Management’sTable Annualof Report On Internal Control Over Financial Reporting Contents

50Table of Contents

OurTable Executiveof Officers Contents

53Table of Contents

(a)Table Represents matching contributions made by the company on behalf of Mr. Howell and Mr. Matthews under our 401(k) retirement savings plan. These matching contributions are subject to vesting in accordance with the terms of the plan. See discussion below under “Retirement Savings Plan.”Contents

56Table of Contents

EquityTable Compensationof Plan Information Contents

InTable the twelve month period ending December 31, 2011, the Company made principal repayments of debt to Raytheon in the amount of $33.2 million, including a one-time payment of $27.0 million on November 16, 2011 and a non-scheduled prepayment of debt on its Senior Note in the amount of $843,247 as a result of the Company’s “Excess cash” position for the year ending December 31, 2010. Contents

PARTTable IVof Contents

(ii)Table Balance Sheets as of December 31, 2012 and 2011Contents

(2)Table The exhibits filed as part of this report and exhibits incorporated herein by reference to other documents are listed in the Exhibit Index to this Annual Report on Form 10-K (pages E-1 through E-3).Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2012~~2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 0-23224

GREAT LAKES AVIATION, LTD.

(Exact name of registrant as specified in its charter)

Iowa		42-1135319
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1022 Airport Parkway, Cheyenne, WY		82001
(Address of principal executive offices)		(Zip Code)


1022 Airport Parkway, Cheyenne, WY		82001
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (307) 432-7000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

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

The aggregate market value of common stock held by non-affiliates of the registrant as of the last business day of registrant’s most recently completed second fiscal quarter was approximately $54,~~600.~~200,000.

As of March 20, ~~2013~~2015 there were 8,974,990 shares of Common Stock of the registrant issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

GREAT LAKES AVIATION, LTD.

FORM 10-K

For the Fiscal Year Ended December 31, ~~2012~~2014

INDEX

Forward-Looking Statements		1
PART I		2
Item 1.	BUSINESS	2
Item 1A.	RISK FACTORS	1110
Item 1B.	UNRESOLVED STAFF COMMENTS	1615
Item 2.	PROPERTIES	1615
Item 3.	LEGAL PROCEEDINGS	16
Item 4.	MINE SAFETY DISCLOSURES	16
PART II		1716
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	1716
Item 6.	SELECTED FINANCIAL DATA	17
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2927
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	3028
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	5046
Item 9A	CONTROLS AND PROCEDURES	50
Item 9A.	CONTROLS AND PROCEDURES	46
Item 9B.	OTHER INFORMATION	5147
PART III		5248
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	5248
Item 11.	EXECUTIVE COMPENSATION	5551
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	5653
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	5954
Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	6055
PART IV		6256
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	6256
SIGNATURES		6357

Forward-Looking Statements

This Annual Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Great Lakes Aviation, Ltd. (Great Lakes, we, our, its, it or the Company) notes that certain statements in this Form 10-K and elsewhere are forward-looking and provide other than historical information. Our management may also make oral, forward-looking statements from ~~time~~ time to time. These forward-looking statements include, among others, statements concerning our general business strategies, financing decisions, and expectations for funding expenditures and operations in the future. The words “may,”, “will,”, “believe,” “plan,” “continue,” “could,”, “should,”, “hope,” “~~likely,” “~~estimate,” “project,” “intend,” “expect,” “anticipate” and similar expressions reflected in such forward-looking statements are based on reasonable assumptions, and none of the forward-looking statements contained in this Form 10-K or elsewhere should be relied on as predictions of future events. Such statements are necessarily dependent on assumptions, data, or methods that may ~~prove to~~ be incorrect or imprecise, and may be incapable of being realized. The risks and uncertainties that are inherent in these forward-looking statements could cause actual results to differ materially from those expressed in or implied by these statements.

AsFactors ~~more fully described in this report, important factors~~ that could cause results to differ materially from the expectations reflected in any forward-looking statements include~~, but are not limited to~~:

1) ~~the~~our ~~receipt~~ability ofto hire and retain sufficient ~~passenger~~pilots ~~revenues~~to onservice ~~the~~existing routes ~~that~~and weexpand ~~serve;~~into other profitable routes;

2) ~~the continued funding of the Essential Air Service program and~~ our ability to ~~continue~~comply towith beour ~~awarded~~current ~~future~~debt ~~service;~~obligations and covenants;

3) the ~~volatility~~continuation of ~~fuel~~Essential ~~costs~~Air Service and our ability to capitalize on it;

4) the ~~effect~~level of ~~general~~regulatory ~~economic conditions on business~~ and ~~leisure~~environmental ~~travel~~costs;

5) ~~dependence~~airline onindustry ~~other~~and ~~air~~broader ~~carrier~~economic ~~connecting capacity at our hubs~~conditions;

6) the ~~payments~~continued connection capacity at our hubs and ~~restrictions~~ ~~resulting~~activities ~~from~~of our ~~contractual~~code ~~obligations;~~share partners;

7) ~~the~~our ~~effect~~ability ofto ~~rules~~monetize ~~regarding~~our ~~the effect of stock sales on the availability of~~ net operating loss ~~carryforwards;~~carry forwards;

8) ~~exposure~~the toincidence ~~increases~~of indomestic ~~interest~~or ~~rates~~international ~~associated~~terrorism ~~with~~and ~~our~~military ~~new debt financing~~actions;

9) ~~our~~competition ~~ability~~from toother ~~maintain~~airlines ~~compliance with specified financial~~ and ~~non-financial~~ground ~~covenants.~~transportation companies;

10) the ~~incidence~~volatility of ~~domestic~~fuel ~~or international terrorism and military actions~~costs;

11) ~~competition from~~the ~~other~~incidence ~~airlines~~of ~~and~~labor ~~from~~disruptions ~~ground~~or ~~transportation~~strikes;

12) ~~the~~our ~~incidence~~ability ofto ~~labor~~retain ~~disruptions~~key ~~or strikes~~personnel;

13) ~~dependence~~the onincidence ~~our~~of ~~key~~aircraft ~~personnel~~accidents;

14) the incidence of ~~aircraft~~technological ~~accidents;~~failures or attacks;

15) ~~the~~maintenance ~~level~~costs ofrelated ~~regulatory~~to ~~and~~aging ~~environmental costs~~aircraft;

16) the ~~incidence~~limited ofmarket ~~technological~~for ~~failures~~our ~~or attacks~~securities;

17) ~~maintenance~~the ~~costs~~volatility ~~related~~of tothe ~~aging aircraft;~~market price of our common stock;

18) ~~the~~our ~~possibility~~concentration of ~~substantial~~stock ~~numbers~~ownership ofand ~~shares~~control ~~being~~of ~~sold~~the company by our ~~current~~Chairman ~~investors;~~and President;

19) ~~the~~our ~~limited~~ability ~~market~~to ~~for~~timely remediate any deficiencies in our ~~securities;~~internal controls;

20) ~~our~~ ~~ability~~no toexpectation ~~remediate~~of ~~timely any deficiencies in our internal controls~~dividend;

21) noanti-takeover ~~expectation~~provisions ofand ~~dividends;~~other ~~and~~restrictions in our credit agreements.

~~22)~~Readers ~~anti~~are cautioned not to attribute undue certainty on the forward-~~takeover~~looking ~~provisions~~statements incontained ~~our~~herein, ~~charter~~which ~~documents~~speak only as of the date hereof. Changes may occur after that date, and ~~Iowa~~we do not undertake to update any forward-looking statements except as required by law in the normal course of our public disclosure practices.

See also Item 1A. “Risk Factors,” below for additional discussion of these factors.

Readers are cautioned not to attribute undue certainty on the forward-looking statements contained herein, which speak only as of the date hereof. Changes may occur after that date, and we assume no obligation to publicly update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting these statements other than as required by applicable law.

PART I

Item 1.

BUSINESS

General

We were incorporated on October 25, 1979 as an Iowa corporation and became a publicly traded company in January 1994. We commenced scheduled air ~~service~~ service operations on October 12, 1981. Great Lakes Airlines currently operates hubs at ~~Albuquerque, NM,~~ Denver, CO, Los Angeles, CA, ~~Las Vegas, NV,~~ Minneapolis, MN, and Phoenix, AZ.

We are a regional airline operating as an independent carrier and as a code share partner with United Air Lines~~, Inc~~. ~~(United or United Airlines) and Frontier Airlines, Inc. (Frontier or Frontier Airlines).~~ Our code share ~~agreements~~agreement ~~allow~~allows our mutual customers to purchase connecting flights through our code share ~~partners~~partner and to share other benefits such as baggage transfer and frequent flyer benefits (in certain instances), while wethe ~~maintain our~~Company maintains its own branding on our planes and ticket counters and our own designator code on all our flights. ~~Effective~~In ~~April 1,~~addition ~~2013,~~to weour ~~will~~code ~~serve~~share agreement 45and ~~airports~~independent inbranding, 13the ~~states~~Company ~~with~~has adeveloped ~~fleet~~electronic ofticketing ~~six~~(e-ticket) ~~Embraer~~interline ~~EMB-120~~agreements ~~Brasilias~~with ~~and~~American 28Airlines, ~~Raytheon/Beech~~Delta ~~1900D regional~~Airlines, ~~airliners~~United Airlines and U.S. Airways.

~~General~~We ~~information~~operated ~~about~~under ~~us and~~ a ~~current~~code ~~route~~share ~~map~~agreement ~~can~~with beFrontier ~~found~~Airlines at(Frontier) ~~www.flygreatlakes.com.~~from ~~Our annual report on Form 10-K~~May, ~~quarterly~~2001 ~~reports~~through ~~on Form 10-Q~~September 30, ~~and~~2014. ~~current~~Effective ~~reports on Form 8-K~~October 1, ~~as well as any amendments and exhibits to those reports~~2014, ~~are available free of charge through~~ our ~~website after we have filed such reports with, or furnished them to, the United~~ ~~States~~code ~~Securities~~share and ~~Exchange~~interline ~~Commission.~~e-ticketing ~~Information~~agreements onwith ~~our~~Frontier ~~website~~were isterminated ~~not~~due ~~incorporated~~to ~~into,~~Frontier’s ~~nor~~migration ato ~~part~~an ~~of,~~ultra-low ~~this~~cost ~~Form~~carrier ~~10-K~~which orno ~~our~~longer ~~other~~provides ~~securities~~for ~~filings~~interline agreements.

As of March 20, 2015, we served 28 airports in 9 states with a fleet of six Embraer EMB-120 Brasilias and 28 Beechcraft 1900D regional airliners.

Essential Air Service (“EAS”) Program

We derived approximately 4251% of our total revenue from the EAS program in the year ended December 31, ~~2012~~2014, which is administered by the United States Department of Transportation (DOT). The EAS program was instituted under the Airline Deregulation Act of 1978 (the “Deregulation Act”), which allowed airlines greater freedom to introduce, increase, and generally reduce or eliminate service to existing markets. Under the EAS program, certain communities are guaranteed specified levels of “essential air service.” In order to promote the provision of essential air services, the DOT may authorize the payment of federal subsidies to compensate an air carrier that is providing essential air services in otherwise unprofitable or minimally profitable markets.

The FAA Modernization and Reform Act of 2012 was enacted into law on February 14, 2012. This legislation provides for the authorization of the EAS program for federal fiscal years 2011 through ~~2014~~2015. Federal fiscal year ~~2014~~2015 ends on September 30, 2015. ~~While~~The ~~the~~ FAA Modernization and Reform Act of 2012 reaffirmed the Congressional commitment to the continuance of the Essential Air Service program,. The EAS program obtains a portion of the funding ~~for~~through ~~the EAS program continues to depend on~~ annual Congressional appropriations. Furthermore, the Budget Control Act of 2011, popularly known as “sequestration” legislation mandating across-the-board federal budget cuts, went into effect on March 1, 2013. If, and how this legislation will affect the EAS program and our public service revenue, is unknown at this time.

An airline serving a community that qualifies for essential air services is required to give the DOT advance notice before the airline may ~~terminate~~discontinue, suspend, or reduce service. Depending on the circumstances, the DOT may require the continuation of existing service until a replacement carrier is found. EAS rates are normally set for two-year periods for each city. Significant fluctuations in passenger traffic, fares and associated revenues, as well as fluctuations in fuel and other costs, may cause EAS routes to become unprofitable during these two-year terms. Near the end of the two year term for EAS service to a particular city, the DOT will request service proposals from the Company and competitive proposals from other airlines. Proposals, when requested, are evaluated on, among other things, the level of service provided, the amount of subsidy requested, the fitness of the applicant, and comments from the communities served.

As of March 20, 2015, we served 19 EAS communities on a subsidized basis.

~~Effective April 1, 2013, we will serve 32~~ EAS ~~communities~~Program onand aMarket ~~subsidized~~Activity ~~basis.~~

Primarily as a result of the pilot shortage, the company suspended EAS ~~Program~~service ~~Activity~~to the following cities since January 1, 2014:

~~On February 1,~~Moab ~~2012, March 11, 2012~~ and ~~March 17~~Vernal, ~~2012,~~UT ~~we initiated service to our Minneapolis hub from Pierre, SD (non-EAS subsidized), Ironwood, MI, and Jamestown, ND and Williston, ND (non-EAS subsidized).~~

~~On April 2~~Pueblo, ~~2012 we commenced service from Watertown, SD to Minneapolis, MN and on April 11th we initiated service from Fort Dodge, IA and Mason City, IA to~~AZ ~~Minneapolis, MN.~~

OnClovis ~~April 4,~~and ~~2012~~Silver ~~we discontinued EAS service to Garden~~ City, KSNM ~~and transitioned this service to another carrier.~~

OnDevils ~~May 17,~~Lake ~~2012~~and ~~we initiated service from Thief River Falls~~Jamestown, MNND ~~to our Minneapolis hub.~~

OnFt. ~~November 4,~~Dodge ~~2012~~and weMason ~~discontinued EAS service to Laramie~~City, WYIA ~~and transitioned this service to another carrier.~~

~~On February 1~~Ironwood, ~~2013~~MI ~~we continued our service to Dickinson, ND on a non-subsidized basis.~~

OnHays ~~February 12,~~and ~~2013 the U.S. Department of Transportation terminated the eligibility of Ely, NV under the EAS program effective April 1, 2013. We will operate our last flight to Ely, NV on~~Great ~~March 31~~Bend, ~~2013~~KS ~~and discontinue operations at our Las Vegas, NV hub at this time.~~

~~United~~Visalia, ~~Airlines~~CA ~~and Frontier Airlines Code Share Relationships~~

~~United~~In ~~Airlines.~~addition ~~We have operated under ticket revenue proration code share agreements with United Airlines since April 1992. On May 1, 2001, we transitioned from a United Express branded code share agreement~~ to ~~a unique code share agreement that provides United with code share marketable access to all seats on Great Lakes aircraft where~~ the ~~United~~ ~~code~~EAS ~~share~~subsidized ~~product~~cities ~~can~~above, ~~provide~~in ~~our~~March ~~mutual customers connecting opportunities and access to all~~ of ~~the~~2014, ~~benefits of~~ the ~~United~~Company ~~product~~discontinued ~~line~~service ~~including~~to ~~convenient~~Dickinson ~~baggage transfer~~ and ~~United’s~~Williston, ~~frequent~~ND ~~flyer~~which ~~program.~~were ~~The~~not ~~Company~~EAS ~~and~~subsidized ~~United~~cities. ~~entered into~~In ~~a new code share agreement on~~ September 1, ~~2011. Terms~~ of ~~the~~2014, ~~agreement~~we ~~provide~~discontinued ~~for~~service ~~the Company~~ to ~~continue United Airlines code sharing for destinations the Company services to and from our Denver~~Telluride, ~~Los Angeles and Phoenix, AZ hubs~~CO.

~~Frontier~~Pilot ~~Airlines.~~Shortage On May 3, 2001, we entered into a code share agreement with Frontier, which was implemented July 9, 2001. While the Frontier agreement does not have a fixed termination date, it is terminable 180 days after written notice by either party. The Frontier agreement facilitates additional convenient access to connecting seat inventories and makes available the entire Frontier product line to all Great Lakes communities. The Frontier flight designator code (F9) can be used on Great Lakes’ flights connecting with Frontier’s flights at our Denver, CO, Los Angeles, CA and Phoenix, AZ hubs. Accordingly, certain flights to and from our Denver, Los Angeles and Phoenix hubs carry both the United Airlines and Frontier Airlines flight designator codes and all flights throughout our route system carry the Great Lakes designator code.

~~During~~New ~~2012~~Federal Aviation Administration (“FAA”), wepilot ~~estimate~~qualification ~~that~~rules ~~approximately~~imposed ~~32%~~as part of ~~Great~~the ~~Lakes’~~Airline ~~passenger~~Safety ~~traffic~~and ~~utilized~~Federal ~~the~~Aviation ~~United~~Administration ~~code~~Extension ~~share product~~Act ~~line~~of 2010 in combination with revised FAR Part 117 Flight Crewmember Flight and ~~approximately~~Duty ~~23%~~Limitations ofand ~~Great~~Rest Requirements, ~~Lakes’~~(“FAR ~~passenger~~Part ~~traffic~~117”), ~~utilized~~have ~~the~~created ~~Frontier~~an ~~code~~industry-wide ~~share~~shortage ~~product~~of ~~line~~qualified pilots and negatively affected our operations and financial condition.

These new rules resulted in a greatly accelerated demand for qualified pilots as air carriers proceeded to increase pilot staffing requirements to compensate for the loss of crew efficiency due to the new rules. As a result, Great Lakes lost a large portion of its pool of qualified pilots with ATP certification to airlines operating aircraft with more seat availability and hence greater pilot earnings potential.

The Airline Safety and Federal Aviation Administration Extension Act of 2010 was enacted in August 2010. Among many other pilot training directives, the legislation mandated that first officers (co-pilots) obtain an Airline Transport Pilot certification (“ATP”) prior to being qualified to perform crewmember duties in scheduled airline passenger service under FAR Part 121 regulatory requirements. A key factor to enable a pilot to receive an ATP certificate is the accumulation of 1,500 flight hours.

Furthermore, the legislation directed the FAA Administrator to conduct a rule making proceeding, to identify specific academic training courses that would provide for exemptions to the 1,500 hour requirement. The FAA published the final rule in the Federal Register on July 15, 2013. These rules became effective August 1, 2013. As a result of the rule making process, first officers may be eligible to receive a “restricted privileges” ATP with a minimum of 750 hours if they were a military pilot, 1,000 hours if they have received a bachelor’s degree from an accredited educational institution with an aviation major and 1,250 hours if they have received an associate’s degree from an accredited educational institution with an aviation major. It should be noted that accredited educational institutions provide very limited actual flight experience and that graduates from these institutions typically will have received between 250 to 350 hours of actual flight time.

These new pilot qualification rules have severed the historical path in which pilots have had the opportunity to build enough hours so they could advance their careers. Great Lakes has historically provided this career path for more than 32 years. Prior to this new rule, regulatory requirements provided for pilots to become eligible as first officers for a FAR Part 121 air carrier with a minimum of 250 hours of experience. The new rules also mandate that a first officer must have 1,000 hours as a FAR Part 121 first officer in an air carrier operation prior to being eligible to serve as a captain in a FAR Part 121 airline. As an alternative, the rule provides for captain eligibility under FAR Part 121 for pilots who accumulate 1,000 hours of pilot in command time in a FAR Part 135 operation.

The current supply of pilot candidates who qualify under the new regulations is severely limited. It is difficult for Great Lakes, which operates Beech 1900D turboprop aircraft, to compete for qualified pilots with other airlines operating 50 seat regional jets and larger equipment.

As a result, we have had to reduce scheduled departures by suspending service to multiple communities eligible for Essential Air Service, and other non-EAS markets. These actions resulted in a reduction of revenue and operating expenses. The rate of expense reduction will inherently lag the revenue drop-off as the Company aggressively adjusts its operating expenditures to match the new level of operations.

In April of 2013, Great Lakes submitted a written proposal to the FAA seeking authority to operate Beech 1900D aircraft in a nine seat passenger configuration utilizing FAR Part 135 pilot hiring requirements, while maintaining and complying with all other FAR Part 121 operational and maintenance standards.

On March 18, 2014, the Company received from the FAA new operations specifications allowing the Company to hire pilots under FAR Part 135 regulatory requirements. This will allow us to restore first officer staffing levels while maintaining FAR Part 121 hiring, training and employment standards as we have always done as a Part 121 carrier. From February 2014 through December 2014 we have hired 84 new pilots. Of the 84 new hire pilots, 55 have completed training and are operating in revenue generating scheduled air service.

The Company’s pilots are represented by the Sheet Metal, Air, Rail Transportation Union (“SMART”). The Company entered into a new agreement with the pilots on September 16, 2014. This agreement will continue in full force and effect for four years and thereafter is subject to amendment, which would reopen collective bargaining.

United Airlines and Frontier Airlines Code Share Relationships

United Airlines. We have operated under ticket revenue proration code share agreements with United Airlines since April 1992. On May 1, 2001, we transitioned from a United Express branded code share agreement to a unique code share agreement that provides United with code share marketable access to all seats on Great Lakes aircraft where the United code share product can provide our mutual customers connecting opportunities and access to all of the benefits of the United product line including convenient baggage transfer and United’s frequent flyer program. The Company and United entered into a new code share agreement on September 1, 2011. Terms of the agreement provide for the Company to continue United Airlines code sharing for destinations the Company services to and from our Denver, Los Angeles and Phoenix, AZ hubs.

Frontier Airlines. We operated under a code share agreement with Frontier Airlines (Frontier) from May, 2001 through September 30, 2014. Effective October 1, 2014, our code share and interline e-ticketing agreements with Frontier were terminated due to Frontier’s migration to an ultra-low cost carrier which no longer provides for interline agreements.

During 2014, we estimate that approximately 38% of Great Lakes’ passenger traffic utilized the United code share product line and approximately 19% of Great Lakes’ passenger traffic utilized the Frontier code share product line.

Interline Relationships

Since 1982, Great Lakes has developed and maintained various interline relationships with numerous domestic and international airlines. In recent years, the airline industry has modified its interline ticketing and baggage agreements to move towards electronic processing of interline transactions and related customer services. Great Lakes is committed to being part of the airline industry’s mission to simplify the customer relationship. As a ~~part~~ of this commitment, we have developed electronic ticketing (e-ticket) interline agreements with American Airlines, Delta Airlines, Frontier Airlines, United Airlines and U.S. Airways. We intend to update our remaining paper ticket interline agreements with e-ticket processing procedures.

Markets

Effective April 1, 2013, we will operate 241 weekday flights. Service scheduled to and from our four hubs includes: 126 flights at Denver, 12 flights at Phoenix, 14 flights at Los Angeles (LAX), and 22 flights at Minneapolis. Great Lakes’ route map below illustrates our route map with the effect of discontinuing operations at our Las Vegas, NV hub:

We frequently modify our routes. For a current map of routes being flown, please visit our website at www.flygreatlakes.com.

Marketing

Our services are marketed primarily by means of our internet website, code-share partners’ websites, the Delta.com website, global distributions systems (travel agencies and travel agent websites) and our reservation system’s call center. Our promotional programs emphasize our close affiliation with our code share and interline e-ticket partners and, in particular, the opportunity for our passengers to participate in certain related customer service benefits, such as frequent flyer programs.

part of this commitment, we have developed electronic ticketing (e-ticket) interline agreements with American Airlines, Delta Airlines, United Airlines and U.S. Airways. We intend to update our remaining paper ticket interline agreements with e-ticket processing procedures.

Marketing

Our services are marketed primarily by means of our website, code-share partners’ website, the Delta.com website, global distributions systems (travel agencies and travel agent websites) and our reservation system’s call center. Our promotional programs emphasize our close affiliation with our code share and interline e-ticket partners and, in particular, the opportunity for our passengers to participate in certain related customer service benefits, such as frequent flyer programs.

Yield Management

We ~~monitor~~manage our inventory and pricing of available seats utilizing automated systems and yield management techniques. These processes enable our revenue control analysts to examine our past traffic and pricing trends, and to estimate the optimal number of seats to make available for sale at various fares. The analysts then monitor each flight to adjust seat allocations and booking levels, with the objective of maximizing total revenue for each flight.

Charter, Freight and Contract Service

Great Lakes uses its Beechcraft 1900Ds and Embraer Brasilia aircraft to provide charter services to private individuals, corporations and athletic teams. We also carry freight and small packages on most of our scheduled flights and provide contract services for other airlines. Combined revenues from our charter flights, freight and contract services were 0.3%, 0.8%, and 1.5% of our total revenues for the years ended December 31, 2012, 2011, and 2010, respectively.

Seasonality

Seasonal factors, related to weather conditions and changes in passenger demand, generally affect our monthly passenger enplanements. We have historically shown a higher level of passenger enplanements in the May through October period as compared with the November through April period for many of the cities served. These seasonal factors have generally resulted in reduced revenues, lower operating income, and reduced cash flow for us during the November through April period. As a result of such factors, our revenues and earnings have shown a corresponding increase during the May through October period. ~~Essential~~EAS ~~Air Service~~ revenues are generated under subsidy per departure rates established by the DOT and we realize revenue as departures are performed. Inherently, most of our EAS revenues, (other than winter weather related cancellations,) are not affected by seasonality, but certain EAS markets do receive summer season increased departures which are eligible for subsidy revenue.

Competition

Great Lakes competes for passenger traffic with regional and major air carriers and ground transportation. We also compete with other regional air carriers to receive EAS subsidies for providing air service to small communities. Our competition from other air carriers varies from location to location and, in certain areas, comes from regional and major carriers who serve airports in close proximity to destinations we serve.

Aircraft

As of March 20, ~~2013~~2015, our fleet consisted of 28 Beechcraft Model 1900D 19-passenger aircraft and six Embraer Brasilia Model 120 30-passenger aircraft.

Beechcraft 1900D Aircraft. The 19 passenger Beechcraft 1900D aircraft are pressurized and weather radar equipped, and offer a 310-mile per hour cruising speed. We currently operate the majority of our Beechcraft 1900D aircraft in a nine seat configuration.

Embraer Brasilia Aircraft. The 30-passenger Embraer Brasilia aircraft are pressurized, weather radar equipped, configured with lavatories, staffed with a flight attendant, and offer a 330-mile per hour cruising speed.

A summary of our operating aircraft as of December 31, ~~2012~~2014, ~~2011~~2013 and ~~2010~~2012 is as follows:

	2012				2011				2010
	2014				2013				2012
	Beechcraft		Embraer		Beechcraft		Embraer		Beechcraft		Embraer
	Beechcraft1900D		EmbraerBrasilia		Beechcraft1900D		EmbraerBrasilia		Beechcraft1900D		EmbraerBrasilia
	1900D		Brasilia		1900D		Brasilia		1900D		Brasilia
Owned		28		6		28		6		28		6
Owned		28		6		27		4		25		4
Operating leases		0		0		0		0		0		0
Operating leases		0		0		0		2		7		2
		28		6		28		6		28		6
		28		6		27		6		32		6

As of March 20, ~~2013~~2015, the average age of our aircraft was approximately 1820 years.

Maintenance

We utilize Federal Aviation ~~Administration~~ Administration (“FAA”) approved FAR part 121 maintenance programs developed by Great Lakes for periodic inspection and maintenance of our aircraft. We have operated and maintained Beechcraft 1900 aircraft since August of 1987 and we have operated and maintained Embraer Brasilia EMB 120 aircraft since June of 1994. We perform inspection and maintenance of our aircraft at our maintenance bases in Cheyenne, WY, Farmington, NM, ~~Fort Dodge, IA~~ and ~~Williston~~Denver, NDCO. Select components such as engine gas generators, power sections and avionics repairs and/or overhauls may be contracted with third parties certified to perform such maintenance. ~~Line maintenance is also performed in Denver, CO and Minneapolis, MN.~~ Parts inventories are maintained at these locations to promote the mechanical dispatch reliability of the fleet. We also keep an inventory of spare engines and propellers for our fleet to allow for minimal downtime during major overhauls.

Since 1979, we have operated a FAA certified repair station (CRS), under FAA Federal Aviation Regulation (FAR) ~~part~~Part 145. We currently utilize the repair station, located in Cheyenne, WY, to perform overhaul and repair of selected aircraft components for our fleet of Beechcraft 1900D and Embraer Brasilia EMB-120 aircraft.

Fuel

We expect to continue to be able to obtain fuel in quantities sufficient to meet our future requirements. We contract, both through intermediaries and directly with refiners, for the purchase of a significant portion of our aircraft fuel requirements. However, standard industry contracts generally do not provide protection against fuel price increases and do not ensure availability of supply. Accordingly, an increase in the cost of fuel, if not accompanied by an equivalent increase in passenger revenues or subsidies, could have a material adverse impact on our future operating results. During ~~2012~~2014, our average price of fuel, including taxes and into plane service fees, was $3.7644 per gallon, as compared to $3.6967 in ~~2011~~2013 and $23.8376 in ~~2010~~2012. Based on rates of consumption for ~~2012~~2014, a one cent increase or decrease in the price per gallon ~~price~~ of fuel would increase or decrease our fuel expense by approximately $~~113~~48,000 annually.

Liquidity, Financing and Capital Resources

We have historically used debt to finance the purchase of our aircraft. On November 16, 2011, we entered into a financing agreement with GB Merchant Partners, LLC, serving as Collateral Agent, and Crystal Capital LLC, serving as Administrative Agent (the “Credit Agreement”). Terms of the financing include a four-year term loan in the amount of $24 million and a revolving loan credit facility in which we may borrow up to $10 million. This Credit Agreement enabled us to:

On December 22, 2014, we entered into the Loan Agreement (the “Loan Agreement”) with Callidus Capital Corporation (the “Lender”). The Lender agreed to make available to the Company: (i) a $25,000,000 single advance term loan facility, (ii) a revolving loan facility with availability of up to $6,000,000 and (iii) a second revolving loan facility with availability of up to $3,000,000. The $25,000,000 term loan was disbursed at closing, and substantially all of its proceeds were used to pay all outstanding borrowings, fees and expenses

• under ~~Make~~the aCredit ~~one-time~~Agreement ~~payment~~dated toNovember 6, ~~Raytheon~~2011 ~~Aircraft~~as ~~Credit~~amended ~~Corporation~~between ~~(“Raytheon”)~~the inCompany ~~the~~and ~~amount~~Crystal ofFinancial ~~$27~~LLC ~~million~~and toother ~~satisfy~~lenders ~~$37.2~~(the ~~million~~“Refinanced ofCredit ~~outstanding~~Agreement”). ~~debt~~The ~~obligations,~~revolving ~~extinguishing~~loan facilities ~~all~~may ofbe used for our ~~debt~~working ~~obligations~~capital toneeds. ~~Raytheon;~~

•In ~~Pay~~connection ~~related~~with ~~expenses~~the ofLoan Agreement described above, we repaid obligations totaling $224.5 9 million, which constituted all outstanding borrowings, fees and expenses under the Refinanced Credit Agreement. In connection with the repayment, GB Merchant Partners, LLC and Crystal Capital LLC under the Refinanced Credit Agreement terminated their security agreements and released all of their security interests in the Company’s aircraft and other assets.

•The ~~Obtain~~term loan and revolving credit facilities mature on December 22, as2017 aat ~~part~~which oftime any outstanding balances will be due and payable. At that time in order to pay the ~~transaction,~~principal amount the ~~return~~Company ofwould ~~all~~need 5to raise cash by obtaining new debt financing,~~371,980~~ ~~shares~~raising additional ofequity ~~Great~~financing ~~Lakes~~or ~~common~~selling ~~stock~~owned ~~previously~~aircraft ~~held~~or bya ~~Raytheon~~combination thereof. ~~This~~We ~~transaction~~are ~~reduced~~not ~~the~~required ~~issued~~to ~~and~~make ~~outstanding~~any ~~balance~~principal ofpayments ~~common~~under ~~stock~~the ~~from~~Loan ~~14,291,970~~Agreement ~~shares~~until toDecember 22, 82017,~~919,990~~ ~~shares~~absent atan ~~November~~event ~~2011~~of default.

~~At December 31,~~We ~~2012,~~have ~~our~~experienced ~~outstanding~~a ~~principal~~shortage ~~balance~~of onqualified ~~the~~pilots ~~term~~which ~~loan~~has ~~was~~caused ~~$18~~us to curtail operations and reduce capacity.7 ~~million~~The pilot shortage and its effect on operations are expected to continue until we can hire and train enough pilots to reestablish operations in those markets in which we were forced to suspend service or expand into new markets. The curtailment of operations has had ~~borrowed~~a $7negative impact on revenue, operating income and operating cash flows which is expected to continue.5 ~~million~~While ~~under~~we ~~the~~are ~~revolving~~re-staffing a sufficient number of qualified pilots to restore service to suspended or expand into new markets, we expect that absent unusual circumstances, that a combination of cash generated from operations in conjunction with new working capital lines of credit ~~facility~~and potential aircraft sales, will generate sufficient liquidity to service our obligations.

~~Pursuant~~As ~~to the terms~~ of ~~a pledge and security agreement and an aircraft security agreement~~December 31, ~~our~~2014 ~~obligations to~~ the ~~lenders identified in the Credit Agreement are secured by substantially all assets of the~~ Company, ~~including~~has ~~all~~no ~~owned~~ aircraft lease obligations.

Since we entered into the November 2011 Credit Agreement, a combination of cash generated from operations and additional borrowings of $3.5 million under the revolving credit facility through March 20, 2013, has provided enough liquidity to purchase three Beechcraft 1900D aircraft and two Embraer EMB-120 Brasilia aircraft. Two Beechcraft 1900D aircraft, one of which was purchased without engines, were purchased in December 2011 and the third Beechcraft 1900D aircraft was purchased in January 2012. We leased two Embraer EMB-120 Brasilia aircraft which leases where scheduled to terminate in January of 2013 and April of 2013. In December of 2012, we negotiated the early termination of these lease agreements and the purchase of the two Embraer EMB-120 Brasilia leased aircraft.

For the 12 months ending December 31, 2012, we invested $6.5 million of cash in aircraft, engines, rotable parts and other equipment. Aircraft and aircraft engine acquisitions, consisting of one Beechcraft 1900D, two Embraer EMB-120 Brasilia aircraft and one Embraer EMB-120 Brasilia aircraft engine, represented $3.3 million of the $6.5 million cash investment. We do not expect to acquire additional aircraft or engines in the foreseeable future.

