UNITED STATES
                     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 June 30, 2006

                                     OR

           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      ----            SECURITIES EXCHANGE ACT OF 1934

             For the transition period from   N/A   to   N/A


                        COMMISSION FILE NUMBER 1-5046

                                Con-way Inc.

                    Incorporated in the State of Delaware
                I.R.S. Employer Identification No. 94-1444798

         2855 Campus Drive, Suite 300, San Mateo, California  94403
                       Telephone Number (650) 378-5200

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 and (2)  has  been subject to such filing
requirements for the past 90 days.
Yes X    No
   ---      ---

Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer.

Large accelerated filer  X   Accelerated filer      Non-accelerated filer
                        ---                    ---                        ---

Indicate by check mark whether the registrant is a  shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes      No  X
    ---     ---



             Number of shares of Common Stock, $.625 par value,
                outstanding as of July  31, 2006:  47,956,779









                                CON-WAY INC.
                                  FORM 10-Q
                        Quarter Ended June 30, 2006

_______________________________________________________________________________
_______________________________________________________________________________

                                    INDEX



PART I.FINANCIAL INFORMATION                                                Page

  Item 1. Financial Statements

    Consolidated Balance Sheets -
      June 30, 2006 and December 31, 2005                                     3

    Statements of Consolidated Income -
      Three and Six Months Ended June 30, 2006 and 2005                       5

    Statements of Consolidated Cash Flows -
      Six Months Ended June 30, 2006 and 2005                                 6

    Notes to Consolidated Financial Statements                                7

  Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                       21

  Item 3. Quantitative and Qualitative Disclosures about Market Risk         35

  Item 4. Controls and Procedures                                            36


PART II. OTHER INFORMATION

  Item 1. Legal Proceedings                                                  37

  Item 1A. Risk Factors                                                      37

  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds        38

  Item 6. Exhibits                                                           39

  Signatures                                                                 40






                         PART I. FINANCIAL INFORMATION



ITEM 1.  FINANCIAL STATEMENTS


                                 CON-WAY INC.
                         CONSOLIDATED BALANCE SHEETS
                                (Unaudited)
                           (Dollars in thousands)



                                                   June 30,    December 31,
ASSETS                                               2006          2005
                                                 ------------  ------------
Current Assets
  Cash and cash equivalents                      $   313,904   $   514,275
  Marketable securities                              215,474       202,350
  Trade accounts receivable, net                     516,124       541,507
  Other accounts receivable (Note 1)                  27,370        42,529
  Operating supplies, at lower of
   average cost or market                             21,493        19,069
  Prepaid expenses (Note 1)                           56,512        53,883
  Deferred income taxes                               50,578        49,434
  Assets of discontinued operations (Note 2)          17,997        21,000
                                                 ------------  ------------
    Total Current Assets                           1,219,452     1,444,047
                                                 ------------  ------------

Property, Plant and Equipment, at cost
  Land                                               156,041       150,413
  Buildings and leasehold improvements               672,022       649,786
  Revenue equipment                                  879,344       778,958
  Other equipment                                    233,772       217,269
                                                 ------------  ------------
                                                   1,941,179     1,796,426
  Accumulated depreciation and amortization         (891,221)     (845,428)
                                                 ------------  ------------
                                                   1,049,958       950,998
                                                 ------------  ------------

Other Assets
  Deferred charges and other assets (Note 3)          41,045        42,578
  Capitalized software, net                           39,985        42,949
                                                 ------------  ------------
                                                      81,030        85,527
                                                 ------------  ------------
Total Assets                                     $ 2,350,440   $ 2,480,572
                                                 ============  ============


      The accompanying notes are an integral part of these statements.



                                 CON-WAY INC.
                         CONSOLIDATED BALANCE SHEETS
                                (Unaudited)
             (Dollars in thousands except per share amounts)



                                                   June 30,    December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY                 2006          2005
                                                 ------------  ------------
Current Liabilities
  Accounts payable                               $   288,788   $   274,742
  Accrued liabilities (Note 1)                       225,540       209,824
  Self-insurance accruals                             88,825        91,342
  Current maturities of long-term debt                18,633        15,033
  Liabilities of discontinued
   operations (Note 2)                                31,409        40,555
                                                 ------------  ------------
    Total Current Liabilities                        653,195       631,496

Long-Term Liabilities
  Long-term debt and guarantees                      560,332       581,469
  Self-insurance accruals                            107,761       102,416
  Employee benefits (Note 5)                         210,731       212,824
  Other liabilities and deferred credits              19,976        19,142
  Deferred income taxes                               28,345        22,307
                                                 ------------  ------------
    Total Liabilities                              1,580,340     1,569,654
                                                 ------------  ------------

Commitments and Contingencies (Note 10)

Shareholders' Equity
  Preferred stock, no par value;
   authorized 5,000,000 shares:
   Series B, 8.5% cumulative, convertible,
   $.01 stated value; designated
   1,100,000 shares; issued 622,928 and
   641,359 shares, respectively                            6             6
  Additional paid-in capital, preferred stock         94,741        97,544
  Deferred compensation, Thrift and Stock Plan       (36,059)      (40,628)
                                                 ------------  ------------
    Total Preferred Shareholders' Equity              58,688        56,922
                                                 ------------  ------------

  Common stock, $.625 par alue;
   authorized 100,000,000 shares;
   issued 61,600,799 and 61,204,263
   shares, respectively                               38,421        38,253
  Additional paid-in capital, common stock           544,726       528,743
  Retained earnings                                  719,115       620,565
  Deferred compensation,
   nonvested stock (Note 8)                               --        (3,078)
  Cost of repurchased common stock (Note 7)
   (13,415,647 and 8,928,008
    shares, respectively)                           (554,244)     (293,380)
                                                 ------------  ------------
    Total Common Shareholders' Equity                748,018       891,103
                                                 ------------  ------------
  Accumulated Other Comprehensive Loss (Note 6)      (36,606)      (37,107)
                                                 ------------  ------------
      Total Shareholders' Equity                     770,100       910,918
                                                 ------------  ------------
        Total Liabilities and
         Shareholders' Equity                    $ 2,350,440   $ 2,480,572
                                                 ============  ============


       The accompanying notes are an integral part of these statements.



                                 CON-WAY INC.
                      STATEMENTS OF CONSOLIDATED INCOME
                                 (Unaudited)
               (Dollars in thousands except per share amounts)



                                 Three Months Ended        Six Months Ended
                                      June 30,                 June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006        2005
                               ----------- -----------  ----------- -----------

Revenues                       $1,100,052  $1,021,565   $2,146,044  $1,957,160

Costs and Expenses
  Operating expenses              867,039     807,348    1,713,492   1,565,036
  Selling, general and
   administrative expenses
   (Note 8)                        89,428      82,926      178,987     160,586
  Depreciation                     31,752      27,179       63,824      53,576
                               ----------- -----------  ----------- -----------
                                  988,219     917,453    1,956,303   1,779,198
                               ----------- -----------  ----------- -----------
Operating Income                  111,833     104,112      189,741     177,962
                               ----------- -----------  ----------- -----------

Other Income (Expense)
  Investment income                 6,680       5,535       13,622      10,162
  Interest expense                 (8,317)     (9,688)     (16,465)    (20,154)
  Miscellaneous, net                  174      (1,493)         656      (2,585)
                               ----------- -----------  ----------- -----------
                                   (1,463)     (5,646)      (2,187)    (12,577)
                               ----------- -----------  ----------- -----------
Income from Continuing
 Operations Before Income
  Tax Provision                   110,370      98,466      187,554     165,385
Income Tax
 Provision (Note 9)                34,418      29,622       63,609      55,078
                               ----------- -----------  ----------- -----------
Income from
 Continuing Operations             75,952      68,844      123,945     110,307
                               ----------- -----------  ----------- -----------

Discontinued Operations,
 net of tax (Note 2)
  Loss from
   Discontinued Operations         (1,176)       (688)      (1,929)     (1,300)
  Gain (Loss) from Disposal        (4,044)      2,951       (4,850)     (6,825)
                               ----------- -----------  ----------- -----------
                                   (5,220)      2,263       (6,779)     (8,125)

Net Income                         70,732      71,107      117,166     102,182
  Preferred Stock Dividends         1,808       2,036        3,571       4,025
                               ----------- -----------  ----------- -----------

Net Income Available to
 Common Shareholders           $   68,924  $   69,071   $  113,595  $   98,157
                               =========== ===========  =========== ===========

Net Income From Continuing
 Operations (after
  preferred dividends)         $   74,144  $   66,808   $  120,374  $  106,282
                               =========== ===========  =========== ===========

Weighted-Average Common
 Shares Outstanding (Note 1)
   Basic                       49,676,912  52,166,814   50,793,078  52,257,396
   Diluted                     53,104,005  56,016,513   54,228,769  56,333,732

Earnings (Loss) per
 Common Share (Note 1)
   Basic
     Net Income from
      Continuing Operations    $     1.49  $     1.28   $     2.37  $     2.03
     Loss from Discontinued
      Operations                    (0.02)      (0.01)       (0.04)      (0.02)
     Gain (Loss) from
      Disposal                      (0.08)       0.05        (0.09)      (0.13)
                               ----------- -----------  ----------- -----------
     Net Income Available to
      Common Shareholders      $     1.39  $     1.32   $     2.24  $     1.88
                               =========== ===========  =========== ===========

   Diluted
     Net Income from
      Continuing Operations    $     1.40  $     1.20   $     2.23  $     1.90
     Loss from Discontinued
      Operations                    (0.02)      (0.01)       (0.04)      (0.02)
     Gain (Loss) from
      Disposal                      (0.08)       0.05        (0.09)      (0.13)
                               ----------- -----------  ----------- -----------
     Net Income Available to
      Common Shareholders      $     1.30  $     1.24   $     2.10  $     1.75
                               =========== ===========  =========== ===========


          The accompanying notes are an integral part of these statements.



                                 CON-WAY INC.
                   STATEMENTS OF CONSOLIDATED CASH FLOWS
                                (Unaudited)
                           (Dollars in thousands)

                                                            Six Months Ended
                                                                June 30,
                                                        -----------------------
                                                           2006        2005
                                                        ----------- -----------

Cash and Cash Equivalents, Beginning of Period          $  514,275  $  346,581
                                                        ----------- -----------

Operating Activities

 Net income                                                117,166     102,182
 Adjustments to reconcile net income to net cash
  provided by operating activities:
   Discontinued operations, net of tax                       6,779       8,125
   Depreciation and amortization, net of accretion          68,404      59,062
   Increase (Decrease) in deferred income taxes              5,991     (11,476)
   Amortization of deferred compensation                     4,569       4,375
   Share-based compensation (Note 8)                         3,485         647
   Provision for uncollectible accounts                      1,251       2,251
   Equity in earnings of joint venture                      (8,859)     (7,454)
   Gain from sales of property and equipment, net           (1,197)       (353)
   Changes in assets and liabilities:
     Receivables                                            18,122     (57,850)
     Prepaid expenses                                       (2,629)      5,582
     Accounts payable                                        9,389     (10,854)
     Accrued incentive compensation                            944     (20,101)
     Accrued liabilities, excluding accrued
      incentive compensation                                16,320      10,274
     Self-insurance accruals                                 2,828       1,841
     Income taxes                                           23,276      27,383
     Employee benefits                                      (2,093)    (30,871)
     Deferred charges and credits                           13,938      22,517
     Other                                                  (8,489)     (7,200)
                                                        ----------- -----------
       Net Cash Provided by Operating Activities           269,195      98,080
                                                        ----------- -----------

Investing Activities

  Capital expenditures                                    (164,215)    (90,622)
  Software expenditures                                     (6,252)     (4,908)
  Proceeds from sales of property and equipment, net         4,050       2,347
  Proceeds from sale of discontinued operations                 --      29,366
  Net decrease (increase) in marketable securities         (13,124)    269,839
                                                        ----------- -----------
       Net Cash Provided by (Used in) Investing
        Activities                                        (179,541)    206,022
                                                        ----------- -----------

Financing Activities

  Repayment of long-term debt and guarantees               (15,016)   (112,715)
  Proceeds from exercise of stock options                   11,749      32,263
  Excess tax benefit from stock
   option exercises (Note 8)                                 2,229          --
  Payments of common dividends                             (10,223)    (10,527)
  Payments of preferred dividends                           (4,311)     (4,861)
  Repurchases of common stock (Note 7)                    (261,783)    (74,568)
                                                        ----------- -----------
       Net Cash Used in Financing Activities              (277,355)   (170,408)
                                                        ----------- -----------

      Net Cash Provided by (Used in) Continuing
       Operations                                         (187,701)    133,694
                                                        ----------- -----------

Discontinued Operations
  Net Cash Used In Operating Activities                    (12,492)    (13,547)
  Net Cash Used In Investing Activities                       (178)        (84)
                                                        ----------- -----------
      Net Cash Used in Discontinued Operations             (12,670)    (13,631)
                                                        ----------- -----------

      Increase (Decrease) in Cash and
       Cash Equivalents                                   (200,371)    120,063
                                                        ----------- -----------
   Cash and Cash Equivalents, End of Period             $  313,904  $  466,644
                                                        =========== ===========


Supplemental Disclosure
  Cash paid for income taxes, net                       $   30,188  $   37,246
                                                        =========== ===========
  Cash paid for interest, net of
   amounts capitalized                                  $   20,597  $   27,631
                                                        =========== ===========


      The accompanying notes are an integral part of these statements.






                                CON-WAY INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

1.  Principal Accounting Policies

Organization and Re-branding Initiative

The term "Con-way" or "Company" refers to Con-way Inc. (formerly CNF Inc.)
and subsidiaries.  On April 18, 2006, shareholders approved management's
proposal to change the Company's name to Con-way Inc. from CNF Inc.  The
corporate name change marks the launch of a strategy to bring the Company's
operations under a single master brand.  Company management and the Board of
Directors believe that the corporate name change and the re-branding
initiative will result in better understanding of the Company's core
businesses, operating strengths, corporate culture and values, thereby
enabling the Company to compete more effectively in the markets it serves.
Included in the initiative is a new Con-way logo and graphic identity.

