UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549
                     --------------------------------
                                 FORM 10-K

             Annual Report Pursuant to Section 13 or 15(d) of
                    the Securities Exchange Act of 1934

<TABLE>
<S>                             <C>
    For the fiscal year ended           Commission file number
        December 31, 1997                       1-6512
</TABLE>
                    ----------------------------------

                       AIRBORNE FREIGHT CORPORATION
          (Exact name of registrant as specified in its charter)

<TABLE>
<S>                             <C>
            Delaware                          91-0837469
   (State of Incorporation)     (I.R.S. Employer Identification No.)
</TABLE>
                       Airborne Freight Corporation
                            3101 Western Avenue
                               P.O. Box 662
                            Seattle, WA  98111
                 (Address of principal executive offices)

      Registrant's telephone number including area code: 206-285-4600

        Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
  <S>                                   <C>
                                          Name of each Exchange
         Title of each class               on which Registered
         -------------------               -------------------
  Common Stock, Par Value                New York Stock Exchange
  $1.00 per share                        Pacific Stock Exchange
                                                    
  Rights to Purchase Series A            New York Stock Exchange
  Participating Cumulative               Pacific Stock Exchange
  Preferred Stock
                                                    
</TABLE>
        Securities registered pursuant to Section 12(g) of the Act:
                                     
                                   NONE
     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes   X   No ___

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.(X)

     As of February 23, 1998, 50,116,274 shares (net of 512,078 treasury
shares) of the registrant's Common Stock were outstanding and the aggregate
market value of the voting stock held by non-affiliates of the registrant
(based on the closing price on that date on the New York Stock Exchange)
was approximately $1,873,316,338.(1)

                    Documents Incorporated by Reference

     Portions of the 1997 Annual Report to Shareholders are incorporated by
reference into Part I and Part II.

     Portions of the Proxy Statement for the 1998 Annual Meeting of
Shareholders to be held April 28, 1998 are incorporated by reference into
Part III.





(1)  Excludes value of shares of Common Stock held of record by non-
     employee directors and executive officers at February 23, 1998.
     Includes shares held by certain depository organizations.  Exclusion
     of shares held by any person should not be construed to indicate that
     such person possesses the power, direct or indirect, to direct or
     cause the direction of the management or policies of the registrant,
     or that such person is controlled by or is under common control with
     the registrant.
                       AIRBORNE FREIGHT CORPORATION
                       1997 FORM 10-K ANNUAL REPORT
                                     
                             Table of Contents

<TABLE>
<CAPTION>
                                                               Page
                                                               ----
<S>       <C>                                                  <C>
          Part I                                                 
                                                                 
Item 1.   Business                                               1
Item 2.   Properties                                             9
Item 3.   Legal Proceedings                                      9
Item 4.   Submission of Matters to a Vote of Security Holders    9
Item 4a.  Executive Officers of the Registrant                  10
                                                                 
                                                                 
                                                                 
          Part II                                                
                                                                 
Item 5.   Market for Registrant's Common Equity and Related      
          Stockholder Matters                                   11
Item 6.   Selected Financial Data                               11
Item 7.   Management's Discussion and Analysis of Financial      
          Condition and Results of Operations                   11
Item 8.   Financial Statements and Supplementary Data           11
Item 9.   Changes in and disagreements with Accountants on       
          Accounting and Financial Disclosure                   11
                                                                 
                                                                 
                                                                 
          Part III                                               
                                                                 
Item 10.  Directors and Executive Officers of the Registrant    12
Item 11.  Executive Compensation                                12
Item 12.  Security Ownership of Certain Beneficial Owners        
          and Management                                        12
Item 13.  Certain Relationships and Related Transactions        12
                                                                 
                                                                 
                                                                 
          Part IV                                                
                                                                 
Item 14.  Exhibits, Financial Statement Schedules, and           
          Reports on Form 8-K                                   13
                                                                 
</TABLE>

<PAGE>
                                  PART I

ITEM 1.   BUSINESS
------------------
a)   General Development of Business
     -------------------------------
     Airborne Freight Corporation (herein referred to as "Airborne Express"
or the "Company", which reference shall include its subsidiaries and their
assets and operations, unless the context clearly indicates otherwise) was
incorporated in Delaware on May 10, 1968.  The Company is an air express
company and air freight forwarder that expedites shipments of all sizes to
destinations throughout the United States and most foreign countries.  The
Company was formed in 1968 through the merger of two established freight
forwarders, Airborne Freight Corporation and Pacific Air Freight.

     The Company holds a certificate of registration issued by the United
States Patent and Trademark Office for the service mark AIRBORNE EXPRESS.
Most public presentation of the Company carries this name.  The purpose of
using this trade name is to more clearly communicate to the market place
the primary nature of the business of the Company.

     ABX Air, Inc., the Company's principal wholly-owned subsidiary (herein
referred to as "ABX"), was incorporated in Delaware on January 22, 1980.
ABX provides domestic express cargo service and cargo service to Canada.
The Company is the sole customer of ABX for this service.  ABX also offers
limited charter service.

b)   Financial Information about Industry Segments
     ---------------------------------------------
     None

c)   Narrative Description of Business
     ---------------------------------
     Airborne Express provides door-to-door express delivery of small
packages and documents throughout the United States and to and from most
foreign countries.  The Company also acts as an international and domestic
freight forwarder for shipments of any size.  The Company's strategy is to
be the low cost provider of express services for high volume corporate
customers.

Domestic Operations
-------------------
     The Company's domestic operations, supported by approximately 285
facilities, primarily involve express door-to-door delivery of shipments
weighing less than 100 pounds.  Shipments consist primarily of business
documents and other printed matter, electronic and computer parts,
software, machine parts, health care items, films and videotapes, and other
items for which speed and reliability of delivery are important.

     The Company's primary service is its Overnight Express product.  This
product, which comprised approximately 58% of the Company's domestic
shipments during 1997, generally provides for before noon delivery on the
next business day to most metropolitan cities in the United States.  The
Company also provides Saturday and holiday pickup and delivery service for
most cities.

