exv99w1

Exhibit 99.1


		–NEWS RELEASE–
Company Contact:		Investor Relations:
Joseph Czyzyk		David Herbst/Larry Barrios
Mercury Air Group, Inc.		The MWW Group
(310) 827-2737		(213) 486-6560 ext. 317

Mercury Air Group, Inc. Reports Net Loss for Its Fiscal 2004 Third Quarter,
Reduces Debt by $41.1 Million in April with Proceeds from Sale of FBOs

Los Angeles, CA (May 13, 2004) – Mercury Air Group, Inc. (AMEX/PCX: MAX) reported a net loss for the three-month period ended March 31, 2004 of $1,819,000, or $0.63 per basic and diluted share, as compared to a net loss for the three-month period ended March 31, 2003 of $1,098,000, or $0.33 per basic and diluted share.

“The reported net loss for the third quarter of fiscal 2004 reflects the effect of our high debt service costs in addition to lower margin contributions from the Air Centers and Air Cargo segments. With the proceeds from the sale of Mercury Air Centers, Inc. on April 12, we reduced the principal amount of outstanding long-term debt by $41.1 million, to approximately $18.0 million, which will significantly reduce our debt service costs going forward,” said Joseph A. Czyzyk, President and CEO of Mercury Air Group, Inc. adding, “after satisfying all of the obligations associated with retiring debt, paying transaction related expenses and establishing escrow accounts, we netted $9.3 million in surplus cash from the sale which improved our financial position. The improved financial position and lower debt service costs provide us with additional options to enhance shareholder value in the future, including the growth of our remaining three business lines.”

Mercury Air Group’s revenue for the third quarter of fiscal 2004 was $125,536,000, an increase of 13.1% over the revenue for the third quarter of fiscal 2003 of $111,027,000. The Company’s gross margin for the third quarter of fiscal 2004 was $4,836,000 as compared to the gross margin of $6,119,000 in the third quarter of fiscal 2003.

MercFuel, Inc. (“MercFuel”), the Company’s aviation fuel reseller subsidiary, had revenue of $88,305,000 on sales volume of 72,393,000 gallons, or 795,500 gallons per day, in the third quarter of fiscal 2004 as compared to sales revenue of $72,497,000 on sales volume of 63,286,000 gallons, or 703,200 gallons per day, for the comparable period last year. MercFuel’s average aviation fuel sales price per gallon sold in the third quarter of fiscal 2004 was $1.220 as compared to last year’s third quarter per gallon average aviation fuel sales price per gallon sold of $1.146. MercFuel’s gross margin in the third quarter of fiscal 2004 decreased to $1,506,000, equating to an average sales margin of $0.021 per gallon, as compared to last year’s third quarter sales margin of $1,670,000, or $0.026 per gallon. MercFuel’s aviation fuel sales volume within the corporate and fractional aviation segment increased to 11,750,000 gallons, or 16.2% of MercFuel’s total sales volume in the third quarter of fiscal 2004, as compared to 7,111,000 gallons, or 11.2% of MercFuel’s total sales volume for the same period last year.

The Company’s Mercury Air Cargo, Inc. (“Air Cargo”) subsidiary had revenue of $9,729,000 in the third quarter of fiscal 2004, an increase of $1,333,000 or 15.9% from last year’s third quarter revenue of $8,396,000. Air Cargo’s gross margin was $60,000 in the third quarter of fiscal 2004 versus a gross margin of $368,000 in the third quarter of fiscal 2003 as both the cargo marketing services and warehouse divisions’ margins declined.

Maytag Aircraft, Inc. (“Maytag Aircraft”), the Company’s wholly-owned subsidiary engaged in U.S. government contract services, had revenue of $5,747,000 in the third quarter of fiscal 2004 as compared to $5,990,000 for the same period last year. The revenue decline is primarily due to the loss of Maytag

Aircraft’s Air Terminal contract at Eielson Air Force Base in Alaska that generated revenue of $134,000 in the third quarter of fiscal 2003. Maytag Aircraft’s gross margin for the third quarter of fiscal 2004 was $1,166,000, a decrease of $45,000 from Maytag Aircraft’s gross margin of $1,211,000 for the same period last year.

Revenue from the Company’s Mercury Air Centers, Inc (“Air Centers”) subsidiary in the third quarter of fiscal 2004 was $23,704,000 on sales volume of 7,545,000 gallons, or 82,900 gallons per day, as compared to last year’s third quarter revenue of $24,479,000 on sales volume of 8,029,000 gallons, or 89,200 gallons per day. Air Centers’ gross margin was $2,104,000 and $2,870,000 for the third quarters of fiscal 2004 and 2003, respectively. On April 12, 2004, after receiving shareholder approval, the Company completed the sale of Air Centers to Allied Capital Corporation for $76,349,000, subject to adjustment upon the determination of Air Centers’ closing net working capital. The Company used the proceeds, among other things, primarily to repay $41,070,000 of outstanding principal of its long term debt.

