|   |       x | Quarterly      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 for the quarterly period ended June 30,  2008 |
|--------|---------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

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

    AcceleratedFiler 
     Non-Accelerated Filer     SmallerReporting Company

----

|           | 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 Ended June 30, 2008 and 2007 (Unaudited)                                         |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Balance Sheets                                                         |   |   | 4      |   |
|           | June      30, 2008 (Unaudited) and March 31, 2008                                                  |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Statements of Cash Flows                                               |   |   | 5      |   |
|           | Three      Months Ended June 30, 2008 and 2007 (Unaudited)                                         |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Condensed      Consolidated Statements of Stockholders’ Equity and Comprehensive      Income |   |   | 6      |   |
|           | Three      Months Ended June 30, 2008 and 2007 (Unaudited)                                         |   |   |   |   |
|           |                                                                                               |   |   |   |   |
|           | Notes      to Condensed Consolidated Financial Statements (Unaudited)                              |   |   | 7      |   |
|           |                                                                                               |   |   |   |   |
| Item      2.   | Management's      Discussion and Analysis of Financial Condition and Results of      Operations    |   |   | 12     |   |
| 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      6    | Exhibits                                                                                           |   |   | 17     |   |
|           | Signatures                                                                                         |   |   | 18     |   |
|           | Certifications                                                                                     |   |   | 19     |   |

----

|                                                           |   | Three      Months Ended June 30, |       |
|----------------------------------------------------------------|--------|----------------------------------|------------|
|                                                           |   | 2008                             |       |   | 2007 |   |
| Operating      Revenues:                                       |   |                             |       |   |   |   |
| Overnight      air cargo                                       |   | $                                | 9,455,564  |   |   | $ | 8,512,451 |   |
| Ground      equipment                                          |   |                             | 12,961,013 |   |   |   | 7,283,516 |   |
|                                                           |   |                             | 22,416,577 |   |   |   | 15,795,967 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Operating      Expenses:                                       |   |                             |       |   |   |   |   |   |
| Flight-air      cargo                                          |   |                             | 4,738,775  |   |   |   | 4,350,062 |   |
| Maintenance-air      cargo                                     |   |                             | 3,056,492  |   |   |   | 2,839,161 |   |
| Ground      equipment                                          |   |                             | 9,285,989  |   |   |   | 5,178,368 |   |
| General      and administrative                                |   |                             | 3,143,464  |   |   |   | 2,329,582 |   |
| Depreciation      and amortization                             |   |                             | 111,338    |   |   |   | 123,874 |   |
|                                                           |   |                             | 20,336,058 |   |   |   | 14,821,047 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Operating      Income                                          |   |                             | 2,080,519  |   |   |   | 974,920 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Non-operating      Expense (Income):                           |   |                             |       |   |   |   |   |   |
| Interest      expense                                          |   |                             | 13,222     |   |   |   | 64,571 |   |
| Investment      income                                         |   |                             | (17,953    | ) |   |   | (66,537 | ) |
| Other                                                          |   |                             | -          |   |   |   | 3,500 |   |
|                                                           |   |                             | (4,731     | ) |   |   | 1,534 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Earnings      Before Income Taxes                              |   |                             | 2,085,250  |   |   |   | 973,386 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Income      Taxes                                              |   |                             | 745,000    |   |   |   | 347,018 |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Net      Earnings                                              |   | $                                | 1,340,250  |   |   | $ | 626,368 |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Basic      and Diluted Net Earnings Per Share                  |   | $                                | 0.55       |   |   | $ | 0.25 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Dividends      Declared Per Share                              |   | $                                | 0.30       |   |   | $ | 0.25 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Weighted      Average Shares Outstanding:                      |   |                             |       |   |   |   |   |   |
| Basic      and Diluted                                         |   |                             | 2,423,506  |   |   |   | 2,461,719 |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |                             |       |   |   |

