United States Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Period Ended September 30, 2002 or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Transition Period From ______ to ______




Commission file number  000-21642


                               ATA HOLDINGS CORP.
- --------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)

            Indiana                                          35-1617970
  (State or other jurisdiction of                         (I.R.S.  Employer
   incorporation or organization)                        Identification No.)


       7337 West Washington Street
           Indianapolis, Indiana                                 46231
    (Address of principal executive offices)                  (Zip  Code)


                                 (317) 247-4000
- --------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not applicable
    (Former name, former address and former fiscal year, if changed
     since last report)

          Indicate  by check  mark  whether  the  registrant  (1) has  filed all
          reports  required to be filed by Section 13 or 15(d) of the Securities
          Exchange  Act of 1934  during  the  preceding  12 months  (or for such
          shorter  periods  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 ______

                Applicable Only to Issuers Involved in Bankruptcy
                   Proceedings During the Preceding Five Years

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by the court. Yes ______ No ______

                      Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.

Common Stock, Without Par Value - 11,764,753 shares outstanding as of
October 31, 2002

PART I - Financial Information
Item I - Financial Statements


                                                 ATA HOLDINGS CORP. AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEETS
                                                       (Dollars in thousands)

                                                                              September 30,             December 31,
                                                                                 2002                     2001
                                                                              -------------             ------------
                                    ASSETS                                    (Unaudited)
Current assets:
                                                                                                 
     Cash and cash equivalents .......................................      $     113,058              $    184,439
     Aircraft pre-delivery deposits ..................................             88,882                   166,574
     Receivables, net of allowance for doubtful accounts
     (2002 - $17,222; 2001 - $1,526) .................................             69,686                    75,046
     Inventories, net ................................................             50,733                    47,648
     Assets held for sale ............................................                 -                     18,600
     Prepaid expenses and other current assets .......................             29,242                    19,471
                                                                            -------------              -------------
Total current assets .................................................            351,601                   511,778

Property and equipment:
     Flight equipment ................................................            338,241                   327,541
     Facilities and ground equipment .................................            131,895                   119,975
                                                                            -------------              -------------
                                                                                  470,136                   447,516
     Accumulated depreciation ........................................           (176,205)                 (132,573)
                                                                            -------------              -------------
                                                                                  293,931                   314,943

Goodwill .............................................................             21,780                    21,780
Assets held for sale .................................................              8,595                    33,159
Prepaid aircraft rent ................................................             75,798                    49,159
Investment in BATA, LLC ..............................................             19,138                    30,284
Deposits and other assets ............................................             43,635                    41,859
                                                                            -------------              -------------
Total assets .........................................................      $     814,478              $  1,002,962
                                                                            =============              =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Current maturities of long-term debt .............................      $      15,177              $      5,820
    Short-term debt ..................................................             65,591                   118,239
    Accounts payable .................................................             29,634                    26,948
    Air traffic liabilities ..........................................             92,417                   100,958
    Accrued expenses .................................................            177,508                   177,102
                                                                            -------------              -------------
Total current liabilities ............................................            380,327                   429,067

Long-term debt, less current maturities ..............................            334,727                   373,533
Deferred income taxes ................................................                  -                    13,655
Deferred gains from sale and leaseback of aircraft ...................             52,877                    45,815
Other deferred items .................................................             36,496                    16,760
                                                                            -------------              -------------
Total liabilities ....................................................            804,427                   878,830

Redeemable preferred stock; authorized and issued 800 shares .........             80,000                    80,000

Shareholders' equity (deficit):
    Preferred stock; authorized 9,999,200 shares; none issued ........                  -                         -
    Common stock, without par value; authorized 30,000,000 shares;
       issued 13,476,193 - 2002; 13,266,642 - 2001 ...................             65,290                    61,964
    Treasury stock; 1,711,440 shares - 2002; 1,710,658 shares - 2001              (24,778)                  (24,768)
    Additional paid-in capital .......................................             10,824                    11,534
    Other comprehensive loss .........................................                  -                      (687)
    Retained deficit .................................................           (121,285)                   (3,911)
                                                                            -------------              -------------
Total shareholders' equity (deficit) .................................            (69,949)                   44,132
                                                                            -------------              -------------
Total liabilities and shareholders' equity ...........................      $     814,478              $  1,002,962
                                                                            =============              =============

See accompanying notes.



                                       2





                                                 ATA HOLDINGS CORP. AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                            (Dollars in thousands, except per share data)

                                                 Three Months Ended September 30, Nine Months Ended September 30,
                                                      2002             2001             2002             2001
                                                   ------------    -----------     ------------     ------------
                                                   (Unaudited)       (Unaudited)    (Unaudited)      (Unaudited)
Operating revenues:
                                                                                          
Scheduled service..................................  $ 231,633        $ 208,490        $ 664,431       $ 656,044
Charter............................................     68,185           93,629          238,698         292,603
Ground package.....................................      5,605            8,738           30,582          45,214
Other..............................................     11,866           10,612           32,689          33,988
                                                    ----------       ----------       ----------      ----------
Total operating revenues...........................    317,289          321,469          966,400       1,027,849
                                                    ----------       ----------       ----------      ----------
Operating expenses:
Salaries, wages and benefits.......................     95,094           84,956          264,782         249,444
Fuel and oil.......................................     52,956           67,908          151,350         205,918
Aircraft rentals...................................     51,244           26,884          135,731          68,279
Handling, landing and navigation fees..............     29,343           21,640           85,473          70,299
Depreciation and amortization......................     18,850           32,156           60,258         101,400
Crew and other employee travel.....................     14,485           15,089           41,933          46,695
Aircraft maintenance, materials and repairs........     11,308           14,704           37,388          50,064
Other selling expenses.............................     11,103           10,311           33,462          32,258
Passenger service..................................     10,379           12,614           29,677          35,725
Advertising........................................      9,553            7,190           30,181          20,695
Insurance..........................................      8,021            2,520           23,693           6,960
Facilities and other rentals.......................      6,294            5,347           17,492          14,670
Commissions........................................      3,964            7,707           18,089          28,520
Ground package cost................................      3,757            6,381           23,832          36,665
Special charges....................................          -            9,367                -           9,367
Aircraft impairments and retirements...............     34,318           37,633           51,559          41,749
U.S. Government grant..............................          -          (62,597)          15,210         (62,597)
Other..............................................     16,264           17,207           55,169          52,961
                                                    ----------       ----------       ----------      ----------
Total operating expenses...........................    376,933          317,017        1,075,279       1,009,072
                                                    ----------       ----------       ----------      ----------
Operating income (loss)............................    (59,644)           4,452         (108,879)         18,777

Other income (expense):
Interest income....................................        626            1,157            2,138           4,247
Interest expense...................................     (7,729)          (7,036)         (25,979)        (21,345)
Other..............................................       (620)           1,831             (988)          1,763
                                                    ----------       ----------       ----------      ----------
Other expense......................................     (7,723)          (4,048)         (24,829)        (15,335)
                                                    ----------       ----------       ----------      ----------
Income (loss) before income taxes..................    (67,367)             404         (133,708)          3,442
Income taxes (credits).............................     (6,746)              16          (19,569)            907
                                                    ----------       ----------       ----------      ----------
Net income (loss)..................................    (60,621)             388         (114,139)          2,535

Preferred stock dividends..........................       (375)            (375)          (3,235)         (3,083)
                                                    ----------       ----------       ----------      ----------
Income (loss) available to common shareholders.....  $ (60,996)            $ 13       $ (117,374)         $ (548)
                                                    ==========       ==========       ==========      ==========
Basic earnings per common share:

Average shares outstanding......................... 11,764,753       11,509,333       11,694,097      11,439,167
Net income (loss) per share........................     $(5.18)           $0.00         $ (10.04)        $ (0.05)
                                                    ==========       ==========       ==========      ==========
Diluted earnings per common share:
Average shares outstanding......................... 11,764,753       12,515,904       11,694,097      11,439,167
Net income (loss) per share........................     $(5.18)           $0.00         $ (10.04)        $ (0.05)
                                                    ==========       ==========       ==========      ==========
See accompanying notes.



                                       3




                                                 ATA HOLDINGS CORP. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED STOCK, COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
                                                       (Dollars in thousands)

                                  Redeemable                              Additional        Other
                                  Preferred     Common        Treasury      Paid-in     Comprehensive     Retained
                                    Stock        Stock          Stock       Capital     Income (Loss)      Deficit         Total
                                  --------      --------      ---------     --------          ----      ----------         --------
                                                                                                    
  Balance, December 31, 2001 .    $ 80,000      $ 61,964      $ (24,768)    $ 11,534       $ (687)       $ (3,911)       $ 124,132
                                  --------      --------      ---------     --------          ----      ----------         --------
Net income ...................           -             -              -            -            -           1,880            1,880

Net gain on derivative
instruments ..................           -             -              -            -          629               -              629
                                                                                             ----      ----------         --------
Total comprehensive
income .......................           -             -              -            -          629           1,880            2,509
                                                                                             ----      ----------         --------
Preferred stock dividends ....           -             -              -            -            -            (375)            (375)

Restricted stock grants ......           -            10              -            3            -               -               13

Stock options exercised ......           -           291              -         (138)           -               -              153
                                  --------      --------      ---------     --------          ----      ----------         --------
  Balance, March 31, 2002 ....    $ 80,000      $ 62,265      $ (24,768)    $ 11,399        $ (58)       $ (2,406)       $ 126,432
                                  ========      ========      =========     ========          ===      ==========         ========
Net loss .....................           -             -              -            -            -         (55,398)         (55,398)

Net gain on derivative
instruments ..................           -             -              -            -          391               -              391
                                                                                             ----      ----------         --------
Total comprehensive
income (loss) ................           -             -              -            -          391         (55,398)         (55,007)
                                                                                             ----      ----------         --------
Preferred stock dividends ....           -             -              -            -            -          (2,485)          (2,485)

Payment of liability
with stock ...................           -         2,445              -         (295)           -               -            2,150

Restricted stock grants ......           -             3            (10)           1            -               -               (6)

Stock options exercised ......           -           577              -         (281)           -               -              296
                                  --------      --------      ---------     --------          ----      ----------         --------
  Balance, June 30, 2002 .....    $ 80,000      $ 65,290      $ (24,778)    $ 10,824        $ 333       $ (60,289)        $ 71,380
                                  ========      ========      =========     ========          ===      ==========         ========
Net loss .....................           -             -              -            -            -         (60,621)         (60,621)

Net loss on derivative
instruments ..................           -             -              -            -         (333)             -              (333)
                                                                                              ----     ----------         --------
Total comprehensive
loss .........................           -             -              -            -         (333)        (60,621)         (60,954)
                                                                                              ----     ----------         --------
Preferred stock dividends ....           -             -              -            -            -            (375)            (375)
                                  --------      --------      ---------     --------          ----      ----------         --------
  Balance, September 30, 2002.    $ 80,000      $ 65,290      $ (24,778)    $ 10,824          $ -      $ (121,285)        $ 10,051
                                   ========      ========      =========     ========         ====      ==========         ========


  See accompanying notes.



                                       4



                                                 ATA HOLDINGS CORP. AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                       (Dollars in thousands)

                                                                               Nine Months Ended September 30,
                                                                             2002                           2001
                                                                         -------------                -------------
                                                                           (Unaudited)                 (Unaudited)

Operating activities:
                                                                                                    

Net income (loss)............................................              $(114,139)                     $   2,535
Adjustments to reconcile net income (loss)
  to net cash provided by operating activities:
Depreciation and amortization................................                 60,258                        101,400
Aircraft impairments and retirements.........................                 51,559                         41,749
Deferred income taxes (credits)..............................                (13,655)                         2,842
Other non-cash items.........................................                 30,913                         (4,650)
Changes in operating assets and liabilities:
U.S. Government grant receivable.............................                 15,210                        (29,996)
Other receivables............................................                 (9,850)                         2,805
Inventories..................................................                 (5,570)                       (10,554)
Prepaid expenses.............................................                 (9,771)                         6,850
Accounts payable.............................................                  2,686                         29,949
Air traffic liabilities......................................                 (8,541)                       (17,331)
Accrued expenses.............................................                 (3,984)                        16,375
                                                                           ---------                      ---------
Net cash provided by operating activities                                     (4,884)                       141,974
                                                                           ---------                      ---------
Investing activities:

Aircraft pre-delivery deposits...............................                 77,396                        (61,666)
Capital expenditures.........................................                (57,618)                      (251,031)
Noncurrent prepaid aircraft rent.............................                (19,273)                       (18,778)
Investment in BATA, LLC......................................                 18,632                         18,043
Reductions (additions) to other assets.......................                 (3,867)                         5,272
Proceeds from sales of property and equipment................                    408                             32
                                                                           ---------                      ---------
Net cash provided by (used in) investing activities                           15,678                       (308,128)
                                                                           ---------                      ---------
Financing activities:

Preferred stock dividends....................................                 (3,235)                        (3,083)
Proceeds from sale/leaseback transactions....................                  2,794                            369
Proceeds from short-term debt................................                 56,859                         71,537
Payments on short-term debt..................................               (109,507)                       (18,726)
Proceeds from long-term debt.................................                194,491                        151,238
Payments on long-term debt...................................               (224,016)                        (5,600)
Proceeds from stock options exercises........................                    449                          1,434
Purchase of treasury stock...................................                    (10)                          (204)
                                                                           ---------                      ---------
Net cash provided by (used in) financing activities                          (82,175)                       196,965
                                                                           ---------                      ---------
Increase (decrease) in cash and cash equivalents.............                (71,381)                        30,811
Cash and cash equivalents, beginning of period...............                184,439                        129,137
                                                                           ---------                      ---------
Cash and cash equivalents, end of period.....................              $ 113,058                      $ 159,948
                                                                           =========                      =========


Supplemental disclosures:

Cash payments for:
Interest.....................................................               $ 33,102                       $ 33,794
Income taxes (refunds).......................................               $  3,063                       $ (7,931)

Financing and investing activities not affecting cash:
Accrued capitalized interest.................................               $ (6,406)                      $ 11,293

See accompanying notes.



                                       5




                       ATA HOLDINGS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation

     The accompanying  consolidated  financial statements of ATA Holdings Corp.,
     formerly Amtran,  Inc., and subsidiaries (the "Company") have been prepared
     in accordance with instructions for reporting interim financial information
     on Form 10-Q and,  therefore,  do not include all information and footnotes
     necessary  for a  fair  presentation  of  financial  position,  results  of
     operations  and  cash  flows  in  conformity  with  accounting   principles
     generally accepted in the United States.

     The consolidated  financial statements for the quarters ended September 30,
     2002 and 2001  reflect,  in the  opinion  of  management,  all  adjustments
     necessary to present fairly the financial  position,  results of operations
     and cash  flows  for  such  periods.  Results  for the  nine  months  ended
     September 30, 2002 are not necessarily indicative of results to be expected
     for the full fiscal year ending December 31, 2002. For further information,
     refer  to the  consolidated  financial  statements  and  footnotes  thereto
     included  in the  Company's  Annual  Report on Form 10-K for the year ended
     December 31, 2001.

