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Midwest Express Holdings, Inc. Robert W. Baird Growth Stock Conference May 10, 2002

Midwest Express Holdings, Inc. Robert W. Baird Growth Stock Conference May 10, 2002. Investment Highlights. Proven market niche: premium service Historical growth in revenue and earnings Attractive growth strategy Strategic plan for the future. MEH 1. Overview 2001 in Review

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Midwest Express Holdings, Inc. Robert W. Baird Growth Stock Conference May 10, 2002

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  1. Midwest Express Holdings, Inc. Robert W. Baird Growth Stock Conference May 10, 2002

  2. Investment Highlights • Proven market niche: premium service • Historical growth in revenue and earnings • Attractive growth strategy • Strategic plan for the future MEH 1

  3. Overview • 2001 in Review • Going Forward MEH 2

  4. Midwest Express Airlines • Began commercial operations in 1984 • Recognized as best U.S. Airline by leading consumer surveys • Single-class, premium service catering to higher-yield business travelers MEH 3

  5. ‘The Best Care in the Air’ MEH 4

  6. Midwest Express Airlines Service • 26 destinations nationwide • 35 McDonnell Douglas DC-9 and MD-80 jet aircraft in service MEH 5

  7. Skyway Airlines,The Midwest Express Connection • Initiated in 1989, became wholly owned subsidiary in 1994 • Builds feeder traffic and provides nonstop service in select markets MEH 6

  8. Skyway Airlines Service • 30 markets strengthen Milwaukee base • 10 Fairchild Dornier 328JETs and 15 Beech 1900D turboprops in service MEH 7

  9. Benefits of Premium Service Strategy • Customer preference, brand loyalty • Preferred by 75% of Milwaukee frequent flyers • Consistently rated #1 U.S. airline by consumers • More profitable passenger mix • Higher percentage of business travelers • More “high-end” discretionary travelers • Premium revenue yields • 30-40% higher than industry MEH 8

  10. Ability to Capture Premium Yields • Midwest Express has historically maintained a significant yield premium $0.176 $0.123 MEH 9

  11. Consistent Revenue Growth • 10-year compounded annual revenue growth of 14% Source: Midwest Express Holdings, Inc. MEH 10

  12. 14 Years of Operating Profits • 1987-2000 operating income: $283 million on sales of $3.1 billion • 1987-2000 operating margin: 9.1%; 1995-2000 operating margin: 10.2% • 2001 operating loss of $12.9 million(1) • Excluding asset impairment charge of $8.8 million, including federal government grant of $16.3 million Source: Midwest Express Airlines/The Airline Monitor MEA information as reported, not pro forma. MEH 11

  13. Higher Yields Offset Product Costs • 2001 excludes asset impairment charge of $8.8 million and includes federal government grant of $16.3 million Source: Midwest Express Airlines/The Airline Monitor MEA information as reported, not pro forma. MEH 12

  14. 2001 In Review MEH 13

  15. Factors Impacting 2001 • Slowing economy resulted in decline in business travel that began in April and accelerated monthly • Continued high fuel cost environment • Events of September 11 compounded already-difficult operating environment and necessitated capacity reduction to align with travel demand MEH 14

  16. Net Result – 2001 vs. 2000 • 5% decrease in revenue • 1.3 percentage point decrease in load factor • 8.7% decrease in yield • Higher insurance and security costs MEH 15

  17. Profitability: 1998-2001 Full Year Revenue Oper. Income(Loss) Net Income(Loss) Net Margin Earnings (Loss)/Share Cash Flow (1) 1998 $388.9 $55.7 $35.9 9.2% $2.51 $45.9 1999 $447.6 $60.8 $38.8 8.7% $2.71 $52.0 2000 $480.0 $6.9 $5.2 1.1% $0.37 $22.2 2001 $457.2 ($12.9) ($9.3) (2.0%) ($0.68) $11.6 Note: Consolidated financial results of Midwest Express Holdings. Dollars in millions except Earnings Per Share. Information as reported, not pro forma. For operating income, net income, net margin and earnings/share, 2001 excludes impact of $8.8 million impairment charge and includes federal government grant of $16.3 million. (1) Net Income plus depreciation and amortization MEH 16