For the year ending December 31, 2012, we incurred $1.4 million of aircraft rental expense of which $0.6 million was related to contractual lease obligations for the two Embraer EMB-120 Brasilia aircraft, $0.1 million was related to accelerated rent payments associated with the termination of the leases and a non-cash expense of $0.7 million was related to maintenance deposits expensed as a result of terminating the leases early. These expenses will be non-recurring going forward. At December 31, 2012 the Company has no aircraft lease obligations.

We had borrowed $7.5 million under the revolving credit facility at December 31, 2012 and borrowed an additional $1.5 million in 2013. The borrowings under the revolving credit facility are secured by accounts receivable, parts inventory and spare engines. As of March 20, 2013, we have borrowed $9.0 million, leaving $1.0 million available under our revolving credit facility.

Mandatory contractual principal and interest obligations for the next 12 months will be approximately $7.1 million. In addition to the mandatory contractual principal and interest obligations, we are required to make principal payments, based on a percentage of excess cash flows, on September 30 of each year beginning September 30, 2012, as determined in the Credit Agreement. In November of 2012, we made an excess cash flow payment in the amount of $2.3 million used to reduce the principal outstanding balance of the term loan. In 2012, we also made principal payments of $5.3 million which reduced the outstanding principal balance of the term loan from $24.0 million at December 31, 2011 to $18.7 million at December 31, 2012.

The term loan and the revolving loan credit facility are set to mature on November 16, 2015 at which time the outstanding principal balance due under the term loan is scheduled to be $7.8 million. If we do not decrease our borrowings under the revolving credit facility between March 31, 2013 and November 16, 2015, an additional $9.0 million under the revolving credit facility will also be due at maturity.

For additional information regarding the EAS Program and Liquidity, Financing and Capital Resources see Item 1A “Risk Factors” and Notes 1 and 5 to the Company’s financial statements included in this Annual Report on Form 10-K.

Employees

At March 20, ~~2013,~~2014 ~~the Company~~we ~~had~~employed ~~803~~442 full-time employees and ~~361~~215 part-time ~~active~~employees, of the 442 full-time employees, as95 ~~compared~~were topilots. ~~743~~At March 20, 2015 we employed 374 full-time employees and ~~325~~174 part-time ~~active~~ employees, atof ~~March 20~~the 374 full-time employees, ~~2012~~86 were pilots.

~~The~~Our ~~Company’s~~ pilots are represented by the ~~United~~Sheet Metal, Air, Rail Transportation Union (“~~UTU~~SMART”). ~~The~~We ~~pilot~~entered ~~collective~~into ~~bargaining~~a new agreement ~~became~~with ~~amendable~~the pilots on September 16, ~~2010~~2014. ~~The~~This ~~Company~~agreement ~~and~~will ~~the UTU~~continue ~~have been engaged~~ in ~~contract~~full ~~mediation~~force ~~under~~and ~~the~~effect ~~auspices~~for offour ~~the~~years ~~National Mediation Board (“NMB”). In August 2012, both the pilots~~ and ~~the~~thereafter ~~Company~~is ~~asked~~subject to ~~be released from mediated bargaining. On March 22~~amendment, ~~2013, the NMB~~which ~~proffered~~would ~~arbitration.~~reopen ~~The~~collective ~~parties have 30 days to accept that proffer~~bargaining. ~~If, at the end of the 30 day period both parties have not agreed to arbitrate, then they will be released to exercise self-help.~~

~~The~~Our ~~Company’s~~ flight attendants are ~~also~~ represented by the United Transportation Union (“UTU”). ~~The~~We ~~Company~~ entered into a new agreement with the flight attendants on May 17, 2011. This agreement will ~~continue~~become inamendable ~~full~~on ~~force and effect for four years and thereafter is subject to amendment~~May 17, ~~which would reopen collective bargaining~~2015.

~~The~~Our ~~Company’s~~ mechanics and maintenance clerks are represented by the International Association of Machinists and Aerospace Workers (“IAM”). The collective bargaining agreements between the Company and the clerks and mechanics represented by IAM, District 143, became amendable in 2002 and 2005, respectively. We are currently engaged in contract mediation under the auspices of the National Mediation Board.

In 2003, the Company’s dispatchers voted to be represented by the International Brotherhood of Teamsters. Negotiations with the dispatchers are not active at the present time.

Executive Officers of the Registrant

The following table provides information with respect to the Company’s executive officers as of March 20, ~~2012~~2015.

Name	Age		~~Title~~	Title
Douglas G. Voss	58	60	~~Chairman of the Board of Directors and President~~	Chairman of the Board of Directors and President
Charles R. Howell IV	55	57	~~Chief Executive Officer~~	Chief Executive Officer
Michael O. Matthews	56	58	~~Vice President and Chief Financial Officer~~	Vice President and Chief Financial Officer
Michael L. Tuinstra	59	61	~~Treasurer~~	Treasurer

Douglas G. Voss. Mr. Voss co-founded the Company in 1979 and served in the position of Chief Executive Officer from the Company’s inception until December 31, 2002. Mr. Voss has served as a director of the Company since the Company’s inception. Mr. Voss was initially licensed as a private pilot in 1974 and today holds both an Airline Transport Pilot Certificate and Airframe and Powerplant Mechanic Certificates. Mr. Voss is a graduate of Colorado Aero Tech. Mr. Voss has previously served the Company in the FAA Air Carrier Certificate required operational control positions of Director of Operations and Director of Maintenance.

Charles R. Howell IV. Mr. Howell became the Chief Executive Officer of the Company on December 31, 2002. Mr. Howell served as Chief Operating Officer from August 2002 until December 31, 2002. Prior to joining the Company, Mr. Howell was the President and Chief Executive Officer of Corporate Airlines, Inc., a Nashville-based airline that he co-founded in 1996.

Michael O. Matthews. Mr. Matthews became the Vice President and Chief Financial Officer of the Company on March 28, 2005. Mr. Matthews joined the Company in November 2004 as Vice President of Finance. Prior to joining the Company, Mr. Matthews was employed as Director of Treasury for Budget Group, Inc. Prior to joining Budget Group, Inc. in 2000, Mr. Matthews held management positions in the financial services industry including Newcourt Financial, MetLife Capital, Sanwa Business Credit and Societe Generale Financial Corporation.

Michael L. Tuinstra. Mr. Tuinstra became the Company’s Treasurer in January 2002. From April 1999 to January 2002, Mr. Tuinstra served as the Company’s Director of Purchasing and Inventory Control. From August 1998 until April 1999, Mr. Tuinstra was the Company’s Budget and Financial Analyst.

Regulation

The U.S. Department of Transportation (“DOT”) has continuous economic and fitness oversight of the Company’s operations. The Company’s economic authority is authorized under DOT Part 298 commuter air carrier certification regulations. The Deregulation Act of 1978 eliminated many regulatory constraints so that airlines became free to set fares and, with limited exceptions, to establish domestic routes without the necessity of seeking government approval.

The DOT is authorized to establish consumer protection regulations in order to prohibit certain pricing practices, influence conditions of carriage, and make ongoing determinations of a carrier’s fitness, willingness, and ability to provide air transportation properly and lawfully. The DOT also has the power to bring proceedings to enforce its regulations and seek penalties, including the assessment of civil penalties, the revocation of operating authority, and criminal sanctions.

We hold an air carrier operating certificate and a certified repair station certificate issued by the Federal Aviation Administration (“FAA”) pursuant to Federal Aviation Regulation (FAR) Part 121 and ~~Federal Aviation Regulation (~~FAR) Part 145, respectively. Effective March 18, 2014, we hold an air carrier operating certificate pursuant to FAR Part 135. As a result, we are subject to the jurisdiction of the FAA with respect to our flight operations, aircraft maintenance, and safety related matters, including, but not limited to, equipment, ground facilities, dispatch, communications, training, weather observation, flight personnel, and other matters affecting air safety. Our certificate is subject to suspension or revocation for cause.

~~The~~8 Aviation and Transportation Security Act requires the adoption of certain security measures by airlines and airports, including the screening of passengers and baggage. The security measures are being partially funded by a per flight segment tax on tickets. We are responsible for certain security costs above this level.

The Aviation and Transportation Security Act requires the adoption of certain security measures by airlines and airports, including the screening of passengers and baggage. The security measures are being partially funded by a per flight segment tax on tickets.

We are subject to the jurisdiction and regulations of the Federal Communications Commission regarding the use of our radio facilities. In addition, local governments and authorities in certain markets have adopted regulations governing various aspects of aircraft operations, including noise abatement, curfews, and use of airport facilities. We believe that we are in compliance with all such regulations.

We are subject to regulation under various environmental laws and regulations, including the Clean Air Act, the Clean Water Act and Comprehensive Environmental Response, Compensation and Liability Act of 1980. In addition, many state and local governments have adopted environmental laws and regulations to which our operations are subject.

Insurance

Great Lakes carries the types and amounts of insurance that are required by the DOT and are customary in the regional airline industry, including coverage for public liability, property damage, aircraft loss or damage, baggage and cargo liability, and workers’ compensation.

As a result of the September 11, 2001 terrorist attacks, aviation insurers have significantly increased premiums for all aviation coverage. We believe our insurance is adequate as to amounts and risks covered. There can be no assurance, however, that the limits of our insurance will be sufficient to cover any catastrophic loss, or that we will be able to renew insurance at commercially reasonable rates.

As a result of the September 11, 2001 terrorist attacks, aviation insurers have significantly increased premiums for all aviation coverage, while dramatically reducing the amount of coverage available for war-risk occurrences. In response to the reduction in coverage, the Air Transportation Safety and System Stabilization Act (the Stabilization Act) provided U.S. air carriers with the option to purchase certain war-risk liability insurance from the United States government on an interim basis at rates that are more favorable than those available in the private market. We have purchased this coverage from the United States government and anticipate renewing it for as long as the coverage is available. The airline and insurance industries, together with the United States and other governments, are continuing to evaluate both the cost of aviation insurance and options for providing insurance coverage. We anticipate that we will follow industry practices with respect to sources of insurance. We believe our insurance is adequate as to amounts and risks covered. There can be no assurance, however, that the limits of our insurance will be sufficient to cover any catastrophic loss, or that we will be able to renew insurance at commercially reasonable rates.

ITEM 1A.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should consider carefully the risks described below and the other information included or incorporated by reference into this annual report, including our financial statements and the related notes, before deciding to invest in our common stock. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently do not deem material may also impair our business operations. If any of the events or circumstances described in the following risk factors actually occur, or if any unforeseen risk develops, our business, financial condition and results of operations could suffer, the trading price of our stock could decline, and you could lose part or all of your investment.

Risks Related to Our Business

We are currently experiencing a shortage of qualified pilots which has materially impacted our operations and financial condition.

New Federal Aviation Administration (“FAA”), pilot qualification rules imposed as part of the Airline Safety and Federal Aviation Administration Extension Act of 2010 in combination with revised FAR Part 117 Flight Crewmember Flight and Duty Limitations and Rest Requirements, (“FAR Part 117”), have created an industry-wide shortage of qualified pilots and negatively affected our operations and financial condition.

Furthermore, the legislation directed the FAA Administrator to conduct a rule making proceeding, to identify specific training programs that would provide for exemptions to the 1,500 hour requirement. The FAA published the final rule in the Federal Register on July 15, 2013. These rules became effective August 1, 2013. As a result of the rule making process, first officers may be eligible to receive a “restricted privileges” ATP with a minimum of 750 hours if they were a military pilot, 1,000 hours if they have received a bachelor’s degree from an accredited educational institution with an aviation major and 1,250 hours if they have received an associate’s degree from an accredited educational institution with an aviation major. Prior to this new rule, regulatory requirements provided for pilots to become eligible as first officers for a FAR Part 121 air carrier with a minimum of 250 hours of experience.

The new rules also mandate that a first officer must have 1,000 hours as a FAR Part 121 first officer in an air carrier operation prior to being eligible to serve as a captain in a FAR Part 121 airline. As an alternative, the rule provides for captain eligibility under FAR Part 121 for pilots who accumulate 1,000 hours of pilot in command time a FAR Part 135 operation. These new pilot qualification rules have severed the historical path in which pilots have had the opportunity to build enough hours so they could advance their careers. Great Lakes has historically provided this career path for more than 32 years.

The reduction in the availability of qualified pilots has caused the Company to reduce our capacity by suspending service to multiple communities eligible for Essential Air Service subsidies, canceling and suspending service at several non-EAS subsidized markets. This has caused a significant decrease in revenues that will have a negative impact on earnings in the immediate future. There can be no assurance that the Company will be able to hire and retain pilots in amounts necessary to support its operations.

Our senior credit facility Callidus Capital Corporation requires us to maintain certain financial ratios, maintain sufficient collateral values and comply with various operational and other covenants.

Our failure to comply with the covenants contained in the credit agreement, including as a result of events beyond our control, could result in an event of default. If there were an event of default under our senior credit facility that was not cured or waived, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot assure you that our collateral values supporting our borrowings or cash flow will be sufficient to fully repay borrowings under our outstanding debt instruments, either upon maturity or if accelerated, upon an event of default, or that we would be able to refinance or restructure the payments on those debt instruments. This would have a material adverse impact on our liquidity, financial position and results of operations.

We depend on Essential Air Service revenue to justify a substantial portion of our capacity.

We receive Essential Air Service (“EAS”) revenue as compensation for essential air service provided by us to smaller communities. We received $5830.3 0 million of EAS revenue for the twelve month period ending December 31, ~~2012~~2014, representing approximately 4251% of our total operating revenue, compared to $5255.4 million of EAS revenue, or approximately 4247% of our total operating revenue, for ~~the~~ the twelve month period ending December 31, ~~2011~~2013. The total amount of EAS revenue ultimately received by us over an extended period is determined by, among other things, overall funding levels of the EAS program by the U.S. Congress (which could be reduced), competitive bids by other carriers (which could cause us to lose EAS revenue to competitors), and our ability to optimize our schedules. EAS revenue awards generally have a term of two years. The U.S. Department of Transportation, ~~which~~ which administers the EAS program, has the right to cancel EAS revenue awards if it deems that the communities served by such arrangements are no longer eligible.

The FAA Modernization and Reform Act of 2012 was enacted into law on February 14, 2012. This legislation provides for the authorization of the Essential Air Service program for federal fiscal years 2011 through 2014. Federal fiscal year 2014 ends on September 30, 2015. The FAA Modernization and Reform Act of 2012 reaffirmed the Congressional commitment to the continuance of the Essential Air Service program. However, there can be no assurances that future legislation will be consistent with this current legislation or that Congress will provide appropriated funding for the program at any particular level. Furthermore, the Budget Control Act of 2011, popularly known as “sequestration” legislation mandating across-the- board federal budget cuts, went into effect on March 1, 2013. If, and how this legislation will affect the EAS program and our public service revenue, is unknown at this time. A reduction of EAS revenue could adversely affect our business, financial condition, operating results and cash flows.

~~Our~~The ~~senior~~airline ~~credit facility~~industry ~~with~~is GBsubject ~~Merchant~~to ~~Partners~~extensive government regulation, ~~LLC~~ and ~~Crystal~~new ~~Capital~~regulations, ~~LLC~~or ~~requires~~changes usin tointerpretations ~~maintain~~of ~~certain~~current ~~financial~~regulations, ~~ratios~~could ~~and~~increase ~~comply~~our ~~with~~operating ~~various operational and other covenants~~costs.

~~Our~~Airlines ~~failure~~are subject to ~~comply~~extensive ~~with~~regulatory ~~the~~and ~~covenants~~legal ~~contained~~compliance inrequirements ~~the~~that ~~credit~~result ~~agreement,~~in ~~including~~significant ascosts. aThe ~~result~~Federal ofAviation ~~events~~Administration ~~beyond~~(“FAA”) ~~our~~from ~~control,~~time ~~could~~to ~~result~~time inissues andirectives ~~event~~and ofother ~~default.~~regulations Ifrelating ~~there~~to ~~were~~the anmaintenance ~~event~~and ofoperation ~~default under~~of ~~our~~aircraft ~~senior~~that ~~credit~~may ~~facility~~necessitate ~~that~~significant ~~was~~expenditures. ~~not~~Other ~~cured~~laws, ~~or waived~~regulations, ~~the~~taxes ~~holders~~and ofairport ~~the~~rates ~~defaulted~~and ~~debt~~charges ~~could~~have ~~cause~~also ~~all~~been ~~amounts~~imposed ~~outstanding~~from ~~with~~time ~~respect~~ to time that ~~debt~~significantly toincrease bethe ~~due~~cost ~~and~~of ~~payable~~airline ~~immediately.~~operations Weand/or ~~cannot~~reduce ~~assure you that~~ our ~~assets~~revenue. ~~or cash flow will be~~The ~~sufficient~~Aviation toand ~~fully~~Transportation ~~repay~~Security ~~borrowings under our outstanding debt instruments~~Act, ~~either~~which ~~upon~~became ~~maturity~~law orin ifNovember ~~accelerated~~2001, ~~upon~~mandated anthe ~~event~~federalization of ~~default,~~certain orairport ~~that~~security weprocedures ~~would~~and beimposed ~~able~~additional tosecurity ~~refinance~~requirements oron ~~restructure~~airports ~~the~~and ~~payments~~airlines, onmost ~~those~~of ~~debt~~which ~~instruments.~~are ~~This~~funded ~~would have~~by a ~~material~~per ticket ~~adverse~~tax ~~impact~~ on ~~our liquidity, financial position and results of operations~~passengers.

~~Airline~~We ~~industry~~incur ~~conditions~~substantial ~~constantly change~~costs in maintaining our current certifications and otherwise complying with the laws, rules and regulations ~~negative~~to ~~economic~~which ~~conditions~~we inare subject. We expect to continue incurring expenses to comply with the ~~United~~FAA’s ~~States~~regulations, ~~may~~as ~~materially~~well ~~and~~as ~~adversely~~regulation ~~affect~~by ~~our~~states, ~~business~~airports and ~~results~~municipalities ofthat have jurisdiction over our operations.

The airline industry is significantly affected by general economic conditions, and the global economic recession has resulted in weaker demand for air travel in general. Economic and competitive conditions in the airline industry have contributed to a number of airline bankruptcies in recent years. A worsening of current economic conditions, or an extended period of recession, whether nationally or regionally, would have a material adverse effect on our business, financial condition, operating results and cash flows.

In addition, proposed laws, regulations, taxes and user fees, if enacted, may increase our operating expenses and otherwise affect our business. Examples of this are the recent proposals to impose substantial user fees on aviation (including airlines) to fund air traffic control system costs and upgrades to that system. Future regulatory action concerning climate change and aircraft emissions also could have a significant effect on the airline industry, including the potential for increased fuel costs, carbon taxes or fees or a requirement to purchase carbon credits. We cannot predict whether these or other new regulations may be imposed on airlines and we cannot assure that laws or regulations enacted in the future will not materially adversely affect our business, financial condition, operating results and cash flows.

Airline industry conditions constantly change, and negative economic conditions in the United States may materially and adversely affect our business and results of operations.

We depend on connecting capacity at our hubs and the activities of our code share partners affect that capacity.

Our business depends on, and is sensitive to, events affecting the airline industry capacity at our connecting hubs. The operations of other airlines with substantial business at those hubs, therefore, impact our business. Our code share ~~partners~~partner, United Airlines, ~~and~~operates ~~Frontier Airlines operate~~ a large percentage of the flights at Denver International Airport, our largest hub. Changes in their business plans or models, employee strikes or job actions, or significant curtailment of services could have an adverse effect on our financial results.

Our code share agreements with ~~Frontier Airlines and~~ United Airlines dodoes not have a fixed termination date, but are cancellable by either party upon sufficient notice. We estimate that approximately 3238% ~~and~~ ~~23%~~ of our connecting passenger traffic utilizes the United Airline ~~and Frontier Airlines~~ code share product line~~, respectively~~. While we are the only carrier serving the majority of the non-hub destinations we serve, we can make no assurances that absent a code share agreement with United Airlines ~~or Frontier Airlines~~, that passengers wishing to travel to these destinations would either: (i) purchase travel through our interline e-ticketing agreements established with ~~United Airlines,~~American ~~Frontier~~ Airlines, ~~Continental~~Delta Airlines, ~~Delta~~United Airlines, and U.S. Airways, and ~~American Airlines~~ or (ii) purchase their travel directly through our own sales channels. Therefore, if the United Airlines ~~or Frontier Airlines~~ code share ~~agreements~~ ~~are~~agreement is terminated, we cannot predict the effect this would have on our future total operating revenue.

An “ownership change” under IRS Section 382 could reduce, eliminate, or defer the utilization of our net operating loss carryforwards.

At December 31, ~~2012~~2014, we had estimated net operating loss carryforwards (“NOLs”) of $2027.81 million for federal income tax purposes that expire beginning in 2021 and continuing through ~~2024~~2034. Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change”. Generally, an ownership change occurs if one or more shareholders, each of whom owns 5% or more in value of a corporation’s stock, increase their percentage ownership, in the aggregate, by more than 50% over the lowest percentage of stock owned by such shareholders at any time during the preceding three-year period.

If we were to undergo an ownership change as defined in Section 382, our NOLs generated prior to the ownership change would be subject to annual limitations, which could reduce, eliminate, or defer the utilization of these losses. Our NOLs available to offset future taxable income could be severely limited and the NOLs may expire as a result of the limitation. If we were to experience an ownership change as defined in Section 382 we may have to reduce or eliminate our deferred tax assets, incur future income taxes payable that could require cash payments or a combination of both. The effect could be materially adverse to our financial statements and cash flows.

At this time, we cannot predict if future transactions in our shares would constitute a change in ownership as defined by Section 382, and, therefore, affect the availability of our NOLs.

Our operations could be negatively impacted by terrorist events or war activity.

Our operations are sensitive to changes in the economy and airline industry that are caused by, or related to, past and future terrorist attacks. Such changes include, but are not limited to, the impact of additional airline and security charges on our costs, reduced customer demand for travel, the cost and availability of war-risk and other aviation insurance (including the federal government’s provision of third party war-risk coverage). War or other military action by the United States or other countries could have a significant effect on passenger traffic and passenger revenue, which could adversely affect our business, financial condition, operating results and cash flows.

We compete for passenger traffic and EAS revenue with other air carriers.

We compete for passenger traffic with regional and major air carriers. We also compete with other regional air carriers to receive EAS revenue for providing air service to small communities. Our competition from other air carriers varies from location to location and, in certain areas, comes from regional and major carriers who serve the same airports or larger airports which are in close proximity to some of the destinations we serve. Additionally, passengers may decide to drive or utilize other ground transportation services to nearby airports which we do not serve and/or hubs in which we serve. These competing factors could adversely affect our future passenger revenues.

Fuel prices or disruptions in fuel supplies could have a material adverse effect on us.

Expenditures for fuel and related taxes represent one of the largest costs of operating our business. Our operations depend on the availability of jet fuel supplies, and our results are significantly impacted by changes in jet fuel prices, which have been volatile in the last 36 months. ~~Jet~~Volatility ~~fuel prices increased~~ in 2012 and continue to increase in first quarter of 2013. We do not participate in fuel hedging instruments. Fuel prices could increase dramatically and supplies could be disrupted as a result of many factors outside of our control. Further volatility in jet fuel prices or disruptions in fuel supplies could have a material adverse effect on our results of operations, financial condition and liquidity.

Any labor disruption by our employees or those of our code share partners would adversely affect our ability to conduct our business.

Our pilots, flight attendants, mechanics and maintenance clerks, and dispatchers are represented by unions. Collectively, these employees represented approximately 3438.5% of our workforce as of December 31, ~~2012~~2014. ~~The~~We ~~collective~~entered ~~bargaining~~into ~~agreements~~a ~~became~~new ~~amendable~~agreement with the pilots on September 16, 2014. This agreement will continue in ~~2010~~full force and effect for ~~the~~four ~~pilots~~years and ~~2005~~thereafter ~~for~~is ~~the~~subject ~~mechanics~~to amendment, which would reopen collective bargaining. We entered into a new four year agreement with our flight attendants effective May 17, 2011 which will become amendable on May 17, 2015. Our collective bargaining agreement with our mechanics became amendable in 2005.

~~Our~~If ~~pilots~~we are ~~represented~~unable byto ~~the~~reach ~~United Transportation Union (“UTU”). The pilot collective bargaining~~ agreement ~~became~~with ~~amendable~~any ~~on September 16, 2010. The Company and the UTU have been engaged in contract mediation under the auspices~~ of ~~the~~our ~~National~~unionized ~~Mediation~~work ~~Board (“NMB”). In August~~groups ~~2012,~~when ~~both~~collective ~~the~~bargaining ~~pilots~~agreements ~~and~~are ~~the~~amendable, ~~Company~~we ~~asked~~may to be ~~released~~subject ~~from~~to ~~mediated~~work ~~bargaining.~~interruptions Onand/or ~~March 22~~stoppages, ~~2013,~~which ~~the~~could ~~NMB~~adversely ~~proffered~~affect ~~arbitration.~~our ~~The~~business, ~~parties~~financial ~~have~~condition, ~~30 days~~operating toresults ~~accept~~and ~~that~~cash ~~proffer~~flows. ~~If,~~A atlabor ~~the~~disruption ~~end~~or oflabor ~~the~~strike ~~30 day period both parties~~at ~~have~~either ~~not~~of ~~agreed~~our tocode ~~arbitrate,~~share ~~then~~partners ~~they~~could ~~will~~have bethe ~~released~~same ~~to exercise self-help~~effects.

If we are unable to reach agreement with any of our unionized work groups when collective bargaining agreements are amendable and the work group is released from bargaining by the NMB, we may be subject to work interruptions and/or stoppages, which could adversely affect our business, financial condition, operating results and cash flows. A labor disruption or labor strike at either of our code share partners could have the same effects.

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

Our business depends upon the efforts of our Chairman of the Board and President, Douglas G. Voss, and our other key management and operating personnel. We depend on the experience and industry knowledge of these individuals to execute our business plans. If we experience turnover in our leadership and other key employees, our business, financial condition, operating results and cash flows could be materially adversely impacted.

We are at risk of losses stemming from an accident involving any of our aircraft.

If one of our aircraft were to be involved in a serious accident, we could be exposed to significant liability for loss of life or other damages. Though we carry insurance against liability resulting from accidents, we cannot assure you of its adequacy in all circumstances. An accident could result in decreased revenues which could materially adversely affect our business, financial condition, operating results and cash flows. In addition, depending on the circumstances, any accident involving a particular aircraft of the type that we operate could result in a negative perception of that type of aircraft by air travelers. This could adversely affect our revenue whether or not our company was actually involved in the accident.

The airline industry is subject to extensive government regulation, and new regulations, or changes in interpretations of current regulations, could increase our operating costs.

Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs. The Federal Aviation Administration (“FAA”) from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that may necessitate significant expenditures. Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly increase the cost of airline operations and/or reduce our revenue. The Aviation and Transportation Security Act, which became law in November 2001, mandated the federalization of certain airport security procedures and imposed additional security requirements on airports and airlines, most of which are funded by a per ticket tax on passengers and a tax on airlines.

In 2010 Congress passed legislation, effective in July 2013, which may require the company to alter its minimum flight crew (pilot) hiring requirements for First Officers. The legislation statutorily will require a minimum of 1,500 hours of piloting experience and Airline Transport Pilot FAA certificate. This Act is subject to further rulemaking and the FAA Administrator has been designated by Congress with the authority to grant exemptions to the new hiring standard subject to the development of specialized pilot training programs. The airline industry has had a long history of recognizing regional airlines, such as Great Lakes, for providing initial FAR Part 121 pilot experience development.

With the most recent economic recession and the statutory retirement age for airline pilots increasing from age 60 to age 65, the airline industry has experienced a reduced level of pilot hiring as pilots have been allowed to extend their careers. New student pilot certificates have decreased dramatically in the past three years and subsequently the pool of eligible pilots qualified to be new hires into the airline industry has been diminishing significantly. The new federally mandated changes to hiring requirements, along with the current reduction of eligible and qualified pilot work force, could create a potentially serious regional airline pilot shortage. Depending on the outcome of this active rulemaking process, the provisions could significantly negatively impact the supply of pilots available to conduct our flight operations.

We incur substantial costs in maintaining our current certifications and otherwise complying with the laws, rules and regulations to which we are subject. We expect to continue incurring expenses to comply with the FAA’s regulations, as well as regulation by states, airports and municipalities that have jurisdiction over our operations.

We rely on technology and automated systems to operate our business, and a failure of these technologies or systems, or failures by their operators, could harm our business.

We depend on technology and automated systems to operate our business, including our computerized airline reservations system, our telecommunication systems, our website, our maintenance and engineering systems, our flight dispatching and crew management systems, our flight scheduling systems, and other technologies and systems. Disruption in, changes to, or a breach of, these systems could result in the loss of important data, negatively affect our customer service, increase our expenses, delay or impede our flight and related operations, or otherwise adversely impact our business. We may be vulnerable to external interruption in technology infrastructure on which we depend, such as power, telecommunications or the internet, whether due to large-scale events, such as natural disasters, or directed actions, including terrorist attacks and system security attacks seeking to compromise or obtain financial data, infect systems with computer viruses or impair or disrupt functionality through denial of services.

Production of both types of aircraft which we fly has ceased.

As of March 20, ~~2013~~2015, we operated a fleet of 28 Beechcraft Model 1900D 19-passenger aircraft and 6 Embraer Brasilia Model 120 30-passenger aircraft, neither of which of which are currently in production. These aircraft types continue to receive factory parts, manufacturing and engineering support. We may experience increased maintenance costs as our fleet ages.

Risks Related to Our Securities

The limited market for our securities could make trading more difficult or more expensive.

Trading in our common stock is conducted on the Over-the-Counter Bulletin Board, which was established for securities that do not meet NASDAQ listing requirements. We cannot assure you of an active public market for our common stock. Consequently, trading our common stock may be more difficult because of lower trading volumes, transaction delays, and reduced security analyst and news media coverage. These factors also could contribute to lower prices and larger spreads in the bid and ask prices for our common stock than might otherwise prevail.

The market price of our common stock may be subject to wide fluctuations.

The price of our common stock may fluctuate, depending on many factors, some of which are beyond our control and may not be related to our operating performance. As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the stock. The price of our common stock will be determined in the marketplace and may be influenced by many factors, including:

•

the extremely limited “float” in the public market;

•

price and volume fluctuations in the overall stock market from time to time;

•

significant volatility in the market price and trading volume of companies in the airline industry;

•

actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of financial market analysts;

•

regulatory changes affecting the airline industry;

•

investor perceptions of our industry, in general, and our company, in particular;

•

passenger concerns about the safety of air travel, in general, and public perceptions of our company, in particular;

•

the operating and stock performance of comparable companies;

•

general economic conditions and trends;

•

major catastrophic events;

•

loss of external funding sources;

•

sales of large blocks of our stock or sales by insiders; or

•

departures of key personnel.

A decline in the market price of our common stock could cause you to lose some or all of your investment and may adversely impact our ability to attract and retain employees and raise capital. In addition, stockholders may initiate securities class action lawsuits if the market price of our stock drops significantly, which may cause us to incur substantial costs and could divert the time and attention of our management.

We are controlled by our Chairman and President.

Our Chairman of the Board and President, Douglas G. Voss, beneficially owns 4,160,247 shares of our outstanding common stock, representing approximately 46.4% of our outstanding shares. As a result, Mr. Voss may be able to control our company and direct our affairs, including the election of directors and approval of significant corporate transactions.

This concentration of ownership could also delay, defer or prevent a change in control of our company, and make some transactions more difficult or impossible without Mr. Voss’ support. These transactions might include proxy contests, tender offers, open market purchase programs or other share purchases that could give our stockholders the opportunity to realize a premium over the then-prevailing market price of our securities. As a result, this concentration of ownership could depress the price of our securities.

We may be exposed to potential risks relating to our internal control over financial reporting and our ability to have those controls remediated timely.

In the event we identify control deficiencies that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements, and the trading price of our common stock and our ability to obtain any necessary equity or debt financing could suffer.

We are restricted from paying cash dividends on our shares of common stock in the foreseeable future.

We intend to retain any future earnings to fund the operation and expansion of our business and, therefore, we do not anticipate paying cash dividends on our shares of common stock in the foreseeable future. In addition, we are restricted from paying dividends under the current terms of our debt instruments. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for investors in our common stock for the foreseeable future.

Provisions in our credit agreement restrict us from ~~issuing preferred stock,~~ merging with or acquiring another entity ~~or modifying any of our organizational documents~~.

Our ~~current~~ credit agreement also restricts us from ~~issuing~~participating ~~preferred~~in ~~stock~~any merger or ~~amending,~~acquisition ~~modifying~~activity orthat ~~waiving~~would ~~any~~be ~~term~~adverse to our current lenders or ~~provision~~transfer ownership of ~~our~~property ~~organizational~~to ~~documents,~~another ~~including~~entity ~~our~~without ~~articles~~their ofprior ~~incorporation,~~consent. ~~certificates~~This ofprovision ~~designation~~could ~~pertaining~~discourage toothers ~~preferred~~from bidding for our common stock and could, ~~by-laws~~ as a result, orreduce ~~other~~the ~~operating~~likelihood ~~agreement~~of an increase in ~~any~~our ~~manner~~stock ~~adverse~~price tothat would ~~our~~otherwise ~~current~~occur ~~lenders~~if ~~without~~a ~~their~~bidder ~~prior~~sought ~~consent~~to buy our stock.

Our credit agreement also restricts us from participating in any merger or acquisition activity that would be adverse to our current lenders without their prior consent. This provision could discourage others from bidding for our common stock and could, as a result, reduce the likelihood of an increase in our stock price that would otherwise occur if a bidder sought to buy our stock.

Item 1B.

UNRESOLVED STAFF COMMENTS

None.

Item 2.

PROPERTIES

Aircraft

We currently operate a total of 34 aircraft consisting of 28 19-passenger Beechcraft 1900D aircraft, most of which are currently operating in a nine seat configuration, and six 30-passenger Embraer Brasilia aircraft. The average age of our fleet is approximately 1820 years. All 34 of our aircraft are owned and pledged as security for our loan agreements with GBCallidus ~~Merchant Partners, LLC and Crystal~~ Capital ~~LLC~~Corporation.

Ground Facilities

We lease approximately 94,000 square feet of space for maintenance, operations, and administration in Cheyenne, Wyoming.

On September 1, 2008 we entered into a lease for an approximate 120,000 square foot hangar and aircraft maintenance facility in Farmington, NM. We also lease aircraft maintenance facilities in ~~Williston~~Denver, ~~ND and Fort Dodge, IA~~CO.

