SPACEHAB Reports Financial Results For Third Quarter Fiscal Year 2005

FOR IMMEDIATE RELEASE

SPACEHAB REPORTS FINANCIAL RESULTS FOR THIRD QUARTER FISCAL YEAR 2005

Houston, Texas, May 10, 2005 – SPACEHAB, Incorporated (NASDAQ/NMS: SPAB), a leading provider of commercial space services, today announced financial results for the third quarter ended March 31, 2005 of its fiscal year 2005.

Third Quarter Results
SPACEHAB posted a third quarter fiscal 2005 net loss of $0.5 million, or ($0.04) per share, on revenue of $14.3 million compared with third quarter fiscal year 2004 net income of $0.3 million, or $0.02 per share, on revenue of $14.8 million.

"During the third quarter we continued to prepare for NASA's return to flight of the space shuttle," stated Michael E. Kearney, SPACEHAB President and Chief Executive Officer. "Although NASA has recently deferred the launch date to mid July, we are completing work for the STS-114 mission scheduled as the space shuttle's return to flight, as well as mission-specific work on STS-121 and STS-116." Kearney continued, "We are also proceeding with new work to add a deployable stowage platform that will be affixed to the International Space Station next year during the STS-118 mission and used for spare parts storage."

In addition to the space shuttle mission revenues, SPACEHAB's Astrotech Space Operations revenue improved in the third quarter. This was primarily due to the commencement of processing activities on several missions that had been deferred from the second quarter to the third quarter due to slips in the customers' launch schedules. With payload processing activities supported at all Astrotech operating locations, seven spacecraft underwent processing with three of those successfully launched during the third quarter.

"NASA's rescheduling of the space shuttle launch to mid July 2005 is expected to have a small impact on our revenues and margins in the third and fourth quarters," stated Brian K. Harrington, SPACEHAB Senior Vice President and Chief Financial Officer. "However, we are generally reimbursed under the contract for additional costs due to delays once we begin mission-specific work," added Harrington.

Nine Month Results
SPACEHAB's net income for the nine months ended March 31, 2005 was $5.2 million, or $0.36 per share, on revenue of $40.4 million compared to $4.4 million, or $0.31 per share, on revenue of $66.5 million for first nine months of the prior fiscal year. The prior fiscal year results included the one-time termination payment of financial guarantees of $17.5 million in the Company's Astrotech subsidiary, impairment of goodwill of $8.3 million, and an impairment on an investment of $1.8 million, while the current fiscal year includes the recovery of $8.2 million from NASA for the loss of SPACEHAB's Research Double Module (RDM) on the STS-107 space shuttle accident which occurred prior to the third quarter.

Liquidity
SPACEHAB's cash and short-term investments were approximately $6.0 million as of March 31, 2005. In February 2005 the Company entered into a new revolving credit facility providing up to $5.0 million secured by accounts receivable. This new bank facility replaced the previous revolving line of credit which was secured by pledged cash and invested cash assets. As of March 31, 2005 SPACEHAB had no advances outstanding against this facility.

Deferred revenue as of March 31, 2005 was reduced to $2.4 million compared to $7.2 million at June 30, 2004. The decrease is primarily due to the successful execution of a commercial contract, JETIS, with the Japan Aerospace Exploration Agency where SPACEHAB provided for the delivery of a thermal incubator system to the International Space Station (ISS) via the Russian Progress. For the three and nine months ended March 31, 2005, the Company recognized revenue of approximately $0.6 million and $2.7 million, respectively, under this contract.

Current liabilities decreased to $15.3 million at March 31, 2005 compared to $22.3 million at June 30, 2004 due to reductions in current deferred revenue, accounts payable, and repayment of the revolving loan payable outstanding at the end of the prior fiscal year. As of March 31, 2005 SPACEHAB carried a contract backlog of $81.9 million, which represents the expected value of contractually-committed work, portions of which are subject to the space shuttle's return to flight or future government funding decisions.

As announced in May 2005, the Company closed on a sale-leaseback transaction for the SPACEHAB Payload Processing Facility in Cape Canaveral, Florida. This transaction will generate cash to further improve liquidity while providing attractive lease arrangements. As SPACEHAB transitions to serving NASA's emerging needs under the National Vision for Space Exploration, this lease offers the flexibility to respond to new opportunities and optimize our facility requirements for both the Cape Canaveral and Titusville, Florida locations.

Update of Ongoing Operations
"As a forward thinking company focused on high value commercial access to space, it is critical that we are on the forefront of innovation while remaining a leading force in helping people work and live in space," said Kearney. "As a result, each of our business units continues to advance our proven capabilities in support of International Space Station logistics, space exploration resupply, and support of commercial human space initiatives," added Kearney.