In December of 2004, Con-way completed the sale of Menlo Worldwide
Forwarding, Inc. and its subsidiaries and Menlo Worldwide Expedite!, Inc.
(hereinafter collectively referred to as "MWF") to United Parcel Service,
Inc. and United Parcel Service of America, Inc. (collectively, "UPS").  Prior
to the sale, the collective results of MWF and Emery Worldwide Airlines, Inc.
("EWA") were reported as the Menlo Worldwide Forwarding reporting segment.
EWA is a separate wholly owned subsidiary of Con-way that was not sold to
UPS.  In addition, on June 2, 2006, Con-way closed the operations of its
domestic air freight forwarding business known as Con-way Forwarding.  As a
result, for the periods presented, the results of operations, net
liabilities, and cash flows of the Menlo Worldwide Forwarding ("Forwarding")
segment and the Con-way Forwarding operating unit have been segregated and
reported as discontinued operations, as more fully discussed in Note 2,
"Discontinued Operations."  Refer to Note 4, "Reporting Segments," for
additional discussion of the re-branding initiative and other organizational
changes.

Basis of Presentation

Pursuant to the rules and regulations of the Securities and Exchange
Commission, the accompanying consolidated financial statements of Con-way
Inc. and its wholly owned subsidiaries have been prepared by Con-way, without
audit by an independent registered public accounting firm. In the opinion of
management, the consolidated financial statements include all normal
recurring adjustments necessary to present fairly the information required to
be set forth therein.  Certain information and note disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States ("GAAP") have been
condensed or omitted from these statements pursuant to such rules and
regulations and, accordingly, should be read in conjunction with the
consolidated financial statements included in Con-way's 2005 Annual Report on
Form 10-K.  Results for the periods presented are not necessarily indicative
of annual results.


Earnings per Share ("EPS")

Basic EPS is computed by dividing reported earnings (loss) by the weighted-
average common shares outstanding.  Diluted EPS is calculated as follows:

  (Dollars in thousands          Three Months Ended        Six Months Ended
   except per share data)              June 30,                June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006       2005
                               ----------- -----------  ----------- -----------
Numerator:
  Continuing operations
   (after preferred stock
    dividends), as reported    $   74,144  $   66,808   $  120,374  $  106,282
  Add-backs:
    Dividends on
     Series B preferred
     stock, net of
     replacement funding              290         297          545         561
                               ----------- -----------  ----------- -----------
  Continuing operations            74,434      67,105      120,919     106,843
                               ----------- -----------  ----------- -----------
  Discontinued operations          (5,220)      2,263       (6,779)     (8,125)
                               ----------- -----------  ----------- -----------
  Available to common
   shareholders                $   69,214  $   69,368   $  114,140  $   98,718
                               =========== ===========  =========== ===========

Denominator:
 Weighted-average common
  shares outstanding           49,676,912  52,166,814   50,793,078  52,257,396
 Stock options and
  nonvested stock                 494,347     711,059      502,945     937,696
 Series B preferred stock       2,932,746   3,138,640    2,932,746   3,138,640
                               ----------- -----------  ----------- -----------
                               53,104,005  56,016,513   54,228,769  56,333,732
                               =========== ===========  =========== ===========

 Anti-dilutive stock
  options not included in
  denominator                     321,700     362,700      325,700     332,200
                               =========== ===========  =========== ===========

Earnings (Loss) per Diluted
 Share:
   Continuing operations       $     1.40  $     1.20   $     2.23  $     1.90
   Discontinued operations          (0.10)       0.04        (0.13)      (0.15)
                               ----------- -----------  ----------- -----------
   Available to common
    shareholders               $     1.30  $     1.24   $     2.10  $     1.75
                               =========== ===========  =========== ===========

Income Taxes

Deferred income taxes are provided for the tax effect of temporary
differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements.  Con-way uses the liability
method to account for income taxes, which requires deferred taxes to be
recorded at the statutory rate to be in effect when the taxes are paid.  At
June 30, 2006 and December 31, 2005, income tax receivables of $10.9 million
and $31.5 million, respectively, were included in Other Accounts Receivable
in Con-way's Consolidated Balance Sheets.

Self-Insurance Accruals

Con-way uses a combination of purchased insurance and self-insurance programs
to provide for the costs of medical, casualty, liability, vehicular, cargo,
and workers' compensation claims.  Con-way participates in a re-insurance
pool to reinsure a portion of its workers' compensation liabilities, as more
fully discussed in Note 1, "Principal Accounting Policies - Self-Insurance
Accruals," of Item 8, "Financial Statements and Supplementary Data," in Con-
way's 2005 Annual Report on Form 10-K.  Annually, each participant in the
pool reinsures claims with the pool and assumes claims of an approximately
equal amount.  Reinsurance does not relieve Con-way of its liabilities under
the original policy.  In the 2006 plan year, Con-way increased its
participation in the re-insurance pool when compared to the 2005 plan year.
Con-way's higher participation level in 2006 resulted in a $13.9 million
increase in the amount of annual premiums Con-way is obligated to pay the re-
insurance pool and resulted in a similar increase in unearned annual premiums
the re-insurance pool is obligated to pay to Con-way.  Con-way's prepaid
premiums and unearned premiums are recognized ratably over the year and the
unamortized amounts are reported in the Consolidated Balance Sheets in
prepaid expenses and accrued liabilities, respectively.

Property, Plant and Equipment

Con-way periodically evaluates whether changes to estimated useful lives are
necessary to ensure that these estimates accurately reflect the economic use
of the assets.  In the second quarter of 2006, Con-way extended the estimated
useful lives for certain classes of revenue equipment from 10 years to 13
years.  Revenue equipment is depreciated on a straight-line basis over its
estimated useful life, which ranges from 5 to 13 years.  The effect of this
change did not have a material effect on Con-way's results of operations for
the periods presented.

New Accounting Standards

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment" ("SFAS
123R"), a revision of SFAS 123, "Accounting for Stock-Based Compensation"
("SFAS 123") that supersedes Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and its related
implementation guidance.  SFAS 123R eliminates the alternative to use APB
25's intrinsic-value method of accounting that was provided in SFAS 123 as
originally issued, and requires companies to recognize the cost of employee
services received in exchange for awards of equity instruments based on the
grant-date fair value of those awards (with limited exceptions) over the
period during which an employee is required to provide service in exchange
for the award.  The adoption of SFAS 123R also requires new disclosures and
additional accounting related to income taxes, earnings per share, and the
cash flow effects of share-based compensation.  See Note 8, "Share-Based
Compensation" for more information on the effects of the new accounting
standard.

In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of SFAS 109" ("FIN 48"),
which clarifies the accounting for uncertainty in tax positions.  FIN 48 is a
comprehensive model for how a company should recognize, measure, present, and
disclose in its financial statements uncertain tax positions that the company
has taken or expects to take on a tax return.  Tax positions shall be
recognized only when it is more likely than not that the position will be
sustained upon examination by a taxing authority.  If the position meets the
more-likely-than-not criteria, it should be measured using a probability-
weighted approach as the largest amount of tax benefit that is greater than
50% likely of being realized upon settlement.  It requires previously
recognized tax positions that no longer meet the more-likely-than-not
recognition threshold to be derecognized in the first subsequent financial
reporting period in which the threshold is no longer met.  FIN 48 requires
expanded disclosure, which includes a reconciliation of the unrecognized tax
benefits at the beginning and end of the period. The effective date of FIN 48
is the first fiscal year beginning after December 15, 2006.  Con-way is
currently assessing the effect that FIN 48 will have on its financial
statements.

Reclassification

Certain amounts in the prior-period financial statements have been
reclassified to conform to the current-period presentation.

In the third quarter of 2005, Con-way reclassified the reporting of a $29.4
million first-quarter payment from UPS in the Consolidated Statements of Cash
Flows.  The first-quarter payment, which is more fully discussed below in
Note 2, "Discontinued Operations," has been reclassified to investing
activities from operating activities, where it was reported in Con-way's 2005
first- and second-quarter reports on Form 10-Q.

In the fourth quarter of 2005, Con-way reclassified the reporting of
variable-rate demand notes in its financial statements from cash and cash
equivalents to marketable securities.  In the Consolidated Statements of Cash
Flows for the six months ended June 30, 2005, the revised classification of
these securities decreased beginning cash and cash equivalents by $40.0
million and reduced investing activities by $44.2 million from the amounts
reported in Con-way's 2005 second-quarter report on Form 10-Q.


2.  Discontinued Operations

Discontinued operations in the periods presented relate to the closure of
Con-way Forwarding, the sale of MWF, and the shut-down of EWA and its
terminated Priority Mail contract with the U.S. Postal Service ("USPS").  The
results of operations, net liabilities, and cash flows of discontinued
operations have been segregated from continuing operations, except where
otherwise noted.

Results of discontinued operations are summarized below:

                                 Three Months Ended        Six Months Ended
                                      June 30,                June 30,
                               -----------------------  -----------------------
  (Dollars in thousands)          2006        2005         2006        2005
                               ----------- -----------  ----------- -----------

Revenues
  Con-way Forwarding           $    9,544  $   12,310   $   21,699  $   24,398

Loss from Discontinued
 Operations
   Con-way Forwarding
     Loss before income tax        (1,493)     (1,071)      (2,963)     (2,177)
      benefit
     Income tax benefit               317         383        1,034         877
                               ----------- -----------  ----------- -----------
                               $   (1,176) $     (688)  $   (1,929) $   (1,300)
                               =========== ===========  =========== ===========
Gain (Loss) from Disposal,
 net of tax
   Con-way Forwarding          $   (5,128) $       --   $   (5,128) $       --
   MWF                              1,025       3,633          644      (6,143)
   EWA and Other                       59        (682)        (366)       (682)
                               ----------- -----------  ----------- -----------
                               $   (4,044) $    2,951   $   (4,850) $   (6,825)
                               =========== ===========  =========== ===========

The assets and liabilities of discontinued operations are presented in the
Consolidated Balance Sheets under the captions "Assets (or Liabilities) of
Discontinued Operations."  At June 30, 2006 and December 31, 2005, assets of
discontinued operations were $18.0 million and $21.0 million respectively,
and liabilities of discontinued operations were $31.4 million and $40.6
million, respectively.  As of the balance sheet dates reported, assets of
discontinued operations consisted primarily of deferred taxes, while
liabilities of discontinued operations included primarily accrued
liabilities.

Con-way Forwarding

On June 2, 2006, Con-way closed the operations of its domestic air freight
forwarding business known as Con-way Forwarding.  The decision to close the
operating unit was made following management's detailed review of the unit's
competitive position and its prospects in relation to Con-way's long-term
strategies.  As a result of the closure, Con-way recognized a second-quarter
$5.1 million loss (net of a $2.8 million tax benefit), due primarily to a
$4.0 million write-off of non-transferable capitalized software and other
assets, a $2.2 million loss related to non-cancelable operating leases, and
$0.7 million of employee severance costs. Reflecting the write-off of assets
and accrual of related costs, the remaining assets and liabilities related to
the Con-way Forwarding operating unit at June 30, 2006 were $4.9 million and
$5.9 million, respectively.

MWF

In October 2004, Con-way and Menlo Worldwide, LLC ("MW") entered into a stock
purchase agreement with UPS to sell all of the issued and outstanding capital
stock of MWF.  Con-way completed the sale in December 2004, as more fully
discussed below.  The stock purchase agreement excludes certain assets and
liabilities of MWF and includes certain assets and liabilities of Con-way or
its subsidiaries related to the business conducted by MWF.  Among the assets
and liabilities so excluded are those related to EWA, and the obligation
related to MWF employees covered under Con-way's domestic pension,
postretirement medical and long-term disability plans.  Under the agreement,
UPS agreed to pay to Con-way an amount equal to MWF's cash position as of
December 31, 2004, and to pay the estimated present value of Con-way's
retained obligations related to MWF employees covered under Con-way's long-
term disability and postretirement medical plans, as agreed to by the
parties.  Under the stock purchase agreement, Con-way has agreed to a three-
year non-compete covenant that, subject to certain exceptions, will limit
Con-way's annual air freight and ocean forwarding and/or customs brokerage
revenues to $175 million through December 19, 2007.  Con-way has also agreed
to indemnify UPS against certain losses that UPS may incur after the closing
of the sale with certain limitations.  Any losses related to these
indemnification obligations or any other costs, including any future cash
expenditures, related to the sale that have not been estimated and recognized
at this time will be recognized in future periods as an additional loss from
disposal when and if incurred.

Upon completion of the sale of MWF on December 19, 2004, Con-way received
cash consideration of $150 million, subject to certain post-closing
adjustments, including adjustments for cash held by MWF at closing and MWF's
net working capital as of closing.  Following settlement of the MWF cash
balance in March 2005, Con-way received cash of $29.4 million and recognized
a first-quarter net loss from disposal in 2005 of $9.8 million, primarily to
recognize the difference between the actual cash received and Con-way's
estimate of the cash position at December 31, 2004, and to accrue additional
estimated transaction costs.  In the second quarter of 2005, Con-way
recognized a $3.6 million gain for revisions to disposal-related cost
estimates.

Con-way's disposal of MWF generated a capital loss for tax purposes.  Under
current tax law, capital losses can only be used to offset capital gains.
Since Con-way did not forecast any significant taxable capital gains in the
five-year tax carryforward period, the $40.8 million cumulative disposal-
related tax benefit at December 31, 2004 was fully offset by a valuation
allowance of an equal amount.  The cumulative disposal-related tax benefit
and the associated valuation allowance declined to $30.0 million at December
31, 2005 and June 30, 2006, due primarily to third-quarter sale-related
proceeds received from UPS in 2005 and revisions to the tax effect of sale-
related estimates in 2005, partially offset by the first-quarter disposal-
related capital loss in 2005.

See Note 2, "Discontinued Operations," of Item 8, "Financial Statements and
Supplementary Data," in Con-way's 2005 Annual Report on Form 10-K for a
complete description of the disposition of MWF, including a discussion of
losses from impairment and disposal of MWF and of cash payments received from
UPS in connection with sale of MWF.

EWA

The results of EWA relate to the cessation of its air-carrier operations in
2001 and to the termination of its Priority Mail contract with the USPS in
2000.  EWA's estimated loss reserves declined to $25.4 million at June 30,
2006 from $34.1 million at December 31, 2005 due primarily to the $9.2
million litigation settlement described below.  EWA's remaining loss reserves
at June 30, 2006 were reported in Liabilities of Discontinued Operations and
consisted of Con-way's estimated remaining exposure related to the labor
matters described below, and other litigation-related losses, as more fully
discussed in Note 10, "Commitments and Contingencies."

In connection with the cessation of its air-carrier operations in 2001, EWA
terminated the employment of all of its pilots and flight crewmembers.  Those
pilots and crewmembers were represented by the Air Line Pilots Association
("ALPA") union under a collective bargaining agreement.  Subsequently, ALPA
filed grievances on behalf of the pilots and flight crewmembers protesting
the cessation of EWA's air-carrier operations and MWF's use of other air
carriers.  The ALPA matters are the subject of litigation in U.S. District
Court, including litigation brought by former EWA pilots and flight
crewmembers no longer represented by ALPA, and, depending on the outcome of
that litigation, may be subject to binding arbitration.  Based on management's
current evaluation, Con-way believes that it has provided for its estimated
remaining exposure related to the ALPA matters. However, there can be no
assurance in this regard as Con-way cannot predict with certainty the
ultimate outcome of these matters.

