PS Group Holdings, Inc. Reports Operating Results for the Third Quarter of 1997.

SAN DIEGO--(BUSINESS WIRE)--Nov. 12, 1997--PS Group Holdings, Inc. (PSGH) reported an unaudited net loss for the third quarter of 1997 of $1,005,000 - $(.16) per share - compared to net income of $1,048,000 - $.17 per share - in the third quarter of 1996. 1997 results included unusual charges which, after tax, totaled $2.7 million - $(.44) per share.

The third quarter results for 1997 were depressed by after-tax charges of $1.0 million - $(.16) per share - for additional depreciation for aircraft that may be sold in accordance with lease termination provisions, $.6 million - $(.10) per share - for the estimated loss on the mid-September 1997 sale of the wholesale division of PSGH's fuel distribution subsidiary, PS Trading, Inc. (PST), and $1.1 million - $(.18) per share - for additional environmental remediation expenses at the San Francisco International Airport (SFIA). Further details as to these items are provided below.

PSGH results for the first nine months of 1997 were a net loss (unaudited) of $3,766,000 - $(.62) per share - compared to net income of $3,486,000 - $.57 per share for the first nine months of 1996. Both periods included unusual charges which, after tax, totaled $6.0 million - $(.99) per share in 1997 and $.7 million - $(.11) per share in 1996.

Results for the first nine months of 1997 were depressed by weak fuel prices plus after-tax charges totaling $1.9 million - $(.32) per share - for additional depreciation on aircraft mentioned above, $3.5 million - $(.57) per share - primarily for SFIA environmental expenses mentioned above and the estimated loss ($.6 million - $(.10) per share) on the sale of PST's wholesale division mentioned above. Further details as to these items are provided below.

Results for the first nine months of 1996 were depressed by SFIA pipeline removal charges and expenses related to the holding company reorganization approved in June 1996. These 1996 items were partially offset by additional income from a Pan Am bankruptcy settlement and Pan Am 747 engine parts sales. The net charge in the first nine months of 1996 was $.7 million - $(.11) per share.

Segment Results - Overview

PS Group, Inc. (PSG), PSGH's aircraft leasing subsidiary, recorded significantly reduced results in 1997 due to the additional aircraft depreciation previously mentioned. Lower fuel prices, lower fuel sales volume, plus the sale of the wholesale division in mid-September 1997 resulted in lower PST revenue in 1997 compared to 1996. As a holder of fuel inventories, the lower fuel prices, combined with the shut-down costs for the wholesale division, resulted in significant operating and net losses for PST in 1997 versus profits in 1996. Increased well maintenance costs in 1997 compared to 1996 were offset by higher production levels which enabled Statex Petroleum, Inc. (Statex), PSGH's oil and gas production subsidiary, to record income in 1997 slightly above 1996.

Aircraft Leasing Charges

In the second quarter of 1997, PSG started to record increased depreciation expense on five of the ten BAe 146 aircraft leased to US Airways, Inc. (US Airways) to reflect lower interim termination values. This additional after-tax depreciation was $1.0 million - $(.16) per share - and $1.9 million - $(.32) per share - in the third quarter and first nine months of 1997, respectively. With respect to those five aircraft, the specified lease termination values were below the net book values of the aircraft. This additional depreciation was recorded to reflect the notification received in the second quarter of 1997 from US Airways that it may exercise its lease termination rights with respect to four of the ten BAe 146 aircraft (including three of those five aircraft on which additional depreciation is being recorded) at specified lease termination values. (See below for details on the sale of one BAe 146 in November 1997.) In light of the notification and the improved market for possible sales by US Airways, PSG adjusted its depreciation to reflect the lease termination values on those five aircraft. PSG was previously depreciating all ten aircraft to the final lease termination amounts on a straight-line basis. If sales do not occur, the additional depreciation to be recorded in succeeding periods on those five BAe 146's to match the future lease termination values is as follows: -0-

                                Additional Depreciation-Net of Tax
Period                            Amount          Per share

Last three months of 1997      $ .3 million         $(.05)
1998                            1.1 million          (.18)
1999                             .4 million          (.07)


    See discussion below for effects of terminating the leases on the
three additional BAe 146 aircraft that US Airways has indicated an
interest in selling in the fourth quarter of 1997 (which US Airways
now indicates is its delayed estimated timetable).
    PSG has no control over US Airways' possible sales of any of the
nine remaining leased BAe 146 aircraft and there are no assurances
such sales will occur.

