ATSG REPORTS STRONG REVENUE AND CASH FLOW FOR 2008

WILMINGTON, Ohio - March 23, 2009 - Air Transport Services Group, Inc. (NASDAQ: ATSG) today reported strong fourth-quarter and annual revenue and cash flow growth in 2008, principally from the air cargo businesses it acquired at the end of 2007 and the deployment of additional Boeing 767 and 757 aircraft.

ATSG said its 2008 revenues increased 37 percent to $1.61 billion from $1.17 billion in 2007. Fourth-quarter 2008revenues increased 35 percent to $430.7 million from $319.2 million.

ATSG reported 2008 net losses of $64.2 million, or $1.03 per diluted share, for the fourth quarter, and $56.0 million, or$0.90 per diluted share, for the year. In 2007, ATSG’s net earnings were $8.4 million, or 14 cents per diluted share,for the fourth quarter, and $19.6 million, or 33 cents per diluted share, for the year.

Results for 2008 include pretax impairment charges for acquired goodwill and customer intangibles totaling $91.2million in the fourth quarter. Fourth quarter 2008 Adjusted EBITDA, which excludes the impairment charges,increased 122 percent to $68.1 million from $30.7 million. Adjusted EBITDA for 2008 increased 85 percent to $174.5million from $94.5 million in 2007. Adjusted EBITDA is a non-GAAP measure of financial performance thatmanagement believes better reflects the performance of ATSG and other asset-intensive air-cargo businesses. Seetables providing a reconciliation of GAAP Net Earnings to Adjusted EBITDA at the end of this release.

Joe Hete, president and CEO of ATSG, said "Our ability to generate strong cash flow from our valuable aircraft assetsunder multiple business models is a unique, underappreciated strength of ATSG. It is that flexibility that we will rely onto meet our obligations to creditors and to deliver strong returns on capital to our shareholders."

ATSG’s pretax income for 2008 was a loss of $57.9 million for the fourth quarter, and a loss of $45.8 million for 2008.Excluding impairment charges for acquired goodwill and customer intangibles recorded in 2008, pretax earnings were$45.4 million, an increase of 36 percent from 2007 pretax earnings of $33.3 million. Net earnings included non-cashincome tax expense of $10.2 million for 2008, and $13.7 million for 2007. ATSG did not pay out cash for federalincome taxes in 2007 or 2008 because tax-loss carryforwards offset its federal income tax liability.

On Monday, March 16, 2009, ATSG’s subsidiary ABX Air, Inc. signed an agreement with DHL to amend its $92.3million unsecured promissory note with DHL, and also signed a memorandum of understanding ("MOU") with DHLconcerning leases of certain Boeing 767 aircraft. The combined effect of the agreement and MOU, when finalized, willreduce ATSG’s total outstanding debt principal by more than $110 million. The note agreement also calls for thewithdrawal of DHL’s prepayment demand. These agreements are further described below under DHL NoteAmendment and Aircraft Leases.

"Our goals at the outset of 2008 were to deliver strong cash returns by supporting our principal customer, DHL, whileexpanding our customer base and operational capabilities via the Cargo Holdings International (CHI) businesses weacquired at the end of 2007," Hete continued. "DHL’s decisions during the year to restructure, and later to convert itsdomestic U.S. package delivery network into an international-only network, together with the onset of a globalrecession, made the year extraordinarily challenging. But measured against our initial goals, 2008 was a successfulyear for ATSG, with strong revenue growth and a major increase in cash flow, mostly from those newer businesses.With those achievements, and the significant de-leveraging of our balance sheet we announced last week, I amconfident in our ability to generate continued strong operating cash flow during 2009."

ATSG is required annually to test its acquired intangible asset values for impairment. The global economic recessionand tight credit-market conditions that developed during 2008 are affecting the businesses of some of ATSG’s customers, and affecting the cash-flow outlook for Air Transport International, LLC (ATI), and Capital CargoInternational Airlines, Inc. (CCIA). As a result of those tests, ATSG determined that the goodwill and acquiredcustomer intangibles of both ATI and CCIA were impaired. In the fourth quarter of 2008, it recorded non-cash chargestotaling $73.2 million and $18.0 million, respectively, to reflect the impairment in goodwill and customer intangibles.

"The businesses we acquired have significantly increased our cash generating capacity, and have prepared us towithstand the loss of a substantial portion of our business with DHL," Hete added. "Because those CHI companies arepart of our portfolio, we have many more opportunities to diversify our revenue streams, add cash flow, and deliverreturns to shareholders."

Results Associated with the DHL Agreements

In November 2008, DHL and ABX Air amended their ACMI and Hub Services agreements to establish new pricing forthe fourth quarter of 2008 and the first quarter of 2009. The revisions effectively fixed ABX Air’s pretax earnings underthose agreements. While base and incremental markup revenues for the first nine months of 2008 were based onexpense or performance metrics as described in the agreements, fourth-quarter markup revenues were based onprior-period benchmarks.