For the nine-month period ended March 31, 2004, the Company reported a net loss of $3,638,000, or $1.18 per basic and diluted share, as compared to a net loss of $2,283,000, or $0.70 per basic and diluted share, for the comparable fiscal 2003 period. The fiscal 2004 loss includes an after-tax settlement expense of $1,799,000 associated with the J O Hambro Settlement and an accrual for debt premiums on the Senior Subordinated Note of $702,000, net of income taxes. Revenue in fiscal 2004 was $340,436,000, an increase of $7,552,000, or 2.3%, from revenue of $332,884,000 for the same period in fiscal 2003. Gross margin for the first nine months of fiscal 2004 was $18,463,000, a decrease of $494,000, or 2.6%, from $18,957,000 last year.

MercFuel’s revenue for the nine-month period ended March 31, 2004 was $228,195,000 on sales volume of 207,507,000 gallons, or 754,600 thousand gallons per day, as compared to revenue of $218,111,000 on sales volume of 221,486,000 gallons, or 808,300 gallons per day, for the same period last year. Despite the lower sales volume, revenue increased primarily due to higher worldwide petroleum product prices and an increase in the sales volume in the corporate and fractional aviation segment, where MercFuel realizes a higher average sales price and margin per gallon sold than in the commercial airlines segment. The lower sales volume is primarily due to the cessation of business by National Airlines in November 2002. Despite the lower sales volume, MercFuel’s gross margin for fiscal 2004 increased slightly to $4,806,000 from $4,741,000 in fiscal 2003. The average per gallon fuel sales margin in fiscal 2004 was $0.0401 as compared to $0.0383 in fiscal 2003. MercFuel’s aviation fuel sales volume within the corporate and fractional aviation segment increased to 28,536,000 gallons, or 13.8% of MercFuel’s total sales volume in fiscal 2004, as compared to 20,765,000 gallons, or 9.4% of MercFuel’s total sales volume last year.

Air Cargo’s revenue for the first nine months of fiscal 2004 was $29,306,000 as compared to $24,840,000 for fiscal 2003, an increase of 18%. Air Cargo’s gross margin in fiscal 2004 was $1,356,000 as compared to $2,072,000 in fiscal 2003, a decrease of 34.6% primarily due to the lower contributions from the cargo marketing services and the warehouse divisions and the establishment of a reserve for executive severance partially offset by improved results from Mercury World Cargo.

Maytag Aircraft’s revenue for the first nine months of fiscal 2004 was $17,489,000, a decrease of $1,021,000, or 5.5% from last year’s revenue of $18,510,000. Maytag Aircraft’s gross margin increased to $3,909,000, representing an increase of 16.3% from last year’s gross margin of $3,360,000.

Air Centers’ revenue for the first nine months of fiscal 2004 was $69,687,000 resulting in a gross margin of $8,392,000. This compares to revenue for the first nine months of fiscal 2003 of $72,187,000 resulting in a gross margin of $8,784,000. Aviation fuels sales volume in fiscal 2004 was 23,285,000 gallons, or 84,700 gallons per day, a decrease of 1,881,000 gallons from last year’s sales volume of 25,166,000 gallons, or 91,800 gallons per day.

About Mercury Air Group

Los Angeles-based Mercury Air Group (AMEX/PCX:MAX) provides aviation petroleum products, air cargo services and transportation, and support services for international and domestic commercial airlines, general and government aircraft and specialized contract services for the United States government. Mercury Air Group operates four business segments worldwide: Mercury Air Centers, Inc., MercFuel, Inc., Maytag

Aircraft Corporation and Mercury Air Cargo, Inc. On April 12, 2004, Mercury Air Group sold its entire ownership interest in Mercury Air Centers, Inc. to Allied Capital Corporation. For more information, please visit www.mercuryairgroup.com.

Statements contained in this news release which are not historical facts are forward looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company’s filings with the Securities and Exchange Commission.

