansion Space as they become the subject of Landlord's Notices, subject to good faith adjustments by Landlord in the size, configuration and location of such remaining portions. If the Expansion Space is part of a larger space that Landlord desires to lease as a unit, then Landlord's Notice shall, at Landlord's option, identify the entire such space and the Expansion Terms therefor, and in such case, this Right Of Offer shall apply only to such entire space. Landlord reserves the right at any time prior to sending, or as part of, Landlord's Notice, to substitute for the Expansion Space other space (herein referred to as the "new expansion space") in the Building or another building in the same complex or in the vicinity, provided the new expansion space shall be similar to the Expansion Space in size (up to 10% larger or smaller); at Landlord's option, the new expansion space may overlap with and include a portion of the then current Expansion Space. This Right Of Offer shall be subject to the then existing tenants or occupants of the Expansion Space renewing their existing leases whether pursuant to options to extend previously granted or otherwise, and such Right Of Offer, and any rights of Tenant to extend the Term of the Lease with respect to the Expansion Space, are subordinate to, and limited by, any rights of any other parties to lease the Expansion Space granted prior to full execution and delivery of this document. 6. MISCELLANEOUS. This Right Of Offer is subject to the condition that the Lease be in full force and effect, and that Tenant not then be in default beyond any applicable cure period under the Lease on the date when Landlord provides or would otherwise provide Landlord's Notice, or at any time thereafter and prior to the Expansion Space Commencement Date. The rights granted in this Exhibit are personal to Tenant as named in this Lease document. Under no circumstance whatsoever shall the assignee under a complete or partial assignment of the Lease document, or a subtenant under a sublease of the Premises, have any right to exercise the rights of Tenant under this Exhibit. If Tenant shall sublease or assign the Lease with respect to all or any portion of the Premises, then immediately upon such sublease or assignment Tenant's rights under this Exhibit shall concurrently terminate and become null and void. If Tenant shall exercise the Right Of Offer herein, Landlord does not guarantee to deliver possession of the Expansion Space on the Expansion Space Commencement Date due to continued possession by the then existing occupants or any other reason beyond Landlord's reasonable control. In such event, rent and other charges with respect to the Expansion Space shall be abated until Landlord delivers the same to Tenant (except to the extent that Tenant or its affiliates, agents, employees or contractors cause the delay), as Tenant's sole recourse. Tenant's exercise of this Right of Offer is intended to supersede any rights of Tenant under the Lease to reduce or relocate the Premises, or terminate the Lease early, and all such provisions shall thereupon be automatically deleted. Tenant's failure to exercise this Right of Offer in accordance with the terms of this Exhibit is intended to supersede any other rights of Tenant under other provisions of the Lease to expand or relocate the Premises, and all such other provisions shall thereupon be automatically deleted. EXHIBIT E CMD 117A (1/02) RIGHT OF OFFER OCCUPIED EXPANSION SPACE RIGHT OF OFFER 1. RIGHT OF OFFER. Landlord hereby grants Tenant a right of offer ("Right Of Offer") to lease the space shown on Exhibit A, currently known as Suite 1100 and Suite 1150 (the "Expansion Space"), which shall be deemed to contain 3,227 square feet of rentable area and 8,232 square feet of rentable area, respectively, for current purposes hereof, all on and subject to the following provisions; provided, this Right of Offer and Landlord's obligation to provide a "Landlord Notice" shall be in effect commencing on the Extension Date. 2. LANDLORD'S NOTICE OF EXPANSION TERMS. While this Right of Offer is in effect, Landlord shall notify Tenant in writing ("Landlord's Notice"): (i) within thirty (30) days after the Expansion Space becomes legally available to lease, or (ii) at such earlier time as Landlord shall be in a position to project when the Expansion Space will be legally available to lease, advising Tenant of such projected date, or (iii) at any time thereafter but prior to leasing the Expansion Space to another party. Landlord's Notice shall set forth the terms ("Expansion Terms") on which Landlord proposes to lease the Expansion Space to Tenant, including, but not limited to, a date for the commencement of the lease thereof ("Expansion Space Commencement Date"), an expiration date therefor or whether the term therefor will be coterminous with the Term of this Lease, rentable area, monthly base rent and any scheduled increases therein, Tenant's share of taxes, expenses and other such items (and any base year or stop level therefor), any tenant improvements or allowance therefor, and any other terms and conditions, as determined in Landlord's good faith discretion, taking into account any "Comparable Expansions" as described in Paragraph 4 below, and any comparable expansion terms generally being provided for comparable tenants of comparable financial condition for comparable non-sublease space in comparable buildings in the vicinity for time periods that are substantially the same as the period of time during which the Expansion Space will be leased to Tenant. Except as set forth in Landlord's Notice, the Expansion Terms shall be deemed to include the same terms then in effect on the Expansion Space Commencement Date, and thereafter scheduled to be in effect, under the Lease (with any matters in the Lease based on square footage adjusted proportionately to reflect the rentable area of the Expansion Space and Landlord's then current Building-standard ratios and policies). 3. TENANT'S NOTICE AND FINANCIAL INFORMATION; CONFIRMATION OR DISAGREEMENT CONCERNING MARKET TERMS. Within five (5) days after Landlord's Notice, Tenant shall deliver to Landlord either: (a) a notice ("Tenant's Acceptance Notice") accepting Landlord's determination of the Expansion Terms set forth in Landlord's Notice, or (b) a notice ("Tenant's Expansion Terms Notice") of Tenant's good faith determination of the Expansion Terms and reasons therefor. Tenant's Acceptance Notice or Tenant's Expansion Terms Notice shall include financial information for Tenant's business comparable to the information provided in connection with entering into this Lease document. If Landlord determines in good faith that Tenant's financial condition is worse than the condition that Landlord accepted when the parties entered into this Lease document, Landlord may withdraw Landlord's Notice and the Right of Offer, or provide a new Landlord's Notice with reasonably modified Expansion Terms or reasonable additional security requirements taking into account Tenant's financial condition. 4. LETTER OF INTENT AND EXPANSION DOCUMENTATION. If Tenant provides a timely Tenant's Expansion Terms Notice, the parties shall seek to agree on the Expansion Terms in the form of a non-binding letter of intent ("Letter of Intent") during the period ("Negotiation Period") ending ten (10) days after Landlord's Notice. In connection with such negotiations, Landlord shall at Tenant's request, provide copies of the pages containing the basic economic provisions from any comparable negotiated expansions at the Property (with the names and suite numbers of the other tenants covered over) that are reasonably relevant to the determination of Market Rates, Terms and Conditions as described in Paragraph 2 above ("Comparable Expansions"), as reasonable determined by Landlord. If Tenant delivers a timely Tenant's Acceptance Notice, or if the parties enter into the Letter of Intent concerning the Expansion Terms during the Negotiation Period, then the parties shall seek to agree on and enter into a mutually acceptable formal written expansion amendment to the Lease ("Expansion Documentation") setting forth the final and definitive Expansion Terms and other mutually acceptable provisions for the Expansion Space during the period ("Documentation Period") ending ten (10) days after Landlord's Notice. Once Tenant provides either Tenant's Acceptance Notice or Tenant's Expansion Terms Notice exercising Tenant's Right of Offer, Landlord shall have no further obligation to provide a Landlord's Notice respecting the Expansion Space included in Landlord's Notice (provided, this Right of Offer shall continue to apply to any portions of the Expansion Space that were not included in Landlord's Notice as further provided below). If Tenant fails to validly exercise such Right Of Offer, or fails to sign and deliver the Expansion Documentation to Landlord, strictly in accordance with the terms hereof, such Right Of Offer shall be deemed to have lapsed and expired as to the Expansion Space that was included in Landlord's Notice, and Landlord may thereafter freely lease all or a portion of the Expansion Space that was included in Landlord's Notice to any other party, at any time, on any terms, in Landlord's sole discretion; provided, despite Tenant's waiver, this Right of Offer shall continue to apply to any portions of the Expansion Space that were not included in Landlord's Notice as further provided below; and further provided, despite Tenant's waiver, this Right of Offer shall: (a) continue to apply to any portions of the Expansion Space that were not included in Landlord's Notice as further provided below, and (b) apply again to the Expansion Space (or such portion thereof as may have been included in Landlord's Notice) if Landlord fails to enter into a lease document for the Expansion Space (or such portion thereof, as the case may be) within six (6) months after Tenant waives this Right of Offer as to such area. TIME PERIODS AND STRICT COMPLIANCE IN GIVING TENANT'S NOTICE. AND IN TENANT'S SIGNING AND DELIVERING THE EXPANSION DOCUMENTATION, ARE OF THE ESSENCE OF THIS RIGHT OF OFFER. 5. OFFERING PORTIONS OF EXPANSION SPACE; ADJUSTMENTS TO EXPANSION SPACE; PRIOR RIGHTS. This Right Of Offer shall apply only with respect to the entire Expansion Space, and may not be exercised with respect to only a portion thereof (unless only a portion of the Expansion Space shall be included in Landlord's Notice). If only a portion of the Expansion Space shall be included in Landlord's Notice, this Right of Offer shall apply to such portion, and shall thereafter apply to such other portions of the Expansion Space as they become the subject of Landlord's Notices, subject to good faith adjustments by Landlord in the size, configuration and location of such remaining portions. If the Expansion Space is part of a larger space that Landlord desires to lease as a unit, then Landlord's Notice shall, at Landlord's option, identify the entire such space and the Expansion Terms therefor, and in such case, this Right Of Offer shall apply only to such entire space. Landlord reserves the right at any time prior to sending, or as part of, Landlord's Notice, to substitute for the Expansion Space other space (herein referred to as the "new expansion space") in the Building or another building in the same complex or in the vicinity, provided the new expansion space shall be similar to the Expansion Space in size (up to 10% larger or smaller); at Landlord's option, the new expansion space may overlap with and include a portion of the then current Expansion Space. This Right Of Offer shall be subject to the then existing tenants or occupants of the Expansion Space renewing their existing leases whether pursuant to options to extend previously granted or otherwise, and such Right Of Offer, and any rights of Tenant to extend the Term of the Lease with respect to the Expansion Space, are subordinate to, and limited by, any rights of any other parties to lease the Expansion Space granted prior to full execution and delivery of this document. 6. MISCELLANEOUS. This Right Of Offer is subject to the condition that the Lease be in full force and effect, and that Tenant not then be in default beyond any applicable cure period under the Lease on the date when Landlord provides or would otherwise provide Landlord's Notice, or at any time thereafter and prior to the Expansion Space Commencement Date. The rights granted in this Exhibit are personal to Tenant as named in this Lease document. Under no circumstance whatsoever shall the assignee under a complete or partial assignment of the Lease document, or a subtenant under a sublease of the Premises, have any right to exercise the rights of Tenant under this Exhibit. If Tenant shall sublease or assign the Lease with respect to all or any portion of the Premises, then immediately upon such sublease or assignment Tenant's rights under this Exhibit shall concurrently terminate and become null and void. If Tenant shall exercise the Right Of Offer herein, Landlord does not guarantee to deliver possession of the Expansion Space on the Expansion Space Commencement Date due to continued possession by the then existing occupants or any other reason beyond Landlord's reasonable control. In such event, rent and other charges with respect to the Expansion Space shall be abated until Landlord delivers the same to Tenant (except to the extent that Tenant or its affiliates, agents, employees or contractors cause the delay), as Tenant's sole recourse. Tenant's exercise of this Right of Offer is intended to supersede any rights of Tenant under the Lease to reduce or relocate the Premises, or terminate the Lease early, and all such provisions shall thereupon be automatically deleted. Tenant's failure to exercise this Right of Offer in accordance with the terms of this Exhibit is intended to supersede any other rights of Tenant under other provisions of the Lease to expand or relocate the Premises, and all such other provisions shall thereupon be automatically deleted. EXHIBIT F CMD 111D-1 (3/01) DIFFERENT PARKING AREAS FOR AMENDMENT PARKING 1. AMENDMENT; DELETION OF PRIOR PARKING. This Exhibit is attached to an amendment to an existing lease, and the term "Lease" herein shall refer to such amendment, or the existing lease as amended, and terms such as "Commencement Date" shall refer to analogous terms in such amendment, as the context reasonably implies. This Exhibit supersedes any parking rights previously granted under the Lease or any other parking agreements between the parties, all of which are hereby deleted and/or superseded. 2. SPACES. Tenant hereby agrees to license from Landlord and Landlord agrees to license to Tenant, for the Extended Term, the use by Tenant and its employees occupying the Premises designated by Tenant: Area A Covered Unreserved Spaces: sixty-two (62) parking spaces on the Extension Date and an additional twelve (12) parking spaces on the Additional Premises Commencement Date, for a total of seventy-four (74) parking spaces, in the area of the Parking Facility known or described as the Garage ("Area A") on a non-exclusive, unassigned basis, subject to the other provisions hereof. Area B Uncovered Unreserved Spaces: twenty-eight (28) parking spaces on the Extension Date and an additional five (5) parking spaces on the Additional Premises Commencement Date, for a total of thirty-three (33) parking spaces, in the area of the Parking Facility known or described as the Garage Rooftop or Uncovered Surface ("Area B") on a nonexclusive, unassigned basis, subject to the other provisions hereof. Covered Reserved Spaces: sixteen (16) parking spaces on the Extension Date and an additional three (3) parking spaces on the Additional Premises Commencement Date, for a total of nineteen (19) reserved parking spaces in the Garage area of the Parking Facility ("Reserved Spaces"), subject to the other provisions hereof. Such Reserved Spaces shall be assigned parking spaces identified with Tenant's name in accordance with Landlord's standard procedures, provided Landlord shall have no the obligation to tow vehicles that are improperly parked in such assigned spaces (but Landlord reserves the right to do so after receiving notice thereof from Tenant or otherwise). 3. CHARGES. Tenant shall pay Landlord the monthly charges established from time to time by Landlord for such spaces, in advance, on the first day of each calendar month of the License Term, plus any sales or other tax thereon, concurrently with Tenant's payment of monthly Base Rent (but, at Landlord's option, by separate check payable to Landlord's agent or parking facility operator). No deductions from the monthly charge shall be made for days on which the Parking Facility is not used by Tenant. Failure to pay in advance by the first day of each month will automatically cancel parking privileges and a charge at the prevailing daily parking rate will be due. The initial charges for such spaces are as follows: Area A Spaces: $30.00 per space per month, or a total monthly charge of $1,860.00 on the Extension Date and $2,200.00 on the Additional Premises Commencement Date for all such Area A Spaces, plus any sales or other tax thereon, provided, however, that such charges shall be abated for the first 18 months of the Extended Term. Area B Spaces: $--0-- during the Extended Term. Reserved Spaces: $--0-- during the Extended Term. 4. OTHER PROVISIONS. The term ("License Term") of this license shall commence on the Commencement Date, and shall continue until the earlier to occur of the expiration or earlier termination of the Lease, or at Landlord's option without prior notice after Tenant's abandonment of the Premises or parking spaces hereunder. Landlord reserves the right to relocate any of the above spaces from any Area to another Area of the Parking Facility from time to time upon ten (10) days notice to Tenant. Tenant may. from time to time, request additional parking spaces, and if Landlord shall provide the same, such spaces shall be provided and used on a month-to-month basis, and otherwise on the other terms and provisions herein, and for such monthly parking charges as Landlord shall establish from time to time. All spaces hereunder shall be used solely for the purpose of parking non-commercial passenger vehicles. As a condition to the use of such spaces, Landlord may require that Tenant and/or each individual using such spaces sign and comply with such further documentation as any parking facility management company for the Parking Facility may require. Tenant may transfer the parking rights hereunder pro rata to the subtenant or assignee in connection with a sublease or assignment of this Lease. However, Tenant shall not otherwise assign, mortgage, pledge, hypothecate, encumber or permit any lien to attach to, or otherwise transfer, the rights under this Exhibit, by operation of law or otherwise, nor sublicense the parking spaces hereunder, nor permit the use thereof by any parties other than Tenant and its employees (and any attempt to engage in such a transfer of the parking rights hereunder shall, at Landlord's written election, be null and void ab initio). Notwithstanding the foregoing to the contrary, any Reserved Spaces hereunder are personal to the initial Tenant named in this Lease, and if the number of parking spaces hereunder exceeds the number derived by applying Tenant's Share (as defined in the Lease) to the number of unassigned spaces designated to serve the Building ("Above Standard Ratio"), Tenant's rights to such Above Standard Ratio are personal to the initial Tenant named in this Lease, and Landlord reserves the right in connection with any sublease, assignment or other transfer of or under the Lease, or at anytime thereafter, to convert any Reserved Spaces to General Spaces and/or to reduce the number of spaces hereunder to eliminate the Above Standard Ratio. The parking spaces hereunder shall be subject to the Rules set forth below, except to the extent expressly inconsistent herewith. PARKING RULES (i) Cars must be parked entirely within the stall lines, and only small or other qualifying cars may be parked in areas reserved for such cars; all directional signs, arrows and speed limits must be observed; spaces reserved for disabled persons must be used only by vehicles properly designated; washing, waxing, cleaning or servicing of any vehicle is prohibited; every parker is required to park and lock his own car, except to the extent that Landlord adopts a valet parking system; in areas requiring an attendant or security personnel, hours shall be reasonably established by Landlord or its parking operator from time to time; parking is prohibited in areas: (a) not striped or designated for parking, (b) aisles, (c) where "no parking" signs are posted, (d) on ramps, and (e) loading areas and other specially designated areas. Delivery trucks and vehicles shall use only those areas designated therefor. (ii) Parking stickers, key cards or any other devices or forms of identification or entry shall remain the property of Landlord. Such devices must be displayed as requested and may not be mutilated in any manner. Devices are not transferable and any device in the possession of an unauthorized holder will be void. Loss or theft of such devices must be reported to Landlord or any garage manager immediately. Any parking devices reported lost or stolen which are found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution. Lost or stolen devices found by Tenant or its employees must be reported to Landlord or the office of the garage immediately. (iii) Except as may be specifically granted in this Exhibit, parking for Tenant and its employees and visitors shall be in areas designated by Landlord from time to time on a non-exclusive "first come, first served," unassigned basis, in common with Landlord and other tenants at the Property, and their employees and visitors, and other Persons to whom Landlord shall grant the right or who shall otherwise have the right to use the same. Landlord reserves the right to: (x) adopt additional requirements or procedures pertaining to parking, including systems with charges favoring carpooling, and validation systems, (y) assign specific spaces, and reserve spaces for small and other size cars, disabled persons, and other tenants, customers of tenants or other parties, and (z) restrict or prohibit full size vans and other large vehicles. (iv) In case of any violation of these rules, Landlord may also refuse to permit the violator to park, and may remove the vehicle owned or driven by the violator from the Property without liability whatsoever, at such violator's risk and expense. Landlord reserves the right to close all or a portion of the Parking Facility in order to make repairs or perform maintenance services, or to alter, modify, re-stripe or renovate the same, or if required by casualty, strike, condemnation, act of God, Law or governmental requirement or guideline, termination or modification of any lease or other agreement by which Landlord obtained parking rights, or any other reason beyond Landlord's reasonable control. In the event access is denied for any reason, any monthly parking charges shall be abated to the extent access is denied, as Tenant's sole recourse. Tenant shall be responsible for ensuring compliance with these Rules, as they may be amended, by Tenant's employees and as applicable, by Tenant's agents, invitees, contractors, subcontractors, and suppliers. Tenant shall cooperate with any reasonable program or requests by Landlord to monitor and enforce the Rules, including providing vehicle numbers and taking appropriate action against such of the foregoing parties who violate these provisions. LEASE AMENDMENT SIX CMD 177A (8/98) (EXPANSION/CO - TERMINOUS) THIS LEASE AMENDMENT SIX ("Amendment') is made and entered into as of the 1st day of April, 2003 by and between CMD Realty Investment Fund IV, L.P. an Illinois limited partnership ("Landlord") and Mesa Air Group, Inc., a Nevada corporation ("Tenant"). A. Landlord and Tenant are the current parties to that certain lease ("Original Lease") dated October 16, 1998, for premises (the "Premises") in the building (the "Building") known as Three Gateway, located at 410 N. 44th Street, Phoenix, Arizona (the "Property"), which lease has heretofore been amended by documents described and dated as follows: First Amendment to Lease dated March 9, 1999, Second Amendment to Lease dated November 8, 1999, Letter Agreement dated May 10, 2000, Lease Amendment Three dated November 7, 2000, Lease Amendment Four dated May 15, 2001, Lease Term Adjustment Confirmation dated January 3, 2001, Letter from Mesa Air dated May 30, 2001, Parking Letter dated March 21, 2002 and Lease Amendment Five dated October 11, 2002 (collectively, and as amended herein, the "Lease"). B. The parties mutually desire to amend the Lease on the terms hereof. NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows. 1. ADDITIONAL PREMISES. The space currently known as a portion of Suite 1100 ("Additional Premises"), the approximate location of which is shown on Exhibit A hereto on the eleventh (11th) floor of the Building, and which shall be deemed to contain 713 square feet of rentable area for purposes hereof, shall be added to and become a part of the Premises commencing on May 1, 2003 ("Additional Premises Commencement Date") and continuing conterminously with the expiration date under the Lease ("Lease Expiration Date"), as the same may be extended from time to time, subject to the terms herein. The Additional Premises Commencement Date shall be subject to adjustment and confirmation to the extent further described below. As of the Additional Premises Commencement Date the Additional Premises shall be known as Suite 1110. 2. BASE RENT FOR ADDITIONAL PREMISES. Tenant shall pay monthly base rent for the Additional Premises as provided below and otherwise as provided in the Lease:

Additional Premises Period Monthly Base Rent ------ ------------------- Additional Premises Commencement Date - August 31, 2004 $[*] September 1, 2004 - August 31, 2005 $[*] September 1, 2005 - August 31, 2007 $[*] September 1, 2007 - August 31, 2009 $[*] September 1, 2009 - Lease Expiration Date $[*]

3. EXPENSES AND TAXES. Commencing on the Additional Premises Commencement Date: (a) Tenant shall pay Tenant's Share for the Additional Premises of increases in Property expenses, real estate taxes and other such amounts, over the amount for the year 2003, and as otherwise provided in the Lease, and (b) "Tenant's Share" for the Additional Premises shall be [*] percent ([*]%), for purposes hereof. 4. PRORATIONS; Consolidated or Separate Billings. If the Additional Premises Commencement Date does not occur at the beginning of an applicable payment period under the Lease, Landlord shall reasonably pro rate Tenant's payment obligations on a per diem basis. The base rent, Property expenses, real estate taxes, and all other rentals and charges respecting the Additional Premises are sometimes herein called "Additional Premises Rent". Landlord may compute and bill Additional Premises Rent (or components thereof) separately or treat the Additional Premises and Premises as one unit for computation and billing purposes. 5. OTHER TERMS. Commencing on the Additional Premises Commencement Date, the Additional Premises shall be added to, and become part of, the Premises under the Lease, and all applicable provisions then or thereafter in effect under the Lease shall also apply to the Additional Premises, except as provided to the contrary herein. Without limiting the generality of the preceding sentence, Sections 9, 10 and 11 of Lease Amendment Four and Sections 15 and 16 of Lease Amendment Three are incorporated herein by reference. 6. CONDITION OF ADDITIONAL PREMISES. Tenant has inspected the Additional Premises (and portions of the Building, Property, systems and equipment providing access to or serving the Additional Premises) or has had an opportunity to do so, and agrees to accept the same "AS IS" without any agreements, representations, understandings or obligations on the part of Landlord to perform or pay for any alterations, repairs or improvements. 7. ADDITIONAL PREMISES COMMENCEMENT DATE ADJUSTMENTS. a. Early Additional Premises Commencement Date. During any period that Tenant shall be permitted to enter the Additional Premises prior to the Additional Premises Commencement Date other than to occupy the same for business purposes (e.g. to install equipment or furniture, or to make alterations or improvements), Tenant shall comply with all provisions of the Lease, except for the payment of Additional Premises Rent. Landlord shall permit Tenant to have early access, so long as the Additional Premises is legally available, Landlord has completed any work required of Landlord under this Amendment (or can reasonably accommodate the scheduling of minor work that Tenant desires to perform, such as cabling, without delaying any such Landlord work), and Tenant is in compliance with the other provisions of the Lease. The Additional Premises Commencement Date, Additional Premises Rent and Tenant's other obligations respecting the Additional Premises shall be advanced to such earlier date as Tenant commences occupying the Additional Premises for business purposes. If such event occurs with respect to a portion of the Additional Premises, the Additional Premises Commencement Date and Additional Premises Rent shall be so advanced with respect to such portion (and fairly prorated based on the rentable square footage involved). b. Additional Premises Commencement Date Delays. Subject to the other provisions of this Amendment, the Additional Premises Commencement Date, Additional Premises Rent and Tenant's other obligations respecting the Additional Premises shall be postponed to the extent Tenant is unable to reasonably occupy the Additional Premises because Landlord fails to deliver possession of the Additional Premises for any reason, including holding over by prior occupants, except to the extent that Tenant, its space planners, architects, contractors, agents or employees cause such failure. If such failure occurs with respect to a portion of the Additional Premises, the Additional Premises Commencement Date, Additional Premises Rent and Tenant's other obligations shall be so postponed with respect to such portion (and fairly prorated based on the rentable square footage involved). Any such delay in the Additional Premises Commencement Date shall not subject Landlord to liability for loss or damage resulting therefrom, and Tenant's sole recourse with respect thereto shall be the postponement of Additional Premises Rent and other obligations described herein. c. Adjustments and Confirmation. If the Additional Premises Commencement Date is advanced or postponed as described above, the lease Expiration Date shall not be changed. Landlord and Tenant shall execute a confirmation of the Additional Premises Commencement Date as adjusted herein in such form as Landlord may reasonably request; any failure to respond within thirty (30) days after Landlord provides such written confirmation shall be deemed an acceptance of the date set forth in Landlord's confirmation. If Tenant disagrees with Landlord's adjustment of such date, Tenant shall pay Additional Premises Rent and perform all other obligations commencing and ending on the dates determined by Landlord, subject to refund or credit when the matter is resolved. 8. REAL ESTATE BROKERS. Tenant hereby represents to Landlord that Tenant has not dealt with any broker, salesperson, agent or finder in connection with this Amendment, except Cushman & Wakefield of Arizona, Inc., and agrees to defend, indemnify and hold Landlord, and its employees, agents and affiliates harmless from all liabilities and expenses (including reasonable attorneys' fees and court costs) arising from any claims or demands of any other broker, salesperson, agent or finder with whom Tenant has dealt for any commission or fee alleged to be due in connection with this Amendment. 9. OFFER. The submission and negotiation of this Amendment shall not be deemed an offer to enter into the same by Landlord. This Amendment shall not be binding on Landlord unless and until fully signed and delivered by both parties. Tenant's execution of this Amendment constitutes a firm offer to enter into the same which may not be withdrawn for a period of thirty (30) days after delivery to Landlord. During such period, Landlord may proceed in reliance thereon, but such acts shall not be deemed an acceptance. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above. LANDLORD: CMD REAL TV INVESTMENT FUND IV, L.P. [SEAL] an Illinois limited partnership By: CMD/Fund IV GP Investments, L.P., an Illinois limited partnership, its general partner By: /s/ --------------------------------------- Lee Moreland, Vice President TENANT: MESA AIR GROUP, INC. [SEAL] a Nevada corporation By: /s/ --------------------------------------- CERTIFICATE I, Brian Gillman, as Vice President & General Counsel of the aforesaid Tenant, hereby certify that the individual(s) executing the foregoing Lease on behalf of Tenant was/were duly authorized to act in his/their capacities as set forth above, and his/their action(s) are the action of Tenant. (Corporate Seal) /s/ -------------------- EXHIBIT A FLOOR PLATE SHOWING ADDITIONAL PREMISES LEASE AMENDMENT SEVEN CMD 177A (8/98) (EXPANSION/CO-TERMINOUS) THIS LEASE AMENDMENT SEVEN ("Amendment") is made and entered into as of the 6th day of December, 2004 by and between CMD REALTY INVESTMENT FUND IV, L.P. an Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a Nevada corporation ("Tenant"). A. Landlord and Tenant are the current parties to that certain lease ("Original Lease") dated October 16, 1998, for premises (the "Premises") in the building (the "Building") known as Three Gateway, located at 410 N. 44th Street, Phoenix, Arizona (the "Property"), which lease has heretofore been amended by documents described and dated as follows: First Amendment to Lease dated March 9, 1999, Second Amendment to Lease dated November 8, 1999, Letter Agreement dated May 10, 2000, Lease Amendment Three dated November 7, 2000, Lease Amendment Four dated May 15, 2001, Lease Term Adjustment Confirmation dated January 3, 2001, Letter from Mesa Air dated May 30, 2001, Parking Letter dated March 21, 2002, Lease Amendment Five dated October 11, 2002, Lease Amendment Six dated April 1, 2003 and Lease Term Confirmation Letter dated June 24, 2003 (collectively, and as amended herein, the "Lease"). B. The parties mutually desire to amend the Lease on the terms hereof. NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows. 1. ADDITIONAL PREMISES. The space currently known as Suite 100 ("Additional Premises"), the approximate location of which is shown on Exhibit A hereto on the first (1st) floor of the Building, and which shall be deemed to contain 6,414 square feet of rentable area for purposes hereof, shall be added to and become a part of the Premises commencing on July 1, 2005 ("Additional Premises Commencement Date") and continuing co-terminously with the expiration date under the Lease ("Lease Expiration Date"), as the same may be extended from time to time, subject to the terms herein. The Additional Premises Commencement Date shall be subject to adjustment and confirmation to the extent further described below. 2. BASE RENT FOR ADDITIONAL PREMISES. Tenant shall pay monthly base rent for the Additional Premises as provided below and otherwise as provided in the Lease:

Additional Premises Period Monthly Base Rent ------ ------------------- Additional Premises Commencement Date - August 31, 2007 $[*] September 1, 2007 - August 31, 2010 $[*] September 1, 2010 - Lease Expiration Date $[*]

