FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

                  Quarterly Report Under Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934


        For Quarter Ended             June 30, 2004
        Commission File Number     0-11720


                                       Air T, Inc.
             (Exact name of registrant as specified in its charter)


              Delaware                             52-1206400
      (State or other jurisdiction of          (I.R.S. Employer
      incorporation or organization)           Identification No.)

                  Post Office Box 488, Denver, North Carolina
                                  28037
                  (Address of principal executive offices)

                              (704) 377-2109
            (Registrant's telephone number, including area code)
     Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.


                  Yes   X                 No

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

+    Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.

     2,647,334 Common Shares, par value of $.25 per share were
outstanding as of July 29, 2004


This filing contains 27 pages.























                  AIR T, INC. AND SUBSIDIARIES

                                      INDEX

                                                          Page
PART I.  FINANCIAL INFORMATION


     Item 1.  Financial Statements

     Condensed Consolidated Statements of Operations
     for the three-months ended
     June 30, 2004 and 2003 (Unaudited)                       3

     Condensed Consolidated Balance Sheets at
     June 30, 2004 (Unaudited)
     and March 31, 2004                                       4

     Condensed Consolidated Statements of Cash
     Flows for the three-months
     ended June 30, 2004 and 2003 (Unaudited)                 5

     Condensed Consolidated Statement of Stockholders'
     Equity and Other Comprehensive Income (Loss) for the
     three-months ended June 30, 2004 and 2003(Unaudited)     6

     Notes to Condensed Consolidated Financial
     Statements (Unaudited)                                7-12

     Item 2.  Management's Discussion and Analysis
              of Financial Condition and Results
              of Operations                               13-21

     Item 3.  Quantitative and Qualitative Disclosure
              About Market Risk                              21

     Item 4.  Controls and Procedures                        21

PART II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K               22

              Signatures                                     23

              Exhibit Index                                  24

              Officers' Certifications                    25-27



















                                2

(page>
<table>
                      AIR T, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<caption>
                                    Three months ended,
                                          June 30
                                     2004         2003

                             <c>           <c>
Operating Revenues:
 Overnight air cargo            $ 9,051,128   $ 7,285,468
 Ground equipment                 6,035,705     3,770,593

                                 15,086,833    11,056,061

Operating Expenses:
 Flight-air cargo                 3,733,347     3,152,385
 Maintenance-air cargo            3,562,771     2,400,511
 Ground equipment                 4,656,292     2,867,801
 General and administrative       2,101,893     1,814,361
 Depreciation and amortization      160,632       137,557
                                 14,214,935    10,372,615

Operating Income                    871,898       683,446

Non-operating (Income) Expense:
 Interest, net                       21,396       (41,724)
 Deferred retirement expense          5,250         5,250
 Investment income and other        (23,213)      (36,084)
                                      3,433       (72,558)

Earnings From Continuing
 Operations Before Income Taxes     868,465       756,004

Income Tax Expense                  335,189       312,304

Earnings From Continuing
 Operations                         533,276       443,700

Loss From Discontinued Operations,
 Net of Income taxes                   -          (94,912)

Net Earnings                    $   533,276   $   348,788


Basic and Diluted Earnings
   (Loss) Per Share:
 Continuing Operation           $      0.20   $      0.16
 Discontinued Operations                -           (0.03)
Total Basic and Diluted Net
 Earnings Per Share             $      0.20   $      0.13



Weighted Average Shares Outstanding:
   Basic                          2,686,827     2,726,320
   Diluted                        2,713,038     2,726,320
<fn>
See notes to condensed consolidated financial statements.
</fn>
</table>
</page>

<page>
<table>

                          AIR T, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<caption>
                                                June 30, 2004    MARCH 31, 2004
                                                 (Unaudited)

                                              <c>              <c>
ASSETS
 Current Assets:
  Cash and cash equivalents                      $  2,966,344     $    459,449
  Marketable securities                               776,697          849,018
  Accounts receivable, less allowance
    for doubtful accounts of $331,999 in June
    30, 2004 and $367,505 in March 31, 2004         4,875,501        5,094,849
  Notes and other non-trade receivables-current       129,916          146,137
  Inventories, net                                  7,225,495        6,460,072
  Deferred tax assets                               1,288,903        1,254,870
  Prepaid expenses and other                          110,487          151,879
    Total Current Assets                           17,373,343       14,416,274

 Property and Equipment                             7,463,280        8,376,370
  Less accumulated depreciation                    (5,031,821)      (5,105,802)
    Property and Equipment, net                     2,431,459        3,270,568

 Deferred Tax Assets                                  309,338          288,920
 Intangible Pension Asset                              79,695           79,695
 Other Assets                                          71,642           54,635
 Cash surrender value of life insurance policies    1,101,862        1,059,862
 Notes and other non-trade receivables-long-term      394,691          403,584

    Total Assets                                 $ 21,762,030     $ 19,573,538

LIABILITIES AND STOCKHOLDERS' EQUITY
 Current Liabilities:
  Accounts payable                               $  4,000,032     $  3,540,350
  Accrued expenses                                  2,355,267        2,200,209
  Billings in excess of costs and
    estimated earnings on uncompleted
    contracts                                          80,129           80,129
  Income taxes payable                                390,119          172,359
  Current portion of long-term debt and
                   obligations                        191,176           94,807
   Total Current Liabilities                        7,016,723        6,087,854

 Capital Lease Obligations (less
                 current portion)                      44,727           52,659

 Long-term Debt                                     1,435,304          131,864

 Deferred Retirement Obligations (less
                 current portion)                   1,649,882        1,624,361

 Stockholders' Equity:
  Preferred stock, $1 par value,
authorized 50,000 shares,  none issued                   -                -
  Common stock, par value $.25; authorized
4,000,000 shares;  2,686,827 and 2,686,827
  shares issued and outstanding                       671,706          671,706
Additional paid in capital                          6,834,279        6,834,279
Retained earnings                                   4,125,102        4,127,484
Accumulated other comprehensive
  (loss) income, net                                  (15,693)          43,331
    Total Stockholders' Equity                     11,615,394       11,676,800
    Total Liabilities and Stockholders'
                     Equity                      $ 21,762,030     $ 19,573,538
<fn>
See notes to condensed consolidated financial statements.
</fn>
</table>
                                        4
</page>

<page>
<table>
                          AIR T, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<caption>


                                               Three Months Ended,
                                                     June 30
                                                 2004         2003

                                         <c>          <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net earnings                               $   533,276  $   348,788
  Adjustments to reconcile net earnings
    to net cash provided by
    operating activities:
    Change in accounts receivable and
       Inventory reserves                       (20,894)      27,589
    Depreciation and amortization               160,632      137,557
    Deferred tax provision                      (54,451)    (100,000)
    Net Periodic pension cost                    39,999       39,999
  Change in assets and liabilities
    which provided (used) cash:
    Accounts receivable                         254,854    1,567,972
    Notes receivable                             25,114         -
    Inventories                                 (61,250)     981,769
    Prepaid expenses and other                  (17,614)        -
    Accounts payable                            459,682   (2,140,245)
    Accrued expenses and other
      current liabilities                       140,580      448,242
    Net billings in excess of costs
      and estimated earnings on
      uncompleted contracts                        -        (828,093)
    Income taxes payable                        217,760      251,469
     Total adjustments                        1,144,412      386,259
   Net cash provided by
       operating activities                   1,677,688      735,047

