SECURITIES AND EXCHANGE COMMISSION
                   Washington, D.C.  20549
                              
                          FORM 10-K
                              
                              
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934
                              
                              
           For the fiscal year ended June 30, 1997
                              
                              
               Commission File Number 33-67422
                              
                              
                   SABRELINER CORPORATION
                   A Delaware Corporation
        (IRS Employer Identification No. 43-1289921)
              Pierre Laclede Center, Suite 1500
     7733 Forsyth Blvd., St. Louis, Missouri  63105-1821
                 Telephone:  (314) 863-6880




Securities registered pursuant to Section 12(b) of  the  Act:
None

Securities registered pursuant to Section 12(g) of  the  Act:
121/2% Senior Notes due 2003, Series B

Indicate  by check mark whether the Registrant (1) has  filed
all  reports required to be filed by Section 13 or  15(d)  of
the  Securities Exchange Act of 1934 during the preceding  12
months,  or  (2) has been subject to such filing requirements
for the past 90 days.   Yes  X   No ___

Indicate  by  check  mark if disclosure of delinquent  filers
pursuant  to  Item  405 of Regulation S-K  is  not  contained
herein,  and  will  not be contained,  to  the  best  of  the
Registrant's  knowledge, in definitive proxy  or  information
statements incorporated by reference in Part III of this Form
K or any amendment to this Form 10-K.   ( X )

The   number   of  shares  of  the  Company's  common   stock
outstanding on August 31, 1997 was 870,934.

                           PART I

Item 1.  BUSINESS

Sabreliner  Corporation and its subsidiaries (Company)  is  a
diversified aerospace company, providing services in airframe
maintenance and modification, gas turbine engine overhaul and
repair,  aircraft systems upgrades and refurbishments,  fleet
logistics  support and other aerospace products and  services
for  corporate,  commercial and government aviation  markets.
During  fiscal  year  1997, Sabreliner and  its  wholly-owned
subsidiaries   Midcoast  Aviation,  Inc.,  SabreTech,   Inc.,
Dimension Aviation, Inc. and Turbotech Repairs, Inc. reported
revenue  of  $260.9  million, of which 33%  was  provided  by
corporate  aviation, 26% by commercial aviation, and  41%  by
government aviation business.

During  fiscal 1997, revenue increased 27%, due to  continued
growth  in  the government and corporate aviation businesses,
partially  offset  by  reduced  revenues  in  the  commercial
aviation  business.   The  sale of  the  Undergraduate  Naval
Flight  Officer (UNFO) training system assets in  the  fourth
quarter  added $36.7 million in government aviation  revenue.
The  award  of  new  contracts and  increased  deliveries  on
existing contracts also improved government revenue by  $15.7
million  during  fiscal  1997.   Corporate  aviation  revenue
increased   by   $18.6  million  in  fiscal  1997,   due   to
capitalizing   on   strong   customer   demand   for    major
modifications  and maintenance and expanded engine  activity.
Commercial  aviation revenues declined by  $15.5  million  in
fiscal  1997, due to the closing of four commercial  aviation
facilities  during fiscal 1997 (see Item 3. LEGAL PROCEEDINGS
and Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS).  Excluding the revenues
provided by these closed facilities in fiscal 1996 and  1997,
revenue  for continuing commercial aviation operations  would
have  increased by $10.6 million in fiscal 1997, due  to  the
addition of the Dimension Aviation subsidiary.

Significant  highlights during fiscal 1997 include:  (1)  The
formation  of a new commercial aviation subsidiary, Dimension
Aviation, Inc., based in a recently-acquired leased  facility
in  Goodyear, Arizona formed to support the McDonnell Douglas
subcontracts  for the modification of passenger  aircraft  to
freighter configuration. Current firm orders are in excess of
$120.0 million over the next four years, (2) The sale of  the
Company's  UNFO training system assets to the Navy for  $42.5
million  in  the fourth quarter ($36.7 million was recognized
as  fiscal 1997 revenue), (3) Construction of a new hangar at
the  Company's Midcoast-Parks location to capitalize upon the
continued  strong  demand  in corporate  aviation.   The  new
facility is expected to be operational during the next fiscal
year,  (4) The Company's backlog of firm orders exceeds  $250
million as of June 30, 1997, more than double June 30, 1996.

Corporate Aviation Business

The  Company's corporate aviation business provides airframe,
powerplant   and  ancillary  systems  repair,  overhaul   and
modification services and flight line and spare parts support
to  the  operators  of corporate and private  aircraft.   The
revenues  of this business area derive from work  on  a  wide
variety   of   business   aircraft  including   the   Cessna,
Challenger, Falcon, Gulfstream, Hawker, Lear, Sabreliner, and
other  business  jet  and turboprop airframes.   The  Company
services  these  aircraft  for  both  domestic  and   foreign
operators, with international sales in excess of  9%  of  the
corporate  aviation  business.  Total  revenues  reported  in
fiscal  1997  for corporate aviation were $86.6 million,  and
are comprised of the following product lines.

Maintenance and Modification

Maintenance  is  the  inspection  and  resulting  repair   of
aircraft,    including   airframe   corrosion    inspections;
maintenance   and   service  bulletin  compliance;   avionic,
instrument,  electrical  and hydraulic  systems  repairs  and
overhauls;  and the troubleshooting and repair  of  aircraft.
Modification  is  the periodic enhancement or  conversion  of
aircraft,  including  aircraft  painting;  avionics   systems
installation;   interior   refurbishment;   structural   life
extensions or enhancements; and other major modifications  or
improvements.

The  Company maintains four facilities to provide maintenance
and modification services:

  Perryville,  Missouri Center performing routine maintenance
  and modifications on the Sabreliner fleet;

  Downtown  St.  Louis Parks Center dedicated to  maintenance
  and  modification of larger "heavy iron" aircraft, such  as
  and Challengers, Falcons and Gulfstreams;

  Little  Rock  Center specializing in smaller  and  mid-size
  business aircraft; and

  Lambert  Field  Center which supports  base  customers  and
  drop-ins at the Lambert-St. Louis International Airport.

The  combined facilities of Midcoast and Sabreliner  provided
$47.9  million  in  aggregate  maintenance  and  modification
revenue during fiscal 1997.

Engine Repair and Overhaul

The  engine  business area includes the repair, overhaul  and
maintenance  of  powerplants  installed  on  a   variety   of
corporate,  private  and  military  aircraft.   The   Company
markets  its commercial engine  services  under  the  Premier
Turbines trademark. Current engine component repair or engine
overhaul capabilities include the following engines:

            Manufacturer                Engine
                              
           Pratt & Whitney       PT6, JT12, JFTD12, JT8,
                                 J52, J75, J60, JT15, PW100
           General Electric      CF700, T700, CJ610, J85
           AlliedSignal          TFE731, TPE331 APU Series,
                                 T53, LTS101
           Teledyne              J69
           Allison               A250, T63, T56

The  Company's primary engine facility is located in  Neosho,
Missouri.  Totally  dedicated  to  engine  work,  the  Neosho
operation   maintains  advanced  capabilities   in   lathing,
milling,  machining, electron beam and conventional  welding,
plating, coating, blending, shotpeening, plasma spraying,  X-
ray  and  magnetic  diagnostics, and other capabilities.   In
June,  1996,  the Company acquired Turbotech  Repairs,  Inc.,
adding  component repair capability for the Pratt  &  Whitney
PT6 and PW100 and AlliedSignal TPE331 and related APU series,
as  well as, full overhaul authority for the Allison 250.  In
May, 1996, the Company acquired the heavy maintenance tooling
and  license  for  the AlliedSignal TFE731 engine  from  UNC-
Airwork.   The addition of the heavy maintenance license  for
the  AlliedSignal TFE731 makes Sabreliner's  Premier  Turbine
division  one  of only three companies in the  United  States
capable   of  performing  a  factory-authorized   core   zone
inspection,   a  sophisticated  overhaul  on   this   popular
powerplant.

The  Company  has achieved significant growth  in  this  area
during the last fiscal year, with total revenues for 1997  at
$21.9 million more than double the previous year.  Growth  of
the  Premier  Turbines  division can  be  attributed  to  the
capture  of  engine  component  repairs,   the  addition   of
Turbotech,   the   expansion  of   capabilities   at   Neosho
(specifically, the heavy overhaul capability on the  TFE731),
and foreign market expansion. The Company believes additional
growth  in  the engine business area can be achieved  in  the
next  year  as  domestic and international  market  expansion
continues in recently-acquired capabilities.

Other Corporate Aviation Business

In addition to the products and services described above, the
Company  provides  other aerospace support to  the  corporate
aviation market, including: fueling, long-term tenant leasing
and  flight  line services, collectively known as  the  Fixed
Base  Operator (FBO) business; over-the-counter spare  parts;
and  pre-owned aircraft sales.  These services accounted  for
$16.8 million in fiscal 1997 revenue.

