postalnews blog

DALLAS– 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.