10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended: March 31, 2012 

BALTIA AIR LINES, INC. 

(Exact name of registrant as specified in its charter)

New York (State or other jurisdiction of incorporation or organization)  11-2989648  (IRS Employer Identification No.) 

JFK International Airport 

Building 151, Jamaica, NY 11430 

(Address of principal executive offices) 

Issuer’s telephone no: (718)244 8880 

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

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). |X| Yes   |  | No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer |_|    Accelerated Filer |_|    Smaller reporting company |X|

Non Accelerated Filer |_| (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES |_|   NO |X|

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:	Outstanding as of May 10, 2012
Class: Common Stock	1,989,728,322

BALTIA AIR LINES, INC. 

INDEX 

Part I - Financial Information	Page
Item 1 –Financial Statements:	3
Balance Sheet – March 31, 2012	3
Statement of Operations – Three Months Ended March 31, 2012	4
Statement of Cash Flows – Three Months Ended March 31, 2012	5
Statement of Shareholder Equity	6
Notes to Financial Statements	7 - 8
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3 – Quantitative and Qualitative Disclosures about Market Risk	14
Item 4T – Controls and Procedures	14
Part II - Other Information	15
Item 1 – Legal Proceedings	15
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3 Default Upon Senior Securities.	15
Item 4 - Submission of Matters to a Vote of Security Holders.	15
Item 5 – Other Information	15
Item 6 – Exhibits
Signatures and Certifications	15-17
Exhibit 101 – XBRL Files

Baltia Air Lines, Inc.
Balance Sheet
(A Development Stage Company)
	March 31, 2012	December 31, 2011
	(unaudited)
Assets
Current Assets
Cash	$39,847	$57,390
Prepaid expenses	0	0
Total current assets	39,847	57,390
Property & Equipment:
equipment	1,762,179	3,513,526
accumulated depreciation	(114,268)	(109,268)
Net property & equipment	1,647,911	3,404,258
Other Assets:
Security deposit and other	317,293	317,293
Total Assets	$2,005,051	$3,778,941
Liabilities & Equity
Current Liabilities:
Accounts payable	$210,286	$205,285
Accrued expenses	138,000	112,125
Total current liabilities	348,286	317,410
Long-term debt, net of discount	1,035,502	1,003,941
Equity:
Preferred stock-2,000,000 authorized $0.01 par value
66,500 issued & outstanding	665	665
Common stock-2,000,000,000 authorized $0.0001 par value
1,760,436,018 issued & outstanding (1,718,031,382 in Dec)	176,044	171,803
Additional paid in capital	78,483,802	76,933,560
Deficit Accumulated During Development Stage	(78,039,248)	(74,648,438)
Total Equity	621,263	2,457,590
Total Liabilities & Equity	$2,005,051	$3,778,941
See notes to unaudited interim financial statements.

Baltia Air Lines, Inc.
Statement of Operations
(Unaudited)
(A Development Stage Company)
	Three Months Ended March 31,		8/29/89 (Inception) to
	2012	2011	3/31/2012
Revenue	$0	$0	$0
Costs & Expenses:
General & administrative	1,634,051	2,610,324	71,282,271
FAA certification costs	87,140	100,882	2,611,287
Training	0	0	225,637
Depreciation	5,000	2,500	361,089
Other	0	0	568,245
Interest expense (income)	57,436	57,945	1,368,655
Loss on sale of assets	1,607,183	0	1,607,183
Total costs & expenses	3,390,810	2,771,651	78,024,367
Loss before income taxes	(3,390,810)	(2,771,651)	(78,024,367)
Income taxes	0	0	14,881
Deficit Accumulated During Development Stage	($3,390,810)	($2,771,651)	($78,039,248)
Per share amounts:
Basic:
Loss	Nil	Nil
Weighted Average Shares Outstanding	1,739,000,707	1,150,504,772
See notes to unaudited interim financial statements.

Baltia Air Lines, Inc.
Statement of Cash Flows
(Unaudited)
(A Development Stage Company)
	Three Months Ended March 31,		8/29/89 (Inception) to
Statement of Cash Flows	2012	2011	3/31/2012
Cash flows from operating activities:
Deficit Accumulated During Development Stage	($3,390,810)	($2,771,651)	($78,039,248)
Adjustments required to reconcile deficit accumulated
development stage to cash used in operating activities:
Depreciation	5,000	2,500	359,940
Amortization of loan discount	31,561	32,070	180,479
Expenses paid by issuance of common stock and options	422,877	1,253,850	49,886,033
Basis of sold or disposed assets	1,751,347	0	1,751,347
(Increase) decrease in prepaid expenses	0	0	400,301
Increase in accounts payable & accrued expenses	30,876	136,502	3,499,767
Cash flows used by operating activities:	(1,149,149)	(1,346,729)	(21,961,381)
Cash flows from investing activities:
Purchase of equipment	0	(77,422)	(3,696,583)
Security deposits	(0)	0	(317,293)
Cash used in investing activities	(0)	(77,422)	(4,013,876)
Cash flows from financing activities:
Proceeds from issuance of common stock	1,131,606	1,406,311	24,420,585
Proceeds from issuance of preferred stock	0	0	2,753
Loans from related parties	0	0	1,351,573
Repayment of related party loans	0	0	(368,890)
Proceeds of long-term debt	0	0	1,109,183
Acquisition of treasury stock	0	0	(500,100)
Cash generated by financing activities	1,131,606	1,406,311	26,015,104
Change in cash	(17,543)	(17,840)	39,847
Cash-beginning of period	57,390	52,840	0
Cash-end of period	$39,847	$35,000	$39,847
See notes to unaudited interim financial statements.

Baltia Air Lines, Inc.
Statement of Stockholders' Equity
(Unaudited)
(A Development Stage Company)
	Preferred		Common			Deficit
	Shares	Par Value	Shares	Common Stock Amount	Additional Paid-In Capital	Accumulated During Development Stage
Balance at December 31, 2011	66,500	$665	1,718,031,382	$171,803	$76,933,560	($74,648,438)
Stock issued and issuable for cash			31,791,666	3,179	1,128,427
Stock issued for services @$.039/share			10,612,970	1,062	421,815
Net Loss						(3,390,810)
Balance at March 31, 2012	66,500	$665	1,760,436,018	$176,044	$78,483,802	($78,039,248)
See notes to unaudited interim financial statements.

Baltia Air Lines, Inc.

(A DEVELOPMENT STAGE COMPANY)

Notes To UNAUDITED INTERIM Financial Statements

MARCH 31, 2012 

1. Basis of Presentation

The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our December 31, 2011 Annual Report on Form 10-K and should be read in conjunction with the notes to financial statements which appear in that report.

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on going basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.

In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three-month periods ended March 31, 2012 and 2011. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform to annual reporting requirements. 

The financial statements have been presented in a “development stage” format. Since inception, our primary activities have been raising of capital, obtaining financing and obtaining route authority and approval from the U.S. Department of Transportation. We have not commenced our principal revenue producing activities.

2. Earnings/Loss Per Share

Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share  assumes that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented. 

3.  Stockholders' Equity 

  Stock Issued for Services

During the three months ended March 31, 2012 we issued 10,612,970 shares of our common stock in exchange for services. The shares were valued at $ 422,877, approximately $0.039 per share and reflected the share market value at the time of issuance. The shares are not registered and are subject to restrictions as to transferability 

During the three months ended March 31, 2011 we issued 25,077,000 shares of our common stock in exchange for services. The shares were valued at $ 1.254 million, approximately $0.05 per share and reflected the share market value at the time of issuance. The shares are not registered and are subject to restrictions as to transferability.

  Stock Issued for Cash 

During the three months ended March 31, 2012 we issued 31.8 million shares of our common stock in exchange for cash. The shares sold for cash were subscribed at $ 1,131,000, approximately $0.036 weighted average per share. The options were exercised at par value.

During the three months ended March 31, 2011 we issued 39.7 million shares of our common stock in exchange for cash. The shares sold for cash were subscribed at $ 1.406 million, approximately $0.035 weighted average per share.

4. Sale of Assets

In January 2012, we sold one of our aircraft, Boeing 747 N705BL, for approximately $144,000 resulting in a loss of approximately 1.6 million dollars.  

ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations 

The following discussion includes certain forward-looking statements within the meaning of the safe harbor protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include words such as "believe," "expect," "should," intend," "may," "anticipate," "likely," "contingent," "could," "may," or other future-oriented statements, are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our business plans, strategies and objectives, and, in particular, statements referring to our expectations regarding our ability to continue as a going concern, generate increased market awareness of, and demand for, our service, realize profitability and positive cash flow, and timely obtain required financing. These forward-looking statements involve risks and uncertainties that could cause actual results to differ from anticipated results. The forward-looking statements are based on our current expectations and what we believe are reasonable assumptions given our knowledge of the markets; however, our actual performance, results and achievements could differ materially from those expressed in, or implied by, these forward-looking statements.

Our fiscal year ends on December 31. References to a fiscal year refer to the calendar year in which such fiscal year ends.

OVERVIEW 

Baltia Air Lines, Inc. the “Company” or “Baltia” or “Baltia Air Lines”) is the only Part 121 (heavy jet operator) start-up airline in the United States today that has received Government fitness approval. Baltia is currently conducting the FAA Air Carrier Certification. Baltia Air Lines, Inc. is a New York State corporation, organized in the State of New York on August 24, 1989.

On December 19, 2008, the U.S. Department of Transportation (DOT) issued its Order to Show Cause, finding that Baltia Air Lines is fit, willing and able to engage in international air transport of persons, property and mail. Baltia was awarded the non-stop route from JFK to St. Petersburg Russia. Baltia was also authorized for worldwide charter services. Baltia had filed its application with the DOT in October 2007.

On August 18, 2009, the Company purchase of Boeing 747 aircraft (N705BL). In 2010 the Company purchased a second Boeing 747 aircraft (N706BL). Baltia leased engines on a power-by-the-hour basis which are installed on the aircraft.  On January 11, 2012, Baltia sold Boeing 747 aircraft (N705BL). 

Baltia currently carries $500,000,000 aircraft liability insurance, and has placed $1.2 billion airline liability insurance through JLT Aerospace meeting the regulatory requirement in preparation for the commencement of revenue operations.

Following the commencement of service on the JFK-St. Petersburg route, Baltia’s objective is to develop its route network to Russia, Latvia, Ukraine, and Belarus.  

Baltia intends to provide full service, i.e. passenger, cargo and mail, and will not be dependent upon one or a few major customers. Baltia has two registered trademarks "BALTIA" and "VOYAGER CLASS" and five trademarks are subject to registration.

There is currently no non-stop service from JFK to St. Petersburg. Connecting service is provided mainly by foreign carriers. Finnair, Lufthansa and SAS are the leading competitors in the US-Russia market. KLM, British Airways, Air France, Austrian Airlines, and Swissair also provide service. However, foreign carriers are required to have intermediate stops at transit airports in their respective countries (Helsinki, Frankfurt, Stockholm, Copenhagen, etc.) because they are “third nation” airlines and as such cannot fly directly between the US and Russia (only a US airline as well as a reciprocating Russian airline is eligible to fly nonstop). Delta and two Russian airlines, Aeroflot and Transaero, currently operate between JFK and Moscow. With the exception of the JFK-Moscow route, there exists no non-stop competitive air transportation service on the routes for which Baltia intends to apply.

Baltia’s objective is to establish itself as the leading non-stop carrier in the market niche over the North Atlantic with operations that are profitable and growing over time. In order to accomplish this objective, we intend to establish and maintain high quality service standards which we believe will be competitive with the European airlines currently providing connecting flights. Baltia does not expect to be in direct competition with deep discount airlines, including several East European airlines and the offspring of the former Soviet airline Aeroflot, which provide connecting flights.

Baltia intends to provide First, Business, and Voyager Class accommodations. Baltia’s passenger market strategy is tailored to particular preferences of the various segments of its customer base, with marketing attention particularly focused on American business travelers with interests in Russia who require high quality, non-stop service from the US to Russia.

Baltia’s initial marketing strategy is based on existing agencies specializing in the market, selected travel and business publications, supplemented by direct mailings to corporate travel planners, and individual American businesses that are currently involved in Russia. Soon after the inauguration of flight service, Baltia plans to implement its frequent flyer program. As the marketing matures, Baltia plans to advertise to the general public throughout the US, and in Russia. Baltia also plans to sponsor selected industry and trade events in the US and in St. Petersburg.

