UNITED STATES

|     x | Quarterly      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 for the quarterly period ended December 31,  2009 |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Transition      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 for the transition period from _____to  _____ |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

|           | AIR      T, INC. AND SUBSIDIARIES                                                                  |   |   |   |
|----------------|----------------------------------------------------------------------------------------------------|--------|--------|--------|
|           | QUARTERLY      REPORT ON FORM 10-Q                                                                 |   |   |   |
|           | TABLE      OF CONTENTS                                                                             |   |   |   |
|           |                                                                                               |   | Page   |   |
|           | PART      I                                                                                        |   |   |   |
|           |                                                                                               |   |   |   |
| Item      1.   | Financial      Statements                                                                          |   |   |   |
|           |                                                                                               |   |   |   |
|           | Condensed      Consolidated Statements of Income                                                   |   |   | 3      |   |
|           | Three      Months and Nine Months Ended December 31, 2009 and 2008      (Unaudited)                |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Balance Sheets                                                         |   |   | 4      |   |
|           | December      31, 2009 (Unaudited) and March 31, 2009                                              |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Statements of Cash Flows                                               |   |   | 5      |   |
|           | Nine      Months Ended December 31, 2009 and 2008 (Unaudited)                                      |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Statements of Stockholders’ Equity and Comprehensive      Income |   |   | 6      |   |
|           | Nine      Months Ended December 31, 2009 and 2008 (Unaudited)                                      |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Notes      to Condensed Consolidated Financial Statements (Unaudited)                              |   |   | 7      |   |
|           |                                                                                               |   |   |   |   |
| Item      2.   | Management's      Discussion and Analysis of Financial Condition and Results of      Operations    |   |   | 11     |   |
| Item      3.   | Quantitative      and Qualitative Disclosures About Market Risk                                    |   |   | 16     |   |
| Item      4(T) | Controls      and Procedures                                                                       |   |   | 16     |   |
|           |                                                                                               |   |   |   |   |
|           | PART      II                                                                                       |   |   |   |   |
|           |                                                                                               |   |   |   |   |
| Item      1.   | Legal      Proceedings                                                                             |   |   | 16     |   |
| Item      6    | Exhibits                                                                                           |   |   | 16     |   |
|           | Signatures                                                                                         |   |   | 17     |   |
|           | Exhibit      Index                                                                                 |   |   | 18     |   |
|           | Certifications                                                                                     |   |   | 19     |   |
|           |                                                                                               |   |   |   |   |
|           |                                                                                               |   |   |   |   |

