MIDWEST EXPRESS HOLDINGS INC, 424B1, 1996-05-24

MIDWEST EXPRESS HOLDINGS INC
424B1, 1996-05-24
AIR TRANSPORTATION, SCHEDULED

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Rule 424(b)(1)
Registration No. 333-03325
Prospectus

1,158,571 Shares [logo]
Midwest Express Holdings, Inc.

Common Stock
($.01 par value)

All of the shares of Common Stock offered hereby are being sold by a
wholly owned subsidiary of Kimberly-Clark Corporation. See "Principal
Stockholders and Selling Stockholder." The Company will not receive any
proceeds from the sale of the Common Stock in the Offering. All proceeds
from the Offering will be received by the Selling Stockholder.

The Common Stock is traded on the New York Stock Exchange under the symbol
"MEH." On May 23, 1996, the reported closing sale price of the Common
Stock as quoted on the New York Stock Exchange was $31.50 per share. See
"Price Range of Common Stock and Dividend Policy."

See "Risk Factors" on page 8 for a discussion of certain factors that
should be considered by prospective purchasers.

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

Proceeds to
Price to Underwriting Selling
Public Discount Stockholder (1)
Per Share . . $33.625 $1.51 $32.115
Total(2) . . $38,956,950 $1,749,442 $37,207,508

(1) The Company will bear all Offering expenses other than the
Underwriting Discount, which will be borne by the Selling
Stockholder. The Offering expenses are estimated to be approximately
$200,000.

(2) The Selling Stockholder has granted the Underwriters a 30-day option
to purchase up to an additional 130,000 shares of Common Stock on the
same terms as the Common Stock offered hereby solely to cover over-
allotments, if any. If the over-allotment option is exercised in
full, the total Price to Public, Underwriting Discount and Proceeds
to Selling Stockholder will be $43,328,200, $1,945,742, and
$41,382,458, respectively. See "Underwriting."

The shares of Common Stock are offered subject to receipt and acceptance
by the Underwriters, to prior sale and to the Underwriters' right to
reject any order in whole or in part and to withdraw, cancel or modify the
offer without notice. It is expected that delivery of the certificates
representing the shares of Common Stock will be made at the office of
Salomon Brothers Inc, Seven World Trade Center, New York, New York, or
through the facilities of The Depository Trust Company, on or about
May 30, 1996.

Salomon Brothers Inc Robert W. Baird & Co.
Incorporated

The date of this Prospectus is May 23, 1996.

<PAGE>
[Route map of United States labeled "Midwest Express Airlines" depicting
service between Milwaukee and Omaha bases of operations and destination
cities as listed below:

MILWAUKEE SERVICE Newark, New Jersey
Omaha, Nebraska
Appleton, Wisconsin Philadelphia, Pennsylvania
Atlanta, Georgia Phoenix, Arizona
Boston, Massachusetts San Diego, California
Cleveland, Ohio San Francisco, California
Columbus, Ohio Tampa, Florida
Dallas/Ft. Worth, Texas Toronto, Ontario
Denver, Colorado Washington National
Ft. Lauderdale, Florida
Ft. Myers, Florida OMAHA SERVICE
Grand Rapids, Michigan
Kansas City, Missouri Los Angeles, California
Las Vegas, Nevada Milwaukee, Wisconsin
Los Angeles, California Newark, New Jersey
Madison, Wisconsin San Diego, California
New York La Guardia Washington National]

[Map of Midwestern United States and adjoining areas labeled "Skyway
Airlines, The Midwest Express Connection" showing service at:

Cities
Appleton, Wisconsin Louisville, Kentucky
Cincinnati, Ohio Madison, Wisconsin
Cleveland, Ohio Milwaukee, Wisconsin
Columbus, Ohio Muskegon, Michigan
Dayton, Ohio Nashville, Tennessee
Des Moines, Iowa Omaha, Nebraska
Detroit, Michigan Rockford, Illinois
Flint, Michigan St. Louis, Missouri
Grand Rapids, Michigan South Bend, Indiana
Green Bay, Wisconsin Toronto, Ontario
Indianapolis, Indiana Traverse City, Michigan
La Crosse, Wisconsin (seasonal)
Lansing, Michigan Wausau/Stevens Point, Wisconsin]

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW
YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

As used in this Prospectus, unless the context otherwise requires (i)
the "Company" refers to Midwest Express Holdings, Inc., a Wisconsin
corporation, and its subsidiaries and, prior to the formation of Midwest
Express Holdings, Inc. in 1995, Midwest Express Airlines, Inc. and its
subsidiary; (ii) "Midwest Express" refers to Midwest Express Airlines,
Inc., a wholly owned subsidiary of Midwest Express Holdings, Inc. and the
operator of the Company's jet airline service; (iii) "Astral" refers to
Astral Aviation, Inc., a wholly owned subsidiary of Midwest Express
Airlines, Inc. and the operator of Skyway Airlines, the Company's 19-seat
airplane commuter service; (iv) the "Selling Stockholder" refers to K-C
Nevada, Inc., an indirect, wholly owned subsidiary of Kimberly-Clark
Corporation ("Kimberly-Clark"); (v) the "Common Stock" refers to the
Common Stock, $.01 par value, of the Company and associated Preferred
Share Purchase Rights described below under "Description of Capital
Stock"; (vi) the "Initial Public Offering" refers to the initial offering
of Common Stock to the public consummated September 27, 1995; and (vii)
this "Offering" refers to the offering by the Underwriters of the Common
Stock as described herein.

<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to
the more detailed information and the Consolidated Financial Statements
and the Notes thereto appearing elsewhere in this Prospectus.

The Company

Midwest Express operates a single-class, premium service passenger
jet airline that caters primarily to business travelers and serves
selected major business destinations throughout the United States from
operations bases in Milwaukee and Omaha. Midwest Express' historical
results reflect profits since 1987, despite losses in the domestic airline
industry during recent years. Midwest Express attained such profits
through careful selection of markets, controlled growth, efficient use of
resources and a high level of customer service. Recent surveys by Zagat
Airline Survey, Conde Nast Traveler and a leading consumer magazine
reflect that passengers recognize Midwest Express as the best airline in
the United States. See "Business-Customer Service." The Company's service-
oriented philosophy is designed to result in premium yields, and Midwest
Express enters a market only if it believes it can successfully apply its
strategy in the market based upon a careful analysis of market
characteristics.

Midwest Express evolved from Kimberly-Clark's desire to better serve
its internal transportation needs. Management has used its experience
serving Kimberly-Clark corporate passengers in emphasizing service to
business travelers as a commercial airline. The Company believes the
percentage of Midwest Express passengers traveling on business exceeds the
industry average. To accommodate its business travelers, Midwest Express
is committed to providing on-time, primarily nonstop service, with
departure and arrival schedules that facilitate maximum use of the
business day and a route structure that is convenient for business
travelers.

The Company also offers scheduled commuter air service under the name
"Skyway Airlines" through Astral, a wholly owned subsidiary. Astral,
which accounted for approximately 13% of the Company's consolidated
revenues during 1995, provides service between Milwaukee and over 20
Midwestern cities that feeds passenger traffic into the Midwest Express
route system and also provides point-to-point service to selected markets.
Astral began operations in February 1994 by taking over routes that Mesa
Airlines, Inc. had operated pursuant to a code sharing agreement with
Midwest Express. The Company believes there are numerous opportunities to
grow commuter operations, either as part of Astral or otherwise, that will
further contribute to Midwest Express' stability and growth.

Midwest Express began commercial operations in 1984 with two DC-9-10
aircraft, serving three destinations from Milwaukee's General Mitchell
International Airport. Midwest Express now offers services between
Milwaukee and 24 cities. Today, Midwest Express and Astral carry more
passengers and operate more flights at Milwaukee than any other airline,
together accounting for approximately 30% of the Milwaukee commercial air
passenger traffic during 1995. Midwest Express established Omaha as its
first base of operations outside Milwaukee in May 1994 and now provides
the only nonstop service between Omaha and five cities. The Omaha
operations reflected an operating profit for the year ended December 31,
1995.

As of May 1, 1996, Midwest Express had a fleet of 23 jet aircraft,
including four aircraft that Midwest Express acquired since December 1995,
of which one entered service in April and the remainder are anticipated to
be placed into service by early summer, late summer and year end 1996,
respectively. Midwest Express employed one of its recently acquired
aircraft to expand Milwaukee service to existing destinations and will use
another to increase its charter service capacity. The Company is
currently evaluating alternatives for using the remaining two acquired
aircraft in a manner consistent with the Company's profitability and
growth objectives. As of May 1, 1996, Astral had a fleet of 15 Beechcraft
1900D aircraft.

The Company's principal strategy is to pursue continued profitability
and controlled growth by offering premium airline services at competitive
fares. The Company accomplishes this by (i) carefully selecting markets,
(ii) seeking to generate premium yields through its service-oriented
philosophy and rigorous yield management, and (iii) operating in a cost
efficient manner without compromising service. The Company believes it
will have opportunities for continued growth by pursuing its strategy in
the following ways: (a) expanding Milwaukee operations by offering
additional service to existing destinations, identifying new destinations
for Milwaukee service and seeking additional feeder traffic; (b) expanding
Omaha operations by seeking higher passenger loads on existing Midwest
Express service to increase the profits the service now generates,
expanding service to new destinations and expanding commuter service at
Omaha; (c) establishing bases of operations in addition to Milwaukee and
Omaha; and (d) growing commuter operations by adding destinations and
evaluating opportunities to introduce turboprop aircraft with
approximately 30 seats to serve markets that are too small in passenger
traffic to support Midwest Express' DC-9 aircraft but can sustain more
traffic than Astral's current 19-seat aircraft can serve.

The Offering

Common Stock Offered by the Selling
Stockholder(1) . . . . . . . . . . . . . . . 1,158,571 shares

Common Stock to be Outstanding before and
after the Offering(2) . . . . . . . . . . . . 6,428,571 shares

Use of Proceeds . . . . . . . . . . . . . . . . The Company will not
receive any proceeds
from the sale of Common
Stock by the Selling
Stockholder.

New York Stock Exchange Symbol . . . . . . . . MEH

____________________
(1) Assumes that the Underwriters do not exercise their over-allotment
option to purchase up to an aggregate of 130,000 additional shares of
Common Stock from the Selling Stockholder. See "Underwriting."
(2) Does not include 250,000 shares of Common Stock reserved for issuance
pursuant to the exercise of options that are outstanding or available
for future grants under the Company's 1995 Stock Option Plan or up to
25,000 shares of Common Stock reserved for issuance pursuant to the
Company's 1995 Stock Plan for Outside Directors.

SUMMARY FINANCIAL AND OPERATING DATA

The financial data in the following tables have been derived from the
Consolidated Financial Statements of the Company for the respective
periods presented. The data should be read in conjunction with the
Company's Consolidated Financial Statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
1991 1992 1993 1994 1995 1995 1996
(Dollars in thousands, except per share amount)

<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Data:
Operating revenues . . . . $125,262 $133,946 $165,056 $203,592 $259,155 $58,541 $66,608
Operating expenses . . . . 124,694 129,854 149,159 192,328 227,781 55,880 62,192
Operating income . . . . . 568 4,092 15,897 11,264 31,374 2,661 4,416
Interest income (expense),
net(1) . . . . . . . . . 42 (1,594) (895) (436) 1,652 333 256
Income before income taxes 563 2,489 15,000 10,838 31,526 2,994 4,672
Net income . . . . . . . . $ 275 $ 1,135 $ 9,086 $ 6,662 $ 19,129 $ 1,833 2,836
Net income per common
share . . . . . . . . . $ 0.44

At December 31, At March 31,
1991 1992 1993 1994 1995 1995 1996
(Dollars in thousands)

<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash
equivalents(1) . . . . . $ 0 $ 0 $ 0 $ 0 $14,626 $ 0 $ 20,297
Property and equipment, net 58,857 58,390 56,486 57,626 55,919 56,912 58,337
Total assets . . . . . . . 72,244 76,712 80,161 95,436 92,833 103,344 101,923
Intercompany
(payable)/receivable(1) . (19,876) (18,148) 3,199 17,923 61 24,717 0
Long-term debt . . . . . . 0 0 0 0 0 0 0
Stockholders' equity(1) . . $20,957 $22,092 $31,178 $37,840 $21,264 $ 39,673 $ 24,100

<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
1991 1992 1993 1994 1995 1995 1996
(Dollars in thousands)

<S> <C> <C> <C> <C> <C> <C> <C>
Selected Operating and Other
Data:
Revenue passenger miles
(000s)(2) . . . . . . . . 610,695 661,567 785,391 1,016,028 1,216,753 296,512 308,871
Available seat miles
(000s)(3). . . . . . . . . 1,115,664 1,188,263 1,314,522 1,704,196 1,951,037 509,905 500,747
Passenger load factor
(%)(4) . . . . . . . . . 54.7% 55.7% 59.7% 59.6% 62.4% 58.2% 61.7%
Cost per total ASM (cents
per mile)(5) . . . . . . 10.9 10.7 11.1 11.1 11.5 10.7 12.2
Aircraft in service at end
of period . . . . . . . . 13 14 16 32 34 32 34
Average aircraft
utilization (hours per
day)(6) . . . . . . . . . 8.9 8.8 8.3 8.4 8.6 9.2 8.7
Full-time equivalent
employees at end of
period(7) . . . . . . . . 892 998 1,082 1,511 1,628 1,573 1,665
Midwest Express ASMs as %
of Company ASMs . . . . . 100% 100% 100% 93.9% 92.0% 93.1% 92.2%
Passenger yield (cents per
RPM)(8):
Midwest Express . . . . . 19.0 18.5 19.0 16.7 17.8 16.2 17.9
Astral . . . . . . . . . N/A N/A N/A 48.3 49.9 50.9 52.2

Depreciation and
amortization . . . . . . $ 5,977 $ 6,348 $ 6,507 $ 6,900 $ 7,515 $ 1,837 $ 1,889
EBDIATR(9) . . . . . . . . $13,083 $16,914 $30,379 $31,305 $52,343 $ 8,495 $10,381

<CAPTION>
Year Ended Three Months Ended
December 31, 1995 March 31,
1995 1996
Historical Pro Forma Historical Pro Forma Historical
(Dollars in thousands, except per share amounts)

<S> <C> <C> <C> <C> <C>
Pro Forma Statement of Income and Other
Data(10):
Operating revenues . . . . . . . . . . $259,155 $259,155 $58,541 $58,541 $66,608
Operating expenses . . . . . . . . . . 227,781 229,933 55,880 56,635 62,192
Operating income . . . . . . . . . . . 31,374 29,222 2,661 1,906 4,416
Interest income (expense), net . . . . 1,652 1,585 333 287 256
Other expense . . . . . . . . . . . . . (1,500) (1,500) 0 0 0
Income before income taxes . . . . . . 31,526 29,307 2,994 2,193 4,672
Net income . . . . . . . . . . . . . . 19,129 17,775 1,833 1,344 2,836
Net income per common share . . . . . . 2.77 0.21 0.44

Depreciation and amortization . . . . . 7,515 7,515 1,837 1,837 1,889
EBDIATR(9) . . . . . . . . . . . . . . $ 52,343 $ 50,898 $ 8,495 $ 7,973 $10,381
__________________________
<FN>

(1) Prior to the Initial Public Offering, the Company participated in Kimberly-Clark's cash management program, under which
the Company's cash needs were funded by Kimberly-Clark and the Company delivered excess cash to Kimberly-Clark. The net
amount owed to or due from Kimberly-Clark was recorded on the Company's financial statements as a short-term intercompany
payable or receivable, respectively. Prior to 1992, the Company paid no interest on amounts it owed to Kimberly-Clark.
Under loan agreements between the companies, effective January 1992, the Company paid interest on amounts it owed to
Kimberly-Clark at the prime rate plus 150 basis points, and Kimberly-Clark paid interest on the amounts Kimberly-Clark owed
to the Company at the 30-day commercial paper rate for high grade unsecured notes. Immediately prior to consummation of
the Initial Public Offering, (i) the Company ceased participating in this program, (ii) Kimberly-Clark repaid the
outstanding intercompany receivable in full in the amount of $44.0 million and (iii) the Company paid a dividend to the
Selling Stockholder from its cash on hand in an amount such that the Company had a resulting initial cash balance of
approximately $9.0 million. The Company now relies on its cash flow from operations, bank credit facility and other
sources of liquidity and capital to satisfy its cash needs. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources."
(2) "Revenue passenger miles" or "RPMs" represent the number of revenue passenger miles flown on scheduled service flights.
(3) "Available seat miles" or "ASMs" represent the number of seats available for passengers on scheduled service flights
multiplied by the number of miles those seats are flown.
(4) "Passenger load factor" represents revenue passenger miles divided by available seat miles.
(5) "Cost per total ASM" for any period represents the amount determined by dividing total operating expense for such period
by total ASMs for such period. "Total ASMs" represents the number of seats available for passengers on scheduled service
and charter service flights multiplied by the number of miles those seats are flown.
(6) "Average aircraft utilization" is determined for any period by dividing the total hours all aircraft operate during such
period by the number of days during the period that such aircraft were owned or leased by the Company, but excluding days
after an aircraft was acquired and before it was initially placed into service.
(7) See "Business-Employees" for a discussion of the Company's practices regarding part-time employees.
(8) "Passenger yield" for any period represents the amount determined by dividing passenger revenue on scheduled service
flights for such period by the revenue passenger miles flown for such period.
(9) EBDIATR is defined as earnings before depreciation, interest, amortization, taxes and aircraft rental expense. EBDIATR
should not be considered in isolation from or as a substitute for net income, cash flows from operating activities or
other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles or as a
measure of profitability or liquidity.
(10) The pro forma statement of income and other data give effect to estimated changes in the Company's historical costs as if
the Initial Public Offering had been consummated as of January 1, 1995 and the Company had operated as an independent
company after that date. Pro forma adjustments include (i) a lease guarantee fee charged by Kimberly-Clark after the
Initial Public Offering to continue to guarantee certain aircraft leases, (ii) estimated incremental administrative and
management expense to reflect changes in costs to the Company of obtaining, on an arm's length basis as an independent
company, certain services that Kimberly-Clark had provided in the past, (iii) changes in costs due to a new management
structure, (iv) costs associated with being a publicly-owned entity and (v) changes in interest income and expense to
reflect the Company's financial position subsequent to the Initial Public Offering. Pro forma net income per common
share data has been computed based on the weighted average number of common shares outstanding and assuming 6,428,571
shares of Common Stock outstanding for all periods prior to the Initial Public Offering. See Note 3 to the Consolidated
Financial Statements and Note 4 to the Unaudited Interim Financial Statements.
</TABLE>

RISK FACTORS

Constraints on Continued Growth

The Company's growth to date has focused on additional flights to
and from Midwest Express' original Milwaukee base of operations and its
Omaha base of operations, which the Company established in May 1994.
Industry and other conditions could constrain the Company's ability to
continue to grow based upon the Company's current business strategy. See
"The Company-Business Strategy." First, there is no assurance that the
Company will be able to identify and successfully establish markets that fit
the Company's criteria for new destinations from Midwest Express' two
current bases of operations or for a new base of operations. Second, esta-
blishing a new base of operations involves a substantial commitment of
Company resources, and there is no assurance that a new base of operations
will have the same degree of success as the Milwaukee and Omaha bases of
operations. The Omaha base of operations first reflected a monthly
operating profit in March 1995 and reflected an operating profit for the
year ended December 31, 1995. Further, in the initial phases of imple-
menting a new base of operations, the Company is more vulnerable to the
effects of fare discounting in that base, as a result of industry conditions
or a competitive reaction, by competitors already operating at that base or
by new competitors entering that market. Third, the regulations limiting
take-offs and landings at New York's La Guardia, Washington D.C.'s National
and certain other airports to those who have acquired "slots" could limit
Midwest Express' ability to provide additional service to these airports
from existing or new bases of operations. Although rules of the Federal
Aviation Administration ("FAA") permit the buying, selling, trading or
leasing of slots, there is no assurance that the Company will be able to
obtain the additional slots it may need for future expansion at the time
it needs them or at an acceptable price. It is also possible that take-
off and landing restrictions in the same or other forms (such as curfews
or aircraft type restrictions) will apply at other airports through
federal, state or local regulations.

Significant Dependence on Milwaukee Market

Because a substantial percentage of the Company's current flights
have Milwaukee as the origin or destination, the Company remains largely
dependent upon the Milwaukee market, and a reduction in the Company's
share of the Milwaukee market or reduced passenger traffic to or from
Milwaukee could have a material adverse effect on the Company.

Age of Jet Aircraft Fleet

The Company's fleet includes 12 McDonnell Douglas DC-9 aircraft
manufactured between 1965 and 1968, as well as newer jet aircraft and
Beechcraft 1900D aircraft. See "Business-Fleet Equipment." Certain risks
of employing older aircraft are described below.

Maintenance and Reliability

In general, the cost of maintaining older aircraft exceeds the cost
of maintaining newer aircraft. Older aircraft are usually subject to more
Airworthiness Directives ("ADs") promulgated by the FAA than newer
aircraft, and are required to undergo extensive structural modifications
on an ongoing basis after approximately 20 years of service. The Company
believes its cost to maintain its aircraft, including the cost of
compliance with existing ADs, is and will continue to be consistent with
industry experience for this aircraft type and age used by comparable
airlines. In addition, the Company may be required to comply with other
future aging aircraft regulations or ADs. There can be no assurance that
the Company's costs of maintenance, including costs to comply with aging
aircraft requirements, will not exceed the Company's current estimates
based on existing regulations and ADs. The Company believes its aircraft
are, and will be, mechanically reliable based on past performance.
However, there can be no assurance that the Company's aircraft will
continue to be sufficiently reliable in the future.

Stage 3 Compliance

To satisfy FAA rules regarding allowable aircraft noise levels,
before December 31, 1996, Midwest Express intends to have at least 65% of
its fleet meet quieter Stage 3 noise level requirements. The balance of its
fleet must meet Stage 3 noise requirements in phases, with 75% doing so by
December 31, 1998 and 100% by December 31, 1999. As of May 1, 1996, nine
of Midwest Express' 20 aircraft in service did not meet the Stage 3
requirements. There is an FAA-certified "hush kit" available for
approximately $1.8 million for each DC-9-10 and approximately $2.2 million
for each DC-9-30 aircraft that, when installed, allows such aircraft to be
classified as Stage 3 aircraft. Midwest Express complies with the FAA's
current fleet percentage requirements and intends to meet December 31,
1996 Stage 3 compliance requirements by installing hush kits on the three
recently acquired DC-9-30s that are not yet in service. Thereafter, the
Company intends to comply with subsequent phases of noise compliance by
either installing hush kits on additional Midwest Express DC-9 aircraft or
replacing some of the aircraft with Stage 3 aircraft before it must invest
in hush kits. Although the Company does not believe there will be a
problem installing the hush kits or replacing the aircraft on a timely
basis, there can be no assurance that the Company will be able to do so.
See "Business-Fleet Equipment."

Limited Number of Aircraft; Acquiring Additional DC-9s

Midwest Express has a fleet of 23 jet aircraft, 20 of which are
currently in service, and Astral's fleet consists of 15 turboprop
aircraft. There is a risk that any interruption of service as a result of
unscheduled or unanticipated maintenance requirements or the loss of
aircraft could materially and adversely affect the Company's service,
reputation and profitability. If an aircraft becomes unavailable,
management of the Company would evaluate various options to meet its short-
term needs. Further, while the Company currently believes it would be
able to acquire additional DC-9 aircraft on acceptable terms and
conditions and on a timely basis should it have a need to do so, there is
no assurance that these market conditions will continue to exist. See
"Business-Fleet Equipment."

Working Capital Deficit; Capital Resources; Financing

Prior to the Initial Public Offering, the Company participated in
Kimberly-Clark's cash management program, under which the Company's working
capital and capital expenditures requirements were funded by Kimberly-Clark.
Since the Initial Public Offering, Kimberly-Clark has no longer provided
funds to the Company, and the Company relies on its cash flow from
operations, bank credit facilities and other sources of liquidity and
capital to satisfy its cash needs. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -Liquidity and
Capital Resources." The Company operates with a working capital deficit
primarily due to the Company's air traffic liability (advance bookings,
whereby passengers have purchased tickets for future flights), accrued
scheduled maintenance expense and accrued lease payments, and the Company
does not believe a working capital deficit is unusual in the airline
industry. Nonetheless, in light of the working capital deficit, the
Company has significantly less liquidity than it had prior to the Initial
Public Offering and may have less liquidity relative to some of its
competitors. The Company believes its net cash on hand, its cash flow
from operations, funds available from its bank credit facility and other
sources of liquidity and capital, including available long-term financing
for the acquisition of jet aircraft and turboprop aircraft, will be
adequate to provide for working capital needs and capital expenditures
through 1997, but there is no assurance that these sources will be
adequate to meet working capital needs, that long-term financing for
aircraft acquisitions will be available or that, if necessary, the Company
will be able to obtain funding for its operations from other sources.

Dependence on Key Personnel

The Company's management and operations are dependent upon the
efforts of the Company's Chairman of the Board, President and Chief
Executive Officer, Timothy E. Hoeksema, and a small number of senior
management and operating personnel. The Company does not maintain key-man
life insurance on any executive officer. The loss of the services of key
members of senior management could have an adverse impact on the Company.
See "Management."

Industry Conditions and Competition

The airline industry is characterized by several conditions that
could negatively impact the Company's operating results. The industry has
a high degree of operating leverage. The significance of fixed costs in
relation to total costs causes a disproportionate decrease in profits
among airlines when a decrease in the number of passengers carried is not
offset by higher airfares or a decrease in airfares is not offset by an
increase in the number of passengers carried. The discretionary nature of
a substantial portion of leisure and business airline travel tends to
result in a decrease in passenger demand during economic downturns. Much
of the industry also experiences a decrease in passenger demand from
January through March, causing the industry to be seasonal in nature. The
airline industry is highly competitive and susceptible to price
discounting aided by the fact that airlines incur very low additional cost
for providing service to passengers occupying otherwise unsold seats. The
Company's competitors include carriers with substantially greater
financial resources and/or lower costs. In addition, because the only
significant barriers to entry in the airline industry in the United States
are the need for certain government licenses, the limited availability of
slots and the need for capital, there has been an increase in the number
of competitors in the industry, some of which have low cost structures,
and there are likely to be additional competitors based on the increase in
the number of carriers applying for certificates to engage in air
transportation. Competition from established and new carriers has led to
a general reduction in the level of air fares in the industry, and the
Company could face increased competition in one or more of its markets
from time to time.

As a result of these industry conditions, the airline industry
suffered unprecedented losses from 1990 to 1993. During this period, the
U.S. economy experienced a general downturn, the Persian Gulf War erupted,
which affected both fuel prices and passenger demand, and several airlines
initiated deep discounts in airfares. Eastern Air Lines, Pan American
World Airways and Midway Airlines ceased operations during this period,
and Continental Airlines, America West Airlines and Trans World Airlines
filed for bankruptcy protection. The introduction of deeply discounted
fares on a broad scale by a major U.S. airline or a general downturn in
the U.S. economy could have an adverse impact upon the Company and the
industry.

In addition to traditional competition among domestic carriers, the
industry may be subject to new forms of competition in the future. The
development of video teleconferencing and other methods of electronic
communication may add a new dimension of competition to the industry as
businesses look for lower cost substitutes to air travel.

Due to its broad distribution channels, and like many others in the
airline industry, the Company is dependent upon the use of a computer
reservations system ("CRS") not owned by the Company and on independent
travel agents. Costs to the Company associated with use of a CRS and/or
travel agents, including costs the Company incurs as a result of travel
agents' use of CRS systems, are to a large degree outside of the Company's
control and could increase.

The success of the Company's commuter operations is an integral part
of the Company's growth strategy. Commuter turboprop air service has
suffered in the past from the public perception that such air travel is
not as safe as jet air travel. Astral's fleet consists of Beechcraft
aircraft, which is not the make of turboprop aircraft that has experienced
highly-publicized safety-related icing and other incidents since late
1994, and Astral's operations were not adversely affected to the same
extent as those of other commuter operators at the time of such incidents.
However, Astral's commuter operations are subject to the risk that one or
more events could occur within the industry that could adversely affect
the public's perception of commuter air services and, therefore, the
demand for such services or could result in increased costs due to more
stringent regulation.

Aircraft Fuel

Because fuel costs constitute a significant portion of the Company's
operating costs (approximately 15% in 1995 and during the three months
ended March 31, 1996), significant changes in fuel costs would materially
affect the Company's operating results. Fuel prices continue to be
susceptible to political events and other factors that can affect the
supply of fuel, and the Company cannot predict near or long-term fuel
prices. In the event of a fuel supply shortage resulting from a
disruption of oil imports or otherwise, higher fuel prices or curtailment
of scheduled service could result. In addition, into-plane fuel prices
have increased in 1996, averaging approximately 81 cents per gallon in
April 1996, compared to an average of 62.4 cents per gallon in 1995. A
portion of this increase is attributable to the fact that, effective
October 1, 1995, the United States increased taxes on aircraft fuel by 4.3
cents per gallon.

