FINE AIR SERVICES INC, 424B4, 1997-08-06

FINE AIR SERVICES INC
424B4, 1997-08-06
AIR TRANSPORTATION, NONSCHEDULED

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8,500,000 SHARES

[FineAir Logo]
FINE AIR SERVICES, INC.

COMMON STOCK

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

Of the 8,500,000 shares of Common Stock being offered hereby 7,400,000
shares are being offered by Fine Air Services, Inc. (the "Company") and
1,100,000 shares are being offered by the Selling Shareholders. See "Principal
and Selling Shareholders." The Company will not receive any of the proceeds
from the sale of the shares being sold by the Selling Shareholders. Prior to
this offering, there has been no public market for the Common Stock of the
Company. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price. Existing shareholders will
beneficially own 60.3% of the Company's outstanding Common Stock after
completion of this offering and will have sufficient voting power to determine
the outcome of any matters submitted for shareholder approval. See "Principal
and Selling Shareholders." The Company has been approved for quotation of the
Common Stock on the Nasdaq National Market under the symbol "BIGF."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

================================================================================
PRICE UNDERWRITING PROCEEDS PROCEEDS
TO DISCOUNTS AND TO TO SELLING
PUBLIC COMMISSIONS COMPANY(1) SHAREHOLDERS
- --------------------------------------------------------------------------------
Per Share.... $14.50 $1.015 $13.485 $13.485
- --------------------------------------------------------------------------------
Total(2)..... $123,250,000 $8,627,500 $99,789,000 $14,833,500
================================================================================
(1) Before deducting expenses payable by the Company, estimated at $800,000.

(2) The Company has granted to the Underwriters a 30-day option to purchase up
to 1,275,000 additional shares of Common Stock solely to cover
over-allotments, if any. To the extent that the option is exercised in
full, the Underwriters will offer the additional shares at the Price to
Public shown above. If the Underwriters exercise this option in full, the
total Price to Public, Underwriting Discounts and Commissions, Proceeds to
the Company and Proceeds to Selling Shareholders will be $141,737,500,
$9,921,625, $116,982,375 and $14,833,500, respectively.

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

The shares of Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if delivered to and accepted by them, and
subject to the right of the Underwriters to reject any order in whole or in
part. It is expected that delivery of the shares of Common Stock will be made
at the offices of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or
about August 11, 1997.

ALEX. BROWN & SONS
INCORPORATED
BEAR, STEARNS & CO. INC.
DILLON, READ & CO. INC.

THE DATE OF THIS PROSPECTUS IS AUGUST 6, 1997
<PAGE>

GRAPHIC OMITTED -- [Pilots in the cockpit of one of the Company's aircraft]

GRAPHIC OMITTED -- [Crew performing engine repair, maintenance and service
on one of the Company's engines]

GRAPHIC OMITTED -- [Company logo]

GRAPHIC OMITTED -- [Cargo being transported by one of the Company's forklifts]

GRAPHIC OMITTED -- [Crew performing engine repair, maintenance and service on
an aircraft engine]

GRAPHIC OMITTED -- [The front of one of the Company's aircraft]

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THIS OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET.

2
<PAGE>

GRAPHIC OMITTED -- [World Wide Cargo Network]

GRAPHIC OMITTED -- [Company Logo]

GRAPHIC OMITTED -- [Map of the world depicting with (i) green lines, the
Company's international sales network including Beijing,
Seoul, Shanghai, Tokyo, Guanzzlou, Hong Kong, Taipei,
Bangkok, Ho Chi Minh City, Singapore, Djakarta, Sydney,
Melbourne, Helsinki, Manchester, Dublin, London, Amsterdam,
Frankfurt, Luxembourg, Vienna, Paris, Milan, Barcelona,
Madrid, Rome, Tel Aviv, Casablanca, Cairo, Johannesburg,
Capetown, Los Angeles, San Francisco, Seattle, Calgary, Salt
Lake City, Phoenix, Houston, Dallas, Minneapolis, Chicago,
Atlanta, Pittsburgh, Detroit, Toronto, Montreal, Boston, New
York and Miami, (ii) blue lines, the Company's scheduled
cargo service, including Guatemala, El Salvador, San Jose,
Managua, Panama, San Jose, Kingston, Turk Cacos,
Santo Domingo, Puerto Rico, Virgin Islands, Netherlands
Antilles, Aruba, Curacao, Barbados, Trinidad, Caracas,
Medellin, Bogota, Georgetown, Paramaribo, Manaus, Quito,
Guayaquil, Lima, La Paz, Brasilia, Rio de Janeiro, Sao
Paulo, Buenos Aires, Santiago and Miami, (iii) yellow
lines, the Company's North American trucking network,
including Los Angeles, San Francisco, Seattle, Calgary,
Salt Lake City, Phoenix, Houston, Dallas, Minneapolis,
Chicago, Atlanta, Pittsburgh, Detroit, Toronto, Montreal,
Boston, New York and Miami]

<PAGE>

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND COMBINED FINANCIAL
STATEMENTS OF THE COMPANY AND NOTES THERETO APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS
ASSUMES THAT (I) THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED AND
(II) THE COMPANY'S SHAREHOLDERS HAVE CONTRIBUTED TO THE COMPANY ALL OF THE
OUTSTANDING CAPITAL STOCK OF AGRO AIR ASSOCIATES, INC. ("AGRO AIR"). SEE
"CERTAIN TRANSACTIONS."

THE COMPANY

The Company is a leading provider of air cargo services between the United
States and South and Central America and the Caribbean. Since 1994, the Company
has been the largest international air cargo carrier serving Miami
International Airport ("MIA"), based on tons of cargo transported to and from
that airport. MIA is the largest international cargo airport in the United
States and the third largest international cargo airport in the world. The
Company's services include: (i) integrated air and truck cargo transportation
and other logistics services ("scheduled cargo services"); (ii) long- and
short-term ACMI (aircraft, crew, maintenance and insurance) services and AD HOC
charters ("ACMI services"); and (iii) third party aircraft and engine
maintenance, repairs and overhauls, training and other services. The Company's
scheduled cargo services provide seamless transportation through its MIA hub
linking North America, Europe, Asia and the Pacific Rim with 29 South and
Central America and Caribbean cities. The Company's customers include
international and domestic freight forwarders, integrated carriers, passenger
and cargo airlines, major shippers and the United States Postal Service. The
Company's revenues have grown, principally as a result of the expansion of its
scheduled cargo services, from $29.0 million in 1993 to $94.2 million in 1996,
a compound annual rate of 48.1%. Principally as a result of increased revenues
from scheduled cargo services, the Company's revenues increased 23.5% from 1995
to 1996 and 17.6% from 1994 to 1995.

According to published industry sources, the worldwide air freight market
had revenues of $64 billion in 1995 and has grown at a 9.1% compound annual
rate since 1985 (measured in revenue ton kilometers). The United States/Latin
America air freight market is forecasted, by published industry sources, to be
the fifth fastest growing air freight market in the world from 1995 to 2005,
with an average annual growth rate of approximately 7.1%, as measured in tons.
MIA is the largest air gateway to South and Central America and the Caribbean,
with more than 80 pure-cargo flights to the region per day. MIA is the primary
transshipment point for goods moving by air between North America and South and
Central America, representing 72% of total tonnage in 1995. MIA's air trade
with South America tripled from $3.1 billion in 1990 to $10.9 billion in 1996.

The Company markets its scheduled cargo services through a sales network
consisting of eight domestic sales offices serving 55 major U.S. cities, five
international sales offices serving over 29 cities in Europe, Canada, Asia and
the Pacific Rim and 27 sales offices in South and Central America and the
Caribbean. The Company receives cargo at its MIA hub and its foreign operations
stations (i) through its domestic and international sales network, (ii) from
other airlines pursuant to interline agreements and (iii) directly from freight
forwarders and other shippers. See "Business--Customers." The Company utilizes
its own fleet of 15 DC-8 aircraft and the services of other airlines through
interline and other contractual relationships to provide reliable air cargo
service between MIA and South and Central America and the Caribbean. The
Company has interline relationships with over 50 airlines, including Air
France, China Air, Continental Airlines, Iberia, Korean Air and Virgin
Atlantic. The Company's scheduled cargo services transported 32,000 tons of
freight in 1994 and 75,000 tons of freight in 1996, a compound annual increase
of 53%. The Company plans to expand its scheduled cargo services by acquiring
up to four widebody aircraft, which includes an L-1011 aircraft the Company
began leasing in June 1997, and as many as three additional DC-8s by the end of
1998.

3
<PAGE>

The Company's customers utilize the Company's ACMI services to obtain lift
capacity without acquiring their own aircraft. Under a typical ACMI contract,
the Company supplies an aircraft, crew, maintenance and insurance, either on a
regularly scheduled or AD HOC basis, while the customer bears all other
aircraft operating expenses, including fuel, landing and parking fees and
ground and cargo handling expenses. The Company's ACMI customers also bear the
risk of utilizing the cargo capacity of the Company's aircraft. By offering
ACMI services in addition to scheduled cargo services, the Company is able to
schedule its fleet to satisfy demand on its own routes while improving
utilization and generating additional revenue from ACMI services.

The Company's FAA-approved repair stations perform a full range of
maintenance, repair and overhaul services for DC-8 aircraft and Pratt & Whitney
JT3D-3B aircraft engines. The Company also operates professional pilot and
mechanic training schools. The Company's recent move into a new hangar and
maintenance facility at MIA enables the Company to expand its third party
repair and maintenance services while performing all necessary repairs and
maintenance on its own aircraft. The Company began actively marketing its third
party repair and maintenance capabilities in 1996 and intends to seek
certification to provide similar services for other types of aircraft,
including the widebody aircraft the Company intends to acquire with a portion
of the net proceeds of this offering. As a result, management expects that the
Company's revenues from these services will increase in the future.

COMPETITIVE STRENGTHS:

ESTABLISHED MARKET POSITION. Since 1994, the Company has transported more
international air cargo to and from MIA, the principal air gateway for
South and Central America and the Caribbean, than any other carrier. The
Company believes that regulatory and other restrictions imposed by U.S. and
foreign governmental authorities would make it difficult for a new airline
entrant to obtain the necessary operating authority and route rights to
duplicate the Company's business. Management also believes that the
scarcity of available facilities at MIA will inhibit potential competitors
seeking to duplicate the Company's operations.

LOW AIRCRAFT AND OPERATING COST STRUCTURE. The Company maintains a low
cost structure through: opportunistic acquisition of used aircraft, engines
and spare parts; elimination of duplicative costs by centralizing its
flight and maintenance operations in Miami; "in-sourcing" activities such
as training, aircraft and engine repairs and maintenance; and using its own
ground and cargo handling personnel and equipment. The Company's uniform
aircraft fleet has allowed it to standardize its spare part inventories,
maintenance and training operations, thereby increasing operating
efficiencies and improving the reliability of the Company's air cargo
services.

ASSET OWNERSHIP. The Company has made a substantial investment to acquire
the assets necessary to support its operations, including 15 DC-8 aircraft,
20 used spare aircraft engines, an extensive inventory of spare parts and
aircraft components, maintenance and engine repair equipment and
substantially all of the equipment and vehicles for its aircraft ground and
cargo handling requirements. See "Business--Aircraft Fleet." Management
believes that the value of the Company's operating assets is substantially
in excess of their book value, and following the Company's use of a portion
of the net proceeds of this offering to retire long-term debt, it will have
no debt service associated with these assets. The Company has also made a
substantial commitment of capital and resources to obtain required
governmental authorizations, develop its sales and marketing network and
build the infrastructure necessary to support its scheduled cargo and ACMI
services.

4
<PAGE>

environment has been a key element of the Company's success. The other key
members of the Company's management team, including those responsible for
the Company's flight operations, maintenance and repair facilities, as well
as marketing and sales activities, each have over 20 years of industry
experience, including experience in the Company's markets.

DIVERSITY OF CUSTOMER BASE. The Company offers a wide range of air cargo
services to a diverse customer base that includes international and
domestic freight forwarders, integrated carriers, passenger and cargo
airlines, major shippers and the United States Postal Service. The Company
provides scheduled cargo services to over 1,200 customers, none of which
accounted for more than 5% of the Company's total revenues in 1996. Because
the Company is able to provide its customers a broad range of services
tailored to their particular needs, management believes that the Company is
well positioned to benefit from the expected growth in demand for air
freight transportation between the United States and South and Central
America and the Caribbean. See "Industry Overview."

GROWTH STRATEGY:

INCREASE LIFT CAPACITY. The Company intends to increase the number of
markets it can serve and its capacity in existing markets by adding up to
four widebody aircraft and as many as three additional DC-8s by the end of
1998. In June 1997, the Company began leasing an L-1011 aircraft which the
Company has an option to acquire at any time prior to December 1997.
Widebody aircraft have longer range and significantly larger volume
capacity than DC-8s and will permit the Company to extend its route
structure to serve the southernmost countries of South America and to more
economically serve high cargo volume routes on which the Company currently
operates multiple daily flights. DC-8s that are utilized on these routes
will be redeployed to increase capacity to existing markets and to develop
service to new destinations that are more efficiently served with
narrowbody aircraft. In addition, to capture a greater share of air cargo
traffic between Europe to South and Central America and the Caribbean, the
Company will consider utilizing its widebody aircraft to directly serve a
limited number of European destinations that can support the volume
necessary to economically operate trans-Atlantic service.

EXPAND ACMI SERVICES. Management believes that the Company's acquisition
of widebody aircraft will enable it to market its ACMI services to a
broader range of customers, including those who require the longer range
and/or larger volume capacity of these aircraft. The Company also plans to
utilize its existing and any newly acquired DC-8s to increase its ACMI
capabilities.

The Company was incorporated in Florida in 1989. Agro Air, a Florida
corporation incorporated in 1982, owns 15 DC-8 aircraft that are leased
primarily to the Company and provides airframe and engine maintenance, repair
and overhaul services to the Company and third parties. Agro Air is
wholly-owned by the Company's current shareholders and will become a
wholly-owned subsidiary of the Company upon completion of this offering. See
"Certain Transactions" and Note 14 of Notes to the Company's Combined Financial
Statements. Unless the context otherwise requires, references in this
Prospectus to the "Company" refer to the combined operations of the Company and
Agro Air. The Company's principal executive offices are located at 2261 N.W.
67th Avenue, Building 700, Miami, Florida, 33122 and its telephone number is
(305) 871-6606.

5
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company ........................ 7,400,000 shares

Common Stock offered by the Selling Shareholders ......... 1,100,000 shares

Common Stock to be outstanding after the offering(1) ...... 21,410,345 shares

Use of proceeds .......................................... To acquire additional aircraft, hushkit
the Company's existing aircraft, repay
debt and for working capital and
other general corporate purposes. See
"Use of Proceeds."

Proposed Nasdaq National Market symbol ..................... BIGF
</TABLE>

- ----------------
(1) Includes 10,345 shares of Common Stock to be issued to an executive officer
of the Company simultaneously with this offering pursuant to the Company's
Incentive Compensation Plan (the "Incentive Plan"). Excludes (i) an
additional 1,239,655 shares of Common Stock reserved for issuance pursuant
to the Incentive Plan and (ii) 250,000 shares of Common Stock reserved for
purchase under the Company's Employee Stock Purchase Plan (the "Stock
Purchase Plan"). Simultaneously with this offering, the Company intends to
grant to certain officers and other key employees options to purchase an
aggregate of 485,700 shares of Common Stock, exercisable at the initial
public offering price. See "Management--Employment Agreements" and
"--Stock Plans."

6
<PAGE>

SUMMARY COMBINED FINANCIAL AND OPERATING DATA(1)

(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1992 1993 1994 1995 1996
STATEMENT OF OPERATIONS DATA: ---------- ------------ ---------------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Scheduled cargo services ............... $ -- $ -- $ 19,941 $ 40,124 $ 54,775
ACMI services ........................... 22,266 29,025 44,420 35,340 35,520
Repairs, training and other ............ -- -- 492 885 3,953
Total revenues ........................ 22,266 29,025 64,853 76,349 94,248
Operating income ........................ 3,596 3,889 12,139 11,703 13,208
Net income ................................. 5,473 3,128 14,198(2) 11,038 13,028
Pro forma net income(3) .................. 3,414 1,951 8,794 6,818 8,058
Pro forma net income per share(3) ......... $ 0.16 $0.09 $ 0.41 $0.32 $ 0.36
Pro forma weighted average
shares outstanding ........................ 21,410 21,410 21,410 21,410 22,471(4)
OPERATING DATA:
Destinations served (end of period) ...... -- -- 9 21 27
Tons of freight transported--
scheduled cargo services ............... -- -- 32,072 64,906 75,923
ACMI block hours flown .................. 9,566 12,943 15,280 12,068 12,289
Aircraft in service (end of period) ...... 8 13 13 14 15

<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
1996 1997
STATEMENT OF OPERATIONS DATA: ---------- ------------------
<S> <C> <C>
Revenues:
Scheduled cargo services ............... $ 11,693 $ 16,174
ACMI services ........................... 5,430 9,126
Repairs, training and other ............ 1,796 626
Total revenues ........................ 18,919 25,926
Operating income ........................ 1,305 3,349
Net income ................................. 1,465 3,170
Pro forma net income(3) .................. 914 1,977
Pro forma net income per share(3) ......... $ 0.04 $ 0.09
Pro forma weighted average
shares outstanding ........................ 21,410 22,471(4)
OPERATING DATA:
Destinations served (end of period) ...... 27 29
Tons of freight transported--
scheduled cargo services ............... 18,360 19,404
ACMI block hours flown .................. 2,146 3,050
Aircraft in service (end of period) ...... 14 15
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------------------------
PRO FORMA
ACTUAL PRO FORMA (5) AS ADJUSTED (6)
BALANCE SHEET DATA: --------- --------------- ----------------
<S> <C> <C> <C>
Cash and cash equivalents ...... $ 4,831 $ -- $ 89,408
Working capital ............... 16,162 (7,849) 82,987
Total assets .................. 65,341 60,999 150,407
Total debt ..................... 9,581 29,250 19,669
Stockholders' equity ......... 47,793 14,450 113,439
</TABLE>
- ----------------
(1) Presents the combined financial and operating data of the Company and Agro
Air, each of which are under the control of common shareholders (Frank and
Barry Fine). See Note 1 of Notes to the Company's Combined Financial
Statements.
(2) Net income for 1994 includes a $2.2 million gain on insurance settlement,
representing the excess of insurance proceeds over the net book value of
an aircraft that sustained significant damage. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations."
(3) For each of the periods presented, the Company and Agro Air (collectively,
the "S Companies") were S corporations and, accordingly, were not subject
to federal and certain state corporate income taxes. The pro forma
information has been computed as if the S Companies were subject to
federal and all applicable state corporate income taxes for each of the
periods presented, assuming that a 37.6% tax rate would have been applied
had the S Companies been treated as C corporations. See "Dividend Policy
and Prior S Corporation Status," "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview" and "Certain
Transactions."
(4) Includes that number of shares of Common Stock which, had they been issued
(at the initial public offering price less underwriting discounts and
commissions), would have generated cash sufficient to fund the portion of
the S Corporation Distributions in excess of the Company's pro forma net
income for the twelve-months ended March 31, 1997. See Note 14 of Notes to
the Company's Combined Financial Statements.
(5) Pro forma to give effect to the (i) cash payment of approximately $4.8
million and issuance by the S Companies of approximately $19.7 million
promissory notes (the "S Corporation Notes") to their existing
shareholders (collectively, the "S Corporation Distributions") and (ii)
establishment of a $8.8 million net deferred tax liability, in each case,
calculated as if the S Companies had converted to C corporations as of
March 31, 1997. The actual amount of the S Corporation Distributions will
depend upon the S Companies' earnings from April 1, 1997 to the conversion
date, and the cash portion of the S Corporation Distributions will depend
upon the amount of cash available for distribution. See "Dividend Policy
and Prior S Corporation Status."
(6) Pro forma as adjusted to give effect to the sale of the 7,400,000 shares of
Common Stock offered by the Company hereby and the application of the net
proceeds therefrom as described in "Use of Proceeds."

RECENT RESULTS

On July 24, 1997, the Company reported preliminary operating results for
the six months ended June 30, 1997. Revenues for the six months ended June 30,
1997 totaled $52.2 million compared to $39.2 million for the same period in
1996, an increase of 33.2%. Income from operations for the six months ended
June 30, 1997 totaled $6.7 million compared to $2.7 million for the same period
in 1996, an increase of 148%. The Company generated pro forma net income of $4
million for the six months ended June 30, 1997, compared to $1.7 million for
the same period in 1996, an increase of 135%.

7
<PAGE>

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE
SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS.

INTERNATIONAL BUSINESS RISKS. The Company derives a majority of its
revenues from providing air cargo services and ACMI services to South and
Central America and the Caribbean. The risks of doing business in foreign
countries include potential adverse changes in the diplomatic relations of
foreign countries with the United States, hostility from local populations,
adverse effects of currency exchange controls, restrictions on the withdrawal
of foreign investment and earnings, government policies against businesses
owned by non-nationals, expropriations of property, the potential instability
of foreign governments and the risk of insurrections that could result in
losses against which the Company is not insured. The Company's international
operations also are subject to economic uncertainties, including, among others,
risks of renegotiation or modification of existing agreements or arrangements
with governmental authorities, exportation and transportation tariffs, foreign
exchange restrictions and changes in taxation structure. At some foreign
airports, the Company is required by local governmental authorities or market
conditions to contract with third parties for maintenance, ground and cargo
handling and other services. The performance by these third parties of such
services is beyond the Company's control, and any operating difficulties
experienced by these third parties could adversely affect the Company's
reputation or business. In addition, traffic rights to many foreign countries
are subject to bilateral air services agreements between the United States and
the foreign countries, are allocated only to a limited number of U.S. carriers
and are subject to approval by the applicable foreign regulators. Consequently,
the Company's ability to provide air cargo service in some foreign markets
depends in part on the willingness of the U.S. Department of Transportation
(the "DOT") to allocate limited traffic rights to the Company rather than to
competing U.S. airlines and on the approval of the applicable foreign
regulators. See "Business--Government Regulation."

GROWTH STRATEGY IMPLEMENTATION; ABILITY TO MANAGE GROWTH. The Company's
growth strategy includes (i) increasing its scheduled cargo services to South
and Central America and the Caribbean as well as the possible expansion of such
services to other international markets such as Europe, (ii) increasing its
ACMI services and (iii) possible acquisitions. The Company's ability to execute
its growth strategy will depend on a number of factors, including existing and
emerging competition, the ability to maintain profit margins in the face of
competitive pressures, the continued recruitment, training and retention of
operating employees, the strength of demand for its services and the
availability of capital to support its growth. Expanded international
operations are likely to involve increased costs and risks including those
related to foreign regulation, intensified competition, currency fluctuations
and exchange controls. In addition, future growth is likely to place strains on
the Company's management resources, management information systems and
financial and accounting systems. There can be no assurance that the Company
will be successful in implementing its growth strategy, and the Company's
failure to do so effectively could have a material adverse effect on the
Company's financial condition and results of operations. See "Business--Growth
Strategy."

COMPETITION. The air freight industry is highly competitive. The Company's
cargo services compete for cargo volume principally with other all-cargo
airlines, integrated carriers and scheduled and non-scheduled passenger
airlines which have substantial belly cargo capacity. To a lesser extent, the
Company's cargo services also compete for freight forwarding business with
fully integrated carriers, some of which are also customers of the Company. The
Company's ACMI services compete primarily with other airlines that operate
all-cargo aircraft and have lift capacity in excess of their own needs. Many of
the Company's competitors have substantially greater financial and other
resources and more extensive facilities and equipment than the Company. There
can be no assurance that the Company will be able to continue to compete
successfully with existing or new competitors. See "Business--Competition."

CAPITAL INTENSIVE NATURE OF AIRCRAFT OWNERSHIP AND OPERATION. The airline
business is highly capital-intensive. The Company has made significant capital
investments to acquire the aircraft, ground and cargo handling equipment and an
inventory of spare parts necessary for the operation of its business. The
Company historically has purchased, and intends to continue to purchase, used
aircraft,

8
<PAGE>

which tend to require more maintenance than newer generation aircraft. Older
aircraft tend to be subject to more Airworthiness Directives ("ADs")
promulgated by the U.S. Federal Aviation Administration (the "FAA") than newer
aircraft, and are required to undergo extensive structural inspections on an
ongoing basis. Currently, the Company fleet consists of a single aircraft type,
and an AD requiring significant modifications to that aircraft type could
require the Company to invest significant additional funds in its aircraft or
ground its fleet pending compliance with the AD. The Company cannot predict
when and whether new ADs covering its aircraft will be promulgated, and there
can be no assurance that compliance with ADs will not adversely affect the
Company's business, financial condition or results of operations. In addition,
to satisfy FAA rules regarding allowable noise levels, the Company must install
"hushkits" on its existing fleet of 15 DC-8s at an estimated cost of
approximately $1.6 million per aircraft, or $24 million in the aggregate. The
Company intends to purchase hushkits for this purpose from QTV, Ltd., a related
party, which received a Supplemental Type Certificate, a certification from the
FAA that authorizes the use of a particular process to perform a major
modification to a United States registered aircraft ("STC"), meeting the Stage
III noise requirements for its hushkits on June 30, 1997. See "Certain
Transactions". There can be no assurance that the costs of acquiring and
installing hushkits on the Company's aircraft thereof will not exceed
management's estimates or that the installation can be completed on a timely
basis. See "Business--Government Regulation."

AVAILABILITY OF ADDITIONAL AIRCRAFT AND AIRCRAFT PARTS. The Company's
growth strategy depends in large part upon its ability to acquire additional
aircraft to increase its lift capacity. The Company's strategy has been to
acquire used aircraft that formerly were in passenger service and to convert
such aircraft to cargo use. The market for used aircraft can be affected by a
number of factors, including increased demand from other cargo carriers, which
could limit the number of available aircraft and increase the acquisition cost
thereof. Certain parts and components required for the operation of the
Company's existing aircraft may not be readily available in the marketplace
when the Company requires them, and the inability of the Company to obtain
necessary components or parts in a timely manner could adversely affect the
Company's operations. There can also be no assurance that any aircraft acquired
in passenger configuration can be converted to cargo configuration on a timely
basis. See "Business--Growth Strategy."

CYCLICAL NATURE OF AIR FREIGHT INDUSTRY; SEASONALITY AND FLUCTUATIONS IN
QUARTERLY RESULTS. The air freight industry is highly sensitive to general
economic and political conditions, and the results of operations and financial
condition of air cargo carriers such as the Company can be adversely affected
by economic downturns in global or regional economies that result in decreased
demand for air freight transportation. Any prolonged general reduction in the
world air freight market could have a material adverse effect on the Company's
growth or financial performance. The Company's business has been, and is
expected to continue to be, seasonal in nature, with a majority of the
Company's revenues and operating income falling in the second half of the year
(principally the fourth quarter). The Company's fourth quarter revenues and
operating income are typically higher due to an increase in cargo transported
in anticipation of and during the holiday season. An interruption in the
Company's operations during this period due to unanticipated maintenance,
compliance with ADs, severe weather or other factors beyond the Company's
control could have a material adverse effect on the Company's results of
operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Seasonality."

COST AND AVAILABILITY OF FUEL. Fuel is a major expense for all airlines,
and the cost and availability of aviation fuel are subject to economic and
political factors and events which the Company can neither control nor
accurately predict. Higher fuel prices resulting from fuel shortages or other
factors could adversely affect the Company's profitability if the Company is
unable to pass on the full amount of fuel price increases to its customers
through fuel surcharges or higher rates. In addition, a shortage of supply
could have a material adverse effect on the air freight industry in general and
the financial condition and results of operations of the Company. See
"Business--Aircraft Fleet--Fuel."

CONTRABAND RISK. Customers may not inform the Company, despite the
requirement to do so, when their cargo includes hazardous materials. In
addition, the Company's own checks and searches for hazardous materials,
weapons, explosive devices and illegal freight may not reveal the presence of
such

9
<PAGE>

materials or substances in its customers' cargo. The transportation of
unmanifested hazardous materials or of contraband could result in fines,
penalties, flight bans or possible damage to the Company's aircraft. In one
such instance, the government of Peru has alleged that the Company supplied a
chartered aircraft, which transported weapons to Ecuador in February 1995
during the Ecuador-Peru conflict, and has revoked the Company's right to fly
into Peru or over Peruvian airspace. The particular flight at issue was a
chartered aircraft, and the Company denies any wrongdoing. The FAA found after
an investigation of the matter that there was not sufficient evidence to
support a conclusion that the Company violated regulations governing the
transportation of hazardous materials by air. However, the Company continues to
be subject to the Peruvian flight ban and is unable to predict when this ban
will be lifted. There can be no assurance the Company will not be subject to
fines, penalties or flight bans in the future, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Security and Safety."

DEPENDENCE UPON MANAGEMENT AND KEY PERSONNEL. The Company's success
depends to a significant degree upon the continued services of J. Frank Fine
and Barry H. Fine, as well as the Company's ability to retain other members of
the Company's senior management team and key personnel. The Company does not
have employment agreements with any of its officers or employees and does not
maintain "key man" life insurance. The loss of services of Messrs. Frank or
Barry Fine or certain other officers or key personnel could have a material
adverse effect on the Company's results of operations and its future prospects.
See "Management."

