Houston, Texas, November 9, 2004 – SPACEHAB, Incorporated (NASDAQ/NMS: SPAB), a leading provider of commercial space services, today announced financial results for its first quarter fiscal year 2005 ended September 30, 2004.

Earnings and Revenue
SPACEHAB posted a first quarter fiscal year 2005 net income of $7.0 million, or $0.55 per share ($0.49 per share diluted), on revenue of $13.0 million compared with prior year quarter net income of $0.67 million, or $0.05 per share ($0.05 per share diluted), on revenue of $18.9 million. First quarter 2005 results reflect the recovery of $8.0 million from NASA for the loss of SPACEHAB's Research Double Module (RDM) on the STS-107 space shuttle accident. The recovery, along with $0.2 million of interest, is reflected in operating expenses and accounts receivable for the first quarter fiscal year 2005. In October 2004 the Company received the payment of $8.2 million from NASA.

Revenue for the first fiscal quarter of 2005 decreased from the prior year primarily due to the continuing postponement of space shuttle missions as well as an anticipated slow quarter in spacecraft processed through the Company's Astrotech subsidiary. Additionally, the prior year's first quarter included revenue from certain contracts that have now expired in the Company's SPACEHAB Government Services (SGS) business unit.

"Although we anticipated the first quarter of 2005 to be our biggest financial challenge for the year, we experienced a better quarter than expected with the award of new business derived from non-shuttle programs," said Brian K. Harrington, SPACEHAB Senior Vice President, Finance and Chief Financial Officer. "Our new role on NASA's lunar exploration initiative and our successful commercial delivery of research hardware to the International Space Station via a Russian Progress vehicle are two examples of growing space commerce opportunities."

Selling, general and administrative expenses declined to approximately $2.0 million for the first quarter 2005 compared to $2.9 million for the same period a year ago. This improvement in selling, general and administrative expenses is due to decreases in personnel expenses from the Company's on-going cost reduction efforts and benefits from consolidating the Company's corporate offices in Houston, Texas. The first quarter 2005 selling, general and administrative costs also include legal expenses incurred on the claim with NASA.

Liquidity
The Company's cash and short-term investments were approximately $6.2 million as of September 30, 2004. As mentioned, in October 2004 the Company received $8.2 million from NASA in indemnification of losses suffered in the STS-107 accident, which had been recorded in accounts receivable as of September 30, 2004. SPACEHAB expects to utilize existing cash, cash anticipated from future operations, and any potential additional proceeds from NASA in settlement of the Company's claims related to the losses in the accident to support strategies for new business initiatives and to reduce long-term debt.

Deferred revenue as of September 30, 2004 was reduced to $4.2 million compared to $14.7 million at September 30, 2003. The decrease is primarily due to the successful execution of a commercial contract with the Japan Aerospace Exploration Agency (JAXA) where SPACEHAB provided for the delivery of a thermal incubator system to the International Space Station (ISS) via the Russian Progress for one of its international customers.

Current liabilities decreased to $19.9 million at September 30, 2004 compared to $24.5 million at September 30, 2003 mainly due to reductions in current deferred revenue, accounts payable, and accrued expenses.

Update of Ongoing Operations
"I am pleased to see us begin our 2005 fiscal year stable, lean, and primed," said Michael E. Kearney, SPACEHAB President and Chief Executive Officer. "With the Space Shuttle Discovery in process for an anticipated launch next May, a full processing schedule for the remainder of the year at Astrotech, emerging opportunities for new commercial business, and a NASA charter to develop new concepts that support the Nation's vision for Moon, Mars, and beyond, this promises to be an exciting year."

SPACEHAB Flight Services (SFS) continues to provide logistics capabilities and assets in support of the ISS program. This business unit is under contract for the use of SPACEHAB's single module as well as its Integrated Cargo Carriers (ICCs) to support four logistics missions to the ISS: STS-114, STS-121, STS-116, and STS-118, in order of their scheduled launch dates.