Baltia intends to provide customer service and reservations centers in New York and in St. Petersburg, to list Baltia’s schedules and tariffs in the Official Airline Guide, and provide world-wide access to reservations on Baltia’s flights through a major Computer Reservations and Ticketing System (“CRS”).

The Company intends to activate its reservations service when the DOT issues its order authorizing Baltia to sell tickets.

Baltia has identified the following market segments in the U.S.-Russia market: (i) Business Travelers, (ii) General Tourism, (iii) Ethnic Travelers, (iv) Special Interest Groups, (v) Professional Exchanges, and (vi) Government and Diplomatic Travel.

Baltia believes that the direct non-stop service to be offered by it will be superior to the stop-over service currently offered by foreign airlines. A comparison between the two services with respect to passenger convenience and cargo transport efficiency is set forth below.

BALTIA - US flag, non-stop service: With non-stop service, a passenger can fly from JFK to St. Petersburg in about 8 hours in a Boeing B747 wide body airplane. Cargo arrives containerized, palletized, and secure.

Foreign, stop-over journeys: With stop-over service, it would take a passenger 10 to 18 hours to fly through Helsinki, Copenhagen, Moscow, or Frankfurt on a foreign carrier. In addition, passengers must change to narrow-body aircraft at a layover airport. Cargo is “broken up” and manually loaded onto narrow-body aircraft, or trucked from Helsinki.

Baltia plans to operate efficiently and provide consistent high quality service to passengers and cargo shippers alike in order to establish the Company as the preferred airline in the market. The Company also plans to use targeted marketing of its service to maintain and grow its market share.

Because of the increased reliability and comfort of a non-stop flight, Baltia expects to capture a portion of the existing traffic. 

With the Boeing 747 true wide-body aircraft Baltia intends to provide cargo service from JFK to St. Petersburg, offering containers, pallets, and block space arrangements. Baltia expects to carry contract cargo for express shippers. Baltia also plans to market its own “Baltia Courier”, “Baltia Express”, and “Baltia Priority” express service for letters and packages. Baltia also expects revenues from diplomatic mail and cargo, under the Fly America Act.  

Baltia has passenger service and ground service arrangements at JFK and at Pulkovo II Airport in St. Petersburg. As a US carrier flying into a foreign country, Baltia will be eligible to the same degree of priority that a foreign carrier receives when arriving in the US. 

Baltia intends to start the JFK-St. Petersburg service with one round-trip flight per week, increase frequency to three round trips and then to five round trips per week.

Baltia plans to build operating modules and apply them in developing new markets. Once established, Baltia plans to duplicate its JFK-St. Petersburg standards on flights on other transatlantic routes. 

Additional revenues from charter flying: In conjunction with its Part 121 air carrier certification (“Part 121”), (referring to a Federal Aviation Regulations’ number, is an industry acronym used to describe a US airline operating heavy jet aircraft) for scheduled service, Baltia intends to seek certification for world-wide charter service. Following certification, Baltia plans to utilize aircraft time available between scheduled service, to earn additional revenues from charters. We are also considering qualifying our aircraft for military contracts.

In order to start revenue flight operations, the Company has to complete FAA Air Carrier Certification. During the past two and half years the Company has been participating in air carrier certification.

The Company will carry airline liability insurance as required for a US airline by DOT regulation.

As of June 30, 2011, Baltia had a staff of twenty-five which includes professionals who have extensive major US airline experience in aircraft maintenance, airline operations, airline regulatory compliance, reservation, info technology, passenger service and administration.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our financial statements requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates, judgments and assumptions are continually re-evaluated based upon available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. Areas in which significant judgment and estimates are used include, but are not limited to valuation of long lives assets and deferred income taxes.

Valuation of Long-Lived Assets: We review the recoverability of our long-lived assets, including buildings, equipment and intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

We amortize the costs of other intangibles (excluding goodwill) over their estimated useful lives unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value based on either discounted cash flows or appraised values. Intangible assets with indefinite lives are tested for impairment, at least annually, and written down to fair value as required.

The Company complies with FASB ASC Topic 718 "Compensation - Stock Compensation," which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. FASB ASC Topic 718 requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period). No compensation costs are recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

Our primary type of share-based compensation consists of stock-based awards. We use the fair value method in accordance with ASC 718. We also may use stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the options include the market value of the Company's common stock, the estimated volatility of the Company's common stock, the exercise price of the warrants and the risk free interest rate.

As of March 31, 2012, there was no unrecognized compensation cost related to non-vested options granted under the plan. The total fair value of shares vested during the three-month period ended March 31, 2012 was $0.

Income taxes: The Company accounts for income taxes in accordance with FASB ASC Topic 740 "Income Taxes," which requires accounting for deferred income taxes under the asset and liability method. Deferred income tax asset and liabilities are computed for difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on the enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce the deferred income tax assets to the amount expected to be realized.

The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in the Company's financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate.

In accordance with GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce stockholders equity. This policy also provides guidance on thresholds, measurement, de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition that is intended to provide better financial statement comparability among different entities. Management's conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. Generally, the tax filings are no longer subject to income tax examinations by major taxing authorities for years before 2007. Any potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, state and local tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months..

RESULTS OF OPERATIONS 

We had no revenues during the three months ended March 31, 2012 because we do not fly any aircraft and cannot sell tickets.

Our general and administrative expenses decreased $976,273 to $1,634,051 in the three months ended March 31, 2012 as compared to $2,610,324 in the three months ended March 31, 2011. General and administrative expenses comprise 48% and loss in sale of asset comprises 47% of total net loss of $3,390,810 in the three months ended March 31, 2012, as compared to the net loss of $2,771,651 in the three months ended March 31, 2011. 

Our future ability to achieve profitability in any given future fiscal period remains highly contingent upon us beginning flight operations. The management believes that the company has the necessary funding to commence revenue flight operations, subject to completion of the FAA Air Carrier Certification. If commenced, there can be no assurance that such operations would be profitable.

LIQUIDITY AND CAPITAL RESOURCES 

As of March 31, 2012, liquid assets consisted primarily of cash and cash equivalents of approximately $39,847, which is $17,543 less than the approximately $57,390 liquid assets as of December 31, 2012. At March 31, 2012, our working capital was approximately ($308,439), an increase of approximately $48,419, or 18.6% from the ($260,020) reported as of December 31, 2012. As of March 31, 2012, our stockholders’ equity balance was approximately $621,263, a decrease of $1,836,327, or 74.7% from approximately $2,457,590 reported as of December 31, 2012. The decrease in stockholders’ equity is primarily the result of recording a loss of approximately $1.6 million on the sale of a Boeing 747 aircraft in January 2012.  

Since inception, we have incurred substantial operating and net losses of approximately $78.0 million. These losses have primarily been financed with long-term borrowings and proceeds received from the sale of our common stock. 

Our operating activities utilized $1,149,149 in cash during the three months ended March 31, 2012, a decrease of $197,580 from the $1,346,729 in cash utilized during the three months ended March 31, 2011.

Our financing activities, from issuance of common stock, provided $1,131,606 and $1,406,311in cash during the three months ended March 31, 2012 and 2011, respectively.

As a result of the foregoing, our unrestricted cash increased to $39,847 as of March 31, 2012, as compared to $57,390 as of December 31, 2011.

We had no significant planned capital expenditures, budgeted or otherwise, as of March 31, 2012.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

None

Item 4T. Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer, based on evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as of March 31, 2012, have concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Our Chief Executive Officer and Chief Financial Officer also concluded that, as of March 31, 2012 our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There was no change in our internal controls or in other factors that could affect these controls during the three months ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. While existing controls may be adequate at present, upon the commencement of flight revenue service we intend to implement controls appropriate for airline operations.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 

During the three months ended March 31, 2012 we issued 10,612,970 shares of our common stock in exchange for services. The shares were valued at $0.039 per share and reflected the share market value at the time of issuance. The shares are not registered and are subject to restrictions as to transferability. 

During the three months ended March 31, 2012 we issued 31,791,666 shares of our common stock in exchange for cash. The shares sold for cash were subscribed at $1,128,427 million or about $0,0354 weighted average per share. The options were exercised at par value.

All of the above issuances were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of Baltia or executive officers of Baltia, and transfer was restricted by Baltia in accordance with the requirements of the Securities Act of 1933, as amended. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our Securities and Exchange Commission filings.

Item 3. Default Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits. 

10.1. - Fuel supply Agreement between Joint Stock Company “SOVEX” and Baltia Air Lines, Inc. of January 1, 2012 with confidential portion omitted and filed separately with the Commission pursuant to a request for confidential treatment, redacted exhibit filed herewith.

10.2 - Letter evidencing agreement that engines identified in Exhibit 10.3 below may be removed from N705BL and installed on N706BL. Incorporated by reference to Exhibit 10.5 to Company’s 10-K/A for year 2010 as filed December 21, 2011.  

10.3 - Engine Lease Agreement between Logistic Air, Inc. and Baltia Air Lines, Inc. Dated January 15, 2010 with confidential portion omitted and filed separately with the Commission pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.6 to Company’s 10-K/A for year 2010 as corrected and filed April 12, 2012.  

10.4 - Product and Services Agreements between Navtech Systems Support Inc. and Baltia Airt Lines, Inc. Dated January 15, 2010 with confidential portion omitted and filed separately with the Commission pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.7 to Company’s 10-K/A for year 2010 as filed December 21, 2011.  

10.5 - Ground Handling Agreement at Pulkovo Airport between ZAO Cargo Terminal Pulkovo and Baltia Air Lines, Inc. effective June 1, 2011 with confidential portion omitted and filed separately with the Commission pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.9.2 to Company’s 10-K/A for year 2010 as corrected and filed March 2, 2012. . 

10.6 - First Amendment to Product and Services Agreements between Navtech Systems Support Inc. and Baltia Air Lines, Inc. dated January 15, 2010. Incorporated by reference to Exhibit 10.10 to Company’s 10-Q/A for 3rd quarter 2011, corrected and filed March 29, 2012. 

10.7 - Flight Training Services Agreement between Pan Am International Flight Academy and Baltia Air Lines, Inc. dated April 19, 2011. Incorporated by reference to Exhibit 10.11 to Company’s 10-Q/A for 3rd Quarter 2011 as corrected and filed March 29, 2012.  

10.8 - Access and System and Data Use Agreement between Sabre Inc., and Baltia Air Lines, Inc. dated September 21, 2011, Incorporated by reference to Exhibit 10.12 to Company’s 10-Q/A for 3rd Quarter 2011 as filed March 29, 2012.  

10.9  Aircraft Bill of Sale for Boeing 747 aircraft N705BL.

10.10 JLT Certificate of Insurance BA-12-009 – Hull and Liability  

10.11 JLT Insurance Binder  – Hull, Spares and Liability 

10.12 JLT Insurance Binder – Airline Hull War and Allied Perils 

10.13 JLT Insurance Binder – Aviation Hull Deductible 

31.1 Certification by Chief Executive Officer and Chief Financial Officer pursuant to Sarbanes-Oxley Section 302, provided herewith.

32.1 Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S. C. Section 1350, provided herewith.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned thereunto duly authorized.

DATED THIS 15th DAY OF May 2012 

BALTIA AIR LINES, INC.

/s/ Igor Dmitrowsky

------------------------

Igor Dmitrowsky

Chief Executive Officer and Chief Financial Officer (principal accounting officer)

EXHIBIT 3.1

BALTIA AIR LINES, INC. OFFICER'S CERTIFICATE PURSUANT TO SECTION 302

I, Igor Dmitrowsky, the Chief Executive Officer and Chief Financial Officer of Baltia Air Lines, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Baltia Air Lines, 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 small business issuer as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) 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)) 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 principles;

(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

(c) 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(s) 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/ Igor Dmitrowsky Date: May15, 2012 

------------------------

Igor Dmitrowsky

Chief Executive Officer and Chief Financial Officer (principal accounting officer)

EXHIBIT 3.2 

BALTIA AIR LINES, INC.

