================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

         (Mark One )

         [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 or

         [ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

         For the transition period from ______________ to ______________

         Commission file number        0-24247
                                       -------

                      ATLANTIC EXPRESS TRANSPORTATION CORP.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

         New York                                                 13-392-3467
-------------------------------                              -------------------
(State or Other Jurisdiction of                                (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

               7 North Street, Staten Island, New York, 10302-1205
--------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (718) 442-7000
--------------------------------------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)


--------------------------------------------------------------------------------
         (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 Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.    Yes X     No___


                   APPLICABLE ONLY TO REGISTRANTS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

         Indicate by check mark whether the  registrant  has filed all documents
and reports  required  to be filed by Section 12, 13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
Yes____     No____

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

100 Shares of Common Stock, no par value.

================================================================================


<PAGE>

                                TABLE OF CONTENTS


PART I. Financial Information


                                                                         Page
                                                                       --------
     ITEM 1. Financial Statements:

     Consolidated Balance Sheets at June 30, 1999 (audited) and
          September 30, 1999  (unaudited)............................      1

     Consolidated Statements of Operations for the Three Month
          Periods Ended September 30, 1998 (unaudited) and 1999
          (unaudited)................................................      2

     Consolidated Statements of Stockholder's Equity for the Three
          Months Ended September 30, 1999 (unaudited)................      3

     Consolidated Statements of Cash Flows for the Three Month
          Periods Ended September 30, 1998 (unaudited) and 1999
          (unaudited)................................................      4

     Notes to Consolidated Financial Statements (unaudited)..........    5-7

     ITEM 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations........................   8-11


PART II. Other Information                                                12


Signatures...........................................................     13

Index to Exhibits....................................................    E-1



<PAGE>


<TABLE>
<CAPTION>
             Atlantic Express Transportation Corp. and Subsidiaries

                           Consolidated Balance Sheets

                                                                     June 30,      September 30,
                                                                       1999            1999
                                                                   -------------   -------------
                                                                     (audited)      (unaudited)
<S>                                                                <C>             <C>
Assets
Current:
     Cash and cash equivalents .................................   $     855,983   $     338,311
     Current portion of marketable securities ..................       3,842,000       3,165,000
     Accounts receivable, net of allowance for doubtful accounts      48,468,255      48,700,840
     Inventories ...............................................      15,215,018       9,833,905
     Notes receivable ..........................................          31,964          32,564
     Prepaid expenses and other current assets .................       6,190,766       5,500,181
                                                                   -------------   -------------
               Total current assets ............................      74,603,986      67,570,801
                                                                   -------------   -------------

Property, plant and equipment, less accumulated depreciation ...     119,138,827     123,707,200
                                                                   -------------   -------------

Other assets:
     Goodwill, net .............................................      12,143,514      12,062,037
     Investments ...............................................          35,000          35,000
     Marketable securities .....................................       5,869,380       6,132,785
     Deferred lease expense ....................................         148,155         144,038
     Transportation contract rights, net .......................       3,408,096       3,696,474
     Deferred financing and organization costs, net ............       8,018,053       7,541,231
     Due from parent company ...................................         831,117         831,117
     Notes receivable ..........................................          11,494           9,222
     Deposit and other noncurrent assets .......................       3,248,336       3,241,881
     Deferred tax assets .......................................       3,935,981       7,779,928
     Covenant not to compete, net ..............................         120,000         110,000
                                                                   -------------   -------------
               Total other assets ..............................      37,769,126      41,583,713
                                                                   =============   =============
                                                                   $ 231,511,939   $ 232,861,714
                                                                   =============   =============
Liabilities and Stockholder's Equity
Current:
     Current portion of long-term debt .........................   $  21,411,180      28,112,254
     Accounts payable ..........................................       2,453,411       3,715,178
     Accrued compensation ......................................       7,392,071       8,206,425
     Current portion of insurance reserve ......................       4,500,000       3,587,728
     Accrued interest ..........................................       6,890,810       3,184,170
     Other accrued expenses and current liabilities ............       3,992,443       6,279,316
                                                                   -------------   -------------
               Total current  liabilities ......................      46,639,915      53,085,071
                                                                   -------------   -------------