----

|                                                           |   | Three      Months Ended December 31, |       |   | Nine      Months Ended December 31, |   |
|----------------------------------------------------------------|--------|--------------------------------------|------------|--------|-------------------------------------|--------|
|                                                           |   | 2009                                 |       |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Operating      Revenues:                                       |   |                                 |       |   |                                |   |   |   |   |   |   |   |
| Overnight      air cargo                                       |   | $                                    | 9,991,420  |   |                                | $      | 10,846,052 |   |   | $ | 28,594,095 |   |   | $ | 31,862,596 |   |
| Ground      equipment sales                                    |   |                                 | 9,769,016  |   |                                |   | 10,649,024 |   |   |   | 25,964,537 |   |   |   | 32,699,772 |   |
| Ground      support services                                   |   |                                 | 2,560,691  |   |                                |   | 2,042,497 |   |   |   | 6,852,590 |   |   |   | 5,404,103 |   |
|                                                           |   |                                 | 22,321,127 |   |                                |   | 23,537,573 |   |   |   | 61,411,222 |   |   |   | 69,966,471 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Expenses:                                       |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Flight-air      cargo                                          |   |                                 | 4,516,982  |   |                                |   | 4,942,896 |   |   |   | 12,797,373 |   |   |   | 14,983,677 |   |
| Maintenance-air      cargo                                     |   |                                 | 4,038,547  |   |                                |   | 4,356,229 |   |   |   | 11,312,464 |   |   |   | 11,944,107 |   |
| Ground      equipment sales                                    |   |                                 | 7,477,230  |   |                                |   | 8,437,235 |   |   |   | 19,438,142 |   |   |   | 24,596,610 |   |
| Ground      support services                                   |   |                                 | 1,801,877  |   |                                |   | 1,653,918 |   |   |   | 4,887,652 |   |   |   | 4,163,519 |   |
| General      and administrative                                |   |                                 | 2,612,140  |   |                                |   | 2,753,136 |   |   |   | 7,824,147 |   |   |   | 8,562,832 |   |
| Depreciation      and amortization                             |   |                                 | 105,706    |   |                                |   | 107,744 |   |   |   | 317,070 |   |   |   | 330,347 |   |
|                                                           |   |                                 | 20,552,482 |   |                                |   | 22,251,158 |   |   |   | 56,576,848 |   |   |   | 64,581,092 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Income                                          |   |                                 | 1,768,645  |   |                                |   | 1,286,415 |   |   |   | 4,834,374 |   |   |   | 5,385,379 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating      Expense (Income):                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Lawsuit      settlement income                                 |   |                                 | -          |   |                                |   | (550,000 | ) |   |   | - |   |   |   | (550,000 | ) |
| (Gain)      Loss on retirement plan settlement                 |   |                                 | -          |   |                                |   | 195,299 |   |   |   | (8,460 | ) |   |   | 195,299 |   |
| Interest      expense                                          |   |                                 | 262        |   |                                |   | 45,784 |   |   |   | 17,182 |   |   |   | 81,518 |   |
| Investment      income                                         |   |                                 | (20,875    | )      |                                |   | (14,994 | ) |   |   | (72,628 | ) |   |   | (72,828 | ) |
|                                                           |   |                                 | (20,613    | )      |                                |   | (323,911 | ) |   |   | (63,906 | ) |   |   | (346,011 | ) |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      Before Income Taxes                              |   |                                 | 1,789,258  |   |                                |   | 1,610,326 |   |   |   | 4,898,280 |   |   |   | 5,731,390 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income      Taxes                                              |   |                                 | 542,000    |   |                                |   | 636,000 |   |   |   | 1,686,000 |   |   |   | 2,095,000 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net      Earnings                                              |   | $                                    | 1,247,258  |   |                                | $      | 974,326 |   |   | $ | 3,212,280 |   |   | $ | 3,636,390 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      Per Share:                                       |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                          |   | $                                    | 0.51       |   |                                | $      | 0.40 |   |   | $ | 1.32 |   |   | $ | 1.50 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                        |   | $                                    | 0.51       |   |                                | $      | 0.40 |   |   | $ | 1.32 |   |   | $ | 1.50 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Dividends      Declared Per Share                              |   | $                                    | -          |   |                                | $      | - |   |   | $ | 0.33 |   |   | $ | 0.30 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Shares Outstanding:                      |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |
| Basic                                                          |   |                                 | 2,424,486  |   |                                |   | 2,424,503 |   |   |   | 2,424,486 |   |   |   | 2,424,043 |   |
| Diluted                                                        |   |                                 | 2,459,754  |   |                                |   | 2,424,503 |   |   |   | 2,434,751 |   |   |   | 2,424,043 |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |
|                                                           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                              |   | December      31, 2009 |       |   | March      31, 2009 |   |
|-------------------------------------------------------------------|--------|------------------------|------------|--------|---------------------|--------|
| ASSETS                                                            |   | (Unaudited)            |       |   |                |   |
| Current      Assets:                                              |   |                   |       |   |                |   |
| Cash      and cash equivalents                                    |   | $                      | 4,152,866  |   |                | $      | 6,852,713 |   |
| Short-term      investments                                       |   |                   | 1,007,924  |   |                |   | 1,002,221 |   |
| Accounts      receivable, less allowance for                      |   |                   |       |   |                |   |   |   |
|   doubtful      accounts of $139,000 and $111,000       |   |                   | 11,598,404 |   |                |   | 6,253,007 |   |
| Notes      and other non-trade receivables-current                |   |                   | 217,145    |   |                |   | 292,744 |   |
| Income      tax receivable                                        |   |                   | 36,000     |   |                |   | 117,000 |   |
| Inventories                                                       |   |                   | 8,924,941  |   |                |   | 9,830,956 |   |
| Deferred      income taxes                                        |   |                   | 632,000    |   |                |   | 599,000 |   |
| Prepaid      expenses and other                                   |   |                   | 394,768    |   |                |   | 317,153 |   |
|   Total      Current Assets                             |   |                   | 26,964,048 |   |                |   | 25,264,794 |   |
|                                                              |   |                   |       |   |                |   |   |   |
| Property      and Equipment, net                                  |   |                   | 1,391,007  |   |                |   | 1,607,840 |   |
|                                                              |   |                   |       |   |                |   |   |   |
| Deferred      Income Taxes                                        |   |                   | 317,000    |   |                |   | 638,000 |   |
| Cash      Surrender Value of Life Insurance Policies              |   |                   | 1,482,443  |   |                |   | 1,431,440 |   |
| Notes      and Other Non-Trade Receivables-LongTerm               |   |                   | 155,932    |   |                |   | 314,295 |   |
| Other      Assets                                                 |   |                   | 87,968     |   |                |   | 84,968 |   |
|   Total      Assets                                     |   | $                      | 30,398,398 |   |                | $      | 29,341,337 |   |
|                                                              |   |                   |       |   |                |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                         |   |                   |       |   |                |   |   |   |
| Current      Liabilities:                                         |   |                   |       |   |                |   |   |   |
| Accounts      payable                                             |   | $                      | 3,515,696  |   |                | $      | 3,021,074 |   |
| Accrued      compensation to executive                            |   |                   | -          |   |                |   | 950,000 |   |
| Accrued      expenses                                             |   |                   | 2,571,433  |   |                |   | 3,135,698 |   |
| Current      portion of long-term obligations                     |   |                   | 11,706     |   |                |   | 462,708 |   |
|  Total      Current Liabilities                              |   |                   | 6,098,835  |   |                |   | 7,569,480 |   |
|                                                              |   |                   |       |   |                |   |   |   |
| Long-term      Obligations                                        |   |                   | -          |   |                |   | 18,619 |   |
|                                                              |   |                   |       |   |                |   |   |   |
| Stockholders'      Equity:                                        |   |                   |       |   |                |   |   |   |
| Preferred      stock, $1.00 par value, 50,000 shares authorized,  |   |                   | -          |   |                |   | - |   |
| Common      stock, $.25 par value; 4,000,000 shares authorized,   |   |                   |       |   |                |
|   2,424,486      shares issued and outstanding          |   |                   | 606,121    |   |                |   | 606,121 |   |
| Additional      paid in capital                                   |   |                   | 6,179,455  |   |                |   | 6,045,330 |   |
| Retained      earnings                                            |   |                   | 17,513,987 |   |                |   | 15,101,787 |   |
|   Total      Stockholders' Equity                       |   |                   | 24,299,563 |   |                |   | 21,753,238 |   |
|   Total      Liabilities and Stockholders’ Equity |   | $                      | 30,398,398 |   |                | $      | 29,341,337 |   |
|                                                              |   |                   |       |   |                |   |   |   |
|                                                              |   |                   |       |   |                |   |   |   |
| See      notes to condensed consolidated financial statements.    |   |                   |       |   |                |