Government Business

Sabreliner   performs  work  with  the   U.S.   and   foreign
governments for both military and civilian agencies.  Of  the
$108.0  million  in  revenue reported on these  contracts  in
fiscal 1997, 55% was derived from the U.S. Navy, 37% from the
U.S.  Air Force and 6% from the U.S. Army.  Subcontracts  and
government agencies, such as the FAA, represent the remaining
2%  of  this total.  Although the U.S. Department of  Defense
budget  has steadily declined over the last decade,  spending
for  operations  and maintenance - the funding  category  for
substantially all of the Company's contracts -  has  remained
and  is projected by the government to remain stable.  During
the  last  fiscal year, the Company was awarded  several  new
government  contracts  and  had  options  exercised  by   the
government  on existing contracts.  The Company believes  its
experience  and  low-cost structure enable it to  effectively
compete   on  a  broad  spectrum  of  government  contracting
opportunities.   A  description of the Company's  significant
government business follows.

The  Undergraduate  Naval  Flight  Officers  (UNFO)  Training
Program

The Company was awarded the UNFO contract in March, 1990,  to
perform  training  services  for Undergraduate  Naval  Flight
Officers   (now  known  as  Undergraduate  Flight  Officers),
including:   airborne  training  missions  on  radar-equipped
Sabreliner   aircraft;  simulator  training   of   air-to-air
intercepts  and radar mapping; and all logistics, maintenance
and pilot support services.  To meet the requirements of this
contract,  the  Company purchased and modified 17  Sabreliner
aircraft, designed and installed training stations,  modified
airborne  tactical radars, and provided on-site  maintenance,
logistics and pilot crews.  This was achieved by assembling a
team  of  five major subcontractors and through  the  initial
capital  investment  of  over $99 million,  requiring  nearly
eighteen  months  of engineering design, aircraft  and  radar
modifications and other management efforts. The  Company  has
maintained  outstanding  performance  on  the  UNFO  program,
evidenced  through several meritorious commendations  awarded
by   the   Navy,  including  the  prestigious  Vice   Admiral
Goldthwaite  Award.   The 50-month basic  contract  ended  on
September  30,  1995,  and the Navy  exercised  its  36-month
option, which will end on September 30, 1998.

During  fiscal year 1997, the Company negotiated the sale  of
the  UNFO program training system assets with the U.S.  Navy,
which  include  17  aircraft, the associated  radar  systems,
training  simulators and spare parts.  The  sale  provided  a
$36.7  million  payment  in  June  1997,  with  $5.8  million
additional  payments to be collected upon the  completion  of
Aircraft  Condition  Inspections, to be  performed  over  the
remaining life of the logistics contract. The asset sale  and
the  performance of additional delivery items pursuant to the
sale  agreement did not modify the existing on-site logistics
contract.  The total revenues reported for the UNFO  program,
for  both  the on-site logistics contract and the asset  sale
totaled $52.5 million in fiscal 1997.

The C-20 Joint Logistics Support Contract

The  U.S. Air Force C-20 contract was awarded to the  Company
in  July, 1995, to perform on-site logistics support,  depot-
level maintenance and engine maintenance for the government's
fleet  of 24 Gulfstream C-20 aircraft, which operate  out  of
four military bases.  The contract consists of one base year,
starting  October 1, 1995, and six one-year options.   Option
year  two,  starting October 1, 1997, has  been  unofficially
exercised.  The contract was awarded to Sabreliner based upon
its  team approach: Sabreliner as prime contractor, providing
material  management and administration; UNC, Inc., providing
on-site   maintenance  and  stockroom  support;  Sabreliner's
subsidiary,   Midcoast  Aviation,  performing   depot   level
maintenance  at  its Downtown St. Louis Parks  facility;  and
Rolls  Royce-Canada,  providing engine  overhaul  and  repair
support.  Revenues reported for this contract during the last
fiscal year were $33.9 million.

The Navy T-2/A-4 Depot Level Maintenance Program

On August 24, 1995, the Company was awarded the T-2/A-4 Depot
Level  Maintenance contract for the inspection and repair  of
the  Navy's fleet of T-2 aircraft and Foreign Military  Sales
(FMS)  repairs  on  A-4 aircraft.  The contract's  base  year
started October 1, 1995, and includes four option years;  the
option  for  the second additional year, starting October  1,
1997,  has  been exercised.  Significant over and above  work
requests have been approved by the Navy to enable the Company
to  fabricate structural parts for this aircraft. As of  June
30, 1997, the Company has inducted 21 T-2 aircraft under this
contact.   Revenues reported during fiscal 1997 totaled  $6.8
million.

Government Engine Repair and Overhaul

The  Company  holds various contracts for  the  overhaul  and
repair  of  government-owned engines and  engine  components.
The  two largest of these engine contracts are the Air  Force
J85  MISTR  and Army T700-GE-701 GG Rotor Assembly  contracts
("GG  Rotor"), which during fiscal 1997 provided  revenue  of
$5.0  million  and $4.6 million, respectively.   The  Company
retained  the  J85 program during fiscal 1997, capturing  the
five-year  follow-on  contract, that  includes  two  one-year
options.   The  GG  Rotor  contract  was  awarded   for   the
replacement  of first stage turbine blades and other  repairs
as  necessary  of  450  engines used  in  the  Army's  Apache
helicopter fleet.  Options exist for up to 250 more  engines.
Deliveries  on  this contract began in  April,  1997.   Total
revenue  reported  for  government  engine  contracts  during
fiscal 1997 was $11.1 million.

Eagle Subcontract

During  the  third quarter of fiscal 1997,  the  Company  was
awarded   two  subcontracts  to  modify  four  Hawker   800XP
corporate  jet  aircraft in support  of  a  foreign  military
contract  held  by Lockheed-Martin Tactical Defense  Systems.
The  combined  value of these subcontracts is $14.3  million.
The  contract  requires the completion of four aircraft  from
"green"  configuration through avionics  upgrades  and  other
modifications.   The  final phase  of  the  contract  is  the
conversion  of  the aircraft to mission-ready status  through
installation  of  special  mission equipment,  communications
systems  and  other  support equipment.  Performance  of  the
contract  requires  the  participation  of  multiple  company
subsidiaries:    Sabreliner's   Perryville   facility    will
manufacture  interior  components  and  avionics  racks;  the
Midcoast  Aviation subsidiary will provide technical support,
using  their  familiarity with the Hawker airframe;  and  the
final  assembly  and installation will be  performed  at  the
Dimension  facility in Goodyear, Arizona.  The contracts  are
scheduled to be complete within eighteen months of award.  No
revenue  was  reported for the Eagle subcontracts  in  fiscal
1997.

Other Government Business

The Company's broad capabilities and extensive experience  in
government  contracting enables it to perform  a  variety  of
other  government aviation contracts and subcontracts.  Other
government  business  revenues generated  in  the  last  year
include subcontracts to provide spare parts and contracts  to
repair   hydraulic   and  other  system  components.    Other
government contracts generated revenue of $3.7 million during
fiscal 1997.

Commercial Aviation Business

The  Company's  acquisition  of  the  three  subsidiaries  of
DynCorp  collectively known as the DynAir Companies, on  June
30,  1995, expanded the Company into the commercial  aviation
market.    The   Company  renamed  the  acquired   operations
SabreTech  and  in  fiscal 1997 created a  second  commercial
aviation  subsidiary,  Dimension  Aviation,  Inc.   The   two
subsidiaries   serve  a  commercial  aviation   market   that
includes:  third-party  aircraft  maintenance  services   for
commercial  carriers, primarily airlines  and  major  freight
carriers;   modification   and   completion   services    for
manufacturers of airline aircraft; airline aircraft  storage;
spare parts and backshop support.

As  of  June  30,  1997, the Company operated  two  principal
facilities to perform commercial aviation work:

  The  Phoenix  facility  at  Sky  Harbor  International
  Airport  provides  heavy aircraft repair  and  third  party
  overhaul  service  for  airlines,  aircraft  lessors,   and
  aircraft  manufacturers.  In addition, the Phoenix facility
  operates  a  large backshop, capable of avionics  component
  repair, sheet metal fabrication, limited interior component
  manufacture,  hydraulics  overhaul  and  minor   machining.
  Backshop services are provided to support aircraft in  work
  at  the  facility  and as a stand-alone business.   Revenue
  reported  for the SabreTech Phoenix facility totaled  $45.5
  million in fiscal 1997.

  During fiscal 1997, the Company formed a new commercial
  aviation  subsidiary, Dimension Aviation, Inc., located  at
  the  Goodyear Airport in Goodyear, Arizona to  perform  the
  passenger-to-freighter modification subcontract for Boeing's
  Douglas  Products Division.  Current firm orders  for  this
  subcontract are in excess of $120.0 million, with  delivery
  requirements  through  the  year  2000.   Pursuant  to  its
  agreement with Douglas, Dimension has expanded the existing
  hangar facilities to enable the full enclosure of up to four
  wide-body  DC-10  or MD-11 aircraft.   Work  on  the  first
  aircraft commenced in March, 1997.  Revenue reported for the
  Dimension Aviation facility at Goodyear totaled $8.1 million
  in fiscal 1997.