----

|                                                              |   | June      30, 2008 |       |   | March      31, 2008 |   |
|-------------------------------------------------------------------|--------|--------------------|------------|--------|---------------------|--------|
| ASSETS                                                            |   | (Unaudited)        |       |   |                |   |
| Current      Assets:                                              |   |               |       |   |                |   |
| Cash      and cash equivalents                                    |   | $                  | 43,599     |   |                | $      | 51,858 |   |
| Short-term      investments                                       |   |               | 5,357      |   |                |   | 2,004,761 |   |
| Accounts      receivable, less allowance for                      |   |               |       |   |                |   |   |   |
|   doubtful      accounts of $567,500 and $267,700       |   |               | 11,908,858 |   |                |   | 12,272,390 |   |
| Notes      and other non-trade receivables-current                |   |               | 34,813     |   |                |   | 48,334 |   |
| Inventories                                                       |   |               | 10,962,814 |   |                |   | 7,961,436 |   |
| Deferred      income taxes                                        |   |               | 853,000    |   |                |   | 736,000 |   |
| Prepaid      expenses and other                                   |   |               | 167,145    |   |                |   | 343,906 |   |
|   Total      Current Assets                             |   |               | 23,975,586 |   |                |   | 23,418,685 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Property      and Equipment, net                                  |   |               | 1,796,969  |   |                |   | 1,846,400 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Deferred      Income Taxes                                        |   |               | 418,116    |   |                |   | 422,000 |   |
| Cash      Surrender Value of Life Insurance Policies              |   |               | 1,385,443  |   |                |   | 1,368,442 |   |
| Notes      and Other Non-Trade Receivables-LongTerm               |   |               | 164,682    |   |                |   | 165,753 |   |
| Other      Assets                                                 |   |               | 85,163     |   |                |   | 86,330 |   |
|   Total      Assets                                     |   | $                  | 27,825,959 |   |                | $      | 27,307,610 |   |
|                                                              |   |               |       |   |                |   |   |   |
| LIABILITIES AND      STOCKHOLDERS' EQUITY                         |   |               |       |   |                |   |   |   |
| Current      Liabilities:                                         |   |               |       |   |                |   |   |   |
| Accounts      payable                                             |   | $                  | 6,041,525  |   |                | $      | 5,608,735 |   |
| Accrued      expenses                                             |   |               | 1,725,701  |   |                |   | 2,530,945 |   |
| Income      taxes payable                                         |   |               | 268,000    |   |                |   | 58,000 |   |
| Current      portion of long-term obligations                     |   |               | 551,807    |   |                |   | 121,478 |   |
|  Total      Current Liabilities                              |   |               | 8,587,033  |   |                |   | 8,319,158 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Capital      Lease and Other Obligations                          |   |               | 54,775     |   |                |   | 59,996 |   |
| Long-term      Debt (less current portion)                        |   |               | -          |   |                |   | 461,384 |   |
| Deferred      Retirement Obligation                               |   |               | 767,792    |   |                |   | 752,515 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Stockholders'      Equity:                                        |   |               |       |   |                |   |   |   |
| Preferred      stock, $1.00 par value, 50,000 shares authorized,  |   |               | -          |   |                |   | - |   |
| Common      stock, $.25 par value; 4,000,000 shares authorized,   |   |               |       |   |                |
|   2,423,506      shares issued and outstanding          |   |               | 605,876    |   |                |   | 605,876 |   |
| Additional      paid in capital                                   |   |               | 5,784,832  |   |                |   | 5,700,002 |   |
| Retained      earnings                                            |   |               | 12,063,392 |   |                |   | 11,450,192 |   |
| Accumulated      other comprehensive income (loss), net           |   |               | (37,741    | )      |                |   | (41,513 | ) |
|   Total      Stockholders' Equity                       |   |               | 18,416,359 |   |                |   | 17,714,557 |   |
|   Total      Liabilities and Stockholders’ Equity |   | $                  | 27,825,959 |   |                | $      | 27,307,610 |   |
|                                                              |   |               |       |   |                |   |   |   |
| See      notes to condensed consolidated financial statements.    |   |               |       |   |                |   |   |   |