Long-term debt, net of current portion .........................     159,921,440     160,279,921
                                                                   -------------   -------------
Premium on bond issuance .......................................         987,150         933,300
                                                                   -------------   -------------
Other long-term liabilities ....................................       3,023,529       2,495,853
                                                                   -------------   -------------

Commitments and contingencies:

Stockholder's equity:
     Common Stock, no par value, authorized shares 200;
       issued and outstanding 100 shares .......................         250,000         250,000
     Additional paid-in  capital ...............................      15,898,517      15,898,517
     Accumulated other comprehensive income ....................         925,950         751,771
     Retained earnings (deficit) ...............................       3,865,438        (832,719)
                                                                   -------------   -------------
               Total stockholder's equity ......................      20,939,905      16,067,569
                                                                   -------------   -------------
                                                                   $ 231,511,939   $ 232,861,714
                                                                   =============   =============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       1
<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                      Consolidated Statements of Operations


<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                            September 30,
                                                                                  ------------------------------
                                                                                      1998              1999
                                                                                  ------------      ------------
                                                                                             (unaudited)
<S>                                                                               <C>               <C>
Revenues:
  Transportation Operations ....................................................  $ 35,592,591      $ 43,785,012
  Bus Sales Operations..........................................................    35,440,196        38,599,199
                                                                                  ------------      ------------
Total revenues..................................................................    71,032,787        82,384,211
                                                                                  ------------      ------------

Costs and expenses:
  Cost of Operations - Transportation Operations................................    33,276,570        40,468,547
  Cost of Operations - Bus SalesOperations......................................    31,379,503        34,628,461
  General and  administrative...................................................     4,584,422         5,910,604
   Depreciation and amortization................................................     2,855,986         3,440,581
                                                                                  ------------      ------------
Total operating costs and  expenses.............................................    72,096,481        84,448,193
                                                                                  ------------      ------------
  Loss from operations..........................................................    (1,063,694)       (2,063,982)
Interest expense (net)..........................................................    (4,817,603)       (5,617,233)
Other expense ..................................................................            --          (314,501)
                                                                                  ------------      ------------
  Loss before other items and benefit from income taxes ........................    (5,881,297)       (7,995,716)
Cumulative effect of a change in accounting principle ..........................            --          (546,388)
                                                                                  ------------      ------------
  Loss before benefit from income taxes.........................................    (5,881,297)       (8,542,104)
Benefit from income taxes.......................................................     2,646,583         3,843,947
                                                                                  ------------      ------------
Net loss........................................................................  $ (3,234,714)     $ (4,698,157)
                                                                                  ============      ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       2
<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                 Consolidated Statements of Stockholder's Equity

                      Three months ended September 30, 1999


<TABLE>
<CAPTION>
                                                                                                Accumulated
                                                                                                   other
                                   Common stock          Additional           Retained         comprehensive
                                   No par value        paid-in capital        earnings             income               Total
                                 -----------------    ------------------    --------------    -----------------    -----------------

<S>                              <C>                   <C>                  <C>                  <C>               <C>
Balance, June 30, 1999           $    250,000          $    15,898,517      $    3,865,438       $    925,950      $    20,939,905

Net loss..................                 --                       --          (4,698,157)                --           (4,698,157)

Unrealized loss on
          marketable securities.           --                       --                  --           (174,179)            (174,179)
----------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1999      $    250,000          $    15,898,517      $     (832,719)      $    751,771      $    16,067,569
==================================================================================================================================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                September 30,
                                                                       -----------------------------
                                                                            1998            1999
                                                                       ------------    -------------
                                                                                (unaudited)
<S>                                                                    <C>             <C>
Cash flows from operating activities:
     Net loss ......................................................   $ (3,234,714)   $ (4,698,157)

Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:

          Loss (gain) on sale of marketable securities .............         23,940          (4,493)
          Deferred income taxes ....................................     (2,646,583)     (3,843,947)
          Depreciation .............................................      2,494,083       3,200,376
          Amortization .............................................        676,326         641,390
          Reserve for doubtful accounts receivable .................         30,000          30,000
          Interest accrued on note receivable ......................         (8,670)             --
          Decrease (increase) in:
               Accounts receivable .................................     (3,811,569)       (262,585)
               Inventories .........................................     (1,222,070)      5,381,113
               Prepaid expenses and other current assets ...........       (381,416)        690,585
               Deferred lease expense ..............................         30,661           4,117
               Deposits and other noncurrent assets ................       (326,222)          6,456
          Increase (decrease) in:
               Accounts payable ....................................        191,927       1,261,767
               Accrued expenses and other current liabilities ......     (2,268,096)     (1,517,685)
               Other long-term liabilities .........................        102,410        (527,676)
                                                                       ------------    ------------
               Net cash (used in) provided by operating activities .    (10,349,993)        361,261
                                                                       ------------    ------------
Cash flows from investing activities:
     Additions to property, plant and equipment ....................    (14,845,029)     (7,428,749)
     Notes receivable ..............................................        931,292           1,672
     Marketable securities (purchased) sold, net ...................     (2,293,126)        243,909
                                                                       ------------    ------------
               Net cash used in investing activities ...............    (16,206,863)     (7,183,168)
                                                                       ------------    ------------
Cash flows from financing activities:
     Proceeds of additional borrowings .............................     18,760,246       6,469,809
     Principal payments on borrowings ..............................       (101,570)       (165,574)
     Deferred financing and organization costs .....................        (75,529)             --
     Other .........................................................        (89,099)             --
                                                                       ------------    ------------
          Net cash provided by financing activities ................     18,494,048       6,304,235
                                                                       ------------    ------------
Net decrease in cash and cash equivalents ..........................     (8,062,808)       (517,672)
Cash and cash equivalents, beginning of period .....................     13,772,537         855,983
                                                                       ------------    ------------
Cash and cash equivalents, end of period ...........................   $  5,709,729         338,311
                                                                       ============    ============
Supplemental  disclosures of cash flow information:
Cash paid during the period for:
          Interest .................................................   $  8,467,803    $  8,651,538
          Income taxes .............................................        132,122          45,625
Supplemental schedule of noncash investing and financing activities:
     Loans incurred for purchase of property, plant and equipment ..   $  5,686,617    $    340,000
     Liability incurred for acquisition of contract rights .........             --         415,320
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

             Atlantic Express Transportation Corp. and Subsidiaries

                   Notes to Consolidated Financial Statements

1.  Basis of Accounting

         These consolidated  financial  statements should be read in conjunction
with the  consolidated  financial  statements and related notes contained in the
Company's  financial  statements  as of and for the year ended June 30,  1999 as
filed on Form 10-K. In the opinion of management,  all  adjustments and accruals
(consisting only of normal recurring adjustments) which are necessary for a fair
presentation of operating  results are reflected in the  accompanying  financial
statements.

         Certain  amounts  in the fiscal  1999  financial  statements  have been
reclassified to conform with current period presentation.

         Operating  results  for  the  periods  presented  are  not  necessarily
indicative of the results for the full fiscal year.

2.  New Accounting Pronouncement

         On  July 1,  1999,  the  Company  adopted  the  American  Institute  of
Certified Public Accountants  Statement of Position 98-5 ("SOP 98-5") "Reporting
on the Costs of  Start-Up  Activities".  In  connection  therewith,  the Company
recorded a charge of $0.5 million described as the cumulative effect of a change
in accounting principle, which represented unamortized start-up costs as of June
30, 1999.