In  the  past  year,  the Company exited its  Miami  facility
located  at  Miami International Airport.  The  Company  also
ceased  revenue-generating activities at it Orlando  facility
located  on  the Orlando International Airport (see  Item  3.
LEGAL  PROCEEDINGS and Item 7.  MANAGEMENT'S  DISCUSSION  AND
ANALYSIS  OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS).
Two  other  smaller  operations were  consolidated  into  the
Phoenix operation during fiscal 1997.

The  consolidation of the commercial aviation functions  into
the Phoenix location and a full year performance of the MD-10
subcontract  with  Boeing are expected to  provide  increased
operating profits for commercial aviation in fiscal 1998,  as
compared to fiscal 1997.

Business Development and Acquisition Strategy

In the past several years, the Company has employed a variety
of business development and acquisition strategies to enhance
its  market  position and growth potential.  As a  result  of
these  strategies, the Company has entered new business areas
and expanded on existing capabilities causing revenue to grow
at  an  average annual rate of more than 35% the  last  three
years.   Acquisitions have made an integral  contribution  to
the Company's growth strategy.

  In  September,  1992, the Company acquired  the  Neosho
  facility   from   Teledyne  Industries,   Inc.,   providing
  substantial technical and operating capabilities in  engine
  component overhaul and repair.

  In  November,  1994,  the  Company  acquired  Midcoast
  Aviation,  Inc. from Trans World Airlines, providing  high-
  quality major modifications and aircraft maintenance to the
  corporate aviation market.

  In   June,  1995,  the  Company  acquired  the  DynAir
  Companies,  now  known  as  SabreTech,  Inc.  from  DynCorp
  providing   entrance  into  the  complementary   commercial
  aviation market.

  In  fiscal 1997, the Company started operations in  new
  engine product lines gained in the acquisition of Turbotech
  Repairs,  Inc.  in June, 1996, and the acquisition  of  the
  heavy  maintenance license and tooling for the AlliedSignal
  TFE731 engine in May, 1996.

In addition to business expansion gained through acquisition,
the  Company  has  expanded the acquired businesses  and  the
Company's  existing business by building  upon  the  acquired
skills  and  capabilities.   Specifically,  the  Company  has
leveraged  the capabilities of acquired companies into  long-
term  government  contracts and major  subcontracts.   Skills
learned and equipment purchased in support of these contracts
is also utilized in domestic and international markets.

Government Contracts

  Air  Force  C-20 contract - By combining the  technical
  expertise  on Gulfstream aircraft gained in the acquisition
  of  Midcoast,  with  the  logistic support  and  government
  contract background existent at Sabreliner, the Company was
  able  to capture the award of the seven-year Air Force C-20
  contract, estimated at $200.0 million.

  Navy  T-2/A-4  contract  -  The  technical  skills  and
  equipment used in the repair of corporate aircraft were used
  to  capture the structural airframe modification and repair
  requirements of this five year Navy contract, estimated  at
  $30.0 million.

  Air Force J85 Engine contract - The Company was able to
  capture this contract as a result of its acquisition of the
  Neosho,  Missouri plant, providing $25.0 million over  five
  years.

  Army  GG  Rotor contract - The added capabilities,  the
  equipment gained in the Neosho acquisition, plus additional
  internal  investments enabled the capture of this contract,
  estimated at $25.0 million, including all options.

Major Subcontracts

  The   MD-10/MD-11  contracts  -  The  Company's  major
  proposal expertise combined with the technical capabilities
  gained in the SabreTech acquisition provided the opportunity
  to add a major long-term subcontract with McDonnell Douglas
  for  the  modification  of airline  aircraft  to  freighter
  configuration.  The firm ordered value of the contracts  as
  of June 30, 1997 exceeded $120.0 million, over approximately
  four years.

  The  Eagle  subcontracts  - The  Company  combined  the
  capabilities, technical background and facilities of  three
  subsidiaries to enable the performance of this  subcontract
  with Lockheed-Martin, valued at $14.3 million over eighteen
  months.

The Company intends to continue these strategies for business
development;  augmenting its capabilities  and  opportunities
through  acquisition, internal investment and increasing  its
market  share  by  the  aggressive pursuit  of  complementary
opportunities.   The  Company's existing  cash  balances  and
unused  credit facility can enable it to effect an  immediate
acquisition   or  investment,  allowing  rapid  response   to
changing  markets and new opportunities.  However, there  can
be   no   assurance  the  Company  will  be   successful   in
implementing its business development strategies  or  whether
or when the Company will make other acquisitions.

Product Liability Exposure

The  Company is the OEM for the Sabreliner series of aircraft
and,  in accordance with the agreement pursuant to which  the
Company   purchased  the  Sabreliner  Division  of   Rockwell
International in 1983, Rockwell bears the responsibility  for
all known liabilities relating to such aircraft occurring  on
or before June 30, 1983, while the Company is responsible for
all occurrences after such date.  In addition to the inherent
risks  of  the Company's OEM status regarding the  Sabreliner
aircraft,  the Company is responsible for its performance  in
the  repair and modification of critical engine and  airframe
components  and its performance in the support of  its  other
income-producing functions.

The  Company's involvement in the crash of ValuJet Flight 592
has  led  to civil lawsuits filed by many of the families  of
the  110 victims.  The Company believes its product liability
insurance coverage will be adequate to fund such legal  costs
(see Item 3.  LEGAL PROCEEDINGS).

Although  the  Company has historically  maintained  adequate
insurance  coverage for such risks, and has secured  coverage
for  the  next  year,  there can be no  assurance  that  such
coverage will continue to be available in amounts or on terms
acceptable  to  the  Company or that such  coverage  will  be
adequate for liabilities actually incurred.  The Company  has
not  experienced  any material uninsured  loss  from  product
liability  claims  and  believes that its  present  insurance
coverage  is  adequate to protect it against  any  claims  to
which it may be subject.

Competition

Most of the Company's production and service capabilities are
possessed  in  varying  degrees by  other  companies  in  the
industry, including both domestic and foreign firms.  Many of
these  companies are larger and have greater  resources  than
the   Company.    Competition  is  intense  among   companies
currently  involved in the industry.  Competitive  advantages
are   afforded  to  those  with  high-quality  products   and
services, low-cost manufacturing, excellent customer service,
on-time deliveries, and engineering and production expertise.
The  Company believes it competes favorably with  respect  to
these factors.

The   corporate  aviation  industry  is  the  Company's  most
competitive  arena, with hundreds of small  and  large  shops
vying  for  market share.  The Company's primary  competitors
are   Atlantic  Aviation,  Garrett,  K.C.  Aviation,  AVMATS,
Bizjet,  Duncan  Aviation and other, smaller  companies  that
perform aircraft maintenance and modification work.

The  Company's  competition  for government  contract  awards
includes    original   equipment   manufacturers,   incumbent
contractors, small businesses, government-owned and  operated
depot  maintenance  facilities,  foreign-owned  and  operated
businesses  and  designated service facilities  appointed  by
original  equipment manufacturers.  Excepting the UNFO  asset
sale contract, all major government contracts currently being
performed  by the Company were subject to competitive  award;
the Company holds no other significant sole-source contracts.

Although  the  commercial aviation business is subject  to  a
smaller number of competitors due to the larger facility  and
capital  intensive  tooling  requirements,  competition   for
customer  demand is still strong.  Key market  considerations
used  by  the Company to differentiate its capabilities  from
competitors   include:    location   for   line   maintenance
customers, on-time delivery, accelerated turn-times, quality,
reliability and support capabilities.  The Company's  primary
competitors  include: Aero Corporation, Dee  Howard  Company,
Lockheed   AeroMod,   Mobile  Aerospace  Engineering,   Pemco
Aeroplex,  Aeronovali,  Timco, and  Tramco  as  well  as  the
internal  maintenance  operations of many  of  the  Company's
potential customers.

Suppliers

In  the  ordinary  course of business, the  Company  procures
materials  and  purchased  services  from  outside   vendors,
subject  to  internal  "make  vs.  buy"  determinations   and
competitive  bidding, if appropriate.  With the exception  of
certain  proprietary engine assemblies, all of the  Company's
supplier   needs  can  be  fulfilled  by  alternate  supplier
competitors.   The Company does not place undue  reliance  on
any one supplier; the majority of its revenue is derived from
labor services performed by employees.

Backlog

The  total  contract  price  of undelivered  firm  orders  by
business area as of June 30, 1997 and 1996 was as follows:

                               Backlog as of June 30
                                  1997      1996
                               (Dollars in Thousands)
         Government Business     $112,058   $77,404
         Corporate Aviation        17,832     5,807
         Commercial Aviation      122,655    24,880
                                        
                                 $252,545  $108,091

Of  the  total backlog as of June 30, 1997, over 60% will  be
completed and delivered during fiscal year 1998.