  18. Operating Statistics: 1998-2001 Full Year Revenue Yield RPMs (millions) ASMs (millions) Load Factor Revenue per ASM Cost per ASM Fuel Price 1998 19.2¢ 1,624 2,499 65.0% 13.9¢ 11.8¢ $0.56 1999 18.5¢ 1,959 2,994 65.4% 13.4¢ 11.5¢ $0.61 2000 19.3¢ 1,975 3,163 62.4% 13.3¢ 13.0¢ $1.00 2001 17.6¢ 1,974 3,232 61.1% 12.1¢ 12.8¢ $0.91 Note: Midwest Express Airlines only. MEH 17

  19. 2001 Cost Reduction Efforts • Reduced planned capacity 20% following 9/11 • Implemented furlough process to align staffing with capacity, including significant reduction in contract maintenance staff • Implemented wage freeze and benefit adjustments • Placed additional aircraft into charter service • Initiated redesign of dining services program, including transition to roundtrip meal catering • Lowered travel agent commission cap • Reduced advertising and discretionary spending • Completed transition to new aircraft maintenance program MEH 18

  20. Results of Cost Reduction Efforts • Lowered cost/asm each quarter (exc. fuel) • Reduced employee count 18% at Midwest Express and 2% at Skyway • Lowered unit costs in most categories despite significant capacity reduction • Will realize substantial unit cost benefits as capacity is restored MEH 19

  21. Going Forward MEH 20

  22. 2002 – A Rebuilding Year • Continued difficult operating environment • Poor economy, unstable fare environment, increased insurance and security costs • Capacity added as demand warrants • Down 1-2% in second quarter, up 3-4% in third quarter • Remain flexible depending on recovery of economy • Skyway to continue moderate growth • Added two Fairchild Dornier 328JET regional jets • Launched service to Baltimore, Minneapolis in first quarter MEH 21

  23. 2002 – A Rebuilding Year • Continued emphasis on cost management • Enhance brand to retain and increase loyalty • Continue to meet and exceed our customers’ expectations • Federal loan application under consideration MEH 22

  24. First Quarter Profitability Year-to-Date as of March 31, Revenue $118.9 $104.0 (12.5%) Oper. Income (Loss) (10.2) (2.8) 72.9% Net Income (Loss) (2)(6.6) (2.2) 66.6% Net Margin (5.5%) (2.1%) 3.4 pts Earnings (Loss)/Share ($0.47) ($0.16) 66.8% Cash Flow (1) (1.6) 3.4 nm 2001 2002 Change Note: Consolidated financial results of Midwest Express Holdings. Dollars in millions except Earnings Per Share. For operating income, net income, net margin and earnings per share, 2002 excludes $29.9 million asset impairment charge and $39.5 million gain associated with Fairchild arbitration settlement. (1) Net income plus depreciation and amortization. MEH 23

  25. First Quarter Operating Statistics Year-to-Date as of March 31, Revenue Yield 19.0¢ 16.3¢ (14.5%) RPMs (millions) 483.1 460.5 (4.7%) ASMs (millions) 834.4 737.6 (11.6%) Load Factor 57.9% 62.4% 4.5 pts Revenue per ASM 12.4¢ 11.7¢ (5.2%) Cost per ASM 13.3¢ 12.0¢ (10.1%) Fuel Price $0.99 $0.71 (28.1%) 2001 2002 Change Note: Midwest Express Airlines only. MEH 24

  26. 2003 and Beyond • Concentrate on existing bases of operation Milwaukee - Improve market share from existing 36% - Add frequency, cities Omaha - 6% market share, dominant carrier in markets served - Limited future growth opportunities Kansas City - Continue to build critical mass and brand loyalty - Further strengthen connection markets MEH 25

  27. 2003 and Beyond • Manage fleet growth through aircraft retirement and acquisition MEH 26

  28. Boeing 717 • 25 firm orders with options for 25 more • Monthly delivery beginning February 2003 • 88 seats in signature 2-by-2 configuration • Fuel efficient, lower maintenance costs MEH 27

  29. Embraer ERJ • 20 firm orders with options for 20 more • Bi-monthly delivery beginning January 2004 • 2-by-1 configuration • 37-, 44- and 50-seat variations MEH 28

  30. Midwest Express Holdings, Inc. www.midwestexpress.com

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