Annual Report (10-k)

GLUX Great Lakes Aviation Ltd (CE)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2014

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

For the transition period from to

Commission File No. 0-23224

GREAT LAKES AVIATION, LTD.

(Exact name of registrant as specified in its charter)

Iowa

42-1135319

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


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

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

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

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

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

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

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

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

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

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

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

The aggregate market value of common stock held by non-affiliates of the registrant as of the last business day of registrant’s most recently completed second fiscal quarter was approximately $4,200,000.

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

DOCUMENTS INCORPORATED BY REFERENCE

None.

GREAT LAKES AVIATION, LTD.

FORM 10-K

For the Fiscal Year Ended December 31, 2014

INDEX


Forward-Looking Statements		1

PART I		2
Item 1.	BUSINESS	2
Item 1A.	RISK FACTORS	10
Item 1B.	UNRESOLVED STAFF COMMENTS	15
Item 2.	PROPERTIES	15
Item 3.	LEGAL PROCEEDINGS	16
Item 4.	MINE SAFETY DISCLOSURES	16

PART II		16
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	16
Item 6.	SELECTED FINANCIAL DATA	17
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	19
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	28
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	46
Item 9A.	CONTROLS AND PROCEDURES	46
Item 9B.	OTHER INFORMATION	47

PART III		48
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	48
Item 11.	EXECUTIVE COMPENSATION	51
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	53
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	54
Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	55

PART IV		56
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	56

SIGNATURES		57

Forward-Looking Statements

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

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

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

2)	our ability to comply with our current debt obligations and covenants;

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

4)	the level of regulatory and environmental costs;

5)	airline industry and broader economic conditions;

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

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

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

9)	competition from other airlines and ground transportation companies;

10)	the volatility of fuel costs;

11)	the incidence of labor disruptions or strikes;

12)	our ability to retain key personnel;

13)	the incidence of aircraft accidents;

14)	the incidence of technological failures or attacks;

15)	maintenance costs related to aging aircraft;

16)	the limited market for our securities;

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

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

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

20)	no expectation of dividend;

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

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

PART I

Item 1.

BUSINESS

General

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

We are a regional airline operating as an independent carrier and as a code share partner with United Air Lines. Our code share agreement allows our mutual customers to purchase connecting flights through our code share partner and to share other benefits such as baggage transfer and frequent flyer benefits (in certain instances), while the Company maintains its own branding on our planes and ticket counters and our own designator code on all our flights. In addition to our code share agreement and independent branding, the Company has developed electronic ticketing (e-ticket) interline agreements with American Airlines, Delta Airlines, United Airlines and U.S. Airways.

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

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

Essential Air Service (“EAS”) Program

We derived approximately 51% of our total revenue from the EAS program in the year ended December 31, 2014, which is administered by the United States Department of Transportation (DOT). The EAS program was instituted under the Airline Deregulation Act of 1978 (the “Deregulation Act”), which allowed airlines greater freedom to introduce, increase, and generally reduce or eliminate service to existing markets. Under the EAS program, certain communities are guaranteed specified levels of “essential air service.” In order to promote the provision of essential air services, the DOT may authorize the payment of federal subsidies to compensate an air carrier that is providing essential air services in otherwise unprofitable or minimally profitable markets.

The FAA Modernization and Reform Act of 2012 was enacted into law on February 14, 2012. This legislation provides for the authorization of the EAS program for federal fiscal years 2011 through 2015. Federal fiscal year 2015 ends on September 30, 2015. The FAA Modernization and Reform Act of 2012 reaffirmed the Congressional commitment to the continuance of the Essential Air Service program. The EAS program obtains a portion of the funding through annual Congressional appropriations.

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

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

EAS Program and Market Activity

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

Moab and Vernal, UT

Pueblo, AZ

Clovis and Silver City, NM

Devils Lake and Jamestown, ND

Ft. Dodge and Mason City, IA

Ironwood, MI

Hays and Great Bend, KS

Visalia, CA

In addition to the EAS subsidized cities above, in March of 2014, the Company discontinued service to Dickinson and Williston, ND which were not EAS subsidized cities. In September of 2014, we discontinued service to Telluride, CO.

Pilot Shortage

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

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

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

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

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

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

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

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

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

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

United Airlines and Frontier Airlines Code Share Relationships

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

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

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

Interline Relationships

Since 1982, Great Lakes has developed and maintained various interline relationships with numerous domestic and international airlines. In recent years, the airline industry has modified its interline ticketing and baggage agreements to move towards electronic processing of interline transactions and related customer services. Great Lakes is committed to being part of the airline industry’s mission to simplify the customer relationship. As a

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

Marketing

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

Yield Management

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

Seasonality

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

Competition

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

Aircraft

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

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

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

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


	2014				2013				2012
	Beechcraft 1900D		Embraer Brasilia		Beechcraft 1900D		Embraer Brasilia		Beechcraft 1900D		Embraer Brasilia
Owned		28		6		28		6		28		6
Operating leases		0		0		0		0		0		0

		28		6		28		6		28		6

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

Maintenance

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

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

Fuel

We expect to continue to be able to obtain fuel in quantities sufficient to meet our future requirements. We contract, both through intermediaries and directly with refiners, for the purchase of a significant portion of our aircraft fuel requirements. However, standard industry contracts generally do not provide protection against fuel price increases and do not ensure availability of supply. Accordingly, an increase in the cost of fuel, if not accompanied by an equivalent increase in passenger revenues or subsidies, could have a material adverse impact on our future operating results. During 2014, our average price of fuel, including taxes and into plane service fees, was $3.44 per gallon, as compared to $3.67 in 2013 and $3.76 in 2012. Based on rates of consumption for 2014, a one cent increase or decrease in the price per gallon of fuel would increase or decrease our fuel expense by approximately $48,000 annually.

Liquidity, Financing and Capital Resources

We have historically used debt to finance the purchase of our aircraft.

under the Credit Agreement dated November 6, 2011 as amended between the Company and Crystal Financial LLC and other lenders (the “Refinanced Credit Agreement”). The revolving loan facilities may be used for our working capital needs.

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

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

We have experienced a shortage of qualified pilots which has caused us to curtail operations and reduce capacity. The pilot shortage and its effect on operations are expected to continue until we can hire and train enough pilots to reestablish operations in those markets in which we were forced to suspend service or expand into new markets. The curtailment of operations has had a negative impact on revenue, operating income and operating cash flows which is expected to continue. While we are re-staffing a sufficient number of qualified pilots to restore service to suspended or expand into new markets, we expect that absent unusual circumstances, that a combination of cash generated from operations in conjunction with new working capital lines of credit and potential aircraft sales, will generate sufficient liquidity to service our obligations.