Notwithstanding anything to the contrary herein, as a concession to enter this Amendment and provided Tenant has not committed an Event of Default, Tenant's obligations for Base Rent shall be abated for five (5) months commencing on the Additional Premises Commencement Date (except if the Additional Premises Commencement Date does not occur on the first day of a calendar month, the abatement period shall be 150 days), subject to the following conditions. If Tenant shall commit an Event of Default under the Lease, Tenant shall: (i) immediately commence paying the full amount otherwise required under the Lease without regard to such period, if the foregoing period is still in effect, and (ii) immediately pay Landlord the unamortized portion of the amount theretofore abated. 3. EXPENSES AND TAXES. Commencing on the Additional Premises Commencement Date: (a) Tenant shall pay Tenant's Share for the Additional Premises of increases in Property expenses, real estate taxes and other such amounts, over the amount for the year 2006, and as otherwise provided in the Lease, and (b) "Tenant's Share" for the Additional Premises shall be [*] percent ([*]%), for purposes hereof. Property expenses for the Premises (including the Additional Premises) for any year (including the base year) during which the average occupancy of the Property is less than 95% have been and shall continue to be calculated based upon the costs that would have been incurred if the Property were 95% occupied. 4. PRORATIONS; CONSOLIDATED OR SEPARATE BILLINGS. If the Additional Premises Commencement Date does not occur at the beginning of an applicable payment period under the Lease, Landlord shall reasonably pro rate Tenant's payment obligations on a per diem basis. The base rent, Property expenses, real estate taxes, and all other rentals and charges respecting the Additional Premises are sometimes herein called "Additional Premises Rent". Landlord may compute and bill Additional Premises Rent (or components thereof) separately or treat the Additional Premises and Premises as one unit for computation and billing purposes. 5. PARKING. Commencing on the Additional Premises Commencement Date and continuing through the Expiration Date, Tenant shall license from Landlord the following additional parking spaces (which shall be in addition to the parking spaces under Exhibit F to Lease Amendment Five): Area A Covered Unreserved Spaces: fourteen (14) parking spaces. The initial charges for such spaces shall be $30.00 per space per month, or a total monthly charge of $420.00 for all such Area A Spaces, plus any sales or other tax thereon. Area B Uncovered Unreserved (Rooftop) Spaces: five (5) parking spaces, at no charge during the Extended Term. Covered Reserved Spaces: five (5) parking spaces, at no charge during the Extended Term. The remaining terms of Exhibit F to Lease Amendment Five shall continue to apply. 6. OTHER TERMS; EXTENSION OPTION; CERTAIN PROVISIONS DELETED. Commencing on the Additional Premises Commencement Date, the Additional Premises shall be added to, and become part of, the Premises under the Lease, and all applicable provisions then or thereafter in effect under the Lease (including the Extension Option set forth in Exhibit C to Lease Amendment Five, which shall apply to the entire Premises, including the Additional Premises) shall also apply to the Additional Premises, except as provided to the contrary herein. Notwithstanding the foregoing, this Amendment is intended to supersede any rights of Tenant to expand or lease additional space and all such provisions are hereby deleted. 7. CONDITION OF ADDITIONAL PREMISES. Tenant has inspected the Additional Premises (and portions of the Building, Property, systems and equipment providing access to or serving the Additional Premises) or has had an opportunity to do so, and agrees to accept the same "AS IS" without any agreements, representations, understandings or obligations on the part of Landlord to perform or pay for any alterations, repairs or improvements, except as expressly provided in the Work Letter attached as Exhibit B hereto. With respect to the Work that Landlord shall perform under Exhibit B hereto: (i) Landlord shall use diligent, good faith efforts to substantially complete such Work to an extent that Tenant can reasonably occupy the Additional Premises by the Additional Premises Commencement Date, subject to the other provisions of this Amendment, (ii) Tenant shall also use diligent, good faith efforts to cooperate, and to cause its space planners, architects, contractors, agents and employees to cooperate diligently and in good faith, with Landlord and any space planners, architects, contractors or other parties designated by Landlord, so that such Work can be planned, permits can be obtained, and the Work can be substantially completed by the Additional Premises Commencement Date, and (iii) in the event of any dispute as to whether such Work has been substantially completed, Landlord may refer the matter to a licensed architect, whose professional good faith decision shall be final and binding on the parties. 8. ADDITIONAL PREMISES COMMENCEMENT DATE ADJUSTMENTS. a. Early Additional Premises Commencement Date. During any period that Tenant shall be permitted to enter the Additional Premises prior to the Additional Premises Commencement Date other than to occupy the same for business purposes (e.g. to install equipment or furniture, or to make alterations or improvements), Tenant shall comply with all provisions of the Lease, except for the payment of Additional Premises Rent. Landlord shall permit Tenant to have early access, so long as the Additional Premises is legally available, Landlord has completed any work required of Landlord under this Amendment (or can reasonably accommodate the scheduling of minor work that Tenant desires to perform, such as cabling, without delaying any such Landlord work), and Tenant is in compliance with the other provisions of the Lease. The Additional Premises Commencement Date, Additional Premises Rent and Tenant's other obligations respecting the Additional Premises shall be advanced to such earlier date as Tenant commences occupying the Additional Premises for business purposes. If such event occurs with respect to a portion of the Additional Premises, the Additional Premises Commencement Date and Additional Premises Rent shall be so advanced with respect to such portion (and fairly prorated based on the rentable square footage involved). b. Additional Premises Commencement Date Delays. Subject to the other provisions of this Amendment, the Additional Premises Commencement Date, Additional Premises Rent and Tenant's other obligations respecting the Additional Premises shall be postponed to the extent Tenant is unable to reasonably occupy the Additional Premises because Landlord fails (i) to substantially complete any improvements to the Additional Premises required to be performed by Landlord under this Amendment, or (ii) to deliver possession of the Additional Premises for any other reason, including holding over by prior occupants, except to the extent that Tenant, its space planners, architects, contractors, agents or employees cause such failure. If such failure occurs with respect to a portion of the Additional Premises, the Additional Premises Commencement Date, Additional Premises Rent and Tenant's other obligations shall be so postponed with respect to such portion (and fairly prorated based on the rentable square footage involved). Any such delay in the Additional Premises Commencement Date shall not subject Landlord to liability for loss or damage resulting therefrom, and Tenant's sole recourse with respect thereto shall be the postponement of Additional Premises Rent and other obligations described herein. c. Adjustments and Confirmation. If the Additional Premises Commencement Date is advanced or postponed as described above, the Lease Expiration Date shall not be changed. Landlord and Tenant shall execute a confirmation of the Additional Premises Commencement Date as adjusted herein in such form as Landlord may reasonably request; any failure to respond within thirty (30) days after Landlord provides such written confirmation shall be deemed an acceptance of the date set forth in Landlord's confirmation. If Tenant disagrees with Landlord's adjustment of such date, Tenant shall pay Additional Premises Rent and perform all other obligations commencing and ending on the dates determined by Landlord, subject to refund or credit when the matter is resolved. 9. REAL ESTATE BROKERS. Tenant hereby represents to Landlord that Tenant has not dealt with any broker, salesperson, agent or finder in connection with this Amendment, except Cushman & Wakefield of Arizona, Inc., and agrees to defend, indemnify and hold Landlord, and its employees, agents and affiliates harmless from all liabilities and expenses (including reasonable attorneys' fees and court costs) arising from any claims or demands of any other broker, salesperson, agent or finder with whom Tenant has dealt for any commission or fee alleged to be due in connection with this Amendment. 10. OFFER. The submission and negotiation of this Amendment shall not be deemed an offer to enter into the same by Landlord. This Amendment shall not be binding on Landlord unless and until fully signed and delivered by both parties. Tenant's execution of this Amendment constitutes a firm offer to enter into the same which may not be withdrawn for a period of thirty (30) days after delivery to Landlord. During such period, Landlord may proceed in reliance thereon, but such acts shall not be deemed an acceptance. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above. LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL] an Illinois limited partnership By: CMD/Fund IV GP Investments, L.P., an Illinois limited partnership, its general partner By: CMD REIM IV, Inc., an Illinois corporation, its general partner By: --------------------------------------- S. Lee Moreland, Vice President TENANT: MESA AIR GROUP, INC. [SEAL] a Nevada corporation By: -------------------------------------- Mike Lotz, President & COO CERTIFICATE I, ___________________________________, as ________________________________ of the aforesaid Tenant, hereby certify that the individual(s) executing the foregoing Lease on behalf of Tenant was/were duly authorized to act in his/their capacities as set forth above, and his/their action(s) are the action of Tenant. (Corporate Seal) ---------------------------------------- EXHIBIT A FLOOR PLATE SHOWING ADDITIONAL PREMISES EXHIBIT B CMD 108D (12/01) GENERAL IMPROVEMENT WORK LANDLORD PERFORMANCE ALLOWANCE WORK LETTER This Work Letter is an Exhibit to the foregoing document (referred to herein for convenience as the "Lease Document"). I. BASIC TERMS Date To Complete All Plans: 120 days before the Commencement Date (including Construction Drawings) under the Lease Document Date To Substantially Complete Work: Commencement Date under the Lease Document Allowance: $[*] as further described in Section IV Administrative Fee: [*] percent ([*]%) as further described in Section IV Other Defined Terms: "Plans," "Space Plan," "Construction Drawings," "Planner," "Landlord's Planner," and "Work" are defined in Section VIII II. CONSTRUCTION REPRESENTATIVES, SPACE PLANNER, ARCHITECT AND ENGINEER. Landlord's and Tenant's construction representatives for coordination of planning, construction, approval of change orders, substantial and final completion, and other such matters (unless either party changes its representative upon written notice to the other), and the other parties involved in planning the Work, are: Landlord's Representative: Perry Williams, Senior Property Manager Address: c/o CMD Realty Investors, 426 N. 44th Street, Suite 170, Phoenix, AZ 85008 Telephone: 602-275-4100 Fax: 602-275-8255 Tenant's Representative: _____________________________________________________ Address: _____________________________________________________ Telephone: _____________________________________________________ Fax: _____________________________________________________ Space Planner: Krause Interiors or an interior office space planner designated or approved by Landlord in writing (who may be the same as the Architect). Architect: Krause Interiors or a licensed architect designated or approved by Landlord in writing (who may be the same as the Space Planner). Engineer: One or more licensed engineers designated by Landlord in writing. III. PLANNING (a) Date To Complete All Plans. On or before the "Date To Complete All Plans" set forth in Section I above, Tenant shall have: (i) provided Planner with all information concerning Tenant's requirements in order for the Planner to prepare all required Plans (including a Space Plan and Construction Drawings as defined in Section VIII), (ii) arranged for Planner to prepare such Plans (or, if Landlord's Planner is preparing any Plans, Tenant shall have cooperated diligently and in good faith so that such Plans can be prepared by such date), (iii) granted written approval thereof, and (iv) obtained Landlord's written approval thereof (unless Landlord's Planner is preparing the Plans and Landlord has already granted written approval thereof in connection with providing such Plans to Tenant). If any Plans are being prepared by Landlord's Planner, Landlord shall cooperate diligently and in good faith in arranging for Tenant to meet with Landlord's Planner and in preparing such Plans. (b) Landlord's Approval of Plans. Landlord shall either approve any Plans or revisions submitted pursuant to this Exhibit or disapprove the same with suggestions for making the same acceptable within five (5) working days with respect to the Space Plan or revisions thereto, and ten (10) working days with respect to Construction Drawings or revisions thereto, after receiving either of the same (provided Landlord shall have additional time as may be reasonably required in order to obtain any engineering or HVAC report or due to other special or unusual features of the Work or Plans). Landlord shall not unreasonably withhold approval if the Plans provide for a customary office layout, with finishes and materials generally conforming to building standard finishes and materials currently being used by Landlord at the Property, are compatible with the Property shell and core construction, and if no modifications will be required for the Property electrical, heating, air-conditioning, ventilation, plumbing, fire protection, life safety, or other systems or equipment, and will not require any structural modifications to the Property, whether required by heavy loads or otherwise. Landlord may request that Tenant approve Landlord's suggested changes in writing (such approval not to be unreasonably withheld), or Landlord may arrange directly with Planner for revised Plans to be prepared incorporating such suggestions (in which case, Tenant shall sign or initial the revised Plans and/or Landlord's notice concerning the suggested changes, if requested by Landlord). (c) Governmental Approval of Plans. Landlord shall apply for any normal building permits required for the Work which are issued pursuant to a local building code as a ministerial matter. If the Plans must be revised in order to obtain such building permits, Landlord shall promptly notify Tenant. In such case, Tenant shall promptly arrange for the Plans to be revised to satisfy the building permit requirements and shall submit the revised Plans to Landlord for approval as a Change Order under clause (d) below. Landlord shall have no obligation to apply for any zoning, parking or sign code amendments, approvals, permits or variances, or any other governmental approval, permit or action (except normal building permits as described above). If any such other matters are required, Tenant shall promptly seek to satisfy such requirements or revise the Plans to eliminate such requirements. Delays in substantially completing the Work by the Commencement Date as a result of requirements for building permits or other governmental approvals, permits or actions shall be a Construction Delay and shall affect the Commencement Date to the extent provided in Section V (except that, notwithstanding anything contained in Section V to the contrary, any delays in obtaining normal building permits as a result of errors or omissions of Landlord's Planner in preparing the Plans shall postpone the Commencement Date and commencement of rent to the extent that substantial completion of the Work is delayed 2 thereby beyond such Commencement Date, and Tenant shall not be obligated to bear the cost of Plan revisions to correct the same). (d) Changes After Plans Are Approved. If Tenant shall desire any changes, alterations, or additions to the Work after final Plans have been approved by Landlord, Tenant shall submit a detailed written request or revised Plans (the "Change Order") to Landlord for approval. If reasonable and practicable and generally consistent with the Plans theretofore approved, Landlord shall not unreasonably withhold approval, but all costs in connection therewith, including, without limitation, construction costs, permit fees, and any additional plans, drawings and engineering reports or other studies or tests, or revisions of such existing items, shall be paid for by Tenant as a Tenant's Cost under Section IV. Tenant shall bear the cost of any changes or corrections for errors or omissions made by any space planner, architect, engineer or contractor recommended or engaged by Tenant. (e) Planning Delays. If the Plans have not been completed and approved by the Date To Complete All Plans set forth in Section I above, including any revisions reasonably required by Landlord pursuant to clause (b) above, and revisions by Tenant to reduce Tenant's Cost pursuant to Section IV below (collectively called "Planning Delays"), substantial completion of the Work and delivery of the Premises is subject to postponement as a result. In such event, the Commencement Date set forth in the Lease Document for all other purposes, including the commencement of Rent, shall only be postponed to the extent that substantial completion of the Work is delayed beyond such Commencement Date as a result of one or more of the following events (collectively called "Landlord Planning Delays"): (i) Landlord takes more time to approve or disapprove the Space Plan or Construction Drawings or revisions thereto than permitted under clause (b) above, (ii) Landlord's Planner takes more than five (5) working days to meet with Tenant after receiving a written request for a meeting, more than five (5) working days to prepare or revise the Space Plan or revisions thereto, after meeting with Tenant and receiving all information from Tenant required in order to do so, or more than fifteen (15) working days to prepare or revise any required Construction Drawings or revisions thereto, after the Space Plan is final and approved (provided Landlord's Planner shall have additional time as may be reasonably required in order to obtain any engineering or HVAC report or due to other special or unusual features of the Work or Plans, and this clause (ii) shall apply only if Tenant uses Landlord's Planner to prepare such Plans), or (iii) Landlord takes more than ten (10) working days to provide a preliminary cost estimate after receiving a Space Plan sufficiently detailed for such purposes, or more than twenty (20) working days to provide Tenant with a cost estimate after receiving Construction Drawings sufficiently detailed for such purposes (provided this clause (iii) shall apply only if Tenant makes a timely written request for such cost estimates, or if Landlord elects to provide such cost estimates, as further described under Section IV below). IV. COST OF PLANS AND WORK; ALLOWANCE AND TENANT'S COST (a) Cost of Plans and Work; Allowance. Landlord shall bear the Cost of Plans and Work up to the amount of the Allowance set forth in Section I above (provided the portion of the Allowance available for the Plans shall be limited to five percent (5%), and shall exclude planning for furniture, fixtures and equipment). The "Cost of Plans and Work" hereunder includes, without limitation, all costs for or relating to: (i) the Plans, including all revisions thereto, and related engineering reports, or other studies, reports or tests, (ii) the Work, including costs of labor, hardware, equipment and materials, contractors' charges for overhead and fees, and so-called "general conditions" (including rubbish removal, utilities, hoisting, field supervision, building permits, inspection fees, utility connections, bonds, insurance, sales taxes, and the like), and any 3 air balancing or other such work in connection therewith, and (iii) Landlord's Administrative Fee in the amount set forth in Section I (which, if stated as a percentage, shall be applied to the other amounts included in the Cost of Plans and Work herein). If all or any portion of the Allowance shall not be used for the items permitted hereunder by the Commencement Date set forth in the Lease Document (except to the extent that such Commencement Date is delayed due to Construction Delays, other than Tenant Construction Delays), Landlord shall be entitled to the savings and Tenant shall receive no credit therefor. (b) Tenant's Cost; Estimates and Payments. Any portion of the Cost of Plans and Work exceeding the Allowance is referred to herein as "Tenant's Cost." Tenant may submit a written request for Landlord to obtain an estimate of the Work component of the Cost of the Plans and Work concurrently with submitting or approving a Space Plan and/or Construction Drawings; in such case Landlord shall promptly obtain a reasonable estimate of the same. Whether or not Tenant requests such an estimate, Landlord may reasonably estimate such Work component, the Cost of Plans and Work, and/or Tenant's Cost, and reasonably revise any such estimate from time to time (subject to clause (c) below). Tenant shall deposit any such estimated amount of Tenant's Cost (or the increase reflected in any such revised estimate) with Landlord within three (3) days after Landlord so requests. Landlord shall have no obligation to proceed with the Work (or proceed to seek permits or proceed with any demolition or other preliminary Work) until Landlord shall have received such deposit from Tenant. If the Work involves progress payments, Landlord shall apply the amounts deposited by Tenant first. If, after final completion and payment for the Cost of Plans and Work, the actual amount of Tenant's Cost exceeds any amount paid by Tenant as an estimate of Tenant's Cost, Tenant shall pay the difference to Landlord within three (3) days after Landlord so requests. If any such estimated amount exceeds the actual amount of Tenant's Cost, Landlord shall promptly provide a credit or refund of the difference. Tenant's Cost shall be deemed "Rent" under the Lease Document (and all remedies for the non-payment of Rent shall be available to Landlord therefor). (c) Tenant's Approval and Nature of Cost Estimates. If Tenant timely requests cost estimates as described in clause (b) above, or if Landlord otherwise so requires, Landlord shall request Tenant's written approval of any such cost estimate hereunder. Tenant shall not unreasonably withhold such approval, and shall approve or disapprove the same in writing within three (3) days after Landlord so requests. If Tenant reasonably disapproves of any such estimate, Tenant shall meet with the Planner and eliminate or substitute items in order to reduce Tenant's Cost in connection with preparing a revised version of the Plans as a Change Order pursuant to Section III above, but the Date to Complete All Plans shall not be extended thereby. Any cost estimates based on a Space Plan (including a so-called "pricing plan") will be preliminary in nature, and may not be relied on by Tenant. However, Landlord agrees that any written estimate of Tenant's Cost prepared by Landlord's contractor based on the approved Construction Drawings shall not be exceeded by more than fifteen percent (15%), except to the extent that: (a) Tenant makes changes in the Construction Drawings or the Work, (b) overtime labor required in order to substantially complete the Work by the Commencement Date, (c) concealed conditions are encountered on the job site, (d) new legal requirements become effective following preparation of the estimate, or (e) there are strikes, acts of God, shortages of materials or labor, or other causes beyond Landlord's reasonable control. V. CONSTRUCTION (a) Landlord to Arrange Work. Provided Tenant completes the Plans on time and furnishes Landlord's estimate of Tenant's Cost as provided above, and is not then in violation of 4 the Lease Document (including this Exhibit), Landlord shall use reasonable efforts to cause Landlord's contractor to substantially complete the Work by the Commencement Date set forth in the Lease Document, subject to the other provisions hereof. (b) Substantial Completion, Walk-Through, and Punchlist Items. Landlord shall be deemed to have "substantially completed" the Work for purposes hereof if Landlord has caused all of the Work to be sufficiently completed that Tenant can reasonably occupy the Premises or complete any improvements or changes to the Premises to be made by Tenant hereunder. When Landlord notifies Tenant that the Work has been substantially completed, either party may request a joint walk-through inspection in order for Tenant to identify any necessary final completion or other "punchlist" items. Neither party shall unreasonably withhold or delay approval concerning the identification of punchlist items. If Tenant fails to participate in a walk-through as provided above, or otherwise fails to object to Landlord's notice of substantial completion in writing within five (5) days thereafter specifying in reasonable detail the items of work needed to be performed in order for substantial completion, Tenant shall be deemed conclusively to have agreed that the Work is substantially completed for purposes of commencing the Commencement Date and Rent under the Lease Document. If there is any disagreement concerning whether Landlord has substantially completed the Work, Landlord may request a good faith decision by Landlord's Planner which shall be final and binding on the parties. (c) Final Completion, Suite Identification Signage, and Other Matters. Landlord shall use reasonable efforts to complete any punchlist items promptly after substantial completion has occurred. If Landlord notifies Tenant in writing that the Work is fully completed, and Tenant fails to object thereto in writing within five (5) days thereafter specifying in reasonable detail the remaining punchlist items of work needed to be completed, Tenant shall be deemed conclusively to have accepted the Work as fully completed (or such portions as to which Tenant has not so objected). In connection with the Work, Landlord: (i) to the extent not already existing, shall install or cause a contractor to install building standard suite identification signage for the main entrance to the Premises (unless the Premises comprises a full floor, in which case, Tenant shall install such signage, at Tenant's expense, using a professional sign contractor/designer, and a design and materials, and in a location in the Premises, all of which are first approved by Landlord in writing), and (ii) may cause a contractor to perform air balancing tests on the Premises and adjust the HVAC system as a result thereof, and install, to the extent not already existing, building standard window blinds. Tenant shall promptly advise Landlord of the name Tenant wishes for said signage; the content of all signage shall be subject to Landlord's prior written approval. No other signage may be installed or placed outside the Premises by Tenant. The costs of the items that Landlord provides under this Section may be charged against the Allowance, and if the Allowance shall be insufficient, Tenant shall pay Landlord for such costs as additional Rent within fifteen (15) days after billing. (d) Construction Delays. If the Work has not been substantially completed by the Commencement Date set forth in the Lease Document due to casualty damage, acts of God, strikes, shortages of labor or materials, or any other reason ("Construction Delays"), then Landlord's delivery of possession of the Premises (if applicable) shall be postponed as a result. In such case, subject to any contrary provisions in the Lease Document, the Commencement Date set forth in the Lease Document for all other purposes, including commencement of Rent, shall be postponed until the Work is substantially completed, except to the extent that substantial completion is delayed as a result of one or more of the following events (collectively called "Tenant Construction Delays"): (i) Planning Delays as described above (except for Landlord Planning Delays), (ii) Tenant's requests for changes to the Work or Change Orders under Section 5 III, or otherwise, (iii) Tenant's failure to furnish an amount equal to Landlord's reasonable estimate of Tenant's Cost (if any) within the time required under Section IV (which shall give Landlord the absolute right to postpone the Work until such amount is furnished to Landlord, without limiting Landlord's other remedies), (iv) any upgrades, special work or other non-building standard items, or items not customarily provided by Landlord to office tenants, to the extent that the same involve longer lead times, installation times, delays or difficulties in obtaining building permits, requirements for any governmental approval, permit or action beyond the issuance of normal building permits (as described in Section III), or other delays not typically encountered in connection with Landlord's standard office improvements, (v) the performance by Tenant or Tenant's Contractors (as defined in Section VI) of any work at or about the Premises or Property, (vi) any act or omission of Tenant or Tenant's Contractors, any breach by the Tenant of any provisions contained in this Exhibit or in the Lease Document, or any failure of Tenant to cooperate with Landlord or otherwise act with diligence and in good faith in order to cause the Work to be designed and performed in a timely manner. (e) Landlord's Role. The parties acknowledge that neither Landlord nor its managing agent is an architect or engineer, and that the Work will be designed and performed by independent architects, engineers and contractors. Landlord and its managing agent shall have no responsibility for construction means, methods or techniques or safety precautions in connection with the Work. Landlord's approval of the Plans shall not be deemed a warranty as to the adequacy or legality of the design, and Landlord does not guarantee that the Work will be free from errors, omissions or defects. Tenant, in reviewing the Plans and Work, shall have the opportunity to check for any errors, omissions or defects. In the event of material errors, omissions or defects caused by contractors engaged by Landlord which are identified in the punchlist procedure described in Section V (b) above, Landlord shall use reasonable efforts to cause such contractors to reasonably cure such items as described therein (except to the extent caused by Tenant or Tenant's Contractors), and Landlord shall cooperate in any action Tenant desires to bring against such contractors. VI. WORK PERFORMED BY TENANT. Landlord, at Landlord's discretion, may permit Tenant and any of Tenant's space planners, architects, engineers, contractors, suppliers, employees, agents and other such parties (collectively, "Tenant's Contractors") to enter the Premises prior to completion of the Work in order to make the Premises ready for Tenant's use and occupancy. If Landlord permits such entry prior to completion of the Work, then such permission is conditioned upon Tenant and Tenant's Contractors working in harmony and not interfering with Landlord and Landlord's space planners, architects, engineers, contractors, suppliers, employees, agents and other such parties (collectively, "Landlord's Contractors") in doing the Work or with other tenants and occupants of the Building. If at any time such entry shall, in Landlord's sole opinion, cause or threaten to cause such disharmony or interference, Landlord shall have the right to withdraw such permission immediately upon oral or written notice to Tenant. Tenant agrees that any such entry into the Premises shall be deemed to be under all of the terms, covenants, conditions and provisions of the Lease Document (including, without limitation, all insurance requirements under any Original Lease, if the Lease Document is an amendment thereto, as further described in Section IX), and further agrees that Landlord shall not be liable in any way for any injury, loss or damage which may occur to any decorations, fixtures, personal property, installations or other improvements or items of work installed, constructed or brought upon the Premises by or for Tenant or Tenant's Contractors prior to completion of the Work, all of the same being at Tenant's sole risk. Without limitation as to other provisions, Tenant hereby expressly acknowledges that Tenant's indemnity and related obligations under the Lease 6 Document shall apply to all claims and matters arising from early entry to the Premises pursuant hereto. VII. TAXES. Tenant shall pay, prior to delinquency, all taxes, charges or other governmental impositions assessed against or levied upon all fixtures, furnishings, personal property, modular furniture, and systems and equipment located in or exclusively serving the Premises. If the Premises consists of "raw space" which has not previously been improved, and Landlord does not allocate taxes or other such amounts on such initial improvements between the tenants of the Property in general, then Tenant shall also pay all taxes, charges or other governmental impositions assessed against or levied upon the Work under this Exhibit. Whenever possible, Tenant shall cause all such items for which Tenant is responsible hereunder to be assessed and billed separately from the property of Landlord. In the event any such items shall be assessed and billed with the property of Landlord, Tenant shall pay its share of such taxes, charges or other governmental impositions to Landlord within fifteen (15) days after Landlord delivers a statement and a copy of the assessment or other documentation showing the amount of such impositions applicable to Tenant. VIII. DEFINITIONS. The following terms herein shall have the following meanings: (a) "Planner" means the Space Planner, Architect and/or Engineer, as the context implies. (b) "Landlord's Planner" means any Planner regularly used by Landlord and with whom Landlord has a written contractual arrangement for services at the Property, including a contractual arrangement for preparation of the Space Plan and/or Construction Drawings, as the case may be. (c) "Plans" means the "Space Plan" and/or "Construction Drawings" as the context implies. Upon Landlord's approval of any Construction Drawings, the term "Plans" shall refer to such Construction Drawings, which shall supersede the Space Plan. The Plans shall be signed or initialed by Tenant, if requested by Landlord, and any Construction Drawings shall include a usable computer aided design (CAD) file. (d) "Space Plan" means, to the extent reasonably required by the nature of the Work, a detailed floor plan (including any so-called "Pricing Plan"), drawn to scale, showing: (i) demising walls, interior walls and other partitions, including type of wall or partition and height, and any demolition or relocation of walls, (ii) doors and other openings in such walls or partitions, including type of door and hardware, (iii) any floor or ceiling openings, and any variations to building standard floor or ceiling heights, (iv) electrical outlets, and any restrooms, kitchens, computer rooms, file cabinets, file rooms and other special purpose rooms, and any sinks or other plumbing facilities, or other special electrical, HVAC, plumbing or other facilities or equipment, including all special loading, (v) location and dimensions of communications equipment room, and electrical and HVAC requirements therefor, (vi) special cabinet work or other millwork items, (vii) finish selections, and (viii) any other details or features reasonably required in order to obtain a preliminary cost estimate as described in Section IV, or reasonably requested by Architect, Engineer or Landlord in order for the Space Plan to serve as a basis for preparing Construction Drawings. (e) "Construction Drawings" means, to the extent reasonably required by the nature of the Work, fully dimensioned architectural construction drawings and specifications, and any 7 required engineering drawings (including mechanical, electrical, plumbing, air-conditioning, ventilation and heating), and shall include any applicable items described above for the Space Plan, and to the extent applicable: (i) electrical outlet locations, circuits and anticipated usage therefor, (ii) reflected ceiling plan, including lighting, switching, and any special ceiling specifications, (iii) duct locations for heating, ventilating and air-conditioning equipment, (iv) details of all millwork, (v) dimensions of all equipment and cabinets to be built in, (vi) furniture plan showing details of space occupancy, (vii) keying schedule, (viii) lighting arrangement, (ix) location of print machines, equipment in lunch rooms, concentrated file and library loadings and any other equipment or systems (with brand names wherever possible) which require special consideration relative to air-conditioning, ventilation, electrical, plumbing, structural, fire protection, life-fire-safety system, or mechanical systems, (x) special heating, ventilating and air conditioning equipment and requirements, (xi) weight and location of heavy equipment, and anticipated loads for special usage rooms, (xii) demolition plan, (xiii) partition construction plan, (xiv) all governmental requirements, and (xv) final finish selections, and (xvi) any other details or features reasonably required in order to obtain a final cost estimate as described in Section IV, or reasonably requested by Architect, Engineer or Landlord in order for the Construction Drawings to serve as a basis for contracting the Work. (f) "Work" means: (i) the improvements and items of work in the Premises shown on the final approved Plans (including changes thereto), and (ii) any demolition, preparation or other work required in connection therewith, including without limitation, structural or mechanical work, additional HVAC equipment or sprinkler heads, or modifications to any building mechanical, electrical, plumbing or other systems and equipment or relocation of any existing sprinkler heads, either within or outside the Premises required as a result of the layout, design, or construction of the Work or in order to extend any mechanical distribution, fire protection or other systems from existing points of distribution or connection, or in order to obtain building permits for the work to be performed within the Premises (unless Landlord requires that the Plans be revised to eliminate the necessity for such work). Notwithstanding the foregoing to the contrary: (1) the Work shall consist of such materials and finishes that Landlord currently uses as "building standard", unless otherwise expressly specified in the Plans and approval is evidenced by Landlord's initials adjacent to such specification, (2) Landlord reserves the right to install building standard blinds or other window coverings (to the extent not already in the Premises), as part of the Work, whether or not shown on the Plans, (3) Landlord reserves the right to substitute comparable or better materials and items for those shown in the Plans, so long as they do not materially and adversely affect the appearance of the Premises, and (4) any personal property, trade fixtures or business equipment, including, but not limited to, modular or other furniture, and cabling for communications or computer systems, whether or not shown on the Plans, shall be provided by Tenant, at Tenant's sole cost. IX. MISCELLANEOUS. If this Work Letter is attached as an Exhibit to an amendment to an existing lease ("Original Lease"), whether such amendment adds space, relocates the Premises or makes any other modifications, the term "Lease Document" herein shall refer to such amendment, or the Original Lease as amended, as the context implies. By way of example, in such case, references to the "Premises" and "Commencement Date" herein shall refer, respectively, to such additional or relocated space and the effective date for delivery thereof under such amendment, unless expressly provided to the contrary herein. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Lease Document. This Exhibit is intended to supplement and be subject to the provisions of the Lease Document, including, without limitation, those provisions requiring that any modification or amendment be in writing and signed by authorized representatives of both parties. This Exhibit shall not apply to 8 any additional space added to the Premises at any time, whether by any options or rights under the Lease Document or otherwise, or to any portion of the Premises in the event of a renewal or extension of the Term of the Lease Document, whether by any options or rights under the Lease Document or otherwise, unless expressly so provided in the Lease Document or any amendment or supplement thereto. The rights granted in this Exhibit are personal to Tenant as named in the Lease Document, and are intended to be performed for such Tenant's occupancy of the Premises. Under no circumstance whatsoever shall any assignee or subtenant have any rights under this Exhibit. Any remaining obligations of Landlord under this Exhibit not theretofore performed shall concurrently terminate and become null and void if Tenant subleases or assigns the Lease Document with respect to all or any portion of the Premises, or seeks or proposes to do so (or requests Landlord's consent to do so), or if Tenant or any current or proposed affiliate thereof issues any written statement indicating that Tenant will no longer move its business into, or that Tenant will vacate and discontinue its business from, the Premises or any material portion thereof. Any termination of Landlord's obligations under this Exhibit pursuant to the foregoing provisions shall not serve to terminate or modify any of Tenant's obligations under the Lease Document. 9 LEASE AMENDMENT EIGHT CMD 177A (8/98) (EXPANSION/CO-TERMINOUS) THIS LEASE AMENDMENT EIGHT ("Amendment") is made and entered into as of the 1st day of September, 2005, by and between CMD REALTY INVESTMENT FUND IV, L.P., an Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a Nevada corporation ("Tenant"). A. Landlord and Tenant are the current parties to that certain lease ("Original Lease") dated October 16, 1998, for premises (the "Premises") in the building (the "Building") known as Three Gateway, located at 410 N. 44th Street, Phoenix, Arizona (the "Property"), which lease has heretofore been amended by First Amendment to Lease dated March 9, 1999, Second Amendment to Lease dated November 8, 1999, Letter Agreement dated May 10, 2000, Lease Amendment Three dated November 7, 2000, Lease Amendment Four dated May 15, 2001, Lease Term Adjustment Confirmation dated January 3, 2001, Letter from Mesa Air dated May 30, 2001, Parking Letter dated March 21, 2002, Lease Amendment Five dated October 11, 2002, Lease Amendment Six dated April 1, 2003, Lease Term Confirmation Letter dated June 24, 2003, Amended and Re-stated Lease Amendment Seven dated April 15, 2005 and Lease Term Confirmation Letter dated July 6, 2005 (collectively, and as amended herein, the "Lease"). B. The parties mutually desire to amend the Lease on the terms hereof. NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereby agree as follows. 1. ADDITIONAL PREMISES. The space currently known as Suite 140 ("Additional Premises"), the approximate location of which is shown on Exhibit A hereto on the first (1st) floor of the Building, and which shall be deemed to contain 2,430 square feet of rentable area for purposes hereof, shall be added to and become a part of the Premises commencing on the date ("Additional Premises Commencement Date") that is the earlier of: (i) Tenant's occupancy of the Additional Premises for business purposes as further described in Paragraph 8 below, or (ii) December 1, 2005 ("Outside Date"), and continuing co-terminously with the expiration date under the Lease ("Lease Expiration Date"), as the same may be extended from time to time, subject to the terms herein. The Additional Premises Commencement Date shall be subject to adjustment and confirmation to the extent further described in Paragraph 8 below. 2. BASE RENT FOR ADDITIONAL PREMISES. Tenant shall pay monthly base rent for the Additional Premises as provided below and otherwise as provided in the Lease:

Additional Premises Period Monthly Base Rent ------ ------------------- Additional Premises Commencement Date - August 31, 2007 $[*] September 1, 2007 - August 31, 2010 $[*] September 1, 2010 - Lease Expiration Date $[*]

3. EXPENSES AND TAXES. Commencing on the Additional Premises Commencement Date: (a) Tenant shall pay Tenant's Share for the Additional Premises of increases in Property expenses, real estate taxes and other such amounts, over the amount for 10 the year 2005, and as otherwise provided in the Lease, and (b) "Tenant's Share" for the Additional Premises shall be [*] percent ([*]%), for purposes hereof. Property expenses for the Premises (including the Additional Premises) for any year (including the base year) during which the average occupancy of the Property is less than 95% have been and shall continue to be calculated based upon the costs that would have been incurred if the Property were 95% occupied. 4. PRORATIONS; CONSOLIDATED OR SEPARATE BILLINGS. If the Additional Premises Commencement Date does not occur at the beginning of an applicable payment period under the Lease, Landlord shall reasonably pro rate Tenant's payment obligations on a per diem basis. The base rent, Property expenses, real estate taxes, and all other rentals and charges respecting the Additional Premises are sometimes herein called "Additional Premises Rent". Landlord may compute and bill Additional Premises Rent (or components thereof) separately or treat the Additional Premises and Premises as one unit for computation and billing purposes. 5. PARKING. Commencing on execution and delivery of this Amendment by both parties, and continuing through the Expiration Date, Tenant shall license from Landlord the following additional parking spaces (which shall be in addition to the parking spaces under Exhibit F to Lease Amendment Five and Section 5 of Amended and Restated Lease Amendment Seven): Area A Covered Unreserved Spaces: six (6) parking spaces. The initial charges for such spaces shall be $30.00 per space per month, or a total monthly charge of $[*] for all such Area A Spaces, plus any sales or other tax thereon. Area B Uncovered Unreserved (Rooftop) Spaces: one (1) parking space, at no charge during the Extended Term. Covered Reserved Spaces: one (1) parking space, at no charge during the Extended Term. The remaining terms of Exhibit F to Lease Amendment Five, as amended herein, shall continue to apply to the above-described spaces. 6. OTHER TERMS; EXTENSION OPTION. Commencing on the Additional Premises Commencement Date, the Additional Premises shall be added to, and become part of, the Premises under the Lease, and all applicable provisions then or thereafter in effect under the Lease (including the Extension Option set forth in Exhibit C to Lease Amendment Five, which shall apply to the entire Premises, including the Additional Premises) shall also apply to the Additional Premises, except as provided to the contrary herein. 7. CONDITION OF ADDITIONAL PREMISES; TENANT WORK, LANDLORD ALLOWANCE, SUITE SIGN; AESTHETICS FROM COMMON AREAS. Tenant has inspected the Additional Premises (and portions of the Building, Property, systems and equipment providing access to or serving the Additional Premises) or has had an opportunity to do so, and agrees to accept the same "AS IS" without any agreements, representations, understandings or obligations on the part of Landlord to perform or pay for any alterations, repairs or improvements, except that Landlord shall provide an "Allowance" towards the "Cost of the Work" that Tenant performs all as set forth in Exhibit B hereto. Tenant may also use the Allowance for reasonable out-of-pocket costs of designing and installing one (1) sign identifying Tenant's name and logo on the glass separation between the Additional Premises and the ground floor lobby of the Building, subject to Landlord's prior written approval of the size, colors, and all other details; Landlord may withhold 11 such approval in Landlord's sole good faith opinion. Because the Additional Premises is located on the ground floor and is visible from the main Building lobby: (a) Landlord reserves the right to approve in writing, in Landlord's sole good faith opinion, all internal lighting, signs, and other matters, in the Additional Premises that may be visible from the public, common or exterior areas of the Property, (b) Tenant shall at all times keep the appearance of the portion of the Additional Premises that is visible from public, common and exterior areas of the Property in a neat, professional, attractive, and first class condition, and (c) Landlord reserves the right, at Landlord's sole cost, to replace the glass separation, including replacement with frosted glass, apply a covering or coating over the glass and/or install blinds over the glass and require that Tenant keep such blinds closed. 8. EARLY ACCESS AND ADDITIONAL PREMISES COMMENCEMENT DATE ADJUSTMENT. Landlord shall permit Tenant to enter the Additional Premises upon mutual execution and delivery of this Amendment. During any such early entry (e.g. to perform Work in the Additional Premises under Exhibit B hereto), Tenant shall comply with all terms and provisions of the Lease; however, the Additional Premises Commencement Date shall only be advanced to the extent that Tenant actually commences to occupy the Additional Premises for business purposes early (with the Additional Premises Rent fairly prorated based on the rentable area of the Additional Premises so occupied). If the Additional Premises Commencement Date is advanced as provided herein, the Lease Expiration Date shall not be changed. Landlord and Tenant shall execute a confirmation of the Additional Premises Commencement Date as adjusted herein in such form as Landlord may reasonably request; any failure to respond within thirty (30) days after Landlord provides such written confirmation shall be deemed an acceptance of the date set forth in Landlord's confirmation. If Tenant disagrees with Landlord's adjustment of such date, Tenant shall pay Additional Premises Rent and perform all other obligations commencing and ending on the dates determined by Landlord, subject to refund or credit when the matter is resolved. 9. REAL ESTATE BROKERS; OFFER; MISCELLANEOUS. Sections 8 and 9 of Lease Amendment Six are incorporated herein as though fully set forth. Otherwise, this Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein. IN WITNESS WHEREOF, the parties have executed this Amendment as of the above date. LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL] By: CMD/Fund IV GP Investments, L.P., general partner By: CMD REIM IV, Inc., general partner By: CMD Realty Investors, Agent By: -------------------------------------- Allen D. Aldridge, Vice President TENANT: MESA AIR GROUP, INC. [SEAL] a Nevada corporation By: -------------------------------------- Mike Lotz, President & COO 12 EXHIBIT A FLOOR PLATE SHOWING ADDITIONAL PREMISES 13 EXHIBIT B CMD 108G (12/00) MODERATE WORK TENANT PERFORMANCE WORK LETTER This Exhibit is a "Work Letter" to the foregoing document (referred to herein for convenience as the "Lease Document"). All references to "Premises" hereunder shall mean the Additional Premises. I. Basic Arrangement a. Tenant to Arrange for Work. Tenant desires to engage one or more contractors to perform certain improvements (the "Work," as further defined in Section VII) to or for the Premises under the Lease Document. Tenant shall arrange for the Work to be planned and performed strictly in accordance with the provisions of this Exhibit and applicable provisions of the Lease Document. Tenant shall pay when due all costs for or related to the Plans and Work whatsoever ("Costs of the Work"), and Landlord shall reimburse certain such costs up to the Allowance, as further described below. b. Allowance and, Landlord's Costs and Administrative Fee. Landlord shall provide up to $[*] (the "Allowance") towards the Costs of the Work relating to permanent leasehold improvements (provided the portion of the Allowance available for the Plans shall be limited to [*] percent ([*]%), and shall exclude planning for furniture, fixtures and equipment). Tenant shall pay Landlord's out-of-pocket costs, if any, for architectural and engineering review of the Plans and any Engineering Report, and all revisions thereof, and an administrative fee ("Administrative Fee") equal to $[*] of the other Costs of the Work for Landlord's time in reviewing the Plans and Work and coordinating with Tenant's Contractors. Landlord may, if feasible, also charge Tenant for any extra costs reasonably incurred by Landlord as a result of the Work, including but not limited to, any additional after-hours security for the Property common areas due to after-hours construction activity, and costs of any after-hours HVAC consumed in or for the Premises during the Work (based on actual usage as determined by the Building's energy management system); provided, however, that Tenant's contractors shall not be charged for parking (provided that parking by such contractors shall not exceed ten (10) spaces), freight elevator access or loading dock access. The foregoing items may be charged against the Allowance, and if the Allowance shall be insufficient, Tenant shall pay Landlord for such amounts as additional Rent within thirty (30) days after billing. If all or any portion of the Allowance shall not be used for the purposes permitted herein within twelve (12) months after the Commencement Date set forth in the Lease Document, Landlord shall be entitled to the savings and Tenant shall receive no credit therefore. Notwithstanding anything to the contrary contained herein, any personal property, trade fixtures or business equipment, including, but not limited to, modular or other furniture, and cabling for communications or computer systems, whether or not shown on the Approved Plans, shall be provided by Tenant, at Tenant's sole cost, and the Allowance shall not be used for such purposes. Any cabling remaining in the Premises upon the expiration or earlier termination of the Lease shall become the property of Landlord (without payment by Landlord). All disconnections made by Tenant of any cabling shall be made properly such that, among other things, such cabling is reusable. c. Funding and Disbursement. Landlord shall fund and disburse the Allowance within thirty (30) days after the Work has been completed in accordance with 14 the Approved Plans in accordance with the provisions hereof, and Tenant has submitted all invoices, architect's certificates, a Tenant's affidavit, complete unconditional lien waivers and affidavits of payment by all Tenant's Contractors, and such other evidence as Landlord may reasonably require that the cost of the Work has been paid and that no architect's, mechanic's, materialmen's or other such liens have been or may be filed against the Property or the Premises arising out of the design or performance of such Work. Landlord may issue checks to fund the Allowance jointly or separately to Tenant, its general contractor, and any other of Tenant's Contractors. II. Planning. The term "Plans" herein means a "Space Plan," as the same may be superseded by any "Construction Drawings," prepared and approved pursuant to this Section (and as such terms are further defined in Section VII). In the event of any inconsistency between the Space Plan and Construction Drawings, or revisions thereto, as modified to obtain permits, the latest such item approved by Landlord shall control. The term "Approved Plans" herein means the Plans (and any revisions thereof) as approved by Landlord in writing in accordance with this Section. a. Tenant's Planners. Tenant shall engage a qualified, licensed architect ("Architect"), subject to Landlord's prior written approval. To the extent required by Landlord or appropriate in connection with preparing the Plans, Tenant shall also engage one or more qualified, licensed engineering firms, e.g. mechanical, electrical, plumbing, structural and/or HVAC ("Engineers"), all of whom shall be designated or approved by Landlord in writing. The term "Tenant's Planners" herein shall refer collectively or individually, as the context requires, to the Architect or Engineers engaged by Tenant, and approved or designated by Landlord in writing in accordance with this Exhibit. b. Space Plan, Construction Drawings and Engineering Report. Tenant shall promptly hereafter cause the Architect to submit three (3) sets of a "Space Plan" (as defined in Section VII) to Landlord for approval. Landlord shall, within three (3) working days after receipt thereof, either approve said Space Plan, or disapprove the same advising Tenant of the reasons for such disapproval; Landlord agrees to not unreasonably withhold its approval, as further provided in subsection c below. In the event Landlord disapproves said Space Plan, Tenant shall modify the same, taking into account the reasons given by Landlord for said disapproval, and shall submit three (3) sets of the revised Space Plan to Landlord. The parties shall continue such process in the same time frames until Landlord grants approval. To the extent required by Landlord or the nature of the Work and as further described in Section VII, Tenant shall, after Landlord's approval of the Space Plan: (i) cause the Architect to submit to Landlord for approval "Construction Drawings" (including, as further described in Section VII below, sealed mechanical, electrical and plumbing plans prepared by a qualified, licensed Engineer approved or designated by Landlord), and (ii) cause the Engineers to submit for Landlord's approval a report (the "Engineering Report") indicating any special heating, cooling, ventilation, electrical, heavy load or other special or unusual requirements of Tenant, including calculations. Landlord shall, within five (5) working days after receipt thereof (or such longer time as may be reasonably required in order to obtain any additional architectural, engineering or HVAC report or due to other special or unusual features of the Work or Plans), either approve the Construction Drawings and Engineering Report, or disapprove the same advising Tenant of the reasons for disapproval (and Landlord's agrees that any such disapproval shall be on a reasonable basis, as further provided in subsection c below). If Landlord disapproves of the 15 Construction Drawings or Engineering Report, Tenant shall modify and submit revised Construction Drawings, and a revised Engineering Report, taking into account the reasons given by Landlord for disapproval. The parties shall continue such process in the same time frames until Landlord grants approval. Construction Drawings shall include a usable computer aided design (CAD) file. c. Tenant's Planning Responsibility and Landlord's Approval. Tenant has sole responsibility to provide all information concerning its space requirements to Tenant's Planners, to cause Tenant's Planners to prepare the Plans, and to obtain Landlord's final approval thereof (including all revisions). Tenant and Tenant's Planners shall perform independent verifications of all field conditions, dimensions and other such matters), and Landlord shall have no liability for any errors, omissions or other deficiencies therein. Landlord shall not unreasonably withhold approval of any Plans or Engineering Report submitted hereunder, if they provide for a customary office layout, with finishes and materials generally conforming to building standard finishes and materials (or upgrades) currently being used by Landlord at the Property, are compatible with the Property's shell and core construction, and if no material modifications will be required for the Property's Systems and Equipment (as hereinafter defined), and will not require any structural modifications to the Property, whether required by heavy loads or otherwise, and will not create any potentially dangerous conditions, potentially violate any codes or other governmental requirements, potentially interfere with any other occupant's use of its premises, or potentially increase the cost of operating the Property. "Systems and Equipment" shall mean any plant, machinery, transformers, duct work, cable, wires, and other equipment, facilities, and systems designed to supply light, heat, ventilation, air conditioning and humidity or any other services or utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sprinkler, communications, alarm, security, or fire/life/safety systems or equipment, or any elevators, escalators or other mechanical, electrical, electronic, computer or other systems or equipment for the Property, except to the extent that any of the same serves Tenant or any other tenant exclusively. d. Governmental Approval of Plans; Building Permits. Tenant shall cause Tenant's Contractors (as defined in Section III) to apply for any building permits, inspections and occupancy certificates required for or in connection with the Work. If the Plans must be revised in order to obtain such building permits, Tenant shall promptly notify Landlord, promptly arrange for the Plans to be revised to satisfy the building permit requirements, and shall submit the revised Plans to Landlord for approval as a Change Order under Paragraph e below. Landlord shall have no obligation to apply for any zoning, parking or sign code amendments, approvals, permits or variances, or any other governmental approval, permit or action. If any such other matters are required, Tenant shall promptly seek to satisfy such requirements (if Landlord first approves in writing), or shall revise the Plans to eliminate such requirements and submit such revised Plans to Landlord for approval in the manner described above. e. Changes After Plans Are Approved. If Tenant shall desire, or any governmental body shall require, any changes, alterations, or additions to the Approved Plans, Tenant shall submit a detailed written request or revised Plans (the "Change Order") to Landlord for approval. If reasonable and practicable and generally consistent with the Plans theretofore approved, Landlord shall not unreasonably withhold approval. All costs in connection therewith, including, without limitation, construction costs, permit fees, and any additional plans, drawings and engineering reports or other studies or 16 tests, or revisions of such existing items, shall be included in the Costs of the Work under Section I. In the event that the Premises are not constructed in accordance with the Approved Plans, Tenant shall not be permitted to occupy the Premises until the Premises reasonably comply in all respects therewith; in such case, the Rent shall nevertheless commence to accrue and be payable as otherwise provided in the Lease Document. III. Contractors and Contracts. Tenant shall engage to perform the Work such contractors, subcontractors and suppliers ("Tenant's Contractors") as Landlord customarily engages or recommends for use at the Property; provided, Tenant may substitute other licensed, bonded, reputable and qualified parties capable of performing quality workmanship. Such substitutions may be made only with Landlord's prior written approval, which shall not be unreasonably withheld or delayed. Such approval shall be granted, granted subject to specified conditions, or denied within three (3) working days after Landlord receives from Tenant a written request for such substitution, containing a reasonable description of the proposed party's background, finances, references, qualifications, and other such information as Landlord may request. For Work involving any mechanical, electrical, plumbing, structural, demolition or HVAC matters, or any Work required to be performed outside the Premises or involving Tenant's entrance, Landlord may require that Tenant select Tenant's Contractors from a list of such contractors (provided that Landlord gives Tenant at least 3 choices for each trade) or else, for any trade as to which Landlord is unable to give Tenant a choice of 3 Contractors, Tenant may choose its own Contractor for such trade, subject to Landlord's approval which shall not be unreasonably withheld or delayed. All contracts shall contain insurance, indemnity and other provisions consistent herewith. Each contract and subcontract shall guarantee to Tenant and Landlord the replacement or repair, without additional charge, of all defects or deficiencies in accordance with its contract within one (1) year after completion of such work or the correction thereof. The correction of such work shall include, without additional charge, all additional expenses and damages in connection with such removal or replacement of all or any part of Tenant's Work, and/or the Property and/or common areas, or work which may be damaged or disturbed thereby. Tenant shall give Landlord copies of all contracts and subcontracts promptly after the same are entered. IV. Insurance and Indemnity. In addition to any insurance which may be required under the Lease Document, Tenant shall either secure, pay for and maintain, or cause Tenant's Contractors to secure, pay for and maintain during the continuance of construction and fixturing work within the Property or Premises, reasonable amounts of customary and appropriate insurance with responsible, licensed insurers, for all insurable risks and liabilities relating to the Work, including commercial general liability with contractual liability coverage ("CGL"), and full replacement value property damage (including installation floater coverage). The CGL policy shall be endorsed to include, as additional insured parties, Landlord, the property management company for the Property, and Landlord's agents, partners, affiliates. All policies shall include a waiver of subrogation in favor of the parties required to be additional insureds hereunder. Such insurance shall be primary to any insurance carried independently by said additional insured parties (which shall be excess and non-contributory). Certificates for such insurance, and the endorsements required hereunder, shall be delivered to Landlord before construction is commenced or any contractor's equipment or materials are moved onto the Property. Landlord shall not be liable in any way for any injury, loss or damage which may occur to any decorations, fixtures, personal property, installations or other 17 improvements or items of work installed, constructed or brought upon the Premises by or for Tenant or Tenant's Contractors, all of the same being at Tenant's sole risk. In the event that during the course of Tenant's Work any damage shall occur to the construction and improvements being made by Tenant, then Tenant shall repair the same at Tenant's cost. Tenant hereby agrees to protect, defend, indemnify and hold Landlord and its employees, agents, and affiliates harmless from all liabilities, losses, damages, claims, demands, and expenses (including attorneys' fees) arising out of or relating to the Plans or Work. V. Performance of Work a. Conditions to Commencing Work. Before commencing any Work, Tenant shall: (i) obtain Landlord's written approval of Tenant's Planners and the Plans, as described in Section II, (ii) obtain and post all necessary governmental approvals and permits as described in Section II, and provide copies thereof to Landlord, (iii) obtain Landlord's written approval of Tenant's Contractors, and provide Landlord with copies of the contracts as described in Section III, and (iv) provide evidence of insurance to Landlord as described in Section IV. b. Compliance and Standards. Tenant shall cause the Work to comply in all respects with the following: (i) the Approved Plans, (ii) the Property Code of the City and State in which the Property is located and Federal, State, County, City or other laws, codes, ordinances, rules, regulations and guidance, as each may apply according to the rulings of the controlling public official, agent or other such person, (iii) applicable standards of the National Board of Fire Underwriters (or successor organization) and National Electrical Code, (iv) applicable manufacturer's specifications, and (v) any work rules and regulations as Landlord or its agent may have adopted for the Property, including any Rules attached as an Exhibit to the Lease Document. Tenant shall use only new, first-class materials in the Work, except where explicitly shown in the Approved Plans. Tenant's Work shall be performed in a thoroughly safe, first-class and workmanlike manner, and shall be in good and usable condition at the date of completion. In case of inconsistency, the requirement with the highest standard protecting or favoring Landlord shall govern. c. Property Operations, Dirt, Debris, Noise and Labor Harmony. Tenant and Tenant's Contractors shall make all efforts and take all proper steps to assure that all construction activities do not interfere with the operation of the Property or with other occupants of the Property. Tenant's Work shall be coordinated under Landlord's direction with any other work and other activities being performed for or by other occupants in the Property so that Tenant's Work will not interfere with or delay the completion of any other work or activity in the Property. Construction equipment and materials are to be kept within the Premises, and delivery and loading of equipment and materials shall be done at such locations and at such time as Landlord shall direct so as not to burden the construction or operation of the Property. Tenant's Contractors shall comply with any work rules of the Property and Landlord's requirements respecting the hours of availability of elevators and manner of handling materials, equipment and debris. Demolition must be performed after 6:00 p.m. and on weekends, or as otherwise required by Landlord or the work rules for the Property. Construction which creates noise, odors or other matters that may bother other occupants may be rescheduled by Landlord at Landlord's sole discretion. Delivery of materials, equipment and removal of debris must be arranged to avoid any inconvenience or annoyance to other occupants. 18 The Work and all cleaning in the Premises must be controlled to prevent dirt, dust or other matter from infiltrating into adjacent occupant, common or mechanical areas. Tenant shall conduct its labor relations and relations with Tenant's Planners and Contractors, employees, agents and other such parties so as to avoid strikes, picketing, and boycotts of, on or about the Premises or Property. If any employees of the foregoing parties strike, or if picket lines or boycotts or other visible activities objectionable to Landlord are established, conducted or carried out against Tenant or such parties in or about the Premises or Property, Tenant shall immediately close the Premises and remove or cause to be removed all such parties until the dispute has been settled. d. Removal of Debris. Tenant's Contractors shall be required to remove from the Premises and dispose of, at least once a day and more frequently as Landlord may reasonably direct, all debris and rubbish caused by or resulting from the Work, and shall not place debris in the Property's waste containers. If required by Landlord, Tenant shall sort and separate its waste and debris for recycling and/or environmental law compliance purposes. Upon completion of Tenant's Work, Tenant's Contractors shall remove all surplus materials, debris and rubbish of whatever kind remaining within the Property which has been brought in or created by Tenant's Contractors in the performance of Tenant's Work. If any of Tenant's Contractors shall neglect, refuse or fail to remove any such debris, rubbish, surplus material or temporary structures within 48 hours after notice to Tenant from Landlord with respect thereto, Landlord may cause the same to be removed by contract or otherwise as Landlord may determine expedient, and bill the cost thereof to Tenant. e. Completion and General Requirements. Tenant shall take all actions necessary to cause Tenant's Planners to prepare the Approved Plans, and to cause Tenant's Contractors to obtain permits or other approvals, diligently commence and prosecute the Work to completion, and obtain any inspections and occupancy certificates for Tenant's occupancy of the Premises by the Commencement Date set forth in the Lease Document. Any delays in the foregoing shall not serve to abate or extend the time for the Commencement Date or commencement of Rent under the Lease Document, except to the extent of one (1) day for each day that Landlord delays approvals required hereunder beyond the times permitted herein without good cause, provided substantial completion of the Work and Tenant's ability to reasonably use the Premises by the Commencement Date (or by such later date when Tenant would otherwise have substantially completed the Work) is actually delayed thereby. Tenant shall impose on and enforce all applicable terms of this Exhibit against Tenant's Planners and Tenant's Contractors. Tenant shall notify Landlord upon completion of the Work (and record any notice of completion contemplated by law). To the extent reasonably appropriate based on the nature of the Work, Tenant shall provide Landlord with "as built" drawings no later than thirty (30) days after completion of the Work. f. Landlord's Role and Rights. The parties acknowledge that neither Landlord nor its managing agent is an architect or engineer, and that the Work will be designed and performed by independent architects, engineers and Tenant's Contractors engaged by Tenant. Landlord and its managing agent shall have no responsibility for construction means, methods or techniques or safety precautions in connection with the Work, and do not guarantee that the Plans or Work will be free from errors, omissions or defects, and shall have no liability therefor. Landlord's approval of Tenant's Plans and contracts, and Landlord's designations, lists, recommendations or approvals concerning 19 Tenant's Planners and Contractors shall not be deemed a warranty as to the quality or adequacy thereof or of the Plans or the Work, or the design thereof, or of its compliance with laws, codes and other legal requirements. Tenant shall permit access to the Premises, and inspection of the Work, by Landlord and Landlord's architects, engineers, contractors and other representatives, at all times during the period in which the Work is being planned, constructed and installed and following completion of the Work. If Tenant fails to perform the Work as required herein or the materials supplied fail to comply herewith or with the specifications approved by Landlord, and Tenant fails to cure such failure within two (2) business days after notice by Landlord, Landlord shall have the right, but not the obligation, to order Tenant or any of Tenant's Contractors who violate the requirements imposed on Tenant or Tenant's Contractors in performing the Work to cease the Work and remove its equipment and employees from the Property. Landlord shall have the right, but not the obligation, to perform, on behalf of and for the account of Tenant, subject to reimbursement by Tenant, any work required to cure or complete any Work which has violated this Exhibit or which pertains to patching of the Work (and which Tenant has failed to cure within ten (10) days after notice from Landlord), or involves Work outside the Premises, or affects the base building core or structure or Systems and Equipment for the Property. VI. HVAC Balancing. As a final part of the Work, Tenant shall cause its contractor to perform air balancing tests and adjustments on all areas of the Premises served by the air handling system that serves the areas in which the Work is performed (including any original space and any additional space being added to the Premises in connection herewith). Landlord shall not be responsible for any disturbance or deficiency created in the air conditioning or other mechanical, electrical or structural facilities within the Property or Premises as a result of the Work. If such disturbances or deficiencies result, and Tenant's contractor does not properly correct the same, Landlord reserves the right, after fifteen (15) days notice to Tenant, to correct the same and restore the services to Landlord's reasonable satisfaction, at Tenant's reasonable expense. VII. Certain Definitions a. "Space Plan" herein means, to the extent required by the nature of the Work, detailed plans (including any so-called "pricing plans"), including a fully dimensioned floor plan and drawn to scale, showing: (i) demising walls, interior walls and other partitions, including type of wall or partition and height, and any demolition or relocation of walls, and details of space occupancy and density, (ii) doors and other openings in such walls or partitions, including type of door and hardware, (iii) electrical and computer outlets, circuits and anticipated usage therefor, (iv) any special purpose rooms, any sinks or other plumbing facilities, heavy items, and any other special electrical, HVAC or other facilities or requirements, including all special loading and related calculations, (v) any space planning considerations to comply with fire or other codes or other governmental or legal requirements, (vi) finish selections, and (vii) any other details or features requested by Architect, Engineer or Landlord, or otherwise required, in order for the Space Plan to serve as a basis for Landlord to approve the Work, and for Tenant to contract and obtain permits for the Work, or for the Space Plan to serve as a basis for preparing Construction Drawings. b. "Construction Drawings" herein means, to the extent required by the nature of the Work, fully dimensioned architectural construction drawings and specifications, and any required engineering drawings, specifications and calculations 20 (including mechanical, electrical, plumbing, structural, air-conditioning, ventilation and heating), and shall include any applicable items described above for the Space Plan, and any other details or features requested by Architect, Engineer or Landlord in order for the Construction Drawings to serve as a basis for Landlord to approve the Work, and for Tenant to contract and obtain permits for the Work. c. "Work" herein means: (i) the improvements and items of work shown on the final Approved Plans (including changes thereto), and (ii) any preparation or other work required in connection therewith, including without limitation, structural or mechanical work, additional HVAC equipment or sprinkler heads, or modifications to any building mechanical, electrical, plumbing or other systems and equipment or relocation of any existing sprinkler heads, either within or outside the Premises required as a result of the layout, design, or construction of the Work or in order to extend any mechanical distribution, fire protection or other systems from existing points of distribution or connection, or in order to obtain building permits for the work to be performed within the Premises (unless Landlord requires that the Plans be revised to eliminate the necessity for such work). VIII. Liens. Tenant shall pay all costs for the Plans and Work when due. Tenant shall keep the Property, Premises and this Lease free from any mechanic's, materialman's, architect's, engineer's or similar liens or encumbrances, and any claims therefor, or stop or violation notices, in connection with the Plans and Work. Tenant shall give Landlord notice at least ten (10) days prior to the commencement of any Work (or such additional time as may be necessary under applicable Laws), to afford Landlord the opportunity of posting and recording appropriate notices of non-responsibility. Tenant shall remove any such claim, lien or encumbrance, or stop or violation notices of record, by bond or otherwise within thirty (30) days after notice by Landlord. If Tenant fails to do so, Landlord may pay the amount (or any portion thereof) or take such other action as Landlord deems necessary to remove such claim, lien or encumbrance, or stop or violation notices, without being responsible for investigating the validity thereof. The amount so paid and costs incurred by Landlord shall be deemed additional Rent under the Lease Document payable upon demand, without limitation as to other remedies available to Landlord. IX. Miscellaneous a. Interpretation; Original Lease. If this Work Letter is attached as an Exhibit to an amendment to an existing lease ("Original Lease"), whether such amendment adds space, relocates the Premises or makes any other modifications, the term "Lease Document" herein shall refer to such amendment, or the Original Lease as amended, as the context implies. By way of example, in such case, references to the "Premises" and "Commencement Date" herein shall refer, respectively, to such additional or relocated space and the effective date for delivery thereof under such amendment, unless expressly provided to the contrary herein. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Lease Document. b. General Matters. This Exhibit is intended to supplement and be subject to the provisions of the Lease Document, including, without limitation, those provisions requiring that any modification or amendment be in writing and signed by authorized representatives of both parties. This Exhibit shall not apply to any additional space added to the Premises at any time, whether by any options or rights under the Lease Document or otherwise, or to any portion of the Premises in the event of a renewal or extension of the Term of the Lease Document, whether by any options or rights under the Lease 21 Document or otherwise, unless expressly so provided in the Lease Document or any amendment or supplement thereto. The Lease Document and this Exhibit are not intended to create any third-party beneficiaries; without limiting the generality of the foregoing, no Tenant Contractors or Tenant Planners shall have any legal or beneficial interest in the Allowance. The rights granted in this Exhibit are personal to Tenant as named in the Lease Document, and are intended to be performed for such Tenant's occupancy of the Premises. Under no circumstance whatsoever shall any assignee or subtenant have any rights under this Exhibit. Any remaining obligations of Landlord under this Exhibit not theretofore performed shall concurrently terminate and become null and void if Tenant subleases or assigns the Lease Document with respect to all or any portion of the Premises, or seeks or proposes to do so (or requests Landlord's consent to do so), or if Tenant or any current or proposed affiliate thereof issues any written statement indicating that Tenant will no longer move its business into, or that Tenant will vacate and discontinue its business from, the Premises or any material portion thereof. Any termination of Landlord's obligations under this Exhibit pursuant to the foregoing provisions shall not serve to terminate or modify any of Tenant's obligations under the Lease Document. In addition, notwithstanding anything to the contrary contained herein, Landlord's obligations under this Exhibit, including obligations to perform any work, or provide any Allowance or rent credit, shall be subject to the condition that Tenant shall be in compliance with the material terms of the Lease (including all terms providing for the timely payment of rent), and shall not have committed a violation under the Lease by the time that Landlord is required to perform such work or provide such Allowance or rent credit. 22 EX-21.1 9 p71603exv21w1.txt EXHIBIT 21.1 Exhibit 21.1 List of Subsidiaries of Mesa Air Group, Inc. 1. Mesa Airlnes, Inc. 2. Air Midwest, Inc. 3. Freedom Airlines, Inc. 4. MPD, Inc. 5. Regional Aircraft Services, Inc. 6. MAGI Insurance, Ltd. 7. Ritz Hotel Management, Inc. EX-23.1 10 p71603exv23w1.htm EXHIBIT 23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-02791, 333-09395, 333-83799, 333-83801, 333-83803, 333-83805, 333-58646, 333-107404 and 333-125604 of Mesa Air Group, Inc. on Form S-8 and Registration Statement Nos. 333-108490 and 333-115312 on Form S-3 of our report dated December 14, 2005, relating to the financial statements (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the Company’s significant code-sharing agreements) of Mesa Air Group, Inc. and of our report on internal control over financial reporting dated December 14, 2005, appearing in this Annual Report on Form 10-K of Mesa Air Group, Inc. for the year ended September 30, 2005.

