<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 March 31, 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 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 May 10,  1999 was
33,403,494 (Net of 1,807,502 Treasury Shares).


<PAGE>
                      AIR EXPRESS INTERNATIONAL CORPORATION
                      March 1999 Form 10-Q Quarterly Report

                                Table of Contents


                         Part I - Financial Information
                                                                         Page

Item 1.  Financial Statements

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

                    Condensed Consolidated Statements of Operations -
                    Three Months ended March 31, 1999 and 1998...........  3

                    Consolidated Statements of Cash Flows -
                    Three Months ended March 31, 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..............................................  12

Item 6.  Exhibits and Reports on Form 8-K...............................  12

<PAGE>

                                                                          Page 2
<TABLE>


             AIR EXPRESS INTERNATIONAL CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

                                                   March 31,1999    Dec 31,1998
                                                   (Unaudited)
Assets
<S>                                                     <C>          <C>      
Current Assets:
   Cash and cash equivalents .......................... $  63,312    $  60,246
   Accounts receivable (less allowance for
    doubtful accounts of $5,218 and $5,112) ...........   356,859      366,417
   Marketable securities ..............................      --          7,188
   Other current assets ...............................     4,961        7,096
         Total current assets .........................   425,132      440,947
Investment in unconsolidated affiliates ...............    31,145       29,507
Restricted funds ......................................     1,188        2,126
Property, plant and equipment (less accumulated
 depreciation of $70,914 and $70,515) .................    82,713       81,178
Deposits and other assets .............................    15,753       13,937
Goodwill (less accumulated amortization of
 $15,694 and $15,331) .................................   104,593      107,783
         Total assets ................................. $ 660,524    $ 675,478

Liabilities and stockholders' investment

Current Liabilities:
   Current portion of long-term debt .................. $   4,044    $   4,337
   Bank overdrafts payable ............................     2,561        4,432
   Transportation payables ............................   166,056      157,763
   Accounts payable ...................................    62,353       66,023
   Accrued liabilities ................................    62,202       72,780
   Income taxes payable ...............................    10,851        6,644
         Total current liabilities ....................   308,067      311,979
   Long-term debt .....................................    41,672       42,578
   Other liabilities ..................................     6,906       10,050
         Total liabilities ............................   356,645      364,607

Stockholders' Investment:
   Capital stock-
   Preferred (authorized 1,000,000 shares, none 
     outstanding) .....................................       --           --
   Common, $.01 par value (authorized 100,000,000 
     shares, issued 35,195,996 and 35,028,154 shares) .       352          350
   Additional paid-in capital .........................   149,577      147,544
   Accumulative other comprehensive income ............   (38,537)     (28,192)
   Retained earnings ..................................   228,384      216,763
                                                          339,776      336,465
Less: 1,807,502 and 1,217,586 shares of treasury 
      stock, at cost...................................   (35,897)     (25,594)
   Total stockholders' investment .....................   303,879      310,871
   Total liabilities and stockholders' investment ..... $ 660,524    $ 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
                                                                March 31,       
                                                           1999            1998 

<S>                                                      <C>            <C>     
Revenues .........................................       $354,684       $372,376

Operating expenses:
 Transportation ..................................        234,306        254,523
 Terminal ........................................         69,520         67,126
 Selling, general and administrative .............         38,954         37,571

Operating profit .................................         11,904         13,156

Other income:
 Interest, net ...................................             76            357
 Other, net ......................................          9,645          2,055
                                                            9,721          2,412

Income before provision for income taxes .........         21,625         15,568

Provision for income taxes .......................          8,001          5,838
Net income .......................................       $ 13,624       $  9,730

Income per common share:
     Basic .......................................       $    .40       $    .28
     Diluted .....................................       $    .40       $    .28

Weighted average number
  of common shares:
     Basic .......................................         33,690         34,639
     Diluted .....................................         33,892         35,381

</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 THREE MONTHS ENDED MARCH 31, 1999 AND 1998



(Dollars in thousands)
 
