UNITED STATES

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

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

----

|           | AIR      T, INC. AND SUBSIDIARIES                                                                  |   |   |
|----------------|----------------------------------------------------------------------------------------------------|--------|--------|
|           | QUARTERLY      REPORT ON FORM 10-Q                                                                 |   |   |
|           | TABLE      OF CONTENTS                                                                             |   |   |
|           |                                                                                               |   | PAGE # |
|           | PART      I                                                                                        |   |   |
|           |                                                                                               |   |   |
| Item      1.   | Financial      Statements                                                                          |   |   |
|           |                                                                                               |   |   |
|           | Condensed      Consolidated Statements of Income                                                   |   | 3      |
|           | Three      Months Ended June 30, 2009 and 2008 (Unaudited)                                         |   |   |
|           |                                                                                               |   |   |
|           | Condensed      Consolidated Balance Sheets                                                         |   | 4      |
|           | June      30, 2009 (Unaudited) and March 31, 2009                                                  |   |   |
|           |                                                                                               |   |   |
|           | Condensed      Consolidated Statements of Cash Flows                                               |   | 5      |
|           | Three      Months Ended June 30, 2009 and 2008 (Unaudited)                                         |   |   |
|           |                                                                                               |   |   |
|           | Condensed      Consolidated Statements of Stockholders’ Equity and Comprehensive      Income |   | 6      |
|           | Three      Months Ended June 30, 2009 and 2008 (Unaudited)                                         |   |   |
|           |                                                                                               |   |   |
|           | Notes      to Condensed Consolidated Financial Statements (Unaudited)                              |   | 7      |
|           |                                                                                               |   |   |
| Item      2.   | Management's      Discussion and Analysis of Financial Condition and Results of      Operations    |   | 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     |
|           | Exhibit      Index                                                                                 |   | 19     |
|           | Certifications                                                                                     |   | 20     |
|           |                                                                                               |   |   |
|           |                                                                                               |   |   |

----

|                                                           |   | Three      Months Ended June 30, |       |
|----------------------------------------------------------------|--------|----------------------------------|------------|
|                                                           |   | 2009                             |       |   | 2008 |   |
| Operating      Revenues:                                       |   |                             |       |   |   |   |
| Overnight      air cargo                                       |   | $                                | 8,788,476  |   |   | $ | 9,455,564 |   |
| Ground      equipment sales                                    |   |                             | 8,102,819  |   |   |   | 11,341,005 |   |
| Ground      support services                                   |   |                             | 2,057,012  |   |   |   | 1,620,008 |   |
|                                                           |   |                             | 18,948,307 |   |   |   | 22,416,577 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Operating      Expenses:                                       |   |                             |       |   |   |   |   |   |
| Flight-air      cargo                                          |   |                             | 3,835,469  |   |   |   | 4,738,775 |   |
| Maintenance-air      cargo                                     |   |                             | 3,365,822  |   |   |   | 3,056,492 |   |
| Ground      equipment sales                                    |   |                             | 5,751,726  |   |   |   | 8,043,548 |   |
| Ground      support services                                   |   |                             | 1,505,736  |   |   |   | 1,242,441 |   |
| General      and administrative                                |   |                             | 2,650,519  |   |   |   | 3,143,464 |   |
| Depreciation      and amortization                             |   |                             | 103,898    |   |   |   | 111,338 |   |
|                                                           |   |                             | 17,213,170 |   |   |   | 20,336,058 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Operating      Income                                          |   |                             | 1,735,137  |   |   |   | 2,080,519 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Non-operating      Expense (Income):                           |   |                             |       |   |   |   |   |   |
| Gain      on retirement plan settlement                        |   |                             | (8,460     | ) |   |   | - |   |
| Interest      expense                                          |   |                             | 13,679     |   |   |   | 13,222 |   |
| Investment      income                                         |   |                             | (27,049    | ) |   |   | (17,953 | ) |
|                                                           |   |                             | (21,830    | ) |   |   | (4,731 | ) |
|                                                           |   |                             |       |   |   |   |   |   |
| Earnings      Before Income Taxes                              |   |                             | 1,756,967  |   |   |   | 2,085,250 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Income      Taxes                                              |   |                             | 639,000    |   |   |   | 745,000 |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Net      Earnings                                              |   | $                                | 1,117,967  |   |   | $ | 1,340,250 |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Basic      and Diluted Net Earnings Per Share                  |   | $                                | 0.46       |   |   | $ | 0.55 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Dividends      Declared Per Share                              |   | $                                | 0.33       |   |   | $ | 0.30 |   |
|                                                           |   |                             |       |   |   |   |   |   |
| Weighted      Average Shares Outstanding:                      |   |                             |       |   |   |   |   |   |
| Basic      and Diluted                                         |   |                             | 2,424,486  |   |   |   | 2,423,506 |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
|                                                           |   |                             |       |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |                             |       |   |   |   |   |   |