DELOITTE & TOUCHE LLP

Phoenix, Arizona
December 14, 2005

EX-10.5

                                                                    Exhibit 10.5

                       2005 EMPLOYEE STOCK INCENTIVE PLAN
                                       OF
                              MESA AIR GROUP, INC.

SECTION 1. PURPOSE OF PLAN

     The purpose of this 2005 Employee Stock Incentive Plan (this "Plan") of
Mesa Air Group, Inc., a Nevada corporation (the "Company"), is to enable the
Company and any subsidiary corporation (as the term is defined in Code Section
424(f), hereinafter each a "Subsidiary" or the plural "Subsidiaries") to
attract, retain and motivate their officers and other key employees, and to
further align the interests of such persons with those of the stockholders of
the Company by providing for or increasing the proprietary interest of such
persons in the Company.

SECTION 2. ADMINISTRATION OF PLAN

     2.1 Composition of Committee. This Plan shall be administered by the
Compensation Committee of the Board of Directors (the "Committee"), as appointed
from time to time by the Board of Directors. The Board of Directors shall fill
vacancies on, and from time to time may remove or add members to, the Committee.
The Committee shall act pursuant to a majority vote or unanimous written
consent. The Board of Directors, in its sole discretion, may exercise any
authority of the Committee under this Plan in lieu of the Committee's exercise
thereof. Notwithstanding the foregoing, with respect to any Award that is not
intended to satisfy the conditions of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Committee may
appoint one or more separate committees (any such committee, a "Subcommittee")
composed of one or more directors of the Company (who may but need not be
members of the Committee) and may delegate to any such Subcommittee(s) the
authority to grant Awards, as defined in Section 5.1 hereof, under the Plan to
Eligible Persons, to determine all terms of such Awards, and/or to administer
the Plan or any aspect of it. Any action by any such Subcommittee within the
scope of such delegation shall be deemed for all purposes to have been taken by
the Committee. The Committee may designate the Secretary of the Company or other
Company employees to assist the Committee in the administration of the Plan, and
may grant authority to such persons to execute agreements or other documents
evidencing Awards made under this Plan or other documents entered into under
this Plan on behalf of the Committee or the Company.

     2.2 Powers of the Committee. Subject to the express provisions of this
Plan, the Committee shall be authorized and empowered to do all things necessary
or desirable, in its sole discretion, in connection with the administration of
this Plan, including, without limitation, the following:

          (a) to prescribe, amend and rescind rules and regulations relating to
     this Plan and to define terms not otherwise defined herein; provided that,
     unless the Committee shall specify otherwise, for purposes of this Plan (i)
     the term "fair market value" shall mean, as of any date, the closing price
     for a Share (as defined in Section 3.1) reported for the last trading day
     prior to such date by the Nasdaq Stock Market (or such other stock exchange
     or quotation system on which Shares are then listed or quoted) or, if no
     Shares are traded on the Nasdaq Stock Market (or such other stock exchange
     or quotation system) on the date in question, then for the next preceding
     date for which Shares traded on the Nasdaq Stock Market (or such other
     stock exchange or quotation system); and (ii) the term "Company" shall mean
     the Company and its Subsidiaries, unless the context otherwise requires;

          (b) to determine which persons are Eligible Persons (as defined in
     Section 4), to which of such Eligible Persons, if any, Awards shall be
     granted hereunder and the timing of any such Awards, and to grant Awards;

          (c) to grant Awards to Eligible Persons and determine the terms and
     conditions thereof, including the number of Shares subject to Awards and
     the exercise or purchase price of such Shares and the circumstances under
     which Awards become exercisable or vested or are forfeited or expire, which
     terms may but need not be conditioned upon the passage of time, continued
     employment, the satisfaction of performance criteria, the occurrence of
     certain events (including events which the Board or the Committee determine
     constitute a change of control), whether such Award complies with Code
     Section 409A and Notice 2005-1 or other factors;



          (d) to establish, verify the extent of satisfaction of, adjust, reduce
     or waive any performance goals or other conditions applicable to the grant,
     issuance, exercisability, vesting and/or ability to retain any Award;

          (e) to prescribe and amend the terms of the agreements or other
     documents evidencing Awards made under this Plan (which need not be
     identical);

          (f) to determine whether, and the extent to which, adjustments are
     required pursuant to Section 10;

          (g) to interpret and construe this Plan, any rules and regulations
     under this Plan and the terms and conditions of any Award granted
     hereunder, and to make exceptions to any such provisions in good faith and
     for the benefit of the Company; and

          (h) to make all other determinations deemed necessary or advisable for
     the administration of this Plan.

     2.3 Determinations of the Committee. All decisions, determinations and
interpretations by the Committee regarding this Plan shall be final and binding
on all Eligible Persons and Participants. The Committee shall consider such
factors as it deems relevant to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of
any director, officer or employee of the Company and such attorneys, consultants
and accountants as it may select.

SECTION 3. STOCK SUBJECT TO PLAN

     3.1 Aggregate Limits. The aggregate number of shares of the Company's
Common Stock, no par value ("Shares"), issued pursuant to all Awards granted
under this Plan shall not exceed 1,500,000; plus, the number of shares equal to
the number of shares subject to awards granted under the Company's 1996 Stock
Option Plan but ultimately which are not issued under such plan as a result of
the cancellation, expiration or forfeiture of such awards (such Shares being
known as the "1996 Plan Shares"). The aggregate number of Shares available for
issuance under this Plan and the number of Shares subject to outstanding Options
or other Awards shall be subject to adjustment as provided in Section 10. The
Shares issued pursuant to this Plan may be Shares that either were reacquired by
the Company, including Shares purchased in the open market, or authorized but
unissued Shares.

     3.2 Additional Limits. The aggregate number of Shares subject to Options
granted under this Plan during any calendar year to any one Eligible Person
shall not exceed 150,000 (taking into account the number of shares associated
with an Option granted and then cancelled during such calendar year). The
aggregate number of Shares issued or issuable under all Awards granted under
this Plan, other than Options, during any calendar year to any one Eligible
Person shall not exceed 50,000 (taking into account the number of shares
associated with the Awards other than Options granted and then cancelled during
such calendar year). The foregoing limitations of this Section 3.2 shall not
apply to the extent that they are no longer required in order for compensation
in connection with grants of Awards under this Plan to be treated as
"performance-based compensation" under Code Section 162(m) and, if no longer
required, a change in such limitation shall not be subject to stockholder
approval as required under Section 13 hereof. The aggregate number of Shares
that may be issued pursuant to the exercise of ISOs granted under this Plan
shall not exceed 1,500,000 (provided that such Shares shall not include the 1996
Plan Shares), which number shall be calculated and adjusted pursuant to Section
3.3 and Section 10 only to the extent that such calculation or adjustment will
not affect the status of any Option intended to qualify as an ISO under Code
Section 422, or whether this Plan meets the requirements under Code Section
422(b)(1). For the avoidance of all doubt, the 1996 Plan Shares may not be
issued pursuant to the exercise of ISOs granted under the Plan.

     3.3 Issuance of Shares. For purposes of Section 3.1, the aggregate number
of Shares issued under this Plan at any time shall equal only the number of
Shares actually issued upon exercise or settlement of an Award and shall not
include Shares subject to Awards that have been canceled, expired or forfeited
or Shares subject to Awards that have been delivered (either actually or
constructively by attestation) to or retained by the Company in payment or
satisfaction of the purchase price or exercise price of an Award.

SECTION 4. PERSONS ELIGIBLE UNDER PLAN

     Any person who is an employee or prospective employee of the Company or any
of its Subsidiaries shall be


                                       2



eligible to be considered for the grant of Awards hereunder; provided that the
Award to such prospective employee is conditioned on the prospective employee's
commencement of employment (an "Eligible Person"). The status of the chairman of
the Board of Directors as an "employee" shall be determined by the Committee.

SECTION 5. PLAN AWARDS

     5.1 Award Types. The Committee, on behalf of the Company, is authorized
under this Plan to enter into certain types of arrangements with Eligible
Persons and to confer certain benefits on them. The following arrangements or
benefits are authorized under this Plan if their terms and conditions are not
inconsistent with the provisions of this Plan: Options, Performance Shares and
Restricted Stock. Such arrangements and benefits are sometimes referred to
herein as "Awards." The authorized types of arrangements and benefits for which
Awards may be granted are defined as follows:

          (a) Options: An Option is a right granted under Section 6 to purchase
     a number of Shares at such exercise price, at such times, and on such other
     terms and conditions as are specified in the agreement or terms and
     conditions or other document evidencing the Award (the "Option Document").
     Options intended to qualify as Incentive Stock Options ("ISOs") pursuant to
     Code Section 422 and Options not intended to qualify as ISOs ("Nonqualified
     Options") may be granted under Section 6.

          (b) Performance Shares. Performance Shares is an award made under
     Section 8, to receive a number of Shares, the payment of which is
     contingent upon achieving certain Committee established performance
     standards derived from the Qualifying Performance Criteria described in
     Section 9.2 hereof. Once the conditions for the Performance Shares are met,
     the Performance Shares shall be payable either in cash or Shares (or both)
     by reference to the fair market value of the Shares enumerated in the
     Performance Shares at such time as determined by the Committee in the
     Award.

          (c) Restricted Stock: A Restricted Stock is an award or issuance of
     Shares under Section 7, subject to certain restrictions and the risk of
     forfeiture and terms as are expressed in the agreement or other document
     evidencing the Award.

     5.2 Grants of Awards. An Award may consist of one such arrangement or
benefit or two or more of them in tandem, and the terms as established by the
Committee for all Awards granted hereunder may include performance standards
derived from the Qualifying Performance Criteria, and the receipt of any Award
may be contingent on performance standards derived from the Qualifying
Performance Criteria.

SECTION 6. OPTIONS

     The Committee may grant an Option or provide for the grant of an Option,
either from time to time in the discretion of the Committee or automatically
upon the occurrence of specified events, including, without limitation, the
achievement of performance goals, the satisfaction of an event or condition
within the control of the recipient of the Award or within the control of
others.

     6.1 Option Document. Each Option Document shall contain provisions
regarding (a) the number of Shares that may be issued upon exercise of the
Option, (b) the purchase price of the Shares and the means of payment for the
Shares, (c) the term of the Option, (d) such terms and conditions on the vesting
and/or exercisability of an Option as may be determined from time to time by the
Committee, (e) restrictions on the transfer of the Option and forfeiture
provisions and (f) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Committee. Option Documents evidencing ISOs shall contain such terms and
conditions as may be necessary to qualify, to the extent determined desirable by
the Committee, with the applicable provisions of Section 422 of the Code.

     6.2 Option Price. The purchase price per share of the Shares subject to
each Option granted under this Plan shall equal or exceed 100% of the fair
market value of a Share on the date the Option is granted.

     6.3 Option Term. The "Term" of each Option granted under this Plan,
including any ISOs, shall be 10 years from the date of its grant, unless the
Committee provides for a lesser term.


                                       3



     6.4 Option Vesting. Options granted under this Plan shall be exercisable at
such time and in such installments during the period prior to the expiration of
the Option's Term as determined by the Committee. The Committee shall have the
right to make the timing of the ability to exercise any Option granted under
this Plan subject to continued employment, the passage of time and/or such
performance requirements as deemed appropriate by the Committee.

     6.5 Termination of Employment other than as a Result of Death or
Disability. An ISO of any Participant who shall cease to be an Employee other
than as a result of his death or disability shall be exercisable only to the
extent exercisable on the date of termination of employment (i.e., to the extent
vested) and must be exercised on or before the option expiration date specified
in the Option Agreement but is no event later than the date that is three (3)
months following the date of termination of employment. To the extent any ISO is
not exercisable on the date of termination of employment (i.e., to the extent
not vested) such ISO shall terminate on the date of termination of employment.
To the extent any ISO is not exercised within the time period provided, such ISO
shall terminate as of the date of expiration of such time period. Nothing in the
Plan shall be construed as imposing any obligation on the Company to continue
the employment of any Participant or shall interfere or restrict in any way the
rights of the Company to discharge any Employee at any time for any reason
whatsoever, with or without cause.

     6.6 Payment of Exercise Price. The exercise price of an Option shall be
paid in the form of one of more of the following, as the Committee shall
specify, either through the terms of the Option Document or at the time of
exercise of an Option: (a) cash or certified or cashiers' check, (b) shares of
capital stock of the Company that have been held by the Participant for such
period of time as the Committee may specify, (c) other property deemed
acceptable by the Committee, (d) a reduction in the number of Shares or other
property otherwise issuable pursuant to such Option, (e) payment under an
arrangement with a broker selected or approved by the Company where payment is
made pursuant to an irrevocable commitment by the broker to deliver to the
Company proceeds from the sale of the Shares issuable upon exercise of the
Option, or (f) any combination of (a) through (d).

     6.7 No Option Repricing. Without the approval of stockholders, the Company
shall not reprice any Options. For purposes of this Plan, the term "reprice"
shall mean lowering the exercise price of previously awarded Options within the
meaning of Item 402(i) under Securities and Exchange Commission Regulation S-K
(including canceling previously awarded Options and regranting them with a lower
exercise price).

SECTION 7. RESTRICTED STOCK AWARDS

     The Committee is authorized to make Awards of Restricted Stock to
Participants in such amounts and subject to such terms and conditions as may be
determined by the Committee. All Awards of Restricted Stock shall be evidenced
by a Restricted Stock Award Agreement.

     7.1 Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination of such times, under
such circumstances, in such installments, upon the satisfaction of continued
employment, standards derived from the Qualifying Performance Criteria, lapse of
time, certain acceleration events like death or disability or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.

     7.2 Forfeiture. Except as otherwise determined by the Committee at the time
of the grant of the Award or thereafter, upon termination of employment during
the applicable restriction period or upon failure to satisfy a standard derived
from the Qualifying Performance Criteria during the applicable restriction
period, Restricted Stock that is at that time subject to restrictions shall be
forfeited and re-acquired by the Company; provided, however, that the Committee
may provide in any Award Agreement that restrictions or forfeiture conditions
relating to Restricted Stock will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part restrictions or forfeiture conditions relating
to Restricted Stock.

     7.3 Certificates for Restricted Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions


                                       4



applicable to such Restricted Stock.

SECTION 8. PERFORMANCE SHARES

     The Committee is authorized to grant Performance Shares to Participants on
such terms and conditions as may be determined by the Committee. The Committee
shall have the complete discretion to determine the number of Performance Shares
granted to each Participant. All Awards of Performance Shares shall be evidenced
by an Award Agreement.

     8.1 Right to Payment. A grant of Performance Shares gives the Participant
the right to a number of Shares, contingent upon certain performance standards
established by the Committee and derived from the Qualifying Performance
Criteria, and certain other terms and conditions as may be established by the
Committee. Once the conditions and terms for the performance Shares have been
met, the Performance Shares shall be payable by the Company either in cash or
Shares (or both) by reference to the fair market value of the Shares enumerated
in the Performance Shares and the timing of such payment of cash or Shares shall
be set forth in the Award for the Performance Shares by the Committee.

     8.2 Other Terms. The time period for the measurement of any performance
standard or criteria shall be any time period established by the Committee, but
under no circumstance shall a Performance Shares be granted after the expiration
of the Plan, and the applicable performance associated with such Performance
Share must begin before the expiration of this Plan. The cash or Shares paid
with respect to Performance Shares may be paid in a lump sum or in installments
following the close of the performance period or, in accordance with procedures
established by the Committee, on a deferred basis.

SECTION 9. OTHER PROVISIONS APPLICABLE TO AWARDS

     9.1 Transferability. Unless the agreement or other document evidencing an
Award (or an amendment thereto authorized by the Committee) expressly states
that the Award is transferable as provided hereunder, no Award granted under
this Plan, nor any interest in such Award, may be sold, assigned, conveyed,
gifted, pledged, hypothecated or otherwise transferred in any manner prior to
the vesting or lapse of any and all restrictions applicable thereto.

     9.2 Qualifying Performance Criteria. For purposes of this Plan, the term
"Qualifying Performance Criteria" shall mean any one or more of the following
performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole, to a business unit or subsidiary, or
based on comparisons of any of the performance measures relative to other
companies, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years' results or to
a designated comparison group, in each case as specified by the Committee in the
Award: (a) cash flow, (b) earnings per share or increases of same, (c) earnings
before interest, taxes and amortization, (d) return on equity, (e) total
stockholder return, (f) share price performance, (g) return on capital or
investment, (h) return on assets or net assets, (i) revenue, (j) income or net
income, (k) operating income or net operating income, (l) operating profit or
net operating profit, (m) operating margin or profit margin, (n) return on
operating revenue, (o) pre-tax or after-tax profit levels expressed in either
absolute dollars, (p) revenues or revenue growth, (q) economic or cash value
added, (r) results of customer satisfaction surveys, (s) other measures of
performance, quality, safety, productivity or process improvement, (t) market
share, (u) overhead or other expense reduction, (v) departure or on-time arrival
performance, and (w) baggage handling. These factors may have a minimum
performance standard, a target performance standard and a maximum performance
standard. The Committee shall appropriately adjust any evaluation of performance
under a Qualifying Performance Criteria to exclude any of the following events
that occurs during a performance period: (i) asset write-downs, (ii) litigation
or claim judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the Company's annual report to
stockholders for the applicable year.

     9.3 Dividends. Unless otherwise provided by the Committee, no adjustment
shall be made in Shares issuable


                                       5



under Awards on account of cash dividends that may be paid or other rights that
may be issued to the holders of Shares prior to their issuance under any Award.
The Committee shall specify whether dividends or dividend equivalent amounts
shall be paid to any Participant with respect to the Shares subject to any Award
that have not vested or been issued or that are subject to any restrictions or
conditions on the record date for dividends.

     9.4 Documents Evidencing Awards. Except for ISOs prior to the effective
date of the Plan as set forth in Section 17, the Committee shall, subject to
applicable law, determine the date an Award is deemed to be granted, which for
purposes of this Plan shall not be affected by the fact that an Award is
contingent on subsequent stockholder approval of this Plan. The Committee or,
except to the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements or other documents evidencing Awards under
this Plan and may, but need not, require as a condition to any such agreement's
or document's effectiveness that such agreement or document be executed by the
Participant and that such Participant agree to such further terms and conditions
as specified in such agreement or document. The grant of an Award under this
Plan shall not confer any rights upon the Participant holding such Award other
than such terms, and subject to such conditions, as are specified in this Plan
as being applicable to such type of Award (or to all Awards) or as are expressly
set forth in the agreement or other document evidencing such Award.

     9.5 Tandem Stock or Cash Rights. At the time an Award is granted or by
subsequent action, the Committee may, but need not, provide that an Award shall
contain as a term thereof, a right, either in tandem with the other rights under
the Award or as an alternative thereto, of the Participant to receive, without
payment to the Company, a number of Shares, cash or a combination thereof, the
amount of which is determined by reference to the value of the Award.

     9.6 Financing. The Committee may in its discretion provide financing to a
Participant in a principal amount sufficient to pay the purchase price of any
Award and/or to pay the amount of taxes required by law to be withheld with
respect to any Award. Any such loan shall be subject to all applicable legal
requirements and restrictions pertinent thereto, including Regulation U
promulgated by the Federal Reserve Board. The grant of an Award shall in no way
obligate the Company or the Committee to provide any financing whatsoever in
connection therewith.

     9.7 Compliance with Code Section 409A. Notwithstanding any language to the
contrary in this Plan, the Committee will ensure that the terms and conditions
of any Awards issued will comply with the applicable provision of Code Section
409A or the regulations or other pronouncements thereunder.

     9.8 Additional Restrictions on Awards. Either at the time an Award is
granted or by subsequent action, the Committee may, but need not, impose such
restrictions, conditions or limitations as it determines appropriate as to the
timing and manner of any resales by a Participant or other subsequent transfers
by a Participant of any Shares issued under an Award, including without
limitation (a) restrictions under an insider trading policy, (b) restrictions
designed to delay and/or coordinate the timing and manner of sales by
Participants, and (c) restrictions as to the use of a specified brokerage firm
for such resales or other transfers.

SECTION 10. CHANGES IN CAPITAL STRUCTURE

     10.1 Corporate Actions Unimpaired. The existence of outstanding Awards
(including any Options) shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, exchanges, or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issuance of Shares or other securities or subscription rights
thereto, or any issuance of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Shares or other securities of the Company or the
rights thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise. Further, except
as expressly provided herein or by the Committee, (a) the issuance by the
Company of shares of stock of any class of securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, (b) the payment of a dividend in property other than
Shares, or (c) the occurrence of any similar transaction, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of Shares subject to Options
or other Awards theretofore granted or the purchase price per Share, unless the
Committee


                                       6



shall determine in its sole discretion that an adjustment is necessary to
provide equitable treatment to a Participant.

     10.2 Adjustments Upon Certain Events. If the outstanding Shares or other
securities of the Company, or both, for which the Award is then exercisable or
as to which the Award is to be settled shall at any time be changed or exchanged
by declaration of a stock dividend, stock split, combination of shares,
recapitalization, or reorganization, the Committee may appropriately and
equitably adjust the number and kind of Shares or other securities which are
subject to the Plan or subject to any Awards theretofore granted, and the
exercise or settlement prices of such Awards, so as to maintain the
proportionate number of Shares or other securities without changing the
aggregate exercise or settlement price, provided, however, that such adjustment
shall be made so as to not affect the status of any Award intended to qualify as
an ISO or as "performance based compensation" under Section 162(m) of the Code.

SECTION 11. MERGERS AND LIQUIDATION

     Except as limited by the provisions of Code Section 422 of the Code and the
terms of any individual Award, if the company is the surviving corporation in
any merger or consolidation, all Awards shall remain in force, and any: (1)
Option granted under the Plan shall remain outstanding pursuant to the terms of
the Plan and the Award; and (2) Restricted Stock granted under the Plan shall
continue to be outstanding pursuant to the terms of the Award and this Plan.
Except to the extent otherwise provided in an Award document, by the Board, or
as limited by Code Section 422, dissolution or liquidation of the Company shall
cause every unvested Option, Restricted Stock or other Award for which there
remains contingencies, conditions and unmet performance standards to terminate.
Except as limited by Code Section 422, a merger or consolidation in which the
Company is not the surviving corporation shall also cause every unvested Option,
Restricted Stock or other Award for which there remains contingencies,
conditions and unmet performance standards to terminate unless specifically
provided otherwise in an Award document or by the Board.

SECTION 12. TAXES

     12.1 Withholding Requirements. The Committee may make such provisions or
impose such conditions as it may deem appropriate for the withholding or payment
by a Participant of any taxes that the Committee determines are required in
connection with any Award granted under this Plan, and a Participant's rights in
any Award are subject to satisfaction of such conditions.

     12.2 Payment of Withholding Taxes. Notwithstanding the terms of Section
12.1, the Committee may provide in the agreement or other document evidencing an
Award or otherwise that all or any portion of the taxes required to be withheld
by the Company or, if permitted by the Committee, desired to be paid by the
Participant, in connection with the exercise, vesting, settlement or transfer of
any other Award shall be paid or, at the election of the Participant, may be
paid by the Company by withholding shares of the Company's capital stock
otherwise issuable or subject to such Award, or by the Participant delivering
previously owned shares of the Company's capital stock, in each case having a
fair market value equal to the amount required or elected to be withheld or
paid, or by a broker selected or approved by the Company paying such amount
pursuant to an irrevocable commitment by the broker to deliver to the Company
proceeds from the sale of the Shares issuable under the Award. Any such election
is subject to such conditions or procedures as may be established by the
Committee and may be subject to approval by the Committee.

SECTION 13. AMENDMENTS OR TERMINATION

     The Board may amend, alter or discontinue this Plan or any agreement or
other document evidencing an Award made under this Plan but, except as provided
pursuant to the anti-dilution adjustment provisions of Section 10.2, no such
amendment shall, without the approval of the stockholders of the Company:

          (a) change the maximum number of shares of Common Stock for which
     Awards may be granted under this Plan;

          (b) reduce the price at which Options may be granted below the price
     provided for in Section 6.2;


                                       7



          (c) reduce the exercise price of outstanding Options;

          (d) extend the term of this Plan;

          (e) change the class of persons eligible to be Eligible Persons or
     Participants; or

          (f) increase the number of shares that are eligible for non-Option
     Awards.

     The Board may amend, alter or discontinue the Plan or any agreement
evidencing an Award made under the Plan, but no amendment or alteration shall be
made which would impair the rights of any Award holder, without such holder's
consent, under any Award theretofore granted; provided that no such consent
shall be required if the Committee determines in its sole discretion and prior
to the date of any change in control, recapitalization, stock dividend, stock
split, reorganization, merger, consolidation or similar type transaction that
such amendment or alteration either is required or advisable in order for the
Company, the Plan, or any Award granted, to satisfy any law or regulation or to
meet the requirements of any accounting standard.

SECTION 14. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.

     This Plan, the grant and exercise of Awards thereunder, and the obligation
of the Company to sell, issue or deliver Shares under such Awards, shall be
subject to all applicable federal, state and foreign laws, rules and regulations
and to such approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to register in a Participant's name
or deliver any Shares prior to the completion of any registration or
qualification of such Shares under any federal, state or foreign law or any
ruling or regulation of any government body which the Committee shall determine
to be necessary or advisable. This Plan is intended to constitute an unfunded
arrangement for the Eligible Persons.

     No Option shall be exercisable unless a registration statement with respect
to the Option is effective or the Company has determined that such registration
is unnecessary. Unless the Awards and Shares covered by this Plan have been
registered under the Securities Act of 1933, as amended, or the Company has
determined that such registration is unnecessary, each person receiving an Award
and/or Shares pursuant to any Award may be required by the Company to give a
representation in writing that such person is acquiring such Shares for his or
her own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.

SECTION 15. NO RIGHT TO COMPANY EMPLOYMENT

     Nothing in this Plan or as a result of any Award granted pursuant to this
Plan shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an
individual's employment at any time. The agreements or other documents
evidencing Awards may contain such provisions as the Committee may approve with
reference to the effect of approved leaves of absence.

SECTION 16. LIABILITY OF COMPANY

     The Company and any Affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant, an Eligible Person or other
persons as to:

          (a) The Non-Issuance of Shares. The non-issuance or sale of shares as
     to which the Company has been unable to obtain from any regulatory body
     having jurisdiction the authority deemed by the Company's counsel to be
     necessary to the lawful issuance and sale of any shares hereunder; and

          (b) Tax Consequences. Any tax consequence expected, but not realized,
     by any Participant, Eligible Person or other person due to the receipt,
     exercise or settlement of any Option or other Award granted hereunder.

SECTION 17. EFFECTIVENESS AND EXPIRATION OF PLAN

     This Plan shall be effective on the date the Company's stockholders adopt
this Plan, and no ISOs shall be granted prior to the Company's stockholders
adoption of this Plan. All Awards granted under this Plan are subject


                                       8



to, and may not be exercised before the approval of this Plan by the
stockholders. Stockholder approval of the Plan shall be by the affirmative vote
of the holders of a majority of the outstanding shares of the Company present,
or represented by proxy, and entitled to vote, at a meeting of the Company's
stockholders or by written consent in accordance with the laws of the State of
Delaware; provided that if such approval by the stockholders of the Company is
not forthcoming, all Awards previously granted under this Plan shall be void. No
Awards shall be granted pursuant to this Plan more than 10 years after the
effective date of this Plan.

SECTION 18. INCENTIVE STOCK OPTIONS

     Notwithstanding anything in the Plan to the contrary, it is the intention
of the Company and the Committee that all terms and provisions relating to
Incentive Stock Options of this Plan shall be consistent with the requirements
of Code Section 422 and the applicable regulations thereunder, as of the
effective date of this plan, and to the extent any term or provision of this
Plan relating to Incentive Stock Options is inconsistent with Code Section 422
and the applicable regulations thereunder at that date, the term or provision
shall be read, interpreted or substituted so as to be consistent with the
applicable provision of Code Section 422 or the regulations thereunder.

SECTION 19. NON-EXCLUSIVITY OF PLAN

     Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board or the Committee to adopt
such other incentive arrangements as either may deem desirable, including
without limitation, the granting of restricted stock or stock options otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.

SECTION 20. GOVERNING LAW

     This Plan and any agreements or other documents hereunder shall be
interpreted and construed in accordance with the laws of the State of Nevada and
applicable federal law. The Committee may provide that any dispute as to any
Award shall be presented and determined in such forum as the Committee may
specify, including through binding arbitration. Any reference in this Plan or in
the agreement or other document evidencing any Award to a provision of law or to
a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.

SECTION 21. MISCELLANEOUS MATTERS

     21.1 Annulment of Awards. The grant of any Award under the Plan payable in
cash is provisional until cash is paid in settlement thereof. The grant of any
Award payable in Shares is provisional until the Participant becomes entitled to
the certificates in settlement thereof. In the event the employment of a
Participant is terminated for cause (as defined below), any Award which is
provisional shall be annulled as of the date of such termination for cause. For
the purpose of this Section 21.1, the term "terminated for cause" means any
discharge for violation of the policies and procedures of the Company or any
Subsidiary or for other job performance or conduct which is detrimental to the
best interests of the Company or a Subsidiary.

     21.2 Securities Law Restrictions. No Shares shall be issued under the Plan
unless counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable Federal and state securities laws. Certificates for
Shares delivered under the Plan may be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Shares is then listed, and any applicable
Federal or state securities law. The Committee may cause a legend or legends to
be put on any such certificates to refer to those restrictions. Further, without
limiting the foregoing, each person exercising an Option or Performance Shares
or receiving Restricted Stock may be required by the Company to give a
representation in writing that he or she is acquiring Shares for his or her own
account for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof (regardless of whether such option and
Shares covered by the Plan are registered under the Securities Act of 1933, as
amended). As a condition of transfer of the certificate evidencing Shares, the
Committee may obtain such other agreements or undertakings, if any, that it may
deem necessary or appropriate to assume compliance with any provisions of the
Plan or any law or regulation. Certificates for Shares delivered under


                                       9



the Plan may be subject to such stock transfer orders and other restrictions as
the Board may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
laws. The Board may cause a legend or legends to be put on any such certificate
to refer to those restrictions.

     21.3 Award Agreement. Each Participant receiving an Award under the Plan
shall enter into an, Award Agreement with the Company in a form specified by the
Committee agreeing to the terms and conditions of the Award and such related
matters as the Committee, in its sole discretion, shall determine.

     21.4 Costs of Plan. The costs and expenses of administering the Plan shall
be borne by the Company.

     21.5 Tax Reimbursement Payments to Participants. The Committee, pursuant to
the terms of the agreements or other documents pursuant to which specific Awards
are made under the 2005 Plan, may agree to reimburse Participants for some or
all of the federal, state and local income taxes associated with the grant or
exercise of an Award or the receipt of the cash or Shares from an Award
(including any additional tax imposed due to Code Section 409A), or the 20%
excise tax on any "excess parachute payments" under Code Sections 280G and Code
Section 4999, and may agree to reimburse such Participants for some or all the
additional federal, state and local income tax associated with the payments made
under this Section 21.5.

     21.6 Government Regulations. The Plan and the granting and exercise of
Options and Performance Shares hereunder, and the obligations of the Company to
sell and deliver Shares under such Options and Performance Shares, shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.

     21.7 Interpretation. If any provision of the Plan is held invalid for any
reason, such holding shall not affect the remaining provisions of the Plan, but
instead the Plan shall be construed and enforced as if such provisions had never
been included in the Plan. Headings contained in the Plan are for convenience
only and shall in no manner be construed as part of this Plan. Any reference to
the masculine, feminine or neuter gender shall be a reference to such other
gender as is appropriate.

DATED this 8th day of February, 2005

                                        MESA AIR GROUP, INC.


                                        By:
                                            ------------------------------------
                                        Its: Chairman & Chief Executive Officer


ATTESTED BY:


- -------------------------------------
Secretary


                                       10

EX-10.6

                                                                    Exhibit 10.6

                              MESA AIR GROUP, INC.
                           DEFERRED COMPENSATION PLAN

                                    ARTICLE I

                                   DEFINITIONS

1.1  DEFINITIONS. The following terms when capitalized herein shall have the
     meanings assigned below.

     (a)  Account. The bookkeeping account established and maintained under the
          Plan for each Participant to reflect amounts credited under the Plan
          for the benefit of each Participant, and any earnings or losses
          thereon.

     (b)  Board. The Board of Directors of Mesa Air Group, Inc.

     (c)  Code. The Internal Revenue Code of 1986, as amended from time to time.

     (d)  Committee. The Deferred Compensation Committee responsible for the
          administration of the Plan, as selected by the Board.

     (e)  Company. Mesa Air Group, Inc.

     (f)  Contribution. The amount contributed to the Plan by the Company on
          behalf of a Participant, as determined in the sole discretion of the
          Committee or, if applicable, pursuant to a specific provision
          contained in an employment agreement between the Participant and the
          Company.

     (g)  Designated Beneficiary. The beneficiary designated by the Participant
          to receive the Participant's benefit under this Plan in the event of
          the Participant's death.

     (h)  Eligible Employee. Any employee of the Company who is a member of the
          management or highly compensated group of employees of the Company
          under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), as determined
          by the Committee, in its discretion.

     (i)  ERISA. The Employee Retirement Income Security Act of 1974, as
          amended.

     (j)  Investment Fund. The separate funds in which amounts allocable to
          Participants and held in the Trust may be invested in accordance with
          Article IV.

     (k)  Participant. Each Eligible Employee of the Company who is selected by
          the Committee to participate in this Plan.



     (l)  Plan. The Mesa Air Group, Inc. Deferred Compensation Plan, as set
          forth herein, as amended from time to time.

     (m)  Plan Year. The twelve-month period ending on December 31 of each year,
          except that the first Plan Year will be a short Plan Year commencing
          on the Effective Date and ending on the first December 31 following
          the Effective Date.

     (n)  Trust. The Deferred Compensation Trust in which amounts deferred under
          this Plan, and any earnings thereon, are held, as provided in Article
          V and the Deferred Compensation Trust Agreement.

     (o)  Trustee. The trustee or trustees of the Trust.

     (p)  Valuation Date. The last day of each calendar quarter of each Plan
          Year, and such other dates as the Committee determines necessary or
          appropriate to value the Accounts of Participants.

                                   ARTICLE II

                         PARTICIPATION AND CONTRIBUTIONS

2.1  ELIGIBILITY FOR PARTICIPATION. Each Eligible Employee shall be eligible to
     be selected to participate in the Plan. The Committee, in its sole
     discretion, shall select which Eligible Employees will participate in the
     Plan. Notwithstanding the foregoing, a Participant shall include any
     Eligible Employee whose employment contract with the Company specifically
     provides that such Eligible Employee will be a participant in the Plan.

2.2  TERMINATION OF PARTICIPATION. Participation in the Plan shall terminate on
     the earliest of the date on which a Participant ceases to be an Eligible
     Employee, the date on which a Participant terminates employment with the
     Company, or the date on which the Plan terminates.

2.3  AMOUNT OF CONTRIBUTION . The Committee, in its sole discretion, shall
     determine the amounts that will be contributed on behalf of each
     Participant, and the times at which such amounts will be contributed to the
     Plan. Notwithstanding the foregoing, a Participant's employment contract
     with the Company may specifically provide the amounts that will be
     contributed on behalf of such Participant.


                                        2



                                   ARTICLE III

                      VESTING AND DISTRIBUTION OF BENEFITS

3.1  VESTING. A Participant always shall be 100% vested in his or her Account
     under the Plan.

3.2  DISTRIBUTION OF BENEFITS.

     (a)  Voluntary Termination of Employment. Distribution of a Participant's
          vested Account shall commence within an administratively reasonable
          period of time after the last day of the Plan Year in which the
          Participant voluntarily terminates employment with the Company or at
          such later time as determined by the Participant. Distribution shall
          be made in one of the following forms as elected by the Participant at
          any time prior to termination of employment. The Participant may elect
          to receive a distribution in substantially equal quarterly
          installments over a maximum period of fifteen years of not less than
          [$6,000] (with any remaining balance in the Participant's Account of
          less than $6,000 to be paid in the final installment) or in one lump
          sum distribution which shall be paid within an administratively
          reasonable period of time after the last day of the Plan Year in which
          the Participant terminates employment with the Company or at such
          later time as determined by the Participant. Any lump sum distribution
          elected by the Participant shall be equal to the balance credited to
          the Participant's Account as of the Valuation Date immediately
          preceding such distribution. If no election is made by the
          Participant, the distribution shall be made in substantially equal
          quarterly installments over a fifteen-year period. To the extent the
          Account is paid in installment payments, amounts remaining in the Plan
          (and, if applicable, in the Trust) shall continue to be credited with
          earnings, and those earnings shall be divided by the number of
          remaining installment payments and distributed in substantially equal
          amounts along with the remaining installments. Payment of benefits
          under this Section shall be a complete discharge of the Company's
          obligation under the Plan with respect to that Participant. Any
          election by the Participant with respect to the form or timing of his
          distribution must be made while he still is employed by the Company.

     (b)  Involuntary Termination of Employment. Regardless of the form of
          distribution elected by the Participant, distribution of a
          Participant's entire Vested Account who has been involuntarily
          terminated shall occur within twelve months following the date of
          termination of employment unless the Committee, in its sole and
          absolute discretion, provides otherwise in writing.

     (c)  Death of Participant. Upon the death of a Participant while employed
          with the Company, the Participant's Designated Beneficiary shall be
          paid the vested balance credited to the Participant's Account under
          this Plan. Distribution to the


                                        3



          Designated Beneficiary shall commence within an administratively
          reasonable period of time after the last day of the Plan Year in which
          the Participant dies. Distribution shall be made in one of the
          following forms as elected by the Participant at any time prior to his
          or her death. The Participant may elect to receive a distribution in
          substantially equal quarterly installments over a maximum period of
          fifteen years of not less than [$6,000] (with any remaining balance of
          less than $6,000 to be paid in the final installment) or in one lump
          sum distribution which shall be paid within an administratively
          reasonable period of time after the last day of the Plan Year in which
          the Participant dies. Absent an election by the Participant, the
          distribution shall be made in substantially equal quarterly
          installments over a fifteen-year period. Any lump sum distribution
          elected by the Participant shall be equal to the balance credited to
          the Participant's Account as of the Valuation Date immediately
          preceding such distribution. To the extent the Account is paid in
          installment payments to the Designated Beneficiary, amounts remaining
          in the Plan (and, if applicable, in the Trust) shall continue to be
          credited with earnings, and those earnings shall be divided by the
          number of remaining installment payments and distributed in
          substantially equal amounts along with the remaining installments.
          Payment of benefits under this Section shall be a complete discharge
          of the Company's obligation under the Plan with respect to that
          Participant and the Designated Beneficiary. If a Participant dies
          while his or her Account is being distributed under Section 3.2(a)
          above, the Participant's Designated Beneficiary shall be paid the
          remaining installment distributions owing as of the Participant's
          death.

3.3  HARDSHIP DISTRIBUTIONS. Distribution may be made to a Participant in the
     event of a hardship. "Hardship" is defined as an immediate and heavy
     financial need of the Participant. The Participant or Designated
     Beneficiary may request such distribution from the Committee. The Committee
     shall determine, on a case by case basis in its sole and absolute
     discretion, whether a hardship has occurred which would permit a
     distribution to be made and its decision shall be binding on the
     Participant.