----

|                                                              |   | Nine      Months Ended December 31, |       |
|-------------------------------------------------------------------|--------|-------------------------------------|------------|
|                                                              |   | 2009                                |       |   | 2008 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                        |   |                                |       |   |   |   |
| Net      earnings                                                 |   | $                                   | 3,212,280  |   |   | $ | 3,636,390 |   |
| Adjustments      to reconcile net earnings to net                 |   |                                |       |   |   |   |   |   |
|   cash      (used in) provided by operating activities: |   |                                |       |   |   |   |   |   |
| (Gain)      Loss on sale of assets                                |   |                                | 2,839      |   |   |   | (16,275 | ) |
| Change      in accounts receivable and inventory reserves         |   |                                | 27,657     |   |   |   | (606 | ) |
| Depreciation      and amortization                                |   |                                | 317,070    |   |   |   | 330,347 |   |
| Change      in cash surrender value of life insurance             |   |                                | (51,003    | ) |   |   | (51,003 | ) |
| Deferred      income taxes                                        |   |                                | 288,000    |   |   |   | (176,000 | ) |
| Periodic      pension cost                                        |   |                                | -          |   |   |   | 45,829 |   |
| (Gain)      Loss on retirement plan settlement                    |   |                                | (8,460     | ) |   |   | 195,299 |   |
| Warranty      reserve                                             |   |                                | 100,002    |   |   |   | 195,528 |   |
| Compensation      expense related to stock options                |   |                                | 134,125    |   |   |   | 254,490 |   |
| Change      in operating assets and liabilities:                  |   |                                |       |   |   |   |   |   |
|   Accounts      receivable                              |   |                                | (5,373,054 | ) |   |   | 3,324,492 |   |
|   Notes      receivable and other non-trade receivables |   |                                | 233,963    |   |   |   | (491,216 | ) |
|   Inventories                                           |   |                                | 905,467    |   |   |   | (1,746,244 | ) |
|   Prepaid      expenses and other                       |   |                                | (86,319    | ) |   |   | (43,977 | ) |
|   Accounts      payable                                 |   |                                | 494,622    |   |   |   | (1,782,811 | ) |
|   Accrued      expenses                                 |   |                                | (664,268   | ) |   |   | (171,816 | ) |
|   Accrued      compensation to executive                |   |                                | (941,540   | ) |   |   | - |   |
|   Income      taxes receivable/payable                  |   |                                | 81,000     |   |   |   | (179,000 | ) |
| Total      adjustments                                            |   |                                | (4,539,899 | ) |   |   | (312,963 | ) |
|  Net      cash (used in) provided by operating activities    |   |                                | (1,327,619 | ) |   |   | 3,323,427 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                        |   |                                |       |   |   |   |   |   |
| Proceeds      from sale of investments                            |   |                                | 900        |   |   |   | 6,679,235 |   |
| Purchase      of investments                                      |   |                                | -          |   |   |   | (6,657,345 | ) |
| Capital      expenditures                                         |   |                                | (103,428   | ) |   |   | (162,765 | ) |
|  Net      cash used in investing activities                  |   |                                | (102,528   | ) |   |   | (140,875 | ) |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                        |   |                                |       |   |   |   |   |   |
| Aircraft      term loan payments                                  |   |                                | (450,035   | ) |   |   | (85,264 | ) |
| Payment      of cash dividend                                     |   |                                | (800,080   | ) |   |   | (727,050 | ) |
| Payment      on capital leases                                    |   |                                | (19,585    | ) |   |   | (15,419 | ) |
| Proceeds      from exercise of stock options                      |   |                                | -          |   |   |   | 6,375 |   |
| Repurchase      of common stock                                   |   |                                |       |   |   |   | (122 | ) |
|  Net      cash used in financing activities                  |   |                                | (1,269,700 | ) |   |   | (821,480 | ) |
| NET      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS         |   |                                | (2,699,847 | ) |   |   | 2,361,072 |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             |   |                                | 6,852,713  |   |   |   | 51,858 |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                   |   | $                                   | 4,152,866  |   |   | $ | 2,412,930 |   |
|                                                              |   |                                |       |   |   |   |   |   |
|                                                              |   |                                |       |   |   |   |   |   |
|                                                              |   |                                |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:            |   |                                |       |   |   |
| Cash      paid during the period for:                             |   |                                |       |   |   |   |   |   |
| Interest                                                          |   | $                                   | 21,924     |   |   | $ | 70,534 |   |
| Income      taxes                                                 |   |                                | 1,318,000  |   |   |   | 2,477,644 |   |
|                                                              |   |                                |       |   |   |   |   |   |
| See      notes to condensed consolidated financial statements.    |   |                                |       |   |   |   |   |   |
|                                                              |   |                                |       |   |   |   |   |   |

