---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2000

Commission File Number 1-6512

AIRBORNE FREIGHT CORPORATION(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction
of incorporation or organization) |  | 91-0837469
  (I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- |  | -------------------------------------------------

3101 Western Avenue
P.O. Box 662Seattle, Washington 98111-0662
(Address of principal executive offices)

Registrant's telephone number, including area code:
(206) 285-4600

---

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 / /

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.

|Class                                |  | Outstanding                                                     
|------------------------------------ |  | ----------------------------------------------------------------
|                                     |  |                                                                 
|Common Stock, par value $1 per share |  | 48,035,125                                                      
|                                     |  | (net of 3,244,526 treasury
  shares) 
  as of September 30, 2000

---

---

`AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF NET EARNINGS
               (Dollars in thousands except per share data)
                                (Unaudited)`

`Three Months Ended       Nine Months Ended
                                    September 30             September 30
                                    ------------             ------------
                                   2000      1999          2000        1999
                                   ----      ----          ----        ----
REVENUES:
  Domestic                      $705,977    $696,116  $2,147,530    $2,063,772
  International                   98,552      89,192     280,490       269,884
                                --------    --------  ----------    ----------
                                 804,529     785,308   2,428,020     2,333,656

OPERATING EXPENSES:
  Transportation purchased       262,718     240,738     765,345       712,910
  Station and ground operations  263,768     242,083     776,387       721,917
  Flight operations and
   maintenance                   143,665     129,565     425,729       375,368
  General and administrative      64,312      59,755     191,309       180,089
  Sales and marketing             20,200      20,504      60,740        57,455
  Depreciation and amortization   52,892      53,852     152,768       154,445
                                --------    --------  ----------    ----------
                                 807,555     746,497   2,372,278     2,202,184

EARNINGS (LOSS) FROM OPERATIONS   (3,026)     38,811      55,742       131,472

OTHER INCOME (EXPENSE):
  Interest, net                   (6,544)     (4,709)    (16,635)      (12,388)
  Other                              406         372       3,111           906
                                --------    --------  ----------    ----------
  EARNINGS (LOSS) BEFORE INCOME
   TAXES                          (9,164)     34,474      42,218       119,990

INCOME TAX EXPENSE (BENEFIT)      (3,655)     12,870      16,070        46,120
                                --------    --------  ----------    ----------
    NET EARNINGS (LOSS) BEFORE
     CHANGE IN ACCOUNTING         (5,509)     21,604      26,148        73,870
                                --------    --------  ----------    ----------
CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING                           -           -      14,206             -
                                --------    --------  ----------    ----------
    NET EARNINGS (LOSS)         $ (5,509)   $ 21,604  $   40,354    $   73,870
                                ========    ========  ==========    ==========
NET EARNINGS (LOSS) PER SHARE:
    BASIC
      Before change in
       accounting               $  (0.11)   $   0.44  $     0.54    $     1.52
      Cumulative effect of
       change                          -           -        0.29             -
                                --------    --------  ----------    ----------
      Net earnings (loss)       $  (0.11)   $   0.44  $     0.83    $     1.52
                                ========    ========  ==========    ==========
    DILUTED
      Before change in
       accounting               $  (0.11)   $   0.44  $     0.54    $     1.50
      Cumulative effect of
       change                          -           -        0.29             -
                                --------    --------  ----------    ----------
      Net earnings (loss)       $  (0.11)   $   0.44  $     0.83    $     1.50
                                ========    ========  ==========    ==========

DIVIDENDS PER SHARE             $   0.04    $   0.04  $     0.12    $     0.12
                                ========    ========  ==========    ==========

              See notes to consolidated financial statements.