A one cent change in the cost per gallon of fuel, based on the
Company's 1995 fuel consumption levels, impacts operating expense by
approximately $47,000 per month. There can be no assurance that increases
in the price of fuel can be offset by higher fares. Changes in fuel prices
may have a marginally greater impact on the Company than on many of its
competitors because of the composition of the Company's fleet. See
"Business-Fleet Equipment."

Government Regulation

The Company is subject to regulation by the U.S. Department of
Transportation ("DOT") and the FAA and by certain other governmental
agencies. The DOT principally regulates economic issues affecting air
service, including, among other things, air carrier certification and
fitness, insurance, authorization of proposed scheduled and charter
operations, consumer protection and competitive practices. The FAA
primarily regulates flight operations, in particular matters affecting air
safety, including among other things airworthiness requirements for
aircraft and pilot and crew certification. The Company believes it is in
compliance with all requirements necessary to maintain in good standing
its operating authority granted by the DOT and its air carrier operating
certificate issued by the FAA. A modification, suspension or revocation
of the Company's DOT or FAA authorizations or certificates could have a
material adverse effect on the Company.

In the last several years, the FAA has issued a number of maintenance
directives and other regulations relating to, among other things,
collision avoidance systems, airborne windshear avoidance systems, noise
abatement and increased aircraft and engine inspection requirements. The
Company expects to continue incurring expenditures for the purpose of
complying with the FAA's regulations.

At its aircraft maintenance facilities, the Company uses materials
that are regulated as hazardous under federal, state and local law. The
Company is required to, and believes it does, maintain programs to protect
the safety of employees using these materials and to manage and dispose of
waste in compliance with federal, state and local laws relating to the
protection of the environment and the discharge of materials into the
environment.

The DOT requires the Company to carry liability insurance at
specified minimum levels on each of its aircraft. Midwest Express and
Astral currently maintain public liability insurance in the amounts of $500
million and $100 million, respectively, thereby meeting or exceeding DOT
requirements. The Company is vulnerable to potential losses that it may
incur in the event of an aircraft accident. Any such accident could
involve not only repair or replacement of a damaged aircraft and its
resulting temporary or permanent loss from service, but also potential
claims of injured passengers and others. Although the Company currently
believes its insurance coverage is adequate, there can be no assurance
that the DOT will not change the amount of coverage required or that the
Company will not be forced to bear substantial losses from accidents.
Substantial claims resulting from an accident could have a material
adverse effect on the Company's business, financial condition and results
of operations, and could seriously inhibit passenger acceptance of the
Company's services.

Although both Midwest Express and Astral are subject to FAA safety
regulations, the regulations that govern aircraft with 30 seats or fewer
were less stringent than the regulations applicable to aircraft with more
than 30 seats. In December 1995, the FAA finalized regulations that
require smaller aircraft operators such as Astral to conduct business
under more stringent rules previously applicable only to aircraft with
more than 30 seats. In March 1996, Astral submitted its transition plan
to the FAA to comply with these regulations by no later than the final
compliance deadline in March 1997. The Company believes compliance with
these regulations will result in approximately $0.4 million in additional
annual costs.

The FAA has proposed a revision to its regulations which could
impose additional limits on the maximum time flight crews may be on duty on
an hourly, monthly and annual basis and the minimum periods of rest flight
crews must be provided between duty periods. If these or similar
regulations are adopted, then Midwest Express and Astral could incur
additional flight operations expenses.

Additional laws and regulations have been proposed from time to time
that could significantly increase the cost of airline operations by, for
instance, imposing additional requirements or restrictions on operations.
Management cannot predict what laws and regulations will be adopted, if
any, or how they will affect the Company. See "Business-Regulation."

The Company is also subject to other federal and state laws and
regulations applicable to businesses generally. Currently, the Equal
Employment Opportunity Commission has charges pending against Midwest
Express relating to its recruitment, hiring and promotion practices. See
"Business-Legal Proceedings." Any losses or expenses Midwest Express incurs
as a result of these charges will adversely affect the Company's results of
operations. Although the Company does not believe any adverse
determination involving these charges would adversely affect the Company's
relationships with governmental entities, there is no assurance that will
be the case.

Labor Relations

In July 1995, Astral pilots elected the Air Line Pilots Association
("ALPA"), a labor union, to represent them for collective bargaining
purposes. Although many employees in the airline industry are represented
by labor unions, no Company employees had previously been represented by
any union. The Company began negotiations with ALPA in February 1996, but
does not know what effects, if any, will result from such negotiations or
whether ALPA will initiate any further organizational activities seeking
to represent Midwest Express pilots. ALPA's representation of Astral
pilots or unionization of any of the Company's other employees could have
an unfavorable impact on the Company.

Anti-Takeover Provisions

The Company's Restated Articles of Incorporation and By-laws contain
provisions that, among other things, establish staggered terms for members
of the Company's Board of Directors, place certain restrictions on the
removal of directors, authorize the Board of Directors to issue preferred
stock in one or more series without stockholder approval, impose
procedural requirements in connection with the calling of special meetings
of stockholders, require advance notice for director nominations and
certain other matters to be considered at meetings of stockholders, impose
supermajority voting requirements on amendments to the By-laws and impose
supermajority voting and "fair price" requirements on certain
transactions. The Company also has issued Preferred Share Purchase Rights
("Rights") that entitle holders to certain rights if (subject to an
exception for Kimberly-Clark that will cease to apply upon consummation of
this Offering) a person acquires 15% or more of the Common Stock or
announces a tender offer for 15% or more of the Common Stock. These
provisions, the Rights and the prohibition against certain business
combinations and other provisions contained in the Wisconsin Business
Corporation Law could have the effect of delaying, deferring or preventing
a change in control or the removal of existing management of the Company.
See "Description of Capital Stock."

THE COMPANY

Midwest Express operates a single-class, premium service passenger
jet airline that caters primarily to business travelers and serves selected
major business destinations throughout the United States from operations
bases in Milwaukee and Omaha. Midwest Express' historical results reflect
profits since 1987, despite losses in the domestic airline industry during
recent years. Midwest Express attained such profits through careful
selection of markets, controlled growth, efficient use of resources and a
high level of customer service. Recent surveys by Zagat Airline Survey,
Conde Nast Traveler Magazine and a leading consumer magazine reflect that
passengers recognize Midwest Express as the best airline in the United
States. See "Business-Customer Service." The Company's service-oriented
philosophy is designed to result in premium yields, and Midwest Express
enters a market only if it believes it can successfully apply its strategy
in the market based upon a careful analysis of market characteristics.

Midwest Express evolved from Kimberly-Clark's desire to better serve
its internal transportation needs. Management has used its experience
serving Kimberly-Clark corporate passengers in emphasizing service to
business travelers as a commercial airline. The Company believes the per-
centage of Midwest Express passengers traveling on business exceeds the
industry average. To accommodate its business travelers, Midwest Express
is committed to providing on-time, primarily nonstop service, with departure
and arrival schedules that facilitate maximum use of the business day and
a route structure that is convenient for business travelers.

The Company also offers scheduled commuter air service under the name
"Skyway Airlines" through Astral, a wholly owned subsidiary. Astral,
which accounted for approximately 13% of the Company's consolidated
revenues during 1995, provides service between Milwaukee and over 20
Midwestern cities that feeds passenger traffic into the Midwest Express
route system and also provides point-to-point service to selected markets.
Astral began operations in February 1994 by taking over routes that Mesa
Airlines, Inc. ("Mesa") had operated pursuant to a code sharing agreement
with Midwest Express. The Company believes there are numerous
opportunities to grow commuter operations, either as part of Astral or
otherwise, that will further contribute to Midwest Express' stability and
growth.

As of May 1, 1996, Midwest Express had a fleet of 23 jet aircraft,
including four aircraft that Midwest Express acquired since December 1995,
of which one entered service in April and the remainder are anticipated to
be placed into service by early summer, late summer and year end 1996,
respectively. Midwest Express has employed one of its recently acquired
aircraft to expand Milwaukee service to existing destinations, including
Boston, Dallas/Ft. Worth and Philadelphia, and will use another to
increase its charter service capacity. The Company is currently
evaluating alternatives for using the remaining two acquired aircraft in a
manner consistent with the Company's profitability and growth objectives.
As of May 1, 1996, Astral had a fleet of 15 Beechcraft 1900D aircraft.

History of Profitable Operations

Fundamental to the Company's business strategy is management's
objective to maintain profitability. Since 1987, Midwest Express'
historical results reflect annual net income. Notwithstanding the more
than $13 billion of collective net losses that the commercial airline
industry incurred from 1990 through 1994, Midwest Express has realized
profitability primarily as a result of its focus on business travelers,
the markets it serves and management's conservative business approach. As
an example of the Company's ability to generate operating income
throughout turbulent industry conditions, Midwest Express recorded
historical operating income of $4.1 million and net income of $1.1 million
in 1992 while the industry reported $2.4 billion of operating losses
primarily resulting from over-capacity and significant industry-wide fare
discounting.

Business Strategy

The Company's principal strategy is to pursue continued profitability
and controlled growth by offering premium airline services in an efficient
manner to travelers in selected North American markets where the Company
believes providing those services will enable the Company to generate
premium yields.

Growth Plan

The Company believes it will have opportunities for continued growth
on the basis of the Company's beliefs as to the following:

(i) Expanding Milwaukee Operations. Based upon the Company's market
growth expectations, many markets that currently receive Midwest Express
service from Milwaukee should justify increases in capacity in the near
future, which Midwest Express could accommodate to some extent through
increased loads or by scheduling additional flights or using larger
aircraft. In addition, there are several markets that Midwest Express
does not currently serve from Milwaukee that may justify service at the
present time based upon the Company's market criteria or that may,
through projected population and business growth, justify service in the
future. Finally, growing the Company's commuter operations should
provide additional feeder traffic to Midwest Express through Milwaukee.

(ii) Expanding Omaha Operations. The Company has identified
potential new markets for Omaha service that meet the Company's
criteria. Further, the Company has identified candidates for commuter
point-to-point service from Omaha which, if such service is implemented,
would result in improved utilization of the Company's Omaha facilities
and could benefit Midwest Express by increasing the use of Omaha's
airport.

(iii) Establishing New Bases of Operation. Results to date of
the Omaha operations evidence that the Company has the opportunity to
replicate its base of operations approach in other metropolitan areas.
The Company continuously examines markets that could be opportunities
for one or more additional bases of operations in the future.

(iv) Growing Commuter Operations. Expansion opportunities for
commuter service include introducing service in Omaha, thereby
leveraging upon Midwest Express service and operations. Commuter
service to Milwaukee can grow through increased traffic on existing
flights, as a result of increased demand and the possible introduction
of aircraft with approximately 30 seats to serve selected markets that
are too small in passenger traffic to support Midwest Express' DC-9
aircraft but can sustain more traffic than Astral's current 19-seat
aircraft can serve and by adding new destinations. The Company will
also continue to explore expanding point-to-point commuter service in
cities other than Milwaukee, where the Company has preliminarily
identified some potential markets. The Company announced in February
1996 that it has deferred its plans to add 30-seat aircraft in 1996.
Management continues to evaluate the potential of a large turboprop
program.

Premium Yields

The Company's service-oriented philosophy is designed to result in
premium yields. The Company believes its efforts to identify favorable
markets and provide premium nonstop service enable Midwest Express to
generate a high degree of loyalty to Midwest Express among its passengers
and to attract a larger percentage of business travelers on its flights
than high volume carriers. The Company believes the percentage of Midwest
Express passengers traveling on business exceeds the industry average. As
a result of passenger loyalty and Midwest Express' ability to attract
business travelers, Midwest Express is able to implement rigorous yield
management so that, although its discount and full fares generally are the
same as or only slightly higher than those charged by other airlines, for
each of the last five years, Midwest Express has realized a yield premium
relative to all major U.S. jet carriers in their domestic operations, and
the Company believes Midwest Express carries a higher percentage of
passengers in more expensive fare categories than do major carriers in
their domestic operations.

Competitive Cost Structure

The Company obtains cost efficiencies by using a systematic approach
to identifying work processes and, based upon customer needs and
expectations, determining the most efficient way to do the work, measure
the work and continually improve and problem-solve. The Company manages
costs in such areas as aircraft, employee relations and training and
financial structure. Midwest Express' cost per total ASM of 11.0 cents
and 11.6 cents for 1995 and the first three months of 1996, respectively,
is not directly comparable to cost per total ASM reported by other
airlines, due to Midwest Express' premium seating configuration and dining
service. As evidence of its competitive cost structure, the Company
believes it could reduce Midwest Express' cost per total ASM by
approximately 3.5 cents if it chose to change to a higher density seat
configuration and to provide only snack and beverage service comparable to
that provided by low cost, low fare carriers.

To control aircraft-related costs, the Company has chosen to use
DC-9 aircraft to the extent possible to maximize fleet uniformity and to
minimize segment operating costs by using aircraft of a size that can
efficiently provide adequate service given expected passenger volumes.
Midwest Express believes its practice of operating with pre-owned jet
aircraft, with the stringent maintenance procedures the Company performs,
is more cost-effective than acquiring new aircraft. Astral's turboprop
aircraft complement the Midwest Express fleet and enable Midwest Express
to reach markets it could not otherwise serve economically.

Premium Service

In the markets it chooses to serve, Midwest Express offers a premium
airline service, notably different from that of any other U.S. commercial
airline, at competitive fares. Midwest Express differentiates its product
through low density, extra-wide leather seats, superior meals served on
china, complimentary champagne, wine and newspapers and highly-trained,
service-oriented employees. Midwest Express strives to be known by the
public and within the industry for "The Best Care in the Air"/R/ service,
from the attention to customer satisfaction that its employees show to its
baked-on-board chocolate chip cookies. Midwest Express is committed to
providing on-time, primarily nonstop service, with departure and arrival
schedules that facilitate maximum use of the business day and a route
structure that is convenient for business travelers. In addition, the
Company stresses a corporate culture that is attentive to the business
traveler. This culture is evident in the Company's friendly, but formal,
approach to passenger service and its attention to detail. Although Astral
has less opportunity to provide premium service because of its short haul
routes, it also attempts to cater to business travelers through convenient
scheduling, customer service and its selection of comfortable aircraft.

The Company was organized in 1995 as a Delaware corporation to serve
as a holding company for Midwest Express and Astral, and the Company was
reincorporated as a Wisconsin corporation in 1996. The Company's
executive offices are located at 6744 South Howell Avenue, Oak Creek,
Wisconsin 53154, and its telephone number is (414) 570-4000.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of Common
Stock in this Offering. The Selling Stockholder will receive all proceeds
from this Offering.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Since the Initial Public Offering of the Common Stock on September
22, 1995, the Common Stock has traded on the New York Stock Exchange under
the symbol "MEH." The following table sets forth, on a per share basis,
the range of the high and low sales prices of shares of Common Stock, as
reported by the New York Stock Exchange.

High Low
1995
Third Quarter
(from September 22) . . . . $24 $21 7/8
Fourth Quarter . . . . . . . 30 3/4 22 3/8

1996
First Quarter . . . . . . . . 37 1/2 25 1/2
Second Quarter
(through May 23). . . . . . 38 3/4 31 3/8

See the cover page of this Prospectus for a recent reported last sale
price of the Common Stock. At May 1, 1996, there were 6,428,571 shares of
Common Stock outstanding held by approximately 430 stockholders of record,
which excludes beneficial owners of Common Stock held in "street name" and
participants in the Midwest Express Airlines Savings and Investment Plan.

The Company does not anticipate paying any dividends on its Common
Stock in the foreseeable future. The Company expects to retain any earnings
generated from its operations for use in the Company's business. Any
future determination as to the payment of dividends will be at the
discretion of the Board of Directors of the Company and will depend upon
the Company's future operating results, financial condition and capital
requirements, general business conditions and such other factors as the
Board of Directors of the Company deems relevant. In addition, the
Company's credit facilities each contain a net worth covenant that could
have the effect of limiting the ability of the Company to pay dividends
depending upon the Company's future financial performance. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations-Liquidity and Capital Resources." Accordingly, there can be
no assurance that the Company will pay dividends at any time in the
future. The Company paid no dividends in 1993 and 1994.

Prior to consummation of the Initial Public Offering, the Company
paid a dividend of approximately $35 million to the Selling Stockholder from
its cash on hand such that the Company had a resulting initial cash balance
of approximately $9.0 million. Such dividend is not indicative of the
Company's future dividend policy. The Company paid no other dividends in
1995.

On December 22, 1995, the Company announced that it has authority to
repurchase shares of Common Stock in an amount not to exceed $5 million.
As of May 1, 1996, there were no repurchases pursuant to this authority.
Currently, the Company intends to exercise this authority to acquire
shares of Common Stock for reissuance pursuant to the Company's employee
and director compensation arrangements.

SELECTED FINANCIAL AND OPERATING DATA

The following selected consolidated financial data are derived from
the consolidated financial statements of the Company. The balance sheet
data as of December 31, 1993, 1994 and 1995 and the operating data for
each of the four years ended December 31, 1995 have been derived from
audited financial statements, and the balance sheet data as of December
31, 1992 and the financial data for the year ended December 31, 1991 and
the three-month periods ended March 31, 1995 and 1996 are derived from
unaudited consolidated financial statements. The unaudited consolidated
financial statements for the three-month periods include all adjustments,
consisting only of normal recurring accruals, that the Company considers
necessary for a fair presentation of the financial position and results of
operations for these periods. Operating results for the three months
ended March 31, 1996 are not necessarily indicative of the operating
results that may be expected for the entire year ending December 31, 1996.
The data should be read in conjunction with the consolidated financial
statements, related notes and other financial information included herein.

<TABLE>
<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
1991 1992 1993 1994 1995 1995 1996
(Dollars in thousands, except per share amount)

<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Operating revenues:
Passenger service . . . . . $116,155 $122,531 $149,209 $183,747 $238,422 $ 52,817 $ 60,915
Cargo . . . . . . . . . . . 4,700 5,823 6,792 8,880 10,440 2,669 2,598
Other . . . . . . . . . . . 4,407 5,592 9,055 10,965 10,293 3,055 3,095
------- ------- ------- ------- ------- ------- -------
Total operating revenues . 125,262 133,946 165,056 203,592 259,155 58,541 66,608
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Salaries, wages and
benefits . . . . . . . . . 30,501 33,354 39,502 53,319 62,964 15,168 17,868
Aircraft fuel and oil . . . 24,028 23,537 24,860 30,692 35,212 8,738 10,302
Commissions . . . . . . . . 11,724 12,432 15,331 18,923 24,878 5,530 5,730
Dining services . . . . . . 9,791 9,589 11,635 13,231 14,882 3,760 3,477
Station rental, landing and
other fees . . . . . . . . 10,176 10,994 12,608 16,904 19,451 5,136 5,344
Aircraft maintenance
materials and repairs . . 9,030 9,343 10,053 13,945 17,356 4,476 5,273
Depreciation and
amortization . . . . . . . 5,977 6,348 6,507 6,900 7,515 1,837 1,889
Aircraft rentals . . . . . 6,585 6,820 7,977 13,131 14,954 3,997 4,076
Other . . . . . . . . . . . 16,882 17,437 20,686 25,283 30,569 7,238 8,233
------- ------- ------- ------- ------- ------- -------
Total operating expenses . 124,694 129,854 149,159 192,328 227,781 55,880 62,192
------- ------- ------- ------- ------- ------- -------
Operating income . . . . . . 568 4,092 15,897 11,264 31,374 2,661 4,416
Interest income (expense),
net . . . . . . . . . . . . 42 (1,594) (895) (436) 1,652 333 256
Other income (expense), net . (47) (9) (2) 10 (1,500) 0 0
------- ------- ------- ------- ------- ------- -------
Income before income taxes
and cumulative effects of
accounting changes . . . . 563 2,489 15,000 10,838 31,526 2,994 4,672
Provision for income taxes . 288 1,017 5,914 4,176 12,397 1,161 1,836
Cumulative effects of
accounting changes(1) . . . 0 (337) 0 0 0 0 0
------- ------- -------- -------- ------- ------- -------
Net income . . . . . . . . . $ 275 $ 1,135 $ 9,086 $ 6,662 $ 19,129 $ 1,833 $ 2,836
======= ======= ======== ======== ======= ======= =======
Net income per common share . $ 0.44
=======

At December 31, At March 31,
1991 1992 1993 1994 1995 1995 1996
(Dollars in thousands)

<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents(2). $ 0 $ 0 $ 0 $ 0 $ 14,626 $ 0 $ 20,297
Property and equipment, net . 58,857 58,390 56,486 57,626 55,919 56,912 58,337
Total assets . . . . . . . . 72,244 76,712 80,161 95,436 92,833 103,344 101,923
Intercompany (payable)/
receivable(2) . . . . . . . (19,876) (18,148) 3,199 17,923 61 24,717 0
Long-term debt . . . . . . . 0 0 0 0 0 0 0
Stockholders' equity(2) . . . $ 20,957 $ 22,092 $ 31,178 $ 37,840 $ 21,264 $ 39,673 $ 24,100

<CAPTION>
Three Months Ended
Year Ended December 31, March 31,
1991 1992 1993 1994 1995 1995 1996
(Dollars in thousands)

<S> <C> <C> <C> <C> <C> <C> <C>
Selected Operating Data(3):
Midwest Express Operations:
Passenger service revenue . . $ 116,155 $ 122,531 $ 149,209 $ 162,886 $ 205,261 $ 45,689 $ 52,244
Other revenue(4) . . . . . . . $ 9,107 $ 11,415 $ 15,847 $ 21,607 $ 23,778 $ 6,460 $ 6,462
Operating expenses . . . . . . $ 124,694 $ 129,854 $ 149,159 $ 175,754 $ 200,794 $ 49,580 $ 54,640
RPMs (000s) . . . . . . . . . 610,695 661,567 785,391 972,809 1,150,338 282,517 292,258
ASMs (000s) . . . . . . . . . . 1,115,664 1,188,263 1,314,522 1,600,437 1,794,924 474,725 461,634
Passenger load factor (%) . . . 54.7% 55.7% 59.7% 60.8% 64.1% 59.5% 63.3%
Passenger yield (cents) . . . . 19.0 18.5 19.0 16.7 17.8 16.2 17.9
Cost per total ASM (cents) . . 10.9 10.7 11.1 10.8 11.0 10.2 11.6
Aircraft in service at end of
period . . . . . . . . . . . 13 14 16 19 19 19 19
Average aircraft utilization
(hours per day) . . . . . . . 8.9 8.8 8.3 8.6 9.0 9.8 9.5
Total full-time equivalent
employees at end of period . 892 998 1,082 1,334 1,411 1,381 1,447

Astral Operations(5):
Passenger service revenue . . $ 20,861 $ 33,161 $ 7,128 $ 8,671
Other revenue . . . . . . . . $ 204 $ 243 $ 58 $ 72
Operating expenses(4) . . . . . $ 18,540 $ 30,275 $ 7,094 $ 8,393
RPMs (000s) . . . . . . . . . . 43,219 66,415 13,995 16,613
ASMs (000s) . . . . . . . . . . 103,759 156,113 35,180 39,113
Passenger load factor (%) . . . 41.7% 42.5% 39.8% 42.5%
Passenger yield (cents) . . . . Not Applicable 48.3 49.9 50.9 52.2
Cost per total ASM (cents) . . 17.9 19.4 20.2 21.4
Aircraft in service at end of
period . . . . . . . . . . . 13 15 13 15
Average aircraft utilization
(hours per day) . . . . . . . 7.9 7.9 8.3 7.6
Total full-time equivalent
employees at end of period . 177 217 192 218

<CAPTION>
Three Months Ended
Year Ended March 31,
December 31, 1995 1995 1996
Historical Pro Forma Historical Pro Forma Historical
(Dollars in thousands, except per share amounts)

<S> <C> <C> <C> <C> <C>
Pro Forma Statement of Income and Other
Data(6):
Operating revenues . . . . . . . . . . . . . $259,155 $259,155 $58,541 $58,541 $66,608
Operating expenses . . . . . . . . . . . . . 227,781 229,933 55,880 56,635 62,192
Operating income . . . . . . . . . . . . . . 31,374 29,222 2,661 1,906 4,416
Interest income (expense), net . . . . . . . 1,652 1,585 333 287 256
Other expense . . . . . . . . . . . . . . . . (1,500) (1,500) 0 0 0
Income before income taxes . . . . . . . . . 31,526 29,307 2,994 2,193 4,672
Net income . . . . . . . . . . . . . . . . . $ 19,129 17,775 $ 1,833 1,344 2,836
Net income per common share . . . . . . . . . $ 2.77 $ 0.21 $ 0.44

___________________
<FN>

(1) Effective January 1, 1992, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions," under which the costs of health care and life insurance
benefit plans for retired employees are accrued over the working lives of employees. Prior to that time, these costs were
charged to expense as incurred. The $1,130 cumulative effect of adopting SFAS No. 106, less related deferred income tax
benefits of $449, was charged to 1992 income. Also effective January 1, 1992, the Company adopted SFAS No. 109,
"Accounting for Income Taxes," and the $344 cumulative effect of adopting SFAS No. 109 was credited to 1992 income.
(2) Prior to the Initial Public Offering, the Company participated in Kimberly-Clark's cash management program, under which
the Company's cash needs were funded by Kimberly-Clark and the Company delivered excess cash to Kimberly-Clark. See note
(1) to "Summary Financial and Operating Data." Immediately prior to consummation of the Initial Public Offering, (i) the
Company ceased participating in this program, (ii) Kimberly-Clark repaid the outstanding intercompany receivable in full
in the amount of $44.0 million and (iii) the Company paid a dividend to the Selling Stockholder from its cash on hand in
an amount such that the Company had a resulting initial cash balance of approximately $9.0 million.
(3) See notes (2) through (8) to "Summary Financial and Operating Data" for definitions of certain terms used in this table.
(4) Other revenue for Midwest Express and operating expenses for Astral contain certain items that are eliminated in
consolidation but are included in this schedule to more accurately depict the operating results of each unit.
Specifically, Midwest Express records as other revenue services provided to Astral such as reservations, accounting,
aircraft scheduling, marketing and aircraft ground handling at some airports. Astral records these intercompany charges
as operating expenses. The intercompany charges totalled $1,966 and $3,288 in 1994 and 1995, respectively, and $794 and
$841 for the three months ended March 31, 1995 and March 31, 1996, respectively.
(5) Because Astral began service in February 1994, results for 1994 reflect less than a full year of operations. Before
Astral commenced operations, Mesa, pursuant to a code sharing agreement with Midwest Express, operated commuter routes
similar to those that Astral now operates. See "Business-Background." Because Mesa is not affiliated with the Company,
information relating to Mesa's results of operations for these routes is not shown.
(6) The pro forma statement of income and other data give effect to estimated changes in the Company's historical costs as if
the Initial Public Offering had been consummated as of January 1, 1995 and the Company had operated as an independent
company after that date. Pro forma adjustments include (i) a lease guarantee fee charged by Kimberly-Clark after the
Initial Public Offering to continue to guarantee certain aircraft leases, (ii) estimated incremental administrative and
management expense to reflect changes in costs to the Company of obtaining, on an arm's length basis as an independent
company, certain services that Kimberly-Clark had provided in the past, (iii) changes in costs due to a new management
structure, (iv) costs associated with being a publicly-owned entity and (v) changes in interest income and expense to
reflect the Company's financial position subsequent to the Initial Public Offering. Pro forma net income per common share
data has been computed based on the weighted average number of common shares outstanding and assuming 6,428,571 shares of
Common Stock outstanding for all periods prior to the Initial Public Offering. See Note 3 to the Consolidated Financial
Statements and Note 4 to the Unaudited Interim Financial Statements.
</TABLE>

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

General

The Company's operating income for 1993, 1994 and 1995 was $15.9
million, $11.3 million, and $31.4 million, respectively. Net income for
1993, 1994 and 1995 was $9.1 million, $6.7 million and $19.1 million,
respectively. Operating income for the three months ended March 31, 1995
and March 31, 1996 was $2.7 million and $4.4 million, respectively. Net
income for the three months ended March 1995 and March 1996 was $1.8
million and $2.8 million, respectively.

The Company's results are affected by seasonal decreases in passenger
travel, generally in September, November, December and January. In
addition, operating results can be significantly impacted by both general
and industry economic environments. Small fluctuations in revenue per
revenue passenger mile and cost per total ASM can have a significant
impact on profitability. Despite these factors, the Company's historical
results reflect profits since 1987, even in years when the airline
industry incurred record losses.

Growth in Midwest Express' operations during 1993, 1994, 1995 and
1996 impacted operating results. Midwest Express placed two additional
leased DC-9-30 aircraft into service in September 1992 to increase service
capacity to Washington National, Boston and New York La Guardia, to support
seasonal service to Miami and Ft. Myers, Florida (Miami seasonal service was
replaced with seasonal service to Phoenix in December 1993) and to
increase charter capability. Following the normal suspension of seasonal
service in April 1993, the aircraft were used to support new jet service
between Milwaukee and Cleveland and Columbus (Ohio). In May 1994, Midwest
Express added three more leased DC-9-30 aircraft, primarily to support the
start-up of the new base of operations in Omaha. Since December 1995,
Midwest Express has acquired four additional DC-9-30 aircraft. In April
1996, Midwest Express placed one of these aircraft into service to expand
Milwaukee service beginning May 1, 1996 to existing destinations,
including Boston, Dallas/Ft. Worth and Philadelphia. Midwest Express
intends to place another of these aircraft into service in the second
quarter 1996 primarily to increase its charter service capacity. The
Company anticipates placing the remaining two acquired aircraft into
service by late summer and year end 1996, respectively, and the Company is
currently evaluating alternatives for using these aircraft in a manner
consistent with the Company's profitability and growth objectives.

