~~Table~~UNITED ofSTATES ~~Contents~~

~~UNITED~~SECURITIES ~~STATES~~AND EXCHANGE COMMISSION

~~SECURITIES~~Washington, ~~AND~~D.C. ~~EXCHANGE~~20549 ~~COMMISSION~~

~~Washington,~~FORM ~~D.C. 20549~~ 10-Q

~~FORM~~(Mark ~~10-Q~~ One)

~~(Mark~~x ~~One~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xFor ~~QUARTERLY~~the ~~REPORT~~quarterly ~~PURSUANT~~period TOended ~~SECTION~~March 31, 132015 ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~OR ~~the quarterly period ended September 30, 2014~~

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

¨For ~~TRANSITION~~the ~~REPORT~~transition ~~PURSUANT~~period ~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~from to

~~For~~Commission ~~the~~File ~~transition~~No. ~~period~~0-23224 ~~from to~~

~~Commission~~GREAT ~~File~~LAKES AVIATION, NoLTD. ~~0-23224~~

~~GREAT~~(Exact ~~LAKES AVIATION,~~name ~~LTD.~~of registrant as specified in its charter)

(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)

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)

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

~~Registrant’s~~Indicate ~~telephone~~by ~~number,~~check ~~including~~mark ~~area~~whether ~~code:~~the registrant (~~307~~1) ~~432-7000~~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 ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted byand ~~Section 13~~posted orpursuant ~~15(d)~~to Rule 405 of ~~the Securities~~Regulation ~~Exchange~~S-T ~~Act~~(§ 229.405 of ~~1934~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirements for the past 90~~ ~~days~~files). Yes x No ¨

Indicate by check mark whether the registrant ~~has~~is ~~submitted~~a ~~electronically~~large ~~and~~accelerated ~~posted~~filer, onan ~~its~~accelerated ~~corporate Web site~~filer, ifa ~~any~~non-accelerated filer, ~~every~~or ~~Interactive~~a smaller ~~Data~~reporting ~~File~~company. ~~required~~See tothe bedefinitions ~~submitted~~of ~~and~~“large ~~posted~~accelerated ~~pursuant~~filer,” to“accelerated ~~Rule~~filer” ~~405~~and of“smaller ~~Regulation~~reporting ~~S-T~~company” ~~(§ 229.405~~in ofRule ~~this~~12b-2 ~~chapter)~~of ~~during~~ the ~~preceding~~Exchange 12Act. ~~months~~ (orCheck ~~for such shorter period that the registrant was required to submit and post such files~~one)~~. Yes x No ¨~~:

~~Indicate~~Large ~~by check mark whether the registrant is a large~~ accelerated filer, an¨ ~~accelerated~~Accelerated ~~filer,~~Filer a¨ ~~non~~Non-accelerated filer, or¨ a(Do ~~smaller reporting~~not ~~company.~~check ~~See~~if ~~the~~a ~~definitions of “large accelerated filer,” “accelerated filer” and “~~smaller reporting company”) inSmaller ~~Rule~~reporting ~~12b-2~~company ~~of the Exchange Act. (Check one):~~ x

~~Large~~Indicate ~~accelerated~~by ~~filer~~check ¨mark ~~Accelerated~~whether ~~Filer~~the ¨registrant ~~Non-accelerated~~is ~~filer~~a ¨shell company (Doas ~~not~~defined ~~check~~in ifRule a12b-2 ~~smaller~~of ~~reporting~~the ~~company~~Exchange Act). ~~Smaller reporting company~~ Yes ¨ No x

~~Indicate~~As byof ~~check~~May 15, ~~mark~~2015, ~~whether~~8,974,990 ~~the~~shares ~~registrant~~of isCommon aStock ~~shell~~of ~~company~~the ~~(as~~registrant ~~defined~~were inissued ~~Rule~~and ~~12b-2 of the Exchange Act)~~outstanding. ~~Yes ¨ No x~~

AsGREAT ofLAKES ~~November 11~~AVIATION, ~~2014, 8,974,990 shares of Common Stock of the registrant were issued and outstanding~~LTD.

~~Table~~FORM of10-Q ~~Contents~~

~~GREAT~~For ~~LAKES~~the Quarterly ~~AVIATION~~Period Ended March 31, ~~LTD.~~2015

~~FORM~~INDEX ~~10-Q~~

For the Quarterly Period Ended September 30, 2014


PART I - FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS	2
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19
Item 4.	CONTROLS AND PROCEDURES	19

PART II - OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	19
Item 1A.	RISK FACTORS	20
Item 6.	EXHIBITS	20

SIGNATURES		21

EXHIBIT INDEX		E-1

~~INDEX~~Item 1. FINANCIAL STATEMENTS

PART I—FINANCIAL INFORMATION
Item 1.	CONDENSED FINANCIAL STATEMENTS (UNAUDITED)	2
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
Item 4.	CONTROLS AND PROCEDURES	26
PART II—OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	27
Item 1A.	RISK FACTORS	27
Item 3.	DEFAULTS UPON SENIOR SECURITIES	28
Item 6.	EXHIBITS	28
SIGNATURES		29
EXHIBIT INDEX		30

GREAT LAKES AVIATION, LTD.

~~Table~~Balance ofSheets ~~Contents~~

~~Item~~(unaudited) ~~1. FINANCIAL STATEMENTS~~

GREAT LAKES AVIATION, LTD.


	March 31,			December 31,
	2015			2014
Assets
Current assets:
Cash and cash equivalents	$	1,918,186		$	2,202,273
Accounts receivable and other receivables		4,738,257			5,337,193
Inventories		7,016,140			6,578,419
Prepaid expenses and other current assets		1,974,190			1,785,433
Deferred income taxes		1,249,365			1,249,365

Total current assets		16,896,138			17,152,683


Property and equipment:
Flight equipment		126,191,712			126,252,883
Other property and equipment		10,726,211			10,692,328
Less accumulated depreciation and amortization		(94,569,061	)		(93,119,738	)

Total property and equipment		42,348,862			43,825,473

Other assets		2,917,630			3,283,360

Total assets	$	62,162,630		$	64,261,516


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,859,362		$	2,177,376
Accrued interest, unearned revenue and other liabilities		2,569,155			2,131,928

Total current liabilities		4,428,517			4,309,304

Long-term debt		25,000,000			25,000,000
Deferred income taxes		2,903,674			3,705,007

Total liabilities		32,332,191			33,014,311

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. 8,974,990 shares issued and outstanding		89,750			89,750
Paid-in capital		31,494,609			31,494,609
Accumulated deficit		(1,753,920	)		(337,154	)

Total stockholders’ equity		29,830,439			31,247,205

Total liabilities and stockholders’ equity	$	62,162,630		$	64,261,516

~~Condensed~~See ~~Balance~~accompanying ~~Sheets~~notes to the financial statements.

~~(unaudited)~~2

	As ofSeptember 30,2014			As ofDecember 31,2013
Assets
Current assets:
Cash	$	3,926,164		$	6,597,927
Accounts receivable and other receivables		5,653,930			7,118,868
Inventories		7,167,352			8,667,751
Prepaid expenses and other current assets		2,790,315			3,154,713
Deferred income taxes		1,457,049			1,457,049
Total current assets		20,994,810			26,996,308
Property and equipment:
Flight equipment		125,463,235			125,027,613
Other property and equipment		10,678,845			10,604,094
Less accumulated depreciation and amortization		(91,629,611	)		(87,029,483	)
Total property and equipment		44,512,469			48,602,224
Other assets		1,682,165			2,279,968
Total assets	$	67,189,444		$	77,878,500
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable and current maturities of long-term debt	$	24,721,333		$	24,173,333
Accounts payable		2,635,756			3,684,161
Accrued interest, unearned revenue and other liabilities		2,981,483			3,525,843
Total current liabilities		30,338,572			31,383,337
Deferred income taxes		4,348,084			7,877,096
Total liabilities		34,686,656			39,260,433
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 shares		89,750			89,750
Paid-in capital		31,494,609			31,494,609
Retained earnings		918,429			7,033,708
Total stockholders’ equity		32,502,788			38,618,067
Total liabilities and stockholders’ equity	$	67,189,444		$	77,878,500

GREAT LAKES AVIATION, LTD.

~~See~~Statements ~~accompanying~~of ~~notes~~Operations ~~to the condensed financial statements.~~

2(Unaudited)


	For the Three Months
	Ended March 31,
	2015			2014
Operating revenues:
Passenger	$	4,405,789		$	6,925,030
Public service		8,033,918			6,158,220
Freight, charter, and other		53,512			46,458

Total operating revenues		12,493,219			13,129,708

Operating expenses:
Salaries, wages, and benefits		4,909,873			6,023,562
Aircraft fuel		2,238,729			4,369,246
Aircraft maintenance, materials, and repairs		1,224,864			1,850,609
Depreciation and amortization		1,519,578			1,615,310
Other rentals and landing fees		1,220,566			1,401,518
Other operating expenses		2,531,262			3,634,690

Total operating expenses		13,644,872			18,894,935

Operating loss		(1,151,653	)		(5,765,227	)
Other expense:
Interest expense, net of interest income of $181 and $160, respectively		(1,066,209	)		(986,869	)

Loss before income taxes		(2,217,862	)		(6,752,096	)

Income tax benefit		801,096			2,461,403

Net loss	$	(1,416,766	)	$	(4,290,693	)

Net loss per share:
Basic	$	(0.16	)	$	(0.48	)
Diluted	$	(0.16	)	$	(0.48	)

Weighted average shares outstanding:
Basic		8,974,990			8,974,990
Diluted		8,974,990			8,974,990

~~GREAT~~See ~~LAKES~~accompanying ~~AVIATION,~~notes ~~LTD~~to the financial statements.

~~Condensed~~3 ~~Statements of Income (Loss)~~

~~(Unaudited)~~GREAT LAKES AVIATION, LTD.

	For the Three MonthsEnded September 30,						For the Nine MonthsEnded September 30,
	2014			2013			2014			2013
Operating Revenues:
Passenger	$	8,147,891		$	16,872,807		$	23,208,086		$	48,248,568
Public service		8,190,285			14,584,411			21,035,344			43,135,773
Freight, charter, and other		40,330			136,896			123,595			325,181
Total operating revenues		16,378,506			31,594,114			44,367,025			91,709,522
Operating expenses:
Salaries, wages, and benefits		4,797,153			8,025,642			15,832,953			25,035,725
Aircraft fuel		4,454,621			9,178,841			12,937,966			28,407,341
Aircraft maintenance, materials, and repairs		746,730			4,429,861			3,371,064			11,681,293
Depreciation and amortization		1,532,579			1,598,979			4,742,283			4,801,459
Other rentals and landing fees		668,183			970,034			3,259,683			4,769,668
Other operating expenses		3,290,289			4,168,572			10,497,015			13,453,972
Total operating expenses		15,489,555			28,371,929			50,640,964			88,149,458
Operating income (loss)		888,951			3,222,185			(6,273,939	)		3,560,064
Other expense:
Interest expense, net of interest income of $319, $348, $639 and $1,363, respectively		(1,258,928	)		(1,074,623	)		(3,376,231	)		(3,277,861	)
Income (loss) before income taxes		(369,977	)		2,147,562			(9,650,170	)		282,203
Income tax benefit (expense)		134,647			(880,326	)		3,534,891			(127,790	)
Net income (loss)	$	(235,330	)	$	1,267,236		$	(6,115,279	)	$	154,413
Net income (loss) per share:
Basic	$	(0.03	)	$	0.14		$	(0.68	)	$	0.02
Diluted	$	(0.03	)	$	0.14		$	(0.68	)	$	0.02
Weighted average shares outstanding:
Basic		8,974,990			8,974,990			8,974,990			8,974,990
Diluted		8,974,990			8,974,990			8,974,990			8,974,990

Statements of Cash Flows

~~See~~(Unaudited) ~~accompanying notes to the condensed financial statements.~~


	For the Three Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,416,766	)	$	(4,290,693	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		1,519,578			1,615,310
Loss on property and equipment		46,354			56,384
Amortization of debt issuance costs		135,205			160,335
Deferred tax benefit		(801,333	)		(2,461,653	)
Change in current operating items:
Accounts receivable and other receivables		598,936			3,057,856
Inventories		(437,721	)		821,875
Prepaid expenses and other current assets		(188,757	)		422,836
Other assets		230,524			191,535
Accounts payable		(318,014	)		(824,176	)
Accrued interest, unearned revenue and other liabilities		437,227			(388,303	)

Net cash used in operating activities		(194,767	)		(1,638,694	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of flight equipment and other property and equipment		(89,320	)		(635,606	)

Net cash flows used in investing activities		(89,320	)		(635,606	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and long-term debt		—			(1,000,000	)

Net cash used in financing activities		—			(1,000,000	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(284,087	)		(3,274,300	)

Cash and Cash Equivalents:
Beginning of period		2,202,273			6,597,927

End of period	$	1,918,186		$	3,323,627

Supplementary disclosures of cash flow information:
Cash paid during the period for interest	$	685,536		$	847,232
Cash paid during the period for income taxes	$	—		$	—

~~Table~~See ofaccompanying ~~Contents~~notes to the financial statements.

~~GREAT~~4 ~~LAKES AVIATION, LTD.~~

~~Condensed~~GREAT ~~Statements~~LAKES ofAVIATION, ~~Cash~~LTD. ~~Flows~~

~~(Unaudited)~~Statements of Stockholders’ Equity

	For the Nine Months Ended June 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(6,115,279	)	$	154,413
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		4,742,283			4,801,459
Loss on items beyond economic repair		107,421			264,341
Amortization of debt issuance costs		625,219			481,005
Deferred tax benefit		(3,529,012	)		(100,634	)
Change in current operating items:
Accounts receivable		1,464,938			309,516
Inventories		1,500,399			744,051
Prepaid expenses and other current assets		303,615			(1,090,476	)
Other assets		597,803			780,540
Accounts payable		(1,048,405	)		(1,199,762	)
Accrued interest, unearned revenue and other liabilities		(544,360	)		(111,038	)
Net cash (used) provided by operating activities		(1,895,378	)		5,033,415
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of flight equipment and other property and equipment		(759,949	)		(1,165,060	)
Net cash flows used in investing activities		(759,949	)		(1,165,060	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and long-term debt		(1,452,000	)		(2,625,000	)
Proceeds from borrowing		2,000,000			1,500,000
Payment for debt issuance costs		(564,436	)		—
Net cash used by financing activities		(16,436	)		(1,125,000	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(2,671,763	)		2,743,355
Cash and Cash Equivalents:
Beginning of period		6,597,927			2,887,634
End of period	$	3,926,164		$	5,630,989
Supplementary cash flow information:
Cash paid during the period for interest (contractual)	$	2,720,975		$	2,827,581
Cash paid during the period for income taxes	$	5,661		$	72,230

Three Months Ended March 31, 2015

~~See~~(unaudited) ~~accompanying notes to the condensed financial statements.~~


	Common stock						Accumulated
	Shares		Amount		Paid-in capital		deficit			Total
Balance at January 1, 2015		8,974,990	$	89,750	$	31,494,609	$	(337,154	)	$	31,247,205
Net loss		—		—		—		(1,416,766	)		(1,416,766	)

Balance at March 31, 2015		8,974,990	$	89,750	$	31,494,609	$	(1,753,920	)	$	29,830,439

~~Table~~See ofaccompanying ~~Contents~~notes to financial statements.