					2`

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`AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                          (Dollars in thousands)`

`September 30   December 31
                                                  2000           1999
                                                  ----           ----
                                              (Unaudited)
                  ASSETS
                  ------
CURRENT ASSETS:
  Cash                                          $   26,567     $   28,678
  Trade accounts receivable,
    less allowance of $9,510 and $9,640            353,381        339,044
  Spare parts and fuel inventory                    46,032         44,263
  Refundable income taxes                           10,763          1,679
  Deferred income tax assets                        26,640         31,950
  Prepaid expenses and other                        20,228         24,456
                                                ----------     ----------
     TOTAL CURRENT ASSETS                          483,611        470,070

PROPERTY AND EQUIPMENT, NET                      1,295,004      1,115,712

EQUIPMENT DEPOSITS and OTHER ASSETS                 52,993         57,468

TOTAL ASSETS                                    $1,831,608     $1,643,250
                                                ==========     ==========
   LIABILITIES AND SHAREHOLDERS' EQUITY
   ------------------------------------
CURRENT LIABILITIES:
  Accounts payable                              $  155,296     $  142,087
  Salaries, wages and related taxes                 76,721         65,276
  Accrued expenses                                  80,666         78,755
  Income taxes payable                                   -          3,282
  Current portion of debt                              459            442
                                                ----------     ----------
     TOTAL CURRENT LIABILITIES                     313,142        289,842

LONG-TERM DEBT                                     429,361        314,707

DEFERRED INCOME TAX LIABILITIES                    119,701         99,169

OTHER LIABILITIES                                   91,570         81,325

SHAREHOLDERS' EQUITY:
  Preferred Stock, without par value -
   Authorized 5,200,000 shares, no shares
issued
  Common stock, par value $1 per share -
   Authorized 120,000,000 shares
   Issued 51,279,651 and 51,176,018 shares          51,280         51,176
  Additional paid-in capital                       303,885        298,742
  Retained earnings                                581,484        546,962
  Accumulated other comprehensive income             1,059            918
                                                ----------     ----------
                                                   937,708        897,798
  Treasury stock, 3,244,526 and 2,491,078
  shares, at cost                                  (59,874)       (39,591)
                                                ----------     ----------
                                                   877,834        858,207
                                                ----------     ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $1,831,608     $1,643,250
                                                ==========     ==========

              See notes to consolidated financial statements.

					3`

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`AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in thousands)
                                (Unaudited)`

`Nine Months Ended
                                                       September 30
                                                       ------------
                                                     2000        1999
                                                     ----        ----
OPERATING ACTIVITIES:
  Net Earnings                                     $ 40,354   $ 73,870
  Adjustments to reconcile net earnings to
   net cash provided by operating activities:
     Cumulative effect of change in accounting      (14,206)         -
     Depreciation and amortization                  152,768    139,300
     Deferred income taxes                           17,135      5,952
     Provision for aircraft engine overhauls             -      15,145
     Other                                           15,485      8,526
                                                   --------   --------
  CASH PROVIDED BY OPERATIONS                       211,536    242,793

   Change in:
     Receivables                                    (14,337)    (2,124)
     Inventories and prepaid expenses                (6,625)    (8,409)
     Accounts payable                                13,209    (18,912)
     Accrued expenses, salaries & taxes payable      10,074    (19,581)
                                                   --------   --------
  NET CASH PROVIDED BY OPERATING ACTIVITIES         213,857    193,767

INVESTING ACTIVITIES:
  Additions to property and equipment              (302,390)  (226,429)
  Dispositions of property and equipment              4,037      1,855
  Expenditures for engine overhauls                       -    (13,054)
  Other                                              (7,051)    (3,296)
                                                   --------   --------
  NET CASH USED BY INVESTING ACTIVITIES            (305,404)  (240,924)

FINANCING ACTIVITIES:
  Proceeds from bank notes, net                     115,000     50,000
  Principal payments on debt                           (329)      (270)
  Repurchase of common stock                        (20,662)         -
  Proceeds from common stock issuance                 1,259      5,230
  Dividends paid                                     (5,832)    (5,832)
                                                   --------   --------
  NET CASH PROVIDED BY FINANCING ACTIVITIES          89,436     49,128
                                                   --------   --------

NET (DECREASE) INCREASE IN CASH                      (2,111)     1,971

CASH AT JANUARY 1                                    28,678     18,679
                                                   --------   --------

CASH AT SEPTEMBER 30                               $ 26,567   $ 20,650
                                                   ========   ========


              See notes to consolidated financial statements.

					4`

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AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      September 30, 2000 (Unaudited)

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.

Certain amounts for prior periods have been reclassified to conform to the
2000 presentation.

