<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 0-28428
AIRNET SYSTEMS, INC.
---------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-1458309
- ---------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3939 International Gateway, Columbus, Ohio 43219
-------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(614) 237-9777
------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes_X_ No___
Common Shares, $.01 Par Value,
Outstanding as of May 10, 1999 - 11,383,409
<PAGE>
AIRNET SYSTEMS, INC.
FORM 10-Q FOR QUARTER ENDED MARCH 31, 1999
PART I: FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1 Financial Statements (Unaudited)
<S> <C> <C>
Condensed Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 . 3
Condensed Consolidated Statements of Operations for the three months ended
March 31, 1999 and 1998. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and 1998 . . . .. . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements. . . . . . . . . . . . . . . . 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 3 Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . .11
PART II: OTHER INFORMATION
Items 1 through 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
</TABLE>
2
<PAGE>
AIRNET SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
In thousands, except share data March 31, December 31,
1999 1998
--------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 217 $ 1,142
Accounts receivable:
Trade, less allowances 14,379 13,077
Shareholders, affiliates, and associates 185 163
Inventory and spare parts 13,216 9,386
Taxes refundable 2,635 2,001
Deposits and prepaids 6,736 5,739
--------- ---------
Total current assets 37,368 31,508
Net property and equipment 76,142 75,826
Other assets:
Goodwill, net of accumulated amortization 8,152 8,237
Other intangibles, net of accumulated amortization 656 678
Investment in partnerships and other 2,588 2,490
Start-up costs -- 4,223
--------- ---------
Total assets $ 124,906 $ 122,962
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,530 $ 5,930
Salaries and related liabilities 2,172 1,284
Accrued expenses 1,159 3,889
Deferred taxes 1,813 1,814
Current portion of notes payable 24 26
--------- ---------
Total current liabilities 11,698 12,943
Notes payable, less current portion 39,375 35,480
Deferred tax liability 4,865 4,865
Shareholders' equity:
Preferred shares, $.01 par value; 10,000,000 shares
authorized; and no shares issued and outstanding -- --
Common shares, $.01 par value; 40,000,000 shares authorized; and
12,753,000 shares issued at March 31, 1999 and December 31, 1998 128 128
Additional paid-in-capital 78,424 78,455
Retained earnings 10,649 11,423
Treasury shares, 1,375,000 and 1,370,000 shares held at cost at ,
March 31, 1999 and December 31, 1998, respectively (20,233) (20,332)
--------- ---------
Total shareholders' equity 68,968 69,674
--------- ---------
Total liabilities and shareholders' equity $124,906 $122,962
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
AIRNET SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share data
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
-------- --------
<S> <C> <C>
NET REVENUES
Air transportation, net of excise tax
Check delivery $ 24,430 $ 22,370
Express delivery 5,892 3,913
Fixed base and other operations 200 288
-------- --------
Total net revenues 30,522 26,571
COSTS AND EXPENSES
Air transportation 23,003 19,215
Fixed base operations 255 175
Selling, general and administrative 3,754 2,271
-------- --------
Total costs and expenses 27,012 21,661
-------- --------
Income from operations 3,510 4,910
Interest expense 622 196
-------- --------
Income before income taxes 2,888 4,714
Provision for income taxes 1,174 1,860
-------- --------
Income before cumulative effect of a change in
accounting principle 1,714 2,854
Cumulative effect of writing off start-up costs, net of tax (2,488) --
-------- --------
Net income (loss) ($ 774) $ 2,854
-------- --------
-------- --------
Income (loss) per common share
Income before cumulative effect of a change in
accounting principle $ 0.15 $ 0.23
Cumulative effect of writing off start-up costs (0.22) --
-------- --------
Net income (loss) ($ 0.07) $ 0.23
-------- --------
-------- --------
Income (loss) per common share - assuming dilution
Income (loss) before cumulative effect of a change in
accounting principle $ 0.15 $ 0.22
Cumulative effect of writing off start-up costs (0.22) --
-------- --------
Net income (loss) ($ 0.07) $ 0.22
-------- --------
-------- --------
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
AIRNET SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
In thousands Three Months Ended
March 31,
--------------------
1999 1998
------- -------
<S> <C> <C>
Operating activities:
Net income (loss) ($ 774) $ 2,854
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Cumulative effect of writing off start-up costs 2,488 --
Depreciation 2,668 2,350