In addition, in 2002, EWA, Menlo Worldwide Forwarding, Inc. ("MWF, Inc."),
and Con-way Inc. were named as defendants in a lawsuit filed in state court
in California by approximately 140 former EWA pilots and flight crewmembers.
The lawsuit alleged wrongful termination in connection with the termination
of EWA's air-carrier operations, and sought $500 million and certain other
unspecified damages. On June 30, 2006, EWA, for itself and for Con-way Inc.
and MWF, concluded a final settlement with all plaintiffs not previously
dismissed in the lawsuit. Under the terms of the settlement, plaintiffs
received a cash payment of $9.2 million from EWA, and the lawsuit was
dismissed with prejudice.  Con-way believes that the cash settlement reduces
by an equal amount its estimated loss reserve applicable to the grievances
filed by ALPA.


3.  Investment in Unconsolidated Joint Venture

Vector SCM, LLC ("Vector") is a joint venture formed with General Motors
("GM") in December 2000 for the purpose of providing logistics management
services on a global basis for GM, and for customers in addition to GM.  As
more fully discussed below, on June 23, 2006, GM exercised its call right to
purchase MW's membership interest in Vector.  The agreements provide a
valuation methodology for the fair value of MW's membership interest in
Vector, as defined below, and a framework for transition.

MW Capital and Profit Interest in Vector

Under the joint venture agreements, MW's membership interest in Vector
consists of MW's capital account, its portion of Vector's undistributed
earnings, and its profit interest in Vector.  At June 30, 2006 and December
31, 2005, MW's capital account and undistributed earnings totaled $42.4
million and $33.6 million, respectively, and were reported net of Con-way's
payable to Vector in Deferred Charges and Other Assets in Con-way's
Consolidated Balance Sheets.

In exchange for assets contributed, MW's capital account on Vector's date of
formation was $10.0 million.  No additional capital account contributions
have been made subsequent to the date of formation.  Although MW owns a
majority interest in Vector, MW's portion of Vector's operating results are
reported in the Menlo Worldwide reporting segment as an equity-method
investment based on GM's ability to control certain operating decisions.

Profit and loss are allocated to MW and GM on a percentage basis.  MW's
portion of Vector's net income, which is reported as a reduction of operating
expenses in Con-way's Statements of Consolidated Income, does not include
any provision for U.S. federal income taxes that will be incurred by Con-way,
but does include a provision for MW's portion of Vector's income taxes on
foreign income, as more fully discussed in Note 3, "Investment in
Unconsolidated Joint Venture," of Item 8, "Financial Statements and
Supplementary Data," in Con-way's 2005 Annual Report on Form 10-K.  MW's
undistributed earnings from Vector at June 30, 2006 and December 31, 2005,
before provision for Con-way's related parent income taxes, were $32.4
million and $23.6 million, respectively.

Vector Affiliate Accounts with Con-way

Vector participates in Con-way's centralized cash management system, and,
consequently, Vector's domestic trade accounts payable are paid by Con-way
and settled through Vector's affiliate accounts with Con-way.  In addition,
excess cash balances in Vector's bank accounts, if any, are invested by Con-
way and settled through affiliate accounts, which earn interest income based
on a rate earned by Con-way's cash-equivalent investments and marketable
securities.  As a result of Vector's excess cash invested by Con-way, Con-
way's payable to Vector as of June 30, 2006 and December 31, 2005 was $32.9
million and $22.0 million, respectively, as reported in Deferred Charges and
Other Assets in Con-way's Consolidated Balance Sheets.

Call Right and Put Right

Under the Vector Agreements, GM has the right to purchase MW's membership
interest in Vector ("Call Right") and MW has the right to require GM to
purchase MW's membership interest in Vector ("Put Right").  The Call Right
and Put Right are exercisable at the sole discretion of GM and MW,
respectively.  Under the amended Vector Agreements, the amount payable by GM
to MW under the Put Right is based on a mutually agreed-upon value for MW's
membership interest as of the contract amendment date and will decline on a
straight-line basis over an 8-year period beginning January 1, 2004.  The
amount payable by GM to MW under the Call Right is the fair value for MW's
membership interest in Vector as determined by approved appraisers.  Exercise
of MW's Put Right or GM's Call Right results in MW retaining any
commercialization contracts involving customers other than GM.

GM Exercise of Call Right

As a result of GM's exercise of the Call Right, Con-way is entitled to
receive the fair value of MW's membership interest in Vector as of June 22,
2006.  Con-way believes that the fair value of MW's membership interest in
Vector consists of the amount of MW's capital account, the amount of MW's
portion of Vector's undistributed earnings, and the fair value of MW's portion
of Vector's future profit.  At June 30, 2006, MW's capital account and MW's
portion of undistributed earnings in Vector totaled $42.4 million.

Under the Vector agreements, each party will engage a financial advisor to
develop a valuation within 75 days of the call date.  If the parties are
unable to resolve any difference in excess of ten percent between the
financial advisors' valuations, a third financial advisor will be retained to
perform a valuation within 30 days, which will be used to arrive at the final
valuation.  The proceeds from the valuation are to be paid within 30 days
following completion of the valuation or the end of the transition period
described below, whichever occurs later.  Proceeds received in excess of MW's
capital account and MW's portion of undistributed earnings in Vector will be
reported as a gain from continuing operations.

Con-way will provide transition services for a transition period up to nine
months from the call date.  Customary costs incurred by Con-way during this
transition period, including those related to personnel, technology and other
intellectual property, are required to be reimbursed by GM.

As part of the sale of MW's membership interest, Con-way expects to settle
its affiliate payable to Vector, as described above.  In addition, the $10
million line of credit provided by Con-way to Vector has been automatically
terminated.  As of June 30, 2006, there were no loans outstanding under the
line of credit.

Con-way is currently in discussions with GM as to the valuation amount and
transition terms for Vector operations.  While Con-way believes that it is
entitled to receive the payments described above and therefore expects to
realize a gain from the sale of MW's membership interest to GM, it has not
reached agreement with GM and cannot predict with certainty the ultimate
outcome of these matters.


4.  Reporting Segments

Con-way discloses segment information in the manner in which the components
are organized for making operating decisions, assessing performance and
allocating resources.  For financial reporting purposes, Con-way is divided
into three reporting segments: Con-way Freight and Transportation, Menlo
Worldwide and Con-way Other.  Menlo Worldwide consists of the operating
results of Menlo Worldwide Logistics ("Logistics") and Vector, the joint
venture with GM that is accounted for as an equity-method investment.
Certain corporate activities are reported in the Con-way Other reporting
segment.

Organization and Re-branding Initiative

On April 18, 2006, shareholders approved management's proposal to change the
Company's name to Con-way Inc.  As a part of the strategy to bring the
Company's operations under a single master brand, reporting units and
segments were revised as described below.

Con-way Freight and Transportation includes the combined operating results of
Con-way Freight and Con-way Transportation.  Con-way Freight includes the
U.S. less-than-truckload ("LTL") companies, formerly known as Con-Way Western
Express, Con-Way Central Express and Con-Way Southern Express, which are
being converted to the single Con-way Freight logo and colors.  Also included
in Con-way Freight are Con-Way Canada Express, which is renamed Con-way
Canada, and Con-way Mexico.  Collectively, these units provide primarily
next-day and second-day LTL freight transportation throughout the U.S.,
Canada and Mexico within an integrated regional-carrier network.  Con-way
Transportation provides asset-based regional and transcontinental full-
truckload services, dedicated expediting throughout North America and
domestic brokerage services for truckload and intermodal shipments.  Under
the new master brand initiative, the former Con-Way NOW expediting unit and
Con-Way Full Load brokerage were renamed, collectively, Con-way Expedite and
Brokerage.  As more fully discussed below, the Con-way Expedite portion of
that business was sold in July 2006.  Con-way Truckload will retain its
existing name.  Also within Con-way Transportation is its trailer
manufacturing company, Road Systems.  Logistics will continue to operate
under its existing name within the corporate Con-way master brand while Con-
way examines global trademark issues and requirements.  Once the research is
completed, a decision to change the Menlo name to Con-way will be considered.

Segment results reported below reflect (1) the integration of the former Con-
way Logistics with Menlo Worldwide Logistics effective in the second quarter
of 2005, (2) the reporting of Road Systems in the Con-way Freight and
Transportation operating segment rather than the Con-way Other reporting
segment effective in the first quarter of 2006, and (3) the closure of Con-
way's domestic air freight forwarding business known as Con-way Forwarding in
June 2006, which requires that the operating unit be excluded from the Con-
way Freight and Transportation operating segment and be reported separately
as discontinued operations. Prior-period segment results have been
reclassified to reflect the above and to conform to the current-period
presentation.

On June 23, 2006, GM exercised its call right to purchase MW's membership
interest in Vector, as more fully discussed in Note 3, "Investment in
Unconsolidated Joint Venture."

On July 21, 2006, Con-way executed an agreement with Panther Expedited
Services, Inc. ("Panther") for Panther to purchase a portion of Con-way
Expedite and Brokerage.  Under the agreement, Con-way will sell to Panther
the customer list, owner-operator relationships and certain equipment of Con-
way Expedite and Con-way will retain Con-way Brokerage, the portion of
business involved in truckload brokerage.  As part of the transaction, Con-
way has executed a non-compete agreement with Panther and has agreed to exit
the expedited market immediately.  In connection with the sale, Con-way
received proceeds of $7.0 million in July 2006 and could receive up to an
additional $1.0 million dependent on certain incentive provisions.  Con-way
estimates that the sale will result in a third-quarter gain in 2006 in
continuing operations of approximately $6 million.

Financial Data

Management evaluates segment performance primarily based on revenue and
operating income (loss), except for Vector, which is evaluated based on MW's
proportionate share of Vector's income before taxes.  Accordingly, interest
expense, investment income and other non-operating items are not reported in
segment results.  Corporate expenses are generally allocated based on
measurable services provided to each segment or, for general corporate
expenses, based on segment revenue and capital employed.  Inter-segment
revenue and related operating income have been eliminated to reconcile to
consolidated revenue and operating income.

                                 Three Months Ended         Six Months Ended
  (Dollars in thousands)                June 30,                June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006        2005
                               ----------- -----------  ----------- -----------
Revenues from
 External Customers
   Con-way Freight and
    Transportation             $  754,353  $  704,529   $1,450,483  $1,338,175
   Menlo Worldwide Logistics      345,699     317,036      695,561     618,985
                               ----------- -----------  ----------- -----------
                               $1,100,052  $1,021,565   $2,146,044  $1,957,160
                               =========== ===========  =========== ===========
Inter-segment
 Revenues
   Con-way Freight and
    Transportation             $   22,420  $   16,143   $   45,629  $   31,723
   Menlo Worldwide Logistics          226          --          226          --
                               ----------- -----------  ----------- -----------
                               $   22,646  $   16,143   $   45,855  $   31,723
                               =========== ===========  =========== ===========

Revenues before
 Inter-segment Eliminations
   Con-way Freight and
    Transportation             $  776,773  $  720,672   $1,496,112  $1,369,898
   Menlo Worldwide Logistics      345,925     317,036      695,787     618,985
   Inter-segment Revenue
    Eliminations                  (22,646)    (16,143)     (45,855)    (31,723)
                               ----------- -----------  ----------- -----------
                               $1,100,052  $1,021,565   $2,146,044  $1,957,160
                               =========== ===========  =========== ===========
Operating Income (Loss)
  Con-way Freight and
   Transportation              $  102,276  $   96,014   $  169,079  $  160,168
  Menlo Worldwide
    Logistics                       6,093       5,634       12,278      10,664
    Vector                          6,777       4,941       12,049       8,976
                               ----------- -----------  ----------- -----------
                                   12,870      10,575       24,327      19,640
                               ----------- -----------  ----------- -----------
  Con-way Other                    (1,201)       (955)        (475)       (324)
                               ----------- -----------  ----------- -----------
                               $  113,945  $  105,634   $  192,931  $  179,484
                               ----------- -----------  ----------- -----------
Reconciliation of segments
 to consolidated amount:
   Income tax related to
    Vector, an equity-method
    investment                     (2,112)     (1,522)      (3,190)     (1,522)
                               ----------- -----------  ----------- -----------
                               $  111,833  $  104,112   $  189,741  $  177,962
                               =========== ===========  =========== ===========


5.  Employee Benefit Plans

Employees of Con-way and its subsidiaries in the U.S. are covered under
several defined benefit pension plans ("Pension Plans") and a postretirement
medical plan ("Postretirement Plan").  The Pension Plans consist of a plan
that covers the non-contractual employees and former employees of continuing
operations and the former employees of discontinued operations (the
"Retirement Plan").  Certain other pension plans cover only the former
employees of the discontinued Forwarding segment (the "Forwarding Plans").
Con-way completed the sale of MWF in December 2004 and retained the
obligations related to the MWF employees covered under the Retirement Plan
and the Postretirement Plan as well as the net prepaid benefit cost related
to the Forwarding Plans.

The employee benefit plan interim disclosures presented below are provided
only for the Retirement Plan and the Postretirement Plan, including employees
and former employees of continuing operations and the former employees of
discontinued operations who are covered by those plans. As more fully
discussed in Note 9, "Benefit Plans," of Item 8, "Financial Statements and
Supplementary Data" in Con-way's 2005 Annual Report on Form 10-K, the benefit
expense associated with employees of MWF and EWA covered under the Retirement
Plan and Postretirement Plan was reported in the Consolidated Statements of
Income as discontinued operations in 2005, but is reported as continuing
operations in 2006.

Retirement Plan

The following table summarizes the components of net periodic benefit expense
for the Retirement Plan:


                                  Three Months Ended       Six Months Ended
                                       June 30,                 June 30,
                               -----------------------  -----------------------
 (Dollars in thousands)            2006       2005         2006        2005
                               ----------- -----------  ----------- -----------

Service cost - benefits
 earned during the quarter     $   13,161  $   12,120   $   27,102  $   24,004
Interest cost on
 benefit obligation                13,075      12,924       27,354      25,788
Expected return on plan assets    (15,494)    (14,122)     (32,936)    (28,726)
Net amortization and deferral       2,007       1,173        3,665       1,734
                               ----------- -----------  ----------- -----------
 Net periodic benefit expense  $   12,749  $   12,095   $   25,185  $   22,800
                               =========== ===========  =========== ===========

In the presentation above, the portion of benefit expense that relates to
discontinued operations was immaterial for the periods presented.

