SPACEHAB Subsidiary Awarded New $1.3 Million NASA Contract

SPACEHAB, Incorporated, a leading provider of commercial space services,
today announced that its Astrotech Space Operations subsidiary has
been awarded a new contract by NASA/Kennedy Space Center to provide
the payload processing facilities and support for the CALIPSO/CloudSat
mission.

The CALIPSO and CloudSat satellites are scheduled for a January
2005 delivery to Astrotech’s facility located at Vandenberg Air Force
Base (VAFB), California where the Company will begin providing its
processing services. The NASA contract, valued at approximately $1.3
million, provides for processing support from satellite arrival at
VAFB through launch on a Delta II expendable launch vehicle (ELV)
complex.

Scheduled for launch in April 2005, CALIPSO and CloudSat are part
of the Earth Science Enterprise program whose mission is to study the
planet’s environment. These satellites will fly in close proximity,
providing combined, detailed observations about the Earth’s condition,
assisting scientists with making predictions related to global climate
change.

The CALIPSO and CloudSat spacecrafts, as part of a six satellite
formation known as the A-Train, also provide students with a link to
NASA research through the GLOBE Program, a hands-on, primary and
secondary education science program. Students from around the world
take ground-based measurements of weather, clouds, and aerosols,
collecting information that scientists can compare with related
satellite data.

Astrotech is currently providing processing support for the NASA
Aura spacecraft, scheduled for launch on July 10, 2004, another of the
A-Train observation satellites. Processed at Astrotech’s VAFB facility
and secured onboard a Delta II ELV, Aura’s mission is to study the
dynamics of chemistry occurring in the atmosphere. The spacecraft will
provide data to help researchers better understand the Earth’s ozone,
air quality, and climate change.

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).

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.