2.   Earnings per Share

     The  following  tables  set forth  the  computation  of basic  and  diluted
     earnings per share:



                                                                                         Three Months Ended September 30,
                                                                                          2002                   2001
                                                                                      ------------           ------------
                                                                                                         
        Numerator:
        Net income (loss)                                                             $ (60,621,000)           $  388,000
        Preferred stock dividends                                                          (375,000)             (375,000)
                                                                                      -------------            ----------
        Income (loss) available to common
        shareholders-numerator for basic and
           diluted earnings per share                                                 $ (60,996,000)             $ 13,000
                                                                                      =============            ==========


        Denominator:
        Denominator for basic earnings per share
        - weighted average shares                                                        11,764,753            11,509,333
        Effect of potential dilutive securities:
        Employee stock options                                                                    -             1,006,571
                                                                                      -------------            ----------
        Denominator for diluted earnings per share
         - adjusted weighted average shares                                              11,764,753            12,515,904
                                                                                      =============            ==========
        Basic income (loss) per share                                                       $ (5.18)               $ 0.00
                                                                                      =============            ==========
        Diluted income (loss) per share                                                     $ (5.18)               $ 0.00
                                                                                      =============            ==========




                                       6





                                                                                         Nine Months Ended September 30,
                                                                                          2002                   2001
                                                                                      ------------           ------------
                                                                                                         
        Numerator:
        Net income (loss)                                                             $(114,139,000)           $ 2,535,000
        Preferred stock dividends                                                        (3,235,000)            (3,083,000)
                                                                                      -------------            -----------
        Loss available to common
        shareholders-numerator for basic and
           diluted earnings per share                                                 $(117,374,000)           $  (548,000)
                                                                                      =============            ===========

        Denominator:
        Denominator for basic and diluted earnings
        per share - weighted average shares                                              11,694,097             11,439,167
                                                                                      =============            ===========
        Basic loss per share                                                               $ (10.04)               $ (0.05)
                                                                                      =============            ===========
        Diluted loss per share                                                             $ (10.04)               $ (0.05)
                                                                                      =============            ===========


     In accordance with Financial  Accounting Standards Board ("FASB") Statement
     No.  128,   "Earnings  per  Share,"  the  impact  of  1,914,486  shares  of
     convertible  redeemable preferred stock in the three months and nine months
     ended  September 30, 2002 and 2001, has been excluded from the  computation
     of diluted  earnings per share because their effect would be  antidilutive.
     In  addition,  the impact of 180,886 and 668,841  employee  stock  options,
     respectively,  has been excluded from the  computation of diluted  earnings
     per  share  for  the  nine  months  ended  September  30,  2002  and  2001,
     respectively, because their effect would be antidilutive.

3.   Segment Disclosures

     The Company  identifies  its segments on the basis of similar  products and
     services.  The airline segment derives its revenues primarily from the sale
     of  scheduled  service or charter air  transportation.  ATA  Leisure  Corp.
     ("ATALC") derives its revenues from the sale of vacation  packages,  which,
     in  addition  to  air  transportation,  include  hotels  and  other  ground
     arrangements.  ATALC purchases air transportation for its vacation packages
     from ATA and other airlines.

     On July 1, 2002, the Company outsourced the management operations of two of
     its ATALC brands, ATA Vacations and Travel Charter  International  ("TCI"),
     to Milwaukee-based  The Mark Travel Corporation  ("MTC").  MTC will create,
     advertise,  take  reservations  and deliver  these ATALC  brands.  MTC will
     receive  revenue  from the package  sales,  and the Company  will receive a
     royalty fee from MTC. Other ATALC  products,  including Key Tours' Canadian
     Rail  programs  and Key Tours'  Las Vegas  ground  operations,  will not be
     outsourced. The Company expects this segment to have a less material effect
     on the  consolidated  financial  statements as a result of the  outsourcing
     arrangements,  and does not  consider  it a  reportable  segment due to its
     immateriality.


4.   Commitments and Contingencies

     In 2000,  the Company  entered  into a purchase  agreement  with the Boeing
     Company to purchase  directly from Boeing 10 new Boeing 757-300s and 20 new
     Boeing  737-800s.  The  Boeing  737-800  aircraft  are  powered  by General
     Electric CFM56-7B27 engines, and the Boeing 757-300 aircraft are powered by
     Rolls-Royce  RB211-535  E4C  engines.  The Company also  received  purchase
     rights for an  additional  50 aircraft.  The  manufacturer's  list price is
     $73.6 million for each 757-300 and $52.4 million for each 737-800,  subject


                                       7



     to escalation. The Company's purchase price for each aircraft is subject to
     various  discounts.  To fulfill its purchase  obligations,  the Company has
     arranged for each of these aircraft, including the engines, to be purchased
     by third parties that will, in turn, enter into long-term  operating leases
     with the Company.  As of September 30, 2002, the Company had taken delivery
     of eight Boeing  737-800s and 10 Boeing  757-300s  obtained  directly  from
     Boeing.  All  remaining  aircraft to be purchased  directly from Boeing are
     currently  scheduled  for  delivery  between  October 2002 and August 2004.
     Aircraft  pre-delivery  deposits are required for these purchases,  and the
     Company has funded these deposits using  operating cash and deposit finance
     facilities.  As of  September  30, 2002,  the Company had $93.3  million in
     pre-delivery  deposits  outstanding  for  these  aircraft,  of which  $65.6
     million was provided by deposit finance  facilities  with various  lenders.
     Upon delivery of the aircraft,  pre-delivery deposits funded with operating
     cash will be  returned  to the  Company,  and  those  funded  with  deposit
     facilities will be used to repay those facilities.

     In  December  2001,  the  Company  entered  into an  agreement  to exercise
     purchase  rights on two Boeing 757-300  aircraft to be delivered in May and
     June 2003. The Company  currently has purchase  rights  remaining for eight
     Boeing 757-300 aircraft and 40 Boeing 737-800 aircraft.

     The Company has operating lease  agreements in place to lease 14 new Boeing
     737-800s from  International  Lease  Finance  Corporation  ("ILFC").  As of
     September 30, 2002,  the Company had taken  delivery of 12 Boeing  737-800s
     that are being leased from ILFC.  The  remaining  two aircraft  under these
     operating lease  agreements are scheduled for delivery in June 2003 and May
     2004.

     The Company has an agreement  with General  Electric to purchase four spare
     engines, which are scheduled for delivery between 2003 and 2006.

     In March  2001,  the  Company  entered  into a  limited  liability  company
     agreement with Boeing Capital  Corporation ("BCC") to form BATA Leasing LLC
     ("BATA") a 50/50 joint venture.  Because the Company does not control BATA,
     the Company's  investment is being accounted for under the equity method of
     accounting.  BATA is  expected to remarket  the  Company's  fleet of Boeing
     727-200 aircraft in either passenger or cargo  configurations.  In exchange
     for  supplying  the aircraft and certain  operating  services to BATA,  the
     Company has and will continue to receive both cash and equity in the income
     or loss of BATA. The Company transferred 12 Boeing 727-200 aircraft to BATA
     in 2001,  and  subsequently  leased  nine of those  aircraft  back  through
     short-term operating leases with BATA. As of June 30, 2002, all nine leases
     had  terminated,  but the  Company is subject  to lease  return  conditions
     contained  in these nine  operating  leases  upon  delivery of any of these
     aircraft to a third party by BATA.  As of September 30, 2002, a third-party
     lessee  or  buyer  has  not  been  identified  for any of  these  aircraft.
     Management  believes it is reasonably  possible that a lessee or buyer will
     be identified. The Company estimates that it could incur up to $7.0 million
     of expense to meet the return conditions,  if all nine of the aircraft were
     sold or leased by BATA to third parties. No liability has been recorded for
     these return conditions.

     Various claims, contractual disputes and lawsuits against the Company arise
     periodically   involving   complaints   which  are  normal  and  reasonably
     foreseeable in light of the nature of the Company's business.  The majority
     of these suits are covered by insurance. In the opinion of management,  the
     resolution of these claims will not have a material  adverse  effect on the
     business, operating results or financial condition of the Company.


5.   New Accounting Pronouncements

     In June 2001, the FASB issued Statement of Financial  Accounting  Standards
     No. 141, Business Combinations,  and No. 142, Goodwill and Other Intangible
     Assets ("FAS 142"), effective for fiscal years beginning after December 15,
     2001. As required upon adoption of FAS 142, as of June 30, 2002 the Company
     had  completed  transitional   impairment  reviews  on  its  goodwill.  See
     "Management's Discussion and Analysis of Financial Condition and Results of
     Operations  -  Critical  Accounting  Policies"  for a  description  of  the
     Company's application of FAS 142.


                                       8



     The Company  adopted FASB  Statement of Financial  Accounting  Standard No.
     144,  Accounting for the Impairment or Disposal of Long-Lived  Assets ("FAS
     144") effective January 1, 2002. See "Management's  Discussion and Analysis
     of Financial  Condition  and Results of  Operations  - Critical  Accounting
     Policies" for a description of the Company's application of FAS 144.


                                       9



PART I - Financial Information
Item II - Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Quarter and Nine Months Ended September 30, 2002, Versus Quarter and Nine Months
Ended September 30, 2001

Overview

The Company is a leading  provider of  scheduled  airline  services  and charter
airline services to leisure and other value-oriented  travelers, and to the U.S.
military.  The Company,  through its principal  subsidiary,  American Trans Air,
Inc.  ("ATA"),  has been  operating  for 30 years and is the tenth  largest U.S.
airline in terms of 2001  capacity  and  traffic.  ATA  provides  jet  scheduled
service   through   nonstop  and   connecting   flights  from  the  gateways  of
Chicago-Midway and Indianapolis to popular vacation destinations such as Hawaii,
Phoenix, Las Vegas, Florida, California, Mexico and the Caribbean, as well as to
New  York's  LaGuardia  Airport,   Philadelphia,   Denver,   Dallas-Ft.   Worth,
Washington, D.C., Boston, Seattle,  Minneapolis-St.  Paul, Newark and Charlotte.
The Company's  commuter  subsidiary  Chicago Express  Airlines,  Inc.  ("Chicago
Express")  provides commuter  scheduled service between  Chicago-Midway  and the
cities of Indianapolis,  Cedar Rapids, Des Moines,  Dayton, Flint, Grand Rapids,
Lexington,  Madison, Milwaukee,  Moline, South Bend, Springfield and Toledo. ATA
also provides charter service to independent tour operators,  specialty  charter
customers and the U.S. military.

In the quarter and nine months ended September 30, 2002, the Company recorded an
operating loss of $59.6 million and $108.9 million, respectively, as compared to
operating  income of $4.5 million and $18.8 million in the same periods of 2001.
Consolidated yield declined by 0.6% and 7.1%,  respectively,  in the quarter and
nine months ended  September  30, 2002, as compared to the same periods of 2001,
while  consolidated load factors declined 5.6% and 2.5%,  respectively,  between
the same periods.  Weak pricing was evident particularly in scheduled service in
2002,  and reflects the continuing  impacts of severely  reduced demand for both
business and leisure air travel subsequent to the terrorist attacks of September
11, 2001.  The Company also believes that  consumer  confidence  continues to be
eroded by an  unsettled  economic  climate  in the  United  States and that some
customers are choosing  alternative modes of transportation due to the impact of
enhanced  security  procedures on air  transportation  convenience.  The Company
expects  continued  weakness  in unit  revenue and load  factor  throughout  the
remainder of 2002.

The Company's  unit costs  remained  among the lowest of major airlines in 2002.
Excluding  special and unusual items,  consolidated cost per available seat mile
("CASM")  was 7.62 cents and 7.73 cents,  respectively,  in the quarter and nine
months  ended  September  30,  2002,  as  compared to 7.79 cents and 8.11 cents,
respectively,  in the comparable  periods of 2001 (see "Results of Operations in
Cents Per ASM.") In 2002 unit cost of salaries,  wages and benefits  were higher
than in 2001,  because the Company recorded a charge of $9.9 million to record a
signing  bonus  relating to  recently-ratified  amendments  to the cockpit  crew
collective  bargaining  agreement  and  implemented  higher pay rates  under the
amended agreement  effective July 1, 2002. The Company is continuing its efforts
to further  reduce its operating  costs in the fourth  quarter of 2002, and also
expects to continue  to realize  net  operating  cost  savings  from the ongoing
deliveries of its new fleet of Boeing 737-800 and Boeing 757-300  aircraft,  and
ongoing retirements of Lockheed L-1011 aircraft.  The Company had retired all of
its Boeing 727-200 aircraft by June 30, 2002.

The Company, however, does not expect that it will be able to fully mitigate the
weak revenue results solely through cost savings initiatives. Consequently, the
Company  expects  to incur  operating  and net  losses  for the full year  2002,
including further losses in the fourth quarter.


                                       10



Critical Accounting Policies

"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" discusses the Company's  consolidated  financial  statements,  which
have been prepared in accordance with accounting  principles  generally accepted
in the United States.  The  preparation of these financial  statements  requires
management to make judgments and estimates  that affect the reported  amounts of
assets,  liabilities,  revenues and expenses,  and the disclosures of contingent
assets and liabilities.  Certain significant  accounting policies applied in the
preparation of the financial  statements  require  management to make difficult,
subjective or complex judgments, and are considered critical accounting policies
by the  Company.  The Company has  identified  the  following  areas as critical
accounting policies.

Goodwill  Accounting.  In June 2001,  the FASB issued new  accounting  standards
pertaining to goodwill in FAS 142,  effective for fiscal years  beginning  after
December 15, 2001. Under FAS 142,  goodwill and intangible assets deemed to have
indefinite  lives  will no longer be  amortized,  but will be  subject to annual
impairment  reviews.  The Company's goodwill is related to its ATALC, ATA Cargo,
Inc. ("ATA Cargo") and Chicago Express subsidiaries acquired in 1999.

FAS 142  requires  companies  to  perform  transitional  impairment  reviews  of
goodwill as of the date of adoption of the statement, which was January 1, 2002.
The transitional  goodwill  impairment test was required to be completed by June
30, 2002, based upon the carrying values and estimated fair values as of January
1, 2002. This test is a two-step process.  Step one compares the fair value of a
reporting  unit  (determined  through  market  quotes  or the  present  value of
estimated future cash flows) with its carrying amount (assets less  liabilities,
including  goodwill.) If the estimated  fair value exceeds the carrying  amount,
goodwill of the reporting unit is considered  not impaired,  and step two of the
impairment  test is not  necessary.  If the carrying  amount of a reporting unit
exceeds its  estimated  fair value,  the second step of the goodwill  impairment
test is then  performed,  which compares the implied fair value of the reporting
unit's goodwill  (determined in accordance with purchase  accounting),  with the
carrying amount of the reporting unit's goodwill.  If the carrying amount of the
reporting  unit's  goodwill  exceeds the implied fair value of the goodwill,  an
impairment  loss  is  recognized  in an  amount  equal  to  that  excess.  If an
impairment  loss is  recognized,  the adjusted  carrying  amount of the goodwill
becomes the new accounting basis for future impairment tests.

The fair market values of all of the Company's  reporting  units were  estimated
using  discounted  future  cash  flows,  since  market  quotes  were not readily
available.  For Chicago Express and ATA Cargo,  future cash flows were estimated
based on historical performance.  In both cases, the estimated fair market value
was  higher  than  the  carrying  amount  of the  reporting  unit,  and  thus no
impairment was indicated.

The fair market  value of ATALC was  estimated  based on  projected  future cash
flows from the Key Tours and Key Tours Las Vegas  brands,  estimated  cash flows
from royalties under the new management services contract with MTC (see Footnote
3, "Segment Disclosures"), and incremental cash flows from the increased sale of
scheduled service seats to ATA Vacations customers under the management services
agreement.  Based on this analysis, the estimated fair market value of ATALC was
higher than its carrying amount, and thus no impairment was indicated.

All of the  estimates of fair market  value for the  Company's  three  reporting
units involved highly subjective judgments on the part of management,  including
the  amounts  of cash  flows  to be  received,  their  estimated  duration,  and
perceived  risk as reflected in selected  discount  rates.  In some cases,  cash
flows were estimated without the benefit of historical data, although historical
data was used where  available.  Although the Company believes its estimates and
judgments to be  reasonable,  different  assumptions  and  judgments  might have
resulted in the impairment of some or all of the Company's  recorded goodwill of
$21.8 million under the transitional testing rules of FAS 142.


                                       11



U. S. Government Grant Reimbursement  Accounting.  The Air Transportation Safety
and System  Stabilization  Act passed in  response  to the  September  11,  2001
terrorist  attacks  provided  for,  among other  things,  up to $5.0  billion in
compensation for the direct and incremental  losses resulting from the terrorist
attacks  incurred by U. S. domestic  passenger and cargo airlines from September
11, 2001 through December 31, 2001.