~~GREAT~~5 ~~LAKES AVIATION, LTD.~~

~~Condensed~~Great ~~Statements~~Lakes ofAviation, ~~Stockholders’~~Ltd. ~~Equity~~

~~Nine~~Notes ~~Months~~to ~~Ended~~Financial ~~September 30,~~Statements ~~2014~~

~~(unaudited)~~March 31, 2014

	Common stock						Retained
	Shares		Amount		Paid-in capital		earnings			Total
Balance at January 1, 2014		8,974,990	$	89,750	$	31,494,609	$	7,033,708		$	38,618,067
Net loss		—		—		—		(6,115,279	)		(6,115,279	)
Balance at September 30, 2014		8,974,990	$	89,750	$	31,494,609	$	918,429		$	32,502,788

(unaudited)

~~See~~1. ~~accompanying~~Basis ~~notes~~of ~~to condensed financial statements.~~ Presentation

5The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial statements for the respective periods. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2014.

~~Table~~The preparation of ~~Contents~~financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue 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 allowance for deferred tax assets, inventory allowances; and allowances for other contingencies.

~~Great~~Business ~~Lakes Aviation, Ltd.~~

~~Notes~~Passenger toRevenue ~~Condensed Financial Statements~~

~~September 30~~Great Lakes Aviation, ~~2014~~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 or United Airlines). Our code share agreement allows our mutual customers to purchase connecting flights through our code share partner and to share other benefits such as baggage transfer and frequent flyer benefits (in certain instances). The Company maintains its own branding on its planes and ticket counters and its own designator code on all its flights. In addition to our code share agreement and independent branding, the Company has developed electronic ticketing (e-ticket) interline agreements with American Airlines, Delta Airlines, United Airlines and U.S. Airways.

~~(unaudited)~~The Company estimates that approximately 51% of Great Lakes’ passenger traffic utilized the United code share product line in the three months ending March 31, 2015.

1.Public ~~Basis~~Service ofRevenue ~~Presentation~~

~~The~~Approximately ~~accompanying~~64% ~~unaudited~~and ~~condensed~~47% ~~financial~~of ~~statements~~the ~~have~~Company’s ~~been~~total ~~prepared~~revenue induring ~~accordance~~each ~~with~~of ~~generally~~the ~~accepted~~three ~~accounting~~months ~~principles~~ended ~~for interim~~March 31, ~~financial~~2015 ~~information~~ and ~~the~~2014, ~~instructions~~respectively, towere ~~Form~~generated by ~~10-Q~~services ~~and~~provided ~~Regulation~~under ~~S-X. Accordingly,~~ the ~~accompanying~~Essential ~~unaudited~~Air ~~condensed~~Service ~~financial statements contain all adjustments~~ (~~consisting of only normal recurring accruals~~EAS) ~~necessary~~program toadministered ~~present fairly~~by the ~~financial~~United ~~statements~~States ~~for~~Department ~~the~~of ~~respective~~Transportation ~~periods~~(DOT). ~~Interim~~The ~~results~~FAA ~~are~~Modernization ~~not~~and ~~necessarily~~Reform ~~indicative~~Act of ~~results~~2012 ~~for~~was aenacted ~~full~~into ~~year.~~law ~~The~~on ~~financial~~February 14, ~~statements~~2012. ~~should~~This belegislation provides ~~read~~for inthe ~~conjunction~~authorization ~~with~~of the ~~Company’s~~Essential ~~audited~~Air ~~financial~~Service ~~statements~~program ~~and notes~~through ~~thereto~~September 30, ~~for~~2015, ~~the~~at ~~year~~which ~~ended December 31~~time, ~~2013~~we expect it will be renewed.

~~The~~As ~~preparation~~ of ~~financial statements in conformity with accounting principles generally~~ ~~accepted~~May 15, in2015, the ~~United~~Company ~~States~~served of26 ~~America~~airports, ~~requires management to make estimates and assumptions that affect the reported amounts~~ of ~~assets~~which ~~and~~19 ~~liabilities~~locations ~~and~~receive ~~disclosure~~EAS ofsubsidy, ~~contingent~~in ~~assets~~nine ~~and~~states ~~liabilities~~with ata ~~the~~fleet ~~date~~ of ~~the~~six ~~financial~~Embraer ~~statements~~EMB-120 ~~and the~~Brasilia ~~reported amounts of revenue~~ and ~~expenses~~28 ~~during~~Beechcraft ~~the~~1900D ~~reporting~~regional ~~period~~airliners. ~~Actual~~The ~~results~~Company ~~could~~currently ~~differ~~operates ~~from~~hubs ~~those~~in ~~estimates.~~Denver, ~~Significant items subject to such estimates and assumptions include the useful lives of fixed assets; the salvage value of~~CO, ~~fixed~~Los ~~assets;~~Angeles, ~~the valuation of deferred tax assets~~CA, ~~fixed assets~~Minneapolis, ~~inventory;~~MN and ~~reserves~~Phoenix, ~~for employee benefit obligations and other contingencies~~AZ.

~~Business~~6

~~Passenger~~Liquidity ~~Revenue~~

~~Great~~On ~~Lakes~~December 22, ~~Aviation~~2014, ~~Ltd.~~we ~~(Great~~entered ~~Lakes,~~into a Loan Agreement (the ~~Company,~~“Loan weAgreement”) orwith usCallidus Capital Corporation (the “Lender”). isThe Lender aagreed ~~regional~~to ~~airline~~make ~~operating~~available asto anthe ~~independent~~Company: ~~carrier~~(i) a ~~and~~$25,000,000 assingle advance term loan facility, (ii) a ~~code~~revolving ~~share~~loan ~~partner~~facility with ~~United~~ ~~Air~~availability ~~Lines,~~of ~~Inc.~~up ~~(United~~to or$6,000,000 ~~United~~and ~~Airlines~~(iii). a ~~Our~~second ~~code~~revolving ~~share~~loan ~~agreement~~facility ~~allows~~with ~~our~~availability ~~mutual~~of up ~~customers~~ to ~~purchase~~$3,000,000. ~~connecting~~The ~~flights~~$25,000,000 ~~through~~term ~~our~~loan ~~code~~was ~~share~~disbursed ~~partner~~at closing, and tosubstantially ~~share~~all ~~other~~of ~~benefits~~its ~~such~~proceeds aswere ~~baggage~~used ~~transfer~~to ~~and~~pay ~~frequent~~all ~~flyer~~outstanding ~~benefits (in~~borrowings, ~~certain~~fees ~~instances),~~and ~~while~~expenses under the ~~Company~~Credit ~~maintains~~Agreement ~~its~~dated ~~own~~November 6, ~~branding~~2011 onas ~~our~~amended ~~planes~~between the Company and ~~ticket~~Crystal ~~counters~~Financial LLC and ~~our~~other ~~own~~lenders ~~designator~~(the ~~code~~“Refinanced onCredit ~~all~~Agreement”). ~~our~~The ~~flights.~~revolving Inloan ~~addition~~facilities tomay be used for our ~~code~~working ~~share~~capital ~~agreement~~needs. ~~and~~At ~~independent~~March 31, ~~branding~~2015, the ~~Company~~entire ~~has~~undrawn ~~developed electronic~~balance ~~ticketing~~of ~~(e-ticket)~~$6 ~~interline~~million ~~agreements~~and ~~with~~$3 million ~~American~~was ~~Airlines,~~available ~~Delta~~to ~~Airlines,~~us ~~United~~under ~~Airlines~~the first and ~~U.S.~~second ~~Airways~~revolving loan facilities.

~~The~~In ~~Company~~connection ~~operated~~with ~~under a~~the ~~code~~Loan ~~share~~Agreement ~~agreement~~described ~~with~~above, ~~Frontier~~we ~~Airlines~~repaid obligations ~~(Frontier)~~totaling ~~from~~$24.9 ~~May~~million, ~~2001~~which ~~through~~constituted ~~September 30~~all outstanding borrowings, ~~2014~~fees and expenses under previous loan facilities. ~~Effective~~In ~~October 1,~~connection ~~2014,~~with the ~~Company’s~~repayment, ~~code~~our ~~share~~previous ~~and~~lenders ~~interline~~terminated ~~e-ticketing~~their security agreements ~~with~~and ~~Frontier~~released ~~were~~all ~~terminated~~of their security interests in the Company’s aircraft and other assets.

The ~~Company~~term ~~estimates~~loan and revolving credit facilities mature on December 22, 2017 at which time any outstanding balances will be due and payable. At that ~~approximately~~time, ~~36%~~in oforder ~~Great~~to ~~Lakes’~~pay ~~passenger~~the ~~traffic~~principal ~~utilized~~amount, the ~~United~~Company ~~code~~would ~~share~~need ~~product~~to ~~line~~raise ~~and~~cash ~~approximately~~by ~~23%~~obtaining ofnew ~~Great~~debt financing, raising additional equity financing or selling owned aircraft or a ~~Lakes’~~combination ~~passenger~~thereof. ~~traffic~~We ~~utilized~~are not required to make any principal payments under the ~~Frontier~~Loan ~~code~~Agreement ~~share~~until ~~product~~December 22, ~~line~~2017, absent an event of default.

6We have experienced a shortage of qualified pilots which has caused us to curtail operations and reduce capacity. 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. As a result of refinancing all of the Company’s debt on terms that will not require any scheduled principal payments until December 22, 2017, the Company has improved its working capital capabilities to support its efforts in reestablishing curtailed operations.

~~Table~~2. ofEarnings ~~Contents~~per share

The ~~Company~~following ~~also~~table ~~provides~~shows ~~charter~~the ~~air~~computation ~~services~~of tobasic ~~private individuals, corporations,~~ and ~~athletic~~diluted ~~teams.~~earnings ~~The Company~~per ~~also~~common ~~carries~~share: ~~cargo on most of the Company’s scheduled flights.~~

Public Service Revenue


	Three months ended
	March 31,
	2015			2014
Numerator:
Net Loss	$	(1,416,766	)	$	(4,290,693	)
Denominator:
Weighted average shares outstanding, basic and diluted		8,974,990			8,974,990

Net loss per share, basic	$	(0.16	)	$	(0.48	)
Net loss per share, diluted	$	(0.16	)	$	(0.48	)

~~Approximately~~For ~~47% of~~ the ~~Company’s~~three ~~total~~month ~~revenue~~periods ~~during each of the nine months~~ ended ~~September~~March 3031, ~~2014~~2015 and ~~2013~~March 31, ~~respectively,~~2014 there were ~~generated~~no ~~by services~~options ~~provided~~or ~~under~~other 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 legislationpotentially ~~provides~~dilutive ~~for~~securities ~~the authorization of the Essential Air Service program through September 30, 2015~~outstanding.

As7 of November 11, 2014, the Company served 29 airports, of which 21 locations receive EAS subsidy, in 9 states with a fleet of six Embraer EMB-120 Brasilia and 28 Beechcraft 1900D regional airliners. The Company currently operates hubs at Denver, CO, Los Angeles, CA, Minneapolis, MN and Phoenix, AZ.

~~Liquidity~~3. Accrued Liabilities

~~The~~Accrued ~~Company~~liabilities ~~has historically~~consisted ~~used~~of ~~debt to finance~~ the ~~purchase~~following ofbalances ~~its~~at ~~aircraft.~~March 31, In2015 ~~order to service the interest~~ and ~~principal payments on this debt~~December 31, ~~the~~2014: ~~Company relies on cash generated from operations.~~

The Company has experienced a shortage of qualified pilots which has caused the Company to curtail operations and reduce capacity. The pilot shortage and its effect on operations are expected to continue until the Company can hire and train enough pilots to reestablish operations in those markets in which the Company was forced to suspend service. The curtailment of operations has had a negative impact on revenue, operating income and operating cash flows which is expected to continue. Due to this negative impact on revenue, operating income and operating cash flows, the Company was not in compliance as of September 30, 2014 and does not expect to be in compliance with the debt to earnings coverage covenant in its credit agreement. Until the Company is able to re-staff a sufficient number of qualified pilots to restore service to suspended markets, or refinance its existing debt obligations, it expects that it will not have sufficient liquidity to service its current debt obligations.


	March 31,		December 31,
	2015		2014
Unearned revenue		796,002		645,320
Accrued property taxes		139,249		68,140
Accrued interest		308,163		89,491
Accrued payroll		1,272,319		1,290,555
Other		53,422		38,422

Total accrued liabilities	$	2,569,155	$	2,131,928

The above circumstances and near term projections of significant net losses and negative operating cash flows in combination with the expectation the Company will not be in compliance with the terms of our current senior credit facility, and the lender’s ability to call our debt, raise substantial doubt about the Company’s ability to continue as a going concern4. ~~Our~~Long-Term financial statements are prepared on a going concern basis in accordance with United States generally accepted accounting principles and do not include any adjustments that might result from the outcome of this uncertainty. The going concern basis of presentation assumes that we will continue in operation for the next twelve months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. Our credit facility matures on November 16, 2015. As a result of not being in compliance under our senior credit facility and the expectation the Company will not be in compliance with the terms of the senior credit facility throughout 2014 and into 2015, all borrowings (approximately $24.7 million) under our senior credit facility are classified as current as of September 30, 2014. Our operating and capital plans for the next twelve months call for dedication of substantially all of our excess cash flow to the repayment of indebtedness. Debt

~~Effective~~The ~~September 23,~~following ~~2014,~~table ~~the~~sets ~~Company entered~~forth, ~~into~~as ~~the~~of ~~Fifth~~March 31, ~~Amendment~~2015 and ~~Third~~December 31, ~~Forbearance~~2014, ~~to Credit Agreement (~~the ~~“Forbearance~~carrying ~~Agreement”)~~amount ~~with~~of ~~its~~the ~~lenders~~Company’s ~~Crystal~~long-term debt. ~~Financial~~No ~~LLC~~scheduled ~~and~~principal GBpayments ~~Merchant~~are ~~Partners,~~required ~~LLC~~until (the ~~“Lenders”). The Forbearance Termination Date is on the earlier of (i)~~ December 1, ~~2014~~2017 ormaturity ~~(ii) the~~ date, ontherefore, ~~which~~there ~~Great~~are ~~Lakes~~no ~~commits~~current ~~additional~~maturities ~~breaches~~of ~~under~~long ~~the~~term ~~Credit Agreement~~debt.