     The Company also offers two deferred service products, Next Afternoon
Service (NAS) and Second Day Service (SDS).  NAS is available for shipments
weighing five pounds or less and SDS is offered for shipments of all
weights.  Deferred service shipments, which comprised approximately 42% of
domestic shipments during 1997, are lower priced than the Overnight Express
product reflecting the less time sensitive nature of the shipments.  NAS
rates are generally higher than SDS rates.

     While the Company's domestic airline system is designed primarily to
handle express shipments, any available capacity is also utilized to carry
shipments which the Company would normally move on other carriers in its
role as an air freight forwarder.




                                     1
<PAGE>

Communications System
---------------------
     FOCUS (Freight On-line Control and Update System) is a proprietary
communications system which provides real time information for purposes of
tracking and providing the status of customer shipments as well as
monitoring the performance of the Company's operational systems.  The
Company's facilities and international agents are linked to FOCUS and
provide information on the status and location of customer shipments 24
hours a day.  Some information is provided to FOCUS through the use of hand-
held scanners which read bar-codes on the shipping documents.  FOCUS allows
customers access to shipment information through either direct dial-in
capabilities or through the Company's website on the Internet.

     FOCUS provides the Company's personnel with important information for
use in coordinating its operational activities.  Information regarding
Company-operated aircraft arrivals and departures, weather, and
documentation requirements for shipments destined to foreign locations are
several examples of the information maintained and provided by FOCUS.

Pickup and Delivery
-------------------
     The Company accomplishes its door-to-door pickup and delivery service
using approximately 14,300 radio-dispatched delivery vans and trucks, of
which approximately 5,700 are owned by the Company.  Independent
contractors under contract with the Company provide the balance of the
pickup and delivery services.

     Because convenience is an important factor in attracting business from
less frequent shippers, the Company has an ongoing program to place drop
boxes in convenient locations.  The Company has approximately 12,600 boxes
in service.

Sort Facilities
---------------
     The Company's main sort center is located in Wilmington, Ohio.  As
express delivery volume has increased, the main sort center has been
expanded.  The sort center currently has the capacity to handle
approximately  1,095,000 pieces during the primary 3 hour nightly sort
operation.  On average, approximately 972,000 pieces were sorted each
weekday night at the sort center during the fourth quarter of 1997.

     In addition to the main sort facility at Wilmington, nine regional hub
facilities have been established primarily to sort shipments originating
and having a destination within approximately a 300 mile radius of a
regional hub.

     The Company also conducts a day sort operation at Wilmington which
services SDS shipments.  The day sort generally receives SDS shipments
through a combination of flights and trucks originating from either
regional hub or station facilities.

     The operation of the Wilmington facility is critical to the Company's
business.  The inability to use the Wilmington airport, because of bad
weather or other factors, would have a serious adverse effect on the
Company's service.  However, contingency plans, including landing at nearby
airports and transporting packages to and from the sort center by truck,
can be implemented to address, in part, temporary inaccessibility of the
Wilmington airport.

     In the fourth quarter of 1997, approximately 51% and 22% of total
shipment weight was handled through the night sort and day sort operations
at Wilmington, respectively, with the remaining 27% being handled
exclusively by the regional hubs.








                                     2
<PAGE>

Shipment Routing
----------------
     The logistics of moving a shipment from its origin to destination is
determined by several factors.  Shipments are routed differently depending
on shipment product type, weight, geographic distances between origin and
destination, and locations of Company stations relative to the locations of
sort facilities.  Shipments generally are moved between stations and sort
facilities on either Company aircraft or contracted trucks.  A limited
number of shipments are transported airport-to-airport on commercial air
carriers.

     Overnight Express shipments and NAS shipments are picked up by local
stations and generally consolidated with other stations' shipments at
Company airport facilities.  Shipments that are not serviced through
regional hubs are loaded on Company aircraft departing each weekday evening
from various points within the United States and Canada.  These aircraft
may stop at other airports to permit additional locations and feeder
aircraft to consolidate their cargo onto the larger aircraft before
completing the flight to the Wilmington hub.  The aircraft are scheduled to
arrive at Wilmington between approximately 11:30 p.m. and 3:00 a.m. at
which time the shipments are sorted and reloaded.  The aircraft are
scheduled to depart before 6:00 a.m. and return to their applicable
destinations in time to complete scheduled next business morning or
deferred service commitments.  The Wilmington hub also receives shipments
via truck from selected stations in the vicinity of the Wilmington hub for
integration with the nightly sort process.

     The day sort operation for SDS shipments is supported by 12 aircraft
that return to Wilmington from overnight service destinations on Tuesday
through Thursday.  These aircraft, and trucks from six regional hubs,
arrive at Wilmington between 10:00 a.m. and 2:00 pm, at which time
shipments are sorted and reloaded on the aircraft or trucks by 3:30 p.m.
for departure and return to their respective destinations.

     The Company also performs weekend sort operations at Wilmington to
accommodate Saturday pickups and Monday deliveries of both Overnight
Express and deferred service shipments.  This sort is supported by 15
Company aircraft and by trucks.

Aircraft
--------
     The Company currently utilizes used aircraft manufactured in the late
1960s and early 1970s.  Upon acquisition, the aircraft are modified by the
Company.  At the end of 1997, the Company's in-service fleet consisted of a
total of 105 aircraft, including 36 McDonnell Douglas DC-8s (consisting of
13 series 61, 6 series 62 and 17 series 63) and 69 DC-9s (consisting of 2
series 10, 43 series 30 and 24 series 40).  In 1997, the Company sold its 9
YS-11 turboprop aircraft which completed the planned phase out of this
smaller aircraft.  The Company owns the majority of the aircraft it
operates, but in 1989 and 1990 completed sale-leaseback transactions with
respect to six DC-8 and six DC-9 aircraft.  In addition, approximately 70
smaller aircraft are chartered nightly to connect small cities with Company
aircraft that then operate to and from Wilmington.