MERCURY AIR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(all amounts in thousands of dollars, except per share amounts)


	Nine Months Ended						Three Months Ended
	March 31,						March 31,
	(unaudited)						(unaudited)
	2004			2003			2004			2003
Sales and revenues:
Sales	$	269,640		$	263,487		$	101,775		$	88,151
Service revenues		70,796			69,397			23,761			22,876

		340,436			332,884			125,536			111,027

Costs and expenses:
Cost of sales		241,307			234,647			93,722			78,400
Operating expenses		80,666			79,280			26,978			26,508

		321,973			313,927			120,700			104,908

Gross margin (excluding depreciation and amortization)		18,463			18,957			4,836			6,119

Expenses (income):
Selling, general and administrative		7,838			7,889			2,798			2,648
Provision for bad debts		421			1,201			361			442
Depreciation and amortization		6,405			6,121			2,126			2,072
Interest expense		6,240			5,536			1,715			2,621
Hambro settlement costs		1,799
Debt extinguishment costs					1,773						40
Other income		(286	)		(77	)		(41	)		(27	)

Total expenses		22,417			22,443			6,959			7,796

Loss before income tax benefit		(3,954	)		(3,486	)		(2,123	)		(1,677	)
Income tax benefit		(316	)		(1,203	)		(304	)		(579	)

Net loss		(3,638	)		(2,283	)		(1,819	)		(1,098	)
Accrued preferred stock dividends		28						9

Net loss applicable to common stockholders		($3,666	)		($2,283	)		($1,828	)		($1,098	)

Net loss per common share :
Basic:		($1.18	)		($0.70	)		($0.63	)		($0.33	)

Diluted:		($1.18	)		($0.70	)		($0.63	)		($0.33	)

MERCURY AIR GROUP, INC.
SELECTED BUSINESS SEGMENT DATA

For the Nine and Three Month Periods Ended March 31, 2004 and 2003

(Unaudited)
(all amounts in thousands)


	Nine Months Ended						Three Months Ended
	March 31,						March 31,
	2004			2003			2004			2003
Revenue
MercFuel	$	228,195		$	218,111		$	88,305		$	72,497
Mercury Air Centers		69,687			72,187			23,704			24,479
Mercury Air Cargo		29,306			24,840			9,729			8,396
Maytag Aircraft		17,489			18,510			5,747			5,990
Intersegment elimination		(4,241	)		(764	)		(1,949	)		(335	)

Total Revenue	$	340,436		$	332,884		$	125,536		$	111,027

Gross Margin
MercFuel	$	4,806		$	4,741		$	1,506		$	1,670
Mercury Air Centers		8,392			8,784			2,104			2,870
Mercury Air Cargo		1,356			2,072			60			368
Maytag Aircraft		3,909			3,360			1,166			1,211

Total Gross Margin	$	18,463		$	18,957		$	4,836		$	6,119

Depreciation and Amortization
MercFuel	$	352		$	213		$	118		$	105
Mercury Air Centers		4,004			3,963			1,306			1,382
Mercury Air Cargo		1,401			1,545			484			453
Maytag Aircraft		249			265			89			84
Other		399			135			129			48

Total Depreciation & Amortization	$	6,405		$	6,121		$	2,126		$	2,072

Sales Volume (thousands of gallons)
MercFuel		207,507			221,486			72,393			63,286
Mercury Air Centers		23,285			25,166			7,545			8,029

MERCURY AIR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited)
(all amounts in thousands of dollars)


ASSETS	March 31,			June 30,
	2004			2003
CURRENT ASSETS:
Cash and cash equivalents	$	1,822		$	2,802
Trade accounts receivable		58,954			46,753
Inventories, principally aviation fuel		3,867			4,422
Prepaid expenses and other current assets		9,017			5,241
Deferred taxes, current		901			901

TOTAL CURRENT ASSETS		74,561			60,119
PROPERTY, EQUIPMENT AND LEASEHOLDS, net		57,789			58,844
NOTES RECEIVABLE		1,034			1,815
DEFERRED INCOME TAXES, LONG TERM		1,961			2,284
GOODWILL		4,389			4,389
OTHER INTANGIBLE ASSETS		808			1,033
OTHER ASSETS		3,869			4,471

TOTAL ASSETS	$	144,411		$	132,955

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	38,358		$	34,677
Accrued expenses and other current liabilities		15,672			9,554
Current portion of long-term debt		3,145			4,194

TOTAL CURRENT LIABILITIES		57,175			48,425
LONG-TERM DEBT		29,286			25,501
SENIOR SUBORDINATED NOTE		23,697			23,445
SUBORDINATED NOTE		3,586
OTHER NONCURRENT LIABILITIES		1,057			608
DEFERRED RENT		1,414			1,885
MINORITY INTEREST		182			180

TOTAL LIABILITIES		116,397			100,044

MANDATORILY REDEEMABLE PREFERRED STOCK		509			481
STOCKHOLDERS’ EQUITY:
Common Stock — $ .01 par value; authorized 18,000,000 shares;		30			33
Additional paid-in capital		20,752			22,496
Retained earnings		10,353			14,018
Accumulated other comprehensive loss		6			(86	)
Notes receivable from officers		(3,636	)		(4,031	)

TOTAL STOCKHOLDERS’ EQUITY		27,505			32,430

TOTAL LIABILITIES, PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY	$	144,411		$	132,955