Due to the  limited  guidance  provided  by the  legislation  and  the  evolving
guidance provided by the interpretive  rules of the Department of Transportation
("DOT"), the Company has made subjective and judgmental estimates in calculating
and recording the amount of grant revenue to recognize.  In the third and fourth
quarters of 2001, the Company  recognized $66.3 million in total grant revenues.
As of December 31, 2001, $44.5 million had been received,  and $21.8 million was
recorded as a receivable.

In the second  quarter of 2002,  the DOT issued  new  guidelines  for  measuring
reimbursable  losses and the Company submitted a final application,  accompanied
by the required  accountant's report on agreed upon procedures.  Based on review
of its application with the DOT, the Company determined that it is probable that
a portion of the receivable recorded in 2001 may not be collected, and therefore
recorded a  valuation  allowance  of $15.2  million  against  the $21.8  million
receivable  as of June  30,  2002.  As of  September  30,  2002,  the  remaining
receivable  had not yet been  collected,  but the  Company  does  not  currently
believe  that a further  change to the  valuation  allowance is  necessary.  The
Company  is  continuing  to discuss  its  compensation  claim with the DOT,  and
currently expects that claim to be settled during the fourth quarter of 2002.

Fleet Impairment Accounting.  Effective January 1, 2002, the Company adopted FAS
144, which superseded FASB Statement of Financial  Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
Be Disposed of ("FAS  121") but the Company  continues  to account for the fleet
and related assets that were impaired prior to January 1, 2002 under FAS 121, as
required  by FAS 144.  The  Company has been  performing  impairment  reviews in
accordance  with FAS 121 on the Lockheed  L-1011-50/100  and the Boeing  727-200
fleets  since the end of 2000,  and both fleets  became  impaired  under FAS 121
subsequent to the events of September 11, 2001.

In the third  quarter  of 2002,  the  Company  decided to retire one of its five
Lockheed L-1011-500 aircraft earlier than originally planned.  This event caused
the  Company  to  consider  whether  the net book  value of the  remaining  four
aircraft and related assets in this fleet could be recovered through future cash
flows.  In the third  quarter  of 2002,  the  Company  performed  an  impairment
analysis on the Lockheed L-1011-500 fleet and related assets, in accordance with
FAS 144, and determined  that the Lockheed  L-1011-500  fleet and related assets
were not impaired.

Both FAS 144 and FAS 121 require that whenever events or circumstances  indicate
that the Company may not be able to recover the net book value of its productive
assets  through future cash flows,  an assessment  must be performed of expected
future cash flows, and undiscounted estimated future cash flows must be compared
to the net book value of these  productive  assets to determine if impairment is
indicated.  They specify that impaired assets be written down to their estimated
fair market value by recording an impairment charge to earnings. FAS 144 and FAS
121 state that fair market values may be estimated  using  discounted  cash flow
analysis or quoted market prices, together with other available information,  to
estimate fair market values.  The Company  primarily used  discounted  cash flow
analysis to estimate fair market value of the Lockheed  L-1011-50/100 fleet, and
quoted market prices to estimate the value of the Boeing 727-200 fleet.

The  application  of FAS 144 and FAS 121 required  the  exercise of  significant
judgment and the  preparation  of numerous  significant  estimates.  The Company
estimated  future  cash  flows  from  the  productive  use of  these  fleets  by
estimating  the expected net cash  contribution  from  revenues  less  operating
expenses,  and adjusting for estimated cash outflows for heavy  maintenance  and
estimated  cash inflows from final  disposal of the assets,  for up to ten years
into the future.  Although the Company believes that its estimates of cash flows
in the application of FAS 144 and FAS 121 were  reasonable,  and were based upon
all available  information,  including extensive historical cash flow data about
the prior use of these fleets, such estimates  nevertheless required substantial



                                       12



judgments and were based upon material  assumptions  about future  events.  Such
estimates were significant in determining the amount of the impairment charge to
be recorded,  which could have been materially different under different sets of
assumptions and estimates.

As FAS 144 and FAS 121 require the Company to continuously  evaluate fair market
values of previously  impaired  assets,  it is possible that future estimates of
fair market value may result in  additional  material  charges to  earnings,  if
those estimates  indicate a material  reduction in fair market value as compared
to the estimates made at the end of the third quarter of 2002.

Results of Operations

For the quarter ended  September 30, 2002,  the Company had an operating loss of
$59.6 million, as compared to operating income of $4.5 million in the comparable
quarter of 2001;  and the Company  had a $61.0  million  net loss  available  to
common  shareholders  in the third  quarter of 2002,  as  compared to net income
available to common shareholders of $13,000 in the third quarter of 2001.

Operating  revenues  decreased  1.3% to $317.3  million in the third  quarter of
2002,  as  compared to $321.5  million in the same period of 2001.  Consolidated
revenue per  available  seat mile ("RASM")  decreased  6.1% to 7.06 cents in the
third  quarter of 2002,  as compared to 7.52 cents in the third quarter of 2001.
Scheduled  service revenues  increased $23.1 million between periods,  or 11.1%,
while, charter revenues decreased $25.4 million between periods, or 27.1%. These
revenue changes reflected the Company's continuing strategy to build capacity in
scheduled service at  Chicago-Midway.  Capacity in commercial charter operations
declined as a result of the continued  retirement of Boeing 727-200 aircraft and
Lockheed  L-1011-50/100  aircraft.  Scheduled service unit revenues continued to
reflect weakness in both load factors and yields in the third quarter of 2002.

Operating  expenses  increased  18.9% to $376.9  million in the third quarter of
2002,  as  compared  to  $317.0  million  in  the  comparable  period  of  2001.
Consolidated CASM increased 13.1% to 8.39 cents in the third quarter of 2002, as
compared to 7.42 cents in the third quarter of 2001.  Operating expenses in both
quarters included special charges,  aircraft  impairment and retirement charges,
and  U.S.  Government  grant  amounts.  After  excluding  these  special  items,
consolidated  CASM decreased 2.2% to 7.62 cents in the third quarter of 2002, as
compared to 7.79 cents in the third quarter of 2001.

For the nine months ended  September 30, 2002, the Company had an operating loss
of $108.9  million,  as compared  to  operating  income of $18.8  million in the
comparable  period  of  2001;  and the  Company  had a $117.4  million  net loss
available to common shareholders in the nine months ended September 30, 2002, as
compared to a net loss available to common  shareholders  of $0.5 million in the
same period of 2001.

Operating  revenues  decreased  6.0% to $966.4  million in the nine months ended
September  30, 2002,  as compared to $1.028  billion in the same period of 2001.
Consolidated  RASM  decreased  9.3% to  7.41  cents  in the  nine  months  ended
September  30,  2002,  as  compared  to 8.17  cents in the same  period of 2001.
Scheduled service revenues increased $8.4 million between periods, while charter
revenues  decreased $53.9 million,  and ground package revenues  decreased $14.6
million.

Operating  expenses  increased  6.5% to $1.075  billion in the nine months ended
September 30, 2002, as compared to $1.009  billion in the  comparable  period of
2001.  Consolidated  CASM  increased 2.7% to 8.24 cents in the nine months ended
September 30, 2002, as compared to 8.02 cents in the same period of 2001.  After
excluding  special items,  consolidated CASM decreased 4.7% to 7.73 cents in the
nine  months  ended  September  30,  2002,  as  compared  to 8.11  cents  in the
comparable period of 2001.


                                       13



Results of Operations in Cents Per ASM

The following table sets forth, for the periods  indicated,  operating  revenues
and expenses expressed as cents per available seat mile ("ASM").



                                                          Cents per ASM                             Cents per ASM
                                                  Three Months Ended September 30,           Nine Months Ended September 30,
                                                         2002                     2001             2002                     2001
                                                  --------------------------------------     -----------------------------------
                                                                                                          
Consolidated operating revenues:                         7.06                     7.52             7.41                     8.17

Consolidated operating expenses:
   Salaries, wages and benefits                          2.12                     1.99             2.03                     1.98
   Fuel and oil                                          1.18                     1.59             1.16                     1.64
   Aircraft rentals                                      1.14                     0.63             1.04                     0.54
   Handling, landing and navigation fees                 0.65                     0.51             0.65                     0.56
   Depreciation and amortization                         0.42                     0.75             0.46                     0.81
   Crew and other employee travel                        0.32                     0.35             0.32                     0.37
   Aircraft maintenance, materials and repairs           0.25                     0.34             0.29                     0.40
   Other selling expenses                                0.25                     0.24             0.26                     0.26
   Passenger service                                     0.23                     0.30             0.23                     0.28
   Advertising                                           0.22                     0.17             0.23                     0.16
   Insurance                                             0.18                     0.06             0.18                     0.06
   Facilities and other rentals                          0.14                     0.13             0.13                     0.12
   Commissions                                           0.09                     0.18             0.14                     0.23
   Ground package cost                                   0.08                     0.15             0.18                     0.29
   Special charges                                          -                     0.22                -                     0.07
   Aircraft impairment and retirements                   0.76                     0.88             0.40                     0.33
   U.S. Government grant                                    -                    (1.47)            0.12                    (0.50)
   Other                                                 0.36                     0.40             0.42                     0.42
                                                         ----                     ----             ----                     ----
Total consolidated operating expenses                    8.39                     7.42             8.24                     8.02
                                                         ----                     ----             ----                     ----

Consolidated operating income (loss)                    (1.33)                    0.10            (0.83)                    0.15
                                                        =====                     ====            =====                     ====

ASMs (in thousands)                                 4,494,336                4,272,432       13,050,595               12,583,425

Consolidated operating expenses, excluding
special charges, aircraft impairment and
retirements, and U.S. Government grant                   7.62                     7.79             7.73                     8.11
                                                         ====                     ====             ====                     ====


                                       14



Consolidated Flight Operating and Financial Data

The following table sets forth, for the periods indicated, certain key operating
and financial data for the consolidated  flight operations of the Company.  Data
shown for "Jet"  operations  include  the  consolidated  operations  of Lockheed
L-1011,  Boeing  727-200,  Boeing 737-800,  Boeing  757-200,  and Boeing 757-300
aircraft  in all  of  the  Company's  business  units.  Data  shown  for  "Saab"
operations  include the  operations of Saab 340B  propeller  aircraft by Chicago
Express as the ATA Connection.


                                                 Three Months Ended September 30,
                                                    2002                  2001               Inc (Dec)            % Inc (Dec)
                                                  ------------------------------------------------------------------------------
                                                                                                              
Departures Jet                                          17,147                14,471                 2,676                18.49
Departures Saab                                         11,669                 6,732                 4,937                73.34
                                                  ------------------------------------------------------------------------------
Total Departures (a)                                    28,816                21,203                 7,613                35.91
                                                  ------------------------------------------------------------------------------
Block Hours Jet                                         50,833                44,453                 6,380                14.35
Block Hours Saab                                        10,982                 6,224                 4,758                76.45
                                                  ------------------------------------------------------------------------------
Total Block Hours (b)                                   61,815                50,677                11,138                21.98
                                                  ------------------------------------------------------------------------------
RPMs Jet (000s)                                      3,195,420             3,238,209               (42,789)               (1.32)
RPMs Saab (000s)                                        43,664                22,244                21,420                96.30
                                                  ------------------------------------------------------------------------------
Total RPMs (000s) (c)                                3,239,084             3,260,453               (21,369)               (0.66)
                                                  ------------------------------------------------------------------------------
ASMs Jet (000s)                                      4,428,021             4,235,610               192,411                 4.54
ASMs Saab (000s)                                        66,315                36,822                29,493                80.10
                                                  ------------------------------------------------------------------------------
Total ASMs (000s) (d)                                4,494,336             4,272,432               221,904                 5.19
                                                  ------------------------------------------------------------------------------
Load Factor Jet (%)                                      72.16                 76.45                 (4.29)               (5.61)
Load Factor Saab (%)                                     65.84                 60.41                  5.43                 8.99
                                                  ------------------------------------------------------------------------------
Total Load Factor (%)  (e)                               72.07                 76.31                 (4.24)               (5.56)
                                                  ------------------------------------------------------------------------------
Passengers Enplaned Jet                              2,375,954             2,070,172               305,782                14.77
Passengers Enplaned Saab                               254,403               135,174               119,229                88.20
                                                  ------------------------------------------------------------------------------
Total Passengers Enplaned (f)                        2,630,357             2,205,346               425,011                19.27
                                                  ------------------------------------------------------------------------------
Revenue $ (000s)                                       317,289               321,469                (4,180)               (1.30)
RASM in cents (g)                                         7.06                  7.52                 (0.46)               (6.12)
CASM in cents (h)                                         8.39                  7.42                  0.97                13.07
Yield in cents (i)                                        9.80                  9.86                 (0.06)               (0.61)

See footnotes (a) through (i) on pages 16-17.


                                       15




                                                   Nine Months Ended September 30,
                                                     2002                    2001                Inc (Dec)             % Inc (Dec)
                                                  ---------------------------------------------------------------------------------
                                                                                                                    
Departures Jet                                            49,305                  44,167                 5,138                11.63
Departures Saab                                           28,982                  18,665                10,317                55.27
                                                  ---------------------------------------------------------------------------------
Total Departures (a)                                      78,287                  62,832                15,455                24.60
                                                  ---------------------------------------------------------------------------------
Block Hours Jet                                          146,085                 134,549                11,536                 8.57
Block Hours Saab                                          27,182                  17,194                 9,988                58.09
                                                  ---------------------------------------------------------------------------------
Total Block Hours (b)                                    173,267                 151,743                21,524                14.18
                                                  ---------------------------------------------------------------------------------
RPMs Jet (000s)                                        9,290,163               9,221,576                68,587                 0.74
RPMs Saab (000s)                                         106,071                  68,210                37,861                55.51
                                                  ---------------------------------------------------------------------------------
Total RPMs (000s) (c)                                  9,396,234               9,289,786               106,448                 1.15
                                                  ---------------------------------------------------------------------------------
ASMs Jet (000s)                                       12,891,505              12,481,432               410,073                 3.29
ASMs Saab (000s)                                         159,090                 101,993                57,097                55.98
                                                  ---------------------------------------------------------------------------------
Total ASMs (000s) (d)                                 13,050,595              12,583,425               467,170                 3.71
                                                  ---------------------------------------------------------------------------------
Load Factor Jet (%)                                        72.06                   73.88                 (1.82)               (2.46)
Load Factor Saab (%)                                       66.67                   66.88                 (0.21)               (0.31)
                                                  ---------------------------------------------------------------------------------
Total Load Factor (%)  (e)                                 72.00                   73.83                 (1.83)               (2.48)
                                                  ---------------------------------------------------------------------------------
Passengers Enplaned Jet                                6,939,844               6,395,596               544,248                 8.51
Passengers Enplaned Saab                                 646,904                 413,323               233,581                56.51
                                                  ---------------------------------------------------------------------------------
Total Passengers Enplaned (f)                          7,586,748               6,808,919               777,829                11.42
                                                  ---------------------------------------------------------------------------------
Revenue $ (000s)                                         966,400               1,027,849               (61,449)               (5.98)
RASM in cents (g)                                           7.41                    8.17                 (0.76)               (9.30)
CASM in cents (h)                                           8.24                    8.02                  0.22                 2.74
Yield in cents (i)                                         10.28                   11.06                 (0.78)               (7.05)

See footnotes (e) through (i) on page 17.

(a) A departure is a single  takeoff and landing  operated by a single  aircraft
between an origin city and a destination city.

(b) Block hours for any aircraft  represent  the elapsed time  computed from the
moment  the  aircraft  first  moves  under its own power  from the  origin  city
boarding  ramp to the moment it comes to rest at the  destination  city boarding
ramp.