     In late 1995, the Company agreed to purchase 12 used Boeing 767-200s
between the years 1997 and 2000.  The Company also plans to pursue the
acquisition of 10 to 15 additional used 767-200's between the years 2000
and 2004.  This newer generation of aircraft should increase operating
efficiency and allow the Company to meet anticipated demand for additional
lift capacity.  There are no plans to retire any aircraft as a result of
these acquisitions, although retirement is an option if shipment growth
does not require the added capacity.  The Company took delivery of 2 767's
in 1997 and expects to take delivery of an additional 4 767's in 1998.  In
1998, 5 of these aircraft are planned to be placed in service following
completion of necessary modifications.

     During 1997, the nightly lift capacity of the system was increased by
approximately 38,000 pounds, reaching 3.8 million pounds at December 31,
1997.  During 1997, the Company's average utilization of available lift
capacity approximated 77%.

                                     3
<PAGE>

     In response to increased public awareness regarding the operation of
older aircraft, the Federal Aviation Administration ("FAA") periodically
mandates additional maintenance requirements for certain aircraft,
including the type operated by the Company.  In recent years, the Company
has completed, and continues to perform, a number of inspection and
maintenance programs pertaining to various Airworthiness Directives issued
by the FAA.  The FAA could, in the future, impose additional maintenance
requirements for aircraft and engines of the type operated by the Company
or interpret existing rules in a manner which could have a material effect
on the Company's operations and financial position.

     In accordance with federal law and FAA regulations, only subsonic
turbojet aircraft classified as Stage 2 or 3 by the FAA may be operated in
the United States.  Generally, Stage 3 aircraft produce less noise than
comparable Stage 2 aircraft.

     In 1990, Congress passed the Airport Noise and Capacity Act of 1990
(the "Noise Act").  Among other things, the Noise Act generally requires
turbojet aircraft weighing in excess of 75,000 pounds and operating in the
United States (the type of DC-8 and DC-9 aircraft operated by the Company)
to comply with Stage 3 noise emission standards on or before December 31,
1999.  In accordance with the Noise Act, the FAA has issued regulations
establishing interim compliance deadlines.  These rules require air
carriers to reduce the base level of Stage 2 aircraft they operate 75% by
December 31, 1998.  As of December 31, 1997, the Company had complied with
interim compliance deadlines, and the Company expects to meet or exceed the
December 31, 1998 interim compliance deadline.  As of December 31, 1997,
71% of the Company's turbojet aircraft in service (27 DC-8 and 48 DC-9
aircraft) were Stage 3, the balance being Stage 2.  The 767-200 aircraft
meet Stage 3 requirements and will not require noise compliance
modifications prior to being placed in service.  In addition to FAA
regulation, certain local airports also regulate noise compliance.  See
"Business - Regulation".

     The Company, in conjunction with several other companies, has
developed noise suppression technology known as hush kits for its DC-9
series aircraft which have been certified to meet FAA Stage 3 requirements.
The capital cost for Stage 3 hush kits is approximately $1.5 million for
each DC-9 series aircraft.  The Company has installed hush kits which
satisfy Stage 3 compliance requirements on all of its DC-8-62 and DC-8-63
series aircraft and four of its 13 DC-8-61 series aircraft.  The capital
cost to modify the Company's remaining DC-8-61 aircraft to meet Stage 3
noise standards is approximately $5.8 million per aircraft.

International Operations
------------------------
     The Company provides international express door-to-door delivery and a
variety of freight services.  These services are provided in most foreign
countries on an inbound and outbound basis through a network of Airborne
offices and independent agents.  Most international deliveries are
accomplished within 24 to 96 hours of pickup.

     The Company's domestic stations are staffed and equipped to handle
international shipments to or from almost anywhere in the world.  In
addition to its extensive domestic network, the Company operates its own
offices in the Far East, Australia, New Zealand, and the United Kingdom.
The Company's freight and express agents worldwide are connected to FOCUS,
Airborne's on-line communication network, through which the Company can
provide its customers with immediate access to the status of shipments
almost anywhere in the world.

     The Company's international air express service is intended for the
movement of non dutiable and certain dutiable shipments weighing less than
99 pounds.  The Company's international air freight service handles heavier
weight shipments on either an airport-to-airport, door-to-airport or door-
to-door basis.  The Company also offers ocean service capabilities for
customers who want a lower cost shipping option.




                                     4
<PAGE>

     The Company's strategy is to use a variable-cost approach in
delivering and expanding international services to its customers.  This
strategy uses existing commercial airline lift capacity in connection with
the Company's domestic network to move shipments to and from overseas
destinations and origins.  Additionally, service arrangements with
independent freight and express agents have been entered into to
accommodate shipments in locations not currently served by Company-owned
operations.  The Company currently believes there are no significant
service advantages which would justify the operation of its own aircraft on
international routes, or making significant investment in additional
offshore facilities or ground operations.  In order to expand its business
at a reasonable cost, the Company continues to explore possible joint
venture agreements which combine the Company's management expertise,
domestic express system and information systems with local business
knowledge and market reputation of suitable partners.  Joint venture
operations currently exist in Japan, Thailand, Malaysia, the Netherlands,
and South Africa.

Customers and Marketing
-----------------------
     The Company's primary domestic strategy focuses on express services
for high volume corporate customers.  Most high volume customers have
entered into service agreements providing for specified rates or rate
schedules for express deliveries.  As of December 31, 1997, the Company
serviced approximately 550,000 active customer shipping locations.

     The Company determines prices for any particular domestic express
customer based on competitive factors, anticipated costs, shipment volume
and weight, and other considerations.  The Company believes that it
generally offers prices that are competitive with, or lower than, prices
quoted by its principal competitors for comparable services.

     Internationally, the Company's marketing strategy is to target the
outbound express and freight shipments of U.S. corporate customers, and to
sell the inbound service of the Company's distribution capabilities in the
United States.