Regulatory Compliance

Environmental Regulation

The  Company is subject to extensive, stringent and  changing
federal,  state and local environmental laws and regulations,
including  those  regulating  the  use,  handling,   storage,
discharge  and  disposal  of  hazardous  substances  and  the
remediation  of  any  potential environmental  contamination.
Accordingly,  the Company is involved from time  to  time  in
administrative  and judicial investigations  and  proceedings
regarding environmental issues.

The Company has been subject to government inquiry regarding
alleged  environmental wrongdoing that may have occurred  at
the  Perryville  facility.  Several requests  for  documents
concerning  this  matter have been received  since  January,
1994,  most recently July, 1997.  All requests for documents
have been complied with or are in the process of resolution.
In  addition,  various  current and  former  employees  have
received subpoenas or notice letters identifying each  as  a
witness,  subject or target.  The Company  believes  it  has
meritorious defenses to allegations of wrongdoing,  if  any,
that may result from the investigation.

In addition to the environmental regulatory action identified
above, the Company has performed internal investigations  and
evaluations  of  environmental regulatory compliance.   There
are   three   principal   sites  under   evaluation.    Total
remediation costs at these sites are expected to be less than
$50,000.

The  Company designs and implements a system of programs  and
facilities for the management of its production processes and
industrial  waste to comply with environmental  requirements.
Efforts  are  under way to provide systematic  monitoring  of
fuel   and  waste  storage  tanks  and  to  upgrade   certain
underground  storage tanks to comply with  the  Environmental
Protection   Agency's   recent   directives.    The   Company
anticipates  aggregate capital expenditures made  during  the
next four years to comply with current EPA guidelines will be
less than $500,000.

The  Company's  handling of oxygen generators  prior  to  the
ValuJet  Flight 592 crash has instigated an investigation  by
federal  and state environmental regulatory authorities  into
the  hazardous material handling procedures applicable to the
Company's  previous  operations at the Miami  facility.   The
status and any findings of these investigations has not  been
announced.    The   Company  continues  to  cooperate   fully
throughout   these   investigations  (see   Item   3.   LEGAL
PROCEEDINGS ValuJet).

Other Government Regulation

The   Federal   Aviation  Administration   (FAA)   prescribes
standards  and licensing requirements for aircraft components
and  licenses  component repair stations  within  the  United
States,  and  comparable agencies regulate  such  matters  in
other  countries.   The Company holds several  FAA  component
certificates  and performs component repairs at  all  of  its
operating facilities.

In  the  aftermath  of  the ValuJet  Flight  592  crash,  the
Company's   SabreTech  subsidiary  has  been   subjected   to
increased scrutiny by the FAA (see Item 3.  LEGAL PROCEEDINGS
ValuJet).

Employees

As  of  June  30,  1997, the Company had approximately  1,900
employees,  of  which  approximately 1,650  were  engaged  in
operations, including the repair and maintenance of aircraft,
aircraft   components   and  jet  engines.    The   remaining
approximately   250  employees  were  dedicated   to   sales,
marketing  and general administration. Approximately  15%  of
the  Company's  employees  are  represented  by  unions.   In
addition, the Company utilizes contract mechanics to  perform
work   on   aircraft  and  aircraft  components  within   its
facilities.  As of June 30, 1997, the Company contracted  for
the services of approximately 600 contract mechanics.

Forward-Looking Information

The  Company  may  have  provided  certain  "forward-looking"
information (as defined in the Private Securities  Litigation
Report  Act  of 1995) which may involve risk or  uncertainty,
including,  but  not  limited  to:  future  sales,  earnings,
margins,  production  levels and costs, aircraft  deliveries,
research    and   development,   environmental   and    other
expenditures,  and various business trends.   Actual  results
and  trends  in  the  future may differ materially  from  the
projections, depending on a variety of factors.

Item 2.   PROPERTIES

The  Company leases or owns an aggregate of approximately 2.0
million  square  feet  of space.  The  Company  believes  its
facilities  are well maintained, are suitable to support  the
Company's business and are adequate for the Company's present
and anticipated needs.

The  following  table  sets  forth  the  Company's  principal
facilities and indicates the location and function of each:

              Approximate                      
   Location   Sq. Footage  Primary Function     Owned/Leased*
                                               
Perryville,   180,000      Airframe            Leased through
Missouri                   maintenance and     2031
                           modification for
                           corporate
                           aviation and
                           government
                           markets.
                                               
Neosho,       320,000      Engine and          Owned
Missouri                   component
                           overhaul and
                           repair for
                           corporate
                           aviation and
                           government
                           markets.
                                               
Cahokia,      210,000      Airframe            Various leases
Illinois                   maintenance and     through 2012
                           modification for
                           corporate
                           aviation and
                           government
                           markets.
                                               
Phoenix,      310,000      Airframe            Leased through
Arizona                    maintenance and     2004
                           modification for
                           commercial
                           aviation markets.
                                               
Goodyear,     360,000      Airframe            Leased through
Arizona                    modification for    2021
                           commercial
                           aviation markets

*  Includes all exercisable options.

Item 3.  LEGAL PROCEEDINGS

ValuJet Related

On May 11, 1996, ValuJet Flight 592 from Miami, carrying 110
passengers  and  crew  crashed into the Florida  Everglades.
Prior to take-off, an employee of SabreTech's Miami facility
returned  to  ValuJet  various company materials,  including
five  boxes containing oxygen generators.  The ValuJet  ramp
agent, after consultation with ValuJet's flight crew, loaded
the  boxes into the cargo bay of Flight 592.  On August  19,
1997,   the  National  Transportation  Safety  Board  (NTSB)
conducted its public meeting and issued an Abstract of Final
Report  on  ValuJet Flight 592 and determined  the  probable
causes of the accident to be (1) the failure of SabreTech to
properly  prepare,  package, identify and  track  unexpended
oxygen  generators  before presenting them  to  ValuJet  for
carriage, (2) the failure of ValuJet to properly oversee its
contract  maintenance  program  to  ensure  compliance  with
maintenance,  maintenance training and  hazardous  materials
requirements  and practices and (3) failure of  the  Federal
Aviation Administration (FAA) to require smoke detection and
fire suspression systems in Class D cargo compartments.  The
NTSB also found that other acts and omissions by ValuJet and
FAA contributed to the accident.

The  FAA  is  also  conducting  an  investigation  into  the
circumstances surrounding the ValuJet crash and  has  sought
information from SabreTech and various of its employees  and
contract  workers  in  connection therewith.   In  addition,
SabreTech  is  one  of several subjects of an  investigation
being conducted by a federal grand jury in conjunction  with
the  United  States  Attorney for the Southern  District  of
Florida.  The Company has cooperated fully throughout  these
investigations and is continuing to do so.

SabreTech,  ValuJet and others have been named as defendants
in  numerous wrongful death actions that have been filed  by
families of victims.  Additional wrongful death actions  are
expected  to  be  filed.   The  Company's  legal  costs   of
defending against these civil actions and any possible claim
settlements are funded by the Company's insurance  policies.
Management believes coverage is adequate to provide for such
legal actions.

SabreTech has filed a Complaint for Declaratory Judgment and
Other Relief against ValuJet in the U.S. District Court  for
the  Southern District of Florida.  Among other things, that
suit seeks indemnification for damages incurred by SabreTech
in  connection  with  the accident.  ValuJet  has  filed  an
Answer  and  Conditional Counterclaim in  the  case  seeking
various  damages.   The Company's legal costs  in  defending
against   the  counterclaim  are  funded  by  the  Company's
insurance  policies.  Management believes that  the  Company
will  be  able  to  successfully  defend  against  ValuJet's
counterclaim.

Costs   associated  with  this  accident,  such   as   media
relations, incremental professional services, legal fees and
other  costs related to the various investigations and other
lawsuits,  of  approximately $5.7 million were  incurred  in
fiscal  year 1997. The ultimate outcome of the legal actions
related  to the ValuJet Flight 592 crash and the  length  of
time  necessary to resolve all the outstanding issues cannot
be  determined  at  this time.  The Company  does  not  know
whether  the  continuing effects of the  investigations  and
related  lawsuits will have a material adverse  effect  upon
the  results  of  operations or financial condition  of  the
Company.

Environmental

The Company has been subject to government inquiry regarding
alleged  environmental wrongdoing that may have occurred  at
the  Perryville  facility.  Several requests  for  documents
concerning  this  matter have been received  since  January,
1994,  most recently July, 1997.  All requests for documents
have been complied with or are in the process of resolution.
In  addition,  various  current and  former  employees  have
received subpoenas or notice letters identifying each  as  a
witness,  subject or target.  The Company  believes  it  has
meritorious defenses to allegations of wrongdoing,  if  any,
that may result from the investigation.