NOTE B-LONG-TERM DEBT:

`Long-term debt consists of the following:

                                            September 30   December 31
                                                2000           1999
                                                ----           ----
                                                  (In thousands)

Senior debt:
  Revolving bank credit                       $ 190,000      $  95,000
  Notes payable                                  20,000              -
  Senior notes                                  200,000        200,000
  Revenue bonds                                  13,200         13,200
  Other debt                                      6,620          6,949
                                              ---------      ---------
                                                429,820        315,149
  Less current portion                              459            442
                                              ---------      ---------
                                              $ 429,361      $ 314,707
                                              =========      =========`

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.

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

`Three Months Ended          Nine Months Ended
                              September 30               September 30
                              ------------               ------------
                           2000         1999         2000          1999
                           ----         ----         ----          ----
WEIGHTED AVERAGE SHARES
OUTSTANDING:
  Basic                48,034,899     48,642,297   48,516,263   48,579,333
  Diluted              48,185,156     49,222,452   48,850,931   49,303,004

					5`

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.

`The following is a summary of key segment information (in thousands):

                         Three Months Ended         Nine Months Ended
                            September 30               September 30
                            ------------               ------------
                         2000          1999         2000          1999
                         ----          ----         ----          ----
SEGMENT REVENUES:
  Domestic             $705,977        $696,116    $2,147,530   $2,063,772
  International          98,552          89,192       280,490      269,884
                       --------        --------    ----------   ----------
                       $804,529        $785,308    $2,428,020   $2,333,656
                       ========        ========    ==========   ==========
SEGMENT EARNINGS
(LOSS) FROM
OPERATIONS:
  Domestic              $    55         $39,488       $61,786     $129,779
  International          (3,081)           (677)       (6,044)       1,693
                        -------         -------       -------     --------
                        $(3,026)        $38,811       $55,742     $131,472
                        =======         =======       =======     ========`

Other  comprehensive  income includes the following  transactions  and  tax
effects  for the three and nine month periods ended September 30, 2000  (in
thousands):

`Three Months Ended        Nine Months Ended
                           September 30, 2000        September 30, 2000

                                  Income                   Income
                         Before    Tax    Net of  Before    Tax    Net of
                          Tax   (Expense)   Tax     Tax  (Expense)   Tax
                                    or                       or
                                 Benefit                  Benefit
                         ------  -------  ------  ------  -------  ------

Unrealized securities
gains
arising during the
period                   $  593  $ (228)  $  365  $1,043  $ (401)  $  642

Less: Reclassification
adjustment for gains
realized in net income      (67)     26      (41)   (588)    227     (361)
                         ------  ------   ------  ------  ------   ------
Net unrealized
securities gains            526    (202)     324     455    (174)     281
Foreign currency
translation adjustments     (16)      6      (10)   (227)     87     (140)
                         ------  ------   ------  ------  ------   ------
Other comprehensive
income                   $  510  $ (196)  $  314  $  228  $  (87)  $  141
                         ======  ======   ======  ======  ======   ======

					6`

Effective January 1, 2000, the Company changed its method of accounting for
major engine overhaul costs on DC-9 aircraft from the accrual method to the
direct expense method where costs are expensed as incurred.  Previously,
these costs were accrued in advance of the next scheduled overhaul based
upon engine usage and estimates of overhaul costs.  The Company believes
that this new method is preferable because it is more consistent with
industry practice and appropriate given the relatively large size of its DC-
9 fleet.

The cumulative effect of this change in accounting resulted in a non-cash
credit of $14,206,000, net of taxes, or $.29 per share on a diluted basis
being recognized in the first nine months of 2000.  Excluding the
cumulative effect, this change increased net earnings for the third quarter
and first nine months of 2000 by approximately $1.4 million, net of tax or
$.03 per share, and $4.2 million, net of tax or $.09 per share,
respectively.  If the accounting change for engine overhaul costs had been
retroactively applied, earnings from continuing operations for the three
and nine month periods ended September 30, 1999 would have been as follows:

`Three Months Ended Nine Months Ended
                                        September 30,   September 30,
                                            1999            1999
                                            ----            ----
As Reported:
  Earnings from continuing operations     $38,811         $131,472
  Diluted earnings per share              $  0.44         $   1.50

Proforma continuing operations:
  Earnings from continuing operations     $40,109         $134,311
  Diluted earnings per share              $  0.47         $   1.56`

ACCOUNTING FOR DERIVATIVE INSTRUMENTS:

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities".  In June 2000, the FASB
issued SFAS No. 138, which amended certain provisions of SFAS 133 to
clarify areas causing difficulties in implementation.