(c) Revenue  passenger  miles (RPMs)  represent the number of seats  occupied by
revenue passengers multiplied by the number of miles those seats are flown. RPMs
are an industry measure of the total seat capacity actually sold by the Company.

(d) Available seat miles (ASMs) represent the number of seats available for sale
to revenue  passengers  multiplied by the number of miles those seats are flown.
ASMs are an industry  measure of the total seat capacity offered for sale by the
Company, whether sold or not.


                                       16



(e) Passenger  load factor is the  percentage  derived by dividing RPMs by ASMs.
Passenger load factor is relevant to the evaluation of scheduled service because
incremental  passengers  normally provide  incremental revenue and profitability
when  seats  are  sold  individually.  In the  case of  commercial  charter  and
military/government  charter,  load  factor is less  relevant  because an entire
aircraft is sold by the Company  instead of individual  seats.  Since both costs
and revenues are largely  fixed for these types of charter  flights,  changes in
load factor have less impact on business unit  profitability.  Consolidated load
factors  and  scheduled  service  load  factors for the Company are shown in the
appropriate tables for industry  comparability,  but load factors for individual
charter businesses are omitted from applicable tables.

(f) Passengers  enplaned are the number of revenue passengers who occupied seats
on the  Company's  flights.  This  measure is also  referred  to as  "passengers
boarded."

(g) Revenue per ASM (expressed in cents) is total  operating  revenue divided by
total ASMs.  This  measure is also  referred  to as "RASM."  RASM  measures  the
Company's  unit revenue  using total  available  seat  capacity.  In the case of
scheduled  service,  RASM is a measure of the combined impact of load factor and
yield (see (i) below for the definition of yield).

(h) Cost per ASM  (expressed  in cents) is total  operating  expense  divided by
total ASMs.  This  measure is also  referred  to as "CASM."  CASM  measures  the
Company's unit cost using total available seat capacity.

(i) Revenue per RPM (expressed in cents) is total  operating  revenue divided by
total RPMs.  This measure is also  referred to as "yield."  Yield is relevant to
the  evaluation of scheduled  service  because yield is a measure of the average
price paid by customers  purchasing  individual seats. Yield is less relevant to
the commercial  charter and  military/government  charter businesses because the
entire  aircraft  is sold at one time for one  price.  Consolidated  yields  and
scheduled  service  yields  are shown in the  appropriate  tables  for  industry
comparability,  but yields for  individual  charter  businesses are omitted from
applicable tables.


                                       17



Operating Revenues

Scheduled  Service  Revenues.  The following  table sets forth,  for the periods
indicated,  certain key operating and financial  data for the scheduled  service
operations of the Company.  Data shown for "Jet" operations include the combined
operations of Lockheed L-1011, Boeing 727-200,  Boeing 737-800,  Boeing 757-200,
and  Boeing  757-300  aircraft  in  scheduled  service.  Data  shown for  "Saab"
operations  include the  operations of Saab 340B  propeller  aircraft by Chicago
Express as the ATA Connection.


                                                  Three Months Ended September 30,
                                                    2002                  2001                 Inc (Dec)             % Inc (Dec)
                                                  ---------------------------------------------------------------------------------
                                                                                                                  
Departures Jet                                          15,020                 11,645                   3,375                 28.98
Departures Saab                                         11,669                  6,732                   4,937                 73.34
                                                  ---------------------------------------------------------------------------------
Total Departures (a)                                    26,689                 18,377                   8,312                 45.23
                                                  ---------------------------------------------------------------------------------
Block Hours Jet                                         42,722                 33,830                   8,892                 26.28
Block Hours Saab                                        10,982                  6,224                   4,758                 76.45
                                                  ---------------------------------------------------------------------------------
Total Block Hours (b)                                   53,704                 40,054                  13,650                 34.08
                                                  ---------------------------------------------------------------------------------
RPMs Jet (000s)                                      2,693,804              2,307,374                 386,430                 16.75
RPMs Saab (000s)                                        43,664                 22,244                  21,420                 96.30
                                                  ---------------------------------------------------------------------------------
Total RPMs (000s) (c)                                2,737,468              2,329,618                 407,850                 17.51
                                                  ---------------------------------------------------------------------------------
ASMs Jet (000s)                                      3,562,676              2,945,974                 616,702                 20.93
ASMs Saab (000s)                                        66,315                 36,822                  29,493                 80.10
                                                  ---------------------------------------------------------------------------------
Total ASMs (000s) (d)                                3,628,991              2,982,796                 646,195                 21.66
                                                  ---------------------------------------------------------------------------------
Load Factor Jet (%)                                      75.61                  78.32                   (2.71)                (3.46)
Load Factor Saab (%)                                     65.84                  60.41                    5.43                  8.99
                                                  ---------------------------------------------------------------------------------
Total Load Factor (%)  (e)                               75.43                  78.10                   (2.67)                (3.42)
                                                  ---------------------------------------------------------------------------------
Passengers Enplaned Jet                              2,148,094              1,700,855                 447,239                 26.29
Passengers Enplaned Saab                               254,403                135,174                 119,229                 88.20
                                                  ---------------------------------------------------------------------------------
Total Passengers Enplaned (f)                        2,402,497              1,836,029                 566,468                 30.85
                                                  ---------------------------------------------------------------------------------
Revenue $ (000s)                                       231,633                208,490                  23,143                 11.10
RASM in cents (g)                                         6.38                   6.99                   (0.61)                (8.73)
Yield in cents (i)                                        8.46                   8.95                   (0.49)                (5.47)
Revenue per segment $ (j)                                96.41                 113.55                  (17.14)               (15.09)

See footnotes (a) through (i) on pages 16-17.

(j) Revenue per segment flown is determined by dividing total scheduled  service
revenues  by the number of  passengers  boarded.  Revenue per segment is a broad
measure  of the  average  price  obtained  for  all  flight  segments  flown  by
passengers in the Company's scheduled service route network.


                                       18




                                                  Nine Months Ended September 30,
                                                    2002                  2001                 Inc (Dec)            % Inc (Dec)
                                                  ---------------------------------------------------------------------------------
                                                                                                                 
Departures Jet                                          41,347                 35,056                  6,291                 17.95
Departures Saab                                         28,982                 18,665                 10,317                 55.27
                                                  ---------------------------------------------------------------------------------
Total Departures (a)                                    70,329                 53,721                 16,608                 30.92
                                                  ---------------------------------------------------------------------------------
Block Hours Jet                                        116,317                101,349                 14,968                 14.77
Block Hours Saab                                        27,182                 17,194                  9,988                 58.09
                                                  ---------------------------------------------------------------------------------
Total Block Hours (b)                                  143,499                118,543                 24,956                 21.05
                                                  ---------------------------------------------------------------------------------
RPMs Jet (000s)                                      7,336,282              6,722,193                614,089                  9.14
RPMs Saab (000s)                                       106,071                 68,210                 37,861                 55.51
                                                  ---------------------------------------------------------------------------------
Total RPMs (000s) (c)                                7,442,353              6,790,403                651,950                  9.60
                                                  ---------------------------------------------------------------------------------
ASMs Jet (000s)                                      9,785,177              8,653,441              1,131,736                 13.08
ASMs Saab (000s)                                       159,090                101,993                 57,097                 55.98
                                                  ---------------------------------------------------------------------------------
Total ASMs (000s) (d)                                9,944,267              8,755,434              1,188,833                 13.58
                                                  ---------------------------------------------------------------------------------
Load Factor Jet (%)                                      74.97                  77.68                  (2.71)                (3.49)
Load Factor Saab (%)                                     66.67                  66.88                  (0.21)                (0.31)
                                                  ---------------------------------------------------------------------------------
Total Load Factor (%)  (e)                               74.84                  77.56                  (2.72)                (3.51)
                                                  ---------------------------------------------------------------------------------
Passengers Enplaned Jet                              5,970,143              5,199,950                770,193                 14.81
Passengers Enplaned Saab                               646,904                413,323                233,581                 56.51
                                                  ---------------------------------------------------------------------------------
Total Passengers Enplaned (f)                        6,617,047              5,613,273              1,003,774                 17.88
                                                  ---------------------------------------------------------------------------------
Revenue $ (000s)                                       664,431                656,044                  8,387                  1.28
RASM in cents (g)                                         6.68                   7.49                  (0.81)               (10.81)
Yield in cents (i)                                        8.93                   9.66                  (0.73)                (7.56)
Revenue per segment $ (j)                               100.41                 116.87                 (16.46)               (14.08)



See footnotes (a) through (i) on pages 16-17.
See footnote (j) on page 18.

Scheduled  service  revenues  in the third  quarter of 2002  increased  11.1% to
$231.6  million from $208.5  million in the third quarter of 2001; and scheduled
service  revenues in the nine months ended  September 30, 2002 increased 1.3% to
$664.4 million from $656.0 million in the same period of 2001. Scheduled service
revenues comprised 73.0% and 68.8%,  respectively,  of consolidated  revenues in
the quarter and nine months ended  September  30, 2002, as compared to 64.9% and
63.8%, respectively, of consolidated revenues in the same periods of 2001. While
the  Company's  capacity in 2002 has increased  from 2001,  both load factor and
yield have declined from the prior year.

In the third quarter of 2002, the Company's  scheduled service at Chicago-Midway
accounted  for  approximately  67.8% of  scheduled  service  ASMs  and  87.4% of
scheduled service departures, as compared to 63.6% and 85.8%,  respectively,  in
the third  quarter of 2001.  In the third  quarter of 2002,  the  Company  began
nonstop service from Chicago-Midway to Charlotte.  In the first quarter of 2002,
the Company began nonstop  international  service to Aruba, Cancun, Grand Cayman



                                       19



and  Guadalajara.  In the third and fourth  quarters of 2001,  the Company began
operating nonstop between Chicago-Midway and the cities of Newark and Miami. The
Company began nonstop  service from  Chicago-Midway  to San Jose,  California on
October 1, 2002 and has announced  nonstop  service to Montego Bay,  Jamaica and
Puerto Vallarta, Mexico beginning in the fourth quarter of 2002.

Chicago  Express  operates,  as of  September  30,  2002,  17 34-seat  Saab 340B
aircraft between  Chicago-Midway  and the cities of Indianapolis,  Cedar Rapids,
Des Moines, Dayton, Flint, Grand Rapids, Lexington,  Madison, Milwaukee, Moline,
Springfield, South Bend and Toledo.

The Company  anticipates  that its  Chicago-Midway  operation  will  continue to
represent a substantial  proportion of its scheduled service business throughout
2002 and  beyond.  Chicago  Express  has  been  performing  well as a feeder  of
passengers  to the jet  system.  The  Company  operated  140 peak  daily jet and
commuter  departures from Chicago-Midway and served 34 destinations on a nonstop
basis in the  third  quarter  of 2002,  as  compared  to 111 peak  daily jet and
commuter departures and 27 nonstop destinations in the third quarter of 2001.

The Company's  anticipated  growth at  Chicago-Midway  will be  accomplished  in
conjunction  with the  completion  of new  terminal and gate  facilities  at the
Chicago-Midway Airport. In March 2001, the Company occupied 24 newly constructed
ticketing and passenger check-in spaces in the new terminal, an increase from 16
ticketing  and  passenger   check-in  spaces  previously   occupied.   Once  all
construction  is complete in 2004, the Company expects to occupy at least 12 jet
gates and one commuter aircraft gate at the new airport concourses. One new gate
was occupied in October  2001,  and the Company  moved to seven  additional  new
gates in the first quarter of 2002. The five remaining  gates are expected to be
available  for  use by the  Company  in  2004.  The  construction  of a  Federal
Inspection Service ("FIS") facility at Chicago-Midway was completed in the first
quarter of 2002,  and the opening of this facility  allowed the Company to begin
nonstop international services from Chicago-Midway in the first quarter of 2002,
as noted above.  The Company plans to continue to add new nonstop jet service to
international   destinations  using  this  customs  facility  at  Chicago-Midway
Airport.

The Company's Hawaii service  accounted for 16.9% of scheduled  service ASMs and
3.8% of scheduled  service  departures in the third quarter of 2002, as compared
to 23.1% and 5.1%,  respectively,  in the third  quarter  of 2001.  The  Company
provided  nonstop  services in both periods  from Los  Angeles,  Phoenix and San
Francisco to both Honolulu and Maui,  with connecting  service between  Honolulu
and Maui. From June to September 2002, the Company operated  seasonal service to
Lihue from Los Angeles and San  Francisco.  The Company  provides these services
through a marketing alliance with the largest  independent tour operator serving
leisure travelers to Hawaii from the United States. The Company  distributes the
remaining seats on these flights through normal scheduled  service  distribution
channels.

The Company's Indianapolis service accounted for 10.0% of scheduled service ASMs
and 6.0% of  scheduled  service  departures  in the third  quarter  of 2002,  as
compared to 7.7% and 5.9%,  respectively,  in the third quarter of 2001. In both
quarters, the Company operated nonstop to Cancun, Ft. Lauderdale, Ft. Myers, Las
Vegas, Los Angeles,  Orlando,  St. Petersburg,  San Francisco and Sarasota.  The
Company also began limited jet service,  in the second quarter of 2002,  between
Indianapolis and Chicago-Midway,  with continuing service to Seattle,  and began
nonstop service to New York LaGuardia and Phoenix from Indianapolis beginning in
the third  quarter of 2002.  The  Company has served  Indianapolis  for 30 years
through the Ambassadair Travel Club, and in scheduled service since 1986.

Commercial  Charter  Revenues.  The Company's  commercial  charter  revenues are
derived  principally  from  independent  tour  operators and  specialty  charter
customers.  The Company's  commercial charter product provides  full-service air
transportation to hundreds of  customer-designated  destinations  throughout the
world. Commercial charter revenues accounted for 6.5% and 11.2%, respectively of
consolidated  revenues in the quarter and nine months ended  September 30, 2002,
as compared to 16.6% in each of the comparable periods of 2001.


                                       20



The following table sets forth, for the periods indicated, certain key operating
and financial data for the commercial charter operations of the Company.



                                                  Three Months Ended September 30,
                                                  -------------------------------------------------------------------------------
                                                   2002                   2001                Inc (Dec)           % Inc (Dec)
                                                   ------------------------------------------------------------------------------
                                                                                                              
Departures (a)                                           1,157                  1,972                 (815)               (41.33)
Block Hours (b)                                          3,888                  6,792               (2,904)               (42.76)
RPMs (000s) (c)                                        246,956                675,275             (428,319)               (63.43)
ASMs (000s) (d)                                        304,538                798,277             (493,739)               (61.85)
Passengers Enplaned (f)                                166,148                315,603             (149,455)               (47.36)
Revenue $ (000s)                                        20,626                 53,329              (32,703)               (61.32)
RASM in cents (g)                                         6.77                   6.68                 0.09                  1.35
RASM excluding fuel escalation in cents (k)               6.56                   6.52                 0.04                  0.61



                                                  Nine Months Ended September 30,
                                                  ------------------------------------------------------------------------------
                                                    2002                  2001                Inc (Dec)            % Inc (Dec)
                                                  ------------------------------------------------------------------------------
                                                                                                              
Departures (a)                                           5,257                  6,386               (1,129)               (17.68)
Block Hours (b)                                         17,949                 21,387               (3,438)               (16.08)
RPMs (000s) (c)                                      1,228,998              1,755,865             (526,867)               (30.01)
ASMs (000s) (d)                                      1,535,375              2,239,239             (703,864)               (31.43)
Passengers Enplaned (f)                                792,176              1,017,639             (225,463)               (22.16)
Revenue $ (000s)                                       108,120                170,124              (62,004)               (36.45)
RASM in cents (g)                                         7.04                   7.60                (0.56)                (7.37)
RASM excluding fuel escalation in cents (k)               6.96                   7.26                (0.30)                (4.13)

See footnotes (a) through (g) on pages 16-17.