The Company is currently pursuing a new financing facility. There is no assurance the Company will be able to complete a new financing facility on acceptable terms.


	March 31,		December 31,
	2015		2014
Long-term debt:
Term Loan	$	25,000,000	$	25,000,000
Revolving Loans		—		—

Total long-term debt		25,000,000		25,000,000

7On December 22, 2014, the Company entered into a 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 outstanding borrowings, fees and expenses under the Credit Agreement with our previous lenders. The revolving loan facilities may be used for the Company’s working capital needs. At March 31, 2015, the entire undrawn balance of $6 million and $3 million was available to us under the first and second revolving loan facilities.

~~Table~~The loans under the Loan Agreement mature on December 22, 2017 at which time all outstanding principal balances will be due and payable. No scheduled principal payments will be required until the maturity date unless there is a devaluation in the collateral supporting the term loan. Outstanding principal under the term loan and revolving loans will bear interest at a fixed rate of ~~Contents~~14% 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.

2In connection with the Loan Agreement, the Company granted first-ranking security interests to the Lender covering substantially all of the assets of the business. ~~Earnings~~The ~~per~~Loan ~~share~~Agreement contains certain affirmative and negative covenants which are usual and customary with asset based loans. The Company agreed to maintain a fixed charge coverage ratio beginning with the period ended March 31, 2015. In an event of default, the Lender may terminate its obligation to make further loans and may declare all obligations under the Loan Agreement to be immediately due and payable. The Company was in compliance with all convents as of March 31, 2015.

~~The~~8 ~~following table shows the computation of basic and diluted earnings per common share:~~

	Three months endedSeptember 30,					Nine months endedSeptember 30,
	2014			2013		2014			2013
Numerator:
Net Income (loss)	$	(235,330	)	$	1,267,236	$	(6,115,279	)	$	154,413
Denominator:
Weighted average shares outstanding, basic		8,974,990			8,974,990		8,974,990			8,974,990
Weighted average shares outstanding, diluted		8,974,990			8,974,990		8,974,990			8,974,990
Net income (loss) per share, basic and diluted	$	(0.03	)	$	0.14	$	(0.68	)	$	0.02

At March 31, 2015 the Company has no aircraft lease obligations.

~~For the three and nine month periods ended September 30, 2014 and September 30, 2013 there were no options or other potentially dilutive securities outstanding~~5. Related Parties

3The Company rents two six-passenger aircraft and a vehicle from Iowa Great Lakes Flyers, Inc., ~~Accrued~~a ~~Liabilities~~corporation solely owned by Douglas G. Voss, the Company’s Chairman and major stockholder. Total payments for these leases were $7,125 for each of the three months ending March 31, 2015 and 2014, respectively. As of March 31, 2015, Mr. Voss controlled 4,160,247 shares of common stock of the Company, representing approximately 46.4% of the Company’s outstanding common stock.

~~Accrued~~6. ~~liabilities~~Income ~~consisted of the following balances at September 30, 2014 and December 31, 2013:~~ Taxes

	September 30,2014		December 31,2013
Unearned revenue		1,063,279		1,221,257
Other accruals		107,254		—
Accrued property taxes		250,375		74,962
Accrued interest		315,481		286,701
Accrued payroll		1,245,094		1,942,923
Total accrued liabilities	$	2,981,483	$	3,525,843

The Company’s annual effective income tax rate is estimated to be 36.0% for 2015. The Company’s effective tax rate includes non-deductible permanent tax differences. Prior to 2004, the Company reported significant cumulative losses and generated substantial net operating loss carryforwards. From 2007 through 2013, the Company utilized a portion of these carryforwards to offset taxable income. The losses recorded in 2014 are also expected to result in additional net operating loss carryforward when the Company files its income tax return for the 2014 tax year.

4In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. ~~Long-Term~~Management ~~Debt~~considers the projected reversal of deferred tax liabilities and tax planning strategies in making this assessment. Based upon this assessment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of any valuation allowances for state net operating loss carryforwards that are expected to expire unused. Federal net operating loss carryforwards begin to expire in year 2021.

~~The following table sets forth, as of September 30, 2014 and December 31, 2013, the carrying amount of the Company’s long-term debt and current maturities of long term debt~~7. ~~The~~Fair ~~carrying~~Value ~~amount of the debt consists of the principal payments contractually required under the debt agreements:~~ Measurements

8A 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.

	September 30,2014			December 31,2013
Long-term debt:
GB/Crystal Term Loan—principal	$	16,200,000		$	15,200,000
GB/Crystal Revolving Loan- principal		8,521,333			8,973,333
Total long-term debt		24,721,333			24,173,333
Less current portion:
GB/Crystal Term Loan—principal (1)		(24,721,333	)		(24,173,333	)
Total current portion		(24,721,333	)		(24,173,333	)
Total long-term portion	$	0		$	0

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”).

~~(1)~~Our ~~All~~financial ~~debt~~instruments isconsist ~~classified~~of ascash ~~current~~and ascash aequivalents, ~~result~~accounts ofreceivable ~~not~~and ~~being~~other inreceivables, ~~compliance~~accounts ~~with~~payable, ~~our~~accrued ~~credit~~liabilities ~~agreement~~and long-term debt. The carrying values of cash and ~~the~~cash ~~lender’s~~equivalents, ~~ability~~accounts toreceivable ~~call~~and ~~our~~other ~~debt~~receivables, ~~upon~~accounts ~~expiration~~payable, ofand ~~the~~accrued ~~current~~liabilities ~~Forbearance~~approximate ~~Agreement~~their fair values. These are

On9 November 16, 2011, the Company entered into a new financing agreement (the “Credit 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 declining in increments of 1% at each the first and second anniversaries of the loan. At September 30, 2014, the prepayment penalty was 2%. At November 17, 2014, under the terms of the Credit Agreement, the prepayment penalty is eliminated. As of September 30, 2014, $16.2 million was outstanding under the term loan. In addition to the scheduled contractual principal and interest obligations, the Company is required to make principal payments, based on a percentage of excess cash flows (as defined in the 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 for each subsequent twelve-month period thereafter. The Company was not required to make an excess cash flow payment for the 12 month periods ending September 30, 2013 and September 30, 2014.

~~The~~ considered ~~term~~Level ~~loan~~1 ismeasurements. ~~set~~The tofair ~~mature~~value onof ~~November 16,~~our ~~2015~~long atterm ~~which~~debt ~~time~~approximates the ~~outstanding~~carrying ~~principal~~value ~~balance~~of ~~due is scheduled to be~~ $1125.80 million. ~~The~~at ~~other~~March 31, ~~$4.4 million~~2015 isand ~~scheduled~~December 31, to2014, berespectively ~~paid~~because atthe rate ~~various~~on ~~intervals~~this ~~prior~~debt towas ~~that~~recently ~~date.~~negotiated ~~Other~~and ~~than~~we ~~the~~believe ~~deferral~~is ofsimilar $2to ~~million~~the ofrate ~~payments,~~that ~~discussed~~we ~~below,~~could ~~all~~negotiate ~~payments~~at ~~have~~each ~~been~~period-end. ~~made~~For inadditional ~~accordance~~information, ~~with~~see ~~the~~Note ~~original~~4 ~~Credit~~Long-Term ~~Agreement~~Debt.

As of September 30, 2014, $8.5 million was outstanding under the revolving credit facility, secured by accounts receivable, parts inventory and spare engines. The revolving credit facility bears interest at the rate of 30 day LIBOR rate plus 8.0% with a minimum interest rate of 10~~.5%.~~ The revolving loan credit facility is set to mature on November 16, 2015 at which time any outstanding principal balance will be due. The Company was also required to pay a closing fee based on the initial facility commitment, and is required to pay a monthly unused line fee, a specified fee for certain prepayments of the term loan, and certain administrative and fronting fees related to the Credit Agreement.

9Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Table~~The ofCompany ~~Contents~~

AsWe ofwere ~~September 30,~~incorporated ~~2014~~on ~~the Company was not in compliance with the leverage coverage ratio financial covenant contained in the Company’s Credit Agreement. Specifically the Company was required to maintain a leverage ratio~~October 25, ~~calculated by dividing average quarterly borrowings by trailing 12 month earnings before interest, taxes, depreciation and~~1979 ~~amortization (EBITDA),~~ as ~~defined~~an byIowa ~~the~~corporation ~~Credit~~and ~~Agreement,~~became ofa ~~2.25:1~~publicly ortraded ~~less.~~company ~~At September 30, 2014, the Company’s leverage ratio was not~~ in ~~compliance~~January ~~with the terms of the Credit Agreement~~1994. ~~Furthermore,~~We ~~the~~commenced ~~Company~~scheduled ~~does~~air ~~not~~service ~~expect~~operations ~~to be in compliance with its leverage ratio covenants throughout the balance of 2014 as EBITDA is calculated~~ on ~~a trailing~~ October 12~~-month~~, ~~basis~~1981. AtGreat ~~March 31,~~Lakes ~~2014~~Airlines ~~the~~currently ~~Company~~operates ~~did~~hubs ~~not~~at ~~submit~~Denver, ~~its~~CO, ~~audited~~Los ~~annual report to its lenders within the prescribed timeframe required by the terms of the Credit Agreement. Furthermore~~Angeles, ~~the auditor’s report over the Company’s financial statements for the fiscal year ended December 31~~CA, ~~2013 contained an explanatory paragraph referencing substantial doubt about the Company’s ability to continue as a going concern. These are both covenant violations that~~Minneapolis, ~~absent a forbearance~~MN, ~~permit the Company’s lenders to exercise their right to declare our debt obligations to be immediately due~~ and payable under the terms of the Credit Agreement. As a result of not being in compliance with the terms of the Company’s senior credit facility and the expectation the Company will not be in compliance with the terms of the senior credit facility upon expiration of the forbearance and throughout the remainder of 2014 and into 2015Phoenix, ~~all borrowings (approximately $24~~AZ.7 ~~million) under the Company’s senior credit facility are classified as current maturities as of September 30, 2014.~~

OnWe ~~April 1,~~are ~~2014,~~a ~~the~~regional ~~Company~~airline ~~and~~operating ~~its~~as ~~Lenders~~an ~~have~~independent ~~entered~~carrier ~~into~~and as a ~~Third~~code ~~Amendment~~share ~~and~~partner ~~Forbearance~~with ~~Agreement~~United ~~which terminated~~Air ~~on April 30, 2014~~Lines. AsOur ~~part~~code ofshare ~~this~~ agreement allows weour ~~agreed~~mutual customers to apurchase 2%connecting ~~increase~~flights inthrough ~~the~~our ~~applicable~~code ~~rate~~share ~~that~~partner weand ~~are~~to ~~paying~~share onother ~~our~~benefits ~~loan~~such ~~agreements.~~as ~~The~~baggage ~~interest~~transfer ~~rate~~and onfrequent ~~our~~flyer ~~revolving~~benefits ~~credit~~(in ~~facility~~certain ~~increased~~instances), towhile the ~~greater~~Company ofmaintains 30its ~~day~~own ~~LIBOR~~branding on our ~~plus~~planes ~~10%~~and orticket ~~12.5%.~~counters ~~The~~and ~~interest~~our ~~rate~~own designator code on all our ~~term~~flights. ~~loan~~In ~~will~~addition ~~increased~~ to our code share agreement and independent branding, the ~~greater~~Company ofhas 30developed ~~day~~electronic ~~LIBOR~~ticketing ~~plus~~(e-ticket) ~~13%~~interline oragreements 17with American Airlines, Delta Airlines, United Airlines and U.5%S. Airways.

~~Effective~~As of May 3015, ~~2014~~2015, ~~the Company~~we ~~entered~~served ~~into~~26 ~~the~~airports ~~Fourth~~in ~~Amendment~~nine ~~and~~states ~~Second Forbearance to Credit Agreement (the “Forbearance Agreement”)~~ with its Lenders which terminated on September 15, 2014. In consideration of entering into the Forbearance Agreement, the Lenders have agreed to lend the Company up to an additional $3.0 million under our term loan and defer an additional $2.0 million of amortization payments until the maturity of the loan, which were due and payable by September 30, 2014. As of September 30, 2014 the Company has borrowed an additional $2.0 million under the terms of the Forbearance Agreement and deferred a ~~$2.0~~fleet ~~million~~ of ~~amortization~~six ~~payments~~Embraer ~~that,~~EMB-120 ~~absent the forbearance, would have been payable by~~Brasilias ~~September 30, 2014. The Company also agreed to pay a forbearance fee of $242,000, a funding fee of $60,000,~~ and a28 ~~commitment~~Beechcraft ~~fee~~1900D ofregional ~~$60,000~~airliners.

~~Effective~~Essential ~~September 23,~~Air ~~2014,~~Service ~~the Company entered into the Fifth Amendment and Third Forbearance to Credit Agreement~~ (~~the~~ “~~Forbearance Agreement~~EAS”) ~~with~~Program its lenders Crystal Financial LLC and GB Merchant Partners, LLC (the “Lenders”). The Forbearance Termination Date is on the earlier of (i) December 1, 2014 or (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement.

5We derived approximately 64% of our total revenue from the EAS program for the quarter ended March 31, 2015, which is administered by the United States Department of Transportation (DOT). ~~Related~~The ~~Parties~~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 ~~Company~~FAA Modernization ~~rents~~and ~~two~~Reform ~~six-passenger~~Act ~~aircraft~~of ~~and~~2012 awas ~~vehicle~~enacted ~~from~~into ~~Iowa~~law ~~Great~~on ~~Lakes Flyers~~February 14, ~~Inc~~2012., aThis ~~corporation~~legislation ~~solely~~provides ~~owned~~for bythe ~~Douglas~~authorization ~~G. Voss,~~of the ~~Company’s~~EAS ~~Chairman~~program ~~and major stockholder. Total payments~~ for ~~these~~federal ~~leases~~fiscal ~~were~~years ~~$21,375~~2011 ~~for~~through ~~each~~2015. ofFederal ~~the~~fiscal ~~nine~~year ~~months~~2015 ~~ending~~ends on September 30, 2015. ~~2014~~The ~~and~~FAA ~~2013,~~Modernization ~~respectively.~~and AsReform Act of ~~September 30,~~2012 ~~2014,~~reaffirmed ~~Mr. Voss~~the ~~controlled 4,160,247~~Congressional ~~shares~~commitment ofto ~~common~~the ~~stock~~continuance of the ~~Company,~~Essential ~~representing~~Air ~~approximately~~Service 46program.4% The EAS program obtains a portion of the ~~Company’s~~funding ~~outstanding~~through ~~common~~annual ~~stock~~Congressional appropriations.