As of December 31, 2014 the Company has no aircraft lease obligations.

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

Employees

At March 20, 2014 we employed 442 full-time employees and 215 part-time employees, of the 442 full-time employees, 95 were pilots. At March 20, 2015 we employed 374 full-time employees and 174 part-time employees, of the 374 full-time employees, 86 were pilots.

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

Our flight attendants are represented by the United Transportation Union (“UTU”). We entered into a new agreement with the flight attendants on May 17, 2011. This agreement will become amendable on May 17, 2015.

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

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

Executive Officers of the Registrant

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

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

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

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

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

Regulation

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

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

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

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

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

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

Insurance

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

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

ITEM 1A.

RISK FACTORS

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

Risks Related to Our Business

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

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

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

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

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

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

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

We receive Essential Air Service (“EAS”) revenue as compensation for essential air service provided by us to smaller communities. We received $30.0 million of EAS revenue for the twelve month period ending December 31, 2014, representing approximately 51% of our total operating revenue, compared to $55.4 million of EAS revenue, or approximately 47% of our total operating revenue, for the twelve month period ending December 31, 2013. The total amount of EAS revenue ultimately received by us over an extended period is determined by, among other things, overall funding levels of the EAS program by the U.S. Congress (which could be reduced), competitive bids by other carriers (which could cause us to lose EAS revenue to competitors), and our ability to optimize our schedules. EAS revenue awards generally have a term of two years. The U.S. Department of Transportation, which administers the EAS program, has the right to cancel EAS revenue awards if it deems that the communities served by such arrangements are no longer eligible.

The FAA Modernization and Reform Act of 2012 was enacted into law on February 14, 2012. This legislation provides for the authorization of the Essential Air Service program for federal fiscal years 2011 through 2014. Federal fiscal year 2014 ends on September 30, 2015. The FAA Modernization and Reform Act of 2012 reaffirmed the Congressional commitment to the continuance of the Essential Air Service program. However, there can be no assurances that future legislation will be consistent with this current legislation or that Congress will provide appropriated funding for the program at any particular level. A reduction of EAS revenue could adversely affect our business, financial condition, operating results and cash flows.

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

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

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

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

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

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

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

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

Our code share agreements with United Airlines does not have a fixed termination date, but are cancellable by either party upon sufficient notice. We estimate that approximately 38% of our connecting passenger traffic utilizes the United Airline code share product line. While we are the only carrier serving the majority of the non-hub destinations we serve, we can make no assurances that absent a code share agreement with United Airlines, that passengers wishing to travel to these destinations would either: (i) purchase travel through our interline e-ticketing agreements established with American Airlines, Delta Airlines, United Airlines and U.S. Airways, and or (ii) purchase their travel directly through our own sales channels. Therefore, if the United Airlines code share agreement is terminated, we cannot predict the effect this would have on our future total operating revenue.

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

At December 31, 2014, we had estimated net operating loss carryforwards (“NOLs”) of $27.1 million for federal income tax purposes that expire beginning in 2021 and continuing through 2034. Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change”. Generally, an ownership change occurs if one or more shareholders, each of whom owns 5% or more in value of a corporation’s stock, increase their percentage ownership, in the aggregate, by more than 50% over the lowest percentage of stock owned by such shareholders at any time during the preceding three-year period.

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

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

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

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

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

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

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

Expenditures for fuel and related taxes represent one of the largest costs of operating our business. Our operations depend on the availability of jet fuel supplies, and our results are significantly impacted by changes in jet fuel prices, which have been volatile in the last 36 months. Volatility in jet fuel prices or disruptions in fuel supplies could have a material adverse effect on our results of operations, financial condition and liquidity.

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

Our pilots, flight attendants, mechanics and maintenance clerks, and dispatchers are represented by unions. Collectively, these employees represented approximately 38.5% of our workforce as of December 31, 2014. We entered into a new agreement with the pilots on September 16, 2014. This agreement will continue in full force and effect for four years and thereafter is subject to amendment, which would reopen collective bargaining. We entered into a new four year agreement with our flight attendants effective May 17, 2011 which will become amendable on May 17, 2015. Our collective bargaining agreement with our mechanics became amendable in 2005.

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

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

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

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

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

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

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

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

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

Risks Related to Our Securities

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

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

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

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

•

the extremely limited “float” in the public market;

•

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

•

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

•

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

•

regulatory changes affecting the airline industry;

•

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

•

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

•

the operating and stock performance of comparable companies;

•

general economic conditions and trends;

•

major catastrophic events;

•

loss of external funding sources;

•

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

•

departures of key personnel.

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

We are controlled by our Chairman and President.

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

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

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

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

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

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

Provisions in our credit agreement restrict us from merging with or acquiring another entity.

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

Item 1B.

UNRESOLVED STAFF COMMENTS

None.

Item 2.

PROPERTIES

Aircraft

We currently operate a total of 34 aircraft consisting of 28 19-passenger Beechcraft 1900D aircraft, most of which are currently operating in a nine seat configuration, and six 30-passenger Embraer Brasilia aircraft. The average age of our fleet is approximately 20 years. All 34 of our aircraft are owned and pledged as security for our loan agreements with Callidus Capital Corporation.

Ground Facilities

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

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

As of March 20, 2015 we leased gate, terminal and ramp facilities at 28 airports where ticketing and passenger loading and unloading are handled by Great Lakes personnel.

Item 3.

LEGAL PROCEEDINGS

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

Item 4.

MINE SAFETY DISCLOSURES

Not Applicable.

PART II

Item 5.

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

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


Stock Quotations	High		Low

2014:
First quarter	$	1.23	$	1.01
Second quarter		0.90		0.43
Third quarter		0.84		0.43
Fourth quarter		0.55		0.34

2013:
First quarter	$	2.15	$	1.40
Second quarter		1.75		1.21
Third quarter		1.50		0.96
Fourth quarter		1.23		0.84

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

The transfer agent for our Common Stock is Wells Fargo Shareowner Services, 1110 Centre Pointe Curve Suite 101, Mendota Heights, MN 55120, telephone: (855) 217-6361.

We have not paid any dividends on our Common Stock since our initial public offering in January 1994. We expect that, for the foreseeable future, we will follow a policy of retaining earnings in order to finance the continued development of our business. Payment of dividends is within the discretion of our Board of Directors and will depend, among other factors, upon the earnings, capital requirements, operating and financial condition of Great Lakes, and any applicable restrictive debt and lease covenants. In addition, the provisions of our December 22, 2014 financing agreement with Callidus Capital Corporation, restrict us from paying dividends without their prior consent.

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

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

Item 6.

