SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended September 30, 1999

                         Commission file number: 1-8306

                      AIR EXPRESS INTERNATIONAL CORPORATION
             (Exact name of registrant as specified in its charter)

          Delaware                                 36-2074327
  (State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
   Incorporation or Organization)


                  120 Tokeneke Road, Darien, Connecticut 06820
                                 (203) 655-7900
   (Address of, Including Zip Code, and Telephone Number, Including Area Code,
                  of Registrant's Principal Executive Offices)

                                      NONE
Former name, former address and former fiscal year,if changed since last report


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  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 registrant's classes of
common stock, as of the latest  practicable  date  (applicable only to corporate
registrants).

The  number  of  shares of  common  stock  outstanding  as of  November 8, 1999
was 33,597,834 (Net of 1,797,660 Treasury Shares).

<PAGE>

                      AIR EXPRESS INTERNATIONAL CORPORATION
                    September 1999 Form 10-Q Quarterly Report

                                Table of Contents


                         Part I - Financial Information
                                                                         Page

Item 1.  Financial Statements

            Condensed  Consolidated  Balance Sheets as at
            September 30, 1999 and December 31, 1998......................2

            Condensed Consolidated Statements of Operations -
            Three Months and Nine Months Ended September 30, 1999
            and 1998......................................................3

            Consolidated Statements of Cash Flows -
            Nine Months Ended September 30, 1999 and 1998.................4

            Notes to Condensed Consolidated Financial
            Statements....................................................5


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations..    ........................8


                           Part II - Other Information


Item 1.  Legal Proceedings...............................................14

Item 6.  Exhibits and Reports on Form 8-K................................14


<PAGE>

                                                                          Page 2
<TABLE>

             AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

                                                Sept 30,1999  Dec 31,1998
                                                (Unaudited)
Assets
<S>                                                  <C>            <C>
Current Assets:
   Cash and cash equivalents .................... $  46,806    $  60,246
   Accounts receivable (less allowance for
    doubtful accounts of $5,683 and $5,112) .....   404,827      366,417
   Marketable securities ........................       --         7,188
   Other current assets .........................     6,241        7,096
         Total current assets ...................   457,874      440,947
Investment in unconsolidated affiliates .........    30,392       29,507
Restricted funds ................................       994        2,126
Property, plant and equipment (less accumulated
 depreciation of $79,190 and $70,515) ...........    91,963       81,178
Deposits and other assets .......................    18,774       13,937
Goodwill (less accumulated amortization of
 $17,306 and $15,331) ...........................   111,021      107,783
         Total assets ........................... $ 711,018    $ 675,478

Liabilities and stockholders' investment

Current Liabilities:
   Current portion of long-term debt ............ $   4,108    $   4,337
   Bank overdrafts payable ......................     7,893        4,432
   Transportation payables ......................   182,585      157,763
   Accounts payable .............................    57,361       66,023
   Accrued liabilities ..........................    65,543       72,780
   Income taxes payable .........................     6,495        6,644
         Total current liabilities ..............   323,985      311,979
   Long-term debt ...............................    51,250       42,578
   Other liabilities ............................     8,746       10,050
         Total liabilities ......................   383,981      364,607

Stockholders' Investment:
   Capital stock-
   Preferred (authorized 1,000,000 shares,
    none outstanding) ...........................        --           --
   Common, $.01 par value (authorized
    100,000,000 shares, issued 35,370,690
    and 35,028,154 shares) ......................       354          350
   Additional paid-in capital ...................   152,612      147,544
   Accumulative other comprehensive income ......   (39,336)     (28,192)
   Retained earnings ............................   249,187      216,763
                                                    362,817      336,465
Less: 1,797,660 and 1,217,586 shares of
      treasury stock, at cost....................   (35,780)     (25,594)
   Total stockholders' investment ...............   327,037      310,871
   Total liabilities and stockholders'
    investment .................................. $ 711,018    $ 675,478


The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>

                                                                          Page 3
<TABLE>


             AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

(In thousands, except
 per share data)

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


<S>                          <C>           <C>          <C>         <C>
Revenues .................   $  407,538    $  372,961   $1,135,485  $1,123,831

Operating expenses:
  Transportation .........      274,566       249,068      755,490      759,050
  Terminal ...............       73,672        67,027      213,488      200,959
  Selling, general and
   administrative ........       40,208        38,236      116,766      112,399

Operating profit .........       19,092        18,630       49,741       51,423

Other (expense) income:
  Interest, net ..........         (150)          566          (37)       1,556
  Other, net .............        1,356         1,208       12,392        4,849
                                  1,206         1,774       12,355        6,405

