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<HEAD>
<TITLE> ABF 10Q
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<P ALIGN="CENTER"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Washington, D.C. 20549</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=5><B>FORM 10-Q</B></FONT></P>
<P ALIGN="CENTER">
<FONT SIZE=3><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>For the quarterly period ended September 30, 1999</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2><B>Commission File Number 1-6512</B></FONT></P>
<P ALIGN="CENTER"><FONT SIZE=5><B>AIRBORNE FREIGHT CORPORATION<BR></B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter)</FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH="46%" ALIGN=CENTER><FONT SIZE=2><B>Delaware</B></FONT><FONT SIZE=2><BR>
(State or other jurisdiction<BR>
of incorporation or organization)</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="46%" ALIGN=CENTER><font size="2"><b>91-0837469</b><BR>
  (I.R.S. Employer<BR>
Identification No.)</font></TD>
</TR>
</TABLE></CENTER>

<P ALIGN="CENTER"><b><font size="2">3101 Western Avenue<br>
P.O. Box 662<br>
</font></b><FONT SIZE=2><B>Seattle, Washington 98111-0662</B><BR>
(Address of principal executive offices)</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>
Registrant's telephone number, including area code:
<U>(206) 285-4600</U></FONT></P>
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<BR>
<P><FONT SIZE=2>
    Indicate by check mark whether the Registrant (1) has filed all reports required 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 / /</FONT></P>
<P><FONT SIZE=2>
    Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the
close of the period covered by this report.</FONT></P>

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<TD WIDTH="47%" ALIGN=CENTER><FONT SIZE=2>Class</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="47%" ALIGN=CENTER><FONT SIZE=2>Outstanding </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="47%" ALIGN=CENTER><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="47%" ALIGN=CENTER><HR NOSHADE></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="47%" ALIGN=CENTER><FONT SIZE=2>Common Stock, $1.00 par value</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="47%" ALIGN=CENTER><font size="2">48,641,606</font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="47%" ALIGN=CENTER><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="47%" ALIGN=CENTER><FONT SIZE=2> (net of 2,491,078 treasury
  shares) <br>
  as of September 30, 1999<BR>
 </FONT></TD>
</TR>
</TABLE></CENTER>

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<P><FONT SIZE=2>
</FONT></P>


<P ALIGN="CENTER">
</P>
<TABLE WIDTH="92%" CELLSPACING=0 CELLPADDING=0>
<TR VALIGN=TOP>
<TD WIDTH="102%" ALIGN=CENTER colspan="14"><FONT SIZE=2><B></B></FONT><FONT SIZE=2><BR>
<b>AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<br>
Consolidated Statements of Net Earnings<br>
(Dollars in thousands except per share amounts)<br>
(Unaudited)<br>
 <br>
  </b>
</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="49%" ALIGN=LEFT><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="24%" COLSPAN=5 ALIGN=CENTER><FONT SIZE=1><B>Three Months Ended<br>
  September 30</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="24%" COLSPAN=5 ALIGN=CENTER><FONT SIZE=1><B>Nine Months Ended<br>
  September 30</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="49%" ALIGN=CENTER><FONT SIZE=2> <BR></FONT>
<FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B> <BR>
1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B> <BR>
1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B> <BR>
1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B> <BR>
1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
</TR>
<tr>
<TD WIDTH="49%" bgcolor="#CCEEFF"><FONT SIZE=2>REVENUES:</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#CCEEFF"> </TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#CCEEFF"> </TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#CCEEFF"> </TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#CCEEFF"> </TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Domestic</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">696,116</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">678,650</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,063,772</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">2,013,546</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   International</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">89,482</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">90,432</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">270,565</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">269,866</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#FFFFFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">785,598</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">769,082</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">2,334,337</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">2,283,412</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#CCEEFF"><FONT SIZE=2>OPERATING EXPENSES:</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Transportation purchased</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">240,738</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">237,503</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">712,910</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">702,623</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%"><font size="2">   Station and ground operations</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">242,083</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">228,339</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">721,917</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">679,315</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="49%"><font size="2">   Flight operations and maintenance</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">129,565</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">121,102</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">375,368</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">355,985</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#CCEEFF"><FONT SIZE=2>   General and administrative</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">59,673</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">62,811</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">179,864</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">184,701</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#FFFFFF"><font size="2">   Sales and marketing</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">20,504</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">18,288</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">57,455</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">53,256</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#CCEEFF"><font size="2">   Depreciation and amortization</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">53,852</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">45,954</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">154,445</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">136,024</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#FFFFFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">746,415</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">713,997</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">2,201,959</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">2,111,904</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#CCEEFF"><FONT SIZE=2>      EARNINGS
  FROM OPERATIONS</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">39,183</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">55,085</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">132,378</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">171,508</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#FFFFFF"><font size="2">INTEREST, NET</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">4,709</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">3,005</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">12,388</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">9,881</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2>      EARNINGS BEFORE
  INCOME TAXES</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">34,474</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">52,080</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">119,990</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">161,627</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%"><font size="2">INCOME TAXES</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">12,870</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">19,267</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">46,120</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">62,627</font></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="49%"><font size="2">      NET EARNINGS</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$ </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">21,604</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">32,813</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">73,870</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">99,000</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="49%"><font size="2">NET EARNINGS PER SHARE:<br>
        Basic</font></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">.44</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">.66</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">1.52</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">1.98</font></TD>
<TD WIDTH="1%"><font size="2"> </font></TD>
</tr>
<tr>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="49%" bgcolor="#CCEEFF"><FONT SIZE=2>      Diluted</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">.44</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">.65</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">1.50</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">1.94</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
</tr>
<tr>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="49%" bgcolor="#FFFFFF"><font size="2">DIVIDENDS PER SHARE</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">.040</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT><font size="2">.040</font></TD>
<TD WIDTH="2%"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">.120</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">.118</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><font size="2">  </font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"><FONT SIZE=2>
See notes to consolidated financial statements.</FONT></P>
<P ALIGN="CENTER"> </P>