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 Quarterly Report Baltia Air Lines, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Igor Dmitrowsky, Chief Executive Officer and Chief Financial Officer (principal accounting officer) of the Company, certify, pursuant to 18 U.S.C. ss.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 results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Baltia Air Lines, Inc. and will be retained by Baltia Air Lines, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Igor Dmitrowsky Date: May 9, 2012  

------------------------

Igor Dmitrowsky

Chief Executive Officer and Chief Financial Officer (principal accounting officer)

EX-10

EXHIBIT 10.1 - Aircraft Fuel Supply Agreement - SOVEX (Redacted)

Aviation fuel supply contract

No 011/A-12 valid as of 01.01.2012.

between
Joint Stock Company "Sovex", hereinafter referred to as "the Seller", being a legal entity under the laws of the Russian Federation, registered in the Unified State Register of Legal Entities, registration No 1027804877594, principal place of business: 35 Pilotov Ul., Saint Petersburg, 196210, Russia, in the person of its General Director Mr. Andrei Anatolyevich Bakhmet, acting by virtue of the Articles,

and

Baltia Air Lines, Inc, hereinafter referred to as "the Buyer", being a legal entity under the laws of USA, principal place of business: 95-01 63rd Drive, Rego park, NY, 11374, represented by President Igor Dmitrowsky, acting by virtue of the Articles.

hereinafter together also referred to as "Parties".

The Parties hereby have agreed as follows:

1. Subject

1.1. The subject of this Contract shall be the provision of the Buyer's Aircrafts (hereinafter referred to as "the Aircrafts") with aviation fuel (hereinafter referred to as "the Fuel") for performance of flights under orders to Pulkovo Airport on the terms and conditions herein contained.

1.2. The quantity of the Fuel to be supplied, as well as the terms of delivery shall be determined in the Specification signed by the Parties and being an integral part of this Contract (Appendix No 1 hereto). The quantity of products specified in the Specification is approximately and shall be corrected by the Buyer, depending on its needs.

2. Aircrafts of the Buyer

2.1. The Parties have agreed that the Buyer's Aircrafts (hereinafter referred to as the Aircrafts) shall mean the airplanes and/or helicopters specified by the Buyer in its written order. The Buyer must, at least 1 day prior to the date of arrival of an Aircraft at Pulkovo Airport, notify the Seller in written form, and pay all costs connected with the provision of such Aircrafts with the Fuel according to the terms of this Contract.

2.2. The Buyer must produce extracts from operation and maintenance manuals (RTE) for all types of the Aircrafts being operated by the airline, concerning the filling with aviation fuel, as well as the existing conditions and restrictions on refueling parameters

3. Quality

3.1. The Seller guarantees that the aviation fuel supplied by it will correspond to the specification stipulated in GOST 10227-86 of the Russian Federation for brand TS-1, RT

4. Quantity

4.1. The Seller must transfer, and the Buyer must accept the Fuel in the quantity agreed upon by the Parties in the Specification, however provided that the Buyer shall in no case accept any quantities exceeding its real needs.

4.2. If the Buyer's needs for the Fuel exceed the quantity specified in the Specification by more than ten percents (1 0%), the Buyer must notify the Seller on such change not later than fifteen (15) days prior to the beginning of the month in which it is planned to increase the quantity of the Fuel to be supplied.

5. Shipment of fuel

5.1. Fuelling will be carried out according to all applicable legislative acts and regulations being in effect in the Russian Federation, and the requirements of the Chief Operator of Pulkovo Airport.

5.2. The Seller and the Buyer have agreed that fuelling will be carried out by the Seller according to its own standard production and quality control procedures (hereinafter referred to as "the Agreement"), executed as Appendix No 2 being an integral part of this Contract.

5.3. The date of signing by the Parties of a fuel distribution form for refueling an Aircraft will be considered the date of refueling.

5.4 The Buyer must ensure prompt (not later than within 5 minutes upon completion of refueling) signing and receipt of a fuel distribution form. In particular, the Buyer must provide, if so requested by the Seller's personnel, necessary data for inclusion thereof in a fuel distribution form. The powers to sign and receive a fuel distribution forms shall be given to the Buyer's representative by virtue of a power of attorney or to one of the members of the Aircraft's crew. When signing and receiving documents, the Buyer must ensure that its employees indicate their names and positions, as well as produce, at the Seller's request, the documents certifying their identity, and powers of attorney.

5.5. The Buyer must notify the Seller on all changes in the flight time-table of the Buyer's Aircrafts at Pulkovo Airport according to the current laws.

5.6. To ensure prompt provision of the Seller with information on the necessity (absence of such necessity) to refuel an Aircraft. In case of failure to notify (delayed notification) of the Seller on the absence of the necessity to refuel an Aircraft, and if such failure has resulted in the fact of delivery of the Seller's fuelling truck to an Aircraft parking area without performance of the refueling procedure, the Seller shall have the right to request payment of a penalty equal to 50 US dollars. Such fact of delivery of the Seller's fuelling truck to an Aircraft parking area without performance of the refueling procedure shall be certified with a Certificate to be executed according to the procedure stipulated by clause 2.1. of Appendix No 2 hereto ("the Agreement").

5.7. The Buyer hereby authorizes the Seller to take, on its own behalf, any actions connected with customs clearance of the aviation fuel supplied to the Buyer under "Aviation Fuel Supply Contract" No 011/A-12

6. Prices

Unless otherwise stipulated in the Specification, the following provisions shall apply to prices:

6.1. The price of the Fuel to be shipped to the Aircrafts performing flights under orders shall be determined according to the option 81 of the Price-Llst of tariffs and prices for foreign aircraft operators (hereinafter referred to as the Price-List), being in effect at the date of refueling.

6.2. All effective tariffs and prices shall be published on the official web-site of Sovex JSC at www.sovex.ru.

6.3. The Seller may change the Price-List in a unilateral order without execution of an additional agreement on changing tariffs and prices under the Contract

6.4. In case of changes in prices, the updated Price-List shall come into effect not earlier than on the fifth day from the date of notification, provided that such notification has been carried out according to the provisions of clause 12.1 of this Contract.

6.5. Currency of the Contract:
USD (US dollars)

6.6. Currency of settlements:
USD (US dollars)

7. Terms and conditions of payment

7.1. The Buyer must pay for the planned refueling in advance, not later than one (1) banking day prior to the date of refueling.

7.2. If the Buyer has failed to comply with the provision concerning advance payment for the planned quantities of the Fuel, the Seller shall have the right to suspend the provision of the Buyer with the Fuel, having notified the Buyer by fax or e-mall 24 hours prior to such suspension. A notice shall specify the date and time when the provision is planned to be suspended. In this case, the Seller shall bear no responsibility for possible losses of the Buyer and (or) third parties, connected with the suspension of supplies of the Fuel to the Buyer.

7.3. The Seller shall, once every ten days, produce to the Buyer an invoice for the refueling of the Buyer's Aircrafts. The date of producing shall mean the date of transfer of an invoice to the following address:

E-mail: Victoria.cape@baltia.com

Within one (1) banking day from the date of producing an invoice, the Buyer shall have the right to contest correctness thereof. If there are no objections, an invoice shall be considered accepted by both Parties in the wording proposed by the Seller.

7.4. If the Buyer has violated the term of payment established in clause 7.1. hereof, the Seller shall have the right to request the Buyer to pay a fine equal to 0.5% of the overdue amount per each day of delay.

7.5. If the payment amount is insufficient to cover the entire debt, the debt shall be covered according to the following sequence: First of all, fines (interests under borrowings) and penalties, then the principal debt amount.

7.6. Payments shall be considered effected upon arrival thereof at the Seller's bank account.
All bank charges (commissions) collected by the Buyer's bank and by correspondent banks shall be at the Buyer's expense.

7.7. The Seller shall, monthly and at request, send to the Buyer a certificate of verification of mutual payments (hereinafter referred to as "a Certificate") under the Contract The Buyer shall carry out verification and, if there are no objections, return to the Seller one copy of a Certificate signed and certified with its seal within ten (1 0) calendar days upon receipt thereof. If the Buyer violates the terms specified in this clause, a Certificate shall be considered signed in the wording proposed by the Seller.

8. Validity

8.1. This Contract shall come into effect as of the date specified on the first page thereof, and shall remain in force till December 31, 2012. The term of validity of this Contract may be prolonged on the Parties' written agreement for a period not exceeding one calendar year. The Parties shall have the right to prolong this Contract an unlimited number of times.

8.2. If one of the Parties fails to comply or improperly complies with the terms of this Contract, the other Party shall have the right to terminate this Contract in a unilateral order, having notified about its intention in writing twenty (20) days prior to the supposed date of termination.

8.3. Despite the terms of clause 8.2, none of the Parties shall be released from the obligation to effect payments under this Contract.

8.4. Any amendments and additions to this Contract shall be made in written form, and shall only be considered valid if signed by both Parties

8.5. The Contract has been made in Russian and translated into the English language in duplicate, of which one counterpart shall be kept with the Buyer, and the other with the Seller. The Contract shall come into effect as of the date of signing thereof by the Parties.

8.6. This Contract is final and obligatory for both Parties, and does not allow any other interpretation or understanding. None of the Parties shall have the right to transfer its rights and duties under this Contract to any third party without written consent of the other contracting party

9. Responsibility

9.1. The Seller has taken, and shall maintain during the entire term of validity of this Contract, insurance of the Seller's liability to third parties with the total limit (physical injuries/damage to property) of the sum insured equal to one hundred millions US dollars (USD 100,000,000) per insured accident I Aircraft. The Seller reserves the right to choose the insurer at its own discretion, without any consultations with the Buyer.

9.2. If the Buyer has failed to comply with the term of payment, and if RF currency control authorities in this connection have charged penalties to the Seller, the Seller shall recharge such penalties to the Buyer in a separate invoice to be paid by the Buyer within 5 banking days upon receipt thereof.

9.3. The Seller's responsibility for quality of the Fuel supplied shall spread up to the on board filling nozzle of the Buyer's Aircraft. Responsibility for quality of the Fuel in the fuel system of the Buyer's Aircraft shall be borne by the Buyer.

9.4. The Seller shall be released from responsibility for failure to perform or for improper performance of its obligations due to discrepancies between the meteorological conditions and the minimums fixed for the Buyer's crews, minimums fixed for the aerodrome, failure to ensure the state of the runway meeting the requirements of the Flight Operating Manual for the type of the Buyer's Aircraft, due to delayed arrival of an Aircraft at Pulkovo in Airport against the established time-table or time appointed

10. Confidentiality All information contained in this Contract shall be confidential as between the Parties. None of the Parties shall disclose such information to any person on any basis without the other Party's written consent, except for the following:

10.1. to the necessary extent and on a confidential basis, to persons in their own organizations or in similar enterprises involved in the shipment and provision of the services specified in clause 5 hereof; or

10.2. disclosure to the necessary extent at request of any public, regulating or international authorities.

11. Force-major

11.1. Should any unforeseen circumstances arise, which prevent from full or partial performance by either Party of its obligations hereunder, namely: a fire, military actions of any character, blockade, delays of vehicles due to breakdown or bad weather, embargo, actions and/or restrictive acts of public and/or customs authorities, or other circumstances beyond control of one of the Parties, and which arise after the date of this Contract, the period fixed for performance of obligations shall be prolonged for the period of existence of such circumstances.

11.2. Despite the terms of clause 11.1, none of the Parties shall be released from the obligation to effect payments under this Contract.

12. Notices

12.1. Notices under this Contract shall be made in writing (including telex, e-mail and fax), and shall be considered duly served if transferred to the other Party to the addresses specified in this Contract. At request of a Party, the other Party shall confirm the receipt of any notice. Notices transmitted using any electronic communication facilities shall be valid without individual signature.

12.2. Addresses of the Seller:

For correspondence:
35 Pilotov UL, Saint Petersburg, 196210, Russia
E-mail: tzksovex@sovex.ru; serqei.kulbizkiy@sovex.ru
Ph.: 007-812-677-41-81
Fax: 007-812-677-41-81

12.3. Addresses of the Buyer:

For correspondence:
95-01 63rd Drive,
Rego park, NY, 11374
Ph.: 1-718-275-2300
Fax: 1-718-896-7971
E-mail: Victoria.cape@baltia.com

12.4. In case of revocation, cancellation or suspension of the Seller's Certificates of conformity for aviation fuel supply and quality control of aviation fuel and lubricants, as stipulated by this Contract, the Seller must notify the Buyer immediately in writing.

12.5. The Buyer must notify the Seller immediately in the following cases:

A) Revocation, cancellation or suspension, in full or in part, the Buyer's Aircraft Operator Certificate;

B) Initiation of bankruptcy legal proceedings against the Buyer.