                                   ARTICLE IV

                 FUNDING, INVESTMENT, AND VALUATION OF ACCOUNTS

4.1  PLAN ACCOUNTS ARE UNFUNDED AND MAY BE HELD IN TRUST.

     (a)  All amounts payable in accordance with this Plan shall constitute a
          contractual general unsecured obligation of the Company. Such amounts,
          as well as any administrative costs relating to the Plan, shall be
          paid out of the general assets of the Company, to the extent not paid
          from the assets of the Trust established pursuant to Section 4.1(b)
          below.


                                        4



     (b)  The Company, shall establish a grantor trust for the benefit of
          Participants under the Plan. The assets placed in the Trust shall be
          comprised of all or any portion of amounts in Accounts and shall be
          held separate and apart from other Company funds, and shall be used
          exclusively for the purposes set forth in the Plan and Trust, subject
          to the following conditions:

               (i)  the Company shall be treated as "grantor" of the Trust; and

               (ii) the Trust agreement shall provide that its assets may be
                    used upon the insolvency of the Company to satisfy claims of
                    the Company's general creditors, and that the rights of such
                    general creditors are enforceable by them under federal and
                    state law.

     (c)  In the event that a Trust is established pursuant to this Section
          4.1(b), the amounts contributed in the form of Contributions shall be
          transferred by the Company to such Trust, as directed by the
          Committee.

4.2  ACCOUNT INVESTMENT. Each Participant may direct the investment of the
     amounts allocable to the Participant's Account under the Plan which are
     held in the Trust into one or more of the Investment Funds offered by the
     Committee.

4.3  ACCOUNT INVESTMENT. Each Participant may direct the investment of the
     amounts allocable to the Participant's Account under the Plan into one or
     more of the Investment Funds offered by the Committee.

4.4  INVESTMENT FUNDS. The Committee may designate one or more Investment Funds
     for the investment of Participant's Accounts. The Committee may change the
     designation of Investment Funds from time to time, in its sole discretion.
     The Committee shall determine, from time to time, the manner in which
     Participants may provide investment instructions for their Accounts under
     the Plan.

4.5  INDIVIDUAL RECORDS. The Committee shall maintain, or cause to be
     maintained, records showing the individual balances of each Participant's
     Account and the amounts allocable to each Participant under this Plan (and,
     if applicable, under the Trust); provided, however, the Committee may
     delegate this responsibility to another administrator. At least once a
     year, each Participant shall be furnished with a statement setting forth
     the balance credited to his or her Account under the Plan.


                                        5



4.6  VALUATIONS.

     (a)  Except as provided in Section 4.4, on each Valuation Date each
          Participant's Account shall be allocated its proportionate share of
          the increase or decrease (including earnings) in the fair market value
          of that portion of any Investment Fund or interest under Section 4.4
          which is allocable to the Participant's Account, as well as any
          brokerage or other investment expenses. All other expenses of the
          Trust shall be paid by the Company.

     (b)  Immediately after any gain or loss or earnings are allocated to a
          Participant's Account under the Trust in accordance with Section
          4.6(a), an equal amount of gain or loss or earnings shall be credited
          to the Participant's Account under the Plan.

                                    ARTICLE V

                                 ADMINISTRATION

5.1  MODIFICATION, AMENDMENT, AND TERMINATION. The Board reserves the right to
     modify, amend in whole or in part, discontinue benefit accrual under, or
     terminate the Plan at any time. However, no modification or amendment shall
     adversely affect the right of any eligible employee to receive the benefits
     accrued and the vested balance to the credit of such eligible employee's
     Account as of the date of such modification, discontinuance, amendment, or
     termination.

10.2 ADMINISTRATION AND INTERPRETATION. Full power and authority to construe,
     interpret and administer the Plan shall be vested in the Committee. Any
     interpretation of the Plan by the Committee or any administrative act by
     the Committee shall be final and binding on all Participants. The Committee
     shall, from time to time, establish rules and regulations for the
     administration of the Plan and the transaction of its business and shall
     maintain or cause to be maintained all records which it shall deem
     necessary for purposes of the Plan.

5.3  NO CONTRACT OF EMPLOYMENT. The establishment of the Plan (and the
     establishment of any Trust) shall not be construed as conferring any legal
     rights upon any person for a continuation of employment, nor shall it
     interfere with the rights of the Company to discharge any employee and to
     treat such employee without regard to the effect which such treatment might
     have upon such employee as a Participant in the Plan.

5.4  FACILITY OF PAYMENT. In the event that the Committee shall find that a
     Participant is unable to care for his or her affairs because of illness or
     accident, the Committee may direct that any benefit payment due to such
     Participant, unless a claim shall have been made therefor by a duly
     appointed legal representative, be paid to such Participant's


                                        6



     spouse, child, or other blood relative, or to a person with whom such
     Participant resides, and any such payment so made shall be a complete
     discharge of the liabilities of the Company and the Plan and the Trust
     therefor.

5.5  WITHHOLDING AND TAX CONSEQUENCES. The Company and the Trustee shall have
     the right to deduct from each payment to be made under the Plan and the
     Trust any required withholding or other taxes. In the event the Internal
     Revenue Service determines that the value of all or any portion of the
     benefits accrued under this Plan are taxable to Participants in any year
     prior to the year of actual distribution, the Committee may authorize
     distribution of a portion of a Participant's Account in an amount
     sufficient to satisfy such tax liability. The Company shall not be
     responsible for the ordinary income taxes attributable to distributions
     from the Plan.

5.6  NONALIENATION. Subject to any applicable law, no benefit under the Plan
     shall be subject in any manner to anticipation, alienation, sale, transfer,
     assignment, pledge, encumbrance or charge, and any attempt to do so shall
     be void, nor shall any such benefit be in any manner liable for or subject
     to garnishment, attachment, execution of levy, or liability for or subject
     to the debts, contracts, liabilities, engagements or torts of a
     Participant.

5.7  CONSTRUCTION. The Plan shall be construed, regulated and administered
     under the laws of the State of Colorado. When used herein the masculine
     pronoun shall include the feminine pronoun, and the singular shall include
     the plural, where appropriate.

5.8  CLAIMS PROCEDURE. Any Participant, beneficiary, or his duly authorized
     representative may file a claim for a Plan benefit to which the claimant
     believes that he or she is entitled. Such a claim must be in writing and
     delivered or mailed to the Committee. The Committee shall have full
     discretion to deny or grant a claim in whole or in part.

5.9  UNFUNDED PLAN. The Company shall not be required to fund its obligations
     under this Plan in any manner, whether by purchase of insurance or
     endowment contracts, or contributions to a trust fund, or deposits in an
     escrow account, or otherwise; and if the Company does choose to do so, then
     the Participant shall not have any right or interest in such contract,
     trust (other than the Participants right to the funds held in a trust
     created under Section 4.1), or account but may look only to the Company's
     unsecured promise to pay in accordance with the provisions of this Plan.
     Nothing contained in this Plan will be deemed to create a trust of any kind
     or to create any fiduciary relationship.


                                        7



     IN WITNESS WHEREOF, Mesa Air Group, Inc. has approved this Plan effective
July 13, 2001.

                                        Mesa Air Group, Inc.


                                        By:
                                            ------------------------------------

                                        Title:
                                               ---------------------------------

                                        Date:
                                              ----------------------------------


                                        8

EX-10.7

                                                                    Exhibit 10.7

                              MESA AIR GROUP, INC.
                         2005 DEFERRED COMPENSATION PLAN

                                    ARTICLE I

                                   DEFINITIONS

1.1  Definitions. The following terms when capitalized herein shall have the
     meanings assigned below.

     (a)  Account. The bookkeeping account established and maintained under the
          Plan for each Participant to reflect amounts credited under the Plan
          for the benefit of each Participant and any earnings or losses
          thereon.

     (b)  Board. The Board of Directors of Mesa Air Group, Inc.

     (c)  Code. The Internal Revenue Code of 1986, as amended from time to time.

     (d)  Committee. The Deferred Compensation Committee responsible for the
          administration of the Plan, as selected by the Board.

     (e)  Company. Mesa Air Group, Inc.

     (f)  Contribution. The amount contributed to the Plan by the Company on
          behalf of a Participant, as determined in the sole discretion of the
          Committee or, if applicable, pursuant to a specific provision
          contained in an employment agreement between the Participant and the
          Company.

     (g)  Designated Beneficiary. The beneficiary designated by the Participant
          to receive the Participant's benefit under this Plan in the event of
          the Participant's death.

     (h)  Eligible Employee. Any employee of the Company who is a member of the
          management or highly compensated group of employees of the Company
          under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), as determined
          by the Committee, in its discretion.

     (i)  ERISA. The Employee Retirement Income Security Act of 1974, as
          amended.

     (j)  First Eligible Payment Date. The first date that is more than 6 months
          after the date a Participant terminates (including by death)
          employment with the Company.


                                       1



     (k)  Investment Fund. The separate funds in which amounts allocable to
          Participants and held in the Trust may be invested in accordance with
          Article IV.

     (l)  Participant. Each Eligible Employee of the Company who is selected by
          the Committee to participate in this Plan.

     (m)  Plan. The Mesa Air Group, Inc. Deferred Compensation Plan, as set
          forth herein, as amended from time to time.

     (n)  Plan Year. The twelve-month period ending on December 31 of each year.

     (o)  Trust. The Deferred Compensation Trust in which amounts deferred under
          this Plan, and any earnings thereon, may be held, as provided in
          Article V and any Deferred Compensation trust agreement.

     (p)  Trustee. The trustee or trustees of the Trust.

     (q)  Valuation Date. The last day of each calendar quarter of each Plan
          Year, and such other dates as the Committee determines necessary or
          appropriate to value the Accounts of Participants.

                                   ARTICLE II

                         PARTICIPATION AND CONTRIBUTIONS

2.1  Eligibility for Participation. Each Eligible Employee shall be eligible to
     be selected to participate in the Plan. The Committee, in its sole
     discretion, shall select which Eligible Employees will participate in the
     Plan. Notwithstanding the foregoing, a Participant shall include any
     Eligible Employee whose employment contract with the Company specifically
     provides that such Eligible Employee will be a participant in the Plan.

2.2  Termination of Participation. Participation in the Plan shall terminate on
     the date on which a Participant terminates employment with the Company.

2.3  Amount of Contribution. The Committee, in its sole discretion, shall
     determine the amounts that will be contributed on behalf of each
     Participant, and the times at which such amounts will be contributed to the
     Plan. Notwithstanding the foregoing, a Participant's employment agreement
     may specify the amounts that will be contributed on behalf of such
     Participant, as well as the dates of any such contributions.


                                       2



                                   ARTICLE III

                      VESTING AND DISTRIBUTION OF BENEFITS

3.1  Vesting. A Participant shall always be 100% vested in his or her Account
     under the Plan.

3.2  Distribution of Benefits.

     (a)  Termination of Employment. Distribution of a Participant's vested
          Account shall commence within an administratively reasonable period of
          time after such Participant's First Eligible Payment Date.
          Distribution shall be made in one of the following forms as elected by
          the Participant at the time an initial contribution is made to the
          Plan on behalf of the Participant. The Participant may elect, at such
          time, to receive a distribution in substantially equal quarterly
          installments over a maximum period of fifteen years of not less than
          $6,000 per installment (with any remaining balance in the
          Participant's Account of less than $6,000 to be paid in the final
          installment) or in one lump sum distribution which shall be paid
          within an administratively reasonable period of time after such
          Participant's First Eligible Payment Date, subject to the provisions
          of section 3.2(d) hereof. Any lump sum distribution elected by the
          Participant shall be equal to the balance credited to the
          Participant's Account as of the Valuation Date immediately preceding
          such distribution. If no election is made by the Participant, the
          distribution shall be made in substantially equal quarterly
          installments over a fifteen-year period. To the extent the Account is
          paid in installment payments, amounts remaining in the Plan (and, if
          applicable, in the Trust) shall continue to be credited with earnings,
          and those earnings shall be divided by the number of remaining
          installment payments and distributed in substantially equal amounts
          along with the remaining installments. Payment of benefits under this
          Section shall be a complete discharge of the Company's obligation
          under the Plan with respect to that Participant. Any election by the
          Participant with respect to the form or timing of his distribution
          must be made within thirty (30) days of the Company's notification to
          the Participant of his or her initial selection as a Participant.

     (b)  Death of Participant. Upon the death of a Participant while employed
          with the Company, the Participant's Designated Beneficiary shall be
          paid the vested balance credited to the Participant's Account under
          this Plan. Distribution to the Designated Beneficiary shall commence
          within an administratively reasonable period of time after such
          Participant's First Eligible Payment Date. Distribution shall be made
          in one of the following


                                       3



          forms as elected by the Participant within 30 days of his or her
          selection as a Participant. The Participant may elect to receive a
          lump sum distribution or a distribution in substantially equal
          quarterly installments over a maximum period of fifteen years.

     (c)  A Participant may elect one form of distribution in the event of death
          and a different form of distribution in the event of termination of
          employment, provided that all elections relating to such forms of
          distribution shall be made within thirty (30) days of the Company's
          notification to the Participant of his or her initial selection as a
          Participant.

     (d)  Notwithstanding any other provision hereof, no distribution may be
          made to any Participant who is a "specified employee" (within the
          meaning of section 409A of the Code) prior to the date that is 6
          months after the date such employee terminates employment with the
          Company.

                                   ARTICLE IV

                 FUNDING, INVESTMENT, AND VALUATION OF ACCOUNTS

4.1  Plan Accounts Are Unfunded and May be Held in Trust.

     (a)  All amounts payable in accordance with this Plan shall constitute a
          contractual general unsecured obligation of the Company. Such amounts,
          as well as any administrative costs relating to the Plan, shall be
          paid out of the general assets of the Company, to the extent not paid
          from the assets of any Trust established pursuant to Section 4.1(b)
          below.

     (b)  The Company may establish a grantor trust for the benefit of all or
          some of the Participants under the Plan. Any assets placed in the
          Trust shall be comprised of all or any portion of amounts in Accounts
          and shall be held separate and apart from other Company funds, and
          shall be used exclusively for the purposes set forth in the Plan and
          Trust subject to the following conditions:

          (i)  the Company shall be treated as "grantor" of the Trust for
               federal income tax purposes; and

          (ii) the Trust agreement shall provide that its assets may be used
               upon the insolvency of the Company to satisfy claims of the
               Company's general creditors, and that the rights of such general
               creditors are enforceable by them under federal and state law.

     (c)  In the event that a Trust is established pursuant to this Section
          4.1(b), the amounts contributed in the form of Contributions shall be
          transferred by the Company to such Trust, as directed by the
          Committee.


                                       4



4.2  Account Investment. Each Participant may direct the investment of the
     amounts allocable to the Participant's Account under the Plan, whether or
     not such amounts are held in a Trust, into one or more of the Investment
     Funds offered by the Committee.

4.3  Investment Funds. The Committee may designate one or more Investment Funds
     for the investment of Participant's Accounts. The Committee may change the
     designation of Investment Funds from time to time, in its sole discretion.
     The Committee shall determine from time to time the manner in which
     Participants may provide investment instructions for their Accounts under
     the Plan.

4.4  Individual Records. The Committee shall maintain, or cause to be
     maintained, records showing the individual balances of each Participant's
     Account and the amounts allocable to each Participant under this Plan (and,
     if applicable, under the Trust); provided, however, the Committee may
     delegate this responsibility to another administrator. At least once a
     year, each Participant shall be furnished with a statement setting forth
     the balance credited to his or her Account under the Plan.

4.5  Valuations.

     (a)  Except as provided in Section 4.3, on each Valuation Date each
          Participant's Account shall be allocated its proportionate share of
          the increase or decrease (including earnings) in the fair market value
          of that portion of any Investment Fund or interest under Section 4.3
          which is allocable to the Participant's Account, as well as any
          brokerage or other investment expenses. All other expenses of the
          Trust shall be paid by the Company.

     (b)  In the event that a Trust is established under section 4.1 hereof,
          immediately after any gain or loss or earnings are allocated to a
          Participant's Account under the Trust in accordance with Section
          4.5(a), an equal amount of gain or loss or earnings shall be credited
          to the Participant's Account under the Plan.

                                    ARTICLE V

                                 ADMINISTRATION

5.1  Modification, Amendment, and Termination. The Board reserves the right to
     modify, amend in whole or in part, discontinue benefit accrual under, or
     terminate the Plan at any time. However, no modification or amendment shall
     adversely affect the right of any Participant to receive the benefits
     accrued and the vested balance to the credit of such Participant's Account
     as of the date of such


                                       5



     modification, discontinuance, amendment, or termination, without the
     written consent of the affected Participant. In the event of any
     termination of the Plan, distributions shall be made to Participants only
     in accordance with the provisions of section 3.2 hereof and the termination
     of the Plan shall not result in any acceleration of such distributions.

5.2  Administration and Interpretation. Full power and authority to construe,
     interpret, and administer the Plan shall be vested in the Committee. Any
     interpretation of the Plan by the Committee or any administrative act by
     the Committee shall be final and binding on all Participants. The Committee
     shall, from time to time, establish rules and regulations for the
     administration of the Plan and the transaction of its business and shall
     maintain or cause to be maintained all records which it shall deem
     necessary for purposes of the Plan.

5.3  No Contract of Employment. The establishment of the Plan (and the
     establishment of any Trust) shall not be construed as conferring any legal
     rights upon any person for a continuation of employment, nor shall it
     interfere with the rights of the company to discharge any employee and to
     treat such employee without regard to the effect which such treatment might
     have upon such employee as a Participant in the Plan.

5.4  Facility of Payment. In the event that the Committee shall find that a
     Participant is unable to care for his or her affairs because of illness or
     accident, the Committee may direct that any benefit payment due to such
     Participant, unless a claim shall have been made therefore by a duly
     appointed legal representative, be paid to such Participant's spouse,
     child, or other blood relative, or to a person with whom such Participant
     resides, and any such payment so made shall be in complete discharge of the
     liabilities of the Company, the Plan, and the Trust therefor.

5.5  Withholding and Tax Consequences. The Company and the Trustee shall have
     the right to deduct from each payment to be made under the Plan and the
     Trust any required withholding or other taxes. In the event the Internal
     Revenue Service determines (pursuant to section 409A of the Code or
     otherwise) that the value of all or any portion of the benefits accrued
     under this Plan are taxable to Participants in any year prior to the year
     of actual distribution, the Committee may authorize distribution of a
     portion of a Participant's Account in an amount sufficient to satisfy such
     tax liability. The Company shall not be responsible for any income taxes
     (or additions to tax imposed by section 409A of the Code) attributable to
     distributions from the Plan.

5.6  Nonalienation. Subject to any applicable law, no benefit under the Plan
     shall be subject in any manner to anticipation, alienation, sale, transfer,
     assignment, pledge, encumbrance, or charge, and any attempt to do so shall
     be void, nor shall any such benefit be in any manner liable for or subject
     to garnishment,


                                       6



     attachment, execution of levy, or liability for or subject to the debts,
     contracts, liabilities, engagements or torts of a Participant.

5.7  Construction. The Plan shall be construed, regulated and administered under
     the laws of the State of Arizona. When used herein the masculine pronoun
     shall include the feminine pronoun, and the singular shall include the
     plural, where appropriate.

5.8  Claims Procedure. Any Participant, beneficiary, or his duly authorized
     representative may file a claim for a Plan benefit to which the claimant
     believes that he or she is entitled. Such a claim must be in writing and
     delivered or mailed to the Committee. The Committee shall have full
     discretion to deny or grant a claim in whole or in part.

5.9  Unfunded Plan. The Company shall not be required to fund its obligations
     under this Plan in any manner, whether by purchase of insurance or
     endowment contracts, or contributions to a trust, or deposits in an escrow
     account or otherwise; and if the Company does choose to do so, then the
     Participant shall not have any right or interest in such contract, trust
     (other than the Participant's right to the funds held in a trust created
     under Section 4.1), or account but may look only to the Company's unsecured
     promise to pay in accordance with the provisions of this Plan. Nothing
     contained in this Plan will be deemed to create a trust of any kind or to
     create any fiduciary relationship.

     IN WITNESS WHEREOF, Mesa Air Group, Inc. has approved this Plan effective
February 7, 2005.

                                        MESA AIR GROUP, INC.


                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------


                                       7

EX-10.14

                                                                   Exhibit 10.14

                                             * TEXT OMITTED AND FILED SEPARATELY
                                                CONFIDENTIAL TREATMENT REQUESTED
                                           UNDER 17 C.F.R. SECTION 200.80(B)(4),
                                                            200.83 AND 240.24b-2

                          FIFTH AMENDMENT TO CODE SHARE
                          AND REVENUE SHARING AGREEMENT

     THIS FIFTH AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT ("Fifth
Amendment") is made and entered into as of January 28, 2005 (the "Effective
Date"), among AMERICA WEST AIRLINES, INC., a Delaware corporation ("AWA"), MESA
AIRLINES, INC., a Nevada corporation ("Mesa"), AIR MIDWEST, INC., a Kansas
corporation ("AM"), and FREEDOM AIRLINES, INC., a Nevada corporation
("Freedom"). Mesa, AM and Freedom are referred to collectively as the "Mesa
Group".

     RECITALS:

     A. AWA and the Mesa Group are parties to that certain Code Share and
Revenue Sharing Agreement, dated to be effective February 1, 2001, as amended by
that certain First Amendment to Code Share and Revenue Sharing Agreement, dated
to be effective April 27, 2001, that certain Second Amendment to Code Share and
Revenue Sharing Agreement, dated to be effective October 24, 2002 ("Second
Amendment"), that certain Third Amendment to Code Share and Revenue Sharing
Agreement, dated to be effective January 29, 2003 ("Third Amendment"), and that
certain Fourth Amendment to Code Share and Revenue Sharing Agreement and
Release, dated to be effective September 5, 2003 (collectively, the "Code Share
Agreement"). All capitalized terms used herein, but not otherwise defined
herein, shall have the meanings given to such terms in the Code Share Agreement.

     B. The Code Share Agreement requires the Mesa Group to provide certain
Flight Services for AWA, pursuant to the terms and conditions of the Code Share
Agreement.

     C. The Mesa Group and AWA desire to amend the Code Share Agreement pursuant
to the terms and conditions of this Fifth Amendment.

     D. The Mesa Group and AWA desire to terminate certain Subcontracting of
Services and allow for Subcontracting of Services under limited circumstances.

     NOW, THEREFORE, in consideration of the promises, covenants,
representations and warranties hereinafter set forth, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, AWA
and the Mesa Group agree as set forth below.

     AMENDMENTS:



     1.   The parties agree that Section 2.2.2(b) of the Code Share Agreement is
          amended in its entirety as follows:

          (b) AWA shall have the options to expand the CRJ Fleet from the Option
          Aircraft. On or before each option "Exercise Date" (as set forth on
          Exhibit A), AWA, by written notice to Mesa (the "Option Notice"),
          shall have the option to require Mesa to increase the CRJ Subfleet by
          the addition of the applicable CRJ Aircraft (as set forth on Exhibit
          A) in the applicable "In Service Months" (as set for on Exhibit A)
          (each, a "Fleet Expansion Option"). Each Option Notice shall specify
          whether AWA is selecting either a CRJ Model 700 or 900. If the Option
          Notice does not specify the CRJ Model, then AWA shall be deemed to
          have selected a CRJ Model 900. The Fleet Expansion Options are
          separate and individual options and may be exercised or not exercised
          on a separate and individual basis. If AWA does not exercise a Fleet
          Expansion Option timely, then the applicable Option Aircraft shall not
          be added to the CRJ Subfleet and shall not be placed into Flight
          Services. The Aircraft that are the subject of each exercise of a
          Fleet Expansion Option shall be added to the Fleet by Mesa in the
          applicable In Service Months. Mesa shall provide AWA with at least 90
          days prior written notice of the week each Option Aircraft will be
          placed into Flight Service under this Agreement and at least 60 days'
          prior written notice of the Scheduled Delivery Date for each Option
          Aircraft that is the subject of each exercised Fleet Expansion Option.

     2.   The parties agree that Section 8.1 of the Code Share Agreement is
          amended in its entirety as follows:

          Term. The term of this Agreement (the "Term") commences on the
          Effective Date retroactive to the Contract Date (the "Commencement
          Date") and shall expire at 11:59 p.m., Phoenix time, on June 30, 2012
          ("Expiration Date"), unless earlier terminated as provided in this
          Agreement. Notwithstanding the foregoing to the contrary, if any of
          the Option Aircraft is added to the CRJ Subfleet pursuant to Section
          2.2.2(b), then the Expiration Date shall be extended to 11:59 p.m.,
          Phoenix time, on the date eight (8) years after the last day of the In
          Service Month (as set forth on Exhibit A) for the last Option Aircraft
          added to the CRJ Subfleet. By way of example, if AWA adds the Option
          Aircraft with the December 2006 In Service Month and does not add any
          of the remaining seven Option Aircraft from January 2007 through July
          2007, the Expiration Date shall be extended to 11:59 p.m., Phoenix
          time, on December 31, 2014. AWA, by written notice to Mesa at least
          180 days prior to the Expiration Date, may further extend the
          Expiration Date for two years, expiring at 11:59 p.m., Phoenix time,
          on either (i) June 30, 2014; or (ii) the date ten (10) years after the
          last day of the In Service Month for the last Option Aircraft added to
          the CRJ Subfleet, if applicable. Unless AWA


                                        2



          does not exercise any of the Fleet Expansion Options, Mesa and AWA
          shall execute an amendment to this Section 8.1 following the Exercise
          Date for the last Option Aircraft specifying the revised Expiration
          Date.

     3.   The parties agree that the second page of Exhibit A of the Code Share
          Agreement is amended in its entirety as set forth in Exhibit 1 to this
          Fifth Amendment.

     AGREEMENTS:

     4.   900 Election Notice. Mesa acknowledges: (i) receipt of AWA's 900
          Election Notice dated April 29, 2004, rejecting the twelve (12) CRJ
          Model 900s pursuant to Section 2.2.5(e) of the Code Share Agreement;
          and (ii) as a result thereof, the twelve (12) CRJ Model 900s scheduled
          to be delivered into Flight Services from April 2005 to November 2005,
          pursuant to the Delivery Schedule, will not be added to the CRJ
          Subfleet and will not be placed into Flight Services.

     5.   Termination of Consent to Subcontracting. AWA and the Mesa Group agree
          that AWA's consent to subcontracting granted to both Freedom and AM
          pursuant to the Code Share Agreement is terminated, except as set
          forth in Section 6 below. Notwithstanding the preceding sentence, (i)
          Freedom's assumption relating to the CRJ 700 Services (as set forth in
          Section 2 of the Second Amendment) and relating to the CRJ 900
          Services (as set forth in Section 2 of the Third Amendment) shall
          remain in effect for all CRJ 700 Services and CRJ 900 Services
          previously provided by Freedom pursuant to the Code Share Agreement
          and (ii) AM's assumption relating to the AM Services shall remain in
          effect for all AM Services previously provided by AM pursuant to the
          Code Share Agreement. AM confirms and acknowledges that for all AM
          Services previously provided by AM pursuant to the Code Share
          Agreement, AM assumed and agreed to be bound by all of the
          liabilities, obligations, and duties of Mesa applicable to the AM
          Services. Nothing in this Section 5 shall prohibit Mesa, after the
          Effective Date of this Fifth Amendment, from seeking AWA's consent for
          the Subcontracting of Services pursuant to Section 2.1 of the Code
          Share Agreement.

     6.   Consent to Subcontracting for Beech 1900s. The consent to
          subcontracting granted to AM and Freedom shall remain in effect only
          for the limited circumstance in which irregular operations make a
          Flight for which a Dash 8 Aircraft is scheduled to be used by Mesa
          subject to cancellation ("Swap Flight"), and AM or Freedom is
          available to provide Flight Services for the Swap Flight (and avoid
          cancellation of the Swap Flight) using a Beech 1900 Aircraft. For such
          Swap Flights, Freedom and AM assume and agree to discharge,


                                        3



          perform, and satisfy on behalf of Mesa all the obligations,
          liabilities and duties of Mesa under the Code Share Agreement relating
          to the provision of these Flight Services, in the time and manner
          required by the Code Share Agreement, to the same extent Mesa is
          required to perform and satisfy such obligations, liabilities and
          duties under the Code Share Agreement. AWA shall make payments for the
          Swap Flights to Mesa for negotiated activity costs for the Beech 1900
          Aircraft, which shall include de-icing expenses (if any), fuel costs,
          landing fees, security outside AWA Service locations (if any), the
          B1900 station cost per departure (as set forth in Exhibit B to the
          Code Share Agreement), the Beech 1900 flight crew cost per block hour
          and dispatcher cost per departure (as set forth in Exhibit C to the
          Code Share Agreement), and the Beech 1900 maintenance cost per block
          hour and maintenance cost per departure (as set forth in Exhibit D to
          the Code Share Agreement). Payments for the Swap Flights shall not
          include any fixed monthly costs relating to the Beech 1900 Aircraft.

     7.   Effect. Except as set forth in this Fifth Amendment, all of the terms
          and conditions of the Code Share Agreement shall remain in full force
          and effect and be applicable to this Fifth Amendment.

     8.   Counterparts. This Fifth Amendment may be executed in counterparts,
          all of which when taken together shall be one and the same document.

     9.   Entire Agreement. This Fifth Amendment constitutes the entire
          agreement between the parties with respect to the subject matter
          hereof and supersedes all prior understandings with respect thereto.

                        [SIGNATURES APPEAR ON NEXT PAGE]


                                        4



                                        AMERICA WEST AIRLINES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        MESA AIRLINES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        FREEDOM AIRLINES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        AIR MIDWEST, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        5



                                    Exhibit 1


                                        6



                                    EXHIBIT A
                               OPTION CRJ-700/900
                                DELIVERY SCHEDULE



            Option
          CRJ-7/900
          ---------
       
 Nov-05
 Dec-05
 Jan-06
 Feb-06
 Mar-06
 Apr-06
 May-06
*Jun-06      [*]
*Jul-06      [*]
*Aug-06      [*]
 Sep-06      [*]
 Oct-06      [*]
 Nov-06      [*]
 Dec-06      [*]
 Jan-07      [*]
 Feb-07      [*]
 Mar-07      [*]
 Apr-07      [*]
 May-07      [*]
 Jun-07      [*]
 Jul-07       *
             ---
 Totals       *
             ===


Note: [*]

*[*]


                                        7

EX-10.15

                                                                   Exhibit 10.15

                                             * TEXT OMITTED AND FILED SEPARATELY
                                                CONFIDENTIAL TREATMENT REQUESTED
                                           UNDER 17 C.F.R. SECTION 200.80(B)(4),
                                                            200.83 AND 240.24b-2

                        SIXTH AMENDMENT TO CODE SHARE AND
                          REVENUE SHARING AGREEMENT AND
                              SETTLEMENT AGREEMENT

     THIS SIXTH AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT AND
SETTLEMENT AGREEMENT ("Sixth Amendment") is made and entered into as of July 27,
2005 (the "Effective Date"), between AMERICA WEST AIRLINES, INC., a Delaware
corporation ("AWA"), MESA AIRLINES, INC., a Nevada corporation ("Mesa"), AIR
MIDWEST, INC., a Kansas corporation ("AM"), and FREEDOM AIRLINES, INC., a Nevada
corporation ("Freedom"). Mesa, AM and Freedom are referred to collectively as
the "Mesa Group").

     RECITALS:

     A. AWA and the Mesa Group are parties to that certain Code Share and
Revenue Sharing Agreement, dated to be effective February 1, 2001, as amended by
that certain First Amendment to Code Share and Revenue Sharing Agreement, dated
to be effective April 27, 2001, that certain Second Amendment to Code Share and
Revenue Sharing Agreement, dated to be effective October 24, 2002, that certain
Third Amendment to Code Share and Revenue Sharing Agreement, dated to be
effective January 29, 2003, that certain Fourth Amendment to Code Share and
Revenue Sharing Agreement and Release, dated to be effective September 5, 2003
(the "Fourth Amendment"), and that certain Fifth Amendment to Code Share and
Revenue Agreement, dated to be effective January 28, 2005 (collectively, the
"Code Share Agreement"). All capitalized terms used herein, but not otherwise
defined herein, shall have the meanings given to such terms in the Code Share
Agreement.

     B. The Code Share Agreement requires the Mesa Group to provide certain
Flight Services and Other Services for AWA, pursuant to the terms and conditions
of the Code Share Agreement.

     C. The Mesa Group and AWA desire to amend the Code Share Agreement pursuant
to the terms and conditions of this Sixth Amendment.

     D. The Mesa Group and AWA desire to settle certain amounts payable to each
other pursuant to the Code Share Agreement.

     NOW, THEREFORE, in consideration of the promises, covenants,
representations and warranties hereinafter set forth, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, AWA
and the Mesa Group agree as set forth below:

     AMENDMENTS:



     1. The parties agree that Section 2.2.2(f) of the Code Share Agreement is
amended in its entirety as follows:

          CRJ 900 Put Option. AWA agrees that Mesa may add to the CRJ Subfleet
          and place into Flight Services [*] CRJ Model 900s that, pursuant to
          Exhibit A, were scheduled to be placed into Flight Services in [*]
          (the "Put CRJ 900s") on [*]. Each Put CRJ 900 shall be marked with
          AWA's livery and shall be configured with all coach seating in a
          manner required by AWA, at Mesa's sole cost and expense, upon being
          placed into Flight Services. Notwithstanding anything contained in
          Section 7.2 to the contrary, AWA shall not be required to pay
          "Ownership" Guaranteed Non-Maintenance Costs for each of the Put CRJ
          900s for a period of 30 days after each Put CRJ 900 commences Flight
          Services.

     2. The parties agree that Section 2.2.6 of the Code Share Agreement is
amended by deleting the parenthetical "(other than overhead)" in the last
sentence and replacing it with the following: "(other than Overhead and Crew
RON)".

     3. The parties agree that Section 2.6.3 of the Code Share Agreement is
amended in its entirety as follows:

          2.6.3 Location. Mesa shall maintain maintenance bases as follows: (i)
          one in Grand Junction, Colorado for Dash 8s; (ii) one in Phoenix,
          Arizona for CRJ Model 200s; (iii) one in Phoenix, Arizona for CRJ
          Model 900s; and (iv) commencing on or after December 1, 2005, one in a
          mutually acceptable location on the East Coast for CRJ Model 900s (the
          "Maintenance Bases"). In addition, Mesa intends to provide CRJ Model
          200 and 900 maintenance at certain outstation or Mesa provided
          maintenance bases (the "Outstation Bases"). Each Schedule prepared by
          AWA shall provide for not less than 20% of the Dash 8s, 33% of the CRJ
          Model 200s, and 33% of the CRJ Model 900s to remain overnight at the
          applicable Maintenance Bases and Outstation Bases each night. AWA and
          Mesa intend that 20% to 25% of the CRJ will be maintained at the
          Maintenance Bases and the balance will be maintained at the Outstation
          Bases in order to reach the 33% overnight threshold. One aircraft
          shall remain overnight for 10 hours and the remainder for at least 8
          hours. Mesa shall not relocate any Maintenance Base without prior
          written consent of AWA, which consent may be withheld if the new
          location fails to meet AWA's schedule requirements. Each CRJ
          Maintenance Base shall be staffed and equipped to maintain a fleet of
          up to 25 aircraft. Mesa shall add maintenance bases as necessary to
          provide the Flight Services and Other Services at locations which meet


                                       2



          AWA's maintenance base requirements and are approved by AWA. AWA, by
          providing Mesa with at least 180 days' prior written notice, may
          require Mesa to close any Maintenance Base. Upon Mesa assigning to AWA
          all of its rights, title and interest in the lease of the Maintenance
          Base that is closed (together with any required landlord consent), AWA
          shall reimburse Mesa for all actual out-of-pocket costs and expenses
          incurred by Mesa in closing such Maintenance Bases.

     4. The parties agree that Section 5 of the Code Share Agreement is amended
by adding the following new paragraph 5.7:

          5.7 Performance Penalties Waiver. Mesa and AWA agree that neither Mesa
          nor AWA shall be required to pay any performance penalties or bonuses,
          pursuant to Sections 5.1 through 5.4, based on Mesa's provision of
          Flight Services for the period of [*]. If AWA exercises its right to
          slot substitutions pursuant to that certain Slot Substitution
          Agreement, dated July 27, 2005, between AWA and Mesa (the
          "Substitution Agreement"), then, for the purposes of calculating
          performance penalties and bonuses for the applicable year, month, Six
          Month Period or Calendar Quarter, as applicable, pursuant to Sections
          5.1 through 5.4, the Flight Services and AWA flight operations
          occurring on any date on which AWA exercises its rights under the
          Substitution Agreement shall not be included. For example only, if AWA
          exercised its rights under the Substitution Agreement on August 15,
          2005, then the Flight Services and AWA flight operations on such day
          shall not be used in calculating the DOT Complaint Rate and AWA's DOT
          Complaint Rate for calendar year 2005, the MBR for the month of
          August, 2005, the OTP Rate Threshold and OTP Rate for the Six Month
          Period between July 1, 2005 and December 31, 2005, and the FCF
          Threshold and FCF for the Calendar Quarter commencing July 1, 2005 and
          expiring on September 30, 2005.

     5. The parties agree that the Code Share Agreement is amended by adding the
following as a new Section 7.1.9:

          7.1.9 Actual costs invoiced to and paid by Mesa for the maintenance of
          CRJs at the Outstation Bases, including depreciation of parts,
          equipment and tooling and Mesa on-site personnel costs (net of any
          discounts or promotions and provided a good faith estimate of the
          general scope and costs for the Outstation Bases was initially
          pre-approved, in writing, by AWA's scheduling and planning group).


                                       3



     6. The parties agree that the Code Share Agreement is amended by adding the
following as a new last paragraph to Section 7.2:

          Notwithstanding anything above to the contrary, subsequent to December
          31, 2004, AWA shall be entitled to a credit equal to the sum of: (i)
          the greater of $[*] per day that an applicable CRJ is out of Flight
          Services for the performance of the Reliability Improvement Program
          ("RIMP") or the actual ownership reimbursement received by Mesa from
          Bombardier for the applicable CRJ undergoing such RIMP work; plus (ii)
          an amount equal to a per diem allocation of Crew RON and Engine and
          APU Depreciation chargeable by Mesa as Guaranteed Maintenance Costs
          for the CRJ undergoing such RIMP work, based on the number of days the
          CRJ is out of service for RIMP work.

     7. The parties agree that Exhibit C of the Code Share Agreement is amended
by: (i) deleting the reference to $[*] in the "Ownership" line under the CRJ 200
column and replacing such number with a reference to Note 5; (ii) replacing the
CRJ 200 A/C Ownership Schedule attached as page 2 to Exhibits C and D with page
2, attached hereto; and (iii) adding the following Note 5:

          [*]

     AGREEMENTS:

     8. Settlement Amounts. AWA and Mesa agree to the following settlement of
certain outstanding liabilities, duties and obligations contained in the Code
Share Agreement and disputes between Mesa and AWA:

          8.1 AWA and Mesa agree that, pursuant to Section 19 of the Fourth
Amendment, the Reimbursement Payment is $[*];

          8.2 AWA and Mesa agree that Mesa shall reimburse AWA for Mesa's
overcharge of "overhead costs" for spare aircraft, pursuant to Section 2.2.6, in
an amount equal to $[*];

          8.3 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in
settlement of outstanding CRJ Model 200 Ownership costs payable through [*],
pursuant to Section 7.2(a);

          8.4 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] for
actual outstation maintenance costs incurred by Mesa for the periods of [*]
through [*] (the "Outstation Costs");

          8.5 AWA and Mesa agree that Mesa shall pay to AWA the sum of $[*] in
settlement of all performance penalties incurred by Mesa, pursuant to Sections
5.1 through 5.4, through [*];


                                       4



          8.6 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in
settlement of all transition costs incurred by Mesa in connection with the
elimination of CRJ Model 700s, pursuant to Section 2.3.3;

          8.7 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in
settlement of all turn costs payable by AWA for CRJ Model 900s at the Phoenix
Hub, pursuant to Exhibit B, for the period of [*];

          8.8 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] in
settlement of disputed sums due for the provision of Flight Services to
Guadalajara, Mexico (the "GDC Services"); and

          8.9 AWA and Mesa agree that AWA shall pay to Mesa the sum of $[*] for
RIMP work performed by Mesa between March 1, 2004 and December 31, 2004 (the
"RIMP Work").

          The net amount due pursuant to Sections 7.1 through 7.9, above, from
AWA to Mesa is $[*], which sum shall be paid by AWA to Mesa within three (3)
business days after the Effective Date.

     9. Releases.

          9.1 The Mesa Group fully and finally release, acquit and forever
discharge AWA and its parent companies and subsidiaries from any and all claims
or demands for: (i) the Reimbursement Payment; (ii) CRJ Model 200 Ownership
costs through and including June 30, 2005; (iii) Outstation Costs through
December 31, 2004; (iv) costs and expenses incurred in connection with the RIMP
Work; (v) reimbursement of actual out-of-pocket costs and expenses incurred in
connection with the elimination of CRJ Model 700s from the Fleet; (vi) turn
costs for CRJ Model 900s pursuant to Exhibit B for the periods of October 1,
2004 through June 30, 2005; and (vii) payment for the GDC Services.

          9.2 AWA fully and finally releases, acquits and forever discharges
Mesa and its parent company and subsidiaries from any and all claims and demands
for: (i) reimbursement of improperly charged overhead costs prior to the
Effective Date pursuant to Section 2.2.6; (ii) performance penalties pursuant to
Sections 5.1 through 5.4 for all periods prior to December 31, 2004; and (iii)
Crew RON costs charged for spare aircraft prior to July 1, 2005.

     10. Tail N937/TSA Expenses. AWA and Mesa agree that: (i) no amount is
payable by AWA to Mesa for CRJ Model 900 tail number N937 for the month of June,
2005; and (ii) no payment is due to AWA for the double billed TSA expenses.

     11. Effect. Except as set forth in this Sixth Amendment, all of the terms
and conditions of the Code Share Agreement shall remain in full force and effect
and be applicable to this Sixth Amendment.


                                       5



     12. Counterparts. This Sixth Amendment may be executed in counterparts, all
of which when taken together shall be one and the same document.

     13. Entire Agreement. This Sixth Amendment constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior understandings with respect thereto.

                        [SIGNATURES APPEAR ON NEXT PAGE]


                                       6



                                        AMERICA WEST AIRLINES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                              ----------------------------------


                                        MESA AIRLINES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        FREEDOM AIRLINES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        AIR MIDWEST, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                              ----------------------------------


                                       7



                               Exhibit C - Page 2


CRJ-200 A/C Ownership Schedule



                 Monthly
    Tail #        Amount
- --------------   -------
              
    1   7178       $[*]
    2   7218       $[*]
    3   7228       $[*]
    4   7231       $[*]
    5   7260       $[*]
    6   7264       $[*]
    7   7275       $[*]
    8   7278       $[*]
    9   7286       $[*]
   10   7291       $[*]
   11   7302       $[*]
   12   7305       $[*]
   13   7314       $[*]
   14   7318       $[*]
   15   7325       $[*]
   16   7337       $[*]
   17   7353       $[*]
   18   7358       $[*]

Agreed Rate(1)     $[*]


(1)  [*]

EX-10.34

                                                                   Exhibit 10.34

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
April 30, 2005 by and between MESA AIR GROUP, INC., a Nevada corporation (the
"Company"), and Brian S. Gillman (the "Executive").

                                   WITNESSETH:

     1. EMPLOYMENT

     The Company hereby employs the Executive, and the Executive hereby accepts
such employment, upon the terms and subject to the conditions set forth in this
Agreement.

     2. TERM

     Subject to the provisions for termination as hereinafter provided, the term
of employment under this Agreement shall begin on the date hereof and shall
continue for a term of three years, provided, however, that if the Company fails
to give one hundred eighty days written notice prior to the date of termination,
the term of this Agreement shall automatically be extended for additional one
hundred eighty day periods.

     3. COMPENSATION

     3.1 Base Salary. The Company shall pay to the Executive as basic
compensation for all services rendered by the Executive during the term of this
Agreement as basic annualized salary of $125,000 through September 30, 2005, and
130,000 through September 30, 2006, and $135,000 for the remainder of the
Agreement, or such other sum in excess of that amount as the parties may agree
on from time to time or as provided in the last sentence of this Section 3.1 (as
in effect from time to time, the "Base Salary"), payable bi-weekly or in other
more frequent installments, as determined by the Company. The Company shall have
no authority to reduce the Executive's Base Salary in effect from time to time.
In addition, the Company, in its discretion, may award a bonus or bonuses to the
Executive in addition to the bonuses provided for in Section 3.2, provided,
however, such discretionary bonus shall not be included in the definition of
"Base Salary." Annually, the Company shall review the Base Salary and increase
it as it deems appropriate.

     3.2 Bonuses. In addition to the Base Salary to be paid pursuant to Section
3.1, the Company shall pay the Executive as incentive compensation a bonus. The
bonus will be a minimum of thirty (30%) of Base Salary, which will be paid
quarterly if Company is profitable. In addition, Executive shall be eligible to
receive and the Company shall pay to the Executive an additional bonus
(including the minimum bonus) in the aggregate of 31% to 100% of the Executive's
Base Salary at such time that the Board grants similar bonuses to other
executives of the Company.


