<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

        ( X )  ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

               For the fiscal year ended December 31, 1999

                                       OR

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

                       For the transition period from to .

                         Commission file number 1-13025

                              AirNet Systems, Inc.
             (Exact name of registrant as specified in its charter)

                               An Ohio Corporation
                  I.R.S. Employer Identification No. 31-1458309

                           3939 International Gateway
                              Columbus, Ohio 43219
               (Address of principal executive offices) (Zip Code)

                                  614-237-9777
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
    AirNet Systems, Inc. common shares, $.01 par value, are registered on the
                            New York Stock Exchange


Based on a closing sales price of $5.875 per share on March 3, 2000, the
aggregate market value of the voting stock held by non-affiliates of AirNet
Systems, Inc., was approximately $45,162,218. As of that date, 11,393,362 common
shares of AirNet Systems, Inc., were issued and outstanding.

We have no securities registered under Section 12(g) of the Act. We are and for
the past 90 days have been subject to certain filing requirements under Sections
13 and 15(d) of the Securities Exchange Act of 1934 and have filed all required
reports during the preceding 12 months.

We are not aware of any delinquent filers for which disclosure must be made
pursuant to Item 405 of Regulation S-K.

Portions of the Registrant's definitive Proxy Statement for its Annual Meeting
of Shareholders to be held on May 12, 2000, are incorporated by reference into
Part III of this Annual Report on Form 10-K.

<PAGE>

                                     PART I

ITEM 1  -  BUSINESS

Overview of AirNet's business

AirNet ExpressSM, the integrated national air transportation network of AirNet
Systems, Inc., operates between 100 cities and 40 states and delivers over
20,000 time-critical shipments each working day. AirNet's check delivery
service, which generates approximately 77% of AirNet's revenues, is the leading
transporter of canceled checks and related information for the U.S. banking
industry, meeting more than 2,200 daily deadlines. AirNet's Express service,
which generates approximately 22% of AirNet's revenues, provides specialized,
high priority delivery service for customers requiring late pick-ups and early
deliveries combined with prompt, on-line delivery information. AirNet's fixed
base operations, which account for approximately 1% of AirNet's revenues, offer
retail aviation fuel sales and related ground services for customers in
Columbus, Ohio.

AirNet currently operates a fleet of 119 aircraft (31 Learjets and 88 light twin
engine aircraft), which fly approximately 110,000 miles per operating night,
primarily Monday through Thursday. AirNet also provides ground pick-up and
delivery services throughout the nation seven days per week, using a combination
of company personnel and a network of over 300 independent contractors. AirNet
uses its air and ground network to support its banking industry customers, as
well as its Express delivery customers. AirNet also uses commercial airlines to
provide SameDay delivery service for some of its banking and small package
customers. Later pick-ups and earlier deliveries than those offered by other
national carriers are the differentiating characteristics of AirNet's
time-critical delivery network. In order to maintain this performance, AirNet
uses a number of proprietary customer service and management information systems
to track, sort, dispatch and control the flow of checks and small packages
throughout AirNet's delivery system. Delivery times and selected shipment
information are available on-line and through the Internet.

AirNet intends to capitalize on time-critical segments, such as medical,
radioactive pharmaceutical and just-in-time inventories, in which its airline
offers customers competitive advantages in their industries. The company's
airline affords unique delivery capabilities to a limited number of shippers and
it intends to broaden those capabilities and markets. AirNet believes that its
flexible and reliable air network and its demonstrated expertise in providing
time-critical deliveries to the banking industry for over 25 years position
AirNet to provide these services.

AirNet  Systems,  Inc. was  incorporated  under the laws of the State of Ohio on
February  15, 1996.  AirNet's  principal  executive  offices are located at 3939
International Gateway,  Columbus,  Ohio 43219, and its telephone number is (614)
237-9777. AirNet's website address is www.airnet.com.


Business strategy

The principal components of AirNet's operating and growth strategy are as
follows:

Increase yields on aircraft

AirNet's fast and reliable fleet of aircraft is positioned around a highly
efficient and flexible national route structure designed to facilitate late
pick-up and early delivery times, minimize delays and simplify flight
scheduling. AirNet's hub-and-spoke system, with a primary hub in Columbus, Ohio
and several mini-hubs across the nation, allows AirNet to match the varying load
capacities of its aircraft with the shipment weight and volume of each
destination city and to consolidate shipments at its hubs. The hubs are located
primarily in less congested regional airports. These locations, in conjunction
with AirNet's off-peak departure and arrival times, provide easy take-offs and
landings, convenient loading and unloading, and fast refueling and maintenance.
AirNet intends to leverage the use of its aircraft by attracting high volume
Express customers who benefit from the airline's multiple late night departures
and early morning arrivals.


                                       2
<PAGE>

Focus on service for the radioactive pharmaceutical industry

In 1999, AirNet received an exemption certificate from the Department of
Transportation (DOT 7060 Exemption) that allows its aircraft to transport
increased volumes of certain radioactive materials. As one of only three
carriers in the United States holding such an exemption, AirNet intends to
aggressively market its services to producers of radioactive pharmaceuticals.
These products have short half-lives, whereby the product's effectiveness and
dosage potential are reduced exponentially over time. AirNet believes this 7060
Exemption, coupled with its multiple reflex hub system, gives its radioactive
pharmaceutical customers a significant time and cost savings advantage over
using other carriers.

Regionalize/Localize ground operations

AirNet is currently developing plans and procedures to shift a significant
portion of the ground operations management to a regional and local basis from
the current centralized management. AirNet believes that a more localized
approach to the selection, dispatching and management of ground couriers will
improve the ground system's efficiencies and help to minimize, and in some
instances reduce, costs associated with the ground delivery system.

Flight operations

AirNet's flight operations are headquartered in Columbus, Ohio. AirNet utilizes
an extensive screening process to evaluate potential pilots prior to hiring.
These pilots meet stringent company qualifications, as well as all required
Federal Aviation Administration requirements. All new pilots must satisfactorily
complete a five-week training program conducted by AirNet's flight training
staff prior to assignment of pilot duties. This training program includes one
week of flight simulator training prior to any actual flight time in an
aircraft, as well as intensive ground instruction. Additionally, new pilots
typically apprentice as co-pilots in order to gain a familiarity with AirNet's
route system and the unique demands of night flying.

AirNet's central dispatch system ties together all components of the air
operation. Departure and arrival times are continuously updated, and weather
conditions throughout the nation are constantly monitored. AirNet dispatchers
remain in constant contact with pilots, outbased hub managers, fuelers,
maintenance and ground delivery personnel to ensure that no gaps exist in the
delivery process. AirNet also uses commercial airlines, primarily to transport
shipments during the daytime and weekend hours when its aircraft typically do
not operate. Operations personnel utilize FlightTrax, a computerized flight
tracking system that allows them to track the status of every AirNet and
commercial flight in the country and schedule ground pick-up and delivery
personnel appropriately.


                                       3
<PAGE>

Aircraft fleet

AirNet owns and operates a fleet of 119 aircraft. AirNet's fleet was comprised
of the following aircraft at December 31, 1999:

<TABLE>
<CAPTION>
                                                  Maximum          Maximum          Maximum
                                                Payload (1)       Range (2)        Speed (3)
    Aircraft Type                   Number        (lbs.)         (n. miles)         (knots)
    -------------                   ------        ------         ----------         -------
<S>                 <C>             <C>            <C>              <C>               <C>
    Learjets, Model 35/35A          27             4,200            2,000             440

    Learjets, Model 25               4             3,500            1,000             440

    Piper Navajo Chieftain          17             1,500              800             175

    Piper Aerostar                  12             1,000              900             190

    Beech Baron                     43             1,000              700             180

    Cessna 310                      16               900              600             170
</TABLE>

----------------
(1) Maximum payload in pounds for a one-hour flight plus required fuel reserves.
(2) Maximum range in nautical miles, assuming zero wind, full fuel and full
    payload.
(3) Maximum speed in knots, assuming full payload.

The Learjet is among the fastest, most reliable and most fuel efficient small
jet aircraft available in the world. Although not currently required by
regulations, the Learjet 35 meets all Stage Three noise requirements currently
being implemented across the country. The Learjet 25 is a smaller aircraft with
slightly smaller payload and range capabilities. AirNet intends to modify its
Learjet 25 aircraft with approved hush kits, allowing them to operate more
quietly in respect to the noise-sensitive communities surrounding most airports
or phase them out of scheduled operations and replace them with the more
efficient Learjet 35 or other Stage Three compliant aircraft.

AirNet's Learjet fleet provides it with nationwide connectivity. Long lane
segments from all corners of the nation converge on AirNet's hub in Columbus, as
well as "mini-hubs" located in Atlanta, Chicago, Charlotte, Dallas, Denver, Des
Moines, and New York. Smaller, light twin engine aircraft provide service to the
various "spoke" cities in AirNet's network, which include virtually all of the
nation's large metropolitan areas.

AirNet acquires and operates pre-owned aircraft, typically between 20 and 25
years old. These aircraft are reasonably priced and are relatively modern, as
they have undergone no significant design changes in the last 25 years. Further,
when appropriately maintained these aircraft show little or no evidence of
erosion in performance.

Aircraft maintenance is also headquartered in Columbus. This facility operates
24 hours a day, 365 days a year. AirNet employs over 75 experienced aircraft and
avionics technicians in eight separate locations across the country (Columbus,
Dallas, Denver, Hartford, Minneapolis, New Orleans, Philadelphia and San Diego),
performing all levels of maintenance from 100-hour inspections on its light twin
engine aircraft to 7,200-hour/12-year inspections on its fleet of Learjets.
AirNet has an in-house engine shop where some of the piston engines are
overhauled on-site, thereby reducing aircraft downtime and controlling costs.
Avionics trouble-shooting and repair, performed internally by AirNet since 1989,
also provide for maximum efficiency and minimum aircraft downtime for its entire
fleet.

Ground support operations

Shipments are typically picked up by AirNet couriers and delivered to the
originating airport where shipments are loaded into aircraft by AirNet ground
crews. Upon arrival at the main hub in Columbus,


                                       4
<PAGE>

Ohio, packages are off-loaded, fine sorted by destination and reloaded onto the
aircraft. During the thirty to forty minute sort period, the aircraft is
refueled by AirNet ground support personnel. Fueling operations include trained
fuelers and ground support equipment, including six fuel trucks and
approximately 86,500 gallons of fuel storage capacity. Outbased fueling of
aircraft is typically performed by contracted fixed base operators at the local
airports.

Delivery services

A typical shipment is picked up from the sending bank or an Express customer by
an AirNet courier. Canceled check shipments are pre-sorted by bank personnel and
bundled as to final destination using AirNet-supplied, color-coded bags. Express
shipments are packaged in either AirNet-provided packaging or the customers'
packaging. The shipment is then transported to the local airport where it enters
AirNet's air transportation system and is scanned via bar code technology, which
reads information pertaining to the shipper, receiver, airbill number and
applicable deadline. This data is then downloaded into AirNet's ComCheck or
AirNet Connect computer systems, where it is available to AirNet's customer
service representatives ("CSRs").

Upon arrival at AirNet's Columbus hub or one of its mini-hubs, the shipment is
off-loaded, sorted by destination and reloaded onto company aircraft. At the
destination city, the shipment is off-loaded for the final time and delivered by
company courier to the receiver. When delivered, the shipment is once again
scanned and downloaded into AirNet's computer system. Delivery information for
all shipments is then available on-line to the customers and all CSRs. AirNet's
customer service department is available to handle any inquiries, discrepancies
or supply requests, as well as provide proof of delivery documentation, all of
which are value-added features of AirNet's service.

AirNet provides delivery service for three sets of banking deadlines and
customized express deadlines designed around customer needs. Basic deadlines,
which have a 9:30 p.m. - 10:00 p.m. hub time in Columbus, provide delivery
service between 12:01 a.m. and 2:00 a.m. to approximately the northeastern third
of the nation. Premium deadlines, which have an 11:00 p.m. - 11:30 p.m. hub time
in Columbus and Charlotte, provide delivery service at approximately 3:00 a.m.
to the eastern half of the nation. Finally, City deadlines, which have a 4:00
a.m. - 5:30 a.m. hub time in Columbus, provide delivery service at approximately
8:00 a.m. to all cities served by the network. AirNet prices these services
based on the tier of service and by the pound on a customer-by-customer basis.

