UNITED STATES

|       X | Quarterly      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 for the quarterly period ended September 30,  2009 |
|----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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|           | 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 Six Months Ended September 30, 2009 and 2008      (Unaudited)                |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Balance Sheets                                                         |   |   | 4      |   |
|           | September      30, 2009 (Unaudited) and March 31, 2009                                             |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Statements of Cash Flows                                               |   |   | 5      |   |
|           | Six      Months Ended September 30, 2009 and 2008 (Unaudited)                                      |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Statements of Stockholders’ Equity and Comprehensive      Income |   |   | 6      |   |
|           | Six      Months Ended September 30, 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                                    |   |   | 17     |   |
| Item      4(T) | Controls      and Procedures                                                                       |   |   | 17     |   |
|           |                                                                                               |   |   |   |   |
|           | PART      II                                                                                       |   |   |   |   |
|           |                                                                                               |   |   |   |   |
| Item      1.   | Legal      Proceedings                                                                             |   |   | 17     |   |
| Item      4.   | Submission      of Matters to a Vote of Security Holders                                           |   |   | 17     |   |
| Item      6    | Exhibits                                                                                           |   |   | 18     |   |
|           | Signatures                                                                                         |   |   | 19     |   |
|           | Exhibit      Index                                                                                 |   |   | 20     |   |
|           | Certifications                                                                                     |   |   | 21     |   |
|           |                                                                                               |   |   |   |   |
|           |                                                                                               |   |   |   |   |

----

|                                                           |   | Three      Months Ended September 30, |       |   | Six      Months Ended September 30, |   |
|----------------------------------------------------------------|--------|---------------------------------------|------------|--------|-------------------------------------|--------|
|                                                           |   | 2009                                  |       |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Operating      Revenues:                                       |   |                                  |       |   |                                |   |   |   |   |   |   |   |
| Overnight      air cargo                                       |   | $                                     | 9,814,199  |   |                                | $      | 11,560,980 |   |   | $ | 18,602,675 |   |   | $ | 21,016,544 |   |
| Ground      equipment sales                                    |   |                                  | 8,092,702  |   |                                |   | 10,709,743 |   |   |   | 16,195,521 |   |   |   | 22,050,748 |   |
| Ground      support services                                   |   |                                  | 2,234,887  |   |                                |   | 1,741,598 |   |   |   | 4,291,899 |   |   |   | 3,361,606 |   |
|                                                           |   |                                  | 20,141,788 |   |                                |   | 24,012,321 |   |   |   | 39,090,095 |   |   |   | 46,428,898 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Expenses:                                       |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Flight-air      cargo                                          |   |                                  | 4,444,922  |   |                                |   | 5,302,006 |   |   |   | 8,280,391 |   |   |   | 10,040,781 |   |
| Maintenance-air      cargo                                     |   |                                  | 3,908,095  |   |                                |   | 4,531,386 |   |   |   | 7,273,917 |   |   |   | 7,587,878 |   |
| Ground      equipment sales                                    |   |                                  | 6,209,186  |   |                                |   | 8,115,827 |   |   |   | 11,960,912 |   |   |   | 16,159,375 |   |
| Ground      support services                                   |   |                                  | 1,580,039  |   |                                |   | 1,267,160 |   |   |   | 3,085,775 |   |   |   | 2,509,601 |   |
| General      and administrative                                |   |                                  | 2,561,488  |   |                                |   | 2,666,232 |   |   |   | 5,212,007 |   |   |   | 5,809,696 |   |
| Depreciation      and amortization                             |   |                                  | 107,466    |   |                                |   | 111,265 |   |   |   | 211,364 |   |   |   | 222,603 |   |
|                                                           |   |                                  | 18,811,196 |   |                                |   | 21,993,876 |   |   |   | 36,024,366 |   |   |   | 42,329,934 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Income                                          |   |                                  | 1,330,592  |   |                                |   | 2,018,445 |   |   |   | 3,065,729 |   |   |   | 4,098,964 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating      Expense (Income):                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Gain      on retirement plan settlement                        |   |                                  | -          |   |                                |   | - |   |   |   | (8,460 | ) |   |   | - |   |
| Interest      expense                                          |   |                                  | 3,241      |   |                                |   | 22,512 |   |   |   | 16,920 |   |   |   | 35,734 |   |
| Investment      income                                         |   |                                  | (27,530    | )      |                                |   | (40,220 | ) |   |   | (54,579 | ) |   |   | (58,173 | ) |
| Other                                                          |   |                                  | 2,826      |   |                                |   | 339 |   |   |   | 2,826 |   |   |   | 339 |   |
|                                                           |   |                                  | (21,463    | )      |                                |   | (17,369 | ) |   |   | (43,293 | ) |   |   | (22,100 | ) |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      Before Income Taxes                              |   |                                  | 1,352,055  |   |                                |   | 2,035,814 |   |   |   | 3,109,022 |   |   |   | 4,121,064 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income      Taxes                                              |   |                                  | 505,000    |   |                                |   | 714,000 |   |   |   | 1,144,000 |   |   |   | 1,459,000 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net      Earnings                                              |   | $                                     | 847,055    |   |                                | $      | 1,321,814 |   |   | $ | 1,965,022 |   |   | $ | 2,662,064 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and Diluted Net Earnings Per Share                  |   | $                                     | 0.35       |   |                                | $      | 0.55 |   |   | $ | 0.81 |   |   | $ | 1.10 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Dividends      Declared Per Share                              |   | $                                     | -          |   |                                | $      | - |   |   | $ | 0.33 |   |   | $ | 0.30 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Shares Outstanding:                      |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |
| Basic                                                          |   |                                  | 2,424,486  |   |                                |   | 2,424,115 |   |   |   | 2,424,486 |   |   |   | 2,423,812 |   |
| Diluted                                                        |   |                                  | 2,428,033  |   |                                |   | 2,437,653 |   |   |   | 2,424,486 |   |   |   | 2,424,929 |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |

----

|                                                              |   |                    |       |   |                |   |
|-------------------------------------------------------------------|--------|-------------------------|------------|--------|---------------------|--------|
|                                                              |   | September      30, 2009 |       |   | March      31, 2009 |   |
| ASSETS                                                            |   | (Unaudited)             |       |   |                |   |
| Current      Assets:                                              |   |                    |       |   |                |   |
| Cash      and cash equivalents                                    |   | $                       | 2,802,262  |   |                | $      | 6,852,713 |   |
| Short-term      investments                                       |   |                    | 1,002,477  |   |                |   | 1,002,221 |   |
| Accounts      receivable, less allowance for                      |   |                    |       |   |                |   |   |   |
|   doubtful      accounts of $141,000 and $111,000       |   |                    | 9,780,554  |   |                |   | 6,253,007 |   |
| Notes      and other non-trade receivables-current                |   |                    | 268,953    |   |                |   | 292,744 |   |
| Income      tax receivable                                        |   |                    | 270,000    |   |                |   | 117,000 |   |
| Inventories                                                       |   |                    | 9,864,816  |   |                |   | 9,830,956 |   |
| Deferred      income taxes                                        |   |                    | 634,000    |   |                |   | 599,000 |   |
| Prepaid      expenses and other                                   |   |                    | 304,904    |   |                |   | 317,153 |   |
|   Total      Current Assets                             |   |                    | 24,927,966 |   |                |   | 25,264,794 |   |
|                                                              |   |                    |       |   |                |   |   |   |
| Property      and Equipment, net                                  |   |                    | 1,488,998  |   |                |   | 1,607,840 |   |
|                                                              |   |                    |       |   |                |   |   |   |
| Deferred      Income Taxes                                        |   |                    | 333,000    |   |                |   | 638,000 |   |
| Cash      Surrender Value of Life Insurance Policies              |   |                    | 1,465,442  |   |                |   | 1,431,440 |   |
| Notes      and Other Non-Trade Receivables-LongTerm               |   |                    | 305,932    |   |                |   | 314,295 |   |
| Other      Assets                                                 |   |                    | 87,968     |   |                |   | 84,968 |   |
|   Total      Assets                                     |   | $                       | 28,609,306 |   |                | $      | 29,341,337 |   |
|                                                              |   |                    |       |   |                |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                         |   |                    |       |   |                |   |   |   |
| Current      Liabilities:                                         |   |                    |       |   |                |   |   |   |
| Accounts      payable                                             |   | $                       | 2,800,165  |   |                | $      | 3,021,074 |   |
| Accrued      compensation to executive                            |   |                    |       |   |                |   | 950,000 |   |
| Accrued      expenses                                             |   |                    | 2,678,894  |   |                |   | 3,135,698 |   |
| Current      portion of long-term obligations                     |   |                    | 12,673     |   |                |   | 462,708 |   |
|  Total      Current Liabilities                              |   |                    | 5,491,732  |   |                |   | 7,569,480 |   |
|                                                              |   |                    |       |   |                |   |   |   |
| Long-term      Obligations                                        |   |                    | 68,709     |   |                |   | 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                                   |   |                    | 6,176,015  |   |                |   | 6,045,330 |   |
| Retained      earnings                                            |   |                    | 16,266,729 |   |                |   | 15,101,787 |   |
|   Total      Stockholders' Equity                       |   |                    | 23,048,865 |   |                |   | 21,753,238 |   |
|   Total      Liabilities and Stockholders’ Equity |   | $                       | 28,609,306 |   |                | $      | 29,341,337 |   |
|                                                              |   |                    |       |   |                |   |   |   |
|                                                              |   |                    |       |   |                |   |   |   |
| See      notes to condensed consolidated financial statements.    |   |                    |       |   |                |