OnAs of March 3120, ~~2013~~2015 we ~~will have~~ leased gate, terminal and ramp facilities at 4528 airports where ticketing and passenger loading and unloading are handled by Great Lakes personnel.

Item 3.

LEGAL PROCEEDINGS

We are a party to ongoing legal claims and assertions arising in the ordinary course of business. Management believes that the resolution of these matters will not have a material adverse effect on our financial position, results of operations, or cash flows.

Item 4.

MINE SAFETY DISCLOSURES

Not Applicable.

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock is traded under the symbol “GLUX” on the Over-the-Counter Bulletin Board (the “OTCBB”). The following table sets forth the range of high and low sale prices for our Common Stock for each of the fiscal quarters for the past two years as reported on the OTCBB. These prices represent inter-dealer prices without adjustments for mark-up, mark-down, or commission and do not necessarily reflect actual transactions.

Stock Quotations	High		Low
2012:
2014:
First quarter	$	1.4923	$	01.6501
Second quarter		10.6090		10.1043
Third quarter		10.6984		10.0943
Fourth quarter		20.4655		10.1534
2011:
2013:
First quarter	$	12.7015	$	1.2040
Second quarter		1.4375		01.3521
Third quarter		01.8550		0.4096
Fourth quarter		01.8323		0.5084

As of March 20, ~~2013~~2015, we had approximately ~~293~~285 record holders of our Common Stock.

The transfer agent for our Common Stock is Wells Fargo ~~Bank~~Shareowner ~~Minnesota~~Services, ~~N.A.,~~1110 ~~161~~Centre ~~North~~Pointe ~~Concord~~Curve ~~Exchange~~Suite 101, ~~South~~Mendota ~~St. Paul~~Heights, ~~Minnesota~~MN ~~55075-0738~~55120, telephone: (~~651~~855) ~~450~~217-~~4064~~6361.

We have not paid any dividends on our Common Stock since our initial public offering in January 1994. We expect that, for the foreseeable future, we will follow a policy of retaining earnings in order to finance the continued development of our business. Payment of dividends is within the discretion of our Board of Directors and will depend, among other factors, upon the earnings, capital requirements, operating and financial condition of Great Lakes, and any applicable restrictive debt and lease covenants. In addition, the provisions of our ~~November~~December 1622, ~~2011~~2014 financing agreement with GBCallidus ~~Merchant~~Capital ~~Partners~~Corporation, ~~LLC and Crystal Capital LLC,~~ restrict us from paying dividends without their prior consent.

There were no sales of unregistered securities of the Company during the fiscal year ended December 31, ~~2012~~2014.

There are no securities authorized for issuance under equity compensation plans as of December 31, ~~2012~~2014.

Item 6.

SELECTED FINANCIAL AND OPERATING DATA

The following statement of operations and balance sheet data as of, and for each of the years in the five-year period ended December 31, ~~2012~~2014 have been derived from our audited financial statements. The financial statements as of December 31, ~~2012~~2014 and ~~2011~~2013, and for each of the years in the three-year period ended December 31, ~~2012~~2014, and the audit report thereon, are included elsewhere in this Form 10-K. The following selected financial data should be read in conjunction with, and are qualified in their entirety by, the financial statements and the notes thereto included elsewhere in this Form 10-K.


	Year Ended December 31,
	2014			2013			2012			2011			2010
	(in thousands, except per share and selected operating data)
Statement of Operations Data:
Passenger revenues	$	29,037		$	61,421		$	79,008		$	70,989		$	63,066
Public service revenues		29,957			55,448			58,347			52,406			60,398
Freight, charter, and other		161			327			424			970			1,937

Total operating revenues		59,155			117,196			137,779			124,365			125,401

Operating expenses:
Salaries, wages and benefits		20,458			32,345			34,176			32,118			32,847
Aircraft fuel		16,435			35,667			41,871			38,955			31,374
Aircraft maintenance, material, and repairs		4,701			14,790			16,649			13,368			16,066
Depreciation and amortization		6,265			6,400			5,830			5,236			5,300
Aircraft rental		—			—			1,418			1,907			2,294
Other rentals and landing fees		4,402			6,438			7,136			6,046			5,717
Other operating expense		12,750			17,791			21,286			20,411			21,160

Total operating expenses		65,011			113,431			128,366			118,041			114,758

Operating income		(5,856	)		3,765			9,413			6,324			10,643

Interest expense, net		(4,555	)		(4,318	)		(5,008	)		(2,618	)		(1,910	)
Gain (Loss) on extinguishment of debt and deferred leases		(996	)		—			—			13,697			—

Income (loss) before income taxes		(11,407	)		(553	)		4,405			17,403			8,733
Income tax benefit (expense)		4,036			110			(1,503	)		(6,715	)		(3,680	)

Net income (loss)	$	(7,371	)	$	(443	)	$	2,902		$	10,688		$	5,053

Net income (loss) per share:
Basic	$	(0.82	)	$	(0.05	)	$	0.33		$	0.78		$	0.35
Diluted		(0.82	)		(0.05	)		0.32			0.78			0.35

Average number of common shares outstanding:
Basic		8,975			8,975			8,923			13,630			14,292
Diluted		8,975			8,975			9,060			13,740			14,446


	December 31,
	2014			2013			2012			2011			2010
	(in thousands, except per share and selected operating data)
Balance Sheet Data:
Working capital (1)	$	12,843		$	(4,387	)	$	14,891		$	15,110		$	(18,778	)
Total assets		64,262			77,878			84,372			83,778			84,350
Long-term debt (including current installments) and long-term debt classified as current		25,000			24,173			26,173			29,473			43,988
Stockholders’ equity		31,247			39,061			36,137			28,941			23,887

Common Stock Issued and Outstanding (2)		8,975			8,975			8,920			14,292			14,292

(1)	At December 31, 2013 all debt obligations were classified as current as the Company is not in compliance with financial covenants in its credit agreement. See “Liquidity, Financing and Capital Resources”.

	Year Ended December 31,
	2012			2011			2010			2009			2008
	(in thousands, except per share and selected operating data)
Statement of Operations Data:
Passenger revenues	$	79,008		$	70,989		$	63,066		$	58,737		$	75,719
Public service revenues		58,347			52,406			60,398			61,258			39,250
Freight, charter, and other		424			970			1,937			1,849			1,187
Total operating revenues		137,779			124,365			125,401			121,844			116,156
Operating expenses:
Salaries, wages and benefits		34,176			32,118			32,847			31,500			26,834
Aircraft fuel		41,871			38,955			31,374			26,631			38,556
Aircraft maintenance, material, and repairs		16,649			13,368			16,066			16,925			13,774
Depreciation and amortization		5,830			5,236			5,300			5,641			5,606
Aircraft rental		1,418			1,907			2,294			2,066			968
Other rentals and landing fees		7,136			6,046			5,717			6,646			5,162
Other operating expense		21,286			20,411			21,160			20,490			18,411
Total operating expenses		128,366			118,041			114,758			109,899			109,311
Operating income		9,413			6,324			10,643			11,945			6,845
Interest expense, net		(5,008	)		(2,618	)		(1,910	)		(2,160	)		(2,336	)
Gain on extinguishment of debt and deferred leases					13,697			—			—			—
Income before income taxes		4,405			17,403			8,733			9,785			4,509
Income tax expense		(1,503	)		(6,715	)		(3,680	)		(4,003	)		(2,568	)
Net income	$	2,902		$	10,688		$	5,053		$	5,782		$	1,941
Net income per share:
Basic	$	0.33		$	0.78		$	0.35		$	0.40		$	0.14
Diluted		0.32			0.78			0.35			0.40			0.13
Average number of common shares outstanding:
Basic		8,923			13,630			14,292			14,292			14,237
Diluted		9,060			13,740			14,446			14,442			14,414
	December 31,
	2012			2011			2010			2009			2008
	(in thousands, except per share and selected operating data)
Balance Sheet Data:
Working capital	$	14,891		$	15,110		$	(18,778	)	$	9,647		$	3,086
Total assets		84,372			83,778			84,350			84,644			86,217
Long-term debt (including current installments) and long-term debt classified as current		26,173			29,473			43,988			51,779			59,411
Stockholders’ equity		39,061			36,137			28,941			23,887			17,385
Common Stock Issued and Outstanding (1)		8,975			8,920			14,292			14,292			14,292

(2)	On November 16, 2011, Raytheon Aircraft Credit Corporation returned 5,371,980 shares of common stock to the Company. These shares were retired, resulting in our issued and outstanding shares of common stock decreasing from 14,291,970 shares to 8,919,990 shares.

(1) On November 16, 2011, Raytheon Aircraft Credit Corporation returned 5,371,980 shares of common stock to the Company. These shares were retired, resulting in our issued and outstanding shares of common stock decreasing from 14,291,970 shares to 8,919,990 shares.


	Year Ended December 31,
	2014			2013			2012			2011			2010
Selected Operating Data (unaudited):
Available seat miles (in thousands) (1)		118,996			334,426			397,160			370,376			388,162
Revenue passenger miles (in thousands) (2)		54,293			133,933			169,929			162,893			149,131
Revenue passengers carried		190,248			466,490			540,062			519,601			499,439
Departures flown		32,810			70,540			79,699			74,888			82,802
Passenger load factor (3)		45.6	%		40.0	%		42.8	%		44.0	%		38.4	%
Average yield per revenue passenger mile (4)		53.5	¢		45.9	¢		46.5	¢		43.6	¢		42.3	¢
Revenue per available seat mile (5)		49.7	¢		35.0	¢		34.7	¢		33.6	¢		32.3	¢
Operating cost per available seat mile (6)		54.6	¢		33.9	¢		32.3	¢		31.9	¢		29.6	¢
Average passenger fare (7)	$	143.50		$	131.67		$	146.29		$	136.62		$	126.27
Average passenger trip length (miles) (8)		285			287			315			313			299
Aircraft in service (end of period)		34			34			34			34			38
Destinations served (end of period)		29			44			47			44			58

18(1) “Available seat miles” or “ASMs” represent the number of seats available for passengers in scheduled flights multiplied by the number of scheduled miles those seats are flown. For comparative purposes, the change in period over period ASMs was not only affected by fewer departures in 2014 versus 2013, but as the Company was forced to transition to operating Beech 1900s in a nine seat configuration to mitigate the effect of new pilot qualification rules; operating a flight with nine seats versus 19 seats had a significant effect on period over period ASMs. The standalone effect of operating nine seat Beech 1900s versus 19 seat Beech 1900s resulted in a decrease of 47,637,190 ASMs in the twelve month period ended December 31, 2014.

	Year Ended December 31,
	2012			2011			2010			2009			2008
Selected Operating Data (unaudited):
Available seat miles (in thousands) (1)		397,160			370,376			388,162			401,068			360,636
Revenue passenger miles (in thousands) (2)		169,929			162,893			149,131			134,077			154,655
Revenue passengers carried		540,062			519,601			499,439			481,668			569,846
Departures flown		79,699			74,888			82,802			92,517			82,477
Passenger load factor (3)		42.8	%		44.0	%		38.4	%		33.4	%		42.9	%
Average yield per revenue passenger mile (4)		46.5	¢		43.6	¢		42.3	¢		43.8	¢		49.0	¢
Revenue per available seat mile (5)		34.7	¢		33.6	¢		32.3	¢		30.4	¢		32.2	¢
Operating cost per available seat mile (6)		32.3	¢		31.9	¢		29.6	¢		27.4	¢		30.3	¢
Average passenger fare (7)	$	146.29		$	136.62		$	126.27		$	121.94		$	132.88
Average passenger trip length (miles) (8)		315			313			299			278			271
Aircraft in service (end of period)		34			34			38			38			34
Destinations served (end of period)		47			44			58			62			59

(1) “Available seat miles” or “ASMs” represent the number of seats available for passengers in scheduled flights multiplied by the number of scheduled miles those seats are flown.

(2)	“Revenue passenger miles” represent the number of miles flown by revenue passengers.

(3)	“Passenger load factor” represents the percentage of seat miles flown by revenue passengers and is calculated by dividing revenue passenger miles by available seat miles.

(4)	“Average yield per revenue passenger mile” represents the average passenger revenue received for each mile a revenue passenger is carried.

(5)	“Revenue per available seat mile” represents the average total operating revenue received for each available seat mile.

(6) “~~Operating~~Cost ~~cost~~ per available seat mile” represents operating expenses divided by available seat miles. For prior year comparative purposes, considering the standalone effect of operating a portion of the Beech 1900 fleet in a nine seat configuration versus a 19 seat configuration; cost per ASM would have decreased to 39.0 cents per ASM from the 54.6 cents per ASM (as illustrated above) for the year ended December 31, 2014.

(7)	“Average passenger fare” represents passenger revenue divided by the number of revenue passengers carried.

(8)	“Average passenger trip length” represents revenue passenger miles divided by the number of revenue passengers carried.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Overview

The discussion and analysis throughout this report contains certain forward-looking terminology such as “believes,” “anticipates,” “will,” and “intends” or comparable terminology. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Potential purchasers of Great Lakes securities are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by the cautions and risks described herein. See “Forward-Looking Statements” at the front of this report.

Great Lakes began providing air charter service in 1979, and has provided scheduled passenger service since 1981. We provide scheduled air service to our hubs under the Great Lakes brand. Connecting code share and interline e-ticket products are available to United Airlines at selected hubs. American Airlines, Delta Airlines, United Airlines and U.S. Airways interline e-ticket products are available at all of the hubs which we serve. Effective March 20, 2015, we will provide passenger service to 28 airports in 9 states.

Financial Highlights

We had operating revenue of $59.1 million for the year ending December 31, 2014, a 49.5% decrease compared to operating revenue of $117.2 million for the year ending December 31, 2013. We realized a $32.4 million decrease in passenger revenue and a $25.5 million decrease in public service revenue. The $57.9 million or 49.6% period-over-period decrease in operating revenues was primarily attributable to a reduction of scheduled service as a result of a 53.5% reduction in the number of departures for the year ending December 31, 2014 compared to the year ending December 31, 2013. This reduction in the number of departures is directly related to a nationwide shortage of qualified pilots.

We had an operating loss of $5.9 million for the year ending December 31, 2014, compared to operating income of $3.8 million for the year ending December 31, 2013. The $9.6 million decrease in operating income is attributable to a $58.0 million decrease in operating revenue offset by a $48.4 million decrease in operating expenses.

We had a net loss of $7.4 million for the year ending December 31, 2014, compared to a net loss of $0.4 million for the year ending December 31, 2013. This $7.0 million increase in net loss is primarily a result of a decrease in operating revenue of $58.0 million offset by a decrease of operating expenses of $48.4 million, a decrease of income tax expense of $3.9 million, loss on extinguishment of debt of $1.0 million and interest expense increase of $0.2 million.

On December 22, 2014, we entered into a new loan agreement with Callidus Capital Corporation (Callidus). The loan agreement consists of: (i) a $25,000,000 single advance term loan facility, (ii) a revolving loan facility with availability of up to $6,000,000 and (iii) a second revolving loan facility with availability of up to $3,000,000. The $25,000,000 term loan was disbursed at closing, and substantially all of its proceeds were used to pay all outstanding borrowings, fees and expenses under our prior credit agreement dated November 6, 2011 with Crystal Financial LLC and GB Merchant Partners. The Callidus revolving loan facilities may be used for the Company’s working capital needs.

~~Great~~Results Lakes began providing air charter service in 1979, and has provided scheduled passenger service since 1981. We provide scheduled air service to our hubs under the Great Lakes brand. Connecting code share and interline e-ticket products are available to both United and Frontier Airlines at selected hubs. American Airlines, Delta Airlines, Frontier Airlines, United Airlines and U.S. Airways interline e-ticket products are available at all of ~~the~~Operations ~~hubs which we serve . Effective April 1, 2013, we will provide passenger service to 45 airports in 13 states.~~

~~Financial~~(dollars ~~Highlights~~in thousands)

We had operating revenue of $137.8 million for the year ending December 31, 2012, a 10.8 percent increase compared to operating revenue of $124.4 million for the year ending December 31, 2011. We realized a $8.0 million increase in passenger revenue and an $5.9 million increase in public service revenue.


	For the Years Ended December 31,
	2014									2013								2012
	Amount			Cents per ASM			% Increase (decrease) from 2013			Amount		Cents per ASM			% Increase (decrease) from 2012			Amount		Cents per ASM
Operating revenues:
Passenger	$	29,037						(52.7	)%	$	61,421					(22.3	)%	$	79,008
Public service		29,957						(46.0	)		55,448					(5.0	)		58,347
Other		161						(50.8	)		327					(22.9	)		424

Total operating revenues		59,155						(49.5	)%		117,196					(14.9	)%		137,779

Salaries, wages, and benefits		20,458			17.2	¢		(36.8	)%		32,345		9.7	¢		(5.4	)%		34,176		8.6	¢
Aircraft fuel		16,435			13.8			(53.9	)		35,667		10.7			(14.8	)		41,871		10.5
Aircraft maintenance materials and component repairs		4,701			4.0			(68.2	)		14,790		4.4			(11.2	)		16,649		4.2
Depreciation and amortization		6,265			5.3			(2.1	)		6,400		1.9			9.8			5,830		1.5
Aircraft rental		—			0.0			—			—		0.0			(100.0	)		1,418		0.4
Other rentals and landing fees		4,402			3.7			(31.6	)		6,438		1.9			(9.8	)		7,136		1.8
Other operating expense		12,750			10.7			(28.3	)		17,791		5.3			(16.4	)		21,286		5.4

Total operating expenses		65,011			54.6	¢		(42.7	)%		113,431		33.9	¢		(11.6	)%		128,366		32.3	¢

Operating income (loss)	$	(5,856	)							$	3,765							$	9,413

We had operating income of $9.4 million for the year ending December 31, 2012, a 48.8 percent increase compared to operating income of $6.3 million for the year ending December 31, 2011. The $3.1 million increase in operating income is attributable to a $13.4 million increase in operating revenue offset by a $10.3 million increase in operating expenses.


	2014			Increase/ (decrease) from 2013			2013			Increase/ (decrease) from 2012			2012
Available seat miles (thousands)		118,996			(64.4	)%		334,426			(15.8	)%		397,160
Revenue passenger miles (thousands)		54,293			(59.5	)%		133,933			(21.2	)%		169,929
Passenger load factor		45.6	%		14.0	%		40.0	%		(6.5	)%		42.8	%
Average yield per revenue passenger mile		53.5	¢		16.6	%		45.9	¢		(1.3	)%		46.5	¢
Revenue per available seat mile		49.7	¢		42.0	%		35.0	¢		0.9	%		34.7	¢
Cost per available seat mile		54.6	¢		61.1	%		33.9	¢		5.0	%		32.3	¢

WeComparison ~~had net income~~ of ~~$2.9~~2014 ~~million for the year ending December 31, 2012, compared~~ to ~~net~~2013 ~~income of $10.7 million for the year ending December 31, 2011. This $7.8 million decrease in net income is primarily a result of a one-time $13.7 million gain on extinguishment of debt in 2011.~~

~~Additional~~Passenger ~~Comments~~Revenues. ~~Forthcoming~~Passenger revenues decreased 52.7% for the year ended 2014 compared to the year ended 2013. The decrease in passenger revenues was largely due to a 59.5% decrease in revenue passenger miles which was partially offset by a 16.6% increase in average yield per revenue passenger mile. The $32.4 million year-over year decrease in passenger revenues was attributable to the curtailment of operations due to a severe shortage of available qualified pilots.

	For the Years Ended December 31,
	2012								2011								2010
			Cents			% Increase					Cents			% Increase					Cents
			per			(decrease)					per			(decrease)					per
	Amount		ASM			from 2011			Amount		ASM			from 2010			Amount		ASM
Operating revenues:
Passenger	$	79,008					11.3	%	$	70,989					12.6	%	$	63,066
Public service		58,347					11.3			52,406					(13.2	)		60,398
Other		424					(56.3	)		970					(49.9	)		1,937
Total operating revenues		137,779					10.8	%		124,365					(0.8	)%		125,401
Salaries, wages, and benefits		34,176		8.6	¢		6.4	%		32,118		8.7	¢		(2.2	)%		32,847		8.5	¢
Aircraft fuel		41,871		10.5			7.5			38,955		10.5			24.2			31,374		8.1
Aircraft maintenance materials and component repairs		16,649		4.2			24.5			13,368		3.6			(16.8	)		16,066		4.1
Depreciation and amortization		5,830		1.5			11.3			5,236		1.4			(1.2	)		5,300		1.4
Aircraft rental		1,418		0.4			(25.6	)		1,907		0.5			(16.9	)		2,294		0.6
Other rentals and landing fees		7,136		1.8			18.0			6,046		1.6			5.8			5,717		1.5
Other operating expense		21,286		5.4			4.3			20,411		5.5			(3.5	)		21,160		5.5
Total operating expenses		128,366		32.3	¢		8.7	%		118,041		31.9	¢		2.9	%		114,758		29.7	¢
Operating income	$	9,413							$	6,324							$	10,643

Public Service Revenues. Public service revenues earned through the Essential Air Service program decreased 46.0% to $30.0 million in 2014, as compared to $55.4 million in 2013. The decrease in public service revenue is primarily attributable to our reduction of communities served as result of the curtailment of operations due to a severe shortage of available qualified pilots. These factors contributed to a net decrease of $25.5 million of public service revenue in 2014 as compared to 2013.

Other Revenues. Other revenues decreased 50.8% to $0.2 million in 2014. This decrease was mainly due to a $0.1 million decrease in cargo revenues.

				Increase/						Increase/
				(decrease)						(decrease)
	2012			from 2011			2011			from 2010			2010
Available seat miles (thousands)		397,160			7.2	%		370,376			(4.6	)%		388,162
Revenue passenger miles (thousands)		169,929			4.3	%		162,893			9.2	%		149,131
Passenger load factor		42.8	%		(2.7	)%		44.0	%		14.6	%		38.4	%
Average yield per revenue passenger mile		46.5	¢		6.7	%		43.6	¢		3.1	%		42.3	¢
Revenue per available seat mile		34.7	¢		3.3	%		33.6	¢		4.0	%		32.3	¢
Cost per available seat mile		32.3	¢		1.3	%		31.9	¢		7.8	%		29.6	¢

Operating Expenses. Total operating expenses decreased 42.7%, or $48.4 million from the previous year. The rate of expense reduction lagged the revenue drop-off as the Company adjusted its operating expenditures to match the new level of operations. The Company was forced to transition to operating Beech 1900s in a nine seat configuration to mitigate the effect of new pilot qualification rules; operating a flight with nine seats versus 19 seats had a significant effect on period over period ASMs. The standalone effect of operating nine seat Beech 1900s versus 19 seat Beech 1900s resulted in a decrease of 47,637,190 ASMs in the twelve month period ended December 31, 2014. For prior year comparative purposes, considering the standalone effect of operating a portion of the Beech 1900 fleet in a nine seat configuration versus a 19 seat configuration; cost per ASM would have decreased to 39.0 cents per ASM from the 54.6 cents per ASM (as illustrated above) for the year ended December 31, 2014.

~~Comparison~~Salaries, ofwages, ~~2012~~and benefits decreased 36.8% to ~~2011~~$20.4 million or 17.2 cents per ASM compared to $32.3 million or 9.7 cents per ASM in 2013, which was primarily attributable to decrease in employees needed to support the decrease in operations served, along with decreases in health insurance claims and other employee benefits in 2014 compared to 2013.

~~Passenger~~Aircraft ~~Revenues~~fuel expense, in 2014, was $16.4 ~~Passenger~~million, ~~revenues~~or ~~increased~~13.8 11cents per ASM, a decrease of $19.3%2 million compared to 2013. In 2013, aircraft fuel expense was $35.7 million, or 10.7 cents per ASM. The average cost of fuel decreased from ~~2011~~$3.67 per gallon in 2013 to $3.44 per gallon in 2014. The ~~increase~~effect of the $0.23 decrease in ~~passenger~~cost ~~revenues~~per ~~was~~gallon, ~~largely~~along ~~due~~with toa decrease in consumption, was a 4decrease in total cost of approximately $19.3%2 ~~increase~~million in ~~revenue~~2014. ~~passenger~~We ~~miles~~estimate that of the $19.2 million decrease in ~~addition~~year-over-year fuel cost that $1.1 million is attributable to afuel 6price decreases and $18.7%1 million is attributable to the reduction in operations. At 2014 rates of consumption, a one-cent increase or decrease in ~~average~~the ~~yield~~price per ~~revenue~~gallon ~~passenger~~of ~~mile~~fuel will increase or decrease our fuel expense by approximately $48,000 annually.

~~Public~~Aircraft ~~Service~~maintenance, ~~Revenues.~~materials ~~Public~~and ~~service~~component ~~revenues~~repair ~~earned~~expense ~~through~~was ~~the Essential~~$4.7 ~~Air~~million ~~Service~~in ~~program~~2014, ~~increased~~a ~~11.3%~~decrease toof $5810.31 million infrom ~~2012~~2013. In comparison, asour ~~compared~~aircraft maintenance, tomaterials, and repairs expense for 2013 was $5214.48 million ~~in 2011~~. The ~~increase~~68.2% decrease in ~~public~~2014 ~~service~~aircraft ~~revenue~~maintenance isexpense was primarily attributable to ~~our~~an ~~expansion~~53.5% ~~into~~decrease ~~our~~in ~~Minneapolis~~the ~~hub,~~number ~~which~~of ~~serves~~departures ~~communities requiring~~and ~~higher~~an ~~subsidation,~~52.2% decrease in ~~combination~~aircraft ~~with~~block ~~renewing~~hour time. ~~EAS~~Aircraft ~~services~~maintenance, inmaterials ~~existing~~and ~~markets~~component ~~that~~expense ~~required~~does ~~subsidy~~not ~~rate~~include ~~increases.~~internal ~~These~~salaries, ~~factors~~wages ~~contributed~~and tobenefit aexpenses ~~net~~incurred ~~increase~~as ofa ~~$4.5~~result ~~million~~ of ~~public~~employees ~~service~~performing ~~revenue~~aircraft ~~in 2012 as compared to 2011~~maintenance.

~~Other~~Depreciation ~~Revenues.~~and ~~Other~~amortization ~~revenues~~expense ~~decreased~~was 56$6.3% tomillion in 2014 and $06.4 million in ~~2012~~2013. ~~This~~The decrease ~~was mainly due to a $0.5 million decrease~~ in ~~ground~~depreciation ~~handling~~is ~~services~~primarily ~~provided~~due to ~~other~~equipment ~~carriers~~becoming fully ~~who served the same locations in which we had ongoing operations~~depreciated.

~~Operating Expenses.~~We ~~Total~~had ~~operating~~no ~~expenses~~passenger ~~increased~~aircraft 8rental expense during 2014 and 2013.7% In December 2012, orwe ~~$10~~purchased aircraft that we were previously leasing.3 ~~million~~We ~~from~~currently ~~the~~own ~~previous~~all ~~year~~of our passenger service aircraft.

~~Salaries,~~Other ~~wages,~~rentals and ~~benefits~~landing ~~increased 8~~fees decreased 31.76% to $344.24 million orin ~~8.6~~2014 ~~cents~~from ~~per ASM compared to~~ $326.14 million in ~~or 8~~2013.7 ~~cents~~The ~~per~~decrease ~~ASM~~is ~~in 2011, which was~~ primarily attributable to ~~additional~~our ~~employees~~reduction ~~needed~~of tocommunities ~~support the increase in operations~~ served, ~~offset~~along bywith ~~decreases~~other inmarket ~~health~~service ~~insurance claims in 2012 compared to 2011~~reductions.

~~Aircraft~~Other ~~fuel~~operating expenses ~~expense,~~decreased 28.3% in ~~2012,~~2014 ~~was~~to $4112.97 million, orfrom ~~10.5 cents per ASM, an increase of~~ $217.98 million ~~compared~~ toin ~~2011~~2013. InThe ~~2011, aircraft fuel expense was~~ $395.01 million, ordecrease ~~10.5~~in ~~cents~~other ~~per~~operating ~~ASM.~~expenses ~~The~~was ~~average~~primarily ~~cost~~attributable ofto ~~fuel~~the ~~increased~~curtailment ~~from~~of ~~$3.69~~operations ~~per~~due ~~gallon in 2011~~ to ~~$3.76~~a ~~per~~severe ~~gallon~~shortage ~~in 2012. The effect~~ of ~~the~~available ~~$0.07~~qualified ~~increase in cost per gallon~~pilots, ~~along with~~ anoffset ~~increase~~by inincreases ~~consumption,~~for ~~was~~legal anand ~~increase~~professional infees ~~total cost~~ of ~~approximately~~ $20.96 million ~~in 2012~~. ~~At 2012 rates of consumption, a one cent increase or decrease in the price per gallon of fuel will increase or decrease our fuel expense by approximately $113,000 annually.~~

~~Aircraft~~Interest ~~maintenance,~~Expense. ~~materials~~Interest ~~and component repair~~ expense was $164.6 million, orduring ~~4.2 cents per ASM~~2014, ~~in 2012,~~ an increase of $35.35% ~~million~~ from ~~2011. In comparison, our aircraft maintenance, materials, and repairs expense for 2011 was~~ $~~13.~~4.3 million, ~~or 3.6 cents per ASM. The 24.5% increase~~ in ~~2012~~2013 ~~aircraft~~as ~~maintenance~~a ~~expense~~result ~~was~~of ~~primarily~~incremental ~~attributable to~~borrowings aat ~~6.4%~~default ~~increase~~rates ~~in the number~~ of ~~departures~~interest ~~and~~prior ato ~~7.9%~~our ~~increase~~refinancing in ~~aircraft~~December ~~block hour time. Aircraft maintenance, materials and component expense does not include internal salaries, wages and benefit expenses incurred as a result~~ of ~~employees performing aircraft maintenance~~2014.

~~Depreciation~~Loss ~~and~~on ~~amortization~~Extinguishment ~~expense~~of ~~was $5~~Debt.8 ~~million~~In inconjunction ~~2012~~with ~~and~~our December 2014 refinancing of our 2011senior credit facility, we repaid obligations totaling $524.39 million into ~~2011.~~our ~~The~~previous ~~increase~~lenders, ~~in depreciation~~which isconstituted ~~primarily~~all ~~due~~outstanding toborrowings, ~~addition~~fees ofand ~~flight~~expenses ~~equipment~~due ~~and~~under ~~other~~the ~~property~~our ~~and~~previous ~~equipment~~loan ~~purchased~~agreements. Our 2011 senior credit facility was

~~Aircraft~~ set ~~rental expense was $1.4 million in 2012, a decrease of 25.6% compared~~ to ~~$1.9~~mature ~~million~~ in ~~2011.~~November ~~The decrease~~2015 ~~resulted~~and ~~mainly~~had ~~from the return of seven Beechcraft model 1900D aircraft leased from Raytheon during the second half of 2011. The~~ $1.~~4 million of aircraft rental expense in 2012, consisted of $~~0.6 million of ~~rental~~unamortized ~~expense~~fees ~~for~~and ~~two~~expenses ~~Embraer EMB-120~~associated ~~Brasilia~~with ~~aircraft.~~that Infacility ~~December~~at ~~of 2012 we negotiated~~ the ~~early~~time ~~termination~~ of ~~these lease agreements and~~ the ~~purchase~~December of2014 ~~the~~refinancing ~~two~~with ~~Embraer~~Callidus ~~EMB-120 Brasilia leased aircraft~~Capital. ~~As result of the early termination of these leases and the acquisition of the aircraft~~Therefore, ~~we incurred an additional~~ $0.1.0 million of ~~aircraft~~unamortized ~~rental~~fees ~~expense~~has ~~related~~been torecorded ~~accelerated rent payments associated with the termination of these leases and a non-cash aircraft rental expense of $0.7 million related to maintenance deposits expensed~~ as a ~~result~~loss ofon ~~terminating~~ the ~~leases~~extinguishment ~~early.~~of ~~These~~debt ~~expenses~~at ~~will~~December 31, ~~be non-recurring going forward~~2014.

~~Other~~Income ~~rentals~~Tax ~~and landing~~Expense. ~~fees~~We ~~increased~~had ~~18.0%~~an toincome tax benefit of $74.10 million in ~~2012~~2014 ~~from~~compared to income tax benefit of $6.0.1 million in ~~2011~~2013. The ~~increase~~provision isfor ~~mostly~~income ~~attributable~~tax tobenefit ~~opening~~in of2014, ~~our~~as ~~Minneapolis~~a ~~hub~~percentage asof ~~well~~income asbefore ~~increased~~taxes, ~~rent~~was ~~expense~~35.4 atpercent ~~pre-existing~~compared ~~airport~~to ~~locations~~20.0 ~~combined~~percent ~~with~~income ~~incremental departures~~tax ~~over~~expense ~~the~~in ~~prior year~~2013.

~~Other~~As ~~operating~~of ~~expenses~~December 31, ~~increased~~2014, ~~4.3%~~we inhad ~~2012~~approximately to $2127.31 million, orof ~~5.4~~federal ~~cents~~net ~~per~~operating ~~ASM~~loss ~~from~~carry-forwards ~~$20.4~~which ~~million~~will orbe ~~5.5~~available ~~cents~~to ~~per~~offset ~~ASM~~future intaxable ~~2011~~income. ~~The~~We ~~increase~~also inhad ~~other~~$19.2 ~~operating~~million ~~expenses~~of isstate ~~primarily~~net ~~due~~operating toloss ~~increases~~carry-forwards, ~~in pilot training and associated lodging expenses~~ of which $010.42 million, ~~communications and utilities of~~ ($0.36 million, ~~passenger~~tax ~~related~~effected) ~~expenses~~is ofexpected ~~$0.3~~to ~~million, employee~~expire ~~related~~unused ~~expenses~~and of $09.20 million ~~and~~will ~~other~~be ~~expenses~~available ofto ~~$0.2~~offset ~~million~~future taxable income. ~~These~~A valuation ~~were~~allowance ~~offset~~of byapproximately ~~decreases~~$570,000 ~~for~~remained ~~professional~~at ~~fees~~December 31, of2014 ~~$0.2~~for ~~million,~~state ~~deicing~~net ~~expense~~operating ofloss ~~$0.2~~carry-forwards ~~million~~that ~~and~~may ~~insurance~~not ~~expense~~be ofutilized ~~$0.1~~before ~~million~~they expire.

~~Interest~~Comparison ~~Expense. Interest expense was $5.0 million during 2012, an increase~~ of ~~91.3%~~2013 ~~from $2.6 million in 2011. In 2011, we amortized $0.6 million of deferred debt restructuring gains which had the effect of lowering our interest expense from $3.2 million~~ to ~~$2.6 million. The~~ 2012 interest expense increase is attributable to a combination of higher interest rates associated with our long-term debt and the absence of deferred debt restructuring gains which became fully amortized in June of 2011.