----

|                                                                         |   | Three      Months Ended June 30, |       |
|------------------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                         |   | 2008                             |       |   | 2007 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                   |   |                             |       |   |   |   |
| Net      earnings                                                            |   | $                                | 1,340,250  |   |   | $ | 626,368 |   |
| Adjustments      to reconcile net earnings to net                            |   |                             |       |   |   |   |   |   |
| cash      provided by (used in) operating activities:                        |   |                             |       |   |   |   |   |   |
| Change      in accounts receivable and inventory reserves                    |   |                             | 329,553    |   |   |   | 34,106 |   |
| Depreciation      and amortization                                           |   |                             | 111,338    |   |   |   | 123,874 |   |
| Change      in cash surrender value of life insurance                        |   |                             | (17,001    | ) |   |   | (17,001 | ) |
| Deferred      income taxes                                                   |   |                             | (117,376   | ) |   |   | (43,897 | ) |
| Periodic      pension cost                                                   |   |                             | 23,325     |   |   |   | - |   |
| Warranty      reserve                                                        |   |                             | 4,008      |   |   |   | (41,000 | ) |
| Compensation      expense related to stock options                           |   |                             | 84,830     |   |   |   | 87,278 |   |
| Change      in operating assets and liabilities:                             |   |                             |       |   |   |   |   |   |
|   Accounts      receivable                                         |   |                             | 63,723     |   |   |   | 3,334,737 |   |
|   Notes      receivable and other non-trade receivables            |   |                             | 14,592     |   |   |   | 24,165 |   |
|   Inventories                                                      |   |                             | (3,031,124 | ) |   |   | (426,019 | ) |
|   Prepaid      expenses and other                                  |   |                             | 177,928    |   |   |   | 211,828 |   |
|   Accounts      payable                                            |   |                             | 432,790    |   |   |   | (503,619 | ) |
|   Accrued      expenses                                            |   |                             | (809,252   | ) |   |   | (831,574 | ) |
|   Income      taxes payable                                        |   |                             | 210,000    |   |   |   | (366,220 | ) |
| Total      adjustments                                                       |   |                             | (2,522,666 | ) |   |   | 1,586,658 |   |
|  Net      cash provided by (used in) operating activities               |   |                             | (1,182,416 | ) |   |   | 2,213,026 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                   |   |                             |       |   |   |   |   |   |
| Proceeds      from sale of investments                                       |   |                             | 3,501,036  |   |   |   | - |   |
| Purchase      of investments                                                 |   |                             | (1,501,648 | ) |   |   | - |   |
| Capital      expenditures                                                    |   |                             | (61,905    | ) |   |   | (101,281 | ) |
|  Net      cash provided by (used in) investing activities               |   |                             | 1,937,483  |   |   |   | (101,281 | ) |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                   |   |                             |       |   |   |   |   |   |
| Net      aircraft term loan payments                                         |   |                             | (28,113    | ) |   |   | (26,825 | ) |
| Payment      of cash dividend                                                |   |                             | (727,050   | ) |   |   | (610,851 | ) |
| Payment      on capital leases                                               |   |                             | (8,163     | ) |   |   | (7,037 | ) |
| Repurchase      of common stock                                              |   |                             | -          |   |   |   | (547,049 | ) |
|  Net      cash used in financing activities                             |   |                             | (763,326   | ) |   |   | (1,191,762 | ) |
| NET      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                    |   |                             | (8,259     | ) |   |   | 919,983 |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                        |   |                             | 51,858     |   |   |   | 2,895,499 |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                              |   | $                                | 43,599     |   |   | $ | 3,815,482 |   |
|                                                                         |   |                             |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |   |                             |       |   |   |
|                                                                         |   |                             |       |   |   |   |   |   |
| Change      in value of deferred retirement                                  |   | $                                | 3,788      |   |   | $ | 2,303 |   |
| Change      in fair value of marketable securities                           |   |                             | -          |   |   |   | 14,768 |   |
| Property      and equipment transferred to inventory                         |   |                             | -          |   |   |   | (458,300 | ) |
|                                                                         |   |                             |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                       |   |                             |       |   |   |   |   |   |
| Cash      paid during the period for:                                        |   |                             |       |   |   |   |   |   |
| Interest                                                                     |   | $                                | 13,170     |   |   | $ | 83,428 |   |
| Income      taxes                                                            |   |                             | 652,085    |   |   |   | 757,900 |   |
|                                                                         |   |                             |       |   |   |   |   |   |
| See      notes to condensed consolidated financial statements.               |   |                             |       |   |   |   |   |   |
|                                                                         |   |                             |       |   |   |   |   |   |