     Both in the international and domestic markets, the Company believes
that its customers are most effectively reached by a direct sales force
and, accordingly, does not currently engage in mass media advertising.
Domestic sales representatives are responsible for selling both domestic
and international express shipments.  In addition, the International
Division has its own dedicated direct sales organization for selling
international freight service.

     The Company's sales force currently consists of approximately 325
domestic representatives and approximately 80 international specialists.
The Company's sales efforts are supported by the Marketing and
International Divisions, based at the Company headquarters.  Senior
management is also active in marketing the Company's services to major
accounts.

     Value-added services continue to be important factors in attracting
and retaining customers.  Accordingly, the Company is automating more of
its operations to make the service easier for customers to use and to
provide them with valuable management information.  The Company believes
that it is generally competitive with other express carriers in terms of
reliability, value-added services and convenience.

     For many of its high volume customers, the Company offers a metering
device, called LIBRA (SM), which is installed at the customer's place of
business.  With minimum data entry, the metering device weighs the package,
calculates the shipping charges, generates the shipping labels, provides
custom shipping reports, and enables the customer to track the exact status
of shipments in Airborne's FOCUS shipping and tracking system.  At year end
1997, the system was in use at approximately 10,800 domestic customer
locations and 900 international customer locations.  Use of LIBRA not only
benefits the customer, but also lowers the Company's operating costs, since
LIBRA shipment data is transferred into the Airborne FOCUS system
automatically, thus avoiding duplicate data entry.

                                     5
<PAGE>

     "Customer Linkage", an electronic data interchange ("EDI") program
developed for Airborne's highest volume shippers, allows customers, with
their computers, to create shipping documentation at the same time they are
entering orders for their goods.  At the end of each day, shipping
activities are transmitted electronically to the Airborne FOCUS system
where information is captured for shipment tracking and billing purposes.
Customer Linkage benefits the customer by eliminating repetitive data entry
and paperwork and also lowers the Company's operating costs by eliminating
manual data entry.  EDI also includes electronic invoicing and payment
remittance processing.  The Company also has available a software program
known as QUICKLINK, which significantly reduces programming time required
by customers to take advantage of linkage benefits.

     The Company offers customers PC-based software designed to improve
their productivity and provide convenient access to the Company's various
services.  LIGHTSHIPr TRACKER, the Company's first product, allows
customers, working from their PCs, to view the status of and receive
information regarding their shipments.

     In 1997, the Company released LIGHTSHIP SHIPPER which allows customers
to obtain estimated shipping rates and delivery times, fill out and print
shipping labels, schedule pickups, and track the status of their shipments.
In 1998, the Company released LIGHTSHIP Shipping and Tracking Software for
Windowsr which combines the benefits of previous LIGHTSHIP software and
adds additional features designed to improve customer productivity.

     The Company maintains an Internet website, www.airborne.com, which
provides customers a global connection to Airborne's services.  The website
allows customers to track the status of their shipments, obtain information
regarding the Company's service offerings and documentation requirements,
in addition to providing other useful information about the Company.

     The Company offers a number of special logistics programs to customers
through Airborne Logistics Services ("ALS"), a division of ABX Air, Inc.
ALS operates the Company's Stock Exchange and Hub Warehousing and other
logistics programs.  These programs provide customers the ability to
maintain centralized inventories which can be managed either by Company or
customer personnel.  Items inventoried at Wilmington can be delivered
utilizing either the Company's airline system or, if required, commercial
airlines on a next-flight-out basis.  ALS' Central Print program allows
information to be sent electronically to customer computers located at
Wilmington where Company personnel monitor printed output and ship the
material according to customer instructions.  ALS also provides
international inventory and distribution logistic services through a
logistics partner with bases in the Netherlands, Belgium, Germany, and
England.

     In addition, the Company's Sky Courier operation provides expedited
next-flight-out service at premium prices.  Sky Courier also offers a Field
Stock Exchange program where customer inventories are managed at over 60
locations around the United States and Canada.

     The Company has obtained ISO 9000 certification for its Chicago,
Philadelphia and London stations and its Seattle Headquarters.  ISO 9000 is
a program developed by the International Standards Organization ("ISO"),
based in Geneva, Switzerland.  This organization provides a set of
international standards on quality management and quality assurance
presently recognized in over 90 countries.  The certification is an asset
in doing business worldwide and provides evidence of the Company's
commitment to excellence and quality.

Competition
-----------
     The market for the Company's services has been and is expected to
remain highly competitive.  The principal competitive factors in both
domestic and international markets are price, the ability to provide
reliable pickup and delivery, and value-added services.




                                     6
<PAGE>

     Federal Express continues to be the dominant competitor in the
domestic air express business, followed by United Parcel Service.  Airborne
Express ranks third in shipment volume behind these two companies in the
domestic express business.  Other domestic air express competitors include
the U.S. Postal Service's Express Mail Service and several other
transportation companies offering next morning or next-plane-out delivery
service.  The Company also competes to some extent with companies offering
ground transportation services and with facsimile and other forms of
electronic transmission.

     The Company believes it is important to maintain an active capital
expansion program to increase capacity, improve service and increase
productivity as its volume of shipments increases.  However, the Company
has significantly less capital resources than its two primary competitors.

     In the international markets, in addition to Federal Express and
United Parcel Service, the Company competes with DHL, TNT, and air freight
forwarders and carriers, and most commercial airlines.

Employees
---------
     As of December 31, 1997, the Company and its subsidiaries had
approximately 13,500 full-time employees and 9,000 part-time and casual
employees.  Approximately 6,500 full-time employees (including the
Company's 730 pilots) and 3,800 part-time and casual employees are employed
under union contracts, primarily with locals of the International
Brotherhood of Teamsters and Warehousemen.

Labor Agreements
----------------
     Labor agreements covering approximately 70% of the Company's union
ground personnel will expire in 1998, with the balance expiring in 1999.
The Company's pilots are covered by a contract which becomes amendable on
July 31, 2001.  Although the Company has not experienced any significant
disruption from labor disputes in the past, there can be no assurance that
the labor agreements covering ground personnel will be renewed on favorable
terms.