Con-way currently estimates that it will contribute $75 million to its
Pension Plans in 2006, including $25.0 million contributed in April 2006 and
$25.0 million contributed in July 2006.


Postretirement Plan

The following table summarizes the components of net periodic benefit expense
for the Postretirement Plan:


                                  Three Months Ended       Six Months Ended
                                       June 30,                 June 30,
                               -----------------------  -----------------------
 (Dollars in thousands)            2006       2005         2006        2005
                               ----------- -----------  ----------- -----------

Service cost - benefits
 earned during the quarter     $      540  $      121   $    1,068  $      262
Interest cost on
 benefit obligation                 1,752         535        3,301       1,098
Net amortization and deferral         620         347        1,136         377
                               ----------- -----------  ----------- -----------
 Net periodic benefit expense  $    2,912  $    1,003   $    5,505  $    1,737
                               =========== ===========  =========== ===========


In the presentation above, the portion of benefit expense that relates to
discontinued operations was immaterial for the periods presented.


6.  Comprehensive Income

Comprehensive income, which is a measure of all changes in equity except
those resulting from investments by owners and distributions to owners, was
as follows:


                                  Three Months Ended       Six Months Ended
                                       June 30,                 June 30,
                               -----------------------  -----------------------
 (Dollars in thousands)            2006       2005         2006        2005
                               ----------- -----------  ----------- -----------

Net income                     $   70,732  $   71,107   $  117,166  $  102,182

Other comprehensive
 income (loss):
   Foreign currency
    translation adjustment             (5)        223          501         611
                               ----------- -----------  ----------- -----------
 Comprehensive income          $   70,727  $   71,330   $  117,667  $  102,793
                               =========== ===========  =========== ===========

The following is a summary of the components of Accumulated Other
Comprehensive Loss, net of tax:

                                             June 30,    December 31,
 (Dollars in thousands)                        2006          2005
                                           ------------  ------------

Accumulated foreign currency
 translation adjustments                   $      (431)  $      (932)
Minimum pension liability adjustment           (36,175)      (36,175)
                                           ------------  ------------
  Accumulated other comprehensive loss     $   (36,606)  $   (37,107)
                                           ============  ============


7.  Common Stock Repurchase Program

In January 2005, the Board of Directors authorized the repurchase of up to
$300 million in Con-way's common stock from time to time during a two-year
period in open-market and privately negotiated transactions.  As described
below, Con-way's Board of Directors on April 24, 2006 authorized an expanded
repurchase program that replaced the $300 million program approved in January
2005.   Under the old program, Con-way repurchased common stock of $189.6
million from January 1, 2005 through April 24, 2006, and no additional shares
will be repurchased under that program.  Under the new program, Con-way is
authorized to repurchase an additional $400 million of common stock through
open-market purchases and privately negotiated transactions from time to time
in such amounts as management deems appropriate through the end of the second
quarter of 2007.  Under the new program, Con-way repurchased common stock of
$221.2 million from April 27, 2006 through June 30, 2006, leaving $178.8
million available for future repurchases of common stock.


8.  Share-Based Compensation

Under terms of Con-way's share-based compensation plans, employees and
directors are granted options to purchase Con-way's common stock and, in some
cases, are awarded nonvested shares of Con-way's common stock (also known as
restricted stock).  Stock options are granted at prices equal to the market
value of the common stock on the date of grant and expire 10 years from the
date of grant.  Generally, stock options are granted with three- or four-year
graded-vesting terms, under which one-third or one-fourth of the award vests
each year, respectively.  Stock options granted in and after December 2004
generally have three-year graded-vesting terms, while stock options issued
before that date generally have four-year graded-vesting terms.  Certain
option awards provide for accelerated vesting if there is a change in control
(as defined in the stock option plans).  Shares of nonvested stock are valued
at the market price of Con-way's common stock at the date of award and are
generally granted with three-year graded-vesting terms.  At June 30, 2006,
Con-way had 6,344,211 common shares available for the grant of stock options,
restricted stock, or other share-based compensation under its equity plans.

Effective January 1, 2006, Con-way adopted the provisions of SFAS 123R, which
requires recognition of compensation expense to share-based payment awards
issued to Con-way's employees and directors.  Con-way previously applied the
recognition provisions of APB 25 and provided the required pro forma
disclosures under SFAS 123.

Pro Forma Information for Periods Prior to Adoption of SFAS 123R

Prior to the adoption of SFAS 123R, Con-way did not recognize compensation
expense for stock option awards, as all options had an exercise price equal
to the market value of the underlying common stock on the date of grant.  For
shares of nonvested stock, Con-way recognized expense using the accelerated
amortization method under FIN 28, "Accounting for Stock Appreciation Rights
and Other Variable Stock Option or Award Plans," based on the estimated
grant-date fair value.

In accordance with the disclosures required under SFAS 123, as amended by
SFAS 148, "Accounting for Stock-Based Compensation," Con-way provided pro
forma disclosures in periods prior to adoption of SFAS 123R.  In the pro
forma disclosures, compensation expense attributable to stock options and
shares of nonvested common stock has been amortized on a straight-line basis
over the requisite service period stated in the award and forfeitures have
been recognized as they occurred.

The table below is presented for comparative purposes and illustrates the pro
forma effect on net income and earnings per share as if Con-way had applied
the fair-value recognition provisions of SFAS 123 to share-based compensation
prior to January 1, 2006:


 (Dollars in thousands,               Three Months Ended     Six Months Ended
  except per share data)                 June 30, 2005         June 30, 2005
                                     --------------------  --------------------
Net income available to common
 shareholders, as reported           $            69,071   $            98,157
Share-based compensation (expense)
 income included in reported
 income, net of tax                                  (18)                  395
Compensation expense, net of tax,
 that would have been included in
 net income if the fair-value
 method had been applied                          (1,613)               (3,163)
                                     --------------------  --------------------
Pro forma net income as if the
 fair-value method had been applied  $            67,440   $            95,389
                                     ====================  ====================
Earnings per share:
  Basic:
    As reported                      $              1.32   $              1.88
                                     ====================  ====================
    Pro forma                        $              1.29   $              1.83
                                     ====================  ====================
  Diluted:
    As reported                      $              1.24   $              1.75
                                     ====================  ====================
    Pro forma                        $              1.21   $              1.70
                                     ====================  ====================


Impact of the Adoption of SFAS 123R

Con-way adopted SFAS 123R using the modified prospective transition method
beginning January 1, 2006.  Under the modified prospective method,
compensation expense recognized in the first half of 2006 includes (1)
compensation cost for all share-based payments granted prior to, but not yet
vested as of January 1, 2006, based on the grant-date fair value estimated in
accordance with the original provisions of SFAS 123, adjusted for estimated
forfeitures, and (2) compensation cost for all share-based payments granted
subsequent to January 1, 2006, based on the grant-date fair value estimated
in accordance with the provisions of SFAS 123R.

In accordance with SFAS 123R, compensation expense for options granted
subsequent to January 1, 2006 will be recorded on a straight-line basis over
the shorter of (1) the requisite service period stated in the award or (2)
the period from the grant date of the award up to the date the employee is no
longer obligated to perform service in order to retain the award.  For awards
granted prior to, but not yet vested upon adoption of SFAS 123R, compensation
expense will be recognized over the requisite service period stated in the
award.

The following is the effect of adopting SFAS 123R:

                                  Three Months Ended        Six Months Ended
                                   June 30, 2006             June 30, 2006
                               -----------------------  -----------------------
                                  Stock     Nonvested      Stock     Nonvested
 (Dollars in thousands)          Options      Stock       Options      Stock
                               ----------- -----------  ----------- -----------
Compensation expense recognized
 Selling, general and
  administrative expenses      $    1,491  $      506   $    2,842  $      643
 Deferred income tax benefit          581         198        1,108         251
                               ----------- -----------  ----------- -----------
   Decrease in net income      $      910  $      308   $    1,734  $      392
                               =========== ===========  =========== ===========


As a result of adopting SFAS 123R, Con-way's income from continuing
operations before income taxes and net income from continuing operations for
the second quarter of 2006, were $1.5 million and $0.9 million lower,
respectively, and for the first half of 2006, were $2.8 million and $1.7
million lower, respectively, than if Con-way had continued to account for
stock-based compensation under APB 25.  In addition, basic and diluted
earnings per share for the second quarter of 2006 were $0.02 lower and for
the first half of 2006 were $0.03 lower.  SFAS 123R requires the benefits on
tax deductions in excess of recognized compensation expense to be reported as
a financing cash flow rather than as an operating activity, as required by
APB 25.  In accordance with SFAS 123R, $2.2 million of excess tax benefits
were reported as financing cash flows in the first half of 2006.

Valuation Assumptions

The fair value of each stock option grant is estimated using the Black-
Scholes option pricing model.  The following is a summary of the weighted-
average assumptions used and the calculated weighted-average fair value:

                                  Three Months Ended       Six Months Ended
                                       June 30,                June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006         2005
                               ----------- -----------  ----------- -----------
Estimated fair value             $ 18.04     $ 17.29      $ 16.95     $ 17.98
Risk-free interest rate             5.1%        4.0%         4.8%        3.8%
Expected term (years)               4.50        5.50         4.50        5.53
Expected volatility                  30%         41%          31%         42%
Expected dividend yield            0.71%       1.20%        1.10%       1.19%

The risk-free interest rate is determined using the U.S. Treasury zero-coupon
issue with a remaining term equal to the expected life of the option.  The
expected life of the option is derived from a binomial lattice model, which
is based on the historical rate of voluntary exercises, post-vesting
terminations and volatility.  Expected volatility is based on the historical
volatility of Con-way's common stock over the most recent period equal to the
expected term of the option.


Share-Based Payment Award Activity

The following table summarizes stock-option award activity for the six months
ended June 30, 2006:

                                            Stock Options
                                    -----------------------------
                                     Number of       Wtd-Avg.
                                      Options     Exercise Price
                                    -----------  ----------------
Outstanding at December 31, 2005     1,729,550      $     34.29
  Granted                              320,900            55.14
  Exercised                           (376,350)           31.22
  Expired or cancelled                 (22,093)           43.34
                                    -----------
Outstanding at June 30, 2006         1,652,007      $     38.92
                                    ===========

Exercisable at June 30, 2006           901,727      $     32.64
                                    ===========


                                                 Outstanding  Exercisable
                                                 -----------  -----------
Weighted-average remaining contractual term       6.92 years   5.47 years
Aggregate intrinsic value (in thousands)         $   31,410   $   22,808

The aggregate intrinsic value reported in the table above represents the
total pretax value, based on Con-way's closing common stock price of $57.93
at June 30, 2006, which would have been received by employees and directors
had all of the holders exercised their in-the-money stock options on that
date.  The aggregate intrinsic value of options exercised in the first half
of 2006 was $9.5 million, the total amount of cash received from the exercise
of options was $11.7 million and the related tax benefit realized from the
exercise of options was $3.7 million.

The total fair value of stock options that became vested in the first half of
2006 was $19.5 million, based on Con-way's closing common stock price on the
vesting date.  The total unrecorded deferred compensation cost on stock
options, net of forfeitures, was $9.3 million, which is expected to be
recognized over a weighted-average period of 1.87 years.

The following table summarizes nonvested stock award activity for the six
months ended June 30, 2006.


                                           Nonvested Stock
                                    -----------------------------
                                                     Wtd-Avg.
                                     Number of      Grant-Date
                                       Awards         Price
                                    -----------  ----------------
Outstanding at December 31, 2005       158,048      $     38.43
  Awarded                               20,186            51.51
  Vested                               (51,825)           36.65
                                    -----------
Outstanding at June 30, 2006           126,409      $     43.98
                                    ===========

The total fair value of nonvested stock that became vested in the first half
of 2006 was $2.8 million, based on Con-way's closing common stock price on
the vesting date.  The total unrecorded deferred compensation cost on shares
of nonvested stock, net of forfeitures, was $3.5 million, which is expected
to be recognized over a weighted-average period of 2.36 years.  In connection
with the adoption of SFAS 123R, Con-way eliminated the amount of deferred
compensation related to shares of nonvested stock, as recorded in
Shareholder's Equity in the Consolidated Balance Sheets on dates before
adoption.  As required by SFAS 123R, Con-way also reduced an equal and
related amount of additional paid-in capital on common stock.


9.  Income Taxes

Con-way's effective tax rate of 31.2% and 33.9% in the second quarter and
first half of 2006, respectively, increased from 30.1% and 33.3% in the
second quarter and first half of 2005, respectively.  Con-way's effective tax
rate in all periods presented reflect the effect of second-quarter discrete
tax items related to the settlement with the IRS of previous tax filings,
which reduced the tax provision in 2006 and 2005 by $6.9 million and $7.0
million, respectively.  Excluding the effect of these second-quarter
adjustments and other less significant first-quarter discrete items, the
effective tax provision rate in the second quarter and first half of 2006 was
37.4% and 37.8%, respectively, compared to 37.1% and 37.8% in the second
quarter and first half of 2005, respectively.


10.  Commitments and Contingencies

Spin-Off of CFC

On December 2, 1996, Con-way completed the spin-off of Consolidated
Freightways Corporation ("CFC") to Con-way's shareholders.  CFC was, at the
time of the spin-off, a party to certain multiemployer pension plans covering
some of its current and former employees.  The cessation of its U.S.
operations in 2002 resulted in CFC's "complete withdrawal" (within the
meaning of applicable federal law) from these multiemployer plans, at which
point it became obligated, under federal law, to pay its share of any
unfunded vested benefits under those plans.

It is possible that the trustees of CFC's multiemployer pension plans may
assert claims that Con-way is liable for amounts owing to the plans as a
result of CFC's withdrawal from those plans and, if so, there can be no
assurance that those claims would not be material.  Con-way has received
requests for information regarding the spin-off of CFC from representatives
from some of the pension funds, and, in accordance with federal law, Con-way
has responded to those requests.

Con-way believes that it would ultimately prevail if any such claims were
made, although there can be no assurance in this regard. Con-way believes
that the amount of those claims, if asserted, could be material, and a
judgment against Con-way for all or a significant part of these claims could
have a material adverse effect on Con-way's financial condition, results of
operations and cash flows.

Prior to the enactment in April 2004 of the Pension Funding Equity Act of
2004, if the multiemployer funds had asserted such claims against Con-way,
Con-way would have had a statutory obligation to make cash payments to the
funds prior to any arbitral or judicial decisions on the funds'
determinations.  Under the facts related to the CFC withdrawals and the law
in effect after enactment of the Pension Funding Equity Act of 2004, Con-way
would no longer be required to make such payments to the multiemployer funds
unless and until final decisions in arbitration proceedings, or in court,
upheld the funds' determinations.