                                      -1-



     3.3 Stock Option/Restricted Stock Award. Each year during the term of this
Agreement on the anniversary date of this Agreement, the Company shall issue
options of not fewer than 20,000 shares of common stock of the Company (adjusted
appropriately for any stock dividend, stock split, spin-off, reorganization, or
similar transaction) or restricted stock or other equity equivalent with a
similar vesting schedule in an amount designed to achieve the same underlying
value to the Executive. With respect to Stock Options, the underlying shares of
Common Stock of which will be registered on Form S-8 or any successor form, at
an exercise price per share, which is no greater than the market price on the
grant date The term will be for a term of ten years from the date of grant and,
except as otherwise provided (but in no event shall the vesting schedule be more
restrictive than as set forth in this Agreement), shall vest one-third annually.

     3.4 Other Benefits. The Executive shall be entitled to such fringe benefits
including, but not limited to, medical and other insurance benefits (for the
Executive and his family), positive space airline travel benefits on the
Company's airline, as may be provided from time to time by the Company to other
senior management of the Company. The Company will use its commercially
reasonable efforts to obtain from other airlines the same benefits for the
Executive as the Company provides to executive officers of other airlines.

     3.5 Expenses. The Company shall reimburse the Executive, in accordance with
the Company's policies and practices for senior management, for all reasonable
expenses incurred by the Executive in the performance of the Executive's duties
under this Agreement.

     3.6 Reimbursement. The Company shall reimburse Executive for his
out-of-pocket costs incurred in connection with the retention of professionals
by Executive to provide Executive with income tax, estate planning, and
investment advisory services. The maximum amount of reimbursable expenses for
such purposes shall be $1,000 for each calendar year during the term of this
Agreement. The Company shall reimburse Executive for such costs promptly after
Executive submits an invoice to Company. In order to preserve Executive's rights
to confidentiality, Executive may satisfy the requirement of submitting an
invoice by providing the Company with a copy of the facing page of the invoice
showing the fees and expenses for the services rendered and the general nature
of the services rendered but without any detail concerning the substance of the
services rendered.

     3.7 Other Incentive and Benefit Plans. The Executive shall be eligible to
participate, in accordance with the terms of such plans as they may be adopted,
amended and administered from time to time, in incentive, bonus, benefit or
similar plans, including without limitation, any stock option, bonus or other
equity ownership plan, any short, mid or long term incentive plan and any other
bonus, pension or profit sharing plans established by the company from time to
time.


                                      -2-



     4. DUTIES

     The Executive is engaged as the Vice President, General Counsel and
Secretary of the Company. The Executive's duties and responsibilities shall be
commensurate with those customarily associated with the Vice President and
General Counsel of a publicly traded Company, including such other duties as
from time to time may be assigned by the Chairman of the Board, Chief Executive
Officer or by the directors.

     5. VACATIONS AND DAYS OFF

     The Executive shall be entitled to vacations with pay and to such personal
and sick leave with pay in accordance with the policy of the Company as may be
established from time to time by the Company and applied to other senior
officers of the Company. In no event shall the Executive be entitled to less
than three week's annual vacation. Unused vacation days may be carried over from
one year to the next for the length of the Agreement.

     6. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC.

     6.1 Death. If the Executive dies during the term of Executive's employment,
the Company shall pay to the estate of the Executive within 30 days after the
date of death such Base Salary and any cash bonus compensation earned pursuant
to the provisions of this Agreement or any incentive compensation plan then in
effect but not yet paid, as would otherwise have been payable to the Executive
up to the end of the month in which the Executive's death occurs. After
receiving the payment provided in this Section 6.1, the Executive and the
Executive's estate shall have no further rights under this Agreement (other than
those rights already accrued).

     6.2 Disability. During any period of disability, illness or incapacity
during the term of this Agreement which renders the Executive at least
temporarily unable to perform the services required under this Agreement, the
Executive shall receive the Base Salary payable under Section 3.1 of this
Agreement plus any cash bonus compensation earned pursuant to the provisions of
this Agreement or any incentive compensation plan then in effect but not yet
paid, less any cash benefits received by him under any disability insurance
carried by or provided by the Company. Upon the Executive's "Permanent
Disability" (as defined below), which Permanent Disability continues during the
payment periods specified herein, the Company shall pay to the Executive for the
period of time specified below an amount (the "Disability Payment") equal to the
(i) sum of (A) the Base Salary paid in the same bi-weekly or other period
installments as in effect at the time of the Executive's Permanent Disability
plus (B) an amount equal to the Minimum Bonus payable to the Executive under
Section 3.2 of this Agreement or the minimum amount of any similar bonus or
incentive plans or programs then in effect if greater than the Minimum Bonus in
respect of the fiscal year during which the Executive's Permanent Disability
occurred, which amount, in any event, shall be paid in pro rata equal bi-weekly
installments over the period of time specified below (ii) reduced by the amount
of any


                                      -3-



monthly payments under any policy of disability income insurance paid for by the
Company which payments are received during the time when any Disability Payment
is being made to the Executive following the Executive's Permanent Disability.
For so long as the Executive's Permanent Disability continues, the Disability
Payment shall be paid by the company to the Executive in equivalent installments
at the same time or times as would have been the case for payment of Base Salary
over the unexpired term of this Agreement if the Executive had not become
permanently disabled and had remained employed by the Company hereunder, but in
no case shall such period be less than 24 months. The Executive may be entitled
to receive payments under any disability income insurance which may be carried
by or provided by the Company from time to time. Upon "Permanent Disability" (as
that terms is defined in Section 6.2(ii) below) of the Executive, except as
provided in this Section 6.2 all rights of the Executive under this Agreement
(other than rights already accrued or the Executive's rights under Section 3.7
shall terminate).

     (ii) The term "Permanent Disability" as used in this Agreement shall mean,
the inability of the Executive, as determined by the Board of Directors of the
Company, by reason of physical or mental disability to perform the duties
required of him under this Agreement for a period of one hundred and eighty
(180) days in any 210-day period. Successive periods of disability, illness or
incapacity is due to the same or related cause and commences less than three
months from the ending of the previous period of disability. Upon such
determination, the Board of Directors may terminate the Executive's employment
under this Agreement upon ten (10) days' prior written notice. If any
determination of the Board of Directors with respect to permanent disability is
disputed by the Executive, the parties hereto agree to abide by the decision of
a panel of three physicians. The Executive and Company shall each appoint one
member, and the third member of the panel shall be appointed by the other two
members. The Executive agrees to make himself available for an submit to
examinations by such physicians as may be directed by the Company. Failure to
submit to any such examination shall constitute a breach of a material part of
this Agreement.

     7. OTHER TERMINATIONS

     7.1 By the Executive. (i) The Executive may terminate the Executive's
employment hereunder upon giving at least ninety (90) days' prior written
notice. In addition, the Executive shall have the right to terminate the
Executive's employment hereunder on the conditions and at the times provided for
in Section 7.4 of this Agreement.

     (ii) If the Executive gives notice pursuant to the first sentence of
Section 7.1(i) above, the Company shall have the right (but not the obligation)
to relieve the Executive, in whole or in part, of the Executive's duties under
this Agreement, or direct the Executive to no longer perform such duties, or
direct that the Executive should no longer report to work, or any combination of
the foregoing. In any such event, the Executive shall be entitled to receive
only the Base Salary not yet paid, as would otherwise have been payable to the
Executive up to the end of the month specified as the month of


                                      -4-



termination in the termination notice. If the Executive gives notice pursuant to
the first sentence of Section 7.1(i) above but specifies a termination date in
excess of ninety (90) days from the date of such notice, the Company shall have
the right (but not the obligation) to accelerate the termination date to any
date prior to the date specified in the notice that is in excess of ninety (90)
days from the date of the notice, and the Company shall have the right (but not
the obligation) to relieve the Executive, in whole or in part, of the
Executive's duties under this Agreement, or direct the Executive to no longer
perform such duties, or direct that the Executive should no longer report to
work, or any combination of the foregoing; provided, however, that in any such
event the Executive shall be entitled to receive the Base Salary, as would
otherwise have been payable to the Executive up to the end of the month of the
termination date properly selected by the Company. If the Executive gives notice
pursuant to the first sentence of Section 7.1(i), upon receiving the payments
provided for under this Section 7.1, all rights of the Executive under this
Agreement (other than rights already accrued or the Executive's rights under
Section 3.7) shall terminate.

     7.2 Termination for "Good Cause." (i) Except as otherwise provided in this
Agreement, the Company may terminate the employment of the Executive hereunder
only for "good cause," which shall mean the termination of employment of
Employee because of Employee's personal dishonesty, willful misconduct, breach
of fiduciary duty involving personal profit, intentional failure to perform
stated duties (including failure to travel to the Company's headquarters to the
extent necessary to complete his duties), willful violation of any material law,
rule or regulation resulting in the Company's detriment or reflecting upon the
Company's integrity (other than traffic infractions or similar minor offenses)
or a material breach by the Employee of the terms of this Agreement and failure
to cure such breach within thirty (30) days after receipt of written notice from
the Company specifying the nature of such breach or to pay compensation to the
Company deemed reasonable by the Company if the breach cannot be cured.

     (ii) If the employment of the Executive is terminated for good cause under
Section 7.2(i) of this Agreement, the Company shall pay to the Executive any
Base Salary earned prior to the effective date of termination but not yet paid
and any such cash bonus compensation earned pursuant to the provisions of this
Agreement or any incentive compensation plan then in effect but not paid to the
Executive prior to the effective date of such termination. Under such
circumstances, such payments shall be in full and complete discharge of any and
all liabilities or obligations of the Company to the Executive hereunder, and
the Executive shall be entitled to no further benefits under this Agreement
(other than rights already accrued or the Executive's rights under Section 3.7).

     (iii) Termination of the employment of the Executive, other than as
expressly specified above in Section 7.2(i) for good cause, shall be deemed to
be termination of employment "Without Good Cause."

     7.3 Termination Without Good Cause. (i) Notwithstanding any other provision
of this Agreement, the Company shall have the right to terminate the


                                      -5-


Executive's employment Without Good Cause pursuant to the provisions of this
Section 7.3. If the Company shall terminate the employment of the Executive
Without Good Cause effective on a date earlier than the termination date
provided for in Section 2 (with the effective date of termination as so
identified by the Company being referred to herein as the "Accelerated
Termination Date"), the Executive, shall receive a lump sum cash payment equal
to a sum of (1) the number of years (or fractions thereof) remaining in the then
unexpired term of this Agreement or three, whichever is greater, multiplied by
the sum of (A) the Base Salary and (B) the highest annual bonus amount received
by Executive during the preceding three years or the minimum amount of any
similar bonus or incentive plans or programs then in effect if greater than
foregoing in respect to the fiscal year during which the Executive's termination
Without Good Cause occurs plus (C) any other cash or other bonus compensation
earned prior to the date of such termination pursuant to the terms of all
incentive compensation plans then in effect other than any such plan relating to
annual incentive cash bonuses or any similar bonus or incentive plans or
programs then in effect; and (2) the additional payments necessary to discharge
certain tax liabilities (the "Gross Ups"), as the term is defined in Section 11
of this Agreement, provided that, notwithstanding such termination of
employment, the Executive's covenants set forth in Section 9 are intended to and
shall remain in full force and effect and provided further that in the event of
such termination, the Company shall have the right (but not the obligation) to
relieve the Executive, in whole or in part, of the Executive's duties under this
Agreement, or direct the Executive to no longer perform such duties, or direct
that the Executive no longer be required to report to work, or any combination
of the foregoing.

     (ii) The parties agree that, because there can be no exact measure of the
damage that would occur to the Executive as a result of a termination by the
Company of the Executive's employment Without Good Cause, the payments and
benefits paid and provided pursuant to this Section 7.3 shall be deemed to
constitute liquidated damages and not a penalty for the Company's termination of
the Executive's employment Without Good Cause.

     7.4 Termination by Executive For Good Reason. (i) The Executive shall be
entitled to terminate his employment hereunder for Good Reason within one-year
of the occurrence of an event constituting Good Reason. For purposes of this
Agreement, "Good Reason" shall mean the occurrence of any of the following
circumstances without the Executive's consent: (1) assignment of the Executive
to any duties substantially inconsistent with his position or duties
contemplated by this Agreement or a substantial reduction of his duties
contemplated by this Agreement; (2) the removal of any titles of the Executive
specified in Section 4 of this Agreement; (3) any breach of the Company's
obligation under this Agreement or any failure by the company to carry out any
of its material obligations hereunder, and the failure to cure such breach or
failure within seven days after written notice of such breach or failure has
been delivered to the Company by the Executive; (4) a Change of Control (as
hereinafter defined); or (5) the relocation of the Executive or his office,
facilities, personnel, or equipment; provided, however, it shall not constitute
"Good Reason" if the Executive or his office, facilities, personnel, or
equipment are relocated to any future location of the Company's corporate
headquarters


                                      -6-



and the relocated corporate headquarters is in a metropolitan area with a
population of at least 1,000,000 people.

     (ii) For purposes of this Agreement, a "Change in Control" shall mean the
first to occur of:

          (1)  a change in control of the Company of a nature that is required,
               pursuant to the Securities Exchange Act of 1934 (the "1934 Act"),
               to be reported in response to Item 1(a) of a Current Report on
               Form 8-K or Item 6(e) of Schedule 14A under the 1934 Act (in each
               case under this Agreement, references to provisions of the 1934
               Act and the rules and regulations promulgated thereunder being
               understood to refer to such law, rules and regulations as the
               same are in effect on April 1, 1998; or

          (2)  the acquisition of "beneficial Ownership" (as defined in Rule
               13d-3 under the 1934 Act) of the Company's securities comprising
               25% or more of the combined voting power of the Company's
               outstanding securities by any "person" (as that term is used in
               Section 13(d) and 14(d)(2) of the 1934 Act and the rules and
               regulations promulgated thereunder, but not including any trustee
               or fiduciary acting in that capacity for an employee benefit plan
               sponsored by the Company) and such person's "affiliates" and
               "associates" (as those terms are defined under the 1934 Act), but
               excluding any ownership by the Executive and his affiliates and
               associates; or

          (3)  the closing of a sale of all or substantially all of the assets
               of the Company;

          (4)  the Company's adoption of a plan of dissolution or liquidation;
               or

          (5)  the closing of a merger or consolidation involving the Company in
               which the Company is not the surviving corporation or if,
               immediately following such merger or consolidation, less than
               seventy-five percent (75%) of the surviving corporation's
               outstanding voting stock is held or is anticipated to be held by
               persons who are stockholders of the Company immediately prior to
               such merger or consolidation.

     (iii) If an event constituting Good Reason occurs, the Executive shall have
the right, exercisable for a period of one year thereafter by delivering a
written statement to that effect to the Company, to immediately terminate this
Agreement and upon such a determination the Executive shall have the right to
receive and the Company shall be obligated to pay to Executive in cash a lump
sum payment in an amount equal to the sum of (1) three times (a) the Base Salary
then in effect, plus (B) the highest annual bonus amount received by Executive
during the preceding three years or the minimum amount of any similar bonus or
incentive plans or programs then in effect if greater than the foregoing in
respect to the fiscal year during which the Executive's termination Without Good
Cause occurs plus (C) any other cash or other bonus compensation earned prior to


the date of such termination pursuant to the terms of all incentive compensation
plans then in effect other than any such plan relating to annual incentive cash
bonuses or any similar bonus or incentive plans or programs then in effect; and
(2) the Gross Up (the sum of the foregoing amounts other than the Gross Up being
referred to as the "Good Reason Termination Payment"). If the Executive fails to
exercise his rights under this Section 7.4(iii) within one year following an
event constituting Good Reason, such rights shall expire and be of no further
force or effect.

     7.5 Intentions Regarding Certain Stock and Benefit Plans. Except as
otherwise provided herein, upon any termination of the Executive's employment
Without Good Cause or upon the exercise by the Executive of his rights to
terminate his employment for Good Reason, it is the intention of the parties
that any and all vesting or performance requirements or conditions affecting any
outstanding restricted stock, performance stock, stock option, stock
appreciation right, bonus, award, right, grant or any other incentive
compensation under the Mesa Air Group Employee Stock Option Plan or any other
similar incentive plan, under this Agreement, or otherwise received, shall be
deemed to be fully satisfied and any risk of forfeiture with respect thereto
shall be deemed to have lapsed.

     7.6 Certain Rights Mutually Exclusive. The provisions of Section 7.3 and
Section 7.4 are mutually exclusive, provided, however, that if within one year
following commencement of an 7.4 payout there shall be a Change of Control as
defined in Section 7.4(ii), then the Executive shall be entitled to the amount
payable to the Executive under Section 7.4(iii) reduced by the amount that the
Executive has received under Section 7.3 up to the date of the Change in
Control. The triggering of the lump sum payment requirement of Section 7.4 shall
cause the provisions of Section 7.3 to become inoperative.

     8. DISCLOSURE

     The Executive agrees that during and after the term of the Executive's
employment by the Company, the Executive will disclose and disclose only to the
Company all ideas, methods, plans, developments or improvements known by him
which relate directly or indirectly to the business of the Company, whether
acquired by the Executive before or during the Executive's employment by the
Company. Nothing in this Section 8 shall be construed as requiring any such
communication where the idea, plan, method or development is lawfully protected
from disclosure as a trade secret of a third party or by any other lawful
prohibition against such communication.

     9. CONFIDENTIALITY

     The Executive agrees to keep in strict secrecy and confidence any and all
information the Executive assimilates or to which the Executive has access
during the Executive's employment by the Company and which has not been publicly
disclosed and is not a matter of common knowledge in the fields of work of the
Company, including but not limited to information regarding the Company's trade
secrets, business plans,


                                      -8-



marketing plans or programs, any non-public financial information, including
forecasts, statistics relating to routes and markets, contracts, customers,
compensation arrangements and business opportunities (collectively, the
"Confidential Information"). The Executive agrees that both during and after the
term of the Executive's employment by the Company, the Executive will not,
without the prior written consent of the Company, disclose any Confidential
Information to any third person, partnership, joint venture, company,
corporation or other organization. The foregoing covenants shall not be breached
to the extent that any such Confidential Information becomes a matter of general
knowledge other than through a breach by a person with an obligation to the
Company to maintain such confidentiality (and the Executive knows that such
person had an obligation to keep such information confidential), including but
not limited to the Executive's obligation to the Company under this Section 9.

     10. SPECIFIC PERFORMANCE

     The Executive agrees that damages at law will be an insufficient remedy to
the Company if the Executive violates the terms of Section 8 or Section 9 of
this Agreement and that the Company would suffer irreparable damage as a result
of such violation. Accordingly, it is agreed that the Company shall be entitled,
upon application to a court of competent jurisdiction, to obtain injunctive
relief to enforce the provisions of such Sections, which injunctive relief shall
be in addition to any other rights or remedies available to the Company.

     11. PAYMENT OF EXCISE TAXES

     11.1 Payment of Excise Taxes. If the Executive is to receive any (1) Good
Reason Termination Payment under Section 7.4 of this Agreement, (2) any benefit
or payment under Section 6 as a result of or following the death or Permanent
Disability of the Executive, (3) any benefit or payment under Section 7.3 as a
result of or following any termination of employment hereunder Without Good
Cause, (4) any benefit or payment under the Plans as a result of a Change in
Control, following the death or Permanent Disability of the Executive or
following the termination of employment hereunder Without Good Cause (such
sections being referred to as the "Covered Sections" and the benefits and
payments to be received thereunder being referred to as the "Covered Payments"),
the Executive shall be entitled to receive the amount described below to the
extent applicable: If any Covered Payment(s) under any of the Covered Sections
or by the Company under another plan or agreement (collectively, the "Payments")
are subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986 (as amended from time to time, the "Code"), or any successor or
similar provision of the Code (the "Excise Tax"), the Company shall pay the
Executive an additional cash amount (the "Gross Up") such that the net amount
retained by the Executive after deduction of any Excise Tax on the Payments and
the federal income tax and Excise Tax on any amounts paid under this Section 11
shall be equal to the Payments. The Gross-Up shall not include the amount of
state or federal income tax owed by the Executive on the amount of the Payments
excluding any state or federal income tax on the Gross-Up.


                                      -9-



     11.2 Certain Adjustment Payments. For purposes of determining the Gross Up,
the Executive shall be deemed to pay the federal income tax at the highest
marginal rate of taxation (currently 39.6%) in the calendar year in which the
payment to which the Gross Up applies is to be made. The determination of
whether such Excise Tax is payable and the amount thereof shall be made upon the
opinion of tax counsel selected by the Company and reasonably acceptable to the
Executive. The Gross Up, if any, that is due as a result of such determination
shall be paid to the Executive in cash in a lump sum within thirty (30) days of
such computation. If such opinion is not finally accepted by the Internal
Revenue Service upon audit or otherwise, then appropriate adjustments shall be
computed (without interest but with Gross Up, if applicable) by such tax counsel
based upon the final amount of the Excise Tax so determined; any additional
amount due the Executive as a result of such adjustment shall be paid to the
Executive by his or her Company in cash in a lump sum within thirty (30) days of
such computation, or any amount due the Executive's Company as a result of such
adjustment shall be paid to the Company by the Executive in cash in a lump sum
within thirty (30) days of such computation.

     12. MISCELLANEOUS

     12.1 Waiver of Breach. The waiver by either party to this Agreement of a
breach of any of the provisions of this Agreement by the other party shall not
be construed as a waiver of any subsequent breach by such other party.

     12.2 Compliance With Other Agreements. The Executive represents and
warrants that the execution of this Agreement by him and the Executive's
performance of the Executive's obligations hereunder will not conflict with,
result in the breach of any provision of or the termination of or constitute a
default under any Agreement to which the Executive is a party or by which the
Executive is or may be bound.

     12.3 Binding Effect Assignment. The rights and obligations of the Company
under this Agreement shall insure to the benefit of and shall be binding upon
the successors and assigns of the Company. This Agreement is a personal
employment contract and the rights, obligations and interests of the Executive
hereunder may not be sold, assigned, transferred, pledged or hypothecated.

     12.4 Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.

     12.5 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.


                                      -10-



     12.6 No Duty to Mitigate. The Executive shall be under no duty to mitigate
any loss of income as result of the termination of his employment hereunder and
any payments due the Executive upon termination of employment shall not be
reduced in respect to any other employment compensation received by the
Executive following such termination.

     12.7 Arizona Law. This Agreement shall be construed pursuant to and
governed by the substantive laws of the State of Arizona (except that any
provision of Nevada law shall not apply if the law of a state or jurisdiction
other than Arizona would otherwise apply).

     12.8 Severability. Any provision of this Agreement which is determined by a
court of competent jurisdiction to be prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction. In any
such case, such determination shall not affect any other provision of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect. In any provision or term of this Agreement is susceptible to
two or more constructions or interpretations, one or more of which would render
the provision or term void or unenforceable, the parties agree that a
construction or interpretation which renders the term or provision valid shall
be favored.

     12.9 Deduction for Tax Purposes. The Company's obligations to make payments
under this Agreement are independent of whether any or all of such payments are
deductible expenses of the company for federal income tax purposes.

     12.10 Enforcement. If, within ten (10) days after demand to comply with the
obligations of one of the parties to this Agreement served in writing on the
other, compliance or reasonable assurance of compliance is not forthcoming, and
the party demanding compliance engages the services of an attorney to enforce
rights under this Agreement, the prevailing party in any action shall be
entitled to recover all reasonable costs and expenses of enforcement (including
reasonable attorneys' fees and reasonable expenses during investigation, before
and at trial and in appellate proceedings if litigation ensues), directly or
indirectly resulting from or arising out of a breach by the other party of their
respective obligations hereunder. The parties' costs of enforcing this Agreement
shall include prejudgment interest. Additionally, if any party incurs any
out-of-pocket expenses in connection with the enforcement of this Agreement, all
such amounts shall accrue interest at ten percent (10%) per annum (or such lower
rate as may be required to avoid any limit imposed by applicable law) commencing
thirty (30) days after any such expenses are incurred.

     12.11 Notices. All notices which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted if transmitted by telecopy or
similar electronic transmission method; one working day after it is sent, if
sent by recognized


                                      -11-



expedited delivery service; and three days after it is sent, if mailed, first
class mail, certified mail, return receipt requested, with postage prepaid. In
each case notice shall be sent to:

         To the Company   c/o Mesa Airlines, Inc.
                          410 North 44th Street, Ste 700
                          Phoenix, AZ 85008
                          Attn: Chief Executive Officer
                          Telephone: (602) 685-4000

     To the Executive at the Executive's last known address, or to such other
address as either party may specify by written notice to the other.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.

                                        MESA AIR GROUP, INC.


                                        By: /s/
                                            ------------------------------------
                                            Michael Lotz, President       (Date)


                                        By: /s/
                                            ------------------------------------
                                            Brian S. Gillman              (Date)


                                      -12-

EX-10.36

                                                                   EXHIBIT 10.36

                                             * TEXT OMITTED AND FILED SEPARATELY
                                                CONFIDENTIAL TREATMENT REQUESTED
                                            UNDER 17C.F.R. SECTION 200.80(B)(4),
                                                            200.83 AND 240.24B-2

                              LEASE AMENDMENT FIVE

                                                                CMD 177 A (8/98)

                     (EXTENSION AND EXPANSION/CO-TERMINOUS)

     THIS LEASE AMENDMENT FIVE ("Amendment") is made and entered into as of the
11th day of October, 2002 by and between CMD REALTY INVESTMENT FUND IV, L.P. an
Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a Nevada
corporation ("Tenant").

     A. Landlord and Tenant are the current parties to that certain lease
("Original Lease") dated October 16, 1998, for premises currently known as Suite
700 (the "Premises"; sometimes referred to herein as the "Original Premises") in
the building (the "Building") known as Three Gateway, located at 410 N. 44th
Street, Phoenix, Arizona (the "Property"), which lease has heretofore been
amended by documents described and dated as follows: First Amendment to Lease
dated March 9. 1999, Second Amendment to Lease dated November 8, 1999, Letter
Agreement dated May 10, 2000, Lease Amendment Three dated November 7, 2000,
Lease Amendment Four dated May 15, 2001, Lease Term Adjustment Confirmation
dated January 3, 2001, Letter from Mesa Air dated May 30, 2001 and Parking
Letter dated March 21, 2002 (collectively, and as amended herein, the "Lease").

     B. Tenant has requested that additional space in the Property be added to
the Premises, and that the term of the Lease be extended, and Landlord is
willing to grant the same, all on the terms and conditions hereinafter set
forth.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the parties do
hereby agree as follows:

     1. TERM EXTENSION. The term of the Lease is hereby modified such that the
current term will expire and a new extended term ("Extended Term") will commence
on September 1, 2002 (the "Extension Date") and continue until August 31, 2012
(the "New Expiration Date"), unless sooner terminated in accordance with the
terms of the Lease. Based on a recent re-measurement of the Building, the size
of the Original Premises shall, as of the Extension Date, be deemed to be 21,172
rentable square feet, the size of the Property shall be deemed to be 221,409
rentable square feet and Tenant's share with respect to the Original Premises
shall be deemed to be nine and 56/100 percent (9.56%).

     2. ADDITIONAL PREMISES. The space known as Suites 1120 and 1140
(collectively, the "Additional Premises"), the approximate location of which is
shown on Exhibit A hereto, and which shall be deemed to contain a total of 5,152
square feet of rentable area for purposes hereof, shall be added to and become a
part of the Premises, commencing on July 15, 2005 or such earlier date as the
Novellus Lease may be terminated as further described in Section 3 below
("Additional Premises Commencement Date"), and continuing co-terminously with
the New Expiration Date, as the same may be extended from time to time, subject
to the terms and



conditions set forth hereinafter.

     3. NOVELLUS SUBLEASE. The parties acknowledge and agree that: (i) Tenant is
subleasing the Additional Premises pursuant to a Sublease dated 10/15/02,
("Novellus Sublease") from Novellus Systems, Inc. ("Novellus"), that will
terminate on July 14, 2005 or such earlier date on which the lease between
Novellus and Landlord ("Novellus Lease") is terminated (as contemplated in the
Consent to Sublease dated 9/19/02 between Landlord, Tenant and Novellus), (ii)
the Additional Premises Commencement Date herein shall be advanced to such
earlier date on which the Sublease and Novellus Lease are terminated, and (iii)
in such event, the Base Rent for the Additional Premises shall be $[*] per month
through July 14, 2005. If the Additional Premises Commencement Date is advanced
to an earlier date under this Section due to an earlier termination of the
Novellus Lease, the New Expiration Date herein shall not be changed. Tenant
shall execute a confirmation of the Additional Premises Commencement Date as
adjusted herein in such form as Landlord may reasonably request; any failure to
respond within thirty (30) days after requested shall be deemed an acceptance of
the date set forth in Landlord's confirmation.

     Tenant acknowledges that Landlord may elect to invoice and require that
Tenant pay directly to Landlord all sub rentals under the Novellus Sublease and
that Novellus has consented to such direct payment under Paragraph 3(c) of the
Consent to Sublease.

     4. BASE RENT.

          a. Original Premises. The base or minimum monthly rent for the
Original Premises shall be as set forth in the following schedule:

                      Original Premises Base Rent Schedule



                                          Original Premises
                 Period                   Monthly Base Rent
                 ------                   -----------------
                                       
Extension Date - August 31,2004                  $[*]
September 1,2004 -  August  31,2005              $[*]
September 1, 2005 -  August 31, 2007             $[*]
September 1, 2007 -  August 31, 2009             $[*]
September 1, 2009 - New Expiration Date          $[*]


          b. Additional Premises. The base or minimum monthly rent for the
Additional Premises shall be as set forth in the following schedule:

                     Additional Premises Base Rent Schedule



                                          Additional Premises
                 Period                    Monthly Base Rent
                 ------                   -------------------
                                       
July 15, 2005 - August 31, 2005                   $[*]
September 1, 2005 - August 31, 2007               $[*]
September 1, 2007 - August 31, 2009               $[*]
September 1, 2009 - New Expiration Date           $[*]


     5. ADDITIONAL RENT; TENANT'S SHARE. As of the Extension Date with respect
to the Original Premises and as of the Additional Premises Commencement Date
with respect to the Additional Premises, the Expense Stop shall be the actual
Building operating costs for the



calendar year 2003. On the Additional Premises Commencement Date, all other
rentals or other charges based or computed on the square footage of the
Premises, including without limitation, real estate taxes, insurance costs,
operating or other expenses of the Property, shall be increased proportionately
to reflect the rentable square footage of the Additional Premises, such that
Tenant's share thereof shall be increased [*] percent ([*]%) with respect to the
Additional Premises, for a total of [*] percent ([*]%) with respect to the
entire Premises including the Additional Premises.

     6. SEPARATE OR COMBINED BILLINGS. The minimum or base rentals and all other
rentals and charges respecting the Additional Premises are sometimes herein
called the "Additional Premises Rent". Landlord may compute and bill the
Additional Premises Rent (or components thereof) separately or treat the
Additional Premises and Premises as one unit for computation and billing
purposes. In either event, any default respecting any separate billing shall be
a default with respect to the entire Premises and Lease.

     7. PRORATIONS. If the Extension Date or Additional Premises Commencement
Date occurs other than on the beginning of the applicable payment period under
the Lease, Tenant's obligations for base or minimum rentals, operating expenses
and real estate taxes and other such charges shall be prorated on a per diem
basis.

     8. PARKING. Commencing as of the Extension Date with respect to the
Original Premises and the Additional Premises Commencement Date with respect to
the Additional Premises, Tenant shall have the parking rights set forth in
Exhibit F attached hereto.

     9. SIGNAGE. During the Extended Term Tenant shall continue to have the
signage rights set forth in Section 21 of the Original Lease.

     10. OTHER TERMS; CERTAIN PROVISIONS DELETED. On the Extension Date with
respect to the Original Premises, and with respect to the Additional Premises on
the Additional Premises Commencement Date, all terms and conditions then or
thereafter in effect under the Lease shall apply, except as expressly provided
to the contrary herein. Without limiting the generality of the preceding
sentence, Sections 9, 10 and 11 of Lease Amendment Four and Sections 15 and 16
of Lease Amendment Three are incorporated herein by reference. However,
notwithstanding the foregoing to the contrary, this Amendment is intended to
supersede any rights of Tenant under the Lease to expand (except as set forth in
Exhibits D and E attached hereto), reduce or relocate the Premises, or extend or
renew the term of the Lease (except as set forth in Exhibit C attached hereto),
or terminate the Lease early, and all such provisions are hereby deleted.

     11. CONDITION OF ORIGINAL PREMISES; ALLOWANCE. Tenant has been occupying
the Original Premises, and agrees to accept the same "AS IS" without any
agreements, representations, understandings or obligations on the part of
Landlord to perform or pay for any alterations, repairs or improvements, except
that Landlord shall provide an allowance ("Allowance") as provided in Section
1.b of Exhibit B towards the "Cost of the Work" for permanent leasehold
improvements ("Work") that Tenant may wish to perform in the Original Premises
in accordance with the Work Letter attached hereto as Exhibit B. There shall be
no postponement of the Extension Date or abatement of Rent as a result of any
such Work under any circumstances.

     12. CONDITION OF ADDITIONAL PREMISES. Tenant is occupying the Additional
Premises pursuant to the Novellus Sublease and Consent to Sublease referred to
in Section 3 above, and has inspected, or had an opportunity to inspect, the
Additional Premises (and portions of the Property, Systems and Equipment
providing access to or serving the Additional Premises), and



agrees to accept the same "as is" on the Additional Premises Commencement Date
without any agreements, representations, understandings or obligations on the
part of Landlord to perform any alterations, repairs or improvements.

     13. ALLOWANCE FOR ADDITIONAL PREMISES. Notwithstanding Section 12 to the
contrary, Landlord shall provide an allowance ("Allowance") as provided in
Section 1.b of Exhibit B to be used towards reasonable, direct out-of-pocket
costs of designing and performing permanent leasehold improvements in the
Additional Premises during the first twelve (12) months of the term of the
Novellus Sublease. Tenant shall engage its own designers and contractors, and
Landlord shall reimburse Tenant based on Tenant's submission of a customary
tenant's affidavit respecting the work, invoices, paid receipts and other
reasonable evidence of payment, and the submission of customary architect's
certificates, lien waivers and affidavits of payment, all reasonably
satisfactory to Landlord, all as further provided in Exhibit B. Any unused
portion of the Allowance shall belong to Landlord. Such work shall be subject to
Exhibit B and the applicable provisions of the Novellus Sublease and Consent to
Sublease, including without limitation obtaining the consent of Novellus and
Landlord to all alterations to the Additional Premises, which consent shall not
be unreasonably withheld. Any personal property, trade fixtures or equipment,
including, but not limited to, modular or other furniture, and cabling or other
items for communications or computer systems, whether or not shown on any plan
approved by Landlord, shall be provided by Tenant, at Tenant's sole cost, except
as otherwise provided in Exhibit B with respect to cabling.

     14. REAL ESTATE BROKERS. Tenant represents and warrants that Tenant has not
dealt with any broker, agent or finder in connection with this Amendment except
for Cushman and Wakefield of Arizona, Inc., and agrees to indemnify and hold
Landlord, and its employees, agents and affiliates harmless from all damages,
judgments, liabilities and expenses (including reasonable attorneys' fees)
arising from any claims or demands of any other broker, agent or finder with
whom Tenant has dealt for any commission or fee alleged to be due in connection
with this Amendment.

     15. OFFER. The submission and negotiation of this Amendment shall not be
deemed an offer to enter the same by Landlord. Tenant's execution of this
Amendment constitutes a firm offer to enter the same which may not be withdrawn
for a period of thirty (30) days after delivery to Landlord. During such period,
Landlord may proceed in reliance thereon and permit Tenant to enter the
Additional Premises, but such acts shall not be deemed an acceptance. Such
acceptance shall be evidenced only by Landlord signing and delivering this
Amendment to Tenant.



     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.

                            LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL]
                                      an Illinois limited partnership

                                      By: CMD/Fund IV GP Investments, L.P., an
                                          Illinois limited partnership, its
                                          general partner

                                      By: CMD REIM IV, Inc., an Illinois
                                          corporation, its general partner


                                      By: /s/
                                          --------------------------------------
                                          Lee Moreland, Vice President


                            TENANT:   MESA AIR GROUP, INC. [SEAL]
                                      A Nevada corporation


                                      By: /s/
                                          --------------------------------------
                                      Name: Mike Lotz
                                      Its; President & COO

                                   CERTIFICATE

     I, ______________________, as ______________________________________of the
aforesaid Tenant, hereby certify that the individual(s) executing the foregoing
Lease on behalf of Tenant was/were duly authorized to act in his/their
capacities as set forth above, and his/their action(s) are the action of Tenant.


(Corporate Seal)
                                      ------------------------------------------



                                    EXHIBIT A
                     FLOOR PLATE SHOWING ADDITIONAL PREMISES

                                  (FLOOR PLAN)



                                    EXHIBIT B

                                                                CMD 108G (12/00)
                                                                   MODERATE WORK
                                                              TENANT PERFORMANCE

                                   WORK LETTER

     This Exhibit is a "Work Letter" to the foregoing document (referred to
herein for convenience as the "Lease Document"). All references to "Premises"
hereunder shall mean either the Original Premises and/or the Additional
Premises, it being understood and agreed that Tenant may allocate use of the
Allowance between the Original Premises and/or the Additional Premises as Tenant
shall determine in its reasonable discretion.

     I.   Basic Arrangement

     a. Tenant to Arrange for Work. Tenant desires to engage one or more
contractors to perform certain improvements (the "Work," as further defined in
Section VII) to or for the Premises under the Lease Document. Tenant shall
arrange for the Work to be planned and performed strictly in accordance with the
provisions of this Exhibit and applicable provisions of the Lease Document.
Tenant shall pay when due all costs for or related to the Plans and Work
whatsoever ("Costs of the Work"), and Landlord shall reimburse certain such
costs up to the Allowance, as further described below.

     b. Allowance and, Landlord's Costs and Administrative Fee. Landlord shall
provide up to $[*] (the "Allowance") towards the Costs of the Work relating to
permanent leasehold improvements (provided the portion of the Allowance
available for the Plans shall be limited to ten percent (10%), and shall exclude
planning for furniture, fixtures and equipment). Tenant shall pay Landlord's
out-of-pocket costs, if any, for architectural and engineering review of the
Plans and any Engineering Report, and all revisions thereof, and an
administrative fee ("Administrative Fee") equal to $[*]of the other Costs of the
Work for Landlord's time in reviewing the Plans and Work and coordinating with
Tenant's Contractors. Landlord may, if feasible, also charge Tenant for any
extra costs reasonably incurred by Landlord as a result of the Work, including
but not limited to, any additional after-hours security for the Property common
areas due to after-hours construction activity, and costs of any after-hours
HVAC consumed in or for the Premises during the Work (based on actual usage as
determined by the Building's energy management system); provided, however, that
Tenant's contractors shall not be charged for parking (provided that parking by
such contractors shall not exceed ten (10) spaces), freight elevator access or
loading dock access. The foregoing items may be charged against the Allowance,
and if the Allowance shall be insufficient, Tenant shall pay Landlord for such
amounts as additional Rent within thirty (30) days after billing. If all or any
portion of the Allowance shall not be used for the purposes permitted herein
within twelve (12) months after the Commencement Date set forth in the Lease
Document, Landlord shall be entitled to the savings and Tenant shall receive no
credit therefor; provided that Landlord shall use up to $[*] of any remaining
portion of the Allowance that has not been used for the purposes permitted above
by the time required herein, to reimburse Tenant's reasonable, direct, out-of
pocket costs incurred for having its telecommunications vendor install and
connect telecommunications cables in the Premises. Landlord shall make such
reimbursement to Tenant, out of any such remaining portion of the Allowance,
within thirty (30) days after the following events have occurred: (x) Tenant
shall have provided Landlord with paid invoices and other evidence of such costs
reasonably satisfactory to Landlord (including lien waivers if applicable),
within twelve (12) months days after the Commencement Date has occurred, and (y)
Tenant shall not be in Default. Notwithstanding anything to the contrary



contained herein, any personal property, trade fixtures or business equipment,
including, but not limited to, modular or other furniture, and cabling for
communications or computer systems (except as otherwise provided above with
respect to cabling), whether or not shown on the Approved Plans, shall be
provided by Tenant, at Tenant's sole cost, and the Allowance shall not be used
for such purposes. Any cabling remaining in the Premises upon the expiration or
earlier termination of the Lease shall become the property of Landlord (without
payment by Landlord). All disconnections made by Tenant of any cabling shall be
made properly such that, among other things, such cabling is reusable.

     c. Funding and Disbursement. Landlord shall fund and disburse the Allowance
within thirty (30) days after the Work has been completed in accordance with the
Approved Plans in accordance with the provisions hereof, and Tenant has
submitted all invoices, architect's certificates, a Tenant's affidavit, complete
unconditional lien waivers and affidavits of payment by all Tenant's
Contractors, and such other evidence as Landlord may reasonably require that the
cost of the Work has been paid and that no architect's, mechanic's,
materialmen's or other such liens have been or may be filed against the Property
or the Premises arising out of the design or performance of such Work. Landlord
may issue checks to fund the Allowance jointly or separately to Tenant, its
general contractor, and any other of Tenant's Contractors.

     II. Planninq. The term "Plans" herein means a "Space Plan," as the same may
be superseded by any "Construction Drawings," prepared and approved pursuant to
this Section (and as such terms are further defined in Section VII). In the
event of any inconsistency between the Space Plan and Construction Drawings, or
revisions thereto, as modified to obtain permits, the latest such item approved
by Landlord shall control. The term "Approved Plans" herein means the Plans (and
any revisions thereof) as approved by Landlord in writing in accordance with
this Section.

     a. Tenant's Planners. Tenant shall engage a qualified, licensed architect
("Architect"), subject to Landlord's prior written approval. To the extent
required by Landlord or appropriate in connection with preparing the Plans,
Tenant shall also engage one or more qualified, licensed engineering firms, e.g.
mechanical, electrical, plumbing, structural and/or HVAC ("Engineers"), all of
whom shall be designated or approved by Landlord in writing. The term "Tenant's
Planners" herein shall refer collectively or individually, as the context
requires, to the Architect or Engineers engaged by Tenant, and approved or
designated by Landlord in writing in accordance with this Exhibit.

     b. Space Plan, Construction Drawings and Engineering Report. Tenant shall
promptly hereafter cause the Architect to submit three (3) sets of a "Space
Plan" (as defined in Section VII) to Landlord for approval. Landlord shall,
within three (3) working days after receipt thereof, either approve said Space
Plan, or disapprove the same advising Tenant of the reasons for such
disapproval; Landlord agrees to not unreasonably withhold its approval, as
further provided in subsection c below. In the event Landlord disapproves said
Space Plan, Tenant shall modify the same, taking into account the reasons given
by Landlord for said disapproval, and shall submit three (3) sets of the revised
Space Plan to Landlord. The parties shall continue such process in the same time
frames until Landlord grants approval. To the extent required by Landlord or the
nature of the Work and as further described in Section VII, Tenant shall, after
Landlord's approval of the Space Plan: (i) cause the Architect to submit to
Landlord for approval "Construction Drawings" (including, as further described
in Section VII below, sealed mechanical, electrical and plumbing plans prepared
by a qualified, licensed Engineer approved or designated by Landlord), and (ii)
cause the Engineers to submit for Landlord's approval a report (the "Engineering
Report") indicating any special heating, cooling, ventilation, electrical, heavy
load or other special or unusual requirements of Tenant, including calculations.
Landlord



shall, within five (5) working days after receipt thereof (or such longer time
as may be reasonably required in order to obtain any additional architectural,
engineering or HVAC report or due to other special or unusual features of the
Work or Plans), either approve the Construction Drawings and Engineering Report,
or disapprove the same advising Tenant of the reasons for disapproval (and
Landlord's agrees that any such disapproval shall be on a reasonable basis, as
further provided in subsection c below). If Landlord disapproves of the
Construction Drawings or Engineering Report, Tenant shall modify and submit
revised Construction Drawings, and a revised Engineering Report, taking into
account the reasons given by Landlord for disapproval. The parties shall
continue such process in the same time frames until Landlord grants approval.
Construction Drawings shall include a usable computer aided design (CAD) file.

     c. Tenant's Planning Responsibility and Landlord's Approval. Tenant has
sole responsibility to provide all information concerning its space requirements
to Tenant's Planners, to cause Tenant's Planners to prepare the Plans, and to
obtain Landlord's final approval thereof (including all revisions). Tenant and
Tenant's Planners shall perform independent verifications of all field
conditions, dimensions and other such matters), and Landlord shall have no
liability for any errors, omissions or other deficiencies therein. Landlord
shall not unreasonably withhold approval of any Plans or Engineering Report
submitted hereunder, if they provide for a customary office layout, with
finishes and materials generally conforming to building standard finishes and
materials (or upgrades) currently being used by Landlord at the Property, are
compatible with the Property's shell and core construction, and if no material
modifications will be required for the Property's Systems and Equipment (as
hereinafter defined), and will not require any structural modifications to the
Property, whether required by heavy loads or otherwise, and will not create any
potentially dangerous conditions, potentially violate any codes or other
governmental requirements, potentially interfere with any other occupant's use
of its premises, or potentially increase the cost of operating the Property.
"Systems and Equipment" shall mean any plant, machinery, transformers, duct
work, cable, wires, and other equipment, facilities, and systems designed to
supply light, heat, ventilation, air conditioning and humidity or any other
services or utilities, or comprising or serving as any component or portion of
the electrical, gas, steam, plumbing, sprinkler. communications, alarm,
security, or fire/life/safety systems or equipment, or any elevators, escalators
or other mechanical, electrical, electronic, computer or other systems or
equipment for the Property, except to the extent that any of the same serves
Tenant or any other tenant exclusively.

     d. Governmental Approval of Plans; Building Permits. Tenant shall cause
Tenant's Contractors (as defined in Section III) to apply for any building
permits, inspections and occupancy certificates required for or in connection
with the Work. If the Plans must be revised in order to obtain such building
permits, Tenant shall promptly notify Landlord, promptly arrange for the Plans
to be revised to satisfy the building permit requirements, and shall submit the
revised Plans to Landlord for approval as a Change Order under Paragraph e
below. Landlord shall have no obligation to apply for any zoning, parking or
sign code amendments, approvals, permits or variances, or any other governmental
approval, permit or action. If any such other matters are required, Tenant shall
promptly seek to satisfy such requirements (if Landlord first approves in
writing), or shall revise the Plans to eliminate such requirements and submit
such revised Plans to Landlord for approval in the manner described above.

     e. Changes After Plans Are Approved. If Tenant shall desire, or any
governmental body shall require, any changes, alterations, or additions to the
Approved Plans, Tenant shall submit a detailed written request or revised Plans
(the "Chance Order") to Landlord for approval. If reasonable and practicable and
generally consistent with the Plans theretofore approved, Landlord shall not
unreasonably withhold approval. All costs in connection therewith, including,
without limitation, construction costs, permit fees, and any additional plans,
drawings and



engineering reports or other studies or tests, or revisions of such existing
items, shall be included in the Costs of the Work under Section I. In the event
that the Premises are not constructed in accordance with the Approved Plans,
Tenant shall not be permitted to occupy the Premises until the Premises
reasonably comply in all respects therewith; in such case, the Rent shall
nevertheless commence to accrue and be payable as otherwise provided in the
Lease Document.