Subsidiaries
------------
     The Company has the following wholly-owned subsidiaries:

     1.   ABX Air, Inc., a Delaware corporation, is a certificated air
          carrier which owns and operates the Company's domestic express
cargo service.  Its wholly-owned subsidiaries with operating
          activities are as follows:

          a)   Wilmington Air Park, Inc., an Ohio corporation, is the owner
               of the Wilmington airport property (Airborne Air Park).
          b)   Airborne FTZ, Inc., an Ohio corporation, is the holder of a
               foreign trade zone certificate at the Wilmington airport
               property and owns and manages the Company's expendable
               aircraft parts inventory.
          c)   Aviation Fuel, Inc., an Ohio corporation, purchases and
               sells aviation and other fuels.

     2.   Airborne Forwarding Corporation, a Delaware corporation doing
          business as Sky Courier, provides expedited courier service.

     3.   Airborne Freight Limited, a New Zealand corporation, provides
          air express and air freight services.










                                     7
<PAGE>

Regulation
----------
     The Company's operations are regulated by the United States Department
of Transportation ("DOT"), the FAA, and various other federal, state, local
and foreign authorities.

     The DOT, under federal transportation statutes, grants air carriers
the right to engage in domestic and international air transportation.  The
DOT issues certificates to engage in air transportation and has the
authority to modify, suspend or revoke such certificates for cause,
including failure to comply with federal law or the DOT regulations.  The
Company believes it possesses all necessary DOT-issued certificates to
conduct its operations.

     The FAA regulates aircraft safety and flight operations generally,
including equipment, ground facilities, maintenance, flight dispatch,
security procedures, training, communications, and other matters affecting
air safety.  The FAA issues operating certificates and operations
specifications to carriers who possess the technical competence to conduct
air carrier operations.  In addition, the FAA issues certificates of
airworthiness to each aircraft which meets the requirements for aircraft
design and maintenance.  The Company believes it holds all airworthiness
and other FAA certificates required for the conduct of its business,
although the FAA has the power to suspend or revoke such certificates for
cause, including failure to comply with federal law.

     The FAA has authority to issue maintenance directives and other
mandatory orders relating to, among other things, inspection of aircraft
and replacement of parts that have failed or may fail in the future.  For
example, the FAA has commenced an inspection of DC-8 aircraft of the type
operated by the Company to determine if certain of the aircraft structures
which were originally designed for passenger carriage are adequate for the
carriage of cargo.  The DC-9 may in the future also be subject to FAA
inspection.  If the FAA were to determine the aircraft structures are not
adequate it could order operators to either reduce cargo loads or otherwise
strengthen any structure shown to be inadequate.

     In addition to the issuance of mandatory directives, the FAA from time
to time may amend its regulations thereby increasing regulatory burdens on
air carriers.  For example, the FAA can order the installation or
enhancement of safety related aircraft equipment.

     Depending on the scope of the FAA's orders or amended regulations,
these requirements may cause the Company to incur substantial,
unanticipated expenses.

     The federal government generally regulates aircraft engine noise at
its source.  However, local airport operators may, under certain
circumstances, regulate airport operations based on aircraft noise
considerations.  The Noise Act provides that in the case of Stage 2
aircraft restrictions, the airport operator must notify air carriers of its
intention to propose rules and satisfy the requirements of federal statutes
before implementation of the rules or in the case of Stage 3 aircraft, the
airport operator must obtain the carriers' or the governments' approval of
the rule prior to its adoption.  The Company believes the operation of its
aircraft either complies with or is exempt from compliance with currently
applicable local airport rules.  However, if more stringent aircraft
operating regulations were adopted on a widespread basis, the Company might
be required to expend substantial sums, make schedule changes or take other
actions.

     The Company's aircraft currently meet all known requirements for
emission levels.  However, under the Clean Air Act, individual states or
the Federal Environmental Protection Agency (the "EPA") may adopt
regulations requiring the reduction in emissions for one or more localities
based on the measured air quality at such localities.  The EPA has in the
past proposed but not adopted regulations for portions of California
calling for emission reductions through restricting the use of emission
producing ground service equipment or aircraft auxiliary power units.
There can be no assurance, that if such regulations are adopted in the
future or changes in existing laws or regulations are promulgated, such
laws or rules would not have a material adverse effect on the Company.
                                     8
<PAGE>

     Under currently applicable federal aviation law, the Company's airline
subsidiary could cease to be eligible to operate as an all-cargo carrier if
more than 25% of the voting stock of the Company were owned or controlled
by non-U.S. citizens or the airline were not effectively controlled by U.S.
citizens.  Moreover, in order to hold an all-cargo air carrier certificate,
the president and at least two-thirds of the directors and officers of an
air carrier must be U.S. citizens.  To the best of the Company's knowledge,
foreign stockholders do not control more than 25% of the outstanding voting
stock.  Two of the Company's 43 officers are not U.S. citizens.

     The Company believes that its current operations are substantially in
compliance with the numerous regulations to which its business is subject;
however, various regulatory authorities have jurisdiction over significant
aspects of the Company's business, and it is possible that new laws or
regulations or changes in existing laws or regulations or the
interpretations thereof could have a material adverse effect on the
Company's operations.

Financial Information Regarding International and Domestic Operations
---------------------------------------------------------------------
     Financial information relating to foreign and domestic operations for
each of the three years in the period ended December 31, 1997 is presented
in Note L (Segment Information) of the Notes to Consolidated Financial
Statements appearing in the 1997 Annual Report to Shareholders and is
incorporated herein by reference.


ITEM 2.   PROPERTIES
--------------------
     The Company leases general and administrative office facilities
located in Seattle, Washington.

     At year end the Company maintained approximately 285 domestic and 40
foreign stations, most of which are leased.  The majority of the facilities
are located at or near airports.

     The Company owns the airport at the Airborne Air Park, in Wilmington,
Ohio.  The airport currently consists of two runways, taxi-ways, aprons,
buildings serving as aircraft and equipment maintenance facilities, sort
facilities, storage facilities, a training center, and operations and
administrative offices.