Astral began commuter operations in February 1994 with two Beechcraft
1900D aircraft, following expiration of a five year code sharing agreement
it had with Mesa. See "Business--Background." During the transition from
the Mesa code sharing agreement to Astral operations, the Company utilized
several aircraft supplied by another airline on a "wet lease" basis (under
which the "lessor" provides aircraft and pilots and generally bears all
operating costs) to provide continuous service to several cities
previously served by Mesa under the code sharing agreement. Astral
acquired 11 more 1900Ds in 1994 and acquired two additional 1900Ds in
1995. Astral accounted for 12.9% and 10.0% of the Company's consolidated
revenues and operating income, respectively, during 1995.

The Company accrues its frequent flyer liability for financial
reporting purposes as participating passengers earn their miles, unlike
some airlines that accrue a liability only when a passenger has actually
earned an award. As of year end 1994 and 1995, the Company had approxi-
mately 592,000 and 713,000 members enrolled in its frequent flyer program,
respectively. The Company estimates that, as of December 31, 1994 and
1995, the total available awards under the frequent flyer program were
33,000 and 45,000, respectively, after eliminating those accounts below
the minimum award level. Free travel awards redeemed were approximately
5,800 and 7,400 during 1994 and 1995, respectively, and were less than
0.6% of total Company revenue passengers carried. As of March 31, 1996,
the Company's accrued liability for these awards was $2.4 million. The
estimated liability includes awards that have been earned or are being
earned and, based upon historical experience, are expected to be
requested. The Company believes, under its frequent flyer program, the
displacement of revenue passengers is not substantial due to the low free
award usage and the Company's ability to manage frequent flyer inventory
through seat allocations and blackout dates.

Information with respect to the Company's results of operations,
expressed as a percentage of operating revenues and cost per total ASM (in
cents), follows:

<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
1993 1994 1995 1995 1996
Cost per Cost per
total total Cost per Cost per Cost per
% ASM % ASM % total ASM % total ASM % total ASM

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues:
Passenger service . . . . . 90.4% 90.2% 92.0% 90.2% 91.6%
Cargo . . . . . . . . . . . 4.1 4.4 4.0 4.6 3.8
Other . . . . . . . . . . . 5.5 5.4 4.0 5.2 4.6
----- ----- ----- ----- -----
Total operating
revenues 100.0% NR(a) 100.0% NR 100.0% NR 100.0% NR 100.0% NR
===== ===== ===== ===== =====
Operating expenses:
Salaries, wages and
benefits . . . . . . . . . 23.9% 2.93 26.2% 3.07 24.3 3.18 25.9% 2.91 26.7% 3.50
Aircraft fuel and oil . . . 15.1 1.84 15.1 1.77 13.6 1.78 15.2 1.67 15.3 2.02
Commissions . . . . . . . 9.3 1.14 9.3 1.09 9.6 1.26 9.8 1.06 8.4 1.12
Dining services . . . . . . 7.1 0.86 6.5 0.76 5.7 0.75 6.3 0.72 5.3 0.68
Station rental, landing
and other fees . . . . . 7.6 0.94 8.3 0.97 7.5 0.98 8.9 0.99 8.4 1.05
Aircraft maintenance
materials and repairs . 6.1 0.75 6.9 0.80 6.7 0.88 7.1 0.86 7.6 1.03
Depreciation and
amortization . . . . . . 3.9 0.48 3.4 0.40 2.9 0.38 2.7 0.35 3.1 0.37
Aircraft rentals . . . . . 4.8 0.59 6.4 0.76 5.8 0.75 7.1 0.77 6.1 0.80
Other . . . . . . . . . . . 12.6 1.54 12.4 1.46 11.8 1.54 12.5 1.39 12.2 1.62
----- ---- ----- ----- ----- ----- ----- ----- ----- -----
Total operating
expenses . . . 90.4 11.07 94.5 11.08 87.9 11.50 95.5 10.72 93.1 12.19
----- ---- ----- ----- ----- ----- ----- ----- ----- -----
Operating income . . . . . . 9.6 1.18 5.5 0.65 12.1 1.58 4.5 0.51 6.6 0.87
Interest income (expense),
net . . . . . . . . . . . . (0.5) (0.07) (0.2) (0.03) 0.6 0.08 0.6 0.06 0.4 0.05
Other income (expense),
net . . . . . . . . . . . . 0.0 0.00 0.0 0.00 (0.5) (0.07) 0.0 0.00 0.0 0.00
----- ---- ----- ----- ----- ----- ----- ----- ----- -----
Income before income taxes . 9.1 1.11 5.3 0.62 12.2 1.59 5.1 0.57 7.0 0.92
Provision for income taxes . 3.6 0.44 2.0 0.24 4.8 0.63 2.0 0.22 2.7 0.36
----- ----- ----- ------ ----- ----- ----- ------ ----- -----
Net income . . . . . . . . . 5.5% 0.67 3.3% 0.38 7.4% 0.96 3.1% 0.35 4.3% 0.56
===== ===== ===== ====== ===== ===== ===== ====== ===== =====

Total ASMs (000s) . . . . . . 1,347,426 1,735,416 1,982,100 521,256 510,135
========= ========= ========= ======= =======

(a) "NR" means not relevant.
</TABLE>

Results of Operations

Three Months Ended March 31, 1996 Compared to Three Months Ended
March 31, 1995

Operating Revenues. Company operating revenues totalled $66.6
million in the first quarter 1996, an $8.1 million, or 13.8%, increase
over revenues for the first quarter 1995. Passenger revenues accounted
for 91.6% of total revenues and increased $8.1 million, or 15.3%, from
1995 to $60.9 million. The increase is attributable to a 4.2% increase in
volume, as measured by revenue passenger miles, a 10.7% increase in
revenue yield and a 1.1% increase in average passenger trip length. The
increase in volume was due primarily to the continuation of strong traffic
throughout the industry driven by a healthy domestic economy and limited
increases in industry capacity. Other factors resulting in higher volumes
were less competition in certain markets and possible increases in
discretionary travel due to the elimination of the 10% excise tax on
passenger travel beginning on January 1, 1996. The increase in revenue
yield was primarily the result of Continental Airlines discontinuing its
low-fare "Lite" product.

Midwest Express passenger revenue increased by $6.6 million, or
14.3%, from 1995 to $52.2 million. This increase was caused by a 1.5%
increase in origin and destination passengers, a 10.5% increase in revenue
yield and a 2.0% increase in average passenger trip length. Total
capacity, as measured in scheduled service ASMs, decreased 2.8%; Midwest
Express operated 19 aircraft in the first quarter 1995 and 18 aircraft in
the first quarter 1996 as one aircraft was removed from service for
scheduled major maintenance. Load factor increased from 59.5% in 1995 to
63.3% in 1996.

Astral passenger revenue increased by $1.5 million, or 21.6%, from
1995 to $8.7 million. This increase was caused by a 10.2% increase in
origin and destination passengers, a 2.5% increase in revenue yield and a
7.7% increase in average passenger trip length. Total capacity increased
by 11.2%, primarily because of the addition of two 19-seat aircraft in the
second quarter 1995. Load factor increased from 39.8% in 1995 to 42.5% in
1996.

Revenue from cargo, charter and other services did not materially
change in the first quarter 1996 compared to the first quarter 1995. The
$0.8 million in revenue generated from the Midwest Express MasterCard
program, which was initiated in October 1995, was offset by lower revenue
from charter services, maintenance contract services and other airlines
ground handling services. Revenue from cargo, mail and small parcel
services decreased $0.1 million, or 2.7%, due to the reduction in Midwest
Express flights in the quarter.

Operating Expenses. 1996 operating expenses increased by $6.3
million, or 11.3%, from 1995, primarily due to higher fuel prices, higher
labor costs, a new profit sharing plan at Midwest Express, increased
passenger volume, higher maintenance costs and costs associated with being
a public company. Cost per total ASM increased 14.0%, from 10.7 cents in
1995 to 12.2 cents in 1996.

Salaries, wages and benefits costs increased by $2.7 million, or
17.8%. On a cost per total ASM basis, these costs increased 20.7%, from
2.9 cents to 3.5 cents. Approximately $1.2 million of the labor cost
change is due to increased labor rates. Most of this change was due to an
adjustment in pay scales for pilots and other operations employees at
Midwest Express effective January 1, 1996. These rate adjustments were
implemented based upon industry salary surveys and management's desire to
increase pay scales to maintain a competitive position within the
industry. Labor costs also increased due to a $0.4 million accrual
recorded in the 1996 quarter relating to a new profit sharing plan
implemented at Midwest Express. The profit sharing plan, which benefits
substantially all Midwest Express employees other than senior management,
is based entirely on achieving certain levels of profitability, is payable
annually and is accrued monthly based on operating income and projected
results for the remainder of the year. An increase in the number of
senior management personnel participating in the Company's management
annual incentive plan from seven to 25 employees also contributed to the
labor cost increase. In addition, the labor cost increase reflects the
addition of 92 full-time equivalent employees, 66 at Midwest Express and
26 at Astral. Midwest Express added employees in the reservations
function to support continuing high passenger volumes. Further, in
connection with Midwest Express' plans to place two of its recently
acquired aircraft into service during the second quarter 1996, Midwest
Express added maintenance, flight operations and reservation employees in
the first quarter 1996, in advance of placing the aircraft into service.
Astral added employees primarily to support the two aircraft placed in
service during the second quarter 1995 and in connection with regulatory
changes.

Aircraft fuel and oil and associated taxes increased $1.6 million, or
17.9%, in first quarter 1996. Into-plane fuel prices increased 18.4% in
1996, averaging 70.9 cents per gallon in 1996 and 59.8 cents per gallon in
first quarter 1995. The Company has experienced increased fuel costs in
April 1996 as well, averaging approximately 81 cents per gallon. A
portion of the increase in fuel prices is attributable to the fact that,
beginning October 1, 1995, airlines were subject to the 4.3 cent federal
fuel excise tax surcharge, which cost the Company $0.6 million in the
first quarter 1996. Fuel consumption decreased by 0.4% because of fewer
flight segments at Midwest Express.

Commissions increased by $0.2 million, or 3.6%, due to increased
passenger revenue. Commissions as a percentage of passenger revenue
decreased from 10.5% in 1995 to 9.4% in 1996. The decrease primarily
resulted from a slight increase in the percentage of revenue generated
from direct sales instead of through travel agents.

Dining services costs decreased by $0.3 million, or 7.5%, in the
first quarter 1996. Total dining services costs (including food,
beverages, linen, catering equipment and supplies) per Midwest Express
revenue passenger decreased from $12.00 in 1995 to $10.94 in 1996. The
decrease was primarily due to a reduction in costs following the
negotiation of a long-term contract with the primary food caterer for
Midwest Express. Reduced pricing was effective January 1, 1996. The
Company has recently learned the Wisconsin Department of Revenue is
asserting that Wisconsin sales taxes should be paid in connection with the
Company's purchase of meals from its food caterer. While the Company does
not believe any such sales tax is payable, if the Department of Revenue
successfully asserts its position, then the Company would be liable for
back taxes and associated interest in the amount of approximately $0.4
million as of May 1, 1996, and the Company would have to pay approximately
$0.2 million in additional sales taxes annually in the future. The
Company has not established any reserve in respect of these potential
taxes.

Maintenance costs increased by $0.8 million, or 17.8%, from 1995. Of
this increase, $0.6 million was at Midwest Express and was attributable to
increased repair costs of engines, landing gear and other aircraft
components. The increase in maintenance costs at Astral was the result of
the two aircraft placed in service in the second quarter 1995.

Aircraft rental costs increased by $0.1 million in 1996. Decreased
lease costs associated with Midwest Express' two MD-88 aircraft were more
than offset by the lease costs for two Midwest Express aircraft acquired
in December 1995, two Astral aircraft acquired in May 1995 and lease
guarantee fees for five Midwest Express aircraft and all of the Astral
aircraft. The lease guarantee fees totalled $0.3 million in the first
quarter 1996.

Other operating expenses increased by $1.0 million, or 13.7%, from
1995. The increase includes $0.2 million of nonrecurring costs associated
with acquiring and transporting three of Midwest Express' recently
acquired aircraft from Asia to Milwaukee and $0.1 million of relocation
costs for the new headquarters office facility. Other significant cost
increases included an increase in the frequent flyer liability resulting
from promotions associated with the credit card program, an increase in
booking fees due to higher passenger volume and rates and higher costs
associated with being a public company. The public company costs included
expenditures for the annual report, external audit fees, investor
relations, regulatory reporting and legal fees.

Interest Income. Interest income for the first quarter 1995 relates
to an intercompany cash management program the Company had with Kimberly-
Clark prior to the Initial Public Offering. Market rates of interest were
earned on the amount of cash the Company had advanced to Kimberly-Clark.
Interest income in the first quarter 1996 reflects interest income on cash
and cash equivalents during the quarter.

Provision for Income Taxes. Income tax expense for the first quarter
1996 increased to $1.8 million, a $0.7 million increase over 1995. The
effective tax rates for the first quarters of 1996 and 1995 were 39.3% and
38.8%, respectively. For purposes of calculating the Company's income tax
expense and effective tax rate for periods after the Initial Public
Offering, the Company treats amounts payable to the Selling Stockholder
under a Tax Allocation and Separation Agreement (the "Tax Agreement")
entered into with the Selling Stockholder in connection with the Initial
Public Offering as if they were payable to taxing authorities. The effect
of the Tax Agreement generally is to put the Company in the same financial
position it would have been in had there been no increase in the tax basis
of Midwest Express' assets in connection with the Initial Public Offering.
See "Relationship with Kimberly-Clark."

Net Income. Net income for the first quarter increased $1.0 million,
or 54.7%, from 1995. The net income margin improved from 3.1% in 1995 to
4.3% in 1996. The expenses of this Offering, which will be paid by the
Company, will have an adverse effect on net income in the second quarter
1996 in an estimated amount of approximately $0.2 million.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Operating Revenues. The Company's operating revenues totalled $259.2
million in 1995, a $55.6 million, or 27.3%, increase over 1994. Passenger
revenues accounted for 92.0% of total revenues and increased $54.7
million, or 29.8%, from 1994 to $238.4 million. The increase was
attributable to a 19.8% increase in volume, as measured by revenue
passenger miles, and an 8.4% increase in revenue yield.

Midwest Express passenger revenue increased by $42.4 million, or
26.0%, from 1994 to $205.3 million. This increase was caused by a 19.3%
increase in origin and destination passengers and a 6.6% increase in
revenue yield. The Omaha base of operations, which was initiated in May
1994, accounted for $15.0 million of the increase in passenger revenues
and 8.5% of the increase in passengers. Midwest Express' capacity, as
measured by ASMs, increased 12.2%, primarily because of the full year of
operations of the three aircraft added in 1994 to initiate Omaha service.
Load factor increased from 60.8% in 1994 to 64.1% in 1995 and revenue
yield increased from 16.7 cents in 1994 to 17.8 cents in 1995. The
improvements in load factor and revenue yield were attributable to a
reduction in competition in several markets and improved industry
conditions, most importantly, the discontinuation of Continental Airlines
"Lite" product.

Astral passenger revenue increased in 1995 by $12.3 million, or
59.0%, to $33.1 million. This operation began as a wholly owned
subsidiary in February 1994 and had an average of 9.8 aircraft in service
during 1994. In 1995, Astral had an average of 14.3 aircraft in service,
including two aircraft acquired in the second quarter 1995. Astral
carried 43.3% more passengers in 1995 and achieved a 3.4% increase in
revenue yield. Load factor increased from 41.7% in 1994 to 42.5% in 1995.

Mail and cargo revenue increased $1.6 million in 1995, or 17.6%. Of
this increase, $1.2 million was due to the Omaha operation.

Revenue from other services decreased $0.7 million, or 6.1%, in 1995.
Other revenue activities include charter sales, airport handling and
contract maintenance sales to other airlines, transportation service
charges, frequent flyer programs and other items. Revenue decreased in
1995 because a corporate shuttle program, which generated $1.4 million in
1994, was discontinued in September 1994. In addition, charter sales
decreased due to the temporary discontinuation of a dedicated charter
aircraft in 1995, and ground handling services revenue decreased due to
the loss of a customer who suspended flight operations. Additional
revenue was realized from an increase in contract maintenance services,
frequent flyer programs, ticket exchange administrative fees and Midwest
Express co-branded credit card program which was initiated in October
1995.

Operating Expenses. 1995 operating expenses increased $35.5 million,
or 18.4%, from 1994. Of this increase, $22.8 million was due to 1995
being the first full year of Astral and Omaha operations. In addition,
the higher costs were due to increased passenger volumes from Midwest
Express' Milwaukee operation. On a cost per total ASM basis, Midwest
Express operating expenses increased 2.1% to 11.00 cents in 1995 from
10.77 cents in 1994. Costs per total ASM at Astral increased 8.4% to
19.38 cents from 17.87 cents. The main reason for the cost increase at
Astral was that aircraft were owned in 1994 prior to a sale/leaseback
transaction in June 1994. Accordingly, Astral did not incur any rental
costs on its aircraft during the first half of 1994.

Salaries, wages and benefits increased $9.6 million, or 18.1%, from
1994. On a cost per total ASM basis, these costs increased from 3.07
cents in 1994 to 3.18 cents in 1995, or 3.6%. The number of full-time
equivalent employees at year-end increased by 117 to 1,628 in 1995.
Midwest Express added 77 employees, about half of which were in the
reservations function to process increased passenger volume. Astral added
40 employees in 1995 primarily due to the addition of two aircraft in the
second quarter and because of an increase in pilots resulting from
regulatory changes. Increases in salary and wage rates accounted for $2.6
million of the change in the Company's labor costs. Benefit costs
increased by $2.4 million at the Company in 1995, and were 25.5% of
salaries and wages in 1995 and 24.5% in 1994.

Aircraft fuel and oil and associated taxes and fueling charges
increased $4.5 million, or 14.7%, from 1994. Fuel consumption increased
by 14.1% because Midwest Express operated 12.8% more flight segments in
1995 over 1994 and Astral operated 34.8% more flight segments. Into-plane
fuel prices increased 0.6% in 1995, averaging 62.0 cents per gallon in
1994 and 62.4 cents per gallon in 1995. A new 4.3 cent federal fuel
excise tax surcharge began on October 1, 1995 and cost the Company $0.6
million in the fourth quarter 1995.

Commissions increased by $6.0 million, or 31.5%, because of increased
passenger revenue. Of this increase, $4.4 million related to increased
travel agency commissions and $1.6 million to increased credit card fees.
Commissions as a percentage of passenger revenue increased from 10.3% in
1994 to 10.4% in 1995. The Company decided not to implement a travel
agent commission cap like most other air carriers in 1995. The Company
believes the incremental passenger travel that travel agents direct to
Midwest Express because the commission cap was not implemented is
sufficient to offset the cost savings had the cap been implemented.

Dining services costs increased $1.7 million, or 12.5%, due to
increased Midwest Express passenger volume. Total dining services costs
(food, beverages, linen, catering equipment and supplies, etc.) per
Midwest Express revenue passenger decreased from $12.15 in 1994 to $11.45
in 1995. This decrease was partly due to increased passenger load
factors, which reduced the fixed component cost per passenger of dining
services costs, and increased passenger volume on lower cost snack
flights.

Station rental, landing and other fees increased by $2.5 million, or
15.0% in 1995. Airport costs at Midwest Express increased $1.6 million, a
result of approximately $0.4 million of higher costs at the new Denver
airport, $0.4 million at the Toronto station where Midwest Express began
jet service in May 1995, and $0.4 million at the Omaha station which was
operated during all of 1995 and only eight months in 1994. At Astral,
these costs increased $0.9 million due to a 34.8% increase in flight
segments in 1995.

Aircraft maintenance materials and repairs increased by $3.4 million,
or 24.5%, from 1994. Midwest Express maintenance costs increased by $2.5
million, or 21.5%, and Astral maintenance costs increased $0.9 million, or
41.7%. The increased costs were primarily the result of the increase in
aircraft operated and flight segments; Midwest Express had 12.8% more
scheduled service flights in 1995 and Astral had 34.8% more flights. In
addition, Midwest Express increased certain accrual rates for future major
engine overhauls and incurred higher non-routine engine maintenance costs
in 1995. On a cost per ASM basis, maintenance materials and repairs
increased 10.0%, from 0.80 cents in 1994 to 0.88 cents in 1995.

Depreciation and amortization increased by $0.6 million in 1995,
primarily the result of the depreciation associated with aircraft hush
kits installed in 1994 and a full year's depreciation on the assets
acquired in 1994 to support the start-up of the Omaha and Astral
operations.

Aircraft rental costs increased $1.8 million, or 13.9%, in 1995.
Astral aircraft lease costs increased $3.0 million because of two
additional aircraft acquired in 1995 and the use of the other 13 aircraft
for the entire year. Astral had an average of 9.8 aircraft in service in
1994 versus 14.3 in 1995. In addition, a sales/leaseback transaction was
executed in June 1994 following the phased-in acquisition of the first 12
Beechcraft aircraft. Accordingly, Astral did not incur any rental costs
on its aircraft during the first half of 1994. Midwest Express' aircraft
rental costs decreased by $1.2 million in 1995 due to a reduction in the
lease cost for two MD-88 aircraft, which became effective in March 1995,
and a non-recurring cost in 1994 of $0.9 million associated with leasing
turboprop aircraft to temporarily support the Astral operation. These
cost reductions were partially offset by a full year of rental expense in
1995 for the three aircraft placed in service in the second quarter 1994
for the Omaha operation.

Other operating expenses increased by $5.3 million, or 20.9%, from
1994. Other operating expenses consist primarily of advertising and
promotion, property and liability insurance, property taxes, reservations
fees, administration and other items. Reservation booking fees increased
$0.8 million in 1995 due to higher passenger volumes and booking fee
rates; insurance costs increased $0.7 million due to the increased number
of aircraft and passengers and higher insurance rates; property taxes
increased $0.6 million primarily due to the increase in the number of
Astral aircraft; advertising costs increased $0.5 million due to an
emphasis on increasing product awareness in Omaha; and telecommunications
costs increased $0.3 million due to higher passenger volumes and
reservations. Other operating expenses on a cost per total ASM basis
increased 5.5% from 1.46 cents in 1994 to 1.54 cents in 1995.

Interest Income/Interest Expense. The net increase in interest
income and expense of $2.1 million relates to an intercompany cash
management program the Company had with Kimberly-Clark Corporation prior
to the Initial Public Offering. Market rates of interest were earned on
the amount of cash the Company had advanced to Kimberly-Clark. Subsequent
to the Initial Public Offering, the Company earned $0.2 million in
interest income and had no interest expense.

Other Income and Expense. Two non-recurring items were incurred in
the third quarter 1995; an employee stock grant cost $0.9 million and
costs associated with the Initial Public Offering, including legal fees,
external audit fees and document printing costs, totalled $0.6 million.

Provision for Income Taxes. The provision for income taxes increased
$8.2 million in 1995. The effective tax rates in 1995 and 1994 were 39.3%
and 38.5%, respectively. The higher tax rate in 1995 was generally
attributable to costs of the Initial Public Offering that are not
deductible for income tax purposes.

Net Income. Net income increased by $12.5 million in 1995, or
187.1%. The net income margin increased to 7.4% in 1995, versus 3.3% in
1994.

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

Operating Revenues. The Company's operating revenues totalled $203.6
million in 1994, a $38.5 million, or 23.3%, increase over 1993. Passenger
revenue, which represented 90.2% of total operating revenues, increased
23.1% over 1993 to $183.7 million. The increase is attributable to a
52.5% increase in passenger volume, which was partially offset by an
11.9% decrease in passenger yield. Of the increase in passenger volume,
52.0% was attributable to the new Astral operation with the remaining
increase in volume attributable to Midwest Express. The decreased yield
was attributable to Midwest Express and was due to pricing discounts
implemented as a result of competitors' discounts, changes in the flight
mix and targeted promotions, primarily in Omaha and other new markets.

Midwest Express' passenger volume increased 25.2% from 1993,
primarily due to the new Omaha operation, increased service to Cleveland,
Kansas City and Newark and full year operations at cities where service
was initiated in 1993. Load factor grew by 1.1 points in 1994 to 60.8%,
as RPMs increased by 23.9% versus a 21.8% increase in capacity. The
increased capacity was due primarily to the introduction of three DC-9
aircraft for the new Omaha operation. The increased passenger volume,
which was partially offset by the 11.9% decrease in yield, caused
passenger revenue to grow to $162.9 million in 1994, a 9.2% improvement
over 1993.

In its partial first year of operations, Astral passenger revenues
were $20.9 million.

Cargo revenue in 1994 increased $2.1 million over 1993 due primarily
to increased mail volume associated with the new Omaha operation.

Excluding a $1.2 million reduction in service charges due to the 1994
expiration of the code-sharing agreement with Mesa, other revenue
increased $3.1 million, or 34.0%, in 1994. Other revenue activities,
which generally produce significant contributions to operating income,
include charter sales, airport handling and contract maintenance sales to
other airlines, transportation service charges and other items. The
increase in other revenue was primarily due to a corporate shuttle program
with an unrelated company (which was discontinued during 1994) and
increased contracted airport handling, ticket exchange service charges,
frequent flyer mileage sales and charter sales.

Operating Expenses. 1994 operating expenses increased $43.2 million,
or 28.9%, from 1993. Of this increase, $16.6 million related to the new
Astral operations. The remainder of the increase was attributable to
Midwest Express' increased passenger volume and costs associated with the
start-up of its Omaha operation. On a cost per total ASM basis, total
operating expenses were 11.08 cents in 1994, virtually unchanged from 1993.

With the addition of 252 and 177 additional full-time equivalent
employees at Midwest Express and Astral, respectively, primarily to
support new operations, salaries, wages and benefits cost per total ASM
increased 4.8% to 3.07 cents in 1994 from 2.93 cents in 1993. Salaries,
wages and benefits increased $13.8 million, or 35.0%, from 1993, of which
$10.8 million related to the employees added in 1994 and to the full year
effect of incremental 1993 employees; $2.6 million was attributable to
labor rate changes; and $0.4 million was due to benefit cost changes.

Aircraft fuel and oil and associated taxes and fueling charges
increased $5.8 million, or 23.5%, in 1994 versus 1993. The average fuel
price per gallon decreased 4.6% to 62.0 cents in 1994, causing the cost of
fuel, oil and associated taxes and fueling cost per total ASM to decrease
by 3.8% to 1.77 cents in 1994 from 1.84 cents in 1993. Fuel consumed
during 1994 increased 29.4% from 1993 due to the start-ups of Omaha and of
Astral.

Commissions increased in 1994 by $3.6 million, or 23.4%, compared to
1993, due to increased passenger revenue. Of this increase, $2.7 million
related to increased travel agency commissions and $0.9 million related to
increased credit card fees.

Dining services costs in 1994 for Midwest Express increased $1.6
million, or 13.7%, from 1993 due to increased passenger volume. Total
dining services costs per Midwest Express passenger decreased from $13.38
in 1993 to 12.15 in 1994. This decrease was primarily due to increased
passenger volume on snack flights.

Station rental, landing and other fees increased by $4.3 million in
1994, a 34.1% increase from 1993. Of this increase, $2.1 million related
to the 1994 start-up of Astral operations. The remainder related to
Midwest Express' new Omaha operation, the effect of full year operations
in Cleveland and Columbus, increased operations at Kansas City and
Dallas/Ft. Worth and increased rental rates in New York.

Aircraft maintenance materials and repairs increased $3.9 million, or
38.7%, from 1993. Of this increase, $2.1 million related to Astral
operations. The remaining increase is due primarily to Midwest Express'
additional aircraft. Aircraft maintenance material and repair cost per
total ASM increased from 0.75 cents in 1993 to 0.80 cents in 1994 due to
the lower number of ASMs generated by Astral's 19-seat aircraft versus
Midwest Express' jet aircraft.

Aircraft rental costs increased by $5.2 million in 1994, a 64.6%
increase from 1993. Of this increase, $3.6 million related to Astral,
consisting of $2.7 million for the aircraft acquired by Astral during 1994
and $0.9 million for short-term wet leases incurred during start-up. The
remaining $1.6 million of the $5.2 million increase related primarily to
the jet aircraft placed into service during 1994 for the new Omaha
operation. Astral leases caused the Company's aircraft rental cost per
total ASM to increase by 28.8% to 0.76 cents in 1994 from 0.59 cents in
1993 because Astral's leases are for new aircraft that have fewer seats
than the leased Midwest Express aircraft.