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale
    of marketable securities                       -         325,575
  Capital expenditures                          (40,309)     (47,273)
   Net cash (used in) provided by
     investing activities                       (40,309)     278,302

CASH FLOWS FROM FINANCING ACTIVITIES:
  Aircraft refinancing
  Net (borrowings) repayments on line           975,000         -
     of credit                                  430,174     (672,059)
  Payment of cash dividend                     (535,658)        -
   Net cash provided by (used in)
     financing activities                       869,516     (672,059)

NET INCREASE IN CASH
     & CASH EQUIVALENTS                       2,506,895      341,290
CASH AND CASH EQUIVALENTS AT
     BEGINNING OF PERIOD                        459,449       79,715
CASH AND CASH EQUIVALENTS AT
     END OF PERIOD                         $  2,966,344   $  421,005


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash paid during the year for:
  Interest                                 $     29,551   $   37,803
  Income taxes                                  171,880      108,408


SUMMARY OF SIGNIFICANT NON-CASH INFORMATION:
 Change in fair value of deravitives       $       -      $   20,262
 Decrease in fair value of marketable
     securities                                 (72,321)        -
 Leased equipment transferred to
     (from) inventory                          (730,785)     113,738



<fn>
See notes to condensed consolidated financial statements.
</fn>
</table>
                                       5
</page>
<page>
<table>
                           AIR T, INC AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND
                      COMPREHENSIVE INCOME (LOSS) (UNAUDITED)



<caption>
                                                       Accumulated
                                                          Other
                                   Additional          Comprehensive   Total
                  Common Stock      Paid-In   Retained     Income  Stockholders'
                 Shares    Amount   Capital   Earnings     (Loss)    Equity

             <c>        <c>      <c>        <c>         <c>       (c>

Balance, March
   31, 2003     2,726,320  681,580  6,863,898  2,529,556  (464,052)   9,610,982


Comprehensive Income:
Net earnings                                     348,788
Other Comprehensive Income                                  94,107
Total Comprehensive Income                                              442,895

Balance, June
   30, 2003    2,726,320   681,580  6,863,898  2,878,344  (369,945)  10,053,877




Balance, March
   31, 2004     2,686,827  671,706  6,834,279  4,127,484    43,331   11,676,800


Comprehensive Income:
Net earnings                                     533,276
Other Comprehensive Loss                                   (59,024)
Total Comprehensive Income                                              474,252
Cash dividend                                   (535,658)              (535,658)

Balance, June
   30, 2004    2,686,827   671,706  6,834,279  4,125,102   (15,693)  11,615,394


<fn>
See notes to condensed consolidated financial statements.
</fn>
</table>
                                 6
</page>






                  AIR T, INC. AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (UNAUDITED)

1.  Financial Statement Presentation

     The Condensed Consolidated Balance Sheet as of June 30, 2004
and the Condensed Consolidated Statements of Operations,
Stockholders' Equity and Comprehensive Income (Loss), for the
three-months ended June 30, 2004 and 2003 have been prepared by
Air T, Inc. (the Company) without audit.  In the opinion of
management, all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the consolidated
financial position, results of operations and cash flows as of
June 30, 2004, and for prior periods presented, have been made.

     It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for
the year ended March 31, 2004.  The results of operations for the
period ended June 30 are not necessarily indicative of the
operating results for the full year.

     Certain reclassifications have been made to fiscal 2004
amounts to conform to the current year presentation.


2.  Income Taxes

     The tax effect of temporary differences, primarily asset
reserves and accrued liabilities, gave rise to the Company's
deferred tax asset in the accompanying June 30, 2004 and March
31, 2004 consolidated balance sheets. Deferred income taxes are
recognized for the tax consequence of such temporary differences
at the enacted tax rate expected to be in effect when the
differences reverse.

     The income tax provision for continuing operations for the
respective three-months ended June 30, 2004 and 2003 differ from
the federal statutory rate primarily as a result of state income
taxes and, to a lesser extent, other permanent tax-timing
differences.


3.  Net Earnings Per Share

     Basic earnings (loss) per share has been calculated by
dividing net earnings by the weighted average number of common
shares outstanding during each period.  For purposes of
calculating diluted earnings per share, shares issuable under
employee stock options were considered potential common shares
and were included in the weighted average common shares unless
they were anti-dilutive.  As of June 30, 2004 5,000 outstanding
stock options were anti-dilutive.  As of June 30, 2003 all
outstanding stock options were anti-dilutive.

 The computation of basic and diluted earnings (loss) per common
                      share is as follows:

                                               Three Months Ended,
                                                     June 30
                                                 2004         2003

Net Earnings                               $   533,276   $   348,788


Basic and Diluted Earnings
   (Loss) Per Share:
 Continuing Operation                      $      0.20   $      0.16
 Discontinued Operations                           -           (0.03)
Total Basic and Diluted Net
 Earnings Per Share                        $      0.20   $      0.13



Weighted Average Shares Outstanding:
   Basic                                     2,686,827     2,726,320
   Diluted                                   2,713,038     2,726,320


                                7

4.   Inventories

    Inventories consist of the following:


                                     June 30, 2004     March 31, 2003

Aircraft parts and supplies          $  2,048,940       $ 2,053,665
Aircraft equipment manufacturing:
  Raw materials                         3,886,774         3,508,363
  Work in process                       1,319,055         1,563,259
  Finished goods                        1,570,702           920,149

Total Inventory                         8,825,471         8,045,436
Reserves                               (1,599,976)       (1,585,364)

Total, net of reserves               $  7,225,495       $ 6,460,072



5.   Recent Accounting Pronouncements

The Financial Accounting Standards Board ("FASB") has issued SFAS
No. 143, "Accounting for Asset Retirement Obligations" and SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets".  SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement
costs. It requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which
it is incurred if a reasonable estimate of fair value can be
made.  The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset.  SFAS No.
143 was effective for the Company beginning April 1, 2003.
Adoption of SFAS No. 143 did not have a material effect on the
Company's financial position and results of operations.

SFAS No. 144 supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" and amends Accounting Principles Bulletin (APB) No.
30 "Reporting the Results of Operations-Discontinued Events and
Extraordinary Items".  Along with establishing a single
accounting model, based on the framework established in SFAS No.
121, for long-lived assets to be disposed of by sale, this
standard retains the basic provisions of APB No. 30 for the
presentation of discontinued operations in the income statement
but broadens that presentation to include a component of an
entity.  SFAS No. 144 was effective for the Company beginning
April 1, 2002. The effect of the adoption of SFAS No. 144 on
management's plan to discontinue the operations of MAS is
reflected in the Company's condensed consolidated statements of
financial position and results of operations and is detailed in
Note 8 Discontinued Operations.

In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others".  This Interpretation elaborates on the disclosures to be
made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it
has issued.  It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the
guarantee.  The disclosure requirements, initial recognition and
initial measurement provisions of this Interpretation are
currently effective and did not have a material effect on the
Company's financial position or results of operations.

The Company's ground equipment subsidiary warranties its products
for up to a two-year period from date of sale.  Product warranty
reserves are recorded at time of sale based on the historical
average warranty cost and are adjusted as actual warranty cost
becomes known.