<TABLE WIDTH="86%" CELLSPACING=0 CELLPADDING=0 height="66">
<TR VALIGN=TOP>
<TD WIDTH="102%" ALIGN=CENTER colspan="8"><FONT SIZE=2><B></B></FONT><FONT SIZE=2><BR>
<b>AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<br>
Consolidated Balance Sheets<br>
(Dollars in thousands)
  </b>
</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="67%" ALIGN=CENTER height="56"><FONT SIZE=2> </FONT></TH>
<TH WIDTH="2%" height="56"></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN=CENTER height="56"><FONT SIZE=1><B>
  September 30,<BR>
1999</B></FONT></TH>
<TH WIDTH="2%" height="56"></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN=CENTER height="56"><FONT SIZE=1><B>December 31,<BR>
1998</B></FONT></TH>
<TH WIDTH="1%" height="56"><FONT SIZE=1><B> <BR> </B></FONT></TH>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="67%" ALIGN=LEFT height="21"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="2%" height="21"></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN=CENTER height="21"><FONT SIZE=1><B>(unaudited)</B></FONT></TH>
<TH WIDTH="2%" height="21"></TH>
<TH WIDTH="16%" COLSPAN=2 ALIGN=CENTER height="21"></TH>
<TH WIDTH="1%" height="21"></TH>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="99%" COLSPAN=7 ALIGN=CENTER height="21"><FONT SIZE=2><B><u>ASSETS</u></B></FONT></TD>
<TD WIDTH="1%" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> CURRENT ASSETS:</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="13%" bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"> </TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>   Cash</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">20,650</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">18,679</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">   Trade accounts
  receivable, <br>
        less allowance of $9,840 and $10,140</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">325,302</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">323,178</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><font size="2">   Spare parts and
  fuel inventory</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">46,089</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">39,726</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">   Deferred income tax
  assets</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">31,715</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">28,508</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>   Prepaid expenses and
  other</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">27,743</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">25,697</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2>     
  TOTAL CURRENT ASSETS</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">451,499</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">435,788</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR>
  PROPERTY AND EQUIPMENT, NET</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR>
  1,106,106</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR>
  1,021,885</FONT></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">EQUIPMENT DEPOSITS
  and OTHER ASSETS</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">45,741</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">43,904</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><font size="2">TOTAL ASSETS</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">1,603,346</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">1,501,577</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="99%" COLSPAN=7 ALIGN=CENTER height="40"><FONT SIZE=2> <BR><B><u>LIABILITIES AND
  SHAREHOLDERS' EQUITY</u></B></FONT>
</TD>
<TD WIDTH="1%" height="40"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2><B> <BR></B> CURRENT
  LIABILITIES:</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="13%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>   Accounts payable</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">134,088</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">153,000</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">   Salaries, wages and
  related taxes</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">69,119</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">77,030</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>   Accrued expenses</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">88,860</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">93,997</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">   Income taxes
  payable</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">2,287</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">8,820</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><font size="2">   Current portion of
  debt</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">431</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">410</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">     
  TOTAL CURRENT LIABILITIES</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">294,785</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">333,257</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><font size="2">LONG-TERM DEBT</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">298,858</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">249,149</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">DEFERRED INCOME TAX
  LIABILITIES</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">97,997</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">88,838</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><font size="2">OTHER LIABILITIES</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">69,568</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">61,181</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2><br>
  SHAREHOLDERS' EQUITY:</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<tr>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="40"><font size="2">   Preferred Stock,
  without par value - <br>
        Authorized 5,200,000 shares, no shares issued</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="40"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="40"><font size="2"> </font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="40"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="40"><font size="2">   Common Stock, par value $1 per share - <br>
        Authorized shares 120,000,000<br>
        Issued 51,132,684 and 50,818,493 shares</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">51,133</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">50,819</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="40"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2>   Additional paid-in capital</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">298,535</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#CCEEFF" height="21"><font size="2">293,629</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"><font size="2">   Retained earnings</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">531,577</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">463,539</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><font size="2"> </font></TD>
</TR>
<tr>
<TD WIDTH="67%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2>   Accumulated other comprehensive income</FONT></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT height="20" bgcolor="#CCEEFF"><font size="2">484</font></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT height="20" bgcolor="#CCEEFF"><font size="2">766</font></TD>
<TD WIDTH="1%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="67%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE></TD>
<TD WIDTH="1%" height="21"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="67%" height="20"> </TD>
<TD WIDTH="2%" height="20"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="20"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT height="20"><font size="2">881,729</font></TD>
<TD WIDTH="2%" height="20"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="20"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT height="20"><font size="2">808,753</font></TD>
<TD WIDTH="1%" height="20"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" height="20" bgcolor="#CCEEFF"><font size="2">   Treasury stock, 2,491,078 and
  2,497,078 shares, at cost</font></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT height="20" bgcolor="#CCEEFF"><font size="2">(39,591</font></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" height="20" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT height="20" bgcolor="#CCEEFF"><font size="2">(39,601</font></TD>
<TD WIDTH="1%" height="20" bgcolor="#CCEEFF"><font size="2">)</font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE></TD>
<TD WIDTH="1%" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=BOTTOM>
<TD WIDTH="67%" bgcolor="#FFFFFF" height="21"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">842,138</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT bgcolor="#FFFFFF" height="21"><font size="2">769,152</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE></TD>
<TD WIDTH="1%" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=BOTTOM>
<TD WIDTH="67%" height="21" bgcolor="#CCEEFF"><FONT SIZE=2>TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY</FONT></TD>
<TD WIDTH="2%" height="21" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="21" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT height="21" bgcolor="#CCEEFF"><font size="2">1,603,346</font></TD>
<TD WIDTH="2%" height="21" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="21" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN=RIGHT height="21" bgcolor="#CCEEFF"><font size="2">1,501,577</font></TD>
<TD WIDTH="1%" height="21" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="67%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%" height="21"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="16%" COLSPAN=2 ALIGN=RIGHT height="21"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%" height="21"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"><FONT SIZE=2>
See notes to consolidated financial statements.</FONT></P>
<P ALIGN="CENTER"> 
</P>