Other

In  addition to the litigation discussed above, the  Company
is  subject to other legal proceedings and claims arising in
the ordinary course of its business.  Although there can  be
no  assurance  as to the outcome of litigation,  it  is  the
opinion  of  management  (based upon  the  advice  of  legal
counsel) that all such actions or proceedings are covered by
insurance or will be resolved without material effect on the
Company's financial position or results of operations.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

                           PART II
                              
Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDERS MATTERS

The  outstanding shares of the Company's common stock are not
traded on any established public market.

As  of  August  31, 1997, there were 35 shareholders  of  the
Company's common stock.

The Company has paid one dividend in the amount of $9,932,000
in the first quarter of fiscal  1994.  The Company expects to
pay  annual  dividends  as its earnings  and  debt  convenant
restrictions allow.  For further information, see Note  7  of
the Notes to Financial Statements on pages F11 through F13 of
this report.


Item 6.  SELECTED FINANCIAL DATA
       (Dollars in thousands, except per share amounts)

                              Fiscal Years Ended June 30
                          1997     1996     1995     1994     1993
Income Statement Data                                   
Revenue (1)             $260,944 $205,633 $120,908 $103,786 $121,174
Cost of revenue          215,476  171,045   91,867   79,626   94,464
Gross margin              45,468   34,588   29,041   24,160   26,710
Selling, general and                                      
administrative expense    33,411   22,956   17,251   14,655   14,469
   
Operating income          12,057   11,632   11,790    9,505   12,241
Interest expense          13,046   11,789   11,123   11,459    4,942
    
Litigation settlement(2)       -        -        -    7,613        -
Other income (expense)       978      877      481       33     (111)
Income tax (expense)         366     (350)    (350)   3,651   (2,660)
   benefit       
Net income (loss) before                                  
  extraordinary loss and                                
  change in accounting                   
  principle                  355      370     798    (5,883)   4,528
Extraordinary loss on                                     
  early debt extinguishment    -        -       -         -   (1,150)
Cumulative effect of                                      
  change in accounting                                    
  principle,               
  postretirement benefits     -         -       -         -    (682)
Net income (loss)           $ 355   $ 370   $ 798   $(5,883)  $2,696

                              Fiscal Years Ended June 30
                           1997     1996     1995      1994    1993
                                                        
Other Data                                              
EBITDA (3)               $ 20,420 $ 24,397 $ 36,243 $ 24,024 $ 34,996
Cash flows from            24,010   10,582   20,038   11,329   32,591
  operating activities
Cash flows from           (13,789)  (7,354) (31,857)  (5,568)  (8,853)
  investing activities
Cash flows from               519     (853)    (578)  (9,617)    (486)
  financing activities
Depreciation and            7,385   11,888   23,972   22,099   22,877
  amortization(4)
Capital expenditures       11,840    4,346    3,788    5,568    6,815
Ratio of EBITDA to                                        
  consolidated interest
  expense (5)                1.6x     2.1x     3.3x     2.1x     7.1x
Ratio of earnings to         1.0x     1.1x     1.1x      .2x     2.4x
  fixed charges
                                           
Per Share Data                                          
Earnings Per Share                                      
  (EPS)(6):
EPS before extraordinary                                  
  loss and change in                 
  accounting principle      $0.41   $0.42    $0.91  $(6.66)    $5.24
Extraordinary loss              -       -        -       -     (1.33)
Cumulative change in                                      
  accounting principle          -       -        -       -     (0.79)
Total earnings per          $0.41   $0.42    $0.91  $(6.66)    $3.12
                                                        
Book value per share       $12.05  $11.64   $11.18  $10.33    $17.59
Cash dividends declared         -       -        -       -     11.25
                                                        
Balance Sheet Data                                      
Cash and cash             $22,994 $12,254   $9,879  $22,276   $26,132
  equivalents         
Total current assets      109,377  85,326   74,279   70,257    76,126
Total assets              156,900 144,618  135,855  126,403   146,332
Total current              49,343  36,660   28,879   25,681    34,666
  liabilities     
Total long-term debt,                                     
  including current        95,613  94,915   93,214   88,630    88,510
  portion       
Stockholders' equity       10,492  10,136    9,853    9,116    14,823
                       

(1)Revenue  for  fiscal 1997 includes the sale  of  the  UNFO
   training  system assets for $36.7 million and the addition
   of  the  Turbotech  Repairs, Inc.  acquisition,  providing
   $6.3  million.  Fiscal 1996 revenue includes the  addition
   of  the SabreTech, Inc. acquisition made on June 30,  1995
   and  a  full  twelve months of Midcoast Aviation  revenue.
   Revenue  for fiscal 1995 includes eight months of Midcoast
   Aviation,  Inc.  acquired in November 1994.   Fiscal  1994
   revenues  were adversely affected by the flooding  of  the
   Company's  facilities in Perryville  and  St.  Louis  (see
   Item  7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
   CONDITION AND RESULTS OF OPERATIONS).

(2)The litigation settlement shown in fiscal 1994 relates  to
   the  Hannon-Armstrong financing dispute.   The  amount  is
   separately identified to provide more ready comparison  of
   fiscal  year  results and to adjust  the 1994 fiscal  year
   data   to   be  more  indicative  of  future  results   of
   operations.

(3)EBITDA  represents  net  income  before  interest,  income
   taxes,  depreciation  and amortization.   EBITDA  and  the
   ratio  of  EBITDA  to  consolidated interest  expense  are
   provided   solely  as  supplemental  disclosures   as   an
   indicator  of  the Company's ability to  comply  with  the
   Consolidated EBITDA Coverage Ratio requirements  contained
   in  the  Indenture relating to its senior  notes.   EBITDA
   should  not  be construed as an alternative  to  operating
   income  (as  determined in accordance with  GAAP),  or  to
   cash  flows  from operating activities (as  determined  in
   accordance with GAAP), or as a measure of liquidity.

(4)Depreciation and amortization shown in fiscal  years  1993
   through   1996  include  the  depreciation  of  the   UNFO
   training  system assets, placed into service in  September
   1991.   These assets were depreciated over the base period
   of the contract which ended September 30, 1995.

(5)For  purposes  of  calculating  the  ratio  of  EBITDA  to
   interest   expense,   interest  expense   represents   all
   interest  and  financing costs paid and accrued  for  each
   respective  period,  including  capitalized  interest   or
   deferred financing fees.

   In  accordance with the EBITDA coverage ratio  calculation
   methods  prescribed  in  the  Indenture  relating  to  the
   Company's   Senior   Notes,   the   removal   of    EBITDA
   attributable to assets sold during the measurement  period
   would  result in an adjusted coverage ratio of  2.2  times
   consolidated interest expense.

(6)Earnings  per share are computed using the average  number
   of   shares   of  common  stock  outstanding  during   the
   respective year, plus dilutive common stock equivalents.

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

Results of Operations
                              
Fiscal 1997 Compared to Fiscal 1996

Revenue.  The diversity of the Company's business  activities
enabled  growth during fiscal 1997, resulting in an  increase
in  revenue  of  $55.3 million or 27% from  the  prior  year.
Government  revenues increased by $52.4 million, largely  due
to the non-recurring sale of the UNFO training system assets,
which provided $36.7 million.  Excluding the one-time revenue
generated  by the UNFO training system asset sale, government
revenues  increased  by 28%, reflecting the  capture  of  new
engine  contracts and growth in existing logistics contracts.
Corporate  aviation  also showed growth during  fiscal  1997,
providing additional revenue of $18.6 million from last year,
primarily  generated  by  the  increased  demand  for   major
modifications  and maintenance experienced at  the  Company's
Midcoast  Aviation subsidiary and the addition  of  Turbotech
Repairs,  Inc., which provided $6.3 million. Offsetting  such
growth  were  declines in the Company's  commercial  aviation
business  revenue  of $15.5 million, caused  by  the  adverse
effects of the ValuJet crash on customer demand (see Item  3.
LEGAL  PROCEEDINGS),  and  the  removal  of  four  commercial
aviation  facilities  from operation.  Excluding  these  four
facilities,  revenue  comparisons for  continuing  commercial
aviation  operations  reflect a $10.6  million  increase  for
fiscal  1997  from the previous year, primarily  due  to  the
performance of the MD-10/MD-11 subcontract.

Gross Margin.  Gross margin for fiscal 1997 was $10.9 million
higher  than  the prior year, representing a growth  rate  of
31%.   Gross margins earned on government contracts increased
by  $15.8 million during the year, primarily due to the  sale
of  the  UNFO  training system assets, which generated  $15.6
million.  Without the UNFO training system asset sale,  gross
margins  in government contracts increased only $0.2 million,
despite a growth in corresponding revenues of 28%.  The  $7.0
million decline in UNFO logistic revenues during fiscal 1997,
resulting from the conversion from the base contract terms to
the three year option contract which started October 1, 1995,
was  replaced  with  lower-margin cost reimbursable  logistic
contracts.  During the year, the Company implemented  certain
tax planning strategies to reduce taxable income generated by
the  UNFO  training system asset sale.  Such actions  reduced
reported gross margin by $2.0 million.