(k) Commercial  charter contracts  generally provide that the tour operator will
reimburse the Company for certain fuel cost increases,  which, when earned,  are
accounted for as additional revenue. A separate RASM calculation,  excluding the
impact of fuel reimbursements, is provided as a separate measure of unit revenue
changes.

The majority of the decline in commercial  charter revenues in the third quarter
and nine months ended  September  30,  2002,  as compared to the same periods of
2001,  was due to the retirement of certain  Lockheed  L-1011 and Boeing 727-200
aircraft that the Company has traditionally  used in commercial  charter flying.
Since aircraft  utilization  (number of productive  hours of flying per aircraft
each  month) is  typically  much lower for  commercial  charter,  as compared to
scheduled service flying, the Company's replacement fleets of new Boeing 737-800
and Boeing  757-300  aircraft are  economically  disadvantaged  when used in the
charter business,  because of their higher  fixed-ownership cost.  Consequently,
the  Company  expects  its  commercial  charter  revenues to continue to decline
throughout the remainder of 2002 as the fleet supporting this business continues
to shrink through aircraft retirements.

The Company  operates in two  principal  components  of the  commercial  charter
business,  known as "track  charter" and  "specialty  charter." The larger track
charter  business  component  is  generally   comprised  of  low  frequency  but
repetitive domestic and international  flights between city pairs, which support
high passenger load factors and are marketed  through tour operators,  providing
value-priced  and convenient  nonstop service to vacation  destinations  for the
leisure traveler.  Since track charter  resembles  scheduled service in terms of
its repetitive  flying patterns  between fixed city pairs, it allows the Company
to achieve  reasonable  levels of crew and aircraft  utilization  (although less
than for scheduled service), and provides the Company with meaningful protection



                                       21



from some fuel price increases through the use of fuel escalation  reimbursement
clauses in tour operator  contracts.  Track charter  accounted for approximately
$16.1 million and $84.2  million,  respectively,  in revenues in the quarter and
nine months ended  September  30, 2002,  as compared to $44.9 million and $135.6
million, respectively, in the comparable periods of 2001.

Specialty  charter  (including  incentive travel programs) is a product which is
designed  to meet the  unique  requirements  of the  customer  and is a business
characterized  by lower frequency of operation and by greater  variation in city
pairs served than the track charter  business.  Specialty  charter includes such
diverse contracts as flying  university  alumni to football games,  transporting
political  candidates  on campaign  trips and moving NASA space  shuttle  ground
crews to alternate landing sites.  Specialty charter accounted for approximately
$2.5 million and $9.8 million, respectively, in revenues in the quarter and nine
months ended  September 30, 2002, as compared to $4.5 million and $14.0 million,
respectively, in the comparable periods of 2001.

Military/Government  Charter  Revenues.  The following table sets forth, for the
periods   indicated,   certain  key  operating   and  financial   data  for  the
military/government flight operations of the Company.



                                                 Three Months Ended September 30,
                                                 -------------------------------------------------------------------------------
                                                    2002                   2001               Inc (Dec)           % Inc (Dec)
                                                 -------------------------------------------------------------------------------
                                                                                                               
Departures (a)                                             955                    854                  101                 11.83
Block Hours (b)                                          4,175                  3,831                  344                  8.98
RPMs (000s) (c)                                        252,215                255,560               (3,345)                (1.31)
ASMs (000s) (d)                                        554,979                491,359               63,620                 12.95
Passengers Enplaned (f)                                 60,140                 53,714                6,426                 11.96
Revenue $ (000s)                                        47,559                 40,300                7,259                 18.01
RASM in cents (g)                                         8.57                   8.20                 0.37                  4.51
RASM excluding fuel escalation in cents (l)               8.52                   7.89                 0.63                  7.98



                                                 Nine Months Ended September 30,
                                                 -------------------------------------------------------------------------------
                                                    2002                  2001               Inc (Dec)            % Inc (Dec)
                                                 -------------------------------------------------------------------------------
                                                                                                              
Departures (a)                                           2,679                 2,709                   (30)               (1.11)
Block Hours (b)                                         11,732                11,756                   (24)               (0.20)
RPMs (000s) (c)                                        719,779               738,316               (18,537)               (2.51)
ASMs (000s) (d)                                      1,559,070             1,580,397               (21,327)               (1.35)
Passengers Enplaned (f)                                175,380               176,572                (1,192)               (0.68)
Revenue $ (000s)                                       130,578               122,479                 8,099                 6.61
RASM in cents (g)                                         8.38                  7.75                  0.63                 8.13
RASM excluding fuel escalation in cents (l)               8.40                  7.43                  0.97                13.06


See footnotes (a) through (g) on pages 16-17.

(l) Military/government  reimbursements to the Company are calculated based upon
a "cost plus" formula, including an assumed average fuel price for each contract
year. If actual fuel prices differ from the contract rate, revenues are adjusted
up or down to  neutralize  the impact of the change on the  Company.  A separate
RASM   calculation  is  provided,   excluding  the  impact  of  the  fuel  price
adjustments.

The Company  participates in two related  military/government  charter  programs
known  as  "fixed-award"  and  "short-term  expansion."  Pursuant  to  the  U.S.


                                       22



military's  fixed-award  system,  each participating  airline is awarded certain
"mobilization  value  points"  based upon the number and type of  aircraft  made
available by that airline for military  flying.  In order to increase the number
of points  awarded,  the Company has  traditionally  participated  in contractor
teaming arrangements with other airlines. Under these arrangements, the team has
a greater likelihood of receiving  fixed-award  business and, to the extent that
the award  includes  passenger  transport,  the  opportunity  for the Company to
operate this flying is enhanced  since the Company  represents a majority of the
passenger  transport  capacity of the team. As part of its participation in this
teaming  arrangement,  the Company pays a commission  to the team,  which passes
that revenue on to all team members based upon their  mobilization  points.  All
airlines  participating in the fixed-award  business  contract annually with the
U.S.  military from October 1 to the  following  September 30. For each contract
year,  reimbursement  rates are  determined  for all aircraft  types and mission
categories  based  upon  operating  cost  data  submitted  by the  participating
airlines.  These contracts  generally are not subject to renegotiation once they
become effective.

Short-term  expansion  business is awarded by the U.S.  military  first on a pro
rata basis to those  carriers who have been  provided  fixed-award  business and
then to any  other  carrier  with  aircraft  availability.  Expansion  flying is
generally offered to airlines on very short notice.

The overall amount of military flying that the Company  performs in any one year
is dependent upon several factors,  including (i) the percentage of mobilization
value points represented by the Company's team as compared to total mobilization
value  points of all  providers  of military  service;  (ii) the  percentage  of
passenger capacity of the Company with respect to its own team; (iii) the amount
of  fixed-award  and  expansion  flying  required  by the U.S.  military in each
contract year; and (iv) the availability of the Company's aircraft to accept and
fly expansion awards.  The Company earned $175.6 million in  military/government
charter revenues in the contract year ended September 30, 2002.

The increase in RASM for military/government charter revenues in the quarter and
nine months ended  September  30, 2002, as compared to the same periods of 2001,
was due primarily to rate increases awarded for the current contract year ending
September 30, 2002,  based upon cost data submitted to the U.S.  military by the
Company and other air carriers  providing these  services,  and partially due to
the mix of aircraft  hours  flown.  The  Company  has renewed its U.S.  military
contract  for the fiscal year  beginning  October 1, 2002,  and has  obtained an
average  rate  nearly  unchanged  as compared to the prior  contract  year.  The
Company  expects the volume of military flying to be higher than in the contract
year  ended  September  30,  2002,  but due to the small  rate  changes  expects
military/government  charter RASM in the contract year beginning October 1, 2002
to be only slightly higher than the current contract year.

Ground Package  Revenues.  The Company earns ground package revenues through the
sale of hotel,  car rental and cruise  accommodations  in  conjunction  with the
Company's air transportation  product. The Company markets these ground packages
through its ATALC and Ambassadair  subsidiaries.  Ambassadair Travel Club offers
tour-guide-accompanied  vacation packages to its approximately 32,000 individual
and family members.  ATALC offers numerous ground  accommodations to the general
public,  which are marketed  through travel  agents,  as well as directly by the
Company.

In the third quarter of 2002,  ground package  revenues  decreased 35.6% to $5.6
million,  as compared to $8.7 million in the third  quarter of 2001,  and in the
nine months ended September 30, 2002, ground package revenues decreased 32.3% to
$30.6 million, as compared to $45.2 million in the same period of 2001.

The decline in ground  package sales (and related  ground  package costs) in the
first nine months of 2002,  as  compared  to the first nine  months of 2001,  is
partially  due to the  reduced  demand  for  leisure  travel  subsequent  to the
terrorist  attacks of September  11, 2001.  Also,  effective  July 1, 2002,  the
Company  outsourced the management and marketing of its ATA Vacations and Travel
Charter International brands to MTC. Under that outsourcing agreement, MTC will
directly sell ground  arrangements  to customers  who also  purchase  charter or
scheduled service air transportation  from the Company.  Therefore,  the Company
anticipates  that ground  package sales (and related  ground package costs) will



                                       23



continue to experience significant  year-over-year  declines in the remainder of
2002, as these sales will no longer be recorded by the Company for ATA Vacations
and Travel Charter International.

Other  Revenues.  Other revenues are comprised of the  consolidated  revenues of
certain affiliated companies,  together with miscellaneous categories of revenue
associated  with the  scheduled,  charter and ground  package  operations of the
Company, such as cancellation and miscellaneous service fees, Ambassadair Travel
Club membership dues and cargo revenue.  Other revenues increased 12.3% to $11.9
million in the third  quarter of 2002, as compared to $10.6 million in the third
quarter of 2001,  and  decreased  3.8% to $32.7 million in the nine months ended
September  30,  2002,  as compared to $34.0  million in the same period of 2001.
Although certain  administrative  fee revenues  increased between periods,  most
other revenues declined in association with the ongoing diminished travel demand
subsequent to the terrorist attacks of September 11, 2001.

Operating Expenses

Salaries,  Wages and Benefits.  Salaries, wages and benefits include the cost of
salaries and wages paid to the Company's employees,  together with the Company's
cost of employee benefits and  payroll-related  local,  state and federal taxes.
Salaries,  wages and  benefits  expense in the third  quarter of 2002  increased
11.9% to $95.1  million,  as compared to $85.0  million in the third  quarter of
2001, and in the nine months ended September 30, 2002,  increased 6.2% to $264.8
million, as compared to $249.4 million in the same period of 2001.

On July 16, 2002, the Company's cockpit crewmembers,  who are represented by the
Air Line Pilots Association ("ALPA"),  ratified an amended collective bargaining
agreement,  which became  effective  July 1, 2002.  The Company  expects  future
salaries,  wages and benefits costs to be significantly increased by the amended
cockpit  crewmember  contract.  The  amended  contract  is  expected to increase
cockpit  crewmembers'  average salaries by approximately  80% over the four year
contract  period.  Additionally,  the amended  contract  provides  for  expanded
retirement  benefits for cockpit  crewmembers.  Although their  existing  401(k)
employer match will be capped in future years, a defined  contribution  plan has
been  established for cockpit  crewmembers  effective  January 1, 2003.  Certain
insurance  benefits for cockpit  crewmembers have also been enhanced as a result
of the amended  contract.  The increase in  salaries,  wages and benefits in the
quarter  and nine  months  ended  September  30,  2002,  as compared to the same
periods of 2001,  is primarily due to the Company  recording  $9.9 million for a
signing  bonus as provided by the amended  cockpit  crewmember  contract.  Also,
impacting  the quarter and nine months ended  September  30, 2002,  were cockpit
crewmember  contract  rate  increases  effective  July 1,  2002,  and  generally
increasing costs for all employees' medical and workers' compensation benefits.

Fuel and Oil. Fuel and oil expense decreased 21.9% to $53.0 million in the third
quarter of 2002,  as compared to $67.9  million in the same period of 2001,  and
decreased  26.5% to $151.4 million in the nine months ended  September 30, 2002,
as compared to $205.9 million in the same period of 2001.

Total jet block hours increased 14.4% and 8.6%, respectively, in the quarter and
nine months ended  September  30, 2002, as compared to the same periods of 2001.
Despite this increase, the Company consumed 14.9% and 14.7% fewer gallons of jet
fuel for flying  operations,  respectively,  between the quarter and  nine-month
periods ended September 30, 2002 and 2001,  which resulted in a decrease in fuel
expense of  approximately  $10.4 million and $30.9 million,  respectively.  This
decrease was primarily due to the addition of Boeing  737-800 and Boeing 757-300
aircraft to the Company's fleet beginning in May 2001.  These aircraft  replaced
certain  less-fuel-efficient  Boeing 727-200 and Lockheed L-1011 aircraft, which
were retired from revenue service.

During the quarter and nine months  ended  September  30,  2002,  the  Company's
average  cost per  gallon  of jet fuel  consumed  decreased  by 2.6% and  13.2%,
respectively,  as compared to the same periods of 2001,  resulting in a decrease
in fuel and oil  expense  of  approximately  $3.4  million  and  $23.9  million,
respectively, between those periods.


                                       24




Periodically,  the Company has entered into fuel price hedge contracts to reduce
the risk of fuel price  fluctuations.  No material gains or losses were recorded
in  any  period  presented.  As of  September  30,  2002,  the  Company  had  no
outstanding fuel hedge agreements.

Aircraft Rentals.  The Company's operating leases require periodic cash payments
that vary in amount and  frequency.  The Company  accounts for aircraft  rentals
expense in equal monthly  amounts over the life of each operating  lease.  As of
September 30, 2002 and December 31, 2001, the Company had recorded $75.8 million
and $49.2 million,  respectively,  of prepaid  aircraft rent under its operating
leases.  Aircraft  rentals expense for the third quarter of 2002 increased 90.3%
to $51.2 million from $26.9 million in the third quarter of 2001,  and increased
98.7% to $135.7 million in the nine months ended September 30, 2002, as compared
to  $68.3  million  in  the  same  period  of  2001.  The  increase  was  mainly
attributable  to the delivery of 25 leased  Boeing  737-800 and 10 leased Boeing
757-300  aircraft  between May 2001 and  September  2002,  which  resulted in an
increase in rental expense of $26.9 million and $71.5 million,  respectively, in
the quarter and nine months ended  September  30, 2002,  as compared to the same
periods  of 2001.  This  increase  was  partially  offset by a decline in rental
expense  recognized  in the third  quarter and nine months ended  September  30,
2001,  of $5.0  million  and $6.2  million,  respectively,  associated  with the
accrual of rents under  operating  leases for certain Boeing 727-200s which were
removed from revenue  service shortly after the events of September 11, 2001. No
such expense was incurred in 2002.

Handling,  Landing and  Navigation  Fees.  Handling and landing fees include the
costs  incurred by the Company at airports to land and service its  aircraft and
to handle  passenger  check-in,  security,  cargo and baggage  where the Company
elects to use third-party contract services in lieu of its own employees.  Where
the Company uses its own employees to perform  ground  handling  functions,  the
resulting cost appears within salaries,  wages and benefits. Air navigation fees
are incurred when the Company's aircraft fly over certain foreign airspace.

Handling, landing and navigation fees increased by 35.6% to $29.3 million in the
third  quarter of 2002,  as  compared to $21.6  million in the third  quarter of
2001, and increased by 21.6% to $85.5 million in the nine months ended September
30, 2002, as compared to $70.3 million in the same period of 2001.  The increase
in handling,  landing and navigation fees between the third quarters of 2002 and
2001 and the nine months ended September 30, 2002 and 2001, was partly due to an
increase in system-wide  jet  departures,  which  increased by 18.5% between the
third  quarters  of 2002 and 2001 and which  increased  11.6%  between  the nine
months ended  September 30, 2002 and 2001. The Company's  average cost to handle
its aircraft  also  increased  in 2002,  as compared to 2001,  primarily  due to
higher costs incurred for airport security as a result of the terrorist  attacks
on September 11, 2001.

