SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 1997

OR

For the transition period from___________ to ______________

Commission File No. 0-23224

Registrant's telephone number, including area code: (712) 262-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X__     No___

As of Novenber 11, 1997 there were 7,589,121 shares of Common Stock, par value $.01 per share, issued and outstanding.

GREAT LAKES AVIATION, LTD. AND SUBSIDIARY
Consolidated Balance Sheets
(in thousands, except share information)

Note:    The Balance Sheet at December 31, 1996, has been derived from the audited financial statements                 as of that date, but does not include all of the information and footnotes required by generally                 accepted accounting principles for complete financial statements.  See condensed notes to                 financial statements.

GREAT LAKES AVIATION, LTD. AND SUBSIDIARY
Consolidated Statement of Operations
For the Three Months and Nine Months Ended September 30

(Unaudited)
(in thousands, except share and per share information)

GREAT LAKES AVIATION, LTD. AND SUBSIDIARY
Consolidated Statement of Cash Flow
For the  Nine Months Ended September 30
(Unaudited)
(in thousands)

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

GREAT LAKES AVIATION, LTD.
CONDENSED NOTES TO THE UNAUDITED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS

1. GENERAL

The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished in the consolidated financial statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of such consolidated financial statements. The Company's business is seasonal and, accordingly, interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements for the year ended December 31, 1996 and the notes thereto, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. The foregoing financial statements contain an opinion by the Company's independent public accountants indicating substantial doubt as to the Company's ability to continue as a going concern.

The consolidated financial statements include the accounts of Great Lakes Aviation, Ltd. and its wholly-owned subsidiary (RDU Inc.), referred to collectively as the Company. All significant inter-company transactions and balances have been eliminated in consolidation.

During the period the Company operated scheduled passenger and air freight service under three marketing identities. In the Upper Midwest as United Express under a cooperative marketing agreement "United Express Agreement" with United Airlines, Inc. (United).  The Company also serves certain destinations in this area as Great Lakes Airlines.

Revenues during the quarter ended September 30, 1997 were derived 94.9% from United Express operations and 5.1% from Great Lakes Airlines operations.

2. TEMPORARY SUSPENSION OF FLIGHT OPERATIONS AND RELATED EXPENSES

Subsequent to the temporary suspension of flight operations on May 16, 1997, the Company incurred continuing operating costs and extraordinary maintenance and other expenditures dureing the shutdown period, which continued after the resumption of reduced level of services on May 23, 1997.  These non-revenue generating expenses are shown on the statement of operations as shutdown expenses.  Shutdown expenses incurred after September 30, 1997 will be reflected in the corresponding financial statements.    Shutdown expensese consist of aircraft lease rentals and depreciation for aircraft not used in scheduled service, and costs of non-utilized personnel and similar   costs.   Such operating costs for the third quarter of 1997 are summarized below.

In addition, the Company incurred interest cost of $555,920 during the third quarter related to aircraft not used in scheduled service.  The above costs further contributed to the liquidity porblems of the Company as discussed below.

3.       LIQUIDITY AND GOING-CONCERN MATTERS

The Company has recently suffered from losses, negative operating cash flows, and has negative working capital.  These matters have raised substantial doubt about its ability to continue as a going concern and, as a result, the Report of Independent Public Accountants on the financial statements for the year ended December 31, 1996, contains a statement to this effect.  The Company's ability to continue as a going concern depends upon returning to sustaind profitability.

Raytheon Aircraft Company and its financing affiliates (collectively, "Raytheon") is the Company's primary aircraft supplier and largest creditor. The Company has financed all of its Beechcraft 1900 aircraft and one of its Brasilia aircraft under related lease and debt agreements with Raytheon, and Raytheon has also extended the Company a $5 million loan secured by accounts receivable (collectively, the "Raytheon Agreements"). The Raytheon Agreements went into default in 1997 due to the Company's non-payment of scheduled amounts due. Effective August 31, 1997, the Company refinanced it Raytheon aircraft agreements.  The refinancing resulted in a total of 31 Beech 1900 aircraft under operating leases of various terms with monthly lease payments ranging from $18,000 to $40,000 per aircraft and six (6) Beech 1900C airliners remaining as owned aircraft.  The refinancing also cured all of the defaults with Raytheon.  The refinancing resulted in a net gain of $1.5 million which will be recognized over the life of the lease agreements.