3.  Inventories

      Inventories comprised the following:
<TABLE>
<CAPTION>
                                                               June 30,            September 30,
                                                                 1999                   1999
                                                           ------------------    -------------------
<S>                                                           <C>                   <C>
                Parts and fuel.....................           $   3,919,018         $   3,537,420
                Buses held for sale................              11,296,000             6,296,485
                                                           ------------------    -------------------
                                                               $ 15,215,018         $   9,833,905
                                                           ==================    ===================
</TABLE>

4.  Litigation

         In June 1998, Atlantic Express Transportation Group, Inc. ("AETG") (the
"parent  company")  commenced  litigation  against National Express Group,  PLC,
("National") asserting claims of "tortuous interference with business relations,
unfair competition and breach of contract".

         Approximately  $1.2 million of  litigation  expenses have been incurred
since the inception of the lawsuit, including $0.6 million incurred in the first
quarter of the current fiscal year.

5.  Inter-Company Transactions

         On August 11, 1999,  after  receiving a fairness  opinion  issued by an
investment bank of national standing,  Central New York Coach Sales and Service,
Inc.  and  Jersey Bus  Sales,  Inc.  (collectively  "Central")  entered  into an
agreement  with  Atlantic  Bus  Distributors,   Inc.  ("ABD"),  a  wholly  owned
subsidiary of AETG,  to order certain buses through ABD.  Central is required to
deposit fifteen percent of the cost of these vehicles  simultaneously with ABD's
receipt of these vehicles from the manufacturers and pay the balance to ABD upon
Central's  delivery of these vehicles to its customers or within one hundred and
twenty days,  whichever  comes first.  The purchase price of each bus equals the
price at which ABD purchased such bus together with any costs incurred by ABD in
connection with the purchases of any such vehicles.


                                       5

<PAGE>


 Supplemental Financial Information

         The   following  are  unaudited   condensed   consolidating   financial
statements  regarding the Company (on a stand-alone  basis and on a consolidated
basis) and Guarantors and  Non-Guarantors of the Company's 103/4% Senior Secured
Notes  as  of  and  for  the  three  months  ended  September  30,  1999,  and a
consolidating balance sheet as of June 30, 1999 and consolidating  statements of
operations and cash flows for the three months ended September 30, 1998.

                      Condensed Consolidating Balance Sheet
                               September 30, 1999

<TABLE>
<CAPTION>
                                          Atlantic
                                           Express                                Non-
                                       Transportation        Guarantor         Guarantor         Elimination
                                            Corp.          Subsidiaries       Subsidiaries         Entries          Consolidated
                                       ----------------    --------------     -------------    ----------------    ---------------

<S>                                      <C>                <C>                 <C>                <C>                 <C>
Current assets ....................      $   3,561,964      $  60,333,588       $   3,675,249      $        --         $  67,570,801
Investment in affiliates ..........         55,458,058                                               (55,458,058)
Total assets ......................        211,251,114        206,081,513          11,027,326       (195,498,239)        232,861,714
Current liabilities ...............         30,630,337         17,947,332           4,507,402               --            53,085,071
Total liabilities .................        185,671,866        167,553,193           6,744,556       (143,175,470)        216,794,145
Stockholder's equity ..............         25,579,248         38,528,320           4,282,770        (52,322,769)         16,067,569

</TABLE>

                 Condensed Consolidating Statement of Operations
                      Three months ended September 30, 1999

<TABLE>
<CAPTION>
                                                  Atlantic
                                                   Express                             Non-
                                               Transportation       Guarantor        Guarantor      Elimination
                                                    Corp.         Subsidiaries     Subsidiaries       Entries         Consolidated
                                              ----------------   --------------   -------------   ----------------   ---------------

<S>                                              <C>              <C>             <C>             <C>              <C>
Net revenues ...............................     $       --       $ 82,319,712    $     64,499    $       --       $ 82,384,211
Income (loss) from  operations .............             --         (2,079,720)         15,738            --         (2,063,982)
Income (loss) before income taxes ..........             --         (8,011,454)         15,738            --         (7,995,716)
Cumulative effect of a change in
  accounting principle .....................             --           (546,388)           --              --           (546,388)
Net loss of ................................             --               --              --              --                 --
subsidiaries ...............................       (4,698,157)       4,698,157
Net income (loss) ..........................       (4,698,157)      (4,706,813)          8,656       4,698,157       (4,698,157)