AirNet operates a fleet of approximately 250 ground transportation vehicles, all
of which it owns. Vehicles range in size from passenger cars to full-sized vans.
AirNet also rents lightweight trucks for certain weekend ground routes. In
addition, AirNet uses a network of over 300 vendors and independent contractors
to further augment its ground delivery network. Dispatching functions related to
ground delivery services have historically been centralized out of the Columbus,
Ohio hub. However, in 1999, AirNet began dispatching for some of the larger
metropolitan areas out of the local offices. Based on the improved efficiencies
obtained, AirNet intends to continue this migration to more localized
dispatching in the future.

AirNet's SameDay service provides canceled check delivery services to banking
customers meeting daytime banking deadlines and to other Express customers
requiring next-flight-out timing. These shipments are typically picked up by
AirNet couriers and transported via commercial airlines to destination cities,
where AirNet couriers accept the packages and deliver them to the destinations.

Customers

The highly specialized needs of AirNet's customer base combined with AirNet's
performance level over the years have resulted in a high level of customer
retention in the check delivery area. This customer retention level, in turn,
creates a level of stability in AirNet's revenue base that allows for product
development and continued dedication of resources to providing the highest
possible level of service to customers. The U.S. banking industry, including
commercial banks, savings banks and Federal Reserve banks, represents AirNet's
largest category of customers and in 1999 accounted for approximately 77% of its
revenues. This customer list represents over 50 of the nation's largest bank
holding companies. AirNet's time-critical canceled check delivery service allows
its banking customers


                                       5
<PAGE>

to offer competitive products and pricing. Express delivery customers, which
accounted for 22% of AirNet's 1999 revenues, include industrial and service
corporations, entertainment companies, medical companies, national integrated
carriers and consolidating freight forwarders. Although AirNet maintains a base
of Express delivery customers who ship nightly and have a high level of
retention, it is also expanding its services to retail customers who tend to
ship less frequently. Bank of America represented 10.4% of total net revenues.
No other single customer accounted for more than 10% of AirNet's fiscal 1999
revenues.

Human Resources

AirNet believes it has achieved a significant competitive advantage within its
industry through its major commitment to human resources. All levels of AirNet's
management strive to operate within the spirit of AirNet's core values, which
are: (i) Accountability, (ii) Honesty, Integrity, Trust and Respect, (iii)
Quality Performance, (iv) Open and Free Communication, (v) Team Management
Style, and (vi) Remember to Enjoy Life It is a Gift!

All AirNet personnel are part of the company-wide drug-testing program.
Management believes this program, which goes beyond the requirements of AirNet's
regulators, helps to ensure the highest possible performance levels. The
management training and professional development seminars are periodically held
for, and attended by, all levels of company personnel. AirNet also aggressively
compensates for performance, with excellent performance recognized and rewarded
through a company-wide incentive-based compensation program.

Associates

The chart below summarizes AirNet's workforce at December 31, 1999, 1998 and
1997. AirNet's associates are not represented by any union or covered by any
collective bargaining agreement. AirNet has experienced no work stoppages and
believes that its relationship with associates is good.

                                                 As of December 31,
      Department                           1999          1998           1997
                                       ----------    -----------    ----------
      Management/Administration             335           249            206
      Flight                                160           164            179
      Maintenance                            77            73             73
      Driver/Courier/Ramp/Sort              713           724            765
                                       ----------    -----------    ----------
         Total                            1,285         1,210          1,223

Competition

The air and ground courier industry is highly competitive. AirNet's primary
competitor in the transportation of cancelled checks is the Federal Reserve's
Check Relay Network. The actions of the Federal Reserve are regulated by the
Monetary Control Act, which requires the Federal Reserve to price its services
at actual cost plus a private sector adjustment factor. AirNet believes that the
purpose of the Monetary Control Act is to curtail the possibility of predatory
pricing by the Federal Reserve when it competes with the private sector. No
assurance beyond the remedies of law can be given that the Federal Reserve will
comply with the Monetary Control Act.

In the private sector, there are a large number of smaller, regional carriers
that transport canceled checks, none with a significant interstate market share.
The two largest private sector air couriers, Federal Express Corporation
("FedEx") and United Parcel Service ("UPS"), both carry canceled checks where
the deadlines being pursued fit into their existing system, but this has not
represented a significant market share of this industry market to date. AirNet
provides customized service for its customer base, often with later pick-ups and
earlier deliveries than the large, national couriers. Both FedEx and UPS utilize
AirNet's transportation network for certain situations where they require
customized service.


                                       6
<PAGE>

AirNet competes with commercial airlines and numerous other carriers in its
Express delivery business. AirNet estimates its market share in this industry at
less than 1%. AirNet believes that this market represents a significant
expansion opportunity for ultra time-critical shipments requiring later pick-ups
or earlier deliveries than are typically provided by major integrators and
freight forwarders. AirNet believes that it is in an excellent position to
leverage the use of its unique air network system, its proprietary information
technology and its historically high on-time performance level to compete in
this market.

Regulation

AirNet is regulated under Part 135 of the Federal Aviation Regulations by the
Federal Aviation Administration. Additionally, AirNet obtained a 7060 exemption
from the U.S. Department of Transportation which allows transportation of
increased volumes of certain radioactive materials on AirNet's airline. AirNet
holds nationwide general commodities authority from the Interstate Commerce
Commission to operate as a common carrier on an interstate basis within the
contiguous 48 states. AirNet's delivery operations are subject to various state
and local regulations, and in many instances, require permits and licenses from
state authorities.

AirNet believes that it has all permits, approvals and licenses required to
conduct its operations and that it is in compliance with applicable regulatory
requirements relating to its operations. AirNet's failure to comply with the
applicable regulations could result in substantial fines or possible revocation
of one or more of AirNet's operating permits.

Environmental matters

AirNet believes that compliance with applicable laws and regulations governing
environmental matters has not had, and is not expected to have, a material
effect on AirNet's capital expenditures, operations or competitive position.
Although AirNet believes that it is in compliance with all applicable noise
level regulations and is working proactively with various local governments to
minimize noise issues, future noise pollution regulations could require the
replacement of several of AirNet's aircraft.

ITEM 2  -  PROPERTIES

AirNet owns its corporate and operational headquarters at 3939 International
Gateway in Columbus, Ohio. The building sits on land owned by the Port Authority
of Columbus. AirNet has a 25-year land lease with the Port Authority, which
expires on December 31, 2009 and contains a 20 year renewal option. The complex
has 80,000 square feet, of which AirNet utilizes approximately 70,000 square
feet. The remainder is subleased to unrelated third parties. AirNet's
headquarters is currently used for operations, aircraft maintenance, vehicle
maintenance, general and administrative functions, and training.

AirNet leases additional space at 4700 East Fifth Avenue, also located on Port
Authority land. The space is used for administrative support personnel. AirNet
operates at approximately 40 additional locations throughout the country. These
locations, which are leased from unrelated third parties, generally include
office space and/or a section of the lessor's hangar or ramp.

For additional information concerning AirNet's leases, see Note 7 to AirNet's
Consolidated Financial Statements included in Item 8, Financial Statements and
Supplementary Data.

ITEM 3  -  LEGAL PROCEEDINGS

On January 29, 1999, AirNet agreed to settle a lawsuit filed by Q International
Courier, Inc. and its shareholders (collectively, "Quick") in connection with
the termination of the agreement to acquire Quick. Quick had filed an action on
August 28, 1998 in the United States District Court for the Southern District of
New York (Case No. 98 CIV. 6129) alleging misappropriation of trade secrets and
confidential information and breach of the acquisition agreement between the
parties. Quick sought injunctive relief, monetary relief and punitive damages.
AirNet filed motions to dismiss all of the claims which were pending when the
parties settled the action. Under the terms of the settlement,


                                       7
<PAGE>

neither AirNet nor Quick admitted any wrongdoing or liability regarding the
claims. AirNet recorded a $3.2 million charge as of December 31, 1998 for
settlement costs and related litigation fees incurred.

There are no other pending legal proceedings involving AirNet other than routine
litigation incidental to its business. In the opinion of AirNet's management,
these proceedings should not, individually or in the aggregate, have a material
adverse effect on AirNet's results of operations or financial condition.

ITEM 4  -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 1999.

Executive officers of the registrant

The following table identifies the executive officers of AirNet as of March 3,
2000. The executive officers serve at the pleasure of the Board of Directors.

Name                          Age                        Positions
----                          ---                        ---------
Gerald G. Mercer              52       Chairman of the Board and Chief Executive
                                       Officer
Joel E. Biggerstaff           43       President and Chief Operating Officer
William R. Sumser             44       Chief   Financial   Officer, Treasurer,
                                       Vice President, Finance and Secretary
Jeffery B. Harris             40       Vice President, Bank Sales
Guy S. King                   47       Vice President, Express Sales
Craig A. Leach                43       Vice President, Information Systems
Wynn D. Peterson              36       Vice President, Corporate Development
Kendall W. Wright             52       Vice President, Bank Sales

Gerald G. Mercer has served as Chairman of the Board and Chief Executive Officer
of AirNet since founding the company in 1974. He was President of AirNet from
1974 to 1999. He won Ohio's "Entrepreneur of the Year" Award in 1996 and has
been a member of the Young Presidents' Organization since 1986. Effective April
1, 2000, Mr. Mercer will transfer his CEO responsibilities to Mr. Biggerstaff,
but will remain as Chairman of the Board.

Joel E. Biggerstaff has served as AirNet's President and Chief Operating Officer
since August 1999. He will replace Mr. Mercer as Chief Executive Officer,
effective April 1, 2000. Prior to joining AirNet, Mr. Biggerstaff served as
President of the Southern Region of Corporate Express Delivery Systems, a
national expedited distribution service, from February 1998 through July 1999.
From September 1996 through February 1998, Mr. Biggerstaff provided
transportation consulting services and prior to September 1996, he held various
positions within Ryder System, Inc., including Regional Vice President and
General Manager.

William R. Sumser has served AirNet as the Chief Financial Officer since January
1, 2000, as Treasurer since March 1999, as the Vice President, Finance and
Secretary since March 1996. He also served as Controller from 1988 through 1999.

Jeffery B. Harris has served AirNet as Vice President, Bank Sales since October,
1997. Prior to joining AirNet in June 1996 as the Relationship Manager for
Banking Sales, Mr. Harris served as Vice President and Senior Transit Product
Manager for Mellon Bank, N.A. from 1994 to 1996.

Guy S. King has served as Vice President, Express Sales for AirNet since 1989.
Prior to 1989, Mr. King served AirNet in numerous functions dating back to 1976,
including dispatcher and pilot, before eventually founding AirNet's Express
delivery division in 1984. Mr. King has served on the Board of Directors of the
Air Courier Conference of America since 1993.

Craig A. Leach was named Vice President of Information Systems effective January
2000. Mr. Leach established AirNet's Information Systems Department in 1985 and
was named Director of Information Systems in 1996.


                                       8
<PAGE>

Wynn D. Peterson, CFA, has served as Vice President of Corporate Development
since February 2000. He joined AirNet in 1997 as Manager of Corporate
Development. Prior to joining AirNet, Mr. Peterson served as a Portfolio Manager
for Deseret Mutual from 1993 to 1997.

Kendall W. Wright has served as Vice President, Bank Sales for AirNet since
1988.

                                     PART II


ITEM 5  -  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The common shares of AirNet Systems, Inc. trade on the New York Stock Exchange
under the symbol "ANS". The table below sets forth the high and low sales prices
of the common shares reported for the periods indicated.


                                       1999                      1998
         Quarter ended            High      Low              High       Low
         -------------            ----      ---              ----       ---
        March 31                $14.38     $6.63           $29.38     $20.81
        June 30                  14.00      7.50            29.19      16.00
        September 30             13.88      9.00            17.81      14.12
        December 31               9.56      4.63            16.31      11.69

AirNet has not paid any dividends on its common shares and does not intend to
pay any such dividends in the foreseeable future. AirNet anticipates using
future earnings to finance operations and future growth and development.
Restrictive covenants in AirNet's revolving credit facility impose limitations
on the payment of dividends. These covenants prohibit AirNet from paying cash
dividends on its common shares in excess of 50% of net income.

On March 3, 2000, there were approximately 2,000 holders of AirNet common
shares, based upon the number of holders of record and the number of individual
participants in certain security position listings.


