Aviation Group, Inc. Announces Sale of its Tri-Star Airline Services Division; Additional Sale and Spin-off Activities Expected.

Business Editors

DALLAS--(BUSINESS WIRE)--Dec. 30, 1999

Aviation Group, Inc. (Nasdaq:AVGP) today announced the sale of its Tri-Star Airline Services, Inc. subsidiary to Servisair USA, Inc., a unit of Servisair Plc in England.

Tri-Star conducts aviation ground handling activities for commercial airlines and freight companies, principally at Dallas-Ft. Worth International Airport. Servisair operates ground handling operations world-wide and has annual revenues of approximately one-half billion dollars.

Aviation Group received $1,500,000 for its Tri-Star operations net of bank debt, or approximately 3.5 times book value. "Servisair is one of the world's finest ground handling operations, and we are proud to represent the first North American acquisition for them," said Lee Sanders, Aviation Group CEO. "The sale of Tri-Star confirms management's belief that its operating divisions are worth significantly more than the current trading range of Aviation Group's common stock price implies," said Sanders.

Management intends to use the proceeds of Tri-Star's sale to provide cash reserves, fund growth in its other operating divisions and to repay certain short-term debt. The Company is in the midst of negotiations and documentation regarding the sale of certain other operating divisions, although management did not predict when such efforts would conclude or the ultimate outcome of its sale activities.

The Company is presently in discussions with certain third parties regarding a sale or merger, and is also in discussions with certain third parties regarding the sale of other segments of its operations on an individual basis. Other parties interested in the Company's status as a public company have expressed interest in a business combination, spin-off, or other transaction. While management anticipates the sale of significant portions of its business during the year, there can be no assurance that such activities will generate a sale of the Company or that if such transaction occurs that related consideration will significantly enhance shareholder value.

Aviation Group is a publicly traded holding company based in Dallas. Aviation Group operates world-class painting facilities through its Aviation Exteriors subsidiaries in New Iberia, La.; Greenville, Miss.; and Portland, Ore. 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.

Except for the historical information contained herein, this press release contains statements that may 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.