Astrotech Exceeding Operating Goals While Expanding Capabilities and Enhancing Facilities

Houston, Texas, January 5, 2006 – SPACEHAB, Incorporated (NASDAQ/NMS: SPAB), a leading provider of commercial space services, announced today that its Astrotech subsidiary will be providing payload processing services to Lockheed Martin’s International Launch Services (ILS) for the ASTRA 1KR satellite.

ASTRA was initially set for launch on a Proton launch vehicle. With a recent change in the type of spacecraft model to be flown, a launch vehicle switch was made and the satellite will now fly aboard Lockheed Martin’s Atlas V. SPACEHAB’s Astrotech subsidiary in Titusville, Florida provides facilities and payload processing support for the Atlas program and will now open its doors to ASTRA and its team this February in order to support an April 2006 liftoff from Cape Canaveral Air Force Station.

“We welcome the ILS and ASTRA teams and we are excited about showcasing our recent facility upgrades that will help us exceed their payload processing needs as well as those of our other customers,” stated Jim Royston, Deputy General Manager of Astrotech Space Operations. In support of ongoing government contracts, Astrotech has been able to increase its facility capabilities and is nearing completion of significant facility enhancements including advanced security capabilities, communications and cleanroom improvements, and the addition of a large capacity conference center.

SPACEHAB’s Astrotech team is not only able to provide unique, commercially operated facilities, but is also leveraging existing competencies to offer new mission support services. “We’ve seen increased demand for services such as propellant operations, logistics, hardware transportation, import and export, and safety and site surveys,” added Royston. “Not only are we expanding these capabilities in Florida and our California operations at Vandenberg Air Force Base, but also in various international locations such as Baikanur, Russia.”

The ASTRA mission comes on the heels of a recently awarded NASA mission, THEMIS, which was the third mission outlined in the $4.9 million indefinite-delivery, indefinite-quantity (ID/IQ) contract that NASA initiated with Astrotech in September 2005. The Company is currently negotiating the follow-on ID/IQ contract to support NASA’s spacecraft processing needs through 2010. This agreement is expected to be valued at approximately $10.0 million.

“I am proud of the numerous accomplishments our Astrotech team has achieved,” stated Michael E. Kearney, SPACEHAB President and Chief Executive Officer. “With a busy manifest through 2007 at our Sea Launch operating location, new business and capabilities at our Vandenberg and Titusville facilities, and viable opportunities for growth, this business unit is exceeding its operating goals for the fiscal year.”

In addition to these latest missions and pending contract, Astrotech is pursuing new business endeavors such as NASA’s Commercial Orbital Transportation Service (COTS) Demonstration solicitation supporting the commercial processing and transportation of provisions and hardware to the International Space Station. “Since most competing teams vying for this contract will rely on Atlas or Delta launch vehicles to transport goods to the space station – both of which are processed at our east coast campus – Astrotech is poised to support the two to three missions per year procured under the ensuing Space Act Agreement that NASA expects to issue,” added Kearney.

Astrotech, named last year’s NASA Kennedy Space Center Small Business Contractor of the Year, is the leading commercial provider of satellite launch processing services in the United States. With operating locations at all major U.S. launch locations, Astrotech accommodates a wide range of customer payloads as well as the payload fairings and payload adapter assemblies of the launch service providers. This approach allows for maximum flexibility in the processing of parallel missions and accommodating schedule changes. Astrotech’s goal is to make its facilities a seamless extension of the customer’s factory environment.

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 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.

FOR MORE INFORMATION:

Kimberly Campbell
Vice President
Corporate Marketing and Communications
SPACEHAB, Inc.
713.558.5049
campbell@spacehab.com