</TABLE>

                 Condensed Consolidating Statement of Cash Flows
                      Three months ended September 30, 1999

<TABLE>
<CAPTION>
                                                  Atlantic
                                                   Express                             Non-
                                               Transportation       Guarantor        Guarantor      Elimination
                                                    Corp.         Subsidiaries     Subsidiaries       Entries         Consolidated
                                              ----------------   --------------   -------------   ----------------   ---------------

<S>                                              <C>              <C>             <C>             <C>              <C>
Net cash provided by (used in)
     operating activities .................      $(5,548,384)      $ 6,388,054       $  (478,409)      $      --        $   361,261
Net cash provided by (used in)
     investing activities .................          (63,269)       (7,363,808)          243,909              --         (7,183,168)
Net cash provided by
     financing activities .................        6,129,809           174,426              --                            6,304,235
Increase (decrease) in cash and
     cash equivalents .....................          518,156          (801,328)         (234,500)             --           (517,672)
Cash and cash equivalents,
     beginning of period ..................          324,134)          522,117           658,000              --            855,983
 Cash and cash equivalents,
     end of period ........................      $   194,022       $  (279,211)      $   423,500       $      --        $   338,311

</TABLE>

                                       6
<PAGE>



                      Condensed Consolidating Balance Sheet
                                  June 30, 1999

<TABLE>
<CAPTION>
                                        Atlantic
                                         Express                                   Non-
                                     Transportation       Guarantor             Guarantor          Elimination
                                          Corp.         Subsidiaries           Subsidiaries          Entries         Consolidated
                                    ----------------   --------------         -------------     ----------------   ---------------

<S>                                  <C>                 <C>                  <C>                 <C>                <C>
Current assets ...............       $   1,220,437       $  68,829,160        $   4,554,389       $        --        $  74,603,986
Investment in affiliates......          60,330,394              --                  --              60,330,394)           --
Total assets .................         208,820,247         204,637,409           12,596,989        (194,542,706)       231,511,939
Current liabilities ..........          22,655,804          18,583,172            5,400,939          46,639,915
Total liabilities ............         171,016,512         161,403,850            8,570,505        (130,418,833)       210,572,034
Stockholder's equity .........          37,803,735          43,233,559            4,026,484         (64,123,873)        20,939,905

</TABLE>


                 Condensed Consolidating Statement of Operations
                      Three months ended September 30, 1998

<TABLE>
<CAPTION>
                                                  Atlantic
                                                   Express                             Non-
                                               Transportation       Guarantor        Guarantor      Elimination
                                                    Corp.         Subsidiaries     Subsidiaries       Entries         Consolidated
                                              ----------------   --------------   -------------   ----------------   ---------------

<S>                                             <C>               <C>               <C>              <C>               <C>

Net revenues ..............................     $       --        $ 70,976,555      $  1,168,680     $ (1,112,448)     $ 71,032,787
Income (loss) from operations .............          (53,491)       (1,024,431)           14,228               --        (1,063,694)
Income (loss) before income taxes .........          (53,491)       (5,842,034)           14,228               --        (5,881,297)
Net income (loss) of subsidiaries .........       (3,205,294)               --                --        3,205,294               --
Net income (loss) .........................       (3,234,714)       (3,211,697)            6,403        3,205,294        (3,234,714)

</TABLE>

<TABLE>
<CAPTION>
                                                Condensed Consolidating Statement of Cash Flows
                                                     Three months ended September 30, 1998

                                             Atlantic
                                              Express                                Non-
                                          Transportation        Guarantor         Guarantor         Elimination
                                               Corp.          Subsidiaries       Subsidiaries         Entries          Consolidated
                                         ----------------    --------------     -------------    ----------------    ---------------

<S>                                            <C>               <C>               <C>               <C>               <C>
Net cash provided by (used in)
     operating activities.................     $(20,428,687)     $  9,637,206      $    441,488      $       --        $(10,349,993)