On July 16, 1997 the Company reached an agreement with Raytheon pursuant to which Raytheon provided a short term loan of  $4 million.  This loan, which was originally due on July 29, 1997, has been extended until November 30, 1997 and may, at the sole option of Raytheon, be extended on a month-to-month basis until July 31, 1998.   This loan, as well as existing Raytheon indebtednes,, has been collateralized with all previously unpledged Beech aircraft spare parts and equipment.  In addition, Raytheon was granted warrants for a period of ten years, exercisable commencing July 16, 1998, to purchase one million shares of Great Lakes common stock at a price of $.75 per share.  As long as the Compnay is in compliance with the July 16, 1997 agreement, all defaults under any other financing agreements with Raytheon have been waived.

In addition to the Raytheon financing, the Company has financed 11 of its Brasilia aircraft through five lease and debt agreements with other unrelated entities (collectively, the "Brasilia Agreements"). During 1997, all  of the Brasilia Agreements went into default due to non-payment of scheduled amounts due. During the third quarter of 1997 the Company reached agreement with three of the Brasilia debt and lease providers to cure delinquent payment defaults.

The fourth agreement under which the Company leased two used Embraers for periods ending December 31, 1998, and September 30, 1999, was terminated by the lessor by the excercise of its rights as a result of the default. These two aircraft have been returned to the lessor.

During the third quarter of 1997, the Company continued to relieve its burden of excess aircraft caused byt the decision made in the second quarter of 1997 to significantly reduce its scope of operation.  The Company currently serves 51 cities in 11 states versus 73 cities served in 21 states on May 16, 1997.  One Beechcraft 1900C airliner has been converted to a freight configuration, and has been leased to a freight operator.   Four 1900C airliners have been sold, and seven 1900C airliners have been leased to other passenger operators.  The Company continues to actively pursue the sale or lease of four remaining excess Beech 1900s in its possession and two excess Brasilias which have been returned to the Lessor.

The Company continues to have past due trade accounts.  Notes totaling approximately $1.8 million have been issued to certain of the creditors which, in general require payment over a one year period.  The balance of these notes was $1.2 million as of September 30, 1997.  The Company believes that it has reached an appropriate accommodation with its key suppliers and that it will be able to obtain necessary goods and services on acceptable terms as long as timely payment is made for current purchases.

On April 25, 1997, the Company's United Express Agreement with United Airlines expired. Subsequently, the term of the Agreement was extended through December 31, 1997 while a new agreement is being negotiated.  The Company is in default of various covenants in the United Express Agreement as a result of its non-payment of bills when due and not maintaining certain financial ratios.  Both of these defaults were waived by United through December 31, 1997. The Company has historically earned the majority of its revenues under the United Express Agreement. In exchange for certain per passenger fees, the Company receives certain benefits from its relationship with United including the listing of its flights under United's computer reservation system code. While management believes that  discussions have been favorable, there can be no assurance that such negotiations will be successful or that the existing United Express Agreement can be renewed.

The Company has made substantial revisions to its flight schedules and may make further revisions in an effort to improve operating results. Service in the Southeastern United States as Midway Connection and in the Southwestern United States as Great Lakes Airlines has been eliminated. The Company is also analyzing opportunities to rationalize its capacity levels, optimize its aircraft fleet and mix and improve the deployment of its capacity. . Further, the Company has negotiated improved terms and subsidy rates on certain of its routes subsidized by the U.S. Department of Transportation under the Essential Air Service program. As of November 11, 1997, new annual rates total $11,932,798.

There can be no assurance that the Company's operational improvement initiatives will result in improved operating performance or sustained profitability. Such initiatives will require the Company to reach an agreement with United on terms acceptable to the Company, which is not assured. If the Company is unsuccessful in its efforts, it may continue to be unable to meet its current and future obligations, making it necessary to undertake such other actions as may be appropriate to preserve asset values, potentially including seeking protection from its creditors under applicable bankruptcy laws. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

4.            NEW ACCOUNTING PRONOUNCEMENT

In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share", (SFAS 128), which changes the way companies calculate their earnings per share (EPS). SFAS 128 replaces primary EPS with basic EPS. Basic EPS is computed by dividing reported earnings by weighted average shares outstanding, excluding potentially dilutive securities. Fully diluted EPS, termed diluted EPS under SFAS 128, is also to be disclosed. The Company is required to adopt SFAS 128 in the first quarter of fiscal 1999, at which time all prior year EPS are to be restated in accordance with SFAS 128.

ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

1.     OVERVIEW

This discussion and analysis in this section and in the notes to the financial statements contains certain forward-looking terminology such as "believes," "anticipates," "will," and "intends," or comparable terminology. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Potential purchasers of the Company's securities are cautioned not to place undue reliance on such forward-looking statements which are qualified in their entirety by the cautions and risks described herein and in other reports filed by the Company with the Securities and Exchange Commission.

The Company began providing air charter service in 1979, and has provided scheduled passenger service in the Upper Midwest since 1981, along the East Coast from October 1995 to May 1997, and in the Southwest and Mexico from August 1995 to May 1997. In April 1992, the Company began operating as a United Express carrier under a cooperative marketing agreement with United that expired April 25, 1997, but was extended through December 31, 1997.  As of Septemeber 30, 1997, the Company served 51 destinations in 11 states with 318 scheduled departures each weekday.

The Company has suffered significant recent losses and negative operating cash flows, has negative working-capital, and has defaulted on certain financial and operating agreements. These matters raise substantial doubt about its ability to continue as a going concern. The Company's ability to continue as a going concern depends upon negotiating extended or improved terms under its major operating agreement, and ultimately, returning to sustained profitablity.

2.        TEMPORARY SUSPENSION OF FLIGHT OPERATIONS AND REVISED MARKETING                  FOCUS

On May 16, 1997 following inspections of the Company's operations by the FAA, the Company and the FAA entered into an agreement whereby the Company voluntarily suspended flight operations pending a thorough review of the Company's maintenance and recordkeeping procedures.  On May 23, 1997, the Company resumed limited operations at five cities after entering into a Consent Order ( the "Order") with the FAA.  This Order imposed a civil penalty of $1,000,000 of which $300,000 is being paid in installments through September 1, 1998 and $7000,000 which will be forgiven if the Company complies with all the terms and conditions of the Order.  The Order also required the Company to, among other things, inspect each of the Company's aircraft and demonstrate to the FAA's satisfaction that the Company has sufficient equipment, qualified personnel, manuals, systems, procedures and financial resources to safely conduct operations.

The Company has returned to its historical core route structure with the primary focus being that of the United Express Marketing Relationship.  Within that relationship the Company is maximizing its operating advantage at Chicago's O'Hare Airport where the Company possesses 74 operating slots and revenue passenger yields are highest.  A reduced level of service has been reinstated at United's Denver hub and at the Company's Minneapolis/ St. Paul hub, where revenue passenger yields are lower and the majority of its operations receive federal subsidies.

The Company's operations are fully restored consistent with the refocused marketing strategy with schedules aircraft departures and available seat miles having been reduced by 33% and 37%, respectively, from the levels produced prior to the May 16, 1997 shutdown.   Revenues have declined by a lesser amount since the refocused strategy has resulted in increased load factors.

At the current level of servic , the Company has four Beechcraft Model 1900C aircraft and two Embraer Brasilia surplus to its schedule service requirements.  The Company is currently negotiating with aircraft operators to lease the surplus aircraft.   Losses, if any, to be incurred as a result of such dispositioins are indeterminable at this time.

Essential Air Service

Under the Essential Air Service Program, which is administered by the U.S. Department of Transportation (DOT), certain communities receive specified levels of "essential air service" (EAS). The DOT may authorize federal subsidies to compensate a carrier providing essential air service in otherwise unprofitable markets. Under the FAA Reauthorization Act of 1996, beginning in October 1997, the EAS program will be continuously funded from a newly established Air Traffic Control Overflight Fee charged to foreign air carriers.  This new $50 million enhanced EAS budget is not subject to the annual appropriations process previously used to fund the program.  The new enhanced EAS program has no scheduled expiration date and replaceds the old program that was scheduled to expire on September 30, 1998.   If , in the future, this new congressionally mandated funding mechanism was modified to reduce or elimate subsidy monies, the Company anticipates that it would discontinue service to some or all of the subsidized communities.

At September 30, 1997 and September 30, 1996, the Company served 21 and 16 subsidized essential air service communities, respectively. The Company received $3.8 and $2.3 million in essential air service subsidies for the nine months ended September 30, 1997 and September 30, 1996, respectively. An airline serving a community that qualifies for essential air services is required to give the DOT advance notice before it may terminate, suspend or reduce service. Depending on the circumstances, the DOT may require the continuation of existing service until an agreement has been reached with DOT for a new increased subsidy rate or a replacement carrier is found.