13. Representation of the Buyer.

13.1. If the Buyer authorizes any person or organization to sign and receive on its behalf payment documents, Orders, as well as to take other actions connected with performance of the Buyer's financial obligations hereunder, the Buyer shall produce to the Seller a power of attorney certifying the powers of such person or organization to take such actions.

13.2. If there is no authorized representative of the Buyer in the course of provision of the Aircrafts with the Fuel at Pulkovo Airport, an authorized member of the flight crew of the Buyer's Aircraft shall be considered as such representative.

14. Laws, settlement of disputes

14.1. This Contract shall be fulfilled and interpreted according to the laws of the Russian Federation.

14.2. The Parties must take all measures to settle all questions at issue through negotiations and consultations. If it is impossible to settle any questions at issue through negotiations, they shall be considered by the Arbitration Court of Saint Petersburg and the Leningradskaya Oblast according to the Arbitration Procedure Code of the Russian Federation and substantive law of the Russian Federation; Russian shall be the language of arbitration proceedings.

14.3. In case of any discrepancies between the texts in Russian and English, the Russian version shall prevail over the English version in case of legal proceedings. Translations into any other language may be made for convenience of understanding, but such translations shall in no case limit, amend, interpret, determine or add the content of both official versions of this Contract.

15. Amendments

15.1. Any amendments and additions to this Contract shall only be valid if signed by the Parties.

16. Bank information

Bank requisites of the Seller:
USD

[REDACTED]

Bank requisites of the Buyer:
USD:

[REDACTED]

For the Seller
/signed/ /sealed/ For the Buyer
/signed/ /sealed/

Appendix 1 / Specification 1

to Aviation Fuel Supply Contract
No 011/A-12 of01.01.12

IATA Code: LED

The Buyer's code: according to a flight plan

Period of supply: 01.01.2012-31.12.2012

Estimated annual quantities: 2200 MT

January-	0 MT
February-	0 MT
March-	100 MT
April -	200 MT
May-	300 MT
June-	300 MT
July-	300 MT
August-	300 MT
September-	300 MT
October-	100 MT
November-	100 MT
December-	200 MT

Shipment: "onboard" (delivery terms: FCA -lncoterms 2000)

Price: According to the Price-List of tariffs and prices for foreign aircraft operators, being in effect at the date of refueling.

For the Seller
/signed/ /sealed/ For the Buyer
/signed/ /sealed/

Appendix No 2

to Contract No 011/A-12 of 01.01.2012.

Constitutes an integral part of the Contract

Agreement
on refueling (provision with aviation fuel of) Aircrafts at Pulkovo Airport

ABBREVIATIONS USED:

The Buyer's Aircraft	-An Aircraft (plane or helicopter) being owned by, and/or leased and/or operated on behalf of, the Buyer and/or the Buyer's Subsidiaries
The Buyer's representative	An authorized person representing interests of the Buyer and/or its Subsidiary
The Seller	-Sovex JSC-organization which provides services in supply (refueling) and sale of fuel aboard the Buyer's Aircraft at Pulkovo Airport of the city of Saint Petersburg, Russia
The Fuel	-Aviation fuel for jet engines, of TS-1 and/or RT brands in accordance with GOST 1022786, which has a Russian certificate of conformity
Poor-quality fuel	-Fuel which does not meet one and/or several certain parameters established by GOST 10227-86 and by departmental normative and technical documentation
NTD	Normative and technical documentation
AWC-L (special liquid)	Anti-water-crystallization liquid "1M" according to OST 54-3-17573- 99, added to the Fuel prior to refueling an Aircraft
The Seller's PRS	-The Seller's pressure refueling system
The Seller's FE	-The Seller's fueling equipment a fuel tank (FT) or a PRS refueling unit (RU) used for refueling the Buyer's Aircraft
A fuel distribution form (order)	-A document to be executed for refueling Aircrafts, which has its serial number and series, contains the date and time of refueling, names of the Seller and the Buyer, flight number (purpose of refueling), Aircraft type and number, and the Fuel name, quantity and density. In case of filling with the Fuel containing AWC-L -name of AWC-L, percentage by volume and density of AWC-L, as well as the number of a Voucher for the Fuel and FE from which the refueling was carried made. A fuel distribution form shall be signed by representatives of the Seller and the Buyer, and shall contain legible (readable) surnames of the persons who have delivered and accepted the Fuel
A Fuel Quality Certificate	-A document to be issued by the Seller's fuels & lubricants laboratory to a shipment of the Fuel from the feed tank from which the Fuel is fed to the Seller's FE and/or PRS, certifying the conformity of the actually established values of physical and chemical parameters of a representative sample of the Fuel from the feed tank and used for refueling the Buyer's Aircraft
A Fuel Voucher	-A document to be issued for the Seller's FE and the Fuel delivered from its tank (reservoir) or pumped through it (RU) to an Aircraft's system, and certifying its readiness for being fed to an Aircraft's fuel system
FEACA	- The Federal Executive Authority in the Field of Civil Aviation of Russia
An Aircraft maintenance schedule	-A Schedule of maintenance of an Aircraft by services of Pulkovo Airport, and by other organizations; regulates delivery of special machines by the time and sequence, with the purpose of well-ordered maintenance, both with or without participation of representatives of an Aircraft's crew preparing for a flight
ATCS of Pulkovo Airport	-The air traffic control system of Pulkovo Airport
PA	-An Aircraft parking area at the aerodrome of Pulkovo Airport

1. BASIC PROVISIONS

1.1. This Procedure of work on refueling (supply of) the Aircrafts with aviation fuel at Pulkovo Airport (hereinafter referred to as "the Procedure) determines the order and conditions of performance by the Seller of the procedures of supply of the Fuel for the Buyer's Aircrafts for performance of all kinds of flights to Pulkovo Airport, through refueling by FT or FE of PRS of the Seller acting on its own behalf and as an agent for its Subsidiaries, if any.

1.2, The Fuel sold shall meet GOST 10227-86, and shall have a Russian certificate of conformity. According to the requirements of the Manual of receipt, storage, preparation to delivery for refueling, and quality control of aviation fuels, lubricants and special liquids, approved by Order of the Air Transport Department of 17.10.1992 No OV-126 (hereinafter referred to as "the Quality Control Manual"), AWC-L may be added (loaded) in the Fuel. The rates of addition of AWC liquid in the Aviation Fuel shall be determined by Manual DV-126 and the Flight Operating manual (FOM) for a certain type of Aircrafts. In case of ay discrepancies between the rates of addition of AWC liquids specified in this Manual and the rates fixed by FOM, the rates provided for by FOM shall be followed.

1.3. Before delivery of the Fuel for refueling the Buyer's Aircraft, it shall be prepared according to the requirements of the current NTD of the FEACA
If any subsequent requirement introduced by the FEACA changes the procedure of application, preparation and refueling Aircrafts with the Fuel within the territory of Russia, which change could impose on the Seller any restrictions connected with sales of this Fuel, the Seller must notify the Buyer. In this case, the Buyer's prior consent shall be required to supply such Fuel for its Aircrafts.

1.4. The Seller's fuels & lubricants laboratory shall control quality of the Fuel filled in the Buyer's Aircraft by the physical parameters specified in table No 9 of the Quality Control Manual and according to the field of activities provided for it upon certification in the RF Civil Aviation Certification System. Proceeding from the results of quality control of the Fuel by the Seller's fuels & lubricants laboratory, a Fuel Quality Certificate shall be issued (executed), being the grounds for subsequent execution of a Fuel Voucher: at the Buyer's request, a copy of a Quality Certificate for the Fuel from the feed tank shall be delivered to the senior shift officer of the flights and production section by internal airport phones at: 48-52, 24-31 or by mobile phone at: 932-85-68).

2. FUEL DELIVERY PROCEDURE

2.1. The Seller shall ensure the fuelling of the Buyer's Airliner and shall take all reasonable measures to eliminate any delay in the Buyer's Aircraft departure. If the Buyer's Aircraft arrives prior to the time of arrival specified in the time-table, or is late, or performs a regular flight beyond the time-table, the Seller shall try to fuel the Buyer's Aircraft according to the maintenance schedules being in effect in Pulkovo Airport for maintenance of certain types of Aircrafts within the shortest time, without breaking the sequence of approaching or interfering with the maintenance of an Aircraft by the airport's other services participating in preparation of an Aircraft for departure.

In any case, the Seller shall fulfill the order of ATCS of "PULKOVO" Airport -division of the aerodrome owner with the request either to stop or to suspend the refueling for an indefinite period, and/or shall notify the Seller of the time of approach of its FE to the Buyer's Aircraft for refueling (additional refueling), as well as on the time of departure of FE from an Aircraft after refueling. The Seller shall record such orders of the ATCS of "PULKOVO" Airport in writing in a special log-book.

If the Buyer's representative has failed to notify the ATCS of "PULKOVO" Airport or the Seller's flight service in due time on its waiver of refueling, and if the Seller's FT has arrived at an Aircraft's parking area and there received such waiver, in this case a corresponding Certificate on the failed refueling shall be executed.

2.2. Operations on refueling will be carried out according to the existing requirements established by the FEACA, as well as the requirements and restrictions being in effect within the territory of Pulkovo Airport and introduced by the airport administration. When carrying out the operation on filling an Aircraft with the Fuel, the Seller's representative shall:

-place FE near an Aircraft according to the existing instructions and schemes of approach to a certain type of aircrafts, not closer than 5 meters from an Aircraft's outside points, with subsequent fixation of FE with backing blocks after stoppage;

-ground it with an Aircraft;

-unwind and connect dispensing hoses to an Aircraft's onboard filling nozzle (opening and shutting of refueling necks and onboard filling nozzles of an Aircraft shall be ensured by the Buyer or by engineering personnel of Pulkovo Airport);

-control the state of the refueling equipment and the quantity of the Fuel fed using readings of a fuel meter;

-produce, at the Buyer's request, a sample of the Fuel from FE for visual examination of the level of purity.

2.3. Responsibility for loss of the Fuel as to quantity and quality shall pass to the Buyer as of the moment of passage of the Fuel through the onboard reception filling nozzle of the fuel system of the Buyer's Aircraft being refueled in case of a "closed" method of refueling, or through the refueling neck of the fuel tank of the Buyer's Aircraft being refueled in case of an "open" method of refueling (additional refueling).

2.4. Readings of fuel meters of the Seller's FE shall be accepted by the Buyer as true readings of the quantity of the Fuel being fed.

2.5. Prior to commencement of the operation on filling an Aircraft with the Fuel, the Seller shall, on an Aircraft's parking area, produce to the Buyer a "Fuel Voucher" being a document constituting the grounds for filling the Buyer's Aircraft with the Fuel by certain FE.

2.6. The Seller may use or apply its (internal) procedures of checking quality and purity of the Fuel, as well as the procedures of work, provided that such procedures of checking and work would not constitute causes of deterioration of flight safety or of quality control of the Fuel, established by the requirements of the FEACA.

2.7. The Seller's FE shall enter the parking area where the Buyer's Aircraft has been placed for refueling only upon receipt of permission from the Buyer's representative or engineering personnel of Pulkovo Airport serving the Buyer's Aircraft and appointed by it as a person in charge of reception and release of an Aircraft for a flight. The Seller shall not proceed with filling the Buyer's Aircraft with the Fuel till receipt of a corresponding command from the Buyer's representative, and if the Buyer's representative is absent in the area of service of an Aircraft and/or onboard an Aircraft, the Seller shall ensure execution of a necessary quantity of copies of a fuel distribution form, agreed upon with the Buyer for filling an Aircraft with the Fuel.

2.8. Management of approach of FE to an Aircraft within the borders of the parking area shall be carried out by the Seller's personnel holding a corresponding certificate for the right to manage approach (departure) FE to/from an Aircraft, issued by the administration of "PULKOVO" Airport. And the Buyer's representative shall have the right to control correctness of actions being taken by the Seller's personnel. Should any violations be revealed, it shall request elimination thereof, or stop the maneuvering of FE on the parking area by an Aircraft.

2.9. The Seller shall specify data on density and temperature of the Fuel, as well as density and temperature of AWC-L, if it will be added to the Fuel, in a "Fuel Voucher" to be issued by it for each FE. which shall be executed by the Seller when preparing the Fuel for refueling an Aircraft at the feed warehouse (terminal). Density of the Fuel and AWC-L shall be established by the Seller at least 3 times a shift (12 hours), namely in the beginning, in the middle and in the end, in samples taken from the warehouse feed tanks, i.e. the tanks from which the Fuel and AWC-L are released.

