<PAGE>1
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549
                                     
                                 FORM 10-Q
                                     
              QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934
                                     
                      For Quarter Ended June 30, 1998
                                     
                       Commission File Number 1-6512
                                     
                       AIRBORNE FREIGHT CORPORATION
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)
                                     
                                 Delaware
                 ----------------------------------------
                 (State of incorporation or organization)
                                     
                                91-0837469
                     ---------------------------------
                     (IRS Employer Identification No.)
                                     
                            3101 Western Avenue
                               P.O. Box 662
                      Seattle, Washington 98111-0662
                      ------------------------------
                  (Address of Principal Executive Office)

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                         Yes: XXX       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.

     Common Stock, par value $1 per share

     Outstanding (net of 497,078 treasury shares)
          as of June 30, 1998                          50,279,509 shares
                                                       -----------------



<PAGE>2
<TABLE>
                  AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF NET EARNINGS
                  (Dollars in thousands except per share data)
                                   (Unaudited)
<CAPTION>
                                          Three Months Ended            Six Months Ended
                                          ------------------            ----------------
                                                June 30                      June 30
                                                -------                      -------
                                           1998        1997            1998          1997
                                           ----        ----            ----          ----
<S>                                     <C>         <C>            <C>           <C>
REVENUES:                                                                                     
  Domestic                               $672,378      $611,999     $1,334,896      $1,174,110
  International                            91,759       100,785        179,434         194,196
                                         --------      --------     ----------      ----------
                                          764,137       712,784      1,514,330       1,368,306
                                                                                              
OPERATING EXPENSES:                                                                           
  Transportation purchased                234,797       228,663        465,120         437,553
  Station and ground operations           228,282       210,856        450,976         411,106
  Flight operations and maintenance       117,480       100,913        234,883         204,696
  General and administrative               61,940        57,271        121,890         109,100
  Sales and marketing                      17,569        17,901         34,968          34,079
  Depreciation and amortization            45,182        42,210         90,070          84,481
                                         --------      --------     ----------      ----------
                                          705,250       657,814      1,397,907       1,281,015
                                         --------      --------     ----------      ----------
    EARNINGS FROM OPERATIONS               58,887        54,970        116,423          87,291
                                                                                              
INTEREST, NET                               2,960         8,049          6,876          16,496
                                         --------      --------     ----------      ----------
    EARNINGS BEFORE INCOME TAXES           55,927        46,921        109,547          70,795
                                                                                              
INCOME TAXES                               22,100        18,634         43,360          28,134
                                         --------      --------     ----------      ----------
    NET EARNINGS                         $ 33,827      $ 28,287     $   66,187      $   42,661
                                         ========      ========     ==========      ==========
                                                                                              
NET EARNINGS PER SHARE:                                                                       
    Basic                                $    .67      $    .66     $     1.32      $     1.00
                                         ========      ========     ==========      ==========
    Diluted                              $    .66      $    .59     $     1.29      $      .90
                                         ========      ========     ==========      ==========
DIVIDENDS PER SHARE                      $   .040      $   .038     $     .078      $     .075
                                         ========      ========     ==========      ==========
</TABLE>
                 See notes to consolidated financial statements.

<PAGE>3
<TABLE>
               AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                          (Dollars in thousands)
<CAPTION>
                                                June 30      December 31
                                                -------      -----------
                                                  1998           1997
                                                  ----           ----
                                              (Unaudited)   
<S>                                          <C>            <C>
                  ASSETS                                    
                  ------                                    
CURRENT ASSETS:                                             
  Cash                                        $   16,922     $   25,525
  Trade accounts receivable,                                 
    less allowance of $10,290 and $10,290        310,698        322,549
  Spare parts and fuel inventory                  39,689         37,966
  Deferred income tax assets                      16,713         14,530
  Prepaid expenses and other                      27,872         25,982
                                              ----------     ----------
     TOTAL CURRENT ASSETS                        411,894        426,552
                                                             
