In a large bowl, gently combine the lean beef, milk, egg, torn bread pieces, onion powder, garlic powder, Worcestershire sauce, salt, pepper, and dry mustard using clean hands. The mixture will be slightly wet—that's exactly as intended to keep it moist. Mixing until just combined prevents a dense texture.
Spray your air fryer basket with olive oil spray to ensure easy release. Shape the mixture into an even loaf right in the basket—aim for consistency in thickness so it cooks evenly. No preheating is needed since you shape directly in the basket.
Cook at 350 °F for 15 minutes. While it cooks, whisk together ketchup and BBQ sauce for the glaze. After the initial cook, brush a thin layer of glaze over the top—don’t worry if you don’t use it all. Return the loaf to the air fryer at 350 °F for 10 more minutes. Use a meat thermometer to confirm an internal temperature of 160 °F.
Let the meatloaf rest for 5 minutes in the basket after cooking. That resting time helps the juices redistribute and makes slicing neater. Serve with any leftover glaze brushed on each slice for extra flavor.