2.10. In case of any emergency (abnormal) situations, the Buyer must, jointly with engineering personnel of "PULKOVO" Airport who serve the Aircraft, stop the refueling of the Aircraft, cut off power supply to the Aircraft, and call for a fire-rescue team of the Emergency Searching and Rescue Flight Support Service (ESRFSS) of "PULKOVO" Airport to the Aircraft's parking area. The Seller's representatives must disconnect dispensing hoses, grounding cables, remove backing blocks and remove FE from the service area for a distance of at least 75 meters from the Aircraft

2.11. The Fuel prepared by the Seller for sale and turned out to be of poor-quality shall not be accepted by the Buyer at its absolute discretion.

2.12. The Fuel shall only be fed by the Seller to the Buyer's Aircraft at an Aircraft's parking area equipped and designated in Pulkovo Airport, and provided that an Aircraft has been placed on the area according to the marking and within the designated borders of the parking area equipped with jacks for grounding FE and an Aircraft, equipped with a step-ladder (required when refueling for connection and disconnection of a refueling head to/from an Aircraft's onboard filling nozzle), illuminated at night, evening, and morning.

If such conditions have not been ensured, the Seller shall refuse the Buyer in refueling till the Buyer has settled with the airport authorities the issue of ensuring acceptable conditions for filling the Buyer's Aircraft with the Fuel on this certain parking area, or on other parking area in Pulkovo Airport.

In that case, any delay in service and/or delayed departure of an Aircraft shall be attributed to the Buyer who has not ensured proper conditions for safe service of an Aircraft in Pulkovo Airport.

Note: If the Buyer, on agreement with the management of "PULKOVO" Airport, agrees to place an Aircraft for service on a parking area the dimensions of which are less than provided for a certain type of Aircrafts, and/or if the horizontal markings of a parking area does not meet the NTD, the Seller shall agree to fill an Aircraft with the Fuel, but in this case all responsibility for possible breakdowns of and damages to the Aircraft in the course of service of the Aircraft on such parking area shall be attributed to the Buyer.

2.13. The Buyer shall bear exclusive responsibility for work with all on board switches for pre-sett1ng the quantity of the Fuel to be fed to an Aircraft's fuel systems, distribution thereof by tanks, and for centering an Aircraft.

2.14. The Seller shall not provide to the Buyer the services specified in clause 2.13. If the Buyer is unable to carry out operations stipulated in clause 2.13 (for example, performance of flights with an incomplete crew, etc.), the Buyer must notify the administration of "PULKOVO" Airport reasonably in advance on provision of such services by the airport's engineering personnel holding permission to perform such kind of works.

When planning regular flights in Pulkovo Airport, the Buyer shall, at own expense, train the airport's technicians and issue necessary permissions to them (shall issue certificates) for the works connected with refueling the Buyer's Aircraft, which require manual (remote) distribution of the Fuel by an Aircraft's tanks.

2.15. The process of refueling an Aircraft shall be supervised by both Parties.

2.15.1. In this case, the Buyer shall have the right to stop (not to allow) refueling of an Aircraft if:

• -there is any leakage of the Fuel (oil) from FE's process equipment;
• -connecting parts of FE's onboard filling nozzles and the Aircraft are polluted;
• -a water hydrant well is filled with water (when RU is used for refueling):
• -the pressure difference on filters of FT and RU exceeds the allowable values;

Responsibility for any flight delay which has taken place as a result of stoppage of refueling for the reasons listed in item 2.15.1. shall be borne by the Seller.

2.15.2. The Seller's representatives shall have the right not to serve the Buyer's Aircraft if there are no:

• -grounding devices (grounding jack) of FEs, and/or if the places of their locations (grounding jacks) have not been cleared from snow, ice, dust and other deposits on the parking area;
• -T-shaped sign of the place of stop of special transport, from which FE shall enter the parking area to the Aircraft;
• -Illumination at evening, night and morning;
• -serviceable step-ladder corresponding to the type of an Aircraft being served, where the conditions of refueling require such step-ladder.

Responsibility for any flight delay which has taken place as a result of stoppage of refueling for the reasons listed in item 2.15.1. shall be borne by the Buyer.

2.16. Data on the quantity of the Fuel to be fed to an Aircraft shall be specified by the Seller in a "Fuel distribution form for refueling an Aircraft", form No TZK-01, with all columns thereof completed and with indication of all requisites on the parking area after refueling an Aircraft. If E several FEs are used for refueling an Aircraft, a fuel distribution form shall be executed for each FE participating in the refueling. Based on a Fuel Voucher issued by the Seller for each FE, the following shall be specified in a fuel distribution form (order):

• -Fuel brand;
• -percentage of AWC-L;
• -density of the Fuel and AWC-L;
• -number of the Fuel Voucher.

Based on the inscriptions on the fuselage and/or on an Aircraft's wing, the following shall be specified in a fuel distribution form:

• -type and tail number of the Aircraft;
• -name of the Airline.
• -flight number according to the daily flight plan of Pulkovo Airport.
• -time of beginning and completion of refueling.
• -FE number

The quantity of the Fuel delivered, in liters, shall be specified proceeding from readings of a fuel meter installed on the Seller's FE. The quantitative readings of a fuel meter of the Seller's FE shall be accepted by the Buyer as authentic.

The weight in kg of the Fuel and AWC-Iiquid delivered shall be specified in a fuel distribution form in the course of accounting processing of documents.

Note: The form No TZK-01 "A fuel distribution form for refueling an Aircraft" shall be executed by the Seller in a printing house in the format 225 mm x 150 mm, selfcopying, multi-colored, in the form of separate complete sets, glued by the left edge, with tear-off punching at 15 mm from the left edge of the form. Seal color: black.

Color of the paper:

• -of the first and second copies: blue (for the Buyer and/or its representation at Pulkovo Airport, and/or for the Aircraft owner);
• -of the third and fourth: yellow (for the Seller, organizationrefueling operator);
• -of the fifth: white (for a customs authority).

All copies of the form shall have the same identification data: series, alphabetic identification according to the Russian alphabet, and six-character's numerical number. The Seller shall reserve the right to make subsequent changes in the form No TZK-01 both at its own discretion, and at request of the FEACA.

2.17. The Buyer's representative shall have the right to request that the Seller's authorized person re-execute a fuel distribution form in the form No TZK-01, if any errors or discrepancies are revealed immediately in the place of E execution (issue) thereof. Authorized persons of both Parties shall bear equal responsibility for correct and complete execution of a fuel distribution form upon signing thereof.

2.18. If any obvious errors (discrepancies) and/or differences in data are revealed by either Party or by both Parties in a fuel distribution form (order) in the course of accounting processing (verification), the Parties, on agreement between themselves, shall either make changes therein or issue a new fuel distribution form (order).

2.19. If either Party has lost a prior executed fuel distribution form (order), a Party which holds a copy of the lost document shall make another copy thereof and, having certified the same with the signature of CEO and the corporate seal, transfer it to the other Party pursuant to a letter.

3. CHECKS AND SAMPLING OF FUEL

3.1. The Buyer or its representative in Pulkovo Airport shall have the right to carry out a technical check or inspection of the following positions:

a) the Seller's instructions and procedures of works being in effect according to the provisions of clause 2.6. of this Procedure;

b) log-books of the results of quality checks and analyses of the Fuel, as well as the Seller's process operations in the course of preparation for filling an Aircraft with the Fuel;

c) operation of the equipment participating in the process of aviation fuel supply;

d) certificate of conformity, license and permission to perform certain kinds of works (procedures) connected with provision of an Aircraft with aviation fuel;

e) metrological checks of the measurement tools used in the process of provision of an Aircraft with aviation fuel, and certificates on passage of such checks.

3.2. The Buyer or its representative shall have the right to take samples of the Fuel intended for sale to the Buyer, which sampling the Seller shall have the right to carry on in the presence of the Buyer (its representative).

The Buyer shall, not later than 72 hours in advance, notify the Seller on its intention to receive (take) samples of the Fuel used for filling the Buyer's Aircraft. Sampling shall be carried out on-site and using a method agreed upon by the Parties.

At the same time, the Seller shall have the right to take from the same point and to certify, according to the requirements of the FEACA's NTD, an arbitration sample of the Fuel, which sample shall be kept with its fuels & lubricants laboratory till receipt from the Buyer of the results of an analysis of the sample it has taken, and, if necessary and depending on the circumstances, to carry out an analysis of the arbitration sample in its fuels & lubricants, or I in the Center of Certification of Aviation Fuels, Lubricants and Special Liquids of FGUP GosNII GA (22 bldg. 2, Planernaya Ul, Moscow).

3.3. The Selle,r shall not accept the results of an analysis of a sample of the Fuel carried out by the Buyer, if such analysis has been carried out in a laboratory (organization), which does not hold a certificate of conformity in the system of certification on Air Transport of the Russian Federation.

If the Buyer, based on such results of an analysis, distribute any information to third parties, the Seller shall consider such actions of the Buyer as biased and aimed at disruption of the Seller's image, with all consequences thereof according to the current laws of the Russian Federation.

3.4. In case of any differences between the Parties as to quality of the Fuel fed to the Buyer's Aircraft, the Parties shall carry out an arbitration analysis in the Center of Certification of Aviation Fuels, Lubricants and Special Liquids of FGUP GosNII GA (22 bldg. 2, Planernaya Ul., Moscow)

4. CLAIMS, STATEMENT

4.1. Claims concerning:

• -incomplete refueling and/or delays in refueling;
• -actions of the Seller's personnel in the course of service of an Aircraft;
• -quantity of the Fuel;
• -technical order (malfunctions) of the Seller's FE;
• -execution of fuel distribution forms (requirements) and vouchers for FE,

shall be produced to the Seller in the course of refueling (service of) an Aircraft, in the person of the senior shift officer of the Flight and Production Support Section (FPSS), being an authorized person for decision-making on matters related to the above-named claims (call by local internal airport telephone numbers 48-52, 24-31, and/or by mobile phone 932-85-68), with subsequent execution of a certificate (statement) not later than within 15 days after the event.

Claims as to poor quality (lack of purity) of the Fuel or for any other reasons (questions) shall be produced to the Seller within the shortest time in the form of a written statement not later than within 30 days after the event.

If a statement has not been executed within 15 or 30 days, respectively, this shall mean a wavier of the right to produce a claim.

5. FUELLING THE AIRCRAFT WITH PASSENGERS ONBOARD, OR IN THE COURSE OF PASSENGER LOADING AND UNLOADING

5.1. According to the requirements being in effect at civil aerodromes (Airports), filling an Aircraft with the Fuel may be carried out with passengers on board, or in the course of passenger loading and unloading at request of the crew of the Buyer's Aircraft or the aviation authorities of Pulkovo Airport (Chief of the ATCS or a shift deputy chief of the airport). In that case, the Buyer shall bear exclusive responsibility for compliance with all requirements produced by the administration of Pulkovo Airport, as well as for following corresponding safety rules, calling for fire special equipment to the Buyer's Aircraft on the parking area in the course of filling with the Fuel with passengers onboard, and presence of such special equipment on the parking area till full completion of refueling.

For the Seller
/signed/ /sealed/ For the Buyer
/signed/ /sealed/

EX-10

AIRCRAFT BILL OF SALE

FOR AND IN CONSIDERATION OF ONE HUNDRED FORTY FOUR THOUSAND ONE HUNDRED SIXTY FOUR DOLLAR AND SIX CENTS ($144,164.06), THE UNDERSIGNED OWNER OF THE LEGAL AND BENEFICIAL TITLE OF THE AIRCRAFT DESCRIBED AS FOLLOW:

UNITED STATES REGISTRATION NUMBER:	N705BL
AIRCRAFT MANUFACTURER & MODEL:	BOEING 747-200
AIRCRAFT SERIALNO:	21035

DOES THIS 11th DAY OF JANUARY, 2012 HEREBY SELL, GRANT, TRANSFER AND DELIVER ALL RIGHTS, TITLE, AND INTERESTS 1N AND TO SUCH AIRCRAFT "AS IS WHERE IS" UNTO:

PURCHASER: YUSOF, MOHD YAZMEEN MD
NO.8, JALAN DINAR A U3/A
SECTION U3 TAMAN SUBANG PERDANA
40150SHAH ALAM
SELANGOR MALAYSIA

IN TESTIMONY THEREOF I HAVE PLACED MY SIGNATURE BELOW ON THIS 14th DAY OF MAY, 2012.