The Company has appointed a team to implement SFAS 133.  This team is
responsible for developing appropriate management reports, educating both
financial and non-financial personnel, completing an inventory of embedded
derivatives and addressing various other SFAS 133 related issues.  The
Company will adopt SFAS 133 and the corresponding amendments under SFAS 138
on January 1, 2001.  SFAS 133, as amended by SFAS 138, is not expected to
have a material impact on the Company's consolidated results of operations,
financial position or cash flows.

7



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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS:

The Company reported net earnings for the first nine months of 2000 below
that of the comparable period in 1999, and experienced a net loss for the
third quarter of this year.  The weaker operating results are primarily
caused by the lack of growth in domestic shipment volumes. While the
revenue yield on domestic shipments has continued to improve, the lack of
shipment growth precludes realizing productivity gains necessary to offset
cost increases.  As a result, average operating cost per shipment increased
at a faster rate than average revenue per shipment.

The net loss for the third quarter of 2000 was $5.5 million, or $.11 per
diluted share.  This compares to net earnings of $21.6 million, or $.44 per
share reported in the third quarter of 1999.

Net earnings for the first nine months of 2000 were $40.4 million, or $.83
per share, compared to $73.9 million, or $1.50 per share for the
corresponding period in 1999. Earnings for 2000 include a non-recurring
gain from the sale of securities of $1.9 million, or $.02 per share
recorded in the second quarter.  Effective at the beginning of 2000, the
Company changed from the accrual method of accounting for DC-9 engine
overhaul costs to the direct expense method where costs are expensed as
incurred.  The cumulative effect of this change resulted in a non-cash
credit of $14.2 million, net of taxes, or $.29 per share, being recorded in
the first quarter and included in net earnings for the first nine months of
2000.

Operating costs for the first nine months of 2000 have continued to be
impacted by the high cost of jet fuel, which began to escalate in the third
quarter of 1999. To help address this cost increase the Company implemented
a 3% fuel surcharge on domestic revenue effective in early February 2000,
under which $19.5 million and $51.9 million of surcharge revenues were
recorded during the third quarter and first nine months of 2000,
respectively.  Jet fuel costs increased approximately $15.5 million, or
$.35 per gallon in the third quarter of 2000 and $48.5 million, or $.36 per
gallon for the first nine months of 2000 versus comparable periods in 1999.
Higher fuel costs have also impacted ground related linehaul and cartage
operations. While the fuel surcharge has been adequate to offset these
higher fuel related costs during the third quarter of 2000, it has not
fully offset the impact of all fuel-related increases incurred in the first
nine months of 2000.  Also, fuel prices continue to be at historically high
levels, which is not an encouraging trend. To assist in mitigating these
continued high prices, effective October 16, 2000, the fuel surcharge was
increased from 3 percent to 4 percent of domestic revenue.

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

`Three Months Ended          Nine Months Ended
                           September 30               September 30
                           ------------               ------------
                          2000      1999    Change   2000      1999   Change
                          ----      ----    ------   ----      ----   ------
Shipments (in thousands):
  Domestic
    Overnight            45,540      46,496  (2.1%) 139,694    139,239  0.3%
    Next Afternoon
     Service             13,430      13,722  (2.1%)  41,044     42,538 (3.5%)
    Second Day Service   19,466      18,733   3.9%   58,398     54,444  7.3%
    100 Lbs. and Over        72          69   4.3%      214        217 (1.4%)
                         ------      ------         -------    -------
    Total Domestic       78,508      79,020  (0.6%) 239,350    236,438  1.2%

  International
    Express               1,506       1,699 (11.4%)   4,584      4,912 (6.7%)
    Freight                 102          96   6.3%      297        296  0.3%
                         ------      ------         -------    -------
    Total International   1,608       1,795 (10.4%)   4,881      5,208 (6.3%)