Income before provision
   for income taxes ......       20,298        20,404       62,096       57,828

Provision for income taxes        7,511         7,394       22,976       21,427
Net income ...............   $   12,787    $   13,010   $   39,120   $   36,401

Income per common share:
      Basic ..............   $     .38     $      .38   $     1.17   $     1.05
      Diluted ............   $     .38     $      .38   $     1.15   $     1.04

Weighted average number
  of common shares:
      Basic ..............       33,531        34,314       33,573       34,530
      Diluted ............       34,082        34,633       33,971       35,006

</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE>

                                                                         Page 4
<TABLE>

             AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

  (Dollars in thousands)
                                                           1999         1998
Cash flows from operating activities:
<S>                                                      <C>         <C>
  Net Income ..............  ..........................  $  39,120   $  36,401
  Adjustments to reconcile net income to net
    cash provided by operating activities:
        Depreciation expense ..........................     13,721      10,256
        Amortization of goodwill ......................      2,317       2,001
        Deferred income taxes .........................      2,381       3,158
        Equity in earnings of unconsolidated
         affiliates ...................................     (1,317)     (2,059)
       (Gains) on sales of assets, net ................        (25)        (15)
       (Gain) on sale of marketable securities ........     (7,852)         --
  Changes in assets and liabilities, net of
    business acquisitions:
       (Increase) decrease in accounts receivable,
         net ..........................................    (42,432)      4,109
        Decrease in other current assets ..............        753       2,048
       (Increase) in other assets .....................     (1,884)       (945)
        Increase (decrease) in transportation
         payables .....................................     20,828     (22,554)
       (Decrease) increase in accounts payable ........     (6,447)      8,374
       (Decrease) increase in accrued liabilities .....     (7,342)      2,051
        Increase (decrease) in income taxes payable ...        920      (1,119)
        Increase in other liabilities .................        131         157
           Total adjustments ..........................    (26,248)      5,462

       Net cash provided by operating activities ......     12,872      41,863

Cash flows from investing activities:
    Acquisitions, net of cash acquired ................     (6,321)    (10,568)
    Restricted funds ..................................      1,132      10,921
    Other investing activities ........................     (1,269)      1,370
    Proceeds from sales of assets .....................         95         968
    Proceeds from sale of marketable securities .......      7,877          --
    Capital expenditures ..............................    (25,100)    (24,442)
    Investment in unconsolidated affiliates ...........     (1,781)     (7,101)

       Net cash used by investing activities ..........    (25,367)    (28,852)

Cash flows from financing activities:
    Net borrowings in bank overdrafts payable .........      3,181       1,490
    Additions to long-term debt .......................     11,754         271
    Payment of long-term debt .........................     (1,935)     (1,455)
    Issuance of common stock ..........................      3,605       3,402
    Payment of cash dividends .........................     (6,376)     (5,553)
    Purchase of treasury stock ........................     (9,692)    (22,209)

       Net cash provided (used) by financing
        activities ....................................        537     (24,054)

Effect of foreign currency exchange rates on cash .....     (1,482)       (663)

Net decrease in cash and cash equivalents .............    (13,440)    (11,706)

Cash and cash equivalents at beginning of period ......     60,246      67,576

Cash and cash equivalents at end of period ............  $  46,806   $  55,870
</TABLE>

  The accompanying notes are an integral part of these financial statements.

<PAGE>

                                                                          Page 5

             AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


A.   The  consolidated  balance  sheet at September 30, 1999,  the  consolidated
     statements of operations for the three-month  and nine-month  periods ended
     September 30, 1999 and 1998, and the consolidated  statements of cash flows
     for the nine-month  periods ended September 30, 1999 and 1998 were prepared
     by the Company without audit. In the opinion of management, all adjustments
     necessary to present fairly the financial position,  results of operations,
     and cash flows for the  interim  periods  were made.  Certain  items in the
     September 30, 1998 financial statements were reclassified to conform to the
     classification of September 30, 1999 financial statements.

     Certain  information  and  footnote   disclosures,   normally  included  in
     financial   statements  prepared  in  accordance  with  generally  accepted
     accounting  principles,  were  condensed  or  omitted.  Accordingly,  these
     condensed  consolidated  financial statements should be read in conjunction
     with the  consolidated  financial  statements and notes thereto included in
     the Company's annual report to stockholders for the year ended December 31,
     1998.