----

|                                                              |   | June      30, 2009 |       |   | March      31, 2009 |   |
|-------------------------------------------------------------------|--------|--------------------|------------|--------|---------------------|--------|
| ASSETS                                                            |   | (Unaudited)        |       |   |                |   |
| Current      Assets:                                              |   |               |       |   |                |   |
| Cash      and cash equivalents                                    |   | $                  | 2,525,772  |   |                | $      | 6,852,713 |   |
| Short-term      investments                                       |   |               | 1,008,425  |   |                |   | 1,002,221 |   |
| Accounts      receivable, less allowance for                      |   |               |       |   |                |   |   |   |
|   doubtful      accounts of $145,000 and $111,000       |   |               | 9,121,924  |   |                |   | 6,253,007 |   |
| Notes      and other non-trade receivables-current                |   |               | 262,180    |   |                |   | 292,744 |   |
| Income      tax receivable                                        |   |               | -          |   |                |   | 117,000 |   |
| Inventories                                                       |   |               | 10,696,460 |   |                |   | 9,830,956 |   |
| Deferred      income taxes                                        |   |               | 680,000    |   |                |   | 599,000 |   |
| Prepaid      expenses and other                                   |   |               | 99,987     |   |                |   | 317,153 |   |
|   Total      Current Assets                             |   |               | 24,394,748 |   |                |   | 25,264,794 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Property      and Equipment, net                                  |   |               | 1,576,356  |   |                |   | 1,607,840 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Deferred      Income Taxes                                        |   |               | 665,000    |   |                |   | 638,000 |   |
| Cash      Surrender Value of Life Insurance Policies              |   |               | 1,448,441  |   |                |   | 1,431,440 |   |
| Notes      and Other Non-Trade Receivables-LongTerm               |   |               | 305,932    |   |                |   | 314,295 |   |
| Other      Assets                                                 |   |               | 84,968     |   |                |   | 84,968 |   |
|   Total      Assets                                     |   | $                  | 28,475,445 |   |                | $      | 29,341,337 |   |
|                                                              |   |               |       |   |                |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                         |   |               |       |   |                |   |   |   |
| Current      Liabilities:                                         |   |               |       |   |                |   |   |   |
| Accounts      payable                                             |   | $                  | 3,167,451  |   |                | $      | 3,021,074 |   |
| Accrued      compensation to executive                            |   |               | 941,540    |   |                |   | 950,000 |   |
| Accrued      expenses                                             |   |               | 2,167,362  |   |                |   | 3,135,698 |   |
| Income      taxes payable                                         |   |               | 16,000     |   |                |   | - |   |
| Current      portion of long-term obligations                     |   |               | 12,673     |   |                |   | 462,708 |   |
|  Total      Current Liabilities                              |   |               | 6,305,026  |   |                |   | 7,569,480 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Capital      Lease and Other Obligations                          |   |               | 14,464     |   |                |   | 18,619 |   |
|                                                              |   |               |       |   |                |   |   |   |
| Stockholders'      Equity:                                        |   |               |       |   |                |   |   |   |
| Preferred      stock, $1.00 par value, 50,000 shares authorized,  |   |               | -          |   |                |   | - |   |
| Common      stock, $.25 par value; 4,000,000 shares authorized,   |   |               |       |   |                |
|   2,424,486      shares issued and outstanding          |   |               | 606,121    |   |                |   | 606,121 |   |
| Additional      paid in capital                                   |   |               | 6,130,160  |   |                |   | 6,045,330 |   |
| Retained      earnings                                            |   |               | 15,419,674 |   |                |   | 15,101,787 |   |
|   Total      Stockholders' Equity                       |   |               | 22,155,955 |   |                |   | 21,753,238 |   |
|   Total      Liabilities and Stockholders’ Equity |   | $                  | 28,475,445 |   |                | $      | 29,341,337 |   |
|                                                              |   |               |       |   |                |   |   |   |
| See      notes to condensed consolidated financial statements.    |   |               |       |   |                |