                                8
     Product warranty reserve activity during the three-months
     ended June 30, 2004 and 2003 are as follows:

                                           Three Months Ended
                                                 June 30,
                                         2004             2003

Beginning balance                    $  147,000       $ 116,000
  Additions to reserve                   45,000          24,000
  Use of reserve                        (41,000)        (23,000)

Ending balance                       $  151,000       $ 117,000



In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure".  This
Statement amends FASB Statement No. 123, "Accounting for Stock-
Based Compensation", to provide alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation.  In addition,
this Statement amends the disclosure requirements of Statement
123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-
based employee compensation and the effect of the method used on
reported results. The Company has elected to continue to account
for its stock-based compensation under the provisions of
Accounting Principles Bulletin No. 25.  The Company has applied
the fair value recognition provisions of SFAS NO. 123 to its
stock-based compensation and has determined that there is no
effect on proforma net income and proforma earnings per share for
the three-month periods ended June 30, 2004 and 2003.

In January 2003, the FASB issued FIN 46 "Consolidation of
Variable Interest Entities" which requires the primary
beneficiary of a variable interest entity's activities to
consolidate the variable interest entity.  In December 2003, the
FASB issued FIN 46 (Revised December 2003) (FIN 46R),
"Consolidation of Variable Interest Entities - An Interpretation
of ARB No. 51," which supercedes and amends certain provisions of
FIN 46. While FIN 46R retains many of the concepts and provisions
of FIN 46, it also provides additional guidance related to the
application of FIN 46 and certain additional scope exceptions,
and incorporates several FASB Staff Positions issued related to
the application of FIN 46. The provisions of FIN 46 are
immediately applicable to variable interest entities created, or
interests in variable interest entities obtained, after January
31, 2003 and the provisions of FIN 46R are required to be applied
to such entities, except for special purpose entities, by the end
of the first reporting period ending after March 15, 2004 (March
31, 2004 for the Company). For variable interest entities
created, or interests in variable interest entities obtained, on
or before January 31, 2003, FIN 46 or FIN 46R was required to be
applied to special-purpose entities by the end of the first
reporting period ending after December 15, 2003 (December 31,
2003 for the Company), and was required to be applied to all
other non-special purpose entities by the end of the first
reporting period ending after March 15, 2004 (March 31, 2004 for
the Company). Adoption of FIN 46 did not have an impact on the
Company's consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both
Liabilities and Equity".  SFAS No. 150 is effective for the
Company beginning July 1, 2003, although the FASB has recently
proposed that implementation of certain provisions of SFAS NO.
150 be postponed indefinitely.  The Company has determined that
the adoption of SFAS No. 150 will not have an impact on the
Company's financial position or results of operations.


6.   Derivative Financial Instruments

As required by SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", the Company recognizes all
derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value.


                                9
The Company is exposed to market risk, such as changes in
interest rates.  To manage the volatility relating to interest
rate risk, the Company may enter into interest rate hedging
arrangements from time to time.  The Company does not utilize
derivative financial instruments for trading or speculative
purposes.

In May 2001, the Company entered into two interest rate swaps
with notional amounts of $2.4 million, and $2 million
respectively.  These agreements were originally entered into at
respective interest rates of 6.97% and 6.5%.  On July 31, 2002
the Company elected to unwind its $2,000,000 (6.5%) revolving
credit line swap in consideration for $58,750, the fair-market-
value termination fee as of that date.  On October 30, 2003, the
Company terminated its remaining credit line swap for $97,500,
the fair-market-value termination fee as of that date.  The
$62,044 included in accumulated other comprehensive income (loss)
at date of termination will be ratably amortized into interest
expense over the remaining term of the Company's credit line.



7.   Financing Arrangements

 On August 31, 2003 the Company amended its $7,000,000 secured
long-term revolving credit line to extend its expiration date to
August 31, 2005.  The revolving credit line contains customary
events of default, a subjective acceleration clause and
restrictive covenants that, among other matters, require the
Company to maintain certain financial ratios.  There is no
requirement for the Company to maintain a lock-box arrangement
under this agreement.  As of June 30, 2004, the Company was in
compliance with all of the restrictive covenants.  The amount of
credit available to the Company under the agreement at any given
time is determined by an availability calculation, based on the
eligible borrowing base, as defined in the credit agreement,
which includes the Company's outstanding receivables, inventories
and equipment, with certain exclusions.  The credit facility is
secured by substantially all of the Company's assets.

Amounts advanced under the credit facility bear interest at the
30-day "LIBOR" rate plus 137 basis points.  The LIBOR rate at
June 30, 2004 was 1.37%. At June 30, 2004 and March 31, 2004, the
amounts outstanding against the line were $571,000 and $132,000,
respectively.  At June 30, 2004, $5,133,000 was available under
the terms of the credit facility.

In March 2004, the company utilized its revolving credit line to
acquire a corporate aircraft for $975,000.  In April 2004, the
Company refinanced the aircraft under a secured 4.35% fixed rate
five-year term loan, based on a ten year amortization with a
balloon payment at the end of the fifth year.

8.   Discontinued Operations

During the fourth quarter of fiscal 2003, Company management
agreed to a plan to sell the assets of Mountain Aircraft
Services, LLC. (MAS) and to discontinue the operations of the
Company's aviation service sector business.  The Company entered
into a letter of intent on June 19, 2003 to sell certain assets
and the business operations of MAS to an investor group, which
included former management of MAS, for consideration of
$1,950,000.  On August 14, 2003, the Company closed on the
transaction for consideration totaling $1,885,000, comprised of
$1,550,000 in cash and a $335,000 promissory note.  The sale
resulted in the recognition of losses totaling $1,121,000.  In
conjunction with the sale, the Company agreed to indemnify the
buyer and its affiliates with respect to certain matters related
to contractual representations and warranties and the operation
of the business prior to closing.  Although no assurances can be
made, the Company does not believe the indemnities provided will
have a material effect on its financial condition or results of
operations.

Under the terms of the sale agreement, the Company also entered
into a three-year consignment agreement granting the buyer an
exclusive right to sell remaining MAS inventory not included in
the sale transaction. Upon termination of the consignment
agreement, all unsold inventory will be returned to the Company.
Inventory on consignment under this agreement amounted to
$692,000 as of June 30, 2004.  The accompanying fiscal 2004
condensed consolidated financial statements reflects the sale of
certain MAS assets and the net operations of MAS as discontinued
operations, net of tax, for all periods presented.
                               10
      A summary of the operating results of the discontinued
          operations for the
      three-months ended June 30, 2004 and 2003 is as follows:


                                       2004             2003

         Revenue                   $      -         $  2,105,613

         Operating Loss            $      -         $    (57,389)


         Loss before income taxes  $      -         $   (155,593)
         Income tax benefit               -               60,681

         Net loss                  $      -         $    (94,912)

9.   Segment Information

  The Company operates three subsidiaries in two continuing
business segments. Each business segment has separate management
teams and infrastructures that offer different products and
services.  During the fourth quarter of fiscal 2003, Company
management agreed to a plan to sell the assets of MAS and to
discontinue the operations of the Company's aviation service
sector business.  The operations of MAS are, therefore, not
presented in the segment information below.  The subsidiaries
with continuing operations have been combined into the following
two reportable segments: overnight air cargo and ground
equipment.   The overnight air cargo segment encompasses services
provided primarily to one customer, Federal Express Corporation,
and the ground equipment segment encompasses the operations of
Global Ground Support, LLC.