----

|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     | Accumulated        |       |          |          |        |
|----------------------------------------------------------------|--------|-------------------|-----------|--------|------------|--------|---------|---------|--------|---------|-----------|--------|----------|--------------------|------------|---------------|---------------|-------------|
|                                                           |   | Common      Stock |      |   | Additional |   |    |    |   |    | Other     |   |     | Total              |       |
|                                                           |   |              |      |   |       |   |    | Paid-In |   |    | Retained  |   |     | Comprehensive      |       |          | Stockholders' |        |
|                                                           |   | Shares            |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |     | Income      (Loss) |       |          | Equity        |        |
| Balance,      March 31, 2007                                   |   |              | 2,509,998 |   |       | $      | 627,499 |    |   | $       | 6,058,070 |   |     | $                  | 8,658,606  |          |          | $           | 104,558 |   |   | $ | 15,448,733 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Net      earnings                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 626,368    |          |          |        |   |   |   |   |   |   |
| Other      comprehensive income,                               |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|     net      of tax                        |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        | 9,372 |   |   |   |   |   |
| Comprehensive      Income                                      |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   | 635,740 |   |
| Cash      dividend ($0.25 per share)                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               | (610,851   | )             |          |        |   |   |   |   | (610,851 | ) |
| Compensation      expense related to                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|     stock      options                     |   |              |      |   |       |   |    |    |   |    | 87,278    |   |     |               |       |          |          |        |   |   |   |   | 87,278 |   |
| Stock      repurchase                                          |   |              | (67,692   | )      |       |   | (16,923 | )       |   |    | (530,126  | )      |     |               |       |          |          |        |   |   |   |   | (547,049 | ) |
| Balance,      June 30, 2007                                    |   |              | 2,442,306 |   |       | $      | 610,576 |    |   | $       | 5,615,222 |   |     | $                  | 8,674,123  |          |          | $           | 113,930 |   |   | $ | 15,013,851 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          | Accumulated |   |   |   |   |   |
|                                                           |   | Common      Stock |      |   | Additional |   |    |    |   |    |      | Other  |     |               | Total      |          |
|                                                           |   |              |      |   |       |   |    |    |   | Paid-In |      |   | Retained |               |       | Comprehensive |          |        | Stockholders' |   |
|                                                           |   | Shares            |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |     | Income      (Loss) |       |          | Equity        |        |
| Balance,      March 31, 2008                                   |   |              | 2,423,506 |   |       | $      | 605,876 |    |   | $       | 5,700,002 |   |     | $                  | 11,450,192 |          |          | $           | (41,513 | ) |   | $ | 17,714,557 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Net      earnings                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 1,340,250  |          |          |        |   |   |   |   |   |   |
| Other      comprehensive income,                               |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|     net      of tax                        |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        | 3,772 |   |   |   |   |   |
| Comprehensive      Income                                      |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   | 1,344,022 |   |
| Cash      dividend ($0.30 per share)                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               | (727,050   | )             |          |        |   |   |   |   | (727,050 | ) |
| Compensation      expense related to                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|     stock      options                     |   |              |      |   |       |   |    |    |   |    | 84,830    |   |     |               |       |          |          |        |   |   |   |   | 84,830 |   |
| Balance,      June 30, 2008                                    |   |              | 2,423,506 |   |       | $      | 605,876 |    |   | $       | 5,784,832 |   |     | $                  | 12,063,392 |          |          | $           | (37,741 | ) |   | $ | 18,416,359 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |              |      |   |       |   |    |    |   |