PROPERTY AND EQUIPMENT, NET                      949,417        916,331
                                                             
EQUIPMENT DEPOSITS and OTHER ASSETS               35,868         23,090
                                              ----------     ----------
TOTAL ASSETS                                  $1,397,179     $1,365,973
                                              ==========     ==========
   LIABILITIES AND SHAREHOLDERS' EQUITY                     
   ------------------------------------                     
CURRENT LIABILITIES:                                        
  Accounts payable                            $  144,478     $  143,966
  Salaries, wages and related taxes               70,710         80,154
  Accrued expenses                                72,043        100,126
  Income taxes payable                             4,704          5,440
  Current portion of debt                            393            381
                                              ----------     ----------
     TOTAL CURRENT LIABILITIES                   292,328        330,067
                                                             
LONG-TERM DEBT                                   222,892        250,559
                                                             
DEFERRED INCOME TAX LIABILITIES                   78,154         65,322
                                                             
OTHER LIABILITIES                                 63,713         49,110
                                                             
SHAREHOLDERS' EQUITY:                                        
  Preferred Stock, without par value -                       
   Authorized 5,200,000 shares,                              
   no shares issued                                          
  Common stock, par value $1 per share -                     
   Authorized 60,000,000 shares                              
   Issued 50,776,587 and 50,428,548 shares        50,777         50,429
  Additional paid-in capital                     293,697        287,208
  Retained earnings                              396,384        334,083
                                              ----------     ----------
                                                 740,858        671,720
  Treasury stock, 497,078 and 522,300               (766)          (805)
   shares, at cost                            ----------     ----------
                                                 740,092        670,915
                                              ----------     ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $1,397,179     $1,365,973
                                              ==========     ==========
</TABLE>
              See notes to consolidated financial statements.


<PAGE>4
<TABLE>
               AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in thousands)
                                (Unaudited)
<CAPTION>
                                                     Six Months Ended
                                                     ----------------
                                                          June 30
                                                     ----------------
                                                     1998        1997
                                                     ----        ----
<S>                                               <C>         <C>
OPERATING ACTIVITIES:                                         
  Net Earnings                                     $ 66,187   $ 42,661
  Adjustments to reconcile net earnings to                    
   net cash provided by operating activities:                 
     Depreciation and amortization                   82,412     78,116
     Provision for aircraft engine overhauls          7,658      6,365
     Deferred income taxes                           10,649     10,387
     Other                                           14,695        229
                                                   --------   --------
  CASH PROVIDED BY OPERATIONS                       181,601    137,758
                                                              
   Change in:                                                 
     Receivables                                     11,851    (19,238)
     Inventories and prepaid expenses                (3,613)    (7,636)
     Accounts payable                                   512       (660)
     Accrued expenses, salaries & taxes payable     (37,922)    22,405
                                                   --------   --------
  NET CASH PROVIDED BY OPERATING ACTIVITIES         152,429    132,629
                                                              
INVESTING ACTIVITIES:                                         
  Additions to property and equipment              (126,377)   (78,716)
  Dispositions of property and equipment                633      2,615
  Expenditures for engine overhauls                  (8,471)    (6,036)
  Proceeds from insurance on aircraft accident           --     18,000
  Other                                              (1,811)       537
                                                   --------   --------
  NET CASH USED BY INVESTING ACTIVITIES            (136,026)   (63,600)
                                                              
FINANCING ACTIVITIES:                                         
  Proceeds (payments) on bank notes, net            (27,500)   (89,000)
  Principal payments on debt                           (155)      (143)
  Proceeds from common stock issuance                 6,535      1,357
  Dividends paid                                     (3,886)    (3,202)
                                                   --------   --------
  NET CASH USED BY FINANCING ACTIVITIES             (25,006)   (90,988)
                                                   --------   --------
NET DECREASE IN CASH                                 (8,603)   (21,959)
                                                              
CASH AT JANUARY 1                                    25,525     35,816
                                                   --------   --------
CASH AT JUNE 30                                    $ 16,922   $ 13,857
                                                   ========   ========
                                                              
</TABLE>
		See notes to consolidated financial statements.


<PAGE>5
               AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               June 30, 1998
                                (Unaudited)

NOTE A - SUMMARY OF FINANCIAL STATEMENT PREPARATION:

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
1998 presentation.