     The Company evaluates the performance of its operating
segments based on operating income from continuing operations.

Segment data is summarized as follows:

                             Three Months Ended
                                  June 30,
                              2004         2003

Operating Revenues
 Overnight Air Cargo     $  9,051,128  $ 7,285,468
 Ground Equipment           6,035,705    3,770,593

 Total                   $ 15,086,833  $11,056,061

Operating Income from
 Continuing operations
 Overnight Air Cargo     $    782,206  $ 1,017,797
 Ground Equipment             635,468      318,410
 Corporate (1)               (545,776)    (652,761)

     Total               $    871,898  $   683,446

Depreciation and Amortization
 Overnight Air Cargo     $    116,131  $    54,801
 Ground Equipment              30,331       41,668
 Corporate                     14,170       41,088

 Total                   $    160,632  $   137,557



Capital Expenditures, net
 Overnight Air Cargo     $     15,257  $    31,596
 Ground Equipment               4,232        6,798
 Corporate                     20,820        8,879

 Total                   $     40,309  $    47,273

                                11

                                    As of
                         June 30, 2004  March 31, 2004
Identifiable Assets
 Overnight Air Cargo     $  5,761,126    $  5,727,470
 Ground Equipment           9,360,916       9,646,490
 Corporate                  6,639,988       3,093,449

 Total                   $ 21,762,030    $ 18,467,409


10.  Resignation of Executive Officer

     Effective December 31, 2003, an executive officer and
director of the Company resigned his employment.

     In consideration of approximately $300,000, payable in three
installments over a one-year period starting January 12, 2004,
the executive agreed to forgo certain retirement and other
contractual benefits for which the Company had previously accrued
aggregate liabilities of amounting to approximately $715,000.

     During the third quarter of fiscal 2004 the above-mentioned
cancellation of contractual retirement benefits reduced recorded
liabilities by $715,000.  The difference between the recorded
liability and ultimate cash payment of $300,000 resulted in a
$305,000 reductionthe offset of which write-off in actuarial
losses, recorded in Other Comprehensive Loss, a $90,000 reduction
in intangible assets and a net $20,000 reduction in executive
compensation charges included in the statement of operations
increase to net earnings from continuing operations.
     During the third quarter of fiscal 2004 the Company also
agreed to buyback purchase from the former executive officer
118,480 shares of the Company common stock held by him
(representing approximately 4.3% of the outstanding shares of
common stock at December 31, 2003) for $4.54 per share (80% of
the January 5, 2004 closing price).  The stock repurchase will
take place in three installments over a one-year period, starting
January 12, 2004, and will total approximately $538,000.  The
repurchase of the former executive's stock will be recorded in
the period that the repurchase occurs as treasury stock
transactions and all such stock will be subsequently retired.

     All installment payments required to be made, including the
July 7, 2004 payment, under the above agreements have been made.

11.  Commitments and Contingencies

  Global  and  one of its employees are defendants in  a  lawsuit
filed  in March 2002 in the United States District Court for  the
District  of  Columbia, Catalyst & Chemical  Services  et  al  v.
Terex,  et  al.  In this action, the plaintiffs allege that  they
provided  to  Global  and  the  employee  certain  trade  secrets
regarding aircraft de/anti-icing systems that were then disclosed
by  Global  and  the employee to third parties.   The  plaintiffs
allege misappropriation of trade secrets, breach of contract  and
violation  of  the  federal  Racketeer  Influenced  and   Corrupt
Organizations Act and seek monetary damages. The Company and  its
employee  have  filed  an  answer  in  this  action  denying  all
liability.   Upon  Global's motion, the court has  dismissed  the
plaintiff's  claims  under the Racketeer Influenced  and  Corrupt
Organizations Act.  The plaintiffs have amended the complaint  to
add  a  patent infringement claim, which appears to  involve  the
same  materials and information that constitute the alleged trade
secrets.  Global has not yet responded to the newly-filed  patent
claim.   The  Company does not believe that the  action  has  any
merit and intends to
defend the lawsuit vigorously.  In November 2002, Global and  the
Company   filed  suit  in  North  Carolina  state  court  against
affiliates of the plaintiffs in the Catalyst & Chemical  Services
et  al  v. Terex, et al action alleging defamation.  This  action
has  been  moved  to, and is pending before,  the  United  States
District Court for Western the District of North Carolina.  As of
June  30,  2004 both parties have filed for motions  for  summary
judgment.

                               12
      The  Company  is currently involved in certain intellectual
property,  personal  injury  and  environmental  matters,   which
involve  pending or threatened lawsuits. Management believes  the
results of these pending or threatened lawsuits will not  have  a
material adverse effect on the Company's results of operations or
financial position.



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

     As discussed above, during fiscal 2003, the Company decided
to discontinue and dispose of its aircraft component parts
brokerage and repair services business operated by its Mountain
Aircraft Services, LLC (MAS) subsidiary and accordingly, the
Company's consolidated financial statements have been
reclassified to reflect the results of MAS as a discontinued
operation.  See Note 8 Discontinued Operations of Notes to
Condensed Consolidated Financial Statements.  Consequently, MAS'
operations are not included in the Results of Continuing
Operations discussed below.


Overview

          The Company's continuing operations operate in two
business segments, providing overnight air cargo services to the
express delivery services industry and aviation ground support
and other specialized equipment products to passenger and cargo
airlines, airports, the military and industrial customers.  Each
business segment has separate management teams and
infrastructures that offer different products and services. The
subsidiaries make up the following reportable segments: air cargo
and ground equipment in the accompanying condensed consolidated
financial statements.

The Company's most significant component of revenue, which
accounted for approximately 60% and 66% of revenue for the
three-months ended June 30, 2004 and 2003, respectively,
was generated through its overnight air cargo subsidiaries,
Mountain Air Cargo, Inc. (MAC) and CSA Air, Inc. (CSA).

     MAC and CSA provide short-haul express air freight services
primarily to one customer, Federal Express Corporation (the
Customer).  MAC and CSA's revenue contributed approximately
$9,051,000 and $7,285,000 to the Company's revenues for the three-
month periods ended June 30, 2004 and 2003, respectively, a
current year increase of approximately 24%. The increase in
revenue was primarily attributed to an increased volume of
maintenance and cargo services related to customer fleet
modernization and route expansion provided during the current
period.

     Under the terms of the dry-lease service agreements, which
currently cover approximately 98% of the revenue aircraft
operated, the Company charges an administrative fee and passes
through to its customer certain other cost components of its
operations without markup.  The cost of fuel, flight crews,
landing fees, outside maintenance, parts and certain other
direct operating costs are included in operating
expenses and billed to the customer as cargo and maintenance
revenue, at cost.

     Separate agreements cover the four types of aircraft
operated by MAC and CSA for their customer-Cessna Caravan, ATR-
42, Fokker F-27, and Short Brothers SD3-30.  Cessna Caravan, ATR-
42 and Fokker F-27 aircraft (a total of 92 aircraft at June 30,
2004) are owned by and dry-leased from the Customer, and the
Short Brothers SD3-30 and King Air aircraft (respectively, two
and one aircraft at June 30, 2004) are owned by the Company.  The
SD3-30's are operated periodically under wet-lease arrangements
with the Customer.  Pursuant to such agreements, the Customer
determines the type of aircraft and schedule of routes to be
flown by MAC and CSA, with all other operational decisions made
by the Company.