10An airline serving a community that qualifies for essential air services is required to give the DOT advance notice before the airline may 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.

~~Table~~As of ~~Contents~~May 15, 2015, we served 18 EAS communities on a subsidized basis.

6.Pilot ~~Income~~Shortage ~~Taxes~~

~~The~~Federal ~~Company’s~~Aviation ~~annual~~Administration (“FAA”), ~~effective~~pilot ~~income~~qualification ~~tax~~rules ~~rate~~imposed isas ~~estimated~~part toof bethe ~~36.6%~~Airline ~~for~~Safety ~~2014.~~and ~~The~~Federal ~~Company’s~~Aviation ~~effective~~Administration ~~tax~~Extension ~~rate~~Act ~~includes non-deductible~~of ~~permanent~~2010 ~~tax~~in ~~differences.~~combination ~~Prior~~with torevised ~~2004,~~FAR ~~the~~Part ~~Company~~117 ~~reported~~Flight ~~significant~~Crewmember ~~cumulative~~Flight ~~losses~~ and ~~generated~~Duty ~~substantial~~Limitations ~~net~~and ~~operating~~Rest Requirements, ~~loss~~(“FAR ~~carryforwards.~~Part ~~From~~117”), ~~2007~~have ~~through~~created ~~2013,~~an ~~the~~industry-wide ~~Company~~shortage ~~utilized~~of aqualified ~~portion~~pilots ofand ~~these~~negatively ~~carryforwards~~affected ~~to offset~~our ~~taxable~~operations ~~income~~and financial condition.

~~Federal~~11 net operating loss carryforwards begin to expire in year 2021. The Company believes it is more likely than not that it will realize the benefit of the deductible temporary differences and these net operating loss carryforwards prior to expiration.

7These 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. ~~Fair~~As ~~Value~~a ~~Measurements~~result, Great Lakes lost a large portion of its pool of qualified pilots with Airline Transport Pilot (“ATP”) certification to airlines operating aircraft with more seat availability and hence greater pilot earnings potential.

AThe ~~fair~~Airline ~~value~~Safety ~~hierarchy~~and ~~that~~Federal ~~prioritizes~~Aviation Administration ~~the~~Extension ~~inputs~~Act ~~used~~of to2010 ~~measure~~was ~~fair~~enacted ~~value~~in ~~has~~August ~~been~~2010. ~~established~~Among bymany ~~ASC~~other ~~820,~~pilot ~~Fair~~training ~~Value Measurement.~~directives, ~~The hierarchy gives~~ the ~~highest~~legislation ~~priority~~mandated tothat ~~unadjusted~~first ~~quoted~~officers ~~prices~~(co-pilots) inobtain ~~active~~an ~~markets~~Airline ~~for~~Transport ~~identical~~Pilot ~~assets~~certification ~~or liabilities~~ (~~Level 1 measurement~~“ATP”) ~~and~~prior ~~the~~to ~~lowest~~being qualified ~~priority~~ to ~~unobservable~~perform ~~inputs~~crewmember ~~(Level~~duties 3in ~~measurement).~~scheduled ~~This~~airline ~~hierarchy requires~~passenger ~~entities~~service tounder ~~maximize~~FAR ~~the~~Part ~~use~~121 ofregulatory ~~observable~~requirements. ~~inputs~~A ~~and~~key ~~minimize~~factor ~~the~~to ~~use~~enable ofa ~~unobservable~~pilot ~~inputs.~~to ~~The~~receive ~~three~~an ~~levels~~ATP ofcertificate ~~inputs~~is ~~used~~the toaccumulation ~~measure~~of ~~fair~~1,500 ~~value~~flight ~~are~~hours. ~~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.

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.

~~Fair~~These ~~value~~new ispilot ~~defined~~qualification asrules have severed the ~~price~~historical ~~that~~path ~~would~~in bewhich ~~received~~pilots have had the opportunity to ~~sell~~build anenough ~~asset~~hours orso ~~paid~~they could advance their careers. Great Lakes has historically provided this career path for more than 32 years. Prior to ~~transfer~~this new rule, regulatory requirements provided for pilots to become eligible as first officers for a ~~liability~~FAR inPart an121 ~~orderly transaction~~air ~~between~~carrier ~~market~~with ~~participants~~a atminimum ~~the~~of ~~measurement~~250 ~~date~~hours of experience. WeThe ~~use~~new ~~valuation~~rules ~~techniques~~also mandate that ~~maximize~~a ~~the~~first ~~use~~officer ofmust ~~observable~~have ~~inputs~~1,000 ~~and~~hours ~~minimize~~as ~~the~~a ~~use~~FAR ofPart ~~unobservable~~121 ~~inputs~~first ~~when~~officer ~~determining~~in an ~~fair~~air ~~value~~carrier ~~and~~operation ~~then~~prior weto ~~rank~~being ~~the~~eligible ~~estimated~~to ~~values based~~serve onas ~~the~~a ~~reliability~~captain ofin ~~the~~a ~~inputs~~FAR ~~used~~Part ~~following~~121 airline. As an alternative, the ~~fair~~rule ~~value~~provides ~~hierarchy~~for ~~set~~captain ~~forth~~eligibility byunder ~~the~~FAR ~~Financial~~Part ~~Accounting~~121 ~~Standards~~for ~~Board~~pilots ~~(the~~who ~~“FASB”)~~accumulate 1,000 hours of pilot in command time in a FAR Part 135 operation.

~~Our~~The ~~financial~~current ~~instruments~~supply ~~consist~~ of ~~cash,~~pilot ~~accounts~~candidates ~~receivable,~~who ~~accounts~~qualify ~~payable,~~under ~~accrued~~the ~~liabilities~~new ~~and~~regulations ~~long-term~~is ~~debt~~severely ~~including the current portion~~limited. ~~The carrying~~It ~~values~~is ofdifficult ~~cash,~~for ~~accounts~~Great ~~receivable~~Lakes, which ~~accounts~~operates ~~payable~~Beech ~~and~~1900D ~~accrued~~turboprop ~~liabilities~~aircraft, ~~approximate~~to ~~their~~compete ~~fair~~for ~~values.~~qualified ~~These~~pilots ~~are~~with ~~considered~~other ~~Level~~airlines 1operating ~~measurements.~~50 ~~The~~seat ~~carrying~~regional ~~value~~jets ~~of our long term debt reflects original cost~~ and ~~was~~larger ~~$24~~equipment.7 ~~million and $24.2 million as of September 30, 2014 and December 31, 2013, respectively. For additional information, see Note 4 Long-Term Debt.~~

~~All~~As ~~of the~~a ~~Company’s~~result, ~~debt~~we ishave ~~comprised~~had ofto ~~variable~~reduce ~~rate~~scheduled ~~debt~~departures ~~(see~~by ~~Note~~suspending ~~4).~~service ~~Because~~to ~~there~~multiple iscommunities ~~not~~eligible ~~an active market~~ for ~~the~~Essential ~~Company’s~~Air ~~notes~~Service, and ~~the~~other ~~Company~~non-EAS markets. isThese ~~unable~~actions toresulted ~~determine~~in ana ~~appropriate~~reduction ~~discount~~of ~~rate~~revenue toand ~~use~~operating inexpenses. ~~estimating~~The ~~the~~rate ~~fair~~of ~~value~~expense ~~of this~~reduction ~~obligation~~will orinherently lag the ~~probability~~revenue ofdrop-off ~~early~~as ~~redemption,~~the itCompany isaggressively ~~not~~adjusts ~~practical~~its operating expenditures to ~~estimate~~match the ~~fair~~new ~~value~~level of ~~the debt~~ operations.

11In 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.

~~Table~~On ofMarch 18, ~~Contents~~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 March 2015 we have hired 90 new pilots. Of the 90 new hire pilots, 58 have completed training and 40 are operating in revenue generating scheduled air service.

~~Item~~The 2Company’s pilots are represented by the Sheet Metal, Air, Rail Transportation Union (“SMART”). ~~MANAGEMENT’S~~The ~~DISCUSSION~~Company ~~AND~~entered ~~ANALYSIS~~into OFa ~~FINANCIAL~~new ~~CONDITION~~agreement ~~AND~~with ~~RESULTS~~the OFpilots ~~OPERATIONS~~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.

~~The Company~~EAS Program Activity Subsequent to January 1, 2015

WeOn ~~were incorporated on October~~January 254, ~~1979~~2015 asthe anCompany ~~Iowa~~transitioned ~~corporation~~Essential ~~and~~Air ~~became~~Service ~~a publicly traded company~~ in ~~January~~Silver ~~1994. We commenced scheduled air service operations on October 12~~City, ~~1981.~~NM ~~Great~~to ~~Lakes~~another ~~Airlines currently operates hubs at Denver, CO, Los Angeles, CA, Minneapolis, MN and Phoenix, AZ~~carrier.

WeOn ~~are~~February 9, ~~regional~~2015 ~~airline~~the ~~operating~~Company astransitioned anEssential ~~independent carrier and as a code share partner with United~~ Air ~~Lines,~~Service Inc. (United or United Airlines). Our code share agreement allows our mutual customers to purchase connecting flights through our code share partner and to share other benefits such as baggage transfer and frequent flyer benefits (in ~~certain instances)~~Visalia, ~~while~~CA ~~we maintain our own branding on our planes and ticket counters and our own designator code on all our flights. In addition~~ to ~~our~~another ~~code share agreement and independent branding, we have developed electronic ticketing (e-ticket) interline agreements with American Airlines, Delta Airlines, United Airlines and U~~carrier.S. ~~Airways.~~

We12 operated under a code share agreement with Frontier Airlines (Frontier) from May, 2001 through September 30, 2014. The Company has been informed by Frontier that, as part of Frontier’s transformation to an ultra-low cost carrier, their business model and subsequent change to a new reservation platform will no longer allow for interline agreements with other carriers. As a result, effective October 1, 2014, the Company’s code share and interline e-ticketing agreements with Frontier were terminated. As a result, effective October 1, 2014, our code share and interline e-ticketing agreements with Frontier were terminated. We estimate that approximately 23% of our ticket sales are generated by the Frontier code share and interline e-ticketing sales channels. These ticket sales represented approximately 10.5% of our total revenue for the nine-month period ending September 30, 2014.

~~Whereas~~On weApril 30, ~~cannot~~2015, ~~currently quantify the effect of the termination of the Frontier code share and interline e-ticketing agreements~~Kingman, itAZ isbecame ~~our~~ineligible belief that the majority of the Frontier passengers will migrate to other sales channels provided by Great Lakes if they intend to use air transportation to reach their final destination. Our belief is largely predicated on the fact that we are the only scheduled airline serving these particular destinations. The alternative for ~~these~~Essential ~~passengers~~Air ~~would~~Service ~~be to utilize ground transportation or to not undertake their travel~~subsidy.

AsFinancial ofHighlights ~~November 11, 2014, we served 29 airports in nine states with a fleet of six Embraer EMB-120 Brasilias and 28 Beech 1900D regional airliners.~~

AsWe had operating revenue of ~~September~~$12.5 million for the three-month period ending March 3031, ~~2014~~2015, wea ~~were~~4.9% ~~not~~decrease incompared ~~compliance~~to ~~with~~operating ~~the~~revenue ~~terms~~of ~~contained~~$13.1 inmillion for the ~~Company’s~~three-month ~~senior~~period ~~credit~~ending ~~facility’s~~March 31, ~~Credit~~2014. ~~Agreement~~We realized a $2.5 As million decrease in passenger revenue and a ~~consequence~~$1.9 million ~~our~~increase ~~lenders~~in ~~have~~public ~~the~~service ~~right~~revenue compared to ~~declare~~the ~~our~~prior ~~debt~~year ~~obligations~~period. ofThe ~~approximately~~ $242.75 million toperiod-over-period bedecrease ~~immediately~~in ~~due~~passenger ~~and~~revenues ~~payable~~was ~~under~~attributable to a 9% reduction in the ~~terms~~number of departures in the ~~Credit~~first ~~Agreement.~~quarter Onof ~~September 23,~~2015 ~~2014,~~compared to the ~~Company~~first ~~entered~~quarter ~~into~~of 2014 in combination with operating the ~~Fifth Amendment~~Beechcraft ~~and~~1900D ~~Third~~in ~~Forbearance~~a nine seat versus 19 seat configuration. These contributing factors are directly related to ~~the~~a ~~Credit~~nationwide ~~Agreement~~shortage ~~with~~of ~~its~~qualified ~~Lenders~~pilots. The ~~Forbearance~~$1.9 ~~Termination~~million ~~Date~~increase in public service revenue is onmostly ~~the~~attributable ~~earlier~~to ofearning ~~(i) December 1,~~higher ~~2014~~subsidy orper ~~(ii) the~~departure ~~date~~rates onas ~~which~~we ~~Great~~renewed ~~Lakes~~Essential ~~commits~~Air ~~additional~~Service ~~breaches~~that ~~under~~required higher subsidy amounts as a result of operating the ~~Credit~~Beechcraft 1900D in a nine seat versus 19 seat ~~Agreement~~configuration. Fewer seats available to generate passenger revenue requires a higher proportional amount of public service revenue to operate the same flight.

We had an operating loss of $1.2 million for the three-month period ending March 31, 2015, compared to an operating loss of $5.8 million for the three-month period ending March 31, 2014. The ~~Company~~$4.6 million decrease in operating loss is ~~currently~~attributable ~~pursuing~~to a ~~new~~$5.3 ~~financing~~million ~~facility~~decrease in operating expenses, partially offset by a $0.6 ~~There~~million isdecrease noin ~~assurance~~operating revenue. We realized a net loss of $1.4 million for the ~~Company~~three-month ~~will~~period beending ~~able~~March 31, 2015, compared to ~~complete~~net loss of $4.3 million for the three-month period ending March 31, 2014. The decrease in net loss is primarily a ~~new~~result ~~financing~~of the decrease in operating loss ~~facility~~discussed onabove, ~~acceptable~~partially ~~terms~~offset by $1.7 million decrease in income tax benefit due to a lower loss before income taxes, and a $0.1 million increase in interest expense.