SELLER:

BALTIA AIR LINES, INC

BY /signature/
RUSSELL THAL
EXECUTIVE V .P.

EX-10

[LETTERHEAD]

JLT Aerospace (North America) Inc.
2300 Dulles Station Blvd., Suite 230
Herndon, VA 20171
Main: 703 459-2380
Facsimile: 703 459-2381

CERTIFICATE OF INSURANCE BA-12-009

This is to certify to:	Kalitta Air, L.L.C. Attn: Conrad Kalitta (Kertman@kalittaair.com) 818 Willow Run Airport Ypsilanti, MI 48198
Copy to:	Kelsey Law Group, PC Attn: Cheryl Dunn (CDunn@kelseylaw.com) 2395 S. Huron Parkway, Suite 200 Ann Arbor, MI 48104
That:	Baltia Air Lines, Inc. Terminal 4, Room 263.047 John F. Kennedy International Airport Jamaica, NY 11430

as of this date, has arranged for the following insurance coverage(s) for the period and with underwriters as identified on the attached Security Sheet.

COVERAGES:

ALL RISKS (GROUND) AIRCRAFT HULL INSURANCE (including test flights) All Risks (including transit) Aircraft Spare Parts Insurance	Hull Limit As held on file
The Hull coverage is subject to a Deductible (not applicable to Total or Constructive Total Loss/Arranged Total Loss.	Each and Every Loss $1,000,000
Occurrence aggregate deductible equal to highest applicable deductible.)	Spares Limit $1,000,000 each occurrence
COMPREHENSIVE AIRLINE LIABILITY INSURANCE Including, but not limited to: Comprehensive General Liability, Bodily Injury and Property Damage to Third Parties, Passenger Liability, Personal Injury Liability, Contractual Liability, Passengers' Checked and Unchecked Baggage Liability, Premises, Products, Ground Hangarkeepers and Completed Operations Liabilities, On Airport Automobile, Off Airport Excess Automobile and Employers' Liabilities.	Combined Single Limit Each Occurrence* $500,000,000

*REFER TO THE POLICY. AN ANNUAL AGGREGATE LIMIT AND/OR SUB-LIMIT MAY APPLY TO SOME COVERAGES.

GEOGRAPHICAL LIMITS: Worldwide

CONTRACT(S): Aircraft and/or Engine Maintenance Services Agreement, dated December 23, 2010 between Baltia Air Lines, Inc. ("Customer"), and Kalitta Air, L.L.C. (dba Kalitta Maintenance) ("Kalitta")

EQUIPMENT INSURED: Any aircraft owned and/or operated by the Named Insured. OTHER COVERAGES/CONDITIONS/REMARKS

Subject always to the scope of the attached policies and all the policies' declarations, insuring agreements, terms, conditions, limitations, exclusions, deductibles, warranties and endorsements thereof remaining paramount: Solely as respects: (i) The Coverage(s) noted above; (ii) the Contract(s) (and then only to the extent of the Named Insured's obligation to provide insurance under the terms of the Contract(s)); and (iii) the operations of the Named Insured; the policies are endorsed to include the following provisions(s):

Solely as respects Comprehensive Airline Liability Insurance, Kalitta, its members, officers, directors, employees and agents are included as Additional Insureds ("the Additional Insureds") as their respective rights and interests may appear; however, no party shall be included as an Additional Insured as respects its legal liability as manufacturer, repairer or servicing agent of the Aircraft and/or Engines.

Such insurance as is afforded the Additional Insureds shall not be invalidated and shall protect their interests regardless of any action or inaction of Lessee or any other person or party whether or not such action or inaction is a breach or violation of any warranties, declarations or conditions of the policies, provided that the Additional Insured so protected has not caused, contributed to or knowingly condoned said act or omission, but in no event shall this clause apply in the event of exhaustion of policy limits, nor to losses, claims, expenses, etc., excluded from coverage under the policies.

Solely as respects Comprehensive Airline Liability Insurance, this insurance is primary without right of contribution from any other insurance as may be carried by the Additional Insureds.

All provisions of the above Liability insurance policies shall apply separately to the Named Insured and each Additional Insured against whom claim is made or suit is brought except with respect to the Limits of Liability.

Solely as respects Physical Damage Coverage, the Insurers waive their rights of subrogation against the Additional Insureds but only to the extent the Named Insured has waived its rights of recovery under the Contract(s).

[LETTERHEAD]

JLT Aerospace (North America) Inc.
2300 Dulles Station Blvd., Suite 230
Herndon, VA 20171
Main: 703 459-2380
Facsimile: 703 459-2381

CERTIFICATE OF INSURANCE BA-12-009

Insurers agree to hold harmless and waive their rights of subrogation against the Additional Insureds, but only to the extent the Named Insured has waived its rights of recovery under the Contract(s).

In the event of cancellation or material changes of the policies by insurers which would adversely affect the interests of the Additional Insureds, Insurers agree to provide 30 days (ten (10) days in the event of cancellation for non-payment of premiums) prior written notice to the Certificate Holder(s).

This Certificate of Insurance is issued as summary of the insurances under the policies noted above and confers no rights upon the Certificate Holders as regards the insurances other than those provided by the policies. The undersigned has been authorized by the above insurers to issue this certificate on their behalf and is not an insurer and has no liability of any sort neither under the above policies nor as a result of this certification.

This certificate or verification of insurance is not an insurance policy and does not amend, extend or alter the coverage afforded by the policies listed herein. Notwithstanding any requirement, term, or condition of any contact or other document with respect to which this certificate or verification of insurance may be issued or may pertain, the insurance afforded by the policies described herein is subject to all terms, exclusions, limitations and conditions of such policies (including, but not limited to an Electronic Date Recognition Exclusion Clause, and a related Electronic Date Recognition Exclusion Limited Coverage Endorsement; copies of which will be made available on request).

/ initials /	February 17, 2012
Authorized Representative	Date

[LETTERHEAD]

JLT Aerospace (North America) Inc.
2300 Dulles Station Blvd., Suite 230
Herndon, VA 20171
Main: 703 459-2380
Facsimile: 703 459-2381

CERTIFICATE OF INSURANCE BA-12-009 SECURITY SHEET

POLICY TERM: January 30, 2012 to January 30, 2013, on both dates at 12:01 A.M. Local Standard Time at the address of the Named Insured.

INSURER	POLICY NUMBER	QUOTA SHARE
Allianz Global Risks US Insurance Company	A1AL000433012AM	10.00%
XL Specialty Insurance Company	UA00004496AV12A	10.00%
Catlin Syndicate 2003 at Lloyd's Catlin France S.A.S.	944124	5.00%
Starr Surplus Lines Insurance Company Ironshore Specialty Insurance Company Per Starr Aviation Agency, Inc.	SASLAMR63609812-01 IHM100144-01	8.00% 5.00%
StarNet Insurance Company	BA-12-01-00140	10.00%
Per Berkley Aviation, LLC National Union Fire Insurance Company of Pittsburgh, PA Per Chartis Aerospace	HL1859938-04	12.50%
Underwriters at Lloyds of London, British Insurance Companies and Others Per JLT Specialty Ltd	J51206057/74	8.50%
One or More Member Companies of Global Aerospace, Inc.	337901/12	5.00%
Member Companies of La Reunion Aerienne	2012/60049	20.00%
Torus Insurance (Europe) AG	33018A121AAV	3.50%
International Insurance Company of Hannover Ltd. Per Inter Hannover	BLT12HC0A1	2.50%
	TOTAL	________ 100.00%

SEVERAL LIABILITY NOTICE

The subscribing insurers' obligations under contracts of insurance to which they subscribe are several and not joint and are limited solely to the extent of their individual subscriptions. The subscribing insurers are not responsible for the subscription of any co-subscribing insurer who for any reason does not satisfy all or part of its obligations. LSW 1001 (Insurance)

EX-10

LETTERHEAD GRAPHIC: JLT --------------- Page 1 of 6

BINDER

TYPE:	AVIATION HULL, SPARES, AND LIABILITY INSURANCE
INSURED:	Baltia Air Lines, Inc. and all subsidiaries, affiliated, managed, owned or controlled entities as may now exist or hereafter are formed and acquired.
ADDRESS:	Building 151, Room 361 JFK International Airport Jamaica, NY 11430
PERIOD:	12 months at January 30,2012 at 12:01 a.m. Local Standard Time at the address of the Named Insured
INTEREST:	Hull: To cover Aircraft owned, non-owned and/or operated or for which the Insured is responsible as per schedule against All Risks of Physical Loss or Damage while on the ground, including ferry and test flights. Spares: To cover all Aircraft Spares, pods, parts, spare part kits, tools, or equipment (hereunder referred to as Spares) usually attached to and forming a part of an Aircraft, but while not so attached and provided such Spares are owned by the Named Insured or the property of others while in the care, custody or control of the Named Insured and for which the Named Insured has agreed, in writing, to be responsible for direct physical damage, against all risks of physical loss or damage including while in transit. Spare/Leased Engines: Spare engines and aircraft engines leased to or operated by or on behalf of the Named Insured against all risks of physical loss or damage while in flight, taxiing or on the ground (whether attached to and forming part of an Aircraft or as a Spare) for an Agreed Value each engine. Liability: To pay all sums which the Insured shall become legally Obligated to pay in respect of Third Party (Bodily Injury and Property Damage), Passenger Legal Liability, Non-Owned Aircraft Liability, Baggage, Cargo and Mail Liability (including declared values), Medical, Funeral and Repatriation Expenses, Personal Injury and Ground Liability including Premises, Products (including Completed Operations), Contractual, Hangarkeepers (including in-flight) and Non-Aviation Excess Liability, all as may arise from the Insured's Air Transport Business.

LETTERHEAD GRAPHIC: JLT --------------- Page 2 of 6

SUM INSURED: Hull: Agreed Values as per Schedule but subject to a Maximum Agreed Value $15,000,000 anyone aircraft

Spares: $10,000,000 anyone location/anyone transit/any one occurrence

Spare/Leased Engines: Agreed Values as per Schedule but subject to a Maximum Agreed Value $10,000,000 anyone engine

Liability:

Combined Single Limit $500,000,000 each occurrence and in the aggregate with respect to Products and Completed Operations, however the following sub-limits apply:

Grounding Liability limited to $125,000,000 anyone occurrence and in the aggregate

Personal Injury $25,000,000 each offense and in the aggregate (except with respect to passengers to whom the full Policy limit applies)

If required, Excess of Schedule of underlying insurances $25,000,000 each occurrence excess of:

Employers Liability $1,000,000 anyone occurrence

Automobile Liability $1,000,000 anyone occurrence

DEDUCTIBLES:	Hull:	$1,000,000 each and every loss (not applicable to total/arranged/constructive loss)
	Spares:	$10,000 each and every loss $500 each and every loss in respect of Mechanics' Tools $10,000 each and every loss in respect of Buyer Furnished Equipment
	Spare/Leased Engines: Whilst attached to an Aircraft the applicable All Risk Hull deductible applies; when declared as a spare the applicable spares deductible shall apply, but applicable Hull Deductible in respect of ingestion damage.
	Liability:	$3,300 anyone loss (or tariff whichever is greater) in respect of Baggage $5,000 anyone loss in respect of Cargo $2,500 anyone loss Hangarkeepers (Ground); Hull Deductible to apply in respect of in flight
	In the event of a claim involving the application of more than one deductible the highest applicable deductible shall be applied as an aggregate deductible for all losses arising out of that claim.