     Statements   included   herein   which   are  not   historical   facts  are
     forward-looking  statements.  These  statements are based upon  information
     available to the Company on the date hereof.  Inherent in these  statements
     are a variety of risks and other factors, both known and unknown, which may
     cause the  Company's  actual  results  to differ  materially  from those in
     forward-looking statements. Accordingly, the realization of forward-looking
     statements  is not  certain,  and all such  statements  should be evaluated
     based upon the applicable  risks and  uncertainties  affecting the Company.
     Consequently,  the results of operations for the three-month and nine-month
     periods  ended  September  30, 1999 are not  necessarily  indicative of the
     results of operations expected for the year ending December 31, 1999.


B.   Marketable securities:

     During the first quarter of 1999, the Company sold 30% of its investment in
     the equity  securities  of Equant,  N.V.,  an  international  data  network
     service  provider,  for a pre-tax gain of  approximately  $7.9 million (See
     Note D) and an  after-tax  gain of  approximately  $4.9 million or $.14 per
     diluted share.  The remaining  shares are not currently  marketable and are
     carried at a cost of approximately $.1 million in the accompanying  balance
     sheet.


C.   Interest, net was as follows:
<TABLE>
                                      Three Months Ended     Nine Months Ended
                                        September 30,         September 30,
                                      1999         1998      1999        1998

<S>                                  <C>        <C>       <C>        <C>
           Interest expense ......   $ (776)    $ (380)   $(1,993)   $(1,046)
           Interest income  ......      626        946      1,956      2,602
                                     $ (150)    $  566    $   (37)   $ 1,556
</TABLE>
<PAGE>

                                                                          Page 6

D.    Other, net was as follows:
<TABLE>
                                      Three Months Ended     Nine Months Ended
                                        September 30,          September 30,
                                      1999         1998      1999         1998

<S>                                <C>          <C>       <C>         <C>
Gain on the sale of marketable
  securities.....................  $     --     $    --    $  7,852   $    --
Equity in earnings of
  unconsolidated affiliates .....     1,211       1,132       3,597     3,902
Foreign exchange gains ..........        82          92         918       932
Other ...........................        63         (16)         25        15
                                   $  1,356     $ 1,208    $ 12,392   $ 4,849
</TABLE>


E.    Comprehensive income:
<TABLE>
                                      Three Months Ended     Nine Months Ended
                                        September 30,          September 30,
                                      1999         1998      1999         1998

<S>                                 <C>         <C>         <C>        <C>
Net income ................... .... $ 12,787    $ 13,010    $ 39,120   $ 36,401

Other comprehensive income:
Translation of foreign currency
  financial statements .. .........      174       3,472      (7,678)    (3,885)
Income tax (expense) benefit ......     (126)       (394)        661       (532)
                                          48       3,078      (7,017)    (4,417)
Reclassification adjustment for
  gain on sale of marketable
  securities included in net
  income...........................       --          --      (7,019)       --
Income tax expense ................       --          --       2,892        --
                                          --          --      (4,127)       --
Comprehensive income .............. $ 12,835    $ 16,088    $ 27,976   $ 31,984
</TABLE>


F.   Acquisitions:

     During the third quarter of 1999, the Company purchased Team Fret, an ocean
     freight forwarder headquartered in Marseilles,  France. The acquisition has
     been accounted for as a purchase.  Accordingly, the cost of the acquisition
     has been  allocated on the basis of the estimated  fair market value of the
     assets acquired and the liabilities  assumed.  This allocation has resulted
     in goodwill of  approximately  $7.5 million which will be amortized over 40
     years.  The results of operations for this acquisition were included in the
     Consolidated Statements of Operations  from the date of acquisition and had
     no material  pro forma impact on the  Company's  results of  operations  or
     financial  position.  On  October  18,  1999,  the  Company  announced  the
     acquisition  of the  business  and  certain  assets  of the  CMS  group  of
     companies (CMS).  Founded in 1983, CMS is a leader in  international  cargo
     consolidation  services  in  the  Trans-Pacific  trades,   specializing  in
     purchase order management and consolidation  services  primarily for United
     States based retailers and  manufacturers  of retail products  working with
     multiple vendors throughout Asia.
<PAGE>

                                                                          Page 7


G.   Regional Operations:

     The Company operates its integrated  logistics business as a single segment
     comprised of three major  services:  airfreight  forwarding,  ocean freight
     forwarding,  and customs  brokerage  and other  services,  all of which are
     fully integrated.