1213

~~Table~~Results of ~~Contents~~Operations for the Three Months Ended March 31, 2015 and 2014

~~Essential~~The ~~Air~~following ~~Service~~table ~~(“EAS”)~~sets ~~Program~~forth certain financial information regarding our results of operations for the three months ended March 31, 2015 and 2014.

InStatement ~~the nine months ended September 30, 2014, we derived approximately 47%~~ of ~~our~~Loss ~~total~~Data revenue from the EAS program 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~~(dollars ~~FAA Modernization~~in ~~and~~thousands) 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 2015. Federal fiscal year 2015 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. The EAS program obtains a portion of the funding through annual Congressional appropriations.

~~An airline serving a community that qualifies for essential air services is required to give the DOT advance notice before the airline may terminate, suspend,~~(unaudited) 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 November 11, 2014, we served 21 EAS communities on a subsidized basis.


	For the Three Months Ended March 31,
	2015									2014
							Year over Year
				Cents			Revenue/Cost						Cents
	Amount			per			Increase (Decrease)			Amount			per
	(in thousands)			ASM			Percentage			(in thousands)			ASM
Operating revenues:
Passenger	$	4,406			20.9	¢		(36.4	)%	$	6,925			17.4	¢
Public service		8,034			38.1			30.5			6,158			15.5
Freight, charter and other		53			0.3			12.8			47			0.1

Total operating revenues		12,493			59.3			(4.9	)		13,130			33.1

Operating expenses:
Salaries, wages, and benefits		4,910			23.3			(18.5	)		6,024			15.2
Aircraft fuel		2,239			10.6			(48.8	)		4,369			11.1
Aircraft maintenance, materials and repairs		1,225			5.8			(33.8	)		1,851			4.7
Depreciation and amortization		1,520			7.2			(5.9	)		1,615			4.1
Other rentals and landing fees		1,220			5.8			(12.9	)		1,401			3.5
Other operating expenses		2,531			12.0			(30.4	)		3,635			9.2

Total operating expenses		13,645			64.7			(27.8	)		18,895			47.6

Operating loss		(1,152	)		(5.4	)		(80.0	)		(5,765	)		(14.5	)
Interest expense, net		(1,066	)		(5.1	)		8.0			(987	)		(2.5	)

Loss before income taxes		(2,218	)		(10.5	)¢		(67.2	)%		(6,752	)		(17.0	)¢
Income tax benefit		801			3.8			(67.5	)		2,461			6.2

Net Loss	$	(1,417	)		(6.7	)¢		(67.0	)%	$	(4,291	)		(10.8	)¢

~~Pilot~~14 ~~Shortage~~

~~New~~Selected ~~Federal~~Operating ~~Aviation~~Data 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.

~~These~~The ~~new~~following ~~rules~~table ~~resulted~~sets inforth acertain ~~greatly~~selected ~~accelerated~~operating ~~demand~~data ~~for~~regarding ~~qualified~~our ~~pilots~~operations ~~as air carriers proceeded to increase pilot staffing requirements to compensate~~ for the ~~loss~~three ofmonths ~~crew~~ended ~~efficiency due to the new rules. As a result~~March 31, ~~Great~~2015 ~~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~~2014.

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.


	March 31, 2015			Increase (Decrease) from 2014			March 31, 2014
Selected Operating Data:
Available seat miles (in thousands) (1)		21,089			-46.9	%		39,722
Revenue passenger miles (in thousands) (2)		7,465			-54.5	%		16,405
Revenue passengers carried		26,573			-53.4	%		57,031
Departures flown		7,048			-9.4	%		7,780
Passenger load factor (3)		35.4	%		-14.3	%		41.3	%
Average yield per revenue passenger mile (4)		59.0	¢		39.8	%		42.2	¢
Revenue per available seat miles (5)		59.2	¢		78.9	%		33.1	¢
Cost per available seat mile (6)		64.7	¢		35.9	%		47.6	¢
Average passenger fare (7)	$	165.80			36.5	%	$	121.43
Average passenger trip length (miles) (8)		281			-2.4	%		288
Average cost per gallon of fuel	$	2.22			-40.8	%	$	3.75

~~Furthermore,~~(1) ~~the legislation~~“Available ~~directed~~seat ~~the~~miles” ~~FAA~~or ~~Administrator~~“ASMs” torepresent ~~conduct~~the anumber ~~rule~~of ~~making~~seats ~~proceeding,~~available tofor ~~identify~~passengers ~~specific~~in ~~academic~~scheduled ~~training~~flights ~~courses~~multiplied ~~that~~by ~~would~~the ~~provide~~number ~~for~~of ~~exemptions~~scheduled tomiles ~~the~~those ~~1,500~~seats ~~hour~~are ~~requirement~~flown. ~~The~~For ~~FAA~~comparative ~~published~~purposes, the ~~final~~change ~~rule~~ in ~~the~~period ~~Federal~~over ~~Register on~~period ~~July 15,~~ASMs ~~2013.~~was ~~These~~not ~~rules~~only ~~became~~affected ~~effective~~by ~~August 1,~~fewer ~~2013.~~departures Asin a2015 ~~result~~versus of2014, ~~the~~but ~~rule~~as ~~making~~the ~~process,~~Company ~~first~~was ~~officers~~forced ~~may~~to betransition ~~eligible~~ to ~~receive~~operating aBeech ~~“restricted~~1900s ~~privileges”~~in ~~ATP with~~ a ~~minimum~~nine ofseat ~~750~~configuration ~~hours~~to ifmitigate ~~they~~the ~~were~~effect aof ~~military~~ new pilot, ~~1,000~~qualification ~~hours~~rules; ifoperating ~~they have received~~ a ~~bachelor’s~~flight ~~degree from an accredited educational institution~~ with annine ~~aviation~~seats ~~major~~versus ~~and~~19 ~~1,250~~seats ~~hours~~had ifa ~~they~~significant ~~have~~effect ~~received~~on anperiod ~~associate’s~~over ~~degree~~period ~~from an accredited educational institution with an aviation major~~ASMs. ItThe ~~should~~standalone beeffect ~~noted~~of ~~that~~operating ~~accredited~~nine ~~educational~~seat ~~institutions~~Beech ~~provide~~1900s ~~very~~versus ~~limited~~19 ~~actual~~seat ~~flight~~Beech ~~experience~~1900s ~~and~~resulted ~~that~~in ~~graduates~~a ~~from~~decrease ~~these~~of ~~institutions~~14,416,000 ~~typically~~ASMs ~~will~~in ~~have~~the ~~received~~three ~~between~~month ~~250~~period toended ~~350~~March ~~hours~~31, ~~of actual flight time~~2015.

13(2) “Revenue passenger miles” or “RPMs” represent the number of miles flown by revenue passengers.

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

~~These~~(4) ~~new~~“Average ~~pilot~~yield ~~qualification~~per ~~rules~~revenue ~~have~~passenger ~~severed~~mile” ~~the~~represents ~~historical path in which pilots have had~~ the ~~opportunity~~average ~~to build~~passenger ~~enough~~revenue ~~hours~~received ~~so they could advance their careers. Great Lakes has historically provided this career path~~ for ~~more~~each ~~than~~mile ~~32 years. Prior to this new rule, regulatory requirements provided for pilots to become eligible as first officers for~~ a ~~FAR Part~~revenue ~~121~~passenger ~~air~~is ~~carrier with a minimum of 250 hours of experience~~carried. 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~~(5) ~~current~~“Revenue ~~supply~~per ofavailable ~~pilot~~seat ~~candidates~~mile” ~~who~~represents ~~qualify~~the ~~under~~average ~~the~~total ~~new~~operating ~~regulations~~revenue isreceived ~~severely~~for ~~limited.~~each Itavailable isseat ~~difficult~~mile. ~~for~~For ~~Great~~prior ~~Lakes~~year comparative purposes, ~~which~~considering ~~operates~~the ~~Beech~~standalone ~~1900D turboprop~~effect ~~aircraft,~~of tooperating ~~compete~~a ~~for~~portion ~~qualified~~of ~~pilots~~the ~~with~~Beech ~~other~~1900 ~~airlines~~fleet ~~operating~~in 50a nine seat ~~regional~~configuration ~~jets~~versus ~~and~~a ~~larger~~19 ~~equipment~~seat configuration; revenue per ASM would have decreased to 35.2 cents per ASM from the 59.2 cents per ASM (as illustrated above) for the three month period ended March 31, 2015.

As(6) a“Cost ~~result,~~per weavailable ~~have~~seat ~~had~~mile” ~~to reduce~~represents ~~scheduled~~operating ~~departures~~expenses divided by ~~suspending~~available ~~service~~seat tomiles. ~~multiple~~For ~~communities~~prior ~~eligible~~year ~~for~~comparative ~~Essential~~purposes, ~~Air~~considering ~~Service,~~the ~~and~~standalone ~~other~~effect ~~non-EAS~~of ~~markets.~~operating ~~These~~a ~~actions~~portion ~~resulted~~of the Beech 1900 fleet in a ~~reduction~~nine ofseat ~~revenue~~configuration ~~and~~versus ~~operating~~a ~~expenses.~~19 ~~The~~seat ~~rate~~configuration; ofcost ~~expense~~per ~~reduction~~ASM ~~will inherently~~would ~~lag~~have ~~the~~decreased ~~revenue~~to ~~drop-off~~38.4 ascents per ASM from the ~~Company~~64.7 ~~aggressively~~cents ~~adjusts~~per ~~its~~ASM ~~operating~~(as ~~expenditures~~illustrated toabove) ~~match~~for the ~~new~~three ~~level~~month ofperiod ~~operations.~~ended March 31, 2015.

In(7) ~~April~~“Average ~~of 2013,~~passenger ~~Great~~fare” ~~Lakes~~represents ~~submitted~~passenger arevenue ~~written~~divided ~~proposal~~by to the ~~FAA~~number ~~seeking~~of ~~authority~~revenue topassengers 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 standardscarried.

On(8) ~~March 18,~~“Average ~~2014,~~passenger ~~the~~trip ~~Company~~length” ~~received~~represents ~~from~~revenue ~~the~~passenger ~~FAA~~miles ~~new~~divided ~~operations~~by ~~specifications allowing~~ the ~~Company~~ tonumber ~~hire~~of 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 October 2014 we have hired 69 new pilots. Of the 69 new hire pilots, 49 have completed training and are operating in revenue ~~generating~~passengers ~~scheduled air service~~carried.

~~The~~15 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.

~~EAS~~Comparison ~~Program~~of ~~Activity~~First ~~Subsequent~~Quarter 2015 to ~~January 1,~~First Quarter 2014

~~Primarily~~Passenger asRevenues. aPassenger ~~result~~revenues ofwere $4.4 million in the ~~pilot~~first ~~shortage~~quarter of 2015, a decrease of 36.4% from $6.9 million in the ~~company~~first quarter ~~suspended~~of ~~EAS~~2014. ~~service~~The $2.5 million quarter-over-quarter decrease in passenger revenues was attributable to the ~~following~~curtailment ~~cities~~of ~~since~~operations ~~January 1,~~as ~~2014:~~a result of operating a large portion of our Beechcraft 1900D fleet in a nine seat configuration due to a severe shortage of available qualified pilots.

~~Moab~~Public Service Revenues. Public service revenues collected through the EAS Program increased 30.5% to $8.0 million during the first quarter of 2015, as compared to $6.2 million during the first quarter of 2014. The increase in public service revenue can be attributed to higher subsidy rates per departure as a result of operating the Beechcraft 1900D in a nine seat configuration. Fewer seats available to generate passenger revenue requires a higher proportional amount of public service revenue to operate the same flight. As we renewed EAS contracts utilizing nine seat configured aircraft, we increased our subsidy per departure rates. At March 31, 2015 and ~~Vernal~~March 31, UT2014, we served 18 and 22 communities, respectively, on a subsidized basis under the EAS Program.

~~Pueblo,~~Other AZ Revenues. Other revenues during the first quarter of 2015 was consistent with the first quarter of 2014.

~~Clovis~~Operating Expenses. Total operating expenses were $13.6 million, NMor 64.7 cents per ASM, in the first quarter of 2015, as compared to $18.9 million, or 47.6 cents per ASM in the first quarter of 2014.

~~Devils~~Salaries, ~~Lake~~Wages, and Benefits. Salaries, wages, and benefits were $4.9 million ~~Jamestown~~in the first quarter of 2015, NDa decrease of 18.5% from $6.0 million in the first quarter of 2014. The decrease in salaries, wages, and benefits was mostly attributable to the decreased number of employees as a result of the decreased operations due to the industry-wide shortage of qualified pilots.

FtAircraft Fuel Expense. ~~Dodge~~Aircraft fuel and ~~Mason~~into-plane ~~City~~expense was $2.2 million, IAor 10.6 cents per ASM, in the first quarter of 2015. In comparison, our aircraft fuel and into-plane expense for the first quarter of 2014 was $4.4 million, or 11.1 cents per ASM. The average cost of fuel decreased from $3.75 per gallon in the first quarter of 2014 to $2.22 per gallon in the first quarter of 2015. We estimate that of the $2.2 million decrease in year-over-year fuel cost that $1.5 million is attributable to fuel price decreases and $0.7 million is attributable to the reduction in operations. At first quarter 2015 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 $40,000 annually.

~~Ironwood~~Aircraft Maintenance, MIMaterials, and Component Repairs. Aircraft maintenance, materials, and component repairs expense was $1.2 million during the first quarter of 2015, which was a 33.8% decrease from $1.9 million during the first quarter of 2014. The decrease was primarily attributable to the reduction of component repairs and the timing of engine overhaul expenses resulting from the reduced operations.

~~Hays~~Depreciation and ~~Great~~amortization. Depreciation and amortization expense was $1.5 million during the first quarter of 2015 ~~Bend,~~which KSwas consistent with $1.6 million in the first quarter of 2014.

InOther ~~addition~~Rentals toand ~~the~~Landing ~~EAS~~Fees ~~subsidized~~Expense. ~~cities~~Other ~~above,~~rentals inand ~~March~~landing offees expense ~~2014,~~was ~~the~~$1.2 ~~Company~~million ~~terminated~~during ~~service~~the tofirst ~~Dickinson~~quarter ~~and~~of ~~Williston~~2015, ND which ~~were~~was ~~not EAS~~a ~~subsidized~~decrease ~~cities~~of $0.2 Inmillion ~~September~~from the first quarter of 2014,. weThe ~~terminated~~decrease ~~service~~was mainly attributable to ~~Telluride,~~decreased COlanding fees resulting from the 9.4% reduction in departures along with reduced hub rental expense.