As a result of the matters discussed above, Con-way can provide no assurance
that matters relating to the spin-off of CFC will not have a material adverse
effect on Con-way's financial condition, results of operations and cash
flows.

Other

In February 2002, a lawsuit was filed against EWA in the District Court for
the Southern District of Ohio, alleging violations of the Worker Adjustment
and Retraining Notification Act (the "WARN Act") in connection with employee
layoffs and ultimate terminations due to the August 2001 grounding of EWA's
airline operations and the shutdown of the airline operations in December
2001.  The court subsequently certified the lawsuit as a class action on
behalf of affected employees laid off between August 11 and August 15, 2001.
The WARN Act generally requires employers to give 60-days notice, or 60-days
pay and benefits in lieu of notice, of any shutdown of operations or mass
layoff at a site of employment.  The estimated range for potential loss on
this matter is zero to approximately $8 million.  Con-way intends to continue
to vigorously defend the lawsuit.

In September 2003, Con-way received notice from the U.S. Attorney's Office
for the District of Columbia that EWA is being considered for possible civil
action under the False Claims Act for allegedly submitting false invoices to
the USPS for payment under the Priority Mail contract. EWA subsequently
entered into a tolling agreement with the government in order to give the
parties more time to investigate the allegations. In November 2004, Con-way
representatives met with the government to discuss the government's
allegations, and at that time received certain information relating to the
government's investigation.  In addition, Con-way, on behalf of EWA,
conducted its own investigation into the allegations.  Under the False Claims
Act, the government would be entitled to recover treble damages, plus
penalties, if a court were to ultimately conclude that EWA knowingly
submitted false invoices to the USPS.  Based on management's current
evaluation, Con-way believes that it has provided for its estimated exposure
related to the allegations.  However, there can be no assurance in this
regard as Con-way cannot predict with certainty the outcome of this matter.

Con-way is a defendant in various other lawsuits incidental to its
businesses.  It is the opinion of management that the ultimate outcome of
these actions will not have a material effect on Con-way's financial
condition, results of operations, or cash flows.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

                                Introduction
                               --------------

Management's Discussion and Analysis of Financial Condition and Results of
Operations (referred to as "Management's Discussion and Analysis") is
intended to assist in a historical and prospective understanding of Con-way's
results of operations, financial condition and cash flows, including a
discussion and analysis of the following:

   * Overview of Business
   * Results of Operations
   * Liquidity and Capital Resources
   * Estimates and Critical Accounting Policies
   * Forward-Looking Statements

This discussion and analysis should be read in conjunction with the
information included in Con-way's 2005 Annual Report on Form 10-K.

                            Overview of Business
                           ----------------------

Con-way provides transportation, logistics and supply chain management
services for a wide range of manufacturing, industrial, and retail customers.
For financial reporting purposes, Con-way is divided into three reporting
segments: Con-way Freight and Transportation, primarily a provider of
regional less-than-truckload ("LTL") freight services; Menlo Worldwide, a
provider of integrated contract logistics solutions; and Con-way Other, which
includes certain corporate activities.  Menlo Worldwide consists of the
operating results of Menlo Worldwide Logistics ("Logistics") and Vector, a
joint venture with GM that is accounted for as an equity-method investment.

Con-way's operating-unit results depend on the number and weight of shipments
transported, the prices received on those shipments, and the mix of services
provided to customers, as well as the fixed and variable costs incurred by
Con-way in providing the services and the ability to manage those costs under
changing shipment levels.  Con-way Freight and Transportation primarily
transports shipments through a freight service center network while Logistics
and Vector manage the logistics functions of their customers and primarily
utilize third-party transportation providers for the movement of customer
shipments.

Organization and Re-branding Initiative

On April 18, 2006, shareholders approved management's proposal to change the
Company's name to Con-way Inc., as more fully discussed in Note 1, "Principal
Accounting Policies - Organization and Re-branding Initiative," of Item 1,
"Financial Statements."  Con-way has begun a re-branding initiative to
introduce a new Con-way logo and graphic identity as the master brand.  Con-
way's regional LTL operations have been renamed Con-way Freight, while the
Company's truckload, expedite and brokerage divisions and its trailer
manufacturer were made part of Con-way Transportation.  As more fully
discussed under "Results of Operations - Con-way Freight and Transportation,"
the expediting portion of that business was sold in July 2006.  Logistics
will continue to operate under its existing name within the corporate Con-way
master brand while Con-way examines global trademark issues and requirements.
Once the research is completed, a decision to change the Menlo name to Con-
way will be considered.  The Con-way re-branding initiative is expected to
incur costs of $25 million to $35 million. Complete conversion to the
Company's new graphic identity is scheduled to take 24 to 36 months.  In the
second quarter and first half of 2006, Con-way recognized re-branding expense
of $1.1 million and $1.3 million, respectively.

As more fully discussed in Note 2, "Discontinued Operations," of Item 1,
"Financial Statements," Con-way and Menlo Worldwide, LLC ("MW") in 2004 sold
MWF to UPS, and on June 2, 2006, Con-way closed the operations of its
domestic air freight forwarding business known as Con-way Forwarding.
Accordingly, the results of operations, net liabilities, and cash flows of
the Menlo Worldwide Forwarding segment and Con-way Forwarding operating unit
have been segregated and reported as discontinued operations, except where
otherwise noted.  Refer to Note 4, "Reporting Segments," of Item 1,
"Financial Statements," for additional discussion of organizational changes.

On June 23, 2006, GM exercised its call right to purchase MW's membership
interest in Vector, as more fully discussed in Note 3, "Investment in
Unconsolidated Joint Venture," of Item 1, "Financial Statements."



                            Results of Operations
                           -----------------------

The following table compares Con-way's consolidated operating results:

 (Dollars in thousands,
  except per shareamounts)        Three Months Ended        Six Months Ended
                                       June 30,                June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006        2005
                               ----------- -----------  ----------- -----------
Net Income (Loss)
  Continuing Operations 1      $   74,144  $   66,808   $  120,374  $  106,282
  Discontinued Operations          (5,220)      2,263       (6,779)     (8,125)
                               ----------- -----------  ----------- -----------
Available to
 Common Shareholders           $   68,924  $   69,071   $  113,595  $   98,157
                               =========== ===========  =========== ===========

Diluted Earnings
 (Loss) per Share
   Continuing Operations       $     1.40  $     1.20   $     2.23  $     1.90
   Discontinued Operations          (0.10)       0.04        (0.13)      (0.15)
                               ----------- -----------  ----------- -----------
   Available to
    Common Shareholders        $     1.30  $     1.24   $     2.10  $     1.75
                               =========== ===========  =========== ===========

1 After preferred stock dividends


Con-way's second-quarter net income from continuing operations (after
preferred stock dividends) grew 11.0% to $74.1 million ($1.40 per diluted
share) in 2006 from $66.8 million ($1.20 per diluted share) in 2005, and in
the first six months, grew 13.3% to $120.4 million ($2.23 per diluted share)
in 2006 from $106.3 million ($1.90 per diluted share) in 2005.  In 2006,
second-quarter and first-half net income from continuing operations was
partially offset by losses from discontinued operations, which primarily
reflect a $5.1 million second-quarter charge related to the closure of Con-
way Forwarding.  In 2005,  discontinued operations  primarily includes a $9.8
million first-quarter loss related to the disposal of MWF and a $3.0 million
second-quarter net gain due to revisions of cost estimates for the disposal
of MWF and EWA.  The resulting second-quarter net income available to common
shareholders was $68.9 million ($1.30 per diluted share) in 2006 compared to
$69.1 million ($1.24 per diluted share) in 2005, while in the first six
months, net income available to common shareholders grew 15.7% to $113.6
million ($2.10 per diluted share) in 2006 from $98.2 million ($1.75 per
diluted share) in 2005.

Higher earnings per share in the second quarter and first half of 2006
reflect Con-way's expanded common stock repurchase program, which included
the repurchase in May 2006 of 3.75 million shares in two significant
privately negotiated transactions.  Primarily as the result of share
repurchases, Con-way's second-quarter average diluted shares outstanding
declined to 53.1 million shares in 2006 from 56.0 million shares in 2005, and
in the six-month period, declined to 54.2 million shares from 56.3 million
shares.

The following table compares Con-way's segment operating results of
continuing operations:

                                 Three Months Ended         Six Months Ended
  (Dollars in thousands)                June 30,                June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006        2005
                               ----------- -----------  ----------- -----------
Revenues
  Con-way Freight and
   Transportation              $  754,353  $  704,529   $1,450,483  $1,338,175
  Menlo Worldwide Logistics       345,699     317,036      695,561     618,985
                               ----------- -----------  ----------- -----------
                               $1,100,052  $1,021,565   $2,146,044  $1,957,160
                               =========== ===========  =========== ===========

Operating Income (Loss)
  Con-way Freight and
   Transportation              $  102,276  $   96,014   $  169,079  $  160,168
  Menlo Worldwide
    Logistics                       6,093       5,634       12,278      10,664
    Vector                          6,777       4,941       12,049       8,976
                               ----------- -----------  ----------- -----------
                                   12,870      10,575       24,327      19,640
                               ----------- -----------  ----------- -----------
  Con-way Other                    (1,201)       (955)        (475)       (324)
                               ----------- -----------  ----------- -----------
                               $  113,945  $  105,634   $  192,931  $  179,484
                               ----------- -----------  ----------- -----------
Reconciliation of segments
 to consolidated amount:
   Income tax related to
    Vector, an equity-method
    investment                     (2,112)     (1,522)      (3,190)     (1,522)
                               ----------- -----------  ----------- -----------
                               $  111,833  $  104,112   $  189,741  $  177,962
                               =========== ===========  =========== ===========


                            Continuing Operations

The overview below summarizes Con-way's operating results in the periods
presented.  This introductory section is intended to facilitate an executive-
level understanding that provides context for the remainder of the
discussion.  Refer to "Reporting Segment Review" for more complete and
detailed discussion and analysis.

Con-way's consolidated revenue for the second quarter and first half of 2006
increased 7.7% and 9.7%, respectively, from the same periods last year, due
to higher revenue at both revenue-generating reporting segments.
Consolidated operating income in 2006 rose 7.4% in the second quarter and
grew 6.6% in the first half of the year on improved operating results from
Con-way Freight and Transportation and Menlo Worldwide.  Consolidated
operating income in the second quarter and first half of 2006 reflects re-
branding costs of $1.1 million and $1.3 million, respectively, and stock-
option compensation expense of $1.5 million and $2.8 million, respectively,
which was recognized in connection with Con-way's adoption of SFAS 123R
effective January 1, 2006, as more fully discussed in Note 8, "Share-Based
Compensation," of Item 1, "Financial Statements." Con-way Freight and
Transportation's operating income for the second quarter and first half of
2006 increased 6.5% and 5.6%, respectively, due largely to revenue growth of
7.1% and 8.4%, respectively, which reflects regional-carrier tonnage growth
and yield improvement. Menlo Worldwide's operating income in the second
quarter and first half of 2006 increased 21.7% and 23.9%, respectively, on
improved operating results from Vector and Logistics.  Reported segment
income from Vector increased 37.2% to $6.8 million in the second quarter and
34.2% to $12.0 million in the first half of 2006.  Logistics' operating
income in the second quarter and first half of 2006 increased 8.1% and 15.1%,
respectively, on revenue growth of 9.0% and 12.4%, respectively, reflecting
the transition to a shared-resource process-based approach to providing
logistics solutions.

Other net expense decreased $4.2 million in the second quarter of 2006 and
$10.4 million in the first half of 2006 due primarily to an increase in
investment income, a reduction in interest expense, and foreign exchange
gains.  Investment income in the second quarter and first half of 2006 rose
$1.1 million and $3.5 million, respectively, on higher interest rates earned
on cash-equivalent investments and marketable securities.  Interest expense
decreased $1.4 million and $3.7 million in the second quarter and first half
of 2006, respectively, due largely to the $100.0 million repayment in June
2005 of the 7.35% Notes.  In the second quarter and first half of 2006, other
miscellaneous non-operating income primarily reflects positive variations in
foreign exchange transactions, which improved comparative operating results
by $1.5 million and $2.1 million, respectively.

Con-way's effective tax rate of 31.2% and 33.9% in the second quarter and
first half of 2006, respectively, increased from 30.1% and 33.3% in the
second quarter and first half of 2005, respectively.  Con-way's effective tax
rate in all periods presented reflect the effect of second-quarter discrete
tax items related to the settlement with the IRS of previous tax filings,
which reduced the tax provision in 2006 and 2005 by $6.9 million and $7.0
million, respectively.  Excluding the effect of these second-quarter
adjustments and other less significant first-quarter discrete items, the
effective tax provision rate in the second quarter and first half of 2006 was
37.4% and 37.8%, respectively, compared to 37.1% and 37.8% in the second
quarter and first half of 2005, respectively.

                          Reporting Segment Review

Con-way Freight and Transportation
----------------------------------

The following table compares operating results, operating margins, and the
percentage increase in selected operating statistics of the Freight and
Transportation reporting segment:

                                 Three Months Ended         Six Months Ended
  (Dollars in thousands)                June 30,                June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006        2005
                               ----------- -----------  ----------- -----------
Summary of Operating Results
  Revenues                     $  754,353  $  704,529   $1,450,483  $1,338,175
  Operating Income                102,276      96,014      169,079     160,168
  Operating Margin                   13.6%       13.6%        11.7%       12.0%



                                2006 vs. 2005            2006 vs. 2005
                               ---------------          ---------------
Selected Freight
 Operating Statistics
   Revenue per day                   +8.9%                    +9.8%
   Weight per day                    +2.7                     +5.3
   Revenue per
    hundredweight ("yield")          +6.1                     +4.2
   Weight per shipment               +2.3                     +2.6

Con-way Freight and Transportation's revenue in the second quarter and first
half of 2006 rose 7.1% and 8.4%, respectively, from the same periods in 2005
due primarily to higher revenue from Con-way Freight.  Revenue per day from
Con-way Freight in the second quarter of 2006 rose 8.9% from the second
quarter of 2005 on a 6.1% increase in yield and a 2.7% increase in weight per
day.  For the first half of 2006, revenue per day from Con-way Freight rose
9.8% from the same period last year on a 5.3% increase in weight per day and
a 4.2% increase in yield.  Yield increases in the second quarter and first
half of 2006 primarily reflect an increase in fuel surcharges and general
rate increases, partially offset by increases in weight per shipment, as more
fully discussed below.  Like other LTL carriers, Con-way Freight assesses
many of its customers with a fuel surcharge.  As fuel prices have risen, the
fuel surcharge has increased Con-way Freight's yield and revenue.  However,
the fuel surcharge is only one part of Con-way Freight's overall rate
structure, and the total price that Con-way Freight receives from customers
for its services is governed by market forces.  Excluding fuel surcharges,
yields in 2006 increased 2.4% and 0.8% from the second quarter and first half
of 2005, respectively.  Improved yields in the second quarter and first half
of 2006 reflect Con-way's pricing initiatives and emphasis on increasing
yields, which contributed to the departure of certain lower-yielding customer
contracts.  Yields in 2006 were adversely affected by 2.3% and 2.6% increases
in weight per shipment in the second quarter and first half of 2006,
respectively, which was driven in part by a spot-quote program that
contributed to an increase in the number of shipments in excess of 10,000
pounds.  The spot-quote program was developed to place lower-yielding large
shipments into empty linehaul segments, making use of under-utilized
capacity.  Commensurate with the lower transportation cost per unit of
weight, spot-quote and other lower-cost higher-weight shipments generally
have lower yields.

