SPACEHAB, Incorporated, a leading provider of commercial space services, today
announced that it has filed a formal claim against NASA in the amount of
$87.7 million for the value of its Research Double Module (RDM) and related
equipment that was destroyed during the STS-107 Space Shuttle Columbia

In July 2003 SPACEHAB submitted a detailed claim in draft to NASA for
recovery of its RDM investment in the amount of $87.0 million. The claim has
since been revised and re-filed with NASA to incorporate the findings of the
Columbia Accident Investigation Board report. NASA has sixty days to respond
to the claim or request an extension period.

SPACEHAB’s contract with NASA included an indemnification provision
providing for any loss of, or damage to, the Company’s flight hardware up to
$8.0 million. SPACEHAB’s final claim in the amount of $87.7 million includes
a separately filed claim for the $8.0 million contractually-stipulated
provision plus losses in addition to those contractually specified. The
Company believes that such additional amounts are justified and substantiated.
Any amounts paid by NASA in support of the $8.0 million contract provision
will be deducted from the total claim amount.

“We believe that the Company is entitled to recovery of the loss from NASA
but there can be no assurances as to the timing or the amount, if any, to be
received from the claim,” said Brian K. Harrington, SPACEHAB Senior Vice
President and Chief Financial Officer. “Upon resolution of the claim, any
proceeds from NASA would be recorded in the period in which the claim is
resolved,” added Harrington.

SPACEHAB is pursuing discussions with NASA with the goal of settling the
claim as soon as possible. As a result of the RDM loss, the Company was
required to write off the entire book value of the module net of the
commercial insurance recovery. This loss resulted in a material reduction in
property, plant, and equipment assets as of March 2003.

In February 2003 SPACEHAB received $17.7 million from the proceeds of its
commercial insurance policy. In January 2004 SPACEHAB received a complaint
from Lloyd’s of London, the Company’s insurer for the RDM, demanding return of
the $17.7 million paid SPACEHAB alleging that the Company, among other things,
breached the contracts of insurance by demanding and receiving the insurance
proceeds before NASA had paid, or agreed to pay, the contractually obligated
$8.0 million loss proceeds. SPACEHAB believes that Lloyd’s complaint is
without merit and will respond to the Lloyd’s complaint accordingly.

About SPACEHAB, Incorporated

SPACEHAB, Incorporated ( ) 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 ( ).

The statements in this document may contain “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those projected in the statements. In addition to those risks and
uncertainties discussed herein, such risks and uncertainties include, but are
not limited to, whether the Company will fully realize the economic benefits
under its U.S. National Aeronautics and Space Administration (“NASA”) and
other customer contracts, whether NASA and other customers will continue to
utilize the Company’s habitat modules and related commercial space assets,
whether plans to complete the International Space Station (“ISS”) are
fulfilled, continued availability and use of the U.S. Space Shuttle system,
technological difficulties, product demand and market acceptance risks, the
effect of economic conditions, uncertainty in government funding, the impact
of competition, delays and uncertainties in future space shuttle and ISS
programs, resolution of the Company’s indemnification claim with NASA arising
from the loss of the Columbia orbiter and its crew during the STS-107 mission,
and other risks described in reports filed by the Company with the Securities
and Exchange Commission. The Company assumes no obligation to update these
forward-looking statements.