                                                             1999         1998  
Cash flows from operating activities:
<S>                                                        <C>         <C>      
   Net Income ..........................................   $ 13,624    $  9,730
   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation expense ............................      4,118       3,436
       Amortization of goodwill ........................        766         622
       Deferred income taxes ...........................       (948)     (1,493)
       Equity in earnings of unconsolidated affiliates .       (536)     (1,069)
      (Gains) on sales of assets, net ..................        (50)         (8)
      (Gain) on sale of marketable securities ..........     (7,852)       --
   Changes in assets and liabilities:
      (Increase) decrease in accounts receivable, net ..       (708)      2,117
       Decrease in other current assets ................      1,906         862
      (Increase) in other assets .......................       (681)       (619)
       Increase (decrease) in transportation payables ..     11,764        (536)
      (Decrease) increase in accounts payable ..........       (533)      1,939
      (Decrease) in accrued liabilities ................     (9,072)     (2,429)
       Increase (decrease) in income taxes payable .....      4,932      (1,498)
       Increase in other liabilities ...................         68          78
         Total adjustments .............................      3,174       1,402

       Net cash provided by operating activities .......     16,798      11,132

Cash flows from investing activities:
    Restricted funds ...................................        938       3,808
    Proceeds from sales of assets ......................         84         283
    Proceeds from sale of marketable securities ........      7,877        --
    Capital expenditures ...............................     (6,903)     (6,787)
    Investment in unconsolidated affiliates ............     (1,676)     (7,040)

       Net cash provided (used) by investing activities         320      (9,736)

Cash flows from financing activities:
    Net repayments in bank overdrafts payable ..........     (1,679)       (366)
    Additions to long-term debt ........................        992        --
    Payment of long-term debt ..........................       (787)        (39)
    Issuance of common stock ...........................        905       1,847
    Payment of cash dividends ..........................     (2,029)     (1,728)
    Purchase of treasury stock .........................     (9,692)        (96)

       Net cash used by financing activities ...........    (12,290)       (382)

Effect of foreign currency exchange rates on cash ......     (1,762)       (223)

Net increase in cash and cash equivalents ..............      3,066         791

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

Cash and cash equivalents at end of period .............   $ 63,312    $ 68,367
</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  March  31,  1999,  the  consolidated
     statements of operations for the  three-month  periods ended March 31, 1999
     and 1998, and the consolidated statements of cash flows for the three-month
     periods ended March 31, 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  March  31,  1998
     financial  statements were reclassified to conform to the classification of
     March 31, 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  period ended
     March 31, 1999 are not necessarily  indicative of the results of operations
     expected for the full 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
                                                            March 31,
                                                    1999              1998  

<S>                                                <C>                <C>   
          Interest expense ................        $(610)             $(323)
          Interest income .................          686                680
                                                   $  76              $ 357

</TABLE>


<PAGE>

                                                                         Page 6

D.    Other, net was as follows:
<TABLE>
                                                             Three Months Ended
                                                                  March 31,       
                                                             1999         1998    

<S>                                                        <C>            <C>   
          Gain on the sale of marketable
           securities ...............................      $7,852         $   --
          Equity in earnings of unconsolidated
            affiliates ..............................       1,143          1,574
          Foreign exchange gains ....................         600            473
          Other .....................................          50              8
                                                           $9,645         $2,055
</TABLE>


E.    Comprehensive income:
<TABLE>
                                                            Three Months Ended
                                                                  March 31,     
                                                             1999         1998 

<S>                                                        <C>         <C>     
          Net income .................................     $ 13,624    $  9,730
          Other comprehensive income, net of tax:

          Translation of foreign currency
            financial statements (income tax 
            benefit of $387 and $138) ................       (6,218)     (1,723)

          Reclassification adjustment for gain
            on sale of marketable securities
            included in net income(income tax 
            expense of $3,061) .......................       (4,127)       --

          Comprehensive income .......................     $  3,279    $  8,007

</TABLE>

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

                                                             Three Months Ended
                                                                   March 31,    
                                                             1999         1998 
<S>                                                        <C>          <C>    
          Interest and income taxes paid:
          Interest....................................     $     329    $   222
          Income taxes................................         4,410      4,465
                                                           $   4,739    $ 4,687
</TABLE>