SELECTED FINANCIAL AND OPERATING DATA

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


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

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

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

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

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

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

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

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

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

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


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

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

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

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


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

(1)

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

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

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

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

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

(6)

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

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

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

Item 7.

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

Overview

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

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

Financial Highlights

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

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

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

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

Results of Operations

(dollars in thousands)


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

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

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

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

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


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

Comparison of 2014 to 2013

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

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

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

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

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

Aircraft fuel expense, in 2014, was $16.4 million, or 13.8 cents per ASM, a decrease of $19.2 million compared to 2013. In 2013, aircraft fuel expense was $35.7 million, or 10.7 cents per ASM. The average cost of fuel decreased from $3.67 per gallon in 2013 to $3.44 per gallon in 2014. The effect of the $0.23 decrease in cost per gallon, along with a decrease in consumption, was a decrease in total cost of approximately $19.2 million in 2014. We estimate that of the $19.2 million decrease in year-over-year fuel cost that $1.1 million is attributable to fuel price decreases and $18.1 million is attributable to the reduction in operations. At 2014 rates of consumption, a one-cent increase or decrease in the price per gallon of fuel will increase or decrease our fuel expense by approximately $48,000 annually.

Aircraft maintenance, materials and component repair expense was $4.7 million in 2014, a decrease of $10.1 million from 2013. In comparison, our aircraft maintenance, materials, and repairs expense for 2013 was $14.8 million. The 68.2% decrease in 2014 aircraft maintenance expense was primarily attributable to an 53.5% decrease in the number of departures and an 52.2% decrease in aircraft block hour time. Aircraft maintenance, materials and component expense does not include internal salaries, wages and benefit expenses incurred as a result of employees performing aircraft maintenance.

Depreciation and amortization expense was $6.3 million in 2014 and $6.4 million in 2013. The decrease in depreciation is primarily due to equipment becoming fully depreciated.

We had no passenger aircraft rental expense during 2014 and 2013. In December 2012, we purchased aircraft that we were previously leasing. We currently own all of our passenger service aircraft.

Other rentals and landing fees decreased 31.6% to $4.4 million in 2014 from $6.4 million in 2013. The decrease is primarily attributable to our reduction of communities served along with other market service reductions.

Other operating expenses decreased 28.3% in 2014 to $12.7 million from $17.8 million in 2013. The $5.1 million decrease in other operating expenses was primarily attributable to the curtailment of operations due to a severe shortage of available qualified pilots, offset by increases for legal and professional fees of $0.6 million.

Interest Expense. Interest expense was $4.6 million during 2014, an increase of 5.5% from $4.3 million in 2013 as a result of incremental borrowings at default rates of interest prior to our refinancing in December of 2014.

Loss on Extinguishment of Debt. In conjunction with our December 2014 refinancing of our 2011senior credit facility, we repaid obligations totaling $24.9 million to our previous lenders, which constituted all outstanding borrowings, fees and expenses due under the our previous loan agreements. Our 2011 senior credit facility was

set to mature in November 2015 and had $1.0 million of unamortized fees and expenses associated with that facility at the time of the December 2014 refinancing with Callidus Capital. Therefore, $1.0 million of unamortized fees has been recorded as a loss on the extinguishment of debt at December 31, 2014.

Income Tax Expense. We had an income tax benefit of $4.0 million in 2014 compared to income tax benefit of $0.1 million in 2013. The provision for income tax benefit in 2014, as a percentage of income before taxes, was 35.4 percent compared to 20.0 percent income tax expense in 2013.

As of December 31, 2014, we had approximately $27.1 million of federal net operating loss carry-forwards which will be available to offset future taxable income. We also had $19.2 million of state net operating loss carry-forwards, of which $10.2 million ($0.6 million tax effected) is expected to expire unused and $9.0 million will be available to offset future taxable income. A valuation allowance of approximately $570,000 remained at December 31, 2014 for state net operating loss carry-forwards that may not be utilized before they expire.

Comparison of 2013 to 2012

Passenger Revenues. Passenger revenues decreased 22.3% from 2012. The decrease in passenger revenues was largely due to a 21.2% decrease in revenue passenger miles in addition to a 0.1% decrease in average yield per revenue passenger mile. The $17.6 million year-over year decrease in passenger revenues was attributable to the curtailment of operations due to a severe shortage of available qualified pilots in combination with a reduction of scheduled service in markets that were experiencing diminishing year-over-year load factors and lower revenue passenger mile (RPM) yields.

Public Service Revenues. Public service revenues earned through the Essential Air Service program decreased 5.0% to $55.4 million in 2013, as compared to $58.3 million in 2012. The decrease in public service revenue is primarily attributable to our reduction of communities served which was partially offset with renewing EAS services in existing markets that required subsidy rate increases. These factors contributed to a net decrease of $2.9 million of public service revenue in 2013 as compared to 2012.

Other Revenues. Other revenues decreased 22.9% to $0.3 million in 2013. This decrease was mainly due to a $0.1 million decrease in cargo revenues.

Operating Expenses. Total operating expenses decreased 11.6%, or $14.9 million from the previous year. The rate of expense reduction lagged the revenue drop-off as the Company adjusted its operating expenditures to match the new level of operations.

Salaries, wages, and benefits decreased 5.4% to $32.3 million or 9.7 cents per ASM compared to $34.2 million or 8.6 cents per ASM in 2012, which was primarily attributable to decrease in employees needed to support the decrease in operations served, along with decreases in health insurance claims in 2013 compared to 2012. These decreases were partially offset by increase for workers compensation insurance.

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

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

Depreciation and amortization expense was $6.4 million in 2013 and $5.8 million in 2012. The increase in depreciation is primarily due to addition of flight equipment in fourth quarter of 2012 and other property and equipment purchased.

We had no passenger aircraft rental expense during 2013 compared to $1.4 million in 2012. In December 2012, we purchased aircraft that we were previously leasing. We currently own all of our passenger service aircraft.

Other rentals and landing fees decreased 9.8% to $6.4 million in 2013 from $7.1 million in 2012. The decrease is mostly due to reduced hub expenses attributable to a reduction in the number of departures and an annual rate adjustment from Denver International Airport that was $0.2 million higher than the credit we received in 2012.

Other operating expenses decreased 16.4% in 2013 to $17.8 million, or 5.3 cents per ASM from $21.3 million or 5.4 cents per ASM in 2012. The decrease in other operating expenses is primarily due to decreases in pilot training and associated lodging expenses of $1.4 million, passenger related expenses of $1.1 million, contract airline handling of $0.6 million, employee related expenses of $0.3 million, insurance of $0.2 million, professional fees of $0.2 million and other expenses of $0.2 million. These were offset by increases for deicing expense of $0.5 million.