                                       9
<PAGE>

ITEM 6 - SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                                                      Three Months
Statement of Operations Data                                             Years Ended                 Years Ended          Ended
(in thousands, except per share data)                                    December 31,                September 30,      December 31,
                                                                ------------------------------   ---------------------   -----------
                                                                  1999       1998        1997      1996         1995       1996
Net Revenues
<S>                                                              <C>        <C>        <C>       <C>          <C>        <C>
     Check delivery                                              $98,951    $93,206    $80,707   $65,025      $58,264    $16,811
     Express delivery                                             28,714     19,109     15,660    13,864       12,424      3,614
     Fixed base and other operations                               1,033      1,366      1,395     1,063        1,007        366
-----------------------------------------------------------------------------------------------------------------------------------
Total net revenues                                               128,698    113,681     97,762    79,952       71,695     20,791
-----------------------------------------------------------------------------------------------------------------------------------

Costs and Expenses
     Air transportation                                           97,315     82,793     66,031    53,797       49,246     14,383
     Fixed base operations                                         1,089        853      1,101     1,033          956        309
     Selling, general, and administrative                         17,237     13,782      8,551    11,875       13,418      1,916
-----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses                                         115,641     97,428     75,683    66,705       63,620     16,608
-----------------------------------------------------------------------------------------------------------------------------------

Income from operations                                            13,057     16,253     22,079    13,247        8,075      4,183

Acquisition termination charge (Note 1)                                -      5,570          -         -            -          -
Interest expense                                                   2,477      1,336        109     1,072        1,469         10
Offering-related, non-recurring expenses (Note 2)                      -          -          -    13,704            -          -

-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes                                 10,580      9,347     21,970    (1,529)       6,606      4,173
-----------------------------------------------------------------------------------------------------------------------------------

Income tax expense (benefit), net (Note 3)                         4,308      3,711      8,767     4,200          (13)     1,688

-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of accounting change        6,272      5,636     13,203    (5,729)       6,619      2,485
-----------------------------------------------------------------------------------------------------------------------------------

Cumulative effect of accounting change, net of tax (Note 4)       (2,488)         -          -         -            -          -

-----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                 $3,784     $5,636    $13,203   ($5,729)      $6,619     $2,485
-----------------------------------------------------------------------------------------------------------------------------------

Income per common share
     Income before cumulative effect of accounting change          $0.55      $0.46      $1.05
     Cumulative effect of accounting change, net of tax            (0.22)         -          -
     Net income                                                    $0.33      $0.46      $1.05

Income per common share - assuming dilution
     Income before cumulative effect of accounting change          $0.55      $0.46      $1.04
     Cumulative effect of accounting change, net of tax            (0.22)         -          -
     Net income                                                    $0.33      $0.46      $1.04

Pro forma information - unaudited (Note 5)
     Net income (loss) before taxes                                                              ($1,529)      $6,606
     Pro forma adjustments, other than income taxes                                                4,429        7,367
     Pro forma income taxes                                                                        5,618        5,589
     Pro forma net income (loss)                                                                 ($2,718)      $8,384

     Pro forma net income (loss) per share
     - basic and assuming dilution                                                                ($0.34)       $1.43

Adjusted pro forma information - unaudited
     Pro forma net income (loss)                                                                 ($2,718)      $8,384
     Effects of eliminating offering-related,
          non-recurring expense, net of tax (Note 2)                                              12,681            -


     Adjusted pro forma net income                                                                $9,963       $8,384

     Adjusted pro forma net income per share (Note 6)                                              $0.80        $0.67

Balance Sheet Data
(in thousands)

Total assets                                                    $127,477   $127,129   $103,986   $75,866      $49,929    $79,495
Total debt                                                        33,948     35,506      9,730       197       19,431        111
Shareholders' equity                                              73,751     69,674     80,260    66,287       20,875     70,719
</TABLE>

Note 1  Represents costs incurred as a result of the termination of a planned
        acquistion of Q International Courier, Inc. ("Quick"). The agreement was
        terminated in June, 1998, resulting in a $2.4 million charge related to
        costs incurred during merger negotiations and a $3.2 million charge
        related to the settlement of a lawsuit filed by Quick.

Note 2  Represents non-cash, non-recurring expenses incurred as a result of
        the Company's initial public offering (the "Offering"), effective May
        31, 1996.

Note 3  Prior to the Company's Offering, it operated as an S corporation under
        the Internal Revenue Code for tax purposes and, consequently, was not
        subject to federal and certain state income taxes, except for the
        portion of income (loss) related to the operations of Express
        Convenience Center, Inc.

Note 4  See Note 2 to AirNet's Consolidated Financial Statements included in
        Item 8, Financial Statements and Supplementary Data for pro forma
        disclosure relating to prior periods presented.

Note 5  Includes pro forma adjustments related to the Offering. Such
        adjustments reflect restructured executive compensation plans, the
        elimination of a deferred compensation plan, the reduction of interest
        expense and the termination of a covenant not to compete and
        corresponding payments as if the events occurred at the beginning of the
        period. All such changes were effective with the consummation of the
        Offering on May 31, 1996.

Note 6  Assumes shares issued in the Offering were outstanding for the entire
        period.


                                       10
<PAGE>

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION

General

AirNet's consolidated financial statements have been and will be affected by the
following factors:

Acquisitions

On August 11, 1998, AirNet acquired all of the outstanding common stock of
Mercury Business Services, Inc., an Express delivery management service located
in Boston, Massachusetts, for 117,647 AirNet common shares and approximately
$2.0 million cash.

AirNet completed three acquisitions in 1997. On January 30, 1997, all of the
outstanding shares of Express Convenience Center, Inc., a national small package
forwarder, were acquired for 145,953 AirNet common shares. The transaction was
accounted for as a pooling-of-interests. Consequently, all financial data has
been restated to reflect the operations of ECC. On June 6, 1997, AirNet acquired
all of the outstanding shares of Pacific Air Charter, Inc., a regional airline
in the business of transporting canceled checks, for $0.4 million cash. On July
31, 1997, AirNet acquired all of the outstanding shares of Data Air Courier,
Inc., a national transporter of canceled checks and small packages through a
ground delivery network and commercial airlines, for approximately $4.0 million
cash.

The results of operations of Mercury, PAC and Data Air have been included in the
financial data since the respective dates of the acquisitions.

Acquisition Termination Charge

On June 17, 1998, AirNet announced that it had terminated an agreement to
acquire Q International Courier, Inc. ("Quick"). AirNet incurred $2.4 million of
costs in conjunction with this termination, all of which were expensed upon the
termination of the agreement. Subsequent to the termination of the agreement,
AirNet agreed to settle a lawsuit filed by Quick in connection with the
termination of the acquisition. Settlement and litigation costs related to the
suit totaled approximately $3.2 million and were fully expensed as of December
31, 1998.

Start-Up Costs

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-5, Reporting on the Costs of Start-Up
Activities, which requires that costs related to start-up activities be expensed
as incurred. Prior to 1999, AirNet capitalized start-up costs associated with
its premium products line of business. Effective July 1, 1998, the company
ceased capitalizing these costs and began amortizing the previously capitalized
costs over five years. The company adopted the provisions of the SOP in its
financial statements as of January 1, 1999.

Results of Operations

Year ended December 31, 1999 compared to year ended December 31, 1998

Total net revenues were $128.7 million for the twelve months ended December 31,
1999, an increase of $15.1 million, or 13.2%, over the twelve months ended
December 31, 1998. Net revenues from check delivery increased $5.7 million, or
6.2%. This increase was comprised of $1.9 million related to price increases in
1999 and $1.6 million related to operating a full year of the Federal Reserve
weekend program, which was introduced in the fourth quarter of 1998. In
addition, net revenues increased due to one additional flying day in 1999
compared to 1998, and increased business activity from both new and existing
customers.


                                       11
<PAGE>

Net revenues from Express delivery increased $9.6 million, or 50.3%, from 1998
to 1999. Of this increase, $4.2 million was due to a whole year of Mercury
operations versus a partial year in 1998, as Mercury was acquired in August
1998. $5.3 million of the increase in Express revenue was due to growth in
premium product shipments requiring specialized AirNet line-haul service,
SameDay commercial airline service or hazardous material handling. These
increases were offset by lower revenue from wholesale customers (freight
forwarders) and customers requiring less time-critical standard service as
AirNet continued its sales emphasis on premium services.

Total costs and expenses were $115.6 million in 1999, an increase of $18.2
million, or 18.7%, over 1998. This resulted in income from operations of $13.1
million in 1999, compared to $16.3 million in 1998. Air transportation expenses
rose $14.5 million, or 17.5%.

In addition to the effects of capitalizing $0.8 million of start-up costs
related to the Express business in the first half of 1998 and expensing such
costs as incurred in 1999, air transportation costs increased to support growth
in the Express delivery area and the addition of Federal Reserve shipments to
the weekend program. Wages and benefits were up $2.5 million and ground courier
costs were up $3.0 million due to additional personnel to support the increased
weekend operations and Express business growth. Aircraft fuel costs were up
11.3%, or $1.1 million, compared to 1998 as jet and piston fuel prices rose
significantly during 1999. Outside services were up $0.3 million due to
outsourced routes related to pilot shortages. Depreciation expense was up $1.3
million, or 12.8%, primarily due to aircraft overhauls, engine additions and
inspections in late 1998 and 1999. Other expense increased $5.2 million
primarily due to a $1.5 million increase in workers' compensation costs, $2.9
million increase in commercial freight expense related to a full year of Mercury
operations and significant increases in bank and Express shipments shipped via
the commercial airlines.

Selling, general and administrative expenses increased by $3.5 million, or
25.1%, compared to 1998. $0.9 million of this increase was a result of expensing
start-up costs as incurred in 1999 compared to capitalizing start-up costs in
the first half of 1998. Increased expenses of $2.5 million in the administrative
payroll areas were a result of the addition of personnel to support growth in
AirNet's Express service, a full year of Mercury operations, and the hiring of a
new president. Commission expense increased in conjunction with Express revenue
growth. Additionally, bad debt expense increased $0.4 million due to a dispute
with one customer. $0.9 million of the selling, general and administrative
increase was related to the use of outside consultants. These increases were
offset by decreases in officer severance packages and the one-time cost of a
consulting study related to the call center in 1998.

In 1998, AirNet incurred a $5.6 million charge in connection with the write-off
of costs associated with the efforts to acquire Quick and the settlement of a
related lawsuit. The impact of the one-time $5.6 million charge decreased fully
diluted net income per share by $0.27 in 1998. Settlement of the litigation and
write-off of the acquisition costs were recorded as of December 31, 1998
resulting in no impact to the 1999 financial results.

Interest costs were $2.5 million in fiscal 1999, compared to $1.3 million in
1998. AirNet increased the average outstanding balance on its revolving credit
facility in 1999 primarily as the result of the $20 million stock buyback
program executed in the second half of 1998.

AirNet recorded tax expense of $4.3 million for fiscal 1999 compared to $3.7
million for fiscal 1998.

Year ended December 31, 1998 compared to year ended December 31, 1997

Net revenues were $113.7 million for the twelve months ended December 31, 1998,
an increase of $15.9 million, or 16.3%, over the twelve months ended December
31, 1997. Net revenues from check delivery increased $12.5 million, or 15.5%.
This included $4.4 million which can be attributed to price increases effective
January 1, 1998 and approximately $6.9 million from the Data Air and PAC
acquisitions being in place for a full year. The balance of the increase can be
attributed to the introduction of a weekend delivery program in April, 1997 and
increased business activity from both new and existing customers during 1998.
AirNet operated its full air system 199 days in both 1998 and 1997.


                                       12
<PAGE>

Net revenues from Express delivery increased $3.4 million, or 22.0%, from fiscal
1997 to fiscal 1998. Approximately $2.8 million of the increase was due to the
addition of Mercury in 1998. An increase of $4.0 million in premium product
shipments requiring LateNight or SameDay service was offset by a $3.2 million
decrease in the services provided to wholesale customers (freight forwarders)
and customers requiring less time-critical standard services. This decrease
resulted from AirNet's strategic decision to decrease its wholesale and standard
service business in late 1997 and early 1998 and emphasize the LateNight and
SameDay services.