<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
                                                                March 31,      
                                                        1999             1998  

<S>                                                    <C>              <C>     
Revenues by service:

Airfreight ...................................         $268,276         $291,530
Ocean freight ................................           49,252           43,155
Customs brokerage & other ....................           37,156           37,691
Total revenues ...............................         $354,684         $372,376

Revenues by geographic area:

U.S.A ........................................         $141,395         $159,481

 United Kingdom ..............................           34,956           39,279
 Other .......................................           74,129           75,727
Europe .......................................          109,085          115,006
Asia and Others ..............................          104,204           97,889
  Total foreign ..............................          213,289          212,895

Total revenues ...............................         $354,684         $372,376

Operating profit by
 geographic area:

U.S.A ........................................         $  4,819         $  2,814

Europe .......................................            1,656            5,660
Asia and Others ..............................            5,429            4,682
  Total foreign ..............................            7,085           10,342

Total operating profit .......................         $ 11,904         $ 13,156

</TABLE>

<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
                                                                March 31,      
                                                        1999            1998 
<S>                                                    <C>           <C>     
Gross Revenues:
  Airfreight .......................................   $  268.3      $  291.5
  Ocean freight ....................................       49.3          43.2
  Customs brokerage and other ......................       37.1          37.7
    Total Gross Revenues ...........................   $  354.7      $  372.4

Net Revenues:
  Airfreight .......................................   $   76.0      $   74.6
  Ocean freight ....................................       15.4          12.5
  Customs brokerage and other ......................       29.0          30.8
    Total Net Revenues .............................      120.4         117.9

Internal Operating Expenses:
  Terminal .........................................       69.5          67.1
  Selling, general and administrative ..............       39.0          37.6
    Total Internal Operating Expenses ..............      108.5         104.7

Operating Profit ...................................   $   11.9      $   13.2
</TABLE>


     Consolidated  gross revenues for the first quarter of 1999 decreased  $17.7
million  (4.8%) to $354.7  million  compared  with the  first  quarter  of 1998.
Consolidated  net  revenues  increased  $2.5  million  (2.1%) to $120.4  million
compared  to the first  quarter of 1998.  The  decrease  in gross  revenues  was
comprised  of a $23.2  million  (8.0%)  decline in  airfreight  revenues,  a $.6
million  (1.6%)  decline in customs  brokerage  and other  revenues,  and a $6.1
million (14.1%) increase in ocean freight revenues. The increase in net revenues
was the result of increases in airfreight and ocean freight net revenues of $1.4
million (1.9%) and $2.9 million (23.2%), respectively,  offset by a $1.8 million
(5.8%)  decline in customs  brokerage  and other net  revenues.  The decrease in
airfreight  gross revenues  resulted from reduced  shipping  volumes and pricing
pressures in certain markets.  The increase in airfreight net revenues  resulted
from   improvement   in  both  the  mix  and   routing  of  cargo  and  cost  of
transportation.  As a result,  the  airfreight  gross margin (net  revenues as a
percentage of gross  revenues)  increased 2.7% over the first quarter of 1998 to
28.3%.   The  increase  in  both  gross  and  net  ocean  freight  revenues  was
attributable to increased shipping activity, particularly from the United States
and Far East, and lower ocean freight costs in certain markets.  The decrease in
customs  brokerage  and other net  revenues  was  primarily  due to a decline in
warehouse and distribution activity and selling rates in several markets.


<PAGE>

                                                                         Page 9


     Internal  operating  expenses for the first quarter of 1999  increased $3.8
million  (3.6%) over the first  quarter of 1998.  The increase was primarily the
result of expenses related to acquisitions  made subsequent to the first quarter
of 1998,  which  contributed  positively  to the  first  quarter  1999  results,
combined with an increase in information  systems  expenses  including Year 2000
remediation and testing.

     Consolidated  operating profit for the first quarter of 1999 decreased $1.3
million (9.8%) compared to the first quarter of 1998.