----

|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     | Accumulated        |       |          |          |        |
|----------------------------------------------------------------|--------|-------------------|-----------|--------|------------|--------|---------|---------|--------|---------|-----------|--------|----------|--------------------|------------|---------------|---------------|-------------|
|                                                           |   | Common      Stock |      |   | Additional |   |    |    |   |    | Other     |   |     | Total              |       |
|                                                           |   |              |      |   |       |   |    | Paid-In |   |    | Retained  |   |     | Comprehensive      |       |          | Stockholders' |        |
|                                                           |   | Shares            |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |     | Income      (Loss) |       |          | Equity        |        |
| Balance,      March 31, 2008                                   |   |              | 2,423,506 |   |       | $      | 605,876 |    |   | $       | 5,700,002 |   |     | $                  | 11,450,192 |          |          | $           | (41,513 | ) |   | $ | 17,714,557 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Net      earnings                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 3,636,390  |          |          |        |   |   |   |   |   |   |
|   Other      comprehensive income,                   |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|     net      of tax                        |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        | 41,513 |   |   |   |   |   |
| Comprehensive      Income                                      |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   | 3,677,903 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Cash      dividend ($0.30 per share)                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               | (727,050   | )             |          |        |   |   |   |   | (727,050 | ) |
|  Exercise      of stock options                           |   |              | 1,000     |   |       |   | 250     |    |   |    | 6,125     |   |     |               |       |          |          |        |   |   |   |   | 6,375 |   |
| Compensation      expense related to                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |
|     stock      options                     |   |              |      |   |       |   |    |    |   |    | 254,490   |   |     |               |       |          |          |        |   |   |   |   | 254,490 |   |
| Stock      repurchase                                          |   |              | (20       | )      |       |   | (5      | )       |   |    | (117      | )      |     |               |       |          |          |        |   |   |   |   | (122 | ) |
| Balance,      December 31, 2008                                |   |              | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 5,960,500 |   |     | $                  | 14,359,532 |          |          | $           | - |   |   | $ | 20,926,153 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          | Accumulated |   |
|                                                           |   | Common      Stock |      |   | Additional |   |    |    |   |    |      | Other  |     |               | Total      |          |
|                                                           |   |              |      |   |       |   |    |    |   | Paid-In |      |   | Retained |               |       | Comprehensive |          |        | Stockholders' |   |
|                                                           |   | Shares            |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |     | Income             |       |          | Equity        |        |
| Balance,      March 31, 2009                                   |   |              | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 6,045,330 |   |     | $                  | 15,101,787 |          |          | $           | - |   |   | $ | 21,753,238 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Net      earnings                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 3,212,280  |          |          |        |   |   |   |   |   |   |
|   Other      comprehensive income                    |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        | - |   |   |   |   |   |
| Comprehensive      Income                                      |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   | 3,212,280 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Cash      dividend ($0.33 per share)                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               | (800,080   | )             |          |        |   |   |   |   | (800,080 | ) |
| Compensation      expense related to                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |
|     stock      options                     |   |              |      |   |       |   |    |    |   |    | 134,125   |   |     |               |       |          |          |        |   |   |   |   | 134,125 |   |
| Balance,      December 31, 2009                                |   |              | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 6,179,455 |   |     | $                  | 17,513,987 |          |          | $           | - |   |   | $ | 24,299,563 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |              |      |   |       |   |    |    |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |

----

| 1.   | Financial Statement      Presentation |
|----------------|---------------------------------------|

| 2.   | Income      Taxes |
|----------------|-------------------|

| 3.   | Comprehensive      Income |
|----------------|---------------------------|

|                                      |   | Three      Months Ended December 31, |      |   | Nine      Months Ended December 31, |   |
|-------------------------------------------|--------|--------------------------------------|-----------|--------|-------------------------------------|--------|
|                                      |   | 2009                                 |      |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |
| Net      earnings                         |   | $                                    | 1,247,258 |   |                                | $      | 974,326 |   |   | $ | 3,212,280 |   |   | $ | 3,636,390 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income:          |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of Net Actuarial Losses |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|    Net      of tax)        |   |                                 | -         |   |                                |   | 37,741 |   |   |   | - |   |   |   | 41,513 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total      Comprehensive Income           |   | $                                    | 1,247,258 |   |                                | $      | 1,012,067 |   |   | $ | 3,212,280 |   |   | $ | 3,677,903 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |

----

| 4.   | Net Earnings Per      Share |
|----------------|-----------------------------|

|                                      |   | Three      Months Ended December 31, |      |   | Nine      Months Ended December 31, |   |
|-------------------------------------------|--------|--------------------------------------|-----------|--------|-------------------------------------|--------|
|                                      |   | 2009                                 |      |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |
| Net      earnings                         |   | $                                    | 1,247,258 |   |                                | $      | 974,326 |   |   | $ | 3,212,280 |   |   | $ | 3,636,390 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      Per Share:                  |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                     |   | $                                    | 0.51      |   |                                | $      | 0.40 |   |   | $ | 1.32 |   |   | $ | 1.50 |   |
| Diluted                                   |   | $                                    | 0.51      |   |                                | $      | 0.40 |   |   | $ | 1.32 |   |   | $ | 1.50 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Shares Outstanding: |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                     |   |                                 | 2,424,486 |   |                                |   | 2,424,503 |   |   |   | 2,424,486 |   |   |   | 2,424,043 |   |
| Diluted                                   |   |                                 | 2,459,754 |   |                                |   | 2,424,503 |   |   |   | 2,434,751 |   |   |   | 2,424,043 |   |
|                                      |   |                                 |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |

| 5.   | Inventories |
|----------------|-------------|

|                                       |   | December      31, |      |   | March      31, |   |
|--------------------------------------------|--------|-------------------|-----------|--------|----------------|--------|
|                                       |   | 2009              |      |   | 2009           |   |
|  Aircraft      parts and supplies     |   | $                 | 128,873   |   |           | $      | 151,833 |   |
|  Ground      equipment manufacturing: |   |              |      |   |           |   |   |   |
| Raw      materials                         |   |              | 6,801,898 |   |           |   | 6,935,490 |   |
| Work      in process                       |   |              | 1,231,051 |   |           |   | 2,439,072 |   |
| Finished      goods                        |   |              | 1,345,192 |   |           |   | 886,634 |   |
|  Total      inventories               |   |              | 9,507,014 |   |           |   | 10,413,029 |   |
|  Reserves                             |   |              | (582,073  | )      |           |   | (582,073 | ) |
|                                       |   |              |      |   |           |   |   |   |
| Total,      net of reserves                |   | $                 | 8,924,941 |   |           | $      | 9,830,956 |   |
|                                       |   |              |      |   |           |   |   |   |

| 6.   | Stock Based      Compensation |
|----------------|-------------------------------|

----

| 7.   | Fair Value of      Financial Instruments |
|----------------|------------------------------------------|

|                           |   | Fair      Value Measurements at |      |
|--------------------------------|--------|---------------------------------|-----------|
|                           |   | December      31, 2009          |      |   | March      31, 2009 |   |
|                           |   |                            |      |   |   |   |
| Cash      and cash equivalents |   | $                               | 4,152,866 |   |   | $ | 6,852,713 |   |
|                           |   |                            |      |   |   |   |   |   |
| Short-term      investments    |   | $                               | 1,007,924 |   |   | $ | 1,002,221 |   |
|                           |   |                            |      |   |   |   |   |   |

| 8.   | Financing      Arrangements |
|----------------|-----------------------------|

|   |     |
|--------|--------------------|

| 9.   | Segment      Information |
|----------------|--------------------------|