<TABLE>
                                 Three Months Ended       Nine Months Ended
                                    September 30,            September 30,
                                1999          1998       1999            1998

Revenues by service:

<S>                           <C>          <C>          <C>          <C>
Airfreight ...................$  299,004   $ 282,171    $  843,427   $  865,186
Ocean freight ................    65,471      52,523       170,450      147,375
Customs brokerage & other ....    43,063      38,267       121,608      111,270
Total revenues ...............$  407,538   $ 372,961    $1,135,485   $1,123,831

Revenues by geographic area:

U.S.A ........................$  152,143   $ 144,960    $  438,438   $  464,729

 United Kingdom ..............    39,242      40,708       110,200      118,998
 Other .......................    85,445      80,785       234,892      232,724
Europe .......................   124,687     121,493       345,092      351,722
Asia and Others ..............   130,708     106,508       351,955      307,380
  Total foreign ..............   255,395     228,001       697,047      659,102

Total revenues ...............$  407,538   $ 372,961    $1,135,485   $1,123,831

Operating profit by
 geographic area:

U.S.A ........................$    7,123   $   5,165    $   20,374   $   16,782

Europe .......................     5,055       5,646         9,967       16,576
Asia and Others ..............     6,914       7,819        19,400       18,065
  Total foreign ..............    11,969      13,465        29,367       34,641

Total operating profit .......$   19,092   $  18,630    $   49,741   $   51,423
</TABLE>


H.   Supplemental disclosures of cash flow information:
<TABLE>

                                       Three Months Ended      Nine Months Ended
                                           September 30,          September 30,
                                       1999          1998      1999        1998
<S>                                   <C>         <C>        <C>        <C>
     Interest and income taxes paid:
     Interest ....................... $   701     $   197    $  1,479   $   714
     Income taxes ...................   5,465       5,960      19,137    18,462
                                      $ 6,166     $ 6,157    $ 20,616   $19,176
</TABLE>

     Noncash investing and financing activities:
     During the second  quarter of 1998, as part of an  acquisition, the Company
     issued a $6.0 million note.

<PAGE>

                                                                          Page 8


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations


Results of Operations

     The Company operates its integrated  logistics business as a single segment
comprised  of  three  major  services:   airfreight  forwarding,  ocean  freight
forwarding,  and customs  brokerage and other  services,  all of which are fully
integrated.  The following  table sets forth the gross revenues and net revenues
(gross revenues minus  transportation  expenses) for each of these three service
categories,  as well as the Company's  internal  operating  expenses  (terminal,
selling, general and administrative expenses) and operating profit:
<TABLE>

                                       Three Months Ended     Nine Months Ended
                                           September 30,         September 30,
                                        1999       1998        1999       1998
<S>                                     <C>     <C>         <C>       <C>
Gross Revenues:
  Airfreight ...........................$299.0  $ 282.2     $   843.4   $  865.2
  Ocean freight ........................  65.5     52.5         170.5      147.4
  Customs brokerage and other ..........  43.0     38.3         121.6      111.2
    Total Gross Revenues ...............$407.5  $ 373.0     $ 1,135.5   $1,123.8

Net Revenues:
  Airfreight ...........................$ 79.8  $  77.5     $   231.6   $  230.1
  Ocean freight ........................  18.6     16.1          51.2       45.1
  Customs brokerage and other ..........  34.6     30.3          97.2       89.6
    Total Net Revenues ................. 133.0    123.9         380.0      364.8

Internal Operating Expenses:
  Terminal .............................  73.7     67.0         213.5      201.0
  Selling, general and administrative ..  40.2     38.3         116.8      112.4
    Total Internal Operating Expenses .. 113.9    105.3         330.3      313.4

Operating Profit .......................$ 19.1  $  18.6     $    49.7   $   51.4
</TABLE>


     Consolidated  gross revenues for the third quarter and first nine months of
1999  increased   9.2%  to  $407.5   million  and  1.0%  to  $1,135.5   million,
respectively, over the comparable periods in 1998. Additionally,  gross revenues
for the quarter and nine months were negatively  impacted by approximately  $2.0
million and $8.7  million,  respectively,  due to the effect of a stronger  U.S.
dollar when converting foreign currency revenues into U.S. dollars for financial
reporting  purposes.  Consolidated  net revenues for the third quarter and first
nine months of 1999 increased 7.3% to $133.0 million and 4.2% to $380.0 million,
respectively, over the comparable 1998 periods.