Depreciation and Amortization.  Depreciation  reflects the periodic expensing of
the recorded cost of owned  airframes and engines,  leasehold  improvements  and
rotable parts for all fleet types,  together  with other  property and equipment
owned by the  Company.  Amortization  is  primarily  the  periodic  expensing of
capitalized airframe and engine overhauls on a  units-of-production  basis using
aircraft   flight  hours  and  cycles   (landings)  as  the  units  of  measure.
Depreciation  and amortization  expense  decreased 41.3% to $18.9 million in the
third  quarter of 2002,  as  compared to $32.2  million in the third  quarter of
2001,  and decreased  40.5% to $60.3 million in the nine months ended  September
30, 2002, as compared to $101.4 million in the same period of 2001.

In 2001,  the Company  retired three  Lockheed  L-1011-50  aircraft from revenue
service,  immediately preceding their next heavy maintenance check. In the first
nine months of 2002, the Company  retired  another five  L-1011-50/100  aircraft
earlier  than  planned.  During the fourth  quarter of 2001,  the  Company  also
determined that the remaining ten Lockheed L-1011-50/100 aircraft, rotable parts
and inventory were impaired.  These assets were subsequently  classified as held
for use in accordance with FAS 121, requiring them to be recorded on the balance
sheet at their  estimated fair market value at the time of impairment,  which is
the new asset basis to be  depreciated  over their  estimated  remaining  useful
lives.  Due  primarily to the reduced cost basis of the  remaining ten aircraft,



                                       25



and the early  retirement of eight aircraft,  the Company  recorded $5.0 million
and $14.6 million, respectively,  less depreciation and amortization expense for
this fleet in the quarter and nine months ended  September 30, 2002, as compared
to the same periods of 2001.

Following  the events of September 11, 2001,  the Company  decided to retire its
Boeing 727-200 fleet earlier than originally planned.  Most of the aircraft were
retired from revenue  service in the fourth quarter of 2001,  although some were
used for charter  service  through  the first five months of 2002.  As a result,
these  aircraft were  determined to be impaired  under FAS 121.  Boeing  727-200
aircraft  not  already   transferred  to  BATA  have  been   classified  in  the
accompanying balance sheets as assets held for sale. In accordance with FAS 121,
depreciation  expense was not recorded  after the fleet was deemed  impaired and
held for disposal,  and will not be recorded in future accounting  periods. As a
result,  the  Company  did not  record  any  depreciation  expense on the Boeing
727-200  fleet in the quarter and nine months ended  September  30, 2002,  which
resulted  in a decrease  of $7.8  million and $28.7  million,  respectively,  in
depreciation  and  amortization  expense in the quarter  and nine months  ended
September 30, 2002, as compared to the same periods of 2001.

Partially offsetting these decreases were increased  amortization of capitalized
engine and airframe overhauls on the Lockheed  L-1011-500 fleet and increases in
depreciation and amortization expense associated with other fleet rotable parts,
owned  engines  and  the  provision  for  inventory  obsolescence,   along  with
fluctuations in expenses  related to furniture and fixtures,  computer  hardware
and  software,  and  debt  issue  costs  between  periods,  none  of  which  was
individually significant.

Crew and Other Employee Travel.  Crew and other employee travel is primarily the
cost of air  transportation,  hotels and per diem  reimbursements to cockpit and
cabin  crewmembers  incurred to position  crews away from their bases to operate
Company flights throughout the world. The cost of crew and other employee travel
decreased  4.0% to $14.5  million in the third  quarter of 2002,  as compared to
$15.1 million in the third quarter of 2001, and decreased 10.3% to $41.9 million
in the nine months ended September 30, 2002, as compared to $46.7 million in the
same period of 2001. These decreases were mainly due to the Company's benefiting
from lower hotel rates  which  became  available  after the  September  11, 2001
terrorist attacks.  The average hotel cost per  full-time-equivalent  crewmember
decreased  6.4% in the third  quarter of 2002 and 15.8% in the first nine months
of 2002, as compared to the same periods of 2001.  The decreases  also reflect a
decline  in  non-crew  employee  travel in the  first  nine  months of 2002,  as
compared to the first nine  months of 2001,  due to the  Company's  cost-cutting
initiatives.  These  decreases  in the third  quarter of 2002 were  offset by an
increase  in crew per diem of  nearly  $1.0  million  as  compared  to the third
quarter of 2001. The amended cockpit crewmember contract substantially increased
per  diem  rates  paid to  cockpit  crewmembers.  As  stipulated  in the  flight
attendants'  collective  bargaining  agreement,  the Company must also pay these
amended per diem rates to the flight attendant group.

Aircraft  Maintenance,  Materials and Repairs. This expense includes the cost of
expendable  aircraft  spare parts,  repairs to repairable  and rotable  aircraft
components, contract labor for maintenance activities, and other non-capitalized
direct costs related to fleet maintenance,  including spare engine leases, parts
loan and exchange fees, and related  shipping  costs. It also includes the costs
incurred under hourly engine maintenance agreements the Company has entered into
on its Boeing 737-800 and Saab 340B power plants.  These agreements  provide for
the Company to pay  monthly  fees based on a  specified  rate per engine  flight
hour,  in  exchange  for  major  engine  overhauls  and  maintenance.   Aircraft
maintenance,  materials and repairs expense  decreased 23.1% to $11.3 million in
the third  quarter of 2002, as compared to $14.7 million in the third quarter of
2001,  and decreased  25.3% to $37.4 million in the nine months ended  September
30, 2002, as compared to $50.1 million in the same period of 2001.

The decline in  maintenance,  material and repairs  expense in the third quarter
and nine months ended  September  30,  2002,  as compared to the same periods of
2001,  was  primarily  attributable  to a decrease  in  materials  consumed  and
components  repaired  related to  maintenance  on the Company's  aging fleets of
Lockheed  L-1011-50/100 and Boeing 727-200  aircraft.  During 2001 and the first
nine months of 2002, the Company  placed 20 Boeing  727-200  aircraft into BATA,
and retired  eight  Lockheed  L-1011-50/100  aircraft  prior to the due dates of
heavy maintenance visits. Maintenance,  materials and repairs expense associated



                                       26



with these two fleets decreased $4.4 million and $16.6 million, respectively, in
the third  quarter and nine months ended  September 30, 2002, as compared to the
same periods of 2001.

This decline in  maintenance,  materials and repairs was partially  offset by an
increase  in the  cost  of the  hourly  engine  maintenance  agreement  for  the
Company's  growing  fleet of Saab 340B  propeller  aircraft  operated by Chicago
Express.

Other  Selling  Expenses.  Other  selling  expenses are  comprised  primarily of
booking fees paid to computer reservation systems ("CRS"),  credit card discount
expenses incurred when selling to customers using credit cards for payment,  and
toll-free  telephone  services  provided to  single-seat  and  vacation  package
customers who contact the Company directly to book  reservations.  Other selling
expenses  increased  7.8% to $11.1  million  in the third  quarter  of 2002,  as
compared to $10.3  million in the third quarter of 2001,  and increased  3.7% to
$33.5 million in the nine months ended  September 30, 2002, as compared to $32.3
million in the same period of 2001.  These increases are primarily the result of
a greater  portion  of the  Company's  sales  being  made on credit  cards,  and
slightly higher CRS fees.

Passenger Service.  Passenger service expense includes the onboard costs of meal
and  non-alcoholic  beverage  catering,  the  cost of  alcoholic  beverages  and
in-flight movie headsets sold, and the cost of onboard  entertainment  programs,
together  with certain  costs  incurred for  mishandled  baggage and  passengers
inconvenienced  due to flight delays or cancellations.  For the third quarter of
2002 and 2001,  catering  represented  79.9% and 72.5%,  respectively,  of total
passenger  service  expense,   while  catering   represented  79.6%  and  72.6%,
respectively,  of total  passenger  service  expense for the nine-month  periods
ended September 30, 2002 and 2001.

The total cost of  passenger  service  decreased  17.5% to $10.4  million in the
third quarter of 2002, as compared to $12.6 million in the third quarter of 2001
and  decreased  16.8% to $29.7  million in the nine months ended  September  30,
2002,  as  compared  to $35.7  million in the same  period of 2001.  The Company
experienced a decrease of approximately  32.0% and 21.9%,  respectively,  in the
average unit cost of catering each passenger between the quarter and nine months
ended September 30, 2002, and comparable  periods of 2001,  primarily because in
the first three quarters of 2002 the Company boarded a higher ratio of scheduled
service  passengers  to  charter  passengers  than in the same  periods of 2001.
Scheduled  service  passengers  are  provided  a  significantly  less  expensive
catering service than is provided to commercial charter and military passengers.
In addition,  the Company introduced round-trip catering for flights originating
in  Chicago-Midway  to reduce  catering  service charges in the quarter and nine
months   ended   September   30,   2002.   These   differences   resulted  in  a
price-and-business-mix  decrease of $3.3 million and $5.7 million, respectively,
in catering  expense  between the quarter and nine months  ended  September  30,
2002, and the comparable periods of 2001. Total jet passengers boarded increased
14.8% and  8.5%,  respectively,  between  the same time  periods,  resulting  in
approximately   $2.5  million  and  $3.6   million,   respectively,   in  higher
volume-related  catering expenses between the same sets of comparative  periods.
In the quarter and nine months ended September 30, 2002, as compared to the same
periods of 2001, the Company also incurred  approximately  $1.9 million and $4.2
million,  respectively,  less  expense  for  mishandled  baggage  and  passenger
inconvenience,  due to  significantly  fewer flight delays and  cancellations in
2002.

Advertising.  Advertising  expense  increased 33.3% to $9.6 million in the third
quarter of 2002, as compared to $7.2 million in the third  quarter of 2001,  and
increased 45.9% to $30.2 million in the nine months ended September 30, 2002, as
compared  to $20.7  million  in the same  period  of 2001.  The  Company  incurs
advertising costs primarily to support single-seat  scheduled service sales. The
increase in advertising  was primarily  attributable to the promotion of the new
scheduled  service  destinations  added in the first nine months of 2002 and the
promotion  of low fares in a market  that had less demand for air  service.  The
Company also increased  advertising in an effort to increase consumer preference
for the Company's enhanced product,  especially in its important  Chicago-Midway
hub.


                                       27



Insurance. Insurance expense represents the Company's cost of hull and liability
insurance  and the costs of  general  insurance  policies  held by the  Company,
including workers' compensation insurance premiums and claims handling fees. The
total cost of insurance increased 220.0% to $8.0 million in the third quarter of
2002,  as compared to $2.5 million in the third  quarter of 2001,  and increased
238.6% to $23.7 million in the nine months ended September 30, 2002, as compared
to $7.0 million in the same period of 2001.

Liability  insurance increased $4.1 million and $12.5 million in the quarter and
nine months ended  September  30, 2002, as compared to the same periods of 2001.
Immediately  following the September 11, 2001 terrorist  attacks,  the Company's
insurer reduced the maximum amount of insurance  coverage they would  underwrite
for liability to persons other than employees or passengers  resulting from acts
of terrorism,  war,  hijacking,  or other similar perils (war-risk coverage) and
significantly  increased their premiums for this reduced  coverage.  Pursuant to
the Air  Transportation  Safety and System  Stabilization Act and other enabling
legislation,  the U.S. Government has issued  supplemental  war-risk coverage to
U.S. air carriers,  including the Company, which is expected to continue through
late 2003.  It is  anticipated  that after this date a  commercial  product  for
war-risk coverage will become  available,  but the Company may continue to incur
significant additional costs for this coverage.

Hull  insurance  increased $1.0 million and $3.0 million in the quarter and nine
months ended  September 30, 2002,  as compared to the same periods of 2001.  The
increase is mainly  attributable  to the  increase in the  Company's  hull value
between periods due to the addition of the new Boeing 737-800 and Boeing 757-300
aircraft.  The  increase is also  attributable  to an increase in premium  rates
following the  September 11, 2001  terrorist  attacks.  Expenses  related to the
Company's general insurance  policies increased $0.4 million and $1.2 million in
the quarter and nine months ended  September  30, 2002,  as compared to the same
periods of 2001, due primarily to an increase in workers'  compensation premiums
and claims handling fees between periods.

Facilities and Other Rentals.  Facilities and other rentals  include the cost of
all ground  facilities  that are leased by the  Company  such as airport  space,
regional  sales offices and general  offices.  The cost of facilities  and other
rentals  increased  18.9% to $6.3  million  in the  third  quarter  of 2002,  as
compared to $5.3 million in the third quarter of 2001,  and  increased  19.0% to
$17.5 million in the nine months ended  September 30, 2002, as compared to $14.7
million in the same period of 2001.  Growth in facilities  costs between periods
was  primarily  attributable  to  facilities  at airport  locations  required to
support new  scheduled  service  destinations  added in the last three months of
2001 and the first  nine  months of 2002,  and  expanded  services  at  existing
destinations.

Commissions. The Company incurs commissions expense in association with the sale
by travel agents of single seats on scheduled service. In addition,  the Company
incurs  commissions to secure some  commercial and  military/government  charter
business.  Commissions  expense  decreased  48.1% to $4.0  million  in the third
quarter of 2002, as compared to $7.7 million in the third  quarter of 2001,  and
decreased 36.5% to $18.1 million in the nine months ended September 30, 2002, as
compared to $28.5 million in the same period of 2001.

The Company  experienced  a decrease  in  commissions  of $0.6  million and $3.2
million,  respectively, in the quarter and nine months ended September 30, 2002,
attributable to commissions paid to travel agents by ATALC,  which is consistent
with the decrease in related revenue. In addition, scheduled service commissions
decreased $3.1 million and $6.9 million,  respectively,  in the quarter and nine
months ended  September 30, 2002,  primarily due to the  elimination of standard
travel  agency  commissions  for sales made after  March 21,  2002.  The Company
continues to pay special travel agency commissions  targeted to specific markets
and periods of the year.

Ground Package Cost. Ground package cost is incurred by the Company with hotels,
car rental  companies,  cruise lines and similar  vendors who provide ground and
cruise  accommodations  to Ambassadair and ATALC customers.  Ground package cost
decreased  40.6% to $3.8  million in the third  quarter of 2002,  as compared to
$6.4 million in the third quarter of 2001, and decreased  35.1% to $23.8 million
in the nine months ended September 30, 2002, as compared to $36.7 million in the
same period of 2001. Ground package costs between years decreased in approximate
proportion to the decrease in ground package  revenues.  See the "Ground Package
Revenues"  section  above for an  explanation  of the decline in ground  package
sales and related costs.


                                       28



Special  Charges.  Special charges  represent  direct expenses which, due to the
events of  September  11,  2001,  were  considered  unusual in nature  under the
provisions of APB Opinion 30,  "Reporting  the Results of Operations - Reporting
the  Effects of  Disposal  of a Segment of a  Business,  and the  Extraordinary,
Unusual and Infrequently  Occurring Events and Transactions" ("APB 30"). Special
charges for both the three and nine months  ended  September  30, 2001 were $9.4
million,  while no expenses were classified as special charges in 2002. The 2001
special  charges were  comprised  primarily of costs  associated  with the early
retirement of the Company's Boeing 727 fleet, a decision made immediately  after
September 11, 2001, costs associated with the Company's proposed  transaction in
which ATA Holdings Corp. would have been taken private,  which was substantially
complete by September 11, 2001,  when the Company lost  financing as a result of
the September 11, 2001 attacks,  and expenses directly associated with the FAA's
temporary  mandated  suspension of commercial  flights on September 11, 2001 and
for several days thereafter.

Aircraft  Impairments and Retirements.  Aircraft impairment and retirement costs
decreased  8.8% to $34.3  million in the third  quarter of 2002,  as compared to
$37.6 million in the third quarter of 2001, and increased 23.7% to $51.6 million
in the nine months ended September 30, 2002, as compared to $41.7 million in the
same period of 2001.