     III. Contractors and Contracts. Tenant shall engage to perform the Work
such contractors, subcontractors and suppliers ("Tenant's Contractors") as
Landlord customarily engages or recommends for use at the Property; provided,
Tenant may substitute other licensed, bonded, reputable and qualified parties
capable of performing quality workmanship. Such substitutions may be made only
with Landlord's prior written approval, which shall not be unreasonably withheld
or delayed. Such approval shall be granted, granted subject to specified
conditions, or denied within three (3) working days after Landlord receives from
Tenant a written request for such substitution, containing a reasonable
description of the proposed party's background, finances, references,
qualifications, and other such information as Landlord may request. For Work
involving any mechanical, electrical, plumbing, structural, demolition or HVAC
matters, or any Work required to be performed outside the Premises or involving
Tenant's entrance, Landlord may require that Tenant select Tenant's Contractors
from a list of such contractors (provided that Landlord's gives Tenant at least
3 choices for each trade) or else, for any trade as to which Landlord is unable
to give Tenant a choice of 3 Contractors, Tenant may choose its own Contractor
for such trade, subject to Landlord's approval which shall not be unreasonably
withheld or delayed. All contracts shall contain insurance, indemnity and other
provisions consistent herewith. Each contract and subcontract shall guarantee to
Tenant and Landlord the replacement or repair, without additional charge, of all
defects or deficiencies in accordance with its contract within one (1) year
after completion of such work or the correction thereof. The correction of such
work shall include, without additional charge, all additional expenses and
damages in connection with such removal or replacement of all or any part of
Tenant's Work, and/or the Property and/or common areas, or work which may be
damaged or disturbed thereby. Tenant shall give Landlord copies of all contracts
and subcontracts promptly after the same are entered.

     IV. Insurance and Indemnity. In addition to any insurance which may be
required under the Lease Document, Tenant shall either secure, pay for and
maintain, or cause Tenant's Contractors to secure, pay for and maintain during
the continuance of construction and fixturing work within the Property or
Premises, reasonable amounts of customary and appropriate insurance with
responsible, licensed insurers, for all insurable risks and liabilities relating
to the Work, including commercial general liability with contractual liability
coverage ("CGL"), and full replacement value property damage (including
installation floater coverage). The CGL policy shall be endorsed to include, as
additional insured parties, Landlord, the property management company for the
Property, and Landlord's agents, partners, affiliates. All policies shall
include a waiver of subrogation in favor of the parties required to be
additional insureds hereunder. Such insurance shall be primary to any insurance
carried independently by said additional insured parties (which shall be excess
and non-contributory). Certificates for such insurance, and the endorsements
required hereunder, shall be delivered to Landlord before construction is
commenced or any contractor's equipment or materials are moved onto the
Property. Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any decorations, fixtures, personal property, installations
or other improvements or items of work installed, constructed or brought upon
the Premises by or for Tenant or Tenant's Contractors, all of the same being at
Tenant's sole risk. In the event that during the course of Tenant's Work any
damage shall occur to the construction and improvements being made by Tenant,
then Tenant shall repair the same at Tenant's cost. Tenant hereby agrees to
protect, defend, indemnify and hold Landlord and its employees, agents, and
affiliates harmless from all liabilities, losses,



damages, claims, demands, and expenses (including attorneys' fees) arising out
of or relating to the Plans or Work.

     V. Performance of Work

     a. Conditions to Commencing Work. Before commencing any Work, Tenant shall:
(i) obtain Landlord's written approval of Tenant's Planners and the Plans, as
described in Section II, (ii) obtain and post all necessary governmental
approvals and permits as described in Section II, and provide copies thereof to
Landlord, (iii) obtain Landlord's written approval of Tenant's Contractors, and
provide Landlord with copies of the contracts as described in Section III, and
(iv) provide evidence of insurance to Landlord as described in Section IV.

     b. Compliance and Standards. Tenant shall cause the Work to comply in all
respects with the following: (i) the Approved Plans, (ii) the Property Code of
the City and State in which the Property is located and Federal, State, County,
City or other laws, codes, ordinances, rules, regulations and guidance, as each
may apply according to the rulings of the controlling public official, agent or
other such person, (iii) applicable standards of the National Board of Fire
Underwriters (or successor organization) and National Electrical Code, (iv)
applicable manufacturer's specifications, and (v) any work rules and regulations
as Landlord or its agent may have adopted for the Property, including any Rules
attached as an Exhibit to the Lease Document. Tenant shall use only new,
first-class materials in the Work, except where explicitly shown in the Approved
Plans. Tenant's Work shall be performed in a thoroughly safe, first-class and
workmanlike manner, and shall be in good and usable condition at the date of
completion. In case of inconsistency, the requirement with the highest standard
protecting or favoring Landlord shall govern.

     c. Property Operations, Dirt, Debris, Noise and Labor Harmony. Tenant and
Tenant's Contractors shall make all efforts and take all proper steps to assure
that all construction activities do not interfere with the operation of the
Property or with other occupants of the Property. Tenant's Work shall be
coordinated under Landlord's direction with any other work and other activities
being performed for or by other occupants in the Property so that Tenant's Work
will not interfere with or delay the completion of any other work or activity in
the Property. Construction equipment and materials are to be kept within the
Premises, and delivery and loading of equipment and materials shall be done at
such locations and at such time as Landlord shall direct so as not to burden the
construction or operation of the Property. Tenant's Contractors shall comply
with any work rules of the Property and Landlord's requirements respecting the
hours of availability of elevators and manner of handling materials, equipment
and debris. Demolition must be performed after 6:00 p.m. and on weekends, or as
otherwise required by Landlord or the work rules for the Property. Construction
which creates noise, odors or other matters that may bother other occupants may
be rescheduled by Landlord at Landlord's sole discretion. Delivery of materials,
equipment and removal of debris must be arranged to avoid any inconvenience or
annoyance to other occupants. The Work and all cleaning in the Premises must be
controlled to prevent dirt, dust or other matter from infiltrating into adjacent
occupant, common or mechanical areas. Tenant shall conduct its labor relations
and relations with Tenant's Planners and Contractors, employees, agents and
other such parties so as to avoid strikes, picketing, and boycotts of, on or
about the Premises or Property. If any employees of the foregoing parties
strike, or if picket lines or boycotts or other visible activities objectionable
to Landlord are established, conducted or carried out against Tenant or such
parties in or about the Premises or Property, Tenant shall immediately close the
Premises and remove or cause to be removed all such parties until the dispute
has been settled.

     d. Removal of Debris. Tenant's Contractors shall be required to remove from
the Premises and dispose of, at least once a day and more frequently as Landlord
may reasonably



direct, all debris and rubbish caused by or resulting from the Work, and shall
not place debris in the Property's waste containers. If required by Landlord,
Tenant shall sort and separate its waste and debris for recycling and/or
environmental law compliance purposes. Upon completion of Tenant's Work,
Tenant's Contractors shall remove all surplus materials, debris and rubbish of
whatever kind remaining within the Property which has been brought in or created
by Tenant's Contractors in the performance of Tenant's Work. If any of Tenant's
Contractors shall neglect, refuse or fail to remove any such debris, rubbish,
surplus material or temporary structures within 48 hours after notice to Tenant
from Landlord with respect thereto, Landlord may cause the same to be removed by
contract or otherwise as Landlord may determine expedient, and bill the cost
thereof to Tenant.

     e. Completion and General Requirements. Tenant shall take all actions
necessary to cause Tenant's Planners to prepare the Approved Plans, and to cause
Tenant's Contractors to obtain permits or other approvals, diligently commence
and prosecute the Work to completion, and obtain any inspections and occupancy
certificates for Tenant's occupancy of the Premises by the Commencement Date set
forth in the Lease Document. Any delays in the foregoing shall not serve to
abate or extend the time for the Commencement Date or commencement of Rent under
the Lease Document, except to the extent of one (1) day for each day that
Landlord delays approvals required hereunder beyond the times permitted herein
without good cause, provided substantial completion of the Work and Tenant's
ability to reasonably use the Premises by the Commencement Date (or by such
later date when Tenant would otherwise have substantially completed the Work) is
actually delayed thereby. Tenant shall impose on and enforce all applicable
terms of this Exhibit against Tenant's Planners and Tenant's Contractors. Tenant
shall notify Landlord upon completion of the Work (and record any notice of
completion contemplated by law). To the extent reasonably appropriate based on
the nature of the Work, Tenant shall provide Landlord with "as built" drawings
no later than thirty (30) days after completion of the Work.

     f. Landlord's Role and Rights. The parties acknowledge that neither
Landlord nor its managing agent is an architect or engineer, and that the Work
will be designed and performed by independent architects, engineers and Tenant's
Contractors engaged by Tenant. Landlord and its managing agent shall have no
responsibility for construction means, methods or techniques or safety
precautions in connection with the Work, and do not guarantee that the Plans or
Work will be free from errors, omissions or defects, and shall have no liability
therefor. Landlord's approval of Tenant's Plans and contracts, and Landlord's
designations, lists, recommendations or approvals concerning Tenant's Planners
and Contractors shall not be deemed a warranty as to the quality or adequacy
thereof or of the Plans or the Work, or the design thereof, or of its compliance
with laws, codes and other legal requirements. Tenant shall permit access to the
Premises, and inspection of the Work, by Landlord and Landlord's architects,
engineers, contractors and other representatives, at all times during the period
in which the Work is being planned, constructed and installed and following
completion of the Work. If Tenant fails to perform the Work as required herein
or the materials supplied fail to comply herewith or with the specifications
approved by Landlord, and Tenant fails to cure such failure within two (2)
business days after notice by Landlord, Landlord shall have the right, but not
the obligation, to order Tenant or any of Tenant's Contractors who violate the
requirements imposed on Tenant or Tenant's Contractors in performing the Work to
cease the Work and remove its equipment and employees from the Property.
Landlord shall have the right, but not the obligation, to perform, on behalf of
and for the account of Tenant, subject to reimbursement by Tenant, any work
required to cure or complete any Work which has violated this Exhibit or which
pertains to patching of the Work (and which Tenant has failed to cure within ten
(10) days after notice from Landlord), or involves Work outside the Premises, or
affects the base building core or structure



or Systems and Equipment for the Property.

     VI. HVAC Balancing, As a final part of the Work, Tenant shall cause its
contractor to perform air balancing tests and adjustments on all areas of the
Premises served by the air handling system that serves the areas in which the
Work is performed (including any original space and any additional space being
added to the Premises in connection herewith). Landlord shall not be responsible
for any disturbance or deficiency created in the air conditioning or other
mechanical, electrical or structural facilities within the Property or Premises
as a result of the Work. If such disturbances or deficiencies result, and
Tenant's contractor does not properly correct the same, Landlord reserves the
right, after fifteen (15) days notice to Tenant, to correct the same and restore
the services to Landlord's reasonable satisfaction, at Tenant's reasonable
expense.

     VII. Certain Definitions

     a. "Space Plan" herein means, to the extent required by the nature of the
Work, detailed plans (including any so-called "pricing plans"), including a
fully dimensioned floor plan and drawn to scale, showing: (i) demising walls,
interior walls and other partitions, including type of wall or partition and
height, and any demolition or relocation of walls, and details of space
occupancy and density, (ii) doors and other openings in such walls or
partitions, including type of door and hardware, (iii) electrical and computer
outlets, circuits and anticipated usage therefore, (iv) any special purpose
rooms, any sinks or other plumbing facilities, heavy items, and any other
special electrical, HVAC or other facilities or requirements, including all
special loading and related calculations, (v) any space planning considerations
to comply with fire or other codes or other governmental or legal requirements,
(vi) finish selections, and (vii) any other details or features requested by
Architect, Engineer or Landlord, or otherwise required, in order for the Space
Plan to serve as a basis for Landlord to approve the Work, and for Tenant to
contract and obtain permits for the Work, or for the Space Plan to serve as a
basis for preparing Construction Drawings.

     b. "Construction Drawings" herein means, to the extent required by the
nature of the Work, fully dimensioned architectural construction drawings and
specifications, and any required engineering drawings, specifications and
calculations (including mechanical, electrical, plumbing, structural,
air-conditioning, ventilation and heating), and shall include any applicable
items described above for the Space Plan, and any other details or features
requested by Architect, Engineer or Landlord in order for the Construction
Drawings to serve as a basis for Landlord to approve the Work, and for Tenant to
contract and obtain permits for the Work.

     c. "Work" herein means: (i) the improvements and items of work shown on the
final Approved Plans (including changes thereto), and (ii) any preparation or
other work required in connection therewith, including without limitation,
structural or mechanical work, additional HVAC equipment or sprinkler heads, or
modifications to any building mechanical, electrical, plumbing or other systems
and equipment or relocation of any existing sprinkler heads, either within or
outside the Premises required as a result of the layout, design, or construction
of the Work or in order to extend any mechanical distribution, fire protection
or other systems from existing points of distribution or connection, or in order
to obtain building permits for the work to be performed within the Premises
(unless Landlord requires that the Plans be revised to eliminate the necessity
for such work).

     VIII. Liens. Tenant shall pay all costs for the Plans and Work when due.
Tenant shall keep the Property, Premises and this Lease free from any
mechanic's, materialman's,



architect's, engineer's or similar liens or encumbrances, and any claims
therefor, or stop or violation notices, in connection with the Plans and Work.
Tenant shall give Landlord notice at least ten (10) days prior to the
commencement of any Work (or such additional time as may be necessary under
applicable Laws), to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Tenant shall remove any such claim,
lien or encumbrance, or stop or violation notices of record, by bond or
otherwise within thirty (30) days after notice by Landlord. If Tenant fails to
do so, Landlord may pay the amount (or any portion thereof) or take such other
action as Landlord deems necessary to remove such claim, lien or encumbrance, or
stop or violation notices, without being responsible for investigating the
validity thereof. The amount so paid and costs incurred by Landlord shall be
deemed additional Rent under the Lease Document payable upon demand, without
limitation as to other remedies available to Landlord.

     IX. Miscellaneous

     a. Interpretation; Original Lease. If this Work Letter is attached as an
Exhibit to an amendment to an existing lease ("Original Lease"), whether such
amendment adds space, relocates the Premises or makes any other modifications,
the term "Lease Document" herein shall refer to such amendment, or the Original
Lease as amended, as the context implies. By way of example, in such case,
references to the "Premises" and "Commencement Date" herein shall refer,
respectively, to such additional or relocated space and the effective date for
delivery thereof under such amendment, unless expressly provided to the contrary
herein. Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Lease Document.

     b. General Matters. This Exhibit is intended to supplement and be subject
to the provisions of the Lease Document, including, without limitation, those
provisions requiring that any modification or amendment be in writing and signed
by authorized representatives of both parties. This Exhibit shall not apply to
any additional space added to the Premises at any time, whether by any options
or rights under the Lease Document or otherwise, or to any portion of the
Premises in the event of a renewal or extension of the Term of the Lease
Document, whether by any options or rights under the Lease Document or
otherwise, unless expressly so provided in the Lease Document or any amendment
or supplement thereto. The Lease Document and this Exhibit are not intended to
create any third-party beneficiaries; without limiting the generality of the
foregoing, no Tenant Contractors or Tenant Planners shall have any legal or
beneficial interest in the Allowance. The rights granted in this Exhibit are
personal to Tenant as named in the Lease Document, and are intended to be
performed for such Tenant's occupancy of the Premises. Under no circumstance
whatsoever shall any assignee or subtenant have any rights under this Exhibit.
Any remaining obligations of Landlord under this Exhibit not theretofore
performed shall concurrently terminate and become null and void if Tenant
subleases or assigns the Lease Document with respect to all or any portion of
the Premises, or seeks or proposes to do so (or requests Landlord's consent to
do so), or if Tenant or any current or proposed affiliate thereof issues any
written statement indicating that Tenant will no longer move its business into,
or that Tenant will vacate and discontinue its business from, the Premises or
any material portion thereof. Any termination of Landlord's obligations under
this Exhibit pursuant to the foregoing provisions shall not serve to terminate
or modify any of Tenant's obligations under the Lease Document. In addition,
notwithstanding anything to the contrary contained herein, Landlord's
obligations under this Exhibit, including obligations to perform any work, or
provide any Allowance or rent credit, shall be subject to the condition that
Tenant shall be in compliance with the material terms of the Lease (including
all terms providing for the timely payment of rent), and shall not have
committed a violation under the Lease by the time that Landlord is required to
perform such work or provide such Allowance or rent credit.



                                    EXHIBIT C

                                                                 CMD 116B (1/02)
                                                                    MARKET RATES

                                EXTENSION OPTION

     1. OPTION TO EXTEND. Subject to the other provisions hereof, Landlord
hereby grants Tenant one option ("Extension Option") to extend the current Term
of the Lease for an additional period of five (5) consecutive years from the
expiration of the prior period ("Extension Period"), on the same terms and
conditions then in effect under this Lease immediately prior to the Extension
Period, except as modified by the "Market Rates, Terms and Conditions" further
described below, and Tenant shall have no further option to extend. Tenant may
exercise the Extension Option only by giving Landlord written notice thereof
("Tenant's Exercise Notice") no earlier than twelve (12) and no later than nine
(9) full calendar months prior to commencement of the subject Extension Period.
Tenant's Exercise Notice shall be unconditional and irrevocable (except as
expressly provided herein).

     2. MARKET RATES, TERMS AND CONDITIONS; DISAGREEMENT. Within thirty (30)
days after receiving Tenant's Exercise Notice, Landlord shall provide Tenant
with notice ("Landlord's Notice") of the Market Rates, Terms and Conditions. The
term "Market Rates, Terms and Conditions" herein shall mean Landlord's good
faith determination of the Base Rent and other terms and conditions that a
comparable, ready and willing landlord, and a comparable, ready and willing
tenant, would mutually accept on a negotiated arm's length basis for a lease
extension for the Premises for the subject Extension Period in the 44th Street
submarket, taking into account when the Extension Period will commence and
expire, the location, quality and age of the Building, the location, size,
configuration and use of the Premises, the method of determining rentable area,
that the Premises constitutes non-sublease, unencumbered, non-equity space, and
any other relevant term or provision in making such determination; provided,
that if the then current Market Rates, Terms and Conditions include leasehold
improvements or an allowance therefore or any other economic concessions or
incentives, then Landlord shall, at its option, either provide such items or
Landlord shall adjust the Base Rent to take into account any items which
Landlord has elected not to provide. If the Market Rates, Terms and Conditions
determined by Landlord are not acceptable to Tenant, then Tenant may, no later
than fifteen (15) days after Landlord's Notice, either: (a) revoke its exercise
of the Extension Option by notice ("Tenant Revocation Notice") to Landlord, in
which case the Extension Option and Tenant's exercise thereof shall thereupon be
null and void, or (b) leave Tenant's Exercise Notice irrevocably and
unconditionally in effect and provide notice ("Arbitration Request Notice") of
Tenant's desire to arbitrate in accordance with this Exhibit. If Tenant fails to
provide a Tenant Revocation Notice or Arbitration Request Notice within the time
required herein, then Tenant shall be deemed to have unconditionally and
irrevocably exercised the Extension Option and accepted the Market Rates, Terms
and Conditions in Landlord's Notice.

     3. ARBITRATION. If Tenant provides an Arbitration Request Notice within the
time required herein, each party shall within the next fifteen (15) days, at its
own cost and expense, give notice ("Arbitration Appointment Notice") to the
other party appointing a licensed commercial real estate broker with at least
seven (7) years of full-time experience leasing comparable office space in
comparable buildings in the same market area to determine the Base Rent
component ("Base Rent Component") of the Market Rates, Terms and Conditions,
including any fixed increases in such Base Rent Component, taking into account
the other provisions of this Exhibit, and the other components of the Market
Rates. Terms and Conditions contained in Landlord's Notice (such as whether such
Market Rates, Terms and Conditions include leasehold improvements or other
economic concessions, or a base year or stop level for Taxes or Expenses). If a
party does not appoint such a broker within such fifteen (15) day period, and so



fails for an additional fifteen (15) day period following further notice from
the other party requesting such appointment, and giving notice of the name of
its broker, the single broker appointed shall be the sole broker and shall
reasonably and in good faith determine the Base Rent Component. If the two
brokers are appointed by the parties as stated herein, they shall meet promptly
and attempt to determine the Base Rent Component. If they are unable to agree on
the Base Rent Component within fifteen (15) days after the second broker has
been appointed, they shall elect a third broker meeting the standards set forth
above, and who has not previously acted in any capacity for either party, within
fifteen (15) days thereafter. Each of the parties hereto shall bear one-half of
the cost of appointing the third broker and of paying the third broker's fee.
Within fifteen (15) days after the selection of the third broker, a majority of
the brokers shall determine the Base Rent Component. If a majority of the
brokers are unable to determine the Base Rent Component within such period, each
broker shall thereupon submit his final determination in writing, the three
determinations shall be added together and the total divided by three, and the
resulting quotient shall be the Base Rent Component, subject to the following
provisions. If the low or high determination are more than ten (10) percent
lower and/or higher than the middle determination, the low determination and/or
the high determination shall be disregarded. If only one determination is
disregarded, the remaining two determinations shall be added together and their
total divided by two, and the resulting quotient shall be the Base Rent
Component. If both the low determination and the high determination are
disregarded as provided herein, the middle determination shall be the Base Rent
Component. If, for any reason, the Base Rent Component has not been resolved by
the commencement of the Extension Period, Tenant shall commence paying Base
Rent, Taxes, Expenses and other sums in accordance with Landlord's Notice on the
commencement of the Extension Period, subject to retroactive and prospective
adjustment after the matter is resolved. An arbitration decision made in
accordance with this Exhibit shall be final and binding on the parties. Tenant
and the brokers shall be required to keep all matters pertaining to the
arbitration strictly confidential and shall be required to sign such
confidentiality agreements as Landlord reasonably requires.

     4. GENERAL MATTERS. If Tenant validly exercises the Extension Option,
Tenant shall execute an amendment ("Extension Amendment") to confirm the
extension of the Term, within fifteen (15) days after Landlord reasonably
prepares and provides the same to Tenant. The Extension Option herein shall, at
Landlord's election, be conditioned on the Lease being in full force and effect,
and Tenant not then being in default beyond any applicable cure period under the
Lease, at the time Tenant seeks to exercise the Extension Option, or at any time
thereafter and prior to commencement of the Extension Period. If Tenant shall
fail to properly and timely exercise the Extension Option, then the Extension
Option shall thereupon terminate. STRICT COMPLIANCE AND TIMELINESS IN GIVING
TENANT'S NOTICES AND SIGNING THE EXTENSION AMENDMENT HEREUNDER IS OF THE ESSENCE
OF THIS PROVISION. The rights granted in this Exhibit are personal to Tenant as
named in this Lease document. Under no circumstance whatsoever shall the
assignee under a complete or partial assignment of the Lease document, or a
subtenant under a sublease of the Premises, have any right to exercise the
rights of Tenant under this Exhibit. If Tenant shall sublease or assign the
Lease with respect to all or any portion of the Premises, then immediately upon
such sublease or assignment Tenant's rights under this Exhibit shall
concurrently terminate and become null and void.



                                    EXHIBIT D

                                                                 CMD 117C (1/02)
                                                                 VACANT/OCCUPIED
                                                                EXPANSION SPACES

                                 RIGHT OF OFFER

     1. RIGHT OF OFFER. Landlord hereby grants Tenant a right of offer ("Right
Of Offer") to lease all rentable space on the 4th (fourth) floor of the Property
that is not currently included in the Premises (collectively referred to herein
as the "Expansion Space"), all on and subject to the following provisions;
provided, this Right of Offer and Landlord's obligation to provide a "Landlord
Notice" shall be in effect commencing on the Extension Date.

     2. LANDLORD'S NOTICE OF EXPANSION TERMS. While this Right of Offer is in
effect, landlord shall notify Tenant in writing ("landlord's Notice"): (i) as to
any currently available portions of the Expansion Space, when Landlord enters or
intends to enter negotiations with a third party to lease the Expansion Space
(and landlord's good faith determination of whether negotiations have been
entered or are about to be entered shall be conclusive and binding upon the
parties), or (ii) as to any currently unavailable portions of the Expansion
Space, when such areas become available, or (iii), at Landlord's option, at any
time prior thereto or thereafter, but in any event prior to leasing the
Expansion Space to another party. Landlord's Notice shall set forth the terms
("Expansion Terms") on which landlord proposes to lease the Expansion Space to
Tenant, including, but not limited to, a date for the commencement of the lease
thereof ("Expansion Space Commencement Date"), and the other items as further
set forth below.

     a. Expansion Space Commencement Date Within First 180 Days. If the
Expansion Space Commencement Date will occur within the first 180 days after the
Extension Date set forth in Section 1 of this Amendment, landlord's Notice shall
set forth "Expansion Terms" as follows: (i) an Expansion Space Commencement
Date, (ii) an expiration date therefor, which shall be co-terminous with the
Extended Term of this Lease (as the same may be extended pursuant to Exhibit C),
(iii) rentable area, (iv) monthly Base Rent and scheduled increases therein
(which shall be the same rates per square foot of rentable area as contained in
Section 4 of this Amendment then in effect with respect to the Original Premises
hereunder), (v) Tenant's Share of operating costs applicable to the Expansion
Space (any so-called Expense Stop shall be the same as set forth in Section 5 of
this Amendment), and (vi) that the space shall be provided in "as is" condition
at the time possession is delivered, except that Landlord shall provide an
allowance ("Expansion Allowance") towards Tenant's reasonable direct out-of
pocket costs of designing and performing permanent leasehold improvements to the
Expansion Space of up to $[*] times the number of square feet of usable area of
the subject Expansion Space.

     b. Expansion Space Commencement Date After 180 Days. If the Expansion Space
Commencement Date will occur more than 180 days after the Extension Date set
forth in Section 1 of this Amendment, then Landlord's Notice shall set forth
"Expansion Terms" on which landlord proposes to lease the Expansion Space to
Tenant, including, but not limited to, an Expansion Space Commencement Date, and
an expiration date therefor or whether the term therefor will be co-terminous
with the Term of this Lease, rentable area, monthly base rent and any scheduled
increases therein, Tenant's share of taxes, expenses and other such items (and
any base year or stop level therefor), any tenant improvements or allowance
therefor, and any other terms and conditions, as determined in landlord's good
faith discretion, taking into account any "Comparable Expansions" as described
in Paragraph 4 below, and any comparable expansion terms generally being
provided for comparable tenants of comparable financial condition for comparable
non-sublease space in comparable buildings in the vicinity for time periods that
are substantially the same as the period of time during which the Expansion
Space



will be leased to Tenant.

     c. General Terms. Except as set forth in Landlord's Notice, the Expansion
Terms shall be deemed to include the same terms then in effect on the Expansion
Space Commencement Date, and thereafter scheduled to be in effect, under the
Lease (with any matters in the Lease based on square footage adjusted
proportionately to reflect the rentable area of the Expansion Space and
Landlord's then-current Building standard ratios and policies).

     3. TENANT'S NOTICE AND FINANCIAL INFORMATION; CONFIRMATION OR DISAGREEMENT
CONCERNING MARKET TERMS. Within five (5) days after Landlord's Notice, Tenant
shall deliver to Landlord either: (a) a notice ("Tenant's Acceptance Notice")
accepting Landlord's determination of the Expansion Terms set forth in
Landlord's Notice, or (b) a notice ("Tenant's Expansion Terms Notice") of
Tenant's good faith determination of the Expansion Terms and reasons therefor;
provided that Tenant shall have the right to send a Tenant's Expansion Terms
Notice only if the expansion is pursuant to 2.b above. Tenant's Acceptance
Notice or Tenant's Expansion Terms Notice shall include financial information
for Tenant's business comparable to the information provided in connection with
entering into this Lease document. If Landlord determines in good faith that
Tenant's financial condition is worse than the condition that Landlord accepted
when the parties entered into this Lease document, Landlord may withdraw
Landlord's Notice and the Right of Offer, or provide a new Landlord's Notice
with reasonably modified Expansion Terms or reasonable additional security
requirements taking into account Tenant's financial condition.

     4. LETTER OF INTENT AND EXPANSION DOCUMENTATION. If Tenant provides a
timely Tenant's Expansion Terms Notice, the parties shall seek to agree on the
Expansion Terms in the form of a non-binding letter of intent ("Letter of
Intent") during the period ("Negotiation Period") ending ten (10) days after
Landlord's Notice. In connection with such negotiations, Landlord shall at
Tenant's request, provide copies of the pages containing the basic economic
provisions from any comparable negotiated expansions at the Property (with the
names and suite numbers of the other tenants covered over) that are reasonably
relevant to the determination of Market Rates, Terms and Conditions as described
in Paragraph 2.b above ("Comparable Expansions"), as reasonable determined by
Landlord. If Tenant delivers a timely Tenant's Acceptance Notice, or if the
parties enter into the Letter of Intent concerning the Expansion Terms during
the Negotiation Period, then the parties shall seek to agree on and enter into a
mutually acceptable formal written expansion amendment to the Lease ("Expansion
Documentation") setting forth the final and definitive Expansion Terms and other
mutually acceptable provisions for the Expansion Space during the period
("Documentation Period") ending ten (10) days after Landlord's Notice. Once
Tenant provides either Tenant's Acceptance Notice or Tenant's Expansion Terms
Notice exercising Tenant's Right of Offer, Landlord shall have no further
obligation to provide a Landlord's Notice respecting the Expansion Space
included in Landlord's Notice (provided, this Right of Offer shall continue to
apply to any portions of the Expansion Space that were not included in
Landlord's Notice as further provided below). If Tenant fails to validly
exercise such Right Of Offer, or fails to sign and deliver the Expansion
Documentation to Landlord, strictly in accordance with the terms hereof, such
Right Of Offer shall be deemed to have lapsed and expired as to the Expansion
Space that was included in Landlord's Notice, and Landlord may thereafter freely
lease all or a portion of the Expansion Space that was included in Landlord's
Notice to any other party, at any time, on any terms, in Landlord's sole
discretion; provided, despite Tenant's waiver, this Right of Offer shall
continue to apply to any portions of the Expansion Space that were not included
in Landlord's Notice as further provided below; and further provided, despite
Tenant's waiver, this Right of Offer shall: (a) continue to apply to any
portions of the Expansion Space that were not included in Landlord's Notice as
further provided below, and (b) apply again to the Expansion Space (or such
portion thereof as may have been



included in Landlord's Notice) if Landlord fails to enter into a lease document
for the Expansion Space (or such portion thereof, as the case may be) within six
(6) months after Tenant waives this Right of Offer as to such area. TIME PERIODS
AND STRICT COMPLIANCE IN GIVING TENANT'S NOTICE AND IN TENANT'S SIGNING AND
DELIVERING THE EXPANSION DOCUMENTATION, ARE OF THE ESSENCE OF THIS RIGHT OF
OFFER.

     5. OFFERING PORTIONS OF EXPANSION SPACE; ADJUSTMENTS TO EXPANSION SPACE;
PRIOR RIGHTS. This Right Of Offer shall apply only with respect to the entire
Expansion Space, and may not be exercised with respect to only a portion thereof
(unless only a portion of the Expansion Space shall be included in Landlord's
Notice). If only a portion of the Expansion Space shall be included in
Landlord's Notice, this Right of Offer shall apply to such portion, and shall
thereafter apply to such other portions of the Expansion Space as they become
the subject of Landlord's Notices, subject to good faith adjustments by Landlord
in the size, configuration and location of such remaining portions. If the
Expansion Space is part of a larger space that Landlord desires to lease as a
unit, then Landlord's Notice shall, at Landlord's option, identify the entire
such space and the Expansion Terms therefor, and in such case, this Right Of
Offer shall apply only to such entire space. Landlord reserves the right at any
time prior to sending, or as part of, Landlord's Notice, to substitute for the
Expansion Space other space (herein referred to as the "new expansion space") in
the Building or another building in the same complex or in the vicinity,
provided the new expansion space shall be similar to the Expansion Space in size
(up to 10% larger or smaller); at Landlord's option, the new expansion space may
overlap with and include a portion of the then current Expansion Space. This
Right Of Offer shall be subject to the then existing tenants or occupants of the
Expansion Space renewing their existing leases whether pursuant to options to
extend previously granted or otherwise, and such Right Of Offer, and any rights
of Tenant to extend the Term of the Lease with respect to the Expansion Space,
are subordinate to, and limited by, any rights of any other parties to lease the
Expansion Space granted prior to full execution and delivery of this document.

     6. MISCELLANEOUS. This Right Of Offer is subject to the condition that the
Lease be in full force and effect, and that Tenant not then be in default beyond
any applicable cure period under the Lease on the date when Landlord provides or
would otherwise provide Landlord's Notice, or at any time thereafter and prior
to the Expansion Space Commencement Date. The rights granted in this Exhibit are
personal to Tenant as named in this Lease document. Under no circumstance
whatsoever shall the assignee under a complete or partial assignment of the
Lease document, or a subtenant under a sublease of the Premises, have any right
to exercise the rights of Tenant under this Exhibit. If Tenant shall sublease or
assign the Lease with respect to all or any portion of the Premises, then
immediately upon such sublease or assignment Tenant's rights under this Exhibit
shall concurrently terminate and become null and void. If Tenant shall exercise
the Right Of Offer herein, Landlord does not guarantee to deliver possession of
the Expansion Space on the Expansion Space Commencement Date due to continued
possession by the then existing occupants or any other reason beyond Landlord's
reasonable control. In such event, rent and other charges with respect to the
Expansion Space shall be abated until Landlord delivers the same to Tenant
(except to the extent that Tenant or its affiliates, agents, employees or
contractors cause the delay), as Tenant's sole recourse. Tenant's exercise of
this Right of Offer is intended to supersede any rights of Tenant under the
Lease to reduce or relocate the Premises, or terminate the Lease early, and all
such provisions shall thereupon be automatically deleted. Tenant's failure to
exercise this Right of Offer in accordance with the terms of this Exhibit is
intended to supersede any other rights of Tenant under other provisions of the
Lease to expand or relocate the Premises, and all such other provisions shall
thereupon be automatically deleted.



                                    EXHIBIT E

                                                                 CMD 117A (1/02)
                                                                  RIGHT OF OFFER
                                                        OCCUPIED EXPANSION SPACE

                                 RIGHT OF OFFER

     1. RIGHT OF OFFER. Landlord hereby grants Tenant a right of offer ("Right
Of Offer") to lease the space shown on Exhibit A, currently known as Suite 1100
and Suite 1150 (the "Expansion Space"), which shall be deemed to contain 3,227
square feet of rentable area and 8,232 square feet of rentable area,
respectively, for current purposes hereof, all on and subject to the following
provisions; provided, this Right of Offer and Landlord's obligation to provide a
"Landlord Notice" shall be in effect commencing on the Extension Date.

     2. LANDLORD'S NOTICE OF EXPANSION TERMS. While this Right of Offer is in
effect, Landlord shall notify Tenant in writing ("Landlord's Notice"): (i)
within thirty (30) days after the Expansion Space becomes legally available to
lease, or (ii) at such earlier time as Landlord shall be in a position to
project when the Expansion Space will be legally available to lease, advising
Tenant of such projected date, or (iii) at any time thereafter but prior to
leasing the Expansion Space to another party. Landlord's Notice shall set forth
the terms ("Expansion Terms") on which Landlord proposes to lease the Expansion
Space to Tenant, including, but not limited to, a date for the commencement of
the lease thereof ("Expansion Space Commencement Date"), an expiration date
therefor or whether the term therefor will be coterminous with the Term of this
Lease, rentable area, monthly base rent and any scheduled increases therein,
Tenant's share of taxes, expenses and other such items (and any base year or
stop level therefor), any tenant improvements or allowance therefor, and any
other terms and conditions, as determined in Landlord's good faith discretion,
taking into account any "Comparable Expansions" as described in Paragraph 4
below, and any comparable expansion terms generally being provided for
comparable tenants of comparable financial condition for comparable non-sublease
space in comparable buildings in the vicinity for time periods that are
substantially the same as the period of time during which the Expansion Space
will be leased to Tenant. Except as set forth in Landlord's Notice, the
Expansion Terms shall be deemed to include the same terms then in effect on the
Expansion Space Commencement Date, and thereafter scheduled to be in effect,
under the Lease (with any matters in the Lease based on square footage adjusted
proportionately to reflect the rentable area of the Expansion Space and
Landlord's then current Building-standard ratios and policies).

     3. TENANT'S NOTICE AND FINANCIAL INFORMATION; CONFIRMATION OR DISAGREEMENT
CONCERNING MARKET TERMS. Within five (5) days after Landlord's Notice, Tenant
shall deliver to Landlord either: (a) a notice ("Tenant's Acceptance Notice")
accepting Landlord's determination of the Expansion Terms set forth in
Landlord's Notice, or (b) a notice ("Tenant's Expansion Terms Notice") of
Tenant's good faith determination of the Expansion Terms and reasons therefor.
Tenant's Acceptance Notice or Tenant's Expansion Terms Notice shall include
financial information for Tenant's business comparable to the information
provided in connection with entering into this Lease document. If Landlord
determines in good faith that Tenant's financial condition is worse than the
condition that Landlord accepted when the parties entered into this Lease
document, Landlord may withdraw Landlord's Notice and the Right of Offer, or
provide a new Landlord's Notice with reasonably modified Expansion Terms or
reasonable additional security requirements taking into account Tenant's
financial condition.

     4. LETTER OF INTENT AND EXPANSION DOCUMENTATION. If Tenant provides a
timely Tenant's Expansion Terms Notice, the parties shall seek to agree on the
Expansion Terms in the form of a non-binding letter of intent ("Letter of
Intent") during the period ("Negotiation Period") ending ten (10) days after
Landlord's Notice. In connection with such negotiations,



Landlord shall at Tenant's request, provide copies of the pages containing the
basic economic provisions from any comparable negotiated expansions at the
Property (with the names and suite numbers of the other tenants covered over)
that are reasonably relevant to the determination of Market Rates, Terms and
Conditions as described in Paragraph 2 above ("Comparable Expansions"), as
reasonable determined by Landlord. If Tenant delivers a timely Tenant's
Acceptance Notice, or if the parties enter into the Letter of Intent concerning
the Expansion Terms during the Negotiation Period, then the parties shall seek
to agree on and enter into a mutually acceptable formal written expansion
amendment to the Lease ("Expansion Documentation") setting forth the final and
definitive Expansion Terms and other mutually acceptable provisions for the
Expansion Space during the period ("Documentation Period") ending ten (10) days
after Landlord's Notice. Once Tenant provides either Tenant's Acceptance Notice
or Tenant's Expansion Terms Notice exercising Tenant's Right of Offer, Landlord
shall have no further obligation to provide a Landlord's Notice respecting the
Expansion Space included in Landlord's Notice (provided, this Right of Offer
shall continue to apply to any portions of the Expansion Space that were not
included in Landlord's Notice as further provided below). If Tenant fails to
validly exercise such Right Of Offer, or fails to sign and deliver the Expansion
Documentation to Landlord, strictly in accordance with the terms hereof, such
Right Of Offer shall be deemed to have lapsed and expired as to the Expansion
Space that was included in Landlord's Notice, and Landlord may thereafter freely
lease all or a portion of the Expansion Space that was included in Landlord's
Notice to any other party, at any time, on any terms, in Landlord's sole
discretion; provided, despite Tenant's waiver, this Right of Offer shall
continue to apply to any portions of the Expansion Space that were not included
in Landlord's Notice as further provided below; and further provided, despite
Tenant's waiver, this Right of Offer shall: (a) continue to apply to any
portions of the Expansion Space that were not included in Landlord's Notice as
further provided below, and (b) apply again to the Expansion Space (or such
portion thereof as may have been included in Landlord's Notice) if Landlord
fails to enter into a lease document for the Expansion Space (or such portion
thereof, as the case may be) within six (6) months after Tenant waives this
Right of Offer as to such area. TIME PERIODS AND STRICT COMPLIANCE IN GIVING
TENANT'S NOTICE. AND IN TENANT'S SIGNING AND DELIVERING THE EXPANSION
DOCUMENTATION, ARE OF THE ESSENCE OF THIS RIGHT OF OFFER.

     5. OFFERING PORTIONS OF EXPANSION SPACE; ADJUSTMENTS TO EXPANSION SPACE;
PRIOR RIGHTS. This Right Of Offer shall apply only with respect to the entire
Expansion Space, and may not be exercised with respect to only a portion thereof
(unless only a portion of the Expansion Space shall be included in Landlord's
Notice). If only a portion of the Expansion Space shall be included in
Landlord's Notice, this Right of Offer shall apply to such portion, and shall
thereafter apply to such other portions of the Expansion Space as they become
the subject of Landlord's Notices, subject to good faith adjustments by Landlord
in the size, configuration and location of such remaining portions. If the
Expansion Space is part of a larger space that Landlord desires to lease as a
unit, then Landlord's Notice shall, at Landlord's option, identify the entire
such space and the Expansion Terms therefor, and in such case, this Right Of
Offer shall apply only to such entire space. Landlord reserves the right at any
time prior to sending, or as part of, Landlord's Notice, to substitute for the
Expansion Space other space (herein referred to as the "new expansion space") in
the Building or another building in the same complex or in the vicinity,
provided the new expansion space shall be similar to the Expansion Space in size
(up to 10% larger or smaller); at Landlord's option, the new expansion space may
overlap with and include a portion of the then current Expansion Space. This
Right Of Offer shall be subject to the then existing tenants or occupants of the
Expansion Space renewing their existing leases whether pursuant to options to
extend previously granted or otherwise, and such Right Of Offer, and any rights
of Tenant to extend the Term of the Lease with respect to the Expansion Space,



are subordinate to, and limited by, any rights of any other parties to lease the
Expansion Space granted prior to full execution and delivery of this document.

     6. MISCELLANEOUS. This Right Of Offer is subject to the condition that the
Lease be in full force and effect, and that Tenant not then be in default beyond
any applicable cure period under the Lease on the date when Landlord provides or
would otherwise provide Landlord's Notice, or at any time thereafter and prior
to the Expansion Space Commencement Date. The rights granted in this Exhibit are
personal to Tenant as named in this Lease document. Under no circumstance
whatsoever shall the assignee under a complete or partial assignment of the
Lease document, or a subtenant under a sublease of the Premises, have any right
to exercise the rights of Tenant under this Exhibit. If Tenant shall sublease or
assign the Lease with respect to all or any portion of the Premises, then
immediately upon such sublease or assignment Tenant's rights under this Exhibit
shall concurrently terminate and become null and void. If Tenant shall exercise
the Right Of Offer herein, Landlord does not guarantee to deliver possession of
the Expansion Space on the Expansion Space Commencement Date due to continued
possession by the then existing occupants or any other reason beyond Landlord's
reasonable control. In such event, rent and other charges with respect to the
Expansion Space shall be abated until Landlord delivers the same to Tenant
(except to the extent that Tenant or its affiliates, agents, employees or
contractors cause the delay), as Tenant's sole recourse. Tenant's exercise of
this Right of Offer is intended to supersede any rights of Tenant under the
Lease to reduce or relocate the Premises, or terminate the Lease early, and all
such provisions shall thereupon be automatically deleted. Tenant's failure to
exercise this Right of Offer in accordance with the terms of this Exhibit is
intended to supersede any other rights of Tenant under other provisions of the
Lease to expand or relocate the Premises, and all such other provisions shall
thereupon be automatically deleted.



                                    EXHIBIT F

                                                               CMD 111D-1 (3/01)
                                                         DIFFERENT PARKING AREAS
                                                                   FOR AMENDMENT

                                     PARKING

     1. AMENDMENT; DELETION OF PRIOR PARKING. This Exhibit is attached to an
amendment to an existing lease, and the term "Lease" herein shall refer to such
amendment, or the existing lease as amended, and terms such as "Commencement
Date" shall refer to analogous terms in such amendment, as the context
reasonably implies. This Exhibit supersedes any parking rights previously
granted under the Lease or any other parking agreements between the parties, all
of which are hereby deleted and/or superseded.