~~Income Tax~~Passenger ~~Expense~~Revenues. WePassenger ~~had~~revenues ~~income~~decreased ~~tax~~22.3% ~~expense~~from of2012. $1The decrease in passenger revenues was largely due to a 21.52% ~~million~~decrease in ~~2012~~revenue ~~compared~~passenger miles in addition to $6a 0.71% ~~million~~decrease in ~~2011~~average yield per revenue passenger mile. The ~~provision~~$17.6 million ~~for~~year-over ~~income~~year ~~taxes,~~decrease asin apassenger ~~percentage~~revenues ofwas ~~income~~attributable ~~before~~to ~~taxes,~~the ~~decreased~~curtailment of operations due to ~~34.1~~a ~~percent~~severe shortage of available qualified pilots in ~~2012~~combination ~~from~~with ~~38.6~~a ~~percent~~reduction of scheduled service in ~~2011.~~markets that were experiencing diminishing year-over-year load factors and lower revenue passenger mile (RPM) yields.

AsPublic ofService ~~December 31, 2012, we had approximately $20~~Revenues.8 ~~million~~Public ofservice ~~federal~~revenues earned ~~net~~through ~~operating~~the ~~loss~~Essential ~~carryforwards~~Air ~~which~~Service ~~will~~program bedecreased ~~available~~5.0% to ~~offset~~ ~~future~~$55.4 ~~taxable~~million ~~income.~~in We2013, ~~also~~as ~~had~~compared to $1358.3 million ofin ~~state~~2012. ~~net~~The ~~operating~~decrease ~~loss~~in ~~carryforwards,~~public ofservice ~~which~~revenue ~~$9.5~~is ~~million~~primarily ~~($0.6~~attributable ~~million~~to ~~tax~~our ~~effected)~~reduction isof ~~expected~~communities toserved ~~expire~~which ~~unused~~was partially ~~and~~offset ~~$3.8~~with ~~million~~renewing ~~will~~EAS beservices ~~available~~in toexisting ~~offset~~markets ~~future~~that ~~taxable~~required ~~income.~~subsidy ~~A valuation~~rate ~~allowance~~increases. ofThese ~~approximately~~factors ~~$609,000~~contributed ~~remained~~to ata ~~December 31,~~net ~~2012~~decrease ~~for~~of ~~state~~$2.9 ~~net~~million ~~operating~~of ~~loss~~public ~~carryforwards~~service ~~that~~revenue ~~may~~in ~~not~~2013 beas ~~utilized~~compared ~~before~~to ~~they expire~~2012.

~~Comparison~~Other ofRevenues. ~~2011~~Other revenues decreased 22.9% to ~~2010~~$0.3 million in 2013. This decrease was mainly due to a $0.1 million decrease in cargo revenues.

~~Passenger~~Operating ~~Revenues~~Expenses. ~~Passenger~~Total ~~revenues~~operating ~~increased 12~~expenses decreased 11.6%, ~~from~~or ~~2010~~$14.9 ~~The~~million ~~increase~~from inthe ~~passenger~~previous ~~revenues~~year. ~~was~~The ~~largely~~rate ~~due~~of toexpense reduction alagged ~~9.2%~~the ~~increase in~~ revenue ~~passenger~~drop-off ~~miles~~as inthe ~~addition~~Company toadjusted aits ~~3.1%~~operating ~~increase~~expenditures into ~~average~~match ~~yield~~the ~~per~~new ~~revenue~~level ~~passenger~~of ~~mile~~operations.

~~Public~~Salaries, ~~Service~~wages, ~~Revenues.~~and benefits ~~Public service revenues earned through the Essential Air Service program~~ decreased 135.24% to $5232.43 million inor ~~2011,~~9.7 ascents per ASM compared to $6034.42 million inor ~~2010~~8.6 ~~The~~cents ~~decrease in~~per ~~public~~ASM ~~service~~in ~~revenues~~2012, which was ~~mainly~~primarily attributable to ~~a net~~ decrease in ~~communities~~employees ~~served~~needed byto ussupport ~~under~~ the ~~EAS~~decrease ~~program, partially offset by subsidy rate increases, stemming primarily from higher fuel costs,~~ in ~~recent~~operations ~~rate renewals for EAS markets in which we were reselected to continue subsidized air service. In February of 2011~~served, wealong ~~discontinued~~with ~~our Kansas City EAS hub operation and~~ decreases in ~~April~~health ofinsurance ~~2011~~claims ~~we discontinued our EAS hub operation~~ in ~~Milwaukee.~~2013 Wecompared ~~discontinued EAS operations~~ to ~~seven Montana communities in May of 2011 and ceased operations at our Billings, MT EAS hub on June 30, 2011~~2012. ~~The~~These ~~discontinuation~~decreases ofwere ~~these~~partially ~~EAS routes,~~ offset by ~~increases~~increase infor ~~other~~workers ~~public~~compensation ~~service revenues, resulted in a net decrease of $8~~insurance.0 ~~million of EAS revenue in 2011 as compared to 2010.~~

Aircraft fuel expense, in 2013, was $35.7 million, or 10.7 cents per ASM, a decrease of $6.2 million compared to 2012. In 2012, aircraft fuel expense was $41.9 million, or 10.5 cents per ASM. The average cost of fuel decreased from $3.76 per gallon in 2012 to $3.67 per gallon in 2013. The effect of the $0.09 decrease in cost per gallon, along with a decrease in consumption, was a decrease in total cost of approximately $6.2 million in 2013. At 2013 rates of consumption, a one-cent increase or decrease in the price per gallon of fuel will increase or decrease our fuel expense by approximately $98,000 annually.

Aircraft maintenance, materials and component repair expense was $14.8 million, or 4.4 cents per ASM, in 2013, a decrease of $1.9 million from 2012. In comparison, our aircraft maintenance, materials, and repairs expense for 2012 was $16.6 million, or 4.2 cents per ASM. The 11.2% decrease in 2013 aircraft maintenance expense was primarily attributable to an 11.5% decrease in the number of departures and an 11.4% decrease in aircraft block hour time. Aircraft maintenance, materials and component expense does not include internal salaries, wages and benefit expenses incurred as a result of employees performing aircraft maintenance.

~~Other~~Depreciation ~~Revenues.~~and ~~Other~~amortization ~~revenues~~expense ~~decreased~~was 49$6.9%4 tomillion in 2013 and $15.08 million in ~~2011~~2012. ~~This~~The ~~decrease~~increase ~~was~~in ~~mainly~~depreciation is primarily due to aaddition ~~$0.9~~of ~~million~~flight ~~decrease~~equipment in ~~ground~~fourth ~~handling~~quarter ~~services~~of ~~provided~~2012 toand other ~~carriers~~property ~~who~~and ~~served~~equipment ~~the same locations in which we had ongoing operations~~purchased.

~~Operating~~We ~~Expenses.~~had ~~Total~~no ~~operating~~passenger aircraft ~~expenses~~rental ~~increased~~expense ~~2.9%,~~during or2013 compared to $31.34 million ~~from~~in ~~the~~2012. ~~previous~~In ~~year~~December 2012, ~~primarily~~we ~~related~~purchased toaircraft ~~increased~~that ~~fuel~~we ~~costs.~~were ~~Fuel~~previously ~~costs increased 24~~leasing.~~2%,~~ orWe ~~$7.6~~currently ~~million, from~~own ~~8.1~~all ~~cents~~of ~~per~~our ~~ASM~~passenger inservice ~~2010 to 10~~aircraft.5 ~~cents per ASM in 2011.~~

~~Salaries,~~Other ~~wages,~~rentals and ~~benefits~~landing fees decreased 29.28% to $326.4 million in 2013 from $7.1 million, ~~which~~in ~~was primarily~~2012. ~~attributable~~The decrease is mostly due to ~~fewer~~reduced ~~employees~~hub ~~needed~~expenses attributable to ~~support~~a ~~the~~reduction ~~decreased~~in the number of ~~communities~~departures ~~served~~ and aan ~~reduction~~annual ofrate ~~health~~adjustment ~~insurance~~from ~~claims~~Denver International Airport that was $0.2 million higher than the credit we received in 2012.

~~Aircraft~~Other ~~fuel~~operating ~~expense,~~expenses decreased 16.4% in ~~2011,~~2013 ~~was~~to $3917.08 million, or ~~10.~~5.3 cents per ASM, anfrom ~~increase of~~ $721.63 million ~~compared~~or to5.4 ~~2010~~cents per ASM in 2012. InThe ~~2010,~~decrease ~~aircraft~~in ~~fuel~~other operating ~~expense~~expenses ~~was~~is primarily due to decreases in pilot training and associated lodging expenses of $311.4 million, orpassenger ~~8.1~~related ~~cents~~expenses ~~per~~of ~~ASM~~$1.1 ~~The~~million, ~~average cost~~contract ofairline ~~fuel~~handling ~~increased~~of ~~from~~ $20.836 ~~per~~million, ~~gallon~~employee inrelated ~~2010~~expenses toof $30.693 ~~per~~million, insurance ~~gallon~~of ~~in 2011~~$0.2 ~~The~~million, ~~effect~~professional fees of ~~the~~ $0.862 ~~increase~~million inand ~~cost~~other ~~per~~expenses ~~gallon, net~~ of a$0.2 ~~decrease~~million. inThese ~~consumption,~~were ~~was~~offset anby ~~increase~~increases infor ~~total~~deicing ~~cost~~expense of ~~approximately~~ $70.65 million ~~in 2011~~.

~~Aircraft~~Interest ~~maintenance,~~Expense. ~~materials~~Interest ~~and component repair~~ expense was $~~13.~~4.3 million, orduring ~~3.6 cents per ASM~~2013, ~~in 2011,~~ a decrease of $213.78% ~~million~~ from ~~2010. In comparison, our aircraft maintenance, materials, and repairs expense for 2010 was~~ $165.10 million, ~~or 4.1 cents per ASM. The 16.8% decrease~~ in ~~2011~~2012 aircraft maintenance expense was primarily attributable a 9.6% reduction in the number of departures and a 6.0 % reduction in aircraft block hour time. Our Fleet Management Program (FMP) with Pratt and Whitney Canada Corporation expired by its terms on June 30, 2011. The termination of this contract also contributed to lower aircraft maintenance expense in 2011. Aircraft maintenance, materials and component expense does not include internal salaries, wages and benefit expenses incurred as a result of reducing ~~employees~~our ~~performing~~long-term ~~aircraft maintenance~~debt.

~~Depreciation~~Income ~~and~~Tax ~~amortization~~Expense. ~~expense~~We ~~was~~had an income tax benefit of $50.21 million ~~during~~in ~~2011~~2013 ~~and~~compared to income tax expense of $51.35 million ~~during~~in ~~2010~~2012. The provision for income tax benefit in 2013, as a percentage of income before taxes, was 20 percent compared to 34.1 percent income tax expense in 2012.

~~Aircraft~~As ~~rental~~of ~~expense~~December 31, ~~was~~2013, we had approximately $118.97 million ~~during~~of ~~2011,~~federal anet ~~decrease~~operating ofloss 16carry-forwards which will be available to offset future taxable income. We also had $12.9% ~~compared~~million toof state net operating loss carry-forwards, of which $9.2 million ($0.35 million ~~during~~tax ~~2010~~effected) is expected to expire unused and $3.7 ~~The~~million ~~decrease~~will ~~resulted~~be ~~from~~available ~~the~~to ~~return~~offset future taxable income. A valuation allowance of ~~seven~~approximately ~~Beechcraft~~$507,000 ~~model~~remained ~~1900D~~at ~~aircraft~~December 31, ~~leased~~2013 ~~from~~for ~~Raytheon~~state ~~during~~net ~~the~~operating ~~second~~loss ~~half~~carry-forwards ofthat ~~2011~~may not be utilized before they expire.

~~Other~~Liquidity, ~~rentals~~Financing and ~~landing~~Capital ~~fees~~Resources increased 5.8% to $6.0 million in 2011 from $5.7 million in 2010. The increase is mostly attributable to reduced retroactive annual rate adjustment from Denver International Airport (“DIA”), which was partially offset by net decreases in expense mostly attributable to the decrease in communities served.

~~Other~~We ~~operating expenses decreased 3.5% in 2011 to $20.4 million, or 5.5 cents per ASM~~have ~~from~~historically ~~$21.2~~used ~~million~~debt ~~or 5.5 cents per ASM in 2010. The decrease in other operating expenses is primarily due~~ to afinance ~~decrease~~the inpurchase ~~pilot training and associated lodging expenses~~ of ~~$0.5~~our ~~million, contract handling of $0~~aircraft.3 million, communication expenses $0.3 million, contract maintenance of $0.2 million and passenger related expenses of $0.1 million. These were offset by increases for professional fees of $0.4 million, deicing expenses of $0.1 million and insurance of $0.1 million.

~~Interest~~On ~~Expense~~December 22, 2014, we entered into the Loan Agreement (the “Loan Agreement”) with Callidus Capital Corporation (the “Lender”). ~~Interest~~The ~~expense~~Lender ~~was~~agreed to make available to the Company: (i) a $~~2.6~~25,000,000 ~~million~~single ~~during~~advance ~~2011~~term loan facility, an(ii) a ~~increase~~revolving ofloan ~~37.1%~~facility ~~from~~with availability of up to $~~1.9~~6,000,000 ~~million~~and in(iii) a ~~2010~~second revolving loan facility with availability of up to $3,000,000. The ~~increase~~$25,000,000 term loan was ~~mostly the~~disbursed ~~result~~at ofclosing, ~~the~~and ~~amortization~~substantially all of ~~gains~~its ~~from~~proceeds ~~the~~were ~~2002~~used ~~deferred~~to ~~debt~~pay ~~restructuring~~all ~~becoming~~outstanding ~~fully~~borrowings, ~~amortized~~fees asand expenses ofunder ~~June~~the Credit Agreement dated November 306, 2011 as amended between the Company and Crystal Financial LLC and other lenders (the “Refinanced Credit Agreement”). The revolving loan facilities may be used for our working capital needs.

In connection with the Loan Agreement described above, we repaid obligations totaling $24.9 million, which constituted all outstanding borrowings, fees and expenses under the Refinanced Credit Agreement. In connection with the repayment, GB Merchant Partners, LLC and Crystal Capital LLC under the Refinanced Credit Agreement terminated their security agreements and released all of their security interests in the Company’s aircraft and other assets.

~~Income~~The ~~Tax~~term ~~Expense.~~loan Weand ~~had~~revolving ~~income~~credit ~~tax~~facilities ~~expense~~mature ofon ~~$6.7~~December 22, ~~million~~2017 inat ~~2011~~which ~~compared~~time any outstanding tobalances $3will be due and payable.7 ~~million~~At that time in ~~2010.~~order ~~The~~to ~~provision~~pay ~~for~~the ~~income~~principal ~~taxes,~~amount asthe aCompany ~~percentage~~would ofneed ~~income~~to ~~before~~raise ~~taxes~~cash by obtaining new debt financing, ~~decreased~~raising toadditional ~~38.6~~equity ~~percent~~financing inor ~~2011~~selling ~~from~~owned 42aircraft or a combination thereof.1 ~~percent~~We inare not ~~2010~~required to make any principal payments under the Loan Agreement until December 22, 2017, absent an event of default.

AsWe have experienced a shortage of ~~December 31,~~qualified ~~2011,~~pilots wewhich ~~had~~has ~~approximately~~caused ~~$28~~us to curtail operations and reduce capacity.6 ~~million~~The ofpilot ~~federal~~shortage ~~net~~and ~~operating~~its ~~loss~~effect ~~carryforwards~~on ~~which~~operations ~~were~~are ~~available~~expected to ~~offset~~continue ~~future~~until ~~taxable~~we ~~income.~~can Wehire ~~also~~and ~~had~~train ~~$13.6~~enough ~~million~~pilots ofto ~~state~~reestablish ~~net operating~~operations ~~loss~~in ~~carryforwards,~~those ofmarkets in which ~~$10.0~~we ~~million~~were ~~($0.6~~forced ~~million~~to ~~tax~~suspend ~~effected)~~service isor ~~expected~~expand tointo ~~expire~~new ~~unused~~markets. ~~and~~As ~~$3.6~~a ~~million~~result ~~will~~of berefinancing ~~available~~all toof ~~offset~~the ~~future~~Company’s ~~taxable~~debt ~~income.~~on Aterms ~~valuation~~that ~~allowance~~will ofnot ~~approximately~~require ~~$646,000~~any ~~remained~~scheduled at principal payments until December 3122, ~~2011~~2017, ~~for~~the ~~state~~Company ~~net~~has ~~operating~~improved its ~~loss~~working ~~carryforwards~~capital ~~that~~capabilities ~~may~~to ~~not~~support beits ~~utilized~~efforts ~~before~~in ~~they~~reestablishing ~~expire~~curtailed operations.

Liquidity, Financing and Capital Resources

We have historically used debt to finance the purchase of aircraft. On November 16, 2011, we entered into a financing agreement with GB Merchant Partners, LLC, serving as Collateral Agent, and Crystal Capital LLC, serving as Administrative Agent (the “Credit Agreement”). Terms of the financing include a four-year term loan in the amount of $24 million and a revolving loan credit facility in which the Company may borrow up to $10 million. This Credit Agreement enabled us to:

• Make a one-time payment to Raytheon Aircraft Credit Corporation (“Raytheon”) in the amount of $27 million to satisfy $37.2 million of outstanding debt obligations, extinguishing all of our debt obligations to Raytheon;

• Pay related expenses of $2.5 million, and

• Obtain, as a part of the transaction, the return of all 5,371,980 shares of Great Lakes common stock previously held by Raytheon. This transaction reduced the issued and outstanding balance of common stock from 14,291,970 shares to 8,919,990 shares at November 2011.

At December 31, 2012, our outstanding principal balance on the term loan consisted of $18.7 million and we had borrowed $7.5 million under the revolving credit facility.

Pursuant to the terms of a pledge and security agreement and an aircraft security agreement, our obligations to the lenders identified in the Credit Agreement are secured by substantially all assets of the Company, including all owned aircraft.

We had borrowed $7.5 million under the revolving credit facility at December 31, 2012 and borrowed an additional $1.5 million in 2013. The borrowings under the revolving credit facility are secured by accounts receivable, parts inventory and spare engines. As of March 20, 2013, we will have borrowed $9.0 million leaving $1.0 million available under our revolving credit facility.

Mandatory contractual principal and interest obligations for the next 12 months will be approximately $7.1 million. In addition to the mandatory contractual principal and interest obligations, we are required to make principal payments, based on a percentage of excess cash flows, on September 30 of each year beginning September 30, 2012, as determined in the Credit Agreement. In November of 2012, we made an excess cash flow payment in the amount of $2.3 million used to reduce the principal outstanding balance of the term loan. In 2012, we also made principal payments of $5.3 million used to reduce the outstanding principal balance of the term loan from $24.0 million at December 31, 2011 to $18.7 million at December 31, 2012.

Working Capital

Net cash ~~provided~~ used by operating activities was $92.10 million at December 31, ~~2012~~2014 compared tonet cash provided of $87.03 million at December 31, ~~2011~~2013. We had positive working capital of $1412.98 million and a current ratio of 23.298:1 at December 31, ~~2012~~2014, compared to ~~positive~~ negative working capital of $154.1 4 million and a current ratio of 20.386:1 at December 31, ~~2011~~2013. At December 31, 2013, all borrowings (approximately $24.2 million) under our senior credit facility were classified as current maturities. We refinanced our senior debt in December of 2014. Under the terms of our new credit facility we have a $25.0 million term loan with no scheduled principal payments due until maturity in December of 2017. The new credit facility also provides for an additional $9.0 million available under revolving lines of credit facilities. As of December 31, 2014 we have $25.0 million of outstanding debt under the term loan and we have not drawn on the additional $9.0 million of working capital available under the revolving lines of credit.

We believe that in the absence of unusual circumstances, the working capital currently available to us, together with our projected cash flows from operations, will be sufficient to meet our present financial requirements, meet debt service, and fulfill our other cash requirements for at least the next 12 months.

For additional information regarding Liquidity and Capital Resources see Item 1A “Risk Factors.”

Operating Activities. Net cash ~~provided~~used by operating activities for the year ended December 31, ~~2012 was~~2014 was $92.10 million as compared to net cash provided by operating activities of $87.03 million for the year ended December 31, ~~2011~~2013. The increase in cash used by operating activities can be attributed to the curtailment of operations due to the pilot shortage the Company is experiencing.

Investing Activities. Net cash used in investing activities for the year ended December 31, ~~2012~~2014 was $61.56 million for the purchase of flight equipment and other property and equipment. Net cash used in investing activities for the year ended December 31, ~~2011~~2013 was $31.9 6 million for the purchase of flight equipment and other property and equipment.

Financing Activities. Net cash used in financing activities for the year ended December 31, ~~2012~~2014 was $30.3 8 million, consisting of $526.32 million of contractual principal payments on long-term debt, offset by $227.0 million of incremental borrowings ~~under~~and ~~our~~$1.6 ~~revolving~~million ~~credit~~for ~~facility~~payments on debt issuance costs.

2524

Contractual Obligations

The following table summarizes ~~our~~the ~~major~~ contractual ~~payment~~due dates of the Company’s long-term debt obligations as of December 31, ~~2012~~2014, without considering the potential impact resulting from the covenant violations:

	2013		2014		2015		After 2015		Total
	2015		2016		2017		After 2017		Total
Long-term debt - contractual
Term loan facility	$	~~3,500,000~~—	$	~~4,000,000~~—	$	1125,~~200~~000,000	$	—	$	1825,~~700~~000,000
Revolving credit facility (1)		—		—		7,473,333		—		7,473,333
Revolving credit facility		—		—		—		—		—
Contractual interest
Term loan facility		23,~~731~~615,~~175~~068		23,~~151~~624,~~487~~658		13,~~341~~953,~~611~~767		—		611,~~224~~193,~~273~~493
Revolving credit facility		~~821,215~~—		~~821,215~~—		~~719,970~~—		—		~~2,362,400~~—
Total debt		7,052,390		6,972,702		20,734,914		—		34,760,006
Revolving credit facility - fees		128,959		129,205		125,775		—		383,939
Total debt	$	3,744,027	$	3,753,863	$	29,079,542	$	—	$	36,577,432

(1) Does not include a February of 2013 additional $1.5M draw on the revolving line of credit.

See discussion below for contractual interest obligations.

Contractual Interest Expense

The projected contractual interest expense on our long-term obligations (based on the minimum variable interest rate stated in the debt instruments, which is the rate in effect as of December 31, 2012) for the next five years and thereafter is as follows:

	Variable Rate
	Contractual
Maturity	Interest
2013	$	3,552,390
2014		2,972,702
2015		2,061,581
2016		—
2017		—
Thereafter		—

The preceding projected contractual interest rate expenses are calculated based on borrowings as of December 31, 2012. Our contractual interest expense is subject to fluctuations in the amount of debt outstanding at any given time, particularly under our revolving credit facility, as well as increases in 30-day LIBOR. In February of 2013, we borrowed an additional $1.5 million under our revolving credit facility. Under the provisions of our revolving credit facility LIBOR would have to increase approximately 2.2 percentage points before we would realize increases in interest expense as a result of contractual minimums applied to the variable rates within our debt instruments.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements; revenues and expenses during the reporting period; and related disclosures of contingent assets and liabilities in the financial statements and the accompanying notes. Actual results could differ from those estimates.

The United States Securities and Exchange Commission (the “SEC”) has defined a company’s most critical accounting policies as the ones that are most important to the portrayal of our financial condition and results and that require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified our critical accounting policies as including those addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions. See Note 2, “Summary of Significant Accounting Policies and Procedures,” in the Notes to the Financial Statements for additional discussion of these items. Management believes that its estimates and assumptions are reasonable, based on information presently available; however, changes in these estimates, judgments, and assumptions will occur as a result of future events. Accordingly, actual results could differ from amounts estimated.

Depreciation and Residual Values of Aircraft. In accounting for long-lived assets, we make estimates about the expected useful lives, projected residual values, and the potential for impairment. Estimates of useful lives and residual values of aircraft are based on actual industry experience with the same or similar aircraft types and anticipated utilization of the aircraft. Changing market prices of new and used aircraft, government regulations, and changes in our maintenance program or operations could result in changes to these estimates.

Accounting for Maintenance Deposits. Until December 2012, we leased two Embraer EMB-120 Brasilia aircraft and, in addition to the base rent, were required to pay supplemental rent (“Maintenance Rent”) based upon flight hours or cycles flown. Under the terms of the leases the lessor would reimburse the Company for performing specified maintenance activities. This Maintenance Rent was accounted for as maintenance deposits in accordance with ASC subtopic 840-10, whereby the amount of the rent is capitalized and treated as a deposit against future maintenance expense until: (i) such time as a defined maintenance event is performed and a reimbursement is received, or (ii) we determined it was no longer probable that all or a portion of the deposit would be refunded as a reimbursement of the costs of a maintenance activity. When an amount on deposit is less than probable of being returned, it shall be recognized as additional expense. In December of 2012, we negotiated the early termination of these lease agreements and the purchase of these two leased aircraft. In connection with the early termination of the aircraft leases and purchase of the aircraft, we determined it was no longer probable that $0.7 million of the maintenance deposits would be refunded when maintenance activity was performed and so we incurred additional aircraft rental expense of $0.7 million in December of 2012. At December 31, 2012 and December 31, 2011, the Company had maintenance deposits of approximately $0 and $1.7 million, respectively.

In connection with the purchase of these aircraft, $1.5 million of maintenance deposits and $0.3 million of accounts receivable, associated with maintenance activity performed on the aircraft and reimbursable by the lessor, were considered to be used as a part of the aircraft acquisition cost. Both aircraft and their respective engines were capitalized for a total of $3.5 million. As a result of this transaction, the $0.7 million of aircraft rental expense was a non-cash transaction and $1.8 million of the aircraft acquisition cost did not require a cash outflow.

Inventories. Inventories are comprised primarily of expendable spare aircraft parts, fuel, materials, and supplies relating to flight equipment, which are recorded at the lower of cost (average cost) or market. Expendable spare aircraft parts are subject to reserves for obsolescence.

Aircraft Valuation and Impairments. In accordance with ASC Section 360-10-35 (originally Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed of) long-lived assets, such as property, plant, equipment and aircraft, subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the

2725

fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.

Income Taxes. We account for income taxes using the asset and liability method. Under that method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and tax bases of existing assets and liabilities and net operating losses (“NOLs”) and tax credit carryforwards. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The tax net operating loss carryforwards (NOLs) that have been generated are due in large part to the accelerated depreciation of property and equipment over a shorter useful life for tax purposes. Our NOLs will expire between 2021 and ~~2024~~2034. The book basis of property and equipment is approximately $3935.34 million greater than the tax basis at December 31, ~~2012~~2014, all of which is expected to reverse during periods in which NOLs are available. Approximately $910.52 million ($0.6 million tax effected) of state NOLs are expected to expire unused and accordingly a valuation allowance has been provided for these deferred tax assets. Based upon the projections for future taxable income over the periods in which the deferred tax assets become deductible, the Company believes it is more likely than not that it will realize the benefits of most of the deductible temporary differences and NOLs. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Liability Accruals and Reserves. We are obligated under various agreements relating to employee health and welfare, injuries, tax and fee remittances, and other contractual matters, some of which involve estimates of the ultimate amounts due and impacts of insurance coverage. Changes in the estimates and assumptions could occur and would result in actual results being different than those estimated.

Effects of Inflation

We are subject to inflationary pressures from labor agreements, fuel price escalations, and increased operating costs at airports served by us. We attempt to counteract the effects of inflation through fare increases, subsidy increases and capacity adjustments.

Environmental Matters

In the normal course of our operations, we are subject to various federal, state, local and foreign laws and regulations relating to environmental protection matters. These laws and regulations govern such matters as environmental reporting, storage and disposal of materials and chemicals and aircraft noise. We are, and expect in the future to be, involved in various environmental matters and conditions at, or related to, our properties. We are not currently subject to any environmental cleanup orders or actions imposed by regulatory authorities. We are not aware of any active material environmental investigation related to our assets or properties.

Off Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, ~~liquidity, market risk or credit risk support to the company, or that engages in leasing, hedging or research and development arrangements with the company.~~

transferred assets, (3) an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the company, or that engages in leasing, hedging or research and development arrangements with the company.

We have no off-balance sheet arrangements of the types described in the four categories above that we believe may have a material current or future effect on our financial condition, liquidity or results of operations.

Item 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risks

We are susceptible to certain risks related to changes in the cost of aircraft fuel and changes in interest rates. As of December 31, ~~2012~~2014, we did not have any derivative financial instruments.

Aircraft Fuel

Due to the airline industry’s dependency on aircraft fuel for operations, airline operators including Great Lakes are impacted by changes in aircraft fuel prices. Aircraft fuel represented approximately 3325.03% of our operating expenses in ~~2012~~2014. At ~~2012~~2014 rates of consumption, a one cent increase or decrease in the per gallon price of fuel would increase or decrease our fuel expense by approximately $~~113~~48,000 annually.

~~Interest~~27 ~~Rates~~

Our operations are capital intensive because the vast majority of our assets consist of flight equipment, which is financed primarily with long-term debt. At December 31, 2012, we had approximately $26.2 million of variable rate debt. Going forward, we could be subject to increased rates of interest on our debt if the 30 day LIBOR rate increases by more than 2.2 percentage points.

GREAT LAKES AVIATION, LTD.

FORM 10-K

For the Fiscal Year Ended December 31, ~~2012~~2014

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the Company as of December 31, ~~2012~~2014 and ~~2011~~2013 and for the each of the years in the three year period ended December 31, ~~2012~~2014, together with the Report of the Company’s Independent Registered Public Accounting Firm, are included in this Form 10-K on the pages indicated below.

Report of Independent Registered Public Accounting Firm			3129
Balance Sheets as of December 31, 2012 and 2011			32
Balance Sheets as of December 31, 2014 and 2013			30
Statements of Income for the Years Ended December 31, 2012, 2011 and 2010			33
Statements of Income (Loss) for the Years Ended December 31, 2014, 2013 and 2012			31
Statements of Stockholders’ Equity for the Years Ended December 31, 2012, 2011 and 2010			34
Statements of Stockholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012			32
Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010			35
Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012			33
Notes to Financial Statements			3634

Supporting schedules are omitted because they are inapplicable, not required, or the information is presented in the financial statements or notes thereto.

3028

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Great Lakes Aviation, Ltd.:

We have audited the accompanying balance sheets of Great Lakes Aviation, Ltd. (the Company) as of December 31, ~~2012~~2014 and ~~2011~~2013, and the related statements of income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, ~~2012~~2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Great Lakes Aviation, Ltd. as of December 31, ~~2012~~2014 and ~~2011~~2013, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, ~~2012~~2014, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Denver, Colorado

March 26 30, ~~2013~~2015

3129

GREAT LAKES AVIATION, LTD.

Balance Sheets

	December 31,2012			December 31,2011
	December 31,2014			December 31,2013
Assets
Current assets:
Cash	$	2,887,634		$	3,592,993
Cash and cash equivalents	$	2,202,273		$	6,597,927
Accounts receivable and other receivables		95,~~235~~337,~~433~~193			97,~~945~~118,~~461~~868
Inventories		86,~~971~~578,~~610~~419			78,~~568~~667,~~792~~751
Prepaid expenses and other current assets		21,~~634~~785,~~839~~433			13,~~962~~154,~~959~~713
Deferred income taxes		31,~~573~~249,~~024~~365			31,~~789~~457,~~530~~049
Total current assets		2717,~~302~~152,~~540~~683			26,~~859~~996,~~735~~308
Property and equipment:
Flight equipment		~~124~~126,~~406~~252,~~769~~883			~~117~~125,~~573~~027,~~486~~613
Other property and equipment		10,~~498~~692,~~439~~328			910,~~766~~604,~~209~~094
Less accumulated depreciation and amortization		(8193,~~123~~119,~~534~~738	)		(7587,~~696~~029,~~512~~483	)
Total property and equipment		5343,~~781~~825,~~674~~473			5148,~~643~~602,~~183~~224
Maintenance deposits		—			1,718,943
Other assets		3,283,360			2,279,968
Other assets		3,288,281			3,555,639
Total assets	$	64,261,516		$	77,878,500
Total assets	$	84,372,495		$	83,777,500
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable and current maturities of long-term debt	$	~~3,500,000~~—		$	324,~~000~~173,~~000~~333
Accounts payable		42,~~604~~177,~~906~~376			43,~~301~~684,~~993~~161
Accrued interest, unearned revenue and other liabilities		42,~~306~~131,~~980~~928			43,~~447~~525,~~321~~843
Total current liabilities		124,~~411~~309,~~886~~304			1131,~~749~~383,~~314~~337
Long-term debt, net of current maturities		2225,~~673~~000,~~333~~000			~~26,473,333~~—
Deferred income taxes		103,~~226~~705,~~538~~007			97,~~417~~877,~~813~~096
Total liabilities		4533,~~311~~014,~~757~~311			4739,~~640~~260,~~460~~433
Commitments and contingencies
Preferred stock; $0.01 par value; Authorized: 25,000,000 shares.
No shares issued or outstanding		—			—
Common stock; $0.01 par value; Authorized: 50,000,000 shares.
Issued and outstanding: 8,974,990 and 8,919,990 shares		89,750			89,200
Issued and outstanding: 8,974,990 and 8,974,990 shares		89,750			89,750
Paid-in capital		31,494,609			31,~~473~~494,~~597~~609
Retained earnings		7,476,379			4,574,243
Retained earnings (accumulated deficit)		(337,154	)		7,033,708
Total stockholders’ equity		3931,~~060~~247,~~738~~205			3638,~~137~~618,~~040~~067
Commitments and contingencies		—			—
Total liabilities and stockholders’ equity	$	64,261,516		$	77,878,500
Total liabilities and stockholders’ equity	$	84,372,495		$	83,777,500

See accompanying notes to financial statements.

3230

GREAT LAKES AVIATION, LTD.

