Aviation Group, Inc. Announces Major Paint Expansion; Greenville, MS Facility Doubles Capacity.

DALLAS--(BUSINESS WIRE)--Oct. 16, 199--Aviation Group, Inc. (Nasdaq: AVGP) announced today that it has executed long term lease agreements with the Mid Delta Regional Airport for the use of major paint and manufacturing facilities located in Greenville, Mississippi. The three-hangar facility was constructed and formerly occupied by Boeing, and is capable of painting up to 150 commercial aircraft annually. Aircraft painting alone could generate up to 200 jobs for the area. This additional capacity will enable Aviation Group to continue to expand its commercial painting operations, which have generated record revenues and operating profits during the last two years. Additional space is available for future growth of aviation related manufacturing activities.

"Our commercial paint division has achieved a level of success that two years ago we only wished for", said Lee Sanders, Chairman and CEO. "Since acquiring Pride Aviation in 1996, we have improved quality, broadened our customer base, added additional locations, and improved our revenues and profitability. This success and the strength of our management team, has convinced commercial airlines, cargo airlines and other customers of our standing as the world leader in paint out-sourcing. The additional capacity from the new Greenville facility is already being spoken for by our customer base, and we are excited about its operating and profit potential", added Sanders.

In addition to two commercial mid-body sized hangars, the facility also includes a 200,000 square foot "wide body" facility that with modifications, can accommodate a Boeing 747 or Lockheed C5-A, among the largest commercial and military planes in the market. "We are working closely with Mississippi state and local officials to iron out the details of the wide body hangar modifications as soon as possible", said Sanders. "Additional wide body capacity, and the ability to attract government military contracts, has significant potential for the company. And the best part for our shareholders is, we didn't have to issue any stock to generate the earnings growth."

Aviation Group is a publicly traded holding company based in Dallas, Texas. Aviation Group operates world-class painting facilities through its Pride Aviation, Inc. subsidiary in New Iberia, Louisiana and Portland, Oregon. Through its Tri-Star Airline Services division, Aviation Group provides airline ground services to a variety of passenger and freight airlines at Dallas-Fort Worth International Airport. Its Fixed Base Operations and Airport Management division, through Casper Air Service, provides fuel, parts, and light maintenance services to general, corporate, and freight aircraft customers. The Company's Component Overhaul and Service Division manufactures replacement batteries, precision aviation scales and other component parts for general and commercial airplanes. Additional information can be obtained from the Company's website at www.aviationgroup.com.

This press release contains statements that constitute forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that may cause or contribute to such differences include, among other things, the Company's dependence on one customer, changes in the airline travel industry, seasonality of the Company's painting business, risk of future losses from operations, the ability to make additional business acquisitions, uninsured casualty losses, environmental regulation of airline stripping and painting operations and increased competition in the airline services industry. Other risks and uncertainties include changes in business conditions and the economy in general, changes in governmental regulations, unforeseen litigation and other risk factors identified in the Company's SEC filings under "Risk Factors." The Company undertakes no obligation to update these forward-looking statements for revisions or changes after the date of this press release.