Net cash used in investing
     activities ..........................         (101,408)      (13,812,329)       (2,293,126)             --         (16,206,863)
Net cash provided by (used in)
     financing  activities ...............       18,595,618          (101,570)                               --           18,494,048
Increase (decrease) in cash and
     cash equivalents ....................       (1,934,477)       (4,276,693)       (1,851,638)             --          (8,062,808)
Cash and cash equivalents,
     beginning of period .................        6,932,910         4,014,584         2,825,043              --          13,772,537
Cash and cash equivalents,                     -------------------------------------------------------------------------------------
     end of period .......................     $  4,998,433      $   (262,109)     $    973,405      $       --        $  5,709,729

</TABLE>

7.  Subsequent Event

         In November 1999, Congress Financial  Corporation  ("Congress") renewed
the Company's $30.0 million  revolving  credit facility (the "Facility") and the
Company's Accounts Purchase and Sale Agreement (the "Receivable  Agreement") for
an additional two years commencing February 4, 2000.


                                       7


<PAGE>


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

         The following discussion contains forward-looking statements within the
meaning of the federal  securities  laws and as such  involve  known and unknown
risks and uncertainties.  These statements may use forward-looking words such as
"anticipate",  "estimate",  "expect",  "will"  or  other  similar  words.  These
statements discuss future  expectations or contain projections of future events.
Actual  results may differ  materially  from those  expressed  or implied by the
forward-looking  statements  for various  reasons,  including  general  economic
conditions,  reliance on suppliers,  labor relations and other factors,  many of
which are beyond the Company's control. Readers are cautioned not to place undue
reliance on such forward-looking statements.

Three months ended  September 30, 1999 compared to three months ended  September
30, 1998.

         The Company's revenues from Transportation Operations are significantly
curtailed  during the months of July and  August due to school  holidays,  while
revenues from Bus Sales Operations have historically been  significantly  higher
during the first three months of the fiscal year.  In  addition,  the  quarterly
results of the  Transportation  Operations  also  fluctuate  due to a variety of
factors,  including  variation  in the  number of school  days in each  quarter.
Consequently,  revenues  and  results  for  the  first  fiscal  quarter  are not
representative   of  annual   operations   and   quarterly   results   may  vary
substantially, both within a fiscal year and between comparable fiscal years.

         Revenues.  Revenues from  Transportation  Operations were $43.8 million
for the three months ended  September 30, 1999 compared to $35.6 million for the
three months  ended  September  30, 1998,  an increase of $8.2 million or 23.0%.
This increase was due primarily to (i) $1.4 million  additional summer revenues;
(ii) $1.6 million as a result of new contracts  awarded;  and (iii) $5.2 million
due to contract rate increases and service  requirements of existing  contracts,
(including  two  additional  revenue days in New York City in September  1999 as
compared  to  September  1998  which  increased  revenues  by  approximately  $1
million). Revenues for the Bus Sales Operations were $38.6 million for the three
months ended  September  30, 1999 compared to $35.4 million for the three months
ended September 30, 1998, an increase of $3.2 million or 8.9%. This increase was
primarily due to a $4.3 million  increase in new vehicles sales partially offset
by a $1.1 million decrease in used bus sales.

         Gross  Profit.  Gross profit from  Transportation  Operations  was $3.3
million for the three months ended  September  30, 1999 compared to $2.3 million
for the three months ended  September  30, 1998,  an increase of $1.0 million or
43.2%. As a percentage of revenues, gross profit increased to 7.6% for the three
months ended  September 30, 1999 from 6.5% for the three months ended  September
30, 1998. This increase was due primarily to increased revenues and gross profit
generated due to the increase in revenue days mentioned  above (with no increase
in payroll days),  partially offset by increases in labor costs due to the tight
labor market. Gross profit for the Bus Sales Operations was $4.0 million for the
three months  ended  September  30, 1999  compared to $4.1 million for the three
months  ended  September  30,  1998,  a decrease of $0.1  million or 2.2%.  As a
percentage  of revenues,  gross profit  decreased to 10.3 % for the three months
ended  September  30, 1999 from 11.5% for the three months ended  September  30,
1998. The reduction in gross profit  percentage was due primarily to an increase
in the current  quarter of the proportion of sales made in the New Jersey market
which has had historically lower gross profit margins than the New York market.