Statements of Income (Loss)

	Years Ended December 31,
	2012			2011			2010
	2014			2013			2012
Operating revenues:
Passenger	$	7929,~~007~~037,~~876~~409		$	7061,~~989~~421,~~350~~238		$	6379,~~065~~007,~~692~~876
Public service		5829,~~347~~956,~~399~~468			5255,~~406~~448,~~337~~240			6058,~~398~~347,~~036~~399
Freight, charter, and other		~~423~~160,~~601~~639			~~969~~326,~~770~~947			1423,~~936,602~~601
Total operating revenues		~~137~~59,~~778~~154,~~876~~516			~~124~~117,~~365~~196,~~457~~425			~~125~~137,~~400~~778,~~330~~876
Operating expenses:
Salaries, wages, and benefits		3420,~~175~~458,~~706~~058			32,~~117~~345,~~733~~669			3234,~~846~~175,~~739~~706
Aircraft fuel		4116,~~871~~434,~~066~~842			3835,~~954~~667,~~692~~468			3141,~~374~~871,~~203~~066
Aircraft maintenance, materials, and repairs		164,~~648~~700,~~569~~761			1314,~~367~~789,~~928~~573			16,~~065~~648,~~583~~569
Depreciation and amortization		56,~~830~~264,~~006~~804			56,~~236~~399,~~110~~943			5,~~300~~830,~~217~~006
Aircraft rental		~~1,417,918~~—			~~1,906,682~~—			21,~~294~~417,~~100~~918
Other rentals and landing fees		74,~~136~~402,~~225~~530			6,~~046~~437,~~212~~633			57,~~717~~136,~~207~~225
Other operating expense		2112,~~286~~749,~~349~~978			2017,~~411~~791,~~414~~545			21,~~159~~286,~~510~~349
Total operating expenses		~~128~~65,~~365~~010,~~839~~973			~~118~~113,~~040~~431,~~771~~831			~~114~~128,~~757~~365,~~559~~839
Operating income		9,413,037			6,324,686			10,642,771
Operating income (loss)		(5,856,457	)		3,764,594			9,413,037
Other income (expense):
Interest expense net of interest income of $2,639, $4,043 and $6,104 respectively		(5,007,949	)		(2,618,222	)		(1,909,642	)
Interest expense net of interest income of $865, $1,664 and $2,639 respectively		(4,554,625	)		(4,317,753	)		(5,007,949	)
Gain on extinguishment of debt		—			13,696,695			—
Loss on extinguishment of debt		(996,093	)		—			—
Total other income (expense)		(5,~~007~~550,~~949~~718	)		11(4,~~078~~317,~~473~~753	)		(15,~~909~~007,~~642~~949	)
Income before income taxes		4,405,088			17,403,159			8,733,129
Income (loss) before income taxes		(11,407,175	)		(553,159	)		4,405,088
Income tax expense		(1,502,952	)		(6,714,891	)		(3,679,851	)
Income tax benefit (expense)		4,036,313			110,488			(1,502,952	)
Net income	$	2,902,136		$	10,688,268		$	5,053,278
Net income (loss)	$	(7,370,862	)	$	(442,671	)	$	2,902,136
Net income per share:
Net income (loss) per share:
Basic	$	(0.3382	)	$	(0.7805	)	$	0.3533
Diluted		(0.3282	)		(0.7805	)		0.3532
Average shares outstanding:
Basic		8,~~923~~974,~~269~~990			138,~~629~~974,~~671~~990			148,~~291~~923,~~970~~269
Diluted		98,~~065~~974,~~171~~990			138,~~739~~974,~~516~~990			149,~~445~~065,~~732~~171

See accompanying notes to financial statements.

3331

GREAT LAKES AVIATION, LTD.

Statements of Stockholders’ Equity

Years Ended December 31, ~~2012~~2014, ~~2011~~2013, and ~~2010~~2012

	Common stock						Paid-in capital			Retained Earnings(accumulateddeficit)			Total
	Shares			Amount			~~Paid-in capital~~			~~Earnings~~			~~Total~~
Balance at January 1, 2010		14,291,970		$	142,920		$	33,568,669		$	(9,824,308	)	$	23,887,281
Balance at January 1, 2012		8,919,990			89,200			31,473,597			4,574,243			36,137,040
Net income and comprehensive income		—			—			—			5,053,278			5,053,278
Balance at December 31, 2010		14,291,970			142,920			33,568,669			(4,771,030	)		28,940,559
Repurchase and retirement of common stock		(5,371,980	)		(53,720	)		(2,095,072	)		(1,342,995	)		(3,491,787	)
Net income and comprehensive income		—			—			—			10,688,268			10,688,268
Balance at December 31, 2011		8,919,990		$	89,200		$	31,473,597			4,574,243		$	36,137,040
Exercise of stock options		55,000			550			21,012			—			21,562
Net income and comprehensive income		—			—			—			2,902,136			2,902,136
Net income		—			—			—			2,902,136			2,902,136
Balance at December 31, 2012		8,974,990		$	89,750		$	31,494,609		$	7,476,379		$	39,060,738
Net loss		—			—			—			(442,671	)		(442,671	)
Balance at December 31, 2013		8,974,990		$	89,750		$	31,494,609		$	7,033,708		$	38,618,067
Net loss		—			—			—			(7,370,862	)		(7,370,862	)
Balance at December 31, 2014		8,974,990		$	89,750		$	31,494,609		$	(337,154	)	$	31,247,205

See accompanying notes to financial statements.

3432

GREAT LAKES AVIATION, LTD.

Statements of Cash Flows

	Years Ended December 31,
	2012			2011			2010
	2014			2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,902,136		$	10,688,268		$	5,053,278
Net income (loss)	$	(7,370,862	)	$	(442,671	)	$	2,902,136
Adjustments to reconcile net income to net cash provided by operating activities
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		56,~~830~~264,~~006~~804			56,~~236~~399,~~110~~943			5,~~300~~830,~~217~~006
Loss on items beyond economic repair		~~303~~126,~~692~~415			~~166~~372,~~117~~629			~~178~~303,~~341~~692
Amortization of deferred debt restructuring gain		—			(599,945	)		(1,344,610	)
Amortization of debt issuance costs		819,133			641,339			641,339
Amortization of debt issuance costs		641,339			78,153			—
Non-cash loss on extinguishment of debt		996,093			—			—
Non-cash gain on extinguishment of debt		—			(13,696,695	)		—
Deferred tax expense		(3,964,405	)		(233,467	)		1,025,231
Deferred tax expense		1,025,231			5,586,974			3,193,333
Change in current operating items:
Accounts receivable		~~710~~1,~~028~~781,675			~~(845~~2,~~050~~116,565	)		~~427~~710,~~690~~028
Inventories		(12,~~402~~089,~~818~~332	)		~~(977~~303,~~583~~859	)		(~~218~~1,~~452~~402,818	)
Prepaid expenses and other current assets		~~(671~~633,~~880~~377	)		~~715~~(1,~~679~~161,214	)		(~~958~~671,~~394~~880	)
Maintenance deposits		~~(41,057~~—	)		~~305,501~~—			(~~461~~41,~~876~~057	)
Other assets		(~~373~~463,~~982~~732	)		~~184~~1,~~309~~008,313			(61373,~~370~~982	)
Accounts payable		~~302~~(1,~~913~~506,784	)		1(920,~~068,028~~745	)		~~(355~~302,~~168~~913	)
Accrued interest, unearned revenue and other liabilities		(~~140~~1,~~341~~393,915	)		~~106~~(781,~~851~~137	)		47(140,~~895~~341	)
Other long-term liabilities		—			—			(152,866	)
Net cash provided by (used in) operating activities		(1,988,869	)		7,303,414			9,085,267
Deferred credits		—			(35,434	)		(46,837	)
Net cash provided by operating activities		9,085,267			7,981,283			10,601,181
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of flight equipment and other property and equipment		(61,~~512~~614,~~188~~469	)		(31,~~859~~593,~~011~~121	)		(26,~~765~~512,~~732~~188	)
Net cash flows used in investing activities		(61,~~512~~614,~~188~~469	)		(31,~~859~~593,~~011~~121	)		(26,~~765~~512,~~732~~188	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and repurchase of common stock		(5,300,000	)		(33,182,962	)		(6,446,882	)
Repayment of notes payable		(26,173,333	)		(3,500,000	)		(5,300,000	)
Proceeds from the issuance of debt		227,000,000			291,~~473~~500,~~333~~000			—2,000,000
Payments for debt issuance costs		—(1,618,983	)		~~(2,535,755~~—	)		—
Proceeds from the exercise of stock options		~~21,562~~—			—			—21,562
Net cash used in financing activities		(3792,~~278,438~~316	)		(62,~~245~~000,~~384~~000	)		(63,~~446~~278,~~882~~438	)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(~~705~~4,~~359~~395,654	)		(23,~~123~~710,~~112~~293	)		1(705,~~388,567~~359	)
Cash and Cash Equivalents:
Beginning of year		36,~~592~~597,~~993~~927			52,~~716~~887,~~105~~634			43,~~327~~592,~~538~~993
End of year	$	2,~~887~~202,~~634~~273		$	36,~~592~~597,~~993~~927		$	52,~~716~~887,~~105~~634
Supplementary cash flow information:
Cash paid during the year for interest (contractual)	$	43,~~434~~928,~~100~~085		$	3,~~144~~698,~~060~~776		$	34,~~260~~434,~~357~~100
Cash paid during the year for income taxes	$	16,~~454,359~~661		$	~~368~~189,~~576~~809		$	~~660~~1,~~226~~454,359
Non-cash purchase of flight equipment	$	~~1,760,000~~—		$	—		$	—1,760,000

See accompanying notes to financial statements.

3533

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~ 2013

Note 1.

Business

Passenger Revenue

Great Lakes Aviation, Ltd. (Great Lakes, the Company, we or us) is a regional airline operating as an independent carrier and as a code share partner with United Air Lines, Inc. (United ~~Airlines~~ or United Airlines). ~~and~~Our ~~Frontier~~code ~~Airlines,~~share ~~Inc.~~agreement ~~(Frontier~~allows ~~Airlines~~our ormutual ~~Frontier).~~customers to ~~Terms~~purchase ofconnecting ~~the~~flights ~~agreement~~through ~~provide~~our ~~for~~code ~~the~~share ~~Company~~partner and to ~~continue~~share ~~United~~other ~~Airlines~~benefits ~~code~~such ~~sharing~~as ~~for~~baggage ~~destinations~~transfer and frequent flyer benefits (in certain instances), while the Company ~~currently~~maintains ~~services~~its own branding on our planes and ticket counters and our own designator code on all our flights. In addition to our code share agreement and ~~from~~independent ~~Denver~~branding, COthe Company has developed electronic ticketing (e-ticket) interline agreements with American Airlines, ~~Los~~Delta ~~Angeles~~Airlines, CAUnited Airlines and ~~Phoenix,~~U.S. ~~AZ hubs~~Airways.

The Company ~~operates~~operated under a ~~similar~~ code share agreement with Frontier. ~~The~~Airlines (Frontier) ~~agreement~~from ~~provides~~May, ~~for~~2001 ~~the~~through ~~use~~September 30, of2014. ~~Frontier’s~~Effective ~~flight~~October 1, ~~designator~~2014, ~~code on~~ the Company’s ~~flights~~code ~~connecting~~share ~~with~~and ~~Frontier’s~~interline ~~flights~~e-ticketing inagreements ~~Denver,~~with ~~CO,~~Frontier ~~Los~~were ~~Angeles,~~terminated ~~CA,~~due ~~and~~to ~~Phoenix, AZ. The Company~~Frontier’s ~~code~~migration ~~share~~to ~~agreements~~an doultra-low ~~not~~cost ~~have~~carrier ~~fixed~~which ~~termination~~no ~~dates~~longer ~~and~~provides ~~are cancellable~~for byinterline ~~either party upon sufficient notice~~agreements.

~~Currently,~~The weCompany ~~estimate~~estimates that approximately 3238% of Great Lakes’ passenger traffic ~~utilizes~~ utilized the United code share product line and approximately 2319% of Great Lakes’ passenger traffic ~~utilizes~~utilized the Frontier code share product line.

The Company ~~provides charter air services to private individuals, corporations, and athletic teams. The Company~~ also carries cargo on most of the Company’s scheduled flights.

Public Service Revenue

Approximately 4251% and 47% of the Company’s total revenue during each of the twelve months ended December 31, ~~2012~~2014 and ~~2011~~2013, ~~were~~respectively, were generated by services provided under the Essential Air Service (EAS) program administered by the United States Department of Transportation (DOT). The FAA Modernization and Reform Act of 2012 was enacted into law on February 14, 2012. This legislation provides for the authorization of the Essential Air Service program ~~for fiscal years~~ through ~~2014. Federal fiscal year 2014 ends on~~ September 30, 2015.

As of March 20, ~~2013~~2015, the Company served 4628 airports, of which 3219 locations receive EAS subsidy, in 139 states with a fleet of six Embraer EMB-120 Brasilia and 28 ~~Raytheon/~~Beechcraft 1900D regional airliners. The Company currently operates hubs at Denver, CO, ~~Las Vegas, NV,~~ Los Angeles, CA, Minneapolis, MN and Phoenix, AZ.

Liquidity

The Company has historically used debt to finance the purchase of its ~~aircraft.~~ On November 16, 2011, the Company entered into a new financing agreement with GB Merchant Partners, LLC, serving as Collateral Agent, and Crystal Capital LLC, serving as Administrative Agent (the “Credit Agreement”). Terms of the financing include a four-year term loan in the amount of $24 million and a revolving loan credit facility in which the Company may borrow up to $10 million. Pursuant to the terms of a pledge and security agreement and an aircraft ~~security agreement, the Company’s obligations to the lenders identified in the Credit Agreement are secured by substantially all assets of the Company, including all owned aircraft~~.

~~The~~On ~~Company~~December 22, ~~had~~2014, ~~previously~~the ~~leased~~Company ~~seven~~entered ~~Beechcraft~~into ~~model~~the ~~1900D~~Loan ~~aircraft~~Agreement ~~from~~(the ~~Raytheon,~~“Loan Agreement”) ~~four~~ with ~~attached~~Callidus ~~engines~~Capital ~~and~~Corporation ~~three~~(the ~~without engines~~“Lender”). The ~~Company~~Lender ~~returned~~agreed ~~these~~to ~~seven~~make ~~aircraft~~available into the ~~quarters~~Company: ~~ended September~~(i) 30a $25,000,000 ~~2011~~single ~~and~~advance ~~December~~term loan facility, (ii) 31a revolving loan facility with availability of up to $6,000,000 ~~2011.~~and ~~The~~(iii) a ~~Company~~second ~~subsequently~~revolving ~~purchased~~loan ~~three~~facility ~~Beechcraft~~with ~~model~~availability ~~1900D~~of ~~aircraft.~~up ~~Two~~to ~~aircraft~~$3,000,000. ~~one~~The of$25,000,000 ~~which~~term loan was ~~purchased~~disbursed ~~without~~at ~~engines~~closing, and substantially all of its proceeds were ~~purchased~~used into ~~December~~pay all outstanding borrowings, fees and expenses under the Credit Agreement dated November 6, 2011 as amended between the Company and Crystal Financial LLC and other lenders (the ~~third~~“Refinanced ~~aircraft~~Credit ~~was~~Agreement”). The revolving loan facilities may be used for the ~~purchased~~Company’s inworking ~~January~~capital ~~2012~~needs.

3634

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

OnIn ~~November 16,~~connection ~~2011,~~with the ~~Company~~Loan ~~used $27 million of the proceeds obtained from the Credit~~ Agreement todescribed ~~satisfy~~above, ~~all of~~ the Company’s ~~outstanding~~repaid ~~debt~~ obligations ~~with~~totaling ~~Raytheon Aircraft Credit Corporation (Raytheon), at a discount, and to repurchase the Company’s common stock owned by Raytheon representing approximately 37~~$24.6%9 ofmillion, ~~the~~which ~~then~~included ~~outstanding shares of common stock~~$2.0 Onmillion ~~that day, the debt obligations with Raytheon were extinguished and 5,371,980 shares~~ of ~~the~~additional ~~Company’s~~borrowings ~~common stock were returned resulting in a decrease in the issued~~ and ~~outstanding~~scheduled ~~balance~~principal payments of ~~common~~ ~~stock from 14,291,970 shares to 8,919,990 shares. The Company used~~ $21.5 million ofduring ~~the~~2014, ~~proceeds~~constituting toall ~~pay~~outstanding ~~the~~borrowings, ~~closing fee and professional~~ fees, ~~associated~~accrued ~~with~~interest ~~the transaction. Mandatory contractual principal~~ and ~~interest~~expenses ~~obligations~~under ~~for~~ the ~~next~~ 12Refinanced ~~months~~Credit ~~will be approximately $7~~Agreement.1 ~~million.~~ In ~~addition~~connection to with the ~~mandatory~~repayment, ~~contractual~~GB ~~principal~~Merchant ~~and interest obligations~~Partners, ~~the~~LLC ~~Company~~and isCrystal ~~required~~Capital toLLC ~~make~~under ~~principal~~the ~~payments,~~Refinanced ~~based~~Credit onAgreement aterminated ~~percentage~~their ofsecurity ~~excess~~agreements ~~cash~~and ~~flows,~~released onall ~~September 30~~ of ~~each~~ ~~year~~their ~~beginning~~security ~~September 30,~~interests ~~2012, as determined~~ in the ~~Credit Agreement. In November of 2012, the~~ Company’s ~~made~~aircraft anand ~~excess~~other ~~cash flow payment in the amount of $2~~assets.3 ~~million.~~

The ~~Company~~term ~~leased~~loan ~~two~~and ~~Embraer~~revolving ~~EMB-120~~credit ~~Brasilia~~facilities ~~aircraft~~mature ~~from~~on ~~Boeing~~December 22, ~~Capital~~2017 ~~Corporation~~at which ~~leases~~time ~~were~~any ~~scheduled~~outstanding tobalances ~~terminate~~will inbe ~~January~~due ~~of 2013~~ and ~~April of 2013~~payable. InThe ~~December of 2012, the~~ Company is ~~negotiated~~not ~~the~~required ~~early~~to ~~termination~~make ofany ~~these~~principal ~~lease~~payments ~~agreements~~under ~~and~~the ~~purchased~~Loan ofAgreement ~~these~~until ~~two aircraft~~December 22, ~~resulting in cash expenditures of $1~~2017.7 ~~million.~~

The Company ~~had~~has ~~drawn~~experienced ~~down~~a ~~$7.5~~shortage ~~million~~of onqualified pilots ~~the~~which ~~revolving~~has ~~credit~~caused ~~facility~~the asCompany ofto ~~December 31,~~curtail ~~2012~~operations and ~~drew~~reduce ~~down~~capacity. anThe ~~additional~~pilot ~~$1.5~~shortage ~~million~~and inits ~~2013. The~~effect ~~draws~~on operations are ~~secured~~expected byto ~~accounts~~continue ~~receivable,~~until ~~parts~~the ~~inventory~~Company ~~and~~can ~~spare~~hire ~~engines.~~and ~~The~~train ~~Company~~enough ~~was~~pilots ~~also required~~ to ~~pay~~reestablish aoperations ~~closing~~in ~~fee~~those ~~based~~markets onin which the ~~initial~~Company ~~facility~~was ~~commitment,~~forced ~~and~~to issuspend ~~required~~service toor ~~pay~~expand ainto ~~monthly~~new ~~unused~~markets. ~~line~~As ~~fee,~~ a ~~specified~~result ~~fee~~of ~~for certain~~refinancing ~~prepayments~~all of the ~~term~~Company’s ~~loan,~~debt ~~and~~on ~~certain~~terms ~~administrative~~that ~~and~~will ~~fronting~~not ~~fees~~require ~~related~~any toscheduled ~~the~~principal ~~Credit~~payments ~~Agreement.~~until ~~The~~December 22, ~~term~~2017, ~~loan and~~ the ~~revolving~~Company ~~loan~~has improved ~~credit~~its ~~facility~~working ~~are~~capital ~~set~~capabilities to ~~mature~~support onits ~~November 16,~~efforts ~~2015~~in reestablishing curtailed operations.

Note 2.

Summary of Significant Accounting Policies and Procedures

(a) Use of Estimates. The preparation of financial statements in conformity with accounting ~~principles~~ principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets; the salvage value of fixed assets; the valuation of deferred tax assets, fixed assets, ~~maintenance deposits~~ and inventory; and reserves for employee benefit obligations and other contingencies.

(b) Cash and Cash Equivalents. Cash and cash equivalents include highly liquid investments with original maturities of three months or less that are readily convertible into cash. Cash equivalents are not subject to significant risk from fluctuations in interest rates and as a result, the carrying amount of cash equivalents approximates fair value. To preserve capital and maintain liquidity, we invest with financial institutions we deem to be of sound financial condition, and in high quality and relatively risk-free investment products. Our cash investment policy limits the concentration of investments with specific financial institutions or among certain products and includes criteria related to credit worthiness of any particular financial institution.

(c) Accounts Receivable and Other Receivables. Approximately 9689% of accounts receivable balances are due from various airlines, credit card companies, or the United States government.

3735

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

The table below shows the composition and approximate percentages attributable to our receivables at December 31, ~~2012~~2014 and ~~2011~~2013.

	December 31,2012			December 31,2011
	December 31,2014			December 31,2013
United Airlines		119	%		1012	%
Frontier Airlines		90			118
Other Airlines		2			35
Credit card companies		1411			1314
United States government		6067			4855
Other		411			156
Total accounts receivable		100	%		100	%

All receivables are pledged as collateral under the Company’s debt agreements.

(d) Inventories. Inventories consist of fuel, expendable spare parts, ~~fuel,~~ materials, and supplies relating to flight equipment. Inventories are stated at the lower of average cost or market. The Company establishes an obsolescence reserve for inventories that are not expected to used based the Company’s analysis of historical usages. Expendable parts are charged to maintenance expense as used. Inventories consisting of expendable spare parts and equipment are pledged as collateral for our loan agreements. The balance of fuel held in inventories was $0.2 million and $1.0 million as of December 31, 2014 and 2013, respectively.

(e) Property and Equipment. Property and equipment includes aircraft and major parts relating to such aircraft. Property is stated at cost and depreciated on a straight-line basis for financial reporting purposes over estimated useful lives of 10 to 20 years for flight equipment and 3 to 10 years for other property and equipment. The estimated lives used to record depreciation on the Company’s aircraft may be affected by the revenue generating capability of the aircraft, technology, policies regarding EAS subsidies promulgated by the DOT, and changes in strategy by the Company. In accounting for long-lived assets, we make estimates about the expected useful lives and projected residual values. Estimates of useful lives and residual values of aircraft are based on actual industry experience with the same or similar aircraft types and anticipated utilization of the aircraft. Changing market prices of new and used aircraft, government regulations, and changes in our maintenance program or operations could result in changes to these estimates. Leasehold improvements are amortized over the shorter of the life of the lease or the life of the asset. Accelerated methods of depreciation are used for tax reporting purposes. All owned aircraft are pledged as collateral for our loan agreements

(f) Impairment of Long Lived Assets. In accordance with ASC Section 360-10-35, (originally Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed of) long-lived assets, such as property, plant, equipment, and aircraft, subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.

3836

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

~~longer~~(g) beOther ~~depreciated~~Assets. ~~The~~Other assets ~~and~~consist ~~liabilities~~primarily of aprepayments of ~~disposal~~debt ~~group~~issuance ~~classified~~costs, asdeposits ~~held~~with ~~for~~financial ~~sale~~institutions, ~~would~~bonding becompanies, ~~presented~~facilities ~~separately~~lessors, inaircraft lessors and others to secure the ~~appropriate~~payment ~~asset~~of ~~and~~fixed ~~liability~~obligations. ~~sections~~We incurred $2.5 million of ~~the~~debt ~~balance~~issuance costs in 2011. At ~~sheet~~December 31, 2014, the remaining unamortized debt issuance costs of $1.0 Anmillion ~~impairment~~were recorded as a loss ison ~~recognized~~extinguishment toof ~~the~~debt ~~extent~~in accordance with ASC 470-50-40. During 2014, we incurred debt issuance costs of $1.6 million which is classified as other assets that will be amortized over the ~~carrying~~next ~~amount~~three ~~exceeds~~years using the ~~asset’s~~effective ~~fair~~interest ~~value~~method. Security deposits related to long-term facility leases were $1.2 million at December 31, 2014 and 2013.

(gh) ~~Other~~ ~~Assets~~Revenue Recognition. ~~Other~~Revenue ~~assets~~generated ~~consist~~from ~~primarily of prepayments of debt issuance costs~~passenger, ~~deposits with financial institutions~~cargo, ~~bonding~~and ~~companies,~~other ~~facilities~~activities ~~lessors,~~are ~~aircraft~~recorded ~~lessors~~as ~~and~~revenue either ~~others~~when ~~to secure~~ the ~~payment~~respective ofservices ~~fixed~~are ~~obligations. We~~rendered ~~incurred~~or ~~$2.5~~when ~~million~~the oftime ~~debt~~for ~~issuance~~use ~~costs~~of inthe ~~2011.~~ticket Athas ~~December 31~~expired, ~~2012,~~one year after the ~~unamortized~~date ~~debt~~of issuance, ~~costs~~and are ~~$1.8~~net ~~million,~~ of ~~which~~excise ~~$0.6~~taxes, ~~million~~passenger isfacility ~~classified~~charges asand asecurity ~~prepaid~~fees. ~~expense~~Unused ~~that~~tickets ~~will~~issued beby ~~amortized~~the ~~in 2013 and $1.2 million is~~Company ~~classified~~are inrecorded ~~other assets which will amortize~~ in the ~~years~~accompanying ~~2014~~balance ~~and~~sheets ~~2015.~~as ~~Security~~unearned ~~deposits related to long-term facility leases were $1~~revenue.2 ~~million and $1.0 million at December 31, 2012 and 2011, respectively.~~

(h) Maintenance Deposits. Until December 2012, the Company leased two of its Embraer EMB-120 Brasilia aircraft and, in addition to the base rent, was required to pay supplemental rent (“Maintenance Rent”) based upon flight hours or cycles flown. Under the terms of the leases the lessor would reimburse the Company for performing specified maintenance activities. This Maintenance Rent was accounted for as maintenance deposits in accordance with ASC subtopic 840-10, whereby the amount of the rent is capitalized and treated as a deposit against future maintenance expense until: (i) such time as a defined maintenance event is performed and a reimbursement is received, or (ii) the Company determined it was no longer probable that all or a portion of the deposit would be refunded as a reimbursement of the costs of a maintenance activity. When an amount on deposit is less than probable of being returned, it shall be recognized as additional expense. In December of 2012, the Company negotiated the early termination of these lease agreements and the purchase of these two leased aircraft. In connection with the early termination of the aircraft leases and purchase of the aircraft, management determined it was no longer probable that $0.7 million of the maintenance deposits would be refunded when maintenance activity was performed and so the Company incurred additional aircraft rental expense of $0.7 million in December of 2012. At December 31, 2012 and December 31, 2011, the Company had maintenance deposits of approximately $0 and $1.7 million, respectively.

(i) Revenue Recognition. Revenue generated from passenger, cargo, and other activities are recorded as revenue either when the respective services are rendered or when the time for use of the ticket has expired, one year after the date of issuance, and are net of excise taxes, passenger facility charges and security fees. Unused tickets issued by the Company are recorded in the accompanying balance sheets as unearned revenue.

The Company also receives public service subsidy revenues for providing air service to certain communities that do not generate sufficient traffic to fully support profitable air service under the EAS program. With respect to awarded EAS subsidy cases, the Company records revenues based on departures performed at departure rates that were approved by the DOT during the term of service agreement.

39(i) Code Share Relationships. At December 31, 2014, the Company operated under code share agreements with United Airlines. The Company operated under a code share agreement with Frontier Airlines (Frontier) from May, 2001 through September 30, 2014. Effective October 1, 2014, the Company’s code share and interline e-ticketing agreements with Frontier were terminated due to Frontier’s migration to an ultra-low cost carrier which no longer provides for interline agreements. These code share agreements are/were prorate agreements whereby the passenger’s fare is split between the two carriers based on the distance traveled by the passenger on each airline. Revenue from these code share agreements is recorded as passenger revenue when the services are rendered. The Company also participates in United’s “Mileage Plus” frequent flyer program. If a customer books travel on United which includes a segment on Great Lakes, the United customer earns points in their United frequent flier account for the miles flown on the Great Lakes segment. When a United frequent flier customer earns sufficient points to earn an award, he or she can choose whether to redeem those points on a United flight connecting with a Great Lakes flight. Our participation in United’s frequent flyer program does not require us to issue tickets in exchange for frequent flyer awards. Award redemption can only be facilitated through United on United flights in conjunction with a Great Lakes flight. Tickets sold to passengers on Great Lakes ticket stock for Great Lakes flight segments (ZK designator) are not eligible to accrue United frequent flyer credits. The Company accounts for the incremental cost to fly United frequent flyer passengers at the time of service since the Company does not have sufficient information to estimate future awards expected to be redeemed on a Great Lakes segment, and an estimated frequent flyer liability would be insignificant in the aggregate given the historical volume of awards used for flights including Great Lakes segments.

(j) Income Taxes. The Company accounts for income taxes using the asset and liability method. Under that method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and tax basis of existing assets and liabilities and net operating losses and tax credit carryforwards. A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized. The effect on deferred taxes from a change in tax rates is recognized in income in the period that includes the enactment date.

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

(jk) ~~Code~~Income ~~Share~~(Loss) ~~Relationships~~Per Share. AtBasic ~~December 31,~~income ~~2012,~~(loss) ~~the~~per ~~Company operated under code~~ share ~~agreements~~has ~~with~~been ~~United~~computed ~~Airlines and Frontier Airlines. These code share agreements are prorate agreements whereby the passenger’s fare is split between the two carriers based on the distance traveled~~ by ~~the passenger~~ ondividing ~~each airline. Revenue from these code share agreements is recorded as passenger revenue when~~ the ~~services~~net ~~are~~income ~~rendered.~~for ~~The Company also participates in United’s “Mileage Plus” frequent flyer program. If~~ a ~~customer~~particular ~~books~~year ~~travel~~by ~~on United which includes a segment on Great Lakes,~~ the ~~United~~weighted ~~customer~~average ~~earns~~number ~~points~~of inshares ~~their~~of ~~United~~common ~~frequent~~stock ~~flier~~outstanding ~~account~~during ~~for~~such ~~the miles flown on the Great Lakes segment~~year. ~~When~~Diluted aearnings ~~United~~per ~~frequent~~share ~~flier~~reflects ~~customer~~the ~~earns~~potential ~~sufficient~~dilution ~~points~~of tosecurities ~~earn~~that ancould ~~award, he~~share ~~or she can choose whether to redeem those points on a United flight connecting with a Great Lakes flight. Our participation~~ in ~~United’s frequent flyer program does not require us to issue tickets in exchange for frequent flyer awards~~earnings. Award redemption can only be facilitated through United on United flights in conjunction with a Great Lakes flight. Tickets sold to passengers on Great Lakes ticket stock for Great Lakes flight segments (ZK designator) are not eligible to accrue United frequent flyer credits. The Company accounts for the incremental cost to fly United frequent flyer passengers at the time of service since the Company does not have sufficient information to estimate future awards expected to be redeemed on a Great ~~Lakes~~currently ~~segment~~has 8,974,990 ~~and~~shares ~~an estimated frequent flyer liability would be insignificant in the aggregate given the historical volume~~ of ~~awards~~common ~~used~~stock ~~for flights including Great Lakes segments~~outstanding.

(kl) ~~Income~~Stock ~~Taxes.~~Option ~~The Company accounts for income taxes using the asset and liability method~~Plans. ~~Under~~For ~~that method, deferred income taxes are recognized for~~ the ~~tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future~~ years toending ~~differences between the financial statement carrying amounts and tax basis of existing~~December 31, ~~assets~~2014, ~~and~~2013 ~~liabilities~~ and ~~net~~2012 ~~operating~~there ~~losses~~were ~~and~~no ~~tax~~stock-based ~~credit~~compensation ~~carryforwards.~~awards ~~A valuation allowance is provided to the extent that it is more likely than not that deferred tax assets will not be realized~~granted. ~~The effect on deferred taxes from a change in tax rates is recognized in income in the period that includes the enactment date.~~

(lm) ~~Income~~Aircraft ~~Per Share~~Maintenance. ~~Basic~~The Company operates ~~income~~under ~~per~~an ~~share~~FAA-approved ~~has~~continuous ~~been~~inspection ~~computed~~and bymaintenance ~~dividing~~program. ~~the~~The ~~net~~Company ~~income~~accounts for amaintenance ~~particular~~activities ~~year~~on by the ~~weighted~~direct ~~average~~expense ~~number~~method. ofUnder ~~shares~~this ofmethod, ~~common~~major ~~stock~~airframe ~~outstanding~~overhaul ~~during~~maintenance ~~such~~costs ~~year~~are recognized as expense as maintenance services are performed. ~~Diluted~~Routine ~~earnings~~maintenance ~~per~~and ~~share~~repairs ~~reflects~~are charged to operations as incurred. In the ~~potential~~event ~~dilution~~an ofengine ~~securities~~undergoes ~~that could~~a ~~share~~significant inrepair ~~earnings.~~or ~~The~~overhaul, the Company ~~currently~~may ~~has~~determine ~~8,974,990~~that ~~shares~~it is more appropriate to capitalize the repair or overhaul depending on the specific nature of ~~common~~the ~~stock~~maintenance ~~outstanding~~activity performed.

(mn) ~~Stock~~Fair ~~Option Plans.~~Value ~~For~~of ~~the~~Financial ~~years~~Instruments. Fair ~~ending~~value ~~December 31~~estimates, ~~2012~~methods, ~~2011~~ and ~~2010~~assumptions ~~there~~of ~~were~~financial noinstruments ~~stock-based~~are ~~compensation~~set ~~awards~~forth ~~granted.~~below:

~~(n)~~Cash ~~Aircraft Maintenance. The Company operates under an FAA-approved continuous inspection~~ and ~~maintenance~~cash ~~program. The Company accounts for maintenance activities on the direct expense method. Under this method~~equivalents, ~~major airframe overhaul maintenance costs are recognized as expense as maintenance services are performed. Routine maintenance and repairs are charged to~~accounts ~~operations~~receivable ~~as incurred. For the first six months of 2011, major Beechcraft 1900D engine maintenance for most of the Company’s 1900D engines were performed under a Fleet Management Program (FMP) with Pratt~~ and ~~Whitney~~other ~~Canada Corporation which expired by its terms on June 30~~receivables, ~~2011.~~accounts ~~Under the FMP contract~~payable, ~~the Company paid a fixed amount per flight hour (subject to fixed nominal annual rate increases) in exchange for required maintenance~~ and ~~repairs~~accrued ~~under the predefined maintenance program~~liabilities. The ~~expense~~carrying ~~over~~amount ~~the~~approximates ~~life~~fair ofvalue ~~the~~because ~~contract~~of ~~was recognized at a level rate per hour during~~ the ~~minimum, non~~short-~~cancelable~~ term nature of ~~the~~these ~~agreement~~instruments. ~~Beginning July 1, 2011 all maintenance costs related to the Company’s Beechcraft 1900D engines are recognized as~~

40Long-term debt. All of the Company’s debt is comprised of fixed rate debt (see Note 5). Because the rate on this debt was recently negotiated, the Company believes carrying value approximates fair value.