Corporate  aviation gross margins increased $5.7 million  in
fiscal  1997,  due  to increased business  volume  in  major
modifications at the Midcoast and Sabreliner facilities  and
the  additional  gross margin of $1.6 million  generated  by
Turbotech Repairs, Inc., acquired in June, 1996.

Commercial  aviation gross margin declined by  $8.6  million
from  fiscal  1996,  largely due  to  the   four  commercial
aviation locations removed from operation.  The exit of  the
Miami  facility reduced gross margin in fiscal 1997 by  $4.2
million  from the previous year.  The cessation  of  revenue
generating activities at the Orlando facility reduced  gross
margin  by  $2.5  million.   The  sublease  of  the  Orlando
facility, starting in the first quarter of fiscal 1998, will
fully  mitigate the continuing operating costs  attributable
to  Orlando  for  the  next three years.   Other  commercial
facilities removed from operations reduced fiscal 1997 gross
margin  by  $1.0 million from prior year levels.   Excluding
the  effects of these removed operations results in a  same-
facility  gross  margin  decline of $0.9  million  from  the
previous  year.   This decline is due to labor  overruns  in
fixed price contracts and start-up expenses relating to  the
Dimension facility.

Selling, General & Administrative Expense.  Selling,  general
and  administrative expense increased in fiscal 1997 from the
prior   year  primarily  due  to  the  increased  legal   and
professional  services  relating to  the  ValuJet  crash  and
increased  aviation  liability insurance  premiums,  totaling
$7.8   million  (see  Item 3. LEGAL PROCEEDINGS).   Excluding
ValuJet-related effects, selling, general and  administrative
expenses  increased by $2.7 million from the  previous  year.
The   expansion   in  administration  staff   and   the   new
responsibilities stemming from the acquisition  of  Turbotech
Repairs,  Inc.,  incentive compensation and normal  inflation
effects account for the remainder.

Interest  Expense.  The increased interest  expense  reported
for fiscal 1997 of $1.3 million reflects the Company's use of
its working capital credit facility during the year.

Other  Income  (Expense).   Other  income  for  fiscal   1997
represents  the  gain  realized on  an  insurance  settlement
received by the Company's Midcoast Aviation subsidiary.

Fiscal 1996 Compared to Fiscal 1995

Revenue.   The acquisition of SabreTech and Midcoast Aviation
in  fiscal  1995  provided increased volume in  fiscal  1996,
contributing  to  a revenue increase of 70%  from  the  prior
year.    Revenue   increases  attributable   to   these   two
acquisitions were $104.0 million during fiscal 1996.  Without
these  acquisitions,  the remaining business  revenues  would
have   declined  by  $19.3  million  due  to  reductions   in
government  contract revenues, primarily  the  UNFO  program.
The  conversion  of the UNFO program from its  base  contract
period,  ended  September 30, 1995, to its three-year  option
period  reduced  revenues by $21.5 million.   Offsetting  the
previously   anticipated  decline  in  UNFO   revenues   were
increases in other areas of the remaining businesses  due  to
new contract awards.

Gross  Margin.  During fiscal 1996, the Company was  able  to
increase  gross  margins  from the  preceding  year  by  $5.5
million,  or 19%, despite the gross margin decline  from  the
conversion  of the UNFO contract to its option  period.   The
conversion  of  the  UNFO basic contract  to  its  three-year
option  period  reduced  fiscal 1996  gross  margin  by  $7.1
million from the previous year.  The acquisitions of Midcoast
and  SabreTech  more than compensated for this  reduction  by
providing $11.8 million in increased gross margin.

Although  the  dollar value of gross margin increased,  gross
margin  as  a percent of net revenue declined for  the  year,
compared to fiscal 1995.  The overall decline in gross margin
percentage,  from 24% in fiscal 1995 to 17%  in  fiscal  1996
reflects  the change in the Company's revenue mix toward  the
lower-yield, labor-intensive commercial aviation business.

Selling,  General and Administrative Expense.  The  expansion
in administration staff and the new responsibilities stemming
from  the acquisition of SabreTech increased selling, general
and administrative expense during fiscal 1996 by $5.2 million
over  the  preceding year.  In addition, the legal and  other
professional  costs attributed to the ValuJet crash  required
the  recognition  of  $0.7 million in  expense  during  1996.
Without  these  items,  selling, general  and  administrative
expense  would have declined by $0.2 million from  the  prior
year.

Interest  Expense.   The $0.7 million  increase  in  interest
expense experienced in fiscal 1996, versus the prior year, is
attributable  to  a  decline  in interest  income  earned  on
available  cash  balances due to the deployment  of  cash  to
acquire new businesses during fiscal 1995.

Other  Income (Expense).  Of  the total $0.9 million in other
income  recognized  during  fiscal  1996,  $0.7  million   is
attributable  to an insurance claim paid to the  Company  for
lost property.

Fiscal 1995 Compared to Fiscal 1994

Revenue.  Net revenue for fiscal year 1995 increased by $17.1
million  over  the prior year.  The acquisition  of  Midcoast
Aviation,  Inc. on November 2, 1994, added revenue  of  $25.0
million.  Without the revenue generated by Midcoast,  revenue
would  have declined from fiscal 1994 by $7.7 million.   This
revenue reduction can largely be attributed to two factors: a
nonrecurring   price   adjustment  on   the   UNFO   contract
experienced  in  fiscal  1994  which  increased  that  year's
revenue  by  $2.5  million,  and  a  reduction  in  pre-owned
aircraft sales activity in fiscal 1995 versus 1994, resulting
in a drop in revenues of $4.3 million.

Gross Margin.  Gross margin for fiscal year 1995 increased by
$4.9  million over the prior year.  The Midcoast  acquisition
provided  $3.4  million of this increase.  The resumption  of
activities  at the Company's Perryville facility, temporarily
shut  down  during  most  of fiscal  1994  due  to  flooding,
increased  fiscal 1995 gross margin from the  prior  year  by
approximately  $1.1  million. Cost  containment  initiatives,
particularly  in  the  on-site logistic  costs  of  the  UNFO
program,  generated  an  additional  $0.5  million  in  gross
margin.

Selling,   General  and  Administrative  Expense.   Excluding
nonrecurring legal fees of $1.9 million associated  with  the
Hannon-Armstrong lawsuit, which were incurred  in  the  first
two   quarters   of   fiscal  1994,  selling,   general   and
administrative expenses for fiscal 1995 were higher than  the
previous year by $4.5 million.  These increases were  largely
due   to  the  expansion  in  administrative  staff  and  the
responsibilities stemming from the Midcoast acquisition.

Interest Expense.  Interest expense declined slightly in 1995
from  the  prior  year,  by  $0.3  million.   This  reduction
reflects  the increased interest income earned on outstanding
cash balances throughout the year.

Liquidity and Financial Resources

During  fiscal  1997,  operating activities  generated  $24.0
million  in cash flow.  The sale of the UNFO training  system
assets   provided  $36.7  million  in  cash,  before   taxes.
Offsetting  cash  provided  by  the  UNFO  asset  sale   were
increased  working capital investments made for the MD-10/MD-
11  subcontract  at  the  Goodyear  facility,  totaling  $5.1
million;   the  addition  of  engine  component   inventories
totaling  $6.9 million; working capital investments  required
to  support  the  increased business  volume  experienced  in
corporate aviation and ValuJet related expense (see  Item  3.
LEGAL  PROCEEDINGS).  Capital expenditures  for  fiscal  1997
required  $11.8  million in cash.  The facility  enhancements
made at the Goodyear location to enable performance in the MD-
10/MD-11  subcontract accounted for $5.9 million  in  capital
expenditures.   Engine test cell improvements and  equipment,
the  initial  payments  to construct  a  new  hangar  at  the
Midcoast facility and on-going equipment replacement  account
for  the  remainder.   After deducting other  investment  and
financing activities, the remaining cash balance at June  30,
1997 was $23.0 million.

The  Company's cash balance increased during fiscal  1996  by
$2.4  million, resulting in an ending cash balance as of June
30,1996  of $12.4 million.  Earnings before depreciation  and
amortization added $12.3 million during the year,  offset  by
increases  in  working  capital  of  $1.7  million,   capital
expenditures  of  $4.3   million, and  acquisitions  of  $3.0
million.  Also reducing cash generated by earnings were  debt
repayments  and  treasury  stock  purchases,  totaling   $0.9
million.