<TABLE WIDTH="85%" CELLSPACING=0 CELLPADDING=0>
<TR VALIGN=TOP>
<TD WIDTH="102%" ALIGN=CENTER colspan="8"><FONT SIZE=2><B></B></FONT><FONT SIZE=2><BR>
<b>AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<br>
Consolidated Statements of Cash Flows<br>
(unaudited, in thousands)<br>
  </b>
<BR>
</FONT></TD>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="71%" ALIGN=LEFT><FONT SIZE=2> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1> </FONT></TH>
<TH WIDTH="26%" COLSPAN=5 ALIGN=CENTER><FONT SIZE=1><B>Nine Months Ended<br>
  September 30</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1> </FONT></TH>
</TR>
<TR VALIGN=BOTTOM>
<TH WIDTH="71%" ALIGN=CENTER><FONT SIZE=2> <BR></FONT>
<FONT SIZE=1> </FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="12%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B>
1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
<TH WIDTH="11%" COLSPAN=2 ALIGN=CENTER><FONT SIZE=1><B>
1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1><B> <BR> </B></FONT></TH>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%"><FONT SIZE=2> OPERATING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>   Net Earnings</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">73,870</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">99,000</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2>   Adjustments to reconcile net
  earnings to <br>
      net cash provided by operating activities:</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>      Depreciation and amortization</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">139,300</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">124,002</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><font size="2">      Provision for aircraft engine
  overhauls</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">15,145</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">12,022</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><font size="2">      Deferred income taxes</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">5,952</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">14,184</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><font size="2">      Other</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">8,526</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">8,535</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><font size="2"> </font></TD>
</TR>
<tr>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="71%" bgcolor="#CCEEFF"><font size="2">   CASH PROVIDED BY
  OPERATIONS</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">242,793</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">257,743</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"> </TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2>    Change in:</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>      Receivables</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">(2,124</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><font size="2">)</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">5,960</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><font size="2"> </font></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><font size="2">      Inventories and prepaid
  expenses</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><FONT SIZE=2>(8,409</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(1,341</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>      Accounts payable</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><FONT SIZE=2>(18,912</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><FONT SIZE=2>(1,600</FONT></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2>      Accrued expenses salaries and
  taxes payable</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(19,581</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(24,176</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>   NET CASH PROVIDED BY
  OPERATING ACTIVITIES</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">193,767</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">236,586</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"> </TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR>
 INVESTING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="10%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>   Additions to property and equipment</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><FONT SIZE=2>(226,429</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">(193,497</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><font size="2">) </font></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><font size="2">   Dispositions of property and equipment</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">1,855</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><font size="2"> </font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">951</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><font size="2"> </font></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><font size="2">   Expenditures for engine
  overhauls</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">(13,054</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">(15,521</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2>   Other</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><FONT SIZE=2>(3,296</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(1,367</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><font size="2">)</font></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>   NET CASH USED BY
  INVESTING ACTIVITIES</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><FONT SIZE=2>(240,924</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><FONT SIZE=2>(209,434</FONT></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"> </TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"> </TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR>
 FINANCING ACTIVITIES:</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="10%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR>
 </FONT></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> <BR> </FONT></TD>
</TR>
<tr>
<TD WIDTH="71%" bgcolor="#CCEEFF"><font size="2">   Proceeds (payments) on bank
  notes, net</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">50,000</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</tr>
<tr>
<TD WIDTH="71%" bgcolor="#FFFFFF"><font size="2">   Principal payments on debt</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><FONT SIZE=2>(270</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(251</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
</tr>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>   Proceeds from Common Stock
  issuance</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">5,230</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">6,394</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><font size="2">   Dividends paid</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(5,832</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><font size="2">)</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(5,897</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><font size="2">   Repurchase of common stock</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><FONT SIZE=2>—</FONT></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">(38,835</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2>   NET CASH PROVIDED
  (USED) BY FINANCING ACTIVITIES</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">49,128</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">(38,589</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>NET INCREASE (DECREASE) IN CASH</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">1,971</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">(11,437</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2>)</FONT></TD>
</TR>
<tr>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2>    </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</tr>
<TR BGCOLOR="#CCEEFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2>CASH AT JANUARY 1</FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">18,679</font></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#FFFFFF"><font size="2">25,525</font></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="2%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT bgcolor="#FFFFFF"><HR NOSHADE></TD>
<TD WIDTH="1%" bgcolor="#FFFFFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR BGCOLOR="#FFFFFF" VALIGN=TOP>
<TD WIDTH="71%" bgcolor="#CCEEFF"><FONT SIZE=2>CASH AT SEPTEMBER 30</FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">20,650</font></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%" bgcolor="#CCEEFF"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN=RIGHT bgcolor="#CCEEFF"><font size="2">14,088</font></TD>
<TD WIDTH="1%" bgcolor="#CCEEFF"><FONT SIZE=2> </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="71%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="12%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="11%" COLSPAN=2 ALIGN=RIGHT><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2> </FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"><FONT SIZE=2>
See notes to consolidated financial statements.</FONT></P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER"> </P>
<P ALIGN="CENTER">
<b><FONT SIZE=2>
AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES<br>
Notes to Consolidated Financial Statements<br>
September 30, 1999<br>
(unaudited)</FONT>
</b>
</P>
<font size="2"><b>
NOTE A - SUMMARY OF FINANCIAL STATEMENT PREPARATION: </b></font>
<p><font size="2">