EMPLOYEE RELATIONS. Many airline industry employees are represented by
labor unions. The Company's employees have been subject to union organization
efforts from time to time, and the Company is likely to be subject to future
unionization efforts as its operations expand. On July 24, 1997, the Company
received a notice from the National Mediation Board in connection with an
application filed on behalf of the International Brotherhood of Teamsters (the
"Teamsters") seeking a vote by the Company's Flight Deck Crew Members for the
Teamsters to organize and to represent such employees for collective bargaining
purposes. The unionization of the Company's workforce could result in higher
employee compensation and working condition demands that could increase the
Company's operating costs or constrain its operating flexibility. See
"Business--Employees."

GOVERNMENT REGULATION. The Company is subject to extensive government
regulation under U.S. laws and the laws of the various countries which it
serves as well as bilateral and multilateral agreements between the United
States and foreign governments. The Company is subject to the jurisdiction of
the FAA with respect to aircraft maintenance and operations and other matters
affecting air safety. The FAA has the authority to suspend temporarily or
revoke permanently the authority of the Company or its licensed personnel for
failure to comply with FAA regulations and to assess civil penalties for such
failures. The DOT and FAA have authority under the Aviation Safety Noise
Abatement Act of 1979, as amended, and under the Airport Noise and Capacity Act
of 1990 ("ANCA") to monitor and regulate aircraft engine noise and exhaust
emissions. ANCA requires the elimination of Stage II aircraft, pursuant to
which airlines such as the Company must bring their fleets into compliance with
certain FAA Stage III noise emissions standards in the contiguous 48 states by
December 31, 1999. The FAA has promulgated under the ANCA regulations
establishing interim compliance dates and phase-out requirements. The Company
must currently have at least 50% of its fleet in compliance with the FAA's
Stage III noise level requirements. Seventy-five percent of the Company's fleet
must be in compliance by December 31, 1998, and the Company's entire fleet must
be in full compliance by December 31, 1999. In order to meet the FAA's Stage
III requirements, the Company currently intends to install hushkits on six of
its aircraft in 1997, six in 1998 and the balance by December 31, 1999. The
Company intends to purchase hushkits for this purpose from QTV, Ltd., a related
party, which received an STC meeting the Stage III noise requirements for its
hushkits in June 1997. See "Certain Transactions." The Company estimates that
the cost to hushkit its existing fleet of 15 DC-8s to comply with Stage III
requirements will be $1.6 million per aircraft, or $24 million in the
aggregate. To date, however, the Company has not installed hushkits on any of
its aircraft, and has met the Stage III requirements applicable to it through
interchange agreements with other airlines. Pursuant to such interchange
agreements and under current rules promulgated by the FAA, the Company has
pooled its fleet with other carriers and obtained credits from these other
carriers for aircraft that meet the Stage III standards, which has allowed the
Company to satisfy the FAA's Stage III requirements. The

10
<PAGE>

Company is capable and has the authority, right and approval from the FAA to
operate, under an interchange agreement, third party aircraft. There can be no
assurance that the FAA will continue to permit or recognize the validity of
such interchange agreements. The Company must also remain "fit" under
applicable DOT regulations governing, among other things, air carriers'
financial health, record of compliance with DOT regulations and U.S.
citizenship requirements. The FAA also exercises regulatory jurisdiction over
the transportation of hazardous materials. To provide scheduled service to
foreign countries, the Company must obtain permission for such operations from
both the DOT and the applicable foreign government authorities and comply with
all applicable rules and regulations imposed by these foreign government
authorities.

The failure of the Company or its employees to comply with applicable
government regulations could subject the Company to substantial fines or
penalties or could result in the suspension or loss of the Company's licenses,
permits or authority to operate its aircraft or routes. In 1991, Agro Air paid
approximately $107,000 in penalties and signed a consent order with the DOT,
agreeing that Agro Air was able to lease aircraft and to provide maintenance
and insurance, but not to lease or provide aircraft crews to third parties.
This consent order has not adversely impacted the Company's operations and the
Company has been able to provide ACMI services to third parties. In March 1997,
the Company agreed to settle with the FAA and pay civil penalties in the amount
of $30,000 for violation of the Federal Aviation Regulations for failing to
properly document certain training of some of its crew members.

In addition to the foregoing, the adoption of new laws, policies, or
regulations, amendments to existing laws or regulations, including ANCA, or
changes in the interpretation or application of existing laws, policies or
regulations, whether by the FAA, the DOT, the U.S. government or any foreign,
state or local government to whose authority the Company is subject could have
a material adverse impact on the Company and its operations. See
"Business--Government Regulation."

UNINSURED LOSSES; COST OF INSURANCE. The Company is subject to potential
losses as a result of third party claims arising from accidents involving the
Company's aircraft or an aircraft that the Company has repaired or maintained.
Substantial claims resulting from such an accident could exceed the Company's
policy limits and have a material adverse effect on the business, financial
condition and results of operations of the Company. Aviation insurance premiums
historically have fluctuated based on factors that include the loss history of
the industry in general and the insured carrier, and the ability of the Company
to maintain adequate insurance coverage on economical terms could be adversely
affected by general industry conditions or losses incurred by the Company.

CONTROL BY PRINCIPAL SHAREHOLDERS. J. Frank Fine and Barry H. Fine (the
"Principal Shareholders") will each beneficially own approximately 60.3% of the
Company's outstanding Common Stock after completion of this offering
(approximately 56.9% if the Underwriters' over-allotment option is exercised in
full). As a result, each of these shareholders will be in a position to
significantly influence the outcome of matters submitted for shareholder
approval, including the election of directors, mergers, sales of assets and
other corporate transactions, and together, they will have sufficient voting
power to determine the outcome of any matters submitted to the shareholders.
See "Principal and Selling Shareholders."

RESTRICTIONS ON FOREIGN OWNERSHIP AND CONTROL. Under applicable
regulatory restrictions, no more than 25% of the voting stock of the Company
can be owned or controlled, directly or indirectly, by persons who are not U.S.
citizens. In addition, under existing DOT precedent and policy, actual control
must reside in U.S. citizens. Federal statutes also require that at least
two-thirds of the Company's Board of Directors and its President be U.S.
citizens. The Company's Amended and Restated Articles of Incorporation (the
"Articles") and Bylaws limit the aggregate voting power of non-U.S. persons to
25% of the votes voting on or consenting to any matter. The Company's Bylaws
provides that no shares of capital stock may be voted by or at the direction of
persons who are not U.S. citizens unless such shares are registered on a
separate stock record. Furthermore, the Articles and Bylaws do not permit more
than one-third of the Company's officers or directors or its President to be
non-U.S. citizens. See "Description of Capital Stock."

POSSIBLE ANTI-TAKEOVER EFFECTS OF FLORIDA LAW, CHARTER PROVISIONS AND
PREFERRED STOCK. The Company is organized under the laws of the State of
Florida. Certain provisions of Florida law may

11
<PAGE>

have the effect of delaying, deferring or preventing a change in control of the
Company. In addition, certain provisions of the Company's Articles and Bylaws
may be deemed to have anti-takeover effects and may delay, defer or prevent a
takeover attempt that a shareholder might consider in its best interest. The
Board of Directors can authorize and issue shares of preferred stock with
voting or conversion rights that could adversely affect the voting or other
rights of holders of the Company's Common Stock. In addition, the issuance of
preferred stock may have the effect of delaying, deferring or preventing a
change of control of the Company. See "Description of Capital
Stock--Anti-takeover Effects of Certain Provisions of Florida Law and the
Company's Articles and Bylaws."

SHARES ELIGIBLE FOR FUTURE SALE. Upon completion of this offering, the
Company will have outstanding 21,410,345 shares of Common Stock. All of the
8,500,000 of these shares to be sold in this offering will be freely
transferable by persons other than "affiliates" of the Company without
restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"). The remaining 12,910,345 shares of Common Stock
outstanding will be "restricted securities" within the meaning of Rule 144
under the Securities Act and may not be sold in the absence of registration
under the Securities Act unless an exemption from registration is available,
including exemptions contained in Rule 144 under the Securities Act. The
Principal Shareholders have agreed that without the prior written consent of
Alex. Brown & Sons Incorporated, they will not, during the 180 day period
commencing on the date hereof offer, sell or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock. Sales of substantial
numbers of shares of Common Stock in the public market could adversely affect
the market price of the Common Stock. See "Shares Eligible for Future Sale."

LACK OF PRIOR PUBLIC MARKET AND VOLATILITY OF STOCK PRICE. Prior to this
offering, there has been no public market for the Company's Common Stock, and
there can be no assurance that an active trading market for the Common Stock
will develop subsequent to this offering or, if developed, that it will be
sustained. The initial public offering price of the Common Stock will be
determined by negotiation among the Company, the Selling Shareholders and the
Representatives of the Underwriters. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price. Upon
commencement of this offering, the Common Stock will be quoted on the Nasdaq
National Market, which has experienced and may continue to experience
significant price and volume fluctuations which could adversely affect the
market price of the Common Stock without regard to the operating performance of
the Company. In addition, the Company believes that factors such as quarterly
fluctuations in the financial results of the Company, earnings below analyst
estimates and the financial performance of other publicly traded companies
could cause the price of the Common Stock to fluctuate substantially.

DIVIDEND POLICY; S CORPORATION DISTRIBUTIONS. Until immediately prior to
completion of this offering, the S Companies will be treated as S corporations
under the Internal Revenue Code of 1986, as amended (the "Code") and comparable
provisions of state income tax laws. Accordingly, the S Companies have made
and, prior to this offering will make periodic distributions to their
shareholders in amounts at least sufficient to provide them funds for tax
obligations payable by them on account of the S Companies' earnings.
Immediately prior to the completion of this offering, the S Companies will
convert from S corporation to C corporation status. In connection with this
conversion, the S Companies will effect the S Corporation Distributions,
consisting of cash and S Corporation Notes (which, at March 31, 1997, would
have been approximately $24.5 million), with the result that the Company's
retained earnings and shareholders' equity will be significantly reduced. In
addition, the Company will record a one-time, non-cash charge against earnings
in the third quarter of 1997, resulting from a net deferred tax liability in
connection with the S Companies' conversion from S corporation to C corporation
status. Had the Company recorded this liability on March 31, 1997, the amount
of this charge would have been approximately $8.8 million. Following completion
of this offering, the Company does not anticipate paying any further cash
dividends for the foreseeable future. See "Dividend Policy and Prior S
Corporation Status," "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Certain Transactions."

DILUTION. Purchasers of the Common Stock offered hereby will experience
immediate and substantial dilution of approximately $9.20 per share of Common
Stock from the initial public offering price. See "Dilution."

12
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 7,400,000 shares of
Common Stock being offered by the Company hereby are estimated to be
approximately $99.0 million ($116.2 million if the Underwriters' over-allotment
option is exercised in full), after deducting underwriting discounts and
commissions and the estimated offering expenses. Of such net proceeds, the
Company will use (i) approximately $60 million to acquire up to four widebody
aircraft and as many as three additional DC-8s by the end of 1998, which
includes approximately $3 million for spare parts for its widebody aircraft and
the cost to convert the acquired aircraft to cargo configuration if necessary;
(ii) approximately $19.2 million to install hushkits on 12 of the Company's
DC-8s; and (iii) approximately $9.6 million to retire all of the Company's
long-term debt, which bears interest at rates ranging from 7.5% to 10% per
annum and matures at various dates through March 2003. In June 1997, the
Company began leasing an L-1011 aircraft, which the Company has an option to
acquire at any time prior to December 1997 for a purchase price of $13 million
less certain amounts paid by the Company during the lease term. The Company
expects to purchase this aircraft with a portion of the proceeds from this
offering. The Company has not identified any of the other widebody aircraft it
expects to purchase by the end of 1998. See "Business--Aircraft Fleet." For a
description of the Company's long-term debt, see Note 9 of Notes to the
Company's Combined Financial Statements. The Company will use the remaining net
proceeds for working capital and other general corporate purposes, which may
include payment of the S Corporation Notes and the acquisition of complementary
businesses. From time to time, the Company evaluates possible acquisitions but
is not currently considering any specific acquisition. The Company intends to
invest the net proceeds from this offering in interest-bearing, investment
grade obligations pending application thereof in the manner described above.
The Company will not receive any of the proceeds from the sale of Common Stock
by the Selling Shareholders.

DIVIDEND POLICY AND PRIOR S CORPORATION STATUS

Until immediately prior to completion of this offering, the S Companies
have been subject to taxation under Subchapter S of the Code and comparable
provisions of state income tax laws. As a result, the net income of the S
Companies, for federal and certain state income tax purposes, was reported by
and taxable directly to the S Companies' shareholders during that time rather
than to the S Companies. The S Companies historically have paid cash dividends
to their shareholders in amounts at least sufficient to provide them funds for
tax obligations payable by them on account of the S Companies' income. In
connection with their conversion from S corporation to C corporation status,
the S Companies will effect the S Corporation Distributions (consisting of cash
and S Corporation Notes) to their shareholders prior to the conversion. The S
Corporation Notes will have a one-year term and bear interest at 6.25% per
annum. The S Corporation Distributions will represent the S Companies'
accumulated taxable income which has not been distributed to their shareholders
prior to the conversion date. If the S Companies had converted to C
corporations as of March 31, 1997, the aggregate amount of the S Corporation
Distributions would have been approximately $24.5 million. The actual amount of
the S Corporation Distributions will depend upon the S Companies' earnings from
April 1, 1997 to the conversion date, and the cash portion of the S Corporation
Distributions will depend upon the amount of cash available for distribution.
In addition to the S Corporation Distributions, prior to this offering Agro Air
will assign to its shareholders the right to receive the proceeds of a $2.5
million judgment plus interest. See "Certain Transactions."

Following this offering, the Company does not intend to pay cash dividends
as it intends to retain any future earnings for reinvestment in its business.
Any future determination to pay cash dividends will be at the discretion of the
Board of Directors and will be dependent upon the Company's financial
condition, results of operations, capital requirements and such other factors
as the Board of Directors deems relevant.

13
<PAGE>

CAPITALIZATION

The following table sets forth as of March 31, 1997: (i) the cash and cash
equivalents and total combined capitalization of the Company; (ii) such cash
and cash equivalents and combined capitalization on a pro forma basis to give
effect to the S Corporation Distributions and the recognition of a deferred tax
liability resulting from conversions of the S Companies to C corporations; and
(iii) such pro forma cash and cash equivalents and combined capitalization as
adjusted to reflect the sale of the 7,400,000 shares of Common Stock offered by
the Company hereby and the application of the net proceeds therefrom after
deduction of underwriting discounts and commissions and estimated offering
expenses. This table should be read in conjunction with the Company's Combined
Financial Statements and Notes thereto and the other financial information
appearing elsewhere in this Prospectus. See "Use of Proceeds," "Dividend Policy
and Prior S Corporation Status" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents ....................................... $ 4,831 $ -- $ 89,408
======= ======= ========
Current portion of long-term debt ................................. $ 1,428 $ 1,428 $ --
======= ======= ========
Long-term debt, less current portion (1) ........................ $ 8,153 $ 8,153 $ --
------- ------- --------
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; no
shares issued and outstanding, actual, pro forma and pro forma
as adjusted ................................................... $ -- $ -- $ --
Common stock, $1.00 par value; 8,000 shares authorized, 2,500
shares issued and outstanding actual and pro forma; $0.01 par
value, 50,000,000 shares authorized, 21,410,345 shares issued and
outstanding pro forma as adjusted (2) ........................ 3 3 214
Additional paid-in capital .................................... -- 14,555 113,333
Retained earnings ............................................. 47,898 -- --
Net unrealized holding loss on investment securities ............ (108) (108) (108)
------- ------- --------
Total stockholders' equity .................................... 47,793 14,450 113,439
------- ------- --------
Total capitalization ....................................... $55,946 $22,603 $113,439
======= ======= ========
</TABLE>
- ----------------
(1) For a description of the Company's long-term debt, see Note 9 of Notes to
the Company's Combined Financial Statements.

(2) Includes 10,345 shares of Common Stock to be issued to an executive officer
of the Company simultaneously with this offering pursuant to the Incentive
Plan. Excludes (i) an additional 1,239,655 shares of Common Stock reserved
for issuance pursuant to the Incentive Plan and (ii) 250,000 shares of
Common Stock reserved for purchase under the Stock Purchase Plan.
Simultaneously with this offering, the Company intends to grant to certain
officers and other key employees options to purchase an aggregate of
485,700 shares of Common Stock, exercisable at the initial public offering
price. See "Management--Employment Agreements" and "--Stock Plans."

14
<PAGE>

DILUTION

As of March 31, 1997, the Company had a pro forma net tangible book value
of $14.5 million, or $1.04 per share, after giving effect to the S Corporation
Distributions and recognition of a $8.8 million net deferred tax liability
resulting from the conversion of the S Companies to C corporations. Pro forma
net tangible book value per share is determined by dividing the pro forma net
tangible book value (tangible assets less total liabilities) of the Company by
the number of shares of Common Stock outstanding. After giving effect to the
sale of the 7,400,000 shares of Common Stock offered by the Company hereby and
the application of the net proceeds therefrom after deduction of underwriting
discounts and commissions and estimated offering expenses, the Company's pro
forma net tangible book value as of March 31, 1997 would have been $113.4
million, or $5.30 per share. This represents an immediate increase in the pro
forma net tangible book value to existing shareholders of $4.26 per share and
an immediate dilution to new investors of $9.20 per share. The following table
illustrates such per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price .................. $14.50
Pro forma net tangible book value before offering ...... 1.04
Increase attributable to new investors .................. 4.26
------
Pro forma net tangible book value after offering ......... 5.30
---------
Dilution to new investors ................................. $9.20
=========
</TABLE>

The following table sets forth as of March 31, 1997, on a pro forma basis
to give effect to the S Corporation Distributions, the number of shares of
Common Stock purchased from the Company, the total difference between existing
shareholders and new investors with respect to number of shares purchased from
the Company, the total consideration paid and the average price per share,
before deducting underwriting discounts and commissions and estimated offering
expenses:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------ -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ --------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C>
Existing shareholders ...... 12,900,000 60.3% $ 14,557,190 10.6% $ 1.13
New investors ............... 8,500,000 39.7% 123,250,000 89.4% $14.50
----------- ------ ------------- ------
Total ..................... 21,400,000 100.0% $137,807,190 100.0%
=========== ====== ============= ======
</TABLE>

The foregoing tables do not reflect (i) the issuance simultaneously with
this offering of 10,345 shares of Common Stock to an executive officer of the
Company, (ii) the possible exercise of options to purchase up to 1,239,655
shares of Common Stock granted or which may be granted after completion of this
offering under the Incentive Plan, of which the Company intends to grant
options to purchase 485,700 shares at the initial public offering price upon
completion of this offering, or (iii) the issuance of up to 250,000 shares of
Common Stock under the Stock Purchase Plan. See "Management--
Employment Agreements" and "--Stock Plans."

15
<PAGE>

SELECTED FINANCIAL DATA

The balance sheet data set forth below as of December 31, 1994, 1995 and
1996 and the statement of operations data for each of the years in the
three-year period ended December 31, 1996 have been derived from the Company's
audited combined financial statements. The balance sheet data as of December
31, 1992 and 1993 have been derived from unaudited financial statements of the
Company not included herein. The balance sheet data as of March 31, 1996 and
1997 and the selected statements of operations data for the three months ended
March 31, 1996 and 1997 have been derived from the unaudited combined financial
statements of the Company which, in the opinion of management, include all
adjustments (consisting of only normal recurring adjustments) necessary for a
fair presentation of the information set forth therein. The results of
operations for the three months ended March 31, 1997 are not necessarily
indicative of the results for the full year. The following data should be read
in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's Combined Financial
Statements and Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1992 1993 1994
--------- ------------ -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues:
Scheduled cargo services ................................. $ -- $ -- $ 19,941
ACMI services ............................................. 22,266 29,025 44,420
Repairs, training and other .............................. -- -- 492
-------- ----------- ------------
Total revenues ............................................. 22,266 29,025 64,853
-------- ----------- ------------
Operating expenses:
Flying operations .......................................... 19,944
Aircraft and traffic servicing ........................... 4,098
Maintenance ................................................ 12,724
General and administrative ................................. 8,746
Selling ................................................... 3,315
Depreciation and amortization .............................. 3,887
------------
Total operating expenses ................................. 18,670 25,136 52,714
-------- ----------- ------------
Operating income .......................................... 3,596 3,889 12,139
Interest and other income, net .............................. 2,059
------------
Net income ................................................... $ 5,473 $3,128 $ 14,198(2)
======== =========== ============
Pro forma net income (3) .................................... $ 3,414 $1,951 $ 8,794
======== =========== ============
Pro forma net income per share (3) ........................ $ 0.16 $0.09 $ 0.41
======== =========== ============
Pro forma weighted average shares outstanding ............... 21,410 21,410 21,410
OPERATING DATA(1):
Destinations served (end of period) ........................ -- -- 9
Tons of freight transported--scheduled cargo services ...... -- -- 32,072
ACMI block hours flown .................................... 9,566 12,943 15,280
Aircraft in service (end of period) ........................ 8 13 13
BALANCE SHEET DATA (END OF PERIOD)(1):
Working capital ............................................. $ 1,347 $ 3,917 $ 4,861
Total assets ................................................ 20,998 29,502 45,313
Total debt ................................................ 9,572 17,274 13,946
Stockholders' equity ....................................... 7,132 9,537 23,754

<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------------
1995 1996 1996 1997
------------ ----------------- --------- -----------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues:
Scheduled cargo services ................................. $ 40,124 $ 54,775 $11,693 $ 16,174
ACMI services ............................................. 35,340 35,520 5,430 9,126
Repairs, training and other .............................. 885 3,953 1,796 626
---------- -------------- -------- --------------
Total revenues ............................................. 76,349 94,248 18,919 25,926
---------- -------------- -------- --------------
Operating expenses:
Flying operations .......................................... 25,971 36,610 7,880 9,467
Aircraft and traffic servicing ........................... 7,475 7,939 1,684 2,118
Maintenance ................................................ 8,340 9,894 1,683 2,889
General and administrative ................................. 11,482 14,111 3,506 3,994
Selling ................................................... 4,454 3,096 695 1,263
Depreciation and amortization .............................. 6,924 9,390 2,166 2,846
---------- -------------- -------- --------------
Total operating expenses ................................. 64,646 81,040 17,614 22,577
---------- -------------- -------- --------------
Operating income .......................................... 11,703 13,208 1,305 3,349
Interest and other income, net .............................. (665) (180) 160 (179)
---------- -------------- -------- --------------
Net income ................................................... $ 11,038 $ 13,028 $ 1,465 $ 3,170
========== ============== ======== ==============
Pro forma net income (3) .................................... $ 6,818 $ 8,058 $ 914 $ 1,977
========== ============== ======== ==============
Pro forma net income per share (3) ........................ $ 0.32 $ 0.36 $ 0.04 $ 0.09
========== ============== ======== ==============
Pro forma weighted average shares outstanding ............... 21,410 22,471(4) 21,410 22,471(4)
OPERATING DATA(1):
Destinations served (end of period) ........................ 21 27 27 29
Tons of freight transported--scheduled cargo services ...... 64,906 75,923 18,360 19,404
ACMI block hours flown .................................... 12,068 12,289 2,146 3,050
Aircraft in service (end of period) ........................ 14 15 14 15
BALANCE SHEET DATA (END OF PERIOD)(1):
Working capital ............................................. $ 9,735 $ 15,778 $ 8,858 $ 16,162
Total assets ................................................ 57,026 65,886 52,793 65,341
Total debt ................................................ 12,529 10,657 10,898 9,581
Stockholders' equity ....................................... 32,624 45,030 33,768 47,793
</TABLE>
- ----------------
(1) Presents the combined financial and operating data of the Company and Agro
Air, each of which are under the control of common shareholders (Frank and
Barry Fine). See Note 1 of Notes to the Company's Combined Financial
Statements.
(2) Net income for 1994 includes a $2.2 million gain on insurance settlement,
representing the excess of insurance proceeds over the net book value of
an aircraft that sustained significant damage. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations."
(3) The pro forma information has been computed as if the S Companies were
subject to federal and all applicable state corporate income taxes for
each of the periods presented, assuming that a 37.6% tax rate would have
been applied had the S Companies been treated as C corporations. See
"Dividend Policy and Prior S Corporation Status," "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Overview"
and "Certain Transactions."
(4) Includes that number of shares of Common Stock which, had they been issued
(at the initial public offering price less the underwriting discount and
commissions), would have generated cash sufficient to fund the portion of
the S Corporation Distributions in excess of the Company's pro forma net
income for the twelve months ended March 31, 1997. See Note 14 of Notes to
the Company's Combined Financial Statements.

16
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS CONTAINS "FORWARD-LOOKING STATEMENTS" WHICH INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH UNDER THE CAPTION "RISK FACTORS," ABOVE, AND
ELSEWHERE IN THIS PROSPECTUS. THE FOLLOWING DISCUSSION ALSO SHOULD BE READ IN
CONJUNCTION WITH THE COMPANY'S COMBINED FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

The Company derives its revenues from three sources: scheduled cargo
services, ACMI services and repairs, training and other services provided to
third parties. During the past three years, the Company's revenues increased at
a compound annual rate of 48.1% to $94.2 million in 1996 from $29.0 million in
1993. The Company's revenue growth during this period has been substantially
the result of the introduction and expansion of scheduled cargo services. The
Company began offering scheduled cargo services at the beginning of 1994 and
has expanded its service to include 29 South and Central American and Caribbean
destinations as of March 31, 1997. Revenues from scheduled cargo services
increased at a compound annual rate of 65.7% from 1994 to 1996 and represented
58.1% of total revenues in 1996, compared to 30.7% of total revenues in 1994.

The shift in mix of the Company's revenues during the past three years has
impacted its operating margins, as the Company has committed significant
resources to build the infrastructure to support its scheduled cargo services,
including moving to a new cargo warehouse and new MIA hangar facilities,
opening additional domestic and foreign sales offices, and adding sales,
flight, warehouse, cargo and ground handling personnel. Management believes
that the Company will be able to utilize its existing infrastructure and fleet,
as well as the additional aircraft it intends to acquire, to expand its
scheduled cargo services to new destinations in South and Central America and
the Caribbean. Management plans to continue to emphasize the development of
scheduled cargo services for future revenue growth while at the same time
expanding the Company's ACMI services. ACMI services have been more profitable
than scheduled cargo services primarily because increased demand for ACMI
services during the fourth quarter generally has resulted in higher aircraft
utilization and more profitable ACMI rates.

Revenues from scheduled cargo services consist principally of charges for
freight transported on the Company's scheduled cargo routes and charges for
transportation logistics services, such as truck and interline transportation
of freight, local pick-up and delivery, warehousing and assistance in document
preparation and processing. The Company sells air cargo services to
destinations its serves directly, destinations served by its ACMI and AMI
(aircraft, maintenance and insurance) customers and destinations served by
other airlines on an interline basis. Freight rates are structured based upon
the type of freight, weight or volume, delivery service and the destination.
Beginning in the third quarter of 1996, the Company's revenues from scheduled
cargo services include fuel surcharges that the Company instituted following
significant increases in fuel prices during the year. During the first quarter
of 1997, fuel prices began to decline, and the Company removed its fuel
surcharges in certain markets in the second quarter of 1997.

Revenues from ACMI services are derived from both ACMI and AMI contracts
under which the Company supplies its aircraft for specified cargo operations or
on an AD HOC basis and charges its customers for such services on a per block
hour basis subject, in certain instances, to specified minimum charges. The
Company's ACMI customers are responsible for substantially all other aircraft
operating expenses, including fuel, landing and parking fees and ground and
cargo handling expenses. The Company's AMI customers are responsible for the
same operating costs as ACMI customers and also provide their own crews.

Revenues from repairs, training and other are comprised principally of
charges for third party maintenance services, including airframe, component and
engine maintenance, repairs and overhauls, as well as spare parts sales,
leasing and training.

17
<PAGE>

Flying operations expenses are comprised principally of fuel costs, crew
costs, overflight, landing and parking fees, aircraft rental expenses, expenses
for transporting freight to and from the Company's MIA hub from its sales
offices and interline transportation expenses. Flying operations expenses
associated with ACMI services, such as fuel, overflight, landing and parking
fees, are either paid directly by the Company's customer or billed to the
customer on a direct pass-through basis. Most of the Company's ACMI customers
purchase their own fuel.

Aircraft and traffic servicing expenses are comprised principally of
personnel and equipment repair expenses associated with the Company's cargo
warehouse, cargo handling and ground handling operations and communications,
personnel and third party expenses related to flight planning. Aircraft and
traffic servicing expenses have increased over the past three years as the
Company has added personnel to handle the increase in scheduled cargo services.

