KHK Kitty Hawk

Kitty Hawk, Inc. (AMEX:KHK) through its wholly-owned subsidiary Kitty Hawk Ground, Inc., announced today that it has completed its previously announced Asset Purchase Agreement with privately held Air Container Transport, Inc. (ACT). ACT operates an airport-to-airport expedited ground freight network primarily in California, Oregon, Washington, British Columbia, Colorado, Utah, Illinois and Texas. In 2005, ACT had revenues of $44.5 million. The transaction is expected to be accretive to Kitty Hawk's financial performance in 2006. "The closing of ACT marks a very important milestone for Kitty Hawk. We have stayed focused on our strategic plan to build the only independent expedited air and ground heavyweight freight network in North America," said Robert W. Zoller, Kitty Hawk President and CEO. "This acquisition further strengthens the Kitty Hawk brand through a broader range of products and services for a wider range of customers; improved geographic and international gateway coverage representing new opportunities for growth; and the addition of an expanded and experienced ground network infrastructure. "ACT's operations and service offerings are complementary to our existing business, with only a 25-30 percent duplication of customers," said Gary Jensen, VP and COO of Kitty Hawk Ground. "With Kitty Hawk and ACT's long-standing emphasis on customer satisfaction and service, we look forward to a seamless operational integration." Kitty Hawk Ground paid $5 million in a combination of cash and shares of unregistered Kitty Hawk common stock for substantially all of ACT's assets, other than certain excluded assets. In addition, Kitty Hawk Ground reimbursed ACT for its normal operating expenses from May 30, 2006 through the closing date and acquired the cash, accounts receivable and prepaid items generated from the operation of the acquired business in the ordinary course during the same period. Kitty Hawk will register the resale of the shares of Kitty Hawk common stock to be delivered to ACT within sixty days of the closing date. ACT's assets will be operated by Kitty Hawk Ground doing business as Air Container Transport. At closing, Kitty Hawk Ground assumed contracts relating to ACT's customers, trucks and trailers, leased operating facilities, various other facility and equipment leases and its fleet of owner operators. Satish Jindel of SJ Consulting Group, Inc. assisted and advised Kitty Hawk management with operational and financial due diligence of ACT. ACT is considered by independent analysts to be the West Coast's dominant airport-to-airport expedited ground freight network carrier. Its operations are focused along the I-5 highway corridor and extend to all key business centers and international gateway airports from Southwest Canada to San Diego, California and extending as far east as Illinois and Texas. ACT operates in 26 cities offering air and ground freight delivery as well as local pick up and delivery services. ACT offers its customers full EDI capabilities, quality control, 24 hour/365 day dispatch, customer service assistance and express service. 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 beginning October 31, 2005 of scheduled time-definite coast-to-coast 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, US 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 aircraft. Kitty Hawk's air and ground cargo networks 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 implement and operate our expanded ground network; our failure to close the acquisition of the operating assets of Air Container Transport; our inability to successfully operate and integrate the Air Container Transport operations; 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 coast-to-coast less than truckload 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; liability and other claims asserted against the Company; labor disputes; the Company's ability to attract and retain qualified personnel; inflation; and costs. For a discussion of these and other risk factors, see Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2005. 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.