     Gross  airfreight  revenues for the third  quarter and first nine months of
1999  increased  6.0% to $299.0  million and decreased  2.5% to $843.4  million,
respectively,  compared  to the same  periods  in 1998.  The  increase  in gross
airfreight  revenues for the third quarter of 1999 was attributable to increases
in both shipping volumes and weight of cargo shipped.  Gross airfreight revenues

<PAGE>

                                                                          Page 9


in all regions  either  equaled or exceeded  the third  quarter of 1998 with the
strongest growth occurring in the Asia and Others region.  The decrease in gross
airfreight  revenues for the first nine months of 1999  resulted  from  softness
during  the  first  half of the  year in both the  United  States  and  European
region's  airfreight  exports combined with lower selling rates.  Airfreight net
revenues for the third quarter and first nine months of 1999  increased  3.0% to
$79.8 million and .7% to $231.6 million, respectively,  over the comparable 1998
periods.  The increase in airfreight net revenues for the third quarter resulted
from  improvement  in  transportation  costs and  customer  selling  rates.  The
increase in airfreight net revenues for the first nine months of 1999 was mainly
due to lower  transportation  costs and improved routing and mix of cargo during
the first six months of 1999.

     Ocean freight gross revenues for the third quarter and first nine months of
1999 increased 24.8% to $65.5 million and 15.7% to $170.5 million, respectively,
over the  comparable  1998  periods.  Ocean  freight net  revenues for the third
quarter and first nine months of 1999 increased 15.5% to $18.6 million and 13.5%
to $51.2 million, respectively,  over the third quarter and first nine months of
1998. The increases in both gross and net ocean freight revenues were mainly due
to increased shipping volumes from existing  customers and continuing  expansion
into the ocean freight market.

     Customs  brokerage and other gross revenues for the third quarter and first
nine months of 1999 increased 12.3% to $43.0 million and 9.4% to $121.6 million,
respectively,  over the comparable 1998 periods. Customs brokerage and other net
revenues for the third quarter and first nine months of 1999 increased  14.2% to
$34.6 million and 8.5% to $97.2 million, respectively,  over the comparable 1998
periods. The increases in customs brokerage and other gross and net revenues for
the third quarter resulted from increased  brokerage  activity,  particularly in
the United  States,  coupled with  improvement in both customs duty drawback and
warehouse and distribution  operations.  The increases in customs  brokerage and
other gross and net  revenues  for the first nine months of 1999  resulted  from
inclusion of business from companies  acquired during the second quarter of 1998
and  increased  brokerage  activity  which  was  offset by lower  warehouse  and
distribution activity during the first half of 1999.

     Internal  operating expenses for the third quarter and first nine months of
1999 increased 8.2% to $113.9 million and 5.4% to $330.3 million,  respectively,
over the comparable 1998 periods. The increase in internal operating expense for
the third quarter was mainly  attributable  to operations in the Netherlands and
United States where personnel  expenses  increased to handle increased  volumes,
coupled  with  additional  expense  incurred in advance  preparation  of two new
logistics  contracts in Europe and with higher levels of management  information
systems expenses. The increase in internal operating expenses for the first nine
months of 1999 reflect the inclusion of expenses from companies acquired in 1998
combined with the factors previously mentioned for the third quarter.

     Consolidated  operating  profit  for the third  quarter  of 1999  increased
marginally  over the third quarter of 1998 to $19.1 million.  For the first nine
months of 1999,  consolidated  operating  profit decreased 3.3% to $49.7 million
compared to the first nine months of 1998.  The decline was mainly the result of
lower operating profit in the European region (See Note G).
<PAGE>

                                                                         Page 10


     Interest,  net for the third quarter and first nine months of 1999 declined
$.7 million and $1.6 million,  respectively,  compared to the same 1998 periods.
The declines resulted from higher interest expense  associated with the increase
in long-term debt and lower interest  income due to the reduced amount of excess
cash available for investment (See Note C).

     Other,  net for the third  quarter of 1999  increased  marginally  over the
third quarter of 1998. For the first nine months of 1999,  Other,  net increased
$7.5 million over the first nine months of 1998. The increase resulted primarily
from a $7.9  million  gain on the sale of  marketable  securities  (See Note D),
which was offset by a $.4 million  decline which was mainly  attributable to the
results from the Company's equity in the earnings of unconsolidated affiliates.

     The effective  income tax rate for the third quarter of 1999  increased .8%
to 37.0%  compared to the third  quarter of 1998.  In the third quarter of 1998,
the  effective  tax rate was  lowered  to 36.2% in order to reduce the full year
effective  income  tax  rate to  37.0%,  which  resulted  from a  change  in the
geographic  composition  of the  worldwide  earnings  to  countries  with  lower
effective income tax rates. For both the first nine months of 1999 and 1998, the
effective income tax rate was 37.0%.