LETTERHEAD GRAPHIC: JLT --------------- Page 3 of 6

USES:	As required by the Named Insured
PILOTS:	As approved by the Named Insured
SITUATION:	Worldwide
CONDITIONS:	Noise and Pollution and Other Perils Exclusion Clause AVN 46B in respect of Liabilities only (but not applicable to passengers, crew, baggage, cargo or mail and paragraph 1(b) not applicable to pollution or contamination of a product or products sold or supplied by the Insured). Nuclear Exclusion Clause Contractual provisions including hold harmless agreements, indemnity agreements, waivers of subrogation, interline agreements, ACMI (Aircraft, Crew, Maintenance and Insurance) agreements, charter agreements, code shares, additional insureds, severability of interest, cross liability, breach of warranty, loss payees, and standard lATA contracts that may arise from the Insured's Air Transport business (subject AVN67B Airline Finance Lease Contract Endorsement where applicable) War, Hi-jacking and Other Perils Exclusion Clause Extended Coverage Endorsement (Aviation) Liability Clause AVN52E with paragraph 3 limitation of liability sublimit $150,000,000 anyone occurrence and in the annual aggregate deleting all paragraphs except (b) of the War, Hijacking and other perils exclusions clause AVN48B. 50/50 Provisional Claims Settlement Clause Contract (Rights of Third Parties) Act 1999 Exclusion Clause AVN 72 Date Recognition Exclusion Clause AVN 2000A with Date Recognition Limited Coverage Clauses AVN 2001 A and AVN 2002A Automatic pro rata additions, deletions and substitutions of aircraft of similar type (subject to maximum policy Agreed Value). Asbestos Exclusion Clause 150% allowance for overhead/overtime on repairs performed by the Named Insured. Premium payable quarterly 60 days notice of cancellation or non-renewal (10 days notice for nonpayment of premium) "Disappearance" to mean missing and not reported for five (5) days after the commencement of a flight AVN 57 (Canada) subject to AVS 102 (Canada)

LETTERHEAD GRAPHIC: JLT --------------- Page 4 of 6

AVN 57 (USA) subject to AVS 102 (USA) Search and Rescue/Removal of Wreckage/Foaming of Runways: $5,000,000 anyone aircraft/anyone occurrence payable in addition to the limit and without prejudice to any other claims under this policy Non-Owned Aircraft Endorsement AVN.54 with paragraph (D) deleted, subject Maximum seating capacity 294 (excluding crew) Definition of "Mobile Equipment" to include any vehicle or auto operated on designated restricted access airport premises Agree to include dismantling costs under Hull Coverage Fire Legal Liability $1,000,000 Medical Expenses incurred by the Insured in respect of passengers and crew arising out of an occurrence irrespective of Legal Liability hereon Claims are to be handled in accordance with North American Claims Handling Agreement (NACHA) as issued by Slip Leader. Certain Insurers agree to contribute up to $14,875 towards a Risk Management Fund covering safety, security and/or risk management expenses, as required. Service of Suit Clause (U.S.A.) (AVN 65 [amended] or its equivalent) Court of competent jurisdiction within the State of New York

SCHEDULE OF AIRCRAFT:

As held on file by JLT Aerospace (North America) Inc.

Make and Model	Reg. No.	MSN	Hull Value	Passenger Seats
Boeing 747-200	N706BL	21705	$7,000,000	294 327

tba

PREMIUM:	Deposit Premium of $883,475* payable in four quarterly installments as follows:
	January 30, 2012: April 30,2012: July 30, 2012: October 30,2012:	$137,196 $137,196 $262,705 $346,378
	* Including Lead Fee of $65,000 At expiration, the deposit premium will be adjusted to reflect earned.

LETTERHEAD GRAPHIC: JLT --------------- Page 5 of 6

To the best of your knowledge, you have provided complete and accurate information which would influence the judgment of an underwriter in determining whether or not to underwrite the risk and, if so, upon what terms and at what premium. If all such information has not been disclosed, insurers may have a right to void the policy which will lead to claims not being paid. If you believe that you have not complied with this duty please contact us immediately.

The duty of disclosure and the consequences of its breach may vary to a limited degree from the foregoing dependent upon applicable law.

/ signature/ C.F. Engel Signed: JLT Aerospace (North America) Inc.	9th Feb 2012 Date
/signature/ Igor Dmitrowsky PRESIDENT Signed: Baltia Air Lines, Inc.	2-9-12 Date

LETTERHEAD GRAPHIC: JLT --------------- Page 6 of 6

SECURITY SHEET
POLICY TERM: January 30, 2012 to January 30, 2013, on both dates at 12:01 AM. Local Standard Time at the address of the Named Insured.

INSURER	POLICY NUMBER	QUOTA SHARE
Allianz Global Risks US Insurance Company 317 Madison Avenue, Suite 1110 New York, NY 10017	A1AL000433012AM	10.00%
XL Specialty Insurance Company One World Financial Center, 200 Liberty Street, 21st Floor New York, NY 10281	UA00004496AV12A	10.00%
Catlin Syndicate 2003 at Lloyd's Per Catlin France S.AS. 37 rue de Caumartin F-75009 Paris, France	944124	5.0000%
Starr Surplus Lines Insurance Company lronshore Specialty Insurance Company Per Starr Aviation Agency, Inc. 3353 Peachtree Road NE, Suite 1000 Atlanta, GA 30326	SASLAMR63609812-01 IHM100144-01	8.0000% 5.0000%
StarNet Insurance Company Per Berkley Aviation, LLC 3780 State Street, Suite C Santa Barbara, CA 93105	BA-12-01-00140	10.0000%
National Union Fire Insurance Company of Pittsburgh, PA Per Chartis Aerospace 100 Colony Square, Suite 1000, 1175 Peachtree Street, N.E. Atlanta, GA 30361	HL 1859938-04	12.5000%
Lloyds Syndicate DRE 1400 (Alterra) Great Lakes Reinsurance (UK) Ltd. Per JLT Specialty Limited One American Square London EC3N 2JL, United Kingdom	J51206057 J51206074	3.5000% 5.0000%
Member Companies of Global Aerospace, Inc., as follows: Mitsui Sumitomo Insurance Company of America	33018A121AAV	.4640%
Tokio Marine & Nichido Fire Insurance Co. Ltd (USB)		.6185%
Great Lakes Reinsurance (UK) pic		2.2480%
Mapfre Global Risks Compania Internacional de Suguros y Reaseguros S.A		.5000%
National Fire & Marine Insurance Company One Sylvan Way, Third Floor Parsippany, NJ 07054		1.1695%
Member Companies of La Reunion Aerienne 134 Rue Danton 92300 Levallois-Perret, France	2012160049	20.0000%
Torus Insurance (Europe) AG Genferstrasse 35 8002 Zurich, Switzerland	33018A121AAV	3.5000%
International Insurance Company of Hannover Ltd. Per Inter Hannover P.O.Box 22085 10422 Stockholm, Sweden	BLT12HCOA1	2.5000%
	TOTAL	__________ 100.0000%

SEVERAL LIABILITY NOTICE: The subscribing tnsurers' obligations under contracts of insurance to which they subscribe are several and not joint and are limited solely to the extent of their individual subscriptions. The subscribing insurers are not responsible for the subscription of any co-subscribing insurer who for any reason does not satisfy all or part of its obligations. LSW 1001 (Insurance)

EX-10

JLT

(letterhead)

BINDER

TYPE:	AIRLINE HULL WAR AND ALLIED PERILS INSURANCE
INSURED:	Baltia Air Lines, Inc.
ADDRESS:	John F. Kennedy International Airport Building 151, Room 361 Jamaica, NY 11430
PERIOD:	January 30, 2012 to January 30, 2013 on both dates at 12:01 a.m. Local Standard Time at the address of the Named Insured.
INTEREST:	1. Hull War To cover Aircraft as per Schedule of Aircraft against All Risks of Physical Loss or Damage resulting from War and Allied Perils (and including Kidnap, Ransom, Extortion, Hijack and Confiscation Expenses) as more fully described in the Policy Wording. 2. Spares Coverage in respect of Spare Engines, Parts and Equipment (including mobile equipment and unlicensed vehicles) and as more fully defined in the Insured's Spares All Risks Policy, against loss or damage at all times including whilst in transit by whatever means.
SUM INSURED:	Aircraft Hulls:
	Maximum Agreed Value:	$15,000,000 anyone Aircraft
	Kidnap, Ransom and Extortion Expenses	$5,000,000 anyone occurrence and in the aggregate
	Hijack and Confiscation Expenses	$5,000,000 anyone occurrence and in the aggregate
	Supplementary Expenses (AVN76)	$5,000,000 anyone occurrence and in the aggregate
	Spares and Equipment:	$10,000,000 anyone occurrence
DEDUCTIBLES:	None
SITUATION:	Worldwide Or Worldwide subject to KILN Geographic Areas Exclusion Clause (11/05/07) LSW617G 1 Notwithstanding any provisions to the contrary and subject to clauses 2 and 3 below, this Policy excludes any loss, damage or expense howsoever occurring within the geographical limits of any of the following countries and regions: a. Algeria, Cabinda, Burundi, Central African Republic, Congo, Democratic Republic of Congo, Eritrea, Ethiopia, Ivory Coast, Liberia, Nigeria, Sierra Leone, Somalia, Sudan. b. Colombia, Ecuador, Peru. c. Afghanistan, Checheno/lngushskaya, Nagorno-Karabakh, Pakistan, Yemen, Jammu & Kashmir, Nepal. d. Sri Lanka. e. Iran, Iraq. f. Any country where the operations of the insured Aircraft is in breach of United Nations sanctions. 2. However coverage pursuant to this Policy is granted: a. for the over flight of any excluded country where the flight is within an internationally recognized air corridor and is performed in accordance with I.CAO. recommendations; or b. in circumstances where an insured Aircraft has landed in an excluded country as a direct consequence and exclusively as a result of force majeure. 3. Any excluded country may be covered by underwriters at terms to be agreed by the Slip Leader prior to flight.
CONDITIONS:	Insurers agree this Contract is subject to and includes the following: Automatic pro-rata additions, deletions and substitutions of any type of aircraft and increases/decreases in agreed value subject value not exceeding Maximum Sum Insured hereon to be declared and adjusted at expiry.
	Additional Insureds, Waivers of Subrogation, Loss Payees, Breach of Warranty, Hold Harmless, Indemnity, Assignment, Lease, Contractual and Financial Agreements and the like as expiring policy or as per Hull All Risks Policy (subject provisions of Automatic Termination and Cancellation Clauses being paramount), without advice hereon. Coverage hereon shall extend to include the provisions of Aircraft Financing or Leasing Agreements in accordance with the Airline Finance/Lease Contract Endorsement AVN 67B (Hull War) / AVN 67C (Hull War) as applicable or such other Endorsements as may be agreed under the Hull All Risks Policy, subject Policy Terms, Conditions, Limitations and Exclusions remaining Paramount. If at the expiry date of this Policy the subject-matter insured is outside the control of the Insured by reason of any peril insured hereunder then this Policy will automatically extend to cover the subject-matter insured until it has been restored to the control of the Insured notwithstanding any notice of cancellation or automatic cancellation. In the event of insured Aircraft being confiscated (or other perils per LSW555D Section One paragraph (e) or (f)) for more than 60 days the aircraft shall be considered a total loss.
	Including Automatic Contingent Hull War Risks Insurance on the Insured's owned or leased aircraft whilst leased/sub-Ieased/used by others when required by the Insured but excluding loss or damage which is not recoverable (in whole or in part) as a claim from the Operators' policy by reason of the insolvency and/or financial default of an Insurer or Insurers. In the event that an aircraft insured hereon is fitted with a leased engine or parts, the agreed value of the aircraft to which such leased engine or parts is/are attached is automatically increased by the agreed value of the leased engine or parts for the period of installment subject to maximum agreed value hereon not being exceeded. Changes in value to be advised and adjusted at expiry. In the event of the Total Loss of an aircraft on which Insurers are required to pay the agreed value for the hull and the leased engine(s) or parts, Insurers will retain rights of salvage on the engine(s) or parts removed and replaced by such leased engine(s) or parts. However, the foregoing increase in the stated agreed value shall not be taken into account when applying the Constructive Total Loss clause hereon. Innocent Operators Coverage AVN 89 amended to replace the words 'warranted the Insured shall' with 'the Insured shall use their best endeavors to', including cost of re-assembly of aircraft. Excluding confiscation, nationalization, seizure, restraint, detention, appropriation, requisition for title or use by or under the authority of the Government of Registration. It is agreed that where the Insured or his employees are rendered by any peril covered by this Policy unable to protect the Aircraft from damage, wear, tear or gradual deterioration of and are prevented from performing any service or maintenance to the aircraft made necessary by the passage of time, this Policy shall cover all costs and expenses necessarily incurred to reinstate the aircraft to its condition immediately prior to exposure to such peril. As regards spares and equipment, the coverage provided by paragraph (a) of Section One of LSW555D shall only apply whilst such spares are being carried as cargo in transit by water or by air as defined in the Duration Transit Clause of Institute War Clauses (Cargo) CL385 and Institute War Clauses (Air Cargo) CL388. Paragraph (a) of Section One of LSW555D not applicable to spares in storage or on the ground. Contracts (Rights of Third Parties) Act 1999 Exclusion Clause AVN72. 50/50 Provisional Claims Settlement Clause AVS 103 (Not to be shown on Policy wording). Automatic termination (at pro rat policy terms) to apply as required by the London market War and Civil War Agreement (as per wording) 7 days notice to / by Contract Leader to review rate / amend situation (it being understood that any subsequent cancellation under such notice shall only apply to the aircraft the subject of the notice). In the event JLT Aerospace (North America), Inc. is unable to advise the Contract Leader of a flight that requires notification, the flight is automatically covered hereon subject: a. All necessary permits obtained prior to flight b. Contract leader to be advised as soon as practicable c. Subject otherwise to the policy terms, conditions, limitations and exclusions, remaining paramount. TRIA Coverage included.
SCHEDULE OF AIRCRAFT:	As held on file by JLT Aerospace (North America) Inc.