Con-way Freight and Transportation's operating income in the second quarter
and first half of 2006 increased 6.5% and 5.6%, respectively, due largely to
higher revenue from Con-way Freight, partially offset by higher operating and
administrative costs.  Fuel costs in the second quarter and first half of
2006 increased 44.7% and 46.8%, respectively, and purchased transportation
costs in the same comparative periods increased 12.7% and 15.1%,
respectively.  However, higher fuel costs and fuel-related increases in
purchased transportation costs were more than recovered through fuel
surcharges, as more fully discussed below in Item 3, "Quantitative and
Qualitative Disclosures About Market Risk - Fuel."  Employee costs in the
second quarter and first half of 2006 increased 5.9% and 8.3%, respectively,
but declined as a percentage of revenue.  Employee costs in 2006 reflect
increases in base compensation and employee benefits, partially offset by
lower incentive compensation.  Base compensation in the second quarter and
first half of 2006 rose 6.7% and 9.5%, respectively, due primarily to
headcount increases attributable to higher business volumes, and to wage and
salary rate increases, which typically take effect in the second and third
quarters of each year.  Headcount increases were most pronounced at Con-way
Truckload, which began operations in January 2005.  Incentive compensation in
the second quarter and first half of 2006 declined by $2.4 million and $4.8
million, respectively, based on variations in operating income and other
performance measures relative to incentive plan targets.  Employee benefits
expense increased 6.5% and 8.0% in the second quarter and first half of 2006,
respectively, primarily from higher expenses for pension benefits and an
increase in the cost of health and welfare benefits, which was due largely to
an increase in claims experience.  Depreciation expense increased 18.5% and
21.4% in the second quarter and first half of 2006, respectively, due to
planned investments in strategic real estate and tractor and trailer
acquisitions by Con-way Freight and Con-way Truckload in response to business
volumes and equipment replacement needs.  Other operating costs, which
include fuel-related taxes, cargo claims costs and facilities costs,
increased 13.0% and 11.9% in the second quarter and first half of 2006,
respectively.

Con-way's reporting segments are allocated certain corporate administrative
costs, as more fully discussed in Note 4, "Reporting Segments," of Item 1,
"Financial Statements."  Following the sale of MWF to UPS, a portion of Con-
way's corporate administrative costs in 2005 were charged to UPS under a
transition services agreement.  Amounts allocated to the Con-way Freight and
Transportation reporting segment, including those costs related to share-
based compensation and re-branding initiatives, increased by $3.4 million and
$10.6 million in the second quarter and first half of 2006, respectively, due
primarily to a decline in amounts billed to UPS.  In the second quarter and
first half 2005, Con-way was reimbursed by UPS for $3.5 million and $7.3
million of costs, respectively.

As more fully discussed in Note 4, "Reporting Segments," of Item 1,
"Financial Statements," Con-way sold a portion of its Con-way Expedite and
Brokerage business on July 21, 2006.  Under the agreement, Con-way will sell
certain assets of the expediting operation and will retain Con-way Brokerage,
the portion of business involved in truckload brokerage.  In connection with
the sale, Con-way received proceeds of $7.0 million in July 2006 and could
receive up to an additional $1.0 million dependent on certain incentive
provisions.  Con-way estimates that the sale will result in a third-quarter
gain in 2006 in continuing operations of approximately $6 million.

Menlo Worldwide
---------------

The Menlo Worldwide reporting segment consists of the operating results of
Logistics and Vector.  Menlo Worldwide in 2006 reported second-quarter
operating income of $12.9 million, an increase of 21.7% over last year.  In
the first half of 2006, segment operating income was $24.3 million, a 23.9%
improvement over the same prior-year period.  Although MW owns a majority
equity interest, the operating results of Vector are reported as an equity-
method investment based on GM's ability to control certain operating
decisions.  Accordingly, Con-way's Consolidated Statements of Income do not
include any revenue from Vector and only MW's proportionate share of the net
income from Vector is reported as a reduction of operating expenses.

The table below compares operating results and operating margins of the Menlo
Worldwide reporting segment for the three and six months ended June 30.  The
table summarizes Logistics net revenues (revenues less purchased
transportation expenses) as well as gross revenues.  Logistics' management
believes that net revenues are a meaningful measure of the relative
importance of its principal services since total revenues earned on most
carrier-management services include the third-party carriers' charges to
Logistics for transporting the shipments.

                                 Three Months Ended         Six Months Ended
  (Dollars in thousands)                June 30,                June 30,
                               -----------------------  -----------------------
                                  2006        2005         2006        2005
                               ----------- -----------  ----------- -----------
Summary of Operating Results
  Logistics
    Revenues                   $  345,699  $  317,036   $  695,561  $  618,985
    Purchased Transportation     (249,125)   (226,013)    (504,590)   (438,915)
                               ----------- -----------  ----------- -----------
    Net Revenues                   96,574      91,023      190,971     180,070

    Operating Income                6,093       5,634       12,278      10,664
    Operating Margin on Revenue       1.8%        1.8%         1.8%        1.7%
    Operating Margin on
     Net Revenue                      6.3%        6.2%         6.4%        5.9%

  Vector
    Operating Income           $    6,777  $    4,941   $   12,049  $     8,976


Menlo Worldwide - Logistics

Logistics' revenue in the second quarter and first half of 2006 increased
9.0% and 12.4%, respectively, due to increases in revenue from carrier-
management and warehouse-management services.  In 2006, revenue from carrier-
management services in the second quarter and first half grew 8.8% and 14.2%,
respectively, while revenue from warehouse-management services rose 10.0% and
6.0%, respectively.  Revenues in the second quarter and first six months of
2006 reflect the termination in May 2006 of a carrier-management contract
that accounted for 2.9% of Logistics' annual segment revenues in 2005 and
start-up of new warehouse-management projects during the second quarter of
2006.  Carrier-management revenue is attributable to contracts for which
Logistics manages the transportation of freight but subcontracts the actual
transportation and delivery of products to third parties, which Logistics
refers to as purchased transportation.  Logistics' net revenue (revenue less
purchased transportation) in the second quarter and first half of 2006
increased 6.1% for both periods.  In the second quarter and first half of
2006, purchased transportation costs grew 10.2% and 15.0%, respectively, due
primarily to increased carrier-management volumes and fuel-related increases
in carrier rates.

Logistics' operating income in the second quarter and first half of 2006
increased 8.1% and 15.1%, respectively, over the same periods of last year,
due primarily to carrier-management revenue increases, and increased revenue
and improved margins on warehouse-management services.  Logistics' operating
margins on carrier-management and warehouse-management services were
positively affected by Logistics' transition to a shared-resource process-
based approach that leverages a centralized transportation group, utilizes
multi-client warehouses, and creates technological solutions that benefit
multiple customers.  These efforts contributed to improved margins by
reducing facility costs and certain other operating and administrative
expenses when measured as a percent of revenue.  These reductions were
partially offset by increases in employee costs and purchased labor, which
increased 14.9% and 13.2% in the second quarter and first half of 2006,
respectively.  Employee costs in 2006 reflect increases in base compensation,
incentive compensation and employee benefits.  Base compensation in the
second quarter and first half of 2006 rose 7.4% due primarily to growth in
headcount and, to a lesser extent, wage and salary rate increases that
typically take effect in the first and third quarters of each year.
Incentive compensation in the second quarter and first half of 2006 increased
by $1.2 million and $1.5 million, respectively, based on variations in
operating income and other performance measures relative to incentive plan
targets.  Employee benefits expense increased 13.9% and 16.9% in the second
quarter and first half of 2006, respectively, primarily from an increase in
the cost of health and welfare benefits, which was due largely to an increase
in claims experience.  Purchased labor costs increased in the second quarter
and first half of 2006 by 25.9% and 19.1%, respectively, due primarily to the
start-up of new warehouse-management projects, as described above.

Although not material to Con-way's consolidated results of operations,
Logistics in the third quarter of 2006 expects to incur approximately $1
million of costs related to an in-process bid for a significant contract.
Management will continue to pursue initiatives for improving operating
margins, including the continued transition to a shared-resource process-
based approach to serving customers and by renegotiating pricing terms while
renewing customer contracts.  As described above, Logistics in May 2006
terminated a very-low-margin contract with a customer who accounted for 2.9%
of Logistics' annual segment revenues in 2005.

Beginning in the second quarter of 2005, Logistics integrated into its
operations the former Con-Way Logistics business, which was previously
reported in the Con-way Freight and Transportation segment.  Accordingly, the
operating results of Con-Way Logistics are reported with Menlo Worldwide
Logistics and prior periods have been reclassified to conform to the current-
period presentation.

Menlo Worldwide - Vector

Operating Results

Second-quarter segment operating income reported from MW's equity investment
in Vector increased to $6.8 million in 2006 from $4.9 million in 2005, and
for the sixth-month period, improved to $12.0 million in 2006 from $9.0
million in 2005.  In the second quarter and first half of 2006, higher income
earned in GM's North America region was due primarily to cost reductions and
an increase in volumes.  Increased compensation earned from GM's
international regions was due primarily to an increase in compensation earned
in GM's Latin America and Asia Pacific region, partially offset by a decrease
in compensation from GM's European region, which reflects the amended
agreements described in Con-way's 2005 Annual Report on Form 10-K under Item
7, "Management's Discussion and Analysis - Results of Operations - Menlo
Worldwide - Vector."  In 2006, the increased compensation earned from GM's
Latin America and Asia Pacific region was due primarily to the second-quarter
recognition of $1.8 million in performance-based compensation related to the
completion of a successful international business case.

GM Exercise of Call Right

As more fully discussed in Note 3, "Investment in Unconsolidated Joint
Venture," of Item 1, "Financial Statements," on June 23, 2006, GM exercised
its call right to purchase MW's membership interest in Vector.  As a result
of GM's exercise of the call right, Con-way is entitled to receive the fair
value of MW's membership interest in Vector as of June 22, 2006.  Con-way
believes that the fair value of MW's membership interest in Vector consists
of the amount of MW's capital account, the amount of MW's portion of Vector's
undistributed earnings, and the fair value of MW's portion of Vector's future
profit.  At June 30, 2006, MW's capital account and MW's portion of
undistributed earnings in Vector totaled $42.4 million.  Proceeds received in
excess of MW's capital account and MW's portion of undistributed earnings
in Vector will be reported as a gain from continuing operations.

Con-way is currently in discussions with GM as to the valuation amount and
transition terms for Vector operations.  While Con-way believes that it is
entitled to receive the payments described above and therefore expects to
realize a gain, it has not reached agreement with GM and cannot predict with
certainty the ultimate outcome of these matters.

Con-way Other
-------------

The Con-way Other reporting segment consists of certain corporate activities.
The Con-way Other second-quarter operating loss increased to $1.2 million in
2006 from $1.0 million in 2005, while the $0.5 million operating loss in the
first half of 2006 increased from $0.3 million in 2005, as losses from
re-insurance activities and operating costs on corporate properties in all
periods presented were partially offset by gains from the sale of communication
frequencies in the second quarter and first half of 2006.  Losses from
corporate re-insurance activities increased to $1.0 million in the second
quarter of 2006 from $0.3 million in the second quarter of 2005.  The first
half of 2006 included a $0.6 million loss from corporate re-insurance
activities, while the same period last year included a $1.1 million gain from
corporate re-insurance activities.  Costs associated with corporate
properties were $0.5 million and $0.4 million in the second quarter of 2006
and 2005, respectively, and $0.9 million and $0.8 million in the first half
of 2006 and 2005, respectively.  Partially offsetting the losses were gains
on the sale of surplus communication frequencies of $0.3 million and $1.3
million in the second quarter and first half of 2006, respectively.

Discontinued Operations
-----------------------

Discontinued operations in the periods presented relate to the closure of
Con-way Forwarding, the sale of MWF, and the shut-down of EWA and its
terminated Priority Mail contract with the U.S. Postal Service ("USPS").  The
results of operations, net liabilities, and cash flows of discontinued
operations have been segregated from continuing operations, except where
otherwise noted.  See Note 2, "Discontinued Operations," of Item 1,
"Financial Statements" for a summary of operating results and a description
of related loss reserves and contingencies.  See Note 2, "Discontinued
Operations," of Item 8, "Financial Statements and Supplementary Data," in
Con-way's 2005 Annual Report on Form 10-K for a complete description of the
disposition of MWF, including a discussion of losses from impairment and
disposal of MWF and of cash payments received from UPS in connection with the
sale of MWF.


                       Liquidity and Capital Resources
                       -------------------------------

In the first six months of 2006, cash of $456.9 million used in investing and
financing activities was funded with $269.2 million of cash provided by
operating activities and $200.4 million of cash and cash equivalents, which
fell to $313.9 million at June 30, 2006 from $514.3 million at December 31,
2005.  Investing activities in the first six months of 2006 used $179.5
million due primarily to capital expenditures of $164.2 million while
financing activities used $277.4 million primarily for the repurchase of
$261.8 million of common stock.  Con-way's cash flows are summarized in the
table below.