Interest Expense. Interest expense was $4.3 million during 2013, a decrease of 13.8% from $5.0 million in 2012 as a result of reducing our long-term debt.

Income Tax Expense. We had an income tax benefit of $0.1 million in 2013 compared to income tax expense of $1.5 million in 2012. The provision for income tax benefit in 2013, as a percentage of income before taxes, was 20 percent compared to 34.1 percent income tax expense in 2012.

As of December 31, 2013, we had approximately $18.7 million of federal net operating loss carry-forwards which will be available to offset future taxable income. We also had $12.9 million of state net operating loss carry-forwards, of which $9.2 million ($0.5 million tax effected) is expected to expire unused and $3.7 million will be available to offset future taxable income. A valuation allowance of approximately $507,000 remained at December 31, 2013 for state net operating loss carry-forwards that may not be utilized before they expire.

Liquidity, Financing and Capital Resources

We have historically used debt to finance the purchase of our aircraft.

On December 22, 2014, we entered into the Loan Agreement (the “Loan Agreement”) with Callidus Capital Corporation (the “Lender”). The Lender agreed to make available to the Company: (i) a $25,000,000 single advance term loan facility, (ii) a revolving loan facility with availability of up to $6,000,000 and (iii) a second revolving loan facility with availability of up to $3,000,000. The $25,000,000 term loan was disbursed at closing, and substantially all of its proceeds were used to pay all outstanding borrowings, fees and expenses under the Credit Agreement dated November 6, 2011 as amended between the Company and Crystal Financial LLC and other lenders (the “Refinanced Credit Agreement”). The revolving loan facilities may be used for our working capital needs.

We have experienced a shortage of qualified pilots which has caused us to curtail operations and reduce capacity. The pilot shortage and its effect on operations are expected to continue until we can hire and train enough pilots to reestablish operations in those markets in which we were forced to suspend service or expand into new markets. As a result of refinancing all of the Company’s debt on terms that will not require any scheduled principal payments until December 22, 2017, the Company has improved its working capital capabilities to support its efforts in reestablishing curtailed operations.

Working Capital

Net cash used by operating activities was $2.0 million at December 31, 2014 compared net cash provided of $7.3 million at December 31, 2013. We had positive working capital of $12.8 million and a current ratio of 3.98:1 at December 31, 2014, compared to negative working capital of $4.4 million and a current ratio of 0.86:1 at December 31, 2013. At December 31, 2013, all borrowings (approximately $24.2 million) under our senior credit facility were classified as current maturities. We refinanced our senior debt in December of 2014. Under the terms of our new credit facility we have a $25.0 million term loan with no scheduled principal payments due until maturity in December of 2017. The new credit facility also provides for an additional $9.0 million available under revolving lines of credit facilities. As of December 31, 2014 we have $25.0 million of outstanding debt under the term loan and we have not drawn on the additional $9.0 million of working capital available under the revolving lines of credit.

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

Operating Activities. Net cash used by operating activities for the year ended December 31, 2014 was $2.0 million as compared to net cash provided by operating activities of $7.3 million for the year ended December 31, 2013. The increase in cash used by operating activities can be attributed to the curtailment of operations due to the pilot shortage the Company is experiencing.

Investing Activities. Net cash used in investing activities for the year ended December 31, 2014 was $1.6 million for the purchase of flight equipment and other property and equipment. Net cash used in investing activities for the year ended December 31, 2013 was $1.6 million for the purchase of flight equipment and other property and equipment.

Financing Activities. Net cash used in financing activities for the year ended December 31, 2014 was $0.8 million, consisting of $26.2 million of contractual principal payments on long-term debt, offset by $27.0 million of incremental borrowings and $1.6 million for payments on debt issuance costs.

Contractual Obligations

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


	2015		2016		2017		After 2017		Total
Long-term debt - contractual
Term loan facility	$	—	$	—	$	25,000,000	$	—	$	25,000,000
Revolving credit facility		—		—		—		—		—
Contractual interest
Term loan facility		3,615,068		3,624,658		3,953,767		—		11,193,493
Revolving credit facility		—		—		—		—		—
Revolving credit facility - fees		128,959		129,205		125,775		—		383,939

Total debt	$	3,744,027	$	3,753,863	$	29,079,542	$	—	$	36,577,432

Critical Accounting Policies and Estimates

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

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

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

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

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

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

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

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The tax net operating loss carryforwards (NOLs) that have been generated are due in large part to the accelerated depreciation of property and equipment over a shorter useful life for tax purposes. Our NOLs will expire between 2021 and 2034. The book basis of property and equipment is approximately $35.4 million greater than the tax basis at December 31, 2014, all of which is expected to reverse during periods in which NOLs are available. Approximately $10.2 million ($0.6 million tax effected) of state NOLs are expected to expire unused and accordingly a valuation allowance has been provided for these deferred tax assets. Based upon the projections for future taxable income over the periods in which the deferred tax assets become deductible, the Company believes it is more likely than not that it will realize the benefits of most of the deductible temporary differences and NOLs. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

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

Effects of Inflation

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

Environmental Matters

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

Off Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (1) made guarantees, (2) a retained or a contingent interest in

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

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

Item 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risks

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

Aircraft Fuel

Due to the airline industry’s dependency on aircraft fuel for operations, airline operators including Great Lakes are impacted by changes in aircraft fuel prices. Aircraft fuel represented approximately 25.3% of our operating expenses in 2014. At 2014 rates of consumption, a one cent increase or decrease in the per gallon price of fuel would increase or decrease our fuel expense by approximately $48,000 annually.

GREAT LAKES AVIATION, LTD.

FORM 10-K

For the Fiscal Year Ended December 31, 2014

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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


Report of Independent Registered Public Accounting Firm			29

Balance Sheets as of December 31, 2014 and 2013			30

Statements of Income (Loss) for the Years Ended December 31, 2014, 2013 and 2012			31

Statements of Stockholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012			32

Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012			33

Notes to Financial Statements			34

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

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Great Lakes Aviation, Ltd.:

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

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

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

/s/ KPMG LLP

Denver, Colorado

March 30, 2015

GREAT LAKES AVIATION, LTD.