As mentioned previously, the SFS business unit provided JAXA with launch and on-orbit use of a protein crystal growth incubation system under a contract with Mitsubishi Corporation, SPACEHAB's marketing representative in Japan. Flown aboard a Russian Progress vehicle, this payload demonstrates SPACEHAB's ability to offer timely and affordable commercial access to space via the Company's international alliances.

With the successful transition of all systems integration and operations capabilities from SPACEHAB's previous Boeing subcontractor to an in-house capability, the Company has improved the efficiency of its module services. SPACEHAB now provides end-to-end mission integration, hardware development, and sustaining engineering functions and has a stronger team able to support future logistics and research missions to the ISS as well as support NASA's exploration initiatives.

During the fourth quarter fiscal year 2004, SPACEHAB's Astrotech subsidiary supported the processing of two NASA spacecraft that were successfully launched during the first quarter of 2005. The Aura mission, processed at the Company's Vandenberg Air Force Base location, will study the ozone, pollution, and climatic changes in the Earth's atmosphere. NASA's Messenger spacecraft, processed at SPACEHAB's Florida facilities, is designed to orbit the planet Mercury at a distance of 125 miles to collect information on the planet's crust, atmosphere, and polar materials.

After the first quarter 2005 scheduled downtime, Astrotech is moving into high gear with the arrival of NASA's Deep Impact spacecraft at the Company's Titusville, Florida location, the first new processing activity scheduled for the fiscal year. The purpose of this mission is to launch a copper projectile into the surface of Comet Tempel and record photos and data of the large crater that will be formed.

Astrotech Long Beach operations supported the arrival of the Intelsat Americas-8 (IA-8) spacecraft, built by Space Systems/Loral, at the Sea Launch Home Port facilities in preparation for a December 2004 launch date. Set to arrive at the Astrotech Florida facilities in November is the AMC-16 spacecraft, a hybrid Ku/Ka-band satellite built by Lockheed Martin Commercial Space Systems and the first of its kind to be launched on an Atlas V launch vehicle. Astrotech is also working with NASA on finalizing an Indefinite Delivery/Indefinite Quantity (IDIQ) contract format for future processing support for missions scheduled for launch during 2006 through 2010.

SPACEHAB Government Services continues to provide configuration management services within the Program Integration and Control (PI&C) contract supporting the ISS program. The first task order of this contract was successfully completed at the end of the Company's first quarter 2005 which coincides with the end of NASA's fiscal year. A new task order at the same funding level to support another year's effort has been negotiated and approved by NASA despite reductions in the Agency's 2005 budget in this area.

As reported, in January 2004 the Company filed a formal proceeding with NASA seeking indemnification under the Company's Research and Logistics Mission Support (ReALMS) contract in the amount of $87.7 million for the value of the Company's RDM and related equipment that was destroyed during the STS-107 space shuttle Columbia tragedy. NASA responded to this contract claim on October 5, 2004. NASA's determination states that its liability is limited under the ReALMS contract to $8.0 million. The Company received payment of $8.2 million, which included $0.2 million of interest, from NASA in October 2004. The Company has the right to appeal NASA's decision to deny its claim for indemnification in excess of $8.0 million. The appeal can be filed with either the Armed Services Board of Contract Appeals or the U.S. Court of Federal Claims. SPACEHAB is evaluating its options in appealing NASA's determination.

On November 8, 2004 the Company filed a second claim with NASA seeking damages of $79.7 million under the Federal Tort Claims Act for the loss of the RDM resulting from NASA's alleged negligence leading to the destruction of the Space Shuttle Columbia and the loss of the RDM. The Company's claim represents its loss of $87.7 million less the $8.0 million recovered from NASA. Under federal tort claim procedures, NASA has statutory deadlines for responding to such claims. In the event that the Company's administrative claim is denied, the Company would have the right to pursue the claim in the Federal district court.