Total costs and expenses, prior to the acquisition termination charge, were
$97.4 million in fiscal 1998, an increase of $21.7 million, or 28.7%, over
fiscal 1997. This resulted in income from operations of $16.3 million in fiscal
1998, compared to $22.1 million in fiscal 1997. Air transportation expenses rose
$16.8 million, or 25.4%, while selling, general and administrative expenses
increased $5.2 million, or 61.2%, for the fiscal year.

Air transportation costs increased primarily as a result of the acquisitions and
infrastructure costs in anticipation of growth in the Express delivery area. The
greatest effect of the infrastructure buildup occurred in ground courier
operations where overall wages increased $4.9 million, of which approximately
$2.1 million can be attributed to the full year of Data Air operations, compared
to five months in 1997. Healthcare costs were up $1.5 million over 1997 levels
due to the addition of covered personnel and an anomaly of claims experienced in
the third and fourth quarter. The costs associated with shipping packages on the
commercial airlines increased $4.7 million due to the addition of Mercury, the
full year of Data Air operations and the increase in the volume of SameDay
shipments experienced in the Express service business. Aircraft maintenance and
fuel expenses remained flat over 1997 levels, despite an 11.3% increase in
flight hours, due to the unusually good flying weather experienced in 1998 and
lower fuel prices. Depreciation increased $1.7 million, or 20.8%, primarily due
to the increase in aircraft, from 113 at December 31, 1997 to 119 at December
31, 1998, additional vehicles acquired through the Data Air acquisition and the
purchase of AirNet's main operational facility in October, 1997. AirNet also
experienced a pilot shortage, which impacted its operations in the last half of
1998, requiring it to charter routes with third party operators. The impact of
the pilot shortage was approximately $0.5 million for fiscal 1998.

In the selling, general and administrative area, payroll and related expenses
increased $1.0 million primarily due to the addition of personnel in fiscal
1998. A commission plan was established in the first quarter for Express
delivery sales, resulting in $0.5 million of increased expense over the prior
year. AirNet incurred a $0.3 million loss related to the Check Exchange System,
Co. and $0.5 million for the defense and ultimate settlement of two lawsuits
related to issues surrounding the acquisition of Float Control, Inc. and a
non-related covenant not to compete dispute. AirNet also incurred costs
associated with the separation package for an officer who announced his
resignation in December, 1998. In addition, AirNet utilized outside consultants,
especially in the second half of 1998, to assist in the improvement of its
Express delivery call center. AirNet also began amortizing start-up costs
associated with the Express delivery initiative in the third quarter of 1998.
Total amortization for start-up costs in 1998 was $0.5 million.

In addition, AirNet incurred a $5.6 million charge in connection with the
write-off of costs associated with the efforts to acquire Quick and the
settlement of a related lawsuit. The impact of the one-time $5.6 million charge
decreased fully diluted net income per share by $0.27 in 1998.

Interest costs were $1.3 million in fiscal 1998, compared to $0.1 million in
1997. AirNet began borrowing on its line of credit in late 1997 and utilized a
portion of such borrowings to fund the repurchase of $20.0 million of common
shares in the second half of 1998.

AirNet recorded tax expense of $3.7 million for fiscal 1998 on income for the
period compared to $8.8 million for fiscal 1997.

                                       13
<PAGE>

Liquidity and Capital Resources

Cash flow from operating activities

Net cash flow from operating activities was $19.5 million for the year ended
December 31, 1999, compared to $12.0 million for the year ended December 31,
1998.

Current credit arrangements

AirNet maintains a credit agreement with a bank that provides a $50.0 million,
three-year, unsecured revolving credit facility. The credit agreement limits the
availability of funds to specified percentages of accounts receivable, inventory
and the wholesale value of aircraft and equipment. In addition, the credit
agreement requires the maintenance of minimum net worth and cash flow levels,
imposes limits on payments of dividends to 50% of net income and restricts the
amount of additional debt.

Investing activities

Capital expenditures totaled $17.6 million for the year ended December 31, 1999
compared to $18.7 million for fiscal 1998. Approximately $2.3 million was
incurred in connection with the purchase of a new aircraft and approximately
$15.0 million was incurred for flight related equipment, engines and
inspections. The remainder was incurred primarily for delivery vehicles,
furniture and fixtures, and computer equipment and related software. AirNet
anticipates it will spend approximately $20.0 million on capital items in 2000
and will continue to acquire aircraft and flight equipment as necessary to
maintain growth and continue offering quality service to its customers.

The company announced a stock repurchase program in February 2000 for up to $3.0
million of its common shares. Management and the Board of Directors believe that
AirNet's common shares represent an excellent value and an appropriate
investment. Purchases of these common shares will be made over time in the open
market or through privately negotiated transactions.

AirNet anticipates that operating cash and capital expenditure requirements will
continue to be funded by cash flow from operations, cash on hand and bank
borrowings.

Seasonality and Variability in Quarterly Results

AirNet's operations historically have been somewhat seasonal and dependent on
the number of banking holidays falling during the week. Because financial
institutions are currently the company's principal customers, AirNet's air
system is scheduled primarily around the needs of financial institution
customers. When financial institutions are closed, there is no need for AirNet
to operate a full system. AirNet's quarter ending December 31 is often the most
impacted by bank holidays (including Thanksgiving and Christmas). When these
holidays fall on Monday through Thursday, AirNet's revenues and net income are
adversely affected. AirNet's annual results fluctuate in response to the number
of banking holidays.

Operating results are also affected by the weather. AirNet generally experiences
higher maintenance costs during its first quarter ending March 31. Winter
weather requires additional costs for de-icing, hangar rental and other aircraft
services.


                                       14
<PAGE>

Selected Quarterly Data

The following is a summary of the unaudited quarterly results of operations for
the quarterly periods ended (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                               Quarters Ended,
                                           ---------------------------------------------------------
                                              March         June         September      December
                                               31            30              30            31
                                           ------------  ------------  ------------- ---------------
                  1999
<S>                                            <C>           <C>            <C>            <C>
Net revenues                                   $30,522       $31,766        $33,538        $32,872
Income from operations                           3,510         4,298          2,265          2,984
Income before cumulative effect of
     accounting change                           1,714             -              -              -
Cumulative effect of accounting
     change, net of tax                        (2,488)             -              -              -
                                           ------------  ------------  ------------- ---------------
Net income (loss)                               ($774)        $2,184           $993         $1,381

Income per share
     Income before cumulative effect of
          accounting change                       $.15          $.19           $.09           $.12
     Cumulative effect of accounting
          change, net of tax                     (.22)             -              -              -
                                           ------------  ------------  ------------- ---------------
     Net income (loss)                           (.07)           .19            .09            .12

Income per share - assuming dilution
     Income before cumulative effect of
          accounting change                        .15           .19            .09            .12
     Cumulative effect of accounting
          change, net of tax                     (.22)             -              -              -
                                           ------------  ------------  ------------- ---------------
     Net income (loss)                          ($.07)          $.19           $.09           $.12

                  1998
Net revenues                                   $26,571       $28,108        $29,644        $29,357
Income from operations                           4,910         5,528          4,524          1,291
                                           ------------  ------------  ------------- ---------------
Net income (loss)                               $2,854        $1,753         $2,519       ($1,490)

Income per share
     Net income (loss)                            $.23          $.14           $.20         ($.13)

Income per share - assuming dilution
     Net income (loss)                            $.22          $.14           $.20         ($.13)
</TABLE>

Inflation

Historically, inflation has not been a significant factor to AirNet. Although
the value of AirNet's service to its primary customers is enhanced by higher
interest rates, the volume of business has not changed historically with
fluctuating interest rates. AirNet has attempted to minimize the effects of
inflation on its operating results through rate increases and cost controls.

Fuel Surcharge/Rebate Program

AirNet maintains a fuel surcharge/rebate program for its check delivery
customers. Under this program, as the OPIS-CMH (Ohio Price Information Service -
Columbus, Ohio Station) price of jet fuel exceeds $0.75 per gallon, customers
are surcharged. In turn, if the OPIS-CMH price falls below $0.60 per gallon, the
same customers receive a rebate. Due to the recent increases in fuel prices,
AirNet has implemented a 2% temporary fuel surcharge to its Express customers,
effective February 6, 2000. The company intends to rescind the surcharge when
fuel prices return to lower, more stabilized levels.


                                       15
<PAGE>

Year 2000 Impact on Information Systems and Operations

In prior years, AirNet discussed the nature and progress of its plans to become
Year 2000 ready. In 1999, the company completed the remediation and testing of
its systems. As a result of those planning and implementation efforts, the
company experienced no significant disruptions in mission critical information
technology and non-information technology systems and believes those systems
successfully responded to the Year 2000 date change. The company is not aware of
any material problems resulting from Year 2000 issues, either with its services,
its internal systems, or the products and services of third parties. The company
will continue to monitor its mission critical computer applications and those of
its suppliers and vendors throughout the Year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly.

Forward-Looking Statements

Certain matters discussed in this Form 10-K, including, but not limited to,
information regarding future economic performance and plans and objectives of
AirNet's management, are forward-looking statements which involve risks and
uncertainties. When used in this document, the words "anticipate", "estimate",
"expect", "may", "plan", "project" and similar expressions are intended to be
among statements that identify forward-looking statements. These statements
involve risks and uncertainties such as the following, in addition to other
factors not listed, which could cause actual results to differ materially from
any forward-looking statement: potential changes by the FAA, which could
increase the regulation of AirNet's business, or the Federal Reserve, which
could change the competitive environment of transporting canceled checks;
adverse weather conditions; the ability to attract and retain qualified pilots;
technological advances and increases in the use of electronic funds transfers;
AirNet's ability to successfully complete and integrate acquisition targets; as
well as other economic, competitive and domestic and foreign governmental
factors affecting AirNet's markets, prices and other facets of its operations.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual outcomes may vary materially from
those indicated. AirNet undertakes no responsibility to update for changes
related to these or any other factors that may hereafter occur. The following
factors, in addition to those factors listed above and other possible factors
not listed, could affect AirNet's actual results and cause such results to
differ materially from those expressed in forward-looking statements:

Competition

The market for express air and ground delivery service is highly competitive.
AirNet's bank services division competes primarily against the Federal Reserve
Bank's Check Relay Network, which has significantly greater financial and other
resources than AirNet. The Federal Reserve is regulated by the Monetary Control
Act of 1980, which in general requires that the Federal Reserve price its
services on a cost basis plus a set percentage private sector market adjustment
factor. Failure by the Federal Reserve to comply with the Monetary Control Act
could have an adverse competitive impact on AirNet. In addition, there can be no
assurance that the Monetary Control Act will not be amended, modified or
repealed, or that new legislation affecting AirNet's business will not be
enacted. Although major participants in the next-day and second-day air delivery
market (such as UPS and FedEx) have also entered the business of SameDay and
early morning delivery, they have not had a material adverse effect on AirNet's
business to date. However, there can be no assurance that these competitors will
not have a material adverse effect in the future.

Technology

Some analysts have predicted that the increased use of electronic funds
transfers will lead to a "checkless society," which could adversely affect the
demand for AirNet's check delivery services to the financial services industry.
In addition, some financial services industry analysts have predicted the
development of various forms of imaging technology that could reduce or
eliminate the need for prompt delivery of canceled checks. Similarly,
technological advances in the nature of "electronic mail" and "telefax" have
affected the demand for on-call delivery services by express delivery customers.
While none of these technological advances have had a significant adverse impact


                                       16
<PAGE>

on AirNet's business to date, there can be no assurances that these or similar
technologies, or other regulatory or technological changes in the check
clearance and national payment systems, will not have an adverse affect on
AirNet's business in the future.

Risks Related to Growth Through Acquisitions

AirNet intends to continue to evaluate potential acquisitions, primarily in the
check delivery and express delivery areas. Growth through acquisition involves
substantial risks, including the risk of improper valuation of the acquired
business and the risk of inadequate integration. There can be no assurances that
the suitable acquisition candidates will be available, that AirNet will be able
to acquire or profitably manage such additional companies or that future
acquisitions will produce returns that justify the investment. In addition,
AirNet may compete for acquisitions and expansion opportunities with companies
that have significantly greater resources than the company.