					8

  Total Shipments        80,116      80,815  (0.9%) 244,231    241,646  1.1%
                         ======      ======         =======    =======

Average Pounds per
Shipment:
  Domestic                 4.27        4.24   0.7%     4.27       4.21  1.4%
  International           55.69       43.44  28.2%    51.01      43.75 16.6%

Average Revenue per
Pound:
  Domestic                $2.07       $2.04   1.5%    $2.07      $2.04  1.5%
  International           $1.09       $1.14  (4.4%)   $1.11      $1.17 (5.1%)

Average Revenue per
Shipment:
  Domestic                $8.91       $8.81   1.1%    $8.93      $8.73  2.3%
  International          $61.29      $49.69  23.3%   $57.47     $51.82 10.9%`

Total revenues increased 2.4% and 4.0% in the third quarter and first nine
months of 2000, respectively, compared to the same periods in 1999.
Domestic revenues increased 1.5% in the third quarter, and 4.1% for the
first nine months of 2000.  The fuel surcharge accounted for 2.5% of the
year to date growth in domestic revenue.  The average revenue per domestic
shipment increased 1.1% in the third quarter of 2000 and 2.3% for the first
nine months of 2000 compared to the comparable periods of 1999.  The
Company remains encouraged by the stability in domestic revenue per
shipment yields.

Domestic shipments decreased .6% in the third quarter and increased 1.2% in
the first nine months of 2000 in comparison to the same periods in 1999.
The third quarter of 2000 had one less operating day than the comparable
period in 1999.  On a per day basis, domestic shipments increased .9% to
1,246,000 shipments per day.  The first nine months of 2000 had one
additional operating day than in 1999.  Overnight shipments accounted for
58.0% of total domestic shipments in the third quarter compared to 58.8% in
the third quarter of 1999.  The higher yielding overnight shipments
decreased 2.1% in the third quarter, compared to a decline of .6%
experienced in the same period of 1999. The Company's Next Afternoon
Service shipments decreased 2.1% compared to a decrease of 6.3% in the
third quarter of 1999.  Second Day Service shipments increased 3.9% in the
third quarter compared to a 7.1% growth rate experienced in the same period
of 1999.  The Second Day Service category includes shipments associated
with the Company's new product, airborne@home, which was introduced in late
1999 to service expanding e-commerce and business to residential delivery
markets.  airborne@home shipment volumes were 1,758,000 in the third
quarter and 3,500,000 for the first nine months of 2000.  The Company
continues to be encouraged by the business opportunities of this new
product which offers shippers a competitive combination of service and
pricing, while providing the Company an efficient way to accomplish
residential deliveries through an arrangement with the U.S. Postal Service.

International revenues increased 10.5% and 3.9% in the third quarter and
first nine months of 2000, respectively, compared to a decrease of 1.1% in
the third quarter of 1999 and an increase of .3% in the first nine months
of 1999.  Total international shipments decreased 10.4% in the third
quarter and 6.3% in the first nine months of 2000 compared to the same
periods in 1999.  International express shipments decreased 11.4% in the
third quarter and 6.7% for the first nine months of 2000 due primarily to
the loss of a major customer early in 2000.  International freight
shipments increased 6.3% and .3% in the third quarter and first nine months
of 2000, respectively, compared to the corresponding periods in 1999. The
Company is encouraged by the recent strength in freight shipments in the
second and third quarters of 2000. Although international revenues showed
strength in the third quarter, the shift in the mix toward import business,
and the overall cost increases from airlines on international segments
created significant cost pressures, and resulted in a deterioration in
margins and international segment profitability.  Typically, our U.S.
export business has a higher margin than imports.  The international
segment contribution to earnings from operations was a loss of $3.0 million

9

and $6.0 million for the third quarter and first nine months of 2000,
respectively, compared to a loss of $.7 million for the third quarter of
1999 and operating earnings of $1.7 million in the first nine months of
1999.