~~Table~~(o) Recent Accounting Pronouncements. In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15 “Presentation of ~~Contents~~Financial Statements—Going Concern”. This standard provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of conditions or events that could raise substantial doubt about an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. This ASU is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2016, with early adoption permitted. The Company is evaluating the new guidance and plans to provide additional information about its expected impact at a future date.

~~Great~~In ~~Lakes~~May ~~Aviation~~2014, ~~Ltd~~the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. Under ASU No. 2014-09, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received for that specific good or service. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods, and early adoption is not permitted. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. The Company is currently evaluating the impact the adoption of ASU No. 2014-09 will have on the Company’s consolidated financial statements.

Notes to Financial Statements for December 31, 2012 and December 31, 2011

an expense as the maintenance services are performed. In the event an engine undergoes a significant repair or overhaul, the Company may determine that it is more appropriate to capitalize the repair or overhaul depending on the specific nature of the maintenance activity performed.

(o) Fair Value of Financial Instruments. Fair value estimates, methods, and assumptions of financial instruments are set forth below:

Cash, accounts receivable, accounts payable, and accrued liabilities. The carrying amount approximates fair value because of the short-term nature of these instruments.

Long-term debt. All of the Company’s debt is comprised of variable rate debt (see Note 5). Because there is not an active market for the Company’s notes, and the Company is unable to determine an appropriate discount rate to use in estimating the fair value of this obligation or the probability of early redemption, it is not practical to estimate the fair value of the debt.

Note 3.

Leases

Aircraft Leases

Prior to December 27, 2012 the Company operated two leased Embraer Brasilia Model 120 aircraft, which were accounted for under operating lease agreements. The Company negotiated the early termination of these lease agreements and the purchase of these two leased aircraft in December of 2012. The Company was required to make supplemental rent payments to cover the cost of major scheduled maintenance overhauls of these aircraft which were reimbursable to the Company at the time maintenance activities were completed. These supplemental rentals are based on the number of flight hours flown and/or flight departures and are recorded as maintenance deposits. See Note 2(h) Summary of Significant Accounting Policies and Procedures – Maintenance Deposits for the Company’s accounting policy. As a result of the early termination of the aircraft leases and purchase of the aircraft by the Company, it was no longer probable that $0.7 million of maintenance deposits would be refunded when maintenance activity was performed and the Company incurred additional aircraft rental expense of $0.7 million in December of 2012. At December 31, 2012 the Company has no aircraft leases for aircraft. During the years ended December 31, 2012, 2011 and 2010 supplemental rent expense recorded as a result of the maintenance rent provisions in the leases was $0.7, $0.4 and $0.5 million, respectively.

At December 31, 2010, the Company operated seven Beechcraft 1900D aircraft leased from Raytheon which were accounted for under operating lease agreements. These aircraft were returned to Raytheon in the quarters ended September 30 and December 31, 2011. Four of the aircraft were complete with engines and three aircraft were without engines. The lease agreements required the Company to pay taxes, maintenance, insurance, and other operating expenses applicable to the leased property. In addition to scheduled minimum lease payments, the Company was required to make payments to cover the cost of components related to leased engines, attached to four of the leased aircraft, as these components usable life cycle is consumed. At December 31, 2012, the Company had no commitments under aircraft operating leases.

Other Leases

The Company leases office and hangar space, spare engines and office equipment for its headquarters, reservation facilities, airport facilities, and certain other equipment. The Company’s headquarter lease provides for three five-year renewal options making this facility available to the Company through the year 2020. The

4138

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

Company also leases certain airport gate facilities on a month-to-month basis. Facilities rental expense under operating leases, including month-to-month leases, for the years ended December 31, ~~2012~~2014, ~~2011~~2013 and ~~2010~~2012 was $32.9 million, $3.17 million, and $23.8 9 million, respectively.

Note 4.

Accrued Liabilities

Accrued liabilities consisted of the following balances at December 31, ~~2012~~2014 and ~~2011~~2013:

	2012		2011
	2014		2013
Accrued expenses	$	—	$	25,178
Unearned revenue	$	645,320	$	1,221,257
Unearned revenue		1,710,269		1,703,358
Accrued property taxes		68,140		74,962
Accrued property taxes		30,830		226,318
Accrued interest		89,491		286,701
Accrued Interest		307,849		373,719
Accrued payroll		1,290,555		1,942,923
Accrued payroll		2,258,032		2,118,748
Other accrued expenses		38,422		—
Total accrued liabilities	$	42,~~306~~131,~~980~~928	$	43,~~447~~525,~~321~~843

Note 5.

Notes Payable and Long-Term Debt

The following table sets forth, as of December 31, ~~2012~~2014 and ~~2011~~2013, the carrying amount of the Company’s long-term debt and ~~current~~ current maturities of long term debt. The carrying amount of the debt consists of the principal payments contractually required under the debt agreements:

	2012			2011
	December 31,2014			December 31,2013
Long-term debt:
GB/Crystal Term Loan - principal	$	~~18,700,000~~—		$	2415,~~000~~200,000
GB/Crystal Revolving Loan - principal		~~7,473,333~~—			58,~~473~~973,333
Total long-term debt		26,173,333			29,473,333
Callidus Term Loan - principal		25,000,000			—
Callidus Revolving Loan - principal		—			—
Total long-term debt		25,000,000			24,173,333
Less current portion:
GB/Crystal Term Loan - principal		~~(3,500,000~~—	)		(324,~~000~~173,~~000~~333	)
Total current portion		(3,500,000	)		(3,000,000	)
Callidus Term Loan - principal		—			—
Total long-term portion	$	22,673,333		$	26,473,333
Callidus Revolving Loan - principal		—			—
Total current portion		—			(24,173,333	)
Total long-term portion	$	25,000,000		$	—

OnNew ~~November 16,~~Loan 2011, the Company entered into a new financing agreement with GB Merchant Partners, LLC, serving as Collateral Agent, and Crystal Capital LLC, serving as Administrative Agent. Terms of the financing include a four-year term loan in the amount of $24 million and a revolving loan credit facility in which the Company may borrow up to $10 million. Pursuant to the terms of a pledge and security agreement and an aircraft security agreement, the Company’s obligations to the lenders identified in the Credit Agreement are secured by substantially all assets of the Company, including all owned aircraft. The term loan bears interest at a floating rate of 30 day LIBOR rate plus 11% with a minimum rate of 15.5%. Voluntary prepayments of the term loan are subject to prepayment penalties ranging from 4% prior to the first anniversary of the loan and

42On December 22, 2014, the Company entered into the Loan Agreement (the “Loan Agreement”) with Callidus Capital Corporation (the “Lender”). Pursuant to the Loan Agreement, the Lender agreed to make available to the Company: (i) a $25,000,000 single advance term loan facility, (ii) a revolving loan facility with availability of up to $6,000,000 and (iii) a second revolving loan facility with availability of up to $3,000,000. The $25,000,000 term loan was disbursed at closing, and substantially all of its proceeds were used to pay all

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

~~declining~~outstanding inborrowings, ~~increments~~fees ofand 1%expenses atunder ~~each anniversary of~~ the ~~loan~~Credit ~~thereafter.~~Agreement Asdated ~~of December~~November 316, ~~2012,~~2011 ~~$18.7~~as ~~million~~amended ~~was~~between ~~outstanding under~~ the ~~term~~Company ~~loan. In addition to the scheduled contractual principal~~ and ~~interest~~GB ~~obligations,~~Merchant ~~the Company is required to make principal payments~~Partners, ~~based~~LLC onand aCrystal ~~percentage~~Capital ofLLC ~~excess cash flows~~ (~~as defined in~~ the “Refinanced Credit Agreement”)~~, as measured on September 30 of each year beginning September 30, 2012~~. ~~The~~ ~~Company is required to prepay an amount equal to 50% of such excess cash flow for the nine–month period ending September 30, 2012, and each subsequent twelve-month period thereafter.~~ The ~~excess~~revolving ~~cash~~loan ~~flow~~facilities ~~payments~~may ~~are to~~ be ~~applied~~used ~~to reduce~~for the ~~outstanding principal balance of the term loan. The first excess cash flow payment was due November 14, 2012 whereby the~~ Company’s ~~made~~working ancapital ~~excess cash flow payment of $2~~needs.3 ~~million, reducing the outstanding principal balance of the term loan.~~

The ~~term~~loans ~~loan~~under isthe Loan ~~set~~Agreement to mature on ~~November~~December 1622, ~~2015~~2017 at which time ~~the~~all outstanding principal ~~balance~~balances will be due isand payable. No scheduled toprincipal payments will be required until the maturity date unless there is a devaluation in the collateral $7supporting the term loan.8 Outstanding principal under the term loan and revolving loans will bear interest at a fixed rate of 14% ~~million~~per year. In addition, the Company paid a 1% facility fee at closing and will be required to pay a 1.25% facility fee on the maturity date or in an event of default. The Company will also be assessed a maintenance and monitoring fee of $3,000 per month and a 1% unused line fee. The 1% facility fee paid at closing was recorded to other assets and is being amortized as interest expense using the effective interest rate method. The 1.25% facility fee due at maturity is being accrued as an increase to other accrued liabilities and interest expense each period using the effective interest rate method. The maintenance and monitoring fee and the unused line fee are also recorded as interest expense as incurred.

AsIn ofconnection ~~December 31,~~with ~~2012~~the Loan Agreement, ~~$7.5~~the Company ~~million~~granted ~~was~~first-ranking ~~outstanding~~security ~~under~~interests to the ~~revolving~~Lender ~~credit~~covering ~~facility~~substantially ~~secured~~all byof ~~accounts receivable,~~the ~~parts~~assets ~~inventory~~of ~~and~~the ~~spare engines~~business. The ~~revolving~~Loan ~~credit~~Agreement ~~facility~~contains ~~bears~~certain ~~interest~~affirmative atand ~~the~~negative ~~rate~~covenants ofwhich 30are ~~day~~usual ~~LIBOR~~and ~~rate~~customary ~~plus 8.0%~~ with aasset ~~minimum~~based ~~interest~~loans, ~~rate~~and the ~~of 10.5%. The~~ Company ~~was~~agreed ~~also required~~ to ~~pay~~maintain a ~~closing~~fixed ~~fee~~charge ~~based~~coverage onratio ~~the~~beginning ~~initial facility~~with ~~commitment,~~the ~~and~~period isended ~~required~~March 31, to2015. ~~pay~~In aan ~~monthly~~event ~~unused~~of ~~line fee~~default, athe ~~specified~~Lender ~~fee~~may ~~for~~terminate ~~certain~~its ~~prepayments~~obligation ofto ~~the~~make ~~term~~further ~~loan,~~loans and ~~certain~~may ~~administrative~~declare ~~and~~all ~~fronting~~obligations ~~fees~~under ~~related to~~ the ~~Credit~~ Loan Agreement. ~~The~~to ~~revolving~~be ~~loan~~immediately ~~credit~~due ~~facility~~and ispayable. ~~set to~~The ~~mature~~Company onwas ~~November 16,~~in ~~2015~~compliance atwith ~~which~~all ~~time~~convents ~~any~~as ~~outstanding~~of ~~principal~~December 31, ~~balance will be due~~2014.

~~The~~As ~~following~~of ~~table~~December 31, ~~summarizes~~2014, $25.0 million was outstanding under the ~~Company’s~~ ~~long-~~term ~~debt~~loan ~~obligations~~and asthere ofwas ~~December 31,~~no ~~2012:~~balance outstanding und the revolving credit facilities.

	2013		2014		2015		After 2015		Total
Long-term debt - contractual
Term loan facility	$	3,500,000	$	4,000,000	$	11,200,000	$	—	$	18,700,000
Revolving credit facility		—				7,473,333		—		7,473,333
Total debt		3,500,000		4,000,000		18,673,333		—		26,173,333

Previous Credit Agreement

~~Note~~On 6December 22, 2014, in connection with the Loan Agreement described above, the Company repaid obligations totaling $24.9 ~~Income~~million, which ~~Taxes~~included $2.0 million of additional borrowings and scheduled principal payments of $1.5 million during 2014, constituting all outstanding borrowings, fees, accrued interest and expenses under the Refinanced Credit Agreement. In connection with the repayment, GB Merchant Partners, LLC and Crystal Capital LLC under the Refinanced Credit Agreement terminated their security agreements and released all of their security interests in the Company’s aircraft and other assets.

~~The~~On ~~ultimate~~December 31, ~~realization~~2013 ~~of deferred tax assets is dependent upon~~ the ~~generation~~Company ofwas ~~future~~not ~~taxable income during the periods~~ in ~~which those~~compliance ~~temporary~~with ~~differences become deductible. Management considers~~ the ~~scheduled~~Refinanced ~~reversal~~Credit ofAgreement ~~deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The tax net operating loss carryforwards (NOLs)~~ that ~~have~~permitted ~~been generated are due in large part to~~ the ~~accelerated depreciation of property and equipment over a shorter useful life for tax purposes. The~~ Company’s ~~NOLs~~lenders ~~will~~to ~~expire~~exercise ~~between~~their right ~~2021~~to ~~and~~declare ~~2024.~~our ~~The~~debt ~~book~~obligations ~~basis~~to ofbe ~~property~~immediately due and ~~equipment~~ ispayable ~~approximately~~under ~~$39.3~~the ~~million~~terms ~~greater~~of ~~than~~ the ~~tax~~Refinanced ~~basis~~Credit atAgreement. ~~December 31,~~As ~~2012,~~a ~~all~~result of ~~which~~not isbeing ~~expected to reverse during periods~~ in ~~which~~compliance ~~NOLs~~with ~~are~~the ~~available.~~terms ~~Approximately $9.5 million ($0.6 million tax effected)~~ of ~~state~~the ~~NOLs~~Company’s ~~are expected~~Refinanced toCredit ~~expire~~Agreement ~~unused~~ and ~~accordingly a valuation allowance has been provided for these deferred tax assets. Based upon~~ the ~~projections for future taxable income over~~ expectation the ~~periods in which the deferred tax assets become deductible, the~~ Company ~~believes~~ itwould ~~is more likely than~~ not ~~that~~be itin ~~will~~compliance ~~realize~~with the ~~benefits~~terms of ~~most of~~ the ~~deductible~~Refinanced ~~temporary~~Credit ~~differences~~Agreement ~~and~~throughout ~~NOLs.~~2014, ~~The~~all ~~amount~~borrowings of(approximately ~~the~~$24.2 ~~deferred~~million) ~~tax~~under ~~asset~~the ~~considered~~Company’s ~~realizable,~~Refinanced ~~however,~~Credit ~~could~~Agreement bewere ~~reduced~~classified inas ~~the~~current ~~near~~maturities ~~term~~as ~~if estimates~~ of ~~future~~December 31, ~~taxable income during the carryforward period are reduced~~2013.

4340

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

The ~~Company’s~~following ~~estimated~~table ~~net~~summarizes ~~operating~~the ~~loss~~contractual ~~carryforwards~~due ~~for~~dates ~~federal~~of ~~income~~the ~~tax~~Company’s ~~purposes~~long-term ~~totaling approximately~~debt ~~$20.8~~obligations ~~million~~as of at December 31, ~~2012, expire in years 2021 through 2024 as follows (in thousands)~~2014:

Year of Expiration	Amount
	2015		2016		2017		After 2017		Total
2021		14,782
Long-term debt - contractual
2023		4,011
Term loan facility	$	—	$	—	$	25,000,000	$	—	$	25,000,000
2024		2,055
Contractual interest
	$	20,848
Term loan facility		3,615,068		3,624,658		3,528,767		—		10,768,493
Facilty fees		128,959		129,205		550,775		—		808,939
Total debt	$	3,744,027	$	3,753,863	$	29,079,542	$	—	$	36,577,432

InNote ~~order for the Company to utilize these NOLs prior to expiration, the Company would need to generate taxable income of $20~~6.8 ~~million~~Income ~~during the next 10 years, or approximately $2.0 million per year. The Company expects to use $7.7 million of NOL carryforwards in 2012 to offset taxes payable.~~ Taxes

Income tax expense (benefit) for the years ended December 31, ~~2012~~2014, ~~2011~~2013 and ~~2010~~2012 is presented below:

	Current			Deferred			Total
Year ended December 31, 2014:
U.S. Federal		—			(3,719,752	)	($	3,719,752	)
State and local		(71,908	)		(244,653	)	($	316,561	)
	($	71,908	)	($	3,964,405	)	($	4,036,313	)
Year ended December 31, 2013:
U.S. Federal		42,502			(118,415	)	($	75,913	)
State and local		80,471			(115,046	)	($	34,575	)
	$	122,973		($	233,462	)	($	110,488	)
Year ended December 31, 2012:
U.S. Federal		137,096			1,316,899		$	1,453,995
State and local		340,626			(291,669	)	$	48,957
	$	477,722		$	1,025,230		$	1,502,952
Year ended December 31, 2011:
U.S. Federal	$	337,604		$	5,611,401		$	5,949,005
State and local	$	790,317			(24,431	)	$	765,886
	$	1,127,921		$	5,586,970		$	6,714,891
Year ended December 31, 2010:
U.S. Federal	$	232,586		$	2,740,756		$	2,973,342
State and local	$	253,932			452,577		$	706,509
	$	486,518		$	3,193,333		$	3,679,851

The federal statutory tax rate of 34% ~~for 2012 and 35% for 2011 and 2010~~ differs from the Company’s effective income tax rate for the years ended December 31, ~~2012~~2014, ~~2011~~2013, and ~~2010~~2012 as follows:

	2012			2011			2010
	2014			2013			2012
Income tax expense at the federal statutory income tax rate	$	1,497,730		$	6,091,106		$	3,056,595
Income tax expense (benefit) at the federal statutory income tax rate	$	(3,878,439	)	$	(188,074	)	$	1,497,730
State income tax expense, net of federal income tax benefit		134,530			507,910			280,601
State income tax expense (benefit), net of federal income tax benefit		(366,900	)		(7,718	)		134,530
Book expenses not deductible for tax purposes		~~139~~55,~~389~~826			~~125~~102,~~959~~827			~~164~~139,~~025~~389
Increase (Decrease) in valuation allowance		~~(36~~58,~~283~~279	)		21(104,~~111~~942	)		~~111~~(36,~~950~~283	)
Impact of changes in rates		~~(232~~94,~~413~~921	)		~~(31~~87,~~195~~419	)		66(232,~~680~~413	)
Income tax expense	$	1(4,~~502~~036,~~952~~313	)	$	6(110,~~714,891~~488	)	$	31,~~679~~502,~~851~~952

4441

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

Deferred tax assets (liabilities) as of December 31, ~~2012~~2014 and ~~2011~~2013, were as follows:

	2012			2011
	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	710,~~844~~107,~~304~~174		$	107,~~753~~020,~~078~~027
Alternative minimum tax credit carryforwards		1,~~152~~198,~~601~~347			~~994~~1,~~545~~198,265
Inventory reserve		~~814~~889,~~416~~915			~~784~~850,~~751~~023
Deferred revenue		~~632~~240,~~603~~209			~~649~~451,~~572~~673
Other reserves		~~242~~178,~~099~~365			~~258~~235,~~555~~216
Other		185			6,985
Total gross deferred tax assets		12,614,010			9,755,204
Total gross deferred tax assets		10,686,208			13,447,486
Less: valuation allowance		(569,964	)		(506,913	)
Less: valuation allowance		(609,436	)		(645,719	)
Net deferred tax assets		12,044,046			9,248,291
Net deferred tax assets		10,076,772			12,801,767
Deferred tax liabilities:
Property and equipment		(1614,~~668~~496,~~935~~178	)		(1815,~~319~~626,~~511~~145	)
Other		(613,~~353~~510	)		(~~110~~42,~~540~~193	)
Total deferred tax (liability) asset	$	(6,653,516	)	$	(5,628,284	)
Net deferred tax liabilities	$	(2,455,642	)	$	(6,420,047	)

~~The~~In ~~Company~~assessing ~~files~~the ~~income~~ability to realize deferred tax ~~returns~~assets, inmanagement considers whether it is more likely than not that some or all of the Udeferred tax assets will not be realized.S Management considers the projected reversal of deferred tax liabilities and tax planning strategies in making this assessment. Based upon this assessment, ~~and~~management ~~various~~believes ~~state~~it ~~and~~is ~~local~~more ~~jurisdictions~~likely than not that the Company will realize the benefits of these deductible differences, net of any valuation allowances. ~~Federal~~The ultimate realization of deferred tax ~~returns~~assets ~~remain~~is dependent upon the generation of future taxable income during the periods in ~~subject~~which tothose ~~examination~~temporary ~~for~~differences ~~three~~become ~~years~~deductible. ~~after~~Management aconsiders the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The tax net operating loss carryforwards is(NOLs) ~~utilized,~~that ~~accordingly~~have been generated are due in large part to the accelerated depreciation of property and equipment over a shorter useful life for tax ~~returns~~purposes ~~may~~as ~~remain~~well ~~subject~~as tolosses ~~audit~~from ~~beyond~~operations incurred in the ~~original~~current ~~statute~~year. The majority of the ~~limitations~~Company’s NOLs consist of Federal NOLs, which will expire between 2021 and 2034. The book basis of property and equipment is approximately $32.4 million greater than the tax basis at December ~~State~~31, ~~jurisdictions~~2014, ~~also~~all ~~remain~~of ~~subject~~which is expected to reverse ~~examination~~during periods in which NOLs are available.

Approximately $10.2 million ($0.6 million tax effected) of state NOLs are expected to expire unused and accordingly a valuation allowance has been provided for these deferred tax assets.


Year of Expiration	Amount
2021		12,656
2023		4,011
2024		2,055
2034		8,401

	$	27,123

The Company files income tax returns in the U.S., and various state and local jurisdictions. Federal tax returns remain subject to examination for three years after a tax net operating loss is utilized, accordingly the tax returns may remain subject to audit beyond the original statute of limitations. Certain state jurisdictions also typically remain subject to examination in a similar manner.

The Company believes that its income tax filing positions and deductions related to tax periods subject to examination will be sustained upon audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740-10-25.

~~Note~~42 ~~7. Employee Benefit Plans~~

The Company maintains a qualified 401(k) employee retirement savings plan for the benefit of substantially all of the Company’s employees. The Company matches up to 4% of participating employees’ contributions. Company contributions, net of forfeitures, totaled $299,605 in 2012, $317,299 in 2011, and $340,630 in 2010.

In 1993, the Company adopted the Great Lakes Aviation, Ltd. 1993 Stock Option Plan and the Great Lakes Aviation, Ltd. 1993 Director Stock Option Plan (collectively, the Plans). The Plans permitted the grant of stock options in the aggregate of 1,300,000 shares of the Company’s common stock to key employees, officers, and directors of the Company. Pursuant to their terms, both Plans expired on October 31, 2003, and no options have been granted after October 31, 2003. As of December 31, 2012, no options remained outstanding under the plans.

The Company did not realize any tax deductions related to the exercise of stock options during 2012, 2011 or 2010. The aggregate intrinsic value for options outstanding and exercisable at December 31, 2012 and 2011

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

~~was~~Note ~~$0 and $94,153 respectively~~7. ~~There~~Employee ~~was~~Benefit ~~no unrecognized compensation cost from unvested stock options at the implementation date of ASC Section 718-10-25 (originally pursuant to SFAS 123(R)-Share Based Payment).~~ Plans

AThe ~~summary~~Company ofmaintains a qualified 401(k) employee retirement savings plan for the ~~option~~benefit ~~activity~~of ~~under~~substantially all ~~stock~~of ~~option~~the ~~plans~~Company’s employees. ~~during~~The ~~the~~Company ~~year~~matches ~~ended~~up ~~December 31~~to 4% of participating employees’ contributions. Company contributions, ~~2012~~ isnet ~~presented~~of ~~below:~~forfeitures, totaled $197,861 in 2014, $280,753 in 2013, and $299,605 in 2012.

	Shares		WeightedWeighted AverageExercise Price		Weighted AverageRemaining ContractualLife (Years)
Outstanding at January 1, 2012		205,000	$	0.40		1
Granted		—		—		—
Expired		150,000		0.40		—
Exercised		55,000		0.40		—
Outstanding at December 31, 2012		—	$	—		—
Options exercisable at December 31, 2012		—	$	—		—

In 1993, the Company adopted the Great Lakes Aviation, Ltd. 1993 Stock Option Plan and the Great Lakes Aviation, Ltd. 1993 Director Stock Option Plan (collectively, the Plans). The Plans permitted the grant of stock options in the aggregate of 1,300,000 shares of the Company’s common stock to key employees, officers, and directors of the Company. Pursuant to their terms, both Plans expired on October 31, 2003, and no options have been granted after October 31, 2003. At December 31, 2014 and 2013, no options remained outstanding under the plans.

The weighted average intrinsic value of options exercised during the year was $1.53 per share.

Note 8.

Income Per Share

The following table provides a reconciliation of the numerators and denominators of the basic and diluted income per share computations for the periods presented:

	2012								2011								2010
	2014								2013								2012
	Income(numerator)			Shares(denominator)		Pershareamount			Income(numerator)			Shares(denominator)		Pershareamount			Income(numerator)		Shares(denominator)		Pershareamount
	Income (loss)(numerator)			Shares(denominator)		Pershareamount			Income (loss)(numerator)			Shares(denominator)		Pershareamount			Income(numerator)		Shares(denominator)		Pershareamount
Basic income per share attributable to common stockholders	$	2(7,~~902~~370,~~136~~862	)		8,~~923~~974,~~269~~990	$	(0.3382	)	$	10(442,~~688,268~~671	)		138,~~629~~974,~~671~~990	$	(0.7805	)	$	52,~~053~~902,~~278~~136		148,~~291~~923,~~970~~269	$	0.3533
Effect of dilutive securities:
Stock options		—			~~141,902~~—		—			—			~~109,845~~—		—			—		~~153~~141,~~762~~902		—
Diluted income per share attributable to common stockholders	$	2(7,~~902~~370,~~136~~862	)		98,~~065~~974,~~171~~990	$	(0.3282	)	$	10(442,~~688,268~~671	)		138,~~739~~974,~~516~~990	$	(0.7805	)	$	52,~~053~~902,~~278~~136		149,~~445~~065,~~732~~171	$	0.3532

For the years ended December 31, ~~2012~~2014, ~~2011~~2013 and ~~2010~~2012, there were no stock options excluded from the calculation of diluted earnings per share.

Under the terms of the Company’s debt agreements, the Company is prohibited from paying dividends.

4643

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, ~~2012~~2014 and December 31, ~~2011~~2013

Note 9.

Fair Value Measurements

A fair value hierarchy that prioritizes the inputs used to measure fair value has been established by ASC 820, Fair Value Measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:


Level 1		Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2		Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and other inputs that are observable or can be corroborated by observable market data.

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the Financial Accounting Standards Board (the “FASB”).

Our financial instruments consist of cash and cash equivalents, accounts receivable and other receivables, accounts payable, accrued liabilities and long-term debt including the current portion. The carrying values of cash, accounts receivable, accounts payable and accrued cash and cash equivalents, accounts receivable and other receivables, accounts payable, and accrued liabilities approximate their fair values. These are considered Level 1 measurements. The carrying value of our long term debt including the current portion reflects original cost net of unamortized deferred debt restructuring gain and was $2625.20 million and $2924.52 million as of December 31, ~~2012~~2014 and December 31, ~~2011~~2013, respectively. For additional information, see Note 5 Long-Term Debt.

All of the Company’s debt is comprised of ~~variable~~fixed rate debt (see Note 5). Because ~~there~~the israte ~~not~~on anthis ~~active~~debt ~~market~~was ~~for~~recently ~~the Company’s notes~~negotiated, ~~and~~ the Company isbelieves ~~unable~~carrying ~~to determine an appropriate discount rate to use in estimating the fair~~ value ofapproximates ~~this obligation or the probability of early redemption, it is not practical to estimate the~~ fair value ~~of the debt~~.

Note 10.

Transactions with Affiliates

The Company rents two six-passenger aircraft and a vehicle from Iowa Great Lakes Flyers, Inc., a corporation solely owned by Douglas G. Voss, the Company’s Chairman and major stockholder. Total payments for the leases were $28,500 in ~~2012~~2014, $28,500 in ~~2011~~2013, and $28,500 in ~~2010~~2012. The leases are cancellable by either party. As of December 31, ~~2012~~2014, Mr. Douglas Voss controlled 4,160,247 shares of common stock of the Company, representing an approximate 46.4% interest in the Company’s outstanding common stock.

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2012 and December 31, 2011

Note 11.

Commitments and Contingencies

Litigation. The Company is a party to ongoing legal claims and assertions arising in the ordinary course of business. Management believes that the resolution of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Union Agreements. As of March 209, ~~2013~~2015, approximately 3438 percent of the Company’s employees are subject to union agreements.

The Company’s pilots are represented by the ~~United~~Sheet Metal, Air, Rail Transportation Union (“~~UTU~~SMART”). The ~~pilot~~Company ~~collective~~entered ~~bargaining~~into ~~agreement~~a ~~became~~new agreement ~~amendable~~with the pilots on September 16, ~~2010~~2014. ~~The~~This ~~Company~~agreement ~~and~~will ~~the~~continue ~~UTU have been engaged~~ in ~~contract~~full ~~mediation~~force ~~under~~and ~~the~~effect ~~auspices~~for offour ~~the~~years ~~National Mediation Board (“NMB”). In August 2012, both the pilots~~ and ~~the~~thereafter ~~Company~~is ~~asked~~subject to ~~be released from mediated bargaining. On March 22~~amendment, ~~2013,~~which ~~the~~would ~~NMB~~reopen ~~proffered~~collective ~~arbitration~~bargaining. ~~The parties have 30 days to accept that proffer. If, at the end of the 30 day period both parties have not agreed to arbitrate, then they will be released to exercise self-help.~~

The Company’s flight attendants are ~~also represented~~ by the UTU. The Company entered into a new agreement with the flight attendants on May 17, 2011. This agreement will ~~continue~~become inamendable ~~full~~on ~~force and effect for four years and thereafter is subject to amendment~~May 17, ~~which would reopen collective bargaining~~2015.

Great Lakes Aviation, Ltd.

Notes to Financial Statements for December 31, 2014 and December 31, 2013

The Company’s mechanics and maintenance clerks are represented by the International Association of Machinists and Aerospace Workers (“IAM”). The collective bargaining agreements between the Company and the clerks and mechanics represented by IAM, District 143, became amendable in 2002 and 2005, respectively. We are currently engaged in contract mediation under the auspices of the National Mediation Board.

In 2003, the Company’s dispatchers voted to be represented by the International Brotherhood of Teamsters. Negotiations with the dispatchers are not active at the present time.

~~Note~~45 ~~12. Subsequent Event~~

On February 15, 2013, the Company borrowed an additional $1.5 million under its revolving credit facility increasing the borrowings under the facility from $7.5 million to $9.0 million.

~~Great~~Item ~~Lakes~~9. ~~Aviation,~~CHANGES ~~Ltd.~~IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~Notes~~None. ~~to Financial Statements for December 31, 2012 and December 31, 2011~~

~~Note~~Item 139A. ~~Selected~~CONTROLS ~~Quarterly~~AND ~~Financial Data (unaudited)~~PROCEDURES

~~The~~Evaluation ~~following~~of ~~table~~Disclosure ~~presents~~Controls ~~selected quarterly unaudited financial data for quarters during the years ended December 31, 2012~~ and ~~2011~~ ~~(in~~Procedures ~~thousands, except for per share information):~~

2012	FirstQuarter			SecondQuarter		ThirdQuarter		FourthQuarter			TotalYear
Operating revenues	$	31,357		$	36,103	$	37,339	$	32,980		$	137,779
Operating income (loss)		1,595			3,910		4,800		(892	)		9,413
Net income (loss)		176			1,537		2,167		(978	)		2,902
Net income (loss) per share
Basic	$	0.02		$	0.17	$	0.24	$	(0.11	)	$	0.33
Diluted		0.02			0.17		0.24		(0.11	)		0.32
Weighted average shares outstanding
Basic		8,920			8,923		8,925		8,948			8,923
Diluted		9,028			9,062		9,075		8,948			9,065
2011	FirstQuarter			SecondQuarter		ThirdQuarter		FourthQuarter			TotalYear
Operating revenues	$	29,691		$	31,216	$	32,773	$	30,685		$	124,365
Operating income (loss)		(650	)		1,512		3,937		1,526			6,325
Net income (loss)		(577	)		607		1,823		8,835			10,688
Net income (loss) per share
Basic	$	(0.04	)	$	0.04	$	0.13	$	0.76		$	0.78
Diluted		(0.04	)		0.04		0.13		0.75			0.78
Weighted average shares outstanding
Basic		14,292			14,292		14,292		11,664			13,630
Diluted		14,292			14,372		14,385		11,753			13,740

We maintain a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

~~The~~Under ~~above~~the ~~financial~~supervision ~~data~~and ~~includes~~with ~~normal~~the ~~recurring~~participation ~~adjustments~~of ~~and~~our ~~reflects~~management, including ~~all~~our ~~adjustments~~Chief ~~that~~Executive ~~are~~Officer and Chief Financial Officer, inwe ~~the~~conducted ~~opinion~~an evaluation of ~~management,~~ ~~necessary~~our ~~for~~disclosure acontrols ~~fair~~and ~~presentation~~procedures of(as ~~such~~defined ~~financial~~in ~~data~~Exchange Act Rules 13a-15(e) and 15d-15(e)). Based ~~The~~on ~~Company’s~~this ~~business~~evaluation, isour ~~seasonal~~Chief Executive Officer and, ~~accordingly,~~our ~~interim~~Chief ~~results~~Financial ~~are~~Officer ~~not~~concluded ~~indicative~~that, as of ~~results~~December 31, ~~for~~2014, aour ~~full~~disclosure ~~year~~controls and procedures were effective.