The consolidated financial statements included herein are unaudited but
include all adjustments which are, in the opinion of management, necessary
for a fair presentation of the financial position and results of operations
and cash flows for the interim periods reported. </font></p>
<p><font size="2">

Certain amounts for prior periods have been reclassified to conform to the
1999 presentation. </font></p>
<p><font size="2"><b>

NOTE B - LONG-TERM DEBT:</b></font></p>

<PRE>
Long-term debt consists of the following:

                               September 30        December 31
                               ------------        -----------
                                   1999                1998
                                   ----                ----
                                       (In thousands)
Senior debt:
  Revolving bank credit          $65,000             $      -
  Notes payable                   14,000               29,000
  Senior notes                   200,000              200,000
  Revenue bonds                   13,200               13,200
  Other debt                       7,089                7,359
                                --------             --------
                                 299,289              249,559
Less current portion                 431                  410
                                --------             --------
                                $298,858             $249,149
                                ========             ========
</PRE>

<font size="2"><b>

NOTE C - EARNINGS PER SHARE:</b> </font>
<p><font size="2">

Basic earnings per share are based upon the weighted average number of
common shares outstanding during the interim period. Diluted earnings per
share are based upon the weighted average number of common shares
outstanding during the interim period plus dilutive common equivalent
shares applicable to the assumed exercise of outstanding stock options.</font></p>

<PRE>
Weighted average shares outstanding used in earnings per share computations
were as follows:

                          Three Months Ended       Nine Months Ended
                          ------------------       ----------------
                             September 30            September 30
                             ------------            ------------
                          1999        1998         1999        1998
                          ----        ----         ----        ----

WEIGHTED AVERAGE
SHARES OUTSTANDING:
  Basic                   48,642      49,921       48,579      50,056
  Diluted                 49,222      50,682       49,303      51,051

</PRE>

<font size="2"><b>

NOTE D-SEGMENT INFORMATION: </b></font>
<p><font size="2">

The Company has organized its business into two reportable operating
segments.  The domestic segment derives its revenues from the door-to-door
delivery of small packages and documents throughout the United States,
Canada, and Puerto Rico.  Domestic operations are supported principally by
Company operated aircraft and facilities.  The international segment
derives its revenues from express door-to-door delivery and a variety of
freight services.  International revenues are recognized on shipments where
the origin and/or destination is outside of locations supported by the
domestic segment.  The Company uses a variable cost approach to delivering
international services through use of existing commercial airline capacity
in connection with its domestic network and independent express and freight
agents in locations not currently served by Company-owned foreign
operations.</font></p>