AirNet may finance future acquisitions by using common shares for all or a
portion of the consideration to be paid, which may result in substantial
dilution to the current holders of the common shares. In the event the common
shares do not maintain a sufficient valuation, or potential acquisition
candidates are unwilling to accept the common shares as part of the
consideration for the sale of their businesses, AirNet may be required to
utilize more of its cash resources, if available, in order to pursue its
acquisition strategy. If AirNet does not have sufficient cash resources through
working capital or its current credit facility, its growth potential could be
limited and its existing operations could be impaired unless it is able to
obtain additional capital through future debt or equity financing. There can be
no assurance that AirNet will be able to obtain additional financing or that, if
available, this financing will be on terms acceptable to the company.

Permits and Licensing; Regulation

AirNet's delivery operations are subject to various federal, state and local
regulations that in many instances require permits and licenses. Failure by
AirNet to maintain required permits or licenses, or to comply with the
applicable regulations, could result in substantial fines or possible revocation
of the company's authority to conduct certain of its operations. Furthermore,
acquisitions by AirNet could be impeded by delays in obtaining approvals for the
transfer of permits or licenses, or failure to obtain such approvals.

AirNet's flight operations are regulated by the FAA under Part 135 of the
Federal Aviation Regulations. Among other things, these regulations govern
permissible flight and duty time for aviation flight crews. The FAA is currently
contemplating certain changes in flight and duty time guidelines, which, if
adopted, could increase AirNet's operating costs. These changes, if adopted,
could also require AirNet and other operators regulated by the FAA to hire
additional flight crew personnel. In addition, Congress, from time to time, has
considered various means, including excise taxes, to raise revenues directly
from the airline industry to pay for air traffic control facilities and
personnel. There can be no assurances that Congress will not change the current
federal excise tax rate or enact new excise taxes, which could adversely affect
AirNet's business.

ITEM 7A  -  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

AirNet is exposed to certain market risks from transactions that are entered
into during the normal course of business. AirNet's primary market risk exposure
relates to interest rate risk. At December 31, 1999, the company had a balance
of $33.9 million on its revolving credit facility. This facility bears interest
at the company's option of a fixed rate determined by the Eurodollar rate, a
negotiated rate or a floating rate. Assuming borrowings at December 31, 1999, a
one hundred basis point change in interest rates would impact net interest
expense by approximately $339,000 per year. In 1999, the company entered into
two interest rate swap agreements with a bank as a hedge against the interest
rate risk associated with borrowings. The swap agreements each have a notional
amount of $5.0 million and effectively locked in a portion of the company's
variable rate revolving credit liability at fixed rates of 6.3% and 6.5% plus a
margin based on the company's funded debt ratio. These swap agreements contain a
three year term.


                                       17
<PAGE>

ITEM 8  -  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Auditors

Shareholders and Board of Directors
AirNet Systems, Inc.

We have audited the accompanying consolidated balance sheets of AirNet Systems,
Inc. as of December 31, 1999 and 1998, and the related consolidated statements
of operations, shareholders' equity, and cash flows for each of the three years
in the period ended December 31, 1999. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of AirNet Systems,
Inc. at December 31, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.



/s/ Ernst & Young LLP

Columbus, Ohio
February 18, 2000


                                       18
<PAGE>

AIRNET SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

In thousands, except per share data

<TABLE>
<CAPTION>
                                                                        December 31,
                                                                      1999          1998
                                                                    ---------    ---------
<S>                                                                 <C>          <C>
ASSETS
Current assets:
     Cash and  cash equivalents                                     $   1,667    $   1,142
     Accounts receivable:
        Trade, less allowances of $598 and $290 at                     14,919       13,077
             December 31, 1999 and 1998, respectively
        Shareholders, affiliates, and associates                          154          163
     Inventory and spare parts                                         10,426        9,386
     Taxes refundable                                                   2,382        4,199
     Deferred taxes                                                       934        1,969
     Deposits and prepaids                                              1,733        2,748
                                                                    ---------    ---------
Total current assets                                                   32,215       32,684

Net property and equipment                                             84,733       78,817

Other assets:
     Goodwill, net of accumulated amortization of $715 and $371
           at December 31, 1999 and 1998, respectively                  7,920        8,237
     Other intangibles, net of accumulated amortization of $2,264
           and $1,918 at December 31, 1999 and 1998, respectively         375          678
     Investment in partnership and other                                2,234        2,490
     Start-up costs                                                      --          4,223
                                                                    ---------    ---------
Total assets                                                        $ 127,477    $ 127,129
                                                                    =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

     Accounts payable                                               $   5,203    $   5,930
     Salaries and related liabilities                                   2,792        1,284
     Accrued expenses                                                   1,206        3,889
     Deferred taxes                                                       196        2,282
     Current portion of notes payable                                      29           26
                                                                    ---------    ---------
Total current liabilities                                               9,426       13,411

Notes payable, less current portion                                    33,919       35,480
Deferred tax liability                                                 10,381        8,564

Shareholders' equity:
     Preferred shares, $.01 par value; 10,000 shares
       authorized; and no shares issued and outstanding                    --           --
     Common shares, $.01 par value; 40,000 shares authorized;
       and 12,753  shares issued at December 31, 1999 and 1998            128          128
     Additional paid-in-capital                                        78,182       78,455
     Retained earnings                                                 15,207       11,423
     Treasury shares, 1,343 and 1,375 shares held at cost
        at December 31, 1999 and 1998, respectively
                                                                      (19,766)     (20,332)
                                                                    ---------    ---------
Total shareholders' equity                                             73,751       69,674
                                                                    ---------    ---------
Total liabilities and shareholders' equity                          $ 127,477    $ 127,129
                                                                    =========    =========
</TABLE>

See notes to consolidated financial statements

                                      19

<PAGE>

AIRNET SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

In thousands, except per share data

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                                     1999          1998         1997
                                                                                   ---------    ---------   ---------
<S>                                                                                <C>          <C>         <C>
NET REVENUES
  Air  transportation,  net of excise tax of $3,592,  $3,106, and
  $2,113 for the years ended December 31, 1999, 1998, and 1997:
   Check delivery                                                                  $  98,951    $  93,206   $  80,707
   Express delivery                                                                   28,714       19,109      15,660
  Fixed base and other operations                                                      1,033        1,366       1,395
                                                                                   ---------    ---------   ---------
Total net revenues                                                                   128,698      113,681      97,762
                                                                                   ---------    ---------   ---------

COSTS AND EXPENSES
  Air transportation
   Wages and benefits                                                                 16,389       13,871      11,253
   Aircraft fuel                                                                      11,307       10,160      10,176
   Aircraft maintenance                                                                7,625        7,407       7,489
   Ground couriers and outside services                                               25,438       21,301      14,817
   Depreciation                                                                       11,391       10,101       8,363
   Other                                                                              25,165       19,953      13,933
  Fixed base operations                                                                1,089          853       1,101
  Selling, general and administrative                                                 17,237       13,782       8,551
                                                                                   ---------    ---------   ---------
Total costs and expenses                                                             115,641       97,428      75,683
                                                                                   ---------    ---------   ---------
Income from operations                                                                13,057       16,253      22,079
Acquisition termination charge                                                          --          5,570        --
Interest expense                                                                       2,477        1,336         109
                                                                                   ---------    ---------   ---------
Income before income taxes                                                            10,580        9,347      21,970
Provision for income taxes                                                             4,308        3,711       8,767
                                                                                   ---------    ---------   ---------
Income before cumulative effect of accounting change                                   6,272        5,636      13,203

Cumulative effect of accounting change, net of tax                                    (2,488)        --          --

                                                                                   ---------    ---------   ---------
Net income                                                                         $   3,784    $   5,636   $  13,203
                                                                                   ---------    ---------   ---------
Income per common share

  Income before cumulative effect of accounting change                             $    0.55    $    0.46   $    1.05
  Cumulative effect of accounting change, net of tax
                                                                                       (0.22)        --          --
                                                                                   ---------    ---------   ---------
  Net income                                                                       $    0.33    $    0.46   $    1.05
                                                                                   ---------    ---------   ---------
Income per common share - assuming dilution
  Income before cumulative effect of accounting change                             $    0.55    $    0.46   $    1.04
  Cumulative effect of accounting change, net of tax                                   (0.22)        --          --
                                                                                   ---------    ---------   ---------
  Net income                                                                       $    0.33    $    0.46   $    1.04
                                                                                   ---------    ---------   ---------
</TABLE>

  See notes to consolidated financial statements


                                       20
<PAGE>

AIRNET SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands

<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                                        1999         1998        1997
                                                                       --------    --------    --------
<S>                                                                    <C>         <C>         <C>
Operating activities
Net income                                                             $  3,784    $  5,636    $ 13,203
Adjustments to reconcile net income to net cash
provided by operating activities:
  Cumulative effect of accounting change                                  2,488        --          --
  Depreciation                                                           11,525      10,209       8,431
  Amortization of intangibles                                               789       1,067         353
  Deferred taxes                                                            766       4,218       5,169
  Provision for losses on accounts receivable                               504         150          84
  Loss on disposition of assets                                             102          55         616
  Cash provided by (used in) operating assets and liabilities:
   Accounts receivable                                                   (2,338)     (1,574)     (2,589)
   Inventory and spare parts                                             (1,040)     (3,333)     (1,005)
   Prepaid expenses                                                       1,015         112      (2,004)
   Start-up costs                                                          --        (2,165)     (2,522)
   Accounts payable                                                        (727)      1,448        (149)
   Salaries and related liabilities                                       1,508        (324)       (546)
   Accrued expenses                                                      (2,684)      2,168         857
   Taxes payable                                                          3,553      (6,423)      2,386
   Other, net                                                               257         742        (308)
                                                                       --------    --------    --------
Net cash provided by operating activities                                19,502      11,986      21,976

Investing activities

Acquisition of Mercury Business Services, Inc., net of cash acquired       --        (1,827)       --
Acquisition of Pacific Air Charter, Inc., net of cash acquired             --          --          (240)
Acquisition of Data Air Courier, Inc., net of cash acquired                --           (34)     (4,123)
Acquisition of Midway Aviation, Inc., net of cash acquired                 --          --           (53)
Purchases of property and equipment                                     (17,639)    (18,706)    (30,062)
Payments for covenants not  to compete                                     (170)       (540)       (105)
Proceeds from sales of property and equipment                                96         415         592
                                                                       --------    --------    --------
Net cash used in investing activities                                   (17,713)    (20,692)    (33,991)

Financing activities
Proceeds from 1996 Incentive Stock Plan Programs                            293       1,947       2,100
Net borrowings (repayments) under the revolving credit facility          (1,500)     25,800       9,500
Repayment of long-term debt                                                 (57)        (24)     (1,560)
Proceeds from the issuance of long-term debt                               --          --           230
Purchase of treasury stock                                                 --       (20,000)     (5,762)
                                                                       --------    --------    --------
Net cash provided by (used in) financing activities                      (1,264)      7,723       4,508
                                                                       --------    --------    --------

Net increase (decrease) in cash                                             525        (983)     (7,507)
Cash and cash equivalents at beginning of year                            1,142       2,125       9,632
                                                                       --------    --------    --------
Cash and cash equivalents at end of year                               $  1,667    $  1,142    $  2,125
                                                                       ========    ========    ========
</TABLE>


See notes to consolidated financial statements


                                       21
<PAGE>

AIRNET SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

In thousands

<TABLE>
<CAPTION>
                                                              Common Shares
                                                           -------------------   Additional
                                                           Number of              Paid-in    Retained    Treasury
                                                            Shares     Amount     Capital    Earnings    Shares      Total
                                                           --------   --------   --------    --------    --------    --------
<S>                                                          <C>      <C>        <C>         <C>         <C>         <C>
Balance December 31, 1996                                    12,621   $    126   $ 78,009    ($ 7,416)   $   --      $ 70,719
     Net income                                                --         --         --        13,203        --        13,203
     Exercise stock options                                     128          1      1,821        --          --         1,822
     Exercise stock options with treasury shares               --         --         (104)       --           329         225
     Issuance of Common Shares - Associate Stock
       Purchase Program                                           4          1         52        --          --            53
     Purchase treasury shares                                  --         --         --          --        (5,762)     (5,762)
                                                           --------   --------   --------    --------    --------    --------
Balance December 31, 1997                                    12,753        128     79,778       5,787      (5,433)     80,260

     Net income                                                --         --         --         5,636        --         5,636
     Exercise stock options with treasury shares               --         --         (685)       --         2,184       1,499
     Issuance of treasury shares - Associate Stock
       Purchase Program                                        --         --          (34)       --           315         281
     Issuance of treasury shares- acquisition of Mercury       --         --         (604)       --         2,427       1,823
     Issuance of treasury shares - associate stock bonus       --         --         --          --           175         175
     Purchase treasury shares                                  --         --         --          --       (20,000)    (20,000)
                                                           --------   --------   --------    --------    --------    --------
Balance December 31, 1998                                    12,753        128     78,455      11,423     (20,332)     69,674

     Net income                                                --         --         --         3,784        --         3,784
     Issuance of treasury shares - Associate Stock
       Purchase Program                                        --         --         (273)       --           566         293
                                                           --------   --------   --------    --------    --------    --------
Balance December 31, 1999                                    12,753   $    128   $ 78,182    $ 15,207    ($19,766)   $ 73,751
                                                           ========   ========   ========    ========    ========    ========
</TABLE>

See notes to consolidated financial statements

                                       22
<PAGE>

1.      Significant Accounting Policies

AirNet Systems, Inc. and its subsidiaries (the "company") operate a fully
integrated national air transportation network which provides delivery service
for time-critical shipments for customers in the U.S. banking industry and other
industries requiring the express delivery of packages. The company also offers
retail aviation fuel sales and related ground services for customers at its
Columbus, Ohio facility.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the
company and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.

Preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

Certain 1997 and 1998 balances have been reclassified to conform with the 1999
presentation.

Revenue Recognition

Revenue on air transportation services is recognized when the packages are
delivered to their destination. Revenue on fixed based operations is recognized
when the maintenance services are complete or fuel is delivered.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments which are
unrestricted as to withdrawal or use, and which have an original maturity of
three months or less. Cash equivalents are stated at cost, which approximates
market value.

Accounts Receivable

For 1999, approximately 77% and 66% of the company's revenues and related
receivables, respectively, were generated from customers within the banking
industry. The company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral. The company
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risks of specific customers, historical trends and other information.

Inventory and Spare Parts

Inventory and spare parts are valued at the lower of cost (weighted average
method) or market. At December 31, 1999, the balance included a Learjet, valued
at $3,891,000, held for resale.

Property and Equipment

Property and equipment are stated at cost. Engines, overhauls and major
inspections, which have been capitalized and included in flight equipment, are
depreciated and amortized on the basis of hours flown. Airframes, other flight
equipment and other property and equipment (primarily furniture and equipment,
leasehold improvements and vehicles) are depreciated using the straight-line
method over the estimated useful lives of the assets, as summarized below:

        Airframes                                               15 years
        Buildings                                               30 years
        Other flight equipment                               2 - 5 years
        Other property and equipment                        3 - 10 years


                                       23
<PAGE>

During 1997, the company made certain changes in its estimated useful lives and
the salvage values of its aircraft. The changes increased 1997 net income by
$1,050,000, or $.08 per share. These changes were made to better reflect how the
aircraft are expected to be used over time and the continued industry trend of
increased market values associated with the types and models of aircraft the
company owns and operates.

The company prepays certain engine repair and overhaul services under
manufacturer service plans. Such prepaid balances, which are capitalized at the
time the maintenance is performed, are included as other property and equipment
and were $2,991,000 and $2,398,000 at December 31, 1999 and 1998, respectively.

Investment in Subsidiary

AirNet wholly owns Float Control, Inc., which holds a 19% interest in the Check
Exchange System Co. ("CHEXS"). Float Control accounts for its investment in
CHEXS under the equity method of accounting. At December 31, 1999 and 1998,
Float Control's recorded investment in CHEXS was $2,065,000 and $2,337,000,
respectively.

Income Taxes

The company accounts for income taxes under the liability method pursuant to
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Under the liability method, deferred tax liabilities and assets are
determined based on the differences between the financial reporting and tax
bases of assets and liabilities using enacted tax rates and laws that will be in
effect when the differences are expected to reverse.

Goodwill

Goodwill is amortized on a straight-line basis over 25 years. The company's
policy is to periodically review its goodwill and other long-lived assets based
upon the evaluation of such factors as the occurrence of a significant adverse
event of change in the environment in which the business operates or if the
expected future cash flows (undiscounted and without interest) would become less
than the carrying amount of the asset. An impairment loss would be recorded in
the period such determination is made based on the fair value of the related
businesses.

Financial Instruments

The company uses interest rate swaps for the purpose of hedging its exposure to
fluctuations in interest rates. The swaps meet the requirements designation and
correlation for use of the accrual method of accounting. Differentials in the
swapped amounts are recorded as adjustments of the underlying periodic cash
flows that are being hedged. The fair values of the Company's financial
instruments approximate their carrying values at December 31, 1999 and 1998.

Intangibles

Intangibles include non-competition agreements, which are being amortized on the
straight-line method over periods ranging from one to 15 years.

Segment Reporting

In 1997, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 131, Disclosures about Segments of an
Enterprise and Related Information, which establishes annual and interim
reporting and disclosure standards for an enterprise's operating segments. SFAS
131 became effective for fiscal years beginning after December 15, 1997. The
Company has historically not segregated costs between its bank and Express
operations. Management has evaluated the standard and determined that, due to



                                       24
<PAGE>

accounting system limitations, it is impracticable to report segment
information. The Company is modifying its accounting systems and will begin
reporting segment information in the first quarter of fiscal year 2000.

Effect of New Accounting Standards

The FASB issued SFAS No. 133, Accounting for Derivative Financial Instruments
and Hedging Activities, in June 1998 and SFAS No. 137, Accounting for Derivative
Financial Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133, in June 1999, which are effective for the Company
beginning in the first quarter of 2001. The statements require that all
derivatives be recorded in the balance sheet as either assets or liabilities and
be measured at fair value. The accounting for changes in fair value of a
derivative depends on the intended use of the derivative and the resulting
designation. The Company has not determined what impact these statements will
have on its consolidated financial statements.

Supplemental Cash Flow Data

Cash paid for interest was $2,411,000, $1,236,000 and $109,000 for the years
ended December 31, 1999, 1998 and 1997, respectively. Cash paid for taxes was
$559,000, $6,078,000 and $1,312,000 for the year ended December 31, 1999, 1998
and 1997.

2.      Write Off of Start-up Costs

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-5, Reporting on the Costs of Start-Up
Activities, which requires that costs related to start-up activities be expensed
as incurred. Prior to 1999, the company capitalized start-up costs associated
with its premium products line of business. Effective July 1, 1998, the company
ceased capitalizing such costs and began amortizing the previously capitalized
costs over five years. The company adopted the provisions of the SOP in its
financial statements as of January 1, 1999, which resulted in the write-off of
unamortized start-up costs at that time. Had the company accounted for start-up
costs under SOP 98-5 for all years presented, its net income and net income per
share would have been the following:

                                       1999            1998              1997
                                    -----------    -------------    ------------

Proforma net income                  $6,272,000     $4,632,000       $11,715,000
     -per share (assuming dilution)       $0.55          $0.37             $0.92

3.      Acquisitions

Effective August 11, 1998, the company acquired all of the outstanding common
stock of Mercury Business Services, Inc. ("Mercury"), an express delivery
management service located in Boston. The company accounted for the acquisition
under the purchase method of accounting. The purchase price of the acquisition
included $1,827,000 in cash (net of cash acquired) and approximately 118,000
AirNet common shares and resulted in goodwill of $3,544,000, which is being
amortized over 25 years, and covenants not to compete totaling $300,000. The
covenants not to compete are amortized over the terms of the agreements, which
range from two to three years. The acquired assets and assumed liabilities have
been recorded at their estimated fair values as of August 11, 1998. The
company's consolidated financial statements include the results of operations of
Mercury since the purchase date. The pro forma results of operations for this
acquisition would not have been significantly different than those presented for
AirNet.

Effective July 31, 1997, the company acquired all of the outstanding common
stock of Data Air Courier, Inc. ("Data Air"), whose primary business involved
the nationwide transportation of canceled checks between clearing banks through
the use of company-owned ground vehicles, independent agents and commercial
airlines. The company accounted for the acquisition under the purchase method of
accounting. The purchase price of the acquisition totaled approximately
$4,157,000 and resulted in goodwill of approximately $3,718,000, which is being



                                       25
<PAGE>

amortized over 25 years. The company also entered into several covenants not to
compete totaling $170,000, which are being amortized over their respective
terms, which range from one to five years. The acquired assets and assumed
liabilities, including goodwill, have been recorded at their estimated fair
values as of July 31, 1997. The company's consolidated financial statements
include the results of operations of Data Air since the purchase date. The pro
forma results of operations for AirNet and Data Air as though they were combined
as of the beginning of the period ended December 31, 1997 are presented as
follows: Net revenues of $106,787,000, net income of $12,879,000, net income per
share of $1.02 and net income per share assuming dilution of $1.01.

Effective June 6, 1997, the company acquired all of the outstanding common stock
of Pacific Air Charter, Inc. ("PAC") for approximately $240,000 in cash, net of
cash acquired. PAC operated a fleet of eight aircraft, primarily transporting
canceled checks between clearing banks along the West Coast. The company
accounted for the acquisition under the purchase method of accounting. The
purchase resulted in goodwill of approximately $171,000, which is being
amortized over 25 years. The company also entered into a five year covenant not
to compete for $40,000. The acquired assets and assumed liabilities, including
goodwill, have been recorded at their estimated fair values as of June 6, 1997.
The company's consolidated financial statements include the results of
operations of PAC since the purchase date. The pro forma results of operations
for this acquisition would not have been significantly different than those
presented for AirNet.

Effective January 30, 1997, the company acquired Express Convenience Center,
Inc. d/b/a ECC Worldwide Services ("ECC") in a business combination accounted
for as a pooling-of-interests. ECC's primary services included small package
delivery services within the United States and certain other countries. All of
the stock of ECC was exchanged for approximately 146,000 AirNet common shares.
The company also entered into three covenant not-to-compete agreements for a
total of $205,000, which are being amortized over three- and five-year periods.

4.      Property and Equipment

Property and equipment consisted of the following at December 31:

                                                    1999                1998
                                                 ------------       ------------
Flight equipment                                 $130,432,000       $114,494,000
Other property and equipment                       20,803,000         20,279,000
                                                 ------------       ------------
                                                  151,235,000        134,773,000
Less accumulated depreciation                      66,502,000         55,956,000
                                                 ============       ============
Net property and equipment                       $ 84,733,000       $ 78,817,000
                                                 ============       ============


5.      Notes Payable

The company had borrowings as follows at December 31:

                                                     1999                 1998
                                                   -----------       -----------
Term notes                                         $   148,000       $   206,000
Revolving credit facility                           33,800,000        35,300,000
                                                   -----------       -----------
                                                    33,948,000        35,506,000
Current portion of notes payable                        29,000            26,000
                                                   ===========       ===========
Long-term portion of notes payable                 $33,919,000       $35,480,000
                                                   ===========       ===========

The company's credit agreement provides the company with a $50,000,000 unsecured
revolving credit facility. The agreement has a five-year term and is scheduled
to expire on August 1, 2003. The agreement may be extended in one-year
increments at any point through August 1, 2003. The agreement bears interest at
the company's option of a fixed rate determined by the Eurodollar rate, a
negotiated rate or a floating rate, plus a margin based on the company's funded
debt ratio. The floating rate is based on the sum of (a) a margin plus (b) the



                                       26
<PAGE>
greater of (i) the prime rate and (ii) the sum of .5% plus the federal funds
rate in effect from time to time. The credit agreement limits the availability
of funds to certain specified percentages of accounts receivable, inventory and
the wholesale value of aircraft and equipment. In addition, the credit agreement
requires the maintenance of certain minimum net worth and cash flow levels,
imposes certain limitations on payments of dividends and restricts the amount of
additional debt.

In September 1999, the company entered into two interest rate swap agreements
with a bank as a hedge against the interest rate risk associated with
borrowings. The swap agreements each have a notional amount of $5,000,000 and
effectively lock in a portion of the company's variable rate revolving credit
liability at fixed rates of 6.3% and 6.5% plus a margin based on the company's
funded debt ratio. These swap agreements are in effect for a period of three
years. The differential to be paid or received is accrued as interest rates
change and is recognized as an adjustment to the interest expense in the
statements of operations. The company does not use derivative financial
instruments for speculative purposes.

In conjunction with purchase of the company's operations facility in October,
1997, the company issued a $263,000 note. The terms of the note require monthly
principal and interest payments of $4,000 through 2005 and the note is
collateralized by the facility.