As a result, ABX Air’s aggregate revenues under its ACMI and Hub Services agreements with DHL were $313.9million in the fourth quarter, 8 percent more than in the fourth quarter a year ago, and $1.15 billion for the year, up 6percent versus 2007. ACMI mark-up revenues decreased 6 percent in the fourth quarter to $109.5 million and weredown 6 percent to $424.5 million for the year. Hub Services mark-up revenues were $61.6 million for the fourthquarter, down 27 percent, and $257.3 million, down 19 percent for the year. Revenues reimbursed without markup,principally for aircraft fuel, were $139.9 million, up 55 percent, for the fourth quarter, and $470.1 million, up 50 percentfor the year.

Pre-tax earnings for the DHL business were $16.5 million in the fourth quarter, up 53 percent, and $25.2 million, up 19percent for the year. Fourth-quarter earnings reflect the reversal of a $2.9 million reserve for certain corporate costsrelated to an arbitration proceeding, DHL’s reimbursement of ABX Air’s accrued vacation expense for terminatedemployees, and increased incremental mark-ups for Hub Services.

In response to DHL’s restructuring, and subsequent suspension of its domestic package delivery services in the U.S.in favor of international-only services to and from the U.S., ABX Air had eliminated approximately 4,800 positionsthrough February 2009, reduced its DHL-related sort management operations from a network of regional hubs to asingle overnight operation in Wilmington, and idled more than half of its DHL-dedicated fleet, including all of its DC-9aircraft. ABX Air’s revenues and expenses for 2008 included $79.4 million for benefits that DHL has reimbursed undera severance and retention agreement.

ABX Air and DHL continue to discuss a range of issues related to the restructuring of DHL’s U.S. operations. Thosediscussions remain positive and have yielded results, including the amendment of the unsecured promissory note andthe memorandum of understanding on aircraft leases. Several issues remain under discussion, including pension-planfunding and other issues related to the potential termination of the ACMI and Hub Services agreements, and DHL’scontinuing requirement for ABX Air’s 767 aircraft and services.

"We are continuing to support DHL’s international network with both air transport and sorting services in the UnitedStates, but we do not know whether, or for how long, our role in its operations will continue," Hete said. "We continueto believe, however, that our aircraft and support services represent the most flexible and customer-responsive meansfor DHL to meet its obligations to customers in the U.S. We will continue to work with DHL toward agreements thatreflect its status as our principal customer, but also serve the long-term interests of our shareholders."

ACMI Services

Revenues from the ACMI Services segment, including revenues for directly reimbursed costs, were $104.1 million forthe fourth quarter, and $421.0 million for all of 2008. These results were several times greater than 2007 levels due tothe contributions of the acquired airlines ATI and CCIA. Of the $365.4 million annual gain in ACMI segment revenues,$18.9 million represented organic growth, while the remainder was from acquired operations.

The ACMI Services segment had a pretax loss of $85.3 million for the fourth quarter and a loss of $84.1 million for theyear. Results for each period include impairment charges of $91.2 million. Excluding those charges, segment pretaxearnings were $7.1 million for 2008, of which the acquired operations contributed $5.0 million. In 2007, segmentpretax earnings were $4.6 million.

Revenues from the acquired CHI airlines, ATI and CCIA, were strong overall in 2008. ATI achieved consecutivequartergains during 2008 in revenues excluding reimbursed fuel costs, while CCIA’s revenues remained relativelystable during the year. Segment revenues benefited from ABX Air’s support of its Asian customer, ANA. That contract,however, will end this month. Segment results also reflect deployment of more freighter aircraft during 2008,generating additional block-hours and revenues, but also higher costs for certification, crews, maintenance anddepreciation expenses.

Cargo Aircraft Management (CAM)

CAM, the aircraft leasing unit of the former CHI, had pretax earnings of $4.9 million in the fourth quarter, and $18.1million for 2008. Its earnings include allocated interest expense from financing for the CHI acquisition, and thecarrying value of its aircraft assets. At the end of 2008, CAM had 34 aircraft under lease, of which 32 were leased toother ATSG airline subsidiaries. In 2009, CAM has signed agreements to lease three more Boeing 767 aircraft tooutside customers, and has issued options for another three.

CAM has contracted for conversion to full freighters of up to 14 of the Boeing 767s operating in non-standardpassenger-door configuration for DHL. As they are released from DHL service, these aircraft will be modified tostandard freighters and become available for lease or ACMI service beginning in the third quarter of 2009. One suchaircraft entered modification last fall as a prototype, and will be available for service soon.

Other Activities

Revenues from ATSG’s other activities increased 22 percent to $13.3 million in the fourth quarter of 2008, and wereup 29 percent to $46.4 million for the year including inter-company sales. Aircraft parts and maintenance operationswere solidly profitable for the year, as were contracts to manage three sorting centers for the U.S. Postal Service.During the fourth quarter of 2008, ATSG recorded a pre-tax gain of $5.8 million to reflect the receipt of insuranceproceeds from the disposition of one of its aircraft that had experienced a fire. These and other activities, net of nonreimbursedadministrative expenses, contributed $9.3 million and $7.1 million to pre-tax earnings in the fourth quarterand for the year ended December 31, 2008, respectively.