Balance Sheets


	December 31, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	2,202,273		$	6,597,927
Accounts receivable and other receivables		5,337,193			7,118,868
Inventories		6,578,419			8,667,751
Prepaid expenses and other current assets		1,785,433			3,154,713
Deferred income taxes		1,249,365			1,457,049

Total current assets		17,152,683			26,996,308

Property and equipment:
Flight equipment		126,252,883			125,027,613
Other property and equipment		10,692,328			10,604,094
Less accumulated depreciation and amortization		(93,119,738	)		(87,029,483	)

Total property and equipment		43,825,473			48,602,224

Other assets		3,283,360			2,279,968

Total assets	$	64,261,516		$	77,878,500

Liabilities and Stockholders’ Equity

Current liabilities:
Notes payable and current maturities of long-term debt	$	—		$	24,173,333
Accounts payable		2,177,376			3,684,161
Accrued interest, unearned revenue and other liabilities		2,131,928			3,525,843

Total current liabilities		4,309,304			31,383,337

Long-term debt, net of current maturities		25,000,000			—
Deferred income taxes		3,705,007			7,877,096

Total liabilities		33,014,311			39,260,433

Commitments and contingencies
Preferred stock; $0.01 par value; Authorized: 25,000,000 shares.
No shares issued or outstanding		—			—
Common stock; $0.01 par value; Authorized: 50,000,000 shares.
Issued and outstanding: 8,974,990 and 8,974,990 shares		89,750			89,750
Paid-in capital		31,494,609			31,494,609
Retained earnings (accumulated deficit)		(337,154	)		7,033,708

Total stockholders’ equity		31,247,205			38,618,067

Total liabilities and stockholders’ equity	$	64,261,516		$	77,878,500

See accompanying notes to financial statements.

GREAT LAKES AVIATION, LTD.

Statements of Income (Loss)


	Years Ended December 31,
	2014			2013			2012
Operating revenues:
Passenger	$	29,037,409		$	61,421,238		$	79,007,876
Public service		29,956,468			55,448,240			58,347,399
Freight, charter, and other		160,639			326,947			423,601

Total operating revenues		59,154,516			117,196,425			137,778,876

Operating expenses:
Salaries, wages, and benefits		20,458,058			32,345,669			34,175,706
Aircraft fuel		16,434,842			35,667,468			41,871,066
Aircraft maintenance, materials, and repairs		4,700,761			14,789,573			16,648,569
Depreciation and amortization		6,264,804			6,399,943			5,830,006
Aircraft rental		—			—			1,417,918
Other rentals and landing fees		4,402,530			6,437,633			7,136,225
Other operating expense		12,749,978			17,791,545			21,286,349

Total operating expenses		65,010,973			113,431,831			128,365,839

Operating income (loss)		(5,856,457	)		3,764,594			9,413,037
Other income (expense):
Interest expense net of interest income of $865, $1,664 and $2,639 respectively		(4,554,625	)		(4,317,753	)		(5,007,949	)
Loss on extinguishment of debt		(996,093	)		—			—

Total other income (expense)		(5,550,718	)		(4,317,753	)		(5,007,949	)
Income (loss) before income taxes		(11,407,175	)		(553,159	)		4,405,088

Income tax benefit (expense)		4,036,313			110,488			(1,502,952	)

Net income (loss)	$	(7,370,862	)	$	(442,671	)	$	2,902,136

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

Average shares outstanding:
Basic		8,974,990			8,974,990			8,923,269
Diluted		8,974,990			8,974,990			9,065,171

See accompanying notes to financial statements.

GREAT LAKES AVIATION, LTD.

Statements of Stockholders’ Equity

Years Ended December 31, 2014, 2013, and 2012


	Common stock				Paid-in capital		Retained Earnings (accumulated deficit)			Total
	Shares		Amount		Paid-in capital		Retained Earnings (accumulated deficit)			Total

Balance at January 1, 2012		8,919,990		89,200		31,473,597		4,574,243			36,137,040

Exercise of stock options		55,000		550		21,012		—			21,562

Net income		—		—		—		2,902,136			2,902,136

Balance at December 31, 2012		8,974,990	$	89,750	$	31,494,609		7,476,379		$	39,060,738

Net loss		—		—		—		(442,671	)		(442,671	)

Balance at December 31, 2013		8,974,990	$	89,750	$	31,494,609	$	7,033,708		$	38,618,067

Net loss		—		—		—		(7,370,862	)		(7,370,862	)

Balance at December 31, 2014		8,974,990	$	89,750	$	31,494,609	$	(337,154	)	$	31,247,205

See accompanying notes to financial statements.

GREAT LAKES AVIATION, LTD.

Statements of Cash Flows


	Years Ended December 31,
	2014			2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(7,370,862	)	$	(442,671	)	$	2,902,136
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		6,264,804			6,399,943			5,830,006
Loss on items beyond economic repair		126,415			372,629			303,692
Amortization of debt issuance costs		819,133			641,339			641,339
Non-cash loss on extinguishment of debt		996,093			—			—
Deferred tax expense		(3,964,405	)		(233,467	)		1,025,231
Change in current operating items:
Accounts receivable		1,781,675			2,116,565			710,028
Inventories		2,089,332			303,859			(1,402,818	)
Prepaid expenses and other current assets		633,377			(1,161,214	)		(671,880	)
Maintenance deposits		—			—			(41,057	)
Other assets		(463,732	)		1,008,313			(373,982	)
Accounts payable		(1,506,784	)		(920,745	)		302,913
Accrued interest, unearned revenue and other liabilities		(1,393,915	)		(781,137	)		(140,341	)

Net cash provided by (used in) operating activities		(1,988,869	)		7,303,414			9,085,267

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of flight equipment and other property and equipment		(1,614,469	)		(1,593,121	)		(6,512,188	)

Net cash flows used in investing activities		(1,614,469	)		(1,593,121	)		(6,512,188	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable		(26,173,333	)		(3,500,000	)		(5,300,000	)
Proceeds from the issuance of debt		27,000,000			1,500,000			2,000,000
Payments for debt issuance costs		(1,618,983	)		—			—
Proceeds from the exercise of stock options		—			—			21,562


Net cash used in financing activities		(792,316	)		(2,000,000	)		(3,278,438	)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(4,395,654	)		3,710,293			(705,359	)
Cash and Cash Equivalents:
Beginning of year		6,597,927			2,887,634			3,592,993

End of year	$	2,202,273		$	6,597,927		$	2,887,634

Supplementary cash flow information:
Cash paid during the year for interest (contractual)	$	3,928,085		$	3,698,776		$	4,434,100
Cash paid during the year for income taxes	$	6,661		$	189,809		$	1,454,359
Non-cash purchase of flight equipment	$	—		$	—		$	1,760,000

See accompanying notes to financial statements.

Great Lakes Aviation, Ltd.

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

Note 1.

