<PAGE>


                       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, 1997

                         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 3 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  12, 1997 was
34,526,143 (Net of 132,388 Treasury Shares).


<PAGE>


                     AIR EXPRESS INTERNATIONAL CORPORATION
                   September 1997 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, 1997 and December 31, 1996............      2

                    Condensed Consolidated Statements of Operations -
                    three months and nine months ended September 30, 1997
                    and 1996............................................      3

                    Consolidated Statements of Cash Flows -
                    nine months ended September 30, 1997 and 1996.......      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..............................................     11

Item 6.  Exhibits and Reports on Form 8-K...............................     11


<PAGE>
<TABLE>
                                                                          Page 2


             AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)
                                                    Sept 30, 1997   Dec 31, 1996
                                                      (Unaudited)
Assets
<S>                                                       <C>           <C>    
Current Assets:
   Cash and cash equivalents ......................... $  64,346     $  46,516
   Accounts receivable, (less allowance for
    doubtful accounts of $4,302 and $4,721) ..........   372,355       346,323
   Other current assets ..............................     7,460         6,295
         Total current assets ........................   444,161       399,134
Investment in unconsolidated affiliates ..............    18,821        13,991
Restricted funds .....................................    18,692          --
Property, plant and equipment (less accumulated
 depreciation and amortization of $55,703
 and $53,455) ........................................    59,453        61,112
Deposits and other assets ............................    16,758        15,226
Goodwill (less accumulated amortization
 of $11,982 and $10,673) .............................    85,684        91,866
         Total assets ................................ $ 643,569     $ 581,329

Liabilities and stockholders' investment

Current Liabilities:
   Current portion of long-term debt ................. $   3,010     $   3,915
   Bank overdrafts payable ...........................     1,580         2,058
   Transportation payables ...........................   192,935       166,686
   Accounts payable ..................................    51,562        50,201
   Accrued liabilities ...............................    62,066        61,347
   Income taxes payable ..............................     8,735        14,691
         Total current liabilities ...................   319,888       298,898
   Long-term debt ....................................    32,914        16,616
   Other liabilities .................................     6,454         6,729
         Total liabilities ...........................   359,256       322,243

Stockholders' Investment:
   Capital stock-
   Preferred (authorized 1,000,000 shares,
    none outstanding) ................................      --            --
   Common, $.01 par value (authorized 40,000,000
    shares, issued 34,617,938 and 34,179,227 shares ..       346           342
   Capital surplus ...................................   141,988       137,060
   Cumulative translation adjustments ................   (22,776)      (15,633)
   Retained earnings .................................   168,106       137,989
                                                         287,664       259,758

Less: 131,451 and 40,958 shares of treasury stock,
       at cost .......................................    (3,351)         (672)
   Total stockholders' investment ....................   284,313       259,086
   Total liabilities and stockholders' investment .... $ 643,569     $ 581,329
</TABLE>

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

<PAGE>
<TABLE>
                                                                          Page 3

             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,
                                1997           1996          1997         1996

<S>                           <C>          <C>          <C>          <C>       
Revenues ..................   $  395,405   $  340,928   $1,133,151   $  956,375

Operating expenses:
  Transportation ..........      270,401      228,614      773,450      645,185
  Terminal ................       68,008       61,317      196,521      169,458
  Selling, general and
   administrative .........       37,258       35,457      111,744      100,411
Operating profit ..........       19,738       15,540       51,436       41,321

Other income (expense):
  Interest, net ...........          375          258          853       (1,557)
  Other, net ..............        1,179        1,060        3,531        3,087
                                   1,554        1,318        4,384        1,530

Income before provision
 for income taxes .........       21,292       16,858       55,820       42,851

Provision for income taxes         7,929        6,232       20,876       16,369
Net income ................   $   13,363   $   10,626   $   34,944   $   26,482

Income per common share:
    Primary ...............   $      .38   $      .32   $     1.00   $      .85
    Fully diluted .........   $      .38   $      .31   $      .99   $      .81

Weighted average number of 
  common shares (000's):
    Primary ...............       35,446       33,537       35,034       31,097
    Fully diluted .........       35,628       34,685       35,354       34,611

</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.
<PAGE>
<TABLE>
                                                                          Page 4

             AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996


(Dollars in thousands)
                                                           1997           1996
<S>                                                       <C>          <C>     
Cash flows from operating activities:
    Net income .........................................  $ 34,944     $ 26,482
    Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization ....................    9,868        7,214
       Amortization of goodwill .........................    1,935        1,754
       Amortization of bond discount ....................      --           115
       Deferred income taxes ............................      (85)         357
       Equity in earnings of unconsolidated affiliates ..   (1,834)        (983)
       Losses (gains) on sales of assets ................       12         (129)

    Changes in assets and liabilities, net of
        business acquisitions:
      (Increase) in accounts receivable, net ............  (31,143)     (16,079)
      (Increase) decrease in other current assets .......     (557)          55
      (Increase) decrease in other assets ...............   (1,456)       1,764
       Increase (decrease) in transportation payables ...   28,357      (12,744)
       Increase (decrease) in accounts payable ..........    2,620       (5,902)
       Increase in accrued liabilities ..................      816        4,732
      (Decrease) increase in income taxes payable .......   (5,229)       1,979
      (Decrease) in other liabilities ...................      (75)      (1,181)
           Total adjustments ............................    3,229      (19,048)

        Net cash provided by operating activities .......   38,173        7,434

Cash flows from investing activities:
      Business acquisitions, net of cash acquired .......       --       (7,386)
      Restricted funds ..................................  (18,692)          --
      Other investing activities ........................      700       (1,320)
      Proceeds from sales of assets .....................      624          381
      Capital expenditures ..............................  (12,038)      (8,959)
      Investment in unconsolidated affiliates ...........   (3,776)         (71)

        Net cash used in investing activities ...........  (33,182)     (17,355)

Cash flows from financing activities:
    Net (repayments) borrowings in bank overdrafts
     payable ............................................     (418)         627
    Additions to long-term debt .........................   19,055          290
    Payment of long-term debt ...........................   (1,564)      (1,297)
    Issuance of common stock ............................    4,932        1,479
    Payment of cash dividends ...........................   (4,466)      (3,218)
    Purchase of treasury stock ..........................   (2,679)         (55)

        Net cash provided (used) by financing
         activities .....................................   14,860       (2,174)

Effect of foreign currency exchange rates on cash .......   (2,021)        (907)

Net increase (decrease) in cash and cash equivalents ....   17,830      (13,002)

Cash and cash equivalents at beginning of period ........   46,516       54,463

Cash and cash equivalents at end of period .............. $ 64,346     $ 41,461

</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, 1997,  the  consolidated
     statements of operations for the three-month  and nine-month  periods ended
     September 30, 1997 and 1996, and the consolidated  statements of cash flows
     for the nine-month  periods ended September 30, 1997 and 1996 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, 1996 financial statements were reclassified to conform to the
     classification of September 30, 1997 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,
     1996.

     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  and nine  month
     periods  ended  September  30, 1997 are not  necessarily  indicative of the
     results of operations expected for the full year ending December 31, 1997.


B.   Interest, net was as follows:
<TABLE>
                                    Three Months Ended       Nine Months Ended
                                       September 30,            September 30,
                                    1997          1996        1997        1996
<S>                               <C>           <C>           <C>         <C>
       Interest expense ........  $  (310)      $  (355)    $(1,089)    $(3,367)
       Interest income .........      685           613       1,942       1,810
                                  $   375       $   258     $   853     $(1,557)

</TABLE>

C.    Other, net was as follows:
<TABLE>
                                    Three Months Ended       Nine Months Ended
                                       September 30,            September 30,
                                    1997          1996        1997        1996
<S>                               <C>           <C>           <C>         <C>
        Equity in earnings
         of unconsolidated
         affiliates ............. $   986       $   600     $ 2,603     $ 1,780
        Foreign exchange gains ..     171           431         940       1,178
        Other ...................      22            29         (12)        129
                                  $ 1,179       $ 1,060     $ 3,531     $ 3,087
</TABLE>

<PAGE>

                                                                          Page 6

D.    Supplemental disclosures of cash flow information:
<TABLE>
                                    Three Months Ended       Nine Months Ended
                                      September 30,             September 30,
                                    1997         1996        1997          1996
<S>                                <C>           <C>          <C>          <C>
        Interest and income
         taxes paid:
        Interest ...............  $   101     $   216      $    652     $ 2,776
        Income taxes ...........    5,014       3,703        19,458       9,825
                                  $ 5,115     $ 3,919      $ 20,110     $12,601
</TABLE>


     Non-cash investing and financing activities:

     On July 8,  1996,  as a  result  of  conversions  of the  6.0%  Convertible
     Subordinated Debentures ("Debentures"), the Company issued 4,936,134 shares
     of its Common Stock valued at approximately $74.5 million.