----

|                                                              |   | Three      Months Ended June 30, |       |
|-------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                              |   | 2009                             |       |   | 2008 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                        |   |                             |       |   |   |   |
| Net      earnings                                                 |   | $                                | 1,117,967  |   |   | $ | 1,340,250 |   |
| Adjustments      to reconcile net earnings to net                 |   |                             |       |   |   |   |   |   |
|   cash      used in operating activities:               |   |                             |       |   |   |   |   |   |
| Loss      on sale of assets                                       |   |                             | 2,563      |   |   |   | - |   |
| Change      in accounts receivable and inventory reserves         |   |                             | 33,817     |   |   |   | 329,553 |   |
| Depreciation      and amortization                                |   |                             | 103,898    |   |   |   | 111,338 |   |
| Change      in cash surrender value of life insurance             |   |                             | (17,001    | ) |   |   | (17,001 | ) |
| Deferred      income taxes                                        |   |                             | (108,000   | ) |   |   | (117,376 | ) |
| Periodic      pension cost                                        |   |                             | -          |   |   |   | 23,325 |   |
| Gain      on retirement plan settlement                           |   |                             | (8,460     | ) |   |   | - |   |
| Warranty      reserve                                             |   |                             | (40,733    | ) |   |   | 4,008 |   |
| Compensation      expense related to stock options                |   |                             | 84,830     |   |   |   | 84,830 |   |
| Change      in operating assets and liabilities:                  |   |                             |       |   |   |   |   |   |
|   Accounts      receivable                              |   |                             | (2,902,734 | ) |   |   | 63,723 |   |
|   Notes      receivable and other non-trade receivables |   |                             | 38,928     |   |   |   | 14,592 |   |
|   Inventories                                           |   |                             | (865,504   | ) |   |   | (3,031,124 | ) |
|   Prepaid      expenses and other                       |   |                             | 217,165    |   |   |   | 177,928 |   |
|   Accounts      payable                                 |   |                             | 146,377    |   |   |   | 432,790 |   |
|   Accrued      expenses                                 |   |                             | (927,604   | ) |   |   | (809,252 | ) |
|   Income      taxes receivable/payable                  |   |                             | 133,000    |   |   |   | 210,000 |   |
| Total      adjustments                                            |   |                             | (4,109,458 | ) |   |   | (2,522,666 | ) |
|  Net      cash used in operating activities                  |   |                             | (2,991,491 | ) |   |   | (1,182,416 | ) |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                        |   |                             |       |   |   |   |   |   |
| Proceeds      from sale of investments                            |   |                             | -          |   |   |   | 3,501,036 |   |
| Purchase      of investments                                      |   |                             | (6,204     | ) |   |   | (1,501,648 | ) |
| Capital      expenditures                                         |   |                             | (74,977    | ) |   |   | (61,905 | ) |
|  Net      cash (used in) provided by investing activities    |   |                             | (81,181    | ) |   |   | 1,937,483 |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                        |   |                             |       |   |   |   |   |   |
| Aircraft      term loan payments                                  |   |                             | (450,035   | ) |   |   | (28,113 | ) |
| Payment      of cash dividend                                     |   |                             | (800,080   | ) |   |   | (727,050 | ) |
| Payment      on capital leases                                    |   |                             | (4,154     | ) |   |   | (8,163 | ) |
|  Net      cash used in financing activities                  |   |                             | (1,254,269 | ) |   |   | (763,326 | ) |
| NET      DECREASE IN CASH AND CASH EQUIVALENTS                    |   |                             | (4,326,941 | ) |   |   | (8,259 | ) |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             |   |                             | 6,852,713  |   |   |   | 51,858 |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                   |   | $                                | 2,525,772  |   |   | $ | 43,599 |   |
|                                                              |   |                             |       |   |   |   |   |   |
|                                                              |   |                             |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:            |   |                             |       |   |   |
| Cash      paid during the period for:                             |   |                             |       |   |   |   |   |   |
| Interest                                                          |   | $                                | 18,864     |   |   | $ | 13,170 |   |
| Income      taxes                                                 |   |                             | 614,000    |   |   |   | 652,085 |   |
|                                                              |   |                             |       |   |   |   |   |   |
|                                                              |   |                             |       |   |   |   |   |   |
| See      notes to condensed consolidated financial statements.    |   |                             |       |   |   |   |   |   |

