Security of Retirement benefits

February 13, 2002

Dear Fellow Employee:

As many of you are aware, there has been considerable media coverage of the Enron bankruptcy. In particular, the media reports have focused on the losses experienced by the employees in the Enron 401(k) plan and pension plan. In some media reports, Airborne as well as Hewlett-Packard are mentioned as having a similar type of pension program as Enron employees.

Undoubtedly these reports raise questions in your mind. They should. The situation at Enron is very troubling. Many employees have asked how Airborne’s 401(k) and pension programs are protected from what happened at Enron. I would like to take this opportunity to address this issue and explain the safeguards Airborne has taken to protect your 401(k) and pension benefits.

401(k)plan

At Enron, employees could invest 100% of their 401(k) money in Enron stock. Employees also had other investment options. In addition, Enron’s matching 401(k) funds were provided in the form of Enron stock. Employees could not move the matching funds out of Enron stock until the employee reached age 50.

At Airborne, you cannot invest your 401(k) money directly in Airborne stock. Instead your investment options include 15 mutual funds offered by Fidelity Investments and other mutual fund companies. Matching funds are made in cash and are deposited at the same time as your money each pay period.

Pension program

At Enron, the pension program consisted of an Employee Stock Ownership Plan (ESOP) and a defined benefit offset plan. The ESOP was invested entirely in Enron stock. The defined benefit plan was designed to provide a minimum guaranteed benefit to employees in the event that the ESOP investment lost value.

In an unusual move, Enron froze the value of the ESOP locking in a pre-bankruptcy stock price. The minimum guaranteed benefit was then calculated using the pre-bankruptcy value for Enron stock. This resulted in the minimum guaranteed benefit providing little or no pension for employees. For many Enron employees all or most of their pension was invested in Enron stock that is now nearly worthless.

At Airborne, in addition to the 401(k) plan, the pension program consists of a Profit Sharing plan (for those employees with one year of service as of December 31, 1999) and the Retirement Income Plan. While the Profit Sharing plan does invest in Airborne stock, it is limited to no more than 15% of the total value. The remaining money is invested in the General Fund, which consists of several institutional investment funds that are similar to mutual funds. These funds are invested in a broad portfolio of domestic and international stocks and bonds. This approach reduces the risk since the investment is spread over many different investment options.

Our Retirement Income Plan provides a guaranteed benefit for you. When calculating a benefit, the Retirement Income Plan includes the value of the Profit Sharing plan. Unlike the Enron ESOP, your Profit Sharing account is not frozen in value. When you retire or leave employment your Retirement Income Plan benefit is calculated using the market value of the Profit Sharing plan on the last day of the quarter preceding your last day of employment. The Profit Sharing account value has not been artificially frozen to make your Retirement Income Plan benefit vanish. The Pension Benefit Guaranty Corporation, an agency of the federal government, insures the Retirement Income Plan.

A couple of years ago there was a small but vocal group of employees pushing for the Company to abandon the pension program in lieu of a wide open profit sharing program where everyone controlled all of their own retirement funds. We do not embrace this idea. We believe retirement benefits require a balanced approach, including opportunity for financial gain, the principles of asset diversification, and the secure foundation offered by our traditional pension plan. The events at Enron and elsewhere clearly demonstrate the prudence we have used in managing our pension funds. I am sure you have heard of the old saying, Don’t put all your eggs in one basket. It may sound corny but it is wise advice and it is the same approach that we take with your 401(k) plan and pension program.

At Airborne, we take our stewardship of your 401(k) money and pension benefit very seriously. There can be no greater trust placed in an employer by its employees than the promise that your 401(k) and pension benefits will be there when you retire. I invest in our 401(k) plan as many of you do. I am a participant in the same Retirement Income Plan and Profit Sharing plan as many of you. I plan to retire from Airborne with these benefits. My expectation is the same as yours: These benefits will be there at retirement. You should expect no less. You deserve no less.

If you would like more details about the safeguards of Airborne’s programs vs. the Enron situation, I have posted on the Company bulletin boards a letter I received from the actuary of our pension plan. Additionally, for those employees with funds in the Profit Sharing Plan, your annual statements will be mailed to you in March.

If you have any questions about our 401(k) plan or pension program please feel free to contact me directly at hete.hotline@airborne.com or contact the pension and 401(k) experts in the Benefits Department at ext. 2463 or abx.benefits@airborne.com.

Sincerely,

Joe Hete

President & COO

ABX Air, Inc.