     United States gross revenues for the third quarter and first nine months of
1999 increased $7.2 million (5.0%) to $152.1 million and decreased $26.3 million
(5.7%) to $438.4 million, respectively,  compared to the third quarter and first
nine months of 1998.  The increase in the third  quarter was comprised of a $2.1
million (1.9%) increase in airfreight  revenues,  a $1.3 million (7.4%) increase
in ocean  freight  revenues  and a $3.8  million  (24.8%)  increase  in  customs
brokerage and other revenues.  The decrease in the first nine months of 1999 was
comprised of a $34.2 million  (9.4%)  decrease in airfreight  revenues which was
partially  offset by a $.9 million (1.6%) increase in ocean freight revenues and
a $7.0 million (15.2%) increase in customs  brokerage  and other  revenues.  The
increase in  airfreight  revenues for the third quarter was primarily the result
of increased export shipments. The decrease in airfreight revenues for the first
nine months of 1999 was mainly attributable to soft airfreight exports and lower
selling  prices when  compared  with the 1998  period.  The  increases  in ocean
freight  revenues for both the third  quarter and first nine months of 1999 were
due to greater shipping volumes from new and existing  customers.  The  increase
in customs  brokerage  and other  revenues for the third  quarter  resulted from
increased brokerage activity with improvement in both the drawback and warehouse
and distribution operations. For the first nine months of 1999, the increase  in
customs  brokerage  and other  revenues  resulted  from an increase in brokerage
activity  and the  inclusion  of the  results of an  acquisition  which was made
subsequent to the second quarter of 1998.

     United States operating profit for the third quarter increased $2.0 million
(37.9%) to $7.1  million  compared to the third  quarter of 1998.  For the first
nine months of 1999,  operating  profit  increased $3.6 million (21.4%) to $20.4
million  compared  to the first nine months of 1998.  The  increase in the third
quarter  operating profit resulted from  improvement in all service  categories.
The  increase in  operating  profit for the first nine months of 1999 was mainly
the  result  of  improved  margins  during  the  first  six  months of 1999 from
improvement  in the  mix of  cargo  and  lower  transportation  costs,  and  the
inclusion of a business acquired subsequent to the second quarter of 1998.
<PAGE>


                                                                         Page 11


     Foreign gross  revenues for the third quarter and first nine months of 1999
increased  $27.4 million  (12.0%) to $255.4  million and $37.9 million (5.8%) to
$697.1  million,  respectively,  over the comparable  1998 periods.  The overall
effect of exchange  rates reduced  European gross revenues for the third quarter
and first nine months of 1999 by  approximately  $5.7 million and $8.7  million,
respectively;  Asia and  Others  gross  revenues  increased  approximately  $3.7
million for the third  quarter with  minimal  impact on the first nine months of
1999.  European  gross  revenues for the third  quarter  increased  $3.2 million
(2.6%) to $124.7  million.  The increase was comprised of a $2.1 million (13.3%)
increase in ocean freight  revenues,  a $1.0 million (8.9%)  increase in customs
brokerage  and other  revenues,  and $.1 million  (.1%)  increase in  airfreight
revenues.  For the first nine months of 1999,  European gross revenues  declined
$6.6 million  (1.9%) to $345.1  million  which was  comprised of a $12.0 million
(4.4%)  decrease in  airfreight  revenues  offset by increases in ocean  freight
revenues and customs  brokerage  and other  revenues of $3.9 million  (9.1%) and
$1.5 million  (4.6%),  respectively.  The decrease in airfreight  revenues which
occurred  during  the  first six  months  of 1999  resulted  from  lower  export
shipments  and selling  prices.  The  increase  in ocean  freight  revenues  was
attributable to greater  shipping volumes from new and existing  customers.  The
increase in customs  brokerage and other  revenues  resulted  from  increases in
brokerage  activity.  Asia and  Others  gross  revenues  for the  third  quarter
increased $24.2 million (22.7%) over the third quarter of 1998. The increase was
comprised of a $14.6 million  (19.3%)  increase in airfreight  revenues,  a $9.5
million  (50.6%)  increase in ocean  freight  revenues  and a $.1 million  (.3%)
increase in customs  brokerage and other revenues.  For the first nine months of
1999,  gross revenues  increased  $44.5 million (14.5%) over the comparable 1998
period.  The  increase  was  comprised of a $24.4  million  (10.9%)  increase in
airfreight revenues, an $18.3 million (36.7%) increase in ocean freight revenues
and a  $1.8 million (5.7%) increase in customs brokerage and other revenues. The
increases in airfreight and ocean freight  revenues were due to greater shipping
volumes from new and existing customers.