     The Company believes its existing facilities are adequate to meet
current needs.

     Information regarding collateralization of certain property and lease
commitments of the Company is set forth in Notes F and G of the Notes to
Consolidated Financial Statements appearing in the 1997 Annual Report to
Shareholders and is incorporated herein by reference.

ITEM 3.   LEGAL PROCEEDINGS
---------------------------
     None

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------------------------------------------------------------
     None














                                     9
<PAGE>

ITEM 4a.  EXECUTIVE OFFICERS OF THE REGISTRANT
----------------------------------------------
<TABLE>
<CAPTION>
                              Positions and Offices Presently
Name                     Age  Held and Business Experience
----                     ---  ----------------------------
<S>                      <C>  <C>
Robert S. Cline          60   Chairman and Chief Executive Officer (1984
                              to date); Vice Chairman and Chief Financial
                              Officer (1978 to 1984); Executive Vice
                              President and Chief Financial Officer (1973
                              to 1978); Senior Vice President, Finance
                              (1970 to 1973); Vice President, Finance
                              (1968 to 1970); Vice President, Finance,
                              Pacific Air Freight, Inc. (1966 to 1968)
                              
Robert G. Brazier        60   President and Chief Operating Officer (1978
                              to date); Executive Vice President and
                              Chief Operating Officer (1973 to 1978);
                              Senior Vice President, Operations (1970 to
                              1973); Vice President, Operations (1968 to
                              1970); Vice President, Sales and
                              Operations, Pacific Air Freight, Inc. (1964
                              to 1968)
                              
Roy C. Liljebeck         60   Chief Financial Officer (1984 to date);
                              Executive Vice President, Finance Division
                              (1979 to date); Senior Vice President (1973
                              to 1979); Treasurer (1968 to 1988)
                              
Kent W. Freudenberger    57   Executive Vice President, Marketing
                              Division (1980 to date); Senior Vice
                              President (1978 to 1980); Vice President
                              (1973 to 1978)
                              
Raymond T. Van Bruwaene  59   Executive Vice President, Field Services
                              Division (1980 to date); Senior Vice
                              President (1978 to 1980); Vice President
                              (1973 to 1978)
                              
John J. Cella            57   Executive Vice President, International
                              Division (1985 to date); Senior Vice
                              President, International Division (1982 to
                              1985); Vice President, International Divi
                              sion (1981 to 1982); Vice President, Far
                              East (1971 to 1981)
                              
Carl D. Donaway          46   President and Chief Executive Officer, ABX
                              Air, Inc. (1992 to date); offices held in
                              the Company:  Vice President, Business
                              Analysis (1992); Vice President, Customer
                              Support (1990 to 1992)
                                                   
</TABLE>




                                    10
<PAGE>

                                  PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
---------------------------------------------------------------
STOCKHOLDERS MATTERS
--------------------
     The response to this Item is contained in the 1997 Annual Report to
Shareholders and the information contained therein is incorporated by
reference.

     On February 23, 1998 there were 1,184 shareholders of record of the
Common Stock of the Company based on information provided by the Company's
transfer agent.

ITEM 6.   SELECTED FINANCIAL DATA
---------------------------------
     The response to this Item is contained in the 1997 Annual Report to
Shareholders and the information contained therein is incorporated herein
by reference.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
     The response to this Item is contained in the 1997 Annual Report to
Shareholders and the information contained therein is incorporated herein
by reference.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-----------------------------------------------------
     The response to this Item is contained in the 1997 Annual Report to
Shareholders and the information contained therein is incorporated herein
by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
     None


                                    11
<PAGE>

                                 PART III
                                     
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
     The response to this Item is contained in part in the Proxy Statement
for the 1998 Annual Meeting of Shareholders under the captions "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance"
and the information contained therein is incorporated herein by reference.

     The executive officers of the Company are elected annually at the
Board of Directors meeting held in conjunction with the annual meeting of
shareholders.  There are no family relationships between any directors or
executive officers of the Company.  Additional information regarding
executive officers is set forth in Part I, Item 4a.

ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------
     The response to this Item is contained in the Proxy Statement for the
1998 Annual Meeting of Shareholders under the caption "Executive
Compensation" and the information contained therein is incorporated herein
by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
     The response to this Item is contained in the Proxy Statement for the
1998 Annual Meeting of Shareholders under the captions "Voting at the
Meeting" and "Stock Ownership of Management" and the information contained
therein is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
     None


                                    12
<PAGE>

                                  PART IV
                                     
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------
(a)1.     Financial Statements
          --------------------
     The following consolidated financial statements of Airborne Freight
Corporation and its subsidiaries as contained in its 1997 Annual Report to
Shareholders are incorporated by reference in Part II, Item 8:

               Consolidated Statements of Net Earnings

               Consolidated Balance Sheets

               Consolidated Statements of Cash Flows

               Notes to Consolidated Financial Statements

               Independent Auditors' Report

(a)2.     Financial Statement Schedules
          -----------------------------
          Schedule II - Valuation and Qualifying Accounts
          
     All other schedules are omitted because they are not applicable or are
not required, or because the required information is included in the
consolidated financial statements or notes thereto.


(a)3. Exhibits
---------------
      The following exhibits are filed with this report:

EXHIBIT NO. 3  Articles of Incorporation and By-laws
----------------------------------------------------
            3(a) The Restated Certificate of Incorporation of the Company,
            dated as of August 4, 1987 (incorporated by reference from
            Exhibit 3(a) to the Company's Form 10-K for the year ended
            December 31, 1987).

            3(b) The By-laws of the Company as amended to February 4, 1997
            (incorporated by reference from Exhibit 3(b) to the Company's
            Form 10-K for the year ended December 31, 1996).