NOTE B - LONG-TERM DEBT:

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

<CAPTION>
                                              June 30      December 31
                                              -------      -----------
                                                1998           1997
                                                ----           ----
                                                  (In thousands)
<S>                                        <C>            <C>
Senior debt:                                              
  Notes payable                                   2,500         30,000
  Senior notes                                  200,000        200,000
  Revenue bonds                                  13,200         13,200
  Other debt                                      7,585          7,740
                                               --------       --------
                                                223,285        250,940
Less current portion                                393            381
                                               --------       --------
                                               $222,892       $250,559
                                               ========       ========
</TABLE>

NOTE C - EARNINGS PER SHARE:

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.

Diluted earnings per share for the three months and six months ended
June 30, 1997, assumes conversion of the Company's convertible subordinated
debentures as well as the dilutive common equivalent shares applicable to
the assumed exercise of stock options.  Net earnings as adjusted for the
elimination of interest expense, net of applicable taxes was $29,352,000
for the three month period and $44,791,000 for the six month period.




<PAGE>6

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

<TABLE>
<CAPTION>
                            Three Months Ended           Six Months Ended
                            ------------------           ----------------
                                  June 30                     June 30
                                  -------                     -------
                            1998          1997          1998          1997
                            ----          ----          ----          ----
<S>                     <C>           <C>           <C>           <C>
WEIGHTED AVERAGE SHARES                                                        
OUTSTANDING:
  Basic                  50,220,364      42,776,526    50,123,331    42,706,891
  Diluted                51,288,921      50,134,061    51,235,062    49,833,611
                                                                               
</TABLE>

NOTE D - ACCOUNTING FOR DERIVATIVE INSTRUMENTS:

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which will be effective for fiscal year
2000.  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.

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.

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 June 30, 1998.
However, if the provisions of the statement had been adopted, a cumulative
charge of $2,300,000, net of tax, would have been recorded to shareholders'
equity and charges to comprehensive income of approximately $400,000 and
$1,600,000 would have been reported for the three and six month periods
ended June 30, 1998, respectively.



<PAGE>7

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

RESULTS OF OPERATIONS:

The Company's operating performance in the second quarter and the first six
months of 1998 resulted in operating income and net earnings significantly
higher than the comparable periods of 1997.  The Company is pleased with
this strong operating performance which was achieved in spite of what
appears to be a slowing economy in the second quarter.  The overall growth
in shipments and revenue was positive, and an operating margin of 7.7% was
achieved in the second quarter of 1998, the same as experienced in the
second quarter of 1997 and the first quarter of 1998, when growth rates
were higher.

Net earnings for the second quarter of 1998 were $33.8 million, or $.66 per
share on a diluted basis, on revenues of $764 million, compared to
$28.3 million, or $.59 per share on revenues of $713 million, for the
second quarter of 1997.  Net earnings for the first six months of 1998 were
$66.2 million, or $1.29 per share on revenues of $1.51 billion, compared to
$42.7 million, or $.90 per share on revenues of $1.37 billion for the
corresponding period in 1997.



<PAGE>8
<TABLE>

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

<CAPTION>
                                  Three Months Ended                  Six Months Ended              
                                  ------------------                  ----------------              
                               	       June 30                             June 30                       
                                       -------               %             -------              %
                                  1998         1997       Change      1998         1997       Change
                                  ----         ----       ------      ----         ----       ------
<S>                            <C>          <C>          <C>       <C>          <C>          <C>
Shipments (in thousands):                                                                          
  Domestic                                                                                   
    Overnight                    46,632          42,287    10.3%     92,391          81,926    12.8%
    Next Afternoon Service       14,718          13,717     7.3%     29,101          25,881    12.4%
    Second Day Service           17,673          16,657     6.1%     35,684          32,466     9.9%
    100 Lbs. and Over                87              80     8.8%        178             154    15.6%
                                 ------          ------             -------         -------  
    Total Domestic               79,110          72,741     8.8%    157,354         140,427    12.1%
                                 ------          ------             -------         -------  
  International                                                                              
    Express                       1,507           1,271    18.6%      2,896           2,452    18.1%
    Freight                         113             122    (7.4%)       223             238    (6.3%)
                                 ------          ------             -------         -------  
    Total International           1,620           1,393    16.3%      3,119           2,690    15.9%
                                 ------          ------             -------         -------  
  Total Shipments                80,730          74,134     8.9%    160,473         143,117    12.1%
                                 ======          ======             =======         =======  
Average Pounds per Shipment:                                                                 
  Domestic                         4.22            4.31    (2.1%)      4.29            4.31    (0.5%)
  International                   41.62           53.65   (22.4%)     42.85           51.88   (17.4%)
                                                                                             