     Foreign  operating  profit  for the third  quarter of 1999  decreased  $1.5
million (11.1%) to $12.0 million  compared to the third quarter of 1998. For the
first nine months of 1999,  operating  profit  declined $5.3 million  (15.2%) to
$29.3 million  compared to the first nine months of 1998. The European  region's
operating  profit for the third quarter of 1999  decreased  $.6 million  (10.5%)
compared to the third  quarter of 1998.  For the first nine months of 1999,  the
European  region's  operating  profit decreased $6.6 million (39.9%) compared to
the first nine months of 1998.  The declines  were mainly the result of weakness
in airfreight  business and lower selling rates  throughout  the region with the
Company's   operations  in  The   Netherlands,   Belgium  and  France  reporting
significant  declines.  The Asia and Others  region's  operating  profit for the
third  quarter of 1999  decreased  $.9  million  (11.6%)  compared  to the third
quarter of 1998. For the first nine months of 1999, the Asia and Others region's
operating  profit  increased  $1.3 million  (7.4%) over the first nine months of
1998.  The decrease in the third  quarter was  attributable  to lower results in
South America, South Pacific and Canada.


<PAGE>

                                                                         Page 12


Liquidity and Capital Resources

     At September 30, 1999, cash and cash  equivalents  decreased  approximately
$13.4 million to $46.8 million from $60.2 million at December 31, 1998.  For the
first nine months of 1999,  the Company's  primary  sources of cash consisted of
$12.9 million from operating activities, $11.8 million from long-term borrowings
and $7.9 million from the sale of marketable securities,  while the primary uses
of cash  consisted of $25.1 million for capital  expenditures,  $9.7 million for
purchases of treasury stock,  $6.3 million for an acquisition,  and $6.4 million
for  the  payment  of  dividends.   Cash  from  operating  activities  decreased
approximately  $29.0  million  compared  to the first nine  months of 1998.  The
decline  resulted  mainly  from the  increase  in trade  receivables  due to the
increase in revenues during the third quarter of 1999.

     Capital expenditures for the first nine months of 1999 increased marginally
over the first nine months of 1998 to $25.1  million.  The capital  expenditures
were  primarily for  management  information  services and for  improvement  and
expansion of facilities.

     At September  30, 1999,  the Company had  available  for future  borrowings
approximately $63.8 million of its $75.0 million revolving credit facility.  The
Company  utilized   approximately   $11.2  million  under  this  facility.   The
utilization  consisted  of  $8.0  million  for  an  acquisition  (See  Note  F),
classified as long-term  debt,  and $3.2 million for letters of credit issued in
connection  with  insurance  programs.  Additionally,  various of the  Company's
foreign  subsidiaries   maintained  overdraft  facilities  with  foreign  banks,
aggregating approximately $27.5 million, of which approximately $7.9 million was
outstanding.

     The Company's  Board of Directors has  authorized the purchase from time to
time in the open market of up to 2,000,000 shares of the Company's common stock.
During the first  nine  months of 1999,  the  Company  purchased  557,500 of its
common shares at a cost of approximately $9.7 million. As of September 30, 1999,
the Company has purchased 1,635,000 of the 2,000,000 shares authorized at a cost
of approximately $31.7 million.  Additionally, in June 1999, the Company's Board
of Directors  authorized  an increase in the  quarterly  cash  dividend from six
cents ($.06) to seven cents ($.07) per share.

     Management  believes  that the  Company's  available  cash and  sources  of
credit,  together with expected future sources of credit and cash generated from
operations,  will be  sufficient  to satisfy its  anticipated  needs for working
capital, capital expenditures and dividends.


Year 2000

     In 1997,  the Company  undertook an  assessment  to determine the impact of
Year 2000  compliance  on its  computer  systems.  This  assessment  resulted in
preliminary  plans to prepare the Company for Year 2000  readiness.  These plans
included remediation,  upgrading or replacement of the Company's various systems
including those utilizing embedded technology. In accordance with Issue 96-14 of
the  Emerging Issues Task Force of  the  Financial  Accounting  Standards Board,
<PAGE>

                                                                         Page 13


which requires the costs  associated  with modifying  computer  software for the
Year 2000 to be expensed  as  incurred,  the  Company  has and will  continue to
expense the costs  incurred to remediate the applicable  systems.  For 1997, the
Company incurred  approximately  $1.0 million of expense and approximately  $3.6
million of expense in 1998.  Year 2000  expense  for 1999 is  anticipated  to be
approximately $2.5 million with approximately $1.9 million expended in the first
nine months of 1999.