Negotiations with DOT took place during the third quarter and have continued into the fourth quarter to establish new rates which will increase future Public Service Revenues.   This is pursuant to congressional guidance that encourages DOT to improve air service to small communities by increasing service from two round trips to three each weekday and from two roudn trips to three over the weekend period.

Current Annualized Essential
Air Service Rate Status as of November 11, 1997

* Communities where the Company has completed negotiations and DOT has subsequently     issued a new enhanced Air Service Order.

Public Service Revenue amounts received for all EAS routes in years ending:

4. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND        1996

    The following table sets forth certain financial information regarding the Company:

Selected Operating Data

Operating Revenues

Operating revenues decreased 34.6% to $20.4 million in the third quarter of 1997 from $31.2 million during the third quarter of 1996.  The decrease in operating revenues resulted form the decrease in revenue passenger miles flown by 38.4% to 49.3 million in the third quarter of 1997 from 79.9 million during the third quarter of 1996 in conjunction with a 48.0% decrease in capacity to 93.4 million ASMs in the third quarter of   1997 from 179.6 million ASMs during the third quarter of 1996.  Corresponding load factor increased 18.4% from 44.5% to 52.7%.  The 34.6% decrease in operating revenue was not as sharp as the decrease in capacity and revenue passenger miles flown due to a 54.1% increase in public service revenue to $1.6 million in the third quarter of 1997 from $1.1 million during the third quarter of 1996.

Operating Expenses

Total operating decreased to $20.1 million, or 21.6 cents per ASM, in the third quarter of 1997 from $30.7 million, or 17.1 cents per ASM in the third quarter of 1996.  The increase in cost per ASM reflects the costs associated with thte voluntary shutdown and the decrease in ASMs due to the shutdown.

Salaries, wages, and benefits expense increased to 4.9 cents per ASM during the third quarter of 1997, from 3.9 cents per ASM during the third quarter of 1996, due to normal pay increases and a smaller ASM base across which to spread fixed labor.

Aircraft fuel expense per ASM decreased to 2.7 cents in the third quarter of 1997 from 3.1 cents in the third quarter of 1996 due to fuel prices, which began rising dramatically in the fall of 1996 and subsequently dropped in 1997.

Aircraft parts and component repair expenses decreased to 1.0 cents per ASM during the third quarter of 1997 from 2.1 cents per ASM in the third quarter of 1996. This is mainly due to a decrease in the number of engine overhausls performed from five during the third quarter of 1996 to one during the third quarter of 1997.

Other operating expenses increased to 4.5 cents per ASM in the third quarter of 1997 from 3.3 cents in the third quarter of 1996, reflecting higher general and administrative, marketing, communications, supplies, and contract airline handling costs spread across a lower ASM base.

Provision for Income Taxes

The Company's effective tax rate was 0 percent in the third quarter of 1997 and (8.9) percent in the third quarter of 1996.  In recognition of the Company's financial results of recent periods and the uncertainties of the airline competitive environment, the Company has elected to cease recognizing future tax benefits until it is reasonably assured that such benefits will be realized.

LIQUIDITY AND CAPITAL RESOURCES

Cash decreased $4.9 million to $1.8 million at September 30, 1997 from $6.7 million at December 31, 1996. Net cash flows used in operating activities were $8.2 million and $4.0 million in the first three quarters of 1997 and 1996, respectively. The major use of such cash flows in the first three quarters of 1997 was the funding of the Company's $12.7 million loss offset by the deferral of lease payments of $4.8 million.

The Company has suffered significant recent losses and negative operating cash flows, has negative working- capital, and has defaulted on certain financial and operating agreements. These matters raise substantial doubt about its ability to continue as a going concern and, as a result, the Report of Independent Public Accountants on the financial statements for the year ended December 31, 1996, contains a statement to this effect. The Company's ability to continue as a going concern depends upon returning to sustained profitability.

Raytheon Aircraft Company and its financing affiliates (collectively, "Raytheon") is the Company's primary aircraft supplier and largest creditor. The Company has financed all 41 of its Beechcraft 1900 aircraft and one of its Brasilia aircraft under related lease and debt agreements with Raytheon, and Raytheon has also extended the Company a $5 million loan secured by accounts receivable (collectively, the "Raytheon Agreements"). The Raytheon Agreements went into default in 1997 due to the Company's non-payment of scheduled amounts due. The Raytheon Agreements also contain cross-default provisions which may be triggered if the Company's obligations to other creditors are accelerated as a result of non-payment of those obligations. The default provisions of the Raytheon Agreements give Raytheon the right to accelerate certain amounts due under the Raytheon Agreements or repossess the aircraft or other assets securing the Raytheon Agreements. The Company is currently in negotiations with Raytheon to defer, refinance, or restructure all balances owed. While management believes that initial discussions have been favorable, there can be no assurance that such negotiations will be successful or that Raytheon will not exercise its rights under the default provisions.