Maintenance expenses are comprised principally of labor, parts and
supplies associated with the maintenance, repair and overhaul of the Company's
aircraft and engines and third party maintenance services. Costs associated
with major maintenance ("C" and "D") checks are capitalized when incurred and
amortized over their expected useful lives, ranging from 3 years for "C" checks
and engine repairs to 8 years for "D" checks. Other maintenance expenses,
including expenses associated with routine maintenance checks, are expensed
when incurred. Because the Company pays for maintenance whether its aircraft
are used in scheduled cargo service or ACMI service, maintenance expenses are
not affected by changes in the mix of revenues from these two services.

General and administrative expenses are comprised principally of salaries
and benefits for executive and administrative personnel, insurance, security
expenses and rent, utilities and other occupancy expenses associated with the
Company's cargo warehouse and MIA hangar facilities and domestic and
international operations stations and sales offices.

Selling expenses are comprised principally of salaries and benefits for
sales personnel, commissions paid to third party general sales agents,
advertising and marketing expenses and provision for bad debts.

Depreciation and amortization expenses are comprised principally of
depreciation on aircraft, aircraft components and ground equipment, and the
amortization of capitalized major airframe and engine maintenance, repairs and
overhauls.

Immediately prior to this offering, each of Messrs. Frank and Barry Fine
will contribute his interest in Agro Air to the Company, and Agro Air will
become a wholly-owned subsidiary of the Company. The Company's Combined
Financial Statements included in this Prospectus reflect the combined results
of the Company and Agro Air for all periods presented. During all such periods,
the Company and Agro Air were S corporations and, accordingly, were not subject
to federal and certain state corporate income taxes. See "Dividend Policy and
Prior S Corporation Status" and "Certain Transactions." Pro forma net income
assumes that the Company and Agro Air were subject to federal and all
applicable state income taxes applicable to C corporations and was calculated
using a tax rate of 37.6%.

18
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the periods presented, the percentage
of total operating revenues represented by certain revenue, expense and income
items:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ -----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Scheduled cargo services ............ 30.7% 52.6% 58.1% 61.8% 62.4%
ACMI services ........................ 68.5 46.3 37.7 28.7 35.2
Repairs, training and other ......... 0.8 1.1 4.2 9.5 2.4
------ -------- -------- ------ --------
Total revenues ..................... 100.0% 100.0% 100.0% 100.0% 100.0%
====== ======== ======== ====== ========
Operating expenses:
Flying operations .................. 30.8% 34.0% 38.8% 41.6% 36.5%
Aircraft and traffic servicing ...... 6.3 9.8 8.4 8.9 8.2
Maintenance ........................ 19.6 10.9 10.5 8.9 11.1
General and administrative ......... 13.5 15.0 15.0 18.5 15.4
Selling .............................. 5.1 5.8 3.3 3.7 4.9
Depreciation and amortization ...... 6.0 9.1 10.0 11.5 11.0
------ -------- -------- ------ --------
Total operating expenses ............ 81.3 84.6 86.0 93.1 87.1
------ -------- -------- ------ --------
Operating income ..................... 18.7 15.4 14.0 6.9 12.9
Interest and other income, net ...... 3.2 (0.9) (0.2) 0.8 (0.7)
------ -------- -------- ------ --------
Net income ........................... 21.9% 14.5% 13.8% 7.7% 12.2%
====== ======== ======== ====== ========
Pro forma net income .................. 13.6% 8.9% 8.5% 4.8% 7.6%
====== ======== ======== ====== ========
</TABLE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

REVENUES.

Revenues increased 37.0% to $25.9 million in the first quarter of 1997
from $18.9 million in the first quarter of 1996, due to increases in revenues
from both scheduled cargo services and ACMI services. Total block hours flown
by the Company's fleet increased 28.0% to 5,514 in the first quarter of 1997
from 4,309 in the first quarter of 1996 due to the addition of one aircraft
placed into service in December 1996 and increased utilization of the existing
fleet.

Revenues from scheduled cargo services increased 38.5% to $16.2 million in
the first quarter of 1997 from $11.7 million in the first quarter of 1996, due
to increases in cargo rates and the collection of fuel surcharges in most
markets and, to a lesser extent, due to an increase in tons of freight
transported. During the third and fourth quarters of 1996, the Company
increased its cargo rates by approximately 15%. Fuel surcharges were instituted
in most markets during the third quarter of 1996 and accounted for
approximately $1.5 million of revenues from scheduled cargo services in the
first quarter of 1997. Tons of freight transported increased 5.7% to 19,404 in
the first quarter of 1997 from 18,360 in the first quarter of 1996, primarily
as a result of increases in freight transported to and from destinations
already served by the Company (principally in Venezuela and Ecuador) and, to a
lesser extent, from sales of air cargo service to new destinations. The Company
attributes the increased load factors to increased sales efforts by the
Company's domestic and international sales network. As of March 31, 1997, the
Company offered scheduled cargo service to 29 destinations, compared to 27
destinations as of March 31, 1996.

Revenues from ACMI services increased 68.5% to $9.1 million in the first
quarter of 1997 from $5.4 million in the first quarter of 1996, due primarily
to an increase in ACMI block hours. Total block hours flown for ACMI services
increased 38.9% to 3,050 in the first quarter of 1997 from 2,146 in the first
quarter of 1996. The Company added two new ACMI customers in the first quarter
of 1997 and also

19
<PAGE>

increased aircraft utilization by selling ACMI services on the northbound leg
of several flights operated on the southbound leg as scheduled cargo service.
Revenues from ACMI services also increased due to increases in ACMI rates
instituted during the fourth quarter of 1996.

Revenues from repairs, training and other decreased to $626,000 in the
first quarter of 1997 from $1.8 million in the first quarter of 1996, due
primarily to $1.2 million of airframe and repairs performed on a single
aircraft during the first quarter of 1996. Revenues from third party engine
repairs increased to $265,000 in the first quarter of 1997 from $38,000 in the
first quarter of 1996, as a result of engine repairs performed in the first
quarter of 1997 for Boeing. The Company began actively marketing its third
party repair and maintenance capabilities in 1996 and expects that its revenues
from these services will increase in the future.

OPERATING EXPENSES.

Flying operations expenses increased 20.3% to $9.5 million in the first
quarter of 1997 from $7.9 million in the first quarter of 1996, due primarily
to increased fuel costs and, to a lesser extent, increased intermodal,
interline transportation and other costs associated with scheduled cargo
services. Fuel costs, which constitute a significant portion of flying
operations expenses, increased significantly in the first quarter of 1997
compared to the first quarter of 1996 due primarily to higher fuel prices. As a
percentage of total revenues, flying operations expenses decreased to 36.5% in
the first quarter of 1997 from 41.6% in the first quarter of 1996 as a result
of the increase in ACMI service revenues to 35.2% of total revenues in the
first quarter of 1997 from 28.7% in the first quarter of 1996.

Aircraft and traffic servicing expenses increased 23.5% to $2.1 million in
the first quarter of 1997 from $1.7 million in the first quarter of 1996, due
primarily to the addition of personnel to handle the increase in scheduled
cargo services, as well as increased third party cargo handling expenses at
destinations where the Company contracts for such services. As a percentage of
total revenues, aircraft and traffic servicing expenses decreased to 8.2% in
the first quarter of 1997 from 8.9% in the first quarter of 1996, due to the
shift in mix of revenues and economies of scale associated with the Company's
new cargo warehouse facilities.

Maintenance expenses increased 70.6% to $2.9 million in the first quarter
of 1997 from $1.7 million in the first quarter of 1996, due primarily to the
increase in block hours operated during the first quarter of 1997. In addition,
during the first quarter of 1996, the Company performed more maintenance as
part of "C" and "D" checks, the costs of which are capitalized rather than
expensed, than during the first quarter of 1997. As a percentage of total
revenues, maintenance expenses increased to 11.1% in the first quarter of 1997
from 8.9% in the first quarter of 1996 due to the difference in the types of
maintenance performed during each period.

General and administrative expenses increased 14.3% to $4.0 million in the
first quarter of 1997 from $3.5 million in the first quarter of 1996, due
primarily to increased rent associated with the Company's new MIA cargo
warehouse and hangar facilities and increased professional fees. These
increases were partially offset by a decrease in aircraft hull and liability
insurance premiums in the first quarter of 1997 compared to the first quarter
of 1996. As a percentage of total revenues, general and administrative expenses
decreased to 15.4% in the first quarter of 1997 from 18.5% in the first quarter
of 1996, as the Company's existing infrastructure was able to support higher
revenues.

Selling expenses increased 87.1% to $1.3 million in the first quarter of
1997 from $695,000 in the first quarter of 1996, due primarily to increased
commissions and selling expenses and the addition of sales personnel to support
the growth in scheduled cargo services. Commissions and other selling expenses
related to scheduled cargo services increased $269,000 in the first quarter of
1997 compared to the first quarter of 1996. The Company's provision for bad
debts increased $219,000 in the first quarter of 1997 compared to the first
quarter of 1996 due largely to the bankruptcy of one customer. As a percentage
of total revenues, selling expenses increased to 4.9% in the first quarter of
1997 from 3.7% in the first quarter of 1996, primarily due to the increased
provision for bad debts during the first quarter of 1997.

20
<PAGE>

Depreciation and amortization expenses increased 27.3% to $2.8 million in
the first quarter of 1997 from $2.2 million in the first quarter of 1996, due
primarily to increases in equipment and leasehold improvements as well as
increased amortization of capitalized airframe and engine repair and
maintenance costs. As a percentage of total revenues, depreciation and
amortization expenses decreased to 11.0% in the first quarter of 1997 from
11.5% in the first quarter of 1996.

OPERATING INCOME. Operating income increased 154% to $3.3 million in the
first quarter of 1997 from $1.3 million in the first quarter of 1996. The
Company's operating margin increased to 12.9% in the first quarter of 1997 from
6.9% in the first quarter of 1996 due to the change in mix of revenues.

INTEREST AND OTHER INCOME, NET. Interest and other income, net decreased
$339,000 in the first quarter of 1997 compared to the first quarter of 1996,
due primarily to a $364,000 gain on the sale of four surplus aircraft engines
in the first quarter of 1996. Interest expense decreased 14.4% to $225,000 in
the first quarter of 1997 from $263,000 in the first quarter of 1996 due
primarily to lower average outstanding indebtedness during the first quarter of
1997 as a result of scheduled principal payments on long-term debt.

NET INCOME. Net income increased 113% to $3.2 million in the first quarter
of 1997 from $1.5 million in the first quarter of 1996. Pro forma net income
increased 116% to $2.0 million in the first quarter of 1997 from $0.9 million
in the first quarter of 1996.

FISCAL 1996 COMPARED TO FISCAL 1995

REVENUES.

Revenues increased 23.5% to $94.2 million in 1996 from $76.3 million in
1995, primarily due to an increase in revenues from scheduled cargo services.
Total block hours flown by the Company's fleet increased 11.9% to 21,642 in
1996 from 19,340 in 1995 due to the addition of one aircraft placed into
service in 1996 and increased utilization of the existing fleet.

Revenues from scheduled cargo services increased 36.7% to $54.8 million in
1996 from $40.1 million in 1995, due primarily to increases in tons of freight
transported and cargo rates and to a lesser extent to fuel surcharges collected
during the fourth quarter of 1996. Freight tonnage increased 17.0% to 75,923 in
1996 from 64,906 in 1995, primarily as a result of increases in freight
transported to and from destinations already served by the Company (principally
in Ecuador, El Salvador, Puerto Rico and Venezuela), and to a lesser extent
from sales of air cargo service to new destinations (Colombia, the Dominican
Republic and Jamaica). As of December 31, 1996, the Company offered scheduled
cargo service to 27 destinations, compared to 21 destinations as of December
31, 1995. Management believes that increased load factors were largely the
result of expansion of the Company's domestic and international sales network.
During 1995 and 1996, the Company added domestic sales offices in Atlanta and
Chicago and entered into general sales agent relationships for the marketing of
the Company's scheduled cargo services in the western United States and
portions of Canada and Europe. Cargo rates increased approximately 15% during
the third and fourth quarters of 1996. Due to significant increases in fuel
prices, fuel surcharges were instituted in most markets during the third
quarter of 1996 and accounted for approximately $1.5 million of revenues from
scheduled cargo services in 1996.

Revenues from ACMI services increased slightly to $35.5 million in 1996
from $35.3 million in 1995. Revenues from ACMI services in 1995 reflected
higher than normal ACMI rates received for several emergency relief cargo
flights after a Caribbean hurricane and additional ACMI business that the
Company obtained during the temporary discontinuation of air cargo service by a
competitor. Total block hours flown for ACMI services increased 1.8% to 12,289
in 1996 from 12,068 in 1995.

Revenues from repairs, training and other increased to $4.0 million in
1996 from $885,000 in 1995, due primarily to increased airframe and engine
overhauls and repairs, including $1.7 million of airframe

21
<PAGE>

repairs performed on a single aircraft during 1996. The Company's move during
1996 to a new hangar facility at MIA provided the Company the capability to
accomplish a wider range of third party maintenance services, including
airframe repairs and maintenance.

OPERATING EXPENSES.

Flying operations expenses increased 40.8% to $36.6 million in 1996 from
$26.0 million in 1995 due primarily to increased fuel costs and to a lesser
extent increased intermodal and interline transportation and other costs
associated with scheduled cargo services. As a percentage of total revenues,
flying operations expenses increased to 38.8% in 1996 from 34.0% in 1995 as a
result of the increase in revenues from scheduled cargo services as a
percentage of revenues to 58.1% of total revenues in 1996 from 52.6% in 1995.

Aircraft and traffic servicing expenses increased 5.3% to $7.9 million in
1996 from $7.5 million in 1995, due primarily to the increase in 1996 in the
number of flights operated for scheduled cargo services. As a percentage of
total revenues, aircraft and traffic servicing expenses improved to 8.4% in
1996 from 9.8% in 1995, as the Company was able to achieve economies of scale
associated with its new cargo warehouse facilities.

Maintenance expenses increased 19.3% to $9.9 million in 1996 from $8.3
million in 1995, due primarily to the increase in block hours operated during
1996. Despite the significant increase in maintenance services for third
parties and the increase in the number of block hours flown during 1996, as a
percentage of total revenues, maintenance expenses improved to 10.5% in 1996
from 10.9% in 1995 due to operational economies as a result of the
consolidation of the Company's maintenance operations at its new MIA hangar
facility.

General and administrative expenses increased 22.6% to $14.1 million in
1996 from $11.5 million in 1995, due primarily to increases in expenses
associated with the expansion of scheduled cargo services as well as increased
rent related to the Company's new cargo warehouse, new MIA hangar facility and
operations stations and sales office facilities added during 1996, as well as
the addition of personnel. Nevertheless, as a percentage of total revenues,
general and administrative expenses remained constant at 15.0% in 1996 and
1995.

Selling expenses decreased 31.1% to $3.1 million in 1996 from $4.5 million
in 1995, due primarily to an increase in reserves for bad debts in 1995. The
Company provided reserves of approximately $891,000 for bad debts in 1995
compared to only $16,000 in 1996. Commissions and other selling expenses
related to scheduled cargo services increased from 2.5 million in 1995 to 3.2
million in 1996. As a percentage of total revenues, selling expenses declined
to 3.3% in 1996 from 5.8% in 1995, as the Company realized increased revenues
from scheduled cargo services without a corresponding increase in sales
personnel.

Depreciation and amortization expense increased 36.2% to $9.4 million in
1996 from $6.9 million in 1995, primarily due to increased depreciation related
to the acquisition of an additional aircraft during the second quarter of 1995
and the amortization of capitalized airframe engine repair and maintenance
costs. As a percentage of total revenues, depreciation and amortization
expenses increased to 10.0% in 1996 from 9.1% in 1995.

OPERATING INCOME. As a result of the above factors, operating income
increased 12.8% to $13.2 million in 1996 from $11.7 million in 1995. The
Company's operating margin decreased to 14.0% in 1996 from 15.4% in 1995, due
largely to costs associated with the development of scheduled cargo services.

INTEREST AND OTHER INCOME, NET. Interest and other income, net increased
$486,000 in 1996 compared to 1995. Other income in 1996 included a $364,000
gain on the sale of four surplus aircraft engines. Interest expense decreased
slightly to $966,000 in 1996 from $985,000 in 1995 due primarily to lower
average outstanding indebtedness during 1996 as a result of scheduled principal
payments on long-term debt.

22
<PAGE>

NET INCOME. Net income increased 18.2% to $13.0 million in 1996 from $11.0
million in 1995. Pro forma net income increased 18.2% to $8.1 million in 1996
from $6.8 million in 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

REVENUES.

Revenues increased 17.6% to $76.3 million in 1995 from $64.9 million in
1994, due to an increase in revenues from scheduled cargo services. Total block
hours flown by the Company's fleet decreased 5.9% to 19,340 in 1995 from 20,549
in 1994 due to lower utilization of the fleet for ACMI services.

Revenues from scheduled cargo services increased 101.5% to $40.1 million
in 1995 from $19.9 million in 1994, due to an increase in tons of freight
transported. Tons of freight transported increased 102% to 64,906 in 1995 from
32,072 in 1994 as a result of increases in freight transported to and from
destinations already served by the Company (principally in Brazil, Costa Rica,
Panama and Venezuela), and the introduction of cargo service to Ecuador and
Puerto Rico. The Company introduced scheduled cargo service to six destinations
during the first half of 1994 and introduced service to three other
destinations during the second half of 1994. Therefore, the increase in 1995
revenue from existing destinations resulted in part from the Company providing
cargo service to these destinations throughout 1995 compared to only a portion
of the year in 1994. As of December 31, 1995, the Company offered scheduled
cargo service to 21 destinations, compared to nine destinations as of December
31, 1994.

Revenues from ACMI services decreased 20.5% to $35.3 million in 1995 from
$44.4 million in 1994, as the Company discontinued most domestic ACMI services.
The Company had provided ACMI services to several domestic customers, which
required the Company to maintain crews and maintenance personnel at multiple
locations throughout the United States and generated lower margins than the
Company's other ACMI business. During 1995, management decided to discontinue
providing ACMI services to these customers and allocate the Company's resources
to the expansion of scheduled cargo services. As a result, total block hours
flown for ACMI services decreased 21.0% to 12,068 in 1995 from 15,280 in 1994.

Revenues from repairs, training and other increased 79.9% to $885,000 in
1995 from $492,000 in 1994, principally due to increased revenues from third
party maintenance services and engine repairs.

OPERATING EXPENSES

Flying operations expenses increased 30.7% to $26.0 million in 1995 from
$19.9 million in 1994 due primarily to costs associated with an increased
number of flights operated for scheduled cargo services. The increase in flying
operations expenses in 1995 was higher than the corresponding increase in
operating revenues as a result of the increase in revenues from scheduled cargo
services as a percentage of revenues to 52.6% in 1995 from 30.7% in 1994. As a
percentage of total revenues, flying operations expenses increased to 34.0% in
1995 from 30.8% in 1994 as a result of the change in mix of revenues.

Aircraft and traffic servicing expenses increased 82.9% to $7.5 million in
1995 from $4.1 million in 1994, due primarily to the expansion of the Company's
scheduled cargo services. In addition to an increase in the number of scheduled
cargo flights operated in 1995, the Company operated scheduled cargo services
for the full year in 1995 compared to only a portion of the year in 1994. In
addition, during 1995 the Company began operating its cargo warehouse facility
on a 24 hour basis, which resulted in an increase in warehouse and cargo
handling personnel expenses in 1995. As a percentage of total revenues,
aircraft and traffic servicing expenses increased to 9.8% in 1995 from 6.3% in
1994.

Maintenance expenses decreased 34.6% to $8.3 million in 1995 from $12.7
million in 1994. During 1994, the Company completed modifications to all 13 of
its aircraft to comply with an FAA airworthiness directive, at a cost of
between $75,000 and $100,000 per aircraft. In addition, during 1995 the Company
hired additional maintenance personnel to perform maintenance tasks for which
the

23
<PAGE>

Company previously had used third party labor at higher rates. As a percentage
of total revenues, maintenance expenses decreased to 10.9% in 1995 from 19.6%
in 1994, due primarily to changes in the Company's scheduled maintenance
program. During 1995, the Company modified its maintenance program which
resulted in additional maintenance tasks being performed during "C" and "D"
checks, the costs of which are capitalized rather than expensed.

General and administrative expenses increased 32.2% to $11.5 million in
1995 from $8.7 million in 1994, due primarily to increases in personnel,
telecommunications and other expenses associated with the expansion of
scheduled cargo services, as well as increases in rent expenses. During 1995,
the Company moved to a new cargo warehouse handling facility and opened three
new domestic sales offices. As a percentage of total revenues, general and
administrative expenses increased to 15.0% in 1995 from 13.5% in 1994, as the
Company expanded its infrastructure to accommodate existing and planned growth
in scheduled cargo services.

Selling expenses increased 36.4% to $4.5 million in 1995 from $3.3 million
in 1994, due primarily to an increase in commissions and other selling expenses
associated with scheduled cargo services and a $306,000 increase in provision
for bad debts. Commissions and other selling expenses related to scheduled
cargo services increased to $2.5 million in 1995 from $2.0 million in 1994. As
a percentage of total revenues, selling expenses increased to 5.8% in 1995 from
5.1% in 1994 due to the increase in revenues from scheduled cargo services,
which involve higher commissions than ACMI services.

Depreciation and amortization expense increased 76.9% to $6.9 million in
1995 from $3.9 million in 1994, primarily due to increased depreciation
resulting from the acquisition of an aircraft during the first half of 1995 and
higher amortization of capitalized airframe and engine repair and maintenance
costs in 1995 resulting in part from modification of the Company's maintenance
program to incorporate certain tasks as part of major maintenance checks. As a
percentage of total revenues, depreciation and amortization expenses increased
to 9.1% in 1995 from 6.0% in 1994.

OPERATING INCOME. Operating income decreased 3.3%, to $11.7 million in
1995 from $12.1 million in 1994, due largely to costs associated with the
development of scheduled cargo services. The Company's operating margin
decreased to 15.4% in 1995 from 18.7% in 1994.

INTEREST AND OTHER INCOME, NET. Interest and other income, net decreased
$2.7 million to an expense of $666,000 in 1995 compared to income of $2.1
million in 1994, primarily due to a $2.2 million gain on insurance settlement
in 1994. This gain represented the excess of insurance proceeds over the net
book value of a Company's aircraft that sustained significant damage during
takeoff in May 1994. The aircraft, which was being operated by a lessee at the
time of the accident, was declared a total loss by the insurers. There were no
injuries or third party liability claims as a result of the accident. Interest
expense declined 10.5% to $985,000 in 1995 from $1.1 million in 1994, due
primarily to lower average outstanding indebtedness during 1995 as a result of
scheduled principal payments on long-term debt.

NET INCOME. As a result of the above, net income decreased 22.5% to $11.0
million in 1995 from $14.2 million in 1994. Pro forma net income decreased
22.5% to $6.8 million in 1995 from $8.8 million in 1994.

LIQUIDITY AND CAPITAL RESOURCES

Over the past three years, the Company has funded its operations and the
expansion of its business primarily through cash flows from operating
activities. At March 31, 1997, the Company had cash and cash equivalents of
$4.8 million compared to $972,000 at December 31, 1996. The Company had working
capital of $16.2 million at March 31, 1997, compared to $15.8 million at
December 31, 1996.

Net cash provided by operating activities was $10.1 million and $4.2
million in the three months ended March 31, 1997 and 1996, respectively. This
increase in cash flow from operating activities was due primarily to the
increase in net income and a decrease in accounts receivable during the first

24
<PAGE>

quarter of 1997. Net cash provided by operating activities was $14.8 million,
$17.3 million and $15.1 million in 1996, 1995 and 1994, respectively.

Net cash used in investing activities was $4.2 million and $1.5 million in
the three months ended March 31, 1997 and 1996, respectively. During the first
quarter of 1996, $1.9 million in proceeds from sales of property and equipment
offset the $3.4 million in cash used for purchases of property and equipment.
Net cash used in investing activities was approximately $11.9 million, $15.3
million and $11.0 million in 1996, 1995 and 1994, respectively, and primarily
represented additional flight equipment acquired and capitalized airframe and
engine maintenance, repairs and overhauls. Net cash used in investing
activities in 1996 also included property, equipment and leasehold improvements
associated with Company's move to its new MIA hangar facility. Net cash used in
investing activities in 1994 was reduced by approximately $3.9 million due to
the receipt of insurance proceeds from the accident involving an aircraft
leased to a third party.

Net cash used in financing activities was $2.1 million and $2.5 million in
the three months ended March 31, 1997 and 1996, respectively. Net cash used in
financing activities was $2.4 million, $2.1 million and $4.2 million in 1996,
1995 and 1994, respectively. Cash used in financing activities in each period
primarily represented principal repayments of indebtedness incurred for the
acquisition of aircraft. The Company made distributions to its shareholders of
$324,000 and $303,000, $1.1 million, $1.2 million and $845,000 in the three
months ended March 31, 1997 and 1996 and the years ended December 31, 1996,
1995 and 1994, respectively, primarily to enable the shareholders to pay income
taxes related to the Company's income. In connection with their conversion to C
corporation status, the S Companies will make the S Corporation Distributions
in cash and S Corporation Notes. If the S Companies had converted to C
corporations as of March 31, 1997, the aggregate amount of the S Corporation
Distributions would have been approximately $24.5 million. The actual amount of
the S Corporation Distributions will depend upon the S Companies' earnings from
April 1, 1997 to the conversion date, and the cash portion of the S Corporation
Distributions will depend upon the amount of cash available for distribution.
The Company expects to repay the S Corporation Notes from operating cash flows.
In addition, the Company may be required to make future payments to its
existing shareholders pursuant to a Tax Indemnification Agreement if there are
adjustments to the S Companies' tax returns. See "Dividend Policy and Prior S
Corporation Status," "Business--Legal Proceedings" and "Certain Transactions."

The Company's tax returns for the years ended December 31, 1993 and 1994
are currently under examination by the Internal Revenue Service ("IRS"). The
examination relates specifically to the Company's treatment of certain repairs
and maintenance, including safety checks mandated by the FAA, as expenses for
tax purposes. The Company believes that its treatment of such costs as
deductible for tax purposes is proper and is prepared to defend its position
vigorously, if it becomes necessary. Should the IRS take the position that
these costs should have been capitalized and subsequently depreciated, a
substantial assessment could result. Any such assessment will be taxable
directly to the S Companies' shareholders, rather than to the Company, and the
Company will be required to indemnify such shareholders for the amount of the
assessment and any taxes incurred by them on account of the receipt of such
indemnity payment. Because the examination is in process, the amount of such an
assessment is not presently determinable. See "Certain Transactions" and Note 2
of Notes to the Company's Combined Financial Statements.

Following completion of this offering and application of a portion of the
net proceeds to repay the Company's outstanding long-term debt, the Company
will have no bank debt. During 1997, the Company intends to establish a $25
million revolving credit facility for working capital and equipment purchases.
The Company currently is discussing the terms and conditions of such a facility
with banks although no bank has yet offered the Company a commitment for such a
facility.

The Company has no material commitments for future capital expenditures,
apart from normal scheduled major airframe and engine repairs and maintenance
and the hushkitting of its DC-8 aircraft. Over the next three years the Company
will be required to install hushkits on its existing DC-8 aircraft

25
<PAGE>

to comply with noise abatement regulations at an estimated cost of $1.6 million
per aircraft. The Company intends to purchase hushkits for this purpose from
QTV, Ltd., a related party, which received a Supplemental Type Certificate for
its hushkits on June 30, 1997. See "Certain Transactions." Management believes
that the cost of the hushkits to be purchased from the related party will be
significantly lower than the cost of other hushkits available in the market.
The Company intends to utilize a portion of the proceeds of this offering to
purchase up to four widebody aircraft and as many as three additional DC-8s by
the end of 1998. The Company expects that the widebody aircraft will be
acquired for between $12 and $14 million per aircraft, which includes the cost
to convert such aircraft to cargo configuration if necessary. The Company
expects that the additional DC-8 aircraft will be acquired for between $2 and
$5 million per aircraft, depending on the type of DC-8s acquired, which
includes the cost to convert such aircraft to cargo configuration if necessary.
See "Use of Proceeds."

The Company believes that the net proceeds from this offering, together
with cash flows expected to be generated by operations, will be sufficient to
meet its anticipated cash needs for working capital and capital expenditures
for at least the next 18 months.

SEASONALITY

The Company's business has been, and is expected to continue to be,
seasonal in nature, with a majority of the Company's revenues and operating
income falling in the second half of the year (principally the fourth quarter).
The Company's fourth quarter revenues and operating income are typically higher
due to an increase in freight transported in anticipation of and during the
holiday season. In addition to increased fourth quarter revenues from scheduled
cargo services, the Company typically has realized a majority of its ACMI
service revenues from flights conducted during this period.