Business

Passenger Revenue

Great Lakes Aviation, Ltd. (Great Lakes, the Company, we or us) is a regional airline operating as an independent carrier and as a code share partner with United Air Lines, Inc. (United or United Airlines). Our code share agreement allows our mutual customers to purchase connecting flights through our code share partner and to share other benefits such as baggage transfer and frequent flyer benefits (in certain instances), while the Company maintains its own branding on our planes and ticket counters and our own designator code on all our flights. In addition to our code share agreement and independent branding, the Company has developed electronic ticketing (e-ticket) interline agreements with American Airlines, Delta Airlines, United Airlines and U.S. Airways.

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

The Company estimates that approximately 38% of Great Lakes’ passenger traffic utilized the United code share product line and approximately 19% of Great Lakes’ passenger traffic utilized the Frontier code share product line.

The Company also carries cargo on most of the Company’s scheduled flights.

Public Service Revenue

Approximately 51% and 47% of the Company’s total revenue during each of the twelve months ended December 31, 2014 and 2013, respectively, were generated by services provided under the Essential Air Service (EAS) program administered by the United States Department of Transportation (DOT). The FAA Modernization and Reform Act of 2012 was enacted into law on February 14, 2012. This legislation provides for the authorization of the Essential Air Service program through September 30, 2015.

As of March 20, 2015, the Company served 28 airports, of which 19 locations receive EAS subsidy, in 9 states with a fleet of six Embraer EMB-120 Brasilia and 28 Beechcraft 1900D regional airliners. The Company currently operates hubs at Denver, CO, Los Angeles, CA, Minneapolis, MN and Phoenix, AZ.

Liquidity

The Company has historically used debt to finance the purchase of its aircraft.

On December 22, 2014, the Company entered into the Loan Agreement (the “Loan Agreement”) with Callidus Capital Corporation (the “Lender”). The Lender agreed to make available to the Company: (i) a $25,000,000 single advance term loan facility, (ii) a revolving loan facility with availability of up to $6,000,000 and (iii) a second revolving loan facility with availability of up to $3,000,000. The $25,000,000 term loan was disbursed at closing, and substantially all of its proceeds were used to pay all outstanding borrowings, fees and expenses under the Credit Agreement dated November 6, 2011 as amended between the Company and Crystal Financial LLC and other lenders (the “Refinanced Credit Agreement”). The revolving loan facilities may be used for the Company’s working capital needs.

Great Lakes Aviation, Ltd.

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

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

The term loan and revolving credit facilities mature on December 22, 2017 at which time any outstanding balances will be due and payable. The Company is not required to make any principal payments under the Loan Agreement until December 22, 2017.

The Company has experienced a shortage of qualified pilots which has caused the Company to curtail operations and reduce capacity. The pilot shortage and its effect on operations are expected to continue until the Company can hire and train enough pilots to reestablish operations in those markets in which the Company was forced to suspend service or expand into new markets. As a result of refinancing all of the Company’s debt on terms that will not require any scheduled principal payments until December 22, 2017, the Company has improved its working capital capabilities to support its efforts in reestablishing curtailed operations.

Note 2.

Summary of Significant Accounting Policies and Procedures

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

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

(c) Accounts Receivable and Other Receivables. Approximately 89% of accounts receivable balances are due from various airlines, credit card companies, or the United States government.

Great Lakes Aviation, Ltd.

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

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


	December 31, 2014			December 31, 2013
United Airlines		9	%		12	%
Frontier Airlines		0			8
Other Airlines		2			5
Credit card companies		11			14
United States government		67			55
Other		11			6

Total accounts receivable		100	%		100	%

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

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

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

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

Great Lakes Aviation, Ltd.

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

(g) Other Assets. Other assets consist primarily of prepayments of debt issuance costs, deposits with financial institutions, bonding companies, facilities lessors, aircraft lessors and others to secure the payment of fixed obligations. We incurred $2.5 million of debt issuance costs in 2011. At December 31, 2014, the remaining unamortized debt issuance costs of $1.0 million were recorded as a loss on extinguishment of debt in accordance with ASC 470-50-40. During 2014, we incurred debt issuance costs of $1.6 million which is classified as other assets that will be amortized over the next three years using the effective interest method. Security deposits related to long-term facility leases were $1.2 million at December 31, 2014 and 2013.

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

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

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

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

Great Lakes Aviation, Ltd.

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

(k) Income (Loss) Per Share. Basic income (loss) per share has been computed by dividing the net income for a particular year by the weighted average number of shares of common stock outstanding during such year. Diluted earnings per share reflects the potential dilution of securities that could share in earnings. The Company currently has 8,974,990 shares of common stock outstanding.

(l) Stock Option Plans. For the years ending December 31, 2014, 2013 and 2012 there were no stock-based compensation awards granted.

(m) Aircraft Maintenance. The Company operates under an FAA-approved continuous inspection and maintenance program. The Company accounts for maintenance activities on the direct expense method. Under this method, major airframe overhaul maintenance costs are recognized as expense as maintenance services are performed. Routine maintenance and repairs are charged to operations as incurred. In the event an engine undergoes a significant repair or overhaul, the Company may determine that it is more appropriate to capitalize the repair or overhaul depending on the specific nature of the maintenance activity performed.

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

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

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

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

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

Note 3.

Leases

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

Great Lakes Aviation, Ltd.

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

Company also leases certain airport gate facilities on a month-to-month basis. Facilities rental expense under operating leases, including month-to-month leases, for the years ended December 31, 2014, 2013 and 2012 was $2.9 million, $3.7 million, and $3.9 million, respectively.

Note 4.

Accrued Liabilities

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


	2014		2013
Unearned revenue	$	645,320	$	1,221,257
Accrued property taxes		68,140		74,962
Accrued interest		89,491		286,701
Accrued payroll		1,290,555		1,942,923
Other accrued expenses		38,422		—

Total accrued liabilities	$	2,131,928	$	3,525,843

Note 5.

Notes Payable and Long-Term Debt

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


	December 31, 2014		December 31, 2013
Long-term debt:
GB/Crystal Term Loan - principal	$	—	$	15,200,000
GB/Crystal Revolving Loan - principal		—		8,973,333
Callidus Term Loan - principal		25,000,000		—
Callidus Revolving Loan - principal		—		—

Total long-term debt		25,000,000		24,173,333
Less current portion:
GB/Crystal Term Loan - principal		—		(24,173,333	)
Callidus Term Loan - principal		—		—
Callidus Revolving Loan - principal		—		—

Total current portion		—		(24,173,333	)

Total long-term portion	$	25,000,000	$	—

New Loan Agreement

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

Great Lakes Aviation, Ltd.

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

outstanding borrowings, fees and expenses under the Credit Agreement dated November 6, 2011 as amended between the Company and GB Merchant Partners, LLC and Crystal Capital LLC (the “Refinanced Credit Agreement”). The revolving loan facilities may be used for the Company’s working capital needs.