     2. SPACES. Tenant hereby agrees to license from Landlord and Landlord
agrees to license to Tenant, for the Extended Term, the use by Tenant and its
employees occupying the Premises designated by Tenant:

     Area A Covered Unreserved Spaces: sixty-two (62) parking spaces on the
Extension Date and an additional twelve (12) parking spaces on the Additional
Premises Commencement Date, for a total of seventy-four (74) parking spaces, in
the area of the Parking Facility known or described as the Garage ("Area A") on
a non-exclusive, unassigned basis, subject to the other provisions hereof.

     Area B Uncovered Unreserved Spaces: twenty-eight (28) parking spaces on the
Extension Date and an additional five (5) parking spaces on the Additional
Premises Commencement Date, for a total of thirty-three (33) parking spaces, in
the area of the Parking Facility known or described as the Garage Rooftop or
Uncovered Surface ("Area B") on a nonexclusive, unassigned basis, subject to the
other provisions hereof.

     Covered Reserved Spaces: sixteen (16) parking spaces on the Extension Date
and an additional three (3) parking spaces on the Additional Premises
Commencement Date, for a total of nineteen (19) reserved parking spaces in the
Garage area of the Parking Facility ("Reserved Spaces"), subject to the other
provisions hereof. Such Reserved Spaces shall be assigned parking spaces
identified with Tenant's name in accordance with Landlord's standard procedures,
provided Landlord shall have no the obligation to tow vehicles that are
improperly parked in such assigned spaces (but Landlord reserves the right to do
so after receiving notice thereof from Tenant or otherwise).

     3. CHARGES. Tenant shall pay Landlord the monthly charges established from
time to time by Landlord for such spaces, in advance, on the first day of each
calendar month of the License Term, plus any sales or other tax thereon,
concurrently with Tenant's payment of monthly Base Rent (but, at Landlord's
option, by separate check payable to Landlord's agent or parking facility
operator). No deductions from the monthly charge shall be made for days on which
the Parking Facility is not used by Tenant. Failure to pay in advance by the
first day of each month will automatically cancel parking privileges and a
charge at the prevailing daily parking rate will be due. The initial charges for
such spaces are as follows:

     Area A Spaces: $30.00 per space per month, or a total monthly charge of
$1,860.00 on the Extension Date and $2,200.00 on the Additional Premises
Commencement Date for all such Area A Spaces, plus any sales or other tax
thereon, provided, however, that such charges shall be abated for the first 18
months of the Extended Term.

Area B Spaces:   $--0-- during the Extended Term.

Reserved Spaces: $--0-- during the Extended Term.



     4. OTHER PROVISIONS. The term ("License Term") of this license shall
commence on the Commencement Date, and shall continue until the earlier to occur
of the expiration or earlier termination of the Lease, or at Landlord's option
without prior notice after Tenant's abandonment of the Premises or parking
spaces hereunder. Landlord reserves the right to relocate any of the above
spaces from any Area to another Area of the Parking Facility from time to time
upon ten (10) days notice to Tenant. Tenant may. from time to time, request
additional parking spaces, and if Landlord shall provide the same, such spaces
shall be provided and used on a month-to-month basis, and otherwise on the other
terms and provisions herein, and for such monthly parking charges as Landlord
shall establish from time to time. All spaces hereunder shall be used solely for
the purpose of parking non-commercial passenger vehicles. As a condition to the
use of such spaces, Landlord may require that Tenant and/or each individual
using such spaces sign and comply with such further documentation as any parking
facility management company for the Parking Facility may require. Tenant may
transfer the parking rights hereunder pro rata to the subtenant or assignee in
connection with a sublease or assignment of this Lease. However, Tenant shall
not otherwise assign, mortgage, pledge, hypothecate, encumber or permit any lien
to attach to, or otherwise transfer, the rights under this Exhibit, by operation
of law or otherwise, nor sublicense the parking spaces hereunder, nor permit the
use thereof by any parties other than Tenant and its employees (and any attempt
to engage in such a transfer of the parking rights hereunder shall, at
Landlord's written election, be null and void ab initio). Notwithstanding the
foregoing to the contrary, any Reserved Spaces hereunder are personal to the
initial Tenant named in this Lease, and if the number of parking spaces
hereunder exceeds the number derived by applying Tenant's Share (as defined in
the Lease) to the number of unassigned spaces designated to serve the Building
("Above Standard Ratio"), Tenant's rights to such Above Standard Ratio are
personal to the initial Tenant named in this Lease, and Landlord reserves the
right in connection with any sublease, assignment or other transfer of or under
the Lease, or at anytime thereafter, to convert any Reserved Spaces to General
Spaces and/or to reduce the number of spaces hereunder to eliminate the Above
Standard Ratio. The parking spaces hereunder shall be subject to the Rules set
forth below, except to the extent expressly inconsistent herewith.

                                  PARKING RULES

     (i) Cars must be parked entirely within the stall lines, and only small or
other qualifying cars may be parked in areas reserved for such cars; all
directional signs, arrows and speed limits must be observed; spaces reserved for
disabled persons must be used only by vehicles properly designated; washing,
waxing, cleaning or servicing of any vehicle is prohibited; every parker is
required to park and lock his own car, except to the extent that Landlord adopts
a valet parking system; in areas requiring an attendant or security personnel,
hours shall be reasonably established by Landlord or its parking operator from
time to time; parking is prohibited in areas: (a) not striped or designated for
parking, (b) aisles, (c) where "no parking" signs are posted, (d) on ramps, and
(e) loading areas and other specially designated areas. Delivery trucks and
vehicles shall use only those areas designated therefor.

     (ii) Parking stickers, key cards or any other devices or forms of
identification or entry shall remain the property of Landlord. Such devices must
be displayed as requested and may not be mutilated in any manner. Devices are
not transferable and any device in the possession of an unauthorized holder will
be void. Loss or theft of such devices must be reported to Landlord or any
garage manager immediately. Any parking devices reported lost or stolen which
are found on any unauthorized car will be confiscated and the illegal holder
will be subject to prosecution. Lost or stolen devices found by Tenant or its
employees must be reported to Landlord or the office of the garage immediately.



     (iii) Except as may be specifically granted in this Exhibit, parking for
Tenant and its employees and visitors shall be in areas designated by Landlord
from time to time on a non-exclusive "first come, first served," unassigned
basis, in common with Landlord and other tenants at the Property, and their
employees and visitors, and other Persons to whom Landlord shall grant the right
or who shall otherwise have the right to use the same. Landlord reserves the
right to: (x) adopt additional requirements or procedures pertaining to parking,
including systems with charges favoring carpooling, and validation systems, (y)
assign specific spaces, and reserve spaces for small and other size cars,
disabled persons, and other tenants, customers of tenants or other parties, and
(z) restrict or prohibit full size vans and other large vehicles.

     (iv) In case of any violation of these rules, Landlord may also refuse to
permit the violator to park, and may remove the vehicle owned or driven by the
violator from the Property without liability whatsoever, at such violator's risk
and expense. Landlord reserves the right to close all or a portion of the
Parking Facility in order to make repairs or perform maintenance services, or to
alter, modify, re-stripe or renovate the same, or if required by casualty,
strike, condemnation, act of God, Law or governmental requirement or guideline,
termination or modification of any lease or other agreement by which Landlord
obtained parking rights, or any other reason beyond Landlord's reasonable
control. In the event access is denied for any reason, any monthly parking
charges shall be abated to the extent access is denied, as Tenant's sole
recourse. Tenant shall be responsible for ensuring compliance with these Rules,
as they may be amended, by Tenant's employees and as applicable, by Tenant's
agents, invitees, contractors, subcontractors, and suppliers. Tenant shall
cooperate with any reasonable program or requests by Landlord to monitor and
enforce the Rules, including providing vehicle numbers and taking appropriate
action against such of the foregoing parties who violate these provisions.



                               LEASE AMENDMENT SIX

                                                                 CMD 177A (8/98)

                           (EXPANSION/CO - TERMINOUS)

     THIS LEASE AMENDMENT SIX ("Amendment') is made and entered into as of the
1st day of April, 2003 by and between CMD Realty Investment Fund IV, L.P. an
Illinois limited partnership ("Landlord") and Mesa Air Group, Inc., a Nevada
corporation ("Tenant").

     A. Landlord and Tenant are the current parties to that certain lease
("Original Lease") dated October 16, 1998, for premises (the "Premises") in the
building (the "Building") known as Three Gateway, located at 410 N. 44th Street,
Phoenix, Arizona (the "Property"), which lease has heretofore been amended by
documents described and dated as follows: First Amendment to Lease dated March
9, 1999, Second Amendment to Lease dated November 8, 1999, Letter Agreement
dated May 10, 2000, Lease Amendment Three dated November 7, 2000, Lease
Amendment Four dated May 15, 2001, Lease Term Adjustment Confirmation dated
January 3, 2001, Letter from Mesa Air dated May 30, 2001, Parking Letter dated
March 21, 2002 and Lease Amendment Five dated October 11, 2002 (collectively,
and as amended herein, the "Lease").

     B. The parties mutually desire to amend the Lease on the terms hereof.

     NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereby agree as follows.

     1. ADDITIONAL PREMISES. The space currently known as a portion of Suite
1100 ("Additional Premises"), the approximate location of which is shown on
Exhibit A hereto on the eleventh (11th) floor of the Building, and which shall
be deemed to contain 713 square feet of rentable area for purposes hereof, shall
be added to and become a part of the Premises commencing on May 1, 2003
("Additional Premises Commencement Date") and continuing conterminously with the
expiration date under the Lease ("Lease Expiration Date"), as the same may be
extended from time to time, subject to the terms herein. The Additional Premises
Commencement Date shall be subject to adjustment and confirmation to the extent
further described below. As of the Additional Premises Commencement Date the
Additional Premises shall be known as Suite 1110.

     2. BASE RENT FOR ADDITIONAL PREMISES. Tenant shall pay monthly base rent
for the Additional Premises as provided below and otherwise as provided in the
Lease:



                                                          Additional Premises
                         Period                            Monthly Base Rent
                         ------                           -------------------
                                                       
Additional Premises Commencement Date - August 31, 2004           $[*]
September 1, 2004 - August 31, 2005                               $[*]
September 1, 2005 - August 31, 2007                               $[*]
September 1, 2007 - August 31, 2009                               $[*]
September 1, 2009 - Lease Expiration Date                         $[*]


     3. EXPENSES AND TAXES. Commencing on the Additional Premises Commencement
Date: (a) Tenant shall pay Tenant's Share for the Additional Premises of
increases in Property expenses, real estate taxes and other such amounts, over
the amount for the year 2003, and as otherwise provided in the Lease, and (b)
"Tenant's Share" for the Additional Premises shall be [*] percent ([*]%), for
purposes hereof.



     4. PRORATIONS; Consolidated or Separate Billings. If the Additional
Premises Commencement Date does not occur at the beginning of an applicable
payment period under the Lease, Landlord shall reasonably pro rate Tenant's
payment obligations on a per diem basis. The base rent, Property expenses, real
estate taxes, and all other rentals and charges respecting the Additional
Premises are sometimes herein called "Additional Premises Rent". Landlord may
compute and bill Additional Premises Rent (or components thereof) separately or
treat the Additional Premises and Premises as one unit for computation and
billing purposes.

     5. OTHER TERMS. Commencing on the Additional Premises Commencement Date,
the Additional Premises shall be added to, and become part of, the Premises
under the Lease, and all applicable provisions then or thereafter in effect
under the Lease shall also apply to the Additional Premises, except as provided
to the contrary herein. Without limiting the generality of the preceding
sentence, Sections 9, 10 and 11 of Lease Amendment Four and Sections 15 and 16
of Lease Amendment Three are incorporated herein by reference.

     6. CONDITION OF ADDITIONAL PREMISES. Tenant has inspected the Additional
Premises (and portions of the Building, Property, systems and equipment
providing access to or serving the Additional Premises) or has had an
opportunity to do so, and agrees to accept the same "AS IS" without any
agreements, representations, understandings or obligations on the part of
Landlord to perform or pay for any alterations, repairs or improvements.

     7. ADDITIONAL PREMISES COMMENCEMENT DATE ADJUSTMENTS.

     a. Early Additional Premises Commencement Date. During any period that
Tenant shall be permitted to enter the Additional Premises prior to the
Additional Premises Commencement Date other than to occupy the same for business
purposes (e.g. to install equipment or furniture, or to make alterations or
improvements), Tenant shall comply with all provisions of the Lease, except for
the payment of Additional Premises Rent. Landlord shall permit Tenant to have
early access, so long as the Additional Premises is legally available, Landlord
has completed any work required of Landlord under this Amendment (or can
reasonably accommodate the scheduling of minor work that Tenant desires to
perform, such as cabling, without delaying any such Landlord work), and Tenant
is in compliance with the other provisions of the Lease. The Additional Premises
Commencement Date, Additional Premises Rent and Tenant's other obligations
respecting the Additional Premises shall be advanced to such earlier date as
Tenant commences occupying the Additional Premises for business purposes. If
such event occurs with respect to a portion of the Additional Premises, the
Additional Premises Commencement Date and Additional Premises Rent shall be so
advanced with respect to such portion (and fairly prorated based on the rentable
square footage involved).

     b. Additional Premises Commencement Date Delays. Subject to the other
provisions of this Amendment, the Additional Premises Commencement Date,
Additional Premises Rent and Tenant's other obligations respecting the
Additional Premises shall be postponed to the extent Tenant is unable to
reasonably occupy the Additional Premises because Landlord fails to deliver
possession of the Additional Premises for any reason, including holding over by
prior occupants, except to the extent that Tenant, its space planners,
architects, contractors, agents or employees cause such failure. If such failure
occurs with respect to a portion of the Additional Premises, the Additional
Premises Commencement Date, Additional Premises Rent and Tenant's other
obligations shall be so postponed with respect to such portion (and fairly
prorated based on the rentable square footage involved). Any such delay in the
Additional Premises Commencement Date shall not subject Landlord to liability
for loss or damage resulting therefrom, and Tenant's sole recourse with respect
thereto shall be the postponement of Additional Premises Rent and other
obligations described herein.



     c. Adjustments and Confirmation. If the Additional Premises Commencement
Date is advanced or postponed as described above, the lease Expiration Date
shall not be changed. Landlord and Tenant shall execute a confirmation of the
Additional Premises Commencement Date as adjusted herein in such form as
Landlord may reasonably request; any failure to respond within thirty (30) days
after Landlord provides such written confirmation shall be deemed an acceptance
of the date set forth in Landlord's confirmation. If Tenant disagrees with
Landlord's adjustment of such date, Tenant shall pay Additional Premises Rent
and perform all other obligations commencing and ending on the dates determined
by Landlord, subject to refund or credit when the matter is resolved.

     8. REAL ESTATE BROKERS. Tenant hereby represents to Landlord that Tenant
has not dealt with any broker, salesperson, agent or finder in connection with
this Amendment, except Cushman & Wakefield of Arizona, Inc., and agrees to
defend, indemnify and hold Landlord, and its employees, agents and affiliates
harmless from all liabilities and expenses (including reasonable attorneys' fees
and court costs) arising from any claims or demands of any other broker,
salesperson, agent or finder with whom Tenant has dealt for any commission or
fee alleged to be due in connection with this Amendment.

     9. OFFER. The submission and negotiation of this Amendment shall not be
deemed an offer to enter into the same by Landlord. This Amendment shall not be
binding on Landlord unless and until fully signed and delivered by both parties.
Tenant's execution of this Amendment constitutes a firm offer to enter into the
same which may not be withdrawn for a period of thirty (30) days after delivery
to Landlord. During such period, Landlord may proceed in reliance thereon, but
such acts shall not be deemed an acceptance.



     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.

                           LANDLORD: CMD REAL TV INVESTMENT FUND IV, L.P. [SEAL]
                                     an Illinois limited partnership

                                     By: CMD/Fund IV GP Investments, L.P.,
                                         an Illinois limited partnership,
                                         its general partner


                                     By: /s/
                                         ---------------------------------------
                                         Lee Moreland, Vice President


                           TENANT:   MESA AIR GROUP, INC. [SEAL]
                                     a Nevada corporation


                                     By: /s/
                                         ---------------------------------------



                                   CERTIFICATE

     I, Brian Gillman, as Vice President & General Counsel of the aforesaid
Tenant, hereby certify that the individual(s) executing the foregoing Lease on
behalf of Tenant was/were duly authorized to act in his/their capacities as set
forth above, and his/their action(s) are the action of Tenant.


(Corporate Seal) /s/
                 --------------------



                                    EXHIBIT A

                     FLOOR PLATE SHOWING ADDITIONAL PREMISES



                              LEASE AMENDMENT SEVEN
                                 CMD 177A (8/98)

                            (EXPANSION/CO-TERMINOUS)

THIS LEASE AMENDMENT SEVEN ("Amendment") is made and entered into as of the 6th
day of December, 2004 by and between CMD REALTY INVESTMENT FUND IV, L.P. an
Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a Nevada
corporation ("Tenant").

     A. Landlord and Tenant are the current parties to that certain lease
("Original Lease") dated October 16, 1998, for premises (the "Premises") in the
building (the "Building") known as Three Gateway, located at 410 N. 44th Street,
Phoenix, Arizona (the "Property"), which lease has heretofore been amended by
documents described and dated as follows: First Amendment to Lease dated March
9, 1999, Second Amendment to Lease dated November 8, 1999, Letter Agreement
dated May 10, 2000, Lease Amendment Three dated November 7, 2000, Lease
Amendment Four dated May 15, 2001, Lease Term Adjustment Confirmation dated
January 3, 2001, Letter from Mesa Air dated May 30, 2001, Parking Letter dated
March 21, 2002, Lease Amendment Five dated October 11, 2002, Lease Amendment Six
dated April 1, 2003 and Lease Term Confirmation Letter dated June 24, 2003
(collectively, and as amended herein, the "Lease").

     B. The parties mutually desire to amend the Lease on the terms hereof.

     NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereby agree as follows.

     1. ADDITIONAL PREMISES. The space currently known as Suite 100 ("Additional
Premises"), the approximate location of which is shown on Exhibit A hereto on
the first (1st) floor of the Building, and which shall be deemed to contain
6,414 square feet of rentable area for purposes hereof, shall be added to and
become a part of the Premises commencing on July 1, 2005 ("Additional Premises
Commencement Date") and continuing co-terminously with the expiration date under
the Lease ("Lease Expiration Date"), as the same may be extended from time to
time, subject to the terms herein. The Additional Premises Commencement Date
shall be subject to adjustment and confirmation to the extent further described
below.

     2. BASE RENT FOR ADDITIONAL PREMISES. Tenant shall pay monthly base rent
for the Additional Premises as provided below and otherwise as provided in the
Lease:



                                                          Additional Premises
                         Period                            Monthly Base Rent
                         ------                           -------------------
                                                       
Additional Premises Commencement Date - August 31, 2007           $[*]
September 1, 2007 - August 31, 2010                               $[*]
September 1, 2010 - Lease Expiration Date                         $[*]


     Notwithstanding anything to the contrary herein, as a concession to enter
this Amendment and provided Tenant has not committed an Event of Default,
Tenant's obligations for Base Rent shall be abated for five (5) months
commencing on the Additional Premises Commencement Date (except if the
Additional Premises Commencement Date does not occur on the first day of a
calendar month, the abatement period shall be 150 days), subject to the
following conditions. If Tenant shall commit an Event of Default under the
Lease, Tenant shall: (i) immediately commence paying the full amount otherwise
required under the Lease without regard to such



period, if the foregoing period is still in effect, and (ii) immediately pay
Landlord the unamortized portion of the amount theretofore abated.

     3. EXPENSES AND TAXES. Commencing on the Additional Premises Commencement
Date: (a) Tenant shall pay Tenant's Share for the Additional Premises of
increases in Property expenses, real estate taxes and other such amounts, over
the amount for the year 2006, and as otherwise provided in the Lease, and (b)
"Tenant's Share" for the Additional Premises shall be [*] percent ([*]%), for
purposes hereof. Property expenses for the Premises (including the Additional
Premises) for any year (including the base year) during which the average
occupancy of the Property is less than 95% have been and shall continue to be
calculated based upon the costs that would have been incurred if the Property
were 95% occupied.

     4. PRORATIONS; CONSOLIDATED OR SEPARATE BILLINGS. If the Additional
Premises Commencement Date does not occur at the beginning of an applicable
payment period under the Lease, Landlord shall reasonably pro rate Tenant's
payment obligations on a per diem basis. The base rent, Property expenses, real
estate taxes, and all other rentals and charges respecting the Additional
Premises are sometimes herein called "Additional Premises Rent". Landlord may
compute and bill Additional Premises Rent (or components thereof) separately or
treat the Additional Premises and Premises as one unit for computation and
billing purposes.

     5. PARKING. Commencing on the Additional Premises Commencement Date and
continuing through the Expiration Date, Tenant shall license from Landlord the
following additional parking spaces (which shall be in addition to the parking
spaces under Exhibit F to Lease Amendment Five):

     Area A Covered Unreserved Spaces: fourteen (14) parking spaces. The initial
charges for such spaces shall be $30.00 per space per month, or a total monthly
charge of $420.00 for all such Area A Spaces, plus any sales or other tax
thereon.

     Area B Uncovered Unreserved (Rooftop) Spaces: five (5) parking spaces, at
no charge during the Extended Term.

     Covered Reserved Spaces: five (5) parking spaces, at no charge during the
Extended Term.

The remaining terms of Exhibit F to Lease Amendment Five shall continue to
apply.

     6. OTHER TERMS; EXTENSION OPTION; CERTAIN PROVISIONS DELETED. Commencing on
the Additional Premises Commencement Date, the Additional Premises shall be
added to, and become part of, the Premises under the Lease, and all applicable
provisions then or thereafter in effect under the Lease (including the Extension
Option set forth in Exhibit C to Lease Amendment Five, which shall apply to the
entire Premises, including the Additional Premises) shall also apply to the
Additional Premises, except as provided to the contrary herein. Notwithstanding
the foregoing, this Amendment is intended to supersede any rights of Tenant to
expand or lease additional space and all such provisions are hereby deleted.

     7. CONDITION OF ADDITIONAL PREMISES. Tenant has inspected the Additional
Premises (and portions of the Building, Property, systems and equipment
providing access to or serving the Additional Premises) or has had an
opportunity to do so, and agrees to accept the same "AS IS" without any
agreements, representations, understandings or obligations on the part of
Landlord to perform or pay for any alterations, repairs or improvements, except
as expressly provided in the Work Letter attached as Exhibit B hereto. With
respect to the Work



that Landlord shall perform under Exhibit B hereto: (i) Landlord shall use
diligent, good faith efforts to substantially complete such Work to an extent
that Tenant can reasonably occupy the Additional Premises by the Additional
Premises Commencement Date, subject to the other provisions of this Amendment,
(ii) Tenant shall also use diligent, good faith efforts to cooperate, and to
cause its space planners, architects, contractors, agents and employees to
cooperate diligently and in good faith, with Landlord and any space planners,
architects, contractors or other parties designated by Landlord, so that such
Work can be planned, permits can be obtained, and the Work can be substantially
completed by the Additional Premises Commencement Date, and (iii) in the event
of any dispute as to whether such Work has been substantially completed,
Landlord may refer the matter to a licensed architect, whose professional good
faith decision shall be final and binding on the parties.

     8. ADDITIONAL PREMISES COMMENCEMENT DATE ADJUSTMENTS.

          a. Early Additional Premises Commencement Date. During any period that
Tenant shall be permitted to enter the Additional Premises prior to the
Additional Premises Commencement Date other than to occupy the same for business
purposes (e.g. to install equipment or furniture, or to make alterations or
improvements), Tenant shall comply with all provisions of the Lease, except for
the payment of Additional Premises Rent. Landlord shall permit Tenant to have
early access, so long as the Additional Premises is legally available, Landlord
has completed any work required of Landlord under this Amendment (or can
reasonably accommodate the scheduling of minor work that Tenant desires to
perform, such as cabling, without delaying any such Landlord work), and Tenant
is in compliance with the other provisions of the Lease. The Additional Premises
Commencement Date, Additional Premises Rent and Tenant's other obligations
respecting the Additional Premises shall be advanced to such earlier date as
Tenant commences occupying the Additional Premises for business purposes. If
such event occurs with respect to a portion of the Additional Premises, the
Additional Premises Commencement Date and Additional Premises Rent shall be so
advanced with respect to such portion (and fairly prorated based on the rentable
square footage involved).

          b. Additional Premises Commencement Date Delays. Subject to the other
provisions of this Amendment, the Additional Premises Commencement Date,
Additional Premises Rent and Tenant's other obligations respecting the
Additional Premises shall be postponed to the extent Tenant is unable to
reasonably occupy the Additional Premises because Landlord fails (i) to
substantially complete any improvements to the Additional Premises required to
be performed by Landlord under this Amendment, or (ii) to deliver possession of
the Additional Premises for any other reason, including holding over by prior
occupants, except to the extent that Tenant, its space planners, architects,
contractors, agents or employees cause such failure. If such failure occurs with
respect to a portion of the Additional Premises, the Additional Premises
Commencement Date, Additional Premises Rent and Tenant's other obligations shall
be so postponed with respect to such portion (and fairly prorated based on the
rentable square footage involved). Any such delay in the Additional Premises
Commencement Date shall not subject Landlord to liability for loss or damage
resulting therefrom, and Tenant's sole recourse with respect thereto shall be
the postponement of Additional Premises Rent and other obligations described
herein.

          c. Adjustments and Confirmation. If the Additional Premises
Commencement Date is advanced or postponed as described above, the Lease
Expiration Date shall not be changed. Landlord and Tenant shall execute a
confirmation of the Additional Premises Commencement Date as adjusted herein in
such form as Landlord may reasonably request; any failure to respond within
thirty (30) days after Landlord provides such written



confirmation shall be deemed an acceptance of the date set forth in Landlord's
confirmation. If Tenant disagrees with Landlord's adjustment of such date,
Tenant shall pay Additional Premises Rent and perform all other obligations
commencing and ending on the dates determined by Landlord, subject to refund or
credit when the matter is resolved.

     9. REAL ESTATE BROKERS. Tenant hereby represents to Landlord that Tenant
has not dealt with any broker, salesperson, agent or finder in connection with
this Amendment, except Cushman & Wakefield of Arizona, Inc., and agrees to
defend, indemnify and hold Landlord, and its employees, agents and affiliates
harmless from all liabilities and expenses (including reasonable attorneys' fees
and court costs) arising from any claims or demands of any other broker,
salesperson, agent or finder with whom Tenant has dealt for any commission or
fee alleged to be due in connection with this Amendment.

     10. OFFER. The submission and negotiation of this Amendment shall not be
deemed an offer to enter into the same by Landlord. This Amendment shall not be
binding on Landlord unless and until fully signed and delivered by both parties.
Tenant's execution of this Amendment constitutes a firm offer to enter into the
same which may not be withdrawn for a period of thirty (30) days after delivery
to Landlord. During such period, Landlord may proceed in reliance thereon, but
such acts shall not be deemed an acceptance.

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.

                           LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL]
                                     an Illinois limited partnership

                                     By: CMD/Fund IV GP Investments, L.P.,
                                         an Illinois limited partnership,
                                         its general partner

                                     By: CMD REIM IV, Inc.,
                                         an Illinois corporation,
                                         its general partner


                                     By:
                                         ---------------------------------------
                                         S. Lee Moreland, Vice President


                           TENANT:   MESA AIR GROUP, INC. [SEAL]
                                     a Nevada corporation


                                     By:
                                         --------------------------------------
                                         Mike Lotz, President & COO

                                   CERTIFICATE

     I, ___________________________________, as ________________________________
of the aforesaid Tenant, hereby certify that the individual(s) executing the
foregoing Lease on behalf of Tenant was/were duly authorized to act in his/their
capacities as set forth above, and his/their action(s) are the action of Tenant.


(Corporate Seal)
                                        ----------------------------------------



                                    EXHIBIT A

                     FLOOR PLATE SHOWING ADDITIONAL PREMISES



                                    EXHIBIT B

                                                                CMD 108D (12/01)
                                                        GENERAL IMPROVEMENT WORK
                                                            LANDLORD PERFORMANCE
                                                                       ALLOWANCE

                                   WORK LETTER

     This Work Letter is an Exhibit to the foregoing document (referred to
herein for convenience as the "Lease Document").

     I. BASIC TERMS

Date To Complete All Plans:          120 days before the Commencement Date
(including Construction Drawings)    under the Lease Document

Date To Substantially Complete Work: Commencement Date under the Lease Document

Allowance:                           $[*] as further described in Section IV

Administrative Fee:                  [*] percent ([*]%) as further described in
                                     Section IV

Other Defined Terms:                 "Plans," "Space Plan," "Construction
                                     Drawings," "Planner," "Landlord's
                                     Planner," and "Work" are defined in
                                     Section VIII

     II. CONSTRUCTION REPRESENTATIVES, SPACE PLANNER, ARCHITECT AND ENGINEER.
Landlord's and Tenant's construction representatives for coordination of
planning, construction, approval of change orders, substantial and final
completion, and other such matters (unless either party changes its
representative upon written notice to the other), and the other parties involved
in planning the Work, are:

Landlord's Representative: Perry Williams, Senior Property Manager

Address:                   c/o CMD Realty Investors, 426 N. 44th Street,
                           Suite 170,
                           Phoenix, AZ 85008

Telephone:                 602-275-4100

Fax:                       602-275-8255

Tenant's Representative:   _____________________________________________________

Address:                   _____________________________________________________

Telephone:                 _____________________________________________________

Fax:                       _____________________________________________________

Space Planner:             Krause Interiors or an interior office space planner
                           designated or approved by Landlord in writing (who
                           may be the same as the Architect).

Architect:                 Krause Interiors or a licensed architect designated
                           or approved by Landlord in writing (who may be the
                           same as the Space Planner).

Engineer:                  One or more licensed engineers designated by Landlord
                           in writing.



     III. PLANNING

     (a) Date To Complete All Plans. On or before the "Date To Complete All
Plans" set forth in Section I above, Tenant shall have: (i) provided Planner
with all information concerning Tenant's requirements in order for the Planner
to prepare all required Plans (including a Space Plan and Construction Drawings
as defined in Section VIII), (ii) arranged for Planner to prepare such Plans
(or, if Landlord's Planner is preparing any Plans, Tenant shall have cooperated
diligently and in good faith so that such Plans can be prepared by such date),
(iii) granted written approval thereof, and (iv) obtained Landlord's written
approval thereof (unless Landlord's Planner is preparing the Plans and Landlord
has already granted written approval thereof in connection with providing such
Plans to Tenant). If any Plans are being prepared by Landlord's Planner,
Landlord shall cooperate diligently and in good faith in arranging for Tenant to
meet with Landlord's Planner and in preparing such Plans.

     (b) Landlord's Approval of Plans. Landlord shall either approve any Plans
or revisions submitted pursuant to this Exhibit or disapprove the same with
suggestions for making the same acceptable within five (5) working days with
respect to the Space Plan or revisions thereto, and ten (10) working days with
respect to Construction Drawings or revisions thereto, after receiving either of
the same (provided Landlord shall have additional time as may be reasonably
required in order to obtain any engineering or HVAC report or due to other
special or unusual features of the Work or Plans). Landlord shall not
unreasonably withhold approval if the Plans provide for a customary office
layout, with finishes and materials generally conforming to building standard
finishes and materials currently being used by Landlord at the Property, are
compatible with the Property shell and core construction, and if no
modifications will be required for the Property electrical, heating,
air-conditioning, ventilation, plumbing, fire protection, life safety, or other
systems or equipment, and will not require any structural modifications to the
Property, whether required by heavy loads or otherwise. Landlord may request
that Tenant approve Landlord's suggested changes in writing (such approval not
to be unreasonably withheld), or Landlord may arrange directly with Planner for
revised Plans to be prepared incorporating such suggestions (in which case,
Tenant shall sign or initial the revised Plans and/or Landlord's notice
concerning the suggested changes, if requested by Landlord).

     (c) Governmental Approval of Plans. Landlord shall apply for any normal
building permits required for the Work which are issued pursuant to a local
building code as a ministerial matter. If the Plans must be revised in order to
obtain such building permits, Landlord shall promptly notify Tenant. In such
case, Tenant shall promptly arrange for the Plans to be revised to satisfy the
building permit requirements and shall submit the revised Plans to Landlord for
approval as a Change Order under clause (d) below. Landlord shall have no
obligation to apply for any zoning, parking or sign code amendments, approvals,
permits or variances, or any other governmental approval, permit or action
(except normal building permits as described above). If any such other matters
are required, Tenant shall promptly seek to satisfy such requirements or revise
the Plans to eliminate such requirements. Delays in substantially completing the
Work by the Commencement Date as a result of requirements for building permits
or other governmental approvals, permits or actions shall be a Construction
Delay and shall affect the Commencement Date to the extent provided in Section V
(except that, notwithstanding anything contained in Section V to the contrary,
any delays in obtaining normal building permits as a result of errors or
omissions of Landlord's Planner in preparing the Plans shall postpone the
Commencement Date and commencement of rent to the extent that substantial
completion of the Work is delayed


                                        2



thereby beyond such Commencement Date, and Tenant shall not be obligated to bear
the cost of Plan revisions to correct the same).

     (d) Changes After Plans Are Approved. If Tenant shall desire any changes,
alterations, or additions to the Work after final Plans have been approved by
Landlord, Tenant shall submit a detailed written request or revised Plans (the
"Change Order") to Landlord for approval. If reasonable and practicable and
generally consistent with the Plans theretofore approved, Landlord shall not
unreasonably withhold approval, but all costs in connection therewith,
including, without limitation, construction costs, permit fees, and any
additional plans, drawings and engineering reports or other studies or tests, or
revisions of such existing items, shall be paid for by Tenant as a Tenant's Cost
under Section IV. Tenant shall bear the cost of any changes or corrections for
errors or omissions made by any space planner, architect, engineer or contractor
recommended or engaged by Tenant.

     (e) Planning Delays. If the Plans have not been completed and approved by
the Date To Complete All Plans set forth in Section I above, including any
revisions reasonably required by Landlord pursuant to clause (b) above, and
revisions by Tenant to reduce Tenant's Cost pursuant to Section IV below
(collectively called "Planning Delays"), substantial completion of the Work and
delivery of the Premises is subject to postponement as a result. In such event,
the Commencement Date set forth in the Lease Document for all other purposes,
including the commencement of Rent, shall only be postponed to the extent that
substantial completion of the Work is delayed beyond such Commencement Date as a
result of one or more of the following events (collectively called "Landlord
Planning Delays"): (i) Landlord takes more time to approve or disapprove the
Space Plan or Construction Drawings or revisions thereto than permitted under
clause (b) above, (ii) Landlord's Planner takes more than five (5) working days
to meet with Tenant after receiving a written request for a meeting, more than
five (5) working days to prepare or revise the Space Plan or revisions thereto,
after meeting with Tenant and receiving all information from Tenant required in
order to do so, or more than fifteen (15) working days to prepare or revise any
required Construction Drawings or revisions thereto, after the Space Plan is
final and approved (provided Landlord's Planner shall have additional time as
may be reasonably required in order to obtain any engineering or HVAC report or
due to other special or unusual features of the Work or Plans, and this clause
(ii) shall apply only if Tenant uses Landlord's Planner to prepare such Plans),
or (iii) Landlord takes more than ten (10) working days to provide a preliminary
cost estimate after receiving a Space Plan sufficiently detailed for such
purposes, or more than twenty (20) working days to provide Tenant with a cost
estimate after receiving Construction Drawings sufficiently detailed for such
purposes (provided this clause (iii) shall apply only if Tenant makes a timely
written request for such cost estimates, or if Landlord elects to provide such
cost estimates, as further described under Section IV below).

     IV. COST OF PLANS AND WORK; ALLOWANCE AND TENANT'S COST

     (a) Cost of Plans and Work; Allowance. Landlord shall bear the Cost of
Plans and Work up to the amount of the Allowance set forth in Section I above
(provided the portion of the Allowance available for the Plans shall be limited
to five percent (5%), and shall exclude planning for furniture, fixtures and
equipment). The "Cost of Plans and Work" hereunder includes, without limitation,
all costs for or relating to: (i) the Plans, including all revisions thereto,
and related engineering reports, or other studies, reports or tests, (ii) the
Work, including costs of labor, hardware, equipment and materials, contractors'
charges for overhead and fees, and so-called "general conditions" (including
rubbish removal, utilities, hoisting, field supervision, building permits,
inspection fees, utility connections, bonds, insurance, sales taxes, and the
like), and any


                                        3



air balancing or other such work in connection therewith, and (iii) Landlord's
Administrative Fee in the amount set forth in Section I (which, if stated as a
percentage, shall be applied to the other amounts included in the Cost of Plans
and Work herein). If all or any portion of the Allowance shall not be used for
the items permitted hereunder by the Commencement Date set forth in the Lease
Document (except to the extent that such Commencement Date is delayed due to
Construction Delays, other than Tenant Construction Delays), Landlord shall be
entitled to the savings and Tenant shall receive no credit therefor.

     (b) Tenant's Cost; Estimates and Payments. Any portion of the Cost of Plans
and Work exceeding the Allowance is referred to herein as "Tenant's Cost."
Tenant may submit a written request for Landlord to obtain an estimate of the
Work component of the Cost of the Plans and Work concurrently with submitting or
approving a Space Plan and/or Construction Drawings; in such case Landlord shall
promptly obtain a reasonable estimate of the same. Whether or not Tenant
requests such an estimate, Landlord may reasonably estimate such Work component,
the Cost of Plans and Work, and/or Tenant's Cost, and reasonably revise any such
estimate from time to time (subject to clause (c) below). Tenant shall deposit
any such estimated amount of Tenant's Cost (or the increase reflected in any
such revised estimate) with Landlord within three (3) days after Landlord so
requests. Landlord shall have no obligation to proceed with the Work (or proceed
to seek permits or proceed with any demolition or other preliminary Work) until
Landlord shall have received such deposit from Tenant. If the Work involves
progress payments, Landlord shall apply the amounts deposited by Tenant first.
If, after final completion and payment for the Cost of Plans and Work, the
actual amount of Tenant's Cost exceeds any amount paid by Tenant as an estimate
of Tenant's Cost, Tenant shall pay the difference to Landlord within three (3)
days after Landlord so requests. If any such estimated amount exceeds the actual
amount of Tenant's Cost, Landlord shall promptly provide a credit or refund of
the difference. Tenant's Cost shall be deemed "Rent" under the Lease Document
(and all remedies for the non-payment of Rent shall be available to Landlord
therefor).

     (c) Tenant's Approval and Nature of Cost Estimates. If Tenant timely
requests cost estimates as described in clause (b) above, or if Landlord
otherwise so requires, Landlord shall request Tenant's written approval of any
such cost estimate hereunder. Tenant shall not unreasonably withhold such
approval, and shall approve or disapprove the same in writing within three (3)
days after Landlord so requests. If Tenant reasonably disapproves of any such
estimate, Tenant shall meet with the Planner and eliminate or substitute items
in order to reduce Tenant's Cost in connection with preparing a revised version
of the Plans as a Change Order pursuant to Section III above, but the Date to
Complete All Plans shall not be extended thereby. Any cost estimates based on a
Space Plan (including a so-called "pricing plan") will be preliminary in nature,
and may not be relied on by Tenant. However, Landlord agrees that any written
estimate of Tenant's Cost prepared by Landlord's contractor based on the
approved Construction Drawings shall not be exceeded by more than fifteen
percent (15%), except to the extent that: (a) Tenant makes changes in the
Construction Drawings or the Work, (b) overtime labor required in order to
substantially complete the Work by the Commencement Date, (c) concealed
conditions are encountered on the job site, (d) new legal requirements become
effective following preparation of the estimate, or (e) there are strikes, acts
of God, shortages of materials or labor, or other causes beyond Landlord's
reasonable control.

     V. CONSTRUCTION

     (a) Landlord to Arrange Work. Provided Tenant completes the Plans on time
and furnishes Landlord's estimate of Tenant's Cost as provided above, and is not
then in violation of


                                        4



the Lease Document (including this Exhibit), Landlord shall use reasonable
efforts to cause Landlord's contractor to substantially complete the Work by the
Commencement Date set forth in the Lease Document, subject to the other
provisions hereof.

     (b) Substantial Completion, Walk-Through, and Punchlist Items. Landlord
shall be deemed to have "substantially completed" the Work for purposes hereof
if Landlord has caused all of the Work to be sufficiently completed that Tenant
can reasonably occupy the Premises or complete any improvements or changes to
the Premises to be made by Tenant hereunder. When Landlord notifies Tenant that
the Work has been substantially completed, either party may request a joint
walk-through inspection in order for Tenant to identify any necessary final
completion or other "punchlist" items. Neither party shall unreasonably withhold
or delay approval concerning the identification of punchlist items. If Tenant
fails to participate in a walk-through as provided above, or otherwise fails to
object to Landlord's notice of substantial completion in writing within five (5)
days thereafter specifying in reasonable detail the items of work needed to be
performed in order for substantial completion, Tenant shall be deemed
conclusively to have agreed that the Work is substantially completed for
purposes of commencing the Commencement Date and Rent under the Lease Document.
If there is any disagreement concerning whether Landlord has substantially
completed the Work, Landlord may request a good faith decision by Landlord's
Planner which shall be final and binding on the parties.

     (c) Final Completion, Suite Identification Signage, and Other Matters.
Landlord shall use reasonable efforts to complete any punchlist items promptly
after substantial completion has occurred. If Landlord notifies Tenant in
writing that the Work is fully completed, and Tenant fails to object thereto in
writing within five (5) days thereafter specifying in reasonable detail the
remaining punchlist items of work needed to be completed, Tenant shall be deemed
conclusively to have accepted the Work as fully completed (or such portions as
to which Tenant has not so objected). In connection with the Work, Landlord: (i)
to the extent not already existing, shall install or cause a contractor to
install building standard suite identification signage for the main entrance to
the Premises (unless the Premises comprises a full floor, in which case, Tenant
shall install such signage, at Tenant's expense, using a professional sign
contractor/designer, and a design and materials, and in a location in the
Premises, all of which are first approved by Landlord in writing), and (ii) may
cause a contractor to perform air balancing tests on the Premises and adjust the
HVAC system as a result thereof, and install, to the extent not already
existing, building standard window blinds. Tenant shall promptly advise Landlord
of the name Tenant wishes for said signage; the content of all signage shall be
subject to Landlord's prior written approval. No other signage may be installed
or placed outside the Premises by Tenant. The costs of the items that Landlord
provides under this Section may be charged against the Allowance, and if the
Allowance shall be insufficient, Tenant shall pay Landlord for such costs as
additional Rent within fifteen (15) days after billing.

     (d) Construction Delays. If the Work has not been substantially completed
by the Commencement Date set forth in the Lease Document due to casualty damage,
acts of God, strikes, shortages of labor or materials, or any other reason
("Construction Delays"), then Landlord's delivery of possession of the Premises
(if applicable) shall be postponed as a result. In such case, subject to any
contrary provisions in the Lease Document, the Commencement Date set forth in
the Lease Document for all other purposes, including commencement of Rent, shall
be postponed until the Work is substantially completed, except to the extent
that substantial completion is delayed as a result of one or more of the
following events (collectively called "Tenant Construction Delays"): (i)
Planning Delays as described above (except for Landlord Planning Delays), (ii)
Tenant's requests for changes to the Work or Change Orders under Section


                                        5



III, or otherwise, (iii) Tenant's failure to furnish an amount equal to
Landlord's reasonable estimate of Tenant's Cost (if any) within the time
required under Section IV (which shall give Landlord the absolute right to
postpone the Work until such amount is furnished to Landlord, without limiting
Landlord's other remedies), (iv) any upgrades, special work or other
non-building standard items, or items not customarily provided by Landlord to
office tenants, to the extent that the same involve longer lead times,
installation times, delays or difficulties in obtaining building permits,
requirements for any governmental approval, permit or action beyond the issuance
of normal building permits (as described in Section III), or other delays not
typically encountered in connection with Landlord's standard office
improvements, (v) the performance by Tenant or Tenant's Contractors (as defined
in Section VI) of any work at or about the Premises or Property, (vi) any act or
omission of Tenant or Tenant's Contractors, any breach by the Tenant of any
provisions contained in this Exhibit or in the Lease Document, or any failure of
Tenant to cooperate with Landlord or otherwise act with diligence and in good
faith in order to cause the Work to be designed and performed in a timely
manner.

     (e) Landlord's Role. The parties acknowledge that neither Landlord nor its
managing agent is an architect or engineer, and that the Work will be designed
and performed by independent architects, engineers and contractors. Landlord and
its managing agent shall have no responsibility for construction means, methods
or techniques or safety precautions in connection with the Work. Landlord's
approval of the Plans shall not be deemed a warranty as to the adequacy or
legality of the design, and Landlord does not guarantee that the Work will be
free from errors, omissions or defects. Tenant, in reviewing the Plans and Work,
shall have the opportunity to check for any errors, omissions or defects. In the
event of material errors, omissions or defects caused by contractors engaged by
Landlord which are identified in the punchlist procedure described in Section V
(b) above, Landlord shall use reasonable efforts to cause such contractors to
reasonably cure such items as described therein (except to the extent caused by
Tenant or Tenant's Contractors), and Landlord shall cooperate in any action
Tenant desires to bring against such contractors.