Other operating expenses increased in 1994 by $4.6 million, or 22.2%,
from 1993. Other operating expenses consist primarily of advertising and
promotion, property and liability insurance, property taxes, reservations,
administration and other items. Of the $4.6 million increase, $1.4
million related to Astral's operation, which began in 1994. The remainder
of the increase was principally caused by increased Midwest Express
advertising, insurance, reservation system booking fees, relocation
(primarily due to the Omaha start-up), corporate communications, flight
simulator rental and telephone costs, primarily for the Company's
reservations operation. Other operating cost per total ASM decreased 5.2%
to 1.46 cents in 1994 from 1.54 cents in 1993 due to a 28.8% increase in
total ASMs from 1993 to 1994.

Interest Income and Expense. Interest income and expense relates to
the intercompany cash management arrangements the Company had with Kimberly-
Clark. The Company's 1994 net interest expense decreased $0.5 million
from 1993 due to the repayment of amounts owed Kimberly-Clark.

Taxes. The provision for income taxes decreased $1.7 million in
1994, from $5.9 million in 1993 to $4.2 million in 1994. The effective
tax rate was 39.4% and 38.5% in 1993 and 1994, respectively.

Net Income. The Company's net income decreased $2.4 million, or
26.7%, in 1994 due to decreased yield. Increased capacity related to the
start-ups of Astral and Omaha caused total operating cost per total ASM of
11.08 cents in 1994 to be virtually unchanged from 1993.

Quarterly Results of Operations

The following table presents selected unaudited consolidated
quarterly results of operations of the Company for 1994 and 1995 and the
first quarter 1996. The results of operations for any quarter are not
necessarily indicative of the results for any future period.

<TABLE>
<CAPTION>
1994 1995 1996
March 31 June 30 September 30 December 31 March 31 June 30 September 30 December 31 March 31
(in thousands)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $45,041 $51,005 $53,981 $53,565 $58,541 $69,393 $67,846 $63,375 $66,608
Operating expenses 41,868 46,400 51,442 52,618 55,880 56,580 56,749 58,572 62,192
Operating income 3,173 4,605 2,539 947 2,661 12,813 11,097 4,803 4,416
Income before
income taxes 2,768 4,152 2,693 1,225 2,994 13,376 10,046 5,110 4,672
Income taxes 1,067 1,599 1,038 472 1,161 5,305 3,741 2,190 1,836
Net income 1,701 2,553 1,655 753 1,833 8,071 6,305 2,920 2,836
</TABLE>

Liquidity and Capital Resources

Prior to the Initial Public Offering, the Company participated in
Kimberly-Clark's cash management program, under which the Company's working
capital and capital expenditure requirements were funded by Kimberly-Clark
and the Company delivered excess cash to Kimberly-Clark. The net amount
owed to or due from Kimberly-Clark was reported on the Company's financial
statements as a short-term intercompany payable or receivable,
respectively. As a result, the Company generally had not utilized third
party lending sources. Rather, the Company's sources of funds for working
capital and capital expenditure requirements included Kimberly-Clark, cash
flow from operations and the financing of certain aircraft acquisitions
through operating lease arrangements.

Prior to 1992, the Company funded its operations and capital needs
through the Kimberly-Clark cash management program. By December 31, 1993,
the Company's cumulative cash flows from operations were sufficient to
reduce the historical negative cash balance with Kimberly-Clark and
resulted in an intercompany receivable of $3.2 million. Immediately prior
to consummation of the Initial Public Offering, (i) the Company ceased
participating in this program, (ii) Kimberly-Clark repaid the outstanding
intercompany receivable in full in the amount of $44.0 million and (iii)
the Company paid a dividend to the Selling Stockholder from its cash on
hand in an amount such that the Company had a resulting initial cash
balance of approximately $9.0 million.

The Company now finances its operations with cash generated from
operations, short-term borrowings under its credit facilities and long-
term financing arrangements relating to the acquisition of jet and
turboprop aircraft. The Company has entered into a $35.0 million three-
year revolving credit facility involving three banks and a five-year $20.0
million secondary revolving credit facility involving Kimberly-Clark.
Borrowings under the Kimberly-Clark facility must be repaid prior to
repayments on the bank credit facility. The bank credit facility requires
a commitment fee of 12.5 basis points of the average unused commitment
with interest payable on the outstanding principal balance at LIBOR plus
50 basis points. The Kimberly-Clark facility does not require a
commitment fee, and interest is at a rate equal to the then current rate
of interest under the bank credit facility plus 100 basis points. The
Company is most likely to require working capital during November,
December or January due to travel seasonality. As of March 31, 1996, the
Company has not used its credit facilities, except for letters of credit
totalling approximately $1.7 million that reduce the amount of available
credit under the bank credit facility.

The Company's cash and cash equivalents totalled $20.3 million at
March 31, 1996 compared to $14.6 million at December 31, 1995. The
Company's working capital deficit, which is primarily due to the Company's
air traffic liability (advance bookings, whereby passengers have purchased
tickets for future flights), accrued scheduled maintenance expense and
accrued lease payments, decreased to $8.5 million at March 31, 1996 from
$9.8 million at December 31, 1995, reflecting increased working capital
provided from operations. Net cash flows provided by operating activities
totalled $25.7 million, $23.1 million, $34.8 million, $7.7 million and
$9.2 million for the years ended December 31, 1993, 1994 and 1995 and the
three months ended March 31, 1995 and 1996, respectively. Net cash from
operations decreased from 1993 to 1994 due to a decrease in yield and
increased costs associated with the start-ups of Astral and Omaha
operations. The increases for 1995 and for the three months ended March
31, 1996 versus the prior periods were due to improvements in passenger
volumes and yields at both Midwest Express and Astral and improved results
from Midwest Express' Omaha operations. The Company entered into
operating leases in December 1995 to finance two of Midwest Express'
recently acquired aircraft, and as of March 31, 1996, the Company had
approximately $4.7 million in receivables from the aircraft lessors
associated with aircraft refurbishment and hush kit costs for these
aircraft that the lessors will pay to the Company in the second quarter
1996.

Consistent with the industry, the Company incurs significant costs
related to the maintenance and overhaul of its aircraft and engines.
Regarding overhauls, the Company primarily uses two generally accepted
accounting principles, the accrual method and the built-in overhaul
method. Under the accrual method, the expected cost of the next overhaul
is accrued, on a pro rata basis, as the aircraft or engine is in service.
Under the built-in overhaul method, the cost of a completed overhaul is
capitalized and amortized, on a pro rata basis, over the period remaining
until the next overhaul. A significant amount of the Company's capital
expenditures relate to airframe and engine overhaul costs accounted for
under the built-in method.

Capital expenditures totalled $6.7 million in 1993, $9.9 million in
1994, $8.0 million in 1995 and $5.0 million for the three months ended
March 31, 1996. In 1993, capital expenditures related mainly to an
airframe overhaul, engine overhauls and replacements and hush kits.
During 1994, the Company's capital spending related primarily to hush kits
and the start-ups of Astral and Omaha operations. In 1995, capital
expenditures related mainly to engine overhauls and aircraft
modifications. Capital expenditures during the three months ended March
31, 1996 included payments relating to the purchase of one of Midwest
Express' recently acquired aircraft. The Company may choose to enter into
a sale-leaseback transaction relating to this aircraft, in which case the
Company would recover approximately $4.0 million of these capital
expenditure payments as part of the transaction. Other investments of
$0.3 million, $1.8 million and $0.2 million in airport slots were made in
1993, 1994 and 1995, respectively.

The Company expects to incur capital expenditures of $19.8 million
during all of 1996 (which assumes that the Company will own only one of
the four recently acquired aircraft), $11.4 million in 1997 and
$17.8 million in 1998. From March 31, 1996 through 2000, the Company
expects aggregate capital expenditures to be approximately $72.0 million.
Of this, approximately $26.5 million will relate to fleet maintenance
requirements, including $23.6 million for engine and airframe overhauls
accounted for under the built-in method of accounting and $2.9 million for
airworthiness directives. The balance includes $14.0 million for the
planned installation of hush kits on owned jet aircraft to comply with
Stage 3 noise requirements, $6.8 million for spare parts and $24.7 million
to support anticipated market expansions and general business needs.
Other than the $14.0 million of spending for aircraft hush kits, there is
no anticipated material capital spending associated with the protection of
the environment.

Generally, the Company chooses whether to lease or own aircraft based
upon its analysis of which option provides the best economic terms, taking
into account effective interest rates and residual values calculated by
the Company and proposed lessors, among other factors. As of May 1, 1996,
the Company owned 14 jet aircraft (including two of Midwest Express'
recently acquired aircraft), which are subject to no outstanding
indebtedness, and leased nine jet aircraft (including the other two
recently acquired aircraft) and 15 turboprop aircraft under leases that
are treated as operating leases for financial accounting purposes. As to
the two recently acquired aircraft that the Company owns, which the
Company acquired in February and April, respectively, the Company has not
finalized financing; the Company anticipates it will secure lease
financing for one and retain ownership of the other. In connection with
its operating leases, the Company has significant lease obligations not
reflected as liabilities on the Company's balance sheet. See Note 5 to
Consolidated Financial Statements. The required frequency of aircraft
lease payments varies, with the current Astral fleet lease payments
payable semi-annually, certain of Midwest Express' jet aircraft leases
payable quarterly, in arrears, and certain of such leases payable monthly.

As of May 1, 1996, leases relating to five of Midwest Express' jet
aircraft and all of Astral's turboprop aircraft are guaranteed by Kimberly-
Clark in return for a guarantee fee paid by the Company. See
"Relationship with Kimberly-Clark." In connection with the refinancing
that the Company anticipated for its 15 turboprop aircraft at the time of
the Initial Public Offering, the Company has given notice to the current
lessors of the turboprop aircraft of its intention to purchase the
aircraft in June 1996, and the Company is pursuing replacement lease
financing that the Company intends to have in place at the time it
purchases the aircraft or as soon as possible thereafter. In addition,
Midwest Express recently exercised a right of first refusal purchase
option for two DC-9-30 aircraft currently under lease, and the Company
anticipates securing lease financing for these two aircraft with a
different lessor in the second quarter 1996. After refinancing the 15
turboprop aircraft and the two aircraft to be acquired under the right of
first refusal purchase option, only three aircraft will remain subject to
leases that Kimberly-Clark has guaranteed. Kimberly-Clark will continue
to guarantee these leases and continue to receive a guarantee fee of
approximately $0.1 million annually. The Company believes its refinancing
of aircraft leases as described above will have no material effect upon
the Company's overall lease expenses.

As a result of the Initial Public Offering, under leases relating to
two of Midwest Express' aircraft that are not guaranteed by Kimberly-
Clark, the lessor has the right to require the Company to make cash escrow
payments to the lessor of stipulated airframe and engine maintenance
reserve amounts. The Company and the lessor have agreed in principle to
substitute a letter of credit under the Company's bank credit facility in
lieu of cash escrow payments. If this agreement is not finalized and the
lessor requires the Company to make the escrow payments, then the Company
will be obligated to immediately fund past accruals totalling
approximately $3.5 million as of May 1996 and, on a monthly basis, fund
future accruals at a monthly rate of approximately $74,000, in each case
by delivering cash to the lessor. In any event, the Company has retained
the right, and intends, to perform (or cause to be performed) the
maintenance to which the reserved amounts relate. For financial
accounting purposes, the Company accrues an amount on a monthly basis
under the accrual method, based upon its estimated cost to perform the
overhauls; the accrual amount is less than the stipulated escrow amount.
The Company is entitled to receive interest on amounts in escrow, and the
lessor will return any amounts in escrow that are in excess of the
Company's cost to perform the overhauls.

All aircraft leases stipulate the maintenance condition the
applicable aircraft must be in upon redelivery of the aircraft at the
expiration of the lease. The Company believes its maintenance program is
equal or superior to that required by the lessors and, accordingly, does
not anticipate additional maintenance requirements at the expiration of
the leases.

The Internal Revenue Service ("IRS") has recently issued a technical
advice memorandum concerning the timing of deducting amounts paid for
engine and airframe overhaul costs. Consistent with industry practice,
the Company deducts such amounts in full in the year paid. The IRS'
position is that such amounts should be capitalized and depreciated on an
accelerated basis over a period of seven years. If the IRS were to
successfully challenge the Company's practices, the result would have an
adverse impact on the Company's cash flows. The Company currently intends
to deduct approximately $8.0 million of these engine and airframe overhaul
costs in 1996; under the IRS' position, the Company could only deduct
these costs over seven years. In any event, because under the Tax
Agreement the Selling Stockholder is generally responsible for income tax
assessments with respect to periods ending on or prior to consummation of
the Initial Public Offering, a final determination adverse to the Company
would not have an adverse effect on the Company with respect to these
periods.

The Company believes its cash flow from operations, funds available
from credit facilities and available long-term financing for the
acquisition of jet aircraft and turboprop aircraft will be adequate to
provide for working capital needs and capital expenditures through 1997.

New Accounting Standard

In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation." SFAS No. 123 establishes a fair value based method
of accounting for stock options. Entities have the option of either
adopting the measurement criteria of the statement for accounting
purposes, thereby recognizing an amount in results of operations on a
prospective basis, or disclosing in the footnotes the pro forma effects of
the new measurement criteria. The Company intends to adopt the pro forma
disclosure features of SFAS No. 123, which are effective for fiscal years
beginning after December 15, 1995.

BUSINESS

Background

Midwest Express evolved out of Kimberly-Clark's desire to provide a
convenient and cost-effective way to meet Kimberly-Clark's internal
transportation needs. In response to escalating travel costs and
inconvenient commercial airline schedules and service, Kimberly-Clark
began daily, nonstop shuttles in October 1982 for its employees traveling
between Kimberly-Clark offices in two cities. Key management personnel
from Kimberly-Clark who successfully operated the shuttle became the
senior management of Midwest Express.

Midwest Express began commercial operations in 1984 with two DC-9-10
aircraft, serving three destinations from Milwaukee's General Mitchell
International Airport. Milwaukee, as Midwest Express' original base of
operations, has been the main focus of its route structure, and Midwest
Express now offers services between Milwaukee and 24 cities. Midwest
Express established Omaha as its first base of operations outside
Milwaukee in May 1994 and now provides the only nonstop service between
Omaha and five destinations.

A key element of the Company's strategy involves establishing
operations bases in cities such as Milwaukee and Omaha that have strong
business communities, are underserved by other jet carriers and do not
have the potential passenger volume to attract significant competition
from airlines that schedule frequent flights requiring a high volume of
traffic in single markets. From an operations base, Midwest Express
provides service primarily to major business destinations. The Company
carefully selects destinations based upon a variety of factors, including
the size of the "origin and destination" traffic between a city and the
base, a stage length of primarily 600 to 1,000 miles so there is
sufficient flight time to enable Midwest Express to provide a premium
level of service and to enable passengers to value the level of service
they receive, demographics that suggest strong business communities
(including population, income, age, education, lifestyle and business
climate information) and the current air service between the cities.
Midwest Express focuses on routes with potential origin and destination
traffic of approximately 50,000 to 100,000 in annual passenger volume
because the Company believes this level of traffic is optimal to provide
Midwest Express DC-9 service without the significant probability of
competition from high density carriers. In examining the current service
in a particular market, the Company considers such factors as the current
availability of nonstop service, the frequency and convenience of flights,
the level of customer service, other airlines' local brand identities,
strength of other airlines' frequent flyer programs and the passenger
yield that airlines in the market experience. The Company then uses such
data to project volume and profitability of the market for the Company.

Astral began operations in early 1994 by taking over routes that Mesa
had operated as a commuter feed system under a code sharing agreement
between Mesa and Midwest Express that expired that year. Under the
agreement, Mesa operated the system beginning in 1989 as "Skyway Airlines"
using Midwest Express' airline code, and Midwest Express performed
reservations, pricing, yield management, scheduling and marketing
functions for Mesa. Astral elected to operate with new 19-seat Beechcraft
1900D aircraft, with stand-up cabins, instead of the Beechcraft 1900C
aircraft that Mesa had used, which have lower ceilings and slower
operating speeds. Astral now serves more cities than Mesa served under
the code sharing agreement and offers service between Milwaukee and more
than 20 Midwestern cities and point-to-point service to other selected
markets.

Route Structure and Scheduling

Systemwide Growth

Midwest Express began commercial operations in 1984 serving three
destinations from Milwaukee. The following table highlights the growth in
the number of cities served by Midwest Express and by Mesa and Astral
operating as "Skyway Airlines" and related financial and other information
for the Company:

<TABLE>
<CAPTION>
Number of Cities Served
as of December 31 Annual Operating Statistics(1)
Aircraft at
Midwest Skyway Operating Operating end of
Year Express Airlines(1) Total(2) Revenues Income Period(3)
(in thousands)

<S> <C> <C> <C> <C> <C> <C>
1984 5 0 5 $ 6,845 $ (3,761) 3
1985 7 0 7 16,013 (2,764) 4
1986 8 0 8 24,803 (1,556) 5
1987 10 0 10 44,189 5,276 5
1988 15 0 15 61,368 5,745 8
1989 16 18 29 91,872 7,474 10
1990 19 20 34 125,825 5,075 12
1991 19 23 37 125,262 568 13
1992 20 25 41 133,946 4,092 14
1993 23 21(4) 38 165,056 15,897 16
1994 24 25 43 203,592 11,264 32
1995 25 26 44 $259,155 $31,374 34(3)

<FN>
(1) Information for "Skyway Airlines" reflects operations of Mesa from 1989 through January 1994 under a code sharing
agreement with Midwest Express and operations of Astral from February 1994 to December 31, 1995. See "Business-
Background." Annual operating statistics do not include information concerning operations of Mesa, which is not
affiliated with the Company.
(2) The total number of cities served may not be the sum of the number of cities served by Midwest Express and Skyway
Airlines because of cities both carriers serve.
(3) Reflects aircraft in service at the end of the period. Since December 1995, Midwest Express has acquired four additional
aircraft, of which one entered service in April and the remainder are anticipated to be placed into service by early
summer, late summer and year end 1996, respectively.
(4) Under its code sharing agreement with Mesa, Midwest Express assisted Mesa in decisions concerning Skyway Airlines
destinations. In advance of the transition from Mesa to Astral, Mesa elected to eliminate service to selected markets.
</TABLE>

Attractive Bases of Operations

Midwest Express currently has two bases of operations, Milwaukee and
Omaha. As of March 31, 1996, Midwest Express served 24 cities from
Milwaukee and was the only carrier providing nonstop service between
Milwaukee and most Midwest Express destinations. To increase utilization
of aircraft and generate incremental revenues and profits, particularly on
weekends, Midwest Express provides seasonal service from Milwaukee to four
cities, Tampa, Ft. Myers, Ft. Lauderdale and Phoenix, which generally
begins in mid-December and runs through April. During the 1994-1995 and
1995-1996 seasons, the Company provided seasonal service without expanding
its fleet by limiting certain seasonal flights to weekends, by decreasing
the frequency of flights on certain routes and by suspending flights to San
Francisco for a three-month period.

Milwaukee's metropolitan population is approximately 1.5 million,
making it the 35th largest metropolitan area in the United States. Thirty-
eight Fortune 500 companies are headquartered and/or have operations in
the Milwaukee metropolitan area. In 1994, the median household effective
buying income in the Milwaukee metropolitan area was $42,648 (compared
with $37,070 nationwide). In 1995, the unemployment rate was 3.4%
(compared with 5.6% nationwide). More than 21% of the Milwaukee
metropolitan population has a college degree. All of these factors help
make Milwaukee a stable metropolitan area with a strong economic base and
prospects for future growth. In 1995, Milwaukee's airport served more
than 5.2 million passengers and was the 56th largest air passenger market
in the United States and Canada based on passenger enplanements. Although
nine other jet airline carriers serve Milwaukee's airport, these carriers
(other than American Trans Air) provide nonstop flights only between
Milwaukee and their respective hubs. Midwest Express served 29.7% of the
passenger airline travel to and from Milwaukee during 1995.

From Omaha, Midwest Express provides nonstop service to Los Angeles,
San Diego (connecting service on weekdays), Milwaukee, Newark, and
Washington National. Omaha passengers can connect to most other cities in
the Midwest Express route system through Milwaukee.

Approximately 663,000 people live in the Omaha metropolitan area,
making it the 60th largest metropolitan area in the United States. Thirty
Fortune 500 companies are headquartered and/or have operations in the
Omaha metropolitan area. In 1995, the median household effective buying
income in metropolitan Omaha was $39,420. In 1995, the unemployment rate
in Omaha was 2.4%. Nearly 23% of adults 25 years or older are college
graduates, compared with 20.3% nationwide. All of these factors
contribute to make Omaha an area of economic stability and create
potential for further growth. Omaha's airport served approximately 3.1
million passengers in 1995 and was the 68th largest air passenger market
in the United States and Canada based on passenger enplanements. Although
10 other jet airline carriers serve Omaha's airport, these carriers (other
than Southwest Airlines and Airtran Airways) provide nonstop flights only
between Omaha and their respective hubs. Midwest Express served 5.4% of
the passenger airline travel to and from Omaha during 1995.

Integration of Astral Operations

Midwest Express coordinates Astral routes and schedules. The Company
primarily has sought to provide Astral service to communities where there
is the opportunity to complement Midwest Express service by giving
passengers on short haul, low density routes to Milwaukee the ability to
connect to Midwest Express flights without switching carrier systems. To
enhance aircraft utilization, Astral also seeks to identify short haul,
low density point-to-point routes where there is likely to be a consistent
demand for air service even though there is no Milwaukee connection. As
of May 1, 1996, Astral offered flights at 24 cities, generally in the
northern Midwest of the United States, and at Toronto, Canada.

Customer Service

Overall

Midwest Express has consistently emphasized, and been recognized by
the public for, the premium customer service that distinguishes Midwest
Express from other airlines. In February 1995, the Zagat Airline Survey
of frequent travelers rated Midwest Express as the "Top U.S. Airline." It
also ranked Midwest Express as the fourth best airline in the world, the
first time a U.S. airline ranked in the top ten. The Zagat Airline Survey
was based upon the responses of 9,394 frequent travelers, including 667
travel industry professionals, during the summer of 1994 and rated 46
airlines based on comfort, service, timeliness, food and cost. The June
1995 issue of a leading consumer magazine reported Midwest Express as
"Best Airline" based on its 1994 survey of 120,000 readers. Twenty
airlines were ranked based on on-time performance, check-in, seat comfort,
crowding, flight attendants, and baggage service. In January 1996, a
leading consumer travel report awarded Midwest Express the designation as
the best U.S. airline for the fifth consecutive year. Conde Nast Traveler
has also rated Midwest Express as one of the top three U.S. airlines for
four straight years and most recently as #1 in its November 1995 Reader's
Choice Awards.

Midwest Express has accomplished its unique level of customer service
through such tangible amenities as a more comfortable seating
configuration, quality cuisine and complimentary wine and champagne, as
well as such intangibles as the accommodating attitude of Midwest Express
employees. Although Astral has less opportunity to provide premium
service due to the limited duration of its short haul flights, it also
focuses on superior customer service within the regional airline industry.

Service-Oriented Employees

The Company believes the pleasantness, enthusiasm and politeness
Midwest Express employees demonstrate are important elements of the
Company's superior service. Accordingly, the Company stresses these
virtues in its careful and selective hiring process and devotes much time
training employees to provide superior service. See "Business-Employees."
When Midwest Express establishes operations in a new destination or base
of operations, it transfers employees from existing operations so that a
sizable percentage of the personnel in the new operations includes
employees who are familiar with the Midwest Express approach. In
addition, promotions are made from within whenever possible.

Premium Seating

Each Midwest Express aircraft is configured with two leather-covered
seats on each side of the aisle that are larger than coach seats on most
other airlines (21 inches wide at the seat cushion compared to 17 to 18
inch wide standard coach seats). There are no middle seats. Midwest
Express has continued to be recognized by a leading consumer travel
report, most recently in June 1995, as having the most comfortable coach
seats in its periodic surveys of U.S. airlines. The number of seats in
each aircraft is also fewer than the number of seats that major airlines
typically install in the same type of aircraft. The following table
illustrates the seating density on Midwest Express' aircraft compared to
the certificate seating capacity for the type of aircraft and the number
of first class and coach seats installed by certain major airlines,
including Northwest Airlines and Trans World Airlines:

Number of Maximum
Number of Seats Seats on Capacity of
Type of On Midwest Selected Major Seats For
Aircraft Express Aircraft Airlines Aircraft Type

DC-9-10 . . . 60 68-78 109
DC-9-30 . . . 84 90-113 127
MD-88 . . . . 112 132-147 172

Astral's airplanes are similarly equipped with leather seats. The
airplanes also feature stand-up cabins and provide passengers with
individual tray tables.

Dining Services

The high quality of Midwest Express cuisine has been recognized
repeatedly in customer surveys. Breakfast and dinner menus consist
typically of a choice of two entrees. Midwest Express offers
complimentary champagne on all breakfast flights and complimentary wine on
all other flights. Since 1986, after an employee's experiment with a
recipe, Midwest Express has offered passengers warm, freshly baked-on-
board chocolate chip cookies during luncheon flights. During 1995,
Midwest Express spent an average of approximately $10 per Midwest Express
revenue passenger meal, compared to an industry average for major carriers
of approximately $5.

Fare Pricing and Yield Management

Airlines generally offer a range of fares that are distinguished by
restrictions on use, such as the times of day and days of the week for
travel, length of stay and minimum advance booking period. Midwest
Express and Astral generally offer the same range of fares that their
competitors offer, although there are exceptions in particular markets
where Midwest Express will discount certain categories of fares more than
its competition to stimulate the market or will charge a premium in
markets where passengers are willing to pay slightly more than the fare of
Midwest Express' competitors because of the convenience of Midwest
Express' nonstop flights and superior service.

The number of seats an airline offers within each fare category is
also an important factor in pricing. Midwest Express constantly monitors
the inventory and pricing of available seats with a computer-assisted
yield management system. The system enables Midwest Express' yield
management analysts to examine Midwest Express' and Astral's historical
demand and increases the analysts' opportunity to establish the optimal
allocation of the number of seats made available for sale at various
fares. The analysts then monitor each flight to adjust seat allocations
and actual booking levels, with the objective of optimizing the number of
passengers and the fares paid on future flights to maximize revenues. As
a result, for each of the last five years, Midwest Express has realized a
yield premium relative to all major U.S. jet carriers in their domestic
operations, and the Company believes Midwest Express carries a higher
percentage of passengers in more expensive fare categories than do major
jet carriers in their domestic operations.

Marketing

Advertising

The Company markets its services primarily by means of listings in
computer reservations systems and the Official Airline Guide; in
advertising and promotions through newspapers, magazines, billboards,
radio and television; and through direct contact with travel agencies and
corporate travel departments. The Company maintains a nationwide toll-
free telephone number for use by passengers to make reservations and
purchase tickets and has sales representatives assigned to all regions
where Astral and Midwest Express operate.

Midwest Express advertises primarily in Wisconsin, the Omaha area
and, because the Company believes the convenience of Milwaukee's airport
will attract passengers from the area, Northern Illinois. In other
markets, the Company uses targeted marketing efforts intended to reach
specific businesses that have a connection between Midwest Express
markets.

Midwest Express' advertising typically stresses its premium service
and nonstop flights. Since 1986, Midwest Express has used the service
mark "The Best Care in the Air."/R/ In addition, from time to time the
airline has promoted fare discounts or its policy of providing superior
service at competitive fares. The Company advertises Astral's "Skyway
Airlines" as "The Midwest Express Connection," promoting its link to
Midwest Express' nonstop service to other destinations. The Company also
advertises Astral as a reliable short haul carrier to certain destinations
with no Milwaukee connection.

Travel Agency Relationships

Midwest Express sells approximately 80% of its tickets through travel
agents, which the Company believes is comparable to the level of many
other airlines. Travel agents generally receive a commission from
airlines based on the price of the tickets they sell. In 1995, many
airlines began limiting the amount of commissions they would pay to agents
for certain higher priced tickets. To date, the Company has determined
not to limit travel agent commissions because the Company believes the
benefits of not imposing a commission limitation have exceeded the
potential cost savings. Airlines often pay additional commissions in
connection with special revenue programs, usually referred to as
"overrides," and airlines often offer reduced fares to many corporate
customers. The Company generally has not paid overrides to travel
agencies and has discount arrangements with only a very limited number of
corporate customers.

The Company maintains its own reservations center in Milwaukee for
Midwest Express and Astral flights. As with most travel agencies, the
Company's reservations center obtains airline information, makes
reservations and sells tickets through a computer reservation system
("CRS"). CRSs are typically owned or operated by one or more airlines,
although the Company has no ownership interest in any CRS. Accordingly,
the Company is vulnerable to the price it must pay for access to any CRS,
including those controlled or operated by its competitors or their
affiliates. The Company currently uses the SABRE CRS owned by AMR
Information Systems ("AMRIS"), a subsidiary of AMR Corporation, the parent
corporation of American Airlines, Inc. The Company is currently
negotiating with CRS providers concerning a new CRS contract.