The loans under the Loan Agreement mature on December 22, 2017 at which time all outstanding principal balances will be due and payable. No scheduled principal payments will be required until the maturity date unless there is a devaluation in the collateral supporting the term loan. Outstanding principal under the term loan and revolving loans will bear interest at a fixed rate of 14% per year. In addition, the Company paid a 1% facility fee at closing and will be required to pay a 1.25% facility fee on the maturity date or in an event of default. The Company will also be assessed a maintenance and monitoring fee of $3,000 per month and a 1% unused line fee. The 1% facility fee paid at closing was recorded to other assets and is being amortized as interest expense using the effective interest rate method. The 1.25% facility fee due at maturity is being accrued as an increase to other accrued liabilities and interest expense each period using the effective interest rate method. The maintenance and monitoring fee and the unused line fee are also recorded as interest expense as incurred.

In connection with the Loan Agreement, the Company granted first-ranking security interests to the Lender covering substantially all of the assets of the business. The Loan Agreement contains certain affirmative and negative covenants which are usual and customary with asset based loans, and the Company agreed to maintain a fixed charge coverage ratio beginning with the period ended March 31, 2015. In an event of default, the Lender may terminate its obligation to make further loans and may declare all obligations under the Loan Agreement to be immediately due and payable. The Company was in compliance with all convents as of December 31, 2014.

As of December 31, 2014, $25.0 million was outstanding under the term loan and there was no balance outstanding und the revolving credit facilities.

Previous Credit Agreement

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

On December 31, 2013 the Company was not in compliance with the Refinanced Credit Agreement that permitted the Company’s lenders to exercise their right to declare our debt obligations to be immediately due and payable under the terms of the Refinanced Credit Agreement. As a result of not being in compliance with the terms of the Company’s Refinanced Credit Agreement and the expectation the Company would not be in compliance with the terms of the Refinanced Credit Agreement throughout 2014, all borrowings (approximately $24.2 million) under the Company’s Refinanced Credit Agreement were classified as current maturities as of December 31, 2013.

Great Lakes Aviation, Ltd.

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

The following table summarizes the contractual due dates of the Company’s long-term debt obligations as of December 31, 2014:


	2015		2016		2017		After 2017		Total
Long-term debt - contractual
Term loan facility	$	—	$	—	$	25,000,000	$	—	$	25,000,000
Contractual interest
Term loan facility		3,615,068		3,624,658		3,528,767		—		10,768,493
Facilty fees		128,959		129,205		550,775		—		808,939

Total debt	$	3,744,027	$	3,753,863	$	29,079,542	$	—	$	36,577,432

Note 6.

Income Taxes

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


	Current			Deferred			Total
Year ended December 31, 2014:
U.S. Federal		—			(3,719,752	)	($	3,719,752	)
State and local		(71,908	)		(244,653	)	($	316,561	)

	($	71,908	)	($	3,964,405	)	($	4,036,313	)


Year ended December 31, 2013:
U.S. Federal		42,502			(118,415	)	($	75,913	)
State and local		80,471			(115,046	)	($	34,575	)

	$	122,973		($	233,462	)	($	110,488	)

Year ended December 31, 2012:
U.S. Federal		137,096			1,316,899		$	1,453,995
State and local		340,626			(291,669	)	$	48,957

	$	477,722		$	1,025,230		$	1,502,952

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


	2014			2013			2012
Income tax expense (benefit) at the federal statutory income tax rate	$	(3,878,439	)	$	(188,074	)	$	1,497,730
State income tax expense (benefit), net of federal income tax benefit		(366,900	)		(7,718	)		134,530
Book expenses not deductible for tax purposes		55,826			102,827			139,389
Increase (Decrease) in valuation allowance		58,279			(104,942	)		(36,283	)
Impact of changes in rates		94,921			87,419			(232,413	)

Income tax expense	$	(4,036,313	)	$	(110,488	)	$	1,502,952

Great Lakes Aviation, Ltd.

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

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


	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	10,107,174		$	7,020,027
Alternative minimum tax credit carryforwards		1,198,347			1,198,265
Inventory reserve		889,915			850,023
Deferred revenue		240,209			451,673
Other reserves		178,365			235,216

Total gross deferred tax assets		12,614,010			9,755,204
Less: valuation allowance		(569,964	)		(506,913	)

Net deferred tax assets		12,044,046			9,248,291
Deferred tax liabilities:
Property and equipment		(14,496,178	)		(15,626,145	)
Other		(3,510	)		(42,193	)

Net deferred tax liabilities	$	(2,455,642	)	$	(6,420,047	)

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. Management considers the projected reversal of deferred tax liabilities and tax planning strategies in making this assessment. Based upon this assessment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of any valuation allowances. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The tax net operating loss carryforwards (NOLs) that have been generated are due in large part to the accelerated depreciation of property and equipment over a shorter useful life for tax purposes as well as losses from operations incurred in the current year. The majority of the Company’s NOLs consist of Federal NOLs, which will expire between 2021 and 2034. The book basis of property and equipment is approximately $32.4 million greater than the tax basis at December 31, 2014, all of which is expected to reverse during periods in which NOLs are available.

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


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

	$	27,123

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

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

Great Lakes Aviation, Ltd.

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

Note 7.

Employee Benefit Plans

The Company maintains a qualified 401(k) employee retirement savings plan for the benefit of substantially all of the Company’s employees. The Company matches up to 4% of participating employees’ contributions. Company contributions, net of forfeitures, totaled $197,861 in 2014, $280,753 in 2013, and $299,605 in 2012.

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

Note 8.

Income Per Share

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


	2014								2013								2012
	Income (loss) (numerator)			Shares (denominator)		Per share amount			Income (loss) (numerator)			Shares (denominator)		Per share amount			Income (numerator)		Shares (denominator)		Per share amount
Basic income per share attributable to common stockholders	$	(7,370,862	)		8,974,990	$	(0.82	)	$	(442,671	)		8,974,990	$	(0.05	)	$	2,902,136		8,923,269	$	0.33
Effect of dilutive securities:
Stock options		—			—		—			—			—		—			—		141,902		—

Diluted income per share attributable to common stockholders	$	(7,370,862	)		8,974,990	$	(0.82	)	$	(442,671	)		8,974,990	$	(0.05	)	$	2,902,136		9,065,171	$	0.32

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

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

Great Lakes Aviation, Ltd.

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

Note 9.