In  the  next  year,  the  Company expects  to  complete  its
investment  in  facility enhancements at  the  Dimension  and
Midcoast  facilities,  requiring approximately  $9.0  million
during  fiscal year 1998.  In addition to these  investments,
the  Company  expects  to make other smaller  investments  in
tooling,  equipment and capabilities of its existing business
to  permit continued expansion within the growing markets  of
corporate  and commercial aviation and to enable the  capture
of  new  government contracts.  The Company also  intends  to
continue  strategic business development through  acquisition
and  internal  growth.    The current cash  balance  and  the
unused $35.0 million credit facility provides ample resources
for  an  immediate acquisition.  However,  there  can  be  no
assurances  the  Company will be successful  in  implementing
such an acquisition, or whether or when the Company will make
any acquisitions.

The   Company  has  recently  amended  its  revolving  credit
facility  agreement to establish new covenants  requirements,
and  to  extend the revolving credit agreement.  The  Company
believes   the   amended  revolving  credit   agreement   and
continuing operating cash flows will provide adequate capital
resources to meet future cash requirements.

The  Corporation  had an overall net deferred  tax  asset  of
approximately  $2.7  million at June  30,  1997.   Management
believes  it is more likely than not the deferred  tax  asset
will  be  realized  through tax-planning strategies,  through
future  reversals  of existing temporary taxable  differences
against   existing   deductible   differences   and   through
projections of taxable income in future periods.

Forward-Looking Information

The  Company  may  have  provided  certain  "forward-looking"
information (as defined in the Private Securities  Litigation
Report  Act  of 1995) which may involve risk or  uncertainty,
including,  but  not  limited  to:  future  sales,  earnings,
margins,  production  levels and costs, aircraft  deliveries,
research    and   development,   environmental   and    other
expenditures,  and various business trends.   Actual  results
and  trends  in  the  future may differ materially  from  the
projections, depending on a variety of factors.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements of Sabreliner Corporation and Notes
to  Consolidated  Financial Statements appear  on  pages  F7
through F19 of this report.


Item 9.  CHANGES  IN AND DISAGREEMENTS WITH  ACCOUNTS  ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

                          PART III
                              
Item 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The   following   table   sets  forth  certain   biographical
information with respect to Directors and Executive  Officers
of the Company.

       Name                Positions Held            Age
                                                       
F. Holmes Lamoreux  Chairman of the Board of          55
                    Directors,
                    President and Chief Executive
                    Officer
                                                       
Jerry L. Leath      Executive Vice President and      56
                    Chief Operating Officer
                                                       
Rodney E. Olson     Senior Vice President-Finance     42
                    and Corporate Development and
                    Chief Financial Officer
                                                       
Gene L. Harbula     Senior Vice President-Corporate   50
                    Marketing
                    and  Communications
                                                       
Thomas F. Derieg    Group Vice President-Commercial   57
                    Aviation
                                                       
Bob D. Hanks        Group Vice President              57
                                                       
Susan S. Aselage    Director, Vice President-         42
                    Secretary and Assistant
                    Treasurer
                                                       
Gail B. Johnson     Vice President-Assistant          59
                    Secretary and Administrative
                    Assistant
                                                       
Arthur H. Fredston  Director                          68
                                                       
Mary B. Harmon      Director                          49

F.  Holmes  Lamoreux  has  been  Chairman  of  the  Board  of
Directors,  President  and  Chief Executive  Officer  of  the
Company since before 1992.  He is also a partner in Wolsey  &
Co.    Mr.   Lamoreux  is  a  Director  of  General  Aviation
Manufacturers Association and a Trustee of The Hill School in
Pottstown, Pennsylvania.

Jerry  L.  Leath has served as Executive Vice  President  and
Chief  Operating  Officer  since September,  1994.  Prior  to
rejoining  the  Company, Mr. Leath served as Vice  President,
Administration  of  Figgie International,  Inc.  since  1992.
Prior to that he had served as Vice President, Administration
for the Company.

Rodney  E.  Olson has served as Senior Vice President-Finance
and  Corporate Development and Chief Financial Officer  since
September,  1994. Mr. Olson joined the Company in June,  1992
as Vice President, Finance/Administration and Chief Financial
Officer.   Prior  to joining the Company,  Mr.  Olson  was  a
Senior Manager with the accounting firm of Ernst & Young.

Gene L. Harbula has served as Senior Vice President-Corporate
Marketing  and Communications since June, 1997.  Mr.  Harbula
had  served  as  Vice  President,  Government  Marketing  and
Corporate Communications since September, 1995, and  as  Vice
President, Corporate Development from before 1992.

Thomas   F.  Derieg  has  served  as  Group  Vice  President-
Commercial Aviation since 1997.  Prior to joining the Company
Mr.  Derieg served as Senior Vice President of Operations for
America West Airlines, Inc. from 1994 to 1996.  Prior to that
he  served  as Senior Vice President of Operations for  Aloha
AirGroup, Inc.

Bob  D. Hanks has served as Group Vice President since  June,
1997.   Mr. Hanks had served as the Company's Vice President-
Operations  since June, 1995. Mr. Hanks had  served  as  Vice
President- Engineering since before 1992.

Susan  S. Aselage has been a Director of the Company and  its
Vice President-Secretary and Assistant Treasurer since before
1992.  She is a Trustee of the Aircraft Builders Council.

Gail  B.  Johnson has been Vice President-Assistant Secretary
and  Administrative  Assistant since  September,  1995.   Ms.
Johnson  had  been  Assistant  Secretary  and  Administrative
Assistant from before 1992.

Arthur  H. Fredston has been a Director of the Company  since
before 1992.  Mr. Fredston has also been a partner in the law
firm  Winthrop, Stimson, Putnam & Roberts since before  1992.
Mr.  Fredston is also a co-trustee of a trust which holds all
of  the common stock beneficially owned by Mr. Lamoreux.  See
"SECURITY   OWNERSHIP  OF  CERTAIN  BENEFICIAL   OWNERS   AND
MANAGEMENT"  below.

Mary B. Harmon became a Director of the Company in 1992.  Ms.
Harmon  is  a  private investor residing in Florida,  and  is
Chairman  of  the  Board of Directors and Senior  Officer  of
Thames Pharmacal Co., Inc.

Directors  of the Company hold office until the  next  annual
meeting  of stockholders or until their successors  are  duly
elected  and  qualified.  All officers  of  the  Company  are
elected  by  and  serve at the discretion  of  the  Board  of
Directors of the Company.

Item 11.   EXECUTIVE COMPENSATION

The  following table sets forth information with  respect  to
the   Chief  Executive  Officer  and  the  four  most  highly
compensated  executive officers of the Company for  the  year
ended June 30, 1997.

                     Summary Compensation Table

        Name and                                   Options  All Other
   Principal Position       Year Salary   Bonus    Granted  Compensation(1)
                                                          
F. Holmes Lamoreux          1997 $400,000 $  -        -       $15,450
Chairman of the Board of    1996  346,643    -        -        14,730
Directors, President and    1995  320,000    -        -        12,977
Chief Executive Officer
                                                          
Jerry L. Leath, Executive   1997  193,180  100,000    -        12,660
Vice President and Chief    1996  184,698    -      5,000      12,551
Operating Officer           1995  139,028  65,000   5,000      73,696(2)
                                                          
Rodney E. Olson, Senior     1997  143,737  65,000     -        10,400
Vice President- Finance     1996  137,583    -      4,500      10,820
and Corporate Development   1995  125,833  65,000   3,000       9,092
and Chief Financial Officer
                                                          
Bob D. Hanks, Group Vice    1997  121,583  50,000     -         9,706
President                   1996  106,625    -        -        11,427
                            1995   97,825  40,000     -        44,223(3)
                                                                
Gene L. Harbula, Senior     1997  112,600  95,000   2,500       6,414
Vice President- Corporate   1996  106,349    -        -         7,583
Marketing and               1995  103,257  50,000     -         4,465
Communications 

(1)     Represents 401(k) plan payments (including  matching,
  profit  sharing and discretionary contributions)  and  term
  life  insurance  premiums.  For fiscal  year  1997,  401(k)
  plan  payments were $10,500 for F. Holmes Lamoreux, $10,500
  for  Jerry  L.  Leath, $10,062 for Rodney E. Olson,  $6,000
  for  Gene  L.  Harbula and $8,511 for Bob D.  Hanks.   Term
  life  insurance premiums for fiscal year 1996  were  $4,950
  for  F.  Holmes Lamoreux, $2,160 for Jerry L.  Leath,  $338
  for  Rodney E. Olson, $1,196 for Bob D. Hanks and  $414 for
  Gene L. Harbula.
(2)    Includes moving allowance of $65,590.
(3)    Includes moving allowance of $35,780.

Stock Option Plans

The Company currently maintains a stock option plan, pursuant
to  which  options  to purchase shares of  common  stock  are
outstanding  or  available for future grant.  The  plans  are
administered by the Company's Board of Directors.  No  member
of the Board of Directors receives awards under the plans.

Set  forth  in  the  following tables is summary  information
regarding  stock  options granted in 1997 and  stock  options
exercised  during 1997 and outstanding at June 30,  1997  for
each   of  the  executive  officers  listed  in  the  Summary
Compensation Table.