                                                           Six Months Ended
 (Dollars in thousands)                                        June 30,
                                                        -----------------------
                                                           2006        2005
                                                        ----------- -----------
Operating Activities
  Net income                                            $  117,166  $  102,182
  Discontinued operations                                    6,779       8,125
  Non-cash adjustments (1)                                  73,644      47,052
                                                        ----------- -----------
                                                           197,589     157,359
  Changes in assets and liabilities
    Receivables                                             18,122     (57,850)
    Prepaid expenses                                        (2,629)      5,582
    Accounts payable and accrued liabilities,
     excluding accrued incentive compensation               25,709        (580)
    Accrued incentive compensation                             944     (20,101)
    Income taxes                                            23,276      27,383
    Employee benefits                                       (2,093)    (30,871)
    Deferred charges and credits                            13,938      22,517
    All other changes in assets and liabilities             (5,661)     (5,359)
                                                        ----------- -----------
                                                            71,606     (59,279)

  Net Cash Provided by Operating Activities                269,195      98,080
                                                        ----------- -----------

  Net Cash Provided by (Used in) Investing Activities     (179,541)    206,022
                                                        ----------- -----------

  Net Cash Used in Financing Activities                   (277,355)   (170,408)
                                                        ----------- -----------

  Net Cash Provided by (Used in) Continuing Operations    (187,701)    133,694
  Net Cash Used in Discontinued Operations                 (12,670)    (13,631)
                                                        ----------- -----------
  Increase (Decrease) in Cash and Cash Equivalents      $ (200,371) $  120,063
                                                        =========== ===========

 (1) "Non-cash adjustments" refer to depreciation, amortization, deferred
      income taxes, provision for uncollectible accounts, equity in earnings
      of joint venture, and non-cash income and expenses.


Continuing Operations

Operating Activities

Cash flow from operating activities in the first six months of 2006 was
$269.2 million, a $171.1 million increase from the same prior-year period, on
growth in net income before non-cash items and from the net cash provided by
changes in assets and liabilities.  Receivables in the first six months of
2006 provided $18.1 million on a decline in the average collection period for
Logistics' receivables due to improved processing of invoices and receipts.
In the first six months of 2006, increases in prepaid expenses and accrued
liabilities reflect an increase in Con-way's participation in a pool to
reinsure a portion of its workers' compensation liabilities, as more fully
discussed in Note 1, "Principal Accounting Policies - Self-Insurance
Accruals," of Item 1, "Financial Statements." The change in accrued incentive
compensation provided $0.9 million in the first six months of 2006, while the
same prior-year period reflects a $20.1 million use of cash.  In the first
six months of 2006 and 2005, expense accruals for incentive compensation were
$33.6 million and $37.2 million, respectively, while incentive compensation
payments in those periods, which relate to the prior year, were $32.7 million
and $57.3 million, respectively.  The use of cash from the decline in
employee benefit liabilities for the first half of 2006 and 2005 reflects the
net effect of defined benefit plan funding contributions of $25.0 million and
$52.5 million, respectively, as described below under " - Defined Benefit
Pension Plans," partially offset by expense accruals for Con-way's defined
benefit pension plan obligation.  Cash provided by changes in deferred
charges and credits decreased to $13.9 million in the first six months of
2006 from $22.5 million provided in the same period of 2005.  In both periods
presented, cash provided by deferred charges and credits reflects increases
in Con-way's affiliate payable to Vector, which increased $10.9 million and
$19.1 million in the first six months of 2006 and 2005, respectively.

As more fully discussed in Note 3, "Investment in Unconsolidated Joint
Venture," of Item 1, "Financial Statements," on June 23, 2006, GM exercised
its call right to purchase MW's membership interest in Vector.  Under the
Vector agreements, Con-way is entitled to receive the fair
value of MW's membership interest in Vector as of June 22, 2006.  As part of
the sale of MW's membership interest, Con-way expects to settle its affiliate
payable to Vector of $32.9 million as of June 30, 2006.

Investing Activities

Investing activities in the first six months of 2006 used $179.5 million
compared to $206.0 million provided in the first six months of 2005, due
primarily to variations in the conversion of cash and cash equivalents into
and out of short-term marketable securities and to higher capital
expenditures.  Investments in marketable securities increased in the first
six months of 2006 by $13.1 million, while the first six months of 2005
reflect a $269.8 million decrease due primarily to the conversion in March
2005 of auction-rate securities into cash and cash equivalents.  Capital
expenditures in the first six months of 2006 increased $73.6 million from the
same period of 2005 due primarily to increased tractor and trailer
expenditures at Con-way Freight and Transportation.  In the first six months
of 2005, Con-way collected non-trade receivables from UPS, including a $29.4
million payment in March 2005 from UPS in connection with the sale of MWF.

Financing Activities

Financing activities in the first six months of 2006 used cash of $277.4
million compared to $170.4 million used in the first six months of 2005.  For
the periods presented, common stock repurchases of $261.8 million in 2006 and
$74.6 million in 2005 were made under Con-way's repurchase programs described
below.  The significant increase in second-quarter stock repurchases in 2006
was attributable to the repurchase in May 2006 of 3.75 million shares in two
significant privately negotiated transactions.  Under a program more fully
discussed in Note 7, "Common Stock Repurchase Program," of Item 1, "Financial
Statements," Con-way is authorized to repurchase an additional $178.8 million
of common stock through the end of the second quarter of 2007.
Financing activities in both periods presented also reflect dividend payments
and scheduled principal payments for the Thrift and Stock Plan notes
guaranteed by Con-way.  Cash provided by the exercise of stock options
decreased to $11.7 million in the first six months of 2006 from $32.3 million
in the same period last year.  The higher level of stock option exercises in
the first six months of 2005 was the result of an increase in the market
price of Con-way's common stock combined with more outstanding exercisable
options.

Con-way has a $400 million revolving credit facility that matures on March
11, 2010.  The revolving credit facility is available for cash borrowings and
for the issuance of letters of credit up to $400 million.  At June 30, 2006,
no borrowings were outstanding under the facility and $209.3 million of
letters of credit were outstanding, leaving $190.7 million of available
capacity for additional letters of credit or cash borrowings, subject to
compliance with financial covenants and other customary conditions to
borrowing.  Con-way had other uncommitted unsecured credit facilities
totaling $35.0 million at June 30, 2006, which are available to support
letters of credit, bank guarantees, and overdraft facilities; at that date, a
total of $18.0 million was outstanding under these facilities.  The total
letters of credit outstanding at June 30, 2006 provided collateral for Con-
way's self-insurance programs.  See "Forward-Looking Statements" below, and
Note 5, "Debt and Other Financing Arrangements," of Item 8, "Financial
Statements and Supplementary Data," in Con-way's 2005 Annual Report on Form
10-K for additional information concerning Con-way's $400 million credit
facility and some of its other debt instruments.

Defined Benefit Pension Plans

As more fully discussed below under "Estimates and Critical Accounting
Policies - Defined Benefit Pension Plans," Con-way periodically reviews the
funded status of its defined benefit pension plans for non-contractual
employees, and makes contributions from time to time as necessary to comply
with the funding requirements of the Employee Retirement Income Security Act
("ERISA").  In determining the amount and timing of its pension
contributions, Con-way considers both the ERISA- and GAAP- based measurements
of funded status as well as the tax deductibility of contributions.  Con-way
contributed $126.5 million to its defined benefit pension plans in 2005 and
currently estimates it will contribute $75 million in 2006, including $25.0
million contributed in April 2006 and $25.0 million contributed in July 2006.

Contractual Cash Obligations

Con-way's contractual cash obligations as of December 31, 2005 are summarized
in Con-way's 2005 Annual Report on Form 10-K under Item 7, "Management's
Discussion and Analysis - Liquidity and Capital Resources - Contractual Cash
Obligations."  In the first six months of 2006, there have been no material
changes in Con-way's contractual cash obligations outside the ordinary course
of business.

In 2006, Con-way estimates capital expenditures of approximately $360 million
(including software expenditures), primarily for acquisitions of additional
tractor and trailer equipment and land and buildings.  Con-way's actual 2006
capital expenditures may differ from the estimated amount, depending on
factors such as the availability and timing of delivery of equipment, the
availability of land in desired locations for new facilities, and the timing
of obtaining permits, environmental studies and other approvals necessary for
the development of new and existing facilities.

Other

Con-way's ratio of total debt to capital increased to 42.9% at June 30, 2006
from 39.6% at December 31, 2005, due primarily to the decrease in common
shareholders' equity as a result of share repurchases in the second quarter
of 2006.  The effect of the share repurchases was partially offset by the
increase in retained earnings resulting from net income earned in the first
six months of 2006 and the $15.0 million repayment in January of Series A
TASP notes.

On February 1, 2006, Standard & Poor's raised its rating on Con-way's senior
unsecured debt to "BBB" from "BBB-."  In addition, Fitch Ratings initiated
coverage of Con-way on January 25, 2006 with a rating of "BBB."  Both
agencies reported the rating outlook for Con-way as "stable."

Discontinued Operations

Discontinued operations in the periods presented relate to the closure of
Con-way Forwarding, the sale of MWF, and the shut-down of EWA and its
terminated Priority Mail contract with the USPS.  Except as described below
under " - MWF," the cash flows from discontinued operations have been
segregated from continuing operations and reported separately as discontinued
operations.

MWF

On December 19, 2004, Con-way completed the sale of MWF to UPS for $150
million in cash, subject to adjustment for cash held by MWF at closing and
the net working capital of MWF as of closing.  In March 2005, Con-way
received $29.4 million from UPS for the reimbursable cash held by MWF at
closing, with no adjustment for net working capital, as reported in proceeds
from sale of discontinued operations in investing activities.  See Note 2,
"Discontinued Operations," of Item 8, "Financial Statements and Supplementary
Data," in Con-way's 2005 Annual Report on Form 10-K for a complete
description of the disposition of MWF, including a discussion of losses from
impairment and disposal of MWF and of cash payments received from UPS in
connection with sale of MWF.

EWA

On June 30, 2006, EWA, MWF Inc. and Con-way Inc. concluded a final settlement
of a lawsuit filed in state court in California by approximately 140 former
EWA pilots and crewmembers, as more fully discussed in Note 2, "Discontinued
Operations - EWA." Under the settlement, the plaintiffs received a cash
payment of $9.2 million and the lawsuit was dismissed with prejudice.


                 Estimates and Critical Accounting Policies
                 ------------------------------------------

The preparation of financial statements in accordance with accounting
principles generally accepted in the U.S. requires management to adopt
accounting policies and make significant judgments and estimates.  In many
cases, there are alternative policies or estimation techniques that could be
used.  Con-way maintains a process to evaluate the appropriateness of its
accounting policies and estimation techniques, including discussion with and
review by the Audit Committee of its Board of Directors and its independent
auditors.  Accounting policies and estimates may require adjustment based on
changing facts and circumstances and actual results could differ from
estimates.  The policies and estimates discussed below include those that are
most critical to the financial statements.

Self-Insurance Accruals

Con-way uses a combination of purchased insurance and self-insurance programs
to provide for the costs of medical, casualty, liability, vehicular, cargo,
and workers' compensation claims. In the measurement of these costs, Con-way
considers historical claims experience, medical costs, demographic and
severity factors and other assumptions.  Self-insurance accruals are
developed based on the estimated, undiscounted cost of claims, including
those claims incurred but not reported as of the balance sheet date.  The
long-term portion of self-insurance accruals relates primarily to workers'
compensation and vehicular claims that are expected to be payable over
several years.  The actual costs may vary from estimates.

Income Taxes

In establishing its deferred income tax assets and liabilities, Con-way makes
judgments and interpretations based on the enacted tax laws and published tax
guidance that are applicable to its operations.  Con-way records deferred tax
assets and liabilities and periodically evaluates the need for a valuation
allowance to reduce deferred tax assets to realizable amounts.  The
likelihood of a material change in Con-way's expected realization of these
assets is dependent on future taxable income, future capital gains, its
ability to use foreign tax credit carryforwards and carrybacks, final U.S.
and foreign tax settlements, and the effectiveness of its tax planning
strategies in the various relevant jurisdictions.  Con-way is also subject to
examination of its income tax returns for multiple years by the IRS and other
tax authorities.  Con-way periodically assesses the likelihood of adverse
outcomes resulting from these examinations to determine the adequacy of its
provision and related accruals for income taxes.

Disposition and Restructuring Estimates

As more fully discussed in Note 2, "Discontinued Operations," of Item 8,
"Financial Statements and Supplementary Data," in Con-way's 2005 Annual
Report on Form 10-K, Con-way's management made significant estimates and
assumptions in connection with the disposition of MWF in 2004.  Actual
results could differ from estimates, which could affect related amounts
reported in the financial statements.  Significant estimates and assumptions
were also made in connection with the disposition of Con-way Forwarding and
EWA, as more fully discussed herein in Note 2, "Discontinued Operations," of
Item 1, "Financial Statements."

Uncollectible Accounts Receivable

Con-way and its subsidiaries report accounts receivable at net realizable
value and provide an allowance for uncollectible accounts when collection is
considered doubtful.  Con-way Freight and Transportation provides for
uncollectible accounts based on various judgments and assumptions, including
revenue levels, historical loss experience, and composition of outstanding
accounts receivable.  Logistics, based on the size and nature of its client
base, performs a frequent and periodic evaluation of its customers'
creditworthiness and accounts receivable portfolio and recognizes expense
from uncollectible accounts when losses are both probable and reasonably
estimable.

Defined Benefit Pension Plans

Con-way has defined benefit pension plans that cover employees and former
non-contractual employees in the United States.  The amount recognized as
pension expense and the accrued pension liability depend upon a number of
assumptions and factors, the most significant being the discount rate used to
measure the present value of pension obligations and the expected rate of
return on plan assets.  Con-way assesses its plan assumptions for the
discount rate, expected rate of return on plan assets, and other significant
assumptions on a continuous basis, but concludes on those assumptions at the
actuarial plan measurement date in November of each year.  Con-way's most
significant assumptions used in determining pension expense for the periods
presented and for 2006 are summarized below.

                                                           2006        2005
                                                        ----------- -----------
Weighted-average assumptions:
  Discount rate                                              6.00%       6.25%
  Expected long-term rate of return on plan assets           8.50%       8.50%


In determining the appropriate discount rate, Con-way utilizes a bond model
that incorporates expected cash flows of plan obligations.  The bond model
uses a selected portfolio of Moody's Aa-or-better rated bonds with cash flows
and maturities that match the projected benefit payments of Con-way's pension
plans.  Con-way's discount rate is equal to the yield on the portfolio of
bonds, which will typically exceed the Moody's Aa corporate bond index due to
the long duration of expected benefit payments from Con-way's plan.  If all
other factors were held constant, a 0.25% decrease (increase) in the discount
rate would result in an estimated $7 million increase (decrease) in 2006
annual pension expense.

Con-way adjusts its expected rate of return on plan assets based on current
market expectations and historical returns.  The rate of return is based on
an expected 20-year return on the current asset allocation and the effect of
actively managing the plan, net of fees and expenses.  Using year-end plan
asset values, a 0.25% decrease (increase) in the expected rate of return on
plan assets would result in an estimated $2 million increase (decrease) in
2006 annual pension expense.