----

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

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

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

|                                                    |   | Three      Months Ended June 30, |      |
|---------------------------------------------------------|--------|----------------------------------|-----------|
|                                                    |   | 2008                             |      |   | 2007 |   |
|                                                    |   |                             |      |   |   |   |
| Net      earnings                                       |   | $                                | 1,340,250 |   |   | $ | 626,368 |   |
|                                                    |   |                             |      |   |   |   |   |   |
| Other      Comprehensive Income:                        |   |                             |      |   |   |   |   |   |
| Change      in Fair Value of Marketable Securities (Net |   |                             |      |   |   |   |   |   |
|    of      tax)                          |   |                             | -         |   |   |   | 9,372 |   |
| Amortization      of Net Actuarial Losses (Net          |   |                             |      |   |   |   |   |   |
|    of      tax)                          |   |                             | 3,772     |   |   |   | - |   |
|                                                    |   |                             |      |   |   |   |   |   |
| Total      Comprehensive Income                         |   | $                                | 1,344,022 |   |   | $ | 635,740 |   |

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

----

|                                          |   | Three      Months Ended June 30, |      |
|-----------------------------------------------|--------|----------------------------------|-----------|
|                                          |   | 2008                             |      |   | 2007 |   |
|                                          |   |                             |      |   |   |   |
| Net      earnings                             |   | $                                | 1,340,250 |   |   | $ | 626,368 |   |
|                                          |   |                             |      |   |   |   |   |   |
| Basic      and Diluted Net Earnings Per Share |   | $                                | 0.55      |   |   | $ | 0.25 |   |
|                                          |   |                             |      |   |   |   |   |   |
| Weighted      Average Shares Outstanding:     |   |                             |      |   |   |   |   |   |
| Basic      and Diluted                        |   |                             | 2,423,506 |   |   |   | 2,461,719 |   |

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

|                                 |   |                                                                        |  June      30,                                                                         |                                                                             |  March      31,                                                              |
|--------------------------------------|--------|-----------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|
|                                 |   |                                                                        | 2008                                                                                        |                                                                             | 2008                                                                              |
| Aircraft      parts and supplies     | $      | 499,953                                                                     |                                                                                        |  $           481,913 |
| Ground      equipment manufacturing: |   |                                                                        |                                                                                        |
| Raw      materials                   |   |                                                                        |            9,053,380                 |                                                                             |            5,548,635       |
| Work      in process                 |   |            1,632,027 |                                                                                        |            1,724,522      |
| Finished      goods                  |   |                                                                        |               714,891 |                                                                             |            1,114,059       |
|  Total      inventories         |   |                                                                        |          11,900,251                            |                                                                             |            8,869,129       |
|  Reserves                       |   |                                                                        |             (937,437)           |                                                                             |             (907,693) |
|                                 |   |                                                                        |                                                                                        |                                                                             |                                                                              |
| Total,      net of reserves          | $      | 10,962,814                                                                  |                                                                                        |  $        7,961,436                 |