         General  and  administrative   expenses.   General  and  administrative
expenses  for the  Transportation  Operations  were $5.0  million  for the three
months ended  September  30, 1999  compared to $3.6 million for the three months
ended  September 30, 1998,  an increase of $1.3 million or 36.5%.  This increase
was  principally  related to  increases  in  professional  fees of $0.7  million
primarily in connection with the Company's  litigation with National (see Note 4
to Consolidated  Financial  Statements) and additional  administrative  payroll,
benefits, and other general and administrative  expenses due to expansion in new
areas.  As  a  percentage  of  revenues,  general  and  administrative  expenses
increased to 11.3% for the three months ended  September 30, 1999 from 10.2% for
the three months ended September 30, 1998. General and  administrative  expenses
for the Bus Sales  Operations  were $0.9  million  for the  three  months  ended
September  30,  1999  and  1998.  As  a  percentage  of  revenues,  general  and
administrative  expenses were 2.4% and 2.7% for the three months ended September
30, 1999 and 1998.

                                       8
<PAGE>


         Depreciation and amortization  expenses.  Depreciation and amortization
expenses  for the  Transportation  Operations  were $3.2  million  for the three
months ended  September  30, 1999  compared to $2.7 million for the three months
ended September 30, 1998, an increase of $0.6 million.  This increase was due to
additional  depreciation  due to the purchase of new vehicles.  Depreciation and
amortization  expenses  for the Bus Sales  Operations  were $0.2 million for the
three months ended September 30, 1999 and 1998.

         Income (loss) from  operations.  Loss from  operations was $2.1 million
for the three months ended September 30, 1999 compared to a loss of $1.1 million
for the three months ended September 30, 1998 an increase of $1.0 million.  This
increase was due to the net effect of the items discussed above.

         Net interest  expense.  Net  interest  expense was $5.6 million for the
three months  ended  September  30, 1999  compared to $4.8 million for the three
months ended September 30, 1998, an increase of $0.8 million.  This increase was
due primarily to an increase in the amount of interest paid to Congress.

         Net loss.  The  Company  generated  a net loss of $4.7  million for the
three months ended September 30, 1999 compared to a net loss of $3.2 million for
the three months ended September 30, 1998 an increase of $1.5 million due to the
net effect of the items discussed above.

 Liquidity and Capital Resources

         Management  anticipates total capital expenditures of approximately $16
million in fiscal 2000 of which $7.8 million were made by September 30, 1999.

         Net  Cash  Provided  By  Operating  Activities.  Net cash  provided  by
operating activities of $0.4 million for the three months ended in September 30,
1999  resulted  primarily  from a $5.6  million  increase in source of funds for
working  capital plus non cash items of  depreciation  and  amortization of $3.8
million offset by (i) a net loss of $4.7 million;  (ii) $3.8 million increase in
deferred  income  taxes;  and (iii) $0.5  million  decrease in other  sources of
funds.

         Net Cash  Used In  Investing  Activities.  For the three  months  ended
September  30, 1999,  the Company made $7.8 million of capital  expenditures  to
acquire additional  vehicles and equipment.  Of these capital  expenditures $0.3
million were directly financed.

         Net  Cash  Provided  By  Financing  Activities.  Net cash  provided  by
financing  activities  totaled $6.3 million for the three months ended September
30, 1999, due to $6.5 million net borrowing  under the Company's  revolving line
of credit,  partially  offset by principal  payments of $0.2 on  borrowings.  In
addition,  the Company incurred $0.3 million of indebtedness to directly finance
capital expenditures for the three months ended September 30, 1999.

         The first quarter is historically the period of the Company's  greatest
use of its  revolving  line of credit due to the  purchase of  vehicles  for the
upcoming  school year and seasonal lower  revenues in this quarter.  The Company
believes  that its Facility (of which $3.5 million was undrawn at September  30,
1999) and its Receivable  Agreement will provide it with sufficient liquidity to
conduct its operations.