EXHIBIT NO. 4  Instruments Defining the Rights of Security Holders
------------------------------------------------------------------
Including Indentures
--------------------

            4(a) Indenture dated as of December 3, 1992, between the
            Company and The Bank of New York, as trustee, relating to the
            Company's 8-7/8% Notes due 2002 (incorporated by reference
            from Exhibit 4(a) to Amendment No. 1 to the Company's
            Registration Statement on Form S-3, No. 33-54560 filed with
            the Securities and Exchange Commission on December 4, 1992).

            4(b) First Supplemental Indenture dated as of September 15,
            1995, between the Company and The Bank of New York, as
            trustee, relating to the Company's 7.35% Notes due 2005
            (incorporated by reference from Exhibit 4(b) to Amendment No.
            1 to the Company's Registration Statement on Form S-3, No. 33-
            61329, filed with the Securities and Exchange Commission on
            September 5, 1995).







                                    13
<PAGE>

            4(c) Second Supplemental Indenture dated as of February 12,
            1997 between the Company and The Bank of New York, as trustee,
            relating to the Company's 8-7/8% Notes due 2002 (incorporated
            by reference from Exhibit 4(e) to the Company's Form 10-K for
            the year ended December 31, 1996).

            4(d) Rights Agreement, dated as of February 14, 1997 between
            the Company and The Bank of New York, as Rights Agent
            (incorporated by reference from Exhibit 1 to the Company's
            Registration Statement on Form 8-A, filed with the Securities
            and Exchange Commission on February 12, 1997).

            4(e) Certificate of the Voting Powers, Designations,
            Preferences and Relative Participating, Optional and Other
            Special Rights and Qualifications, Limitations or Restrictions
            of Series A Participating Cumulative Preferred Stock of
            Airborne Freight Corporation (incorporated by reference from
            Exhibits 1 and 2 to the Company's Registration Statement on
            Form 8-A, filed with the Securities and Exchange Commission on
            February 12, 1997.)

            4(f) Form of Right Certificate relating to the Rights
            Agreement (see 4(d) above, incorporated by reference from
            Exhibits 2 and 3 to the Company's Registration Statement on
            Form 8-A, filed with the Securities and Exchange Commission on
            February 12, 1997.)

EXHIBIT NO. 10 Material Contracts
---------------------------------
Executive Compensation Plans and Agreements
-------------------------------------------
            10(a)     1983 Airborne Freight Corporation Key Employee Stock
            Option and Stock Appreciation Rights Plan, as amended through
            February 2, 1987 (incorporated by reference from Exhibit 10(c)
            to the Company's Form 10-K for the year ended December 31,
            1986).

            10(b)     1989 Airborne Freight Corporation Key Employee Stock
            Option and Stock Appreciation Rights Plan (incorporated by
            reference from Exhibit 10(d) to the Company's Form 10-K for
            the year ended December 31, 1989).

            10(c) 1994 Airborne Freight Corporation Key Employee Stock Option
            and Stock Appreciation Rights Plan (incorporated by reference
            from the Addendum to the Company's Proxy Statement for the
            1994 Annual Meeting of Shareholders).
            
      	    10(d) Airborne Freight Corporation 1998 Key Employee Stock Option
            Plan (incorporated by reference from the Addendum to the
            Company's Proxy Statement for the 1998 Annual Meeting of
            Shareholders).

            10(e)     Airborne Freight Corporations Directors Stock Option
            Plan  (incorporated by reference from the Addendum to the
            Company's Proxy Statement for the 1991 Annual Meeting of
            Shareholders).

            10(f)     Airborne Freight Corporation Director Stock Bonus
            Plan dated April 23, 1996 (incorporated by reference from
            Exhibit 10(a) to the Company's Form 10-Q for the quarter ended
            June 30, 1996).

                                    14
<PAGE>

            10(g)     Airborne Express Executive Deferral Plan dated
            January 1, 1992 (incorporated by reference from Exhibit 10(b)
            to the Company's Form 10-K for the year ended December 31,
            1991).

            10(h)     Airborne Express Supplemental Executive Retirement
            Plan dated January 1, 1992 (incorporated by reference from
            Exhibit 10(c) to the Company's Form 10-K for the year ended
            December 31, 1991).

            10(i)     Airborne Express 1995-1999 Executive Incentive
            Compensation Plan, amended as of January 1, 1997 (incorporated
            by reference from Exhibit 10(h) to the Company's Form 10-K for
            the year ended December 31, 1996).

            10(j)     Airborne Express 1997-1999 Executive Group Incentive
            Compensation Plan as of January 1, 1997 (incorporated by
            reference from Exhibit 10(i) to the Company's Form 10-K for
            the year ended December 31, 1996).

            10(k)     Employment Agreement dated December 15, 1983, as
            amended November 20, 1986, between the Company and Mr. Robert
            G. Brazier, President and Chief Operating Officer
            (incorporated by reference from Exhibit 10(a) to the Company's
            Form 10-K for the year ended December 31, 1986).
            Substantially identical agreements exist between the Company
            and the other six executive officers.

            10(l)     Employment Agreement dated November 20, 1986 between
            the Company and Mr. Lanny H. Michael, then Vice President,
            Treasurer and Controller (incorporated by reference from
            Exhibit 10(b) to the Company's Form 10-K for the year ended
            December 31, 1986).  The Company and its principal subsidiary,
            ABX Air, Inc., have entered into substantially identical
            agreements with most of their officers.

            Other Material Contracts
            ------------------------
            10(m)     $240,000,000 Revolving Loan Facility dated as of
            November 19, 1993 among the Company, as borrower, and Wachovia
            Bank of Georgia, N.A., as agent, and Wachovia Bank of Georgia,
            N.A., ABN AMRO Bank N.V., United States National Bank of
            Oregon, Seattle-First National Bank, CIBC, Inc., Continental
            Bank N.A., Bank of America National Trust and Savings
            Association, The Bank of New York and NBD Bank, N.A., as banks
            (incorporated by reference from Exhibit 10(k) to the Company's
            Form 10-K for the year ended December 31, 1993).
     