Amortization of intangibles 228 113
Provision for losses on accounts receivable 45 45
Loss (gain) on disposition of assets (10) 36
Cash provided by (used in) operating assets and liabilities:
Accounts receivable (1,369) (649)
Inventory and spare parts (3,830) (678)
Prepaid expenses (997) (388)
Start-up costs -- (922)
Accounts payable 599 255
Accrued expenses (2,730) (723)
Taxes payable 1,101 1,038
Salaries and related liabilities 887 (110)
Other, net (98) 60
------- -------
Net cash provided by (used in) operating activities (1,792) 3,281
Investing activities:
Acquisition of Data Air Courier, Inc., net of cash acquired -- (31)
Purchases of property and equipment (3,049) (4,781)
Payments for covenants not to compete (121) (119)
Proceeds from sales of property and equipment 75 74
------- -------
Net cash used in investing activities (3,095) (4,857)
Financing activities:
Proceeds from 1996 Incentive Stock Plan programs 68 1,183
Net borrowings (repayments)under the revolving credit facility 3,900 (1,000)
Repayment of long-term debt (6) (6)
------- -------
Net cash provided by financing activities 3,962 177
------- -------
Net decrease in cash (925) (1,399)
Cash and cash equivalents at beginning of period 1,142 2,125
------- -------
Cash and cash equivalents at end of period $ 217 $ 726
------- -------
------- -------
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
AIRNET SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
AirNet Systems, Inc. and its subsidiaries ("AirNet" or the "Company") operate a
fully integrated national air transportation network which provides delivery
service for time-critical shipments for customers in the U.S. banking industry
and other industries requiring the express delivery of packages. AirNet also
offers retail aviation fuel sales and related ground services for customers at
its Columbus, Ohio facility.
The accompanying unaudited condensed consolidated financial statements include
the accounts of AirNet Systems, Inc. and its subsidiaries. These financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions for Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. These financial statements should be read in
conjunction with the year ended December 31, 1998 consolidated financial
statements of AirNet Systems, Inc. incorporated by reference in the Annual
Report on Form 10-K (File No. 0-28428) for additional disclosures including a
summary of AirNet's accounting policies, which have not changed.
The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the results of interim periods. Operating
results for the three months ended March 31, 1999 are not necessarily indicative
of the results to be expected for the year ending December 31, 1999.
The preparation of the condensed consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes thereto. Actual results could differ from
those estimates.
2. WRITE OFF OF START-UP COSTS
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-5, Reporting the Costs of Start-Up
Activities, which requires that costs related to start-up activities be expensed
as incurred. Prior to 1999, the Company capitalized start-up costs associated
with its premium products line of business. Effective July 1, 1998, the Company
ceased capitalizing such costs and began amortizing the previously capitalized
costs over five years. The Company adopted the provisions of the SOP in its
financial statements as of January 1, 1999. The effect of the adoption of SOP
98-5 was to increase income before the cumulative effect of a change in
accounting principle for the three months ended March 31, 1999 by $138,000
($0.01 per common share - assuming dilution) and to record a charge for the
cumulative effect of a change in accounting principle of $2,488,000, net of
taxes of $1,735,000 ($0.22 per common share, assuming dilution), to write off
costs that had been capitalized prior to 1999.
6
<PAGE>
3. NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted net income
per share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998
----------- ----------
<S> <C> <C>
Numerator:
Income before the cumulative effect of a change $1,714 $ 2,854
in accounting principle
Net income $ (774) $ 2,854
Denominator:
Basic - weighted average shares outstanding 11,383 12,529
Diluted
Stock options - associates, officers, directors - 253
----------- ----------
Adjusted weighted average shares outstanding 11,383 12,782
Income per common share:
Income before the cumulative effect of a change
in accounting principle $ .15 $ .23
Net income (loss) $(.07) $ .23
Income per common share - assuming dilution:
Income before the cumulative effect of a change
in accounting principle $ .15 $ .22
Net income (loss) $(.07) $ .22
</TABLE>
For the three months ended March 31, 1999, 745,000 stock options were excluded
from the diluted weighted average shares outstanding calculation, as their
exercise prices exceeded the average fair market value of the related common
shares for the period.
