THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

MAIR Holdings, Inc. (MAIR)

2/13/2006 Proxy Information

Carl R.Pohlad is the father of Robert C. Pohlad, a director of the Company

Northwest Airlines Corporation is a beneficial owner of more than 5% of the Company’s outstanding Common Stock. See “Security Ownership of Certain Beneficial Owners and Management.” During the fiscal year ended March 31, 2005, substantially all of the Company’s operating revenues were received from Northwest under an Airline Services Agreement that governed Mesaba’s operation of Saab 340 jet-prop aircraft and a Regional Jet Services Agreement that governed Mesaba’s operation of Avro RJ85 regional jets. Effective August 29, 2005, Northwest and Mesaba entered into a new ten-year Airline Services Agreement (the “ASA”) that incorporates the existing payment terms for the Saabs and Avros contained in the prior agreements, and adds new payment terms for the Canadair regional jets that Mesaba began operating in October 2005.

Under the ASA, Mesaba operates as a regional air carrier providing scheduled passenger service as “Mesaba Airlines/Northwest Airlink” and “Mesaba Airlines/Northwest Jet Airlink.” Under the ASA, all scheduled flights that Mesaba operates are designated as Northwest flights using Northwest’s designator code in all computer reservation systems, including the Official Airline Guide, with an asterisk and a footnote indicating that Mesaba is the carrier providing the service. In addition, flight schedules of Mesaba and Northwest are closely coordinated to facilitate interline connections, and Mesaba’s passenger gate facilities at the Minneapolis/St. Paul International Airport, Detroit Metropolitan Airport and Memphis International Airport are integrated with Northwest’s facilities in the main terminal buildings. Mesaba, through the ASA, receives ticketing and certain check-in, baggage, freight and aircraft handling services from Northwest at certain airports. In addition, Mesaba receives its computerized reservations services from Northwest. Northwest also performs all marketing, scheduling, yield management and pricing services for Mesaba’s flights.

On September 14, 2005, Northwest filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Prior to and following its bankruptcy, Northwest missed several payments owed to Mesaba, and on October 13, 2005, Mesaba also filed for Chapter 11 bankruptcy protection. It is unclear what effect these bankruptcy petitions will have on the ASA between Northwest and Mesaba. It is possible that either Northwest or Mesaba could reject the ASA in bankruptcy. Mesaba believes that rather than the ASA being assumed by either party, it is more likely that the ASA will be renegotiated once both parties determine their respective fleet compositions.

As consideration for entering into the ASA, and pursuant to a separate agreement between the Company and Northwest, the Company made a capital contribution of approximately $31.7 million to Mesaba and also amended the warrants that were then held by Northwest to reduce the number of shares of the Company’s common stock issuable upon exercise from 4,151,922 shares exercisable at prices from $7.25 to $21.25 per share to an aggregate of 4,112,500 shares exercisable at a price of $8.74 per share. The Amended and Restated Warrant expires ten years from the date of the ASA. Under the terms of the Amended and Restated Warrant, sixty percent of the shares become exercisable upon the delivery of the 15th Canadair regional jet aircraft to Mesaba, and an additional 4% of the shares become exercisable with each subsequent delivery of the next ten aircraft. To date, only two of such aircraft have been delivered to Mesaba, and Northwest has advised that no additional aircraft will be delivered unless and until Mesaba is awarded new aircraft pursuant to a new request for proposal issued by Northwest. The Company believes that if a new agreement is reached between Mesaba and Northwest, the Company and Northwest will renegotiate the terms of the Amended and Restated Warrant. Finally, in connection with the ASA, the Company also entered into a registration rights agreement to register the shares of stock currently held by Northwest and the shares of stock that will be issuable to Northwest upon exercise of the warrants. Prior to entering the ASA, Northwest had pledged certain of its shares to Boeing Capital Corporation, and Boeing is also a party to the registration rights agreement. The registration statement has not been filed and will likely not be filed unless and until a new agreement is reached between Northwest and Mesaba.

Agreement with Management Partners and Associates

During fiscal 2005, the Company, Mesaba and Big Sky paid approximately $921,000 to Management Partners and Associates for Sarbanes-Oxley compliance consulting services. Management Partners is owned by William Pal-Freeman and Thomas Schmidt, each of whom also provided certain executive consulting services to Mesaba. On March 1, 2005, Mr. Pal-Freeman accepted the position of Vice President, Technology and Services at Mesaba. On October 11, 2005, Mr. Schmidt accepted the position of Vice President, Finance at Mesaba. Mr. Schmidt was also named to the Board of Directors of Mesaba in October 2005. Concurrently with Mr. Schmidt’s hiring, Management Partners terminated its relationship with Mesaba.