In January 2004 Lloyd's of London (Lloyd's), the Company's insurer for the RDM, filed a complaint in the United States District Court for the Western District of Washington seeking the return of the $17.7 million Lloyd's had paid to the Company under the RDM insurance policy alleging that, among other things, (i) such proceeds were paid erroneously primarily due to the fact that NASA had not paid indemnification due to the Company prior to the payment of the insurance proceeds, (ii) the Company and its insurance broker misled Lloyd's in issuing the policy, and (iii) the Company has not cooperated with Lloyd's in protecting Lloyd's right of subrogation. In February 2004 Lloyd's withdrew its complaint from the United States District Court and filed a similar complaint in Superior Court of the State of Washington. On November 1, 2004 SPACEHAB filed a motion with the Superior Court of the State of Washington to dismiss under forum non conveniens . The Company believes that Lloyd's complaint is without merit and will continue to respond to the complaint accordingly.

Conference Call
SPACEHAB will host a conference call today at 10:00 a.m. Central time following the earnings release. During the call, management will discuss the Company's first quarter financial results as well as other recent and potential future developments relating to SPACEHAB. To participate on the call, please dial 800.377.4872 (domestic calls) or 816.650.0783 (international calls) and ask for the SPACEHAB Earnings Conference. A taped replay will be available following the conference call and accessible via access code 28810984 until 11:59 p.m. Eastern time on November 10, 2004 at 800.252.6030 (domestic calls) or 402.220.2491 (international calls). To hear a replay of the call via the Internet, visit the Investor Information section of the SPACEHAB website at www.spacehab.com . This audio archived webcast of the conference call will be available on the Company website for approximately 90 days.

About SPACEHAB, Incorporated
SPACEHAB, Incorporated (www.spacehab.com) is a leading provider of commercial and government space services with three primary business units. The Flight Services business unit develops, owns, and operates habitat and laboratory modules and cargo carriers aboard NASA's Space Shuttles for Space Station resupply and research purposes. SPACEHAB's Astrotech subsidiary provides payload processing support services for both commercial and government customers at company-owned facilities in Florida and California. The Company's Government Services business unit supports NASA's Johnson Space Center providing configuration management, product engineering, and support services for both the Space Station and Space Shuttle programs. Additionally, through The Space Store, Space Media provides space merchandise to the public and space enthusiasts worldwide (www.thespacestore.com).

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Tables follow

SPACEHAB, INCORPORATED AND SUBSIDIARIES Unaudited Condensed Consolidated Statements of Operations Three Months Ended September 30,   (in thousands, except share data) 2004 2003 Revenue $ 13,033 $ 18,850 Costs of revenue 10,786 13,527 Gross profit 2,247 5,323       Operating expenses      Selling, general and administrative 1,966 2,932      Research and development 7 -      Recovery of nonrecurring charge, loss of Research Double Module (8,244) -        Total operating expenses (6,271) 2,932        Income from operations   8,518   2,391 Interest expense (1,458) (1,740) Interest and other income, net 41 33 Income before income taxes 7,101 684 Income tax expense (142) (18)      Net income $ 6,959 $ 666 Income per share:         Net income per share - basic $ 0.55 $ 0.05 Shares used in computing net income per share - basic   12,574,224 12,370,955   Net income per share - diluted $ 0.49 $ 0.05 Shares used in computing net income per share - diluted 14,247,860 13,745,450

Condensed Consolidated Balance Sheets (In thousands)     September 30, 2004 (unaudited)   June 30, 2003 ASSETS Cash and cash equivalents $ 558 $ 936 Short-term investments   5,677   6,641 Accounts receivable, net   14,676   7,878 Prepaid expenses and other current assets   648   495      Total current assets   21,559   15,950 Property and equipment, net of accumulated depreciation and amortization of $51,040 and $49,755, respectively   78,420   79,600 Other assets, net   3,194   4,375      Total assets $ 103,173 $ 99,925       LIABILITIES AND STOCKHOLDERS' EQUITY         Current liabilities $ 19,855 $ 22,301 Long-term liabilities   66,905   68,214 Stockholders’ equity   16,413   9,410      Total liabilities and stockholders’ equity $ 103,173 $ 99,925