----

|                                |   | Three      Months Ended December 31, |       |   | Nine      Months Ended December 31, |   |
|-------------------------------------|--------|--------------------------------------|------------|--------|-------------------------------------|--------|
|                                |   | 2009                                 |       |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Operating      Revenues:            |   |                                 |       |   |                                |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                    | 9,991,420  |   |                                | $      | 10,846,052 |   |   | $ | 28,594,095 |   |   | $ | 31,862,596 |   |
| Ground      Equipment Sales:        |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|    Domestic          |   |                                 | 8,109,459  |   |                                |   | 8,793,398 |   |   |   | 20,139,466 |   |   |   | 27,946,479 |   |
|    International     |   |                                 | 1,659,557  |   |                                |   | 1,855,626 |   |   |   | 5,825,071 |   |   |   | 4,753,293 |   |
| Total      Ground Equipment Sales   |   |                                 | 9,769,016  |   |                                |   | 10,649,024 |   |   |   | 25,964,537 |   |   |   | 32,699,772 |   |
| Ground      Support Services        |   |                                 | 2,560,691  |   |                                |   | 2,042,497 |   |   |   | 6,852,590 |   |   |   | 5,404,103 |   |
| Total                               |   | $                                    | 22,321,127 |   |                                | $      | 23,537,573 |   |   | $ | 61,411,222 |   |   | $ | 69,966,471 |   |
|                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Income               |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                    | 627,161    |   |                                | $      | 795,412 |   |   | $ | 2,027,105 |   |   | $ | 2,573,238 |   |
| Ground      Equipment Sales         |   |                                 | 1,280,647  |   |                                |   | 1,096,170 |   |   |   | 3,588,369 |   |   |   | 4,770,227 |   |
| Ground      Support Services        |   |                                 | 397,433    |   |                                |   | 114,051 |   |   |   | 962,724 |   |   |   | 243,185 |   |
| Corporate                           |   |                                 | (536,596   | )      |                                |   | (719,218 | ) |   |   | (1,743,824 | ) |   |   | (2,201,271 | ) |
| Total                               |   | $                                    | 1,768,645  |   |                                | $      | 1,286,415 |   |   | $ | 4,834,374 |   |   | $ | 5,385,379 |   |
|                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Capital      Expenditures:          |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                    | 5,849      |   |                                | $      | 7,285 |   |   | $ | 40,434 |   |   | $ | 22,905 |   |
| Ground      Equipment Sales         |   |                                 | -          |   |                                |   | - |   |   |   | 20,436 |   |   |   | 7,185 |   |
| Ground      Support Services        |   |                                 | -          |   |                                |   | 36,575 |   |   |   | 13,304 |   |   |   | 76,623 |   |
| Corporate                           |   |                                 | 517        |   |                                |   | 18,040 |   |   |   | 29,254 |   |   |   | 56,052 |   |
| Total                               |   | $                                    | 6,366      |   |                                | $      | 61,900 |   |   | $ | 103,428 |   |   | $ | 162,765 |   |
|                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and Amortization: |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                    | 52,124     |   |                                | $      | 62,172 |   |   | $ | 158,271 |   |   | $ | 199,586 |   |
| Ground      Equipment Sales         |   |                                 | 12,971     |   |                                |   | 10,442 |   |   |   | 38,119 |   |   |   | 32,839 |   |
| Ground      Support Services        |   |                                 | 27,477     |   |                                |   | 24,597 |   |   |   | 81,699 |   |   |   | 67,749 |   |
| Corporate                           |   |                                 | 13,134     |   |                                |   | 10,533 |   |   |   | 38,981 |   |   |   | 30,173 |   |
| Total                               |   | $                                    | 105,706    |   |                                | $      | 107,744 |   |   | $ | 317,070 |   |   | $ | 330,347 |   |
|                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                |   | As      of :                         |       |   |                                |   |   |   |   |   |   |   |   |   |   |
|                                |   | December      31, 2009               |       |   | March      31, 2009                 |   |   |   |   |   |   |   |   |   |
| Identifiable      Assets:           |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                    | 5,173,732  |   |                                | $      | 6,779,257 |   |   |   |   |   |   |   |   |   |
| Ground      Equipment Sales         |   |                                 | 18,248,487 |   |                                |   | 12,299,439 |   |   |   |   |   |   |   |   |   |
| Ground      Support Services        |   |                                 | 2,695,408  |   |                                |   | 2,231,834 |   |   |   |   |   |   |   |   |   |
| Corporate                           |   |                                 | 4,280,771  |   |                                |   | 8,030,807 |   |   |   |   |   |   |   |   |   |
| Total                               |   | $                                    | 30,398,398 |   |                                | $      | 29,341,337 |   |   |   |   |   |   |   |   |   |
|                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |                                 |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |

| 10.   | Commitments and      Contingencies |
|-----------------|------------------------------------|