SPACEHAB Flight Services (SFS) continues to provide logistics capabilities and assets in support of the ISS program. SFS is under contract to provide SPACEHAB's single module as well as its Integrated Cargo Carriers (ICCs) in support of four logistics missions to the ISS: STS-114, STS-121, STS-116, and STS-118, in order of scheduled launch dates. Support to STS-114 continues under contract to the ISS prime contractor, The Boeing Company (NYSE: BA) , and support for STS-121, 116, and 118 continues under subcontract to Lockheed Martin Corporation (NYSE: LMT). SPACEHAB is currently providing asset maintenance and related services under letter contract and is in final contract negotiations with Lockheed for this contract.

In support of ISS operations during the shuttle's downtime, SFS helped ship over 1,200 pounds of food containers and crew provisions from the United States to Russia. Launched onboard the Russian 17P Progress mission, goods ranged from personal hygiene items to a replacement heat exchanger, all delivered for use by the ISS Expedition 10 and 11 crews.

During the quarter NASA exercised the Company's six-month exploration contract option, valued at approximately $1.0 million, for the phase two extension of the Concept Exploration and Refinement contract. This contract gave SPACEHAB the opportunity to identify systems and an architecture that support human lunar exploration, while being extensible to Mars missions and other destinations. This new option period, scheduled through August 2005, allows the Company to continue and expand upon the work completed over the previous six month contract period.

Astrotech saw the successful launch of three spacecraft in the third quarter, all processed at Company owned or operated facilities in both Florida and California. January 12, 2005 was the liftoff date for NASA's Deep Impact. Reports show that the spacecraft is on target for a July 4, 2005 scheduled collision with the comet Tempel 1. Astrotech supported the processing and February 28, 2005 launch of the XM(Radio)-3 satellite on a Zenit-3SL vehicle from the Sea Launch platform at the equator. Finally, the Inmarsat-4 PFM spacecraft lifted off onboard an Atlas V from Cape Canaveral Air Force Station after processing and encapsulation at Astrotech's Florida facilities.

March 2005 saw the arrival of the Boeing Satellite Systems' GOES-N spacecraft at Astrotech Florida in preparation for a June 2005 launch on a Boeing Delta IV launch vehicle. Once the processing is completed and the vehicle transported to the launch pad, the Florida facilities will undergo a scheduled major maintenance period in anticipation of a heavy mission load beginning at year's end.

At Astrotech's Vandenberg location, the team was readying the facilities for the arrival of NASA's CALIPSO and CloudSat spacecraft. At the Sea Launch Home Port, Astrotech supported the processing of the Spaceway 1 satellite which launched subsequent to quarter end. During the quarter, Astrotech was awarded a new payload processing contract with a value of $2.5 million supplying payload processing services in support of U.S. Government missions.

SPACEHAB Government Services (SGS) continues to provide configuration management services within the Program Integration and Control contract supporting the ISS program. The SGS Project Engineering and Fabrication team led two successful initiatives in support of the ISS program. First, the team fabricated and assembled the next generation of intra-vehicular activity handrails. The 175 handrails were developed and tested for transport to, and final installation on, ISS Nodes 2 and 3 and the Japanese Experiment Module. Second, the team fabricated, assembled and tested a crew training mockup and flight versions of a custom mounting plate which will enable two pieces of critical ISS hardware to be attached to SPACEHAB's ICC on space shuttle mission STS-121, and transferred to the ISS.

Conference Call
SPACEHAB will host a conference call at 10:00 a.m. Central time following the earnings release. During the call, management will discuss the Company's third quarter financial results as well as other recent and potential future developments relating to SPACEHAB. To participate on the call, please dial 866.613.5217 (domestic calls) or 678.460.1862 (international calls) and when prompted, enter the pin code 6661193 followed by the pound (#) key. A taped replay will be available following the conference call until 11:59 p.m. Eastern time on May 11, 2005 at 866.453.6660 (domestic calls) or 678.460.1866 (international calls) via access code 165119. 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 one year.

About SPACEHAB, Inc.
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).

The statements in this document may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, trends, and uncertainties that could cause actual results to be materially different from the forward-looking statement. These factors include, but are not limited to, continued government support and funding for key space programs, product performance and market acceptance of products and services, as well as other risk factors and business considerations described in the company's Securities & Exchange Commission filings including the annual report on Form 10-K. Any forward-looking statements in this document should be evaluated in light of these important risk factors. The Company assumes no obligation to update these forward-looking statements.