14Other Operating Expenses. Other operating expenses were $2.5 million, or 12.0 cents per ASM during the first quarter of 2015, which was a decrease from $3.6 million, or 9.2 cents per ASM during the first quarter of 2014. The decrease was mainly attributable to decreases in passenger related expenses of $487,000, security $302,000, station equipment and expenses $191,000, legal and professional fees of $70,000 and deicing and other expenses of $76,000. These were partially offset by increased pilot related expenses of $23,000.

~~Table~~Interest Expense. We incurred interest expense of ~~Contents~~$1.1 million in the first quarter of 2015 which was consistent with $1.0 million in the first quarter of 2014.

~~Financial~~16 ~~Highlights~~

WeIncome ~~had~~Tax ~~operating revenue of $44~~Expense.4 ~~million~~For ~~for~~ the ~~nine-month~~three ~~period~~months ~~ending~~ended ~~September~~March 3031, ~~2014~~2015, awe ~~51.6%~~recorded ~~decrease~~an ~~compared~~income totax benefit ~~operating revenue~~ of $910.7 8 million and for the ~~nine-month~~three ~~period~~months ~~ending~~ended ~~September~~March 3031, ~~2013.~~2014, Wewe ~~realized~~recorded aan ~~$25.0~~income ~~million~~tax ~~decrease~~benefit inof ~~passenger revenue and public service revenue decreased~~ $222.15 million ~~compared to the prior year period~~. ~~The~~Our ~~$25.0~~estimated ~~million~~effective orfederal ~~51.9% period-over-period decrease in passenger revenues~~ and ~~the~~state ~~$22.1~~income ~~million~~tax orrate ~~51.2%~~is decrease in public service revenues was primarily attributable to a reduction of scheduled service as a result of a 56% reduction in the number of pilots available created by the industry-wide shortage of qualified pilots36. ~~This shortage of qualified pilots resulted in a 63.8~~0% ~~decrease~~for ~~in available seat miles and a 56.3% decrease in departures which resulted in 58.1% decrease in revenue passengers carried. The decrease in available seat miles was due to~~ the ~~decreased~~three ~~departures~~months ~~and~~ended toMarch 31, ~~the reconfiguration of certain aircraft with fewer seats~~2015.

WeSeasonality had an operating loss of $6.3 million for the nine-month period ending September 30, 2014, compared to operating income of $3.6 million for the nine-month period ending September 30, 2013. The $9.8 million decrease in operating income is attributable to a $47.3 million decrease in operating revenue, partially offset by a $37.5 million decrease in operating expenses. We realized a net loss of $6.1 million for the nine-month period ending September 30, 2014, compared to net income of $0.2 million for the nine-month period ending September 30, 2013. The increase in net loss is primarily a result of a $47.3 million decrease in operating revenue partially offset by a $37.5 million decrease in operating expenses, a $0.1 million increase in interest expense and a $3.7 million increase in income tax benefit.

15Seasonal 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. EAS 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

~~Table~~Liquidity, ofFinancing ~~Contents~~and Capital Resources

~~Results~~On December 22, 2014, we entered into a 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 ~~Operations~~up ~~for~~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 the ~~Three~~Credit ~~Months~~Agreement ~~Ended~~dated ~~September~~November 306, ~~2014~~2011 as amended between the Company and ~~2013~~Crystal Financial LLC and other lenders (the “Refinanced Credit Agreement”). The revolving loan facilities may be used for our working capital needs. At March 31, 2015, the entire undrawn balance of $6 million and $3 million was available to us under the first and second revolving loan facilities.

~~The~~In ~~following~~connection ~~table~~with ~~sets~~the ~~forth~~Loan ~~certain~~Agreement ~~financial~~described ~~information~~above, ~~regarding~~we ~~our~~repaid ~~results~~obligations oftotaling ~~operations~~$24.9 ~~for~~million, ~~the~~which ~~three~~constituted ~~months~~all ~~ended~~outstanding ~~September 30~~borrowings, ~~2014~~fees and expenses ~~2013~~under prior borrowing facilities. In connection with the repayment, our previous lenders terminated their security agreements and released all of their security interests in the Company’s aircraft and other assets.

~~Statement~~The ofterm ~~Income~~loan ~~(Loss)~~and ~~Data~~revolving credit facilities mature on December 22, 2017 at which time any outstanding balances will be due and payable. At that time, in order to pay the principal amount, the Company would need to raise cash by obtaining new debt financing, raising additional equity financing or selling owned aircraft or a combination thereof. We are not required to make any principal payments under the Loan Agreement until December 22, 2017, absent an event of default.

~~(dollars~~We have experienced a shortage of qualified pilots which has caused us to curtail operations and reduce capacity. The pilot shortage and its effect on operations are expected to continue until we can hire and train enough pilots to reestablish operations in ~~thousands)~~those markets in which we were forced to suspend service or expand into new markets. As a result of refinancing all of the Company’s debt on terms that will not require any scheduled principal payments until December 22, 2017, the Company has improved its working capital capabilities to support its efforts in reestablishing curtailed operations. At March 31, 2015, our outstanding principal balance on the term loan was $25.0 million and we had not borrowed under the revolving credit facility.

~~(unaudited)~~For the three months ending March 31, 2015, we invested $0.1 million of cash in aircraft, engines, rotable parts and other equipment, mostly represented by rotable parts acquisitions. We do not expect to acquire additional aircraft or engines in the foreseeable future.

	For the Three Months Ended September 30,
	2014									2013
	Amount(in thousands)			CentsperASM			Year over YearRevenue/CostIncrease (Decrease)Percentage			Amount(in thousands)			CentsperASM
Operating revenues:
Passenger	$	8,148			30.1	¢		(51.7	)%	$	16,873			19.5	¢
Public service		8,190			30.2			(43.8	)		14,584			16.9
Freight, charter and other		40			0.1			(70.8	)		137			0.2
Total operating revenues		16,378			60.4			(48.2	)		31,594			36.6
Operating expenses:
Salaries, wages, and benefits		4,797			17.7			(40.2	)		8,026			9.3
Aircraft fuel		4,455			16.4			(51.5	)		9,179			10.6
Aircraft maintenance, materials and repairs		747			2.8			(83.1	)		4,430			5.1
Depreciation and amortization		1,533			5.7			(4.1	)		1,599			1.9
Other rentals and landing fees		668			2.5			(31.1	)		970			1.1
Other operating expenses		3,290			12.1			(21.1	)		4,168			4.8
Total operating expenses		15,490			57.2			(45.4	)		28,372			32.9
Operating income (loss)		888			3.3			(72.4	)		3,222			3.7
Interest expense, net		(1,259	)		(4.6	)		17.1			(1,075	)		(1.2	)
Income (Loss) before income taxes		(371	)		(1.4	)¢		(117.3	)%		2,147			2.5	¢
Income tax benefit (expense)		135			0.5			(115.3	)		(880	)		(0.1	)
Net Income (Loss)	$	(236	)		(0.9	)¢		(118.6	)%	$	1,267			1.5	¢

At March 31, 2015 the Company has no aircraft lease obligations.

1617

~~Table~~Sources and Uses of ~~Contents~~Cash. As of March 31, 2015, our cash balance was $1.9 million.

~~Selected~~Cash Provided by Operating ~~Data~~Activities. During the three months ended March 31, 2015, our cash used by operating activities was $0.2 million compared to cash used in the three month period ending March 31, 2014 of $1.6 million. During the three months ended March 31, 2015 we generated a net loss of $1.4 million compared to a net loss of $4.3 million for the three months ended March 31, 2014. We recorded non-cash depreciation and amortization of $1.6 million and $0.8 million of deferred tax benefit in the first quarter of 2015. The timing of other working capital items generated $0.5 million of cash in the first quarter of 2015.

~~The~~Cash ~~following~~Flows ~~table~~from ~~sets~~Investing ~~forth~~Activities. ~~certain~~For ~~selected~~the ~~operating~~three ~~data~~month ~~regarding~~period ~~our~~ending ~~operations~~March 31, 2015, we invested $0.1 million for the purchase of replacement aircraft rotable components and other property and equipment, which was a decrease as compared to the ~~three~~$0.6 ~~months~~million of purchases in the period ended ~~September~~March 3031, 2014 ~~and 2013~~.

	September30, 2014			Increase(Decrease)from 2013			September30, 2013
Selected Operating Data:
Available seat miles (in thousands) (1)		27,101			-68.6	%		86,336
Revenue passenger miles (in thousands) (2)		13,963			-61.2	%		36,016
Revenue passengers carried		49,448			-61.3	%		127,883
Departures flown		9,147			-49.6	%		18,147
Passenger load factor (3)		51.5	%		23.5	%		41.7	%
Average yield per revenue passenger mile (4)		58.4	¢		24.8	%		46.8	¢
Revenue per available seat miles (5)		60.4	¢		65.0	%		36.6	¢
Cost per available seat mile (6)		57.2	¢		73.9	%		32.9	¢
Average passenger fare (7)	$	164.78			24.9	%	$	131.94
Average passenger trip length (miles) (8)		282			0.0	%		282
Average cost per gallon of fuel	$	3.52			-4.9	%	$	3.70

Cash Flows from Financing Activities. For the three month period ending March 31, 2015, there were no incremental borrowings under our working capital lines of credit nor were we required to make any principal payments on our long-term debt. In the period ended March 31, 2014, we made a $1 million principal payment on our debt.

~~(1)~~Forward-Looking ~~“Available~~Statements 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 16,713,900 ASMs in the three month period ended September 30, 2014.

This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Great Lakes Aviation, Ltd. (2Great Lakes, we, our, its, it or the Company) notes that certain statements in this Form 10-Q and elsewhere are forward-looking and provide other than historical information. Our management may also make oral, forward-looking statements from 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 “~~Revenue~~may”, ~~passenger~~“will”, ~~miles~~“believe,” or“plan,” “~~RPMs~~continue,” ~~represent~~“could”, “should”, “hope,” “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 ~~number~~statements contained in this Form 10-Q or elsewhere should be relied on as predictions of ~~miles~~future ~~flown~~events. Such statements are necessarily dependent on assumptions, data, or methods that may 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 ~~revenue~~these ~~passengers~~statements.

~~(3)~~Factors ~~“Passenger~~that ~~load~~could ~~factor”~~cause ~~represents~~results ~~the~~to ~~percentage~~differ ofmaterially ~~seats~~from ~~filled~~the byexpectations ~~revenue~~reflected ~~passengers~~in ~~and~~any isforward-looking ~~calculated~~statements byinclude: ~~dividing revenue passenger miles by available seat miles.~~

(41) ~~“Average~~our ~~yield~~ability ~~per~~to ~~revenue~~hire ~~passenger~~and ~~mile”~~retain ~~represents~~sufficient ~~the~~pilots ~~average~~to ~~passenger~~service ~~revenue~~existing ~~received~~routes ~~for~~and ~~each~~expand ~~mile~~into aother ~~revenue~~profitable ~~passenger is carried.~~routes;

(52) ~~“Revenue~~our ~~per~~ability available seat mile” represents the average total operating revenue received for each available seat mile. 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; revenue per ASM would have decreased to ~~37.4~~comply ~~cents~~with ~~per~~our ~~ASM~~current ~~from~~debt ~~the~~obligations ~~60.4~~and ~~cents per ASM (as illustrated above) for the three month period ended September 30, 2014.~~covenants;

173) the continuation of Essential Air Service and our ability to capitalize on it;

~~Table~~4) the level of ~~Contents~~regulatory and environmental costs;

(65) ~~“Cost~~airline ~~per~~industry ~~available~~and ~~seat~~broader ~~mile”~~economic 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 configurationconditions; ~~cost per ASM would have decreased to 35.4 cents per ASM from the 57.2 cents per ASM (as illustrated above) for the three month period ended September 30, 2014.~~

(76) ~~“Average~~the ~~passenger~~continued ~~fare”~~connection ~~represents~~capacity ~~passenger~~at ~~revenue~~our ~~divided~~hubs byand ~~the~~activities ~~number~~ of ~~revenue~~our ~~passengers~~code ~~carried.~~share partners;

(87) ~~“Average~~our ~~passenger~~ability ~~trip~~to ~~length”~~monetize ~~represents~~our ~~revenue~~net ~~passenger~~operating ~~miles~~loss ~~divided~~carry ~~by the number of revenue passengers carried.~~forwards;

~~Comparison~~8) ofthe ~~Third~~incidence ~~Quarter~~of ~~2014~~domestic toor ~~Third~~international ~~Quarter~~terrorism ~~2013~~and military actions;

~~Passenger~~9) ~~Revenues.~~competition ~~Passenger revenues were $8.1 million in the third quarter of 2014, a decrease of 51.7%~~ from ~~$16.9~~other ~~million~~airlines in the third quarter of 2013. The $8.8 million quarter-over-quarter decrease in passenger revenues was attributable to the curtailment of operations due to a severe shortage of available qualified pilots in combination with a reduction of scheduled service in markets that were experiencing diminishing year-over-year load factors and ~~lower~~ground ~~revenue~~transportation ~~passenger mile (RPM) yields.~~ companies;

~~Public~~10) ~~Service Revenues. Public service revenues collected through~~ the ~~EAS~~volatility ~~Program decreased 43.8% to $8.2 million during the third quarter~~ of ~~2014,~~fuel as compared to $14.6 million during the third quarter of 2013. The decrease in public service revenue was mostly due to a 49.6% decrease in departures due to the industry-wide shortage of qualified pilots. At September 30, 2014 and September 30, 2013, we served 21 and 32 communities, respectively, on a subsidized basis under the EAS Program. costs;

~~Other~~11) ~~Revenues. Other revenues declined 70.8%, mainly due to decline of cargo revenues resulting from a decrease in markets we serve and a 49.6% decline in departures during~~ the ~~third~~incidence ~~quarter~~ of ~~2014~~labor ~~compared~~disruptions toor ~~the third quarter of 2013.~~ strikes;

~~Operating~~12) ~~Expenses.~~our ~~Total~~ability ~~operating expenses were $15.5 million, or 57.2 cents per ASM, in the third quarter of 2014, as compared~~ to ~~$28.4~~retain ~~million,~~key ~~or 32.9 cents per ASM in the third quarter of 2013.~~ personnel;