Operating expenses exceeded revenues in the third quarter and were 97.7% of
revenues for the first nine months of 2000. This compares to 95.1% and
94.4% for the corresponding three and nine month periods in 1999 and 94.9%
for all of 1999.  Operating cost per shipment increased 9.1% in the third
quarter of 2000 to $10.08 compared to $9.24 in the third quarter of 1999.
The operating cost per shipment for the first nine months of 2000 increased
6.6% to $9.71 compared to the same period in 1999.  The significantly
higher cost of jet fuel is a major factor impacting operating costs in the
first nine months of 2000.  Excluding the cost of jet fuel, operating cost
per shipment increased 7.4% for the third quarter and 4.6% for the first
nine months of 2000.  Additionally, productivity, as measured by shipments
handled per paid employee hour, experienced a decline of 2.6% and 1.2% for
the third quarter and first nine months of 2000, respectively.   The
Company continues to manage productivity at levels sufficient to maintain a
high level of overall service integrity with its customers.  At this time,
maintaining service is a priority and no plans exist to reduce service to
cut costs in the short term.  Comparisons of certain operating expense
components are discussed below.

Transportation purchased increased as a percentage of revenues to 31.5% in
the first nine months of 2000 compared to 30.5% in the comparable period of
1999. This increase was primarily due to increases in farmed out pickup and
delivery, international airline and surface linehaul rates as well as fuel
surcharges on these services.

Station and ground expense increased to 32.0% of revenues in the first nine
months of 2000 compared to 30.9% in the first nine months of 1999.  The
decline in productivity combined with wage related cost increases had a
negative effect on this category of expense.

Flight operations and maintenance expense as a percentage of revenues
during the first nine months of 2000 was 17.5% compared to 16.1% in the
first nine months of 1999.  Aviation fuel consumption decreased to 44.6
million gallons in the third quarter, a 1.3% decrease over the third
quarter of 1999.  For the first nine months of 2000, aviation fuel
consumption of 135.8 million gallons increased 1.2% from the first nine
months of 1999. The average aviation fuel price for the third quarter and
first nine months of 2000 was $1.03 and $.96 per gallon, respectively,
compared to $.68 and $.58 per gallon, respectively, in the comparable
periods of 1999.  As a result of fuel hedging contracts, the Company
incurred $2.4 million of expense, equal to approximately $.02 per gallon,
in the first nine months of 1999, with no hedging settlements occurring in
the first nine months of 2000.

Effective January 1, 2000, the Company began to expense DC-9 engine
overhaul costs directly to maintenance expense as costs are incurred.
Engine overhaul costs currently charged to expense as incurred and included
in the flight operations and maintenance category were previously accrued
in advance of the next scheduled overhaul and charged to the depreciation
and amortization category.

General and administrative expense was 7.9% of revenues in the first nine
months of 2000, compared to 7.7% in 1999.  This category of cost has
increased as a percentage of revenues primarily due to wage and
compensation cost pressures.

Depreciation and amortization expense decreased to 6.3% of revenues for the
first nine months of 2000 compared to 6.6% in 1999.  Depreciation expense
in the first nine months of 2000 increased compared to the comparable
period in 1999 due to the increased number of 767 aircraft placed in
service since the third quarter of 1999.  This increase was offset by the
effect of the change in accounting for engine overhaul costs discussed
above.

10

Interest expense in the first nine months of 2000 was higher than in the
first nine months of 1999 due to higher levels of average outstanding
borrowings.  Effective interest rates for the first nine months of 2000 was
comparable to the same period in 1999.  Capitalized interest was $5.0
million for the first nine months of 2000 compared to $3.1 million in the
first nine months of 1999.

Other income includes a nonrecurring gain of $1.9 million recorded in the
second quarter on the sale of securities received in connection with the
demutualization of Metropolitan Life.

The Company's effective tax rate was 38.1% in the first nine months of 2000
compared to 38.4% in the first nine months of 1999 and 38.1% for all of
1999.

The Company announced a number of new initiatives to improve volume growth
and profitability.  These initiatives include marketing targeted toward
enhancing the suite of products offered, pursuing the small market business
market, improving sales effectiveness, expanding third party logistics
capabilities and increasing online offerings.  Among these initiatives is
also the introduction of a ground delivery service, which allows customers
to consolidate their distribution process with the Company.  The new
service, which is scheduled to begin in April 2001, will leverage our
existing infrastructure and excess capacity and is expected to provide a
sound competitive offering in the marketplace.