E.   Common Stock Split:

     On June 19, 1997, the Company's Board of Directors declared a three-for-two
     split  of the  Company's  Common  Stock,  payable  in the  form  of a stock
     dividend.  The  additional  shares  were  distributed  on July 25,  1997 to
     shareholders  of record on July 11,  1997.  Accordingly,  all share and per
     share  information  throughout the consolidated  financial  statements have
     been restated to reflect this split.

F.   Long-Term Debt:

     The Company  entered into a ground lease  agreement dated July 1, 1997 with
     the Port  Authority  of New  York/New  Jersey in  conjunction  with a lease
     development  agreement  entered  into  with  the New York  City  Industrial
     Development  Agency for the construction of a 135,000 square foot air cargo
     facility terminal building at John F. Kennedy  International  Airport.  The
     Company  will  finance the  development  in part  through  the  issuance of
     tax-exempt New York City  Industrial  Development  Agency Special  Facility
     Revenue Bonds (1997 Air Express International  Corporation Project), Series
     1997, in aggregate  principal amount of $19.0 million due July 1, 2024 (the
     "Series 1997 Bonds").

     Interest shall initially be payable at a weekly rate set by the Remarketing
     Agent using the minimum rate  necessary (as  determined by the  Remarketing
     Agent based on the examination of tax-exempt  obligations comparable to the
     Series  1997 Bonds  known by the  Remarketing  Agent to have been priced or
     traded under  then-prevailing  market conditions) for the Remarketing Agent
     to sell the Series 1997 Bonds on the effective  date of such weekly rate at
     a price equal to 100% of their principal  amount (without regard to accrued
     interest).  The  Company  may  from  time  to time  change  the  method  of
     determining the interest rate on the Series 1997 Bonds to a daily,  weekly,
     
<PAGE>
                                                                          Page 7

     commercial  paper or long-term  interest rate. If the appropriate  interest
     rate is not or cannot be  determined  for  whatever  reason,  the method of
     determining  interest on the Series 1997 Bonds shall be equal to the Public
     Securities  Association  Municipal  Index or such other  weekly  high-grade
     index  comprised  of  seven-day,  tax-exempt  variable  rate  demand  notes
     produced by Municipal Market Data, Inc. In no event shall the interest rate
     on the Series 1997 Bonds exceed the maximum annual interest rate of 15.0%.

     The Series 1997 Bonds are fully secured by an irrevocable direct-pay letter
     of credit issued by a U.S.  Bank with a termination  date of July 16, 2002.
     The Company is obligated to reimburse the U.S. Bank for amounts drawn under
     the letter of credit in accordance with a reimbursement  agreement  between
     the Company and the U.S. Bank (the "Reimbursement  Agreement").  The Series
     1997  Bonds may be  redeemed  in whole or in part at the  direction  of the
     Company.  Among  the  various  covenants  contained  in  the  Reimbursement
     Agreement,  the Company is to maintain  certain  ratios and  balances as to
     minimum  stockholders'  investment,  debt to  stockholders'  investment and
     fixed charge coverage.  The Company is in compliance with all conditions of
     the Reimbursement Agreement.

G.   Restricted Funds:

     The  restricted  funds  consist of cash and  investments  held in trust and
     committed for the construction of an air cargo facility  terminal  building
     in accordance  with the Company's bond indenture (See Note F).  Investments
     are  stated  at  cost  as it is the  intent  of the  Company  to  hold  the
     investments  until maturity.  The funds are invested in compliance with the
     Company's bond indenture which restricts the type,  quality and maturity of
     investments.

H.   Subsequent Event:

     During  October  1997,  the  Company  sold its 60.0%  interest in a foreign
     subsidiary for cash of approximately $3.2 million.  The sale will result in
     a nonrecurring  pre-tax gain of approximately $1.9 million, or $1.5 million
     after tax,  which will be included in the fourth  quarter  1997  results of
     operations.