<PRE>
The following is a summary of key segment information (in thousands):

                      Three Months Ended           Nine Months Ended
                      ------------------           ----------------
                         September 30                September 30
                         ------------                ------------
                      1999          1998         1999           1998
                      ----          ----         ----           ----
SEGMENT
REVENUES:
  Domestic          $696,116      $678,650   $2,063,772      $2,013,546
  International       89,482        90,432      270,565         269,866
                   ---------     ---------   ----------      ----------
                    $785,598      $769,082   $2,334,337      $2,283,412
                   =========     =========   ==========      ==========
SEGMENT EARNINGS
FROM OPERATIONS:
  Domestic           $39,850       $54,481     $134,097        $172,992
  International         (667)          604       (1,719)         (1,484)
                   ---------     ---------    ---------       ---------

                     $39,183       $55,085     $132,378        $171,508
                   =========     =========   ==========      ==========


</PRE>

<font size="2"><b>

NOTE E-OTHER COMPREHENSIVE INCOME:</b></font>

<PRE>
Other comprehensive income includes the following transactions and tax effects
for the three and nine month period ended September 30, 1999 (in thousands):

                                        Three Months Ended               Nine Months Ended
                                        September 30, 1999               September 30, 1999
                                  -------------------------------   ------------------------------
                                              Income                            Income
                                               Tax                               Tax
                                            (Expense)                         (Expense)
                                   Before       or        Net of     Before       or      Net of
                                     Tax     Benefit       Tax        Tax      Benefit     Tax
                                   ------   ---------     ------     ------   ---------   ------
Unrealized securities gains
(losses) arising during the
period                              $(303)      $117     $(186)       $(452)      $174     $(278)
Less: Reclassification adjustment
for gains realized in net income      (81)        31       (50)        (223)        86      (137)
                                     ----       ----      ----         ----       ----      ----
Net unrealized securities gains
(losses)                             (384)       148      (236)        (675)       260      (415)
Foreign currency translation
adjustments                           202        (64)      138          216        (83)      133
                                    -----      -----     -----        -----      -----     -----
Other comprehensive income          $(182)      $ 84     $ (98)       $(459)      $177     $(282)
                                    =====      =====     =====        =====      =====     =====
</PRE>

<font size="2"><b>

NOTE F-NEW ACCOUNTING PRONOUNCEMENTS:</b> </font>
<p><font size="2">

ACCOUNTING FOR DERIVATIVE INSTRUMENTS: </font></p>
<p><font size="2">

In 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  As amended by SFAS No. 137, this
statement will be effective for fiscal year 2001.  SFAS No. 133 requires an
entity to recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. </font></p>
<p><font size="2">

The Company has entered into certain derivative contracts with financial
institutions to limit its exposure to volatility in jet fuel prices.  Under
terms of the contracts, the Company either makes or receives payments if
the market price of heating oil, as determined by an index of monthly NYMEX
Heating Oil futures contracts, is lower or exceeds certain prices agreed to
between the Company and the financial institutions.  The contracts, which
have no cost basis, are accounted for as hedges since there has
historically existed a high correlation between the changes in the NYMEX
index and the price of jet fuel.  Settlements are made in cash and are
recorded in the earnings statement in the period of settlement as either an
increase or decrease to fuel expense. </font></p>
<p><font size="2">

Under the cash flow hedge provisions of SFAS No. 133, the Company will be
required to record the contracts at fair value, with corresponding changes
in fair value recorded as a component of other comprehensive income.  The
Company has not adopted the provisions of SFAS No. 133 as of September 30,
1999.  However, if the provisions of the statement had been adopted, a
cumulative charge of $405,000, net of tax, would have been recorded to
shareholders' equity and a credit to comprehensive income of approximately
$269,000 and $2,969,000 would have been reported for the three and nine
month periods ended September 30, 1999, respectively. </font></p>
<p> </p>
<p align="center"><b>



                  <font size="3">



                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF <br>
               RESULTS OF OPERATIONS AND FINANCIAL CONDITION</font><font size="2"> </font></b></p>
<p align="left"><font size="2">

RESULTS OF OPERATIONS: </font></p>
<p><font size="2">

The Company's operating performance in the third quarter and the first nine
months of 1999 resulted in operating income and net earnings below that of
the comparable periods of 1998.  The lack of growth in domestic shipments
experienced in the first half of 1999 continued through the third quarter.
Without domestic shipment growth the Company did not experience any
productivity gains to offset cost increases.  While the yield on domestic
shipments continued to improve, the average operating cost per shipment
increased at a faster rate than the average revenue per shipment, in part
because the cost of jet fuel has increased significantly compared to both
the second quarter of 1999 and the third quarter of 1998.  These combined
factors had a negative impact on operating performance in the third quarter
and in the first nine months of 1999. </font></p>
<p><font size="2">