In addition, the Company has financed 11 of its Brasilia aircraft through five lease and debt agreements with other unrelated entities (collectively, the "Brasilia Agreements"). At December 31, 1996, one of the Brasilia Agreements under which it operates two of these aircraft was in default due to violation of a financial covenant. During 1997, all of the Brasilia Agreements went into default due to non-payment of scheduled amounts due. Two of these Brasilia Agreements have been subsequently modified to allow deferral of payment of the defaulted amounts. Remedies available under the default provisions of the Brasilia Agreements have not been exercised, but include possible repossession and resale of the related aircraft, with the Company being responsible to pay any shortfall between such sale proceeds and the balance of the underlying obligations. The Company also has received formal notice of default, which is currently unresolved, concerning non-payment of obligations owed under one of the Brasilia Agreements under which the Company leases a total of two Brasilia aircraft.

The Company has been in negotiations with its lessors and lenders for deferral or other credit accommodations under the aforementioned lease and debt agreements, and in conjunction with such negotiations is seeking amendments of the agreements or waivers of the related defaults. There can be no assurance that the lessors or lenders will agree to amend the agreements or waive the defaults.

The Company has been continuing to extend and increase the past due amounts owed to its trade vendors. There can be no assurance that the Company's trade vendors will continue to supply the Company with goods and services on terms acceptable to the Company or that they will agree to any credit accommodations on past due amounts owed.

It is uncertain at the time of this filing what impact the Company's voluntary suspension of operations pursuant to an agreement with the FAA (see Item 5) will have on the Company's negotiations with lessors, lenders and vendors.

On April 25, 1997, the term of the United Express Agreement expired. At that time, the Company was in default of a covenant of the United Express Agreement as a result of its non-payment of bills when due. The Company has earned the majority of its revenues under the United Express Agreement and, in exchange for certain per passenger fees, received certain benefits from its relationship with United including the listing of its flights under United's computer reservation system code. Management is negotiating with United to renew the United Express Agreement. While management believes that initial discussions have been favorable, there can be no assurance that such negotiations will be successful or that the United Express Agreement can be renewed or extended on terms acceptable to the Company. Since April 25, 1997, the Company has been continuing United Express operations under the same terms as the expired United Express Agreement.

Since its inception in October 1995, significant operating losses have been incurred from the Company's operations under the Midway Connection Agreement. This is partially attributable to the fact that Midway reduced the number of aircraft in its operation early in 1996 rather than expanding operations as it had originally planned. This reduced the number of connecting opportunities for the Company's flights and, in turn, potential traffic which could use the Company's services. The Company and Midway have entered into an agreement to terminate the Midway Connection Agreement effective November 1, 1997 at which time the Company plans to terminate all services in areas currently operated under the Midway Connection name. The Company is evaluating the future use or disposition of the ten aircraft currently used in Midway Connection operations. In June 1997 two of these aircraft will be removed from Midway Connection service and placed in United Express service to accommodate seasonal increases in traffic in the Upper Midwest

The Company has made substantial revisions to its flight schedules and may make further revisions in an effort to improve operating results. Service to several unprofitable cities has been eliminated and new service to certain other cities has been or is anticipated to be introduced. The Company continues to analyze opportunities to improve its revenue optimization processes to increase revenue passenger yields and to reduce certain operating expenses. The Company is also analyzing opportunities to rationalize its capacity levels, optimize its aircraft fleet and mix, and improve the deployment of its capacity. Further, the Company has negotiated improved terms and subsidy rates on certain of its routes subsidized by the U.S. Department of Transportation under the Essential Air Service program. While management believes these initiatives will address some of the causes of its recent operating losses, there can be no assurance that the results from these actions will result in improved operating performance or profitability.