     The  remediation of the Company's  systems was 100% completed by the end of
the first quarter of 1999.  Systems  testing was completed in the middle of July
1999. The systems testing verified  existing  functionality and system operation
before, during and after January 1, 2000. The testing placed particular emphasis
on the high risk dates of September 9, 1999, December 31, 1999, January 1, 2000,
February 28, 2000, February 29, 2000, March 1, 2000, February 28, 2001 and March
1, 2001. The Company believes that the  remediation,  upgrade and replacement of
its systems have been materially  completed in July 1999;  however,  the Company
intends to continue testing its systems for the remainder of 1999.

     In  connection  with this  effort,  the Company has  initiated a program to
communicate with its many customers and suppliers to determine the level of Year
2000  readiness of these  entities  and the  potential  impact on the  Company's
operations  if these  entities'  computer  systems are not ready.  This  program
encompasses  contacting  the  Company's  major  customers  and  its  significant
suppliers - airlines,  steamship  lines,  trucking  companies,  handling agents,
customs authorities and other governmental agencies and financial  institutions.
During the third quarter and early fourth quarter of 1998,  questionnaires  were
sent to the Company's significant suppliers. As of October 31, 1999, the Company
surveyed approximately 1,400 of its significant suppliers,  approximately 97% of
those  suppliers  surveyed have advised the Company that they are currently Year
2000  compliant  or expect to be  compliant.  The  Company has  participated  in
evaluation programs  established by its major customers for Year 2000 readiness.
These customers' programs include  communication by the Company,  the customers'
readiness  for  Year  2000,   including  customers'  internal  systems  and  the
evaluation of their third party  suppliers and customers.  Through the Company's
participation in the customer  evaluation programs it appears that the Company's
major customers are prepared for Year 2000.

     The Company has identified those suppliers who have either not responded to
the  questionnaires  or will not be  compliant  and it will  either  discontinue
utilizing those suppliers or minimize usage of these suppliers in December 1999.
Additionally,  during the third quarter of 1999, detailed contingency plans were
formulated  within each country where the Company  operates to minimize the risk
of significant  service  disruptions  due to a Year 2000 failure by supplier(s).
The contingency  plans were communicated to the Company's major customers in the
third  quarter  and  early  fourth  quarter.  Contingency  plans  will  include:
redeployment of existing personnel and employing additional personnel to process
transactions that were automated and may require manual intervention due to Year
2000  non-compliance.   Selection  of  alternative  airlines,  steamship  lines,
trucking  companies  together with  customer  notification  of possible  service
disruptions  in markets where  carriers or customs  authorities  may not be Year
2000 compliant.

     The Company does not warrant as true and accurate any assurance it receives
from  customers and suppliers  regarding the  compliance of their  systems.  The
Company relies entirely on its  transportation  suppliers,  airlines,  steamship
lines  and  independent   trucking  firms  to  transport  its  customers'  cargo
throughout  its  network. To the  degree  that the  operations of any  number of
<PAGE>

                                                                         Page 14


transportation providers are adversely affected by Year 2000, disruptions in the
Company's  business  may occur which may have a material  adverse  effect on the
Company's  operations.  Management believes that Year 2000 - related matters for
the Company's  internal  systems will not have a material  adverse effect on the
Company's  operations or financial  position;  however,  the ultimate  degree to
which the Company's systems may be affected by Year 2000 is uncertain.


New Accounting Standard

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities," which is
required to be adopted in years  beginning  after June 15, 2000.  The  Statement
establishes   accounting  and  financial   reporting  standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and for hedging activities.  The Company does not anticipate that the
adoption of this Statement will have a material  impact on either its results of
operations or financial position.


PART II - OTHER INFORMATION


Item 1. - Legal Proceedings
The Company is involved in various legal proceedings generally incidental to its
business. While the result of any litigation contains an element of uncertainty,
the  Company  presently  believes  that the  outcome  of any  known  pending  or
threatened legal  proceeding or claim, or all of them combined,  will not have a
material  adverse effect on its results of operations or consolidated  financial
position.


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

    a) Exhibits:

    Exhibit 11 - Computation of Earnings Per Common Share.

    Exhibit 27 - Financial Data Schedule.


    b) Reports on Form 8-K:

    None.

<PAGE>

                                                                         Page 15


                                   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.


                                         Air Express International Corporation
                                                      (Registrant)




Date: November 12, 1999                 /s/           Dennis M. Dolan
                                                      Dennis M. Dolan
                                               Executive Vice President and
                                                 Chief Financial Officer
                                               (Principal Financial Officer)




Date: November 12, 1999                 /s/         Martin J. McDonnell
                                                    Martin J. McDonnell
                                                Vice President - Controller
                                              (Principal Accounting Officer)