Make/Model	Req. No.	MSN	Hull Value	Passenger Seats
-	-	-	-	-
Boeing 747-200	N706BL	21705	$7,000,000	294

PREMIUM:	$2,467.50 subject to a minimum premium of $1,762.50 Including 5% premium allocation in respect of TRIA ($117.50 subject to a minimum premium of $ 83.93 included in above).
PAYMENT TERMS:	Premium payable in quarterly installments and adjustable at expiry as follows:
	January 30, 2012: April 30, 2012: July 30, 2012: October 30,2012:	$616.88 $616.88 $616.88 $616.86
INSURER:	Lloyd's Syndicate 510 (Kiln) per JLT Specialty Limited
SHARE:	100%

To the best of your knowledge, you have provided complete and accurate information which would influence the judgment of an underwriter in determining whether or not to underwrite the risk and, if so, upon what terms and at what premium. If all such information has not been disclosed, insurers may have a right to void the policy which will lead to claims not being paid. If you believe that you have not complied with this duty please contact us immediately. The duty of disclosure and the consequences of its breach may vary to a limited degree from the foregoing dependent upon applicable law.

/ signature/ C.F. Engel Signed: JLT Aerospace (North America) Inc.	9th Feb 2012 Date
/signature/ Igor Dmitrowsky PRESIDENT Signed: Baltia Air Lines, Inc.	2-9-12 Date

EX-10

JLT Letterhead

BINDER

TYPE:	AVIATION HULL DEDUCTIBLE INSURANCE
INSURED:	Baltia Air Lines, Inc.
ADDRESS:	John F. Kennedy International Airport Building 151, Room 361 Jamaica, NY 11430
PERIOD:	January 30, 2012 to January 30, 2013 on both dates at 12:01 a.m. Local Standard Time at the address of the Named Insured.
INTEREST:	Whereas the Insured has in force a Hull All Risk Policy covering aircraft owned and/or operated by the Insured and such Policy includes the provision for Deductibles excluding all forms of Total Loss.
SUM INSURED:	Now this Policy will indemnify the Insured as follows: To pay: $900,000 each and every loss Excess of $100,000 each and every loss Subject to one deductible anyone occurrence Subject to an overall policy aggregate of $1,500,000
SITUATION:	Worldwide
CONDITIONS:	Nuclear Risks Exclusion Clause AVN 38B Additional Insureds, Loss Payees, Breach of Warranty, Waiver of Subrogation, Hold Harmless Agreements, Contractual Agreements, Cross Liability clauses as expiring and as may hereinafter be required. JLT Aerospace (North America) Inc. is authorized to issue Certificates of Insurance on behalf of Underwriters. Special Provisions incorporated into the policy as if endorsed thereon. War, Hi-jacking and Other Perils Exclusion Clause (Aviation) AVN48B 60 days notice of cancellation or non-renewal (10 days notice for nonpayment of premium) "Disappearance" to mean missing and not reported for five (5) days after the commencement of a flight Contract (Rights of Third Parties) Act 1999 Exclusion Clause AVN 72 ! Date Recognition Exclusion Clause AVN 2000A with Date Recognition Of Limited Coverage Clauses AVN 2001A and AVN 2002A Asbestos Exclusion Clause 2488AGM00003 All other Terms, Conditions, Limitations, Exclusions and Cancellation Clauses where applicable to follow Hull All Risks Policy
PREMIUM:	$30,600 per aircraft
PAYMENT TERMS:	Premium payable quarterly as follows: January 30,2012: . . . . $7,650 April 30, 2012:. . . . . . $7,650 July 30, 2012:. . . . . . . $7,650 October 30, 2012: . . . $7,650
SCHEDULE OF AIRCRAFT:	As held on file by JLT Aerospace (North America) Inc. Make/Model Re!=!.No. MSN Hull Value Passenger Seats Boeing 747-200 N706BL 21705 $7,000,000 294
INSURER:	XL Specialty Insurance Company
SHARE:	100%

To the best of your knowledge, you have provided complete and accurate information which would influence the judgment of an underwriter in determining whether or not to underwrite the risk and, if so, upon what terms and at what premium. If all such information has not been disclosed, insurers may have a right to void the policy which will lead to claims not being paid. If you believe that you have not complied with this duty please contact us immediately. The duty of disclosure and the consequences of its breach may vary to a limited degree from the foregoing dependent upon applicable law.

/ signature/ C.F. Engel Signed: JLT Aerospace (North America) Inc.	9th Feb 2012 Date
/signature/ Igor Dmitrowsky PRESIDENT Signed: Baltia Air Lines, Inc.	2-9-12 Date

XML

4.Sale of Assets

3 Months Ended

Mar. 31, 2012

Property, Plant and Equipment Disclosure [Text Block]

4. Sale of Assets

In January 2012, we sold one of our aircraft, Boeing 747 N705BL, for approximately $144,000 resulting in a loss of approximately 1.6 million dollars.  

XML

3. Stockholders' Equity

3 Months Ended

Mar. 31, 2012

Stockholders' Equity Note Disclosure [Text Block]

3.  Stockholders' Equity 

  Stock Issued for Services

During the three months ended March 31, 2012 we issued 10,612,970 shares of our common stock in exchange for services. The shares were valued at $ 422,877, approximately $0.039 per share and reflected the share market value at the time of issuance. The shares are not registered and are subject to restrictions as to transferability 

During the three months ended March 31, 2011 we issued 25,077,000 shares of our common stock in exchange for services. The shares were valued at $ 1.254 million, approximately $0.05 per share and reflected the share market value at the time of issuance. The shares are not registered and are subject to restrictions as to transferability.

  Stock Issued for Cash 

During the three months ended March 31, 2012 we issued 31.8 million shares of our common stock in exchange for cash. The shares sold for cash were subscribed at $ 1,131,000, approximately $0.036 weighted average per share. The options were exercised at par value.

During the three months ended March 31, 2011 we issued 39.7 million shares of our common stock in exchange for cash. The shares sold for cash were subscribed at $ 1.406 million, approximately $0.035 weighted average per share.

XML

BALANCE SHEET (USD $)	Mar. 31, 2012	Dec. 31, 2011
Cash	$ 39,847	$ 57,390
Prepaid expenses	0	0
Total current assets	39,847	57,390
equipment	1,762,179	3,513,526
accumulated depreciation	(114,268)	(109,268)
Net property & equipment	1,647,911	3,404,258
Security deposit and other	317,293	317,293
Total Assets	2,005,051	3,778,941
Accounts payable	210,286	205,285
Accrued expenses	138,000	112,125
Total current liabilities	348,286	317,410
Long-term debt, net of discount	1,035,502	1,003,941
66,500 issued & outstanding	665	665
1,760,436,018 issued & outstanding (1,718,031,382 in Dec)	176,044	171,803
Additional paid in capital	78,483,802	76,933,560
Deficit Accumulated During Development Stage	(78,039,248)	(74,648,438)
Total Equity	621,263	2,457,590
Total Liabilities & Equity	$ 2,005,051	$ 3,778,941

XML

1.Basis of Presentation

3 Months Ended

Mar. 31, 2012

Significant Accounting Policies [Text Block]

1. Basis of Presentation

The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our December 31, 2011 Annual Report on Form 10-K and should be read in conjunction with the notes to financial statements which appear in that report.

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on going basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.

In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three-month periods ended March 31, 2012 and 2011. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform to annual reporting requirements. 

The financial statements have been presented in a “development stage” format. Since inception, our primary activities have been raising of capital, obtaining financing and obtaining route authority and approval from the U.S. Department of Transportation. We have not commenced our principal revenue producing activities.

XML

2.Earnings/Loss Per Share

3 Months Ended

Mar. 31, 2012

Earnings Per Share Reconciliation Disclosure

2. Earnings/Loss Per Share

Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share  assumes that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive. Due to the net losses reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented. 

XML

STATEMENT OF OPERATIONS (USD $)	3 Months Ended		271 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Revenue	$ 0	$ 0	$ 0
General & administrative	1,634,051	2,610,324	71,282,271
FAA certification costs	87,140	100,882	2,611,287
Training	0	0	225,637
Depreciation	5,000	2,500	361,089
Other	0	0	568,245
Interest expense (income)	57,436	57,945	1,368,655
Loss on sale of assets	1,607,183	0	1,607,183
Total costs & expenses	3,390,810	2,771,651	78,024,367
Loss before income taxes	(3,390,810)	(2,771,651)	(78,024,367)
Income taxes	0	0	14,881
Deficit Accumulated During Development Stage	$ (3,390,810)	$ (2,771,651)	$ (78,039,248)
Weighted Average Shares Outstanding (in Shares)	1,739,000,707	1,150,504,772

XML

Document And Entity Information (USD $)	3 Months Ended
	Mar. 31, 2012	May 10, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	BALTIA AIR LINES INC.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		1,989,728,322
Entity Public Float		$ 1,989,728,322
Amendment Flag	false
Entity Central Index Key	0000869187
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

XML

STATEMENT OF CASH FLOWS (USD $)	3 Months Ended		271 Months Ended
	Mar. 31, 2012	Mar. 30, 2011	Mar. 31, 2012
Deficit Accumulated During Development Stage	$ (3,390,810)	$ (2,771,651)	$ (78,039,248)
Depreciation	5,000	2,500	359,940
Amortization of loan discount	31,561	32,070	180,479
Expenses paid by issuance of common stock and options	422,877	1,253,850	49,886,033
Basis of sold or disposed assets	1,751,347	0	1,751,347
(Increase) decrease in prepaid expenses	0	0	400,301
Increase in accounts payable & accrued expenses	30,876	136,502	3,499,767
Cash flows used by operating activities:	(1,149,149)	(1,346,729)	(21,961,381)
Purchase of equipment	0	(77,422)	(3,696,583)
Security deposits	0	0	(317,293)
Cash used in investing activities	0	(77,422)	(4,013,876)
Proceeds from issuance of common stock	1,131,606	1,406,311	24,420,585
Proceeds from issuance of preferred stock	0	0	2,753
Loans from related parties	0	0	1,351,573
Repayment of related party loans	0	0	(368,890)
Proceeds of long-term debt	0	0	1,109,183
Acquisition of treasury stock	0	0	(500,100)
Cash generated by financing activities	1,131,606	1,406,311	26,015,104
Change in cash	(17,543)	(17,840)	39,847
Cash-beginning of period	57,390	52,840	0
Cash-end of period	$ 39,847	$ 35,000	$ 39,847

XML

STATEMENT OF STOCKHOLDER EQUITY (USD $)	Preferred Stock [Member]	Common Stock [Member]	Common Stock Including Additional Paid in Capital [Member]	Retained Earnings [Member]	Total
Net Loss at Dec. 31, 2011				$ (3,390,810)
Balance at December 31, 2011 at Dec. 31, 2011					2,457,590
Stock issued and issuable for cash		3,179	1,128,427
Stock issued and issuable for cash (in Shares)		31,791,666
Stock issued for services @$.039/share		1,062	421,815
Stock issued for services @$.039/share (in Shares)		10,612,970
Balance at March 31, 2012 (in Shares)	66,500	1,760,436,018
Net Loss at Mar. 31, 2012				(3,390,810)
Balance at March 31, 2012 at Mar. 31, 2012	$ 665,000,000	$ 176,044,000,000	$ 78,483,802,000,000	$ (78,039,248,000,000)	$ 621,263