USAF Decision Gives Pemco an Opportunity to Bid on New KC-135 Contract

Pemco Aviation Group ("Pemco") (NASDAQ:PAGI) announced
today that it has received notice from the United States Air Force
("USAF") that it will amend the Request for Proposal ("RFP") for the
performance of Programmed Depot Maintenance ("PDM") on KC-135 aircraft
starting in FY08 (the "Program") to provide additional time for
current and new bidders to respond to the solicitation. The
solicitation, which opens on July 12, 2006, will provide a period of
60 days to submit proposals on the Program. The change will allow
Pemco either to bid on the work as a prime contractor or to partner
with another firm.
   Pemco is currently teamed with Boeing to provide KC-135
maintenance and modification work through FY07. That contract remains
in place and there are options for the USAF to extend it into 2008.
   Ron Aramini, President and Chief Executive Officer, stated, "Pemco
is very pleased to have an opportunity to bid on future KC-135 PDM
work. We have provided the most dependable quality and lowest cost,
plus competitive turn-times for the KC-135 program, and we will
continue to do so. We are very encouraged by this opportunity and look
forward to keeping this program at Pemco where it has been the core of
our 35-year successful history with military aircraft."
   Michael Tennenbaum, Chairman of Pemco's Board of Directors added,
"The KC-135 work is crucial to the profitable operation of Pemco's
Birmingham, Alabama facility which employs, directly and indirectly,
about 1,000 people. The tanker is also a vital part of our country's
airpower capabilities which are a centerpiece of current military
operations. We strongly believe that keeping an industrial capacity to
maintain large numbers of KC-135's is prudent national defense
policy."
   Pemco Aviation Group, Inc., 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: 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
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