Frequent Flyer Program

The Company operates a frequent flyer program under which mileage
credits are earned by flying on Midwest Express, Astral or other
participating airlines (including Virgin Atlantic Airways) and by using
the services of participating hotels (including Wyndham, Hilton and Loews)
and car rental firms (including National and Avis). The program is
designed to enhance customer loyalty and thereby retain and increase the
business of frequent travelers by offering incentives for their continued
patronage. The Company's frequent flyer program includes a Mutual Miles
program whereby members in Northwest Airlines' WorldPerks frequent flyer
program and Midwest Express' Frequent Flyer members maintain their
separate accounts, but can choose to redeem award travel on either carrier
or can combine certain mileage from both programs to reach an award level.
This program expires in September 1997.

In October 1995, the Company introduced the Midwest Express
MasterCard in conjunction with Elan Financial Services of Illinois
("Elan"). The program allows Midwest Express to offer a co-branded credit
card to its frequent flyer members and other members of the public to
induce them to become frequent flyers. The Company generates income by
selling frequent flyer miles to Elan, which awards the miles to
cardholders for charges on their credit cards. Similarly, on April 22,
1996, the Company introduced a program in connection with MCI
Telecommunications under which MCI customers are eligible to earn frequent
flyer miles.

Code Sharing Agreements

In 1992, Midwest Express established ties to the international market
through a 5-year code sharing agreement with Virgin Atlantic Airways.
Under the agreement, Midwest Express blocks a certain number of seats for
passengers on its flights between Boston and Milwaukee in connection with
service between Boston and London via Virgin Atlantic. Midwest Express'
Boston-Milwaukee flights are designated in computer reservations systems
and the Official Airline Guide with both Midwest Express and Virgin
Atlantic Airways airline codes.

Astral operates exclusively pursuant to a code sharing agreement with
Midwest Express. Under that agreement, Astral uses Midwest Express'
airline code to identify its flights in the industry's computer
reservation systems and the Official Airline Guide and conducts operations
using Midwest Express' exterior paint schemes.

Although the Company may enter into future code sharing agreements,
particularly with other international carriers, the Company does not
believe future code sharing agreements will be a key element for the
Company's growth.

Related Businesses

Midwest Express also offers ancillary airline services directly to
customers, including freight services. The freight business, which
consists of transporting freight, United States mail and counter-to-
counter packages on regular passenger flights, generated $10.2 million in
revenue in 1995. In addition, Midwest Express provides aircraft charter
services under various circumstances. During 1995, revenues from charter
services were approximately $3.7 million. The primary customers of
aircraft charter services are athletic teams, business groups and tour
operators. In the second quarter 1996, Midwest Express will place one of
its recently acquired aircraft into service primarily to handle charter
operations.

Employees

As of March 31, 1996, Midwest Express had 1,605 employees (317 of
whom were part-time) and Astral had 234 employees (32 of whom were part-
time). The categories of employees were as indicated on the following
table:

Employees as of March 31, 1996
Midwest
Employee Categories Express Astral

Flight Operations . . . . . . . . 226 125
Inflight . . . . . . . . . . . . 280 --
Passenger Services . . . . . . . 501 62
Maintenance . . . . . . . . . . . 225 35
Reservations & Marketing . . . . 252 --
Revenue Accounting & Finance . . 84 7
Administrative . . . . . . . . . 37 5
------- ------
Total . . . . . . . . . . . . . . 1,605 234
====== ======

The Company subjects substantially all of its employees to rigorous
training at the outset of employment. In addition, employees who have
contact with customers generally receive recurrent training each year to
maintain and improve skills.

The Company makes extensive use of part-time employees to increase
operational flexibility. Given the size of Midwest Express' fleet and
flight schedules, the Company does not have continuous operations at many
locations. The use of part-time employees enables Midwest Express to
schedule employees when they are needed. The Company applies the same
standards to hiring part-time employees as it does to full-time employees
to ensure that they are aligned with the Company's service philosophy.
Part-time employees are eligible for the Company's benefits program,
subject to certain restrictions and co-pay requirements, because doing so
enables the Company to attract quality employees and reenforces the value
the Company places on part-time employees. For statistical purposes, the
Company counts each full-time employee as one "full-time equivalent
employee" and each part-time employee as one-half "full-time equivalent
employee."

Labor Relations

The Railway Labor Act ("RLA") governs the labor relations of
employers and employees engaged in the airline industry. Comprehensive
provisions are set forth in the RLA establishing the right of airline
employees to organize and bargain collectively along craft or class lines
and imposing a duty upon air carriers and their employees to exert every
reasonable effort to make and maintain collective bargaining agreements.
The RLA contains detailed procedures which must be exhausted before a
lawful work stoppage can occur.

Until recently, none of the Company's employees have been represented
by labor unions. In July 1995, Astral pilots elected the Air Line Pilots
Association ("ALPA"), a labor union, to represent them for collective
bargaining purposes. The Company began negotiations with ALPA in February
1996. The Company does not know what effects, if any, will result from
such election or whether ALPA will initiate any further organizational
activities seeking to represent Midwest Express pilots.

The Company believes management and employees at Midwest Express have
had excellent relations. Management has encouraged pilots to develop
advisory councils that have been instrumental in developing and overseeing
flight operation policy and procedures.

Employee Benefits

An objective of senior management of the Company is to ensure that
employee interests are aligned with those of the Company's stockholders.
Upon consummation of the Initial Public Offering, the Company made a one-
time contribution to the Midwest Express 401(k) plan of shares of Common
Stock with a cost to the Company of $0.9 million. The Common Stock
contributed to the plan was allocated to accounts of all Midwest Express
employees based upon years of service to the extent permitted by law and
vests in accordance with normal plan vesting rules.

Midwest Express also has established a profit sharing plan, which is
effective in 1996 and will benefit substantially all Midwest Express
employees other than senior management. Midwest Express employees are
eligible for a profit sharing payout based upon the level of operating
income obtained by Midwest Express. Profit sharing payouts will be
determined and paid on an annual basis, not less than 45 days after the
end of the calendar year.

Fleet Equipment

The composition of Midwest Express' aircraft fleet is an important
part of the Company's business strategy of offering a premium airline
service in an efficient manner. The Company believes McDonnell Douglas
DC-9 and MD-88 aircraft, which constitute the entire fleet of Midwest
Express, are generally accepted by the market as safe, dependable
aircraft. The DC-9s allow Midwest Express to meet expected passenger
volumes while minimizing segment costs, and the diversity of the size of
aircraft enhances the Company's ability to more efficiently match its
aircraft to its route network requirements. The uniformity of the fleet
also reduces training and maintenance costs. Midwest Express also
believes its practice of operating pre-owned aircraft is more cost-
effective than purchasing and operating new aircraft because pre-owned
aircraft have a significantly lower acquisition cost, which results in
lower depreciation or lease costs and interest charges. Astral's fleet of
new turboprop airplanes further complement the Midwest Express fleet,
allowing Midwest Express to reach markets it could not otherwise
economically serve.

As reflected in the following table, as of May 1, 1996, Midwest
Express had a fleet of 23 McDonnell Douglas jet aircraft, including
Midwest Express' four recently acquired aircraft, which consisted of eight
DC-9-10 series aircraft, thirteen DC-9-30 series aircraft and two MD-88
aircraft. Fourteen aircraft currently meet Stage 3 noise requirements or
will do so before being placed into service. None of the aircraft owned
by Midwest Express is subject to liens to secure obligations.

Midwest Express Owned/ Date of Stage
Aircraft Leased Manufacture Type

MD-88 Leased 08/22/89 3
MD-88 Leased 09/21/89 3
DC-9-30 Leased 06/26/75 3
DC-9-30 Leased 07/07/75 3
DC-9-30 Leased 07/25/75 3
DC-9-30 Leased 05/07/79 3
DC-9-30 Leased 07/06/79 3
DC-9-30 Leased 06/10/80 3
DC-9-30 Leased 07/21/80 3
DC-9-30 Owned 01/11/68 2
DC-9-30 Owned 11/08/67 2
DC-9-30 Owned 01/02/68 2
DC-9-30 Owned 12/15/67 2
DC-9-30 Owned 11/30/73 3
DC-9-30 Owned 05/24/76 3
DC-9-10 Owned 10/30/66 2
DC-9-10 Owned 01/22/66 3
DC-9-10 Owned 07/29/66 2
DC-9-10 Owned 06/05/65 3
DC-9-10 Owned 02/06/66 2
DC-9-10 Owned 07/14/66 3
DC-9-10 Owned 02/16/66 2
DC-9-10 Owned 08/18/66 2

The two MD-88 aircraft leases expire in 1998. The seven DC-9-30
operating leases expire as follows: two in 1999, three in 2001 and two in
2006.

Astral acquired all new Beechcraft 1900D turboprop aircraft, starting
with its first delivery on January 11, 1994, through the delivery of its
fifteenth airplane on May 18, 1995. As of May 1, 1996, Astral leased the
aircraft from a group of financial institutions. The Company has given
notice of its intention to purchase the aircraft in June 1996 for the
purpose of refinancing the leases.

Noise Abatement

The federal Airport Noise and Capacity Act of 1990 ("ANCA") was
intended to convert the nation's commercial jet service to quieter Stage 3
operations by requiring phaseout of Stage 2 operations (as defined in Part
36 of the Federal Aviation Regulations) by December 31, 1999, subject to
certain exceptions. The FAA regulations that implement ANCA require
carriers to reduce the number of Stage 2 aircraft operated by one of two
methods. Midwest Express has chosen to comply with ANCA by operating a
fleet of jet aircraft that is 65% Stage 3 by the end of 1996, 75% Stage 3
by the end of 1998, and 100% Stage 3 by the end of 1999. As of May 1,
1996, Midwest Express operated 11 Stage 3 aircraft and nine Stage 2
aircraft. Midwest Express intends to meet December 31, 1996 Stage 3
compliance requirements by installing hush kits on the three recently
acquired DC-9-30s that are not yet in service.

Midwest Express is in compliance with and is fully committed to
meeting the interim and final noise compliance requirements as set forth
in ANCA. Midwest Express met the 1994 year-end operational requirements
and has entered into binding contracts with ABS Partnership and United
Technologies Pratt & Whitney Group for the hush kits and related equipment
necessary to convert its Stage 2 aircraft into Stage 3 to meet the 65%
Stage 3 requirements by December 31, 1996. Midwest Express is continuing
to evaluate the economic impact of alternatives for retrofitting or
replacing Stage 2 aircraft. The Company estimates the cost to install
hush kits is approximately $1.8 million for each DC-9-10 and approximately
$2.2 million for each DC-9-30 aircraft. The cost of hush kits installed
on leased aircraft would be added to the underlying operating lease
rental.

ANCA also recognizes the right of airport operators to implement
local noise abatement procedures that do not interfere unreasonably with
the interstate and foreign commerce of the national air transportation
system. ANCA generally requires prior FAA approval of local noise
restrictions on Stage 3 aircraft and establishes a regulatory notice and
review process (but not prior FAA approval) for local restrictions on
Stage 2 aircraft first proposed after October 1990. As the result of
litigation and pressure from airport area residents, airport operators
have adopted airport restrictions on operations over the years to reduce
aircraft noise. These actions have included regulations requiring
aircraft to meet prescribed maximum decibel limits by designated dates,
prohibition on operations during night time hours, restrictions on
frequency of aircraft operations, noise budgets and various operational
procedures for noise abatement. While the Company has had sufficient
operational and scheduling flexibility to accommodate local noise
restrictions imposed to the present and complies with all applicable
airport noise regulations, its operations could be adversely affected if
locally-imposed regulations become more restrictive or widespread.

Flight Data Recorders

The FAA has proposed that flight data recorders ("FDRs") carried on
board certain aircraft be replaced with FDRs that measure 18 parameters of
aircraft operations. Regardless of whether such FAA regulation is
finalized, Midwest Express intends to install the upgraded FDRs in its
fleet by 1998. The Company estimates that the total cost of such upgrade
for its fleet will be approximately $1.0 million.

Maintenance Requirements

Because 12 of Midwest Express' 23 aircraft were manufactured between
1965 and 1968, it is likely that they will require greater maintenance
expense than newer aircraft. The FAA issued several Airworthiness
Directives ("ADs") in 1990 mandating changes to the maintenance program
for older aircraft. These ADs were issued to ensure that the oldest
portion of the nation's transport aircraft fleet remains airworthy. The
FAA is requiring that these aircraft undergo extensive structural
modifications on an ongoing basis after 20 years' service.

Midwest Express is committed to complying with the FAA's requirements
within the timeframe mandated by the applicable AD. Based on its current
fleet and all applicable ADs, Midwest Express estimates that it may incur
additional aggregate expenditures for this purpose of approximately $1.0
million through 1999. Actual expenditures will differ based upon changes
in Midwest Express' fleet composition. The Company believes its aircraft
will remain mechanically reliable and that the estimated cost of
maintenance will be within industry norms. However, management currently
expects to replace some of the older aircraft before it must invest in
hush kits to bring the aircraft in compliance with Stage 3 noise
requirements.

Maintenance and Support

The Midwest Express maintenance facility in Milwaukee provides
maintenance and support for Midwest Express and provides contract services
to third parties. It is an FAA-certified repair station and has
capabilities to perform routine, as well as nonroutine, maintenance on all
types of jet aircraft operated by Midwest Express. Capabilities include
airframe inspections and maintenance, avionics component repair, repair
and overhaul of wheels and brakes, interior refurbishing, nondestructive
testing, and modular teardown and buildup of Pratt & Whitney JT8D-series
engines, but not major engine repairs. Astral operates a separate
maintenance facility in Milwaukee and provides certain maintenance and
support for its own aircraft. The Company believes its two in-house
maintenance programs result in lower costs and superior quality than would
result from contracting for such services with a third party.

In light of its Milwaukee maintenance capabilities, Midwest Express
provides certain maintenance and support services to other companies. As
of May 1, 1996, Midwest Express had contracts to provide on-call
maintenance and support in Milwaukee for most major airlines that operate
at Milwaukee. Midwest Express also provides maintenance and support for
other companies in Omaha, and provides aircraft de-icing services at
Milwaukee, Omaha, Madison and expanding commuter service at Omaha.
Approximately $1.5 million of the Company's revenue for 1995 was
attributable to performing maintenance and de-icing services for third
parties.

It has been the Company's practice to maintain its own ground
handling personnel and equipment where the Company believes either its
volume of flight operations justifies doing so or quality support is not
available from third parties. Currently, Midwest Express has contracts
with third parties for such services in several locations outside its
Milwaukee and Omaha bases of operations. In other locations, Midwest
Express maintains its own personnel and equipment and, in some cases,
provides services to other airlines at those locations. Astral relies on
Midwest Express for ground handling personnel and equipment at those
locations where Midwest Express provides its own such services. In other
locations, Astral provides its own such services or contracts with third
parties for such services.

Fuel

The cost of fuel is the Company's second largest operating expense,
after salaries, wages and benefits. Jet fuel costs are subject to wide
fluctuations as a result of sudden disruptions in supply, such as the
effect of the invasion of Kuwait by Iraq in August 1990. Because the
effect of such events on price and availability of oil, the cost and
future availability of jet fuel cannot be predicted with any degree of
certainty. Increases in fuel prices or a shortage of supply could have a
material adverse effect on the Company's operations and operating results.

The Company's fuel requirements are met by approximately eight
different suppliers. The Company contracts with these suppliers as fuel
is needed, and the terms vary as to price and quantity. The Company has
not entered into any agreement that fixes the price of fuel over any
period of time.

The following table indicates fuel consumption and purchases by
Midwest Express for scheduled operations:

1993 1994 1995

Fuel consumption
(gallons) . . . . . . 37,197,931 45,049,428 50,598,116
Available seat miles
(ASM) . . . . . . . . 1,314,522,304 1,600,437,044 1,794,924,396
Fuel consumption
(gallons) per ASM . . .0283 .0281 .0282
Total fuel costs (1) . $22,760,633 $26,061,435 $29,178,158
Cost per gallon (1) . . $ .612 $ .579 $ .577
Total fuel costs as
percentage of total
Midwest Express
operating costs . . . 15.3% 14.8% 14.5%

(1) Excluding into-plane fees.

Facilities

The Company has secured long-term use of gates and hangar and
maintenance facilities at General Mitchell International Airport in
Milwaukee. The Company is a signatory to the airport master lease, which
expires in 2010, for 14 gates at the Milwaukee airport, including ticket
counter, baggage handling and operations space. In 1989, the Company
completed construction of its maintenance facility at the Milwaukee
airport with a lease of land from the airport that will allow the Company
to exercise a series of five-year options to extend the lease for 60
years. The hangar area of the facility is 48,000 square feet, which can
accommodate four DC-9 aircraft. The facility also has another 16,000
square feet for stockroom and other maintenance operation support. The
Company plans to expand this facility in 1996 to increase office and shop
space by approximately 19,000 square feet.

In 11 of the other 24 cities Midwest Express serves, Midwest Express
leases gates at the airport directly from the airport authority. For the
other 13 cities, Midwest Express subleases gates from other carriers. In
Omaha, Midwest Express has exclusive rights to two gates and leases 11,526
square feet of airport space.

On March 1, 1996, Midwest Express relocated to a new headquarters
building. Midwest Express has contracted to lease the 65,000 square foot
building for a term of 15 years.

Astral has secured long term leases of facilities at Milwaukee's
airport. Astral owns an office and aircraft hangar facility at the
airport. The land on which this facility is located is leased until 2010.
The facility has approximately 20,000 square feet of hangar and
maintenance space, which can accommodate as many as five Beechcraft
1900Ds. The facility also has approximately 5,000 square feet of space
where Astral's administrative offices are located. The Company believes
Astral will need additional office space in the future, but its facilities
are otherwise adequate for current and anticipated future needs.

Astral leases one gate from the Milwaukee airport, under terms that
extend until 2010, and also utilizes one Midwest Express gate. Astral can
park several aircraft in the ramp area serviced by these gates.

Airline Industry Outlook

Airline profitability is highly sensitive to changes in passenger
revenue yield, passenger demand and fuel prices. Each of these factors
was adversely affected from 1990 to 1992 by the general state of the
economy, the effects of the Persian Gulf War and severe industry-wide fare
discounting. As a result, the U.S. domestic airline industry incurred
unprecedented losses during these years. The airline industry began to
improve in 1993, and most major carriers reported strong profits in 1995.
This return to profitability was the result of several significant
developments. Some of these developments, as well as expected future
trends, are discussed below.

Capacity Control

Industry capacity, measured in terms of available seat miles,
increased significantly during the 1980's as new airlines were started and
existing airlines expanded their operations and placed new aircraft into
service. Competition for passenger volume was intense, resulting in
frequent fare promotions and unprofitable operations in many markets.
From 1991 to 1995, growth in domestic capacity was only approximately 1%
annually. Many orders for new aircraft were deferred or cancelled while
some older aircraft were retired. Because of improved industry conditions
and projected traffic growth, the Company believes domestic capacity will
increase in 1996 at rates approximating the increase in passenger traffic.

Traffic Growth

Domestic passenger traffic increased 0.3% in 1993, 5.3% in 1994, and
4.0% in 1995. Much of this growth was caused by low fare, high frequency
carriers that stimulated the leisure passenger market. According to FAA
forecasts, scheduled domestic airline traffic is expected to increase 3.8%
annually during the next ten years. While industry growth can be highly
correlated to broader economic conditions, traffic increases may outpace
the general economy as the airline industry continues to develop
increasingly sophisticated yield management systems designed to maximize
passengers and passenger revenue.

Increase in Leisure/Personal Travel

In the last ten years the percentage of passengers travelling for
leisure or personal reasons as compared to business travel has increased.
The Company believes this trend will continue as industry competition will
remain strong and fares will remain at levels that stimulate nonbusiness
travel.

Reduced Fare Discounting

In the early 1990s, airlines aggressively discounted passenger fares
to increase volume and market share. Other airlines reacted to such fare
action by similarly reducing fares to remain competitive, often at the
expense of profitability. As the larger carriers continue to rationalize
operations by lowering unit costs and shedding unprofitable routes and
hubs, and as newer, smaller airlines tend to have limited market scope and
financial resources, industry-wide fare discounting has become less
severe. However, in specific markets in which low cost carriers provide
service, the offering of unrestricted low fares is increasing. While the
Company believes the industry will continue to offer fare discounts,
particularly in markets in which low cost carriers provide service, the
Company anticipates that the negative impact of broad-based discounting
upon industry-wide profitability will be less severe than experienced in
the early 1990s.

Competition

The Company competes with other air carriers between all cities it
serves. See "Risk Factors-Industry Conditions and Competition." Many of
the Company's competitors have elaborate route structures that transport
passengers to hub airports for transfer to many destinations, including
those served by Midwest Express and Astral. Some competitors offer
flights from cities served by Midwest Express to more than one of their
hub airports, permitting them to compete in markets by offering multiple
routings. For many markets that Midwest Express serves from Milwaukee and
Omaha, the competition does not provide nonstop service, but that
condition could change. In some markets, Astral and Midwest Express also
compete against ground transportation.

The Company has the largest market share of passengers at Milwaukee.
In 1995, the Company carried 29.7% of passengers boarded, while Northwest
Airlines, which has the second largest share, carried 22.7%. In Omaha,
Midwest Express had 5.4% of the market based upon passengers boarded in
1995, compared to 27.2% boarded by United Airlines and 10.7% by Northwest
Airlines, the carriers with the two largest market shares.

Regulation

General

The DOT has the authority to regulate economic issues affecting air
service, including, among other things, air carrier certification and
fitness, insurance, deceptive and unfair competitive practices,
advertising, CRSs and other consumer protection matters such as on-time
performance, denied boarding, and baggage liability. It also is
authorized to require reports from air carriers and to inspect a carrier's
books, records and property. The DOT has authority to investigate and
institute proceedings to enforce its economic regulations and may in
certain circumstances assess civil penalties, revoke operating authority
and seek criminal sanctions.

The FAA regulates the Company's aircraft maintenance and operations,
including flight operations, equipment, aircraft noise, ground facilities,
dispatch, communications, training, security, weather observation, flight
and duty time, crew qualifications, aircraft registration and other
matters affecting air safety. The FAA has the authority to modify,
suspend temporarily or revoke permanently the authority of the Company or
its licensed personnel, after notice and a hearing, for failure to comply
with regulations promulgated by the FAA and to assess civil penalties for
such failures.

The airline also is subject to regulations or oversight by federal
agencies other than the DOT and FAA. The antitrust laws are enforced by
the U.S. Department of Justice; labor relations are generally regulated by
the RLA, which vests certain regulatory powers in the National Mediation
Board with respect to airlines and labor unions arising under collective
bargaining agreements; and the utilization of radio facilities is
regulated by the Federal Communications Commission. Also, the Company is
generally regulated by the Environmental Protection Agency and state and
local agencies with respect to the protection of the environment and to
the discharge of materials into the environment. In addition, the
Immigration and Naturalization Service, the U.S. Customs Service, and the
Animal and Plant Health Inspection Service of the Department of
Agriculture have jurisdiction over inspection of the Company's aircraft,
passengers and cargo to ensure the Company's compliance with U.S.
immigration, customs and import laws.

From time to time, legislation is proposed by Congress and
regulations are proposed by government agencies which could materially
impact the Company's operations and financial condition. For example, the
FAA has proposed regulations that will require Midwest Express to replace
its existing flight data recorders in certain aircraft with flight data
recorders that measure more flight data. See "Fleet Equipment-Flight Data
Recorders." Also, some local governments have adopted laws governing
aircraft operations, including noise abatement, curfews and use of airport
facilities.

Safety

In compliance with FAA regulations, the Company's aircraft are
subject to many different levels of maintenance or "checks" and
periodically go through complete overhauls. Maintenance efforts are
monitored closely by the FAA, with FAA representatives on-site. In 1995,
Midwest Express underwent a Regional Aviation Safety Inspections Program
visit, during which a team of FAA experts from the FAA Regional Office
thoroughly audited Midwest Express' entire maintenance and flight
operations programs over a one-week period. The FAA advised Midwest
Express that there were no adverse findings as a result of its audit.
Also in 1995, Midwest Express underwent an audit by the local FAA Flight
Standards District Office and no significant adverse findings were made.
In 1994, Midwest Express was also the recipient of an in-depth technical
inspection conducted by the Department of Defense ("DOD"). The DOD rated
Midwest Express' operation outstanding.

In 1994, the FAA began a reevaluation of its safety regulations by
calling a summit of senior airline operating officials in January 1995.
Representatives of Midwest Express and Astral participated in the summit.
As a result of the FAA's reevaluation, airlines agreed to undertake
internal audits of their operations and report to the FAA. Midwest
Express and Astral developed procedures for conducting such audits.

Although both Midwest Express and Astral are subject to FAA safety
regulations, the regulations that govern aircraft with 30 seats or fewer
were less stringent than the regulations applicable to aircraft with more
than 30 seats. In December 1995, the FAA finalized regulations that
require smaller aircraft operators to conduct business under more
stringent rules previously applicable only to aircraft with more than 30
seats. In March 1996, Astral submitted its transition plan to the FAA in
order to comply with these regulations by no later than the final
compliance deadline in March 1997. The Company believes compliance with
these requirements will result in approximately $0.4 million in additional
annual costs.

Slots

The FAA's regulations currently permit the buying, selling, trading
and leasing of certain airline slots at Chicago's O'Hare, New York's La
Guardia and Kennedy International and Washington D.C.'s National airports.
A slot is an authorization to take off or land at the designated airport
within a specified time window. The DOT and FAA must be advised of all
slot transfers.

The FAA's slot regulations require the use of each slot at least 80%
of the time, measured on a bi-monthly basis. Failure to do so without a
waiver of the FAA (which is granted only in exceptional cases) subjects
the slot to recall by the FAA. In addition, the slot regulations provide
that slots may be withdrawn by the FAA at any time without compensation to
the carrier holding or operating the slot to meet the DOT's operational
needs (such as providing slots for international or essential air
transportation). The FAA recently concluded a review of slot regulation
and determined that the present structure of the slot system should not be
changed. Midwest Express' ability to increase its level of operations at
certain domestic cities currently served is affected by the number of
slots available for takeoffs and landings.

Insurance

In the opinion of management, the Company maintains insurance
policies of types customary in the industry and in amounts management
believes are adequate to meet DOT requirements and to protect the Company
and its property against material loss. The policies principally provide
coverage for public liability, passenger liability, baggage and cargo
liability, property damage, including coverage for loss or damage to its
flight equipment, and worker's compensation insurance. There is no
assurance, however, that the amount of insurance carried by the Company
will be sufficient to protect it from material loss.

Legal Proceedings

A Commissioner of the Equal Employment Opportunity Commission
("EEOC") filed charges against the Company on July 8, 1992, pursuant to
Title VII of the Civil Rights Act of 1964, as amended, that pertained to
the Company's practices since January 1, 1989. On October 20, 1994, the
Milwaukee office of the EEOC issued a decision finding that reasonable
cause existed to believe the Company violated Title VII by: (a) engaging
in recruitment practices which discriminate against Blacks (as such term
is defined in Title VII); (b) failing to hire Blacks for flight service
representative, aircraft groomer and aircraft mechanic positions; (c)
failing to hire and assign Blacks into entry-level supervisory and
management positions; and (d) failing to maintain proper records on its
employment process in accordance with Section 709 (c)(1) of Title VII and
the Uniform Guidelines Employee Selection Procedures.

Based on these charges and the EEOC's subsequent decision, the EEOC
proposed a conciliation agreement that would have called for the Company
to pay up to $20,000 to publish in local newspapers notice of the
settlement; make $1,010,000 available as a fund for persons allegedly
rejected from employment by the Company or deterred from applying for
employment; pay back pay in the amount of $93,800 for persons denied
promotions; and pay an additional $15,000 for each person identified as a
class member. The Company has denied the allegations by the EEOC, has
rejected the conciliation agreement and intends to vigorously defend
itself against the charges unless a settlement can be reached that would
make it economically impractical to contest the charges. The Company has
not established any reserve in respect of these charges.

In addition to the pending EEOC charges, the Company is a party to
routine litigation incidental to its business. Management believes that
none of this litigation is likely to have a material adverse effect on the
Company's consolidated financial position and results of operations.

MANAGEMENT

Executive Officers and Directors

The following table contains the name, age and position with the
Company of each executive officer and director as of March 31, 1996,
excepting Carol Skornicka, who joined the Company May 13, 1996. Their
respective backgrounds are described below the following table.