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

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

----

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

----

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

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

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

|                                |   | Three      Months Ended June 30, |       |
|-------------------------------------|--------|----------------------------------|------------|
|                                |   | 2008                             |       |   | 2007 |   |
| Operating      Revenues:            |   |                             |       |   |   |   |
| Overnight      Air Cargo            |   | $                                | 9,455,564  |   |   | $ | 8,512,451 |   |
| Ground      Equipment:              |   |                             |       |   |   |   |   |   |
|    Domestic          |   |                             | 11,882,013 |   |   |   | 7,185,016 |   |
|    International     |   |                             | 1,079,000  |   |   |   | 98,500 |   |
| Total      Ground Equipment         |   |                             | 12,961,013 |   |   |   | 7,283,516 |   |
| Total                               |   | $                                | 22,416,577 |   |   | $ | 15,795,967 |   |
|                                |   |                             |       |   |   |   |   |   |
| Operating      Income               |   |                             |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                | 841,428    |   |   | $ | 353,389 |   |
| Ground      Equipment               |   |                             | 2,013,692  |   |   |   | 1,212,786 |   |
| Corporate                           |   |                             | (774,601   | ) |   |   | (591,255 | ) |
| Total                               |   | $                                | 2,080,519  |   |   | $ | 974,920 |   |
|                                |   |                             |       |   |   |   |   |   |
| Capital      Expenditures:          |   |                             |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                | 14,345     |   |   | $ | 15,823 |   |
| Ground      Equipment               |   |                             | 9,548      |   |   |   | 38,439 |   |
| Corporate                           |   |                             | 38,012     |   |   |   | 47,019 |   |
| Total                               |   | $                                | 61,905     |   |   | $ | 101,281 |   |
|                                |   |                             |       |   |   |   |   |   |
| Depreciation      and Amortization: |   |                             |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                | 69,869     |   |   | $ | 110,058 |   |
| Ground      Equipment               |   |                             | 32,671     |   |   |   | 12,261 |   |
| Corporate                           |   |                             | 8,798      |   |   |   | 1,555 |   |
| Total                               |   | $                                | 111,338    |   |   | $ | 123,874 |   |
|                                |   |                             |       |   |   |   |   |   |
|                                |   | As      of:                      |       |
|                                |   | June      30, 2008               |       |   | March      31, 2008 |   |
| Identifiable      Assets:           |   |                             |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                | 2,827,953  |   |   | $ | 5,456,968 |   |
| Ground      Equipment               |   |                             | 21,902,018 |   |   |   | 18,290,440 |   |
| Corporate                           |   |                             | 3,095,988  |   |   |   | 3,560,202 |   |
| Total                               |   | $                                | 27,825,959 |   |   | $ | 27,307,610 |   |
|                                |   |                             |       |   |   |   |   |   |

----

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

----

| (In      thousands)                                     |   |                             |   |
|---------------------------------------------------------|--------|----------------------------------|--------|
|                                                    |   | Three      Months Ended June 30, |   |
|                                                    |   | 2008                             |   |   | 2007 |   |
|                                                    |   |                             |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo Segment:                       |   |                             |   |   |   |   |   |   |   |   |   |   |
|     FedEx                           |   | $                                | 9,456  |   |   |   | 42 | % |   | $ | 8,512 |   |   |   | 54 | % |
|                                                    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ground      Equipment Segment:                          |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Military                        |   |                             | 8,795  |   |   |   | 39 | % |   |   | 5,729 |   |   |   | 36 | % |
|     Commercial      - Domestic      |   |                             | 3,087  |   |   |   | 14 | % |   |   | 1,456 |   |   |   | 9 | % |
|     Commercial      - International |   |                             | 1,079  |   |   |   | 5 | % |   |   | 99 |   |   |   | 1 | % |
|                                                    |   |                             | 12,961 |   |   |   | 58 | % |   |   | 7,284 |   |   |   | 46 | % |
|                                                    |   | $                                | 22,417 |   |   |   | 100 | % |   | $ | 15,796 |   |   |   | 100 | % |

----

----

----

----

----

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

| 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 (Commission file No.    0-11720) |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

----