     VI. WORK PERFORMED BY TENANT. Landlord, at Landlord's discretion, may
permit Tenant and any of Tenant's space planners, architects, engineers,
contractors, suppliers, employees, agents and other such parties (collectively,
"Tenant's Contractors") to enter the Premises prior to completion of the Work in
order to make the Premises ready for Tenant's use and occupancy. If Landlord
permits such entry prior to completion of the Work, then such permission is
conditioned upon Tenant and Tenant's Contractors working in harmony and not
interfering with Landlord and Landlord's space planners, architects, engineers,
contractors, suppliers, employees, agents and other such parties (collectively,
"Landlord's Contractors") in doing the Work or with other tenants and occupants
of the Building. If at any time such entry shall, in Landlord's sole opinion,
cause or threaten to cause such disharmony or interference, Landlord shall have
the right to withdraw such permission immediately upon oral or written notice to
Tenant. Tenant agrees that any such entry into the Premises shall be deemed to
be under all of the terms, covenants, conditions and provisions of the Lease
Document (including, without limitation, all insurance requirements under any
Original Lease, if the Lease Document is an amendment thereto, as further
described in Section IX), and further agrees that Landlord shall not be liable
in any way for any injury, loss or damage which may occur to any decorations,
fixtures, personal property, installations or other improvements or items of
work installed, constructed or brought upon the Premises by or for Tenant or
Tenant's Contractors prior to completion of the Work, all of the same being at
Tenant's sole risk. Without limitation as to other provisions, Tenant hereby
expressly acknowledges that Tenant's indemnity and related obligations under the
Lease


                                        6



Document shall apply to all claims and matters arising from early entry to the
Premises pursuant hereto.

     VII. TAXES. Tenant shall pay, prior to delinquency, all taxes, charges or
other governmental impositions assessed against or levied upon all fixtures,
furnishings, personal property, modular furniture, and systems and equipment
located in or exclusively serving the Premises. If the Premises consists of "raw
space" which has not previously been improved, and Landlord does not allocate
taxes or other such amounts on such initial improvements between the tenants of
the Property in general, then Tenant shall also pay all taxes, charges or other
governmental impositions assessed against or levied upon the Work under this
Exhibit. Whenever possible, Tenant shall cause all such items for which Tenant
is responsible hereunder to be assessed and billed separately from the property
of Landlord. In the event any such items shall be assessed and billed with the
property of Landlord, Tenant shall pay its share of such taxes, charges or other
governmental impositions to Landlord within fifteen (15) days after Landlord
delivers a statement and a copy of the assessment or other documentation showing
the amount of such impositions applicable to Tenant.

     VIII. DEFINITIONS. The following terms herein shall have the following
meanings:

     (a) "Planner" means the Space Planner, Architect and/or Engineer, as the
context implies.

     (b) "Landlord's Planner" means any Planner regularly used by Landlord and
with whom Landlord has a written contractual arrangement for services at the
Property, including a contractual arrangement for preparation of the Space Plan
and/or Construction Drawings, as the case may be.

     (c) "Plans" means the "Space Plan" and/or "Construction Drawings" as the
context implies. Upon Landlord's approval of any Construction Drawings, the term
"Plans" shall refer to such Construction Drawings, which shall supersede the
Space Plan. The Plans shall be signed or initialed by Tenant, if requested by
Landlord, and any Construction Drawings shall include a usable computer aided
design (CAD) file.

     (d) "Space Plan" means, to the extent reasonably required by the nature of
the Work, a detailed floor plan (including any so-called "Pricing Plan"), drawn
to scale, showing: (i) demising walls, interior walls and other partitions,
including type of wall or partition and height, and any demolition or relocation
of walls, (ii) doors and other openings in such walls or partitions, including
type of door and hardware, (iii) any floor or ceiling openings, and any
variations to building standard floor or ceiling heights, (iv) electrical
outlets, and any restrooms, kitchens, computer rooms, file cabinets, file rooms
and other special purpose rooms, and any sinks or other plumbing facilities, or
other special electrical, HVAC, plumbing or other facilities or equipment,
including all special loading, (v) location and dimensions of communications
equipment room, and electrical and HVAC requirements therefor, (vi) special
cabinet work or other millwork items, (vii) finish selections, and (viii) any
other details or features reasonably required in order to obtain a preliminary
cost estimate as described in Section IV, or reasonably requested by Architect,
Engineer or Landlord in order for the Space Plan to serve as a basis for
preparing Construction Drawings.

     (e) "Construction Drawings" means, to the extent reasonably required by the
nature of the Work, fully dimensioned architectural construction drawings and
specifications, and any


                                        7



required engineering drawings (including mechanical, electrical, plumbing,
air-conditioning, ventilation and heating), and shall include any applicable
items described above for the Space Plan, and to the extent applicable: (i)
electrical outlet locations, circuits and anticipated usage therefor, (ii)
reflected ceiling plan, including lighting, switching, and any special ceiling
specifications, (iii) duct locations for heating, ventilating and
air-conditioning equipment, (iv) details of all millwork, (v) dimensions of all
equipment and cabinets to be built in, (vi) furniture plan showing details of
space occupancy, (vii) keying schedule, (viii) lighting arrangement, (ix)
location of print machines, equipment in lunch rooms, concentrated file and
library loadings and any other equipment or systems (with brand names wherever
possible) which require special consideration relative to air-conditioning,
ventilation, electrical, plumbing, structural, fire protection, life-fire-safety
system, or mechanical systems, (x) special heating, ventilating and air
conditioning equipment and requirements, (xi) weight and location of heavy
equipment, and anticipated loads for special usage rooms, (xii) demolition plan,
(xiii) partition construction plan, (xiv) all governmental requirements, and
(xv) final finish selections, and (xvi) any other details or features reasonably
required in order to obtain a final cost estimate as described in Section IV, or
reasonably requested by Architect, Engineer or Landlord in order for the
Construction Drawings to serve as a basis for contracting the Work.

     (f) "Work" means: (i) the improvements and items of work in the Premises
shown on the final approved Plans (including changes thereto), and (ii) any
demolition, preparation or other work required in connection therewith,
including without limitation, structural or mechanical work, additional HVAC
equipment or sprinkler heads, or modifications to any building mechanical,
electrical, plumbing or other systems and equipment or relocation of any
existing sprinkler heads, either within or outside the Premises required as a
result of the layout, design, or construction of the Work or in order to extend
any mechanical distribution, fire protection or other systems from existing
points of distribution or connection, or in order to obtain building permits for
the work to be performed within the Premises (unless Landlord requires that the
Plans be revised to eliminate the necessity for such work). Notwithstanding the
foregoing to the contrary: (1) the Work shall consist of such materials and
finishes that Landlord currently uses as "building standard", unless otherwise
expressly specified in the Plans and approval is evidenced by Landlord's
initials adjacent to such specification, (2) Landlord reserves the right to
install building standard blinds or other window coverings (to the extent not
already in the Premises), as part of the Work, whether or not shown on the
Plans, (3) Landlord reserves the right to substitute comparable or better
materials and items for those shown in the Plans, so long as they do not
materially and adversely affect the appearance of the Premises, and (4) any
personal property, trade fixtures or business equipment, including, but not
limited to, modular or other furniture, and cabling for communications or
computer systems, whether or not shown on the Plans, shall be provided by
Tenant, at Tenant's sole cost.

     IX. MISCELLANEOUS. If this Work Letter is attached as an Exhibit to an
amendment to an existing lease ("Original Lease"), whether such amendment adds
space, relocates the Premises or makes any other modifications, the term "Lease
Document" herein shall refer to such amendment, or the Original Lease as
amended, as the context implies. By way of example, in such case, references to
the "Premises" and "Commencement Date" herein shall refer, respectively, to such
additional or relocated space and the effective date for delivery thereof under
such amendment, unless expressly provided to the contrary herein. Capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Lease Document. This Exhibit is intended to supplement and be subject to the
provisions of the Lease Document, including, without limitation, those
provisions requiring that any modification or amendment be in writing and signed
by authorized representatives of both parties. This Exhibit shall not apply to


                                        8



any additional space added to the Premises at any time, whether by any options
or rights under the Lease Document or otherwise, or to any portion of the
Premises in the event of a renewal or extension of the Term of the Lease
Document, whether by any options or rights under the Lease Document or
otherwise, unless expressly so provided in the Lease Document or any amendment
or supplement thereto. The rights granted in this Exhibit are personal to Tenant
as named in the Lease Document, and are intended to be performed for such
Tenant's occupancy of the Premises. Under no circumstance whatsoever shall any
assignee or subtenant have any rights under this Exhibit. Any remaining
obligations of Landlord under this Exhibit not theretofore performed shall
concurrently terminate and become null and void if Tenant subleases or assigns
the Lease Document with respect to all or any portion of the Premises, or seeks
or proposes to do so (or requests Landlord's consent to do so), or if Tenant or
any current or proposed affiliate thereof issues any written statement
indicating that Tenant will no longer move its business into, or that Tenant
will vacate and discontinue its business from, the Premises or any material
portion thereof. Any termination of Landlord's obligations under this Exhibit
pursuant to the foregoing provisions shall not serve to terminate or modify any
of Tenant's obligations under the Lease Document.


                                        9



                              LEASE AMENDMENT EIGHT
                                 CMD 177A (8/98)

                            (EXPANSION/CO-TERMINOUS)

     THIS LEASE AMENDMENT EIGHT ("Amendment") is made and entered into as of the
1st day of September, 2005, by and between CMD REALTY INVESTMENT FUND IV, L.P.,
an Illinois limited partnership ("Landlord") and MESA AIR GROUP, INC., a Nevada
corporation ("Tenant").

     A. Landlord and Tenant are the current parties to that certain lease
("Original Lease") dated October 16, 1998, for premises (the "Premises") in the
building (the "Building") known as Three Gateway, located at 410 N. 44th Street,
Phoenix, Arizona (the "Property"), which lease has heretofore been amended by
First Amendment to Lease dated March 9, 1999, Second Amendment to Lease dated
November 8, 1999, Letter Agreement dated May 10, 2000, Lease Amendment Three
dated November 7, 2000, Lease Amendment Four dated May 15, 2001, Lease Term
Adjustment Confirmation dated January 3, 2001, Letter from Mesa Air dated May
30, 2001, Parking Letter dated March 21, 2002, Lease Amendment Five dated
October 11, 2002, Lease Amendment Six dated April 1, 2003, Lease Term
Confirmation Letter dated June 24, 2003, Amended and Re-stated Lease Amendment
Seven dated April 15, 2005 and Lease Term Confirmation Letter dated July 6, 2005
(collectively, and as amended herein, the "Lease").

     B. The parties mutually desire to amend the Lease on the terms hereof.

     NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereby agree as follows.

     1. ADDITIONAL PREMISES. The space currently known as Suite 140 ("Additional
Premises"), the approximate location of which is shown on Exhibit A hereto on
the first (1st) floor of the Building, and which shall be deemed to contain
2,430 square feet of rentable area for purposes hereof, shall be added to and
become a part of the Premises commencing on the date ("Additional Premises
Commencement Date") that is the earlier of: (i) Tenant's occupancy of the
Additional Premises for business purposes as further described in Paragraph 8
below, or (ii) December 1, 2005 ("Outside Date"), and continuing co-terminously
with the expiration date under the Lease ("Lease Expiration Date"), as the same
may be extended from time to time, subject to the terms herein. The Additional
Premises Commencement Date shall be subject to adjustment and confirmation to
the extent further described in Paragraph 8 below.

     2. BASE RENT FOR ADDITIONAL PREMISES. Tenant shall pay monthly base rent
for the Additional Premises as provided below and otherwise as provided in the
Lease:



                                                          Additional Premises
                         Period                            Monthly Base Rent
                         ------                           -------------------
                                                       
Additional Premises Commencement Date - August 31, 2007           $[*]
September 1, 2007 - August 31, 2010                               $[*]
September 1, 2010 - Lease Expiration Date                         $[*]


     3. EXPENSES AND TAXES. Commencing on the Additional Premises Commencement
Date: (a) Tenant shall pay Tenant's Share for the Additional Premises of
increases in Property expenses, real estate taxes and other such amounts, over
the amount for


                                       10



the year 2005, and as otherwise provided in the Lease, and (b) "Tenant's Share"
for the Additional Premises shall be [*] percent ([*]%), for purposes hereof.
Property expenses for the Premises (including the Additional Premises) for any
year (including the base year) during which the average occupancy of the
Property is less than 95% have been and shall continue to be calculated based
upon the costs that would have been incurred if the Property were 95% occupied.

     4. PRORATIONS; CONSOLIDATED OR SEPARATE BILLINGS. If the Additional
Premises Commencement Date does not occur at the beginning of an applicable
payment period under the Lease, Landlord shall reasonably pro rate Tenant's
payment obligations on a per diem basis. The base rent, Property expenses, real
estate taxes, and all other rentals and charges respecting the Additional
Premises are sometimes herein called "Additional Premises Rent". Landlord may
compute and bill Additional Premises Rent (or components thereof) separately or
treat the Additional Premises and Premises as one unit for computation and
billing purposes.

     5. PARKING. Commencing on execution and delivery of this Amendment by both
parties, and continuing through the Expiration Date, Tenant shall license from
Landlord the following additional parking spaces (which shall be in addition to
the parking spaces under Exhibit F to Lease Amendment Five and Section 5 of
Amended and Restated Lease Amendment Seven):

     Area A Covered Unreserved Spaces: six (6) parking spaces. The initial
charges for such spaces shall be $30.00 per space per month, or a total monthly
charge of $[*] for all such Area A Spaces, plus any sales or other tax thereon.

     Area B Uncovered Unreserved (Rooftop) Spaces: one (1) parking space, at no
charge during the Extended Term.

     Covered Reserved Spaces: one (1) parking space, at no charge during the
Extended Term.

     The remaining terms of Exhibit F to Lease Amendment Five, as amended
herein, shall continue to apply to the above-described spaces.

     6. OTHER TERMS; EXTENSION OPTION. Commencing on the Additional Premises
Commencement Date, the Additional Premises shall be added to, and become part
of, the Premises under the Lease, and all applicable provisions then or
thereafter in effect under the Lease (including the Extension Option set forth
in Exhibit C to Lease Amendment Five, which shall apply to the entire Premises,
including the Additional Premises) shall also apply to the Additional Premises,
except as provided to the contrary herein.

     7. CONDITION OF ADDITIONAL PREMISES; TENANT WORK, LANDLORD ALLOWANCE, SUITE
SIGN; AESTHETICS FROM COMMON AREAS. Tenant has inspected the Additional Premises
(and portions of the Building, Property, systems and equipment providing access
to or serving the Additional Premises) or has had an opportunity to do so, and
agrees to accept the same "AS IS" without any agreements, representations,
understandings or obligations on the part of Landlord to perform or pay for any
alterations, repairs or improvements, except that Landlord shall provide an
"Allowance" towards the "Cost of the Work" that Tenant performs all as set forth
in Exhibit B hereto. Tenant may also use the Allowance for reasonable
out-of-pocket costs of designing and installing one (1) sign identifying
Tenant's name and logo on the glass separation between the Additional Premises
and the ground floor lobby of the Building, subject to Landlord's prior written
approval of the size, colors, and all other details; Landlord may withhold


                                       11



such approval in Landlord's sole good faith opinion. Because the Additional
Premises is located on the ground floor and is visible from the main Building
lobby: (a) Landlord reserves the right to approve in writing, in Landlord's sole
good faith opinion, all internal lighting, signs, and other matters, in the
Additional Premises that may be visible from the public, common or exterior
areas of the Property, (b) Tenant shall at all times keep the appearance of the
portion of the Additional Premises that is visible from public, common and
exterior areas of the Property in a neat, professional, attractive, and first
class condition, and (c) Landlord reserves the right, at Landlord's sole cost,
to replace the glass separation, including replacement with frosted glass, apply
a covering or coating over the glass and/or install blinds over the glass and
require that Tenant keep such blinds closed.

     8. EARLY ACCESS AND ADDITIONAL PREMISES COMMENCEMENT DATE ADJUSTMENT.
Landlord shall permit Tenant to enter the Additional Premises upon mutual
execution and delivery of this Amendment. During any such early entry (e.g. to
perform Work in the Additional Premises under Exhibit B hereto), Tenant shall
comply with all terms and provisions of the Lease; however, the Additional
Premises Commencement Date shall only be advanced to the extent that Tenant
actually commences to occupy the Additional Premises for business purposes early
(with the Additional Premises Rent fairly prorated based on the rentable area of
the Additional Premises so occupied). If the Additional Premises Commencement
Date is advanced as provided herein, the Lease Expiration Date shall not be
changed. Landlord and Tenant shall execute a confirmation of the Additional
Premises Commencement Date as adjusted herein in such form as Landlord may
reasonably request; any failure to respond within thirty (30) days after
Landlord provides such written confirmation shall be deemed an acceptance of the
date set forth in Landlord's confirmation. If Tenant disagrees with Landlord's
adjustment of such date, Tenant shall pay Additional Premises Rent and perform
all other obligations commencing and ending on the dates determined by Landlord,
subject to refund or credit when the matter is resolved.

     9. REAL ESTATE BROKERS; OFFER; MISCELLANEOUS. Sections 8 and 9 of Lease
Amendment Six are incorporated herein as though fully set forth. Otherwise, this
Amendment sets forth the entire agreement between the parties with respect to
the matters set forth herein.

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the
above date.

                            LANDLORD: CMD REALTY INVESTMENT FUND IV, L.P. [SEAL]

                                      By: CMD/Fund IV GP Investments, L.P.,
                                          general partner

                                      By: CMD REIM IV, Inc., general partner

                                      By: CMD Realty Investors, Agent


                                      By:
                                          --------------------------------------
                                          Allen D. Aldridge, Vice President


                            TENANT:   MESA AIR GROUP, INC. [SEAL]
                                      a Nevada corporation


                                      By:
                                          --------------------------------------
                                          Mike Lotz, President & COO


                                       12



                                    EXHIBIT A

                     FLOOR PLATE SHOWING ADDITIONAL PREMISES


                                       13



                                    EXHIBIT B

                                                                CMD 108G (12/00)
                                                                   MODERATE WORK
                                                              TENANT PERFORMANCE

                                   WORK LETTER

     This Exhibit is a "Work Letter" to the foregoing document (referred to
herein for convenience as the "Lease Document"). All references to "Premises"
hereunder shall mean the Additional Premises.

     I.   Basic Arrangement

     a. Tenant to Arrange for Work. Tenant desires to engage one or more
contractors to perform certain improvements (the "Work," as further defined in
Section VII) to or for the Premises under the Lease Document. Tenant shall
arrange for the Work to be planned and performed strictly in accordance with the
provisions of this Exhibit and applicable provisions of the Lease Document.
Tenant shall pay when due all costs for or related to the Plans and Work
whatsoever ("Costs of the Work"), and Landlord shall reimburse certain such
costs up to the Allowance, as further described below.

     b. Allowance and, Landlord's Costs and Administrative Fee. Landlord shall
provide up to $[*] (the "Allowance") towards the Costs of the Work relating to
permanent leasehold improvements (provided the portion of the Allowance
available for the Plans shall be limited to [*] percent ([*]%), and shall
exclude planning for furniture, fixtures and equipment). Tenant shall pay
Landlord's out-of-pocket costs, if any, for architectural and engineering review
of the Plans and any Engineering Report, and all revisions thereof, and an
administrative fee ("Administrative Fee") equal to $[*] of the other Costs of
the Work for Landlord's time in reviewing the Plans and Work and coordinating
with Tenant's Contractors. Landlord may, if feasible, also charge Tenant for any
extra costs reasonably incurred by Landlord as a result of the Work, including
but not limited to, any additional after-hours security for the Property common
areas due to after-hours construction activity, and costs of any after-hours
HVAC consumed in or for the Premises during the Work (based on actual usage as
determined by the Building's energy management system); provided, however, that
Tenant's contractors shall not be charged for parking (provided that parking by
such contractors shall not exceed ten (10) spaces), freight elevator access or
loading dock access. The foregoing items may be charged against the Allowance,
and if the Allowance shall be insufficient, Tenant shall pay Landlord for such
amounts as additional Rent within thirty (30) days after billing. If all or any
portion of the Allowance shall not be used for the purposes permitted herein
within twelve (12) months after the Commencement Date set forth in the Lease
Document, Landlord shall be entitled to the savings and Tenant shall receive no
credit therefore. Notwithstanding anything to the contrary contained herein, any
personal property, trade fixtures or business equipment, including, but not
limited to, modular or other furniture, and cabling for communications or
computer systems, whether or not shown on the Approved Plans, shall be provided
by Tenant, at Tenant's sole cost, and the Allowance shall not be used for such
purposes. Any cabling remaining in the Premises upon the expiration or earlier
termination of the Lease shall become the property of Landlord (without payment
by Landlord). All disconnections made by Tenant of any cabling shall be made
properly such that, among other things, such cabling is reusable.

     c. Funding and Disbursement. Landlord shall fund and disburse the Allowance
within thirty (30) days after the Work has been completed in accordance with


                                       14



the Approved Plans in accordance with the provisions hereof, and Tenant has
submitted all invoices, architect's certificates, a Tenant's affidavit, complete
unconditional lien waivers and affidavits of payment by all Tenant's
Contractors, and such other evidence as Landlord may reasonably require that the
cost of the Work has been paid and that no architect's, mechanic's,
materialmen's or other such liens have been or may be filed against the Property
or the Premises arising out of the design or performance of such Work. Landlord
may issue checks to fund the Allowance jointly or separately to Tenant, its
general contractor, and any other of Tenant's Contractors.

     II. Planning. The term "Plans" herein means a "Space Plan," as the same may
be superseded by any "Construction Drawings," prepared and approved pursuant to
this Section (and as such terms are further defined in Section VII). In the
event of any inconsistency between the Space Plan and Construction Drawings, or
revisions thereto, as modified to obtain permits, the latest such item approved
by Landlord shall control. The term "Approved Plans" herein means the Plans (and
any revisions thereof) as approved by Landlord in writing in accordance with
this Section.

     a. Tenant's Planners. Tenant shall engage a qualified, licensed architect
("Architect"), subject to Landlord's prior written approval. To the extent
required by Landlord or appropriate in connection with preparing the Plans,
Tenant shall also engage one or more qualified, licensed engineering firms, e.g.
mechanical, electrical, plumbing, structural and/or HVAC ("Engineers"), all of
whom shall be designated or approved by Landlord in writing. The term "Tenant's
Planners" herein shall refer collectively or individually, as the context
requires, to the Architect or Engineers engaged by Tenant, and approved or
designated by Landlord in writing in accordance with this Exhibit.

     b. Space Plan, Construction Drawings and Engineering Report. Tenant shall
promptly hereafter cause the Architect to submit three (3) sets of a "Space
Plan" (as defined in Section VII) to Landlord for approval. Landlord shall,
within three (3) working days after receipt thereof, either approve said Space
Plan, or disapprove the same advising Tenant of the reasons for such
disapproval; Landlord agrees to not unreasonably withhold its approval, as
further provided in subsection c below. In the event Landlord disapproves said
Space Plan, Tenant shall modify the same, taking into account the reasons given
by Landlord for said disapproval, and shall submit three (3) sets of the revised
Space Plan to Landlord. The parties shall continue such process in the same time
frames until Landlord grants approval. To the extent required by Landlord or the
nature of the Work and as further described in Section VII, Tenant shall, after
Landlord's approval of the Space Plan: (i) cause the Architect to submit to
Landlord for approval "Construction Drawings" (including, as further described
in Section VII below, sealed mechanical, electrical and plumbing plans prepared
by a qualified, licensed Engineer approved or designated by Landlord), and (ii)
cause the Engineers to submit for Landlord's approval a report (the "Engineering
Report") indicating any special heating, cooling, ventilation, electrical, heavy
load or other special or unusual requirements of Tenant, including calculations.
Landlord shall, within five (5) working days after receipt thereof (or such
longer time as may be reasonably required in order to obtain any additional
architectural, engineering or HVAC report or due to other special or unusual
features of the Work or Plans), either approve the Construction Drawings and
Engineering Report, or disapprove the same advising Tenant of the reasons for
disapproval (and Landlord's agrees that any such disapproval shall be on a
reasonable basis, as further provided in subsection c below). If Landlord
disapproves of the


                                       15



Construction Drawings or Engineering Report, Tenant shall modify and submit
revised Construction Drawings, and a revised Engineering Report, taking into
account the reasons given by Landlord for disapproval. The parties shall
continue such process in the same time frames until Landlord grants approval.
Construction Drawings shall include a usable computer aided design (CAD) file.

     c. Tenant's Planning Responsibility and Landlord's Approval. Tenant has
sole responsibility to provide all information concerning its space requirements
to Tenant's Planners, to cause Tenant's Planners to prepare the Plans, and to
obtain Landlord's final approval thereof (including all revisions). Tenant and
Tenant's Planners shall perform independent verifications of all field
conditions, dimensions and other such matters), and Landlord shall have no
liability for any errors, omissions or other deficiencies therein. Landlord
shall not unreasonably withhold approval of any Plans or Engineering Report
submitted hereunder, if they provide for a customary office layout, with
finishes and materials generally conforming to building standard finishes and
materials (or upgrades) currently being used by Landlord at the Property, are
compatible with the Property's shell and core construction, and if no material
modifications will be required for the Property's Systems and Equipment (as
hereinafter defined), and will not require any structural modifications to the
Property, whether required by heavy loads or otherwise, and will not create any
potentially dangerous conditions, potentially violate any codes or other
governmental requirements, potentially interfere with any other occupant's use
of its premises, or potentially increase the cost of operating the Property.
"Systems and Equipment" shall mean any plant, machinery, transformers, duct
work, cable, wires, and other equipment, facilities, and systems designed to
supply light, heat, ventilation, air conditioning and humidity or any other
services or utilities, or comprising or serving as any component or portion of
the electrical, gas, steam, plumbing, sprinkler, communications, alarm,
security, or fire/life/safety systems or equipment, or any elevators, escalators
or other mechanical, electrical, electronic, computer or other systems or
equipment for the Property, except to the extent that any of the same serves
Tenant or any other tenant exclusively.

     d. Governmental Approval of Plans; Building Permits. Tenant shall cause
Tenant's Contractors (as defined in Section III) to apply for any building
permits, inspections and occupancy certificates required for or in connection
with the Work. If the Plans must be revised in order to obtain such building
permits, Tenant shall promptly notify Landlord, promptly arrange for the Plans
to be revised to satisfy the building permit requirements, and shall submit the
revised Plans to Landlord for approval as a Change Order under Paragraph e
below. Landlord shall have no obligation to apply for any zoning, parking or
sign code amendments, approvals, permits or variances, or any other governmental
approval, permit or action. If any such other matters are required, Tenant shall
promptly seek to satisfy such requirements (if Landlord first approves in
writing), or shall revise the Plans to eliminate such requirements and submit
such revised Plans to Landlord for approval in the manner described above.

     e. Changes After Plans Are Approved. If Tenant shall desire, or any
governmental body shall require, any changes, alterations, or additions to the
Approved Plans, Tenant shall submit a detailed written request or revised Plans
(the "Change Order") to Landlord for approval. If reasonable and practicable and
generally consistent with the Plans theretofore approved, Landlord shall not
unreasonably withhold approval. All costs in connection therewith, including,
without limitation, construction costs, permit fees, and any additional plans,
drawings and engineering reports or other studies or


                                       16



tests, or revisions of such existing items, shall be included in the Costs of
the Work under Section I. In the event that the Premises are not constructed in
accordance with the Approved Plans, Tenant shall not be permitted to occupy the
Premises until the Premises reasonably comply in all respects therewith; in such
case, the Rent shall nevertheless commence to accrue and be payable as otherwise
provided in the Lease Document.

     III. Contractors and Contracts. Tenant shall engage to perform the Work
such contractors, subcontractors and suppliers ("Tenant's Contractors") as
Landlord customarily engages or recommends for use at the Property; provided,
Tenant may substitute other licensed, bonded, reputable and qualified parties
capable of performing quality workmanship. Such substitutions may be made only
with Landlord's prior written approval, which shall not be unreasonably withheld
or delayed. Such approval shall be granted, granted subject to specified
conditions, or denied within three (3) working days after Landlord receives from
Tenant a written request for such substitution, containing a reasonable
description of the proposed party's background, finances, references,
qualifications, and other such information as Landlord may request. For Work
involving any mechanical, electrical, plumbing, structural, demolition or HVAC
matters, or any Work required to be performed outside the Premises or involving
Tenant's entrance, Landlord may require that Tenant select Tenant's Contractors
from a list of such contractors (provided that Landlord gives Tenant at least 3
choices for each trade) or else, for any trade as to which Landlord is unable to
give Tenant a choice of 3 Contractors, Tenant may choose its own Contractor for
such trade, subject to Landlord's approval which shall not be unreasonably
withheld or delayed. All contracts shall contain insurance, indemnity and other
provisions consistent herewith. Each contract and subcontract shall guarantee to
Tenant and Landlord the replacement or repair, without additional charge, of all
defects or deficiencies in accordance with its contract within one (1) year
after completion of such work or the correction thereof. The correction of such
work shall include, without additional charge, all additional expenses and
damages in connection with such removal or replacement of all or any part of
Tenant's Work, and/or the Property and/or common areas, or work which may be
damaged or disturbed thereby. Tenant shall give Landlord copies of all contracts
and subcontracts promptly after the same are entered.

     IV. Insurance and Indemnity. In addition to any insurance which may be
required under the Lease Document, Tenant shall either secure, pay for and
maintain, or cause Tenant's Contractors to secure, pay for and maintain during
the continuance of construction and fixturing work within the Property or
Premises, reasonable amounts of customary and appropriate insurance with
responsible, licensed insurers, for all insurable risks and liabilities relating
to the Work, including commercial general liability with contractual liability
coverage ("CGL"), and full replacement value property damage (including
installation floater coverage). The CGL policy shall be endorsed to include, as
additional insured parties, Landlord, the property management company for the
Property, and Landlord's agents, partners, affiliates. All policies shall
include a waiver of subrogation in favor of the parties required to be
additional insureds hereunder. Such insurance shall be primary to any insurance
carried independently by said additional insured parties (which shall be excess
and non-contributory). Certificates for such insurance, and the endorsements
required hereunder, shall be delivered to Landlord before construction is
commenced or any contractor's equipment or materials are moved onto the
Property. Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any decorations, fixtures, personal property, installations
or other


                                       17



improvements or items of work installed, constructed or brought upon the
Premises by or for Tenant or Tenant's Contractors, all of the same being at
Tenant's sole risk. In the event that during the course of Tenant's Work any
damage shall occur to the construction and improvements being made by Tenant,
then Tenant shall repair the same at Tenant's cost. Tenant hereby agrees to
protect, defend, indemnify and hold Landlord and its employees, agents, and
affiliates harmless from all liabilities, losses, damages, claims, demands, and
expenses (including attorneys' fees) arising out of or relating to the Plans or
Work.

     V. Performance of Work

     a. Conditions to Commencing Work. Before commencing any Work, Tenant shall:
(i) obtain Landlord's written approval of Tenant's Planners and the Plans, as
described in Section II, (ii) obtain and post all necessary governmental
approvals and permits as described in Section II, and provide copies thereof to
Landlord, (iii) obtain Landlord's written approval of Tenant's Contractors, and
provide Landlord with copies of the contracts as described in Section III, and
(iv) provide evidence of insurance to Landlord as described in Section IV.

     b. Compliance and Standards. Tenant shall cause the Work to comply in all
respects with the following: (i) the Approved Plans, (ii) the Property Code of
the City and State in which the Property is located and Federal, State, County,
City or other laws, codes, ordinances, rules, regulations and guidance, as each
may apply according to the rulings of the controlling public official, agent or
other such person, (iii) applicable standards of the National Board of Fire
Underwriters (or successor organization) and National Electrical Code, (iv)
applicable manufacturer's specifications, and (v) any work rules and regulations
as Landlord or its agent may have adopted for the Property, including any Rules
attached as an Exhibit to the Lease Document. Tenant shall use only new,
first-class materials in the Work, except where explicitly shown in the Approved
Plans. Tenant's Work shall be performed in a thoroughly safe, first-class and
workmanlike manner, and shall be in good and usable condition at the date of
completion. In case of inconsistency, the requirement with the highest standard
protecting or favoring Landlord shall govern.

     c. Property Operations, Dirt, Debris, Noise and Labor Harmony. Tenant and
Tenant's Contractors shall make all efforts and take all proper steps to assure
that all construction activities do not interfere with the operation of the
Property or with other occupants of the Property. Tenant's Work shall be
coordinated under Landlord's direction with any other work and other activities
being performed for or by other occupants in the Property so that Tenant's Work
will not interfere with or delay the completion of any other work or activity in
the Property. Construction equipment and materials are to be kept within the
Premises, and delivery and loading of equipment and materials shall be done at
such locations and at such time as Landlord shall direct so as not to burden the
construction or operation of the Property. Tenant's Contractors shall comply
with any work rules of the Property and Landlord's requirements respecting the
hours of availability of elevators and manner of handling materials, equipment
and debris. Demolition must be performed after 6:00 p.m. and on weekends, or as
otherwise required by Landlord or the work rules for the Property. Construction
which creates noise, odors or other matters that may bother other occupants may
be rescheduled by Landlord at Landlord's sole discretion. Delivery of materials,
equipment and removal of debris must be arranged to avoid any inconvenience or
annoyance to other occupants.


                                       18



The Work and all cleaning in the Premises must be controlled to prevent dirt,
dust or other matter from infiltrating into adjacent occupant, common or
mechanical areas. Tenant shall conduct its labor relations and relations with
Tenant's Planners and Contractors, employees, agents and other such parties so
as to avoid strikes, picketing, and boycotts of, on or about the Premises or
Property. If any employees of the foregoing parties strike, or if picket lines
or boycotts or other visible activities objectionable to Landlord are
established, conducted or carried out against Tenant or such parties in or about
the Premises or Property, Tenant shall immediately close the Premises and remove
or cause to be removed all such parties until the dispute has been settled.

     d. Removal of Debris. Tenant's Contractors shall be required to remove from
the Premises and dispose of, at least once a day and more frequently as Landlord
may reasonably direct, all debris and rubbish caused by or resulting from the
Work, and shall not place debris in the Property's waste containers. If required
by Landlord, Tenant shall sort and separate its waste and debris for recycling
and/or environmental law compliance purposes. Upon completion of Tenant's Work,
Tenant's Contractors shall remove all surplus materials, debris and rubbish of
whatever kind remaining within the Property which has been brought in or created
by Tenant's Contractors in the performance of Tenant's Work. If any of Tenant's
Contractors shall neglect, refuse or fail to remove any such debris, rubbish,
surplus material or temporary structures within 48 hours after notice to Tenant
from Landlord with respect thereto, Landlord may cause the same to be removed by
contract or otherwise as Landlord may determine expedient, and bill the cost
thereof to Tenant.

     e. Completion and General Requirements. Tenant shall take all actions
necessary to cause Tenant's Planners to prepare the Approved Plans, and to cause
Tenant's Contractors to obtain permits or other approvals, diligently commence
and prosecute the Work to completion, and obtain any inspections and occupancy
certificates for Tenant's occupancy of the Premises by the Commencement Date set
forth in the Lease Document. Any delays in the foregoing shall not serve to
abate or extend the time for the Commencement Date or commencement of Rent under
the Lease Document, except to the extent of one (1) day for each day that
Landlord delays approvals required hereunder beyond the times permitted herein
without good cause, provided substantial completion of the Work and Tenant's
ability to reasonably use the Premises by the Commencement Date (or by such
later date when Tenant would otherwise have substantially completed the Work) is
actually delayed thereby. Tenant shall impose on and enforce all applicable
terms of this Exhibit against Tenant's Planners and Tenant's Contractors. Tenant
shall notify Landlord upon completion of the Work (and record any notice of
completion contemplated by law). To the extent reasonably appropriate based on
the nature of the Work, Tenant shall provide Landlord with "as built" drawings
no later than thirty (30) days after completion of the Work.

     f. Landlord's Role and Rights. The parties acknowledge that neither
Landlord nor its managing agent is an architect or engineer, and that the Work
will be designed and performed by independent architects, engineers and Tenant's
Contractors engaged by Tenant. Landlord and its managing agent shall have no
responsibility for construction means, methods or techniques or safety
precautions in connection with the Work, and do not guarantee that the Plans or
Work will be free from errors, omissions or defects, and shall have no liability
therefor. Landlord's approval of Tenant's Plans and contracts, and Landlord's
designations, lists, recommendations or approvals concerning


                                       19



Tenant's Planners and Contractors shall not be deemed a warranty as to the
quality or adequacy thereof or of the Plans or the Work, or the design thereof,
or of its compliance with laws, codes and other legal requirements. Tenant shall
permit access to the Premises, and inspection of the Work, by Landlord and
Landlord's architects, engineers, contractors and other representatives, at all
times during the period in which the Work is being planned, constructed and
installed and following completion of the Work. If Tenant fails to perform the
Work as required herein or the materials supplied fail to comply herewith or
with the specifications approved by Landlord, and Tenant fails to cure such
failure within two (2) business days after notice by Landlord, Landlord shall
have the right, but not the obligation, to order Tenant or any of Tenant's
Contractors who violate the requirements imposed on Tenant or Tenant's
Contractors in performing the Work to cease the Work and remove its equipment
and employees from the Property. Landlord shall have the right, but not the
obligation, to perform, on behalf of and for the account of Tenant, subject to
reimbursement by Tenant, any work required to cure or complete any Work which
has violated this Exhibit or which pertains to patching of the Work (and which
Tenant has failed to cure within ten (10) days after notice from Landlord), or
involves Work outside the Premises, or affects the base building core or
structure or Systems and Equipment for the Property.

     VI. HVAC Balancing. As a final part of the Work, Tenant shall cause its
contractor to perform air balancing tests and adjustments on all areas of the
Premises served by the air handling system that serves the areas in which the
Work is performed (including any original space and any additional space being
added to the Premises in connection herewith). Landlord shall not be responsible
for any disturbance or deficiency created in the air conditioning or other
mechanical, electrical or structural facilities within the Property or Premises
as a result of the Work. If such disturbances or deficiencies result, and
Tenant's contractor does not properly correct the same, Landlord reserves the
right, after fifteen (15) days notice to Tenant, to correct the same and restore
the services to Landlord's reasonable satisfaction, at Tenant's reasonable
expense.

     VII. Certain Definitions

     a. "Space Plan" herein means, to the extent required by the nature of the
Work, detailed plans (including any so-called "pricing plans"), including a
fully dimensioned floor plan and drawn to scale, showing: (i) demising walls,
interior walls and other partitions, including type of wall or partition and
height, and any demolition or relocation of walls, and details of space
occupancy and density, (ii) doors and other openings in such walls or
partitions, including type of door and hardware, (iii) electrical and computer
outlets, circuits and anticipated usage therefor, (iv) any special purpose
rooms, any sinks or other plumbing facilities, heavy items, and any other
special electrical, HVAC or other facilities or requirements, including all
special loading and related calculations, (v) any space planning considerations
to comply with fire or other codes or other governmental or legal requirements,
(vi) finish selections, and (vii) any other details or features requested by
Architect, Engineer or Landlord, or otherwise required, in order for the Space
Plan to serve as a basis for Landlord to approve the Work, and for Tenant to
contract and obtain permits for the Work, or for the Space Plan to serve as a
basis for preparing Construction Drawings.

     b. "Construction Drawings" herein means, to the extent required by the
nature of the Work, fully dimensioned architectural construction drawings and
specifications, and any required engineering drawings, specifications and
calculations


                                       20



(including mechanical, electrical, plumbing, structural, air-conditioning,
ventilation and heating), and shall include any applicable items described above
for the Space Plan, and any other details or features requested by Architect,
Engineer or Landlord in order for the Construction Drawings to serve as a basis
for Landlord to approve the Work, and for Tenant to contract and obtain permits
for the Work.

     c. "Work" herein means: (i) the improvements and items of work shown on the
final Approved Plans (including changes thereto), and (ii) any preparation or
other work required in connection therewith, including without limitation,
structural or mechanical work, additional HVAC equipment or sprinkler heads, or
modifications to any building mechanical, electrical, plumbing or other systems
and equipment or relocation of any existing sprinkler heads, either within or
outside the Premises required as a result of the layout, design, or construction
of the Work or in order to extend any mechanical distribution, fire protection
or other systems from existing points of distribution or connection, or in order
to obtain building permits for the work to be performed within the Premises
(unless Landlord requires that the Plans be revised to eliminate the necessity
for such work).

     VIII. Liens. Tenant shall pay all costs for the Plans and Work when due.
Tenant shall keep the Property, Premises and this Lease free from any
mechanic's, materialman's, architect's, engineer's or similar liens or
encumbrances, and any claims therefor, or stop or violation notices, in
connection with the Plans and Work. Tenant shall give Landlord notice at least
ten (10) days prior to the commencement of any Work (or such additional time as
may be necessary under applicable Laws), to afford Landlord the opportunity of
posting and recording appropriate notices of non-responsibility. Tenant shall
remove any such claim, lien or encumbrance, or stop or violation notices of
record, by bond or otherwise within thirty (30) days after notice by Landlord.
If Tenant fails to do so, Landlord may pay the amount (or any portion thereof)
or take such other action as Landlord deems necessary to remove such claim, lien
or encumbrance, or stop or violation notices, without being responsible for
investigating the validity thereof. The amount so paid and costs incurred by
Landlord shall be deemed additional Rent under the Lease Document payable upon
demand, without limitation as to other remedies available to Landlord.

     IX. Miscellaneous

     a. Interpretation; Original Lease. If this Work Letter is attached as an
Exhibit to an amendment to an existing lease ("Original Lease"), whether such
amendment adds space, relocates the Premises or makes any other modifications,
the term "Lease Document" herein shall refer to such amendment, or the Original
Lease as amended, as the context implies. By way of example, in such case,
references to the "Premises" and "Commencement Date" herein shall refer,
respectively, to such additional or relocated space and the effective date for
delivery thereof under such amendment, unless expressly provided to the contrary
herein. Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Lease Document.

     b. General Matters. This Exhibit is intended to supplement and be subject
to the provisions of the Lease Document, including, without limitation, those
provisions requiring that any modification or amendment be in writing and signed
by authorized representatives of both parties. This Exhibit shall not apply to
any additional space added to the Premises at any time, whether by any options
or rights under the Lease Document or otherwise, or to any portion of the
Premises in the event of a renewal or extension of the Term of the Lease
Document, whether by any options or rights under the Lease


                                       21



Document or otherwise, unless expressly so provided in the Lease Document or any
amendment or supplement thereto. The Lease Document and this Exhibit are not
intended to create any third-party beneficiaries; without limiting the
generality of the foregoing, no Tenant Contractors or Tenant Planners shall have
any legal or beneficial interest in the Allowance. The rights granted in this
Exhibit are personal to Tenant as named in the Lease Document, and are intended
to be performed for such Tenant's occupancy of the Premises. Under no
circumstance whatsoever shall any assignee or subtenant have any rights under
this Exhibit. Any remaining obligations of Landlord under this Exhibit not
theretofore performed shall concurrently terminate and become null and void if
Tenant subleases or assigns the Lease Document with respect to all or any
portion of the Premises, or seeks or proposes to do so (or requests Landlord's
consent to do so), or if Tenant or any current or proposed affiliate thereof
issues any written statement indicating that Tenant will no longer move its
business into, or that Tenant will vacate and discontinue its business from, the
Premises or any material portion thereof. Any termination of Landlord's
obligations under this Exhibit pursuant to the foregoing provisions shall not
serve to terminate or modify any of Tenant's obligations under the Lease
Document. In addition, notwithstanding anything to the contrary contained
herein, Landlord's obligations under this Exhibit, including obligations to
perform any work, or provide any Allowance or rent credit, shall be subject to
the condition that Tenant shall be in compliance with the material terms of the
Lease (including all terms providing for the timely payment of rent), and shall
not have committed a violation under the Lease by the time that Landlord is
required to perform such work or provide such Allowance or rent credit.


                                       22

EX-21.1

                                                                    Exhibit 21.1

                             List of Subsidiaries of
                              Mesa Air Group, Inc.

1.   Mesa Airlnes, Inc.

2.   Air Midwest, Inc.

3.   Freedom Airlines, Inc.

4.   MPD, Inc.

5.   Regional Aircraft Services, Inc.

6.   MAGI Insurance, Ltd.

7.   Ritz Hotel Management, Inc.

EX-23.1

exv23w1

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jonathan G. Ornstein, certify that:

1)	I have reviewed this annual report on Form 10-K of Mesa Air Group, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ JONATHAN G. ORNSTEIN

Jonathan G. Ornstein

Chairman and Chief Executive Officer

Mesa Air Group, Inc.

Date: December 14, 2005

EX-31.2

Exhibit 31.2

CERTIFICATION

I, George Murnane III, certify that:

1)	I have reviewed this annual report on Form 10-K of Mesa Air Group, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ GEORGE MURNANE III

George Murnane III

Executive Vice President and

Chief Financial Officer

Mesa Air Group, Inc.

Date: December 14, 2005

EX-32.1

Exhibit 32.1

MESA AIR GROUP, INC. AND ITS SUBSIDIARIES

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Mesa Air Group, Inc. (the “Company”) on Form 10-K for the period ended September 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jonathan G. Ornstein, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By /s/ Jonathan G. Ornstein
Jonathan G. Ornstein
Chairman and
Chief Executive Officer

Date: December 14, 2005

EX-32.2

Exhibit 32.2

MESA AIR GROUP, INC. AND ITS SUBSIDIARIES

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Mesa Air Group, Inc. (the “Company”) on Form 10-K for the period ended September 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George Murnane III, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By /s/ George Murnane III
George Murnane III
Executive Vice President and
Chief Financial Officer

Date: December 14, 2005