NAME AGE POSITION

Timothy E. Hoeksema 49 Chairman of the Board, President and Chief
Executive Officer and Director (1)

Brenda F. Skelton 40 Senior Vice President - Marketing and
Customer Service and Director (2)

Dennis J. Crabtree 56 Senior Vice President - Operations

Roland E. Breunig 44 Vice President, Chief Financial Officer and
Treasurer

Carol Skornicka 54 Vice President, General Counsel and
Secretary

Peter J. Van Hoof 49 Vice President - Safety and Regulatory
Compliance

Richard J. Nelson 53 President and Chief Executive Officer of
Astral Aviation, Inc.(3)

Rex J. Kessler 49 Vice President - Technical Services

Carol J. Reimer 46 Vice President - Human Resources

Robert S. Bahlman 37 Controller

Dennis J. O'Reilly 40 Assistant Treasurer

John Bergstrom 49 Director (4)

Oscar C. Boldt 71 Director (2)

Albert J. DiUlio, S.J. 53 Director (1)

Thomas J. Falk 37 Director (2)

James G. Grosklaus 60 Director (1)

Frederick P. Stratton,
Jr. 57 Director (4)

David H. Treitel 42 Director (1)

John W. Weekly 64 Director (4)

_______________________

(1) Term expires in 1999.
(2) Term expires in 1997.
(3) In May 1996, Mr. Nelson resigned from his position at Astral,
effective May 31, 1996, to accept a position at the University of
North Dakota ("UND") as Managing Director of UND Aerospace, a well-
recognized educational program for aviation professionals. The
Company is in the process of searching for a permanent replacement
for Mr. Nelson. During the transition period, Wayne E. Just, who
has been with Astral since its formation, will serve as Vice
President and Acting General Manager of Astral. Mr. Just has
served as Astral's Vice President-Flight Operations since January
1996 and served as its Director, Flight Operations from January
1995 to January 1996.
(4) Term expires in 1998.

Timothy E. Hoeksema has been a director, the Chairman of the Board,
Chief Executive Officer and President of the Company since 1983. Mr.
Hoeksema joined Kimberly-Clark in 1969 and, prior to 1977, served as its
Chief Pilot. He was elected President of K-C Aviation Inc., a subsidiary
of Kimberly-Clark that provides various aircraft maintenance and
modification services to the general aviation market, in 1977. Mr.
Hoeksema was appointed President - Transportation Sector of Kimberly-Clark
in 1988. Mr. Hoeksema resigned from all positions with Kimberly-Clark as
of August 1, 1995. Mr. Hoeksema is also a director of The Marcus
Corporation, M&I Marshall & Ilsley Bank, the Rawhide Boys Ranch and the
Milwaukee Metropolitan Association of Commerce and a member of the Greater
Milwaukee Committee.

Brenda F. Skelton has served as the Senior Vice President - Marketing
and Customer Service of the Company since March 1995. Prior thereto, Ms.
Skelton served as Vice President of Marketing for the Company from
February 1993 to March 1995. Ms. Skelton also served as Director of
Marketing Programs for the Company from April 1987 to February 1993. Ms.
Skelton has served as a director of the Company since February 1995.

Dennis J. Crabtree has served as Senior Vice President-Operations of
the Company since September 1995 after joining the Company as Vice
President-Operations in May 1995. From July 1994 to May 1995, Mr.
Crabtree served as Vice President-Safety and Regulatory Compliance for
Continental Airlines, Inc., an airline carrier, where he was responsible
for five departments, the functions of which impacted more than 300
aircraft and 40,000 employees worldwide. From January 1993 to July 1994,
Mr. Crabtree served as the President of Continental Express, Inc., an
airline carrier, in which position he served as senior executive officer
of the company. From March 1989 to January 1993, Mr. Crabtree served as
the Staff Vice President-Safety and Regulatory Compliance for Continental
Airlines, Inc., in which position he was responsible for the evaluation
and monitoring of company-wide regulatory compliance.

Roland E. Breunig has served as the Vice President, Chief Financial
Officer and Treasurer of the Company since July 1995. Mr. Breunig served
as the Controller of the Company from 1986 to September 1995. Mr. Breunig
also served as the Controller of K-C Aviation Inc. and other subsidiaries
of Kimberly-Clark and has served in various other capacities at Kimberly-
Clark since 1980. Mr. Breunig resigned from all positions with Kimberly-
Clark and its subsidiaries as of August 1, 1995.

Carol Skornicka began serving as Vice President, General Counsel
and Secretary of the Company May 13, 1996. Ms. Skornicka formerly served
as Secretary of the Wisconsin Department of Industry, Labor and Human
Relations, a position she held from 1991 until joining the Company.

Peter J. Van Hoof has served as Vice President - Safety and
Regulatory Compliance of the Company since March 1995. Prior thereto, Mr.
Van Hoof served from December 1987 to March 1995 as the Vice President-
Expansion Programs of the Company.

Richard J. Nelson has served as President, Chief Executive Officer,
and a director of Astral since January 1994. From March 1992 to January
1994, Mr. Nelson served as the Director of Special Projects-Aircraft
Lease/Finance for Markair, Inc. and Markair Express, Inc., airline
carriers, at which positions he was responsible for a fleet of 39
aircraft, including 12 jet aircraft and 23 turboprop aircraft. From March
1991 to April 1992, Mr. Nelson served as Vice President of Flight
Operations and Maintenance for Markair, Inc. and Markair Express, Inc., at
which positions he was responsible for 180 employees. On May 20, 1992,
Markair, Inc. and Markair Express, Inc. filed for bankruptcy.

Rex J. Kessler has served as Vice President-Technical Services for
the Company since September 1995. Prior thereto, Mr. Kessler served as
Director-Maintenance of the Company from December 1987 to August 1995.

Carol J. Reimer has served as Vice President-Human Resources of the
Company since September 1995. Prior thereto, Ms. Reimer served as
Director-Human Resources for the Company from its commencement of
operations to August 1995 and as Director-Human Resources for K-C Aviation
Inc. from December 1982 to August 1995.

Robert S. Bahlman has served as the Controller of the Company since
September 1995. Prior thereto, Mr. Bahlman served as the Financial
Manager of the Company from July 1990 to August 1995.

Dennis J. O'Reilly has served as the Assistant Treasurer of the
Company since February 1996. Prior thereto, Mr. O'Reilly served as
Business Analyst for the Company from November 1990 to January 1996.

John F. Bergstrom has served as President and Chief Executive Officer
of Bergstrom Corporation, Neenah, Wisconsin, since 1974. Bergstrom
Corporation owns and operates hotels and automobile sales and leasing
businesses in Wisconsin. Mr. Bergstrom has served as a director of the
Company from 1987 to 1991 and from 1993 to present. Mr. Bergstrom is a
director of the Wisconsin Energy Corporation, Universal Foods Corporation,
The First National Bank-Fox Valley and Kimberly-Clark.

Oscar C. Boldt has served as the Chairman of the Board of The Boldt
Group, Inc., a holding company with subsidiaries in general contracting,
development and related businesses, since 1984. Mr. Boldt served as Chief
Executive Officer of The Boldt Group, Inc. from 1984 to 1996. Mr. Boldt
has been a director of the Company since 1983. Mr. Boldt is a director of
Marshall & Ilsley Corporation.

Rev. Albert J. DiUlio has served as President of Marquette
University, Milwaukee, Wisconsin, since August 1990. Prior thereto, Rev.
DiUlio served as President of Xavier University, Cincinnati, Ohio. Rev.
DiUlio is a director of Baird Capital Development Fund, Inc. and Baird
Blue Chip Fund, Inc. and has been a director of the Company since 1993.

Thomas J. Falk has served as Group President, North American Tissue,
Pulp & Paper of Kimberly-Clark since January 1996. Prior thereto, Mr.
Falk served at Kimberly-Clark as Group President, North American Tissue
Products from July 1995 to January 1996; Group President, North American
Consumer Products from January 1995 to July 1995; Group President, Infant
and Child Care from May 1993 to January 1995; Senior Vice President,
Analysis and Administration from January 1992 to May 1993; and Vice
President, Operations Analysis and Control from May 1990 to January 1992.
Mr. Falk became a director of the Company in July 1995. He is also a
director of Kimberly-Clark de Mexico, S.A. de C.V.

James G. Grosklaus is employed by Kimberly-Clark and served as
Executive Vice President of Kimberly-Clark from 1986 to April 1996. In
such position, he was responsible for the Pulp and Newsprint, Paper,
Specialty Products and Service and Industrial Sectors, and also was
responsible for various staff functions. Mr. Grosklaus served in various
capacities with Kimberly-Clark since 1957. Mr. Grosklaus, also a former
director of Kimberly-Clark, has been a director of the Company since 1988.

Frederick P. Stratton, Jr. has served as a director of the Company
since 1987. Mr. Stratton is the Chairman and Chief Executive Officer of
Briggs & Stratton Corporation, a manufacturer of air-cooled engines. Mr.
Stratton has held such positions since 1986. Mr. Stratton is also a
director of Banc One Corporation, Briggs & Stratton Corporation, Weyco
Group, Inc., Wisconsin Energy Corporation and Wisconsin Electric Power
Company.

David H. Treitel has served as a director of the Company since 1984.
Mr. Treitel has served as Chairman and Chief Executive Officer of SH&E,
Inc., an aviation consulting firm, since January 1996 and as President of
SH&E since September 1993. Prior thereto, Mr. Treitel served as the
Executive Vice President of SH&E, Inc. from 1989 to 1993.

John W. Weekly has served as the Chief Executive Officer of Mutual of
Omaha Insurance Company and United of Omaha Life Insurance Company, life
insurance companies, since February 1996, and has served as the President
and Chief Operating Officer of such companies since February 1990. Mr.
Weekly was appointed to the office of Vice Chairman of Mutual of Omaha
Insurance Company and United of Omaha Life Insurance Company in February
1995. Mr. Weekly has been a director of the Company since April 1995.

The Company's Restated Articles of Incorporation and By-laws provide
for three classes of directors, with staggered terms expiring seriatim at
each annual meeting of stockholders. Pursuant to the Restated Articles of
Incorporation, the Company has 10 directors, three in the class whose term
will expire in 1997, three in the class whose term will expire in 1998,
and four in the class whose term will expire in 1999. The Company's
Restated Articles of Incorporation further sets forth certain notice
requirements in connection with director nominations.

The Company's Board of Directors has established an Audit Committee,
a Compensation Committee, a Board Affairs and Nominating Committee, and an
Executive Committee.

The duties of the Audit Committee are to recommend to the Board of
Directors the selection of independent public accountants to audit
annually the books and records of the Company, discuss with the
independent auditors and internal auditors the scope and results of
audits, and approve and review any nonaudit services performed by the
Company's independent auditing firm.

The duties of the Compensation Committee are to provide a general
review of the Company's compensation and benefit plans to ensure that they
meet the Company's objectives. The Compensation Committee has the sole
authority to administer the Option Plan described below and to grant
awards thereunder. In addition, the Compensation Committee approves the
Chief Executive Officer's compensation and reviews the Chief Executive
Officer's recommendations on (i) the compensation of all other officers of
the Company, (ii) the grant of awards under the Company's then existing
compensation and benefit plans other than such Option Plan and (iii) the
adoption of major Company compensation policies and practices. The
Compensation Committee reports its recommendations to the Board of
Directors for approval and authorization.

The duties of the Board Affairs and Nominating Committee are to
recommend to the Board of Directors nominees for election as Directors of
the Company and to review compensation and benefits for the Board of
Directors and other matters relating to the Board.

The Executive Committee may exercise all the authority of the Board
of Directors of the Company in the management of its business affairs
except for matters related to the composition of the Board and its
committees, changes in the By-laws, matters specifically delegated to
other committees and certain other significant corporate matters.

Director Compensation

All directors who are not employees of the Company, any subsidiary of
the Company or any 10% or greater shareholder of the Company
("Non-employee Directors") are paid an annual retainer and also receive a
fee of $1,500 and $500 for each Board meeting and committee meeting,
respectively, that they attend after the Initial Public Offering.
Pursuant to the Midwest Express Holdings, Inc. 1995 Stock Plan for Outside
Directors (the "Director Plan"), the annual retainer is payable in 300
shares of Common Stock, and at the election of a director, a portion or
all of the meeting and committee fees are also payable in shares of Common
Stock, commencing as of April 19, 1996, the date shareholders of the
Company approved the Director Plan. Pursuant to the Director Plan,
Non-employee Directors may also defer the receipt of fees for purposes of
deferring recognition of income for tax purposes. This deferral may be
made to a share account for Common Stock granted under the Director Plan
or to a cash account for those fees payable, at the Non-employee
Director's election. Such deferred fees (i) will be treated as invested
in Common Stock, and ultimately will be paid in Common Stock, to the
extent such fees would have been paid in Common Stock, or (ii) will
otherwise earn a return at market rates. All directors are reimbursed for
expenses incurred in connection with attendance at Board and committee
meetings.

Executive Compensation

The following table sets forth certain information regarding
compensation paid during each of the Company's last two years to the
Company's Chief Executive Officer and each of the Company's four other
most highly compensated executive officers (collectively, the "named
executive officers") by the Company and its affiliates or Kimberly-Clark
and its affiliates for services rendered in all capacities to the Company
and its affiliates at any time during such periods and/or to Kimberly-
Clark and its affiliates prior to the Initial Public Offering.

<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>

Long-Term Compensation
Annual Compensation Awards

Other Awards
Annual Securities All Other
Name and Principal Fiscal Salary Compensa- LTIP Underlying Compensa-
Position Year ($) Bonus ($) tion ($) Payouts($) Options (#) tion ($)(3)
MEH (1) K-C(2)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Timothy E. Hoeksema, 1995 $299,700 $280,000 $0 $0 50,000 20,000 $4,725
Chairman of the 1994 285,000 82,000 0 293,193 0 0 4,500
Board, President
and Chief
Executive Officer

Brenda F. Skelton 1995 116,666 62,753 0 0 15,000 6,000 3,457
Senior Vice 1994 96,687 18,810 0 0 0 0 2,868
President-
Marketing and
Customer Service

Peter J. Van Hoof 1995 106,834 32,375 0 0 5,000 900 2,337
Vice President- 1994 103,040 13,570 0 0 0 0 3,055
Safety and
Regulatory
Compliance

Roland E. Breunig 1995 106,050 32,375 0 0 10,000 1,000 3,182
Vice President, 1994 99,150 13,161 0 32,984 0 0 2,975
Chief Financial
Officer and
Treasurer

Dennis J. 1995 90,800 44,280 28,667(5) 0 15,000 0 1,050
Crabtree(4)
Senior Vice
President-
Operations

_______________
<FN>

(1) Represents options granted under the Midwest Express Holdings, Inc.
1995 Stock Option Plan.

(2) Represents options to purchase shares of common stock of Kimberly-
Clark, in each case granted by Kimberly-Clark in 1995 prior to
consummation of the Initial Public Offering. As a result of
Kimberly-Clark reducing its ownership of the Company, upon
consummation of the Offering, 70% of all such options will terminate,
and the remaining 30% will expire ninety days after the Offering.

(3) Amounts shown for 1995 consist solely of Kimberly-Clark's
contributions under the Kimberly-Clark Salaried Employees Incentive
Investment Plan prior to the Initial Public Offering and/or Midwest
Express' contributions under the Midwest Express Airlines Savings and
Investment Plan after the Initial Public Offering.

(4) Mr. Crabtree's employment with Midwest Express began on May 18, 1995.

(5) Amount consists solely of relocation expense and related tax gross-
up.
</TABLE>

The following table presents certain information as to grants of
options to purchase Common Stock made to each of the named executive
officers during 1995 pursuant to the Midwest Express Holdings, Inc. 1995
Stock Option Plan (the "Option Plan"), as well as certain information
relating to grants of options to purchase shares of common stock of
Kimberly-Clark made to certain of the named executive officers during 1995
prior to consummation of the Initial Public Offering. The Option Plan
authorizes the grant of options to purchase up to 250,000 shares of Common
Stock. The exercise price of an option issued under the Option Plan
cannot be less than the fair market value of the Common Stock on the date
of grant.

<TABLE>
Option Grants in 1995
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Grant Term (1)

Name Percentage
of Total
Number of Options
Securities Granted to Exercise
Underlying Employees in or Base At 5%
Options Fiscal Price Expiration Annual At 10% Annual
Granted Year ($/share) Date Growth Rate Growth Rate

<S> <C> <C> <C> <C> <C> <C>
Common Stock (2)

Timothy E. Hoeksema 50,000 38.5% $18 09/21/05 $566,006 $1,434,369
Brenda F. Skelton . 15,000 11.5% 18 09/21/05 169,802 430,311
Peter J. Van Hoof . 5,000 3.8% 18 09/21/05 56,601 143,437
Roland E. Breunig . 10,000 7.7% 18 09/21/05 113,202 286,874
Dennis J. Crabtree 15,000 11.5% 18 09/21/05 169,802 430,311

Kimberly-Clark
Common Stock(3)

Timothy E. Hoeksema 20,000 N/A 51 02/16/05 641,473(3) 1,625,617(3)
Brenda F. Skelton . 6,000 N/A 51 02/16/05 192,442(3) 487,686(3)
Roland E. Breunig 1,000 N/A 51 02/16/05 32,074(3) 81,281(3)
Peter J. Van Hoof . 900 N/A 51 02/16/05 28,867(3) 73,153(3)

_______________
<FN>

(1) This presentation is intended to disclose the potential value that
would accrue to the optionee if the option were exercised the day
before it would expire and if the per share value had appreciated at
the compounded annual rate indicated in each column. The assumed
rates of appreciation of 5% and 10% are prescribed by the rules of
the Securities and Exchange Commission regarding disclosure of
executive compensation. The assumed annual rates of appreciation are
not intended to forecast possible future appreciation, if any, with
respect to the price of the Common Stock or Kimberly-Clark's common
stock.

(2) The options to purchase Common Stock reflected in the table (which
are nonstatutory stock options for purposes of the Internal Revenue
Code of 1986, as amended) were granted effective September 22, 1995,
and vest 30% on the first anniversary of the date of grant, another
30% on the second anniversary of the date of grant and the final 40%
on the third anniversary of the date of grant. The options are
subject to early vesting in the case of the optionee's death,
disability or retirement or a change of control (as defined in the
Option Plan) of the Company.

(3) Information relates to options granted to Mr. Hoeksema, Ms. Skelton
and Messrs. Breunig and Van Hoof prior to the Initial Public Offering
giving them the right to purchase shares of common stock of Kimberly-
Clark, which was the parent company of the Company at the time of the
grant. As a result of Kimberly-Clark reducing its ownership of the
Company, upon consummation of the Offering, 70% of all such options
will terminate, and the remaining 30% will expire ninety days after
the Offering. Taking into account the revised number of options and
assuming a term of one and one-half years, each of Mr. Hoeksema, Ms.
Skelton and Messrs. Breunig and Van Hoof has potential realizable
value in Kimberly-Clark options at an assumed 5% and 10% annual
growth rate, respectively, as follows: Mr. Hoeksema: $23,235 and
$47,030; Ms. Skelton: $7,745 and $15,677; Mr. Breunig: $1,162 and
$2,352; and Mr. Van Hoof: $1,046 and $2,117.
</TABLE>

The following table sets forth information regarding (i) the
exercise during 1995 prior to the Initial Public Offering of stock options
by each of the named executive officers under Kimberly-Clark plans and
(ii) the year-end value of unexercised options held by such officers under
the Option Plan. No options to acquire Common Stock were exercised during
1995.

<TABLE>
Aggregated Option Exercises in 1995
and Option Values as of December 31, 1995
<CAPTION>
Midwest Express Options

Number of
Securities
Underlying Value of
Unexercised Unexercised in-
Options at the-Money Options
December 31, at December 31,
Kimberly-Clark Options 1995(#) 1995($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($)(1) Unexercisable Unexercisable

<S> <C> <C> <C> <C>
Timothy E. Hoeksema 4,000 $197,125 0/50,000 $0/$481,250
Brenda F. Skelton 0 0 0/15,000 0/144,375
Peter J. Van Hoof 0 0 0/5,000 0/48,125
Roland E. Breunig 0 0 0/10,000 0/96,250
Dennis J. Crabtree 0 0 0/15,000 0/144,375
_______________
<FN>
(1) The dollar values are calculated by determining the difference
between the fair market value of the underlying stock as of the date
of exercise or December 31, 1995, as the case may be, and the
exercise price of the options.
</TABLE>

Pension Plan

Midwest Express will provide retirement benefits to certain of its
U.S. employees, including the named executive officers, through a pension
plan for employees (the "Midwest Express Pension Plan"). The following
table illustrates the estimated annual benefits payable upon retirement at
age 65 under the Midwest Express Pension Plan for the specified highest
five-year average remuneration and years of service classifications.

<TABLE>
Pension Plan Table
<CAPTION>

Years of Service

Five-Year Average
Remuneration($) 15 20 25 30 35 40

The Midwest Express Pension Plan entitles each vested employee to an
annual pension benefit at normal retirement equal to 1.50% of final
average earnings times the employee's years of service and subject, in
some cases, to deduction for social security benefits. Final average
earnings is defined as the highest average of any five consecutive years
of compensation (as defined in the Midwest Express Pension Plan) out of
the last fifteen calendar years of employment, or the average compensation
over the last sixty months of employment, if greater.

Retirement benefits for participants who have at least five years of
vesting service may begin on a reduced basis at age 55, or on an unreduced
basis at normal retirement age. Unreduced benefits also are available for
participants with 10 years of vesting service at age 62 or as early as age
60 with 30 years of vesting service. The normal form of benefit is a
single-life annuity payable monthly. Benefits will be actuarially
adjusted if the employee receives one of the available forms of joint and
survivor annuity or other option forms of payment.

Service recognized under Kimberly-Clark's pension plan is counted for
eligibility and vesting purposes and, for certain transferring employees,
benefit accrual purposes under the Midwest Express Pension Plan.

The benefits illustrated in the foregoing table are computed on a
single-life annuity basis. Benefits will be adjusted if the employee
receives one of the optional forms of payment. Benefits under the Midwest
Express Pension Plan are limited to the extent required by tax provisions.
To the extent benefits under the pension plan are limited under tax law,
any excess will be paid pursuant to supplemental retirement arrangements.
Remuneration covered by the Midwest Express Pension Plan is a
participant's salary and bonus, as shown in the Summary Compensation Table
for the named executive officers.

The estimated years of benefit service, as of normal retirement at
age 65, for the named executive officers under the Midwest Express Pension
Plan are as follows: Mr. Hoeksema, 42 years; Ms. Skelton, 34 years; Mr.
Van Hoof, 39 years; Mr. Breunig, 37 years; and Mr. Crabtree, 10 years.

Agreements with Named Executive Officers

The Company has agreements with each of the named executive officers
that provide that each officer is entitled to benefits if, after a change
in control (as defined in the agreements) of the Company, such officer's
employment is ended through (i) termination by the Company, other than by
reason of death or disability or for cause (as defined in the agreements),
or (ii) termination by the officer following the first anniversary of the
change in control or due to a breach of the agreement by the Company or a
significant adverse change in the officer's responsibilities. In general,
the benefits provided are: (a) a cash termination payment one to three
times the sum of the executive officer's annual salary and highest annual
bonus during the three years before the termination, (b) continuation of
equivalent hospital, medical, dental, accident, disability and life
insurance coverage as in effect at the time of termination, (c)
supplemental pension benefits, and (d) outplacement services. The
agreement provides that, if any portion of the benefits under the
agreement or under any other agreement would constitute an "excess
parachute payment" for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"), then benefits are reduced so that the executive
officer is entitled to receive $1 less than the maximum amount that such
officer can receive without becoming subject to the 20% excise tax imposed
by the Code, or which the Company may pay without loss of deduction under
the Code.

CERTAIN TRANSACTIONS

In July 1995, Chocolate Chip Limited Partnership, a Wisconsin limited
partnership ("Chocolate Chip"), purchased a parcel of land located at 6744
South Howell Avenue, Oak Creek, Wisconsin, from Midwest Express at a
purchase price of $258,500. The Boldt Group, Inc. controls Boldt
Development Corporation, a member of the limited liability company that is
the general partner to Chocolate Chip. Oscar C. Boldt, a member of the
Company's Board of Directors, is the Chairman of the Board of The Boldt
Group, Inc. The sale price for the parcel was determined on the basis of
two independent appraisals, and the Company believes such price represents
a price no less favorable to Midwest Express than could be obtained from
an unaffiliated party.

On June 30, 1995, Midwest Express entered into a lease with Chocolate
Chip for a corporate headquarters to be built at 6744 South Howell Avenue
in Oak Creek, Wisconsin. The lease began on March 1, 1996. The lease is
for an initial term of 15 years and provides for rental payments of
$557,200 per year for the first five years, $625,457 per year for years
six through ten, and $703,639 per year for years eleven through fifteen.
The lease also requires the Company to pay all expenses relating to the
building. The lease terms were obtained through a competitive bidding
process, and the Company believes the terms are no less favorable to
Midwest Express than could be obtained from an unaffiliated party.

See "Relationship with Kimberly-Clark" for a discussion of certain
relationships and transactions involving the Company and Kimberly-Clark
and its affiliates, including the Selling Stockholder.

RELATIONSHIP WITH KIMBERLY-CLARK

The discussion below includes summaries of the material provisions of
certain agreements affecting the relationship between Kimberly-Clark and
the Company. All of these agreements have been structured and documented
by Kimberly-Clark and the Selling Stockholder without independent legal
representation of the Company and have not been negotiated on an arm's
length basis.

In connection with the Initial Public Offering, the Company, Midwest
Express, Astral, Kimberly-Clark and the Selling Stockholder entered into a
Tax Allocation and Separation Agreement (the "Tax Agreement"). Pursuant
to the Tax Agreement, the Company is responsible for all taxes with
respect to the Company for all periods, but the Selling Stockholder will
be responsible for, or entitled to, U.S. federal, state and local income
and franchise tax assessments or refunds with respect to periods ending on
or prior to the consummation of the Initial Public Offering. Pursuant to
the Tax Agreement, for purposes of federal and certain states' income
taxes, the Company is treated as if it purchased all of Midwest Express'
assets, and as a result, the tax basis of Midwest Express' assets was
increased to the deemed purchase price of the assets. The tax on the
amount of the gain on the deemed asset purchase was paid by the Selling
Stockholder. This additional basis results in increased income tax
deductions and, accordingly, reduced income taxes payable by the Company.
Pursuant to the Tax Agreement, the Company is paying to the Selling
Stockholder the amount of such benefit with respect to the additional
basis (retaining 10% of such tax benefit), as realized on a quarterly
basis, calculated by comparing the Company's actual taxes to the taxes
that would have been owed had the increase in basis not occurred. The
Company made a payment of approximately $76,000 to the Selling Stockholder
in connection with such election for the portion of 1995 after the Initial
Public Offering. The Company's payment in connection with such election
for the first quarter 1996 was approximately $446,000. In the event of
certain business combinations or other acquisitions involving the Company,
tax benefit amounts thereafter will not take into account, under certain
circumstances, income, losses, credits or carryovers of businesses other
than those historically conducted by Midwest Express or the Company. The
Company has agreed that it will not enter into any transaction a
significant purpose of which is to reduce the amount payable to the
Selling Stockholder under the Tax Agreement. Except as described above,
and except for the 10% benefit, the effect of the Tax Agreement generally
is to put the Company in the same financial position it would have been in
had there been no increase in the tax basis of Midwest Express' assets in
connection with the Initial Public Offering.

Prior to the Initial Public Offering, Kimberly-Clark provided various
administrative and financial services to the Company and its subsidiaries,
including management information systems, employee benefits
administration, legal, tax, treasury, accounting and risk management
services, and certain other corporate staff and support services.
Concurrently with the consummation of the Initial Public Offering, the
Company and Kimberly-Clark entered into a shared services agreement giving
the Company the right to continue to receive certain of these services
(the "Shared Services Agreement"). The Shared Services Agreement extends
to December 31, 1996, but may be terminated earlier by the Company.
Further, the Company has the right to elect whether to receive any
individual services and may choose to cease receiving any individual
service at any time. The fees payable by the Company to Kimberly-Clark
under the Shared Services Agreement have been and will continue generally
to be at rates approximately equivalent to Kimberly-Clark's cost of
providing these services, and are payable on a monthly basis. In 1995,
the Company incurred fees of approximately $180,000 payable to Kimberly-
Clark under the Shared Services Agreement, of which approximately $130,000
was paid in 1995. For the first quarter 1996, the Company incurred fees
of approximately $155,000 under the Shared Services Agreement. Amounts
payable to Kimberly-Clark under the Shared Services Agreement will
decrease over time as the Company relies less upon Kimberly-Clark to
provide services, although the Company will incur costs to replace
services that Kimberly-Clark has previously provided. The Company,
Kimberly-Clark and a software vendor of Kimberly-Clark are currently in
discussions regarding the additional costs, if any, to the Company and/or
Kimberly-Clark that may arise out of the Company's use of the vendor's
software after the Initial Public Offering under the Shared Services
Agreement. While the Company does not believe it has any obligation to
Kimberly-Clark or the vendor as to any additional costs, the Company
believes the maximum additional costs it would be obligated to bear upon
the ultimate resolution of this matter, which would result in a one-time
other operating expense charge, is $0.2 million.

As a participant in Kimberly-Clark's central cash management program
prior to the Initial Public Offering, cash generated by the Company and
its subsidiaries prior to the Initial Public Offering was transferred to
Kimberly-Clark and classified as a receivable from Kimberly-Clark and
affiliated companies. In 1995, the Company earned approximately $1.4
million in interest on this receivable. Kimberly-Clark paid interest on
the amounts Kimberly-Clark owed to the Company at a rate imposed
arbitrarily by Kimberly-Clark equal to the 30-day commercial rate for high
grade unsecured notes, which the Company believes was a rate lower than
the Company might have obtained if the Company had the ability to retain
and invest such funds with nonaffiliated entities. Immediately prior to
consummation of the Initial Public Offering, (i) the Company ceased
participating in this program, (ii) Kimberly-Clark repaid the outstanding
intercompany receivable in full in the amount of $44.0 million and (iii)
the Company paid a dividend to K-C Nevada from its cash on hand such that,
after consummation of the Initial Public Offering, the Company had cash on
hand in the amount of approximately $9 million.