Differences between the expected and actual rate of return on plan assets
and/or changes in the discount rate may result in cumulative unrecognized
actuarial losses.  These unrecognized actuarial losses primarily reflect the
declining discount rate and lower market returns in recent years.  Although
these amounts may be recovered in future periods through actuarial gains, any
portion of the unrecognized actuarial loss outside of a corridor amount must
be amortized and recognized as expense over the average service period for
employees.  In its determination of the plan obligation at December 31, 2005
and of pension expense in 2006, Con-way revised its mortality assumption for
plan participants from one based on 1983 U.S. census data to one based on
2000 U.S. census data, which results in a longer-life assumption for plan
participants.

Con-way expects its annual defined benefit pension expense in 2006 will
exceed the annual expense in 2005 by approximately $6 million based on
increases in service cost, interest cost, and amortization of the
unrecognized actuarial loss, partially offset by a higher expected return on
plan assets.   The increase in service cost is due in part to the effect in
2006 of revised mortality assumptions while the increase in interest cost is
due to the lower discount rate that increases the plan obligation.  Despite
unchanged expectations on the long-term rate of return on plan assets, Con-
way expects an increase in the return on plan assets in 2006 based on plan
contributions that increase plan assets.  Amortization of the unrecognized
actuarial loss in 2006 will increase $4 million from 2005, based primarily on
the higher unrecognized actuarial loss at December 31, 2005.

Under assumptions applied at the 2005 measurement date, the accumulated
benefit obligation of certain Con-way pension plans exceeded the fair value
of plan assets.  Accordingly, Con-way recorded a minimum pension liability
adjustment in Accumulated Other Comprehensive Loss of Shareholders' Equity to
recognize the shortfall between the fair value of the assets and the
accumulated benefit obligation of these plans.  At June 30, 2006 and December
31, 2005, the cumulative additional minimum pension liability was $36.2
million (net of $23.1 million of tax benefits).

Con-way periodically reviews the funded status of its defined benefit pension
plans for non-contractual employees, and makes contributions from time to
time as necessary to comply with the funding requirements of the Employee
Retirement Income Security Act ("ERISA").  In determining the amount and
timing of its pension contributions, Con-way considers both the ERISA- and
GAAP-based measurements of funded status as well as the tax deductibility of
contributions.  Con-way contributed $126.5 million to its defined benefit
pension plans in 2005 and currently estimates it will contribute $75 million
in 2006, including $25.0 million contributed in April 2006 and $25.0 million
contributed in July 2006.  Con-way's estimates of its defined benefit plan
contributions are subject to variation based on changes in interest rates and
asset returns.

Property, Plant and Equipment and Other Long-Lived Assets

In accounting for property, plant, and equipment, Con-way makes estimates
about the expected useful lives and the expected residual values of the
assets, and the potential for impairment based on the fair values of the
assets and the cash flows generated by these assets.

The depreciation of property, plant, and equipment over their estimated
useful lives and the determination of any salvage value requires management
to make judgments about future events.  Con-way periodically evaluates
whether changes to estimated useful lives or salvage values are necessary to
ensure these estimates accurately reflect the economic use of the assets.
Con-way's periodic evaluation may result in changes in the estimated lives
and/or salvage values used to depreciate its assets, which can affect the
amount of periodic depreciation expense recognized and, ultimately, the gain
or loss on the disposal of the asset.  As a result of Con-way's periodic
evaluation, the useful lives of certain classes of revenue equipment were
changed in the second quarter of 2006, as more fully discussed in Note 1,
"Principal Accounting Policies - Property, Plant and Equipment," of
Item 1, "Financial Statements."

Con-way performs an impairment analysis of long-lived assets whenever
circumstances indicate that the carrying amount may not be recoverable.  For
assets that are to be held and used, an impairment charge is recognized when
the estimated undiscounted cash flows associated with the asset or group of
assets is less than carrying value.  If impairment exists, a charge is
recognized for the difference between the carrying value and the fair value.
Fair values are determined using quoted market values, discounted cash flows,
or external appraisals, as applicable.  Assets held for disposal are carried
at the lower of carrying value or estimated net realizable value.


                         Forward-Looking Statements
                         --------------------------

Certain statements included herein constitute "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and are subject to a number of risks and uncertainties, and should
not be relied upon as predictions of future events.  All statements other
than statements of historical fact are forward-looking statements, including
any projections of earnings, revenues, weight, yield, volumes, income or
other financial or operating items, any statements of the plans, strategies,
expectations or objectives of Con-way's management for future operations or
other future items, any statements concerning proposed new products or
services, any statements regarding Con-way's estimated future contributions
to pension plans, any statements as to the adequacy of reserves, any
statements regarding the outcome of any claims that may be brought against
Con-way by CFC's multi-employer pension plans or any statements regarding
future economic conditions or performance, any statements regarding the
outcome of legal and other claims and proceedings against Con-way, any
statements of estimates or belief and any statements or assumptions
underlying the foregoing.

Certain such forward-looking statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "seeks," "approximately," "intends," "plans," "estimates" or
"anticipates" or the negative of those terms or other variations of those
terms or comparable terminology or by discussions of strategy, plans or
intentions.  Such forward-looking statements are necessarily dependent on
assumptions, data and methods that may be incorrect or imprecise and there
can be no assurance that they will be realized.  In that regard, the
following factors, among others and in addition to the matters discussed
elsewhere in this document and other reports and documents filed by Con-way
with the Securities and Exchange Commission, could cause actual results and
other matters to differ materially from those discussed in such forward-
looking statements:

   * changes in general business and economic conditions, including the
     global economy;

   * the creditworthiness of Con-way's customers and their ability to pay for
     services rendered;

   * increasing competition and pricing pressure;

   * availability of fuel and changes in fuel prices or fuel surcharges;

   * the effects of the cessation of EWA's air carrier operations;

   * the possibility that Con-way may, from time to time, be required to
     record impairment charges for long-lived assets;

   * the possibility of defaults under Con-way's $400 million credit
     agreement and other debt instruments, and the possibility that Con-way
     may be required to repay certain indebtedness in the event that the
     ratings assigned to its long-term senior debt by credit rating agencies
     are reduced;

   * labor matters, including the grievances by furloughed EWA pilots and
     crewmembers, labor organizing activities, work stoppages or strikes;

   * enforcement of and changes in governmental regulations, including the
     effects of new regulations issued by the Department of Homeland
     Security;

   * environmental and tax matters;

   * matters relating to Con-way's 1996 spin-off of CFC, including the
     possibility that CFC's multi-employer pension plans may assert claims
     against Con-way, that Con-way may not prevail in those proceedings and
     may not have the financial resources necessary to satisfy amounts
     payable to those plans;

   * matters relating to the sale of MWF, including Con-way's obligation to
     indemnify UPS for certain losses in connection with the sale;

   * matters relating to GM's exercise of its call right to purchase MW's
     membership interest in Vector;

   * matters relating to Con-way's defined benefit pension plans.

As a result of the foregoing, no assurance can be given as to future
financial condition, results of operations, or cash flows.  See Note 10,
"Commitments and Contingencies," of Item 1, "Financial Statements."


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Con-way is exposed to a variety of market risks, including the effects of
interest rates, fuel prices and foreign currency exchange rates.  Con-way
enters into derivative financial instruments only in circumstances that
warrant the hedge of an underlying asset, liability or future cash flow
against exposure to some form of interest rate, commodity, or currency-
related risk.  Additionally, the designated hedges should have high
correlation to the underlying exposure such that fluctuations in the value of
the derivatives offset reciprocal changes in the underlying exposure.

Interest Rates

Con-way is subject to the effect of interest rate fluctuations on the fair
value of its long-term debt.  Based on the fixed interest rates and
maturities of its long-term debt, fluctuations in market interest rates would
not significantly affect operating results or cash flows, but may have a
material effect on the fair value of long-term debt, as more fully discussed
in Note 5, "Debt and Other Financing Arrangements," of Item 8, "Financial
Statements and Supplementary Data," in Con-way's 2005 Annual Report on Form
10-K.

Fuel

Con-way is exposed to the effects of changes in the availability and price of
diesel fuel.  Generally, fuel can be obtained from various sources and in the
desired quantities.  However, an inability to obtain fuel due to fuel
shortages or any other reason could have a material adverse effect on Con-
way.  Con-way and its subsidiaries (primarily Con-way Freight and
Transportation) are subject to the risk of price fluctuations.  Like other
LTL carriers, Con-way Freight assesses many of its customers with a fuel
surcharge.  As fuel prices have risen, the fuel surcharge has increased Con-
way Freight's yields and revenue, and Con-way Freight has more than recovered
higher fuel costs and fuel-related increases in purchased transportation.
However, the fuel surcharge is only one part of Con-way Freight's overall
rate structure, and the total price that Con-way Freight receives from
customers for its services is governed by market forces.

At times, in the interest of its customers, Con-way Freight has temporarily
capped the fuel surcharge at a fixed percentage.  Following a sharp increase
in fuel costs in the aftermath of hurricanes in the U.S., Con-way Freight
imposed a temporary cap on its fuel surcharge in 2005 that was in effect from
August 29 through October 24.

Con-way cannot predict the future movement of fuel prices, Con-way Freight's
ability to recover higher fuel costs through fuel surcharges, the effect that
changes in fuel surcharges may have on Con-way Freight's overall rate
structure or the total price that Con-way Freight receives from customers for
its services.  Con-way Freight's operating income would be adversely affected
by a rapid and significant decline in fuel prices as lower fuel surcharges
would reduce Con-way Freight's yield and revenue.  Whether fuel prices
increase, decrease, or remain constant, Con-way's operating income may be
adversely affected if competitive pressures limited Con-way Freight's ability
to assess its fuel surcharges.

Foreign Currency

The assets and liabilities of Con-way's foreign subsidiaries are denominated
in foreign currencies, which create exposure to changes in foreign currency
exchange rates.  However, the market risk related to foreign currency
exchange rates is not material to Con-way's financial condition, results of
operations or cash flows.


ITEM 4.  CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.

Con-way's management, with the participation of Con-way's Chief Executive
Officer and Chief Financial Officer, has evaluated the effectiveness of Con-
way's disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the period covered by this report.
Based on such evaluation, Con-way's Chief Executive Officer and Chief
Financial Officer have concluded that Con-way's disclosure controls and
procedures are effective as of the end of such period.

(b) Internal Control Over Financial Reporting.

There have not been any changes in Con-way's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates that
have materially affected, or are reasonably likely to materially affect, Con-
way's internal control over financial reporting.



                         PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

Certain legal proceedings of Con-way are also discussed in Note 2,
"Discontinued Operations," and Note 10, "Commitments and Contingencies," of
Part 1, Item 1, "Financial Statements."

In 2003, prior to the sale of MWF to UPS, Con-way became aware of information
that Emery Transnational, a Philippines-based joint venture in which MWF,
Inc. may be deemed to be a controlling partner, may have made certain
payments in violation of the Foreign Corrupt Practices Act.  Con-way promptly
notified the Department of Justice and the Securities and Exchange Commission
of this matter, and MWF, Inc. instituted policies and procedures in the
Philippines designed to prevent such payments from being made in the future.
Con-way was subsequently advised by the Department of Justice that it is not
pursuing an investigation of this matter.  Con-way conducted an internal
investigation of approximately 40 other MWF, Inc. international locations and
has shared the results of the internal investigation with the SEC.  The
internal investigation revealed that Menlo Worldwide Forwarding (Thailand)
Limited, a Thailand-based joint venture, also may have made certain payments
in violation of the Foreign Corrupt Practices Act.  MWF, Inc. made certain
personnel changes and instituted policies and procedures in Thailand designed
to prevent such payments from being made in the future.  In December 2004,
Con-way completed the sale of its air freight forwarding business (including
the stock of MWF, Inc., Emery Transnational and Menlo Worldwide Forwarding
(Thailand) Limited) to an affiliate of UPS.  In connection with that sale,
Con-way agreed to indemnify UPS for certain losses resulting from violations
of the Foreign Corrupt Practices Act.  Con-way is currently unable to predict
whether it will be required to make payments under the indemnity.


ITEM 1A.  RISK FACTORS

There are no material changes to the risk factors previously disclosed in
Item 1A, "Risk Factors," in Con-way's 2005 Annual Report on Form 10-K.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides a summary of shares repurchased during the
quarter ended June 30, 2006 by Con-way:

                                            Total Number       Maximum Dollar
                     Total      Average   of Shares Purchased  Value of Shares
                   Number of     Price         as Part of      that May Yet Be
                    shares      Paid per   Publicly Announced  Purchased Under
                 Purchased[1]    Share         Program [1]      the Program[1]
                 ------------ ----------- ------------------- -----------------

April 1, 2006 -
 April 30, 2006     60,000 [2]   $ 51.15              60,000  $    400,000,000

May 1, 2006 -
 May 31, 2006    3,750,000       $ 59.00           3,750,000  $    178,767,500

June 1, 2006 -
 June 30, 2006          --            --                  --  $    178,767,500
                 ------------             -------------------
                 3,810,000       $ 58.87           3,810,000  $    178,767,500
                 ============             ===================

[1] In January 2005, the Board of Directors authorized the repurchase of up
to $300 million in Con-way's common stock from time to time during a two-year
period in open-market and privately negotiated transactions.  As described
below, Con-way's Board of Directors on April 24, 2006 authorized an expanded
repurchase program that replaced the $300 million program approved in January
2005. Under the old program, Con-way repurchased common stock of $189.6
million from January 1, 2005 through April 24, 2006, and no additional shares
will be repurchased under that program.  Under the new program, Con-way is
authorized to repurchase an additional $400 million of common stock through
open-market purchases and privately negotiated transactions from time to time
in such amounts as management deems appropriate through the end of the second
quarter of 2007.

[2] Shares were repurchased under the old repurchase program authorized in
January 2005.


ITEM 6.  EXHIBITS

Exhibit No.
-------------

(2)  Plan of acquisition, reorganization, arrangement, liquidation, or
      succession:

       2.1   Con-way Inc. plan for discontinuance of Con-way Forwarding (Item
              2.05 to Con-way's Report on Form 8-K filed on June 5, 2006.*)

(31) Certification of Officers pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002

(32) Certification of Officers pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002


*  Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.



                                 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.

                                             Con-way Inc.
                                             --------------
                                             (Registrant)

August 7, 2006                               /s/ Kevin C. Schick
                                             ---------------------
                                             Kevin C. Schick
                                             Senior Vice President and
                                             Chief Financial Officer