----

|                                                              |   | Six      Months Ended September 30, |       |
|-------------------------------------------------------------------|--------|-------------------------------------|------------|
|                                                              |   | 2009                                |       |   | 2008 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                        |   |                                |       |   |   |   |
| Net      earnings                                                 |   | $                                   | 1,965,022  |   |   | $ | 2,662,064 |   |
| Adjustments      to reconcile net earnings to net                 |   |                                |       |   |   |   |   |   |
|   cash      (used in) provided by operating activities: |   |                                |       |   |   |   |   |   |
| (Gain)      Loss on sale of assets                                |   |                                | 2,826      |   |   |   | (16,275 | ) |
| Change      in accounts receivable and inventory reserves         |   |                                | 29,790     |   |   |   | (118,425 | ) |
| Depreciation      and amortization                                |   |                                | 211,364    |   |   |   | 222,603 |   |
| Change      in cash surrender value of life insurance             |   |                                | (34,002    | ) |   |   | (34,002 | ) |
| Deferred      income taxes                                        |   |                                | 270,000    |   |   |   | (112,277 | ) |
| Periodic      pension cost                                        |   |                                | -          |   |   |   | 51,258 |   |
| Gain      on retirement plan settlement                           |   |                                | (8,460     | ) |   |   | - |   |
| Warranty      reserve                                             |   |                                | (28,612    | ) |   |   | 63,000 |   |
| Compensation      expense related to stock options                |   |                                | 130,685    |   |   |   | 169,660 |   |
| Change      in operating assets and liabilities:                  |   |                                |       |   |   |   |   |   |
|   Accounts      receivable                              |   |                                | (3,557,337 | ) |   |   | 2,147,926 |   |
|   Notes      receivable and other non-trade receivables |   |                                | 32,155     |   |   |   | 6,576 |   |
|   Inventories                                           |   |                                | (32,146    | ) |   |   | (3,328,368 | ) |
|   Prepaid      expenses and other                       |   |                                | 8,992      |   |   |   | 30,320 |   |
|   Accounts      payable                                 |   |                                | (220,909   | ) |   |   | (47,823 | ) |
|   Accrued      expenses                                 |   |                                | (428,193   | ) |   |   | 76,808 |   |
|   Accrued      compensation to executive                |   |                                | (941,540   | ) |   |   | - |   |
|   Income      taxes receivable                          |   |                                | (153,000   | ) |   |   | 22,669 |   |
| Total      adjustments                                            |   |                                | (4,718,387 | ) |   |   | (866,350 | ) |
|  Net      cash (used in) provided by operating activities    |   |                                | (2,753,365 | ) |   |   | 1,795,714 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                        |   |                                |       |   |   |   |   |   |
| Proceeds      from sale of investments                            |   |                                | -          |   |   |   | 6,679,235 |   |
| Purchase      of investments                                      |   |                                | -          |   |   |   | (6,663,595 | ) |
| Capital      expenditures                                         |   |                                | (97,062    | ) |   |   | (100,865 | ) |
|  Net      cash used in investing activities                  |   |                                | (97,062    | ) |   |   | (85,225 | ) |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                        |   |                                |       |   |   |   |   |   |
| Proceeds      from line of credit, net                            |   |                                | 63,028     |   |   |   | - |   |
| Aircraft      term loan payments                                  |   |                                | (450,035   | ) |   |   | (56,533 | ) |
| Payment      of cash dividend                                     |   |                                | (800,080   | ) |   |   | (727,050 | ) |
| Payment      on capital leases                                    |   |                                | (12,937    | ) |   |   | (9,417 | ) |
| Proceeds      from exercise of stock options                      |   |                                | -          |   |   |   | 6,375 |   |
|  Net      cash used in financing activities                  |   |                                | (1,200,024 | ) |   |   | (786,625 | ) |
| NET      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS         |   |                                | (4,050,451 | ) |   |   | 923,864 |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             |   |                                | 6,852,713  |   |   |   | 51,858 |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                   |   | $                                   | 2,802,262  |   |   | $ | 975,722 |   |
|                                                              |   |                                |       |   |   |   |   |   |
|                                                              |   |                                |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:            |   |                                |       |   |   |
| Cash      paid during the period for:                             |   |                                |       |   |   |   |   |   |
| Interest                                                          |   | $                                   | 19,723     |   |   | $ | 29,985 |   |
| Income      taxes                                                 |   |                                | 1,027,000  |   |   |   | 1,548,416 |   |
|                                                              |   |                                |       |   |   |   |   |   |
| See      notes to condensed consolidated financial statements.    |   |                                |       |   |   |   |   |   |