| 11.   | Subsequent      Events |
|-----------------|------------------------|

----

| (In      thousands)                                     |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                    |   | Three      Months Ended December 31, |   |   | Nine      Months Ended December 31, |   |
|                                                    |   | 2009                                 |   |   |                                |   |   | 2008   |   |   |   |   |   | 2009   |   |   |   |   |   | 2008   |   |   |   |   |
|                                                    |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo Segment:                       |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     FedEx                           |   | $                                    | 9,991  |   |                                |   | 45     | %      |   | $      | 10,846 |   |   |   | 46     | %      |   | $      | 28,594 |   |   |   | 47     | %      |   | $ | 31,863 |   |   |   | 45 | % |
| Ground      Equipment Sales Segment:                    |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Military                        |   |                                 | 4,759  |   |                                |   | 21     | %      |   |   | 2,935  |   |   |   | 12     | %      |   |   | 12,395 |   |   |   | 20     | %      |   |   | 14,193 |   |   |   | 20 | % |
|     Commercial      - Domestic      |   |                                 | 3,350  |   |                                |   | 15     | %      |   |   | 5,858  |   |   |   | 25     | %      |   |   | 7,744  |   |   |   | 13     | %      |   |   | 13,754 |   |   |   | 20 | % |
|     Commercial      - International |   |                                 | 1,660  |   |                                |   | 7      | %      |   |   | 1,856  |   |   |   | 8      | %      |   |   | 5,825  |   |   |   | 9      | %      |   |   | 4,753 |   |   |   | 7 | % |
|                                                    |   |                                 | 9,769  |   |                                |   | 43     | %      |   |   | 10,649 |   |   |   | 45     | %      |   |   | 25,964 |   |   |   | 42     | %      |   |   | 32,700 |   |   |   | 47 | % |
|                                                    |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ground      Support Services Segment                    |   |                                 | 2,561  |   |                                |   | 12     | %      |   |   | 2,043  |   |   |   | 9      | %      |   |   | 6,853  |   |   |   | 11     | %      |   |   | 5,404 |   |   |   | 8 | % |
|                                                    |   | $                                    | 22,321 |   |                                |   | 100    | %      |   | $      | 23,538 |   |   |   | 100    | %      |   | $      | 61,411 |   |   |   | 100    | %      |   | $ | 69,967 |   |   |   | 100 | % |
|                                                    |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

----

|                                                      |   | Nine      Months Ended December 31, |       |
|-----------------------------------------------------------|--------|-------------------------------------|------------|
|                                                      |   | 2009                                |       |   | 2008 |   |
|                                                      |   |                                |       |   |   |   |
| Net      Cash Provided by (Used in) Operating Activities  |   | $                                   | (1,328,000 | ) |   | $ | 3,323,000 |   |
| Net      Cash Used in Investing Activities                |   |                                | (102,000   | ) |   |   | (141,000 | ) |
| Net      Cash Used in Financing Activities                |   |                                | (1,270,000 | ) |   |   | (821,000 | ) |
|                                                      |   |                                |       |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents |   | $                                   | (2,700,000 | ) |   | $ | 2,361,000 |   |
|                                                      |   |                                |       |   |   |   |   |   |

----

|   | (a)  Exhibits |
|--------|-------------------------|

| 3.1   | Restated      Certificate of Incorporation and Certificate of Amendment to Certificate      of Incorporation dated September 25, 2008, incorporated by reference to      Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the fiscal      period ended September 30, 2008 (Commission file No.    0-11720) |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2   | By-laws      of the Company, as amended, incorporated by reference to Exhibit 3.2      of the Company’s Annual Report on Form 10-K for the fiscal year ended      March 31, 1996 (Commission file No.  0-11720) |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1   | Specimen      Common Stock Certificate, incorporated by reference to Exhibit 4.1 of      the Company’s Annual Report on Form 10-K for the fiscal year ended      March 31, 1994 (Commission file No.  0-11720) |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1   |        Section 302 Certification of Chief Executive  Officer |
|------------------|-------------------------------------------------------------------|

| 31.2   |   Section      302 Certification of Chief FinancialOfficer |
|------------------|----------------------------------------------------------------------|

|        32.1   |    Section      1350 Certifications |
|------------------------------|----------------------------------------------------|

----

----

|   | 3.1 | Restated      Certificate of Incorporation and Certificate of Amendment to Certificate      of Incorporation dated September 25, 2008, incorporated by reference to      Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the fiscal      period ended September 30, 2008 (Commission file No.    0-11720) |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | 3.2 | By-laws      of the Company, as amended, incorporated by reference to Exhibit 3.2      of the Company’s Annual Report on Form 10-K for the fiscal year ended      March 31, 1996 (Commission file No.  0-11720) |
|--------------------------------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1   |   Specimen Common      Stock Certificate, incorporated by reference to Exhibit 4.1 of the      Company’s Annual Report on Form 10-K for the fiscal year ended      March 31, 1994 (Commission file No. 0-               11720) |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|