         At  September  30, 1999,  the  Company's  total debt and  stockholder's
equity were $188.4 million and $16.1 million respectively.

Impact of Year 2000 on the Company's Systems

         The Company has completed its  assessment at its 34 locations that have
computerized systems and has determined what changes, if any, need to be made so
that such systems,  which include  information  and  non-information  technology
systems,  will  function  properly  with  respect  to dates in the year 2000 and
thereafter to ensure that the Company's  financial,  information and operational
systems  are year 2000  compliant.  The  Company  has  developed  a  program  to
implement these changes,  which consists of the following phases: (i) developing
solutions  for  affected  technology  and systems;  (ii)  modifying or replacing

                                       9
<PAGE>


affected  technology and systems;  (iii) testing and verifying  solutions;  (iv)
implementing  solutions;  and (v) developing  contingency plans. The Company has
completed  its year 2000  compliance  at 29 of these  locations,  including  its
corporate  office,  which  is  its  most  important  and  most  computer-reliant
location.  The Company  intends to complete its  compliance  of its  remaining 5
locations  by December  15,  1999.  Total costs of  approximately  $800,000  are
expected to be incurred for the year 2000 issues of which approximately $600,000
had been incurred through September 30, 1999.

         The Company has communicated with those vendors and customers with whom
the Company does significant business.  The Company has received assurances from
its five largest customers, which represented approximately 58% of the Company's
transportation  sales for  fiscal  1999,  its two major  fuel  suppliers,  which
provided  approximately  69% of the Company's fuel  requirements in fiscal 1999,
and its three largest suppliers of parts and tires, which provided approximately
20% of the Company's  requirements for parts and tires in fiscal 1999, that they
are or will be year 2000  compliant by the end of 1999. A third party's  failure
to become year 2000  compliant or the Company's  inability to become  compatible
with third parties with which the Company has a material  relationship  may have
an adverse effect on the Company.  Although initial responses from the Company's
major customers and suppliers of fuel,  parts and tires have assured the Company
that they will be year 2000  compliant  before the end of 1999,  there can be no
assurance  that  the  Company's  operations  will  not be  materially  adversely
impacted  by  any  potential  systems  problems  incurred  by  such  vendors  or
customers.

         The Company has developed its  contingency  plan for its  facilities to
provide for the most likely worst case scenarios regarding year 2000 compliance.


                                       10
<PAGE>



PART II     OTHER INFORMATION

Item 1.  Legal Proceedings

         See Note 4 to Consolidated Financial Statements.

Item 2.  Changes in Securities and Use of Proceeds

         None.

Item 3.  Defaults Upon Senior Securities

         None.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

          a)  Exhibits

         See Exhibit  Index on Page E-1 for  exhibits  filed with this report on
Form 10-Q.

          b)  Reports on Form 8-K

              None.

                                       11
<PAGE>


                                   SIGNATURES

         In accordance with the  requirements of the Securities and Exchange Act
of 1934,  the  Company has duly caused this report to be signed on behalf by the
undersigned, thereunto duly authorized.





                                         ATLANTIC EXPRESS TRANSPORTATION CORP.


                                         By:     /s/ NATHAN SCHLENKER
                                                 -------------------------------
                                                 Nathan Schlenker
                                                 Chief Financial Officer

November 12, 1999


                                       12

<PAGE>




                                Index to Exhibits


         The following  documents are exhibits to this Quarterly  Report on Form
10-Q. For convenient reference,  each exhibit is listed according to the Exhibit
Table of Regulation  S-K. The page number,  if any,  listed  opposite an exhibit
indicates  the page number in the  sequential  numbering  system on the manually
signed original of this Quarterly  Report on Form 10-Q where such exhibit can be
found.


     Exhibit                                              Sequential Page
     Number                         Exhibit                    Number


      27.1         Financial Data Schedule


                                      B-1