     Agreements are renewable annually and may be terminated by
the Customer at any time upon 15 to 30 days' notice.  The Company
believes that the short term and other provisions of its
agreements with the Customer are standard within the air freight
contract delivery service industry.  The Company is not
contractually precluded from providing such services to other
firms, and has done so in the past. Loss of its contracts with
the Customer would have a material adverse effect on the Company.

                               13

     Global Ground Support, LLC (Global), which provides the
remainder of the Company's revenue, manufactures, services and
supports aviation ground support and specialized military and
industrial equipment on a worldwide basis. Global's revenue
contributed approximately $6,036,000 and $3,771,000 to the
Company's revenues for the three-month periods ended June 30,
2004 and 2003, respectively.  The 60% increase in revenues was
primarily related to increased military equipment orders,
partially offset by the completion of a large scale airport
contract, during the current three-month period. On January 23,
2004 the company received a three-year extension to its existing
four-year supply agreement with the U.S. Air Force.

     The following table summarizes the changes and trends in the
Company's operating expenses for continuing operations as a
percentage of revenue:


                                                 Three Months Ended
                                                       June 30,
                                                  2004         2003

Operating revenue (in thousands)                 $15,087      $11,056

Expense as a percentage of revenue:
   Flight operations                              24.75%       28.51%
   Maintenance                                    23.62%       21.71%
   Ground Equipment                               30.86%       25.94%
   General and Administrative                     13.93%       16.41%
   Depreciation and amortization                   1.06%        1.24%

                                                  94.22%       93.81%



Outlook

     The Company's current forecast for fiscal 2005 continues to
assume that, due to higher fuel cost and losses sustained since
September 11, 2001, the commercial aviation market will grow at a
rate that is substantially less than the rest of the economy.

     Increased military and Homeland Security budgets, pending
funding approvals, may help offset the expected lower than normal
order levels from Global's commercial customers. Company
management currently anticipates that its air cargo customer will
continue its aircraft fleet modernization program through fiscal
2005, however, future terrorist attacks, competition or inflation
may cause delays or termination of certain projects.  Given
uncertainties associated with the above factors, the Company
continues to operate in a highly unpredictable environment.

     As stated above, during the second quarter of fiscal 2004,
Company management closed on its agreement to sell MAS assets and
to discontinue the operations of the Company's aviation service
sector business.   The completion of this sale and resulting
decrease in operational losses experienced by this business
segment is expected to continue to improve the Company's
operating results and financial position, as compared to fiscal
2004, throughout fiscal 2005.   However, there is no certainty
that overall bottom line improvement can be sustained due to the
other external factors described above.

     Based on the current general economic and industry outlook
and cost cutting measures implemented over the past two fiscal
years, the Company believes its existing cash and cash
equivalents, cash flow from operations, and funds available from
current and renewed
credit facilities will be adequate to meet its current and
anticipated working capital requirements through fiscal 2005. If
these sources are inadequate or become unavailable, then the
Company may pursue additional funds through the financing of
unencumbered assets, although there is no assurance these
additional funds will be sufficient.



                               14
     Actual results for fiscal 2005 will depend upon a number of
factors beyond the Company's control, including, in part, future
significant increases in rate of inflation, including fuel
prices, the timing, speed and magnitude of the economic recovery,
military funding of pending future equipment orders, future
levels of commercial aviation capital spending, future terrorists
acts and weather patterns.

Critical Accounting Policies and Estimates

     The preparation of the Company's financial statements in
conformity with accounting principles generally accepted in the
U.S. requires the use of estimates and assumptions to determine
certain assets, liabilities, revenues and expenses.  Management
bases these estimates and assumptions upon the best information
available at the time of the estimates or assumptions.  The
Company's estimates and assumptions could change materially as
conditions within and beyond our control change.  Accordingly,
actual results could differ materially from estimates.  The most
significant estimates made by management include allowance for
doubtful accounts receivable, reserves for excess and obsolete
inventories, deferred tax asset valuation, retirement benefit
obligations, valuation of revenue recognized under the percentage
of completion method and valuation of long-lived assets.

     Following is a discussion of critical accounting policies
and related management estimates and assumptions.

     Allowance for Doubtful Accounts.  An allowance for doubtful
accounts receivable in the amount of $332,000 and $368,000,
respectively, for the quarters ended June 30, 2004 and 2003, was
established based on management's estimates of the collectability
of accounts receivable.  The required allowance is determined
using information such as customer credit history, industry
information, credit reports and customer financial condition.
The estimates can be affected by changes in the financial
strength of the aviation industry, customer credit issues or
general economic conditions.

     Inventories.  The Company's parts inventories are valued at
the lower of cost or market.  Provisions for excess and obsolete
inventories in the amount of $1,439,000 and $1,425,000,
respectively, for the quarters ended June 30, 2004 and 2003, are
based on assessment of slow-moving and obsolete inventories.
Historical part usage, current period sales, estimated future
demand and anticipated transactions between willing buyers and
sellers provide the basis for estimates.  Estimates are subject
to volatility and can be affected by reduced equipment
utilization, existing supplies of used inventory available for
sale, the retirement of aircraft or ground equipment and changes
in the financial strength of the aviation industry.

     Deferred Taxes.  Deferred tax assets and liabilities, net of
valuation allowance in the amount of $83,000, for the quarters
ended June 30, 2004 and 2003, reflect the likelihood of the
recoverability of these assets.  Company judgment of the
recoverability of these assets is based primarily on estimates of
current and expected future earnings and tax planning.

     Retirement Benefits Obligation.  The Company currently
determines the value of retirement benefits assets and
liabilities on an actuarial basis using a 5.75% discount rate.
Long-term deferred retirement benefit obligations amounted to
$1,650,000 and $1,624,000, respectively, at June 30, 2004 and
2003. Values are affected by current independent indices, which
estimate the expected return on insurance policies and the
discount rates used.  Changes in the discount rate used will
affect the amount of pension liability as well as pension gain or
loss recognized in other comprehensive income.

     Revenue Recognition.  Cargo revenue is recognized upon
completion of contract terms and maintenance revenue is
recognized when the service has been performed.  Revenue from
product sales is recognized when contract terms are completed and
title has passed to customers.  Revenues from overhaul contracts
on customer owned parts, certain labor
service contracts and long term fixed price manufacturing
projects are recognized on the percentage-of-completion method.
Billings in excess of cost and estimated earnings for contracts
under percentage of completion amounted to $80,000, respectively,
for the quarters ended June 30, 2004 and 2003.  Revenues are
measured by the percentage of cost
incurred to date, to estimated total cost for each contract or
work order; unanticipated changes in job performance, job
conditions and estimated profitability may result in revisions to
costs and income, and are recognized in the period in which the
revisions are determined.
                               15
     Valuation of Long-Lived Assets.  The Company assesses long-
lived assets used in operations for impairment when events and
circumstances indicate the assets may be impaired and the
undiscounted cash flows estimated to be generated by those assets
are less than their carrying amount.  In the event it is
determined that the carrying values of long-lived assets are in
excess of the fair value of those assets, the Company then will
write-down the value of the assets to fair value.  The Company
has applied the discontinued operations provisions of SFAS No.
144 for the MAS operations and has reflected any remaining long-
lived assets associated with the discontinued MAS subsidiary at
zero fair market value at June 30, 2004.