7
<PAGE>
AIRNET SYSTEMS, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT
Matters discussed in this Form 10-Q, including, but not limited to, information
regarding future economic performance and plans and objectives of AirNet's
management, are forward-looking statements which involve risks and
uncertainties. When used in this document, the words "anticipate", "estimate",
"expect", "may", "plan", "project" and similar expressions are intended to be
among statements that identify forward-looking statements. Such statements
involve risks and uncertainties including, but not limited to, the following
which could cause actual results to differ materially from any such
forward-looking statement: potential changes by the FAA, which could increase
the regulation of AirNet's business, or the Federal Reserve, which could change
the competitive environment of transporting canceled checks; adverse weather
conditions; technological advances and increases in the use of electronic funds
transfers; the effective detection and remediation of Y2K issues by AirNet and
its key third party vendors and suppliers, including the FAA's air traffic
control system; AirNet's ability to successfully integrate acquisition targets;
as well as other economic, competitive and domestic and foreign governmental
factors affecting AirNet's markets, prices and other facets of its operations.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual outcomes may vary materially from
those indicated. AirNet undertakes no responsibility to update for changes
related to these or any other factors that may hereafter occur.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Revenues were $30.5 million for the three months ended March 31, 1999, an
increase of $4.0 million, or 14.9%, over the same period of 1998. Revenues from
check delivery increased $2.1 million, or 9.2%. Of the increase in check
delivery revenues, $0.4 million is attributable to price increases effective
January 1, 1999, and $0.5 million is attributable to one additional flying day
in the 1999 quarter. The remainder of the increase is the result of additional
volume. Express delivery revenues increased $2.0 million, or 50.6%. The
acquisition of Mercury Business Services, Inc., a Boston-based express delivery
management service, in August 1998 accounted for $1.7 million of the increase in
express delivery revenues. Revenues from AirNet's premium services increased
$0.7 million. These increases were offset by decreases in standard and wholesale
service revenues of $0.6 million.
Total costs and expenses were $27.0 million for the three months ended March 31,
1999, an increase of $5.4 million, or 24.7%, over the same period in 1998,
resulting in income from operations of $3.5 million for the three months ended
March 31, 1999 compared to $4.9 million for the same period of 1998. Air
transportation expenses were up $3.8 million, or 19.7%. Selling, general and
administrative expenses increased $1.5 million, or 65.3%, for the three month
period.
8
<PAGE>
The increase in air transportation costs was partly a result of the acquisition
of Mercury, which occurred in August 1998, and infrastructure costs incurred in
anticipation of growth in the express delivery area. Ground courier costs and
operational wages and benefits increased $1.3 million primarily as a result of
the infrastructure build-up and the addition of Mercury. The costs associated
with shipping packages on commercial airlines increased $1.2 million as a result
of the addition of Mercury and an increase in the weekend business. Aircraft
maintenance expense increased $0.6 million, or 37.6%, over 1998 levels due to an
increase in the fleet size from 115 aircraft at March 31, 1998 to 118 at March
31, 1999, and more adverse weather conditions experienced in the first quarter
of 1999 compared to the first quarter of 1998. Depreciation expense also
increased $0.3 million, or 13.2%, as a result of the increased fleet size and
the addition of Mercury. Aircraft fuel costs for the 1999 quarter were down $0.1
million, or 4.3%, over the same 1998 period due to lower fuel prices in the
market. The average rate paid for fuel, however, did begin to increase late in
the quarter as market prices began to rise.
Selling, general and administrative expense increased partly due to the fact
AirNet capitalized $0.5 million of certain sales and marketing costs associated
with the start up of the premium services in the first quarter of 1998.
Effective January 1, 1999, AirNet was required to write off the remaining
unamortized costs associated with the start-up activities under the provisions
of SOP 98-5. The addition of Mercury accounted for approximately $0.4 million of
the increase in sales, general and administrative costs. In addition, AirNet has
increased its Express sales staff and certain of its administrative staff.