----

|                                                           |   | 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                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 2,662,064  |   |   |   |   |   |   |   |   |   |
|   Other      comprehensive income,                   |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   |   |   |
|     net      of tax                        |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   | 9,821 |   |   |   |   |   |
| Comprehensive      Income                                      |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   | 2,671,885 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   |   |   |
| 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                     |   |              |      |   |       |   |    |    |   |    | 169,660   |   |     |               |       |   |   |   |   |   |   |   | 169,660 |   |
| Balance,      September 30, 2008                               |   |              | 2,424,506 |   |       | $      | 606,126 |    |   | $       | 5,875,787 |   |     | $                  | 13,385,206 |   |   | $ | (31,692 | ) |   | $ | 19,835,427 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   | 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                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 1,965,022  |   |   |   |   |   |   |   |   |   |
|   Other      comprehensive income                    |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   | - |   |   |   |   |   |
| Comprehensive      Income                                      |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   | 1,965,022 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   |   |   |
| Cash      dividend ($0.33 per share)                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               | (800,080   | ) |   |   |   |   |   |   | (800,080 | ) |
| Compensation      expense related to                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |
|     stock      options                     |   |              |      |   |       |   |    |    |   |    | 130,685   |   |     |               |       |   |   |   |   |   |   |   | 130,685 |   |
| Balance,      September 30, 2009                               |   |              | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 6,176,015 |   |     | $                  | 16,266,729 |   |   | $ | - |   |   | $ | 23,048,865 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |   |   |   |   |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |              |      |   |       |   |    |    |   |

----

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

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

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

|                                           |   | Three      Months Ended September 30, |    |   | Six      Months Ended September 30, |   |
|------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------------------------|--------|
|                                           |   | 2009                                  |    |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
|                                           |   |                                  |    |   |                                |   |   |   |   |   |   |   |
| Net      earnings                              |   | $                                     | 847,055 |   |                                | $      | 1,321,814 |   |   | $ | 1,965,022 |   |   | $ | 2,662,064 |   |
|                                           |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income:               |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Amortization      of Net Actuarial Losses (Net |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|    of      tax)                 |   |                                  | -       |   |                                |   | 6,049 |   |   |   | - |   |   |   | 9,821 |   |
|                                           |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total      Comprehensive Income                |   | $                                     | 847,055 |   |                                | $      | 1,327,863 |   |   | $ | 1,965,022 |   |   | $ | 2,671,885 |   |
|                                           |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |

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

|                                          |   | Three      Months Ended September 30, |      |   | Six      Months Ended September 30, |   |
|-----------------------------------------------|--------|---------------------------------------|-----------|--------|-------------------------------------|--------|
|                                          |   | 2009                                  |      |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
|                                          |   |                                  |      |   |                                |   |   |   |   |   |   |   |
| Net      earnings                             |   | $                                     | 847,055   |   |                                | $      | 1,321,814 |   |   | $ | 1,965,022 |   |   | $ | 2,662,064 |   |
|                                          |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and Diluted Net Earnings Per Share |   | $                                     | 0.35      |   |                                | $      | 0.55 |   |   | $ | 0.81 |   |   | $ | 1.10 |   |
|                                          |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Shares Outstanding:     |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                         |   |                                  | 2,424,486 |   |                                |   | 2,424,115 |   |   |   | 2,424,486 |   |   |   | 2,423,812 |   |
|                                          |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                       |   |                                  | 2,428,033 |   |                                |   | 2,437,653 |   |   |   | 2,424,486 |   |   |   | 2,424,929 |   |

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

|                                       |   | September      30, |       |   | March      31, |   |
|--------------------------------------------|--------|--------------------|------------|--------|----------------|--------|
|                                       |   | 2009               |       |   | 2009           |   |
|  Aircraft      parts and supplies     |   | $                  | 131,196    |   |           | $      | 151,833 |   |
|  Ground      equipment manufacturing: |   |               |       |   |           |   |   |   |
| Raw      materials                         |   |               | 7,905,023  |   |           |   | 6,935,490 |   |
| Work      in process                       |   |               | 1,176,193  |   |           |   | 2,439,072 |   |
| Finished      goods                        |   |               | 1,234,477  |   |           |   | 886,634 |   |
|  Total      inventories               |   |               | 10,446,889 |   |           |   | 10,413,029 |   |
|  Reserves                             |   |               | (582,073   | )      |           |   | (582,073 | ) |
|                                       |   |               |       |   |           |   |   |   |
| Total,      net of reserves                |   | $                  | 9,864,816  |   |           | $      | 9,830,956 |   |

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

| 7.   | Recent Accounting      Pronouncements |
|----------------|---------------------------------------|

| 8.   | Fair Value of      Financial Instruments |
|----------------|------------------------------------------|

|                           |   | Fair      Value Measurements at |      |
|--------------------------------|--------|---------------------------------|-----------|
|                           |   | September      30, 2009         |      |   | March      31, 2009 |   |
|                           |   |                            |      |   |   |   |
| Cash      and cash equivalents |   | $                               | 2,802,262 |   |   | $ | 6,852,713 |   |
|                           |   |                            |      |   |   |   |   |   |
| Short-term      investments    |   | $                               | 1,002,477 |   |   | $ | 1,002,221 |   |

| 9.   | Financing      Arrangements |
|----------------|-----------------------------|

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

| 10.   | Segment      Information |
|-----------------|--------------------------|