----

|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     | Accumulated        |       |          |          |        |
|----------------------------------------------------------------|--------|-------------------|-----------|--------|------------|--------|---------|---------|--------|---------|-----------|--------|----------|--------------------|------------|---------------|---------------|-------------|
|                                                           |   | Common      Stock |      |   | Additional |   |    |    |   |    | Other     |   |     | Total              |       |
|                                                           |   |              |      |   |       |   |    | Paid-In |   |    | Retained  |   |     | Comprehensive      |       |          | Stockholders' |        |
|                                                           |   | Shares            |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |     | Income      (Loss) |       |          | Equity        |        |
| Balance,      March 31, 2008                                   |   |              | 2,423,506 |   |       | $      | 605,876 |    |   | $       | 5,700,002 |   |     | $                  | 11,450,192 |          |          | $           | (41,513 | ) |   | $ | 17,714,557 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Net      earnings                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 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 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          | Accumulated |   |
|                                                           |   | Common      Stock |      |   | Additional |   |    |    |   |    |      | Other  |     |               | Total      |          |
|                                                           |   |              |      |   |       |   |    |    |   | Paid-In |      |   | Retained |               |       | Comprehensive |          |        | Stockholders' |   |
|                                                           |   | Shares            |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |     | Income      (Loss) |       |          | Equity        |        |
| Balance,      March 31, 2009                                   |   |              | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 6,045,330 |   |     | $                  | 15,101,787 |          |          | $           | - |   |   | $ | 21,753,238 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Net      earnings                                              |   |              |      |   |       |   |    |    |   |    |      |   |     |               | 1,117,967  |          |          |        |   |   |   |   |   |   |
|   Other      comprehensive income                    |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        | - |   |   |   |   |   |
| Comprehensive      Income                                      |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   | 1,117,967 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| Cash      dividend ($0.33 per share)                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               | (800,080   | )             |          |        |   |   |   |   | (800,080 | ) |
| Compensation      expense related to                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |
|     stock      options                     |   |              |      |   |       |   |    |    |   |    | 84,830    |   |     |               |       |          |          |        |   |   |   |   | 84,830 |   |
| Balance,      June 30, 2009                                    |   |              | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 6,130,160 |   |     | $                  | 15,419,674 |          |          | $           | - |   |   | $ | 22,155,955 |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
|                                                           |   |              |      |   |       |   |    |    |   |    |      |   |     |               |       |          |          |        |   |   |   |   |   |   |
| See      notes to condensed consolidated financial statements. |   |              |      |   |       |   |    |    |   |

----

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

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

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

|                                           |   | Three      Months Ended June 30, |      |
|------------------------------------------------|--------|----------------------------------|-----------|
|                                           |   | 2009                             |      |   | 2008 |   |
|                                           |   |                             |      |   |   |   |
| Net      earnings                              |   | $                                | 1,117,967 |   |   | $ | 1,340,250 |   |
|                                           |   |                             |      |   |   |   |   |   |
| Other      Comprehensive Income:               |   |                             |      |   |   |   |   |   |
| Amortization      of Net Actuarial Losses (Net |   |                             |      |   |   |   |   |   |
|    of      tax)                 |   |                             | -         |   |   |   | 3,772 |   |
|                                           |   |                             |      |   |   |   |   |   |
| Total      Comprehensive Income                |   | $                                | 1,117,967 |   |   | $ | 1,344,022 |   |