Fair Value Measurements

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


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

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

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

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

Our financial instruments consist of cash and cash equivalents, accounts receivable and other receivables, accounts payable, accrued liabilities and long-term debt including the current portion. The carrying values of cash, accounts receivable, accounts payable and accrued cash and cash equivalents, accounts receivable and other receivables, accounts payable, and accrued liabilities approximate their fair values. These are considered Level 1 measurements. The carrying value of our long term debt including the current portion reflects original cost net of unamortized deferred debt restructuring gain and was $25.0 million and $24.2 million as of December 31, 2014 and December 31, 2013, respectively. For additional information, see Note 5 Long-Term Debt.

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

Note 10.

Transactions with Affiliates

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

Note 11.

Commitments and Contingencies

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

Union Agreements. As of March 9, 2015, approximately 38 percent of the Company’s employees are subject to union agreements.

The Company’s flight attendants are by the UTU. The Company entered into a new agreement with the flight attendants on May 17, 2011. This agreement will become amendable on May 17, 2015.

Great Lakes Aviation, Ltd.

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

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

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

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of December 31, 2014, our disclosure controls and procedures were effective.

Management’s Annual Report On Internal Control Over Financial Reporting

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

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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

Our management assessed the effectiveness of our internal control over financial reporting (ICFR) as of December 31, 2014. Management assessed the effectiveness of our ICFR based on the criteria for effective ICFR established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers. Based on this assessment, management believes that as of December 31, 2014, our internal control over financial reporting was effective based on those criteria.

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

Changes in Internal Control Over Financial Reporting

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

Item 9B. OTHER INFORMATION

Not applicable.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our Directors

The following table and narrative provide information concerning the members of our board of directors as of March 20, 2015. Our directors are elected by a plurality of the votes cast. Each director has been appointed to serve until the next annual meeting of shareholders and until their respective successors are elected and duly qualified. There are no familial relationships between any director or officer.


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

(1)	Member of the audit committee.

(2)	Member of the compensation committee.

(3)	Member of the nominating committee.

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

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

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

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

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

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

Our Executive Officers

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

Section 16(a) Beneficial Ownership Reporting Compliance

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

Code of Ethics

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

Audit Committee Matters

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

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

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

Item 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information concerning the compensation of our named executive officers for the fiscal years ended December 31, 2014, 2013, 2012 and 2011:


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

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

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

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

Employment Agreement

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

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

Outstanding Equity Awards at Fiscal Year-End

There were no outstanding equity awards held by our named executive officers as of December 31, 2012.

Retirement Savings Plan

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

Director Compensation

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

The following table sets forth information concerning the compensation of our non-employee directors for fiscal year 2014:


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

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

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

There are no outstanding stock options held by our non-employee directors as of December 31, 2014.

Compensation Committee Interlocks and Insider Participation

The Company’s compensation committee included Messrs. Mickelson, Moulton and Simpson. During Fiscal 2014, no member of the compensation committee served as an officer or Employee of the Company. In addition, during Fiscal 2014, no executive officer of the Company served as a director or as a member of the compensation committee of a company, (i) whose executive officer served as a director or a member of the compensation committee of the Company and (ii) which employed a director of the Company.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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


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

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

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

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

Charles R. Howell IV		50,000				*

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

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

A.L. Maxson		2,000				*

Michael O. Matthews		—			—

A.R. Moulton, III		—			—

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

*	Represents less than 1%.

(1)

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

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

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

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

Equity Compensation Plan Information

As of December 31, 2014 there are no compensation plans under which the Company’s equity securities are authorized for issuance.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Review and Approval or Ratification of Transactions with Related Persons

The audit committee of our board of directors is responsible for reviewing any proposed transaction with a related person. In May 2007, our board of directors amended our audit committee charter to include a policy providing for the review and approval of related person transactions requiring disclosure under Rule 404(a) of Regulation S-K. This policy states that the audit committee is responsible for reviewing and approving or disapproving all proposed interested transactions, which are defined as any transaction, arrangement or relationship in which (a) the amount involved may be expected to exceed $120,000 in any fiscal year, (b) the Company will be a participant, and (c) a related person has a direct or indirect material interest. A related person is defined as an executive officer, director or nominee for director, or a greater than five percent beneficial owner of the Company’s common stock, or an immediate family member of the foregoing. The policy deems certain interested transactions to be pre-approved, including the employment and compensation of executive officers and compensation paid to directors. All future transactions between our company and its executive officers, directors and principal shareholders and their affiliates will be approved by the audit committee pursuant to the foregoing policy.

Director Independence

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

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The firm of KPMG LLP has been our independent auditors since 1998. Fees paid to KPMG LLP during the last two fiscal years were as follows:

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

Audit-Related Fees. Fees for audit-related services provided during the years ended December 31, 2014 and 2013 were $25,600 and $43,000, respectively. Audit-related services consisted primarily of professional services provided with respect to yearly audits of our 401(k) employee savings plan and Passenger Facility Charge audits.

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

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

Audit Committee Pre-Approval Policies and Procedures

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

PART IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	The following documents are filed as a part of this report:

(1)

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

(i)

Report of Independent Registered Public Accounting Firm

(ii)

Balance Sheets as of December 31, 2014 and 2013

(iii)

Statements of Income (loss) for the Years Ended December 31, 2014, 2013 and 2012

(iv)

Statements of Stockholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012

(v)

Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012

(vi)

Notes to Financial Statements

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

(2)

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

(b)

An Exhibit Index is contained on page E-1.

(c)

Not Applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	GREAT LAKES AVIATION, LTD.

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

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

POWER OF ATTORNEY

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

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

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

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

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

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

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

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

EXHIBIT INDEX


3.1		Amended and Restated Articles of Incorporation. (1)

3.2		Amended and Restated Bylaws. (1)

4.1		Specimen Common Stock Certificate. (2)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

24		Powers of Attorney. (included in signature page)

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

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

E-1


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

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

101		Financial Statements in XBRL format.

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

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

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

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

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

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

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

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

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

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

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

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

(13)	Incorporated by reference to Current Report on Form 8-K filed on November 6, 2014 (File No. 000-23224)

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

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

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

E-2

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)

I, Charles R. Howell IV, Chief Executive Officer of Great Lakes Aviation, Ltd., certify that:

1.	I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2014 of Great Lakes Aviation, Ltd.;

2.	Based on my knowledge, this 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 report;

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

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-15(f) and 15d-15(f)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)

I, Michael O. Matthews, Vice President and Chief Financial Officer of Great Lakes Aviation, Ltd., certify that:

1.	I have reviewed this annual report on Form 10-K for the fiscal year ended December 31, 2014 of Great Lakes Aviation, Ltd.;

2.	Based on my knowledge, this 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 report;

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

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 32.1

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of Great Lakes Aviation, Ltd. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Charles R. Howell IV, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of Great Lakes Aviation, Ltd. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Michael O. Matthews, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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