            10(n)     First Amendment to Revolving Loan Facility dated as
            of March 31, 1995 among the Company, as borrower, and Wachovia
            Bank of Georgia, N.A., as Agent, and Wachovia Bank of Georgia,
            N.A., ABN AMRO Bank N.V., United States National Bank of
            Oregon, Seattle-First National Bank, CIBC, Inc., National City
            Bank, Columbus, Bank of America National Trust and Savings
            Association, The Bank of New York, and NBD Bank, N.A., as
            banks (incorporated by reference from Exhibit 10(a) to the
            Company's Form 10-Q for the quarter ended March 31, 1995).
     
            10(o)     Second Amendment to Credit Agreement dated May 1,
            1996 among the Company, as borrower, and Wachovia Bank of
            Georgia, N.A., as Agent, and Wachovia Bank of Georgia, N.A.,
            ABN AMRO Bank N.V., United States National Bank of Oregon,
            Bank of America NW, N.A., CIBC, Inc., National City Bank,
            Columbus, as assignee of Continental Bank N.A., Bank of
            America National Trust and Savings Association, The Bank of
            New York and NBD Bank, N.A., as banks (incorporated by
            reference from Exhibit 10(b) to the Company's Form 10-Q for
            the quarter ended June 30, 1996).
     
            10(p)     Used Aircraft Sales Agreement entered into as of
            December 22, 1995 between ABX Air, Inc. and KC-One, Inc; KC-
            Two, Inc.; and KC-Three, Inc. (incorporated by reference from
            Exhibit 10(n) to the Company's Form 10-K for the year ended
            December 31, 1996).  Confidential treatment has been granted
            for confidential commercial and financial information,
            pursuant to Rule 24b-2 under the Securities Exchange Act of
            1934.





                                    15
<PAGE>

EXHIBIT NO. 12 Statements Re Computation of Ratios
--------------------------------------------------
            12   Statement re computation of ratio of total long-term debt
            to total capitalization

EXHIBIT NO. 13 Annual Report to Security Holders
------------------------------------------------
            13   Portions of the 1997 Annual Report to Shareholders of
            Airborne Freight Corporation

EXHIBIT NO. 21 Subsidiaries of the Registrant
---------------------------------------------
            21   The subsidiaries of the Company are listed in Part I of
            this report on Form 10-K for the year ended December 31, 1997.

EXHIBIT NO. 23 Consents of Experts and Counsel
----------------------------------------------
            23    Independent Auditors' Consent

EXHIBIT NO. 27 Financial Data Schedule
--------------------------------------
            27.1  Financial Data Schedule

            27.2  Financial Data Schedule

            27.3  Financial Data Schedule

      All other exhibits are omitted because they are not applicable, or
not required, or because the required information is included in the
consolidated financial statements or notes thereto.

(b)   Reports on Form 8-K
      -------------------
      None


                                    16

                                SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                   
                                   AIRBORNE FREIGHT CORPORATION
                                   
                                   
                                   By /s/ Robert S. Cline
                                   --------------------------
                                      Robert S. Cline
                                      Chief Executive Officer
                                   
                                   By /s/ Robert G. Brazier
                                   --------------------------
                                      Robert G. Brazier
                                      Chief Operating Officer
                                   
                                   By /s/ Roy C. Liljebeck
                                   --------------------------
                                      Roy C. Liljebeck
                                      Chief Financial Officer
                                   
                                   By /s/ Lanny H. Michael
                                   --------------------------
                                      Lanny H. Michael
                                      Treasurer and Controller
                                   
Date:  March 27, 1998

     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 date indicated:
                                     
/s/ Robert G. Brazier                /s/ Richard M. Rosenberg
-----------------------------        -----------------------------
Robert G. Brazier (Director)         Richard M. Rosenberg (Director)
                                     
                                     
/s/ Robert S. Cline                  /s/ William Swindells
-----------------------------        -----------------------------
Robert S. Cline (Director)           William Swindells (Director)
                                     
                                     
/s/ Mary A. Wilderotter              
-----------------------------        
Mary A. Wilderotter (Director)       

                                     
                                     
                                    17
<PAGE>

                       AIRBORNE FREIGHT CORPORATION
                             AND SUBSIDIARIES
              SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                              (In thousands)
<TABLE>
<CAPTION>
           Column A              Column B    Column C   Column D    Column E
           --------              --------    --------   --------    --------
                                            Additions                   
                                Balance at  Charged to             Balance at
                                Beginning   Costs and                 End
          Description           of Period    Expenses  Deductions  of Period
           --------              --------    --------   --------    --------
<S>                             <C>         <C>        <C>         <C>
DEDUCTED FROM ASSETS TO                                            
WHICH THEY APPLY:
                                                                   
1.   Allowance for doubtful                                        
   accounts -
                                                                   
 Year Ended December 31, 1997     $8,345     $21,638    $19,693     $10,290
                                                                        
 Year Ended December 31, 1996     $7,750     $16,157    $15,562     $ 8,345
                                                                        
 Year Ended December 31, 1995     $7,500     $13,309    $13,059     $ 7,750
</TABLE>

				    18
<PAGE>

EXHIBIT INDEX

Exhibit                                
 Number                          Description
-------                          ------------

EXHIBIT NO. 12  Statements Re Computation of Ratios
--------------------------------------------------

   12     Statement re computation of ratio of total long-term debt
          to total capitalization
          

EXHIBIT NO. 13  Annual Report to Security Holders
-------------------------------------------------

   13     Portions of the 1997 Annual Report to Shareholders of
          Airborne Freight Corporation
          

EXHIBIT NO. 21  Subsidiaries of the Registrant
----------------------------------------------

   21     The subsidiaries of the Company are listed in Part I of
          this report on Form 10-K for the year ended December 31,
          1997.
          

EXHIBIT NO. 23  Consents of Experts and Counsel
-----------------------------------------------

   23     Independent Auditors' Consent
          

EXHIBIT NO. 27  Financial Data Schedule
---------------------------------------

  27.1    Financial Data Schedule
          
  27.2    Financial Data Schedule
          
  27.3    Financial Data Schedule