Average Revenue per Pound:                                                                   
  Domestic                        $1.98           $1.94     2.1%      $1.95           $1.93     1.0%
  International                   $1.34           $1.32     1.5%      $1.33           $1.37    (2.9%)
                                                                                             
Average Revenue per Shipment:                                                                
  Domestic                        $8.49           $8.40     1.1%      $8.48           $8.35     1.6%
  International                  $56.64          $72.35   (21.7%)    $57.53          $72.19   (20.3%)
                                                                                             
</TABLE>



<PAGE>9

Domestic shipments increased 8.8% and 12.1% in the second quarter and first
half of 1998, respectively, compared to the same periods in 1997.  Domestic
revenues increased 9.9% in the second quarter of 1998 and 13.7% for the
first half of 1998 compared to 1997.

The growth rate in the higher yielding overnight segment increased 10.3% in
the second quarter of 1998, a higher growth rate than the other domestic
segments.  This helped the domestic revenue per shipment improve to $8.49 per
shipment, compared to $8.40 for the second quarter of 1997.  Overnight
shipments accounted for approximately 59.0% of total domestic shipments in
the second quarter of 1998 compared to 58.1% in the comparable period of
1997.

Domestic revenues for 1997 included $15.5 million of fuel surcharge revenue
in the first half of the year, of which $10.6 million was realized in the
second quarter of 1997.  This fuel surcharge revenue added approximately
$.16 per share in the first half of 1997, of which $.11 per share related
to the second quarter of 1997.

International revenues decreased 9.0% and 7.6% in the second quarter and
first six months of 1998, respectively, primarily the result of economic
troubles in parts of Asia.  Shipments in the heavier weight, higher revenue
per shipment freight segment decreased 7.4% in the second quarter and 6.3%
in the first half of the year.  Mitigating some of the weakness in freight
volumes, the Company experienced strong growth in its international express
segment.  International express shipments increased 18.6% and 18.1% in the
second quarter and first six months of 1998, respectively, compared to the
corresponding periods of 1997.

Operating expenses as a percentage of revenues were 92.3% for the first six
months of 1998 compared to 93.6% in the first six months of 1997 and 92.3%
for all of 1997.  Operating cost per shipment handled decreased 2.7% to
$8.71 for the first six months 1998 compared to the first six months of
1997.  The operating cost per shipment for the second quarter of 1998
decreased 1.5% to $8.74, compared to the second quarter of 1997 while
operating expense as a percentage of revenues was 92.3%.  Most of the
decrease in operating cost per shipment was attributable to lower costs
related to lower international freight volumes.  The operating margin of
7.7% in the second quarter of 1998 was the same as that experienced in the
first quarter of this year, and in the second quarter of 1997.

The Company experienced a 1.5% improvement in productivity for the second
quarter of 1998, compared to the second quarter of 1997, as measured by
shipments handled per paid employee hour.  This productivity improvement,
while lower than previous periods, was meaningful given the slower shipment
growth.  Productivity improvement and continued emphasis on cost control
were factors having a positive impact on 1998 operating results.
Comparisons of certain operating expense components are discussed below.

Transportation purchased decreased as a percentage of revenues to 30.7% in
the first six months of 1998 compared to 32.0% in the comparable period of
1997.  This decrease was primarily due to commercial airline costs which,
although higher in total, were lower as a percentage of total revenues in
the first half of 1998 due to the lower volumes of international freight
shipments discussed above. The suspension of the Federal Aviation Excise
Tax reduced costs in the first quarter of 1997 by $4.3 million.  The
Aviation Excise Tax moratorium was effective through March 6, 1997,
subsequent to which the tax became effective once again; therefore, no cost
reduction was realized in 1998.