Resignation of Executive Officer

     Effective December 31, 2003, an executive officer and
director of the Company resigned his employment.

     In consideration of approximately $300,000, payable in three
installments over a one-year period starting January 12, 2004,
the executive agreed to forgo certain retirement and other
contractual benefits for which the company had previously accrued
aggregate liabilities of amounting to approximately $715,000.

     During the third quarter of fiscal 2004 the above-mentioned
cancellation of contractual retirement benefits reduced recorded
liabilities by $715,000.  The difference between the recorded
liability and ultimate cash payment of $300,000 resulted in a
$305,000 reductionthe offset of which write-off in actuarial
losses, recorded in Other Comprehensive Loss, a $90,000 reduction
in intangible assets and a net $20,000 reduction in executive
compensation charges included in the statement of operations.

     During the third quarter of fiscal 2004 the Company also
agreed to buyback purchase from the former executive officer
118,480 shares of the Company common stock held by him
(representing approximately 4.3% of the outstanding shares of
common stock at December 31, 2003) for $4.54 per share (80% of
the January 5, 2004 closing price).  The stock repurchase will
take place in three installments over a one-year period, starting
January 12, 2004, and will total approximately $538,000.  The
repurchase of the former executive's stock will be recorded in
the period that the repurchase occurs as treasury stock
transactions and all such stock will be subsequently retired.

All installment payments required to be made, to date, under the
above agreements have been made.


Seasonality

      Global's  business has historically been  highly  seasonal.
Due  to  the  nature of its product line, the  bulk  of  Global's
revenues  and earnings have typically occurred during the  second
and  third fiscal quarters in anticipation of the winter  season,
and comparatively little has occurred during the first and fourth
fiscal quarters.  The Company has continued its efforts to reduce
Global's  seasonal  fluctuation  in  revenues  and  earnings   by
broadening its product line to increase revenues and earnings  in
the  first and fourth fiscal quarters.  In June 1999, Global  was
awarded a four-year contract to supply deicing equipment  to  the
United  States Air Force, and in June 2003 Global was  awarded  a
three-year extension on the contract.  In January 2001 and  March
2003   Global  received  two  large  scale,  fixed-stand   deicer
contracts, which the Company believes contributed to management's
plan  to  reduce seasonal fluctuation in revenues  during  fiscal
2002  and 2004. However, these fixed-stand deicer contracts  have
been  completed,  and seasonal trends for Global's  business  may
resume,  unless  offset by addition revenue from  other  sources.
The  remainder  of  the  Company's  business  is  not  materially
seasonal.








                               16

Results of Operations

     Consolidated revenue increased $4,031,000 (36.5%) to
$15,087,000 for the three-month period ended June 30, 2004
compared to its equivalent 2003 period. The increase in revenue
resulted from an increase in sales from each of the subsidiaries,
as detailed above in Overview.

     Operating expenses increased $3,842,000 (37.0%) to
$14,215,000 for the three-month period ended June 30, 2004
compared to its equivalent 2003 period. The net increase in
operating expenses consisted of the following: cost of flight
operations increased $581,000 (18.4%) primarily as a result of
increased pilot staffing and costs associated with pilot travel
due to customer flight schedule changes and route expansion;
maintenance expense increased $1,162,000 (48.4%) primarily as a
result of increases in cost of maintenance personnel, cost of
travel, contract services, parts and outside maintenance related
to customer fleet modernization and route expansion; ground
equipment increased $1,788,000 (62.4%), as a result of increased
cost of parts and supplies and assembly line personnel related to
increased customer order backlog; depreciation and amortization
increased $23,000 (16.8%) as a result of purchases of capital
assets; and general and administrative expense increased $288,000
(15.9%) primarily as a result of increased staffing and
professional fees.

     The current period's increased operating income ($188,000)
resulted primarily from increased orders for services and
products related to both the air cargo and ground equipment
sectors, mentioned above in Overview.

     Non-operating expense, net increased $76,000 as a result of
a $63,000 increase in interest expense due to higher borrowing
levels and increases in interest rate and a reduction of the
market value of marketable securities in the three-month period
ended June 30, 2004.

     Pretax earnings increased $112,000 for the three-month
period ended June 30, 2004 compared to 2003, principally due to
the above stated increase in current period revenue and related
earnings for the air cargo and ground equipment segments.

     The provision for income taxes for the three-month period
ended June 30, 2004 increased $23,000 compared to the 2003
period, primarily due to increased current period  pretax
earnings for quarter ended June 30, 2004.


Liquidity and Capital Resources

     As of June 30, 2004 the Company's working capital amounted
to $10,357,000, an increase of $2,028,000 compared to March 31,
2004. The net increase primarily resulted from increases in cash
and cash equivalents and inventories and the transfer of certain
equipment, previously on short-term lease, from property and
equipment to inventory, partially offset by an increase in
accounts payable and accrued expenses.


     On August 31, 2003 the Company amended its $7,000,000 bank
financing line.  Under the terms of the agreement, the $7,000,000
secured long-term revolving credit line expires on August 31,
2005.

     The credit facility contains customary events of default, a
subjective clause and restrictive covenants that, among other
matters, require the Company to maintain certain financial
ratios.  As of June 30, 2004, the Company was in compliance with
all of the restrictive covenants.

     The amount of credit available to the Company under the
agreement at any given time is determined by an availability
calculation, based on the eligible borrowing base, as defined in
the credit agreement, which includes the Company's outstanding
receivables, inventories and equipment, with certain exclusions.
The credit facility is secured by substantially all of the
Company's assets.




                               17
     Amounts advanced under the credit facility bear interest at
the 30-day "LIBOR" rate plus 137 basis points.  The LIBOR rate at
June 30, 2004 was 1.37%. At June 30, 2004 and March 31, 2004, the
amounts outstanding against the line were $571,000 and $132,000,
respectively.  At June 30, 2004, an additional $5,133,000 was
available under the terms of the credit facility.

     In March 2004, the company utilized its revolving credit
line to acquire a corporate aircraft for $975,000.  In April
2004, the Company refinanced the aircraft under a secured 4.35%
fixed rate five-year term loan, based on a ten year amortization
with a balloon payment at the end of the fifth year.

     The Company assumed various financial obligations and
commitments in the normal course of its operations and financing
activities.  Financial obligations are considered to represent
known future cash payments that the Company is required to make
under existing contractual arrangements such as debt and lease
agreements.  A table representing the scheduled maturities of the
Company's contractual obligations as of March 31, 2004 was
included under the heading "Contractual Obligations" on page 14
of the Company's 2004 Annual report on Form 10-K filed with the
SEC on June 24, 2004.  There were no significant changes from the
table referenced above during the quarter ended June 30, 2004,
except for the aircraft refinancing discussed above.

     The Company has not currently, nor in the past, engaged in
the use of structured finance arrangements, known as off-balance
sheet financing transactions, with unconsolidated entities or
other persons.

     The respective three-month periods ended June 30, 2004 and
2003 resulted in the following changes in cash flow: operating
activities provided $1,678,000 and $735,000 in 2004 and 2003,
respectively, investing activities used $40,000 in 2004 and
provided $278,000 in 2003, and financing activities provided
$870,000 in 2004 and used $672,000 in 2003. Net cash increased
$2,507,000 and $341,000 during the three months ended June 30,
2004 and 2003, respectively.