Following  the events of September 11, 2001,  the Company  decided to retire its
Boeing 727-200 fleet earlier than originally planned.  Most of the aircraft were
retired from revenue  service in the fourth quarter of 2001,  although some were
used for charter  service  through the first five months of 2002.  In accordance
with  FAS  121,  the  Company  determined  in 2001  that  the  estimated  future
undiscounted  cash flows  expected to be generated by the Boeing  727-200s  were
less than the net book value of these aircraft and the related rotable parts and
inventory.  Therefore,  an impairment charge was recorded in 2001. In accordance
with FAS 121, the Company continues to re-evaluate current fair market values of
previously  impaired  assets.  In the three and nine months ended  September 30,
2002, the Company recorded asset  impairment  charges of $18.8 million and $33.6
million,  respectively,  and $35.2 million for the same periods of 2001, related
to its  remaining net book value of Boeing  727-200  aircraft,  including  those
recorded as an investment in BATA.

Significant assumptions were required concerning the estimated fair market value
of the fleet,  since FAS 121 specifies  that impaired  assets be written down to
their estimated fair market value by recording an impairment charge to earnings.
As FAS 121 requires the Company to  continuously  evaluate fair market values of
previously  impaired assets, it is possible that future estimates of fair market
value may result in additional material charges to earnings,  if those estimates
indicate a material  reduction in fair market value as compared to the estimates
made on September 30, 2002.

In the third  quarter of 2002,  the Company  retired two Lockheed  L-1011-50/100
aircraft,  resulting in a charge of $6.6 million.  In the third quarter of 2002,
the  Company  also  decided to retire one  Lockheed  L-1011-500  aircraft in the
fourth quarter of 2002.  The Company will write off the remaining  value of that
aircraft  ratably over its  remaining  estimated  life.  In the third quarter of
2002, the Company recorded a charge of $8.9 million related to the retirement of
this  aircraft,   which  is  reported  as  part  of  Aircraft   impairments  and
retirements.

U.S Government Grant. As a result of the terrorist attacks of September 11, 2001
President  Bush  signed  into  law  the Air  Transportation  Safety  and  System
Stabilization Act ("Act"). The Act, among other things, provided $5.0 billion in
compensation  for the direct losses incurred by all U.S.  airlines and air cargo
carriers as a result of the closure by the FAA of U.S.  airspace  following  the
September 11, 2001 terrorist attacks and for incremental  losses incurred by air
carriers  through  December 31, 2001.  Each qualified air carrier is entitled to
receive the lesser of: (1) its actual  direct and  incremental  losses  incurred
between  September  11, 2001 and December 31, 2001 or (2) its  proportion of the
$5.0 billion of total compensation available to all qualified air carriers under
the Act allocated based on August 2001 available seat miles or ton miles.


                                       29



The  Company  believed  it was  eligible  to receive up to  approximately  $74.0
million in connection with the Act, based on the Company's allocation calculated
from August 2001  available  seat miles.  In 2001,  the Company  calculated  its
direct and incremental  losses to be $66.3 million,  and recorded that amount as
U.S.  Government  grant  compensation.  The $66.3  million was comprised of lost
profit contribution and certain special charges deemed directly  attributable to
the terrorist attacks, partially offset by expense reductions as a direct result
of lower costs incurred by the Company after the attacks.  The Company  received
$44.5  million  in cash  compensation  under  the Act in 2001,  and  recorded  a
receivable for the remaining amount of $21.8 million.

The DOT issued  revised  guidelines  for  compensation  in April  2002,  and the
Company completed and submitted its third and final  application,  in the second
quarter of 2002. The Company  continues to review its application  with the DOT.
Based on these  discussions  with the DOT,  the  Company has  determined  that a
portion of the  receivable  recorded in 2001 may not be  collected  when the DOT
provides  its final  ruling  of what  qualifies  as  reimbursable.  The  Company
recorded a valuation  allowance of $15.2 million  against the  receivable in the
second  quarter of 2002 and made no  adjustment  to that  allowance in the third
quarter of 2002.  The Company  currently  expects to receive a final decision on
its pending application with the DOT during the fourth quarter of 2002.

Other  Operating  Expenses.  Other  operating  expenses  decreased 5.2% to $16.3
million in the third  quarter of 2002, as compared to $17.2 million in the third
quarter of 2001,  and  increased  4.2% to $55.2 million in the nine months ended
September  30, 2002, as compared to $53.0 million in the same period of 2001. No
line item changes were individually significant between these periods.

Interest  Income and  Expense.  Interest  expense in the quarter and nine months
ended   September  30,  2002  increased  to  $7.7  million  and  $26.0  million,
respectively,  as compared to $7.0 million and $21.3 million,  respectively,  in
the same periods of 2001.  The Company  incurred $2.3 million in the nine months
ended September 30, 2002, in interest expense relating to certain Boeing 757-300
and Boeing 737-800 aircraft which were temporarily financed with bridge debt. No
such  financing  was in place in the first nine months of 2001.  These  aircraft
were refinanced  with operating  leases by the end of the third quarter of 2002.
The Company also  capitalized  interest of $2.2 million  less,  between the nine
months ended  September  30, 2002 and 2001,  associated  with its funding of the
aircraft pre-delivery deposit requirements.

The Company  invested excess cash balances in short-term  government  securities
and  commercial  paper  and  thereby  earned  $0.6  million  and  $2.1  million,
respectively,  in interest income in the quarter and nine months ended September
30, 2002,  as compared to $1.2 million and $4.2  million,  respectively,  in the
same  periods of 2001.  The  decrease  in  interest  income  between  periods is
primarily due to a decline in the average interest rate earned.

Income Tax Expense.  In the quarter and nine months ended September 30, 2002 the
Company  recorded  an income  tax  credit  of $6.7  million  and $19.6  million,
respectively,  applicable to $67.4 million and $133.7 million,  respectively, in
pre-tax  loss for those  periods,  while in the quarter  and nine  months  ended
September 30, 2001 the Company  recorded  income tax expense of $16,000 and $0.9
million,   respectively,   applicable   to  $0.4   million  and  $3.4   million,
respectively,  in pre-tax  income for those  periods.  The  effective  tax rates
applicable  to the quarter and nine months ended  September  30, 2002 were 14.6%
and 10.0%,  respectively,  as compared to 4.0% and 26.4%,  respectively,  in the
same periods of 2001.

The  Company  expects to incur a loss for the full year of 2002.  When  combined
with annual losses reported in 2000 and 2001,  this  three-year  cumulative loss
creates a presumption  under  accounting  principles  generally  accepted in the
United  States that net deferred tax assets should be fully  reserved,  if their
recovery  cannot  be  reasonably  assured  through   carry-backs  or  other  tax
strategies.  As of September  30, 2002 the Company  projects that it will have a
net deferred tax asset of $57.7  million as of the end of 2002,  and that it can
be reasonably  assured of recovering $18.4 million of that deferred tax asset in
cash refunds in 2003, using a five-year  carry-back of expected 2002 alternative
minimum tax net operating losses to the years 1997 through 2001. Therefore,  the
Company has determined that a full valuation allowance against the remaining net
deferred tax asset of $39.3  million is required,  by  adjusting  the  Company's



                                       30



effective tax rate for 2002 prospectively from the third quarter. This allowance
adjustment, included in income tax expense, resulted in an effective tax rate of
14.6% for tax credits applicable to losses incurred through the third quarter of
2002.

Liquidity and Capital Resources

Cash Flows.  In the nine months ended September 30, 2002 and 2001, net cash used
in operating  activities  was $4.9 million,  as compared to net cash provided by
operating  activities of $142.0  million for the same period of 2001. The change
in  cash  provided  by or used  in  operating  activities  between  periods  was
primarily due to a decrease in earnings, and lower depreciation and amortization
expense due to the  retirement  and  impairment  of certain  Boeing  727-200 and
Lockheed  L-1011-50/100  aircraft  in the second half of 2001 and the first nine
months of 2002.  These  decreases were partially  offset by changes in operating
assets  and  liabilities,  most  significantly  in  accounts  receivable,  which
resulted primarily from a decrease in the U. S. Government grant receivable.

Net cash  provided by investing  activities  was $15.7 million in the first nine
months of 2002,  while net cash used in operating  activities was $308.1 million
in the nine-month period ended September 30, 2001. Such amounts included capital
expenditures  totaling  $57.6  million  in the first  nine  months  of 2002,  as
compared to $251.0  million in the same period of 2001. In the first nine months
of 2001, the Company's capital  expenditures  consisted of approximately  $137.0
million for the purchase of certain Boeing  737-800 and Boeing 757-300  aircraft
and engines and the purchase of certain Boeing 727-200 aircraft off of operating
leases, which did not occur in the same periods of 2002. Also, in the first nine
months of 2002,  the Company  incurred  $39.7  million  for engine and  airframe
overhauls,  airframe improvements and the purchase of rotable parts, as compared
to $92.8  million in the same period of 2001.  This decline is primarily  due to
fewer engine  overhauls in the first nine months of 2002 as compared to the same
period of 2001 on the Lockheed  L1011-500 and the Boeing 727-200 fleets,  and to
declining capitalized interest as more aircraft deliveries were completed.  Also
contributing  to the  difference  in net cash  provided  by (used in)  investing
activities is the progress in new aircraft deliveries.  In the first nine months
of 2002 as new  aircraft  were  delivered,  the  Company  was  refunded  through
operating  leases $77.4 million of aircraft  pre-delivery  deposits,  net of new
deposits made for future deliveries. In contrast, the Company paid $61.7 million
of pre-delivery deposit payments in the first nine months of 2001.

Net cash used in financing activities was $82.2 million in the nine months ended
September 30, 2002,  while net cash provided by financing  activities was $197.0
million in the nine months ended September 30, 2001. In the first nine months of
2002,  the Company  borrowed and repaid  $192.5  million in temporary  financing
related to the purchase of certain Boeing  737-800 and Boeing 757-300  aircraft,
which were subsequently  financed through  operating leases,  while in the first
nine months of 2001, the Company borrowed $102.2 million to temporarily  finance
certain new aircraft. In the first nine months of 2002, the Company repaid $52.6
million in short term debt which had financed  pre-delivery  deposits on certain
aircraft  delivered  during that period,  while in the same period of 2001,  the
Company  financed $43.9 million in pre-delivery  deposits.  In addition,  in the
nine months ended  September  30,  2002,  the Company made net payments of $25.0
million on its revolving credit facility,  while in the same period of 2001, the
Company borrowed $49.0 million under its bank credit facility.

The Company presently  expects that cash generated by operations,  together with
available  borrowings  under  collateralized  credit  facilities,  the return of
pre-delivery  deposits held by the  manufacturers  on future aircraft and engine
deliveries, the receipt of additional U.S. Government grant compensation and the
receipt of funds from the pending U.S.  Government-guaranteed secured term loan,
will be sufficient to fund operations  during the next 12 months. If the Company
does not obtain the U.S.  Government-guaranteed  loan,  or the  existing  credit
facility is not extended  past its current  expiration  date of January 2, 2003,
the Company  will pursue  other  sources to fund  operations  during the next 12
months.

Debt and Operating  Lease Cash Payment  Obligations.  The Company is required to
make cash payments in the future on debt obligations and operating  leases.  The
Company's  operating  leases require  periodic cash payments that vary in amount



                                       31



and  frequency.  The Company  accounts  for  aircraft  rentals  expense in equal
monthly amounts over the life of each operating  lease.  Although the Company is
obligated  on a number of long-term  operating  leases which are not recorded on
the balance sheet under accounting  principles  generally accepted in the United
States,  the Company has no  off-balance  sheet debt and,  with the exception of
insignificant amounts not requiring  disclosure,  does not guarantee the debt of
any other party. The following table  summarizes the Company's  contractual debt
and operating  lease  obligations  as of September 30, 2002, and the effect such
obligations  are  expected  to have on its  liquidity  and cash  flows in future
periods.



                                         Cash Payments Currently Scheduled

                                               Total               4Qtr           2003           2005            After
                                           As of 9/30/02           2002          -2004          -2006            2006
                                                                           (in thousands)
                                                                                               

Current and long-term debt                   $   415,495         $ 58,476       $ 203,113      $ 135,640      $    18,266

Lease obligations                              3,381,484           45,391         523,487        481,677        2,330,929
                                               ---------           ------         -------        -------        ---------

Total contractual cash obligations           $ 3,796,979         $103,867       $ 726,600      $ 617,317      $ 2,349,195
                                             ===========         =========      =========      =========      ===========



In addition, the Company is committed to taking future delivery of 16 new Boeing
757-300  and  Boeing  737-800  aircraft,  as  well as four  spare  engines.  The
estimated  amounts  of future  cash  payments  relating  to  financing  of these
aircraft  and engines  are not  included  in the table.  The Company  intends to
finance these aircraft and engines with operating leases.

Aircraft and Fleet  Transactions.  In 2000, the Company  entered into a purchase
agreement with the Boeing Company to purchase directly from Boeing 10 new Boeing
757-300s and 20 new Boeing 737-800s.  The Boeing 737-800 aircraft are powered by
General Electric CFM56-7B27 engines, and the Boeing 757-300 aircraft are powered
by Rolls-Royce  RB211-535 E4C engines. The Company also received purchase rights
for an additional 50 aircraft.  The  manufacturer's  list price is $73.6 million
for each 757-300 and $52.4 million for each 737-800, subject to escalation.  The
Company's purchase price for each aircraft is subject to various  discounts.  To
fulfill its  purchase  obligations,  the Company has  arranged for each of these
aircraft,  including the engines, to be purchased by third parties that will, in
turn, enter into long-term  operating  leases with the Company.  As of September
30, 2002, the Company had taken delivery of eight Boeing  737-800s and 10 Boeing
757-300s obtained directly from Boeing.  All remaining  aircraft to be purchased
directly from Boeing are scheduled for delivery  between October 2002 and August
2004. Aircraft pre-delivery  deposits are required for these purchases,  and the
Company has funded these deposits using operating cash and primarily  short-term
deposit  finance  facilities.  As of September  30, 2002,  the Company had $93.3
million in pre-delivery  deposits outstanding for these aircraft, of which $65.6
million was provided by deposit finance  facilities with various  lenders.  Upon
delivery of the aircraft,  pre-delivery deposits funded with operating cash will
be returned to the Company,  and those funded with  deposit  facilities  will be
used to repay those facilities.

In December  2001,  the Company  entered into an agreement to exercise  purchase
rights on two Boeing 757-300  aircraft to be delivered in May and June 2003. The
Company has purchase rights  remaining for eight Boeing 757-300  aircraft and 40
Boeing 737-800 aircraft.

The  Company  has  operating  lease  agreements  in place to lease 14 new Boeing
737-800s from ILFC. As of September 30, 2002,  the Company had taken delivery of
12 Boeing 737-800s that are being leased from ILFC. The remaining aircraft under
these  operating lease  agreements are currently  scheduled for delivery in June
2003 and May 2004.

The Company has an agreement to acquire five  additional new Boeing  737-800s to
be financed by operating leases with GE Capital Aviation Services ("GECAS"). The
Company took  delivery of the fifth Boeing  737-800  aircraft  being leased from
GECAS in the third quarter of 2002.


                                       32



Although  the Company  typically  finances  aircraft  with  long-term  operating
leases, it has a bridge financing facility which provides for maximum borrowings
of $400.0 million to finance new Boeing 737-800  aircraft and new Boeing 757-300
aircraft.  Borrowings under the facility bear interest, at the option of ATA, at
LIBOR plus a margin,  which  depends on the  percentage  of the  purchase  price
borrowed  and whether the  borrowing  matures 18 or 24 months after the aircraft
delivery date. During the first four months of 2002, the Company borrowed $192.5
million,  under this bridge facility, for the purchase of certain Boeing 737-800
and Boeing 757-300  aircraft.  As of June 30, 2002, these borrowings were repaid
in full,  while the related  aircraft were financed  under  long-term  operating
leases.