The table below sets forth selected unaudited quarterly financial and
operating data for 1995 and 1996 (dollars in thousands):

<TABLE>
<CAPTION>
1995 FISCAL QUARTER ENDED 1996 FISCAL QUARTER ENDED
----------------------------------------- ----------------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31
---------- --------- ---------- --------- ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Scheduled cargo services ......... $ 7,667 $ 9,142 $11,915 $11,400 $11,693 $12,099 $13,333 $17,650
ACMI services ..................... 5,445 6,643 6,820 16,433 5,430 7,347 6,841 15,902
Repairs, training and other ...... 68 104 133 580 1,796 818 542 797
Total revenues .................. 13,180 15,889 18,868 28,412 18,919 20,264 20,716 34,349
Operating income .................. 2,252 1,467 935 7,049 1,305 1,434 1,264 9,205
Net income ........................ 2,202 1,371 719 6,746 1,465 1,249 1,071 9,242
</TABLE>

NEW ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share". SFAS No. 128 specifies new standards designed to
improve the earnings per share ("EPS") information provided in financial
statements by simplifying the existing computational guidelines, revising the
disclosure requirements and increasing the comparability of EPS data on an
international basis. Some of the changes made to simplify the EPS computations
include: (a) eliminating the presentation of primary EPS and replacing it with
basic EPS, with the principal difference being that common stock equivalents
are not considered in computing basic EPS, (b) eliminating the modified
treasury stock method and the three percent materiality provision and (c)
revising the contingent share provisions and the supplemental EPS data
requirements. SFAS No. 128 also makes a number of changes to existing
disclosure requirements. SFAS No. 128 is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods.
The Company has not yet determined the impact of the implementation of SFAS No.
128.

26
<PAGE>

INDUSTRY OVERVIEW

According to published industry sources, the worldwide air freight market
had revenues of $64 billion in 1995 and has grown at a 9.1% compound annual
rate since 1985 (measured in revenue ton kilometers). The United States/Latin
America air freight market is forecasted, by published industry sources, to be
the fifth fastest growing air freight market in the world from 1995 to 2005,
with an average annual growth rate of approximately 7.1%, as measured in tons.
MIA is the largest air gateway to South and Central America and the Caribbean,
with more than 80 pure-cargo flights to the region per day. MIA is the primary
transshipment point for moving goods by air between North America and South and
Central America, representing 72% of total tonnage in 1995. MIA's air trade
with South America tripled from $3.1 billion in 1990 to $10.9 billion in 1996.

South and Central American and Caribbean countries are gaining increasing
importance in worldwide trade, much of which has been spawned by the region's
improved economies, expanding middle class, dismantled tariff barriers and the
privatization of state monopolies. South and Central American and Caribbean
trade has become global, with consumer and industrial goods being imported from
North America, Europe and Asia, and South and Central American and Caribbean
products increasingly finding new export markets, especially in the United
States. Between 1988 and 1994, United States exports to South America nearly
doubled from $14.7 billion to $27.3 billion.

Air cargo demand in South and Central America and the Caribbean is
expected to increase as these markets continue to grow and as trade between the
southernmost countries of South America increases, fostered by the 1995 free
trade pact between Argentina, Brazil, Uruguay, Paraguay and Chile (the
"Mercosur" countries). The Mercosur countries have a population of 200 million
people, a combined GDP of $850 billion and comprise 70% of the total land area
of South America. The Company believes that continued economic development in
the Mercosur countries will further increase demand for widebody air freight
services to this region from Europe and the United States through MIA.

Air cargo traffic between the United States and South and Central America
and the Caribbean flows nearly equally northbound and southbound although it
does not flow evenly in and out of each country due to trade imbalances.
Limited air freight service by passenger carriers and restraints on their
transportation of hazardous cargo have led to the growth of all-cargo carriers
in these markets. Providing air cargo service to South and Central America and
the Caribbean requires special skills to deal with the varied requirements of
numerous foreign government authorities and to transport goods through
relatively inefficient and ill-equipped customs and cargo handling operations
at many foreign airports.

As multinational corporations have demanded more sophisticated and
customized transportation logistics services and increasingly sought to
outsource their transportation logistics functions, freight forwarders have
emerged as important participants in the domestic and international air freight
markets. Major international freight forwarders increasingly have become
reluctant to arrange transportation of their customers' freight with integrated
cargo carriers (such as FedEx, UPS or DHL) because these carriers compete with
the freight forwarders for the same cargo customers. A majority of southbound
air freight to South and Central America and the Caribbean is handled by
freight forwarders, which seek low-cost, reliable service to fulfill their
customers' varied shipping requirements.

The growth of the worldwide air freight market depends partially on the
market for freighter aircraft. Many air freight carriers operate used aircraft
to minimize the fixed costs of aircraft operation. The Company believes that,
over the next five years, an adequate supply of used DC-8s and widebody
aircraft will be available, principally due to refleetings by passenger
carriers to newer generation aircraft, resulting in "cascading" of used
aircraft to the air freight industry.

27
<PAGE>

BUSINESS

COMPANY OVERVIEW

The Company is a leading provider of air cargo services between the United
States and South and Central America and the Caribbean. Since 1994, the Company
has been the largest international air cargo carrier serving MIA, based on tons
of cargo transported to and from that airport. MIA is the largest international
cargo airport in the United States and the third largest international cargo
airport in the world. The Company's services include: (i) integrated air and
truck cargo transportation and other logistics services ("scheduled cargo
services"); (ii) long- and short-term ACMI (aircraft, crew, maintenance and
insurance) services and AD HOC charters ("ACMI services"); and (iii) third
party aircraft and engine maintenance, repairs and overhauls, training and
other services. The Company's scheduled cargo services provide seamless
transportation through its MIA hub linking North America, Europe, Asia and the
Pacific Rim with 29 South and Central America and Caribbean cities. The
Company's customers include international and domestic freight forwarders,
integrated carriers, passenger and cargo airlines, major shippers and the
United States Postal Service. The Company's revenues have grown, principally as
a result of the expansion of its scheduled cargo services, from $29.0 million
in 1993 to $94.2 million in 1996, a compound annual rate of 48.1%. Principally
as a result of increased revenues from scheduled cargo services, the Company's
revenues increased 23.5% from 1995 to 1996 and 17.6% from 1994 to 1995.

The Company markets its scheduled cargo services through a sales network
consisting of eight domestic sales offices serving 55 major U.S. cities, five
international sales offices serving over 29 cities in Europe, Canada, Asia and
the Pacific Rim and 27 sales offices in South and Central America and the
Caribbean. The Company receives cargo at its MIA hub and its foreign operations
stations (i) through its domestic and international sales network, (ii) from
other airlines pursuant to interline agreements and (iii) directly from freight
forwarders and other shippers. The Company utilizes its own fleet of 15 DC-8
aircraft and the services of other airlines through interline and other
contractual relationships to provide reliable air cargo service between MIA and
South and Central America and the Caribbean. The Company has interline
relationships with over 50 airlines, including Air France, China Air,
Continental Airlines, Iberia, Korean Air and Virgin Atlantic. The Company's
scheduled cargo services transported 32,000 tons of freight in 1994 and 75,000
tons of freight in 1996, a compound annual increase of 53%. The Company plans
to expand its scheduled cargo services by acquiring up to four widebody
aircraft, which includes an L-1011 aircraft the Company began leasing in June
1997, and as many as three additional DC-8s by the end of 1998.

28
<PAGE>

COMPANY HISTORY

For approximately 20 years prior to founding the Company's predecessor in
1976, J. Frank Fine owned farming operations in 12 different Latin American and
Caribbean countries and, as a result, had depended on the airlines serving
these countries for timely delivery of his products to processing plants
located primarily in the United States. Many of these airlines did not maintain
adequate capacity to handle the seasonal needs of growers or were ill-equipped
to handle the special requirements of doing business in Latin American and
Caribbean markets. Perceiving a need for reliable transport, in 1976 Mr. Fine
acquired two early model Boeing 707 aircraft which he leased to airlines
serving those markets. In 1982, Barry H. Fine joined the Company, which at the
time owned three aircraft which it leased primarily to international airlines
serving South and Central America and the Caribbean. To maintain control over
its operating costs and improve the turn-around time and reliability of its
aircraft, the Company developed its own maintenance and repair capabilities,
and was certified in 1986 as an FAA repair station for DC-8 aircraft, and in
1987, as an FAA repair station for Pratt & Whitney JT3D-3B aircraft engines.
These certifications allowed the Company to lease and provide its aircraft on
an AMI (aircraft, maintenance and insurance) basis. By 1989, the Company's
fleet consisted of five DC-8 aircraft, which it leased on an AMI basis to a
number of domestic and foreign airlines for both regular and AD HOC cargo
service throughout South and Central America and the Caribbean. The Company
received its U.S. air carrier operating certificate in November 1992. The
Company began developing its own cargo routes in 1994 and has expanded the
coverage of its scheduled cargo services from nine destinations as of December
31, 1994 to 29 cities in 21 countries in South and Central America and the
Caribbean as of March 31, 1997. The Company opened its first regional sales
offices in Houston and New York in 1994. Since that time, the Company has
expanded its sales network to include additional regional sales offices in
Chicago and Atlanta, 14 cargo sales offices in South and Central America and
the Caribbean and general sales agents that represent the Company in the
western United States, Canada, Europe, Asia and the Pacific Rim and in 13 South
and Central American and Caribbean cities.

COMPETITIVE STRENGTHS

Management believes that the Company's success has largely been the result
of the following strengths:

ESTABLISHED MARKET POSITION. Since 1994, the Company has transported more
international air cargo to and from MIA, the principal air gateway for South
and Central America and the Caribbean, than any other carrier. Currently, the
Company operates over 70 round-trip cargo flights per week to South and Central
America and the Caribbean. Management believes that the Company has achieved
its market position as a result of the Company's excellent reputation for
reliability and service among a range of customers that include freight
forwarders, integrated carriers, passenger and cargo airlines and major
shippers. The Company believes that regulatory and other restrictions imposed
by U.S. and foreign governmental authorities would make it difficult for a new
airline entrant to obtain the necessary operating authority and route rights to
duplicate the Company's business. Management also believes that the scarcity of
available facilities at MIA will inhibit potential competitors seeking to
duplicate the Company's operations.

LOW AIRCRAFT AND OPERATING COST STRUCTURE. The Company maintains a low
cost structure through: the opportunistic acquisition of used aircraft, engines
and spare parts; elimination of duplicative costs by maintaining favorable
labor rates and other operating costs associated with the centralizing its
principal flight and maintenance operations in Miami; "in-sourcing" activities
such as training, aircraft and engine repairs and maintenance; and using its
own ground and cargo handling personnel and equipment. The Company also seeks
to increase its profitability and enhance aircraft utilization by maintaining a
balance of scheduled cargo services and ACMI services for third parties. The
Company's uniform aircraft fleet has allowed it to standardize its spare part
inventories, and maintenance and training operations, thereby increasing
operating efficiencies and improving the reliability of the Company's air cargo
services. The Company's low cost structure also enables it to utilize its
aircraft profitably in lower yielding freight markets.

29
<PAGE>

ASSET OWNERSHIP. The Company has made a substantial investment to acquire
the assets necessary to support its operations, including 15 DC-8 aircraft, 20
used spare aircraft engines, an extensive inventory of spare parts and aircraft
components, maintenance and engine repair equipment and substantially all of
the equipment and vehicles for its aircraft ground and cargo handling
requirements. See "Business--Aircraft Fleet." Management believes that the
value of the Company's operating assets is substantially in excess of their
book value, and following the Company's use of a portion of the net proceeds of
this offering to retire long-term debt, it will have no debt service associated
with these assets. The Company has also made a substantial commitment of
capital and resources to obtain required governmental authorizations, develop
its sales and marketing network and build the infrastructure necessary to
support its scheduled cargo and ACMI services.

EXPERIENCED MANAGEMENT TEAM. The Company is led by an experienced
management team, headed by Messrs. Frank and Barry Fine, who together have over
50 years of experience in the air cargo industry and whose knowledge of the
South and Central American and Caribbean business environment has been a key
element of the Company's success. The other key members of the Company's
management team, including those responsible for the Company's flight
operations, maintenance and repair facilities, as well as marketing and sales
activities, each have over 20 years of industry experience, including
experience in the Company's markets.

DIVERSITY OF CUSTOMER BASE. The Company offers a wide range of air cargo
services to a diverse customer base that includes international and domestic
freight forwarders, integrated carriers, passenger and cargo airlines, major
shippers and the United States Postal Service. The Company provides scheduled
cargo services to over 1,200 customers, none of which accounted for more than
5% of the Company's total revenues in 1996. Because the Company is able to
provide its customers a broad range of services tailored to their particular
needs, management believes that the Company is well positioned to benefit from
the expected growth in demand for air freight transportation between the United
States and South and Central America and the Caribbean.

GROWTH STRATEGY

The Company's growth strategy revolves around capitalizing on its position
as a leading provider of air freight transportation services between the United
States and South and Central America and the Caribbean. Principal elements of
the Company's strategy are as follows:

INCREASE LIFT CAPACITY. The Company believes that there are opportunities
to expand its air cargo services to South and Central America and the Caribbean
and intends to strengthen its market position by utilizing both the
capabilities and capacity of its existing aircraft and the increased range and
capacity of the widebody aircraft it intends to acquire. Management believes
that the Company's existing DC-8 fleet will accommodate expected growth in air
freight service demand in the Company's existing markets and can also be
employed effectively to commence service to new markets within South and
Central America and the Caribbean. The Company intends to increase the number
of markets it can serve and its capacity in existing markets by adding up to
four widebody aircraft and as many as three additional DC-8s by the end of
1998. In June 1997, the Company began leasing an L-1011 aircraft which the
Company has an option to acquire at any time prior to December 1997. Widebody
aircraft have longer range and significantly larger volume capacity than DC-8s
and will permit the Company to extend its route structure to serve the
southernmost countries of South America, such as the Mercosur countries, and to
more economically serve high cargo volume routes on which the Company currently
operates multiple daily flights. DC-8s that are utilized on these routes will
be redeployed to increase capacity to existing markets and to develop service
to new destinations that are more efficiently served with narrowbody aircraft.
Management believes that increasing the number of destinations the Company
serves will enhance its ability to develop and broaden relationships with
freight forwarders, airlines and other shippers. In addition, to capture a
greater share of air cargo traffic between Europe to South and Central America
and the Caribbean, the Company will consider utilizing its widebody aircraft to
directly serve a limited number of European destinations that can support the
volume necessary to economically operate trans-Atlantic service.

30
<PAGE>

EXPAND SALES NETWORK AND TRANSPORTATION LOGISTICS SERVICES. The Company
plans to expand its domestic and international sales network by opening new
domestic sales offices, adding sales personnel, increasing the number of
general sales agents who market the Company's services domestically and
internationally and expanding the Company's interline relationships with major
international airlines. The Company has general sales agents that market its
air cargo services in the western United States, Canada, Europe, Asia and the
Pacific Rim. The Company supplements the air cargo sales efforts of its own
personnel and general sales agents by entering into interline relationships
with international airlines that sell air freight services to destinations
served by the Company. The Company intends to expand the number of such
relationships and the amount of air freight it transports for these airlines.
The Company also plans to increase the scope of its transportation logistics
services, particularly in South and Central America and the Caribbean, where
other airlines and freight forwarders play a much smaller role in arranging for
these services. The Company already offers its customers intermodal services,
such as local freight pick-up and delivery, in El Salvador and the Dominican
Republic.

EXPAND ACMI SERVICES. Management believes that demand for ACMI services
will continue to increase, from South and Central America, Caribbean and
domestic carriers seeking to increase their lift capacity without committing to
purchase or lease additional aircraft. Management further believes that the
Company's acquisition of widebody aircraft will enable it to market its ACMI
services to a broader range of customers, including those who require the
longer range and/or larger volume capacity of these aircraft. The Company also
plans to utilize its existing and any newly acquired DC-8s to increase its ACMI
capabilities. By continuing to provide ACMI services with its existing and any
newly-acquired aircraft, the Company believes that it can further increase
aircraft utilization at the same time it expands its scheduled cargo services.

AIR CARGO SERVICES

The Company's scheduled cargo services provide seamless transportation
through its MIA hub linking North America, Europe, Asia and the Pacific Rim
with South and Central America and the Caribbean to serve the varied needs of
international and domestic freight forwarders, integrated carriers, passenger
and cargo airlines, major shippers and the United States Postal Service. The
Company offers its customers a number of services, including scheduled cargo
services, ACMI services, AD HOC charters and transportation logistics services,
such as warehousing, local pick-up and intermodal transportation of freight.

SCHEDULED CARGO SERVICES

The Company offers regular air cargo service between its MIA hub and 29
cities in South and Central America and the Caribbean, of which 13 are served
directly by Company routes, 13 are served by customers that utilize the
Company's aircraft on an ACMI or AMI basis to service such routes and three are
served by other airlines pursuant to interline relationships. Cargo service is
offered on a pre-booked, priority or space-available basis, and the Company
imposes no size or weight restrictions on shipments, except limitations
necessitated by the capacity of the aircraft serving the particular route. The
Company does not dedicate a particular aircraft to any one route and maintains
the flexibility to adjust its flight services, number of daily flights and the
cargo capacity of the aircraft serving each destination and to add intermediate
stops to pick up or deliver additional cargo based on variations in demand. The
Company has operated as many as six flights per day to a particular destination
to meet the demand for air cargo service to such destination. The Company's
scheduled cargo services transported 32,000 tons of freight in 1994 and 75,000
tons of freight in 1996, a compound annual increase of 53%.

The Company's freight rates are based upon the type of freight, weight or
volume, delivery service and destination. Rates vary depending on the type of
freight and, in most instances, durable goods command higher rates than
perishable or dry goods. The Company offers priority next day delivery service
at double the Company's normal rates and second day delivery service which is
billed on a space-available basis. Rates on longer routes generally are higher
than short-haul destinations. Freight

31
<PAGE>

is priced on a per kilogram basis and is adjusted for low weight, high volume
freight in accordance with industry standards. The Company also offers pallet
rates for larger shipments. From time to time, the Company's customers require
the shipment of hazardous or restricted materials or oversized pieces which
require additional handling, and the customer is charged higher rates. The
Company charges a base rate plus prevailing second carrier agreement rates for
its interline services.

As of March 31, 1997, the Company offered scheduled cargo services to and
from MIA and the following destinations:

<TABLE>
<CAPTION>
DESTINATION
- ---------------------------------------------- DAYS OF SERVICE ROUND-TRIP FLIGHTS
COUNTRY CITY PER WEEK(1) PER WEEK(1)
- ------------------------ ------------------- ----------------- -------------------
<S> <C> <C> <C>
Barbados Bridgetown(2) 2 3
British Virgin Islands Tortola(3) 1 1
Colombia Bogota(2) 6 18
Colombia Medellin(2) 1 1
Costa Rica San Jose 3 3
Dominican Republic Santo Domingo 6 6
Dominican Republic Puerto Plata(2) 2 2
Ecuador Guayaquil 5 7
Ecuador Quito 5 7
El Salvador San Salvador 3 3
Guatemala Guatemala City 3 3
Guyana Georgetown 2 2
Haiti Port-au-Prince(2) 2 2
Honduras San Pedro Sula 3 3
Jamaica Montego Bay(2) 3 3
Jamaica Kingston(2) 3 3
Netherlands Antilles Aruba(2) 1 1
Netherlands Antilles Curacao(2) 1 1
Nicaragua Managua 3 3
Panama Panama City 3 3
Puerto Rico San Juan 5 5
Surinam Paramaribo(2) 1 1
Trinidad and Tobago Port-of-Spain(2) 2 4
Turks and Caicos Grand Turk(2) 1 1
Turks and Caicos Providenciales(2) 1 1
U.S. Virgin Islands St. Thomas(3) 5 5
U.S. Virgin Islands St. Croix(3) 5 5
Venezuela Caracas 6 12
Venezuela Maracaibo 5 5
</TABLE>
- ----------------
(1) Represents the typical number of days of service and round-trip flights per
week that the Company offers air cargo services to and from each
destination. The actual number of days of service and round-trip flights
per week to a destination vary depending on demand.

(2) The Company sells air cargo services on these routes, which are served by
other carriers that utilize the Company's aircraft on an ACMI or AMI
basis.

(3) The Company sells air cargo services for these destinations, which it does
not directly serve. Customers' cargo is transferred pursuant to an
interline arrangement from San Juan, Puerto Rico.

The Company transports a broad range of goods and commodities. Generally,
a majority of the southbound freight consists of durable goods, such as
industrial equipment and parts, electronic and computer equipment, medical
instruments, pharmaceuticals, vehicles, oilfield equipment, magazines,
newspapers and mail, consumer durables and textiles. Northbound freight is
comprised mainly of finished textiles, pharmaceuticals, handicrafts, seafood,
flowers and fruits and vegetables. Many of the items that the Company
transports northbound to the United States are perishable commodities, and its

32
<PAGE>

customers rely on the dependability of the Company's cargo service and its
ability to accommodate seasonal and variable air freight requirements.

CARGO SALES NETWORK AND MARKETING

CARGO SALES NETWORK. The Company's sales network is comprised of the
Company's Miami headquarters, seven regional sales offices in major U.S. cities
(four of which are Company operated and three of which are operated by general
sales agents), 27 sales offices in South and Central America and the Caribbean
(14 of which are Company operated and 13 of which are operated by general sales
agents) and general sales agents in Europe, Canada, Asia and the Pacific Rim.
The Company's sales efforts are designed to maximize utilization of the
Company's scheduled cargo service by seeking to achieve a balance between
southbound and northbound air cargo shipments.

Each of the Company's sales offices markets the Company's air cargo
services to customers within its region. The Company's U.S. sales offices, as
well as its offices in El Salvador and the Dominican Republic, have
transportation logistics capabilities, including intermodal relationships with
major trucking companies for local pick-up and delivery of customers' freight.
Company personnel solicit shipment orders and process air waybills and other
documentary requirements for customers' shipments. In areas not covered
directly by the Company's own sales personnel, the Company engages general
sales agents on a commission basis to sell its air cargo services. Most of
these general sales agents represent the Company on an exclusive basis to
destinations served by the Company. Air cargo sales made by general sales
agents are based on the Company's published rate sheets and are documented
utilizing the Company's air waybills.

The following table sets forth the locations of and the major cities
served by the Company's sales network:

<TABLE>
<CAPTION>
DOMESTIC INTERNATIONAL
- ----------------------------------------------- ----------------------------------------------
LOCATION AND CITIES SERVED DATE OPENED LOCATION AND CITIES SERVED DATE OPENED
- ---------------------------- ---------------- ----------------------------- --------------
<S> <C> <C> <C>
MIAMI, FL 1st Qtr. 1994 Caracas, Venezuela 1st Qtr. 1994
Ft. Lauderdale, FL Guatemala City, Guatemala 1st Qtr. 1994
Jacksonville, FL Managua, Nicaragua 1st Qtr. 1994
Orlando, FL Maracaibo, Venezuela 1st Qtr. 1994
Tallahassee, FL San Pedro Sula, Honduras 1st Qtr. 1994
Tampa, FL San Salvador, El Salvador 1st Qtr. 1994
Panama City, Panama 3rd Qtr. 1994
HOUSTON, TX 1st Qtr. 1994 San Jose, Costa Rica 3rd Qtr. 1994
Albuquerque, NM Bridgetown, Barbados(1) 2nd Qtr. 1995
Dallas/Fort Worth, TX Georgetown, Guyana(1) 2nd Qtr. 1995
Little Rock, AK Guayaquil, Ecuador 2nd Qtr. 1995
New Orleans, LA Paramaribo, Surinam(1) 2nd Qtr. 1995
Memphis, TN Port of Spain, Trinidad(1) 2nd Qtr. 1995
Oklahoma City, OK Port Au Prince, Haiti(1) 2nd Qtr. 1995
Tulsa, OK Quito, Ecuador 2nd Qtr. 1995
British Virgin Islands(1) 3rd Qtr. 1995
NEW YORK, NY 1st Qtr. 1994 San Juan, Puerto Rico 3rd Qtr. 1995
Baltimore, MD Turks and Caicos Islands(1) 3rd Qtr. 1995
Buffalo, NY U.S. Virgin Islands(1) 3rd Qtr. 1995
Newark, NJ
Norfolk, VA
Philadelphia, PA LONDON, ENGLAND(1) 4th Qtr. 1995
Pittsburgh, PA Amsterdam, Holland
Richmond, VA Brussels, Belgium
Washington, D.C. Dublin, Ireland
Frankfurt, Germany
Paris, France
Prestwick, Scotland
Milan, Italy
</TABLE>

33
<PAGE>

<TABLE>
<CAPTION>
DOMESTIC INTERNATIONAL
- ---------------------------------------------- ---------------------------------------------
LOCATION AND CITIES SERVED DATE OPENED LOCATION AND CITIES SERVED DATE OPENED
- ---------------------------- --------------- ---------------------------- --------------
<S> <C> <C> <C>
SAN FRANCISCO, CA(1) 1st Qtr. 1995 Bogota, Colombia(1) 1st Qtr. 1996
Denver, CO Kingston, Jamaica(1) 1st Qtr. 1996
Portland, OR Medellin, Colombia(1) 1st Qtr. 1996
Salt Lake City, UT Montego Bay, Jamaica(1) 1st Qtr. 1996
Seattle, WA Puerto Plata, D.R. 1st Qtr. 1996
Santo Domingo, D.R. 1st Qtr. 1996
CHICAGO, IL 1st Qtr. 1995 Netherlands Antilles(1) 1st Qtr. 1997
Cleveland, OH Sao Paulo, Brazil 2nd Qtr. 1997
Cincinnati, OH
Detroit, MI TORONTO, ONTARIO(1) 1st Qtr. 1997
Indianapolis, IN Calgary
Kansas City, MO Regina
Lincoln, NE Vancouver
Milwaukee, WI Winnipeg
Minneapolis/St. Paul, MN
Omaha, NE MONTREAL, QUEBEC(1) 1st Qtr. 1997
St. Louis, MO Ottawa
Quebec City
LOS ANGELES, CA(1) 1st Qtr. 1995
Las Vegas, NV HONG KONG AND BEIJING(1) 2nd Qtr. 1997
Phoenix, AZ Bangkok, Thailand
San Diego, CA Djakarta, Indonesia
Guangzhou, Peoples Republic of China
ATLANTA, GA 1st Qtr. 1996 Ho Chi Minh City, Vietnam
Birmingham, AL Kuala Lumpur, Malaysia
Charlotte, NC Osaka, Japan
Columbia, SC Seoul, South Korea
Greensboro, SC Shanghai, Peoples Republic of China
Jackson, MS Singapore
Knoxville, TN Taipei, Taiwan
Nashville, TN Tokyo, Japan
BOSTON, MA(1) 2nd Qtr. 1997
Hartford, CT
</TABLE>
- ----------------
(1) Represents the office of a general sales agent or interline sales agent.

MARKETING. The Company's sales personnel and general sales agents market
the Company's air cargo services directly to freight forwarders, integrated
carriers, passenger and cargo airlines and major shippers. The Company
participates in international air cargo trade shows and advertises its services
in industry trade journals. General sales agents directly market the Company's
air cargo services to potential customers within their territories using the
Company's trade name. In addition, some of the Company's general sales agents,
such as Air Cargo Partners (an affiliate of Virgin Atlantic), which represents
the Company in Europe, include the Company's air cargo services in their sales
literature and published rate sheets.

TRANSPORTATION LOGISTICS SERVICES

Freight forwarders, integrated carriers and airlines generally deliver
their cargo to the Company's facility at the point of departure. Accordingly,
most of the freight transported by the Company is either delivered to the
Company's MIA hub for shipment to South or Central America or the Caribbean, or
to a Company operations station in South or Central America or the Caribbean
for shipment to the United States or beyond. Smaller freight forwarders with
less developed logistics capabilities often rely on the Company to arrange for
truck or air transportation of their cargo between the Company's MIA hub and
the point of origin and/or destination. In addition, some major freight
forwarders request the Company to arrange for shipment, generally by truck
carrier, of their customers' freight from the point of origin to expedite
shipment and minimize administrative and handling costs.

34
<PAGE>

When the Company provides transportation logistics services, Company
personnel determine the best means of, and then arrange for, the transportation
of the freight between the Company's warehouse facilities in Miami and the
customers points of origin and destination. Whenever possible, the Company
seeks to achieve cost savings for its customers by consolidating shipments and
using major truckload carriers to transport the consolidated freight.
Southbound shipments that are more time-sensitive or which have a value that
justifies the cost of expedited delivery usually are transported by air on
scheduled passenger or cargo airlines to Miami. Each Company sales office
maintains warehouse capabilities for storage and consolidation of freight,
generally through arrangements with local third party warehouse operators.

The Company offers its customers a variety of ancillary services tailored
to their particular needs. These services include arranging for local pick-up
and delivery, warehousing of cargo shipments, expedited document delivery for
customs clearance and priority notification to consignees of cargo arrival. The
Company also assists in the preparation of air waybills and shipping documents
(including customs export declarations, pro forma and foreign consular invoices
and other customs documentary requirements), assists its customers in obtaining
export or import licenses and arranges for cargo insurance. The Company
generally charges its customers additional fees for each of these services.