     Interest,  net  decreased $.3 million in the first quarter of 1999 compared
to the first quarter of 1998. The decline  resulted from higher interest expense
associated  with the increase in  long-term  debt.  Other,  net  increased  $7.6
million in the first quarter of 1999 compared to the first quarter of 1998.  The
increase  resulted  primarily from a $7.9 million gain on the sale of marketable
securities (See Note B).

     The effective  income tax rate for the first  quarter of 1999  decreased to
37.0%  compared to 37.5% for the first quarter of 1998. The decrease was largely
the result of a change in the geographic  composition  of worldwide  earnings to
countries with lower effective income tax rates.

     United States gross  revenues  decreased  $18.1  million  (11.3%) to $141.4
million for the first quarter of 1999 compared to the first quarter of 1998. The
decrease  was  comprised  of a  $18.6  million  (14.6%)  decline  in  airfreight
revenues,  a $1.3 million  (8.9%)  increase in ocean freight  revenues and a $.8
million (5.1%) decrease in customs brokerage and other revenues. The decrease in
airfreight revenues resulted from reduced domestic and export shipment activity.
The increase in ocean freight revenues was due to increase  shipments to new and
existing  customers.  The  decrease  in  customs  brokerage  and other  revenues
resulted from declines in both brokerage and warehousing activity.

     The United States gross margin in the first quarter of 1999  increased 5.7%
over the first  quarter of 1998 to 39.1%.  The increase was mainly the result of
improvement  in the mix of cargo and lower  transportation  costs.  The improved
margin,  coupled  with a  marginal  increase  in  internal  operating  expenses,
resulted in operating  profit  increasing $2.0 million over the first quarter of
1998 to $4.8 million.

     Foreign gross revenues increased marginally in the first quarter of 1999 to
$213.3  million  compared to the first quarter of 1998.  European gross revenues
decreased $5.9 million (5.1%) to $109.1 million. The decrease was comprised of a
$7.2 million  (7.9%)  decline in  airfreight  revenues,  a $1.2  million  (9.2%)
increase in ocean freight revenues and a marginal  increase in customs brokerage
and other revenues.  The decrease in airfreight  gross revenues was due to lower
shipment  activity and selling rates in certain  markets.  The increase in ocean
freight gross revenues was attributable to greater shipping volumes from new and
existing customers. Asia and Others gross revenues increased $6.3 million (6.5%)
to $104.2 million.  The increase was comprised of a $2.5 million (3.5%) increase
in  airfreight  revenues,  a $3.5  million  (24.5%)  increase  in ocean  freight
revenues,  and a $.3  million  (2.9%)  increase in customs  brokerage  and other

<PAGE>

                                                                         Page 10


revenues.  The  increases in airfreight  and ocean  freight gross  revenues were
attributable to greater  shipping  volumes from existing and new customers.  The
increase  in  customs   brokerage  and  other  gross   revenues   resulted  from
acquisitions made subsequent to the first quarter of 1998.

     Foreign  operating  profit  for the first  quarter of 1999  decreased  $3.3
million  (31.5%) to $7.1 million  compared with the first  quarter of 1998.  The
European  region's  operating  profit decreased $4.0 million (70.7%) compared to
the first quarter of 1998. The decrease resulted primarily from weakness in both
the United Kingdom and The Netherlands which experienced  declines in airfreight
shipments  and selling  rates.  The Asia and Others  region's  operating  profit
increased $.7 million (16.0%) over the first quarter of 1998.

Liquidity and Capital Resources

     At March 31,1999,  cash and cash equivalents  increased  approximately $3.1
million to $63.3 million from $60.2 million at December 31, 1998.  For the first
quarter  of 1999,  the  Company's  primary  sources of cash  consisted  of $16.8
million from  operating  activities and $7.9 million from the sale of marketable
securities,  while the primary  uses of cash  consisted  of $9.7 million for the
purchase of treasury stock and $6.9 million for capital expenditures.  Cash flow
from operating  activities  increased  approximately $5.7 million over the first
quarter of 1998. The increase was primarily from the increase in  transportation
payables and income taxes payable. Working capital decreased approximately $11.9
million in the quarter to $117.1 million.  The decrease resulted  primarily from
the purchase of treasury stock.