The Company  has an  agreement  with  General  Electric  to purchase  four spare
engines, which are scheduled for delivery between 2003 and 2006. The Company has
acquired two spare Rolls Royce engines,  one of which was delivered in 2001, and
the other in June 2002.

In May 2002, the Company entered into an agreement with AMR Leasing  Corporation
to lease six Saab  340B  aircraft,  with  options  to lease up to 10  additional
aircraft.  As of September 30, 2002,  the Company had taken  delivery of all six
Saab 340B aircraft under this agreement.

In March 2001, the Company entered into a limited  liability  company  agreement
with BCC to form BATA,  a 50/50 joint  venture.  Because  the  Company  does not
control BATA, the Company's  investment is being  accounted for under the equity
method of accounting. BATA is expected to remarket the Company's fleet of Boeing
727-200  aircraft in either passenger or cargo  configurations.  In exchange for
supplying the aircraft and certain  operating  services to BATA, the Company has
and will continue to receive both cash and equity in the income or loss of BATA.
The  Company  transferred  12  Boeing  727-200  aircraft  to BATA in  2001,  and
transferred  eight of the remaining 12 Boeing  727-200  aircraft to BATA in June
2002.

Significant  Financings.  As of December 31, 2001, the Company's  revolving bank
credit facility provided for maximum borrowings of $100.0 million,  including up
to $50.0  million for  stand-by  letters of credit.  In March 2002,  the Company
amended the credit  facility to reduce the maximum  borrowings to $75.0 million,
declining to $60.0  million as of  September  30,  2002,  and to modify  certain
financial  covenants.   The  amended  facility  matures  January  2,  2003,  and
borrowings  under the facility  bear  interest,  at the option of ATA, at either
LIBOR plus a margin or the agent bank's prime rate.  This  facility is currently
collateralized  by six Lockheed  L-1011-50 and L-1011-100  aircraft and engines,
three Lockheed L-1011-500 aircraft and engines,  two Saab 340B aircraft,  Boeing
727-200  spare  engines,  certain  rotable parts and eligible  receivables.  The
facility agreement provides that in the event of a material adverse  occurrence,
the lenders  can elect not to fund any  additional  borrowings,  and can require
repayment of any outstanding balance immediately. No such determination was made
relative to the  terrorist  attacks on September  11, 2001.  As of September 30,
2002, the Company had borrowings of $10.0 million against the facility,  and had
outstanding  letters of credit of $48.4 million  secured by the facility.  As of
September 30, 2002,  the bank has assigned a collateral  borrowing base of $65.4
million to the various  aircraft and parts  securing  the bank credit  facility,
which is less than their book value.

The Company is seeking a $168.0 million secured term loan that would replace the
existing  credit  facility.  The  Company  filed  an  application  with  the Air
Transportation  Stabilization  Board,  ("ATSB")  for a  $148.5  million  Federal
guarantee of that loan, and on September 26, 2002, received conditional approval
of the loan guarantee. The approval is subject to several conditions,  including
increased  fees and warrants,  resolution of certain issues  regarding  dividend
restrictions,  change of control terms of existing indebtedness,  the results of
on-going  due  diligence  by the ATSB and the  absence of any  material  adverse
change in the condition,  business, property,  operations,  prospects, assets or
liabilities of the Company.  The Company believes the conditions can be met, and
expects the guaranteed loan to close in the fourth quarter of 2002.

The  proceeds of the loan will be used to repay any  borrowings  on the existing
bank credit  facility and to support  approximately  $50.0 million in letters of
credit required by certain of the Company's  creditors.  The remaining  proceeds


                                       33



will be used for  general  corporate  purposes.  The loan will be  secured  with
collateral  similar to that  securing  the current  credit  facility,  plus some
additional  equipment and receivables.  The loan interest rate is expected to be
variable,  based on LIBOR, and the loan is expected to have a term of six years.
In addition to interest on the loan,  the Company  expects to be required to pay
to the Federal  Government certain guarantee fees, based on the outstanding loan
balance.  Interest  and  guarantee  fees will be payable  quarterly  in advance,
beginning  at  closing,  and  principal  repayments  will begin 18 months  after
funding of the loan. As part of the  guaranteed  loan  transaction,  the Company
also  expects to issue stock  warrants to the  Federal  Government.  The Company
expects the loan to be subject to certain restrictive covenants.

In  September  2000,  the  Company  issued  and  sold  300  shares  of  Series B
convertible redeemable preferred stock, without par value. In December 2000, the
Company  issued  and sold 500  shares of Series A  redeemable  preferred  stock,
without par value.  The proceeds  from the issuance and sale of the Series B and
the Series A preferred  stock were used for aircraft  pre-delivery  deposits and
general corporate purposes.

In December 2000, the Company  entered into three finance  facilities with Banca
Commerciale Italiana, GE Capital Aviation Services,  Inc., and Rolls-Royce plc.,
to fund pre-delivery deposits on new Boeing 757-300 and Boeing 737-800 aircraft.
These  facilities  provide  for up to $173.2  million  in  pre-delivery  deposit
funding,  and as of September 30, 2002,  the Company had borrowed  $65.6 million
against  these  three  facilities.  All of this  debt  has  been  classified  as
short-term in the accompanying  balance sheets because it will be repaid through
the return of related pre-delivery  deposits through lease financing of aircraft
scheduled for delivery within the next 12 months.  Interest on these  facilities
is payable monthly.

Card Agreement. The Company accepts charges to most major credit and debit cards
("cards") as payment from its customers. Approximately 90% of scheduled service
and vacation package sales are purchased using these cards.

More than half of these card sales are made using  MasterCard or Visa cards. The
Company  maintains an agreement with a bank for the processing and collection of
charges to these cards. Under this agreement,  a sale is normally charged to the
purchaser's card account and is paid to the Company in cash within a few days of
the date of purchase,  although the Company may provide the  purchased  services
days, weeks or months later. In 2001, the Company processed approximately $535.0
million in MasterCard and Visa charges under its merchant processing agreement.

On September 21, 2001, the bank notified the Company that it had determined that
the terrorist attacks of September 11, 2001, the ensuing grounding of commercial
flights by the FAA, and the  significant  uncertainty  about the level of future
air travel  entitled the bank to retain cash  collected by it on processed  card
charges as a deposit, up to 100% of the full dollar amount of purchased services
to be  provided  at a future  date.  If the  Company  fails to perform  pre-paid
services  which  are  purchased  by a charge  to a card,  the  purchaser  may be
entitled to obtain a refund which, if not paid by the Company, is the obligation
of the bank. The deposit  secures this potential  obligation of the bank to make
such refunds.

The bank exercised its right to withhold  distributions  beginning shortly after
its notice to the Company.  It subsequently  agreed to accept a letter of credit
as partial security for this potential  liability.  As of December 31, 2001, the
bank had withheld $3.1 million in cash with an additional  $20.0 million secured
by a letter of credit provided on behalf of the Company by the Company's  senior
lenders under its revolving  bank  facility.  As of September 30, 2002, the bank
had withheld  $11.8 million in cash, and $20.0 million was secured by the letter
of credit.  The  deposits  and  letter of credit as of  September  30,  2002 and
December 31, 2001  constituted  approximately  60% of the Company's total future
obligations  to provide  services  purchased  by charges to card  accounts as of
those dates.  The bank has agreed to a 60% deposit,  with that percentage  being
subject to increase up to 100% at any time at the sole discretion of the bank. A
deposit  of  100% of this  obligation  would  have  resulted  in the  additional
retention of $15.4  million by the bank at December 31, 2001,  and $21.2 million
at September 30, 2002. The bank's right to maintain a deposit does not terminate
unless,  in its reasonable  judgment and at its sole  discretion,  it determines
that a deposit is no longer required.


                                       34



The  Company  has the  right to  terminate  its  agreement  with  the bank  upon
providing  appropriate  notice. In the event of such  termination,  the bank may
retain a deposit  equal to the amount of purchased  services not yet  performed,
for up to 16 months from the date of termination.

Surety  Bonds.  The Company has  historically  provided  surety bonds to airport
authorities  and selected other parties,  to secure the Company's  obligation to
these parties.  The DOT also requires the Company to provide a surety bond or an
escrow to secure  potential  refund  claims of charter  customers  who have made
prepayments  to the  Company  for future  transportation.  One issuer  currently
provides all surety bonds issued on behalf of the Company.

Prior to the terrorist  attacks of September 11, 2001 the Company had provided a
letter  of  credit of $1.5  million  as  security  to the  issuer  for its total
estimated surety bond obligations,  which were $20.9 million at August 31, 2001.
Effective  October 5, 2001,  the issuer  required  the Company to  increase  its
letter  of credit  to 50% of its  estimated  surety  bond  liability.  Effective
January 16, 2002, the issuer  implemented a requirement for the Company's letter
of credit to secure 100% of estimated  surety bond  obligations,  which  totaled
$19.8 million. The Company's letter of credit was adjusted accordingly,  and the
Company  is  subject to future  adjustments  of its letter of credit  based upon
further revisions to the estimated liability for total surety bonds outstanding.
As of September 30, 2002,  the letter of credit  requirement  decreased to $15.2
million.  The  Company  has the right to  replace  the  issuer  with one or more
alternative  issuers  of surety  bonds,  although  the  Company  can  provide no
assurance  that it  will be able to  secure  more  favorable  terms  from  other
issuers.

Forward-Looking Information

Information contained within "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" includes forward-looking  information which
can be identified by forward-looking  terminology such as "believes," "expects,"
"may,"  "will,"  "should,"  "anticipates,"  or the  negative  thereof,  or other
variations in comparable terminology.  Such forward-looking information is based
upon management's current knowledge of factors affecting the Company's business.
The differences  between  expected  outcomes and actual results can be material,
depending upon the circumstances.  Where the Company expresses an expectation or
belief as to future results in any forward-looking information, such expectation
or belief is expressed in good faith and is believed to have a reasonable basis.
The Company can provide no assurance that the statement of expectation or belief
will result or will be achieved or accomplished.

Such forward-looking  statements involve known and unknown risks,  uncertainties
and other factors that may cause actual results to be materially different. Such
factors include, but are not limited to, the following:

o        economic conditions;
o        labor costs;
o        aviation fuel costs;
o        competitive pressures on pricing;
o        weather conditions;
o        governmental legislation and regulation;
o        consumer perceptions of the Company's products;
o        demand for air  transportation  overall,  considering  the impact of
         September 11, 2001, and  specifically in markets in which the Company
         operates;
o        higher costs associated with new security directives;
o        higher costs for insurance and the continued availability of such
         insurance;
o        the Company's ability to raise additional financing, and to refinance
         existing borrowings upon maturity;
o        declines in the value of the Company's  aircraft,  as these may result
         in lower  collateral  value and  additional  impairment charges; and
o        other risks and uncertainties listed from time to time in reports the
         Company periodically files with the SEC.


                                       35



The Company does not undertake to update the forward-looking statements to
reflect future events or circumstances.


                                       36



PART I - Financial Information
Item III - Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided
in Item 7A,  Quantitative and Qualitative  Disclosures About Market Risk, of ATA
Holdings  Corp's  Annual  Report  on Form  10-K for the  year  2001,  except  as
discussed below.

During  the first nine  months of 2002,  the  Company  entered  into  additional
heating  oil swap  agreements  to  further  minimize  the risk of jet fuel price
fluctuations,  all of which have expired.  As of September 30, 2002, the Company
had no outstanding fuel hedge agreements.


                                       37



PART I - Financial Information
Item IV - Controls and Procedures

Within  the 90 days prior to the filing of this  report,  management,  under the
supervision  of the  Company's  Chief  Executive  Officer  and  Chief  Financial
Officer,  evaluated  the  effectiveness  of  the  design  and  operation  of the
Company's  disclosure controls and procedures.  Based upon this evaluation,  the
Chief Executive  Officer and Chief  Financial  Officer have concluded that these
disclosure  controls and  procedures  (as defined in Exchange Act Rules 13a - 14
and 15d - 14) are  effective,  in all material  respects,  in ensuring  that the
information  required to be disclosed in the reports filed under the  Securities
Exchange Act of 1934 is recorded, processed,  summarized and reported within the
time periods specified in Securities and Exchange Commission rules and forms.

There have been no significant  changes in the Company's internal controls or in
other factors that could significantly affect these controls,  subsequent to the
date of the evaluation.


                                       38



PART II - Other Information

Item I - Legal Proceedings

None

Item II - Changes in Securities

None

Item III - Defaults Upon Senior Securities

None

Item IV - Submission of Matters to a Vote of Security Holders

None

Item V - Other information

None

Item VI - Exhibits and Reports on Form 8-K

     (a) Exhibits are filed as a separate section of this report as set forth in
the Index to Exhibits attached to this report.

     (b) Report filed on August 7, 2002, furnishing items under Item 5. Other
Events and Item 7. Financial Statements and Exhibits.

          Report filed on August 12, 2002, furnishing items under Item 9.
          Regulation FD Disclosure.

          Report filed on August 12, 2002, furnishing items under Item 7.
          Financial Statements and Exhibits and Item 9. Regulation FD
          Disclosure.

          Report filed on August 14, 2002, furnishing items under Item 7.
          Financial Statements and Exhibits and Item 9. Regulation FD
          Disclosure.

          Report filed on August 21, 2002, furnishing items under Item 5. Other
          Events, Item 7. Financial Statements and Exhibits and Item 9.
          Regulation FD Disclosure.

          Report filed on September 16, 2002, furnishing items under Item 5.
          Other Events, Item 7. Financial Statements and Exhibits and Item 9.
          Regulation FD Disclosure.

          Report filed on September 30, 2002, furnishing items under Item 5.
          Other Events, Item 7. Financial Statements and Exhibits and Item 9.
          Regulation FD Disclosure.


                                       39



Signatures

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
     registrant  has dul4y  caused this report to be signed on its behalf by the
     undersigned thereunto duly authorized.


                                             ATA Holdings Corp.
                                             (Registrant)




Date November 12, 2002          by /s/ Kenneth K. Wolff
     ---------------------      ------------------------------
                                Kenneth K. Wolff
                                 Executive Vice President and Chief Financial
                                     Officer
                                 On behalf of the Registrant





                                  Certification
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, J. George Mikelsons, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of ATA Holdings
     Corp.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

     4. The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed  such  disclosure  controls and  procedures to ensure that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

          c)  presented  in this  quarterly  report  our  conclusions  about the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
     on our most recent evaluation,  to the registrant's  auditors and the audit
     committee of  registrant's  board of directors (or persons  fulfilling  the
     equivalent function):

          a) all significant deficiencies in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
          other  employees  who  have a  significant  role  in the  registrant's
          internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Dated:   November 12, 2002                  /s/ J. George Mikelsons
                                            -----------------------
                                            J. George Mikelsons
                                            Chairman and Chief Executive Officer




                                  Certification
            Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Kenneth K. Wolff, certify that:

     1. I have  reviewed  this  quarterly  report on Form  10-Q of ATA  Holdings
     Corp.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

     4. The  registrant's  other  certifying  officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a. designed  such  disclosure  controls and  procedures to ensure that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

          b. evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

          c.  presented  in this  quarterly  report  our  conclusions  about the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

     5. The registrant's other certifying  officers and I have disclosed,  based
     on our most recent evaluation,  to the registrant's  auditors and the audit
     committee of  registrant's  board of directors (or persons  fulfilling  the
     equivalent function):

          a. all significant deficiencies in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

          b) any fraud,  whether or not material,  that  involves  management or
          other  employees  who  have a  significant  role  in the  registrant's
          internal controls; and

     6. The registrant's other certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Dated:   November 12, 2002                         /s/ Kenneth K. Wolff
                                                   ---------------------
                                                   Kenneth K. Wolff
                                                   Executive Vice President and
                                                   Chief Financial Officer




                                Index to Exhibits

                Exhibit No.

99.1     Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002