~~Salaries,~~13) ~~Wages, and Benefits. Salaries, wages, and benefits were $4.8 million in~~ the ~~third~~incidence ~~quarter~~ of ~~2014,~~aircraft a decrease of 40.2% from $8.0 million in the third quarter of 2013. The decrease in salaries, wages, and benefits was mostly attributable to the decreased number of employees as a result of the decreased operations due to the industry-wide shortage of qualified pilots. accidents;

~~Aircraft~~14) ~~Fuel Expense. Aircraft fuel and into-plane expense was $4.5 million, or 16.4 cents per ASM, in~~ the ~~third~~incidence ~~quarter~~ of ~~2014.~~technological ~~In comparison,~~failures ~~our aircraft fuel and into-plane expense for the third quarter of 2013 was $9.2 million,~~ or 10.6 cents per ASM. The 51.5% decrease in our aircraft fuel expense was primarily attributable to a reduction in fuel consumption which was primarily the result of 49.6% fewer departures in the third quarter of 2014. attacks;

~~The~~15) ~~average~~maintenance ~~cost~~costs ofrelated ~~fuel decreased from $3.70 per gallon in the third quarter of 2013~~ to ~~$3.52~~aging ~~per gallon in the third quarter of 2014.~~ aircraft;

1816) the limited market for our securities;

~~Table~~17) the volatility of ~~Contents~~the market price of our common stock;

~~Aircraft~~18) ~~Maintenance,~~our ~~Materials,~~concentration ~~and~~of ~~Component~~stock ~~Repairs.~~ownership ~~Aircraft maintenance, materials,~~ and ~~component~~ ~~repairs~~control ~~expense was $0.7 million during the third quarter~~ of ~~2014, which was an 83.1% decrease from $4.4 million during~~ the ~~third~~company ~~quarter~~by ofour ~~2013.~~Chairman ~~The decrease was primarily attributable to the reduction of component repairs~~ and the timing of engine overhaul expenses resulting from the reduced operations. The decreases in maintenance expense are largely attributable to having more engines available to satisfy the reduced levels of service. We expect that engine repair expense will trend back to normalized levels relative to the number of departures flown. President;

~~Depreciation~~19) ~~and~~our ~~amortization.~~ability ~~Depreciation~~to ~~and~~timely ~~amortization expense~~remediate ~~was~~any ~~$1.5~~deficiencies ~~million during the third quarter of 2014 which was consistent with $1.6 million~~ in ~~the~~our ~~third~~internal ~~quarter of 2013.~~ controls;

~~Other~~18 Rentals and Landing Fees Expense. Other rentals and landing fees decreased by $0.3 million from $1.0 million during the third quarter of 2013, to $0.7 million during the third quarter of 2014. The decrease was mainly attributable to decreased landing fees resulting from the 49.6% reduction in departures along with reduced hub rental expense.

~~Other~~20) ~~Operating~~no ~~Expenses.~~expectation ~~Other operating expenses were $3.3 million, or 12.1 cents per ASM during the third quarter~~ of 2014, which was a decrease from $4.2 million, or 4.8 cents per ASM during the third quarter of 2013. The decrease was mainly attributable to decreases in passenger related expense and pilot related expenses. These were partially offset by increased legal and professional fees. dividend;

~~Interest~~21) ~~Expense.~~anti-takeover Weprovisions ~~incurred interest~~and ~~expense~~other ofrestrictions ~~$1.3 million~~ in ~~the~~our ~~third~~credit ~~quarter of 2014, compared to $1~~agreements.~~1 million in the third quarter of 2013. The increase was mainly attributable to increased prepaid debt fee amortization and an increased interest rate on borrowings.~~

~~Income~~Readers ~~Tax~~are ~~Expense.~~cautioned ~~For~~not ~~the~~to attribute ~~three~~undue ~~months~~certainty ~~ended~~on ~~September 30,~~the ~~2014,~~forward-looking westatements ~~recorded~~contained anherein, ~~income~~which ~~tax~~speak ~~benefit~~only as of ~~$0.1~~the ~~million~~date ~~and~~hereof. ~~for~~Changes ~~the~~may ~~three months~~occur ~~ended~~after ~~September 30,~~that ~~2013~~date, and we ~~recorded~~do annot ~~income~~undertake ~~tax~~to ~~expense~~update ofany ~~$0.9~~forward-looking ~~million.~~statements ~~Our~~except ~~estimated~~as ~~effective~~required ~~federal~~by ~~and~~law ~~state~~in the ~~income~~normal ~~tax~~course ~~rate~~of isour ~~36.6%~~public ~~for~~disclosure ~~2014~~practices.

19Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Table~~Market ~~of Contents~~Risks

~~Results~~We ofare ~~Operations~~susceptible ~~for~~to certain risks related to changes in the ~~Nine~~cost ~~Months~~of ~~Ended~~aircraft ~~September~~fuel and changes in interest rates. As of March 3031, ~~2014~~2015, ~~and~~we ~~2013~~did not have any derivative financial instruments.

~~The~~Aircraft ~~following~~Fuel ~~table sets forth certain financial information regarding our results of operations for the nine months ended September 30, 2014 and 2013.~~

~~Statement~~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 16.4% of ~~Income~~our ~~(Loss)~~operating ~~Data~~expenses in the three-month period ending March 31, 2015. At rates of consumption for the first three months of 2015, a one cent increase or decrease in the per gallon price of fuel will increase or decrease our fuel expense by approximately $40,000 annually.

~~(dollars~~Interest inRates ~~thousands)~~

~~(unaudited)~~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 March 31, 2015, we had approximately $25 million of fixed rate debt.

	For the Nine Months Ended September 30,
	2014									2013
							Year over Year
				Cents			Revenue/Cost						Cents
	Amount			per			Increase (Decrease)			Amount			per
	(in thousands)			ASM			Percentage			(in thousands)			ASM
Operating revenues:
Passenger	$	23,208			24.1	¢		(51.9	)%	$	48,249			18.1	¢
Public service		21,035			21.8			(51.2	)		43,136			16.2
Freight, charter and other		124			0.1			(61.8	)		325			0.1
Total operating revenues		44,367			46.0			(51.6	)		91,710			34.4
Operating expenses:
Salaries, wages, and benefits		15,833			16.4			(36.8	)		25,036			9.4
Aircraft fuel		12,938			13.4			(54.5	)		28,407			10.7
Aircraft maintenance, materials and repairs		3,371			3.5			(71.1	)		11,681			4.4
Depreciation and amortization		4,742			4.9			(1.2	)		4,801			1.8
Other rentals and landing fees		3,260			3.4			(31.7	)		4,770			1.8
Other operating expenses		10,497			10.9			(22.0	)		13,454			5.0
Total operating expenses		50,641			52.5			(42.6	)		88,149			33.1
Operating income (loss)		(6,274	)		(6.5	)		(276.2	)		3,561			1.3
Interest expense, net		(3,376	)		(3.5	)		3.0			(3,278	)		(1.2	)
Income (Loss) before income taxes		(9,650	)		(10.0	)¢		(3,509.9	)%		283			0.1	¢
Income tax benefit (expense)		3,535			3.7			(2,861.7	)		(128	)		0.0
Net Icome (Loss)	$	(6,115	)		(6.3	)¢		(4,045.2	)%	$	155			0.1	¢

Item 4.

CONTROLS AND PROCEDURES

20We 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.

~~Table~~Under the supervision and with the participation of ~~Contents~~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 March 31, 2015, our disclosure controls and procedures were effective.

~~Selected~~During ~~Operating~~the ~~Data~~Company’s most recent fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~The~~PART ~~following~~II ~~table~~- ~~sets~~OTHER ~~forth~~INFORMATION ~~certain selected operating data regarding our operations for the nine months ended September 30, 2014 and 2013.~~

	September 30,2014			Increase(Decrease)from 2013			September 30,2013
Selected Operating Data:
Available seat miles (in thousands) (1)		96,392			-63.8	%		266,569
Revenue passenger miles (in thousands) (2)		44,070			-57.7	%		104,273
Revenue passengers carried		151,176			-58.1	%		360,949
Departures flown		24,560			-56.3	%		56,230
Passenger load factor (3)		45.7	%		16.9	%		39.1	%
Average yield per revenue passenger mile (4)		52.7	¢		13.8	%		46.3	¢
Revenue per available seat miles (5)		46.0	¢		33.7	%		34.4	¢
Cost per available seat mile (6)		52.5	¢		58.6	%		33.1	¢
Average passenger fare (7)	$	142.03			6.3	%	$	133.67
Average passenger trip length (miles) (8)		292			1.0	%		289
Average cost per gallon of fuel	$	3.62			-1.9	%	$	3.69

Item 1.

LEGAL PROCEEDINGS

~~(1)~~We ~~“Available~~are ~~seat~~a ~~miles”~~party orto ~~“ASMs”~~ongoing ~~represent~~legal ~~the~~claims ~~number~~and ofassertions arising ~~seats available for passengers~~ in ~~scheduled flights multiplied by~~ the ~~number~~ordinary course of ~~scheduled miles those seats are flown~~business. ~~For~~Management ~~comparative~~believes ~~purposes,~~that the ~~change~~resolution inof ~~period~~these ~~over~~matters ~~period~~will ~~ASMs was~~ not ~~only~~have ~~affected by fewer departures in 2014 versus 2013, but as the Company was forced to transition to operating Beech 1900s in~~ a ~~nine~~material ~~seat~~adverse ~~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~~our ~~over~~financial ~~period~~position, ~~ASMs.~~results ~~The standalone effect~~ of ~~operating nine seat Beech 1900s versus 19 seat Beech 1900s resulted in a decrease of 25~~operations,~~663,230~~ ~~ASMs~~or incash ~~the nine month period ended September 30, 2014~~flows.

~~(2)~~During ~~“Revenue~~the ~~passenger~~period ~~miles”~~covered orby ~~“RPMs”~~this ~~represent~~Quarterly ~~the~~Report ~~number~~on ofForm ~~miles~~10-Q, ~~flown~~there bywere ~~revenue~~no ~~passengers~~material developments in any legal proceedings previously reported in our Annual Report on Form 10-K for the year ended December 31, 2014.

~~(3)~~19 ~~“Passenger load factor” represents the percentage of seats filled by revenue passengers and is calculated by dividing revenue passenger miles by available seat miles.~~

~~(5)~~Item ~~“Average~~1A. ~~yield~~RISK ~~per revenue passenger mile” represents the average passenger revenue received for each mile a revenue passenger is carried.~~FACTORS

~~(5)~~There ~~“Revenue~~has ~~per~~been ~~available~~no ~~seat~~material ~~mile”~~changes ~~represents~~with ~~the~~respect ~~average~~to ~~total operating revenue received for each available seat mile. For prior year comparative purposes, considering~~ the ~~standalone~~risk factors ~~effect~~disclosed ~~of operating a portion of the Beech 1900 fleet~~ in aour ~~nine~~Annual ~~seat~~Report ~~configuration~~on ~~versus~~Form a10-K 19for ~~seat configuration; revenue per ASM would have decreased to 36.3 cents per ASM from~~ the ~~46.0~~fiscal ~~cents~~year ~~per~~ended ~~ASM~~December 31, ~~(as~~2014, ~~illustrated~~filed ~~above)~~with ~~for~~ the ~~nine~~Securities ~~month~~and ~~period~~Exchange ~~ended~~Commission ~~September~~on March 30, ~~2014~~2015.

21Item 6. EXHIBITS

~~Table~~See of“Exhibit ~~Contents~~Index.”

~~(6)~~20 “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 41.5 cents per ASM from the 52.5 cents per ASM (as illustrated above) for the nine month period ended September 30, 2014.

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

~~(8)~~Pursuant ~~“Average~~to ~~passenger~~the ~~trip~~requirements ~~length”~~of ~~represents~~the ~~revenue~~Securities ~~passenger~~Exchange ~~miles~~Act ~~divided~~of by1934, the ~~number~~registrant ofhas ~~revenue~~duly ~~passengers~~caused ~~carried~~this report to be signed on its behalf by the undersigned thereunto duly authorized.

Comparison of First Nine Months 2014 to First Nine Months 2013


	GREAT LAKES AVIATION, LTD.

Dated: May 14, 2015	By:	/s/ Charles R. Howell IV
		Charles R. Howell IV
		Chief Executive Officer

	By:	/s/ Michael O. Matthews
		Michael O. Matthews
		Vice President and Chief Financial Officer

~~Passenger~~21 Revenues. Passenger revenues were $23.2 million in the first nine months of 2014, a decrease of 51.9% from $48.2 million in the first nine months of 2013. The $25.0 million period-over-period decrease in passenger revenues was attributable to the curtailment of operations due to a severe shortage of available qualified pilots in combination with a reduction of scheduled service in markets that were experiencing diminishing year-over-year load factors and lower revenue passenger mile (RPM) yields. In the first nine months of 2014, passenger revenue of $23.2 million included nonrecurring passenger revenue of $1.7 million related to nonrecurring amounts collected from another carrier. These amounts resulted from a reconciliation of the passenger revenues generated by our proration formulas with this carrier.

~~Public~~EXHIBIT ~~Service~~INDEX Revenues. Public service revenues collected through the EAS Program decreased 51.2% to $21.0 million during the first nine months of 2014, as compared to $43.1 million during the first nine months of 2013. The decrease in public service revenue was mostly due a56.3% decrease in departures due to the industry-wide shortage of qualified pilots. At September 30, 2014 and September 30, 2013, we served 20 and 32 communities, respectively, on a subsidized basis under the EAS Program.

Other Revenues. Other revenues declined 61.8%, mainly due to decline of cargo revenues resulting from 56.3% decline in departures during the first nine months of 2014 compared to the first nine months of 2013.


3.1		Amended and Restated Articles of Incorporation. (1)

3.2		Amended and Restated Bylaws. (1)

4.1		Specimen Common Stock Certificate. (2)

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.

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.

~~Operating~~(1) ~~Expenses.~~Incorporated ~~Total~~by ~~operating~~reference ~~expenses~~to ~~were~~the ~~$50.6~~Company’s ~~million,~~Registration orStatement ~~52.5~~on ~~cents~~Form ~~per ASM~~S-1/A, inRegistration ~~the~~No. ~~first nine months of 2014~~333-159256, as ~~compared~~filed toSeptember ~~$88.1 million~~3, ~~or 33~~2009.~~1 cents per ASM in the first nine months of 2013.~~

~~Salaries,~~(2) ~~Wages,~~Incorporated ~~and~~by ~~Benefits.~~reference Salaries, wages, and benefits were $15.8 million in the first nine months of 2014, a decrease of 36.8% from $25.0 million in the first nine months of 2013. The decrease in salaries, wages, and benefits was mostly attributable to the ~~decreased~~Company’s ~~number~~Registration ofStatement ~~employees~~on asForm ~~a result of the decreased operations due to the industry~~S-~~wide~~1, ~~shortage~~Registration ~~of qualified pilots~~No. 033-71180.