CUSTOMERS

FREIGHT FORWARDERS. Freight forwarders are important participants in the
domestic and international air freight markets. Major international freight
forwarders increasingly have become reluctant to arrange transportation of
their customers' freight through integrated cargo carriers (such as FedEx, UPS
or DHL) because these carriers compete with the freight forwarders for the same
cargo customers. As a result, management believes that air cargo service
companies such as the Company, who can provide reliable air cargo services and
handle the air and truck cargo transportation requirements of both large and
small freight forwarders, have an opportunity to capture an increasing share of
the air freight market. Management estimates that sales to freight forwarders
in 1996 accounted for approximately 86% of the Company's revenues from
scheduled cargo services. Freight forwarder customers include major
international freight forwarders (such as Air Express International, Danzas,
Eagle USA, Expeditors International, Fritz Companies and Nippon Express) as
well as smaller regional freight forwarders.

INTERLINE CUSTOMERS. Many major international airlines sell air cargo
services to destinations they do not serve directly and utilize other airlines
or cargo carriers to transport their customers' cargo from the cities they
serve to the ultimate destination. For example, most of the Company's European
interline customers fly to Miami or one or more major South and Central
American or Caribbean destinations but sell air cargo services to other
destinations to which they have no direct flights. These airlines will deliver
cargo to the Company at its MIA hub or a regional sales office for
transportation at a fixed rate to the Company's South and Central American or
Caribbean scheduled destinations. The Company also transports cargo at a fixed
rate from its South and Central American and Caribbean scheduled destinations
to interline customers at its MIA hub to be distributed by interline customers
to destinations throughout the world. The Company currently handles interline
freight for the following airlines:

35
<PAGE>

<TABLE>
<S> <C> <C> <C>
Aerolineas Argentinas B.W.I.A. Korean Air Pan Am
Aeromar Cargolux LACSA Polar Air Cargo
Aero Transcolombiana Carnival Airlines Laker Airways Qantas Airways Limited
Air Canada Challenge Lan Chile Airlines South African Airways
Air France China Airlines Lauda Air Surinam Airways
Air Haiti Continental Airlines Laparkan Taca International Airlines
Air Jamaica Copa Airlines L.T.U. Int'l Airways Tampa Airlines S.A.
Air U.K. Delta Airlines Lufthansa Airlines Tolair
Alitalia El Al Malev Tower Air
ALM Antillean Airlines Fast Air MAS Air TransWorld Airlines
Amerijet Faucett Martinair Turks Air
Austrian Airlines Finnair Midas Airlines United Airlines
Avensa/Servivensa Four Star Cargo Midwest Express Airlines U.S. Airways
Aviateca Iberia NICA Varig Brazilian Airlines
British Airways Interamericana Northwest Orient Virgin Atlantic Airways
</TABLE>

OTHER CUSTOMERS. The Company's customers also include the United States
Postal Service, the U.S. Department of State, industrial manufacturers,
distributors and other large corporations that arrange for the shipment of
their own air freight. Because of the Company's reliability, reputation and
position in its South and Central American and Caribbean markets, several major
multinational corporations have also either directed their independent freight
forwarders to use the Company's air cargo services or designated the Company as
their air carrier of choice for shipments to or from these markets.

During the year ended December 31, 1994, Charter America, Inc. accounted
for 28% of the Company's total revenues. During the three months ended March
31, 1997, Aero Transcolombiana accounted for 16% of the Company's total
revenues. The Company had no single customer that accounted for more than 10%
of it's total revenues for the years ended December 31, 1995 and 1996.

ACMI SERVICES

The Company's customers utilize the Company's ACMI services to obtain lift
capacity without acquiring their own aircraft. The Company currently has ACMI
contracts with over 15 unaffiliated customers, most of which are international
airlines. Under these contracts, the Company provides its aircraft from as
infrequently as one flight per week to as many as twelve flights per week, or
on an AD HOC basis. In addition, two of the Company's aircraft currently are
dedicated exclusively to service under AMI contracts that expire in 1999. The
Company also provides ACMI services for the seasonal or peak demands of Latin
American produce and flower growers and domestic delivery services such as the
United States Postal Service and United Parcel Service. Additionally, the
Company has received certification to fly equipment and cargo for the U.S.
Department of Defense.

A typical ACMI contract requires the Company to supply the aircraft, crew,
maintenance and insurance for specified cargo operations, while the customer is
responsible for substantially all other aircraft operating expenses, including
fuel, landing and parking fees and ground and cargo handling expenses. Under
the contract, the Company has exclusive operating control and direction of its
aircraft and its customer must obtain any government authorizations and permits
required to service the designated routes. See "--Government Regulation." Most
of the Company's ACMI contracts do not require the Company to operate a
specific aircraft for its customer. Generally, the Company's ACMI contracts are
for a two-year term but are cancelable by either party upon five days' written
notice.

With the exception of two aircraft operated by AMI customers, all of the
Company's aircraft are operated both on its own cargo flights and for ACMI
customers. This enables the Company to schedule its fleet to satisfy demand on
its own routes while improving fleet utilization and generating additional
revenue from ACMI services.

36
<PAGE>

AIRCRAFT FLEET

The Company's operating fleet is comprised of 15 narrowbody DC-8s, which
are short- to medium-range (2,000 to 3,000 nautical miles), medium cargo volume
(72,000 to 93,000 pounds) aircraft. The Company's fleet includes three
"stretch" DC-8s, which have a longer fuselage and more cargo volume capacity
and are generally utilized by the Company to serve higher volume routes. The
Company maintains flexibility to adjust on a daily basis the aircraft it uses
for its own cargo routes based on demand. For example, the Company may respond
to low demand on a particular route by utilizing the same aircraft to handle
two or more destinations or to satisfy higher demand on another route by
utilizing its stretch aircraft or adding additional flights. Similarly,
although the Company may commit to provide a cargo flight for an ACMI customer
at a particular time or date, the Company maintains the flexibility to utilize
whichever of its aircraft best serves the capacity and distance required for
the flight.

The Company's aircraft range in age from 26 to 38 years, with an average
age of approximately 31 years. During 1996, the Company's average daily
aircraft utilization was between six and seven block hours per operating day,
with an average round-trip flight duration of six block hours. Based on the
DC-8's useful life estimated by the FAA and McDonnell Douglas and the Company's
current maintenance program, the Company expects to be able to operate its DC-8
aircraft for at least 10 more years.

The following table contains information concerning the Company's
operating fleet as of June 1, 1997:

<TABLE>
<CAPTION>
NO. OF PALLETS APPROX. CARGO MOST RECENT MAJOR
AIRCRAFT TYPE UPPER/LOWER CAPACITY (LBS) MAINTENANCE CHECK (1)
- ------------------ ---------------- ---------------- ----------------------
<S> <C> <C> <C>
DC-8-61F 18/4 91,300 June 1997
DC-8-61F 18/4 92,000 April 1997
DC-8-61F 18/4 91,800 February 1996
DC-8-55JT 13/2 92,700 October 1996
DC-8-54JT 13/2 92,300 March 1996
DC-8-54JT 13/2 91,700 May 1997
DC-8-54JT 13/2 92,300 November 1996
DC-8-54JT 13/2 92,200 July 1996
DC-8-54JT 13/2 89,200 August 1995
DC-8-54JT 13/2 92,600 December 1995
DC-8-54FM 13/2 91,500 November 1995(2)
DC-8-51F 13/2 77,200 March 1995(2)
DC-8-51F 13/2 75,200 February 1995(2)
DC-8-51F 13/2 75,300 in progress
DC-8-51F 13/2 72,300 in progress
</TABLE>
- ----------------
(1) The most recent major maintenance check for each aircraft was a "C Check",
unless otherwise indicated.

(2) The most recent major maintenance check for this aircraft was a "D Check."

The Company intends to increase its lift capacity by acquiring up to four
widebody aircraft, which includes an L-1011 aircraft the Company began leasing
in June 1997, and as many as three additional DC-8s by the end of 1998.
Widebody aircraft, such as the McDonnell Douglas DC-10 or the Lockheed L-1011,
are capable of mid-range and long-range flights carrying a larger volume cargo,
resulting in operating efficiencies and economies of scale. The Company
believes that operating widebody aircraft will allow it to commence service to
more distant destinations which cannot be effectively served by the Company at
present due to the cargo capacity and range of its current fleet, as well as
increase its flexibility to serve current markets where air freight demand is
strong. To the extent the Company utilizes widebody aircraft to service
existing routes, it will redeploy the DC-8s currently serving those markets to
increase capacity to other markets, develop service to new markets which are
more efficiently serviced by narrowbody aircraft and increase its ACMI
services.

37
<PAGE>

As it has in the past, the Company expects to acquire its aircraft from a
variety of sources, including airlines, aircraft leasing companies, banks and
other financial institutions and individual aircraft owners. The Company
expects that the widebody aircraft will be acquired for between $12 and $14
million per aircraft, which includes the cost to convert such aircraft to cargo
configuration if necessary. The Company expects that the additional DC-8
aircraft will be acquired for between $2 and $5 million per aircraft, depending
on the type of DC-8s acquired, which includes the cost to convert such aircraft
to cargo configuration if necessary. On June 30, 1997, the Company entered into
a lease agreement with an aircraft leasing company, pursuant to which the
Company will lease an L-1011 aircraft until December 19, 1997. At any time
prior to the expiration date of the lease agreement, the Company has the right
to acquire the aircraft for a purchase price equal to $13 million less certain
amounts paid by the Company during the term of the agreement. The Company
expects to place this L-1011 in service in the fourth quarter of 1997. The
Company expects to purchase this aircraft with a portion of the proceeds from
this offering. See "Use of Proceeds."

FLIGHT OPERATIONS AND CONTROL. The Company's flight operations (including
aircraft dispatching, flight following and crew scheduling) are planned and
controlled by the Company's dispatch and flight operations personnel from the
Company's MIA base. The Company's flight control office is manned 24 hours per
day, seven days per week. Logistical support necessary for operations into the
airports served by the Company's flights also are coordinated from the
Company's MIA base.

To enhance the reliability of its service, the Company seeks, when
possible, to maintain at least one spare aircraft at all times. The spare
aircraft can be dispatched on short notice to most locations served by the
Company when a substitute aircraft is needed. Maintaining one or more spare
aircraft allows the Company to better ensure the availability of aircraft for
its regular cargo flights and to provide its ACMI customers with a high
dispatch reliability.

MAINTENANCE. The Company performs at its own facilities substantially all
of the inspections, maintenance and repairs required to keep the Company's
aircraft in operation and in compliance with the Company's FAA-approved
maintenance program. Whenever possible, the Company also utilizes its own
employees to perform line maintenance, such as correcting irregularities noted
by flight crews and maintaining aircraft log books, at the foreign airports
served by the Company. By maintaining its own fleet, the Company believes that
it reduces the maintenance costs, minimizes out-of service time for its
aircraft and achieves a high level of reliability.

Maintenance required by the FAA includes: routine daily maintenance;
maintenance every 150 hours or six months, whichever comes first (an "A
Check"), at an approximate cost of $500; scheduled maintenance every 425 hours
or 12 months, whichever comes first (a "B Check"), at an approximate cost of
$7,000; scheduled major maintenance work every 3,300 hours or 36 months,
whichever comes first (a "C Check"), at an approximate cost of $500,000; and a
major maintenance overhaul every 25,000 hours or 12 years, whichever comes
first (a "D Check"), at an approximate cost of between $1.3 million and $1.6
million. The Company generally schedules major maintenance on its aircraft
during periods of lower utilization. The Company estimates that, at current
rates of operation, seven scheduled C Checks will be completed on the Company's
aircraft in 1997 and four will be completed in 1998 and that, on average, one
of its aircraft will require a D Check each year.

Since 1986, the Company's maintenance facility has been certificated as an
FAA repair station to perform maintenance on DC-8 series aircraft and their
related avionics and accessories, including all required airframe maintenance,
ranging from routine inspections to major airframe overhauls, as well as ADs
and service bulletin compliance. The Company also operates an FAA certified
repair station for Pratt & Whitney JT3D-3B aircraft engines, which performs
complete repair services on all Company aircraft engines. The Company's MIA
facility accommodates up to two large widebody aircraft (such as Boeing 747s),
three medium widebody aircraft (such as McDonnell Douglas DC-10s or Lockheed
L-1011s) or three narrowbody aircraft (such as DC-8s) simultaneously for
repairs and maintenance. See "--Facilities."

The Company's maintenance and engineering personnel coordinate all routine
and non-routine maintenance operations, including tracking the maintenance
status of each aircraft, communicating with

38
<PAGE>

maintenance personnel in connection with every arrival and departure,
consulting with manufacturers and vendors about procedures to correct
irregularities and training the Company's line maintenance personnel on the
requirements of the Company's FAA-approved maintenance program. The Company
conducts virtually all of its own maintenance training.

The Company owns 20 used spare Pratt & Whitney JT3D-3B aircraft engines
and an extensive inventory of spare aircraft parts and consumable materials
required to support line maintenance, scheduled airframe maintenance and engine
maintenance and repairs. The Company purchased its spare aircraft engines at
various times between 1987 and 1995 and has maintained its spare aircraft
engines in accordance with FAA standards. All spare aircraft engines are
continually overhauled and refurbished to extend their useful life and are used
in the Company's normal operations on an as-needed basis. In addition, the
Company owns larger aircraft components, such as airframe structures, landing
gears and flight controls. The Company also owns three DC-8s that are used
solely for parts and has a supply of parts from four disassembled aircraft. The
Company opportunistically purchases spare parts, spare engines, entire
inventories and other aircraft components when "bulk" purchases of these items
have been available or market conditions are otherwise favorable. Generally,
bulk purchase opportunities have arisen when airlines or manufacturers of parts
sell large amounts of inventory in a single transaction or in conjunction with
a bankruptcy. Opportunistic inventory purchases have allowed the Company to
obtain a large inventory of spare parts at a lower cost than could have been
obtained by purchasing on an individual basis. From time to time, parts may
become unavailable or be in short supply. In the past, the Company has been
able to design and manufacture from manufacturers' drawings structural parts
pursuant to a limited license granted by the manufacturer. The Company believes
that such practices will continue to be available within the industry in the
near future.

TRAINING. The FAA mandates initial and recurrent training for most flight,
maintenance and engineering personnel. Initial pilot training consists of a
two-month program that involves FAA regulations and licensing exams, emergency
and security procedures, handling of hazardous materials, systems, flight
simulator sessions and actual operating experience with the Company's aircraft.
The Company generally hires pilots whom it has "pre-screened" as a result of
such training. The Company pays for all of the recurrent training required for
its pilots and pays for most of the training of its ground service and
maintenance personnel. The Company's training programs have received all
required FAA approvals.

The Company operates its own professional training schools at its
FAA-approved MIA facility, where it conducts all of the training programs
required for its personnel. In addition, the Company offers training to
third-party individuals in an effort to control its overhead costs related to
training. Generally at least 25% of each training class is comprised of
third-party individuals. The Company often hires outstanding members of its
training classes, which provides it with a supply of pilots and maintenance
personnel.

GROUND SUPPORT AND EQUIPMENT. The Company utilizes its own ground handling
personnel and equipment for loading, servicing and maintaining the Company's
aircraft at MIA and at most of the other airports served by the Company.

FUEL. Fuel is a significant operating cost. The Company purchases most of
its fuel from World Fuel Services Corporation at MIA. The Company generally
purchases bonded fuel which is tax-free to the Company because the fuel is
utilized for international flights. The Company's exposure to fuel risk is
reduced to the extent that it provides air cargo services under ACMI contracts,
under which the customer is responsible for providing fuel. In the winter
months, the Company engages in a limited amount of market hedging against
possible winter price increases. The Company does not believe that fluctuations
in the price of fuel have had a significant impact on its results of operations
in recent years because it has been able to pass on increases to customers in
the form of fuel surcharges.

INFORMATION SYSTEMS

The Company has invested significant management and financial resources in
the development of information systems to facilitate its cargo, flight and
maintenance operations, provide its personnel

39
<PAGE>

accurate and timely information and increase the level of service and
information provided to its customers. Information concerning the status of
shipments currently is available only to the Company's personnel, but the
Company intends to increase the amount of information available on-line to its
customers. The Company also utilizes the U.S. Customs Department's Automated
Manifest System, which was first made available at MIA, to expedite customs
clearance for its customers' air freight. This system allows the Company to
electronically transfer its cargo manifest to customs while a flight is in
transit and "pre-clear" much of the cargo, thereby reducing transfer delays,
promptly releasing freight and allowing it to be transported to its destination
more quickly.

The Company's maintenance operations utilize information systems with bar
coding to track and control spare parts inventory and costs associated with
each maintenance task. In addition to maintaining records concerning the
maintenance status and history of each major aircraft part or component, as
required by FAA regulations, the Company utilizes its information systems to
track the labor and parts cost of each maintenance task performed by its
personnel.

The Company's flight operations dispatch department utilizes
Company-developed software to coordinate the Company's flight and crew
schedules, track flight time (both for scheduling of aircraft and parts
maintenance and overhauls and for invoicing the Company's ACMI customers for
their flights) and provide Company personnel and customers with flight status
information.

SECURITY AND SAFETY

SECURITY. The Company conducts various security procedures to comply with
FAA regulations. The Company's customers are required to inform the Company in
writing of the nature and composition of their air freight. The Company also
conducts daily cargo searches, x-rays its customers' air freight and conducts
searches for hazardous materials, weapons, explosive devices and illegal
freight. The Company uses search dogs in Miami to seek out explosives and
controlled substances. The Company also conducts searches for contraband in
foreign countries at the point of origin prior to departure for the United
States. Notwithstanding these procedures, the Company may transport contraband
which could result in fines, penalties, flight bans or possible damage to the
aircraft. The Company believes it maintains an excellent cooperative
relationship with U.S. Customs, the U.S. Department of Agriculture and the U.S.
Drug Enforcement Agency.

SAFETY AND INSPECTIONS. Management is committed to the safe operation of
the Company's aircraft. In compliance with FAA regulations, the Company's
aircraft are subject to various levels of scheduled maintenance or "checks" and
periodically go through complete overhauls. See "--Aircraft Fleet--
Maintenance." The Company's maintenance efforts are monitored closely by the
FAA, with FAA representatives often being on-site to observe maintenance being
performed. The Company also conducts extensive safety checks and audits on a
regular basis. All of the Company's flight operations and maintenance manuals
are FAA approved.

In 1996, the Company underwent a Regional Aviation Safety Inspection
Program (RASIP) inspection, during which a team of regional FAA inspectors
conducted a focused inspection over a one-week period. The FAA advised the
Company that there were no material adverse findings as a result of the RASIP
inspection. In connection with the Company's move to its new hangar facility,
the Company underwent an audit by the local FAA Flight Standards District
Office, which resulted in the reissuance of the Company's repair station
certificate for that facility. In accordance with national FAA policy and
procedures, in April 1997, the Company passed a National Aviation Safety
Inspection Program (NASIP) inspection, the most stringent and in-depth FAA
inspection, in which a team of national FAA inspectors thoroughly audited and
inspected the Company's entire maintenance and flight operations for a period
of three weeks.

During the last 10 years, the Company's aircraft, while being operated by
the Company, have not been involved in any accidents. According to the National
Transportation Safety Board Regulations, an "aircraft accident" is an
occurrence associated with the operation of an aircraft which takes place

40
<PAGE>

between the time any person boards the aircraft with the intention of flight
and all said persons have disembarked, and in which any person suffers death or
serious injury, or in which the aircraft receives substantial damage. In May
1994, one of the Company's aircraft, while being leased and operated by a
non-affiliated foreign airlines, was involved in a non-fatal aircraft accident.
The aircraft sustained significant damage during take-off due to the failure of
the aircraft's nose gear component and was declared a total loss by the
insurers.

RISK MANAGEMENT

The Company is exposed to potential losses that may be incurred in the
event of an aircraft accident. An accident could result in substantial cost to
repair or replace a damaged aircraft or claims for damaged or destroyed cargo
and significant potential liability for claims for injury or death to third
parties and Company crew members. The Company purchases hull insurance for its
aircraft on an agreed value basis to provide coverage for total losses and
repair expenses in the event of a partial loss, subject to a $500,000
deductible in the event of partial losses. The DOT requires airlines to carry
at least $20 million of liability insurance. The Company currently maintains
public liability insurance in the amount of $200 million per occurrence. The
Company has had a low claim experience and believes that it enjoys a good
reputation with its insurance providers.

To insure against risks associated with its maintenance and engine repair
operations, the Company maintains aviation and airline products liability,
premises and hangarkeepers insurance in amounts and on terms generally
consistent with industry practice. To date, the Company has not experienced any
significant uninsured or insured claims related to its maintenance or engine
repair services.

The Company is legally responsible to its customers for the safe delivery
of cargo to its ultimate destination, subject to contractual and legal
limitations on liability of $20.00 per kilogram ($9.07 per pound) for
international flights. The Company carries insurance for these claims.

COMPETITION

The air freight industry is highly competitive. The Company's scheduled
cargo services compete for cargo volume principally with other all-cargo
airlines, integrated carriers and scheduled and non-scheduled passenger
airlines which have substantial belly cargo capacity. To a lesser extent, the
Company's scheduled cargo services also compete for freight forwarding business
with fully integrated carriers, some of which are also customers of the
Company. The Company's ACMI services compete primarily with other airlines that
operate all-cargo aircraft and have lift capacity in excess of their own needs.
The Company believes that the most important competitive factors in the air
freight transportation industry are price, flexibility and the quality and
reliability of the cargo transportation service. Competition in the ACMI
business is dependent principally on the payload and cubic capacities of
available aircraft, price and reliability. Many of the Company's competitors
have substantially greater financial and other resources and more extensive
facilities and equipment than the Company.

FACILITIES

All of the Company's aircraft loading, unloading, maintenance, flight
operations and ground handling are accomplished at its MIA hangar facility,
which consists of a 250,000 square foot building, with 100,000 square feet of
hangar space; approximately 450,000 square feet of aircraft ramp space; 50,000
square feet of parts storage space; 30,000 square feet of maintenance shops and
work areas and flight operations center and training space; 20,000 square feet
of administrative offices; and approximately 50,000 square feet of expansion
space which the Company can employ in the future for offices or additional work
shops. The hangar facility accommodates up to two large widebody aircraft (such
as Boeing 747s), three medium widebody aircraft (such as McDonnell Douglas
DC-10s or Lockheed L-1011s) or three narrowbody aircraft (such as DC-8s)
simultaneously. Management believes that the Company's new maintenance
facilities are more than adequate to meet the Company's own maintenance needs
for at least the next several years and will permit the Company to take
advantage of opportunities to provide third party maintenance and airframe
repair work.

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<PAGE>

The Company maintains two cargo facilities at MIA. The Company's main
cargo facility consists of 56,600 square feet of warehouse space, which is
utilized primarily to process air freight for export and 13,500 square feet of
office space, at which the Company's executive offices and Miami sales offices
are located. The Company's other cargo facility consists of 22,500 square feet
of warehouse space which is utilized primarily to process imports. The Company
maintains facilities near MIA totaling 40,000 square feet where it performs
engine repair and overhaul work and additional warehouse space to store spare
aircraft parts.

The Company leases its MIA hangar facility from Metropolitan Dade County
under a lease that expires in 2001, with two five-year renewal options. The
Company's MIA cargo facilities are also leased from Metropolitan Dade County.
The lease for the Company's main cargo facility expires in 1999 and the other
cargo facility is leased on a month-to-month basis. The Company's engine repair
facilities are leased from an unrelated third party under a lease which expires
in May 1998.

The Company maintains regional sales and administrative offices for its
scheduled cargo services operations located at or near airports in four major
U.S. cities and 14 South and Central American and Caribbean cities. See
"Business--Cargo Sales Network and Marketing--Cargo Sales Network." All of such
properties are leased from unrelated third parties.

EMPLOYEES

As of June 1, 1997, the Company had 835 employees, including 115 flight
operations personnel, 420 maintenance, technical and security personnel, 192
cargo handling personnel and 108 executive, administrative, sales and financial
personnel. None of the Company's employees is subject to a collective
bargaining agreement. However, many airline industry employees are represented
by labor unions, and the Company believes that, as it continues to expand, its
employees may be subject to union organizing efforts. The Company considers its
relations with its employees to be satisfactory. On July 24, 1997, the Company
received a notice from the National Mediation Board in connection with an
application filed on behalf of the Teamsters seeking a vote by the Company's
Flight Deck Crew Members for the Teamsters to organize and to represent such
employees for collective bargaining purposes.

FAA regulations require the Company's pilots to be licensed as commercial
pilots, with specific ratings for the aircraft type to be flown, and to be
medically certified as physically fit to fly aircraft. Licenses and medical
certification are subject to periodic continuation requirements, including
recurrent training and minimum amounts of recent flying experience. Mechanics
and quality control inspectors must also be licensed and qualified for specific
aircraft. Under the Company's supplemental certification status flight
dispatchers do not need to be licensed. The Company routinely performs employee
background checks for a ten-year period prior to employment and conducts more
pre-employment screening than mandated by FAA regulations. In addition, the
Company's management personnel who are directly involved in the supervision of
flight operations, training, maintenance and aircraft inspection must meet
experience standards prescribed by FAA regulations. All of the Company's
employees are subject to pre-employment drug and alcohol testing, and employees
holding certain positions are subject to subsequent random testing.

GOVERNMENT REGULATION

GENERAL. The Company is subject to regulation under U.S. laws and the laws
of the various countries to which it flies its aircraft. The Company is also
subject to various international bilateral air services agreements between the
United States and the countries to which the Company provides scheduled cargo
services and must obtain permission from the applicable foreign government to
provide service to that country.

DOMESTIC REGULATION. The Company is subject to the jurisdiction of the FAA
with respect to aircraft maintenance and operations, including flight
operations, equipment, aircraft noise, ground facilities, dispatch,
communications, training, weather observation, flight time, crew
qualifications,

42
<PAGE>

aircraft registration, and other matters affecting air safety. The FAA has the
authority to suspend temporarily or revoke permanently the authority of the
Company or its licensed personnel for failure to comply with regulations
promulgated by the FAA and to assess substantial civil penalties for such
failure. The Company's aircraft, flight personnel and flight and emergency
procedures are subject to periodic inspections and tests by the FAA. The FAA
also conducts safety audits and has the power to impose fines and other
sanctions for violations of airline safety regulations. The FAA also has
jurisdiction over the transportation of hazardous materials. Shippers and air
carriers of hazardous materials generally share responsibility for compliance
with these regulations, and shippers are responsible for proper packaging and
labeling. Substantial monetary penalties can be imposed on both shippers and
air carriers for infractions of these regulations as well as possible criminal
penalties.

The FAA has promulgated under the ANCA regulations certain Stage III noise
requirements, pursuant to which airlines such as the Company must bring their
fleets into compliance with allowable noise levels in phases, with full
compliance required by December 31, 1999. In order to meet the Stage III
requirements, the Company currently intends to install hushkits on six of its
aircraft in 1997, six in 1998 and the balance by December 31, 1999. The Company
intends to purchase hushkits for this purpose from QTV, Ltd., a related party,
which received an STC meeting the Stage III noise requirements, for its
hushkits in June 1997. See "Certain Transactions." The Company estimates that
the cost to hushkit its existing fleet of 15 DC-8s to comply with Stage III
requirements will be $1.6 million per aircraft, or $24 million in the
aggregate. To date, however, the Company has not installed hushkits on any of
its aircraft, and has met the Stage III requirements applicable to it through
interchange agreements with other airlines. Pursuant to such interchange
agreements and under current rules promulgated by the FAA, the Company has
pooled its fleet with other carriers and obtained credits, at a cost of $6,000
per month per aircraft and between $2,200 and $2,700 per hour, from the other
carriers for aircraft that meet the Stage III standards, which has allowed the
Company to satisfy the FAA's Stage III requirements. The Company is capable and
has the authority, right and approval from the FAA to operate, under an
interchange agreement, third party aircraft.

The DOT maintains authority over international aviation and has
jurisdiction over international routes. In order to engage in its air
transportation business, the Company is required to maintain a Certificate of
Public Convenience and Necessity ("CPCN"). Prior to issuing a CPCN, DOT
examines a company's managerial competence, financial resources and plans and
compliance disposition in order to determine whether the carrier is fit,
willing and able to engage in the transportation services it has proposed to
undertake. Among other things, a company holding a CPCN must qualify as a
United States citizen, which requires that it be organized under the laws of
the United States or a State, territory or possession thereof; that its chief
executive officer and at least two-thirds of its Board of Directors and other
managing officers be United States citizens; that not more than 25% of its
voting stock be owned or controlled, directly or indirectly, by foreign
nationals; and that it not otherwise be subject to foreign control. A CPCN
confers no proprietary rights on the holder and DOT may impose conditions or
restrictions on such a CPCN. The DOT has issued the Company (i) a CPCN to
engage in interstate and overseas charter air transportation, (ii) a CPCN to
engage in foreign charter air transportation and (iii) a CPCN to engage in
scheduled air transportation between Miami, Florida and Santo Domingo,
Dominican Republic. By virtue of the CPCNs to engage in interstate, overseas
and foreign charter air transportation of property and mail, the Company is
vested with authority to conduct all-cargo operations worldwide. In addition,
the DOT has granted the Company numerous "exemptions" from its regulations to
permit the Company to engage in scheduled foreign air transportation to 26
cities in 17 countries. Many carriers operate under such exemption authority,
which is granted for up to a period of two years and typically renewed by the
DOT. CPCNs and grants of exemption authority are subject to standard DOT terms,
conditions and limitations and may be conditioned, suspended or withdrawn. The
Company is also required to obtain separate DOT authorization for each
long-term (over 60 days) ACMI arrangement.