Fuel Distribution Charges - Environmental

    In the third quarter and first nine months of 1997, PST recorded
an additional after-tax charge of $1.1 million - $(.18) per share -
and $3.5 million - $(.57) per share, respectively.  These charges
primarily relate to estimated costs for the investigation and
remediation (I&M) of potential soil and groundwater pollution at SFIA
where PST, as the operator of various fuel storage and distribution
facilities, has been named as a potentially responsible party (PRP).
The additional third quarter 1997 expense relates to notification of
an increased total claim from the County and City of San Francisco
(CCSF), as described below, from $15 million to $18.4 million plus an
estimate for future costs through 1998 (of which only a portion
applies to PST) and to an estimated increase in litigation expenses
due in part to cross-actions filed in the third quarter of 1997 (as
described below.) The charge also includes the settlement costs
relating to a former employee.
    PST's estimate of I&M costs relates primarily to expenditures
incurred, or anticipated to be incurred in response to claims by CCSF
for: 1) the removal or cementing-in-place of a 3.6 mile underground
pipeline which has not been used since 1987, 2) PST's estimated
portion of claims by CCSF for both specific projects and airport-wide
I&M expenditures through June 30, 1997 (CCSF is seeking a total
reimbursement in excess of $18.4 million from 26 tenants, plus
potentially 51 other firms who operated at SFIA, and CCSF has not, to
date, asserted its definitive allocation among the tenants or
operators) plus PST's estimated portion of estimated future CCSF
claims from July 1, 1997 through December 31, 1998, 3) I&M expenses
for a small fuel storage facility removed in 1993, and 4) PST's
portion of additional estimated I&M expenses related to future SFIA
construction that will continue past the year 2000.  There is a
substantial likelihood that PST's estimate of SFIA expenditures may
change in the near and long term to reflect updated information
concerning: 1) the level, area and method of remediation of
contamination, 2) possible changes in PST's allocation of remediation
expenses, 3) the possibility of potential future claims being filed
against PST by other PRPs, 4) other PRPs not being able or willing to
fund their allocated portion of expenses, and 5) the size and
complexity of litigation particularly if current efforts to put in
place a case management plan to handle multiple lawsuits is
unsuccessful - see below.
    As reported in the second quarter of 1997, CCSF, on July 11,
1997, filed a complaint in San Francisco Superior Court against
various present and former tenants who had operated fuel storage and
other facilities at SFIA seeking to recover costs incurred in
connection with the investigation and cleanup of contamination in and
around SFIA (the CCSF Action).  This action has now been moved to
federal court.  The CCSF Action alleges claims based on the
California Water Code, breach of contract, violation of CCSF rules
and regulations, nuisance, waste, trespass, negligence, equitable
indemnity, and declaratory relief.  Neither PSGH nor any of its
subsidiaries is a named defendant in the CCSF Action.  PSG and PST,
along with the majority of present and former tenants at SFIA, have
entered into a tolling agreement with CCSF which tolls the statute of
limitations and other time-based defenses that any of the parties to
the tolling agreement have against another, and permits the parties
to attempt to resolve their disputes regarding environmental cleanup
at SFIA without the necessity of litigation.  None of the parties to
the tolling agreement are defendants in the CCSF Action, but the
tolling agreement does not stop the future filing of lawsuits against
PST or PSG by CCSF or others.  The defendants in the CCSF Action are
all present and former tenants who declined to sign the tolling
agreement.  The tolling agreement tolls any claims by CCSF and other
participating tenants against PST or PSG arising out of PST's fuel
storage and distribution facilities at SFIA.  It also tolls any
claims PST or PSG may have against CCSF or any of the participating
tenants relating to environmental investigatory and cleanup costs at
SFIA.  In September 1997, a defendant in the CCSF Action, Atlantic
Richfield Company (ARCO), filed two related cross-actions.  The first
is a counterclaim, filed on September 2, 1997 against CCSF, PSG and
various present and former tenants.  In this counterclaim, ARCO
denies that it has any liability for any investigatory or remediation
costs at SFIA and it also denies that it is jointly and severally
liable for any environmental costs.  ARCO seeks a judicial
declaration stating the rights, obligations and responsibilities of
all of the parties for the contamination-related costs alleged in the
CCSF Action.  The second cross-action is a third party complaint,
filed on September 17, 1997 against PSG.  In this third party
complaint, ARCO alleges that PSG agreed to defend and indemnify ARCO
in various lease assignments and sale agreements (covering certain
pipelines, equipment and facilities at SFIA) for all of the
contamination claims alleged against ARCO in the CCSF Action.  ARCO
asks for unspecified damages for breach of contract, a declaration of
ARCO's rights under such contracts, and ARCO's costs and attorney's
fees in the CCSF Action.
    On October 22, 1997, the Court entered an order, based upon a
stipulation, staying discovery in the CCSF Action and the related
ARCO cross-actions, staying the parties' disclosure obligations,
staying any motion practice, and staying any parties' obligation to
file responsive pleadings or cross-actions, to permit the parties and
potential parties to meet and confer for the purpose of developing a
mediation and/or case management plan for the case.  Consequently,
PSG has not filed a responsive pleading to the counterclaim or the
third-party complaint, and it has not filed any cross-actions.
Mediation, settlement, and case management procedures will be the
subject of a status conference with the Court on December 12, 1997.
    PSGH is unable to determine whether any of the claims mentioned
above will ultimately have any material adverse consequences to it
beyond the environmental remediation charges PST recorded in the
third quarter and first nine months of 1997 described above.
    PSGH is unable to determine the extent, if any, to which any
expenditures which PST incurs in connection with environmental costs
at SFIA (including the third quarter and first nine months of 1997
charges) may be recoverable from third parties, including the prior
lessees of the facilities that PST took by way of assignment, other
tenants at SFIA, or PST's insurers.  Both the prior lessees and PST
insurers have disputed PST's claims for recovery of SFIA
environmental costs.  ARCO has asserted its claim for PST
indemnification by filing the third party complaint against PST
(mentioned above) and the remaining prior lessee has indicated that
it will also assert an indemnification claim against PST.  PST is not
able to estimate and therefore has not recorded an estimate of
potential recovery from or by the third parties.