|                                |   | Three      Months Ended September 30, |       |   | Six      Months Ended September 30, |   |
|-------------------------------------|--------|---------------------------------------|------------|--------|-------------------------------------|--------|
|                                |   | 2009                                  |       |   | 2008                                |   |   | 2009 |   |   | 2008 |   |
| Operating      Revenues:            |   |                                  |       |   |                                |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                     | 9,814,199  |   |                                | $      | 11,560,980 |   |   | $ | 18,602,675 |   |   | $ | 21,016,544 |   |
| Ground      Equipment Sales:        |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|    Domestic          |   |                                  | 5,045,182  |   |                                |   | 8,849,333 |   |   |   | 12,030,007 |   |   |   | 19,153,428 |   |
|    International     |   |                                  | 3,047,520  |   |                                |   | 1,860,410 |   |   |   | 4,165,514 |   |   |   | 2,897,320 |   |
| Total      Ground Equipment Sales   |   |                                  | 8,092,702  |   |                                |   | 10,709,743 |   |   |   | 16,195,521 |   |   |   | 22,050,748 |   |
| Ground      Support Services        |   |                                  | 2,234,887  |   |                                |   | 1,741,598 |   |   |   | 4,291,899 |   |   |   | 3,361,606 |   |
| Total                               |   | $                                     | 20,141,788 |   |                                | $      | 24,012,321 |   |   | $ | 39,090,095 |   |   | $ | 46,428,898 |   |
|                                |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Income               |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                     | 605,133    |   |                                | $      | 936,398 |   |   | $ | 1,399,944 |   |   | $ | 1,777,826 |   |
| Ground      Equipment Sales         |   |                                  | 951,190    |   |                                |   | 1,594,990 |   |   |   | 2,307,722 |   |   |   | 3,674,057 |   |
| Ground      Support Services        |   |                                  | 309,949    |   |                                |   | 194,509 |   |   |   | 565,291 |   |   |   | 129,134 |   |
| Corporate                           |   |                                  | (535,680   | )      |                                |   | (707,452 | ) |   |   | (1,207,228 | ) |   |   | (1,482,053 | ) |
| Total                               |   | $                                     | 1,330,592  |   |                                | $      | 2,018,445 |   |   | $ | 3,065,729 |   |   | $ | 4,098,964 |   |
|                                |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Capital      Expenditures:          |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                     | 22,085     |   |                                | $      | 1,275 |   |   | $ | 34,585 |   |   | $ | 15,620 |   |
| Ground      Equipment Sales         |   |                                  | -          |   |                                |   | 3,580 |   |   |   | 20,436 |   |   |   | 7,185 |   |
| Ground      Support Services        |   |                                  | -          |   |                                |   | 34,105 |   |   |   | 13,555 |   |   |   | 40,048 |   |
| Corporate                           |   |                                  | -          |   |                                |   | - |   |   |   | 28,486 |   |   |   | 38,012 |   |
| Total                               |   | $                                     | 22,085     |   |                                | $      | 38,960 |   |   | $ | 97,062 |   |   | $ | 100,865 |   |
|                                |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and Amortization: |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                     | 52,972     |   |                                | $      | 67,545 |   |   | $ | 106,147 |   |   | $ | 137,414 |   |
| Ground      Equipment Sales         |   |                                  | 13,280     |   |                                |   | 9,670 |   |   |   | 25,148 |   |   |   | 22,397 |   |
| Ground      Support Services        |   |                                  | 27,478     |   |                                |   | 23,208 |   |   |   | 54,222 |   |   |   | 43,152 |   |
| Corporate                           |   |                                  | 13,736     |   |                                |   | 10,842 |   |   |   | 25,847 |   |   |   | 19,640 |   |
| Total                               |   | $                                     | 107,466    |   |                                | $      | 111,265 |   |   | $ | 211,364 |   |   | $ | 222,603 |   |
|                                |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                |   | As      of :                          |       |   |                                |   |   |   |   |   |   |   |   |   |   |
|                                |   | September      30, 2009               |       |   | March      31, 2009                 |   |   |   |   |   |   |   |   |   |
| Identifiable      Assets:           |   |                                  |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                     | 4,078,779  |   |                                | $      | 6,779,257 |   |   |   |   |   |   |   |   |   |
| Ground      Equipment Sales         |   |                                  | 17,691,358 |   |                                |   | 12,299,439 |   |   |   |   |   |   |   |   |   |
| Ground      Support Services        |   |                                  | 2,251,954  |   |                                |   | 2,231,834 |   |   |   |   |   |   |   |   |   |
| Corporate                           |   |                                  | 4,587,215  |   |                                |   | 8,030,807 |   |   |   |   |   |   |   |   |   |
| Total                               |   | $                                     | 28,609,306 |   |                                | $      | 29,341,337 |   |   |   |   |   |   |   |   |   |

| 11.   | Commitments and      Contingencies |
|-----------------|------------------------------------|

| 12.   | Deferred Retirement      Obligation |
|-----------------|-------------------------------------|