<PAGE>10

Flight operations and maintenance expense as a percentage of revenues
during the first half of 1998 was 15.5%, compared to 15.0% in the first six
months of 1997, and was 15.4% in the second quarter of 1998 compared to
14.2% in 1997.  During the second quarter of 1997, costs associated with
periodic aircraft maintenance were lower as a percentage of revenues,
compared to both quarters of 1998 or first quarter of 1997, due to fewer
maintenance checks performed.  The average aviation fuel price for the
second quarter and first six months of 1998 was $.57 per gallon and $.60
per gallon, respectively, compared to $.70 per gallon and $.76 per gallon
for the comparable periods of 1997.  Aviation fuel consumption increased to
89.8 million gallons in the first half of 1998, a 10.4% increase over the
first half of 1997.  As a result of fuel hedging contracts, the Company
incurred $2.0 million of expense in the second quarter of 1998, compared to
$1.0 million of expense in the first quarter of 1998, and $1.7 million
benefit in the first quarter of 1997.

The station and ground expense, general and administrative expense, and
sales and marketing expense categories as a percentage of revenues were
very comparable in the second quarter and first half of 1998 compared to
the same periods in 1997.

The increase in depreciation and amortization expense in the first half of
1998 is due in large part to the increased number of aircraft in service
since the first half of 1997.

Interest expense in the first six months of 1998 was significantly lower
than the same period of 1997.  This is attributable to the significant
reduction in average outstanding borrowings during the first half of 1998
compared to the corresponding period of 1997.

The Company's effective tax rate was 39.6% for the first six months of 1998
compared to 39.7% in the first half of 1997 and 39.2% for all of 1997.

YEAR 2000 ISSUE:

The Company has implemented a compliance program to address the challenges
the Year 2000 may present to its products, systems and applications.  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 which contain date sensitive
technology critical to its operation.

Management anticipates modifications to its own systems, conversions to new
software and related testing will be substantially complete by the end of
1998.  As part of the compliance program, the Company has also initiated
communications with third parties (primarily customers, vendors, airport
authorities, and other governmental agencies, including the Federal
Aviation Administration) whose failure to timely convert their systems
could have an impact on the Company's operations.  Although the Company
does not believe the Year 2000 issue will have a material impact on the
Company's operations, there can be no guarantee that the Company's or any
third party Year 2000 remediation efforts will be fully compliant.  If
non-compliance is extensive, this could have a material effect on the
Company's business, financial condition and results of operation.  In an
attempt to mitigate this risk, the Company is in the process of developing
contingency plans regarding critical systems should they fail to become
Year 2000 compliant.

Management does not consider the incurred or estimated costs of its
compliance program to be material.  Total 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.  This assessment could differ materially if either the
scope or schedule progress with its compliance program is significantly
altered.


<PAGE>11

LIQUIDITY AND CAPITAL RESOURCES:

Cash provided by operations net of change in working capital increased for
the first six months of 1998 to $152 million, compared to $133 million in
the first half of 1997.  This increased liquidity is primarily the result
of the increase in profitability in 1998.

Capital expenditures continue to be a primary factor affecting the
financial condition of the Company.  The Company anticipates total capital
expenditures to approximate $274 million in 1998.  During the first six
months of 1998, total capital expenditures net of dispositions were $126
million.  Cash provided by operations was the primary source for funding
capital expenditures.

The Company's strong operating cash flow has become the major source of
liquidity, whereas, the Company's $250 million unsecured revolving bank
credit agreement had traditionally been used as the 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.  Reliance on the bank facilities has decreased
commensurately, with a total of $2.5 million outstanding at June 30, 1998
under the revolving bank credit and money market credit lines, compared to
$30.0 million outstanding at December 31, 1997 and $99.5 million
outstanding at June 30, 1997.

In management's opinion, the available capacity under the bank credit
agreements coupled with internally generated cash flow from remaining 1998
operations should provide adequate flexibility to finance anticipated
capital expenditures for the balance of 1998.


<PAGE>12

                        PART II. OTHER INFORMATION
                        --------------------------

Item 6.   Exhibits and Reports or Form 8-K.

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



<PAGE>13        

                                SIGNATURES
                                ----------



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:

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

<TABLE>

<CAPTION>
<S>       <C>                           <C>
Date:               8/13/98             /s/Roy C. Liljebeck
                    -------             -------------------------
                                        Roy C. Liljebeck
                                        Executive Vice President,
                                        Chief Financial Officer
                                                          
                                                          
Date:               8/13/98             /s/Lanny H. Michael
                    -------             -------------------------
                                        Lanny H. Michael
                                        Senior Vice President,
                                        Treasurer and Controller
                                        
</TABLE>