Several aspects of airline operations are subject to regulation or
oversight by Federal agencies other than the FAA or the DOT. For instance,
labor relations in the air transportation industry are generally regulated
under the Railway Labor Act, which vests in the National Mediation Board
certain

43
<PAGE>

regulatory powers with respect to disputes between airlines and labor unions
arising under collective bargaining agreements. In addition, the Company is
subject to the jurisdiction of other governmental entities, including the FCC
regarding its use of radio facilities pursuant to the Federal Communications
Act of 1934, as amended; the Commerce Department regarding the Company's
interstate transportation of cargo; the Customs Service regarding inspection of
cargo imported from the Company's international destinations; the Immigration
and Naturalization Service regarding the citizenship of the Company's
employees; the Animal and Plant Health Inspection Service of the Department of
Agriculture regarding the inspection of animals, plants and produce imported
from the Company's international destinations regarding the Company's
international operations; the Environmental Protection Agency regarding
shipment of hazardous materials and compliance with standards for aircraft
exhaust and noise emissions; and the Department of Labor regarding the
Company's employees. The Company believes that it is in material compliance
with all applicable laws and regulations of such governmental entities.

FOREIGN REGULATION. To the extent required to do so, the Company obtains
authority to conduct foreign operations from applicable aeronautical and other
governmental authorities. As with the certificates and license obtained from
U.S. authorities, the Company must comply with all applicable rules and
regulations imposed by foreign governmental authorities or be subject to the
suspension, amendment or modification of its operating authorities.

LEGAL PROCEEDINGS

While the Company is from time to time involved in litigation in the
ordinary course of its business, there are no material legal proceedings
currently pending against the Company or to which any of its property is
subject.

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<PAGE>

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN KEY EMPLOYEES

The following table sets forth certain information regarding the
directors, executive officers and certain key employees of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- ----- ------------------------------------------------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
J. Frank Fine .................. 73 Chairman of the Board
Barry H. Fine .................. 44 President, Chief Executive Officer and Director
John D. Zappia .................. 45 Chief Operating Officer
Orlando M. Machado ............... 38 Chief Financial Officer
H. Jack Pfleger, Jr. ............ 62 Director Nominee
Phillip S. Bradley ............ 59 Director Nominee
Eugene P. Conese, Jr. ............ 37 Director Nominee

CERTAIN KEY EMPLOYEES
Celeste A. Lipworth ............ 34 General Counsel
Terence T. Sullivan ............ 35 Vice President, Director of Finance
Nanci Adels ..................... 40 Vice President, Director of Sales
Hugh P. Nash .................. 56 Vice President, Marketing and Sales
Anthony D. Phillips ............ 52 Vice President, Interline and International Marketing
Hector M. Ponte ............... 56 Vice President, Latin America
Charles South .................. 53 Vice President and Director of Operations
Daniel L. Stemen ............... 29 Director of ACMI Services
</TABLE>

J. FRANK FINE founded the Company's predecessor in 1976 and has served as
the Company's Chairman of the Board since its inception. Mr. Fine also served
as the Company's President and Chief Executive Officer from its inception until
June 1997. Mr. Fine is also the founder of Agro Air, and has served as Agro
Air's Chairman of the Board and President since its inception in 1982. Mr. Fine
also served as Vice President, North America and General Sales Agent of Alas de
Transporte International, S.A., a Dominican all-cargo airline ("Alas"), from
1988 to 1992; Vice President, North America and General Sales Agent of
Interamericana de Aviacion, C.A., a Venezuelan all-cargo airline
("Interamericana"), from 1988 to 1992; Vice President, North America and
General Sales Agent of Aerochago, S.A., a Dominican all-cargo airline
("Aerochago"), from 1985 to 1988; and President, North America and General
Manager of Aeromar C. por A., a Dominican all-cargo carrier ("Aeromar"), from
1978 to 1985. Mr. Fine is the father of Barry H. Fine.

BARRY H. FINE has served as the Company's President and Chief Executive
Officer since June 1997 and has served as a director of the Company since its
inception in 1989. Mr. Fine served as Vice President and General Manager of the
Company from its inception until June 1997. Mr. Fine also has served as a Vice
President and director of Agro Air since its inception in 1982. Mr. Fine served
as Vice President, North America, U.S. General Counsel and U.S. General Sales
Agent of Alas from 1988 to 1992; Vice President, North America and U.S. General
Sales Agent of Interamericana from 1988 to 1992; Vice President, North America
and General Counsel of Aerochago from 1985 to 1988; and Vice President, North
America and General Counsel of Aeromar from 1982 to 1985.

JOHN D. ZAPPIA has served as the Company's Chief Operating Officer since
June 1997. Mr. Zappia served as Senior Vice President, Maintenance and
Operations of the Company from November 1992 until June 1997. Since 1991, Mr.
Zappia has been a member of the Miami Maintenance Management Council, an
association of maintenance companies and was its President from 1991 to 1995.
From March 1984 to November 1992, Mr. Zappia served as Vice President of
Maintenance of Agro Air. Prior to joining the Company, Mr. Zappia's experience
in the airline industry includes: Electrical and Avionic Lead Mechanic of Air
Florida (1980-1984); Technical Consultant to Aviation Components and
Accessories, Inc., an FAR 145 repair station (1981-1984); Lead Avionics and
Electrical Mechanic of

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<PAGE>

Airlift International, Inc. (1979-1980); Supervisor, FAA Accessory Overhaul
Shop of Marco Island Airways (1977-1979); and Accessory Mechanic of Dixie Air
Parts Inc. (1972-1979).

ORLANDO M. MACHADO has served as the Company's Chief Financial Officer
since July 7, 1997. From December 1987 to June 1997, Mr. Machado held various
positions at Greenwich Air Services, Inc., a diversified independent gas
turbine engine repair and overhaul company ("Greenwich"), and most recently
served as Vice President of Finance. Prior to joining Greenwich, Mr. Machado,
who is a certifed public accountant, was employed by Coopers & Lybrand, L.L.P.,
as an audit manager.

H. JACK PFLEGER, JR. has been nominated and has agreed to become a
director of the Company upon completion of this offering. Mr. Pfleger has been
Chairman and a principal of Pfleger Financial Group, Inc., an executive
benefits company, since 1968. Mr. Pfleger was Chairman of the Board and Chief
Executive Officer of Life General Security Insurance Company from 1989 to 1993
and a director of Barnett Bank South Florida from 1978 to 1993.

PHILLIP S. BRADLEY has been nominated and has agreed to become a director
of the Company upon completion of this offering. Since 1990, Mr. Bradley has
served as a director of World Fuel Services Corporation, an aviation and marine
fuel service company ("World Fuel"). Mr. Bradley was a co-founder of Advance
Petroleum, Inc., a wholly-owned subsidiary of World Fuel, and has held various
positions since its organization, most recently as President, since January
1988.

EUGENE P. CONESE, JR. has been nominated and has agreed to become a
director of the Company upon completion of this offering. Since November 1990,
Mr. Conese, Jr. has served as President and Chief Operating Officer of
Greenwich. Mr. Conese, Jr. served as Vice President of Greenwich from March
1989 to November 1990. Mr. Conese, Jr. has also served as a director of
Greenwich since 1987.

CELESTE A. LIPWORTH has served as the Company's General Counsel since
November 1996. From 1993 to 1996, Ms. Lipworth was an associate at the law firm
of Popham, Haik, Schnobrich & Kaufman, Ltd. From 1991 to 1992, Ms. Lipworth was
an associate at the law firm of Crowell & Moring.

TERENCE T. SULLIVAN has served as the Company's Vice President, Director
of Finance since July 1997. From June 1994 to July 1997, Mr. Sullivan served as
Controller of the Company. From May 1993 to May 1994, Mr. Sullivan served as
Controller of Aeromar. From September 1991 to May 1993, Mr. Sullivan served as
Controller of Miami Aircraft Support, Inc., a ground support services company.
From August 1988 to August 1991, Mr. Sullivan served as Controller and was a
partner of International Futures Strategists, an investment brokerage company.
From April 1984 to July 1988, Mr. Sullivan was an accountant with the firm of
Samuels & Company.

NANCI ADELS has served as the Company's Vice President, Director of Sales
since July 1996. From 1991 to 1996, Ms. Adels served as Regional Manager for
the Company's S.W. Region in Houston, Texas. From 1980 to 1987, Ms. Adels held
various positions at British Caledonian Airways, an international passenger and
cargo airline company, and most recently served as Cargo Sales Manager.

HUGH P. NASH has served as the Company's Vice President, Marketing and
Sales since November 1994, and served as Vice President, Northeast Region of
the Company from November 1993 to November 1994. Mr. Nash's experience in the
air cargo industry includes: Regional Manager, Southwest United States of Stair
Cargo Services/Intertrans Corp., a multinational forwarding company (1984-
1993); President of DCA, an airline general sales agency (1992-1994); Sales
Manager, Cargo of British Caledonian Airways (1980-1982); various positions,
including Agency Administrator, North America and Director, National Accounts,
with MSAS, a multinational air and ocean forwarding company (1971-1980); and
various positions, including International Sales Specialist/Eastern Region,
with Emery Air Freight (1965-1971).

ANTHONY D. PHILLIPS has served as the Company's Vice President, Interline
and International Marketing since October 1994. Mr. Phillips' experience in the
air cargo industry includes: General

46
<PAGE>

Manager, North America of Belize Air International (1988-1994); various
positions, including Director, Industry Affairs and Director, Reservations,
with Northeastern International Airways (1983-1986); various positions,
including Director, Caribbean and Director, European Operations, with Air
Florida (1977-1983); Regional Sales Manager of Olympic Airways and Sabena World
Belgian Airlines (1973-1977); and various positions, including Systems Trainer,
with Pan American Airways.

HECTOR M. PONTE has served as the Company's Vice President, Latin America
since October 1994. Mr. Ponte's experience in the air cargo industry includes:
General Manager of Interamericana (1989-1994); Senior Vice President of
Challenge Air Cargo and Vice President, Latin American of Challenge Air
Transport (1983-1989); Vice President of Traffic of T.A.T. Airfreight
Forwarders, a forwarding company (1982); North America Cargo Manager of
Ecuatoriana Airlines (1978-1982); Station Manager and Sales Representative of
T.A.T. Airfreight Forwarders, a forwarding company (1977-1978); Director of
Services of Cono Sur Cargo Services (1976-1977); Cargo District Sales Manager
of LACSA Airlines (1965-1975); and Cargo Agent Supervisor of Cargo Development,
Inc. (1962-1965).

CHARLES SOUTH has served as the Company's Director of Operations since
September 1993 and as a Vice President of the Company since June 1997. Mr.
South's experience in the airline industry includes: DC-8 Captain for Arrow Air
(1988-1991); various positions, including Vice President of Operations, with
Challenge Air International (1985-1987); and crew member for TACA International
Airlines (1969-1985).

DANIEL L. STEMEN has served as the Company's Director of ACMI Services
since May 1997 and as Assistant Director of Operations since January 1995. From
October 1992 until January 1995, Mr. Stemen served as the Manager of Flight
Operations of the Company. Since 1993, Mr. Stemen has also been licensed as a
DC-8 First Officer. From 1986 to 1992, Mr. Stemen served as a technical adviser
and FAA Liaison for several small airlines operating out of MIA and from 1988
to 1992 he served as Vice President of Operations for Trans International Crew
Leasing.

Upon completion of this offering, the Board of Directors will be divided
into three classes, and the directors will serve for staggered three-year
terms, or until their successors have been elected and qualified. Mr. Pfleger
will initially serve as a Class I director until the annual meeting of
shareholders held in 1998, or until his successor is elected and qualified.
Messrs. Bradley and Conese, Jr. will initially serve as a Class II director
until the annual meeting of shareholders to be held in 1999, or until his
successor is elected and qualified. Messrs. Frank and Barry Fine will initially
serve as Class III directors until the annual meeting of shareholders to be
held in 2000, or until their respective successors have been elected and
qualified. At each annual meeting of shareholders, a class of directors will be
elected for a three-year term to succeed the director or directors of the same
class whose terms are then expiring. To the extent there is an increase in the
number of directors, additional directorships resulting therefrom will be
distributed among the three classes so that, as nearly as possible, each class
will consist of an equal numbers of directors.

Officers of the Company serve at the pleasure of the Board of Directors.
Except as noted above, there are no family relationships among any of the
Company's executive officers and directors.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors intends to establish, after the completion of this
offering, an Audit Committee which will be composed of non-employee directors.
The Audit Committee will be responsible for reviewing audit functions,
including accounting and financial reporting practices of the Company, the
adequacy of the Company's system of internal accounting control, the quality
and integrity of the Company's financial statements and relations with
independent auditors. The Company also plans to establish, after the completion
of this offering a Compensation Committee, which will be responsible for
establishing the compensation of the Company's directors, officers and
employees, including salaries, bonuses, commission and benefit plans,
administering the Company's stock plans and other matters relating to
compensation.

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<PAGE>

DIRECTOR COMPENSATION

The Company will reimburse its directors for out-of-pocket expenses
incurred in connection with their rendering of services as directors.
Non-employee directors will receive an annual director's fee of $10,000 and
will be eligible to receive options under the Incentive Plan. See "--Stock
Plans."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to this offering, the Board of Directors, which consisted of J.
Frank Fine and Barry H. Fine, has made all determinations with respect to
executive officer compensation.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth all compensation
awarded to, earned by or for services rendered to the Company in all capacities
during the year ended December 31, 1996 by the Company's Chairman and Chief
Executive Officer (the "Named Officers"). In 1996, there was no other executive
officer whose salary and bonus exceeded $100,000.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION SALARY(1) BONUS COMPENSATION(2) COMPENSATION
- ----------------------------------------------- ----------- ------- --------------- ------------
<S> <C> <C> <C> <C>
J. Frank Fine,
Chairman of the Board ..................... $ 85,800 $-- $15,300 $--

Barry H. Fine,
President and Chief Executive Officer ...... 153,500 -- 14,600 --
</TABLE>
- ----------------
(1) Does not include cash dividends paid by the S Companies to the Named
Officers of which approximately $550,250 for J. Frank Fine and
approximately $58,400 for Barry H. Fine was in excess of amounts of funds
required to pay tax obligations for the S Companies' income. See "Dividend
Policy and Prior S Corporation Status" and "Certain Transaction."
Following this offering, Messrs. Frank and Barry Fine will each receive an
annual salary of $250,000.

(2) Represents amounts related to the Named Officers' personal use of Company
automobiles and a portion of the premiums for health insurance provided to
the Named Officers.

STOCK OPTION GRANTS AND EXERCISES. No stock options were granted to or
exercised by the Named Officers during 1996. Neither of the Named Officers held
any stock options at December 31, 1996.

EMPLOYMENT AGREEMENTS

Effective July 7, 1997, the Company entered into a three-year employment
agreement with Orlando M. Machado, pursuant to which he will serve as Chief
Financial Officer. Mr. Machado will receive an annual base salary of $150,000
and such bonuses as may be awarded from time to time in the discretion of the
Board or any compensation committee thereof. In addition, simultaneously with
this offering, the Company will grant to Mr. Machado pursuant to the Incentive
Plan (i) an award of that number of shares of Common Stock equal to $150,000
divided by the initial public offering price per share and (ii) options to
purchase 75,000 shares of Common Stock, which options will vest over a
three-year period and be exerciseable at the initial public offering price. If
the agreement is terminated prior to the expiration of the term other than by
reason of death, Disability (as defined) or Cause (as defined), or by him for
Good Reason (generally defined as the diminution of his duties or other breach
by the Company of the agreement), Mr. Machado (or his estate or beneficiaries)
will receive, in addition to accrued salary and other benefits to which he may
be entitled, his base salary for a period of two years following such
termination. The agreement prohibits Mr. Machado from competing with the
Company during the term of the agreement and for a period of one year after
termination of his employment, other than a termination by him for Good Reason
or a termination by the Company without Cause.

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<PAGE>

STOCK PLANS

INCENTIVE PLAN. The Company has adopted, effective upon the commencement
of this offering, the Incentive Plan, which is designed to assist the Company
in attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, directors and independent contractors (collectively,
the "Participants") by enabling the Participants to acquire or increase a
proprietary interest in the Company, as well as providing the Participants with
annual and long term performance incentives to expend their maximum efforts in
the creation of shareholder value. Pursuant to the Incentive Plan, the Company
may grant Participants stock options, stock appreciation rights, restricted
stock, deferred stock, other stock-related awards and performance or annual
incentive awards that may be settled in cash, stock or other property
(collectively, "Awards"). A committee comprised of at least two non-employee
directors (the "Committee"), or in the absence thereof the Board of Directors,
administers and interprets the Incentive Plan and is authorized to grant Awards
to all eligible Participants.

The total number of shares of Common Stock that may be subject to the
granting of Awards under the Incentive Plan shall be equal to: (i) 1,250,000
shares, plus (ii) the number of shares with respect to Awards previously
granted under the Incentive Plan that terminate without being exercised or
expire, are forfeited or canceled, and the number of shares of Common Stock
that are surrendered in payment of any Awards or any tax withholding
requirements. No Awards have been granted under the Incentive Plan. However,
simultaneously with this offering, the Company intends grant to certain
officers and other key employees options to purchase an aggregate of 485,700
shares of Common Stock, exercisable at the initial public offering price. In
addition, simultaneously with this offering the Company will issue 10,345
shares of Common Stock to an executive officer. See "--Employment Agreements."

The following is a description of the types of Awards that may be granted
under the Incentive Plan:

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The Committee is authorized
to grant stock options, including incentive and non-qualified stock
options, and stock appreciation rights ("SARs") entitling the Participant
to receive the amount by which the fair market value of a share of Common
Stock on the date of exercise exceeds the grant price of the SAR. The
exercise price per share subject to an option and the grant price of an SAR
are determined by the Committee, but must not be less than the fair market
value of a share of Common Stock on the date of grant. Each option is
exercisable after the period or periods specified in the related option
agreement, but no option may be exercisable after the expiration of ten
years from the date of grant. Options granted to an individual who owns (or
is deemed to own) at least 10% of the total combined voting power of all
classes of stock of the Company must have an exercise price of at least
110% of the fair market value of the Common Stock on the date of grant and
a term of no more than five years. Options may be exercised by payment of
the exercise price in cash, shares of Common Stock, outstanding Awards or
other property having a fair market value equal to the exercise price, as
the Committee may determine from time to time.

RESTRICTED AND DEFERRED STOCK. The Committee is authorized to grant
restricted stock and deferred stock. Restricted stock is a grant of shares
of Common Stock which may not be sold or disposed of, and which may be
forfeited in the event of certain terminations of employment, prior to the
end of a restricted period specified by the Committee. A Participant
granted restricted stock generally has all the rights of a shareholder of
the Company, unless otherwise determined by the Committee. An Award of
deferred stock confers upon the Participant the right to receive shares of
Common Stock at the end of a specified deferral period, subject to possible
forfeiture of the Award in the event of certain terminations of employment
prior to the end of a specified restricted period. Prior to settlement, an
Award of deferred stock carries no voting or dividend rights. The
restricted or deferral period for restricted stock or deferred stock Awards
may not be less than three years unless the Award is subject to performance
conditions, in which case the period will not be less than one year.

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<PAGE>

BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee is
authorized to grant shares of Common Stock as a bonus, free of
restrictions, or to grant shares of Common Stock or other Awards in lieu of
cash under the Incentive Plan, subject to such terms as the Committee may
specify.

OTHER STOCK-BASED AWARDS. The Committee is authorized to grant Awards
denominated or payable in, valued by reference to, or otherwise based on or
related to shares of Common Stock. Such Awards might include convertible or
exchangeable debt securities, other rights convertible or exchangeable into
shares of Common Stock, purchase rights for shares of Common Stock, Awards
with value and payment contingent upon performance by the Company or any
other factors designated by the Committee, and Awards valued by reference
to the book value of shares of Common Stock or the value of securities of
or the performance of specified subsidiaries or business units. The
Committee determines the terms and conditions of such Awards.

The right of a Participant to exercise or receive a grant or settlement of
an Award, and the timing thereof, may be subject to such performance conditions
(including subjective individual goals) as may be specified by the Committee.
In addition, the Incentive Plan authorizes specific annual incentive Awards,
which represent a conditional right to receive cash, shares of Common Stock or
other Awards upon achievement of certain pre-established performance goals and
subjective individual goals during a specified fiscal year.

Awards may be settled in the form of cash, shares of Common Stock, other
Awards or other property in the discretion of the Committee. The Committee may
condition any payment relating to an Award on the withholding of taxes and may
provide that a portion of any shares of Common Stock or other property to be
distributed will be withheld (or previously acquired shares of Common Stock or
other property surrendered by the Participant) to satisfy withholding and other
tax obligations. Awards granted under the Incentive Plan generally may not be
pledged or otherwise encumbered and are not transferable except by will or by
the laws of descent and distribution, or to a designated beneficiary upon the
Participant's death, except that the Committee may, in its discretion, permit
transfers for estate planning or other purposes subject to any applicable
restrictions.

The Incentive Plan also provides that each non-employee director will
automatically receive (i) on the date of his or her appointment as a director,
an option to purchase 10,000 shares of Common Stock and (ii) thereafter, on the
date of each annual meeting of shareholders, an option to purchase 2,000 shares
of Common Stock. Such options have a term of 10 years and become exercisable at
the rate of 25% per year, commencing on the first anniversary of the date of
grant; provided, that the options shall be fully exercisable in the event that,
while serving as a director, the non-employee director dies, or suffers a
"disability" or "retires" (within the meaning of such terms as defined in the
Incentive Plan). The per share exercise price of options granted to
non-employee directors will be equal to the fair market value of a share of
Common Stock on the date such option is granted. Unless otherwise extended in
the sole discretion of the Compensation Committee, the unexercised portion of
any formula option grant will become null and void (i) three months after the
date on which the non-employee director ceases to be a director for any reason
other than the non-employee director's willful misconduct or negligence,
disability, death or retirement, (ii) immediately in the event of the
non-employee director's willful misconduct or negligence, (iii) at the
expiration of its original term if the non-employee ceases to be a director by
reason or his or her retirement, or (iv) one year after the non-employee
director ceases to be a director by reason of his disability or death.

STOCK PURCHASE PLAN. The Company has reserved for issuance 250,000 shares
of Common Stock under the Stock Purchase Plan, which will become effective upon
commencement of this offering. All eligible employees (as defined therein),
other than holders of stock or options to purchase 5% or more of the Company's
Common Stock, employed by the Company from time to time may elect to
participate in the Stock Purchase Plan. Under the Stock Purchase Plan,
participants are granted a purchase right to acquire shares of Common Stock at
semi-annual intervals, during 12 month offering

50
<PAGE>

periods, the first of which will commence on the date of this Prospectus and
end on June 30, 1998. The purchase price for the shares under the Stock
Purchase Plan will be paid by the employee through periodic payroll deductions
and/or lump sum payments not to exceed 25% of the participant's total annual
compensation. The purchase price per share will be equal to 85% of the lower of
(i) the fair market value of the Common Stock at the beginning of the offering
period (which, in the case of the first offering period, would equal the
initial public offering price of the Common Stock) or, if greater, the fair
market value of the Common Stock on the date the participant enrolls in the
Stock Purchase Plan, or (ii) the fair market value per share of the Common
Stock on the purchase date. In no event may a participant purchase more than
$25,000 of Common Stock pursuant to the Stock Purchase Plan in any calendar
year.

CERTAIN TRANSACTIONS

J. Frank Fine, the Company's Chairman, and Barry H. Fine, the Company's
President and Chief Executive Officer (collectively, the "Principal
Shareholders"), each own 50% of the capital stock of the Company and Agro Air.
Immediately prior to this offering, each of the Principal Shareholders will
contribute his interest in Agro Air to the Company, and Agro Air will become a
wholly owned subsidiary of the Company. The Principal Shareholders will receive
no additional consideration for contributing their interests in Agro Air to the
Company.

The S Companies have been subject to taxation under Subchapter S of the
Code and comparable provisions of state income tax laws. As a result, the net
income of the S Companies, for federal and certain state income tax purposes,
was reported by and taxable directly to the S Companies' shareholders during
that time rather than to the S Companies. The S Companies historically have
paid cash dividends to their shareholders in amounts at least sufficient to
provide them funds for tax obligations payable by them on account of the S
Companies' income. During 1994, 1995 and 1996 and the three months ended March
31, 1997, the S Companies made aggregate cash distributions to their
shareholders of $845,032, $1,248,655, $1,110,091 and $324,137, respectively. In
connection with their conversion from S corporation to C corporation status,
which will occur immediately prior to completion of this offering, the S
Companies will effect the S Corporation Distributions. See "Dividend Policy and
Prior S Corporation Status." Messrs. Frank and Barry Fine received 73% and 27%,
respectively, of the aggregate cash distributions made by the S Companies
during 1994, 1995, 1996 and the three months ended March 31, 1997, and will
each receive 50% of the S Corporation Distributions. In addition, prior to this
offering, Agro Air will assign to its shareholders the right to receive the
proceeds of a $2.5 million judgment, plus interest, entered in the Company's
favor in January 1995 in a lawsuit brought against an insurance company for
breach of contract and fraud. The award of damages and pre- and post-judgment
interest is currently being appealed by the defendant insurance company, and
there is no assurance that the Company will ultimately prevail in the lawsuit.

In connection with the conversion of the S Companies' tax status, each of
the S Companies will enter into a Tax Indemnification Agreement with the
Principal Shareholders. Pursuant to these agreements, the Company will
indemnify the Principal Shareholders for the amount of any additional taxes,
interest, penalties or additions to taxes paid by them as a result of any
adjustments to the S Companies' taxable income prior to the conversion date.
The Company will also indemnify the Principal Shareholders for any taxes
incurred by them on account of the receipt of the foregoing indemnity payments.

In December 1996, the Company purchased a cargo aircraft from Frank Fine
Company, a corporation owned by J. Frank Fine. The purchase price was
$2,859,000 consisting of (i) forgiveness of accounts receivable from Frank
Fine Company, related to an overhaul performed on the aircraft, in the amount
of $1,700,000, (ii) forgiveness of loans and advances to Mr. Fine of $481,000
and (iii) forgiveness of loans, interest receivable and accounts receivable
from parties related to Mr. Fine of $678,000.

The Principal Shareholders own 30% of the capital stock of Quiet Nacelle
Corporation ("QNC") and 100% of the capital stock of Quiet Technology, Inc.
("QTI") and Quiet Technology DC-8, Inc.

51
<PAGE>

("QTD"). Quiet Technology Venture, Limited ("QTV, Ltd."), a partnership engaged
in the development of hushkits for DC-8-50 series and DC-8-61 aircraft (the
aircraft used by the Company), in which (i) QTD is the general partner and has
a 1% interest, (ii) QTI is a limited partner and has a priority return on
capital and 94.83% interest and (iii) QNC is a limited partner and has a 4.16%
interest. During 1996 and the three months ended March 31, 1997, the Company
performed approximately $1,886,000 and $300,000 of services for QTV, Ltd. The
Company's services consisted of supplying parts and labor to build and test
prototype hushkit components in support of QTV, Ltd.'s research and development
efforts. At December 31, 1996 and March 31, 1997, the balances of Company's
accounts receivable due from QTV, Ltd. were approximately $1,886,000 and
$734,000, respectively. QTV, Ltd.'s hushkit received a Supplemental Type
Certificate for its hushkits on June 30, 1997 and the Company intends to
purchase hushkits for its 15 DC-8 aircraft from QTV, Ltd. The purchase price
for these hushkits will be (i) for the first 10 hushkits, QTV, Ltd.'s cost plus
$125,000 and (ii) for the next 5 hushkits, QTV, Ltd.'s cost. The Company has
paid QTV, Ltd. a non-refundable $750,000 deposit. Management estimates that the
cost of such hushkits will be approximately $1.6 million per aircraft, which
management believes will be significantly lower than the cost of other hushkits
available in the market.

The Company purchased $7,927,000, $10,713,000, $18,974,000 and $4,970,000
of fuel from World Fuel in 1994, 1995, 1996 and the three months ended March
31, 1997, respectively. Phillip S. Bradley, a director nominee, is a director
of World Fuel and President of Advance Petroleum, Inc., a wholly-
owned subsidiary of World Fuel. Management believes that the terms of its
purchases from World Fuel have been, and will continue to be, on a market
basis.

The Company purchased $152,930, $44,733, $56,934 and $16,711 of engine
parts from Greenwich in 1994, 1995, 1996 and for the three months ended March
31, 1997, respectively. Eugene P. Conese, Jr., a director nominee, is the
President, Chief Operating Officer and a director of Greenwich. Management
believes that the terms of its purchases from Greenwich have been, and will
continue to be, on a market basis.