49Management’s Annual Report On Internal Control Over Financial Reporting

~~Table~~Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the supervision of, ~~Contents~~our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

~~Item~~• 9.Pertain ~~CHANGES~~to INthe ~~AND~~maintenance ~~DISAGREEMENTS~~of ~~WITH~~records ~~ACCOUNTANTS~~that ONin ~~ACCOUNTING~~reasonable ~~AND~~detail ~~FINANCIAL~~accurately ~~DISCLOSURE~~and fairly reflect the transactions and dispositions of our assets;

~~None.~~• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

~~Item~~• ~~9A.~~Provide ~~CONTROLS~~reasonable ~~AND~~assurance ~~PROCEDURES~~regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

~~Evaluation~~Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of ~~Disclosure~~effectiveness ~~Controls~~to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and ~~Procedures~~presentation.

WeOur ~~maintain~~management aassessed ~~system~~the effectiveness of ~~disclosure~~our ~~controls~~internal ~~and~~control ~~procedures~~over ~~that~~financial isreporting ~~designed~~(ICFR) toas ~~ensure~~of ~~that~~December 31, ~~information required~~2014. toManagement beassessed ~~disclosed~~the effectiveness inof our ~~Exchange~~ICFR ~~Act~~based ~~reports~~on isthe ~~recorded,~~criteria ~~processed,~~for ~~summarized~~effective ~~and~~ICFR ~~reported~~established ~~within~~in Internal Control – Integrated Framework (1992) issued by the ~~time~~Committee ~~periods~~of ~~specified~~Sponsoring inOrganizations of the ~~SEC’s~~Treadway ~~rules~~Commission (COSO) and ~~forms,~~SEC ~~and~~guidance ~~that~~on conducting such ~~information~~assessments isby ~~accumulated~~smaller reporting companies and ~~communicated~~non-accelerated tofilers. ~~our~~Based ~~management, including~~on ~~our~~this ~~Chief~~assessment, ~~Executive~~management ~~Officer~~believes ~~and~~that ~~Chief~~as ~~Financial~~of ~~Officer~~December 31, ~~as appropriate~~2014, toour ~~allow~~internal ~~timely~~control ~~decisions~~over ~~regarding~~financial ~~required~~reporting ~~disclosures~~was effective based on those criteria.

~~Under~~46 the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of December 31, 2012, our disclosure controls and procedures were effective.

~~Our~~This ~~management~~Annual isReport ~~responsible~~on ~~for~~Form ~~establishing~~10-K ~~and~~does ~~maintaining~~not ~~adequate~~include ~~internal~~an ~~control~~attestation ~~over~~report ~~financial~~of ~~reporting.~~the ~~Internal~~Company’s ~~control over~~independent ~~financial~~registered ~~reporting,~~public asaccounting ~~defined~~firm inregarding ~~Exchange~~internal ~~Act~~control ~~Rule~~over ~~13a-15(f), is a process designed by, or under the supervision of, our principal executive and principal~~ financial ~~officers~~reporting. ~~and~~Management’s ~~effected~~report bywas ~~our~~not ~~Board~~subject ~~of Directors, management and other personnel,~~ to ~~provide~~attestation ~~reasonable~~by ~~assurance regarding~~ the ~~reliability~~Company’s ofindependent ~~financial~~registered ~~reporting~~public ~~and~~accounting ~~the~~firm ~~preparation~~pursuant ofto ~~financial~~an ~~statements~~exemption for ~~external~~smaller reporting ~~purposes~~companies inunder ~~accordance~~Section 989G ~~with~~of ~~generally~~the ~~accepted~~Dodd-Frank ~~accounting~~Wall ~~principles~~Street Reform and ~~includes~~Consumer ~~those~~Protection ~~policies~~Act. ~~and procedures that:~~

•Changes ~~Pertain to the maintenance of records that~~ in ~~reasonable~~Internal ~~detail~~Control ~~accurately~~Over Financial ~~and~~Reporting ~~fairly reflect the transactions and dispositions of our assets;~~

•During ~~Provide~~the ~~reasonable~~Company’s ~~assurance~~most ~~that~~recent ~~transactions~~fiscal ~~are~~quarter, ~~recorded~~there ashas ~~necessary~~been tono ~~permit~~change ~~preparation~~in ofour internal control over financial ~~statements~~reporting (as defined in ~~accordance~~Rule ~~with~~13a-15(f) ~~generally~~or ~~accepted~~15d-15(f) ~~accounting~~under ~~principles,~~the ~~and~~Securities Exchange Act) that ~~our~~has ~~receipts~~materially ~~and~~affected, ~~expenditures~~or ~~are~~is ~~being~~reasonably ~~made~~likely ~~only~~to inmaterially ~~accordance~~affect, ~~with~~the ~~authorizations~~Company’s ofinternal ~~our~~control ~~management~~over ~~and~~financial ~~directors;~~reporting. ~~and~~

•Item ~~Provide~~9B. ~~reasonable~~OTHER ~~assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.~~INFORMATION

~~Because~~Not ~~of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements~~applicable. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

~~Our~~47 management assessed the effectiveness of our internal control over financial reporting (ICFR) as of December 31, 2012. Management assessed the effectiveness of our ICFR based on the criteria for effective ICFR established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers. Based on this assessment, management believes that as of December 31, 2012, our internal control over financial reporting was effective based on those criteria.

~~Table~~PART ofIII ~~Contents~~

~~This~~Item ~~Annual Report on Form~~ 10~~-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting~~. ~~Management’s~~DIRECTORS, ~~report~~EXECUTIVE ~~was~~OFFICERS ~~not~~AND ~~subject~~CORPORATE to attestation by the Company’s independent registered public accounting firm pursuant to an exemption for smaller reporting companies under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act. GOVERNANCE

~~Changes~~Our inDirectors ~~Internal Control Over Financial Reporting~~

~~During~~The following table and narrative provide information concerning the ~~Company’s~~members ~~most~~of ~~recent~~our ~~fiscal~~board ~~quarter~~of directors as of March 20, ~~there~~2015. ~~has~~Our ~~been~~directors noare ~~change~~elected inby ~~our~~a ~~internal~~plurality ~~control~~of ~~over financial~~the ~~reporting~~votes ~~(as~~cast. ~~defined~~Each indirector ~~Rule~~has ~~13a-15(f)~~been orappointed ~~15d-15(f)~~to ~~under~~serve until the ~~Securities~~next ~~Exchange~~annual ~~Act)~~meeting ~~that~~of ~~has~~shareholders ~~materially~~and ~~affected,~~until their orrespective issuccessors ~~reasonably~~are ~~likely~~elected toand ~~materially~~duly ~~affect,~~qualified. ~~the~~There ~~Company’s~~are ~~internal~~no ~~control~~familial ~~over~~relationships ~~financial~~between ~~reporting~~any director or officer.

Item 9B. OTHER INFORMATION


Name	Age		Principal Occupation	Position with Company	Director Since
Douglas G. Voss		60	Chairman of the Board of Directors and President of Great Lakes Aviation, Ltd.	Chairman of the Board of Directors and President of Great Lakes Aviation, Ltd.	1979
A.L. Maxson(1)		79	Financial Consultant	Director	2010
Vernon A. Mickelson(1)(2)(3)		88	Business Consultant	Director	1994
A.R. Moulton, III(1)(2)		72	Financial Consultant	Director	2005
Ivan L. Simpson(1)(2)(3)		64	Retired Airline Transport Pilot for American Airlines	Director	1997

~~Not~~(1) ~~applicable~~Member of the audit committee.

51(2) Member of the compensation committee.

~~Table~~(3) Member of ~~Contents~~the nominating committee.

~~PART~~Douglas ~~III~~G. Voss. Mr. Voss co-founded the Company in 1979 and served in the position of Chief Executive Officer from the Company’s inception until December 31, 2002. Mr. Voss has served as a director of the Company since the Company’s inception. Mr. Voss was initially licensed as a private pilot in 1974 and today holds both an Airline Transport Pilot Certificate and Airframe and Powerplant Mechanic Certificates. Mr. Voss is a graduate of Colorado Aero Tech. Mr. Voss has previously served the Company in the FAA Air Carrier Certificate required operational control positions of Director of Operations and Director of Maintenance. He is uniquely qualified to serve as our Chairman based on his rich experience with our Company as our founder and longtime leader.

~~Item~~A.L. 10Maxson. ~~DIRECTORS~~Mr. Maxson became a director of the Company in August 2010. He previously served as the Company’s Chief Financial Officer and a director from 1993-1997. Mr. Maxson began his career in the aviation industry in 1966 when he joined Southern Airways, ~~EXECUTIVE~~Inc. ~~OFFICERS~~as ~~AND~~its ~~CORPORATE~~Controller ~~GOVERNANCE~~and was made Chief Financial Officer shortly thereafter. Southern Airways, Inc. was ultimately merged with North Central Airlines Inc. to create Republic Airlines Inc., where Mr. Maxson also served as Chief Financial Officer. Mr. Maxson became Vice President Financial Planning for Northwest Airlines, Inc. upon that company’s acquisition of Republic Airlines, Inc. in 1986. Mr. Maxson remained with Northwest Airlines, Inc. until 1991, and was self-employed as a financial consultant during the period from 1991 to December of 1993. Since 1997, Mr. Maxson has been self-employed as a financial consultant. Mr. Maxson serves as one of our independent directors and our “audit committee financial expert,” and he brings to our board his financial expertise and industry perspective.

~~Our~~Vernon ~~Directors~~A. Mickelson. Mr. Mickelson became a director of the Company in January 1994. For more than the past 20 years, Mr. Mickelson has been self-employed as a business consultant. He provided services to the

~~The~~48 following table and narrative provide information concerning the members of our board of directors as of March 20, 2013. Our directors are elected by a plurality of the votes cast. Each director has been appointed to serve until the next annual meeting of shareholders and until their respective successors are elected and duly qualified. There are no familial relationships between any director or officer.

Name	Age	Principal Occupation	Position with Company	DirectorSince
Douglas G. Voss	58	Chairman of the Board of Directors and President of Great Lakes Aviation, Ltd.	Chairman of the Board of Directors and President of Great Lakes Aviation, Ltd.	1979
A.L. Maxson(1)	77	Financial Consultant	Director	2010
Vernon A. Mickelson(1)(2)(3)	86	Business Consultant	Director	1994
A.R. Moulton, III(1)(2)	70	Financial Consultant	Director	2005
Ivan L. Simpson(1)(2)(3)	62	Retired Airline Transport Pilot for American Airlines	Director	1997

Company concerning matters involving FAA regulatory compliance and maintenance quality control from 1988 to 1994. Mr. Mickelson has worked in the aviation industry since 1949, primarily in the field of aircraft manufacturing and maintenance. From 1969 to 1988, Mr. Mickelson was employed by the FAA in Flight Standards as principal inspector and supervisor of FAA maintenance and avionics inspectors assigned in the states of Indiana and Iowa. In his career, he has held or holds several FAA maintenance certificates and FAA designations in aircraft maintenance in addition to holding a commercial pilot’s certificate. Mr. Mickelson is a graduate of Spartan School of Aeronautics (11948-49), ~~Member~~specializing in aircraft maintenance. Mr. Mickelson brings his long history with our industry and his more than 22 years as a business consultant to his role as one of ~~the~~our ~~audit~~independent ~~committee~~directors.

~~(2)~~A.R. ~~Member~~Moulton, III. Mr. Moulton became a director of the ~~compensation~~Company ~~committee~~in September 2005. Until 2010 Mr. Moulton was a Managing Director of Airline Capital Associates, a consulting firm serving the commercial air transport sector. During his career at Airline Capital Associates he served as a financial advisor to manufacturing companies, financial institutions, and labor unions, providing advice on all aspects of the commercial air transportation industry. Prior to joining Airline Capital Associates in 1990, Mr. Moulton was a Senior Vice President and head of Bank of New England’s loan production office in New York City from June 1988 to June 1990. Prior to joining Bank of New England, Mr. Moulton was a Vice President at Morgan Guaranty Trust Company from April 1974 to June 1988. Mr. Moulton is qualified to serve on our board as one of our independent directors through his combination of over 35 years as a commercial banker and financial consultant, giving him financial and industry experience.

~~(3)~~Ivan L. ~~Member~~Simpson. Mr. Simpson became a director of the ~~nominating~~Company ~~committee~~in 1997. Mr. Simpson co-founded the Company in 1979, and served in various operational roles through 1987, including Chief Pilot and Vice President and Director of Operations. He is a retired Airline Transport Pilot with American Airlines. Mr. Simpson brings a deep knowledge of our Company and our industry to his work as one of our independent directors.

~~Douglas G.~~Our ~~Voss. Mr. Voss co-founded the Company in 1979 and served in the position of Chief~~ Executive ~~Officer~~Officers from the Company’s inception until December 31, 2002. Mr. Voss has served as a director of the Company since the Company’s inception. Mr. Voss was initially licensed as a private pilot in 1974 and today holds both an Airline Transport Pilot Certificate and Airframe and Powerplant Mechanic Certificates. Mr. Voss is a graduate of Colorado Aero Tech. Mr. Voss has previously served the Company in the FAA Air Carrier Certificate required operational control positions of Director of Operations and Director of Maintenance. He is uniquely qualified to serve as our Chairman based on his rich experience with our Company as our founder and longtime leader.

~~A.L.~~Pursuant ~~Maxson.~~to ~~Mr. Maxson~~General ~~became a director of the Company in~~Instruction ~~August~~G(3) ~~2010.~~to HeForm ~~previously served as the Company’s Chief Financial Officer and a director from 1993~~10-~~1997.~~K ~~Mr. Maxson began his career in the aviation industry in 1966 when he joined Southern Airways, Inc. as its Controller~~ and ~~was~~Instruction ~~made Chief~~3 ~~Financial Officer shortly thereafter. Southern Airways, Inc. was ultimately merged with North Central Airlines Inc.~~ to ~~create Republic Airlines Inc., where Mr.~~Item ~~Maxson~~401(b) ~~also served as Chief Financial Officer. Mr. Maxson became Vice President Financial Planning for Northwest Airlines, Inc. upon that company’s acquisition~~ of ~~Republic~~Regulation ~~Airlines~~S-K, ~~Inc.~~information inregarding ~~1986.~~our ~~Mr. Maxson~~executive ~~remained~~officers ~~with Northwest Airlines, Inc. until 1991, and~~ was ~~self-employed~~provided asin aPart ~~financial~~I ~~consultant during the period from 1991 to December~~ of ~~1993.~~our ~~Since~~Form ~~1997, Mr. Maxson has been self~~10-~~employed~~K asunder aseparate ~~financial consultant~~caption. ~~Mr. Maxson serves as one of our independent directors and our “audit committee financial expert,” and he brings to our board his financial expertise and industry perspective.~~

52Section 16(a) Beneficial Ownership Reporting Compliance

~~Table~~Section 16(a) of ~~Contents~~the Exchange Act requires our officers, directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Such officers, directors and shareholders are required by the SEC to furnish us with copies of all such reports. To our knowledge, based solely on a review of copies of reports filed with the SEC during the last fiscal year and furnished to the registrant with respect to its most recent fiscal year, all applicable Section 16(a) filing requirements were met on a timely basis except for a Form 4 for Charles Howell and a Form 4 for Ivan Simpson.

~~Vernon~~Code ~~A. Mickelson. Mr. Mickelson became a director~~ of ~~the~~Ethics Company in January 1994. For more than the past 20 years, Mr. Mickelson has been self-employed as a business consultant. He provided services to the Company concerning matters involving FAA regulatory compliance and maintenance quality control from 1988 to 1994. Mr. Mickelson has worked in the aviation industry since 1949, primarily in the field of aircraft manufacturing and maintenance. From 1969 to 1988, Mr. Mickelson was employed by the FAA in Flight Standards as principal inspector and supervisor of FAA maintenance and avionics inspectors assigned in the states of Indiana and Iowa. In his career, he has held or holds several FAA maintenance certificates and FAA designations in aircraft maintenance in addition to holding a commercial pilot’s certificate. Mr. Mickelson is a graduate of Spartan School of Aeronautics (1948-49), specializing in aircraft maintenance. Mr. Mickelson brings his long history with our industry and his more than 22 years as a business consultant to his role as one of our independent directors.

~~A.R.~~We ~~Moulton,~~have ~~III. Mr. Moulton became~~ adopted a ~~director~~code of ~~the Company~~ethics inthat ~~September~~applies ~~2005.~~to ~~Until~~our ~~2010~~principal ~~Mr. Moulton~~executive ~~was~~officer, aprincipal ~~Managing~~financial ~~Director of Airline Capital Associates~~officer, aprincipal ~~consulting~~accounting ~~firm~~officer ~~serving~~or ~~the~~controller, ~~commercial~~and ~~air~~persons ~~transport~~performing ~~sector~~similar functions. ~~During~~Our ~~his~~code ~~career~~of atethics ~~Airline~~satisfies ~~Capital~~the ~~Associates~~requirements heof ~~served~~Item 406(b) ~~as a financial~~of ~~advisor~~Regulation toS-K. ~~manufacturing~~Our ~~companies,~~code ~~financial~~of ~~institutions,~~ethics ~~and~~is ~~labor~~posted ~~unions, providing advice~~ on ~~all aspects of~~ the ~~commercial~~Company’s ~~air~~web ~~transportation~~site ~~industry.~~at ~~Prior to joining Airline Capital Associates in 1990, Mr~~www. ~~Moulton~~flygreatlakes.com ~~was a Senior Vice President~~ and ~~head~~is ofavailable ~~Bank of New England’s loan production office~~ in ~~New~~print ~~York~~upon ~~City~~written ~~from~~request ~~June 1988~~ to ~~June~~our ~~1990.~~Corporate ~~Prior~~Secretary toat ~~joining~~Great ~~Bank~~Lakes ~~of New England~~Aviation, MrLtd. ~~Moulton~~, ~~was~~1022 aAirport ~~Vice~~Parkway, ~~President~~Cheyenne, atWY 82001. ~~Morgan~~We ~~Guaranty~~intend ~~Trust Company from April 1974~~ to ~~June~~ ~~1988.~~disclose ~~Mr. Moulton~~any isamendments ~~qualified~~ to ~~serve~~or onwaivers ~~our~~from ~~board~~a asprovision ~~one~~ of our ~~independent~~code ~~directors through his combination~~ of ~~over~~ethics 35that ~~years~~requires asdisclosure aon ~~commercial~~our ~~banker~~website ~~and~~at ~~financial consultant, giving him financial and industry experience~~www.flygreatlakes.com.

~~Ivan~~49 L. Simpson. Mr. Simpson became a director of the Company in 1997. Mr. Simpson co-founded the Company in 1979, and served in various operational roles through 1987, including Chief Pilot and Vice President and Director of Operations. He is a retired Airline Transport Pilot with American Airlines. Mr. Simpson brings a deep knowledge of our Company and our industry to his work as one of our independent directors.

~~Pursuant~~Audit toCommittee ~~General~~Matters ~~Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, information regarding our executive officers was provided in Part I of our Form 10-K under separate caption.~~

We have an audit committee that was established in accordance with Section 163(a)(58)(A) ~~Beneficial~~of ~~Ownership~~the ~~Reporting~~Exchange ~~Compliance~~Act, comprised of A.L. Maxson, Vernon A. Mickelson, A.R. Moulton, III and Ivan L. Simpson. Under NASDAQ Marketplace Rules that would apply if our common stock was listed on NASDAQ, each member of the audit committee would be required to (i) be independent as defined under Rule 5605(a)(2) of the NASDAQ Marketplace Rules; (ii) meet the criteria for independence set forth in Rule 10A-3 under the Exchange Act; (iii) not have participated in the preparation of the financial statements of our company or any current subsidiary of our company at any time during the past three years, and (iv) be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement. Our company’s board of directors has determined that each member of the audit committee would meet these requirements, except that Mr. Maxson is not independent under the specific standards applicable to audit committee members in Rule 10A-3 due to the consulting services he has provided to our company from time to time. The audit committee, Mr. Maxson abstaining, has considered this issue and has approved Mr. Maxson’s consulting services under its charter and Mr. Maxson’s service on the audit committee.

~~Section 16(a)~~The functions of the ~~Exchange~~audit ~~Act~~committee ~~requires~~include ~~our~~oversight ~~officers, directors and persons who own more than 10%~~ of athe ~~registered~~integrity ~~class~~ of our ~~equity~~financial ~~securities to~~statements, ~~file~~our ~~reports~~compliance ofwith ~~ownership~~legal and regulatory ~~changes~~requirements, inand ~~ownership with~~ the ~~SEC. Such officers~~performance, ~~directors~~qualifications and ~~shareholders~~independence ~~are required by the SEC to furnish us with copies~~ of ~~all~~our ~~such~~independent ~~reports~~auditors. ToOur ~~our~~audit ~~knowledge,~~committee ~~based~~is ~~solely~~directly onresponsible afor ~~review of copies of reports filed with~~ the ~~SEC~~appointment, ~~during~~retention, ~~the~~compensation, ~~last~~evaluation, ~~fiscal~~termination ~~year~~ and ~~furnished~~oversight toof the ~~registrant~~work ~~with~~of any ~~respect~~independent toauditor ~~its~~engaged ~~most recent fiscal year, all applicable Section 16(a) filing requirements were met on a timely basis except~~ for athe ~~Form~~purpose 4of ~~for~~preparing ~~Charles~~or ~~Howell~~issuing ~~and~~an ~~a Form~~audit 4report ~~for~~or ~~Ivan~~related ~~Simpson~~work.

~~Code~~In addition, our board of ~~Ethics~~directors has determined that Mr. Maxson qualifies as our audit committee financial expert under the rules of the SEC. Our audit committee charter is posted on our web site at www.flygreatlakes.com and is available in print upon written request to our Corporate Secretary at Great Lakes Aviation, Ltd., 1022 Airport Parkway, Cheyenne, WY 82001.

We50 have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Our code of ethics satisfies the requirements of Item 406(b) of Regulation S-K. Our code of ethics is posted on the Company’s web site at www.flygreatlakes.com and is available in print upon written request to our Corporate Secretary at Great Lakes Aviation, Ltd., 1022 Airport Parkway, Cheyenne, WY 82001. We intend to disclose any amendments to or waivers from a provision of our code of ethics that requires disclosure on our website at www.flygreatlakes.com.

~~Table~~Item of11. ~~Contents~~EXECUTIVE COMPENSATION

~~Audit~~Summary ~~Committee~~Compensation ~~Matters~~Table

WeThe ~~have an audit committee that was established in accordance with Section 3(a)(58)(A) of the Exchange Act, comprised of A.L. Maxson, Vernon A. Mickelson, A.R. Moulton, III and Ivan L. Simpson. Under~~following ~~NASDAQ~~table ~~Marketplace~~sets Rules that would apply if our common stock was listed on NASDAQ, each member of the audit committee would be required to (i) be independent as defined under Rule 5605(a)(2) of the NASDAQ Marketplace Rules; (ii) meet the criteria for independence set forth ininformation ~~Rule~~concerning ~~10A-3 under~~ the ~~Exchange~~compensation ~~Act; (iii) not have participated in the preparation~~ of ~~the financial statements of~~ our ~~company~~named orexecutive ~~any~~officers ~~current~~for ~~subsidiary of our company at any time during~~ the ~~past~~fiscal ~~three~~ years, ~~and~~ended ~~(iv)~~December ~~be able to read and understand fundamental financial statements~~31, ~~including a company’s balance sheet~~2014, ~~income statement~~2013, ~~and~~2012 cash flow statement. Our company’s board of directors has determined that each member of the audit committee would meet these requirements, except that Mr. Maxson is not independent under the specific standards applicable to audit committee members in Rule 10A-3 due to the consulting services he has provided to our company from time to time. The audit committee, Mr. Maxson abstaining, has considered this issue and ~~has~~2011: ~~approved Mr. Maxson’s consulting services under its charter and Mr. Maxson’s service on the audit committee.~~

The functions of the audit committee include oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, and the performance, qualifications and independence of our independent auditors. Our audit committee is directly responsible for the appointment, retention, compensation, evaluation, termination and oversight of the work of any independent auditor engaged for the purpose of preparing or issuing an audit report or related work.


Name and Principal Position	Year		Salary ($)		Bonus ($)		All Other Compensation ($)(a)		Total ($)
Charles R. Howell IV Chief Executive Officer		2014		155,000		—		3,100		158,100
Charles R. Howell IV Chief Executive Officer		2013		155,000		—		3,100		158,100
		2012		155,000		—		3,100		158,100
		2011		155,000		—		3,100		158,100

Michael O. Matthews Vice President and Chief Financial Officer		2014		150,000		—		6,000		156,000
		2013		150,000		—		6,000		156,000
		2012		150,000		—		6,000		156,000
		2011		150,000		—		6,000		156,000

Douglas G. Voss Chairman of the Board of Directors and President		2014		175,000		—		—		175,000
		2013		175,000		—		—		175,000
		2012		175,000		—		—		175,000
		2011		175,000		—		—		175,000

In(a) ~~addition,~~Represents ~~our~~matching ~~board~~contributions ofmade ~~directors~~by ~~has determined~~the ~~that~~company ~~Mr. Maxson~~on ~~qualifies~~behalf ~~as our audit committee financial expert under the rules~~ of ~~the SEC~~Mr. ~~Our~~Howell ~~audit~~and ~~committee~~Mr. ~~charter~~Matthews isunder ~~posted on~~ our ~~web~~401(k) ~~site~~retirement atsavings ~~www~~plan.~~flygreatlakes.com~~ ~~and~~These ismatching ~~available~~contributions inare ~~print~~subject ~~upon~~to ~~written~~vesting ~~request~~in toaccordance ~~our Corporate~~with ~~Secretary~~the atterms ~~Great~~of ~~Lakes~~the ~~Aviation, Ltd~~plan., ~~1022~~See ~~Airport~~discussion ~~Parkway,~~below ~~Cheyenne,~~under WY“Retirement ~~82001.~~Savings Plan.”

54Employment Agreement

~~Table~~On December 31, 2002, we entered into a two-year employment agreement with Mr. Voss under which he serves as Chairman of ~~Contents~~the Board of Directors. The agreement specifies a base salary of $120,000 annually and entitles him to participate in the Company’s compensation and benefit plans. Subsequent to entering into this agreement, we have amended the compensatory arrangements under the agreement to increase the annual base salary payable thereunder. The agreement provides that it may be terminated by either party upon six months’ notice. In addition, under the agreement, if we terminate Mr. Voss without cause, or if he terminates because of the company’s breach of the agreement, he would receive his regular base pay for the remainder of the contract period. Our company and Mr. Voss have agreed to continue operating under this agreement indefinitely, until such time as a new agreement becomes effective.

~~Item~~We ~~11.~~currently ~~EXECUTIVE~~do ~~COMPENSATION~~not have any other employment agreements with our executive officers, and do not have any other arrangements between our company and our executive officers in connection with termination of employment, change of control of our company, or any changes to the executive officer’s responsibilities following a change of control.

~~Summary~~Outstanding ~~Compensation~~Equity ~~Table~~Awards at Fiscal Year-End

~~The~~There were ~~following~~no ~~table~~outstanding ~~sets~~equity ~~forth~~awards ~~information~~held ~~concerning~~by ~~the compensation of~~ our named executive officers ~~for~~as ~~the~~of ~~fiscal years ended~~ December 31, 2012,. ~~2011, 2010 and 2009:~~

Name and Principal Position	Year		Salary($)		Bonus($)		All OtherCompensation($)(a)		Total($)
Charles R. Howell IV Chief Executive Officer		2012 2011 2010 2009		155,000 155,000 155,000 155,000		— — — —		3,100 3,100 3,100 3,100		158,100 158,100 158,100 158,100
Michael O. Matthews Vice President and Chief Financial Officer		2012 2011 2010 2009		150,000 150,000 150,000 150,000		— — — —		6,000 6,000 6,000 6,000		156,000 156,000 156,000 156,000
Douglas G. Voss Chairman of the Board of Directors and President		2012 2011 2010 2009		175,000 175,000 175,000 175,000		— — — —		— — — —		175,000 175,000 175,000 175,000

~~Employment~~Retirement ~~Agreement~~Savings Plan

OnWe ~~December 31,~~provide ~~2002, we entered into~~ a ~~two-year~~401(k) ~~employment agreement~~Retirement ~~with~~Savings ~~Mr. Voss~~Plan ~~under~~in which heour ~~serves~~employees, asincluding ~~Chairman of~~ the ~~Board~~executive ofofficers, ~~Directors~~may participate. The ~~agreement~~plan ~~specifies~~permits aall ~~base~~employees ~~salary~~to ofset aside ~~$120,000~~a ~~annually~~portion ~~and~~of ~~entitles~~their ~~him~~income tointo ~~participate~~the in401(k) ~~the~~Retirement ~~Company’s~~Savings ~~compensation~~Plan and ~~benefit~~the ~~plans.~~company ~~Subsequent~~matches ~~to entering~~one ~~into~~hundred ~~this~~percent ~~agreement,~~(100%) of wethe ~~have~~first ~~amended~~four ~~the~~percent ~~compensatory~~(4%) contributed ~~arrangements~~by ~~under~~an ~~the~~employee ~~agreement~~up to ~~increase~~ the ~~annual~~statutory ~~base salary payable thereunder~~maximum. ~~The~~Employee ~~agreement~~contributions ~~provides~~are vested ~~that~~immediately, itwhile ~~may~~matching becontributions ~~terminated~~ by ~~either party upon six months’ notice. In addition, under~~ the ~~agreement,~~company ifvest we20% ~~terminate~~after ~~Mr. Voss~~two ~~without~~years ~~cause, or if he terminates because~~ of ~~the~~service ~~company’s~~with ~~breach of~~ the ~~agreement~~company, heand ~~would~~20% ~~receive his regular base pay~~ for ~~the~~each ~~remainder~~year of ~~the~~service ~~contract~~thereafter ~~period.~~until ~~Our~~fully ~~company and Mr~~vested. ~~Voss~~ ~~have~~The ~~agreed~~participation toof ~~continue~~the ~~operating~~executive ~~under~~officers ~~this~~is ~~agreement~~on ~~indefinitely,~~the ~~until~~same ~~such~~terms ~~time~~ as any aother ~~new~~participant ~~agreement~~in ~~becomes~~the ~~effective~~plan.

~~We currently~~Director doCompensation not have any other employment agreements with our executive officers, and do not have any other arrangements between our company and our executive officers in connection with termination of employment, change of control of our company, or any changes to the executive officer’s responsibilities following a change of control.

~~Outstanding~~Our ~~Equity~~directors ~~Awards~~who atare ~~Fiscal~~not employees of the Company were paid a director fee consisting of a quarterly retainer fee of $1,000 for Messrs. Maxson, Moulton and ~~Year~~Simpson and $2,000 for Mr. Mickelson who serves as Chairman of the Audit Committee, $1,000 per day for each board conference attended and $1,000 for each board or committee meeting attended, plus reimbursement for all out-~~End~~of-pocket expenses incurred on behalf of the company.

~~There~~The ~~were~~following notable ~~outstanding~~sets ~~equity~~forth ~~awards~~information ~~held~~concerning bythe ~~our~~compensation ~~named~~of ~~executive~~our ~~officers~~non-employee asdirectors offor ~~December 31,~~fiscal ~~2012.~~year 2014:


Name	Fees Earned or Paid in Cash ($)		All Other Compensation ($)			Total ($)
A.L Maxson		15,000		12,647	(a)		27,647
Vernon A. Mickelson		19,000		—			19,000
A.R. Moulton, III		16,000		—			16,000
Ivan L. Simpson		14,000		—			14,000

~~Table~~Mr. Mickelson ofreceived ~~Contents~~$8,000 and Messrs. Maxson, Moulton and Simpson received $4,000 in quarterly retainer fees and each received $4,000 for four audit committee meetings. Messrs. Mickelson, Moulton and Maxson received $6,000 and Mr. Simpson received $5,000 for Board Meetings. Messrs. Mickelson, Moulton and Simpson each received $1,000 for conferences and Mr. Maxson received $2,000.

~~Retirement~~(a) ~~Savings~~Mr. Maxson ~~Plan~~received consulting fees of $12,647 during the 12 month period ending December 31, 2014.

WeThere ~~provide~~are ano ~~401(k)~~outstanding ~~Retirement~~stock ~~Savings~~options ~~Plan~~held inby ~~which~~ our ~~employees,~~non-employee ~~including~~directors ~~the~~as ~~executive officers, may participate. The plan permits all employees to set aside a portion~~ of ~~their income into the 401(k) Retirement Savings Plan and the company matches one hundred percent (100%)~~December ~~of the first four percent (4%) contributed by an employee up to the statutory maximum. Employee contributions are vested immediately~~31, ~~while matching contributions by the company vest 20% after two years of service with the company, and 20% for each year of service thereafter until fully vested~~2014. ~~The participation of the executive officers is on the same terms as any other participant in the plan.~~

~~Director~~ Compensation Committee Interlocks and Insider Participation

~~Our~~The ~~directors~~Company’s ~~who are~~compensation ~~not~~committee ~~employees~~included ofMessrs. ~~the~~Mickelson, ~~Company~~Moulton ~~were~~and ~~paid~~Simpson. aDuring ~~director~~Fiscal ~~fee~~2014, ~~consisting~~no member of athe ~~quarterly~~compensation ~~retainer~~committee ~~fee~~served as an officer or Employee of $1the Company. In addition,~~000~~ ~~for~~during ~~Messrs.~~Fiscal ~~Maxson~~2014, ~~Moulton~~no ~~and~~executive ~~Simpson~~officer ~~and~~of ~~$2,000~~the ~~for~~Company ~~Mr. Mickelson~~served ~~who~~as ~~serves~~a director or as ~~Chairman~~a member of the ~~Audit~~compensation ~~Committee,~~committee ~~$1,000~~of ~~per~~a ~~day~~company, ~~for each~~(i) whose ~~board~~executive ~~conference~~officer ~~attended~~served ~~and~~as ~~$1,000~~a ~~for~~director ~~each board~~ or ~~committee~~a member ~~meeting~~of ~~attended,~~the ~~plus~~compensation ~~reimbursement~~committee ~~for~~of ~~all~~the ~~out-of-pocket~~Company ~~expenses~~and ~~incurred~~(ii) which onemployed ~~behalf~~a director of the ~~company~~Company.