     Cash provided by operating activities was $943,000 more
for the three-months ended June 30, 2004 compared to the similar
2003 period, principally due to increased earnings and accounts
payable and decreased accounts receivables, partly offset by
increased inventories.

     Cash used in investing activities for the three-months ended
June 30, 2004 was approximately $319,000 more than the comparable
period in 2003 due to the sale of marketable securities in the
quarter ended June 30, 2003.

     Cash provided by financing activities was $1,542,000 more in
the 2004 three-month period than in the corresponding 2003 period
due to current period aircraft financing and net borrowings on
the line of credit, partially offset by the payment of a 2004
cash dividend.

     There are currently no commitments for significant capital
expenditures. The Company's Board of Directors on August 7, 1998
adopted the policy to pay an annual cash dividend, based on
profitablility and other factors, in the first quarter of each
fiscal year, in an amount to be determined by the Board.  The
Company paid a $0.20 per share cash dividend in June 2004.

Derivative Financial Instruments

     As required by SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", the Company recognizes all
derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value.

     The Company is exposed to market risk, such as changes in
interest rates.  To manage the volatility relating to interest
rate risk, the Company may enter into interest rate hedging
arrangements from time to time.  The Company does not utilize
derivative financial instruments for trading or speculative
purposes.




                               18
     In May 2001, the Company entered into two interest rate
swaps with notional amounts of $2.4 million, and $2 million
respectively.  These agreements were originally entered into at
respective interest rates of 6.97% and 6.5%.  On July 31, 2002
the Company elected to unwind its $2,000,000 (6.5%) revolving
credit line swap in consideration for $58,750, the fair-market-
value termination fee as of that date.  On October 30, 2003, the
Company terminated its remaining credit line swap for $97,500,
the fair-market-value termination fee as of that date.  The
$62,044 included in accumulated other comprehensive income (loss)
at date of termination will be ratably amortized into interest
expense over the remaining term of the Company's credit line.


Deferred Retirement Obligation

     Contractual death benefits for the Company's former Chairman
and Chief Executive Officer who passed away on April 18, 1997 are
payable by the Company in the amount of $75,000 per year for 10
years from the date of his death.  As of June 30, 2004, $64,000
has been reflected as a current liability and $147,000 has been
reflected as a long-term liability associated with this death
benefit.


Impact of Inflation

      If interest rates continue to rise, the Company believes
the impact of inflation and changing prices on its revenues and
net earnings could have a material effect on its manufacturing
operations if the Company cannot increase prices to pass the
additional costs on to its customers.  Although the Company's air
cargo business can pass through the major cost components of its
operations, without markup, under its current contract terms,
higher rate of inflation could affect our customer's current
business plans.


Recent Accounting Pronouncements

The FASB has issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" and SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets".  SFAS No. 143
addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and
the associated asset retirement costs.  It requires that the fair
value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made.  The associated asset
retirement costs are capitalized as part of the carrying amount
of the long-lived asset.  SFAS No. 143 was effective for the
Company beginning April 1, 2003.  Adoption of SFAS No. 143 did
not have an effect on the Company's financial position and
results of operations.  SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" and amends Accounting Principles
Bulletin (APB) No. 30 "Reporting the Results of Operations-
Discontinued Events and Extraordinary Items".  Along with
establishing a single accounting model, based on the framework
established in SFAS No. 121, for long-lived assets to be disposed
of by sale, this standard retains the basic provisions of APB No.
30 for the presentation of discontinued operations in the income
statement but broadens that presentation to include a component
of an entity.  SFAS No. 144 was effective for the Company
beginning April 1, 2002. The effect of the adoption of SFAS No.
144 on management's plan to discontinue the operations of MAS is
reflected in the Company's condensed consolidated statements of
financial position and results of operations and is detailed in
Note H Discontinued Operations.

In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others".  This Interpretation elaborates on the disclosures to be
made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it
has issued.  It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the
guarantee.  The disclosure requirements of this Interpretation
are currently effective and did not affect the Company's
financial position and results of operations.




                               19
The initial recognition and initial measurement provisions of
this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002.  The
Company has evaluated all of its guarantees under the provisions
of FIN 45 and does not believe the effect of its adoption on its
financial position and results of operations will be material.

The Company's ground equipment subsidiary warranties its products
for up to a two-year period from date of sale.  Product warranty
reserves are recorded at time of sale based on the historical
average warranty cost and are adjusted as actual warranty cost
becomes known.



Product warranty reserve activity during the three-months ended
June 30, 2004 and 2003 are as follows:
                                           Three Months Ended
                                                 June 30,
                                         2004             2003

Beginning balance                    $  147,000       $ 116,000
  Additions to reserve                   45,000          24,000
  Use of reserve                        (41,000)        (23,000)

Ending balance                       $  151,000       $ 117,000


In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure".  This
Statement amends FASB Statement No. 123, "Accounting for Stock-
Based Compensation", to provide alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation.  In addition,
this Statement amends the disclosure requirements of Statement
123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-
based employee compensation and the effect of the method used on
reported results. Because the Company has elected to continue to
account for its stock-based compensation under the provisions of
Accounting Principles bulletin No. 25, SFAS No. 148 has no impact
on the Company's consolidated statement of operations for the
quarters ended June 30, 2004 and 2003.

In January 2003, the FASB issued FIN 46 "Consolidation of
Variable Interest Entities" which requires the primary
beneficiary of a variable interest entity's activities to
consolidate the variable interest entity.  In December 2003, the
FASB issued FIN 46 (Revised December 2003) (FIN 46R),
"Consolidation of Variable Interest Entities - An Interpretation
of ARB No. 51," which supercedes and amends certain provisions of
FIN 46. While FIN 46R retains many of the concepts and provisions
of FIN 46, it also provides additional guidance related to the
application of FIN 46 and certain additional scope exceptions,
and incorporates several FASB Staff Positions issued related to
the application of FIN 46. The provisions of FIN 46 are
immediately applicable to variable interest entities created, or
interests in variable interest entities obtained, after January
31, 2003 and the provisions of FIN 46R are required to be applied
to such entities, except for special purpose entities, by the end
of the first reporting period ending after March 15, 2004 (March
31, 2004 for the Company). For variable interest entities
created, or interests in variable interest entities obtained, on
or before

January 31, 2003, FIN 46 or FIN 46R was required to be applied to
special-purpose entities by the end of the first reporting period
ending after December 15, 2003 (December 31, 2003 for the
Company), and was required to be applied to all other non-special
purpose entities by the end of the first reporting period ending
after March 15, 2004 (March 31, 2004 for the Company). Adoption
of FIN 46 did not have an impact on the Company's consolidated
financial statements.





                               20
In May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both
Liabilities and Equity".  SFAS No. 150 is effective for the
Company beginning July 1, 2003.  The Company is in the process of
evaluating the impact of adopting SFAS No. 150 and has not yet
determined the effect of its adoption on its financial position
and results of operations.



Item 3.  Quantitative and Qualitative Disclosures About Market
Risk.

Quantitative and qualitative disclosures about market risk are
included in Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Continuing Operations.