| 13.   | Subsequent      Events |
|-----------------|------------------------|

| (In      thousands)                                     |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------|---------------------------------------|--------|--------|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                    | Three      Months Ended September 30, |   |   | Six      Months Ended September 30, |   |
|                                                    | 2009                                  |   |   |                                | 2008   |   |   |   | 2009   |   |   |   | 2008   |   |   |
|                                                    |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo Segment:                       |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     FedEx                           | $                                     | 9,814  |   | 49                                  | %      |   | $      | 11,561 |   | 48     | %      |   | $      | 18,602 |   | 48 | % |   | $ | 21,017 |   | 45 | % |
| Ground      Equipment Sales Segment:                    |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Military                        |                                  | 1,763  |   | 9                                   | %      |   |   | 2,462  |   | 10     | %      |   |   | 7,636  |   | 19 | % |   |   | 11,258 |   | 25 | % |
|     Commercial      - Domestic      |                                  | 3,282  |   | 16                                  | %      |   |   | 6,388  |   | 27     | %      |   |   | 4,394  |   | 11 | % |   |   | 7,896 |   | 17 | % |
|     Commercial      - International |                                  | 3,048  |   | 15                                  | %      |   |   | 1,860  |   | 8      | %      |   |   | 4,166  |   | 11 | % |   |   | 2,897 |   | 6 | % |
|                                                    |                                  | 8,093  |   | 40                                  | %      |   |   | 10,710 |   | 45     | %      |   |   | 16,196 |   | 41 | % |   |   | 22,051 |   | 48 | % |
|                                                    |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ground      Support Services Segment                    |                                  | 2,235  |   | 11                                  | %      |   |   | 1,741  |   | 7      | %      |   |   | 4,292  |   | 11 | % |   |   | 3,361 |   | 7 | % |
|                                                    | $                                     | 20,142 |   | 100                                 | %      |   | $      | 24,012 |   | 100    | %      |   | $      | 39,090 |   | 100 | % |   | $ | 46,429 |   | 101 | % |

|                                                      |   | Six      Months Ended September 30, |       |
|-----------------------------------------------------------|--------|-------------------------------------|------------|
|                                                      |   | 2009                                |       |   | 2008 |   |
|                                                      |   |                                |       |   |   |   |
| Net      Cash Provided by (Used in) Operating Activities  |   | $                                   | (2,753,000 | ) |   | $ | 1,796,000 |   |
| Net      Cash Used in Investing Activities                |   |                                | (97,000    | ) |   |   | (85,000 | ) |
| Net      Cash Used in Financing Activities                |   |                                | (1,200,000 | ) |   |   | (787,000 | ) |
|                                                      |   |                                |       |   |   |   |   |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents |   | $                                   | (4,050,000 | ) |   | $ | 924,000 |   |

| Nominee                 | Shares Voted For                                                                        |   | Shares Voted Withheld                                                                                                                                                                |
|-------------------------|-----------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |                                                                                    |   |                                                                                                                                                                                 |
|                    |                                                                                    |   |                                                                                                                                                                                 |
| Walter      Clark       |              1,807,854 |   |                            277,682            |
| John      Parry         |              1,786,718 |   |                            298,818            |
| William      H. Simpson |              1,807,829 |   |                            277,707            |
| Sam      Chesnutt       |              2,031,117 |   |                              54,419 |
| Allison      T. Clark   |              1,786,930 |   |                            298,606            |
| George      C. Prill    |              1,788,226 |   |                            297,310            |
| Dennis      A. Wicker   |              2,022,062 |   |                              63,474 |
| J.      Bradley Wilson  |              2,043,198 |   |                              42,338 |

| Shares Voted For |   | Shares Voted Against |   | Shares Cast to Abstain |
|------------------|--------|----------------------|--------|------------------------|
| 2,040,891        |   | 27,355               |   | 17,290                 |

|   | (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) |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1   | Amendment      No. 1 to Loan Agreement dated as of September 22, 2009 between the Company      and its subsidiaries and Bank of America, N.A. amending Loan Agreement      dated September 18, 2007, incorporated by reference to Exhibit 10.1 to the      Company’s Current Report on Form 8-K dated September 28, 2009 (Commission      file No. 0-11720) |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1   |     Section      302 Certification of Chief ExecutiveOfficer |
|------------------|----------------------------------------------------------------------------------|

| 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) |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1   |                Amendment No. 1 to Loan Agreement dated as of September 22, 2009 between      the Company and its subsidiaries and Bank of America, N.A. amending Loan      Agreement dated September 18,               2007, incorporated by reference to Exhibit 10.1 to the Company’s      Current Report on Form 8-K dated September 28, 2009  (Commission      file No. 0-11720) |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|