Net earnings for the third quarter of 1999 were $21.6 million, or $.44 per
share on a diluted basis, on revenues of $786 million, compared to
$32.8 million, or $.65 per share on revenues of $769 million, for the third
quarter of 1998.  Net earnings for the first nine months of 1999 were
$73.9 million, or $1.50 per share on revenues of $2.33 billion, compared to
$99.0 million, or $1.94 per share on revenues of $2.28 billion for the
corresponding period in 1998.</font></p>




<PRE>

The following table sets forth selected shipment and revenue data for the
periods indicated:


                                  Three Months Ended                  Nine Months Ended
                                  ------------------                  ----------------
                                     September 30                       September 30
                                     ------------           %           ------------            %
                                  1999         1998       Change      1999         1998       Change
                                  ----         ----       ------      ----         ----       ------
Shipments (in thousands):
  Domestic
    Overnight                    46,496      46,792       (0.6%)    139,239      139,183       0.0%
    Next Afternoon Service       13,722      14,640       (6.3%)     42,538       43,741      (2.8%)
    Second Day Service           18,733      17,497        7.1%      54,444       53,181       2.4%
    100 Lbs. and Over                69          91      (24.2%)        217          269     (19.3%)
                                 -------     -------      -----      -------     -------      -----
    Total Domestic               79,020      79,020        0.0%     236,438      236,374       0.0%

  International
    Express                       1,699       1,522       11.6%       4,912        4,418      11.2%
    Freight                          96         105       (8.6%)        296          328      (9.8%)
                                 -------     -------      -----      -------     -------      -----
    Total International           1,795       1,627       10.3%       5,208        4,746       9.7%
                                 -------     -------      -----      -------     -------      -----
  Total Shipments                80,815      80,647        0.2%     241,646      241,120       0.2%
                                 ======      ======                 =======      =======
Average Pounds per Shipment:
  Domestic                         4.24        4.26       (0.5%)       4.21         4.28      (1.6%)
  International                   43.44       41.06        5.8%       43.75        42.23       3.6%

Average Revenue per Pound:
  Domestic                        $2.04       $1.98        3.0%       $2.04        $1.96       4.1%
  International                   $1.14       $1.34      (14.9%)      $1.17        $1.33     (12.0%)

Average Revenue per Shipment:
  Domestic                        $8.81       $8.59        2.6%       $8.73        $8.51       2.6%
  International                  $49.85      $55.58      (10.3%)     $51.95       $56.86      (8.6%)

</PRE>
<font size="2">
Total revenues increased 2.1% and 2.2% in the third quarter and first nine
months of 1999, respectively.  This compares to a decrease of 2.5% in the
third quarter of 1998 and an increase of 5.9% for the first nine months of
1998 compared to the same periods of 1997.  Total shipment growth was .2%
for the third quarter of 1999 compared to the third quarter of 1998 and
also for the first nine months of 1999 over the first nine months of 1998.
This compares to total shipment growth of 7.7% for the first nine months of
1998 over 1997, and a decrease of .1% for the third quarter of 1998
compared to the third quarter of 1997.  Domestic shipment and revenue
comparisons for 1998 over 1997 are less meaningful due to a UPS strike in
the third quarter of 1997 which increased the Company's business during
that period. </font>
<p><font size="2">

Domestic revenue growth for the third quarter and the first nine months of
1999 was impacted by the flat growth in total domestic shipments.  Domestic
revenues increased 2.6% and 2.5% in the third quarter and first nine months
of 1999, respectively, compared to a decrease of 1.3% in the third quarter
of 1998 and to an increase of 8.2% for the first nine months of 1998. The
fact that the growth rate in domestic revenue exceeded the growth rate in
shipments for the first nine months of 1999the year continues to be a
positive trend.  The average revenue per domestic shipment increased 2.6%
to $8.81 in the third quarter of 1999 compared to the third quarter of
1998. </font></p>
<p><font size="2">

Overnight shipments accounted for 58.8% of total domestic shipments in the
third quarter of 1999, compared to 59.2% in the third quarter of 1998.  The
higher yielding overnight shipments decreased 0.6% in the third quarter of
1999, compared to a 2.4% increase in the corresponding 1998 period.  The
Company's Next Afternoon Service shipments decreased 6.3% and the Second
Day Service shipments increased 7.1% in the third quarter of 1999 compared
to an increase of 4.3% and a decrease of 10.2%, respectively, in the third
quarter of 1998. </font></p>
<p><font size="2">

The Company began a pilot program in mid-July, 1999 to test a new service
for business to residential delivery.  This service, referred to as
Airborne@Home, will target shipments from internet, catalog, and mail order
businesses which are primarily destined for residential addresses.
Delivery of this product will be accomplished through an arrangement with
the U.S. Postal Service.  The pilot program for Airborne@Home will continue
to be evaluated on an ongoing basis to determine longer-term application. </font></p>
<p><font size="2">

