1011696--3/30/2007--AIRNET_SYSTEMS

related topics

{financial, litigation, operation}

{cost, regulation, environmental}

{acquisition, growth, future}

{provision, law, control}

It will be difficult for AirNet to dispose of its aircraft and other operating assets in response to any reductions in its air transportation network or operations. Government regulation significantly affects AirNet. FAA grounding of AirNet s fleet or a specific type of aircraft used in AirNet s delivery services business may adversely affect AirNet s business and revenues. Loss of AirNet Management, Inc. s Indirect Air Carrier Standard Security Program approval could adversely affect AirNet s business. Changes in government regulations regarding the transportation of hazardous materials may increase AirNet s costs of transporting such shipments or reduce AirNet s ability to transport such shipments. Reclassification of ground couriers as employees rather than independent contractors could subject AirNet to back taxes and other liabilities. Changes to current transportation security requirements or procedures could adversely impact AirNet s ability to efficiently conduct AirNet s air and ground operations to meet AirNet s current delivery parameters or significantly increase costs to transact those operations. Catastrophic accidents involving AirNet s aircraft could result in a significant reduction in AirNet s business and increase its insurance costs. Environmental concerns may arise in connection with AirNet s operation at its Rickenbacker Facility on leased land with known pollution conditions. Failure to renew AirNet s grantee status to the DOT-SP 7060 Special Permit or AirNet s Transport Canada Permit for Equivalent Level of Safety would result in significant loss of Express Services revenue. Anti-takeover provisions may delay or prevent an acquisition or change in control of AirNet by a third party. Limitations on AirNet s ability to borrow could adversely affect AirNet s financial condition and prevent AirNet from fulfilling its financial obligations. AirNet may not be able to raise future capital through debt financing which could adversely affect AirNet s ability to execute its Express Services strategy.

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1011696--3/30/2007--AIRNET_SYSTEMS_INC