~~Aircraft Fuel Expense. Aircraft fuel and into~~E-~~plane~~1 expense was $12.9 million, or 13.4 cents per ASM, in the first nine months of 2014. In comparison, our aircraft fuel and into-plane expense for the first nine months of 2013 was $28.4 million, or 10.7 cents per ASM. The 54.5% decrease in our aircraft fuel expense was primarily attributable to a reduction in fuel consumption which was the result of a 56.3% decrease in departures in the first nine months of 2014.

The average cost of fuel decreased from $3.69 per gallon in the first nine months of 2013 to $3.62 per gallon in the first nine months of 2014. At first nine months of 2014 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 $48,000 annually.

Aircraft Maintenance, Materials, and Component Repairs. Aircraft maintenance, materials, and component repairs expense was $3.4 million during the first nine months of 2014, which was a 71.1% decrease from $11.7 million during the first nine months of 2013. The decrease was primarily attributable to the reduction of component repairs and the timing of engine overhaul expenses resulting from the reduced operations. The decreases in maintenance expense are largely attributable to having more engines available to satisfy the reduced levels of service. We expect that engine repair expense will trend back to normalized levels relative to the number of departures flown.

Depreciation and amortization. Depreciation and amortization expense was $4.7 million during the first nine months of 2014 which was consistent with $4.8 million in the first nine months of 2013.

Other Rentals and Landing Fees Expense. Other rentals and landing fees decreased by $1.5 million from $4.8 million during the first nine months of 2013 to $3.3 million during the first nine months of 2014. The decrease was mainly attributable to decreased landing fees resulting from the 56.3% reduction in departures along with reduced hub rental expense.

Other Operating Expenses. Other operating expenses were $10.5 million, or 10.9 cents per ASM during the first nine months of 2014, which was a decrease from $13.5 million, or 5.0 cents per ASM during the first nine months of 2013. The decrease was mainly attributable to decreases in pilot related expenses, passenger related expenses, deicing expenses, and insurance expense. These were partially offset by increased legal and professional fees.

Interest Expense. We incurred interest expense of $3.4 million in the first nine months of 2014, compared to $3.3 million in the first nine months of 2013. The increase was mainly attributable to increased prepaid debt fee amortization and an increased interest rate on borrowings.

Income Tax Expense. For the nine months ended September 30, 2014, we recorded an income tax benefit of $3.4 million and for the nine months ended September 30, 2013, we recorded an income tax benefit of $3.3 million. Our estimated effective federal and state income tax rate is 36.6% for 2014.

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. EAS 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.

Liquidity, Financing and Capital Resources

As a result of not being in compliance under our senior credit facility and the uncertainty of our liquidity position for the next 12 months, all borrowings (approximately $24.7 million) under our senior credit facility will be callable by the lender upon expiration of the current forbearance agreement and are classified as current maturities as of September 30, 2014. Thus, we had negative working capital of $9.3 million and a current ratio of 0.69:1 at September 30, 2014, compared to negative working capital of $4.4 million and a current ratio of 0.86:1 at December 31, 2013.

We have historically used debt to finance the purchase of aircraft. On November 16, 2011, we entered into a financing agreement with our lenders. 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.

At September 30, 2014, our outstanding principal balance on the term loan was $16.2 million and we had borrowed $8.5 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.

At September 30, 2014, the Company was not in compliance with financial covenants contained in the Credit Agreement, and it is not expected that the Company will be in compliance throughout the balance of 2014. As a result of such non-compliance our lenders have the right to declare all borrowings (approximately $24.2 million) immediately due and payable.

Effective September 23, 2014, the Company entered into the Fifth Amendment and Third Forbearance to Credit Agreement (the “Forbearance Agreement”) with its lenders Crystal Financial LLC and GB Merchant Partners, LLC (the “Lenders”). The Forbearance Termination Date is on the earlier of (i) December 1, 2014 or (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement.

The Company is currently pursuing a new financing facility. There is no assurance the Company will be able to complete a new financing facility on acceptable terms.

For the nine months ending September 30, 2014, we invested $0.8 million of cash in aircraft, engines, rotable parts and other equipment, mostly represented by rotable parts acquisitions.

At September 30, 2014 the Company has no aircraft lease obligations.

Sources and Uses of Cash. As of September 30, 2014, our cash balance was $3.9 million. We made principal payments on term debt of $1.5 million and had additional borrowings on term debt of $2.0 million.

Cash Provided by Operating Activities. During the nine months ended September 30, 2014, our cash used by operating activities was $1.9 million. During the nine months we generated a net loss of $6.1 million and recorded non-cash depreciation and amortization of $4.7 million and a deferred tax benefit of $3.5 million. Other sources of cash included collection of accounts receivable of $1.5 million, a reduction in inventory of $1.5 million and a combined reduction in prepaid expenses, other current assets and other assets of $0.9 million. Uses of cash included payment of accounts payable of $1.0 million and reductions in accrued interest, unearned revenue and other liabilities of $0.5 million.

Cash Flows from Investing Activities. During the first nine months of 2014, we invested $0.8 million for the purchase of replacement aircraft rotable components and other property and equipment.

Cash Flows from Financing Activities. During the first nine months of 2014, we utilized $1.5 million of cash to reduce our outstanding notes payable and long-term debt balances and borrowed an additional $2.0 million under the terms of the Forbearance Agreement. Proceeds from additional borrowings, net of finance and legal fees, amounted to $1.4 million.

Forward-Looking Statements

This Quarterly 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-Q and elsewhere are forward-looking and provide other than historical information. Our management may also make oral, forward-looking statements from 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,” “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-Q or elsewhere should be relied on as predictions of future events. Such statements are necessarily dependent on assumptions, data, or methods that may 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.

Factors that could cause results to differ materially from the expectations reflected in any forward-looking statements include:

1) our ability to hire and retain sufficient pilots to service existing routes and expand into other profitable routes;

2) our ability to restructure our current debt obligations and covenants and obtain additional sources of capital to provide for operating cash requirements either through additional financings and/or sales of assets;

3) the receipt of profitable levels of passenger revenues on the routes that we serve;

4) the continuation of Essential Air Service and our ability to capitalize on it;

5) the level of regulatory and environmental costs;

6) airline industry and broader economic conditions;

7) the continued connection capacity at our hubs and activities of our code share partners;

8) our ability to monetize our net operating loss carry forwards;

9) the incidence of domestic or international terrorism and military actions;

10) competition from other airlines and ground transportation companies;

11) the volatility of fuel costs;

12) the incidence of labor disruptions or strikes;

13) our ability to retain key personnel;

14) the incidence of aircraft accidents;

15) the incidence of technological failures or attacks;

16) maintenance costs related to aging aircraft;

17) the limited market for our securities;

18) the volatility of the market price of our common stock;

19) our concentration of stock ownership and control of the company by our Chairman and President;

20) our ability to timely remediate any deficiencies in our internal controls;

21) no expectation of dividend;

22) anti-takeover provisions and other restrictions in our credit agreements.

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 do not undertake to update any forward-looking statements except as required by law in the normal course of our public disclosure practices.

Item 3. 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 September 30, 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 25.5% of our operating expenses in the nine-month period ending September 30, 2014. At rates of consumption for the first nine months of 2014, a one cent increase or decrease in the per gallon price of fuel will increase or decrease our fuel expense by approximately $48,000 annually.

Interest 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 September 30, 2014, we had approximately $24.7 million of variable rate debt. Effective April 1, 2014, as a result of entering into a Third Amendment and Forbearance Agreement with our lenders, we agreed to a 2% increase in the applicable rate that we are paying on our loan agreements. The interest rate on our revolving credit facility will increase to the greater of 30 day LIBOR plus 10% or 12.5%. The interest rate on our term loan will increase to the greater of 30 day LIBOR plus 13% or 17.5%. Going forward, we could be subject to increased rates of interest on our debt if the 30 day LIBOR rate increases by more than 2.3 percentage points.

Item 4. CONTROLS AND PROCEDURES

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.

Under 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 September 30, 2014, our disclosure controls and procedures were effective.

During the Company’s most recent fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. 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.

During the period covered by this Quarterly Report on Form 10-Q, there were no material developments in any legal proceedings previously reported in our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 1A. RISK FACTORS

We are not in compliance with financial covenants under our senior credit facility with our Lenders.

As of September 30, 2014, the Company was not in compliance with financial covenants contained in the Credit Agreement. Furthermore, the Company does not expect to be in compliance with the leverage ratio covenant throughout the balance of 2014 and into 2015. Furthermore, the auditor’s report over the Company’s financial statements for the fiscal year ended December 31, 2013 contained an explanatory paragraph referencing substantial doubt about the Company’s ability to continue as a going concern. These are covenant violations that permit the Company’s lenders to exercise their right to declare our debt obligations to be immediately due and payable under the terms of the Credit Agreement. As a result, of not being in compliance with the terms of the Company’s senior credit facility and the expectation that the Company will not be in compliance with the terms of the senior credit facility throughout 2014, all borrowings (approximately $24.7 million) under the Company’s senior credit facility are classified as current maturities as of December 31, 2013.

On April 1, 2014, the Company and its Lenders entered into a Third Amendment and Forbearance Agreement which terminated on April 30, 2014. Under the terms of this agreement the Company’s lenders agreed to refrain from exercising their right to declare the obligations to be immediately due and payable under the terms of the Credit Agreement. On March 31, 2014, the Company also made its regularly scheduled debt payment to the lenders in the amount of $1 million. Effective May 30, 2014, the Company entered into the Fourth Amendment and Second Forbearance Agreement to the Credit Agreement with its Lenders in which the Lenders agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date was on the earlier of (i) September 15, 2014 or (ii) the date on which Great Lakes committed additional breaches under the Credit Agreement. In consideration of entering into the Fourth Amendment and Second Forbearance Agreement, the Lenders agreed to lend the Company up to an additional $3.0 million under the term loan and to defer until the maturity of the loan an additional $2.0 million of amortization payments which were due and payable by September 30, 2014. As of September 30, 2014 the Company has borrowed an additional $2.0 million under the terms of the Fourth Amendment and Second Forbearance Agreement and deferred the $2.0 million of amortization payments that were payable by September 30, 2014. In addition the Company agreed to pay the Lenders a forbearance fee of $242,000, a funding fee of $60,000, and a commitment fee of $60,000, and it also agreed to hire three firms to market the Company’s excess aircraft and inventory and to hire a financial advisor to advise the Company on raising capital through additional equity financings, debt financings, or other liquidity events. Effective September 23, 2014, the Company entered into the Fifth Amendment and Third Forbearance to Credit Agreement with its Lenders, pursuant to which the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date is the earlier of (i) December 1, 2014 or (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement.

The Company is currently pursuing a new financing facility. There is no assurance the Company will be able to complete a new financing facility on acceptable terms.

Until the Company is able to re-staff with enough qualified pilots to restore service to suspended or terminated markets, or until the Company is able to successfully close on the refinancing of our existing debt obligations, it is expected that the Company will not have sufficient liquidity to service its existing debt obligations for the next 12 month period.

The Company cannot make assurances that its assets or cash flow from operations will be sufficient to repay borrowings under its existing debt obligations, either upon maturity or if accelerated, that it will be able to refinance or restructure the payments due under the terms of the Credit Agreement. In addition, the Company cannot make assurances that its efforts to obtain financing or other liquidity events will be successful. This would have a material adverse impact on our liquidity and financial position, and would raise substantial doubt about our ability to continue as a going concern.

With the exception of the foregoing there have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the Securities and Exchange Commission on April 9, 2014.

Item 3. DEFAULTS UPON SENIOR SECURITIES

As of September 30, 2014 the Company was not in compliance with the leverage coverage ratio financial covenant contained in the Company’s senior credit facility’s Credit Agreement. Specifically the Company was required to maintain a leverage ratio, calculated by dividing average quarterly borrowings by trailing 12 month earnings before interest, taxes, depreciation and amortization (EBITDA), as defined by the Credit Agreement, of 2.25:1 or less. At September 30, 2014, the Company was not in compliance with the terms of the Credit Agreement. Furthermore, the Company does not expect to be in compliance with its leverage ratio covenants throughout the balance of 2014 as EBITDA is calculated on a trailing 12-month basis. Furthermore, the auditor’s report over the Company’s financial statements for the fiscal year ended December 31, 2013 contained an explanatory paragraph referencing substantial doubt about the Company’s ability to continue as a going concern. These are both covenant violations that permit the Company’s lenders to exercise their right to declare our debt obligations to be immediately due and payable under the terms of the Credit Agreement. As a result of not being in compliance with the terms of the Company’s senior credit facility and the expectation the company will not be in compliance with the terms of the senior credit facility throughout 2014, all borrowings (approximately $24.7 million) under the Company’s senior credit facility are classified as current maturities as of September 30, 2014.

Effective September 23, 2014, the Company entered into the Fifth Amendment and Third Forbearance to Credit Agreement with its Lenders, pursuant to which the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date is on the earlier of (i) December 1, 2014 or (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement.

Item 6. EXHIBITS

See “Exhibit Index.”

SIGNATURES

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

	GREAT LAKES AVIATION, LTD.
Dated: November 14, 2014	By:	/s/ Charles R. Howell IV
		Charles R. Howell IV
		Chief Executive Officer
	By:	/s/ Michael O. Matthews
		Michael O. Matthews
		Vice President and Chief Financial Officer

EXHIBIT INDEX

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		Third Amendment and Forbearance to Credit Agreement dated April 1, 2014 between and among Great Lakes Aviation, Ltd., Crystal Financial LLC, and GB Credit Partners, LLC (incorporated by reference to Current Report on Form 8-K filed on April 3, 2014)
10.2		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 (incorporated by reference to Current Report on Form 8-K filed on June 4, 2014)
10.3		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 (incorporated by reference to Current Report on Form 8-K filed on September 29, 2014)
10.4		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 (incorporated by reference to Current Report on Form 8-K filed on November 5, 2014)
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.
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.

(1) Incorporated by reference to the Company’s Registration Statement on Form S-1/A, Registration No. 333-159256, as filed September 3, 2009.

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

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Filing Compare · GREAT LAKES AVIATION LTD