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

|                                          |   | Three      Months Ended June 30, |      |
|-----------------------------------------------|--------|----------------------------------|-----------|
|                                          |   | 2009                             |      |   | 2008 |   |
|                                          |   |                             |      |   |   |   |
| Net      earnings                             |   | $                                | 1,117,967 |   |   | $ | 1,340,250 |   |
|                                          |   |                             |      |   |   |   |   |   |
| Basic      and Diluted Net Earnings Per Share |   | $                                | 0.46      |   |   | $ | 0.55 |   |
|                                          |   |                             |      |   |   |   |   |   |
| Weighted      Average Shares Outstanding:     |   |                             |      |   |   |   |   |   |
| Basic      and Diluted                        |   |                             | 2,424,486 |   |   |   | 2,423,506 |   |
|                                          |   |                             |      |   |   |   |   |   |

----

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

|                                       |   | June      30, |       |   | March      31, |   |
|--------------------------------------------|--------|---------------|------------|--------|----------------|--------|
|                                       |   | 2009          |       |   | 2009           |   |
|  Aircraft      parts and supplies     |   | $             | 170,850    |   |           | $      | 151,833 |   |
|  Ground      equipment manufacturing: |   |          |       |   |           |   |   |   |
| Raw      materials                         |   |          | 8,306,645  |   |           |   | 6,935,490 |   |
| Work      in process                       |   |          | 2,023,453  |   |           |   | 2,439,072 |   |
| Finished      goods                        |   |          | 777,585    |   |           |   | 886,634 |   |
|  Total      inventories               |   |          | 11,278,533 |   |           |   | 10,413,029 |   |
|  Reserves                             |   |          | (582,073   | )      |           |   | (582,073 | ) |
|                                       |   |          |       |   |           |   |   |   |
| Total,      net of reserves                |   | $             | 10,696,460 |   |           | $      | 9,830,956 |   |
|                                       |   |          |       |   |           |   |   |   |

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

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

----

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

|                           |   | Fair      Value Measurements at |      |
|--------------------------------|--------|---------------------------------|-----------|
|                           |   | June      30, 2009              |      |   | March      31, 2009 |   |
|                           |   |                            |      |   |   |   |
| Cash      and cash equivalents |   | $                               | 2,525,772 |   |   | $ | 6,852,713 |   |
|                           |   |                            |      |   |   |   |   |   |
| Short-term      investments    |   | $                               | 1,008,425 |   |   | $ | 1,002,221 |   |

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

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

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

----

|                                |   | Three      Months Ended June 30,                                                                                                     |       |
|-------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                |   | 2009                                                                                                                                 |       |   | 2008 |   |
| Operating      Revenues:            |   |                                                                                                                                 |       |   |   |   |
| Overnight      Air Cargo            |   | $                                                                                                                                    | 8,788,476  |   |   | $ | 9,455,564 |   |
| Ground      Equipment Sales:        |   |                                                                                                                                 |       |   |   |   |   |   |
|    Domestic          |   |                                                                                                                                 | 6,984,825  |   |   |   | 10,262,005 |   |
|    International     |   |                                                                                                                                 | 1,117,994  |   |   |   | 1,079,000 |   |
| Total      Ground Equipment Sales   |   |                                                                                                                                 | 8,102,819  |   |   |   | 11,341,005 |   |
| Ground      Support Services        |   |                                                                                                                                 | 2,057,012  |   |   |   | 1,620,008 |   |
| Total                               |   | $                                                                                                                                    | 18,948,307 |   |   | $ | 22,416,577 |   |
|                                |   |                                                                                                                                 |       |   |   |   |   |   |
| Operating      Income               |   |                                                                                                                                 |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                                                                                                                    | 794,811    |   |   | $ | 841,428 |   |
| Ground      Equipment Sales         |   |                                                                                                                                 | 1,356,532  |   |   |   | 2,079,067 |   |
| Ground      Support Services        |   |                                                                                                                                 | 255,342    |   |   |   | (65,375 | ) |
| Corporate                           |   |                                                                                                                                 | (671,548   | ) |   |   | (774,601 | ) |
| Total                               |   | $                                                                                                                                    | 1,735,137  |   |   | $ | 2,080,519 |   |
|                                |   |                                                                                                                                 |       |   |   |   |   |   |
| Capital      Expenditures:          |   |                                                                                                                                 |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                                                                                                                    | 12,500     |   |   | $ | 14,345 |   |
| Ground      Equipment Sales         |   |                                                                                                                                 | 20,436     |   |   |   | 3,605 |   |
| Ground      Support Services        |   |                                                                                                                                 | 13,555     |   |   |   | 5,943 |   |
| Corporate                           |   |                                                                                                                                 | 28,486     |   |   |   | 38,012 |   |
| Total                               |   | $                                                                                                                                    | 74,977     |   |   | $ | 61,905 |   |
|                                |   |                                                                                                                                 |       |   |   |   |   |   |
| Depreciation      and Amortization: |   |                                                                                                                                 |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                                                                                                                    | 53,175     |   |   | $ | 69,869 |   |
| Ground      Equipment Sales         |   |                                                                                                                                 | 11,868     |   |   |   | 12,727 |   |
| Ground      Support Services        |   |                                                                                                                                 | 26,744     |   |   |   | 19,944 |   |
| Corporate                           |   |                                                                                                                                 | 12,111     |   |   |   | 8,798 |   |
| Total                               |   | $                                                                                                                                    | 103,898    |   |   | $ | 111,338 |   |
|                                |   |                                                                                                                                 |       |   |   |   |   |   |
|                                |   |                     As      of : |       |   |   |   |   |
|                                |   | June      30, 2009                                                                                                                   |       |   | March      31, 2009 |   |
| Identifiable      Assets:           |   |                                                                                                                                 |       |   |   |   |   |   |
| Overnight      Air Cargo            |   | $                                                                                                                                    | 4,670,785  |   |   | $ | 6,779,257 |   |
| Ground      Equipment Sales         |   |                                                                                                                                 | 17,536,374 |   |   |   | 12,299,439 |   |
| Ground      Support Services        |   |                                                                                                                                 | 2,184,386  |   |   |   | 2,231,834 |   |
| Corporate                           |   |                                                                                                                                 | 4,083,900  |   |   |   | 8,030,807 |   |
| Total                               |   | $                                                                                                                                    | 28,475,445 |   |   | $ | 29,341,337 |   |

