Pemco Aviation Group Announces OKAY Airways Conversion Program

Pemco Aviation Group, Inc. (NASDAQ: PAGI) announced
today that its Dothan, Alabama facility, Pemco World Air Services,
Inc., has entered into a contract with OKAY Airways Co. Ltd. of
Beijing, PRC and DB Equipment Leasing, Inc., a division of Deutsche
Bank, to convert two B-737-300 aircraft from passenger to freighter
configuration. The conversions will take place at Jinan, China in
cooperation with Pemco's partner, STAECO. The inductions will take
place immediately and redelivery to OKAY Airlines is scheduled for
late December, 2006.
   Ron Aramini, President and Chief Executive Officer of Pemco
Aviation said, "We are very pleased to have been selected by OKAY and
Deutsche Bank to perform these conversions. This contract affirms once
again the quality, service and cost-effectiveness provided to our
Chinese customers by our partnership in China with STAECO. We look
forward to working with OKAY and DB Equipment Leasing on this and
other projects."
   Pemco Aviation Group, with executive offices in Birmingham,
Alabama, and facilities in Alabama and California, performs
maintenance and modification of aircraft for the U.S. Government and
for foreign and domestic commercial customers. The Company also
provides aircraft parts and support and engineering services, in
addition to developing and manufacturing aircraft cargo systems,
rocket vehicles and control systems, and precision components. For
more information go to www.pemcoaviationgroup.com.

   This press release contains forward-looking statements made in
reliance on the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These statements may be identified
by their use of words, such as "believe," "expect," "intend" and other
words and terms of similar meaning, in connection with any discussion
of the Company's prospects, financial statements, business, financial
condition, revenues, results of operations or liquidity. Factors that
could affect the Company's forward-looking statements include, among
other things: changes in global or domestic economic conditions; the
loss of one or more of the Company's major customers; the Company's
ability to obtain additional contracts and perform under existing
contracts; the outcome of pending and future litigation and the costs
of defending such litigation; financial difficulties experienced by
the Company's customers; potential environmental and other
liabilities; the inability of the Company to obtain additional
financing; material weaknesses in the Company's internal control over
financial reporting; regulatory changes that adversely affect the
Company's business; loss of key personnel; and other risks detailed
from time to time in the Company's SEC reports, including its Annual
Report on Form 10-K for the fiscal year ended December 31, 2005. The
Company cautions readers not to place undue reliance on any
forward-looking statements, which speak only as of the date on which
they are made. The Company does not undertake any obligation to update
or revise any forward-looking statements and is not responsible for
changes made to this release by wire services or Internet services.