<PAGE>
                                                                          Page 8

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


Results of Operations

     The Company  considers  its total  business to  represent 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         Nine Months
                                       Ended September 30,   Ended September 30,
                                          1997      1996      1997       1996
<S>                                      <C>      <C>        <C>        <C>
Gross Revenues:
  Airfreight ........................... $305.9   $257.5     $  875.2   $733.5
  Ocean freight ........................   54.3     50.4        152.0    139.9
  Customs brokerage and other ..........   35.2     33.0        106.0     83.0
    Total Gross Revenues ............... $395.4   $340.9     $1,133.2   $956.4

Net Revenues:
  Airfreight ........................... $ 79.7   $ 69.4     $  226.2   $198.9
  Ocean freight ........................   15.4     13.3         43.9     37.8
  Customs brokerage and other ..........   29.9     29.6         89.6     74.5
    Total Net Revenues .................  125.0    112.3        359.7    311.2

Internal Operating Expenses:
  Terminal .............................   68.0     61.3        196.5    169.5
  Selling, general and administrative...   37.3     35.5        111.8    100.4
    Total Internal Operating Expenses...  105.3     96.8        308.3    269.9

Operating Profit ....................... $ 19.7   $ 15.5     $   51.4   $ 41.3
</TABLE>

     Consolidated  gross  revenues  for the third  quarter and nine months ended
September  30,  1997  increased  16.0% to $395.4  million  and 18.5% to $1,133.2
million,  respectively,  over the comparable periods in 1996. Additionally,  the
increase in gross revenues for the quarter and nine months included the negative
effect of approximately $15.3 million and $26.0 million, respectively, resulting
from 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 1997  increased  11.3% to $125.0  million
and 15.6% to $359.7 million, respectively, over the comparable 1996 periods.

     Gross  airfreight  revenues for the third  quarter and first nine months of
1997  increased   18.8%  to  $305.9   million  and  19.3%  to  $875.2   million,
respectively,  over the comparable 1996 periods. Airfreight net revenues for the
third quarter and first nine months of 1997 increased 14.8% to $79.7 million and
13.7% to $226.2 million,  respectively,  over the comparable  1996 periods.  The
increases  in gross  and net  revenues  from  airfreight  services  for both the

<PAGE>
                                                                          Page 9


quarter and nine months were  attributable  to increases  in  shipments  and the
total weight of cargo shipped.  For the quarter,  shipments  increased 18.8% and
the weight of cargo shipped  increased 15.0% over the third quarter of 1996. The
significant  increase  in the number of  shipments  in the  quarter was due to a
large increase in United States  domestic  shipments (the United States domestic
business  accounted  for  only  3.0% of  consolidated  revenues  for  the  third
quarter). Excluding United States domestic shipments, the increase in airfreight
shipments  was  8.0%  for the  quarter.  For the nine  month  period,  shipments
increased  15.3% and the weight of cargo shipped  increased 17.7% over the first
nine months of 1996.  The gross margin (net  revenues as a  percentage  of gross
revenues) for the third quarter and first nine months of 1997 decreased .9% from
27.0% to 26.1% and 1.3% from 27.1% to 25.8%, respectively,  when compared to the
comparable  1996  periods.  The  decreases  were  mainly due to  reduced  yields
associated with the increases in the weight of cargo shipped.

     Ocean freight gross revenues for the third quarter and first nine months of
1997 increased 7.7% to $54.3 million and 8.6% to $152.0  million,  respectively,
over the  comparable  1996  periods.  Ocean  freight net  revenues for the third
quarter and first nine months of 1997 increased 15.8% to $15.4 million and 16.1%
to $43.9 million, respectively,  over the comparable 1996 periods. The increases
in both the gross and net ocean freight revenues were due to increased  shipping
volumes from existing  customers and the Company's  continuing  penetration into
the ocean freight market.

     Customs  brokerage and other gross  revenues for both the third quarter and
first nine months of 1997  increased  6.7% to $35.2  million and 27.7% to $106.0
million,  respectively,  over the comparable 1996 periods. Customs brokerage and
other net revenues for the third quarter and first nine months of 1997 increased
1.0% to  $29.9  million  and  20.3%  to $89.6  million,  respectively,  over the
comparable 1996 periods.  The slight increase in customs brokerage and other net
revenues in the third quarter  reflected the increase in foreign  activity which
was offset by a decrease in the United States. The decrease in the United States
was due to a decline in the Canadian  border  activity.  The  increases  for the
first nine months of 1997 for both the gross and net customs brokerage and other
revenues were mainly attributable to the Company's  continuing efforts to expand
its customs brokerage activities to existing and new customers.

     Internal  operating  expenses  increased $8.5 million or 8.8% for the third
quarter  and $38.4  million or 14.2% for the first nine  months of 1997 over the
comparable  periods in 1996.  These  increases were mainly  attributable  to the
additional expenses incurred in connection with greater shipping volumes.