During 1995, travel by Kimberly-Clark employees accounted for
approximately 1.6% of the Company's revenues. Since January 24, 1994,
Midwest Express has had a Corporate Promotion Agreement with Kimberly-
Clark, under which employees of Kimberly-Clark receive a discount on
airfares for flights on Midwest Express and Astral. The agreement is
consistent with the terms that Midwest Express offers to certain
unaffiliated parties after taking into account volume. Employees of
Kimberly-Clark and its affiliates received air fare discounts of
approximately $0.4 million in the year ended December 31, 1995.

Kimberly-Clark has guaranteed leases relating to five of Midwest
Express' jet aircraft and all of Astral's turboprop aircraft. The Company
pays Kimberly-Clark an annual guarantee fee equal to 1.25% of the
outstanding lease balances subject to guarantee. Although the guarantee
fee was fixed by Kimberly-Clark after its review of lease rates that might
be available to the Company in the absence of the guarantee, such
guarantee fee has not been negotiated on an arm's length basis and may or
may not approximate that which an independent third party would charge.
However, to the extent that the Company can renegotiate its leases or
enter into new leases at rates more favorable to the Company than if the
guarantees remain in place, the Company has the ability to do so and
thereby reduce or eliminate its guarantee fees to Kimberly-Clark. Under
the guarantee fee arrangement, the Company cannot renew or amend material
economic terms of guaranteed leases without Kimberly-Clark's consent. In
1995 and for the first quarter of 1996, the Company incurred guarantee
fees payable to Kimberly-Clark in the amount of approximately $145,000 and
$300,000, respectively. Guarantee fee amounts payable to Kimberly-Clark
will decrease as the Company amends or refinances leases that Kimberly-
Clark has guaranteed. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." However, the Company expects that its overall lease expenses
will be approximately the same.

Kimberly-Clark provided the Company with a five-year $20 million
secondary revolving credit facility for use in the event that the Company
does not have amounts available for borrowing under its $35 million
revolving bank credit facility. Borrowings under the Kimberly-Clark
facility must be repaid prior to repayments under the bank credit
facility. Interest on the Kimberly-Clark facility is at a rate equal to
the then current rate on bank credit facility borrowings plus 100 basis
points. The Company did not borrow under the Kimberly-Clark facility in
1995.

In connection with the Initial Public Offering, the Company and
Kimberly-Clark entered into an Employee Matters Agreement. Pursuant to
this agreement, the Company is responsible for all compensation and
benefit claims of employees of the Company and its subsidiaries, with
certain exceptions. The Company has adopted successor plans and
arrangements for employees of the Company and its subsidiaries that in
general duplicate those of Kimberly-Clark that covered them prior to the
Initial Public Offering, and service has been credited under the successor
plans and arrangements for prior service. Kimberly-Clark remains liable
with respect to welfare benefit claims of former employees and their
dependents and claims of current employees incurred prior to consummation
of the Initial Public Offering. Kimberly-Clark will cause a transfer of
assets and liabilities from its qualified 401(k) plan and its qualified
pension plan to the Company's successor plans with respect to those
employed by the Company and its subsidiaries as of consummation of the
Initial Public Offering. The pension plan asset transfer will represent a
proportionate share of pension plan assets attributable to the Company's
employees determined in accordance with Code and Pension Benefit Guaranty
Corporation requirements. Obligations under the qualified 401(k) plan and
qualified pension plan with respect to employees whose employment
terminated prior to consummation of the Initial Public Offering remained
with Kimberly-Clark and its qualified plans.

Pursuant to the Initial Public Offering, Kimberly-Clark and the
Company entered into a Closing Matters Agreement to provide for the
orderly transition of ownership of Midwest Express from a Kimberly-Clark
subsidiary to the Company. Midwest Express and Kimberly-Clark made pro
rata payments to one another pursuant to the Closing Matters Agreement to
appropriately allocate such items as payroll expense, Initial Public
Offering expenses and other matters to be borne separately by the parties
after the Initial Public Offering. Net payments to the Company in 1995
under the Closing Matters Agreement were approximately $234,000. Initial
Public Offering expenses, which the Company bore exclusively although the
Company received no proceeds from the Initial Public Offering, were
approximately $600,000.

In connection with the Initial Public Offering, the Selling
Stockholder and the Company entered into a Stock Agreement (the "Stock
Agreement") providing for the transfer by the Selling Stockholder of all
the outstanding capital stock of Midwest Express in exchange for 6,428,571
shares of Common Stock, of which the Selling Stockholder sold 5,140,000
shares pursuant to the Initial Public Offering. The Selling Stockholder
has agreed to indemnify the Company for any liabilities the substance of
which is based solely on the information provided by Kimberly-Clark or the
Selling Stockholder about Kimberly-Clark or the Selling Stockholder (but
not the Company) contained in specified portions of the registration
statements relating to the Initial Public Offering and this Offering. The
Company has agreed to indemnify Kimberly-Clark and its affiliates for any
other liability related to this Offering and the Initial Public Offering
in respect of such registration statements. In connection with the Stock
Agreement, the Company also agreed to bear exclusively the expenses of
this Offering, which are estimated to be approximately $200,000, although
the Company will receive no proceeds from this Offering.

Mr. Bergstrom, a director of the Company, is a member of the board of
directors of Kimberly-Clark. Mr. Falk, also a director of the Company, is
an executive officer of Kimberly-Clark, and Mr. Grosklaus, also a director
of the Company, is a former executive officer and director of Kimberly-
Clark.

PRINCIPAL STOCKHOLDERS AND SELLING STOCKHOLDER

The following table sets forth beneficial ownership of Common
Stock at March 31, 1996, except as otherwise noted, by certain persons,
including the Company's directors and executive officers, and after this
Offering by the Selling Stockholder.

<TABLE>
<CAPTION>
Prior to the Offering After the Offering

Common Stock Shares to be Common Stock
Name Beneficially Owned Percentage Sold Beneficially Owned Percentage

<S> <C> <C> <C> <C>
Timothy E. Hoeksema 3,758(1)(2) * -- 3,758(1)(2) *
Brenda F. Skelton 537(1) * -- 537(1) *
Peter J. Van Hoof 0 -- -- 0 --
Roland E. Breunig 593(1)(3) * -- 593(1)(3) *
Dennis J. Crabtree 27(1) * -- 27(1) *
John F. Bergstrom 10,900(4) * -- 10,900(4) *
Oscar C. Boldt 5,000 * -- 5,000 *
Albert J. DiUlio, S.J. 0 -- -- 0 --
Thomas J. Falk 1,000 * -- 1,000 *
James G. Grosklaus 1,000 * -- 1,000 *
Frederick P. Stratton, Jr. 16,750 * -- 16,750 *
David H. Treitel 500 * -- 500 *
John W. Weekly 400 * -- 400 *
All directors and executive
officers as a group (19
persons) 40,778(1) * -- 40,778(1) *
Kimberly-Clark Corporation
P.O. Box 619100
Dallas, TX 75261-9100 1,288,571 20.0% 1,158,571 130,000(5) 2.0%
State of Wisconsin Investment
Board
P.O. Box 7842
Madison, WI 53707 608,700(6) 9.5% -- 608,700(6) 9.5%

___________
<FN>

*Less than one percent

(1) Includes shares of Common Stock in which the person or persons noted
had an interest under the Midwest Express Airlines Savings and
Investment Plan as of December 31, 1995. The Plan's Common Stock
fund is a unitized account that is invested in Common Stock and in
liquid funds. As of a given date, each participant with an
investment in the stock fund has a number of share units, and the
participant's interest in Common Stock depends upon the aggregate
number of shares of Common Stock held in the stock fund as of that
date. Thus, each participant has voting rights with respect to share
units based upon the aggregate number of shares held in the stock
fund as of the record date for a stockholders' meeting. Each
participant has the ability to divest of share units through
intraplan transfers.

(2) Includes 100 shares Mr. Hoeksema jointly holds with his wife.

(3) Includes 60 shares in the name of Mr. Breunig's wife.

(4) Mr. Bergstrom shares voting and investment control over 900 shares
that are held in trust for the benefit of Mr. Bergstrom's children.

(5) Assumes no exercise of the Underwriters' over-allotment option. If
the over-allotment option is exercised in full, the Selling
Stockholder will own no shares of Common Stock after completion of
the Offering.

(6) As reported to the Securities and Exchange Commission as of December
31, 1995.
</TABLE>

DESCRIPTION OF CAPITAL STOCK

The authorized share capital of the Company consists of 25,000,000
shares of Common Stock, par value $.01 per share, and 5,000,000 shares of
preferred stock, without par value (the "Preferred Stock"), of which
6,428,571 shares of Common Stock and no shares of Preferred Stock are
outstanding. All such outstanding shares are fully paid and
nonassessable, except as provided by Section 180.0622(b) of the Wisconsin
Business Corporation Law ("WBCL").

Common Stock

Holders of Common Stock are entitled to one vote per share on all
matters which, pursuant to the WBCL, require the approval of the Company's
stockholders, other than matters relating solely to another class of
stock. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to participate ratably in
all distributions to the holders of Common Stock after payment of
liabilities and satisfaction of any preferential rights of holders of
Preferred Stock. Holders of Common Stock are not entitled to any
preemptive rights. Subject to any preferences that may be applicable to
any outstanding shares of Preferred Stock, holders of Common Stock are
entitled to receive cash dividends ratably on a per share basis if and
when such dividends are declared by the Board of Directors from funds
legally available therefor.

The rights, preferences and privileges of Common Stock are subject
to, and may be adversely affected by, the rights of holders of shares of
any series of Preferred Stock which the Company may designate and issue in
the future.

Preferred Stock

The Board of Directors of the Company is authorized to provide for
the issuance by the Company of Preferred Stock in one or more series and
to fix the rights, preferences, privileges, qualifications, limitations
and restrictions thereof, including, without limitation, dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption or
repurchase, redemption or repurchase prices, limitations or restrictions
thereof, liquidation preferences and the number of shares constituting any
series or the designation of such series, without any further vote or
action by the stockholders.

In connection with the outstanding Preferred Share Purchase Rights
("Rights") described below, the Board of Directors of the Company has
authorized a Series A Junior Participating Preferred Stock. Shares of
Series A Junior Participating Preferred Stock (each a "Series A Share")
purchasable upon the exercise of Rights will not be redeemable. Each
Series A Share will be entitled to a minimum preferential quarterly
dividend payment of $1.00 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per share of Common Stock. In
the event of liquidation, the holders of the Series A Shares will be
entitled to a minimum preferential liquidation payment of $100 per share
but will be entitled to an aggregate payment of 100 times the payment made
per share of Common Stock. Each Series A Share will have 100 votes,
voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which Common Stock are
exchanged, each Series A Share will be entitled to receive 100 times the
amount received per share of Common Stock. These rights are protected by
customary antidilution provisions. There are no Series A Shares currently
outstanding.

The issuance of any series of Preferred Stock, including Series A
Shares, may have an adverse effect on the rights of holders of Common
Stock, and could decrease the amount of earnings and assets available for
distribution to holders of Common Stock. In addition, any issuance of
Preferred Stock could have the effect of delaying, deferring or preventing
a change in control of the Company. The Company has no present plans to
issue any Series A Shares or any shares of any other series of Preferred
Stock.

Certain Anti-Takeover Provisions

The Company's Restated Articles of Incorporation, the Rights
Agreement between the Company and Firstar Trust Company, dated as of
February 14, 1996 (the "Rights Agreement") and the WBCL contain provisions
that may have the effect of discouraging persons from acquiring large
blocks of Company stock or delaying or preventing a change in control of
the Company. Pursuant to the Rights Agreement, each outstanding share of
Common Stock has attached thereto one Right and each share subsequently
issued by the Company prior to the expiration of the Rights Agreement will
have attached thereto one Right. Under certain circumstances described
below, the Rights will entitle the holder thereof to purchase Series A
Shares and/or shares of Common Stock.

Currently, the Rights are not exercisable and trade with the Common
Stock. Each Right, when exercisable, entitles the holder to purchase
1/100th of a Series A Share at a purchase price of $100. The Rights will
become exercisable only if a person or entity acquires 15% or more of the
outstanding Common Stock or announces a tender offer for 15% or more of
the outstanding Common Stock. If any person or entity becomes a 15% or
greater stockholder of the Company, then each Right will entitle its
holder to purchase, at the Right's then-current exercise price, Common
Stock valued at twice the exercise price. The Board of Directors is also
authorized to reduce the 15% thresholds referred to above to not less than
10%. The Rights will expire on February 13, 2006.

Certain Charter and By-law Provisions

The Restated Articles of Incorporation of the Company provide that
the number of directors of the Company shall consist of not less than six
and not more than 15, with the exact number to be determined by a vote of
a majority of the Board. Pursuant to the Company's Restated Articles of
Incorporation, the Board of Directors has determined that the Company will
have 10 directors, three in the class whose term will expire in 1997,
three in the class whose term will expire in 1998 and four in the class
whose term will expire in 1999. Any vacancies on the Board may be filled
for the unexpired portion of the term only by a majority vote of the
remaining directors. Any director may be removed from office, but only
for a cause and only by the affirmative vote of the holders of outstanding
shares representing at least 80% of the voting power of all shares of
capital stock of the Company then entitled to vote generally in the
election of directors. In addition, any director may be removed from
office by the affirmative vote of a majority of the entire Board of
Directors, but only for a cause. The Company's By-laws provide that
meetings of stockholders of the Company may be called only by the Chairman
of the Board, the President or the Board of Directors. The Restated
Articles of Incorporation further provide that nominations for the
election of directors and advance notice of other action to be taken at
meetings of stockholders of the Company must be given in the manner
provided in the Company's By-laws, and the By-laws contain detailed notice
requirements relating to nominations and other action. Each of these
provisions could have the effect of delaying, deferring or preventing a
change of control of the Company.

The Restated Articles of Incorporation prohibit the Company from
entering into certain "business combinations" with a stockholder owning 5%
or more of the voting power of the Company unless such transaction (i) is
approved by at least 80% of the voting power of all capital stock of the
Company; (ii) is approved by a majority of "Continuing Directors" (as
defined in the Restated Articles of Incorporation); or (iii) the
transaction meets certain "fair price" requirements set forth in the
Restated Articles of Incorporation. The Restated Articles of
Incorporation further require approval of amendments to the By-laws either
by the Board of Directors or by at least 80% of the voting power of all
capital stock of the Company.

The foregoing provisions and the prohibitions set forth in the WBCL
could have the effect of delaying, deferring or preventing a change in
control or the removal of existing management of the Company.

Statutory Provisions

Section 180.1150 of the WBCL provides that the voting power of shares
of public Wisconsin corporations, such as the Company, held by any person
or persons acting as a group that hold in excess of 20% of the voting
power for the election of directors is limited to 10% of the full voting
power of those shares. This restriction does not apply to shares acquired
directly from the Company or in certain specified transactions or shares
for which full voting power has been restored pursuant to a vote of
stockholders.

Sections 180.1140 to 180.1144 of the WBCL (the "Wisconsin Business
Combination Statute") contain certain limitations and special voting
provisions applicable to "business combinations" between a Wisconsin
corporation and an "interested stockholder." The term "business
combination" is defined for purposes of the Wisconsin Business Combination
Statute to include a merger or share exchange, sale, lease, exchange,
mortgage, pledge, transfer or other disposition of assets equal to at
least 5% of the market value of the stock or assets of a corporation or
10% of its earning power, issuance of stock or rights to purchase stock
with a market value equal to at least 5% of the outstanding stock,
adoption of a plan of liquidation and certain other transactions involving
an "interested stockholder." An "interested stockholder" is defined as a
person who beneficially owns, directly or indirectly, 10% of the voting
power of the outstanding voting stock of a corporation or who is an
affiliate or associate of the corporation and beneficially owned 10% of
the voting power of the then outstanding voting stock within the last
three years. The Wisconsin Business Combination Statute prohibits a
corporation from engaging in a business combination (other than a business
combination of a type specifically excluded from the coverage of the
statute) with an interested stockholder for a period of three years
following the date such person becomes an interested stockholder, unless
the board of directors approved the business combination or the
acquisition of the stock that resulted in a person becoming an interested
stockholder before such acquisition. Business combinations after the
three-year period following the stock acquisition date are permitted only
if (i) the board of directors approved the acquisition of the stock prior
to the acquisition date; (ii) the business combination is approved by a
majority of the outstanding voting stock not beneficially owned by the
interested stockholder; or (iii) the consideration to be received by
stockholders meets certain requirements of the Wisconsin Business
Combination Statute with respect to form and amount.

Sections 180.1130 to 180.1133 of the WBCL provide that certain
"business combinations" not meeting certain fair price standards must be
approved by a vote of at least 80% of the votes entitled to be cast by all
stockholders and by two-thirds of the votes entitled to be cast by
stockholders other than a "significant stockholder" who is a party to the
transaction. The term "business combination" is defined, for purposes of
Sections 180.1130 to 180.1133 of the WBCL, to include, subject to certain
exceptions, a merger or consolidation of the corporation (or any
subsidiary thereof) with, or the sale or other disposition of
substantially all of the assets of the corporation to, any significant
stockholder or affiliate thereof. "Significant stockholder" is defined
generally to include a person that is the beneficial owner of 10% or more
of the voting power of the corporation.

Section 180.1134 of the WBCL (the "Wisconsin Defensive Action
Restrictions") provides that, in addition to the vote otherwise required
by law or the articles of incorporation of an issuing public corporation,
the approval of the holders of a majority of the shares entitled to vote
is required before such corporation can take certain action while a
takeover offer is being made or after a takeover offer has been publicly
announced and before it is concluded. Under the Wisconsin Defensive
Action Restrictions, stockholder approval is required for the corporation
to (i) acquire more than 5% of its outstanding voting shares at a price
above the market price from any individual or organization that owns more
than 3% of the outstanding voting shares and has held such shares for less
than two years, unless a similar offer is made to acquire all voting
shares; or (ii) sell or option assets of the corporation which amount to
at least 10% of the market value of the corporation, unless the
corporation has at least three independent directors or a majority of the
independent directors vote not to have the provision apply to the
corporation. The restrictions described in clause (i) above may have the
effect of deterring a stockholder from acquiring shares of the Company
with the goal of seeking to have the Company repurchase such shares at a
premium over the market price.

Foreign Ownership of Common Stock

The Federal Aviation Act of 1958, as amended, prohibits non-U.S.
citizens from owning more than 25% of the voting interest of a company
such as the Company that owns a U.S. air carrier. The Company's Restated
Articles of Incorporation provide that no shares of Common 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 to be maintained by
the Company for non-U.S. holders (the "Foreign Stock Record"). The
Company's By-laws provide that no shares of Common Stock held by non-U.S.
citizens will be registered on the Foreign Stock Record if the amount so
registered would exceed foreign ownership restrictions - currently 25% of
the voting stock of the Company as noted above.

The Restated Articles of Incorporation provide that, to the extent
the voting interest in the Company owned or controlled by non-U.S.
citizens in the aggregate exceeds 25% of the voting interest in the
Company or such other percentage that would exceed federal foreign
ownership restrictions, the Company has the right to redeem or exchange
such shares through the payment of cash, securities of the Company having
equivalent value or a combination thereof.

Transfer Agent and Registrar

The Transfer Agent and Registrar for the Common Stock is Firstar
Trust Company, Milwaukee, Wisconsin.

UNDERWRITING

Subject to the terms and the conditions set forth in the Underwriting
Agreement, the Selling Stockholder has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Salomon
Brothers Inc and Robert W. Baird & Co. Incorporated are acting as
representatives (the "Representatives"), has severally agreed to purchase
from the Selling Stockholder the respective number of shares of Common
Stock set forth opposite its name below:

Number of
Shares to be
Underwriters Purchased

Salomon Brothers Inc . . . . . . . . . . . . . . . . . 579,286
Robert W. Baird & Co. Incorporated . . . . . . . . . . 579,285
---------
Total . . . . . . . . . . . . . . . . . . . . . . 1,158,571
=========

In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all
1,158,571 shares of Common Stock offered hereby if any such shares are
purchased. In the event of a default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of
the non-defaulting Underwriters may be increased or the Underwriting
Agreement may be terminated. The Selling Stockholder has been advised by
the Representatives that the several Underwriters propose initially to
offer such stock to the public at the 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 $0.90 per share. The Underwriters may
allow and such dealers may reallow a concession not in excess of $0.10 per
share to other dealers. After the initial offering, the public offering
price and such concessions may be changed.

The Selling Stockholder has granted to the Underwriters an option to
purchase up to an additional 130,000 shares of Common Stock at the initial
offering price less the aggregate underwriting discounts and commissions,
solely to cover over-allotments. The option may be exercised at any time
up to 30 days after the date of this Prospectus. To the extent that the
Underwriters exercise such options, each of the Underwriters will be
committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment.

The Underwriting Agreement provides that the Company and the Selling
Stockholder will indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute
to payments the Underwriters may be required to make in respect thereof.
Salomon Brothers Inc and Robert W. Baird & Co. Incorporated have from time
to time provided certain investment banking services to Kimberly-Clark or
the Company.

The Selling Stockholder has agreed not to offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or announce the
offering of any other shares of Common Stock or any securities convertible
into, or exchangeable for, shares of Common Stock for a period of 120 days
after the date of this Prospectus, without the prior written consent of
the Representatives. The Company and each of the directors and executive
officers of the Company are subject to the same restrictions that apply to
the Selling Stockholder on the disposition of shares of Common Stock for a
period of 360 days from the date of the Initial Public Offering.

LEGAL MATTERS

The validity of the Common Stock offered hereby and certain legal
matters will be passed upon for the Company by Foley & Lardner, Milwaukee,
Wisconsin. Certain legal matters will be passed upon for the Selling
Stockholder by O. George Everbach, Senior Vice President -- Law and
Government Affairs of Kimberly-Clark, and for the Underwriters by Winston
& Strawn, Chicago, Illinois.

EXPERTS

The consolidated financial statements of the Company at December 31,
1995 and 1994, and for each of the three years in the period ended
December 31, 1995, appearing in this Prospectus and Registration Statement
have been audited by Deloitte & Touche LLP, independent public
accountants, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon the report of Deloitte & Touche
LLP given on their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-1 (the "Registration
Statement") pursuant to the Securities Act covering the Common Stock
offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements
made in this Prospectus as to the contents of any contract, agreement or
other document are summaries of the material terms of such contract,
agreement or document. With respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the
matter involved. The Registration Statement (including the exhibits and
schedules thereto) filed with the Commission by the Company may be
inspected and copied at the Commission's offices without charge, or copies
may be obtained from the Commission upon the payment of prescribed fees.

The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith
files reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information filed by the Company
with the Commission can be inspected, without charge, and copies may be
obtained at prescribed rates at the public reference facilities maintained
by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: New York
Regional Office, Seven World Trade Center, Suite 1300, New York, New York
10048; and Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. In addition, such reports,
proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005. The Company also will furnish holders of the
Common Stock offered hereby with annual reports containing consolidated
financial statements audited by an independent public accounting firm.

<PAGE>

MIDWEST EXPRESS HOLDINGS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

UNAUDITED INTERIM FINANCIAL STATEMENTS

Consolidated Balance Sheet, March 31, 1996
(Unaudited) . . . . . . . . . . . . . . . . . . . F-2

Consolidated Statements of Income, Three Months
Ended March 31, 1996 and 1995 (Unaudited) . . . . F-3

Consolidated Statements of Cash Flows, Three Months
Ended March 31, 1996 and 1995 (Unaudited) . . . . F-4

Notes to Consolidated Financial Statements
(Unaudited) for Three Months Ended March 31, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . F-5

AUDITED FINANCIAL STATEMENTS

Independent Auditors' Report . . . . . . . . . . . . F-7

Consolidated Balance Sheets, December 31, 1995 and
1994 . . . . . . . . . . . . . . . . . . . . . . . F-8

Consolidated Statements of Income, Year Ended
December 31, 1995, 1994 and 1993 . . . . . . . . . F-9

Consolidated Statements of Cash Flows, Year Ended
December 31, 1995, 1994 and 1993 . . . . . . . . . F-10

Consolidated Statements of Stockholders' Equity,
Year Ended December 31, 1995, 1994 and 1993 . . . . F-11

Notes to Consolidated Financial Statements for Years
Ended December 31, 1995, 1994 and 1993 . . . . . . F-12

<PAGE>

MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)

March 31,
1996

ASSETS (Unaudited)
Current assets:
Cash and cash equivalents . . . . . . . . . $ 20,297
Accounts receivable:
Traffic, less allowance for doubtful
accounts of $363 . . . . . . . . . . . . 3,748
Other receivables . . . . . . . . . . . . 5,212
-------
Total accounts receivable . . . . . 8,960
Inventories . . . . . . . . . . . . . . . . 2,270
Prepaid expenses:
Commissions . . . . . . . . . . . . . . 1,532
Other . . . . . . . . . . . . . . . . . 1,334
--------
Total prepaid expenses . . . . . . 2,866
Deferred income taxes . . . . . . . . . . . 3,415
--------
Total current assets . . . . . . . 37,808
--------
Property and equipment, net . . . . . . . . . . 58,337
Landing slots and leasehold rights, net . . . . 5,474
Other assets . . . . . . . . . . . . . . . . . 304
--------
Total assets . . . . . . . . . . . $101,923
========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . $ 2,978
Income taxes payable . . . . . . . . . . . . 2,862
Air traffic liability . . . . . . . . . . . 17,682
Accrued liabilities:
Vacation pay . . . . . . . . . . . . . . 2,518
Scheduled maintenance expense . . . . . 4,997
Frequent flyer awards . . . . . . . . . 2,361
Other . . . . . . . . . . . . . . . . . 12,919
---------
Total current liabilities . . . . . . 46,317
---------
Deferred income taxes . . . . . . . . . . . . . 13,137
Noncurrent scheduled maintenance expense . . . 11,950
Accrued pension and other postretirement
benefits . . . . . . . . . . . . . . . . . . . 4,159
Other noncurrent liabilities . . . . . . . . . 2,620
---------
Total liabilities . . . . . . . . . . 77,823
---------
Stockholders' equity:
Preferred stock, without par value,
5,000,000 authorized, no shares issued
and outstanding . . . . . . . . . . . . . --
Common stock, $.01 par value, 25,000,000
shares authorized, 6,428,571 shares
issued and outstanding . . . . . . . . . 64
Additional paid-in capital . . . . . . . . . 9,546
Retained earnings . . . . . . . . . . . . . 14,490
--------
Total stockholders' equity . . . . . 24,100
--------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . $101,923
========

See accompanying notes to consolidated financial statements.
<PAGE>

MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amount)

Three Months Ended March 31,
1996 1995

(Unaudited)
Operating revenues:
Passenger service . . . . . . $ 60,915 $ 52,817
Cargo . . . . . . . . . . . . 2,598 2,669
Other . . . . . . . . . . . . 3,095 3,055
--------- --------
Total operating revenues . . 66,608 58,541
--------- --------
Operating expenses:
Salaries, wages and benefits . 17,868 15,168
Aircraft fuel and oil . . . . 10,302 8,738
Commissions . . . . . . . . . 5,730 5,530
Dining services . . . . . . . 3,477 3,760
Station rental, landing and
other fees . . . . . . . . . . 5,344 5,136
Aircraft maintenance materials
and repairs . . . . . . . . 5,273 4,476
Depreciation and amortization
1,889 1,837
Aircraft rentals . . . . . . . 4,076 3,997
Other . . . . . . . . . . . . 8,233 7,238
------- -------
Total operating expenses . 62,192 55,880
------- ------
Operating income . . . . . 4,416 2,661
Interest expense . . . . . . . . (11) (4)
Interest income . . . . . . . . . 267 337
------- --------
Income before income taxes . . . 4,672 2,994
Provision for income taxes . . . 1,836 1,161
------- -------
Net income . . . . . . . . . . . $ 2,836 $ 1,833
======= =======
Net income per common share . . . $ 0.44
=======

See accompanying notes to consolidated financial statements.
<PAGE>

MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

Three Months Ended March 31,
1996 1995
(Unaudited)
Operating activities:
Net income . . . . . . . . . . . . $ 2,836 $ 1,833
Items not involving the use of
cash:
Depreciation and amortization . 1,889 1,837
Deferred income taxes . . . . . (756) (732)
Other . . . . . . . . . . . . . 729 654
Changes in operating assets and
liabilities:
Accounts receivable . . . . . . (2,011) (151)
Inventories . . . . . . . . . . 456 (523)
Prepaid expenses . . . . . . . 666 646
Accounts payable . . . . . . . (709) 131
Income taxes payable . . . . . 1,481 1,597
Accrued liabilities . . . . . . 4,186 3,307
Air traffic liability . . . . . 432 (896)
------- -------
Net cash provided by operating
activities . . . . . . . . . . 9,199 7,703
------- -------
Investing activities:
Capital expenditures . . . . . . . (4,954) (1,559)
Proceeds from sale of property and
equipment . . . . . . . . . . . -- 62
Other . . . . . . . . . . . . . . (32) 53
------- -------
Net cash used in investing
activities . . . . . . . . . . (4,986) (1,444)
------- -------
Financing activities:
Net increase in advances to
Kimberly-Clark . . . . . . . . -- (6,794)
Other . . . . . . . . . . . . . . 1,458 535
------- -------
Net cash provided by (used in)
financing activities . . . . 1,458 (6,259)
------- -------
Net increase in cash and cash
equivalents . . . . . . . . . . . 5,671 --
Cash and cash equivalents, beginning
of period . . . . . . . . . . . . 14,626 --
------- ---------
Cash and cash equivalents, end of
period . . . . . . . . . . . . . . $ 20,297 $ --
======== =========

See accompanying notes to consolidated financial statements.