Item 4. Controls and Procedures

     As of the end of the period covered by this report,
management, including the Company's Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of the
design and operation of our disclosure controls and procedures
with respect to the information generated for use in this report.
Based upon, and as of the date of that evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that
the disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed in
the reports we file or submit under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms.

     There were no changes in the Company's internal control over
financial reporting during or subsequent to the first quarter of
fiscal 2005 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.

     It should be noted that while the Company's management,
including the Chief Executive Officer and the Chief Financial
Officer, believe that the Company's disclosure controls and
procedures provide a reasonable level of assurance, they do not
expect that the disclosure controls and procedures or internal
controls will prevent all error and all fraud.  A control system,
no matter how well conceived or operated, can provide only
reasonable, not absolute, assurance that the objectives of the
control system are met.  Further, the design of a control system
must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their
costs.  Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within
the Company have been detected.  These inherent limitations
include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or
mistake.  Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more
people, or by management override of the controls.  The design of
any system of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated
goals under all potential future conditions; over time, controls
may become inadequate because of changes in conditions, or the
degree of compliance with the policies or procedures may
deteriorate.  Because of the inherent limitations in a cost-
effective control system, misstatements due to error or fraud may
occur and not be detected.











                               21

                          PART II -- OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

               (a)  Exhibits

No.           Description

     3.1  Restated Certificate of Incorporation, incorporated by
          reference to Exhibit 3.1 of the Company's Quarterly Report on
          Form 10-Q for the period ended September 30, 2001

     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

     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

     21.1 List of subsidiaries of the Company, incorporated by
          reference to Exhibit 21.1 to the Company's Quarterly Report on
          Form 10-Q for the period ended September 30, 1997

     31.1 Certification of Walter Clark

     31.2 Certification of John J. Gioffre

     32.1 Section 1350 Certification

     __________________


 b.   Reports on Form 8-K

The Company filed a Current Report Form 8-K on June 25,
2003 to announce earnings for the Company's 2004 fiscal
year.





























                               22
                           SIGNATURES

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

     AIR T, INC.

By:   /s/ Walter Clark
     Walter Clark, Chief Executive Officer
     (Principal Executive Officer)


Date:  July 29, 2004


By:   /s/ John J. Gioffre
     John J. Gioffre, Chief Financial Officer
     (Principal Financial and Accounting Officer)


Date:  July 29, 2004











































                               23


                           AIR T, INC.
                          EXHIBIT INDEX



Exhibit Number Document


31.1              Certification of Walter Clark
31.2              Certification of John Gioffre
32.1              Section 1350 certification














                               24
                          CERTIFICATION

I, Walter Clark, Chief Executive Officer, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Air T,
Inc.;
2.   Based on my knowledge, this report does not contain any
     untrue statement of a material fact or omit to state a
     material fact necessary to make the statements made, in
     light of the circumstances under which such statements were
     made, not misleading with respect to the period covered by
     this report;
3.   Based on my knowledge, the financial statements, and other
     financial information included in this report, fairly
     present in all material respects the financial condition,
     results of operations and cash flows of the registrant as
     of, and for, the periods presented in this report;
4.   The registrant's other certifying officer and I are
     responsible for establishing and maintaining disclosure
     controls and procedures (as defined in Exchange Act Rules
     13a-15(e) and 15d-15(e)) for the registrant and have:
     (a)  Designed such disclosure controls and procedures, or
     caused such disclosure controls and procedures to be
     designed under our supervision, to ensure that material
     information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others
     within those entities, particularly during the period in
     which this report is being prepared;
     (b)  Evaluated the effectiveness of the registrant's
     disclosure controls and procedures and presented in this
     report our conclusions about the effectiveness of the
     disclosure controls and procedures, as of the end of the
     period covered by this report based on such evaluation; and
     (c)  Disclosed in this report any change in the registrant's
     internal control over financial reporting that occurred
     during the registrant's most recent fiscal quarter that has
     materially affected, or is reasonably likely to materially
     affect, the registrant's internal control over financial
     reporting; and
5.   The registrant's other certifying officer and I have
     disclosed, based on our most recent evaluation of internal
     control over financial reporting, to the registrant's
     auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent
     functions):
     (a)  All significant deficiencies and material weaknesses in
     the design or operation of internal control over financial
     reporting which are reasonably likely to adversely affect
     the registrant's ability to record, process, summarize and
     report financial information; and
     (b)  Any fraud, whether or not material, that involves
     management or other employees who have a significant role in
     the registrant's internal control over financial reporting.


Date:  July 29, 2004
 /s/ Walter Clark
Walter Clark
Chief Executive Officer



















                               25
                          CERTIFICATION

I, John Gioffre, Chief Financial Officer, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of Air T,
Inc.;
2.   Based on my knowledge, this report does not contain any
     untrue statement of a material fact or omit to state a
     material fact necessary to make the statements made, in
     light of the circumstances under which such statements were
     made, not misleading with respect to the period covered by
     this report;
3.   Based on my knowledge, the financial statements, and other
     financial information included in this report, fairly
     present in all material respects the financial condition,
     results of operations and cash flows of the registrant as
     of, and for, the periods presented in this report;
4.   The registrant's other certifying officer and I are
     responsible for establishing and maintaining disclosure
     controls and procedures (as defined in Exchange Act Rules
     13a-15(e) and 15d-15(e)) for the registrant and have:
     (a)  Designed such disclosure controls and procedures, or
     caused such disclosure controls and procedures to be
     designed under our supervision, to ensure that material
     information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others
     within those entities, particularly during the period in
     which this report is being prepared;
     (b)  Evaluated the effectiveness of the registrant's
     disclosure controls and procedures and presented in this
     report our conclusions about the effectiveness of the
     disclosure controls and procedures, as of the end of the
     period covered by this report based on such evaluation; and
     (c)  Disclosed in this report any change in the registrant's
     internal control over financial reporting that occurred
     during the registrant's most recent fiscal quarter that has
     materially affected, or is reasonably likely to materially
     affect, the registrant's internal control over financial
     reporting; and
5.   The registrant's other certifying officer and I have
     disclosed, based on our most recent evaluation of internal
     control over financial reporting, to the registrant's
     auditors and the audit committee of the registrant's board
     of directors (or persons performing the equivalent
     functions):
     (a)  All significant deficiencies and material weaknesses in
     the design or operation of internal control over financial
     reporting which are reasonably likely to adversely affect
     the registrant's ability to record, process, summarize and
     report financial information; and
     (b)  Any fraud, whether or not material, that involves
     management or other employees who have a significant role in
     the registrant's internal control over financial reporting.


Date:  July 29, 2004
/s/ John J. Gioffre
John J. Gioffre
Chief Financial Officer



















                               26

                          CERTIFICATION

The undersigned hereby certifies in his capacity as an officer of
Air T, Inc. (the "Company") that, to the best of his knowledge,
the Quarterly Report of the Company on Form 10-Q for the three
months ended June 30, 2004 fully complies with the requirements
of Section 13(a) of the Securities Exchange Act of 1934 and that
the information contained in such report fairly presents, in all
material respects, the financial condition of the Company at the
end of such period and the results of operations of the Company
for such period.









Date:  July 29, 2004          /s/ Walter Clark
                              Walter Clark, Chief Executive
Officer



Date:  July 29, 2004          /s/ John J. Gioffre
          John J. Gioffre, Chief Financial Officer




































                               27