LIQUIDITY AND CAPITAL RESOURCES:

Cash provided by operations net of the change in working capital for the
first nine months of 2000 was $211.5 million, compared to $227.6 million in
the first nine months of 1999.

Capital expenditures continue to be a primary factor affecting the
financial condition of the Company.  The Company anticipates total capital
expenditures to approximate $370 million in 2000.  During the first nine
months of 2000, total capital expenditures net of dispositions were $298.3
million compared to $224.6 million during the first nine months of 1999.
Cash provided by operations and bank borrowings were the primary sources
for funding capital expenditures in the first nine months of 2000.

The Company completed a share repurchase of 1 million shares of common
stock in June 2000 for approximately $20.7 million, which were added to the
Company's treasury stock.  The shares were repurchased pursuant to a 4
million stock repurchase program authorized by the Board of Directors in
1998.  The Company has no current plans to purchase additional shares under
the remaining repurchase authorization.

The Company's operating cash flow is a major source of liquidity.  Also,
the Company's unsecured revolving bank credit agreement has traditionally
been used as a major source of liquidity.  In July 2000, the Company
replaced its revolving bank credit facility under a new agreement that
resulted in an increase in borrowing capacity from $250 million to $275
million for a five-year term expiring June 30, 2005.  The Company also has
available $25 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 the first
nine months of 2000, compared to 1999 and prior levels, and the decreased
operating cash flows, reliance on the bank facilities has increased.  A
total of $210 million was outstanding at September 30, 2000 under the
revolving bank credit and money market credit lines, compared to $95
million outstanding at December 31, 1999 and $79 million outstanding at
September 30, 1999.

11

The Company's ratio of long-term debt to total capitalization was 30.1% at
September 30, 2000, compared to 24.1% at September 30, 1999 and 24.7% at
December 31, 1999.

In management's opinion, the available capacity under the bank credit
agreements coupled with internally generated cash flow from remaining 2000
operations should provide adequate flexibility to finance anticipated
capital expenditures for the balance of 2000.

FORWARD-LOOKING STATEMENTS:

Certain statements contained in this report are considered "forward-looking
statements" as the term is defined in the Private Securities Litigation
Reform Act of 1995.  Such statements relate to views of future events and
operating performance based upon information currently available to
management.  Forward-looking statements that are not historical facts are
generally identified by the use of terminology which includes "believes",
"expects", "anticipates", "intends", "plans" or other words with similar
intent.  Forward-looking statements involve risks, which are inherently
difficult to predict.  Actual results could materially differ from those
expressed in the forward-looking statements.

Many factors could cause actual results to differ materially from the views
expressed by the forward-looking statements.  Those factors include, but
are not limited to the following:

`-    Economic conditions in the U.S. and international markets in
	       which the Company operates.
          -    Competition from other providers of transportation and related
               services.
          -    The ability to adapt to changing customer demand patterns,
                including the effect on demand resulting from technology
                developments.
          -    The ability of management to successfully implement sales growth
               initiatives and other business strategies in a cost-effective
                manner.
          -    Customer acceptance of new business initiatives and pricing
                programs.
          -    Retention and maintenance of key customer relationships.
          -    Disruption of service due to labor disputes.
          -    Changes in government regulation, including federal and local
               regulation governing the operation of the Company's aircraft.
          -    Increase in fuel prices.
          -    The ability to obtain financing on reasonable terms.
          -    Weather related disruptions of service, and customer demand and
                related impacts.`

The Company does not intend to publicly revise or update any of its
forward-looking statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK:

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, 1999.

12

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PART II. OTHER INFORMATION

`Item 6.   Exhibits and Reports on Form 8-K.

     (a)  Exhibits -

EXHIBIT NO. 27   Financial Data Schedule

					13

                                SIGNATURES
                                ----------



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

                                        AIRBORNE FREIGHT CORPORATION
                                        ----------------------------
                                               (Registrant)



Date:               11/14/00            /s/Lanny H. Michael
                    -------             -------------------------
                                        Lanny H. Michael
                                        Senior Vice President,
                                        Chief Financial Officer

                                        /s/Robert T. Christensen
                                        -------------------------
                                        Robert T. Christensen
                                        Vice President,
                                        Corporate Controller

					14`