~~The~~52 ~~following table sets forth information concerning the compensation of our non-employee directors for fiscal year 2012:~~

Name	Fees Earned orPaid in Cash($)		All OtherCompensation($)			Total($)
A.L Maxson		11,000		4,750	(a)		15,750
Vernon A. Mickelson		15,000		—			15,000
A.R. Moulton, III		11,000		—			11,000
Ivan L. Simpson		11,000		—			11,000

~~Mr. Mickelson~~Item ~~received $8,000 and Messrs~~12. ~~Maxson,~~SECURITY ~~Moulton~~OWNERSHIP ~~and~~OF ~~Simpson~~CERTAIN ~~received~~BENEFICIAL ~~$4,000~~OWNERS inAND ~~quarterly~~MANAGEMENT ~~retainer~~AND ~~fees~~RELATED ~~and each~~STOCKHOLDER ~~received $6,000 for six audit committee meetings. Messrs. Mickelson, Maxson, Moulton and Simpson each received $1,000 for conferences.~~ MATTERS

The following table sets forth certain information known to us regarding beneficial ownership of the common stock as of February 13, 2014 by (ai) each Mrperson known to the Company to own beneficially 5% or more of the common stock, (ii) each director of the Company, (iii) each executive officer of the Company named in the summary compensation table, and (iv) all directors and executive officers of the Company as a group. ~~Maxson~~The ~~received~~percentage ~~consulting~~of ~~fees~~beneficial ownership is based on 8,974,990 shares outstanding as of $4March 20,~~750~~ ~~during~~2015. Any shares that are subject to an option or a warrant exercisable within 60 days are reflected in the 12following ~~month~~table ~~period~~and ~~ending~~are ~~December~~deemed 31to be outstanding for the purpose of computing the percentage of common stock owned by the option or warrant holder but are not deemed to be outstanding for the purpose of computing the percentage of common stock owned by any other person. Unless otherwise indicated, ~~2012~~each person in the table has sole voting and investment power as to the shares shown, and none of the listed shares has been pledged as security. Unless otherwise indicated, the address for each listed shareholder is c/o Great Lakes Aviation, Ltd., 1022 Airport Parkway, Cheyenne, Wyoming 82001.

There are no outstanding stock options held by our non-employee directors as of December 31, 2012.


Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)			Percentage of Common Stock (1)

Douglas G. Voss		4,160,247	(2)		46.4	%

Iowa Great Lakes Flyers, Inc. 10400 Milliron Road Cheyenne, Wyoming 82009		1,710,247	(3)		19.1	%

Gayle R. Brandt 256 Emerald Meadows Drive Arnolds Park, Iowa 51331		977,065	(4)		10.9	%

Charles R. Howell IV		50,000				*

Ivan L. Simpson 15239 215th Ave. Spirit Lake, Iowa 51360		15,450				*

Vernon A. Mickelson 1209 3rd Avenue West Spencer, Iowa 51301		17,000				*

A.L. Maxson		2,000				*

Michael O. Matthews		—			—

A.R. Moulton, III		—			—

All directors and executive officers as a group (8 persons)		4,244,697			47.3	%

~~Item~~* ~~12.~~Represents ~~SECURITY~~less ~~OWNERSHIP~~than ~~OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS~~1%.

~~The~~53 following table sets forth certain information known to us regarding beneficial ownership of the common stock as of March 20, 2013, by (i) each person known to the Company to own beneficially 5% or more of the common stock, (ii) each director of the Company, (iii) each executive officer of the Company named in the summary compensation table, and (iv) all directors and executive officers of the Company as a group. The

~~Table~~(1) The securities “beneficially owned” by a person are determined in accordance with the definition of ~~Contents~~“beneficial ownership” as set forth in the regulations of the SEC and, accordingly, may include securities owned by or for, among others, the spouse, children, or certain other relatives of such person, as well as other securities as to which the person has or shares voting or investment power or has the right to acquire within 60 days of March 30, 2015. The same shares may be beneficially owned by more than one person.

~~percentage~~(2) ofMr. ~~beneficial~~Voss ~~ownership~~ is ~~based~~the onbeneficial ~~8,974,990~~owner ~~shares outstanding as~~ of ~~March 20~~4,160,247 ~~2013~~shares. ~~Any~~The 1,710,247 shares ~~that are subject to an option or a warrant exercisable within 60 days are reflected in the following table and are deemed to be outstanding for the purpose of computing the percentage of common stock~~ owned by ~~the~~Iowa ~~option~~Great orLakes ~~warrant~~Flyers, ~~holder~~Inc. ~~but~~ are ~~not~~included ~~deemed to be outstanding for the purpose of computing the percentage of common stock owned by any other person. Unless otherwise indicated, each person~~ in the ~~table has sole voting and investment power as to the~~ shares ~~shown,~~reported ~~and~~by ~~none of the listed shares has been pledged as security~~Mr. ~~Unless otherwise indicated, the address for each listed shareholder is c/o Great Lakes Aviation, Ltd~~Voss.~~, 1022 Airport Parkway, Cheyenne, Wyoming 82001.~~

57(3) Beneficial ownership of these shares of Common Stock is shared with Douglas G. Voss.

~~Table~~(4) ofAccording ~~Contents~~to Ms. Brandt’s latest Form 4 filed with the Securities and Exchange Commission on February 13, 2014.

Name and Address of Beneficial Owner	Amount and Nature ofBeneficial Ownership (1)			Percentage ofCommon Stock (1)
Douglas G. Voss		4,160,247	(2)		46.4	%
Iowa Great Lakes Flyers, Inc. 10400 Milliron Road Cheyenne, Wyoming 82009		1,710,247	(3)		19.1	%
Gayle R. Brandt 256 Emerald Meadows Drive Arnolds Park, Iowa 51331		1,236,690	(4)		13.8	%
Charles R. Howell IV		50,000			*
Ivan L. Simpson 15239 215th Ave. Spirit Lake, Iowa 51360		15,450			*
Vernon A. Mickelson 1209 3rd Avenue West Spencer, Iowa 51301		17,000			*
A.L. Maxson		2,000			*
Michael O. Matthews		—			—
A.R. Moulton, III		—			—
All directors and executive officers as a group (8 persons)		4,244,697			47.3	%

Equity Compensation Plan Information

*As ~~Represents~~of December 31, ~~less~~2014 ~~than~~there 1%are no compensation plans under which the Company’s equity securities are authorized for issuance.

~~Table~~Review and Approval or Ratification of ~~Contents~~Transactions with Related Persons

~~(1)~~ The ~~securities~~audit ~~“beneficially~~committee ~~owned”~~of byour board of directors is responsible for reviewing any proposed transaction with a related person. ~~are~~In ~~determined~~May in2007, ~~accordance~~our ~~with~~board of directors amended our audit committee charter to include a policy providing for the ~~definition~~review and approval of ~~“beneficial~~related ~~ownership”~~person astransactions ~~set~~requiring ~~forth~~disclosure inunder ~~the~~Rule ~~regulations~~404(a) of Regulation S-K. This policy states that the ~~SEC~~audit committee is responsible for reviewing and, ~~accordingly~~approving or disapproving all proposed interested transactions, ~~may~~which ~~include~~are ~~securities~~defined ~~owned~~as byany transaction, arrangement or ~~for~~relationship in which (a) the amount involved may be expected to exceed $120,000 ~~among~~in ~~others~~any fiscal year, (b) the ~~spouse,~~Company ~~children~~will be a participant, and (c) a related person has a direct or ~~certain~~indirect ~~other~~material ~~relatives~~interest. ofA ~~such~~related person, asis ~~well~~defined as ~~other~~an ~~securities~~executive asofficer, todirector ~~which~~or ~~the~~nominee ~~person~~for ~~has~~director, or ~~shares~~a ~~voting~~greater orthan ~~investment~~five ~~power~~percent beneficial owner of the Company’s common stock, or ~~has~~an immediate family member of the ~~right~~foregoing. The policy deems certain interested transactions to ~~acquire~~be ~~within~~pre-approved, 60including ~~days~~the employment and compensation of ~~March~~executive ~~30,~~officers ~~2013~~and compensation paid to directors. ~~The~~All ~~same~~future ~~shares~~transactions ~~may~~between beour ~~beneficially~~company ~~owned~~and its executive officers, directors and principal shareholders and their affiliates will be approved by ~~more~~the ~~than~~audit ~~one~~committee ~~person~~pursuant to the foregoing policy.

~~(2)~~Director ~~Mr.~~Independence ~~Voss is the beneficial owner of 4,160,247 shares. The 1,710,247 shares owned by Iowa Great Lakes Flyers, Inc. are included in the shares reported by Mr. Voss.~~

~~(3)~~Our ~~Beneficial~~company’s ~~ownership~~board of directors ~~these~~is ~~shares~~comprised of ~~Common~~a majority of “independent” directors as defined in Rule 5605(a)(2) of the Marketplace Rules of the NASDAQ Stock isMarket. ~~shared~~Our ~~with~~independent directors are A.L. Maxson, Vernon A. Mickelson, A.R. Moulton, III and Ivan L. Simpson. Douglas G. Voss, our Chairman and President, is not an independent director. Our board of directors has an audit committee, compensation committee and nominating committee, each composed of directors who are independent as defined in the applicable Marketplace Rules of the NASDAQ Stock Market. In addition, each member of the compensation committee is a non-employee director as defined in Rule 16b-3 of the Exchange Act and is an outside director as defined in Section 162(m) of the Internal Revenue Code, and each member of our audit committee is independent as defined in Exchange Rule 10A-3 except Mr. Maxson. (See Item 10, Audit Committee Matters.)

~~(4)~~54 ~~According to Ms. Brandt’s Form 4 filed with the Securities and Exchange Commission on November 27, 2012.~~

~~As of~~Item ~~December 31,~~14. ~~2012~~PRINCIPAL ~~there~~ACCOUNTANT ~~are~~FEES noAND ~~compensation plans under which the Company’s equity securities are authorized for issuance.~~ SERVICES

~~Item~~The 13firm of KPMG LLP has been our independent auditors since 1998. ~~CERTAIN~~Fees ~~RELATIONSHIPS~~paid ~~AND~~to ~~RELATED~~KPMG ~~TRANSACTIONS,~~LLP ~~AND~~during ~~DIRECTOR~~the ~~INDEPENDENCE~~last two fiscal years were as follows:

~~Review~~Audit Fees. Fees for audit services rendered by KPMG LLP for the years ended December 31, 2014 and ~~Approval~~2013 orwere ~~Ratification~~$296,500 and $287,790, respectively. Audit services consisted primarily of ~~Transactions~~the audit and quarterly reviews of our financial statements, consents, assistance with ~~Related~~and ~~Persons~~review of documents filed with the SEC, work performed by tax professionals in connection with the audit and quarterly reviews, accounting and financial reporting consultations, and research work necessary to comply with generally accepted accounting principles.

~~The~~Audit-Related ~~audit committee of our board of directors is responsible for reviewing any proposed transaction with a related person~~Fees. InFees ~~May 2007, our board of directors amended our audit committee charter to include a policy providing~~ for ~~the review and approval of~~ audit-related ~~person~~services ~~transactions~~provided ~~requiring~~during ~~disclosure under Rule 404(a) of Regulation S-K. This policy states that~~ the ~~audit~~years ~~committee~~ended isDecember 31, ~~responsible~~2014 ~~for reviewing~~ and ~~approving~~2013 orwere ~~disapproving all proposed interested transactions~~$25,600 ~~which~~and ~~are defined as any transaction, arrangement or relationship in which (a) the amount involved may be expected to exceed~~ $~~120~~43,000 ~~in any fiscal year~~, ~~(b) the Company will be a participant, and (c) a related person has a direct or indirect material~~ ~~interest~~respectively. A Audit-related ~~person~~services isconsisted ~~defined~~primarily ~~as an executive officer, director or nominee for director, or a greater than five percent beneficial owner~~ of ~~the~~professional ~~Company’s~~services ~~common~~provided ~~stock,~~with orrespect ~~an immediate family member of the foregoing. The policy deems certain interested transactions~~ to beyearly ~~pre-approved,~~audits ~~including the employment and compensation~~ of ~~executive officers and compensation paid to directors. All future transactions between~~ our ~~company~~401(k) ~~and~~employee ~~its~~savings ~~executive~~plan ~~officers, directors~~ and ~~principal shareholders~~Passenger ~~and~~Facility ~~their~~Charge ~~affiliates will be approved by the audit committee pursuant to the foregoing policy~~audits.

~~Transactions~~Tax ~~with~~Fees. ~~Related Persons~~There were no fees for tax services billed during the years ended December 31, 2014 and 2013.

~~Raytheon~~All ~~Aircraft~~Other ~~Credit~~Fees. ~~Corporation~~There were no fees for other services billed during the years ended December 31, 2014 and 2013.

OnAudit ~~November 16,~~Committee ~~2011,~~Pre-Approval ~~the~~Policies Company obtained $29.5 million of funding available under the new Credit Agreement. $27 million of the proceeds was used to satisfy all the outstanding debt obligations with Raytheon Aircraft Credit Corporation (Raytheon), at a discount, and toProcedures repurchase the Company’s common stock owned by Raytheon representing approximately 37.6% of the outstanding shares of common stock. On that day, the debt obligations with Raytheon were extinguished, 5,371,980 shares of the Company’s common stock were returned and Raytheon ceased to be a beneficial owner of the Company. We issued the shares to Raytheon in December 2002 as partial consideration for a series of transactions that included restructured financing terms for aircraft promissory notes, termination of aircraft operating leases, aircraft purchases, aircraft returns, modified aircraft operating leases and other debt restructuring. Raytheon was our principal creditor prior to November 16, 2011.

59The charter of our audit committee provides that the audit committee is responsible for the pre-approval of all auditing services and permitted non-audit services to be performed for our company by the independent auditors, subject to the requirements of applicable law. The procedures for pre-approving all audit and non-audit services provided by the independent auditors include the committee reviewing a budget for audit services, audit-related services, tax services, and other services. The budget includes a description of, and a budgeted amount for, particular categories of non-audit services that are anticipated at the time the budget is submitted. Committee approval would be required to exceed the budgeted amount for a particular category of services or to engage the independent auditors for any services not included in the budget. Budgeted amounts were not exceeded in 2014. The audit committee periodically monitors the services rendered by, and actual fees paid to, the independent auditors to ensure that such services are within the parameters approved by the committee. The text of the audit committee charter is posted on our web site at www.flygreatlakes.com. The audit committee pre-approved all of the services we received from KPMG LLP during fiscal year 2013 and 2014.

~~Table~~55 ~~of Contents~~

~~During~~PART ~~2011,~~IV the Company operated seven Beechcraft 1900D aircraft leased from Raytheon, four complete with engines and three without engines, which were accounted for under operating lease agreements. These aircraft were returned to Raytheon in the quarters ended September 30 and December 31, 2011 and the leases were terminated. During the year ended December 31, 2011, lease payments made to Raytheon were $1.3 million. The lease agreements required the Company to pay taxes, maintenance, insurance, and other operating expenses applicable to the leased property. In addition to scheduled minimum lease payments, the Company was required to make payments to cover the cost of components related to leased engines, attached to four of the leased aircraft, as these components usable life cycle was consumed. During the year ended December 31, 2011, engine consumption fees were $186,276.

~~Director~~Item ~~Independence~~15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

~~Our company’s board of directors is comprised of a majority of “independent” directors as defined in Rule 5605~~(a)~~(2)~~ ofThe ~~the~~following ~~Marketplace~~documents ~~Rules of the NASDAQ Stock Market. Our independent directors~~ are ~~A.L. Maxson,~~filed Vernon A. Mickelson, A.R. Moulton, III and Ivan L. Simpson. Douglas G. Voss, our Chairman and President, is not an independent director. Our board of directors has an audit committee, compensation committee and nominating committee, each composed of directors who are independent as ~~defined in the applicable Marketplace Rules of the NASDAQ Stock Market. In addition, each member of the compensation committee is~~ a ~~non-employee~~part ~~director as defined in Rule 16b-3~~ of ~~the~~this Exchange Act and is an outside director as defined in Section 162(m) of the Internal Revenue Code, and each member of our audit committee is independent as defined in Exchange Rule 10A-3 except Mr. Maxson. (See Item 10, Audit Committee Matters.) report:

(1) Financial statements of the Company included in Item ~~14.~~8, ~~PRINCIPAL~~“Financial ~~ACCOUNTANT~~Statements ~~FEES~~and ~~AND~~Supplementary ~~SERVICES~~Data”:

~~The~~(i) ~~firm~~Report of ~~KPMG~~Independent ~~LLP~~Registered ~~has~~Public ~~been~~Accounting ~~our independent auditors since 1998. Fees paid to KPMG LLP during the last two fiscal years were as follows:~~ Firm

~~Audit~~(ii) ~~Fees.~~Balance ~~Fees~~Sheets ~~for~~as ~~audit~~of ~~services rendered by KPMG LLP for the years ended~~ December 31, ~~2012~~2014 and 2011 were $338,000 and $340,278, respectively. Audit services consisted primarily of the audit and quarterly reviews of our financial statements, consents, assistance with and review of documents filed with the SEC, work performed by tax professionals in connection with the audit and quarterly reviews, accounting and financial reporting consultations, and research work necessary to comply with generally accepted accounting principles. 2013

~~Audit-Related~~(iii) ~~Fees.~~Statements ~~Fees~~of ~~for~~Income ~~audit-related~~(loss) ~~services~~for ~~provided during~~ the ~~years~~Years ~~ended~~Ended December 31, ~~2012 and 2011 were $52~~2014,~~000~~ ~~and~~2013 ~~$51,300, respectively. Audit-related services consisted primarily of professional services provided with respect to yearly audits of our 401(k) employee savings plan~~ and ~~Passenger Facility Charge audits.~~ 2012

~~Tax~~(iv) ~~Fees.~~Statements ~~There~~of ~~were~~Stockholders’ noEquity ~~fees~~ for ~~tax services billed during~~ the ~~years~~Years ~~ended~~Ended December 31, ~~2012~~2014, 2013 and ~~2011.~~ 2012

~~All~~(v) ~~Other~~Statements ~~Fees.~~of ~~During~~Cash ~~the~~Flows ~~fiscal~~for ~~year 2012 no other services were provided by KPMG LLP to~~ the ~~Company.~~Years ~~During~~Ended ~~the~~December ~~fiscal year 2011~~31, ~~$20~~2014,~~215~~ ~~was~~2013 ~~billed~~and ~~for review of amendments to a resale registration statement. In fiscal year 2011, no other services were provided by KPMG LLP to the Company.~~ 2012

60(vi) Notes to Financial Statements

~~Table~~Supporting ofschedules ~~Contents~~are omitted because they are inapplicable, not required, or the information is presented in the financial statements or notes thereto.

~~Audit~~(2) ~~Committee~~The ~~Pre-Approval~~exhibits ~~Policies~~filed as part of this report and ~~Procedures~~exhibits incorporated herein by reference to other documents are listed in the Exhibit Index to this Annual Report on Form 10-K (pages E-1 through E-3).

~~The~~(b) ~~charter~~An ofExhibit ~~our~~Index ~~audit committee provides that the audit committee~~ is ~~responsible~~contained for the pre-approval of all auditing services and permitted non-audit services to be performed for our company by the independent auditors, subject to the requirements of applicable law. The procedures for pre-approving all audit and non-audit services provided by the independent auditors include the committee reviewing a budget for audit services, audit-related services, tax services, and other services. The budget includes a description of, and a budgeted amount for, particular categories of non-audit services that are anticipated at the time the budget is submitted. Committee approval would be required to exceed the budgeted amount for a particular category of services or to engage the independent auditors for any services not included in the budget. Budgeted amounts were not exceeded in 2012. The audit committee periodically monitors the services rendered by, and actual fees paid to, the independent auditors to ensure that such services are within the parameters approved by the committee. The text of the audit committee charter is posted on ~~our~~ ~~web~~page ~~site at www.flygreatlakes.com. The audit committee pre~~E-~~approved all of the services we received from KPMG LLP during fiscal year 2012~~1.

61(c) Not Applicable.

~~Table~~56 ~~of Contents~~

~~Item~~SIGNATURES ~~15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~

Pursuant to the requirements of Section 13 or 15(ad) ~~The~~of ~~following~~the ~~documents~~Securities ~~are~~Exchange ~~filed~~Act asof a1934, ~~part~~the ofregistrant has duly caused this report: to be signed on its behalf by the undersigned, thereunto duly authorized.

(1) Financial statements of the Company included in Item 8, “Financial Statements and Supplementary Data”:


	GREAT LAKES AVIATION, LTD.

Dated: March 30, 2015	By:	/s/ Charles R. Howell IV
		Charles R. Howell IV
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Michael O. Matthews
		Michael O. Matthews
		Vice President and Chief Financial Officer
		(Principal Accounting and Financial Officer)

~~(i)~~57 ~~Report of Independent Registered Public Accounting Firm~~

~~(iii)~~POWER ~~Statements~~OF ofATTORNEY ~~Income for the Years Ended December 31, 2012, 2011 and 2010~~

~~(iv)~~KNOW ~~Statements~~ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Douglas G. Voss, Charles R. Howell IV, and Michael O. Matthews, and each of ~~Stockholders’~~them ~~Equity~~individually, as his or her true and lawful agent, proxy, and attorney-in-fact, with full power of substitution and resubstitution for such individual and in such individual’s name, place, and stead, in any and all capacities, to act on, sign, and file with the ~~Years~~Securities ~~Ended~~and ~~December~~Exchange 31Commission any and all amendments to this report together with all schedules and exhibits thereto and to take any and all actions that may be necessary or appropriate in connection therewith, ~~2012~~and each such individual hereby approves, ~~2011~~ratifies, and ~~2010~~confirms all that such agents, proxies, and attorneys-in-fact, any of them, or any of his or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

~~(v)~~Pursuant ~~Statements~~to the requirements of ~~Cash~~the ~~Flows~~Securities ~~for~~Exchange Act of 1934, this report has been signed below by the ~~Years~~following ~~Ended~~persons ~~December~~on ~~31,~~behalf ~~2012,~~of ~~2011~~the registrant and ~~2010~~in the capacities and on the dates indicated.

(vi) Notes to Financial Statements


Signature	Title	Date

/s/ Douglas G. Voss	Chairman of the Board and President	March 30, 2015
Douglas G. Voss

/s/ Charles R. Howell IV Charles R. Howell IV	Chief Executive Officer (Principal Executive Officer)	March 30, 2015

/s/ Michael O. Matthews Michael O. Matthews	Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)	March 30, 2015

/s/ Vernon A. Mickelson	Director	March 30, 2015
Vernon A. Mickelson

/s/ Ivan L. Simpson	Director	March 30, 2015
Ivan L. Simpson

/s/ A. L. Maxson	Director	March 30, 2015
A. L. Maxson

/s/ Allan R. Moulton III	Director	March 30, 2015
Allan R. Moulton III

~~Supporting schedules~~58 ~~are omitted because they are inapplicable, not required, or the information is presented in the financial statements or notes thereto.~~

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Smaller reporting company

~~(b)~~EXHIBIT AnINDEX ~~Exhibit Index is contained on page E-1.~~


3.1		Amended and Restated Articles of Incorporation. (1)

3.2		Amended and Restated Bylaws. (1)

4.1		Specimen Common Stock Certificate. (2)

10.1		Employment Agreement, dated December 31, 2002, by and between Douglas G. Voss and the Company. (3)

10.2		Code Share Agreement, dated May 3, 2001, by and between Frontier Airlines, Inc. and the Company, as amended on February 8, 2002. Portions of this Exhibit have been excluded from the publicly available document, and the SEC has granted the Company’s application for confidential treatment of the excluded material. (4)

10.3		Amendment No. 2 to Code Share Agreement, dated July 1, 2009 by and between Frontier Airlines, Inc. and the Company. Portions of this Exhibit have been excluded from the publicly available document, and the SEC has granted the Company’s application for confidential treatment of the excluded material. (5)

10.4		Codeshare Agreement between the Company and United Air Lines, dated September 1, 2011. Portions of this Exhibit have been excluded from the publicly available document pursuant to a grant of confidential treatment. (6)

10.5		Credit Agreement by and among the registrant, GB Merchant Partners, LLC, Crystal Financial LLC, and the other financial institutions and entities party thereto, dated November 16, 2011. (7)

10.6		Pledge and Security Agreement by and among the registrant and the Pledgors, dated November 16, 2011. (7)

10.7		Aircraft, Engines, Spare Engines, Propellers, Spare Propellers and Spare Parts Mortgage and Security Agreement, dated November 16, 2011. (7)

10.8		First Amendment to Credit Agreement by and among the registrant, GB Merchant Partners, LLC, Crystal Financial LLC, and the other financial institutions and entities party thereto, dated Jan. 16, 2012. (8)

10.9		Second Amendment to Credit Agreement by and among the registrant, GB Merchant Partners, LLC, Crystal Financial LLC, and the other financial institutions and entities party thereto, dated December 27, 2012. (9)

10.10		Third Amendment and Forbearance to Credit Agreement by and among the registrant, GB Merchant Partners, LLC, Crystal Financial LLC, and the other financial institutions and entities party thereto, dated April 1, 2014. (10)

10.11		Fourth Amendment and Second Forbearance to Credit Agreement dated May 30, 2014 between and among Great Lakes Aviation, Ltd., Crystal Financial LLC, and GB Credit Partners, LLC. (11)

10.12		Fifth Amendment and Third Forbearance to Credit Agreement dated September 23, 2014 between and among Great Lakes Aviation, Ltd., Crystal Financial LLC, and GB Credit Partners, LLC. (12)

10.13		First Amendment to Fifth Amendment and Third Forbearance to Credit Agreement dated November 5, 2014 between and among Great Lakes Aviation, Ltd., Crystal Financial LLC, and GB Credit Partners, LLC. (13)

10.14		Loan Agreement dated as of December 22, 2014, between Great Lakes Aviation, Ltd., and Callidus Capital Corporation. (14)

10.15		Aircraft, Engines, Spare Engines, Propellers, Spare Propellers and Spare Parts Mortgage and Security Agreement dated December 22, 2014 Great Lakes Aviation, Ltd., and Callidus Capital Corporation. (15)

10.16		Security Agreement dated December 22, 2014 between Great Lakes Aviation, Ltd., and Callidus Capital Corporation. (16)

14		Code of Ethics. Available on the Company’s web site.

24		Powers of Attorney. (included in signature page)

31.1		Certification pursuant to Rule 13a-14(a) of Chief Executive Officer.

31.2		Certification pursuant to Rule 13a-14(a) of Chief Financial Officer (Principal Accounting and Financial Officer).

62E-1

SIGNATURES


32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Executive Officer.

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Financial Officer.

101		Financial Statements in XBRL format.

~~Pursuant to the requirements of Section 13 or 15~~(d1) ofIncorporated ~~the~~by ~~Securities~~reference ~~Exchange~~to ~~Act of 1934,~~ the ~~registrant~~Company’s ~~has~~Registration ~~duly~~Statement ~~caused~~on ~~this~~Form ~~report~~S-1/A, toRegistration beNo. ~~signed on~~333-159256, ~~its~~as ~~behalf~~filed bySeptember ~~the undersigned~~3, ~~thereunto duly authorized~~2009.

	GREAT LAKES AVIATION, LTD.
Dated: March 26, 2013	By:	/s/ Charles R. Howell IV
		Charles R. Howell IV
		Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Michael O. Matthews
		Michael O. Matthews
		Vice President and Chief Financial Officer
		(Principal Accounting and Financial Officer)

(2)	Incorporated by reference to the Company’s Registration Statement on Form S-1, Registration No. 033-71180.

63(3) Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. (File No. 000-23224)

~~Table~~(4) ofIncorporated ~~Contents~~by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003. (File No. 000-23224)

~~POWER~~(5) OFIncorporated ~~ATTORNEY~~by reference to the Company’s Registration Statement on Form S-1/A, Registration No. 333-159256, as filed September 30, 2009.

~~KNOW~~(6) ~~ALL~~Incorporated ~~MEN~~by BYreference ~~THESE~~to ~~PRESENTS,~~the ~~that~~Company’s ~~each~~Amendment ~~individual whose signature appears below hereby constitutes and appoints Douglas G~~No. ~~Voss,~~1 ~~Charles~~to R.Current ~~Howell~~Report ~~IV,~~on ~~and~~Form ~~Michael O. Matthews, and each of them individually, as his or her true and lawful agent, proxy, and attorney~~8-~~in-fact,~~K ~~with~~filed ~~full power of substitution and resubstitution for such individual and in such individual’s name, place, and stead, in any and all capacities, to act~~ on, ~~sign, and~~October file with the Securities and Exchange Commission any and all amendments to this report together with all schedules and exhibits thereto and to take any and all actions that may be necessary or appropriate in connection therewith25, ~~and~~2011. ~~each~~(File such individual hereby approves, ratifies, and confirms all that such agents, proxies, and attorneys-in-fact, any of them, or any of his or their substitute or substitutes may lawfully do or cause to be done by virtue hereofNo. 000-23224)

~~Pursuant~~(7) toIncorporated ~~the~~by ~~requirements~~reference ofto the ~~Securities~~Company’s ~~Exchange~~Quarterly ~~Act~~Report ~~of 1934, this report has been signed below by the following persons~~ on ~~behalf~~Form of10-Q ~~the registrant~~for ~~and in~~ the ~~capacities~~quarter ~~and~~ended onSeptember ~~the~~30, ~~dates~~2011. ~~indicated~~(File No. 000-23224)

Signature	Title	Date
/s/ Douglas G. Voss	Chairman of the Board and President	March 26, 2013
Douglas G. Voss
/s/ Charles R. Howell IV	Chief Executive Officer	March 26, 2013
Charles R. Howell IV	(Principal Executive Officer)
/s/ Michael O. Matthews	Vice President and	March 26, 2013
Michael O. Matthews	Chief Financial Officer (Principal Accounting and Financial Officer)
/s/ Vernon A. Mickelson	Director	March 26, 2013
Vernon A. Mickelson
/s/ Ivan L. Simpson	Director	March 26, 2013
Ivan L. Simpson
/s/ A. L. Maxson	Director	March 26, 2013
A. L. Maxson
/s/ Allan R. Moulton III	Director	March 26, 2013
Allan R. Moulton III

(8)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. (File No. 000-23224)

64(9) Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. (File No. 000-23224)

~~Table~~(10) ofIncorporated ~~Contents~~by reference to the Company’s Form 8-K filed on April 3, 2014. (File No. 000-23224)

~~EXHIBIT~~(11) ~~INDEX~~Incorporated by reference to Current Report on Form 8-K filed on June 4, 2014 (File No. 000-23224)

3.1		Amended and Restated Articles of Incorporation. (1)
3.2		Amended and Restated Bylaws. (1)
4.1		Specimen Common Stock Certificate. (2)
10.1		Employment Agreement, dated December 31, 2002, by and between Douglas G. Voss and the Company. (3)
10.2		Code Share Agreement, dated May 3, 2001, by and between Frontier Airlines, Inc. and the Company, as amended on February 8, 2002. Portions of this Exhibit have been excluded from the publicly available document, and the SEC has granted the Company’s application for confidential treatment of the excluded material. (4)
10.3		Amendment No. 2 to Code Share Agreement, dated July 1, 2009 by and between Frontier Airlines, Inc. and the Company. Portions of this Exhibit have been excluded from the publicly available document, and the SEC has granted the Company’s application for confidential treatment of the excluded material. (5)
10.4		Agreement between the Company and Raytheon Aircraft Credit Corporation, dated June 10, 2011. (6)
10.5		Amendment to Agreement between the Company and Raytheon Aircraft Credit Corporation, dated August 31, 2011. (7)
10.6		Amendment to Agreement between the Company and Raytheon Aircraft Credit Corporation, dated October 14, 2011. (8)
10.7		Codeshare Agreement between the Company and United Air Lines, dated September 1, 2011. Portions of this Exhibit have been excluded from the publicly available document pursuant to a grant of confidential treatment. (9)
10.8		Credit Agreement by and among the registrant, GB Merchant Partners, LLC, Crystal Financial LLC, and the other financial institutions and entities party thereto, dated November 16, 2011. (10)
10.9		Pledge and Security Agreement by and among the registrant and the Pledgors, dated November 16, 2011. (10)
10.10		Aircraft, Engines, Spare Engines, Propellers, Spare Propellers and Spare Parts Mortgage and Security Agreement, dated November 16, 2011. (10)
10.11		Payoff Letter Agreement dated November 16, 2011 between the Company and Raytheon Aircraft Credit Corporation. (10)
10.12		First Amendment to Credit Agreement by and among the registrant, GB Merchant Partners, LLC, Crystal Financial LLC, and the other financial institutions and entities party thereto, dated Jan. 16, 2012. (11)
10.13		Second Amendment to Credit Agreement by and among the registrant, GB Merchant Partners, LLC, Crystal Financial LLC, and the other financial institutions and entities party thereto, dated December 27, 2012.
14		Code of Ethics. Available on the Company’s web site.
24		Powers of Attorney. (included in signature page)
31.1		Certification pursuant to Rule 13a-14(a) of Chief Executive Officer.
31.2		Certification pursuant to Rule 13a-14(a) of Chief Financial Officer (Principal Accounting and Financial Officer).
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Executive Officer.
32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Financial Officer.
101		Financial Statements in XBRL format.

(12)	Incorporated by reference to Current Report on Form 8-K filed on September 29, 2014 (File No. 000-23224)

(113) Incorporated by reference to ~~the~~Current ~~Company’s~~Report ~~Registration Statement~~ on Form S8-~~1/A,~~K ~~Registration~~filed ~~No.~~on ~~333-159256~~November 6, as2014 ~~filed~~(File ~~September 3, 2009~~No. 000-23224)

E(14) Incorporated by reference to Current Report on Form 8-1 K filed on December 22, 2014 (File No. 000-23224)

~~Table~~(15) ofIncorporated ~~Contents~~by reference to Current Report on Form 8-K filed on December 22, 2014 (File No. 000-23224)

(216) Incorporated by reference to ~~the~~Current ~~Company’s~~Report ~~Registration Statement~~ on Form S8-1K filed on December 22, ~~Registration~~2014 (File No. ~~033~~000-~~71180.~~23224)

~~(3) Incorporated by reference to the Company’s Annual Report on Form 10~~E-K2 ~~for the year ended December 31, 2002. (File No. 000-23224)~~

(4) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003. (File No. 000-23224)

(5) Incorporated by reference to the Company’s Registration Statement on Form S-1/A, Registration No. 333-159256, as filed September 30, 2009.

(6) Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 10, 2011. (File No. 000-23224)

(7) Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 2, 2011. (File No. 000-23224)

(8) Incorporated by reference to the Company’s Current Report on Form 8-K filed on October 17, 2011. (File No. 000-23224)

(9) Incorporated by reference to the Company’s Amendment No. 1 to Current Report on Form 8-K filed on October 25, 2011. (File No. 000-23224)

(10) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. (File No. 000-23224)

(11) Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. (File No. 000-23224)

E-2

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