Management believes that the terms of the Company's transactions with
Frank Fine Company, QTV Ltd., World Fuel and Greenwich were at least as
favorable to the Company as those that could have been obtained from
unaffiliated third parties. In the future, any transactions with executive
officers, directors and holders of more than 5% of the Common Stock will be
approved by a majority of the Board of Directors, including a majority of the
disinterested members of the Board of Directors.

52
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth information as of the date of this
Prospectus concerning the beneficial ownership of the Common Stock and as
adjusted to give effect to this offering by (i) each person known by the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock, (ii) each of the Company's executive officers, directors and director
nominees who owns any Common Stock and (iii) all executive officers and
directors of the Company as a group. All holders listed below have sole voting
power and investment power over the shares beneficially owned by them, except
to the extent such power may be shared with such person's spouse.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES TO BE BENEFICIALLY
OWNED PRIOR TO OFFERING OWNED AFTER OFFERING(2)
------------------------ SHARES -------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT OFFERED NUMBER PERCENT
- ----------------------------------------- ------------ --------- ----------- -------------------- --------
<S> <C> <C> <C> <C> <C>
J. Frank Fine ........................ 7,000,000 50.0% 550,000 6,450,000 30.1%
Barry H. Fine ........................ 7,000,000 50.0% 550,000 6,450,000 30.1%
All executive officers and directors
as a group (7 persons) ............... 14,000,000 100.0% 1,100,000 12,910,345(3) 60.3%
</TABLE>
- ----------------
(1) The address of each person listed is c/o Fine Air Services, Inc., 2261 N.W.
67th Avenue, Bldg. 700, Miami, Florida 33152.

(2) Assumes that the Underwriters' over-allotment option is not exercised.

(3) Includes 10,345 shares of Common Stock to be issued to an executive officer
of the Company simultaneously with this offering. See
"Management--Employment Agreements."

53
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, $0.01 par value and 10,000,000 shares of preferred stock, $.01
par value. As of the date hereof, there were 14,000,000 shares of Common Stock
outstanding and no shares of preferred stock outstanding.

COMMON STOCK

Except as set forth under "--Limitation on Voting by Foreign Owners," the
holders of Common Stock are entitled to one vote per share on all matters to be
voted upon by the shareholders. Subject to preferences that may be applicable
to any outstanding preferred stock, the holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared from time to time by
the Board of Directors out of funds legally available therefor. Holders of
Common Stock have no preemptive, conversion or other subscription rights. There
are no redemption or sinking fund provisions available to the Common Stock. In
the event of liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior distribution rights of preferred
stock, if any, then outstanding.

PREFERRED STOCK

The Board of Directors has the authority without further action by the
stockholders to issue up to 10,000,000 shares of preferred stock in one or more
series. The Board of Directors is authorized to establish from time to time the
number of shares to be included in and the designation of, any such series, to
determine or alter the rights, preferences, privileges and restrictions thereof
without further action by the shareholders. The Board of Directors of the
Company has not designated any series of preferred stock. Satisfaction of any
dividend preferences of outstanding preferred stock, if any, would reduce the
amount of funds available for the payment of dividends on Common Stock. Also,
the holders of preferred stock, if any, would normally be entitled to receive a
preference payment in the event of any liquidation or other dissolution or
winding up of the Company before any payment is made to the holders of Common
Stock. In addition, any outstanding shares of preferred stock having conversion
rights would potentially increase the number of shares of Common Stock
outstanding.

LIMITATION ON VOTING BY FOREIGN OWNERS

The Articles provide that at no time shall more than 25% of the voting
interest of the Company (the "Permitted Percentage") be owned or controlled by
persons who are not citizens of the United States ("Non-citizens"). In the
event that Non-citizens shall own or have voting control over any shares of
common stock of the Company (i) the voting rights of such persons shall be
subject to automatic suspension to the extent required to ensure that the
Company is in compliance with applicable provisions of law and regulations
relating to ownership and control of a U.S. carrier and (ii) the Company may,
in its sole discretion, redeem any outstanding shares of stock which are owned
in violation of the Articles. In addition, the Company's president and at least
two-thirds of the members of its Board of Directors and other managing officers
shall be U.S. citizens.

The Company's Bylaws provide that no shares of capital stock may be voted
by or at the direction of Foreigners, unless such shares are registered on a
separate stock record (the "Foreign Stock Record"). The Bylaws further provide
that no shares will be registered on the Foreign Stock Record if the amount so
registered would exceed the Permitted Percentage. The shares shall be
registered on the Foreign Stock Record on the date such shares are registered.
In the event the Company determines that the shares registered on its Foreign
Stock Record exceeds the Permitted Percentage, shares shall be removed in
reverse chronological order until the number of shares on its Foreign Stock
Record no longer exceed the Permitted Percentage.

54
<PAGE>

ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF FLORIDA LAW AND THE COMPANY'S
ARTICLES AND BYLAWS

The Company is subject to several anti-takeover provisions under Florida
law that apply to a public corporation organized under Florida law, unless the
corporation has elected to opt out of such provisions in its articles of
incorporation or bylaws. The Company is subject to the "affiliated
transactions" and "control-share acquisition" provisions of the Florida
Business Corporation Act (the "FBCA"). These provisions require, subject to
certain exceptions, that an "affiliated transaction" be approved by the holders
of two-thirds of the voting shares other than those beneficially owned by an
"interested shareholder" or by a majority of disinterested directors and that
voting rights be conferred on "control shares" acquired in specified control
share acquisitions generally only to the extent conferred by resolution
approval by the shareholders, excluding holders of shares defined as
"interested shares." These provisions could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to the Company and, accordingly, may discourage attempts to acquire the
Company.

In addition, certain provisions of the Articles and Bylaws, which will be
in effect upon commencement of this offering and are summarized in the
following paragraphs, may be deemed to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a shareholder
might consider in its best interest, including those attempts that might result
in a premium over the market price for the shares held by shareholders.

CLASSIFIED BOARD OF DIRECTORS. The Board of Directors will be divided into
three classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors will be elected each year.
These provisions, when coupled with the provision of the Articles authorizing
only the Board of Directors to fill vacant directorships or increase the size
of the Board, may deter a shareholder from removing incumbent directors and
simultaneously gaining control of the Board of Directors by filling the
vacancies created by such removal with its own nominees.

SHAREHOLDER ACTION; SPECIAL MEETING OF SHAREHOLDERS. The Articles provide
that shareholders may not take action by written consent, but only at duly
called annual or special meetings of shareholders. The Articles further provide
that special meetings of shareholders of the Company be called only by the
Chairman of the Board of Directors, a majority of the Board of Directors or the
President of the Company.

ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The Bylaws provide that shareholders seeking to bring business
before an annual meeting of shareholders, or to nominate candidates for
election as directors at an annual meeting of shareholders, must provide timely
notice thereof in writing. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company, not less than 120 days nor more than 150 days prior to the first
anniversary of the date of the Company's notice of annual meeting provided with
respect to the previous year's annual meeting; provided, that if no annual
meeting was held in the previous year or the date of the annual meeting has
been changed to be more than 30 calendar days earlier than or 60 calendar days
after such anniversary, notice by the stockholder, to be timely, must be so
received not more than 90 days nor later than the later of (i) 60 days prior to
the annual meeting or (ii) the close of business on the 10th day following the
date on which notice of the date of the meeting is given to stockholders or
made public, whichever first occurs. The Bylaws also specify certain
requirements for a shareholder's notice to be in proper written form. These
provisions may preclude shareholders from bringing matters before the
shareholders at an annual meeting or from making nominations for directors at
an annual meeting.

AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
Common Stock and preferred stock are available for future issuance without
shareholder approval. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued and unreserved Common Stock and preferred stock may
enable the Board of Directors to issue shares

55
<PAGE>

to persons friendly to current management which could render more difficult or
discourage an attempt to obtain control of the Company by means of a proxy
contest, tender offer, merger or otherwise, and thereby protect the continuity
of the Company's management.

The FBCA provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
articles of incorporation or bylaws, unless a corporation's articles of
incorporation or bylaws, as the case may be, requires a greater percentage.

The Articles requires the affirmative vote of the holders of at least 80%
of the combined voting power of the outstanding shares of capital stock of the
Company entitled to vote for the election of directors to amend or repeal any
of the foregoing Articles provisions. Such 80% shareholder vote is also
required to amend or repeal any of the foregoing Bylaws provisions, although
such Bylaws provisions may also be amended or repealed by a majority vote of
the entire Board of Directors. Such 80% shareholder vote would be in addition
to any separate class vote that might in the future be required pursuant to the
terms of any preferred stock that might be outstanding at the time any such
amendments are submitted to stockholders.

LIMITED LIABILITY AND INDEMNIFICATION

Under the FBCA, a director is not personally liable for monetary damages
to the corporation or any other person for any statement, vote, decision, or
failure to act unless (i) the director breached or failed to perform his duties
as a director and (ii) a director's breach of, or failure to perform, those
duties constitutes (1) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause
to believe his conduct was unlawful, (2) a transaction from which the director
derived an improper personal benefit, either directly or indirectly, (3) a
circumstance under which an unlawful distribution is made, (4) in a proceeding
by or in the right of the corporation to procure a judgment in its favor or by
or in the right of a shareholder, conscious disregard for the best interest of
the corporation or willful misconduct, or (5) in a proceeding by or in the
right of someone other than the corporation or a shareholder, recklessness or
an act or omission which was committed in bad faith or with malicious purpose
or in a manner exhibiting wanton and willful disregard of human rights, safety,
or property. A corporation may purchase and maintain insurance on behalf of any
director or officer against any liability asserted against him and incurred by
him in his capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the FBCA.

The Articles and Bylaws of the Company provide that the Company shall, to
the fullest extent permitted by applicable law, as amended from time to time,
indemnify all directors of the Company, as well as any officers or employees of
the Company to whom the Company has agreed to grant indemnification. The
Company has also entered into an agreement with each of its directors and
certain of its officers wherein it has agreed to indemnify each of them to the
fullest extent permitted by law.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company.

56
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
21,410,345 shares of Common Stock. All of the 8,500,000 shares sold in this
offering are freely tradeable in the public market unless acquired by an
affiliate of the Company. The remaining 12,910,345 shares outstanding upon
completion of this offering will be "restricted securities" as that term is
defined under Rule 144 ("Rule 144") promulgated under the Securities Act, and
will be eligible for sale in the public market upon completion of this offering
in compliance with Rule 144, subject to the agreement with the Representatives
described below.

All directors and executive officers and the Selling Shareholders have
agreed with the Underwriters not to sell or otherwise dispose of any shares of
Common Stock for a period of 180 days after the closing of this offering (the
"Lockup Period") without the prior written consent of Alex. Brown & Sons
Incorporated. Upon expiration of the Lockup Period, the shares held by such
persons will be eligible for sale in the public market pursuant to Rule 144.

In general, under Rule 144 as currently in effect, if one year has elapsed
since the later of the date of acquisition of restricted shares from the
Company or any "affiliate" of the Company, as that term is defined under the
Securities Act, the acquiror or subsequent holder is entitled to sell within
any three-month period a number of shares that does not exceed the greater of
1% of the then outstanding shares of the Company's Common Stock (approximately
214,000 shares immediately after this offering) or the average weekly trading
volume of the Company's Common Stock on all exchanges and/or reported through
the automated quotation system of a registered securities association during
the four calendar weeks preceding the date on which notice of the sale is filed
with the Securities and Exchange Commission (the "Commission"). Sales under
Rule 144 are also subject to certain manner of sales provisions, notice
requirements and the availability of current public information about the
Company. If two years have elapsed since the later of the date of acquisition
of restricted shares from the Company or from any affiliate of the Company, and
the acquiror or subsequent holder thereof is deemed not to have been an
affiliate of the Company at any time during the 90 days preceding a sale, such
person would be entitled to sell such shares in the public market under Rule
144(k) without regard to the volume limitations, manner of sale provisions,
public information requirements or notice requirements.

The Company is unable to predict the effect that sales of Common Stock
made under Rule 144, pursuant to future registration statements or otherwise,
may have on any then prevailing market price for shares of the Common Stock.
Nevertheless, sales of a substantial amount of the Common Stock in the public
market, or the perception that such sales could occur, could materially
adversely affect the market price of the Common Stock as well as the Company's
ability to raise additional capital through the sale of its equity securities.

57
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, the Underwriters named below (the "Underwriters"), through their
Representatives, Alex. Brown & Sons Incorporated, Bear, Stearns & Co. Inc. and
Dillon, Read & Co. Inc., have severally agreed to purchase from the Company the
following respective numbers of shares of Common Stock at the initial public
offering price less the underwriting discounts and commissions set forth on the
cover page of this Prospectus.

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ----------------------------------------------------------- -----------------
<S> <C>
Alex. Brown & Sons Incorporated ........................... 1,694,000
Bear, Stearns & Co. Inc. ................................. 1,693,000
Dillon, Read & Co. Inc. ................................. 1,693,000
ABN AMRO Chicago Corporation .............................. 180,000
Credit Suisse First Boston Corporation .................. 180,000
Donaldson, Lufkin & Jenrette Securities Corporation ...... 180,000
A.G. Edwards & Sons, Inc. ................................. 180,000
Goldman, Sachs & Co. .................................... 180,000
Lehman Brothers Inc. .................................... 180,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated ...... 180,000
Morgan Stanley & Co. Incorporated ........................ 180,000
Natwest Securities Limited .............................. 180,000
Prudential Securities Incorporated ........................ 180,000
Robertson, Stephens & Company LLC ........................ 180,000
Schroder & Co. Inc. ....................................... 180,000
Smith Barney Inc. ....................................... 180,000
William Blair & Company, L.L.C. ........................... 120,000
Everen Securities, Inc. ................................. 120,000
Allen C. Ewing & Co. .................................... 120,000
Gerard Klauer Mattison & Co., Inc. ........................ 120,000
Hoefer & Arnett, Inc. .................................... 120,000
Morgan Keegan & Company, Inc. ........................... 120,000
Ragen Mackenzie Incorporated .............................. 120,000
Scott & Stringfellow, Inc. .............................. 120,000
Stephens Inc. ............................................. 120,000
----------
Total ................................................... 8,500,000
==========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares of Common Stock offered hereby, if
any of such shares are purchased.

The Company has been advised by the Representatives of the Underwriters
that the Underwriters propose to offer the shares of Common Stock directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $0.58 per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $0.10 per share to certain other
dealers. After commencement of the initial public offering, the offering price
and other selling terms may be changed by the Representatives.

The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of this Prospectus, to purchase up to
1,275,000 additional shares of Common Stock at the initial public offering
price less the underwriting discounts and commissions set forth on the cover
page of this Prospectus. To the extent that the Underwriters exercise such
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by it shown in the above table bears to 8,500,000, and
the Company will be obligated, pursuant to the option, to sell such shares to
the Underwriters. The

58
<PAGE>

Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 8,500,000 shares are being offered.

To facilitate the offering of the Common Stock, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the Common Stock. Specifically, the Underwriters may over-allot shares
of the Common Stock in connection with the offering, thereby creating a short
position in the Underwriters' syndicate account. Additionally, to cover such
over-allotments or to stabilize the market price of the Common Stock, the
Underwriters may bid for, and purchase, shares of the Common Stock in the open
market. Any of these activities may maintain the market price of the Common
Stock at a level above that which might otherwise prevail in the open market.
The Underwriters are not required to engage in these activities, and, if
commenced, any such activities may be discontinued at any time. The
Representatives, on behalf of the syndicate of Underwriters, also may reclaim
selling concessions allowed to an Underwriter or dealer, if the syndicate
repurchases shares distributed by that Underwriter or dealer.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.

The Company has agreed not to sell, contract to sell or otherwise dispose
of any shares of Common Stock for a period of 180 days after the date of this
Prospectus, except upon exercise of options granted under the Incentive Plan or
the Stock Purchase Plan, without the prior written consent of Alex. Brown &
Sons Incorporated. The Selling Shareholders and the directors and officers of
the Company have agreed not to sell, contract to sell or otherwise dispose of
any shares of Common Stock for a period of 180 days after the date of this
Prospectus without the prior written consent of Alex. Brown & Sons
Incorporated. See "Shares Eligible for Future Sale."

The Representatives of the Underwriters have advised the Company that the
Underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock has
been determined by negotiation among the Company, the Selling Shareholders and
the Representatives. Among the factors considered in such negotiations were
prevailing market conditions, the results of operations of the Company in recent
periods, the market capitalizations and stages of development of other companies
which the Company and the Representatives believed to be comparable to the
Company, estimates of the business potential of the Company, the present state
of the Company's development and other factors deemed relevant.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for
the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
Miami, Florida. Certain legal matters relating to the offering will be passed
upon for the Underwriters by Piper & Marbury L.L.P., Baltimore, Maryland.

EXPERTS

The combined balance sheets as of December 31, 1995 and 1996 and the
combined statements of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996,
included in this Prospectus, have been included herein in reliance on the
report of Coopers & Lybrand, L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

59
<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 (including all amendments,
exhibits and schedules thereto, the "Registration Statement") under the
Securities Act with respect to the shares of Common Stock offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain information contained in the Registration Statement. For further
information with respect to the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and to the exhibits and
schedules filed therewith. A copy of the Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of all or any part thereof may
be obtained from such office upon payment of the prescribed fees. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants,
such as the Company, that file electronically with the Commission. Information
concerning the Company may also available for inspection at the offices of the
Nasdaq National Market, Reports Section, 1735 K Street, N.W., Washington, D.C.
20006.

60
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Accountants ........................ F-2

Combined Balance Sheets
as of December 31, 1995 and 1996 and March 31, 1997 ...... F-3

Combined Statements of Operations
for the Years Ended December 31, 1994, 1995 and 1996 and
the Three Months Ended March 31, 1996 and 1997 ............ F-4

Combined Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1994, 1995 and 1996 and
the Three Months Ended March 31, 1997 ..................... F-5

Combined Statements of Cash Flows
for the Years Ended December 31, 1994, 1995 and 1996 and
the Three Months Ended March 31, 1996 and 1997 ............ F-6

Notes to Combined Financial Statements ..................... F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Directors of
Fine Air Services, Inc.

We have audited the accompanying combined balance sheets of Fine Air Services,
Inc., and combined affiliate as of December 31, 1995 and 1996 and the related
combined statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Fine Air
Services, Inc. and combined affiliate as of December 31, 1995 and 1996, and the
combined results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996 in comformity with generally
accepted accounting principles.

Coopers & Lybrand, L.L.P.

Miami, Florida
February 28, 1997

F-2
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE
COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1995 1996
----------------- -----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................... $ 441,592 $ 972,058
Restricted cash ............................................. 141,283 181,673
Investment securities ....................................... 288,997 224,668
Accounts receivable, net of allowance for losses of
$1,045,000, $1,309,000 and $1,528,000, respectively ......... 19,699,200 24,403,818
Engines held for sale ....................................... 1,570,642 --
Expendable parts ............................................. 751,738 781,498
Loans receivable, current portion ........................... 217,667 --
Deferred tax asset .......................................... -- --
Prepaid expenses and other current assets .................. 368,586 747,278
--------------- ---------------
Total current assets .................................... 23,479,705 27,310,993
--------------- ---------------
Property and equipment:
Flight equipment ............................................. 46,372,150 58,977,975
Other ...................................................... 2,931,327 5,062,243
--------------- ---------------
49,303,477 64,040,218
Less accumulated depreciation .............................. (16,889,328) (26,230,950)
--------------- ---------------
Net property and equipment ................................. 32,414,149 37,809,268
--------------- ---------------
Other assets:
Loans receivable, less current portion ..................... 314,238 --
Deposits and other assets .................................... 817,518 766,057
--------------- ---------------
Total assets ............................................. $ 57,025,610 $ 65,886,318
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit ............................................. $ 600,000 $ 700,000
Current portion of long-term debt ........................... 1,871,545 1,334,369
Distribution payable to S Corporation stockholders ............ -- --
Accounts payable ............................................. 8,658,351 6,634,586
Interest payable ............................................. 934,954 666,775
Accrued expenses ............................................. 1,679,932 2,197,639
--------------- ---------------
Total current liabilities ................................. 13,744,782 11,533,369
Long-term debt, less current portion ........................ 10,657,140 9,322,770
Deferred income taxes .......................................... -- --
--------------- ---------------
Total liabilities ....................................... 24,401,922 20,856,139
--------------- ---------------
Commitments and contingencies (Notes 10, 12 and 13)
Stockholders' equity:
Common stock of Fine Air Services, Inc., $1 par value:
4,000 shares authorized, 1,000 shares issued and
outstanding ................................................ 1,000 1,000
Common stock of Agro Air Associates, Inc., $1 par
value; 4,000 shares authorized, 1,500 shares issued and
outstanding ................................................ 1,500 1,500
Additional paid-in capital .................................... -- --
Retained earnings .......................................... 33,134,016 45,052,196
Net unrealized holding losses on investment securities ...... (31,731) (24,517)
Loans and advances to stockholders ........................... (481,097) --
--------------- ---------------
Total stockholders' equity .............................. 32,623,688 45,030,179
--------------- ---------------
Total liabilities and stockholders' equity ............... $ 57,025,610 $ 65,886,318
=============== ===============

<CAPTION>
MARCH 31, 1997
-----------------------------------
PRO FORMA
ACTUAL (NOTE 14)
----------------- -----------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................... $ 4,831,314 $ --
Restricted cash ............................................. 181,673 181,673
Investment securities ....................................... 141,608 141,608
Accounts receivable, net of allowance for losses of
$1,045,000, $1,309,000 and $1,528,000, respectively ......... 19,415,793 19,415,793
Engines held for sale ....................................... -- --
Expendable parts ............................................. 722,623 722,623
Loans receivable, current portion ........................... -- --
Deferred tax asset .......................................... -- 489,000
Prepaid expenses and other current assets .................. 264,808 264,808
--------------- ---------------
Total current assets .................................... 25,557,819 21,215,505
--------------- ---------------
Property and equipment:
Flight equipment ............................................. 61,261,441 61,261,441
Other ...................................................... 6,878,101 6,878,101
--------------- ---------------
68,139,542 68,139,542
Less accumulated depreciation .............................. (29,067,151) (29,067,151)
--------------- ---------------
Net property and equipment ................................. 39,072,391 39,072,391
--------------- ---------------
Other assets:
Loans receivable, less current portion ..................... -- --
Deposits and other assets .................................... 711,092 711,092
--------------- ---------------
Total assets ............................................. $ 65,341,302 $ 60,998,988
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit ............................................. $ -- $ --
Current portion of long-term debt ........................... 1,428,494 1,428,494
Distribution payable to S Corporation stockholders ............ -- 19,668,686
Accounts payable ............................................. 4,901,062 4,901,062
Interest payable ............................................. 27,612 27,612
Accrued expenses ............................................. 3,038,600 3,038,600
--------------- ---------------
Total current liabilities ................................. 9,395,768 29,064,454
Long-term debt, less current portion ........................ 8,152,921 8,152,921
Deferred income taxes .......................................... -- 9,332,000
--------------- ---------------
Total liabilities ....................................... 17,548,689 46,549,375
--------------- ---------------
Commitments and contingencies (Notes 10, 12 and 13)
Stockholders' equity:
Common stock of Fine Air Services, Inc., $1 par value:
4,000 shares authorized, 1,000 shares issued and
outstanding ................................................ 1,000 1,000
Common stock of Agro Air Associates, Inc., $1 par
value; 4,000 shares authorized, 1,500 shares issued and
outstanding ................................................ 1,500 1,500
Additional paid-in capital .................................... -- 14,554,690
Retained earnings .......................................... 47,897,690 --
Net unrealized holding losses on investment securities ...... (107,577) (107,577)
Loans and advances to stockholders ........................... -- --
--------------- ---------------
Total stockholders' equity .............................. 47,792,613 14,449,613
--------------- ---------------
Total liabilities and stockholders' equity ............... $ 65,341,302 $ 60,998,988
=============== ===============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE
COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- -----------------------------------
1994 1995 1996 1996 1997
----------------- ----------------- ----------------- ----------------- -----------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Scheduled cargo services ......... $ 19,940,524 $ 40,123,759 $ 54,774,892 $ 11,693,202 $ 16,174,090
ACMI services .................. 44,419,970 35,340,514 35,519,906 5,429,774 9,125,902
Repairs, training and other ...... 492,448 885,183 3,953,131 1,796,406 625,906
------------- ------------- -------------- ------------- --------------
Total operating revenues ...... 64,852,942 76,349,456 94,247,929 18,919,382 25,925,898
------------- ------------- -------------- ------------- --------------
Operating expenses:
Flying operations ............... 19,944,329 25,971,028 36,609,604 7,879,340 9,467,104
Aircraft and traffic servicing ... 4,098,454 7,475,080 7,938,513 1,684,328 2,117,863
Maintenance ..................... 12,723,493 8,340,343 9,894,441 1,682,871 2,888,609
General and administrative ...... 8,746,253 11,481,798 14,110,869 3,506,128 3,994,253
Selling ........................ 3,314,558 4,454,051 3,095,842 694,941 1,262,580
Depreciation and amortization . 3,886,679 6,923,711 9,390,396 2,166,299 2,846,571
------------- ------------- -------------- ------------- --------------
Total operating expenses ...... 52,713,766 64,646,011 81,039,665 17,613,907 22,576,980
------------- ------------- -------------- ------------- --------------
Operating income ............... 12,139,176 11,703,445 13,208,264 1,305,475 3,348,918
------------- ------------- -------------- ------------- --------------
Other income (expense):
Interest income .................. 97,438 92,085 94,651 24,952 14,726
Interest expense ............... (1,111,232) (985,201) (966,058) (263,095) (224,658)
Gain on insurance settlement ... 2,227,083 -- -- -- --
Other ........................... 845,908 227,293 691,414 397,988 30,645
------------- ------------- -------------- ------------- --------------
Total other, net ............... 2,059,197 (665,823) (179,993) 159,845 (179,287)
------------- ------------- -------------- ------------- --------------
Net income ........................ $ 14,198,373 $ 11,037,622 $ 13,028,271 $ 1,465,320 $ 3,169,631
============= ============= ============== ============= ==============
Pro Forma Data (unaudited)
Note 14:
Net income per above ............... $ 14,198,373 $ 11,037,622 $ 13,028,271 $ 1,465,320 $ 3,169,631
Pro Forma provision for
income taxes ..................... 5,404,000 4,220,000 4,970,000 551,000 1,193,000
------------- ------------- -------------- ------------- --------------
Pro Forma net income ............... $ 8,794,373 $ 6,817,622 $ 8,058,271 $ 914,320 $ 1,976,631
============= ============= ============== ============= ==============
Pro Forma net income per
common share ..................... $ 0.36 $ 0.09
============== ==============
Weighted average number of
common shares outstanding ......... 22,470,994 22,470,994
============== ==============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK UNREALIZED HOLDING LOANS AND
----------------- RETAINED GAIN (LOSS) ON ADVANCES TO
SHARES AMOUNT EARNINGS INVESTMENT SECURITIES STOCKHOLDERS TOTALS
-------- -------- --------------- ----------------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1993 ...... 2,500 $2,500 $ 9,991,708 $ 23,806 $ (481,097) $ 9,536,917
Net income ........................ -- -- 14,198,373 -- -- 14,198,373
Distributions ..................... -- -- (845,032) -- -- (845,032)
Change in unrealized loss on
investment securities ............ -- -- -- (136,439) -- (136,439)
------ ------- ------------ ---------- ----------- ------------
Balances at December 31, 1994 ...... 2,500 2,500 23,345,049 (112,633) (481,097) 22,753,819
Net income ........................ -- -- 11,037,622 -- -- 11,037,622
Distributions ..................... -- -- (1,248,655) -- -- (1,248,655)
Change in unrealized loss on
investment securities ............ -- -- -- 80,902 -- 80,902
------ ------- ------------ ---------- ----------- ------------
Balances at December 31, 1995 ...... 2,500 2,500 33,134,016 (31,731) (481,097) 32,623,688
Net income ........................ -- -- 13,028,271 -- -- 13,028,271
Distributions ..................... -- -- (1,110,091) -- -- (1,110,091)
Reimbursement of advances to
stockholders ..................... -- -- -- -- 481,097 481,097
Change in unrealized loss on
investment securities ............ -- -- -- 7,214 -- 7,214
------ ------- ------------ ---------- ----------- ------------
Balances at December 31, 1996 ...... 2,500 2,500 45,052,196 (24,517) -- 45,030,179
Net income (unaudited) ............ -- -- 3,169,631 -- -- 3,169,631
Distributions (unaudited) ......... -- -- (324,137) -- -- (324,137)
Change in unrealized loss on
investment securities (unaudited) . -- -- -- (83,060) -- (83,060)
------ ------- ------------ ---------- ----------- ------------
Balances at March 31, 1997
(unaudited) ........................ 2,500 $2,500 $ 47,897,690 $ (107,577) $ -- $ 47,792,613
====== ======= ============ ========== =========== ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1994 1995 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ....................................... $ 14,198,373 $ 11,037,622 $ 13,028,271
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................. 3,886,679 6,923,711 9,390,396
Bad debt expense .............................. 585,905 890,573 16,266
Excess of insurance proceeds over net book
value of assets destroyed ..................... (2,227,083) -- --
Loss (gain) on disposal of property and
equipment .................................... 184,506 -- (668,116)
(Gain) loss on sales of investment securities ... (14,801) -- 76,937
Changes in operating assets and liabilities:
Accounts receivable ........................... (7,369,618) (3,734,503) (4,746,594)
Expendable parts .............................. 398,858 (160,000) (29,760)
Prepaid expenses and other assets ............ (491,540) (349,251) (472,519)
Accounts payable .............................. 4,159,034 2,028,654 (2,023,765)
Interest payable .............................. 422,506 387,901 (268,179)
Accrued expenses .............................. 1,340,200 243,643 517,707
-------------- -------------- --------------
Total adjustments .............................. 874,646 6,230,728 1,792,373
-------------- -------------- --------------
Net cash provided by operating activities ...... 15,073,019 17,268,350 14,820,644
-------------- -------------- --------------
Cash flows from investing activities:
Purchases of property and equipment ............ (14,843,455) (15,164,405) (14,107,612)
Proceeds from sale of property and equipment ... -- -- 2,238,758
Proceeds from insurance settlement ............... 3,900,000 -- --
Increase in restricted cash ..................... (16,951) (124,332) (40,390)
Purchases of investment securities ............... (139,558) -- (146,128)
Proceeds from sales of investment securities ... 100,930 -- 140,734
Decrease (increase) in loans receivable ......... 4,654 (54,253) 25,000
-------------- -------------- --------------
Net cash used in investing activities ......... (10,994,380) (15,342,990) (11,889,638)
-------------- -------------- --------------
Cash flows from financing activities:
Proceeds from long-term debt ..................... 1,000,000 -- --
Principal payments on long-term debt ............ (4,327,715) (1,417,659) (1,871,546)
Proceeds from (payments on) line of credit ...... -- 600,000 100,000
Distributions to stockholders .................. (845,032) (1,248,655) (1,110,091)
Reimbursement of advances to stockholders ...... -- -- 481,097
-------------- -------------- --------------
Net cash used in financing activities ......... (4,172,747) (2,066,314) (2,400,540)
-------------- -------------- --------------
(Decrease) increase in cash and cash equivalents (94,108) (140,954) 530,466
Cash and cash equivalents, beginning of period ... 676,654 582,546 441,592
-------------- -------------- --------------
Cash and cash equivalents, end of period ......... $ 582,546 $ 441,592 $ 972,058
============== ============== ==============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest ......... $ 688,706 $ 597,300 $ 1,234,237
============== ============== ==============
Supplemental disclosures of non-cash investing
activities (also see Note 12):
Increase (decrease) in unrealized holding gain or
(loss) on available for sale investment securities $ 136,439 $ (80,902) $ (7,214)
============== ============== ==============

