KHK Kitty Hawk

Kitty Hawk, Inc. (AMEX: KHK) today announced that its wholly owned subsidiary, Kitty Hawk Cargo, Inc., has entered into a contract with the United States Postal Service ("USPS") to manage a daytime air and ground cargo network (�C-NET�) for the holiday season mail from November 28 through December 24, 2006. Based on successful performance of the contract, the total revenue to Kitty Hawk is estimated to be $29.33 million. The contract value includes the previously reported USPS award of $10.5 million towards the C-NET network, but does not include separate contracts with the USPS to charter seven of Kitty Hawk�s own aircraft to operate in the C-NET network. The daytime C-NET will operate through Kitty Hawk's Fort Wayne, Indiana sort facility and will be in addition to Kitty Hawk's own scheduled overnight air freight network. The C-NET is anticipated to include, in addition to seven (7) of Kitty Hawk's own aircraft, approximately 130 trucks procured by Kitty Hawk, over 200 seasonal employees at Kitty Hawk's Fort Wayne sort facility and approximately 29 aircraft contracted by the USPS. Kitty Hawk is also responsible for the ground handling at all cities that are part of the C-NET. �Kitty Hawk team members are honored the United States Postal Service has recognized the capabilities of our unique, seamless and independent overnight air and expedited ground freight transportation network. These capabilities include our 240,000 square foot Fort Wayne, Indiana air and ground hub as well as the team�s ability to manage this significant coast-to-coast daytime network for holiday mail and priority freight shipments. We expect that successful performance of this contract will position Kitty Hawk for improved profitability during the fourth quarter,� commented Robert W. Zoller, President and CEO. �Throughout the 1990�s Kitty Hawk�s all cargo aircraft have worked on behalf of the USPS,� added Steven Markhoff, Senior Vice President and Chief Operating Officer of Kitty Hawk Cargo. �However, the 2006 C-NET is the single largest project our team has been awarded by the USPS in recent years and for the first time draws on all of the Company�s experience managing and operating our extensive North American expedited air and ground freight network. We look forward to successfully executing this Network and possibly serving future USPS programs,� Mr. Markhoff concluded. The contract provides for minimum payments and agreed upon volumes from the USPS ranging from approximately 250,000 cubic feet of mail per day in weeks one and two to approximately 300,000 cubic feet of mail in weeks three and four. C-NET is scheduled to run six days per week for each of the four weeks. Kitty Hawk is responsible for the complete management of C-NET and is subject to performance penalties for inexcusable delays, as defined in the Contract, attributed to Kitty Hawk's performance. About Kitty Hawk, Inc. www.kittyhawkcompanies.com As a recognized leader in customer service, Kitty Hawk is the premier provider of guaranteed, mission-critical, scheduled overnight air and scheduled time-definite expedited ground freight transportation to major business centers and surrounding communities throughout North America, including, Alaska, Hawaii, Toronto, Canada, and San Juan, Puerto Rico. With more than 30 years experience in the aviation and air freight industries, Kitty Hawk plays a key connecting role in the global supply chain. Kitty Hawk serves the logistics needs of more than 550 freight forwarders, integrated carriers, logistics companies and major airlines with its extensive integrated air and ground network, fleet of Boeing 737-300SF and 727-200 cargo aircraft, as well as a 239,000 square-foot cargo warehouse, U.S. Customs clearance and sort facility at its Fort Wayne, Indiana hub. In 2005, Kitty Hawk became the North American launch customer for the fuel-efficient and environmentally-friendly Boeing 737-300SF cargo aircraft. Kitty Hawk's scheduled freight network and award-winning, guaranteed overnight time-definite service are ideal for heavy-weight shipments (over 150 lbs.), special goods with unique dimensions, perishables, animals and other valuable shipments. Statement under the Private Securities Litigation Reform Act: This report may contain forward-looking statements that are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or future financial and operating performance and involve known and unknown risks and uncertainties that may cause actual results or performance to be materially different from those indicated by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "forecast," "may," "will," "could," "should," "expect," "intends," "plan," "believe," "potential" or other similar words indicating future events or contingencies. Some of the things that could cause actual results to differ from expectations are: economic conditions; the impact of high fuel prices; our inability to successfully operate the C-NET network which could result in monetary performance penalties imposed by the USPS, our inability to successfully implement and operate our expanded scheduled airport-to-airport expedited ground freight network; our inability to successfully operate and integrate the Air Container Transport operation and to retain their customers; failure of key suppliers and vendors to perform; our inability to attract sufficient customers at economical prices for our expanded ground network; unforeseen increases in liquidity and working capital requirements related to our expanded ground network; potential competitive responses from other operators of nationwide airport-to-airport ground freight networks; the continued impact of terrorist attacks, global instability and potential U.S. military involvement; the Company's significant lease obligations and indebtedness; the competitive environment and other trends in the Company's industry; changes in laws and regulations; changes in the Company's operating costs including fuel; changes in the Company's business plans; interest rates and the availability of financing; limitations upon financial and operating flexibility due to the terms of our credit facility; liability and other claims asserted against the Company; labor disputes; the Company's ability to attract and retain qualified personnel; and inflation. For a discussion of these and other risk factors, see the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. These risk factors may not be exhaustive. The Company operates in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on the Company's business or events described in any forward-looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Kitty Hawk, Inc. (AMEX: KHK) today announced that its wholly owned subsidiary, Kitty Hawk Cargo, Inc., has entered into a contract with the United States Postal Service ("USPS") to manage a daytime air and ground cargo network ("C-NET") for the holiday season mail from November 28 through December 24, 2006. Based on successful performance of the contract, the total revenue to Kitty Hawk is estimated to be $29.33 million. The contract value includes the previously reported USPS award of $10.5 million towards the C-NET network, but does not include separate contracts with the USPS to charter seven of Kitty Hawk's own aircraft to operate in the C-NET network. The daytime C-NET will operate through Kitty Hawk's Fort Wayne, Indiana sort facility and will be in addition to Kitty Hawk's own scheduled overnight air freight network. The C-NET is anticipated to include, in addition to seven (7) of Kitty Hawk's own aircraft, approximately 130 trucks procured by Kitty Hawk, over 200 seasonal employees at Kitty Hawk's Fort Wayne sort facility and approximately 29 aircraft contracted by the USPS. Kitty Hawk is also responsible for the ground handling at all cities that are part of the C-NET. "Kitty Hawk team members are honored the United States Postal Service has recognized the capabilities of our unique, seamless and independent overnight air and expedited ground freight transportation network. These capabilities include our 240,000 square foot Fort Wayne, Indiana air and ground hub as well as the team's ability to manage this significant coast-to-coast daytime network for holiday mail and priority freight shipments. We expect that successful performance of this contract will position Kitty Hawk for improved profitability during the fourth quarter," commented Robert W. Zoller, President and CEO. "Throughout the 1990's Kitty Hawk's all cargo aircraft have worked on behalf of the USPS," added Steven Markhoff, Senior Vice President and Chief Operating Officer of Kitty Hawk Cargo. "However, the 2006 C-NET is the single largest project our team has been awarded by the USPS in recent years and for the first time draws on all of the Company's experience managing and operating our extensive North American expedited air and ground freight network. We look forward to successfully executing this Network and possibly serving future USPS programs," Mr. Markhoff concluded. The contract provides for minimum payments and agreed upon volumes from the USPS ranging from approximately 250,000 cubic feet of mail per day in weeks one and two to approximately 300,000 cubic feet of mail in weeks three and four. C-NET is scheduled to run six days per week for each of the four weeks. Kitty Hawk is responsible for the complete management of C-NET and is subject to performance penalties for inexcusable delays, as defined in the Contract, attributed to Kitty Hawk's performance. About Kitty Hawk, Inc. www.kittyhawkcompanies.com As a recognized leader in customer service, Kitty Hawk is the premier provider of guaranteed, mission-critical, scheduled overnight air and scheduled time-definite expedited ground freight transportation to major business centers and surrounding communities throughout North America, including, Alaska, Hawaii, Toronto, Canada, and San Juan, Puerto Rico. With more than 30 years experience in the aviation and air freight industries, Kitty Hawk plays a key connecting role in the global supply chain. Kitty Hawk serves the logistics needs of more than 550 freight forwarders, integrated carriers, logistics companies and major airlines with its extensive integrated air and ground network, fleet of Boeing 737-300SF and 727-200 cargo aircraft, as well as a 239,000 square-foot cargo warehouse, U.S. Customs clearance and sort facility at its Fort Wayne, Indiana hub. In 2005, Kitty Hawk became the North American launch customer for the fuel-efficient and environmentally-friendly Boeing 737-300SF cargo aircraft. Kitty Hawk's scheduled freight network and award-winning, guaranteed overnight time-definite service are ideal for heavy-weight shipments (over 150 lbs.), special goods with unique dimensions, perishables, animals and other valuable shipments. Statement under the Private Securities Litigation Reform Act: This report may contain forward-looking statements that are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or future financial and operating performance and involve known and unknown risks and uncertainties that may cause actual results or performance to be materially different from those indicated by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "forecast," "may," "will," "could," "should," "expect," "intends," "plan," "believe," "potential" or other similar words indicating future events or contingencies. Some of the things that could cause actual results to differ from expectations are: economic conditions; the impact of high fuel prices; our inability to successfully operate the C-NET network which could result in monetary performance penalties imposed by the USPS, our inability to successfully implement and operate our expanded scheduled airport-to-airport expedited ground freight network; our inability to successfully operate and integrate the Air Container Transport operation and to retain their customers; failure of key suppliers and vendors to perform; our inability to attract sufficient customers at economical prices for our expanded ground network; unforeseen increases in liquidity and working capital requirements related to our expanded ground network; potential competitive responses from other operators of nationwide airport-to-airport ground freight networks; the continued impact of terrorist attacks, global instability and potential U.S. military involvement; the Company's significant lease obligations and indebtedness; the competitive environment and other trends in the Company's industry; changes in laws and regulations; changes in the Company's operating costs including fuel; changes in the Company's business plans; interest rates and the availability of financing; limitations upon financial and operating flexibility due to the terms of our credit facility; liability and other claims asserted against the Company; labor disputes; the Company's ability to attract and retain qualified personnel; and inflation. For a discussion of these and other risk factors, see the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. These risk factors may not be exhaustive. The Company operates in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on the Company's business or events described in any forward-looking statements. The Company disclaims any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results.