Fuel Distribution Charges - Sale of Wholesale Division

    In the third quarter of 1997, PST recorded an estimated after tax
loss of $.6 million - $(.10) per share - on the sale of the wholesale
division in 1997.  The estimated loss includes severance and benefits
for former employees and estimated losses on the future collection of
accounts receivable which have been indemnified by PST.

Sale of BAe 146 to US Airways in November 1997

    On November 6, 1997, US Airways exercised its lease termination
rights by purchasing (and subsequently selling) one of the four BAe
146 aircraft it had previously indicated to PSG it might purchase
(see above - Aircraft Leasing Charges).  With the sale, PSGH's fourth
quarter results will include a net gain of approximately $.3 million
- $.05 per share.  Net cash proceeds were approximately $3.1 million
after debt repayment of approximately $2.0 million.  The tax gain on
this sale will utilize approximately $5.1 million of the available
net operating loss carryforward.
    US Airways indicates it is still working with third-party buyers
for the other three BAe 146 aircraft which would also result in US
Airways exercising its lease termination right.  These other three
aircraft are part of those five BAe 146 aircraft that PSG is
recording additional depreciation on to match the lease termination
values (see above - Aircraft Leasing Charges).  If these other three
BAe 146 aircraft are sold in the fourth quarter of 1997, there would
be no net gain or loss recorded and the net cash proceeds would
aggregate approximately $5.2 million after debt repayment of
approximately $8.2 million.  The tax gain on these sales would
utilize approximately $13.4 million of the available net operating
loss carryforward.  In addition, if sales do occur, the additional
depreciation shown above for 1998 and 1999 would be significantly
reduced.

PSGH Common Stock Transfer Restrictions

    There are certain restrictions imposed on the transfer of common
shares of PSGH.  In general, and subject to an exemption for certain
dispositions of shares by persons who were "pre-existing 5%
shareholders" (as defined in PSGH's Restated Certificate of
Incorporation) on June 5, 1996, the transfer restrictions prohibit,
without prior approval of the Board of Directors, the direct or
indirect disposition or acquisition of any stock of PSGH by or to any
holder who owns, or would, as a result thereof, own (either directly
or through the tax attribution rules) 5% or more of the stock upon
such acquisition.  These restrictions have been imposed in order to
help preserve PSGH's substantial net operating loss and investment
tax credit carryforwards and other tax benefits by decreasing the
risk of an "ownership change" for federal income tax purposes.

Forward-Looking Statements

    The Private Securities Litigation Reform Act of 1996 provides a
"safe harbor" for forward-looking statements.  Certain information
included in this release may be deemed forward-looking, such as
information relating to the future effect of possible sales of leased
aircraft by US Airways, potential liability for environmental
contamination at SFIA and the cost of remediation and related
litigation, the collection of PST wholesale division receivables and
the availability of certain tax benefits.  Investors are cautioned
that all forward-looking statements involve risks and uncertainties,
including, but not limited to, uncertainty whether US Airways sells
aircraft leased to them by PSG and the timing of such sales,
uncertainties inherent in estimating the cost of environmental
remediation and related litigation at SFIA, the collection of PST
wholesale division receivables, the efficacy of the transfer
restrictions on PSGH's common stock in preserving PSGH's substantial
tax benefits and PSGH's ability to realize such benefits, the impact
of economic conditions on each business segment, the impact of
competition, the impact of governmental legislation and regulation
and possible future changes therein, and other risks discussed above
and in filings PSGH has made with the Securities and Exchange
Commission.  Should any of such risks or uncertainties materialize or
should other assumptions prove incorrect, actual results or outcomes
may vary materially from those contemplated in such forward-looking
statements.  PSGH does not undertake to publicly update or revise its
forward-looking statements.
-0-
                      PS Group Holdings Inc.
                Consolidated Summary of Operations
             (In Thousands Except Per Share Amounts)
                           (Unaudited)

                           Three Months Ended    Nine Months Ended
                                Sept. 30            Sept. 30
                            1997       1996       1997       1996

Revenues                 $ 59,836   $ 77,638   $176,771    $199,371
Costs and expenses         61,541     75,855    183,138     193,412
Income (loss) before
 taxes                     (1,705)     1,783     (6,367)      5,959
Provision (credit)
 for taxes                   (700)       735     (2,601)      2,473
Net income (loss)        $ (1,005)  $  1,048   $ (3,766)   $  3,486
Net income (loss)
 per share               $   (.16)  $    .17   $   (.62)   $    .57
Shares used in
 determining net income
 (loss) per share           6,068      6,068      6,068       6,068

CONTACT: PS Group Holdings Inc., San Diego

Lawrence A. Guske, 619/642-2982