<PAGE>
MIDWEST EXPRESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months ended March 31, 1996 and 1995
(Dollars in thousands, except per share amount)
(Unaudited)

Note 1.

The accompanying unaudited interim consolidated financial statements
reflect all adjustments (consisting only of normal recurring accruals)
which are, in the opinion of management, necessary for a fair presentation
of the results for the interim periods presented. Results of operations
for the three months ended March 31, 1996 are not necessarily indicative
of the results to be expected for the year ending December 31, 1996.

Note 2.

The accompanying Consolidated Financial Statements reflect the operations
of the following (collectively, the "Company"): (a) for the three months
ended March 31, 1995, Midwest Express Airlines, Inc. ("Midwest Express"),
a subsidiary of Kimberly-Clark Corporation ("Kimberly-Clark") and (b) for
the three months ended March 31, 1996, Midwest Express Holdings, Inc.

Note 3.

There was no change in common stock during the three-month periods ended
March 31, 1996 and 1995. An analysis of retained earnings is as follows:

Three Months Ended March 31,
1996 1995

Retained earnings at beginning
of period . . . . . . . . . . $11,654 $28,230
Net income . . . . . . . . . . 2,836 1,833
------- ------
Retained earnings at end of
period . . . . . . . . . . . . $14,490 $30,063
======= =======

Retained earnings decreased from 1995 to 1996 as a result of a dividend
paid by the Company to its sole stockholder in connection with the
Company's initial public offering (the "Initial Public Offering").

Note 4.

The following unaudited pro forma condensed income statement for the three
months ended March 31, 1995 gives effect to estimated changes in the
Company's historical costs assuming the Initial Public Offering had
occurred January 1, 1995 and it had operated as an independent company
during the three-month period ended March 31, 1995. The pro forma
adjustments to reflect these changes in costs include (i) a lease
guarantee fee of $233 charged by Kimberly-Clark Corporation to continue to
guarantee certain aircraft leases, (ii) estimated incremental
administrative and management expense of $158 to reflect costs of
obtaining, on an arm's length basis as an independent company, certain
services that Kimberly-Clark had provided in the past, (iii) increased
costs of $140 due to a new management structure, (iv) costs of $224
associated with being a publicly-owned entity, and (v) net changes in
interest income and expense of $46 to reflect the Company's financial
position subsequent to the Initial Public Offering. Pro forma net income
per common share was computed based on an assumed weighted average
6,428,571 shares of common stock outstanding.

Management believes the assumptions used in preparing the pro forma
adjustments provide a reasonable basis on which to present the pro forma
condensed income statement. This following pro forma condensed income
statement is provided for informational purposes only, should not be
construed to be indicative of the Company's results of operations had the
Initial Public Offering been consummated on the date assumed, and is not
intended to project the Company's results of operations for any future
periods.
Three Months Ended March 31, 1995
Pro Forma
Historical Adjustments Pro Forma

Operating revenues . . $ 58,541 $ - $ 58,541
Operating expenses . . 55,880 755 56,635
-------- -------- -------
Operating income . . . 2,661 (755) 1,906
Interest income
(expense), net . . . . 333 (46) 287
------- -------- --------
Income before income
taxes . . . . . . . . 2,994 (801) 2,193
Provision for income
taxes . . . . . . . . 1,161 (312) 849
-------- -------- --------
Net income . . . . . . $ 1,833 $ (489) $ 1,344
======== ======= ========
Net income per common
share . . . . . . . . $ 0.21
========

Pro forma net income per common share was computed based on the weighted
average number of common shares outstanding and assuming 6,428,571 shares
of common stock outstanding.

Note 5.

Net income per common share was computed based upon the 6,428,571 common
shares outstanding as of March 31, 1996. As of March 31, 1996, there were
stock options outstanding under the Company's stock option plan to acquire
130,000 shares. These options did not have a material dilutive effect on
net income per common share.

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of Midwest Express Holdings,
Inc.:

We have audited the accompanying consolidated balance sheets of Midwest
Express Holdings, Inc. and subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies as of
December 31, 1995 and 1994, and the results of their operations and their
cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
January 26, 1996

<PAGE>
MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

December 31,
ASSETS 1995 1994
Current assets:
Cash and cash equivalents . . . . . . . . . . . $14,626 $ -
Accounts receivable:
Traffic, less allowance for doubtful accounts
of $307 in 1995 and $125 in 1994 . . . . . 5,229 6,945
Other Receivables:
Kimberly-Clark and affiliated companies . . 61 17,923
Other . . . . . . . . . . . . . . . . . . . 1,659 135
------- -------
Total accounts receivable . . . . . . . 6,949 25,003
Inventories . . . . . . . . . . . . . . . . . 2,726 2,093
Prepaid expenses:
Commissions . . . . . . . . . . . . . . . . 1,996 1,900
Other . . . . . . . . . . . . . . . . . . . . 1,536 1,204
------- -------
Total prepaid expenses . . . . . . . . . 3,532 3,104
Deferred income taxes . . . . . . . . . . . . . 3,253 1,699
------- -------
Total current assets . . . . . . . . . . 31,086 31,899
------- -------
Property and equipment, net . . . . . . . . . . . 55,919 57,626
Landing slots and leasehold rights, less
accumulated amortization of $1,194 in 1995
and $871 in 1994 . . . . . . . . . . . . . . . 5,556 5,629
Other assets . . . . . . . . . . . . . . . . . . 272 282
-------- --------
Total assets . . . . . . . . . . . . . . $92,833 $95,436
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . $ 3,687 $4,972
Income taxes payable . . . . . . . . . . . . . 1,381 3,060
Air traffic liability . . . . . . . . . . . . . 17,250 13,817
Accrued liabilities:
Interest payable to Kimberly-Clark . . . . . 619
Vacation pay . . . . . . . . . . . . . . . . 2,628 2,184
Scheduled maintenance expense . . . . . . . . 4,253 2,059
Frequent flyer awards . . . . . . . . . . . . 2,064 1,558
Other . . . . . . . . . . . . . . . . . . . . 9,664 8,045
------- -------
Total current liabilities . . . . . . . . 40,927 36,314
------- -------
Deferred income taxes . . . . . . . . . . . . . . 13,731 11,471
Noncurrent scheduled maintenance expense . . . . 10,483 8,451
Accrued pension and other postretirement benefits 3,748 -
Other noncurrent liabilities . . . . . . . . . . 2,680 1,360
------- -------
Total liabilities . . . . . . . . . . . . 71,569 57,596
------- -------
Stockholders' equity:
Preferred stock, without par value, 5,000,000
shares authorized, no shares issued or
outstanding . . . . . . . . . . . . . . . . . - -
Common stock, $.01 par value, 25,000,000 shares
authorized, 6,428,571 shares issued and
outstanding . . . . . . . . . . . . . . . . . 64 -
Common stock, no par value, 1,000 shares
authorized, 901 shares issued and
outstanding . . . . . . . . . . . . . . . . . - 9,610
Additional paid-in capital . . . . . . . . . . 9,546 -
Retained earnings . . . . . . . . . . . . . . . 11,654 28,230
------- -------
Total stockholders' equity . . . . . . . 21,264 37,840
------ -------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . . . $92,833 $95,436
====== ======

See notes to consolidated financial statements.

<PAGE>

MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)

Year Ended December 31,
1995 1994 1993
Operating revenues:
Passenger service . . . . $238,422 $183,747 $149,209
Cargo . . . . . . . . . . 10,440 8,880 6,792
Other . . . . . . . . . . 10,293 10,965 9,055
------- ------- -------
Total operating revenues
259,155 203,592 165,056
------- ------- -------
Operating expenses:
Salaries, wages and
benefits . . . . . . . . 62,964 53,319 39,502
Aircraft fuel and oil . . 35,212 30,692 24,860
Commissions . . . . . . . 24,878 18,923 15,331
Dining services . . . . . 14,882 13,231 11,635
Station rental, landing
and other fees . . . . . 19,451 16,904 12,608
Aircraft maintenance
materials and repairs . 17,356 13,945 10,053
Depreciation and
amortization . . . . . . 7,515 6,900 6,507
Aircraft rentals . . . . 14,954 13,131 7,977
Other . . . . . . . . . . 30,569 25,283 20,686
------- ------- -------
Total operating expenses 227,781 192,328 149,159
------- ------- -------
Operating income . . . . 31,374 11,264 15,897
------- ------- -------
Other income (expense):
Interest income . . . . . 1,695 195 -
Interest expense . . . . (43) (631) (895)
Other income (expense),
net . . . . . . . . . . (1,500) 10 (2)
------- -------- --------
Total other income
(expense) . . . . . . . 152 (426) (897)
------- ------- -------
Income before income taxes. 31,526 10,838 15,000
Provision for income taxes. 12,397 4,176 5,914
------- ------- -------
Net income . . . . . . . . $ 19,129 $ 6,662 $ 9,086
======= ======= =======

See notes to consolidated financial statements.

<PAGE>

MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

Year Ended December 31,
1995 1994 1993
Operating activities:
Net income . . . . . . . . . . $19,129 $ 6,662 $ 9,086
Items not involving the use of
cash:
Depreciation and amortization 7,515 6,900 6,507
Deferred income taxes . . . . 2,177 1,116 1,516
Other . . . . . . . . . . . . 2,212 2,195 1,903
Changes in operating assets and
liabilities:
Accounts receivable . . . . . 192 2,297 (4,291)
Inventories . . . . . . . . . (633) 465 686
Prepaid expenses . . . . . . (428) (81) (103)
Accounts payable . . . . . . (1,285) 598 1,422
Income taxes payable . . . . (1,679) (1,338) 4,135
Accrued liabilities . . . . . 4,144 3,135 (570)
Air traffic liability . . . . 3,433 1,155 5,443
------- ------- -------
Net cash provided by operating
activities . . . . . . . . . 34,777 23,104 25,734
------- ------- -------
Investing activities:
Capital expenditures . . . . . (7,980) (9,862) (6,722)
Proceeds from sale of property
and equipment . . . . . . . . 327 49 611
Other . . . . . . . . . . . . (284) (2,122) (35)
------- -------- -------
Net cash used in investing
activities . . . . . . . . . (7,937) (11,935) (6,146)
------- -------- -------
Financing activities:
Net decrease (increase) in
advances to Kimberly-Clark . . 19,988 (14,736) (21,323)
Dividends to Kimberly-Clark . . (35,705) - -
Other . . . . . . . . . . . . . 3,503 3,567 1,735
------- -------- -------
Net cash used in financing
activities . . . . . . . . . . (12,214) (11,169) (19,588)
------- ------- --------
Net increase in cash and cash
equivalents . . . . . . . . . . 14,626 - -
Cash and cash equivalents,
beginning of year . . . . . . . - - -
------- -------- --------
Cash and cash equivalents, end of
year . . . . . . . . . . . . . . $14,626 $ $
======= ======= =======
Supplemental cash flow
information:
Cash paid for:
Income taxes net of refunds . $11,899 $ 4,191 $ 3,759

Supplemental schedule of non-cash
financing activities:
Transfer of assets and
liabilities from Kimberly-Clark:
Accrued pension and other post
retirement benefits . . . . . $ 3,597 $ - $ -
Deferred income taxes . . . . (1,471)
------ ------- -------
Increase in advances to
Kimberly-Clark net . . . . $ 2,126 $ - $ -
======= ======= ========

See notes to consolidated financial statements.

<PAGE>
<TABLE>
MIDWEST EXPRESS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
(Dollars in thousands)
<CAPTION>
Common Stock Additional Total
$.01 par no par Paid-in Retained Stockholders'
value value Capital Earnings Equity

<S> <C> <C> <C> <C> <C>
Balances at January 1,
1993 . . . . . . . . . $ - $9,610 $ - $12,482 $22,092
Net income . . . . . . - - - 9,086 9,086
----- ----- ------ ------- ------
Balances at December
31, 1993 . . . . . . . - 9,610 - 21,568 31,178
Net income . . . . . . - - - 6,662 6,662
------ ------- ------- ------- -------
Balances at December
31, 1994 . . . . . . . - 9,610 - 28,230 37,840
Net income . . . . . . - - - 19,129 19,129
Dividends to
Kimberly-Clark . . . . - - - (35,705) (35,705)
Issuance and transfer
of common stock . . . 64 (9,610) 9,546 - -
------ ------- ------- ------- -------
Balances at December
31, 1995 . . . . . . . $ 64 $ - $9,546 $11,654 $21,264
====== ======== ===== ====== ======

</TABLE>

See notes to consolidated financial statements.

<PAGE>
MIDWEST EXPRESS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Years Ended December 31, 1995, 1994 and 1993
(Dollars in thousands, except per share amounts)

Note 1. Business and Basis of Presentation

Organization

The accompanying Consolidated Financial Statements reflect the operations
of the following (collectively, the "Company"): (a) for periods prior to
September 27, 1995, Midwest Express Airlines, Inc. ("Midwest Express"), a
subsidiary of Kimberly-Clark Corporation ("Kimberly-Clark") and (b) for
the period on and after September 27, 1995, Midwest Express Holdings, Inc.

On September 27, 1995, Kimberly-Clark and the Company entered into a Stock
Agreement providing for the transfer by Kimberly-Clark to the Company of
all the outstanding capital stock of Midwest Express in exchange for
6,428,571 shares of the Company's $.01 par value common stock.

On September 27, 1995, Kimberly-Clark completed, in an initial public
offering ("Initial Public Offering"), the sale of 5,140,000 shares of such
common stock at a price of $18 per share. Following the Initial Public
Offering, Kimberly-Clark retained 1,288,571 shares, or approximately 20%
of the outstanding common stock of the Company. The Company did not
receive any proceeds from the Initial Public Offering.

Basis of Presentation

The Consolidated Financial Statements include the accounts of Midwest
Express and its wholly owned subsidiary, Astral Aviation, Inc. ("Astral"),
which does business as Skyway Airlines. All significant intercompany
balances and transactions have been eliminated.

For all periods prior to September 27, 1995, the accompanying Consolidated
Financial Statements include the historical assets, liabilities, revenues
and expenses directly related to the Company's operations under
Kimberly-Clark. Certain corporate, general and administrative expenses of
Kimberly-Clark and certain affiliates have been allocated to the Company
on a basis which, in the opinion of management, is reasonable (see Note
10). The financial information for the periods prior to September 27,
1995, included herein may not necessarily be indicative of the financial
position, results of operations and cash flows of the Company in the
future or what the balance sheets, income statements or cash flows would
have been had the Company operated as a separate, stand-alone company
during the entirety of the periods presented.

Nature of Operations

Midwest Express is a U.S. air carrier providing scheduled passenger
service from Milwaukee, Wisconsin to 24 cities as of December 31, 1995, as
well as charter, aircraft maintenance, air freight and other airline
services. Midwest Express established Omaha, Nebraska as its first base
of operations outside of Milwaukee in May 1994. Midwest Express provides
service between Omaha and five destinations. Astral provides regional
scheduled passenger service to cities primarily in the upper midwest.

Note 2. Accounting Policies

The accounting policies of the Company conform to generally accepted
accounting principles and to accounting practices generally followed in
the airline industry. Significant policies followed are described below.

Cash and Cash Equivalents

The Company considers all highly liquid investments with purchased
maturities of three months or less to be cash equivalents. They are
carried at cost, which approximates market.

Inventories

Inventories consist primarily of expendable parts, supplies and fuel
stated at the lower of cost on the first-in, first-out (FIFO) method or
market and are expensed when used in operations.

Property and Equipment

Property and equipment is stated at cost and is depreciated on the
straight-line method applied to each unit of property for financial
reporting purposes and by use of accelerated methods for income tax
purposes. Aircraft are depreciated to estimated residual values, and any
gain or loss on disposal is reflected in income. The depreciable book
lives for the principal asset categories are as follows:

Asset Category Depreciable Life
Flight equipment 10 years
Other equipment 5 to 8 years
Office furniture and
equipment 5 to 20 years
Buildings 40 years
Building improvements Lesser of 20 years or
remaining life of
building

Other Assets

Airport take-off and landing slots have an unlimited life, have
historically appreciated in value and are occasionally traded or sold
among airlines. The cost of airport slots is amortized on the
straight-line method over 20 years, consistent with industry practice.
The cost of airport leasehold rights is amortized on the straight-line
method over the term of the lease.

Revenue Recognition

Passenger and cargo revenues are recognized in the period when the service
is provided. Contract maintenance revenue is recognized when work is
completed and invoiced. The estimated liability for sold, but unused,
tickets is included in current liabilities as air traffic liability.

Maintenance and Repair Costs

Routine maintenance and repair costs for owned and leased aircraft are
charged to expense when incurred, except for major airframe and engine
maintenance. Depending on the particular aircraft, these latter costs are
either (1) accrued to expense on the basis of estimated future costs and
the estimated number of hours to be flown or the number of future
take-offs and landings or (2) capitalized when incurred and amortized on
the basis of estimated hours to be flown or the number of future take-offs
and landings over the period of time between overhauls. The actual
maintenance and repair costs to be incurred could differ from the
Company's estimates.

Frequent Flyer Program

The estimated incremental cost of providing future transportation in
conjunction with the Company's frequent flyer program is accrued based on
estimated redemption percentages applied to actual mileage recorded in
members' accounts. The ultimate cost, however, will depend on the actual
redemption of frequent flyer miles and may be greater than amounts accrued
at December 31, 1995.

Postretirement Health Care and Life Insurance Benefits

The costs of health care and life insurance benefit plans for retired
employees are accrued over the working lives of employees in accordance
with Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires that deferred income
taxes be determined under the asset and liability method. Deferred income
taxes have been recognized for the future tax consequences of temporary
differences by applying enacted statutory tax rates applicable to
differences between the financial reporting and the tax bases of assets
and liabilities.

Prior to the Initial Public Offering, the Company was a member of the
Kimberly-Clark consolidated group and, as such, filed a consolidated
federal income tax return with Kimberly-Clark and its U.S. subsidiaries.
The Company also filed consolidated state tax returns with Kimberly-Clark
and certain of its subsidiaries, as well as separately in various states.
Income tax expense and deferred income tax assets and liabilities are
reflected in the Company's financial statements in accordance with SFAS
No. 109.

Leases

Rental obligations under operating leases for aircraft, facilities and
equipment are charged to expense on the straight-line method over the term
of the lease.

Use of Estimates

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

Note 3. Pro Forma Condensed Income Statement

The following unaudited pro forma condensed income statement for the year
ended December 31, 1995 gives effect to estimated changes in the Company's
historical costs assuming the Initial Public Offering had occurred January
1, 1995 and it had operated as an independent company during the year
ended December 31, 1995. The pro forma adjustments to reflect these
changes in costs include (i) a lease guarantee fee of $707 charged by
Kimberly-Clark to continue to guarantee certain aircraft leases, (ii)
estimated incremental administrative and management expense of $474 to
reflect costs of obtaining, on an arm's length basis as an independent
company, certain services that Kimberly-Clark had provided in the past,
(iii) increased costs of $326 due to a new management structure, (iv)
costs of $645 associated with being a publicly-owned entity, and (v) net
changes in interest income and expense of $67 to reflect the Company's
financial position subsequent to the Initial Public Offering. Pro forma
net income per common share was computed based on an assumed weighted
average 6,428,571 shares of common stock outstanding.

Year ended December 31, 1995
Pro Forma
Historical Adjustments Pro Forma

Operating revenues $259,155 $ - $259,155
Operating expenses 227,781 2,152 229,933
------- -------- -------
Operating income 31,374 (2,152) 29,222
Interest income
(expense), net 1,652 (67) 1,585
Other expense (1,500) (1,500)
------- ------- -------
Income before income
taxes 31,526 (2,219) 29,307
Provision for income
taxes 12,397 (865) 11,532
-------- -------- --------
Net income $ 19,129 $ (1,354) $ 17,775
======== ======== =======
Net income per common
share $ 2.77
=======

Note 4. Property and Equipment

As of December 31, 1995 and 1994, property and equipment consisted of the
following:

1995 1994
Flight equipment . . . . . . . . . . $88,318 $82,420
Other equipment . . . . . . . . . . . 6,828 6,328
Buildings and improvements . . . . . 7,491 7,372
Office furniture and equipment . . . 4,164 3,790
Construction in progress . . . . . . 1,029 3,380
Land . . . . . . . . . . . . . . . . - 248
------- --------
107,830 103,538
Less accumulated depreciation . . . . (51,911) (45,912)
------- -------
Property and equipment, net . . . . . $55,919 $57,626
====== ======

Note 5. Leases

The Company leases aircraft, terminal space, office space and warehouse
space. Future minimum lease payments required under operating leases
having an initial or remaining noncancellable lease term in excess of one
year as of December 31, 1995 were as follows:

Year ended December 31, Amount

1996 . . . . . . . . . . . . $12,590
1997 . . . . . . . . . . . . 13,067
1998 . . . . . . . . . . . . 9,432
1999 . . . . . . . . . . . . 8,074
2000 . . . . . . . . . . . . 6,448
2001 and thereafter . . . . . 36,135
------
$85,746
======

As of December 31, 1995, the Company had nine jet aircraft and 15
turboprop aircraft under operating leases. Kimberly-Clark has guaranteed
leases relating to five of Midwest Express' jet aircraft and all of
Astral's turboprop airplanes.

Five of the nine jet aircraft leases are for DC-9-30 jet aircraft with
initial lease terms of seven years, two of which expire in 1999 and three
in 2001. The DC-9-30 leases include purchase options at or near the end
of the lease term at fair market value, but generally not in excess of the
defined lessor's cost of the aircraft. The two leases expiring in 1999
permit renewal for one three-year period, and the three expiring in 2001
permit renewal for two 33-month periods, at rates approximating fair
market value. Two jet aircraft leases are for MD-88 aircraft, initially
leased for five years and subsequently renewed for three additional years,
expiring in 1998. These leases permit renewal for an additional two years
at rates approximating fair market value. The remaining two DC-9-30 jet
aircraft leases were entered into in December 1995 having initial lease
terms of ten years expiring in 2006. These leases permit renewal for one
or two year periods after expiration of the initial lease at rates
approximating fair market value.

The turboprop fleet lease has a one-year lease term with 10 one-year
renewal options. The lease requires a 90 day cancellation notice, has
purchase options at six-month intervals, and includes a cancellation
penalty equal to the difference between the defined lessor's cost and the
realized residual value to the lessor. The Company is investigating
refinancing the leases prior to June 1996.

Rent expense for all operating leases, excluding landing fees, was
$21,884, $19,573 and $13,171 for 1995, 1994 and 1993, respectively.

The above lease commitment schedule includes a lease for the Company's
corporate headquarters which is owned by a limited partnership. The Boldt
Group, Inc. controls Boldt Development Corporation, a member of the
limited liability company that is the general partner to this limited
partnership. A member of the Company's Board of Directors is the
Chairman of the Board of The Boldt Group, Inc. The annual rent for the
lease is $557 for the first five years, $625 for years six through ten and
$704 for years eleven through fifteen. The lease requires the Company to
pay all expenses related to the building.

Note 6. Financing Agreements

On September 27, 1995, the Company entered into two credit facilities, (1)
a three-year $35,000 revolving credit facility with three banks and (2) a
five-year $20,000 secondary revolving credit facility with Kimberly-Clark.
Borrowings under the Kimberly-Clark facility must be repaid prior to
repayments on the bank credit facility. The bank credit facility requires
a commitment fee of 12.5 basis points of the average unused commitment
with interest payable on the outstanding principal balance at LIBOR plus
50 basis points. The Kimberly-Clark facility does not require a
commitment fee, and interest will be at a rate equal to the then current
rate of interest under the bank credit facility plus 100 basis points.
There were no outstanding borrowings under these agreements at December
31, 1995, except for letters of credit totalling approximately $1,500 that
reduce the amount of available credit.

Note 7. Retirement and Benefit Plans

Defined Benefit Plans

Midwest Express has two defined benefit pension plans covering
substantially all of its employees. The benefits for these plans are
based primarily on years of service and employee compensation. It is
Midwest Express' policy to annually fund at least the minimum contribution
as required by the Employee Retirement Income Security Act of 1974.

The following table sets forth the funded status of the plans at December
31, 1995:

Midwest
Express Supplemental
Pension Plan Pension Plan
Benefit obligation
Vested . . . . . . . . . . . . . . . . $ 5,172 $260
Nonvested . . . . . . . . . . . . . . . 561 -
------ -----
Accumulated benefit obligation . . . . . $ 5,733 $260
====== =====
Projected benefit obligation . . . . . . $10,652 $495
Plan assets at fair value . . . . . . . . 5,775 -
------- -----
Projected benefit obligation less plan
assets . . . . . . . . . . . . . . . . . 4,877 495
Unrecognized transition asset . . . . . . (154) (27)
Unrecognized net prior service cost . . . 35 (64)
Unrecognized net loss . . . . . . . . . . (2,538) (232)
Adjustment required to recognize
minimum liability . . . . . . . . . . . - 88
------- -----
Accrued pension cost . . . . . . . . . . $ 2,220 $260
====== =====

The weighted average discount rate used to determine the projected benefit
obligation was 7.25% as of December 31, 1995. The calculation also
assumed a 4.25% weighted average rate of increase for future compensation
levels. The expected long-term rate of return on plan assets used in 1995
was 10%. The unrecognized net loss is amortized on a straight-line basis
over the average remaining service period of employees expected to receive
a plan benefit.

The net periodic pension cost of defined benefit pension plans since the
Initial Public Offering included the following:

Midwest
Express Supplemental
Pension Plan Pension Plan
Service cost (benefits earned
during the period) . . . . . . $345 $ 4
Interest cost on projected
benefit obligations . . . . . . 216 9
Actual return on plan assets . . (130) -
Net amortization and deferral . . 28 5
----- ----
Net periodic pension cost . . . . $459 $18
==== ====

Prior to the Initial Public Offering, substantially all Midwest Express
employees participated in the defined benefit pension plans of Kimberly-
Clark. The liabilities related to the Kimberly-Clark benefit plans were
carried on the books of Kimberly-Clark and were not allocated separately
to subsidiaries. The portion of pension costs attributable to these
employees and reflected as expense in the accompanying financial
statements was $953, $918 and $712 in 1995, 1994 and 1993, respectively.

Postretirement Health Care and Life Insurance Benefits

Midwest Express allows retirees to participate in unfunded health care and
life insurance benefit plans. Benefits are based on years of service and
age at retirement. The plans are principally noncontributory for current
retirees, and are contributory for most future retirees.

The following table sets forth the status of the plans at December 31:

1995
Accumulated postretirement benefit
obligation (APBO) . . . . . . . . . . . $1,051
Unrecognized net gain . . . . . . . . . . 231
-----
Accrued postretirement benefit cost . . . $1,282
=====

Midwest Express' APBO is unfunded. Net postretirement benefit cost since
the Initial Public Offering include the following components:

1995
Service cost (benefits attributed to
service during the period) . . . . . $43
Interest on APBO . . . . . . . . . . . 23
Net amortization and deferral . . . . . (1)
---
Net postretirement benefit cost . . . . $65
===

The assumed health care cost trend rate was approximately 11%, declining
annually to a rate of 6% by the year 2005, and remaining level thereafter.
Increasing the rate by 1 percentage point in each year would increase the
APBO as of December 31, 1995 by $40 and the net postretirement benefit
cost for 1995 by $6. The weighted-average discount rates used in
determining the APBO for 1995 was 7.25%.

Prior to the Initial Public Offering, substantially all retired employees
of Midwest Express participated in unfunded health care and life insurance
benefit plans of Kimberly-Clark. The portion of postretirement health care
and life insurance benefits costs attributable to Midwest Express'
employees and reflected in the accompanying income statements was $200,
$239 and $224 in 1995, 1994 and 1993, respectively.

Defined Contribution Plans

The Company has two voluntary defined contribution investment plans which
cover substantially all employees. Under these plans, the Company matches
a portion of employee contributions. Following the Offering, the Company
made a one-time contribution of 55,500 shares of its common stock to the
Midwest Express investment plan for the benefit of Midwest Express
employees. The portion of costs under these plans attributable to the
Company and reflected in the accompanying income statements was $1,958,
$767 and $577 in 1995, 1994 and 1993, respectively.