Selected Items and Outlook for 2009

DHL Note Amendment and Aircraft Leases

On March 16, 2009, ATSG and DHL agreed to amend the unsecured $92.3 million promissory note that ABX Airissued to DHL in 2003. Under the amendment, ATSG will pay down $15.0 million of the principal balance in exchange for DHL’s agreement to reduce the principal balance by $46.3 million to $31 million. The due date of the remaining$31.0 million remains August 2028, and the annual interest rate remains 5 percent. DHL will continue to reimburse theinterest expense from the note at least through 2012, and will withdraw its demand for repayment based on itsassertion of a "change in control" of ABX. The amendment also replaces limitations on ATSG’s ability to pay dividendsor buy back shares with new terms requiring payments to DHL based on dividend or share buyback amounts. ATSG’scredit agreements, however, include additional limitations on dividends and share buybacks.

ATSG also agreed to grant DHL an option to lease four Boeing 767 freighters from August 15, 2010 through 2015, atfavorable lease rates in exchange for assuming capital leases for five other Boeing 767 aircraft effective January 31,2009. ATSG’s balance sheet at year-end 2008 reflected approximately $52.8 million of debt obligations and acorresponding $22.2 million in asset values related to these aircraft capital leases. ABX will continue to operate someor all of these five Boeing 767 aircraft under the ACMI agreement if requested by DHL.

The combined effect of the agreement and MOU, if executed as proposed, would be to reduce ATSG’s totaloutstanding debt principal by in excess of $110 million.

Commercial Relationships With DHL

ABX Air continues to support DHL under an ACMI agreement subject to a three-year renewal in August 2010, with aone-year prior notice of termination requirement, and a Hub Services agreement subject to renewal each year onAugust 15, with a 90-day prior notice of termination requirement. Although DHL has conducted negotiations withUnited Parcel Service toward an agreement for services similar to those currently provided by ABX Air, no agreementhas been announced between DHL and UPS. DHL has informed ABX Air that it expects to continue to rely on ABX Airto support its U.S. air transport and package sorting operations at least through September 2009.

Outlook

ATSG said that its outlook for 2009 remains cautious, based on its outlook for a weak global economy, uncertaintyabout its current customers’ future requirements, and ATSG’s ability to reduce its costs to levels that will enable it tocompete for new business and generate reasonable returns.

Some customers, however, have signed agreements for new business with ATSG, and discussions are continuingwith others that could provide significant new sources of revenue in 2009 as more modified 767 freighters are addedto its fleet.

"We have launched a new transatlantic charter service with the global cargo carrier TNT, and signed important newleasing agreements with Amerijet International, First Air, and DHL," Hete said. "We will open our new MRO(maintenance, repair and overhaul) business this spring in Wilmington, where we will make available the expertise wehave developed over 28 years of industry experience to airlines and other aircraft operators worldwide."

ATSG’s longer-term outlook is for air-cargo customers to favor operators of the most fuel-efficient, reliable and flexibleaircraft, from responsive, experienced, full-service providers. Under that scenario, ATSG expects to be able to deployup to 14 additional Boeing 767 freighters for charter, ACMI, or lease contracts, beginning later this year.

"Strong headwinds from a global recession, and even stronger crosswinds from DHL’s wind-down of its U.S.-basedoperations, have not altered our long-term course," Hete said. "We have aircraft assets, led by our Boeing 767s, anda unique full-service business model that other organizations want and need, even in the current economy. We intendto be the preferred strategic resource for organizations seeking reliable, efficient and flexible air cargo services." 

About Air Transport Services Group, Inc.
ATSG is a leading provider of air cargo transportation and related services to domestic and foreign air carriers andother companies that outsource their air cargo lift requirements. Through five principal subsidiaries, including threeairlines with separate and distinct U.S. FAA Part 121 Air Carrier Certificates, ATSG also provides aircraft leasing,aircraft maintenance services, airport ground services, fuel management, specialized transportation management,and air charter brokerage services. ATSG’s subsidiaries include ABX Air, Inc., Air Transport International, LLC,Capital Cargo International Airlines, Inc., Cargo Aircraft Management, Inc., and LGSTX Services, Inc.

Except for historical information contained herein, the matters discussed in this release contain forward-looking statements that involve risks anduncertainties. There are a number of important factors that could cause Air Transport Services Group's ("ATSG's") actual results to differ materially fromthose indicated by such forward-looking statements. These factors include, but are not limited to, further reductions in the scope of services that ABX Air isperforming under its commercial agreements with DHL and the rate at which those reductions occur, ABX Air’s ability to maintain cost and service levelperformance under its commercial agreements with DHL, and other factors that are contained from time to time in ATSG's filings with the U.S. Securities andExchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers should carefully review this release andshould not place undue reliance on ATSG's forward-looking statements. These forward-looking statements were based on information, plans and estimatesas of the date of this release. ATSG undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions orfactors, new information, future events or other changes.

For more information, contact:
Quint Turner
Chief Financial Officer
Air Transport Services Group, Inc.
937-382-5591