----

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

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

| (In      thousands)                                     |   |                             |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------|--------|----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                    |   | Three      Months Ended June 30, |   |   |   |   |
|                                                    |   | 2009                             |   |   |   |   |   | 2008   |   |   |   |   |
|                                                    |   |                             |   |   |   |   |   |   |   |   |   |   |
| Overnight      Air Cargo Segment:                       |   |                             |   |   |   |   |   |   |   |   |   |   |
|     FedEx                           |   | $                                | 8,788  |   |   |   | 46     | %      |   | $      | 9,456  |   |   |   | 42 | % |
| Ground      Equipment Sales Segment:                    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Military                        |   |                             | 5,873  |   |   |   | 31     | %      |   |   | 8,795  |   |   |   | 39 | % |
|     Commercial      - Domestic      |   |                             | 1,112  |   |   |   | 6      | %      |   |   | 1,467  |   |   |   | 7 | % |
|     Commercial      - International |   |                             | 1,118  |   |   |   | 6      | %      |   |   | 1,079  |   |   |   | 5 | % |
|                                                    |   |                             | 8,103  |   |   |   | 43     | %      |   |   | 11,341 |   |   |   | 51 | % |
|                                                    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ground      Support Services Segment                    |   |                             | 2,057  |   |   |   | 11     | %      |   |   | 1,620  |   |   |   | 7 | % |
|                                                    |   | $                                | 18,948 |   |   |   | 100    | %      |   | $      | 22,417 |   |   |   | 100 | % |
|                                                    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                                                     |   | Three      Months Ended June 30, |       |
|----------------------------------------------------------|--------|----------------------------------|------------|
|                                                     |   | 2009                             |       |   | 2008 |   |
|                                                     |   |                             |       |   |   |   |
| Net      Cash Used in Operating Activities               |   | $                                | (2,992,000 | ) |   | $ | (1,182,000 | ) |
| Net      Cash (Used in) Provided by Investing Activities |   |                             | (81,000    | ) |   |   | 1,937,000 |   |
| Net      Cash Used in Financing Activities               |   |                             | (1,254,000 | ) |   |   | (763,000 | ) |
|                                                     |   |                             |       |   |   |   |   |   |
| Net      Decrease in Cash                                |   | $                                | (4,327,000 | ) |   | $ | (8,000 | ) |
|                                                     |   |                             |       |   |   |   |   |   |

----

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

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

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

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

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

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

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

----

----

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

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

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