There can be no assurance that the Company's negotiations will be successful in deferring or restructuring its current and long-term financial obligations, extending or improving terms under its major operating agreements, or that its operational improvement initiatives will result in improved operating performance or sustained profitability. Such negotiations and initiatives will require the Company to reach agreements with creditors, trade vendors and code-sharing airlines on terms acceptable to the Company, none of which are assured. If the Company is unsuccessful in its efforts, it may continue to be unable to meet its current and future obligations, making it necessary to undertake such other actions as may be appropriate to preserve asset values, potentially including seeking protection from its creditors under applicable bankruptcy laws. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

During the first quarter of 1996, the Company had a line-of-credit arrangement with a bank totaling $5 million. In March 1996, the credit facility was terminated and a $4 million loan was obtained from an aircraft supplier. The interest on this loan is LIBOR plus 2%, and is being repaid on a monthly basis over a five year period and is collateralized by a Brasilia aircraft. In August 1996, an additional $5 million loan was obtained from the same aircraft supplier. Interest on this loan is payable monthly and the principal amount was due on March 31, 1997 but has not been paid. This loan is collateralized by accounts receivable.

In October 1996, the Company entered into an agreement with a vendor in which $1.8 million of outstanding invoices were converted into a short-term promissory note bearing interest of prime plus 1%. On March 12, 1997, the Company sold five spare engines to this vendor in consideration of a $950,000 reduction of its short-term note.

Capital expenditures related to aircraft and equipment totaled $90,000 in the first quarter of 1997 and $411,000 during the first quarter of 1996. Principal repayments and new long-term borrowing were nominal in the first quarter of 1997. Principal repayments exceeded long-term borrowings by $7.0 million in the first quarter of 1996.

Long-term debt, net of current maturities of $6.5 million, totaled $65.0 million at March 31, 1997 compared to $66.0 million, net of current maturities of $6.7 million, at December 31, 1996. As of March 31, 1997, the long-term debt bears interest at rates ranging from 6.6 to 9.1 percent and are payable monthly or quarterly through July, 2007. All financing was provided by Beech Acceptance Corporation, Inc. and CIT Group/Equipment Financing, Inc. and is collateralized by 25 related aircraft.

Item 5. FAA Inspection

On May 16, 1997, following inspections of the Company's operations by the FAA, the Company and the FAA entered into an agreement whereby the Company voluntarily suspended flight operations on May 16, 1997 pending a thorough review of the Company's maintenance and record keeping procedures. Under the Agreement, the Company may not operate its aircraft in revenue service until approved by the FAA. The FAA maintains that the Company utilized improperly trained personnel to perform aircraft maintenance, and has alleged that the Company has operated unairworthy aircraft. Based upon currently available information, the Company strongly disagrees with the FAA position.

The Company expects to receive a detailed Consent Order from the FAA on or before May 21, 1997 which will describe the required actions to be taken by the Company in order to resume operations. Until the receipt of this Consent Order, no estimate can be made with respect to when the Company might resume operations or the cost of complying with the Consent Order. However, the combination of loss of revenue during the suspension of operations and the cost of complying with the Consent Order is likely to have a material adverse impact on the Company.

Item 6. Exhibits and Reports on Form 8-K

1. Exhibit 10.1 Agreement between the Company and the Federal Aviation Administration dated May 16, 1997.

1. On March 18, 1997, the Company filed Form 8-K reporting matters relating to the financial condition of the registrant.

SIGNATURES

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

GREAT LAKES AVIATION, LTD.

Dated: May 20, 1997

By /s/ Douglas G. Voss
Douglas G. Voss
President and Chief Executive Officer

By /s/ A. L. Maxson
A. L. Maxson
Executive Vice President Finance

Exhibit 10.1

On May 16, 1997 in Spencer, IA, management officials of Great Lakes Aviation, Ltd. certificate number GLBA031A, agreed to voluntarily cease operations. This agreement covers operations under the following business names: United Express; Midway Connection; and Great Lakes Airlines. Operations are to cease this date and the company will not operate their aircraft in revenue service until such time as approval is received from appropriate Federal Aviation Administration (FAA) representatives.

A detailed Consent Order will be prepared by the FAA which will detail required actions to be taken by the company. This Order will be presented to the Company no later than May 21, 1997.

FOR GREAT LAKES AVIATION, LTD.

/s/ Jeffrey M Davis
Jeffrey M. Davis
Vice President Operations

/s/ John Wessner
John Wessner
Vice President Maintenance

FOR THE FEDERAL AVIATION ADMINISTRATION


/s/ John C. Curry
John C. Curry
Central Region Assistant Chief Counsel

/s/ Benjamin H. Tollison
Benjamin H. Tollison
Manager, Central Region Flight
Standards Division