6.      1996 Incentive Stock Plan

In May 1996, the company adopted the AirNet Systems, Inc. 1996 Incentive Stock
Plan (the "Plan"). The Plan was last amended on August 19, 1999. The Plan
provides for the issuance of incentive and non-qualified stock options,
restricted stock and performance shares and a stock purchase plan (collectively
"Awards"). The Plan also provides for the grant of stock options to outside
directors. The maximum number of common shares available for issuance under the
Plan is 1,650,000 through 2006. The Plan is administered by the Compensation
Committee of the Board of Directors, which determines the terms and conditions
applicable to the Awards. The exercise price of each option equals the market
price of a common share on the date of grant. An option's maximum term is ten
years (five years for ISO's granted to 10% shareholders). Option vesting periods
range from vesting upon grant to vesting over four years.

The company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
Interpretations in accounting for its associate stock options. Under APB 25,
because the exercise price of the company's associate stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the company had accounted for its
associate stock options under the fair value method of that Statement. The fair
value of these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions for the years ended December 31:

                                                   1999      1998     1997
                                                 -------    ------   ------

Risk free interest rate                            6.5%      6.5%      6.5%
Volatility factor of expected market price
     of the company's common shares               50.0%     54.5%     59.1%
Weighted average expected life
     of options (years)                            6.88      7.55      7.88


                                       27
<PAGE>

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The company's pro
forma information follows for the years ended December 31:

                                         1999            1998            1997
                                      ----------      ----------     -----------
Net income, adjusted for FAS 123      $2,647,000      $4,668,000     $11,587,000
                                      ----------      ----------     -----------
Net income per share, adjusted
for FAS 123:
     Basic                                 $.23            $.38           $ .92
     Assuming dilution                      .23             .38             .91


A summary of the company's stock option activity and related information follows
(in thousands, except price per share data) for the years ended December 31:


<TABLE>
<CAPTION>
                                          1999                 1998                 1997
                                   -------------------  -------------------  -------------------
                                            Weighted             Weighted             Weighted
                                            Average              Average              Average
                                            Exercise             Exercise             Exercise
                                   Shares     Price     Shares     Price     Shares     Price
                                   -------  ----------  -------  ----------  -------  ----------
<S>                                   <C>      <C>         <C>      <C>         <C>      <C>
 Outstanding at beginning of
      period                          789      $16.14      651      $14.28      523      $14.18
 Granted                              422        9.62      288       19.32      282       14.40
 Exercised                               -           -    (106)      14.11    (145)       14.17
 Canceled                                       12.04      (44)      14.12                14.12
                                      (53)                                      (9)
                                   =======              =======              =======
 Outstanding at end of period       1,158       13.95      789       16.14      651       14.28
                                   =======              =======              =======

 Options exercisable at end of
      period                          662       14.82      532       14.99      587       14.28

 Weighted average fair value of
      options granted during the
      period                            -       $7.33        -      $12.59        -       $9.96
</TABLE>


The following summarizes information about stock options outstanding as of
December 31, 1999:

<TABLE>
<CAPTION>
                        Options Outstanding                            Options Exercisable
  ---------------------------------------------------------------- -----------------------------
                                      Weighted-Averag             a                             ge
                                       Remaining     Weighted-Aver                Weighted-Avera
   Range of Exercise     Number of    Contractual      Exercise    geNumber of      Exercise
        Prices            Options     Life (Years)      Price         Options         Price
  -------------------- -------------- -------------  ------------- -------------- --------------
<S>                        <C>               <C>          <C>           <C>             <C>
     Less than $10.00        385,240           9.4          $9.61         72,430          $9.58
        $10.01-$15.00        465,025           6.2          14.15        452,225          14.20
        $15.01-$20.00        206,200           8.4          17.33         75,400          17.08
        $20.01-$25.00        102,000           8.4          22.64         62,100          22.69
                       ==============                              ==============
                           1,158,465           7.9         $13.95        662,155         $14.82
                       ==============                              ==============
</TABLE>


                                       28
<PAGE>

7.      Lease Obligations

The company leases facility space at various locations throughout the United
States. The company incurred lease expense of $1,560,000, $1,092,000, and
$1,149,000 for the years ended December 31, 1999, 1998 and 1997, respectively.
As of December 31, 1999, future minimum lease payments by year and in the
aggregate under non-cancelable operating leases with initial or remaining terms
exceeding one year are as follows:
2000 - $89,000; 2001 - $56,000.

8.      Related Party Transactions

In October 1997, the company purchased its corporate and operational
headquarters for $4,100,000 from its President and majority shareholder, which
represented fair market value as determined by an independent appraisal. In
addition to the building, the company assumed the shareholder's land lease with
The Port Authority of Columbus which expires on December 31, 2009 and contains a
20-year renewal option. Total rent expense incurred under the facility lease
prior to the company's purchase from this shareholder was $864,000 for the year
ended December 31, 1997. The company believes the terms of this lease and
purchase were no less favorable than those reasonably available from
unaffiliated third parties.

9.      Retirement Plan

The company has a 401(k) retirement savings plan. All associates who have
completed a minimum of six months of service may contribute up to 15% of their
eligible annual earnings to the plan. The company may elect, at its discretion,
to make matching and profit-sharing contributions. The company's contribution
expense related to the plan totaled $529,000, $457,000, and $379,000 for the
years ended December 31, 1999, 1998 and 1997, respectively.

10.     Income Taxes

Income taxes are summarized as follows for the years ended December 31:

                                    1999           1998             1997
                               --------------- --------------  --------------
 Current:
    Federal                        $1,594,000     $1,299,000     $ 3,058,000
    State and local                    63,000        230,000         540,000
                               --------------- --------------  --------------
                                    1,657,000      1,529,000       3,598,000

 Deferred:
    Federal                           759,000      1,855,000       4,394,000
    State and local                   157,000        327,000         775,000
                               --------------- --------------  --------------
                                      916,000      2,182,000       5,169,000
                               =============== ==============  ==============
                                   $2,573,000     $3,711,000      $8,767,000
                               =============== ==============  ==============


                                       29
<PAGE>

Significant components of the company's deferred tax liabilities and assets are
as follows at December 31:


                                                       1999            1998
                                                   ------------    ------------
Long-term deferred tax asset:
     Alternative minimum tax credits               $  3,406,000    $  2,047,000
Long-term deferred tax liabilities:
     Property and equipment                         (11,840,000)     (8,698,000)
     Intangible assets                               (1,947,000)     (1,913,000)
                                                   ============    ============
Net long-term deferred tax liabilities             ($10,381,000)   ($ 8,564,000)
                                                   ============    ============

Current deferred tax assets:
     Health insurance reserves                     $    168,000    $     82,000
     Workers compensation reserves                      265,000               -
     Allowance for bad debt reserves                    236,000         116,000
     Operating loss carryforwards                             -       1,662,000
     Other                                              265,000         109,000
                                                   ------------    ------------
Total current assets                                    934,000       1,969,000

Current deferred tax liabilities:
     Prepaid expenses                                  (172,000)       (362,000)
     Start-up costs                                           -      (1,689,000)
     Other                                              (24,000)       (231,000)
                                                   ------------    ------------
Total current liabilities                              (196,000)     (2,282,000)
                                                   ------------    ------------
Net current deferred tax assets (liabilities)      $    738,000    ($   313,000)
                                                   ============    ============

The provision for income taxes consist of federal and state deferred taxes.
Differences arising between the provision for income taxes and the amount
computed by applying the statutory federal income tax rate to income before
income taxes are as follows for the years ended December 31:


<TABLE>
<CAPTION>
                                               1999            1998            1997
                                            -----------    -----------   -----------
<S>                                         <C>            <C>           <C>
Tax expense at federal statutory
     rate on pretax income                  $ 3,597,000    $ 3,178,000   $ 7,470,000
Add (deduct):
     State taxes, net of Federal benefit        566,000        410,000     1,136,000
     Tax benefit on cumulative effect of
         accounting change                   (1,735,000)          --            --
     Non-deductible permanent differences       145,000        122,000       125,000
     Other                                         --            1,000        36,000
                                            -----------    -----------   -----------
Total taxes                                 $ 2,573,000    $ 3,711,000   $ 8,767,000
                                            ===========    ===========   ===========
</TABLE>

The company has net operating losses for tax purposes of $3,817,000 and $338,000
which expire in 2011 and 2013, respectively.


                                       30
<PAGE>

11.     Net Income Per Share

The following table sets forth the computation of basic and diluted net income
per share for the years ended December 31:

<TABLE>
<CAPTION>
                                                      1999            1998            1997
                                                 --------------    -----------   -----------
<S>                                                  <C>            <C>          <C>
Numerator:
     Income before the cumulative effect of
          accounting change                          $6,272,000     $5,636,000   $13,203,000
     Cumulative effect of accounting
          change, net of tax                         (2,488,000)          --            --
                                                 --------------    -----------   -----------
   Net Income                                        $3,784,000     $5,636,000   $13,203,000

Denominator:
     Basic - weighted average shares
           outstanding                               11,397,000     12,228,000    12,577,000

     Diluted
          Stock options - associates, officers             --          152,000       129,000
              and directors
                                                 --------------    -----------   -----------
          Adjusted weighted average shares
                outstanding                          11,397,000     12,380,000    12,706,000

Net income per share - basic:
     Income before the cumulative effect of
          accounting change                               $.55            $.46         $1.05
     Cumulative effect of accounting
          change, net of tax                              (.22)             --            --
                                                 --------------    -----------   -----------
   Net income                                              .33             .46          1.05

Net income per share - assuming dilution:
     Income before the cumulative effect of
          accounting change                                .55             .46          1.04
     Cumulative effect of accounting
          change, net of tax                              (.22)             --            --
                                                 --------------    -----------   -----------
     Net income                                           $.33            $.46         $1.04
</TABLE>

For the years ended December 31, 1999 and 1998, 1,212,000 and 102,000 stock
options, respectively, were excluded from the diluted weighted average shares
outstanding calculation, as their exercise prices exceeded the average fair
market value of the underlying common shares for the year.

12.     Acquisition Termination Charge

On June 17, 1998, the company announced that it had terminated an agreement to
acquire Q International Courier, Inc. ("Quick"). The company had incurred
$2,370,000 of costs in conjunction with the planned acquisition, all of which
were expensed upon the termination of the agreement. In 1999, the company agreed
to settle a lawsuit filed by Quick in connection with the termination of the
planned acquisition. Settlement and litigation costs related to the suit totaled
approximately $3,200,000 and were expensed as of December 31, 1998.

13.     Litigation and Contingencies

The company is subject to claims and lawsuits in the ordinary course of its
business. In the opinion of management, the outcome of these actions, which are



                                       31
<PAGE>

not clearly determinable at the present time, are either adequately covered by
insurance, or if not insured, will not, in the aggregate, have a material
adverse impact upon the company's financial position or the results of future
operations.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.


                                    PART III


ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information called for in this Item 10 is incorporated herein by reference
to AirNet's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 12, 2000, under the caption "ELECTION OF
DIRECTORS". In addition, information concerning AirNet's executive officers is
included in the portion of Part I of this Annual Report on Form 10-K entitled
"Executive officers of the registrant".

ITEM 11 -  EXECUTIVE COMPENSATION

The information called for in this Item 11 is incorporate herein by reference to
AirNet's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 12, 2000 under the caption "ELECTION OF DIRECTORS
- Compensation of Directors" and "EXECUTIVE COMPENSATION". Neither the report on
executive compensation nor the performance graph included in AirNet's definitive
Proxy Statement shall be deemed to be incorporated herein by reference.

ITEM 12  -  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information called for in this Item 12 is incorporated herein by reference
to AirNet's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 12, 2000, under the caption "BENEFICIAL OWNERSHIP
OF COMMON SHARES".

ITEM 13  -  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for in this Item 13 is incorporated herein by reference
to AirNet's definitive Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 12, 2000, under the caption "TRANSACTIONS WITH
MANAGMENT".