     Capital  expenditures for the quarter  increased  marginally over the first
quarter of 1998 to $6.9 million.  The $6.9 million of capital  expenditures  was
primarily for improvement and expansion of facilities and management information
services.

     At March  31,  1999,  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 $23.3 million, of which
approximately $2.6 million was outstanding.

     The Company's  Board of Directors has  authorized the purchase from time to
time in the open  market of up to two  million  shares of the  Company's  common
stock.  During the first quarter of 1999, the Company  purchased  557,500 of its
common shares at a cost of approximately $9.7 million. As of March 31, 1999, the
Company has purchased  1,635,000 of the two million shares  authorized at a cost
of approximately $31.7 million.

     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.


<PAGE>

                                                                         Page 11

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
include  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,
which requires the costs  associated  with modifying  computer  software for the
Year 2000 to be  expensed  as  incurred,  the  Company  will  expense  the costs
incurred to remediate the applicable  systems.  For 1998,  the Company  incurred
approximately  $3.6 million of expense and approximately $1.0 million of expense
in 1997.  Year 2000 expense for 1999 is  anticipated  to be  approximately  $2.5
million with approximately $1.1 million expended in the first quarter of 1999.

     The remediation of the Company's systems was approximately 99% completed by
the end of the  first  quarter  of 1999.  Systems  testing  is  scheduled  to be
completed  by the end of June 1999.  The systems  testing  will verify  existing
functionality and system operation before, during and after January 1, 2000. The
testing  will place  particular  emphasis on the high risk dates of December 31,
1999, January 1, 2000,  February 29, 2000, March 1, 2000, and March 1, 2001. The
Company  believes that the  remediation,  upgrade and replacement of its systems
will be ready for Year 2000 prior to any impact on its operations.  If, however,
the  remediation,  upgrade  or  replacement  of  the  Company's  systems  is not
completed timely, and negatively impacts the Company's Year 2000 readiness,  the
Company's operations may be materially adversely affected.

     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 major 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 April 23, 1999, the Company surveyed
approximately  1,400 of its significant  suppliers - approximately  77% of those
suppliers  surveyed have advised the Company that they are  currently  Year 2000
compliant or expect compliance by September 30, 1999.

     Those suppliers who advised the Company of compliance  after April 23, 1999
or who have not responded to the Company, will receive additional  communication
from the Company.  Based upon  responses,  these suppliers will be evaluated for
their  level  of  compliance.   For  those   suppliers   deemed  "at  risk"  for
non-compliance, the Company will develop contingency plans wherever necessary.

     Contingency  plans will  include:  redeployment  of existing  personnel and
employing additional personnel to processes that were automated and will require
manual  intervention due to Year 2000  non-compliance,  selection of alternative
air carriers, steamship lines, trucking companies etc., customer notification of
possible service disruptions in markets where carriers,  aviation and/or customs
authorities may not be Year 2000 compliant.

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                                                                         Page 12


     The Company's Year 2000 compliance evaluation of customers and suppliers is
ongoing and the potential impact of  non-compliance  by the Company's  customers
and suppliers has not been determined.  However, the Company does not warrant as
true and  accurate  any  assurance  it receives  from  customers  and  suppliers
regarding the  compliance  of its 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  transportation  providers  are adversely
effected by Year 2000, disruptions in the Company's business may occur which may
have a material adverse effect on the Company's operations.

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, 1999.  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.

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                                                                         Page 13


                                   SIGNATURES


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


                                          Air Express International Corporation 
                                                        (Registrant)




Date:     May 14, 1999                   /s/            Dennis M. Dolan
                                                        Dennis M. Dolan
                                                    Executive Vice President and
                                                      Chief Financial Officer
                                                   (Principal Financial Officer)




Date:     May 14, 1999                  /s/             Martin J. McDonnell
                                                        Martin J. McDonnell
                                                    Vice President - Controller
                                                  (Principal Accounting Officer)