     Operating  profit for the third quarter of 1997  increased  $4.2 million or
27.1%  over the  third  quarter  of 1996.  For the  first  nine  months of 1997,
operating  profit  increased  $10.1  million or 24.5% over the  comparable  1996
period.

     Interest  expense for the third quarter of 1997 was  marginally  lower than
the comparable 1996 period. For the first nine months of 1997,  interest expense
decreased  approximately  $2.3  million  when  compared to the  comparable  1996
period.  The decrease was due primarily to the  elimination of interest  expense
associated  with the  Debentures  (See Note D) which were converted on or before
July 8, 1996.

<PAGE>

                                                                         Page 10

     The effective income tax rate for the third quarter of 1997 was marginally
higher than the comparable  1996 period.  For the first nine months of 1997, the
effective  income tax rate decreased to 37.4% from 38.2% for the comparable 1996
period.  The  decrease was largely the result of a shift in the mix of worldwide
earnings  to  countries  with lower  effective  income  tax rates,  along with a
reduction  in the total of  nondeductible  expenses as a  percentage  of pre-tax
income.

     During  October  1997,  the  Company  sold its 60.0%  interest in a foreign
subsidiary  (See Note H). As a result,  the Company  will record a  nonrecurring
pre-tax gain of  approximately  $1.9 million,  or $1.5 million after tax, in the
fourth quarter of 1997.

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards  No. 128,  Earnings Per Share ("FASB  128"),
which  establishes  standards for computing and  presenting  earnings per share.
FASB 128 will be effective for periods ending after December 15, 1997.  Adoption
of this  accounting  standard is not expected to have a material impact upon the
Company's  earnings  per  share   computations   assuming  the  current  capital
structure.


Liquidity and Capital Resources

     At September 30, 1997, cash and cash  equivalents  increased  approximately
$17.8 million to $64.3 million from $46.5 million at December 31, 1996.  For the
first  nine  months  of  1997,   the  Company's   primary  source  of  cash  was
approximately  $38.2 million from operating  activities,  while its primary uses
were for: capital  expenditures of $12.0 million,  investment in  unconsolidated
affiliates  of $3.8 million and  dividend  payments of $4.5  million.  Cash flow
provided by operating activities increased  approximately $30.7 million over the
first  nine  months  of  1996.  This  increase  was  impacted  by  the  on-going
integration of prior years'  acquisitions  which has resulted in improvements in
the management of working capital. Working capital increased approximately $24.0
million in the nine months to $124.3 million. The increase was mainly due to the
increase in profits.

     Capital expenditures increased approximately $3.0 million from $9.0 million
for the nine months of 1996 to $12.0  million  for the nine months of 1997.  The
capital  expenditures were primarily for improvement and expansion of facilities
and management information services.

     At September  30, 1997,  the Company had  available  for future  borrowings
approximately $71.8 million of its $75.0 million revolving credit facility.  The
Company  utilized  approximately  $3.2 million  under this  facility  mainly for
letters  of  credit   issued  in  connection   with  its   insurance   programs.
Additionally, various of the Company's foreign subsidiaries maintained overdraft
facilities with foreign banks, aggregating approximately $18.1 million, of which
approximately $1.6 million was outstanding.

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                                                                         Page 11

     In July 1997, with the issuance of the Industrial Development Revenue Bonds
(See  Note  F),  the  Company's  long-term  debt  increased  $19.0  million  and
correspondingly  its debt to equity ratio (total  long-term debt as a percentage
of stockholders' investment) was 12.6% at September 30, 1997 as compared to 7.9%
at December 31, 1996.

     In June 1997,  the Company's  Board of Directors  authorized an increase in
the  quarterly  cash  dividend  from four cents  ($.04) to five cents ($.05) 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.


PART II - OTHER INFORMATION


Item 1. - Legal  Proceedings 
The Company  believes that there are no legal  proceedings,  other than ordinary
routine  litigation  incidental  to the  business of the  Company,  to which the
Company or any of its subsidiaries is a party. Management is of the opinion that
the ultimate outcome of existing legal proceedings, if adverse, would not have a
material effect on the Company's 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.

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                                                                         Page 12
                                   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  14, 1997            /s/              Dennis M. Dolan
                                                       Dennis M. Dolan
                                                      Vice President and
                                                   Chief Financial Officer
                                                (Principal Financial Officer)


Date:   November 14, 1997            /s/               Walter L. McMaster
                                                       Walter L. McMaster
                                                 Vice President - Controller
                                                (Principal Accounting Officer)