International revenues decreased 1.1% in the third quarter, and increased
 .3% in the first nine months of 1999, respectively, compared to a decrease
of 10.5% and 8.6% in the comparable periods of 1998. The Company
experienced strong growth in its international express segment, with
shipments increasing 11.6% in the third quarter and 11.2% for the first
nine months of 1999.  The Company continued to experience a decline in
shipments in the heavier weight, higher revenue per shipment freight
segment, which decreased 8.6% in the third quarter and 9.8% in the first
nine months of 1999. </font></p>
<p><font size="2">

Operating expenses as a percentage of revenues were 95.0% and 94.3% for the
third quarter and first nine months of 1999, respectively, compared to
92.8% in the third quarter and 92.5% in the first nine months of 1998, and
92.5% for all of 1998.  Operating cost per shipment handled increased 4.0%
to $9.11 for the first nine months of 1999 compared to the first nine
months of 1998.  The operating cost per shipment for the third quarter of
1999 increased 4.3% to $9.24, compared to the third quarter of 1998.  Flat
shipment growth had a negative impact on productivity.  The Company
experienced a decline of 2.2% and 2.6% in productivity for the third
quarter and first nine months of 1999, respectively, compared to the same
periods of 1998, as measured by shipments handled per paid employee hour.
The decline in year to date productivity, additional first quarter 1999
weather related costs, and higher jet fuel costs, particularly in the third
quarter, were significant factors having a negative impact on year to date
1999 operating results.  Comparisons of certain operating expense
components are discussed below. </font></p>
<p><font size="2">

Transportation purchased decreased as a percentage of revenues to 30.5% in
the first nine months of 1999 compared to 30.8% in the comparable period of
1998.  This decrease was primarily due to commercial airline costs which
were lower in total and as a percentage of total revenues in the first nine
months of 1999 due to the decline in international freight shipments. </font></p>
<p><font size="2">

Station and ground expense increased to 30.9% of revenues in the first nine
months of 1999 compared to 29.8% in the first nine months of 1998.  The
decline in productivity and the weather related costs incurred in the first
quarter had a negative impact on this category of expense. </font></p>
<p><font size="2">

Flight operations and maintenance expense as a percentage of revenues
during the first nine months of 1999 was 16.1%, compared to 15.6% in the
first nine months of 1998.  Aviation fuel consumption decreased to 45.2
million gallons in the third quarter of 1999, a 2.3% decrease over the
third quarter of 1998.  For the first nine months of 1999, aviation fuel
consumption of 134.2 million gallons decreased 1.3% from the first nine
months of 1998.  The average aviation fuel price for the third quarter of
1999 was $.68 per gallon compared to $.58 per gallon in the second quarter
of 1999 and $.55 per gallon in the third quarter of 1998.  As a result of
fuel hedging contracts, the Company incurred $2.4 million of expense in the
first nine months of 1999 compared to $5.9 million in the first nine months
of 1998. </font></p>
<p><font size="2">

General and administrative expense was 7.7% of revenues in the first nine
months of 1999 compared to 8.1% in the comparable period of 1998.  This
category of cost decreased in total and as a percentage of revenues
primarily due to lower profit sharing and management incentive compensation
costs.  These lower costs are a result of reduced levels of operating
earnings in comparison to the first nine months of 1998. </font></p>
<p><font size="2">

Sales and Marketing expense was 2.5% of revenues in the first nine months
of 1999 compared to 2.3% for the first nine months of 1998.  This increase
is due in part to higher sales incentive compensation. </font></p>
<p><font size="2">

The increase in depreciation and amortization expense in the first nine
months of 1999 is due in large part to the increased number of Boeing 767
aircraft in service during the first nine months of 1999 versus the
comparable period of 1998. </font></p>
<p><font size="2">

Interest expense in the first nine months of 1999 was higher than the first
nine months of 1998, primarily as the result of higher levels of average
outstanding borrowings which offset the benefit of lower average effective
interest rates realized. </font></p>
<p><font size="2">

The Company's effective tax rate was 38.4% in the first nine months of 1999
compared to 38.7% in the first nine months of 1998 and 38.0% for all of
1998.  The effective tax rate for the third quarter of 1999 was 37.3%,
which was impacted by lower state tax accruals than in the previous year.
The Company anticipates the effective tax rate for all of 1999 will be in a
range comparable to the first nine months of 1999. </font></p>
<p><font size="2">

YEAR 2000 ISSUE: </font></p>
<p><font size="2">

The Company has implemented a compliance program to address the challenges
Year 2000 issues may present to its business.  This program includes
computer systems and applications operated by the Company, computer systems
of third parties upon whose data or functionality the Company relies, and
certain other fixed assets, including aircraft, which contain date
sensitive technology critical to their operation. </font></p>
<p><font size="2">

Modifications to the Company's critical operational and financial systems
and conversions to new software were substantially complete at the end of
1998. Testing of these critical systems and software as well as remediation
efforts and related testing on less critical applications has also been
substantially completed. </font></p>
<p><font size="2">