Interest costs were $0.6 million for the quarter ended March 31, 1999, an
increase of $0.4 million, over the 1998 quarter due to increased borrowings, of
which $20.0 million was used to fund the repurchase of common shares in the last
half of 1998.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-5, Reporting the Costs of Start-Up
Activities, which requires that costs related to start-up activities be expensed
as incurred. Prior to 1999, the Company capitalized start-up costs associated
with its premium products line of business. Effective July 1, 1998, the Company
ceased capitalizing such costs and began amortizing the previously capitalized
costs over five years. The Company adopted the provisions of the SOP in its
financial statements as of January 1, 1999. The effect of adoption of SOP 98-5
was to increase income before the cumulative effect of a change in accounting
principle for the three months ended March 31, 1999 by $0.1 million ($0.01 per
common share - assuming dilution) and to record a charge for the cumulative
effect of an accounting change of $2.5 million, net of taxes of $1.7 million
($0.22 per common share), to expenses costs that had been capitalized prior to
1999.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATING ACTIVITIES. Net cash used for operating activities was
$1.8 million for the three months ended March 31, 1999, compared to cash
provided by operating activities of $3.3 million for the same period in 1998.
The decrease is primarily the result of the purchase of an aircraft held for
resale in inventory at March 31, 1999 and lower income from operations for the
1999 period.
9
<PAGE>
CURRENT CREDIT ARRANGEMENTS. AirNet maintains a credit agreement with a bank
that provides a $50.0 million, five-year, unsecured revolving credit
facility. The credit agreement limits the availability of funds to designated
percentages of accounts receivable, inventory and the wholesale value of
aircraft and equipment. In addition, the credit agreement requires the
maintenance of minimum net worth and cash flow levels, imposes limits on
payments of dividends to 50% of net income and restricts the amount of
additional debt. AirNet's outstanding balance at March 31, 1999 was $39.2
million, which is a $3.9 million increase over the balance at December 31,
1998.
INVESTING ACTIVITIES. Capital expenditures totaled $3.0 million for three
months ended March 31, 1999 compared to $4.8 million for the same period in
1998. Substantially all of the 1999 capital expenditures were incurred for
aircraft, aircraft inspections, major engine overhauls and related flight
equipment. AirNet anticipates it will have approximately $14.0 million in
total capital expenditures in 1999. AirNet anticipates it will continue to
acquire aircraft and flight equipment as necessary to maintain growth and
continue offering quality service to its customers.
AirNet anticipates that operating cash and capital expenditure requirements will
continue to be funded by cash flow from operations, cash on hand and bank
borrowings.
SEASONALITY AND VARIABILITY IN QUARTERLY RESULTS
AirNet's operations historically have been somewhat seasonal and somewhat
dependent on the number of banking holidays falling during the week. Because
financial institutions are currently AirNet's principal customers, AirNet's air
system is scheduled around the needs of financial institution customers. When
financial institutions are closed, there is no need for AirNet to operate a full
system. AirNet's fiscal quarter ending December 31, is often the most impacted
by bank holidays (including Thanksgiving and Christmas) recognized by its
primary customers. When these holidays fall on Monday through Thursday, AirNet's
revenue and net income are adversely affected. AirNet's annual results fluctuate
as well.
Operating results are also affected by the weather. AirNet generally experiences
higher maintenance costs during its fiscal quarter ending March 31. Winter
weather requires additional costs for de-icing, hangar rental and other aircraft
services.
YEAR 2000 ("Y2K") IMPACT ON INFORMATION SYSTEMS AND OPERATIONS
AirNet intends this information to constitute notice under the Year 2000
Information and Readiness Disclosure Act as a "Year 2000 Readiness Disclosure".
AirNet relies heavily on its own information systems, as well as significant
third party vendors, governmental agencies and business partners (including, but
not limited to, utilities, fuel suppliers, commercial airlines, the FAA and
local airport authorities), whose Y2K non-compliance could have either a
material or adverse effect on AirNet's business, financial conditions or results
of operations, or involve a safety risk to team members and customers.
AirNet has completed assessment, renovation, testing and deployment phases of
its internal systems (Information Technology (IT) and non-IT systems) for Y2K
compliance. No changes or improvements to the systems were required as a result
of the processes, which cost AirNet less than $0.1 million, paid from the
operating cash flows of the Company.