                                     PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)   Documents filed as part of this report

1. The following consolidated financial statements are included in Item 8:

               Report of independent auditors
               Consolidated balance sheets as of December 31, 1999 and 1998.
               Consolidated statements of income for the years ended December
               31, 1999, 1998 and 1997
               Consolidated statements of changes in shareholders' equity for
               the years ended December 31, 1999, 1998 and 1997
               Consolidated statements of cash flows for the years ended
               December 31, 1999, 1998 and 1997
               Notes to consolidated financial statements


                                       32
<PAGE>

2. Schedule II - Valuation and Qualifying Accounts is being filed herewith.

<TABLE>
<CAPTION>
         ------------------------------ ----------- --------------------- -------------- -----------
                     COL A                COL B            COL C              COL D        COL E
                                                    ---------------------
                                                         Additions
         ------------------------------ ----------- --------------------- -------------- -----------
                                                     Charged     Charged
                                        Balance at   to Costs      to                    Balance at
                                         Start of      and        Other                    End of
                  Description             Period     Expenses   Accounts   Deductions      Period
         ------------------------------ ----------- ----------- --------- -------------- -----------
         <S>                             <C>         <C>             <C>   <C>            <C>
         Year end December 31, 1999:
         Deducted from asset
         accounts; Allowance for
         doubtful accounts                $289,784    $504,379        $0    $196,087(1)    $598,076
         ------------------------------ ----------- ----------- --------- -------------- -----------
         Year end December 31, 1998:
         Deducted from asset
         accounts; Allowance for
         doubtful accounts                 122,869     150,215    25,000      8,300 (1)     289,784
         ------------------------------ ----------- ----------- --------- -------------- -----------
         Year end December 31, 1997:
         Deducted from asset
         accounts; Allowance for
         doubtful accounts                  23,149      83,656    16,064         0  (1)     122,869
         ------------------------------ ----------- ----------- --------- -------------- -----------
</TABLE>
         (1)  Uncollectible accounts written off, net of recoveries

         Schedules not listed above have been omitted because they are not
         required or the information required to be set forth therein is
         included in the consolidated financial statements or notes thereto.

      3. Exhibits

        The following exhibits are included or incorporated by reference in this
        Annual Report on Form 10-K:


<TABLE>
<CAPTION>
        Exhibit No.               Description                             Location
        -----------               -----------                             --------
          <S>       <C>                                     <C>
           3.1      Amended Articles of AirNet Systems,     Incorporated herein by reference
                    Inc.                                    to Exhibit 2.1 to AirNet Systems,
                                                            Inc.'s Registration Statement on
                                                            Form 8-A (File No. 0-28428) filed
                                                            on May 3, 1996 (the "Form 8-A")

           3.2      Certificate of Amendment to the         Incorporated herein by reference
                    Amended Articles of AirNet Systems,     to Exhibit 4(b) to AirNet Systems,
                    Inc. as filed with the Ohio Secretary   Inc.'s Registration Statement on
                    of State on May 28, 1996.               Form S-8 (Registration No.
                                                            333-08189) filed on July 16, 1996
                                                            (the "1996 Form S-8")

           3.3      Amended Articles of AirNet Systems,     Incorporated herein by reference
                    Inc. (as amended through May 28,        to Exhibit 4.3 to AirNet Systems,
                    1996) (for SEC reporting compliance     Inc.'s 1996 Form S-8
                    purposes only - not filed with the
                    Ohio Secretary of State)
</TABLE>


                                       33
<PAGE>

<TABLE>
<CAPTION>
        Exhibit No.               Description                             Location
        -----------               -----------                             --------
          <S>       <C>                                     <C>

           3.4      Code of Regulations of AirNet           Incorporated herein by reference
                    Systems, Inc.                           to Exhibit 2.2 to AirNet Systems,
                                                            Inc.'s Form 8-A

           4.1      Loan Agreement among AirNet Systems,    Incorporated herein by reference
                    Inc., the Lenders party thereto and     to Exhibit 4 to AirNet Systems,
                    NBD Bank, as agent, dated August 1,     Inc.'s December 31, 1998 Form
                    1998.                                   10-K. (File No. 1-13025)

           4.2      First Amendment to Credit Agreement,    Filed herewith
                    the Lenders party thereto and NBD Bank
                    as agent, dated as of September 30,
                    1998.

           4.3      Second Amendment to Credit Agreement,   Filed herewith
                    the Lenders party thereto and Bank
                    One, Michigan, as agent, dated as of
                    December 31, 1999.

           4.4      Subordination Agreement among Bank      Filed herewith
                    One, Michigan, as agent, and the
                    Senior Lenders, AirNet Management,
                    Inc., and AirNet Systems, Inc., dated
                    as of December 31, 1999

           4.5      Subsidiary Guaranty by AirNet           Filed herewith
                    Management, Inc. dated as of December
                    31, 1999

          10.1*     AirNet Systems, Inc. Amended and        Filed herewith
                    Restated 1996 Incentive Stock Plan
                    (reflects amendments through August
                    18, 1999)

          10.3*     Agreement, dated as of January 1,       Incorporated herein by reference
                    1999, between AirNet Systems, Inc.      to Exhibit 10.3 to AirNet Systems,
                    and Eric P. Roy                         Inc.'s December 31, 1998 Form
                                                            10-K. (File No. 1-13025)

          10.4      Indemnification Agreement dated as of   Incorporated herein by reference
                    May 15, 1996, among AirNet and          to Exhibit 10.14 to AirNet's
                    Messrs. Miller, Renusch, Roy, King,     Amendment No. 2 to Form S-1
                    Rutter, Sumser and Wright               Registration Statement
                                                            (Registration No. 333-3092) filed
                                                            on May 24, 1996 ("Amendment No. 2")

          10.5      Indemnification Agreement dated as of   Incorporated herein by reference
                    May 15, 1996 between Mr. Mercer and     to Exhibit 10.11 to AirNet's
                    AirNet Systems, Inc.                    Amendment No. 2

          10.6*     Confidential Agreement between AirNet   Filed herewith
                    Systems, Inc. and Joel E. Biggerstaff

          10.7      AirNet Systems, Inc. Director           Filed herewith
                    Deferred Compensation Plan dated May
                    27, 1998
</TABLE>


                                       34
<PAGE>

<TABLE>
<CAPTION>
        Exhibit No.               Description                             Location
        -----------               -----------                             --------
          <S>       <C>                                     <C>
           21       Subsidiaries of AirNet Systems, Inc.    Filed herewith

           23       Consent of Ernst & Young LLP            Filed herewith

           24       Powers of Attorney                      Filed herewith

           27       Financial Data Schedule                 Filed herewith
</TABLE>

*    Denotes a management contract or compensatory plan or arrangement required
     to be filed pursuant to Item 14 of Form 10-K.

(b)  No reports on Form 8-K were filed during the quarter ended December 31,
     1999.

(c)  Exhibits are listed in Item 14(a)(3) above.

(d)  Financial statement schedules are included in Item 14(a)(1) above.


                                       35
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                              AIRNET SYSTEMS, INC.


Dated: March 21, 2000             By: /s/ Gerald G. Mercer
                                      ---------------------------------------
                                      Gerald G. Mercer, Chairman of the Board
                                      and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


  Signature                                 Title                   Date
  ---------                                 -----                   ----

/s/ Gerald G. Mercer                  Chairman of the Board,     March 21, 2000
---------------------------------     Chief Executive Officer
Gerald G. Mercer                      and Director (Principal
                                      Executive Officer)

*Joel E. Biggerstaff                  President and Chief        March 21, 2000
---------------------------------     Operating Officer
Joel E. Biggerstaff

*William R. Sumser                    Chief Financial Officer,   March 21, 2000
---------------------------------     Treasurer, Vice President,
William R. Sumser                     Finance and Secretary

*Roger D. Blackwell                   Director                   March 21, 2000
---------------------------------
Roger D. Blackwell

*Tony C. Canonie, Jr.                 Director                   March 21, 2000
---------------------------------
Tony C. Canonie, Jr.

*Russell M. Gertmenian                Director                   March 21, 2000
---------------------------------
Russell M. Gertmenian

*J. F. Keeler, Jr.                    Director                   March 21, 2000
---------------------------------
J. F. Keeler, Jr.

*David P. Lauer                       Director                   March 21, 2000
---------------------------------
David P. Lauer

*James E. Riddle                      Director                   March 21, 2000
---------------------------------
James E. Riddle

*By   /s/ Gerald G. Mercer
---------------------------------
     Gerald G. Mercer
     Attorney-in-Fact


<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
        Exhibit No.               Description                             Location
        -----------               -----------                             --------
          <S>       <C>                                     <C>
           3.1      Amended Articles of AirNet Systems,     Incorporated herein by reference
                    Inc.                                    to Exhibit 2.1 to AirNet Systems,
                                                            Inc.'s Registration statement on
                                                            Form 8-A (File No. 0-28428) filed
                                                            on May 3, 1996 (the "Form 8-A")

           3.2      Certificate of Amendment to the         Incorporated herein by reference
                    Amended Article of AirNet System,       to Exhibit 4(b) to AirNet Systems,
                    Inc. as filed with the Ohio Secretary   Inc.'s Registration Statement on
                    of State on May 28, 1996                Form S-8 (Registration No.
                                                            333-08189) filed on July 16, 1996
                                                            (the "1996 Form S-8")

           3.3      Amended Article of AirNet Systems,      Incorporated herein by reference
                    Inc. (as amended through May 28,        to Exhibit 4.3 to AirNet Systems,
                    1996) (for SEC reporting compliance     Inc.'s 1996 form S-8
                    purposes only - not filed with the
                    Ohio Secretary of State)

           3.4      Code of Regulations of AirNet           Incorporated herein by reference
                    Systems, Inc.                           to Exhibit 2.2 to AirNet Systems,
                                                            Inc.'s Form 8-A

           4.1      Loan Agreement among AirNet Systems,    Incorporated herein by reference
                    Inc., the Lenders party thereto and     to Exhibit 4 to AirNet Systems,
                    NBD Bank, as agent, dated August 1,     Inc.'s December 31, 1998 Form
                    1998.                                   10-K. (File No. 1-13025)

           4.2      First Amendment to Credit Agreement,    Filed herewith
                    the Lenders party thereto and NBD Bank
                    as agent, dated as of September 30,
                    1998.

           4.3      Second Amendment to Credit Agreement,   Filed herewith
                    the Lenders party thereto and Bank
                    One, Michigan, as agent, dated as of
                    December 31, 1999.

           4.4      Subordination Agreement among Bank      Filed herewith
                    One, Michigan, as agent, and the
                    Senior Lenders, AirNet Management,
                    Inc., and AirNet Systems, Inc., dated
                    as of December 31, 1999

           4.5      Subsidiary Guaranty by AirNet           Filed herewith
                    Management, Inc. dated as of December
                    31, 1999

          10.1*     AirNet Systems, Inc. Amended and        Filed herewith
                    Restated 1996 Incentive Stock Plan
                    (reflects amendments through August
                    18, 1999)

          10.3*     Agreement, dated as of January 1,       Incorporated herein by reference
                    1999, between AirNet Systems, Inc.      to Exhibit 10.3 to AirNet Systems,
                    and Eric P. Roy                         Inc.'s December 31, 1998 Form
                                                            10-K. (File No. 1-13025)

          10.4      Indemnification Agreement dated as of   Incorporated herein by reference
                    May 15, 1996, among AirNet and          to Exhibit 10.14 to AirNet's
                    Messrs. Miller, Renusch, Roy, King,     Amendment No. 2 to Form S-1
                    Rutter, Sumser and Wright               Registration Statement
                                                            (Registration No. 333-3092) filed
                                                            on May 24, 1996 ("Amendment No. 2")

          10.5      Indemnification Agreement dated as of   Incorporated herein by reference
                    May 15, 1996 between Mr. Mercer and     to Exhibit 10.11 to AirNet's
                    AirNet Systems, Inc.                    Amendment No. 2

          10.6*     Confidential Agreement between AirNet   Filed herewith
                    Systems, Inc. and Joel E. Biggerstaff

          10.7      AirNet Systems, Inc. Director           Filed herewith
                    Deferred Compensation Plan dated May
                    27, 1998
</TABLE>


                                       1
<PAGE>

<TABLE>
<CAPTION>
        Exhibit No.               Description                             Location
        -----------               -----------                             --------
          <S>       <C>                                     <C>
           21       Subsidiaries of AirNet Systems, Inc.    Filed herewith

           23       Consent of Ernst & Young LLP            Filed herewith

           24       Powers of Attorney                      Filed herewith

           27       Financial Data Schedule                 Filed herewith
</TABLE>

*    Denotes a management contract or compensatory plan or arrangement required
     to be filed pursuant to Item 14 of Form 10-K.


                                       2