As part of the compliance program, the Company has also had communications
with third parties - primarily customers, vendors, airport authorities, and
other governmental agencies (domestic and foreign), including the Federal
Aviation Administration - whose failure to have Year 2000 compliant systems
could have an adverse impact on the Company's operations.  The Company has
tested interfaces of shipment information with curtain customers as this
data is critical to providing timely services and billing. </font></p>
<p><font size="2">

Although the Company does not believe the Year 2000 issue will have a
material impact on its operations, there can be no guarantee that the
Company's or any third party's Year 2000 remediation efforts will be fully
compliant.  If noncompliance is extensive and, in the worse case, involves
some form of temporary suspension of operations, this could have a material
adverse effect on the Company's business, financial condition and results
of operations.  The Company believes however, the most likely worst case
scenario would include pickup or delivery delays in a particular geographic
location or locations. </font></p>
<p><font size="2">

To assist in mitigating the risk of noncompliance, the Company has
developed contingency plans, and continues to refine these plans, regarding
critical systems should they fail to become Year 2000 compliant.  These
plans focus on the Company's own critical operational and financial systems
as well as customer interfaces of shipment information.  The contingency
plans include, among other things, the development of systems rollover
check plans and manual procedures to be performed by field and headquarters
personnel in the event of communications systems failures. </font></p>
<p><font size="2">

Management estimates the total cost of the Year 2000 compliance program to
be approximately $3.8 million, of which $3.6 million has been incurred
through September 30, 1999.  Total information technology costs are not
expected to differ from the normal recurring costs that are incurred for
systems development, in part due to the reallocation of internal resources
and the deferral of other projects.  Funding of the compliance program is
from internal cash flows. </font></p>
<p><font size="2">

LIQUIDITY AND CAPITAL RESOURCES: </font></p>
<p><font size="2">

Cash provided by operations net of change in working capital for the first
nine months of 1999 was $194 million, compared to $237 million in the first
nine months of 1998. </font></p>
<p><font size="2">

Capital expenditures continue to be a primary factor affecting the
financial condition of the Company.  The Company anticipates total capital
expenditures to approximate $350 million in 1999.  During the first nine
months of 1999, total capital expenditures net of dispositions were $225
million.  Cash provided by operations and bank borrowings were the primary
sources for funding capital expenditures in the first three quarters of
1999. </font></p>
<p><font size="2">

The Company's strong operating cash flow is a major source of liquidity.
Also, the Company's $250 million unsecured revolving bank credit agreement
has traditionally been used as a major source of liquidity for periods
between other financing transactions.  The Company also has available $65
million under unsecured uncommitted money market lines of credit with
several banks used in conjunction with the revolving credit agreement to
facilitate settlement and accommodate short-term borrowing fluctuations.
With the higher level of capital expenditures in 1999 compared to 1998,
reliance on the bank facilities has increased, with a total of $79.0
million outstanding at September 30, 1999 under the revolving bank credit
and money market credit lines, compared to $29.0 million outstanding at
December 31, 1998 and $30.0 million outstanding at September 30, 1998. </font></p>
<p><font size="2">

In management's opinion, the available capacity under the bank credit
agreements coupled with internally generated cash flow from remaining 1999
operations should provide adequate flexibility to finance anticipated
capital expenditures for the balance of 1999. </font></p>
<p><font size="2">

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK: </font></p>
<p><font size="2">

There have been no material changes in the Company's market risk sensitive
instruments and positions since its disclosure in its Annual Report on Form
10-K for the year ended December 31, 1998.  See Note F of the Notes to
Consolidated Financial Statements to this Form 10-Q for further discussion
regarding the Company's fuel hedging activities.</font></p>



<p align="center"><font size="3"><u><b>



                        PART II. OTHER INFORMATION</b></u></font>
<PRE>
Item 6.   Exhibits and Reports or Form 8-K.

     (a)  Exhibits -
          Exhibit No. 27 - Financial Data Schedule



</PRE>


<P align="center"><B><u><font size="3">SIGNATURES</font></u></B></P>
<P><FONT SIZE=2>Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.</FONT></P>

<TABLE WIDTH="76%" CELLSPACING=0 CELLPADDING=0>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%">
  <p align="center"><font size="2"><u>AIRBORNE FREIGHT CORPORATION<br>
  </u>(Registrant)</font></p>
</TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> <BR>
   </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2> <BR>
 </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2>Dated: <u> November 12, 1999</u></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>By: <U>/s/ Roy C. Liljebeck</U><BR>
  Roy C. Liljebeck<br>
  Executive Vice President,<BR>
  (Chief Financial Officer)</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2> <BR>
   </FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> <BR> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2> <BR>
 </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH="49%"><FONT SIZE=2>Dated: <u> November 12, 1999</u></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2> </FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2> <U>/s/ Lanny H. Michael</U><BR>
  Lanny H. Michael<br>
  Senior Vice President,<BR>
  (Treasurer and Controller)</FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"><FONT SIZE=2>

</FONT>
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