AirNet is actively assessing the Y2K status of third party vendors and suppliers
that it heavily relies on for operational and administrative purposes. AirNet
has developed a plan to assess and track the Y2K readiness of these key third
parties. The plan includes: assessing vendor compliance status initially through
questionnaires, tracking progress toward compliance, developing contingency
plans, including identifying alternate suppliers, and follow-up to non-
10
<PAGE>
responses on questionnaires.
AirNet has also performed a review of its aircraft to ensure operational
compliance with Y2K date-sensitive components. Based on representations from
manufacturers, AirNet believes its aircraft and related components are in
compliance with such measures. In addition, the FAA has indicated most of the
air traffic control systems at tier one and tier two airports in the United
States, which are the primary airports that the Company flies in and out of, are
currently Y2K compliant. AirNet will continue to monitor the FAA's progress in
assessing and correcting Y2K issues at the remaining airports to determine the
need and extent of a contingency plan for air operations. If the FAA is not able
to detect and correct any remaining Y2K problems at airports utilized by AirNet
in the appropriate time frame, then a material adverse affect on the Company's
ability to schedule and execute aircraft arrivals and departures from affected
airports may occur.
AirNet is also assessing the Y2K readiness of the internal and third party
systems of Mercury, which it acquired in 1998. Mercury relies on inhouse
developed and vendor supplied shipping stations to maintain and track shipment
data. A Y2K triggered failure in one or more of these shipping stations could
slow the routing process and cause delivery delays.
The Company is currently designing a contingency plan, which is expected to be
completed by June 30, 1999 and updated throughout the remainder of the year as
additional information regarding FAA and third party vendor readiness is
received. The contingency plan will focus on most likely scenarios, such as the
rerouting of aircraft from scheduled airport landings due to individual airport
air traffic control failures, the use of alternative commercial airline routes
in the event commercial airlines reduce their flight schedules and determining
alternate fuel suppliers at key refueling locations. The plan will also address
procedures to track key shipment information manually in the event of an
unanticipated internal system failure. Although AirNet is addressing the
potential issues most likely to affect the Company within its contingency plan,
there can be no assurances that the plan will accommodate a widespread Y2K
failure (including, but not limited to significant power outages nationwide;
significant reduction or elimination of aircraft flights by the FAA or major
commercial airlines and; significant ground traffic delays due to malfunctioned
or overloaded systems). Such a widespread Y2K failure could have a material
adverse impact on AirNet's business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No response required.
11
<PAGE>
AIRNET SYSTEMS, INC.
PART II - OTHER INFORMATION
<TABLE>
<C> <S>
Item 1. Legal Proceedings. Not Applicable
Item 2. Changes in Securities and Use of Proceeds. Not Applicable
Item 3. Defaults Upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable
Item 5. Other Information. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
</TABLE>
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
---------- --------------------------------------
<C> <S>
Exhibit 27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months
ended March 31, 1999
12
<PAGE>
AIRNET SYSTEMS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 12, 1999 By: /s/ William R. Sumser
-----------------------------------
William R. Sumser,
Acting Chief Financial Officer
(Duly Authorized Officer)
(Principal Financial Officer)
13
<PAGE>
AIRNET SYSTEMS, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C> <C>
27 Financial Data Schedule. Filed herewith.
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AIRNET
SYSTEMS, INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH
31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 217
<SECURITIES> 0
<RECEIVABLES> 14,862
<ALLOWANCES> 298
<INVENTORY> 13,216
<CURRENT-ASSETS> 37,368
<PP&E> 134,406
<DEPRECIATION> 58,264
<TOTAL-ASSETS> 124,906
<CURRENT-LIABILITIES> 11,698
<BONDS> 0
0
0
<COMMON> 128
<OTHER-SE> 68,840
<TOTAL-LIABILITY-AND-EQUITY> 124,906
<SALES> 200
<TOTAL-REVENUES> 30,522
<CGS> 255
<TOTAL-COSTS> 23,258
<OTHER-EXPENSES> 3,754
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 622
<INCOME-PRETAX> 2,888
<INCOME-TAX> 1,174
<INCOME-CONTINUING> 1,714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (2,488)
<NET-INCOME> (774)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