<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1996 1997
--------------- ----------------
<S> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income ....................................... $ 1,465,320 $ 3,169,631
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................. 2,166,299 2,846,571
Bad debt expense .............................. -- 219,197
Excess of insurance proceeds over net book
value of assets destroyed ..................... -- --
Loss (gain) on disposal of property and
equipment .................................... (364,988) 47,138
(Gain) loss on sales of investment securities ... -- --
Changes in operating assets and liabilities:
Accounts receivable ........................... 3,945,832 4,768,828
Expendable parts .............................. -- 58,875
Prepaid expenses and other assets ............ 115,550 537,435
Accounts payable .............................. (2,536,736) (1,733,524)
Interest payable .............................. (843,762) (639,163)
Accrued expenses .............................. 234,613 840,961
------------- --------------
Total adjustments .............................. 2,716,808 6,946,318
------------- --------------
Net cash provided by operating activities ...... 4,182,128 10,115,949
------------- --------------
Cash flows from investing activities:
Purchases of property and equipment ............ (3,389,466) (4,156,832)
Proceeds from sale of property and equipment ... 1,935,110 --
Proceeds from insurance settlement ............... -- --
Increase in restricted cash ..................... (4,094) --
Purchases of investment securities ............... -- --
Proceeds from sales of investment securities ... -- --
Decrease (increase) in loans receivable ......... 815 --
------------- --------------
Net cash used in investing activities ......... (1,457,635) (4,156,832)
------------- --------------
Cash flows from financing activities:
Proceeds from long-term debt ..................... -- --
Principal payments on long-term debt ............ (1,630,945) (1,075,724)
Proceeds from (payments on) line of credit ...... (600,000) (700,000)
Distributions to stockholders .................. (302,816) (324,137)
Reimbursement of advances to stockholders ...... -- --
------------- --------------
Net cash used in financing activities ......... (2,533,761) (2,099,861)
------------- --------------
(Decrease) increase in cash and cash equivalents 190,732 3,859,256
Cash and cash equivalents, beginning of period ... 441,592 972,058
------------- --------------
Cash and cash equivalents, end of period ......... $ 632,324 $ 4,831,314
============= ==============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest ......... $ 1,106,857 $ 863,821
============= ==============
Supplemental disclosures of non-cash investing
activities (also see Note 12):
Increase (decrease) in unrealized holding gain or
(loss) on available for sale investment securities $ 17,376 $ 83,060
============= ==============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS:

Fine Air Services, Inc. ("Fine Air") and its combined affiliate, Agro Air
Associates, Inc., ("Agro Air") (collectively the "Company") are under the
control of common stockholders. The Company is primarily engaged in interstate,
overseas and foreign charter and scheduled air transportation of cargo and mail
pursuant to authority granted by the United States Department of Transportation
and operates in the United States, South and Central America, and the
Caribbean. The Company has worldwide charter authority granted by the United
States Department of Transportation and is also engaged in aircraft leasing and
repair and maintenance.

The percentage of revenues derived from each of the Company's primary
business activities was as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------ -----------------
1994 1995 1996 1996 1997
------ ------ ------ ------ --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Scheduled cargo services ......... 31% 53% 58% 62% 62%
ACMI services ..................... 68 46 38 29 35
Repairs, training and other ...... 1 1 4 9 3
---- ---- ---- ---- ----
100% 100% 100% 100% 100%
==== ==== ==== ==== ====
</TABLE>

The assets of the Company consist primarily of aircraft, engines, rotable
parts, ground equipment and furniture and office equipment, substantially all
of which is physically located or based at the Miami International Airport.

The Company operates principally in Latin America (including Puerto Rico
and the U.S. Virgin Islands) and the United States. For the years ended
December 31, 1994, 1995 and 1996, Latin America sales accounted for 68%, 88%
and 89% of total revenues, respectively. All foreign sales were conducted in
U.S. dollars.

2. SIGNIFICANT ACCOUNTING POLICIES:

Basis of Combination

The combined accounts include the accounts of Fine Air and Agro Air. All
significant intercompany accounts and transactions have been eliminated.

REVENUE RECOGNITION

Aircraft, crew, maintenance and insurance ("ACMI") services revenue is
generally recognized on a flight by flight basis, although revenue derived from
certain long term ACMI contracts is recognized on a pro rata basis according to
block hour usage specified in such contracts. Revenue from scheduled cargo
services is recognized when the related cargo reaches its point of destination.
Revenue from repairs, training and other is recognized as services are
performed.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and

F-7
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)

liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The Company uses estimates principally with
respect to the allowance for losses on receivables, the economic useful lives
of property and equipment and salvage value on owned aircraft. Actual results
could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash (both interest bearing and
non-interest bearing) and certificates of deposit and other highly liquid
instruments having maturities of three months or less from the date of
purchase. At times cash and cash equivalents in a depository institution may be
in excess of the FDIC insurance limit.

RESTRICTED CASH

Restricted cash consists of certificates of deposit required by various
letters of credit (Note 13).

INVESTMENT SECURITIES

Debt securities that the Company has both the intent and ability to hold
to maturity are carried at amortized cost. Securities that the Company does not
have the intent or ability to hold to maturity are classified as either
"available-for-sale" or as "trading" and are carried at fair value. Unrealized
gains and losses on available for sale securities are classified as a separate
component of stockholders' equity. Unrealized gains and losses on trading
securities are recognized in current earnings. As of December 31, 1995 and 1996
and March 31, 1997, all securities have been classified as available for sale.

EXPENDABLE PARTS

Flight equipment expendable parts are stated at the lower of average cost
or market value.

PROPERTY AND EQUIPMENT

Owned aircraft are stated at cost. Expenditures for additions,
improvements, flight equipment modifications, engine overhauls and major
maintenance costs are capitalized. Other maintenance and repairs are charged to
expense when incurred. The Company performs a substantial portion of flight
equipment modifications, engine repairs, major maintenance as well as normal
repairs and maintenance. Owned aircraft are depreciated over their estimated
useful lives of 10 years using the straight line method, net of the estimated
salvage value of 10%. Major maintenance and overhaul costs are depreciated over
their estimated useful lives, which range from 3 to 8 years.

At the time assets are retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts, and the
difference, net of proceeds, if any, is recorded as a gain or loss.

Long-lived assets to be held and used are reviewed for impairment whenever
changes in circumstances indicate that the related carrying amounts may not be
recoverable. When required, impairment losses on assets to be held and used are
recognized based on the fair value of the asset. The Company does not believe
impairment charges are warranted as of December 31, 1995 and 1996 or as of
March 31, 1997.

F-8
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)

INCOME TAXES

Fine Air and Agro Air have each elected to be taxed as an S-Corporation
under provisions of the Internal Revenue Code. Accordingly, the Company is not
subject to Federal and State income taxes. Instead, the taxable income is
included in the individual income tax returns of the stockholders.

The Company's tax returns for the years ended December 31, 1993 and 1994
are currently under examination by the Internal Revenue Service. The
examination relates specifically to the Company's treatment of certain repairs
and maintenance, including safety checks mandated by the Federal Aviation
Administration, as expenses for tax purposes. Should the Internal Revenue
Service take the position that these costs should have been capitalized and
subsequently depreciated, a substantial assessment could result. Because the
examination is in process, the amount of such an assessment is not presently
determinable. The Company believes that its treatment of such costs as
deductible for tax purposes is proper and is prepared to defend its position
vigorously, if it becomes necessary.

NEW ACCOUNTING PRONOUNCEMENT

INTERIM FINANCIAL STATEMENTS

The financial statements for the three-month periods ended March 31, 1996
and 1997, and all related footnote information for these periods, are
unaudited, and reflect all normal and recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of the financial
position, operating results and cash flows for the interim period. The results
of operation for the three months ended March 31, 1997 are not necessarily
indicative of the results to be achieved for the entire fiscal year ending
December 31, 1997.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of investment securities,
borrowings under a bank line of credit and long-term debt agreements.
Investment securities have been classified as available for sale and are
recorded at fair value. The fair values of the line of credit and long-term
debt have been estimated based on interest rates available for similar debt
instruments and approximate their carrying values.

F-9
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES:--(CONTINUED)

SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK

The Company had one principal customer, which accounted for approximately
28% of total revenues, for the year ended December 31, 1994. During the years
ended December 31, 1995 and 1996, no single customer comprised 10% or more of
total revenues. For the three-month period ended March 31, 1997, the Company
had one customer that accounted for 16% of total revenues. As of December 31,
1995, three customers accounted for 25%, 21% and 12%, respectively, of net
accounts receivable. At December 31, 1996, the Company had two customers each
accounting for 25% of net accounts receivable. As of March 31, 1997, one
customer accounted for 40% of net accounts receivable.

3. INVESTMENT SECURITIES:

The cost and fair values of investments in equity securities at December
31, 1995 and 1996 and at March 31, 1997 were as follows:

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED MARKET
COST GAINS (LOSSES) VALUE
----------- ------------ --------------- ---------
<S> <C> <C> <C> <C>
Equity securities at December 31, 1995 ...... $320,728 $39,625 $ (71,356) $288,997
========== ======== =========== =========
Equity securities at December 31, 1996 ...... $249,185 $43,920 $ (68,437) $224,668
========== ======== =========== =========
Equity securities at March 31, 1997
(unaudited) .............................. $ 249,185 $ 664 $ (108,241) $141,608
========== ======== =========== =========
</TABLE>

Gains and losses resulting from sales of securities are determined using
the specific identification method.

4. ACCOUNTS RECEIVABLE:

Activity in the allowance for doubtful accounts was as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------- THREE MONTHS ENDED
1994 1995 1996 MARCH 31, 1997
---------------- -------------- ---------------- -------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Balance, beginning of period ...... $ 1,052,304 $ 394,221 $ 1,044,821 $ 1,308,976
Provision ........................ 585,905 890,573 16,226 219,197
Receivables charged off ............ (1,243,988) (239,973) (143,089) --
Recoveries ........................ -- -- 391,018 --
------------- ----------- ------------ ------------
Balance, end of period ............ $ 394,221 $ 1,044,821 $ 1,308,976 $ 1,528,173
============= =========== ============ ============
</TABLE>

F-10
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

5. LOANS RECEIVABLE:

Loans receivable were as follows at December 31, 1995:

<TABLE>
<S> <C>
Mortgage receivable from related party. Interest at 8%; payable in monthly
installments of principal and interest totaling $2,387 through April 2023.
Collateralized by residential real property. ........................... $317,600
Loans receivable from related parties, due on demand; noncollateralized;
non-interest bearing. ................................................... 59,511
---------
Total notes and loans from related parties .............................. 377,111
Loan receivable from unrelated parties due on demand; noncollateralized;
interest at 10%. ...................................................... 72,436
Loan receivable from unrelated parties due on demand; noncollateralized;
non-interest bearing. ................................................... 57,358
Loan receivable from employee due on demand; noncollateralized;
interest at 10%. ...................................................... 25,000
---------
Total loans receivable ................................................... 531,905
Less current portion ...................................................... 217,667
---------
Loans receivable, less current portion .................................... $314,238
=========
</TABLE>

Of the loans receivable outstanding at December 31, 1995, $506,905 were
transferred to one of the 50% stockholders of the Company as part of the
purchase of an aircraft acquired from a company owned by that stockholder (see
Note 12).

6. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following at:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------- MARCH 31,
1995 1996 1997
----------------- ----------------- -----------------
(UNAUDITED)
<S> <C> <C> <C>
Aircraft, engines and betterments ............... $ 46,372,150 $ 58,977,975 $ 61,261,441
Automobile and trucks ........................... 483,538 493,296 500,980
Leasehold improvements, furniture and fixtures . 805,918 957,279 1,003,412
Machinery and equipment ........................ 1,641,871 3,611,668 5,373,709
-------------- -------------- --------------
49,303,477 64,040,218 68,139,542
Accumulated depreciation and amortization ...... (16,889,328) (26,230,950) (29,067,151)
-------------- -------------- --------------
$ 32,414,149 $ 37,809,268 $ 39,072,391
============== ============== ==============
</TABLE>

7. ENGINES HELD FOR SALE:

During 1995, the Company designated four engines, previously recorded in
property and equipment, as engines held for sale. Such engines were carried at
$1,570,642. In March 1996, the engines were sold to the financial institution
which holds the Company's note payable (original principal of $10,810,725) for
$1,935,110 (the March 1996 installment of principal and interest). The Company
recorded a gain of $365,000 as a result of this transaction.

F-11
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

8. LINE OF CREDIT:

The Company had a $2,000,000 revolving line of credit with a bank which
matured in May 1997. The Company did not renew the credit facility. Outstanding
borrowings under the facility, which are collateralized by certain assets of
the Company, bear interest, payable monthly, at the prime rate plus 1% (8.5%
and 9.25% at December 31, 1995 and 1996, respectively). The outstanding
borrowings under the line of credit as of December 31, 1995 and 1996 were
$600,000 and $700,000, respectively. There were no borrowings outstanding at
March 31, 1997.

9. LONG-TERM DEBT:

Long-term debt was as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------- MARCH 31,
1995 1996 1997
---------------- ---------------- ----------------
(UNAUDITED)
<S> <C> <C> <C>
Note payable, interest at 8.75%; payable in annual
installments of principal and interest totaling
$1,935,110 through March 2003; collateralized
by aircraft .................................... $ 10,810,725 $ 9,821,554 $ 8,745,830
Note payable, interest at 7.5%; payable in annual
installments of principal and interest totaling
$321,314 through July 1999; collateralized
by aircraft .................................... 1,076,186 835,585 835,585
Various notes payable; interest at rates ranging
from 7.5% to 10% .............................. 641,774 -- --
------------- ------------- -------------
Total long-term debt .............................. 12,528,685 10,657,139 9,581,415
Current portion of long-term debt ............... (1,871,545) (1,334,369) (1,428,494)
------------- ------------- -------------
Long-term debt, less current portion ............ $ 10,657,140 $ 9,322,770 $ 8,152,921
============= ============= =============
</TABLE>

Required principal maturities on long-term debt are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
- ----------------------------
<S> <C>
1997 ............ $ 1,334,369
1998 ............ 1,447,894
1999 ............ 1,571,108
2000 ............ 1,383,530
2001 ............ 1,504,588
Thereafter ...... 3,415,650
------------
Total ......... $10,657,139
============
</TABLE>

10. LEASE COMMITMENTS:

The Company leases office, hanger and warehouse space at the Miami
International Airport from Metropolitan Dade County. The office and warehouse
facilities lease expires in September 1999. The hanger lease expires in March
2001. The Company also leases a building from an unrelated party for its

F-12
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

10. LEASE COMMITMENTS:--(CONTINUED)

engine repair operations. The building lease expires in May 1998. All leases
have been classified as operating for financial reporting purposes. Minimum
non-cancellable lease commitments are as follows:

<TABLE>
<S> <C>
1997 ............ $2,266,000
1998 ............ 2,373,000
1999 ............ 2,172,000
2000 ............ 1,659,000
2001 ............ 584,000
Thereafter ...... 0
-----------
Total ......... $9,054,000
===========
</TABLE>

Rent expense for the years ended December 31, 1994, 1995, and 1996 was,
$1,076,000, $1,663,000, and $2,305,000, respectively. Rent expense for the
three-month periods ended March 31, 1996 and 1997 was $370,000 and $768,000,
respectively.

11. GAIN ON INSURANCE SETTLEMENT:

During 1994, an aircraft was declared a total loss by the Company's
insurance underwriters as a result of an accident. The total insurance proceeds
received for the aircraft were $3,900,000. A gain of $2,227,000 was recognized
during 1994, which represented the excess of insurance proceeds over the net
book value of the aircraft.

12. RELATED PARTY TRANSACTIONS:

In December 1996, the Company purchased a cargo aircraft from a company
owned by a stockholder of the Company in exchange for $2,859,000, consisting of
$1,700,000 of overhaul costs performed on the aircraft, loans and advances to
stockholders of $481,000 and loans, interest receivable and receivables from
parties related to the stockholders of $678,000. The maintenance performed in
the amount of $1,700,000 is included in revenues--repairs, training and other.

Also, for the year ended December 31, 1996, the Company recorded revenues
(repairs, training and other) of approximately $1,886,000 relating to work
performed for an entity in which the stockholders of the Company have a
controlling interest. This amount is included in trade accounts receivable at
December 31, 1996. For the three-month period ended March 31, 1997, the Company
recorded an additional $300,000 in revenues relating to such work. The accounts
receivable balance at March 31, 1997 was $734,000.

By December 31, 1999, the Company will be required to install hushkits on
all of its existing fleet of 15 DC-8 aircraft to comply with noise abatement
regulations issued by the Federal Aviation Administration. Management estimates
that the cost of installing the hushkits will approximate $1.6 million per
aircraft. The Company intends to purchase the hushkits from an entity in which
its stockholders have a controlling interest.

In January 1995, the Company obtained a $2.5 million judgment against a
former insurance carrier. The judgment was appealed and is pending final
ajudication. Consequently, the $2.5 million judgment is not recorded in the
financial statements of the Company. Prior to the effective date of the
proposed

F-13
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

12. RELATED PARTY TRANSACTIONS:--(CONTINUED)

public offering (See Note 14) the Company will assign to its shareholders the
right to receive the proceeds, if any, resulting from the final settlement of
this litigation.

13. FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK:

At December 31, 1995 and 1996 and at March 31, 1997, the Company had
outstanding $417,500, $578,000 and $578,000, respectively, of irrevocable
standby letters of credit to guarantee landing fees in certain countries and to
guarantee rent at the Miami International Airport corporate offices and hangar
facilities. Of these letters of credit, $141,300, $181,700 and $181,700 have
been collateralized by restricted cash on deposit at the bank issuing such
letters of credit as of December 31, 1995 and 1996 and March 31, 1997,
respectively.

14. PRO FORMA DISCLOSURES (UNAUDITED):

The Company expects to offer for sale 7,400,000 shares of common stock,
$0.01 par value, in an initial public offering. Immediately prior to the
effective date of the offering, each of the 50% shareholders will contribute
their respective interests in Agro Air to Fine Air, and Agro Air will become a
wholly-owned subsidiary of Fine Air.

On the effective date of the proposed initial public offering (the
"Offering"), the Company will increase the number of authorized shares of
Common Stock from 8,000 shares to 50,000,000 shares and will reduce the par
value per share of Common Stock from $1 to $0.01. The Company will also
authorize 10,000,000 shares of preferred stock, par value of $0.01. Also on the
effective date, Fine Air will effect a 14,000-for-1 stock split to increase the
number of shares of Common Stock outstanding from 1,000 shares to 14,000,000
shares. Stockholder's equity will be restated to give retroactive recognition
to the stock split in prior periods by reclassifying from retained earnings to
Common Stock the par value of the additional shares that will arise from the
split. All applicable share and per share data will be adjusted for the stock
split

PRO FORMA INCOME TAXES

As described in Note 2, prior to the effective date of the Company's
proposed public offering, the Company had elected to be taxed as an S
Corporation under the provisions of the Internal Revenue Code. Immediately
prior to the completion of the public offering, the Company will terminate
their S Corporation elections and, accordingly, become subject to federal and
state income taxes. Upon termination of the S Corporation elections, deferred
income taxes reflecting the tax effect of temporary differences between the
Company's financial statement and tax bases of certain assets and liabilities
will become a net liability of the Company and will be reflected on the
consolidated balance sheet with a corresponding non-recurring expense in the
consolidated statement of operations in the quarter that the public offering is
completed. Deferred taxes relate primarily to the difference in capitalization
methods used for book and tax purposes and the differences in the methods of
accounting for the provision for bad debts. The amount of such net deferred tax
liability computed using the asset and liability method of accounting for
deferred income taxes approximated $8,843,000 at March 31, 1997 consisting of a
current deferred tax asset of $489,000 relating to the provision for bad debts
and a noncurrent deferred tax liability of $9,332,000 resulting from the
difference between book and tax capitalization methods.

The following unaudited pro forma information reflects the reconciliation
between the statutory provision for income taxes and the actual provision
relating to the incremental income tax expense that the Company would have
incurred if they had been subject to federal and state income taxes:

F-14
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

14. PRO FORMA DISCLOSURES (UNAUDITED):--(CONTINUED)

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------ ------------------------
1994 1995 1996 1996 1997
------------ ------------ ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Income tax at federal statutory rate ...... $4,827,000 $3,753,000 $4,430,000 $470,000 $1,073,000
State taxes, net of federal benefit ...... 521,000 407,000 479,000 81,000 120,000
Nondeductible expenses ..................... 56,000 60,000 61,000 -- --
----------- ----------- ----------- --------- -----------
Pro forma provision for income taxes
(S Corporations) ........................ $5,404,000 $4,220,000 $4,970,000 $551,000 $1,193,000
=========== =========== =========== ========= ===========
</TABLE>

The Pro forma provisions for income taxes, as calculated above, assumed
combined Federal and state income tax rates of 37.6%.

Prior to the consummation of the offering, the S Corporations will enter
into S Corporation Tax Indemnification Agreements (the "Tax Agreements") with
their current shareholders relating to their respective income tax liabilities.
As specified in the Tax Agreements, the Company will indemnify the S
Corporation shareholders for the amount of any additional taxes, interest or
penalties paid by them as a result of any adjustments to the S Corporations'
taxable income prior to the conversion date. The Company will also indemnify
the S Corporation shareholders for any taxes incurred by them resulting from
receipt of the aformentioned indemnity payments.

PRO FORMA NET INCOME PER SHARE

Pro forma net income per share amounts have been computed based upon the
weighted average number of common shares outstanding during each period and
give effect to the increase in the number of shares which, when multiplied by
the offering price, would have been sufficient to replace the amount of the
distribution to the S Corporation shareholders in excess of pro forma earnings
for the twelve months ended March 31, 1997.

Supplemental pro forma net income per share would have been $0.37 per
share and $0.09 per share for the year ended December 31, 1996 and the three
months ended March 31, 1997, respectively, giving effect to the use of a
portion of the net proceeds of this offering to repay the Company's bank
borrowings at January 1, 1996, and assuming an increase in the number of
weighted average shares outstanding to 23,444,932.

PRO FORMA BALANCE SHEET

The Company's unaudited pro forma stockholders' equity at March 31, 1997
reflects the effect on historical retained earnings of a planned S Corporation
distribution to the existing shareholders of $24.5 million consisting of
approximately $4.8 million in cash and $19.7 million in short-term notes
payable, and the recording of a net deferred tax liability of $8.8 million as
if the S Corporation elections terminated immediately prior to March 31, 1997.
The unaudited pro forma stockholders' equity does not include any proceeds from
the Company's initial public offering or earnings since March 31, 1997.

15. SUBSEQUENT EVENTS (UNAUDITED):

Stock Option Plan

In June 1997, the Company adopted the 1997 Incentive Compensation Plan
(the "Plan"), whereby officers, key employees, directors and nonemployee
consultants may be granted stock options, stock appreciation rights ("SARs"),
restricted stock, deferred stock and other stock-related awards.

F-15
<PAGE>

FINE AIR SERVICES, INC. AND COMBINED AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

15. SUBSEQUENT EVENTS (UNAUDITED):--(CONTINUED)

Prior to the establishment of a Compensation Committee (the "Committee")
of the Board of Directors (the "Board"), the Plan will be administered by the
Board. The Committee or the Board will have the authority to determine, among
other things, the selection of individuals eligible to become participants, the
timing and number of options and other awards to be granted, the vesting
periods and the exercise prices.

The exercise prices and vesting periods of options granted will be
determined by the Committee or the Board, provided that the exercise price of
options granted will not be less than the fair market value of the Company's
Common Stock on the date of the grant, except that options granted to any 10%
shareholder will have an exercise price of at least 10% above the fair market
value of the Company's Common Stock on the date of the grant. Options will have
a maximum exercise period of ten years from the date of grant, except that the
maximum exercise period for 10% shareholders will be five years.

No options will be granted under the Plan prior to the Offering. Upon
consummation of the Offering, the Company intends to grant options to purchase
485,700 and 30,000 shares to employees and non-employee directors,
respectively. These options will have an exercise price equal to the Offering
price and will vest ratably over a three year period. The Company has reserved
1,250,000 shares of Common Stock for issuance under the Plan.

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock Based
Compensation." Under the provisions of SFAS No. 123, companies can elect to
recognize stock-based compensation expense using a fair-value based method or
can adopt disclosure only provisions under Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees." As permitted by
SFAS No. 123, the Company has elected to account for stock based compensation
under the provisions of APB No. 25. Accordingly, the Company's financial
position, results of operations and liquidity will not be affected by the
granting of incentive stock options.

EMPLOYEE STOCK PURCHASE PLAN

In June 1997, the Company adopted the Employee Stock Purchase Plan (the
"Stock Purchase Plan"), which will become effective on the consummation date of
the Offering. All eligible employees, other than holders of Common Stock or
options to purchase 5% or more of the Company's Common Stock may participate in
the Stock Purchase Plan. Under the Stock Purchase Plan, participants have the
right to purchase on an annual basis shares of Common Stock not to exceed 25%
of the participant's total annual compensation. The purchase price per share
will be the lesser of 85% of (a) the initial offering price of the Company's
Common Stock, or (b) the fair market value per share on the purchase date, to a
maximum of $25,000 of Common Stock in any calendar year. The Company has
reserved 250,000 common shares for issuance under the Stock Purchase Plan.

F-16

<PAGE>

THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
<PAGE>

THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

<PAGE>
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR BY THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN
ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS
PAGE
--------
Prospectus Summary .................................... 3
Risk Factors .......................................... 8
Use of Proceeds ....................................... 13
Dividend Policy and Prior S Corporation Status ...... 13
Capitalization ....................................... 14
Dilution ............................................. 15
Selected Financial Data .............................. 16
Management's Discussion and Analysis of
Financial Condition and Results of Operations ...... 17
Industry Overview .................................... 27
Business ............................................. 28
Management .......................................... 45
Certain Transactions ................................. 51
Principal and Selling Shareholders .................. 53
Description of Capital Stock ........................ 54
Shares Eligible for Future Sale ..................... 57
Underwriting .......................................... 58
Legal Matters ....................................... 59
Experts ............................................. 59
Additional Information .............................. 60
Index to Financial Statements ........................ F-1

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

UNTIL AUGUST 31, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
================================================================================

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

8,500,000 SHARES

[FineAir Logo]
FINE AIR SERVICES, INC.

COMMON STOCK

-------------------------
PROSPECTUS
-------------------------

ALEX. BROWN & SONS
INCORPORATED

BEAR, STEARNS & CO. INC.

DILLON, READ & CO. INC.

August 6, 1997
================================================================================