                   Options Granted in 1997

                                                         Potential Realizable
                                                            Value at Assumed
                                                            Annual Rates
                                                            of Stock Price
                                                            Appreication
                 Individual Grants                          for Option Term
                                                   
              Number      % ofTotal                                 
                of        Options                             
              Securities  Granted to   Exercise                        
              Underlying  Employees    Price      Expriation     
   Name       Options     in 1997      ($/Share)  Date         5%($) 10%($)
            
F. Holmes       -            -          $  -          -        $ -    $  -
  Lamoreux                              
Jerry L.        -            -             -          -          -       -
  Leath
Rodney E.       -            -             -          -          -       -
  Olson
Bob D.          -            -             -          -          -       -
  Hanks
Gene L.       2,500         38%          15.00    5/29/2007   23,584  59,765
Harbula             

         Aggregated Stock Options Exercised in 1997
       and Unexercised Option Values at June 30, 1997

                                   Number of            
                                  Securities        Value of
              Shares              Underlying       Unexercised
            Acquired    Value     Unexercised      In-the-Money
                on    Realized     Options at       Options at
   Name     Exercise     ($)     June 30, 1997    June 30, 1997
               (#)                    (#)              ($)
                                 Exercisable(E)/  Exercisable(E)/
                                 Unexercisable(U) Unexercisable(U)
                                                  
F. Holmes        -      $ -             -           $    -
  Lamoreux
Jerry L.        100       0        6,150   E         22,821 E
  Leath                            3,750   U         11,925 U
Rodney E.        -        -        4,500   E         15,840 E
  Olson                            3,000   U          9,030 U
Bob D.           -        -            -                -
  Hanks
Gene L.          -        -        2,500 U               0 U
  Harbula

Compensation of Directors

Directors  of the Company are compensated for their  services
as  directors.  Each director of the Company receives $24,000
annually  in respect of his or her services as director,  and
is   reimbursed  for  ordinary  and  necessary  expenses   in
attending Board meetings.

Employment Contracts and Termination of Employment and
Change of Control Arrangements

The  Company's  executive officers (other than Mr.  Lamoreux,
Mr. Derieg and Ms. Aselage) have entered into agreements with
the Company regarding arrangements in an event of a sale or a
merger of the Company (the "Change of Control Arrangements").
In  the  event of a sale or merger of the Company, each  such
person  will  be entitled to a bonus equal to six  months  of
such  person's salary at such time.  Such bonus will be  paid
in  a lump sum one month after the date of the sale or merger
if  the individual remains with the Company through the  date
of  sale.  An additional bonus amounting to six months salary
will  be  paid to each such person one year from the date  of
sale  if    employment  continues and such  person  does  not
voluntarily   terminate  employment   before   the   one-year
anniversary   date.    In  addition  to   regular   severance
compensation,   a   separation  allowance  (the   "Separation
Allowance")   will  be  paid  if  employment  is   terminated
subsequent  to the sale or merger.  The Separation  Allowance
amounts to six months salary, which will be paid over  a  six
month period beginning 30 days after the date of the sale  or
merger, or upon termination of employment by the buyer of the
Company.  However, the Separation Allowance will not be  paid
if  a  buyer  of  the Company terminates the  employment  for
cause.

Amounts  payable as of June 30, 1997, in scenarios  discussed
above   with  respect  to  officers  listed  in  the  Summary
Compensation Table would be $194,740 for Mr. Leath,  $144,664
for  Mr.  Olson, $150,000 for Mr. Hanks and $150,000 for  Mr.
Harbula.  The remaining eligible executive officers would  be
paid an aggregate of $93,600.

Additional Information

The  annual  salary and bonus allocations for  the  executive
officers  set  forth  in the Summary Compensation  Table  are
determined  annually by Mr. Lamoreux in his capacity  as  the
Chief  Executive Officer of the Company.  The  adjustment  of
Mr. Lamoreux's compensation is determined and approved by the
Board of Directors.


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL  OWNERS
          AND MANAGEMENT

The  following  table  and notes thereto  set  forth  certain
information with respect to the beneficial ownership  of  the
Company's  common stock as of August 31, 1997,  by  (i)  each
person  who is known to the Company to beneficially own  more
than  5%  of  the outstanding shares of common stock  of  the
Company,  (ii) each director who owns shares of common  stock
(iii)  for  the  Chief Executive Officer and  the  four  most
highly  compensated  officers  and  (iv)  all  directors  and
officers as a group.  Except as otherwise indicated, each  of
the  stockholders named below has sole voting and  investment
power with respect to the shares of common stock beneficially
owned by him or her.

       Name and Address       Number of     Percent of
                                Shares        Total
                                                 
    F. Holmes Lamoreux        462,458(1)     53.1%(1)
    Sabreliner Corporation                 
    Pierre Laclede Center,
    Suite 1500
    7733 Forsyth Blvd.
    St. Louis, MO  63105-
    1821
                                           
    Mary B. Harmon, as        187,873        21.6%
    personal representative
    of the estate of
    Douglas A. Harmon
    1447 Tahiti Dr.
    Sanibel, FL 33957
                                           
    G.S. Beckwith Gilbert     100,000        11.5%
    104 Field Point Road
    Greenwich, CT  06830
                                           
    Susan S. Aselage           28,903         3.3%
                                                  
    Jerry L. Leath              8,750         1.0%
                                           
    Rodney E. Olson             8,875         1.0%
                                           
    Bob D. Hanks                9,000         1.0%
                                           
    Gene L. Harbula             5,000         0.6%
                                           
    Arthur H. Fredston        462,458(1)     53.1%(1)
    Winthrop, Stimson,                    
    Putnam & Roberts
    One Battery Park Plaza
    New York, NY 10004-1490
                                           
    All directors and         818,484(2)     92.3%
    executive officers as a
    group

(1)     Mr.  Lamoreux  and Mr. Fredston, a  Director  of  the
  Company,  are  voting trustees pursuant to a  voting  trust
  agreement relating to the 462,458 shares held by  a  trust,
  of  which Mr. Lamoreux is the sole beneficiary.  The voting
  trust  agreement  may be terminated  at  any  time  by  Mr.
  Lamoreux,  and  Mr. Fredston may resign at any  time  as  a
  voting   trustee.   Accordingly,  Mr.  Fredston   disclaims
  beneficial ownership of the 462,458 shares subject to  such
  agreement.

(2)     Includes 14,150 exercisable options and 2,000 options
  exercisable within 60 days of August 31, 1997.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  Company  retained  the law firm  of  Winthrop,  Stimson,
Putnam  &  Roberts during fiscal 1997 and  1996.   Arthur  H.
Fredston,  a  director of the Company, is a partner  in  such
firm.


                           PART IV
                              
Item 14.     EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES,  AND
      REPORTS ON FORM 8-K

(a)     The  following documents are filed as  part  of  this
  report:

                                                     Page
  (1) Financial Statements:                          Number
                                                     in this
                                                     Report
                                                         
      Report of Independent Auditors                    F1
                                                         
      Consolidated Balance Sheets - as of June 30,    F2-F3
      1997 and 1996.
                                                         
      Consolidated Income Statements - Years ended     F4
      June 30, 1997, 1996 and 1995.
                                                          
      Consolidated Statements of Stockholders' Equity   F5
      - Years ended June 30, 1997, 1996 and 1995.
                                                          
      Consolidated Statements of Cash Flows - Years     F6
      ended June 30, 1997, 1996 and 1995.
                                                          
      Notes to Consolidated Financial Statements.     F7-F19
                                                         
  (2)  Financial Statement Schedules:    

      No  schedules have been filed since either they are not
      required,  they  are not applicable,  or  the  required
      information  is  shown  in the  Consolidated  Financial
      Statements  or  in  Notes  to  Consolidated   Financial
      Statements.

  (3) Exhibits:                       
                                      
       Exhibit                   Description
        Number
                                      
         3(1)     Certificate of Incorporation of Sabreliner
                  Corporation dated June  15, 1983 (Filed
                  with the Registration Statement on Form S-
                  4, Registration Number 33-67422, by
                  Sabreliner Corporation on  August 16,
                  1993)
                  
         3(2)     Certificate of Amendment of the
                  Certificate of Incorporation of Sabreliner
                  Corporation dated July 27, 1984 (Filed
                  with the Registration Statement on Form S-
                  4, Registration Number 33-67422, by
                  Sabreliner Corporation on  August 16,
                  1993)
                  
         3(3)     Certificate of Amendment of the
                  Certificate of Incorporation of Sabreliner
                  Corporation dated September 4, 1986 (Filed
                  with the Registration Statement on Form S-
                  4, Registration Number 33-67422, by
                  Sabreliner Corporation on  August 16,
                  1993)
                  
         3(4)     By-laws  of Sabreliner Corporation  (Filed
                  with the Registration Statement on Form S-
                  4,   Registration  Number   33-67422,   by
                  Sabreliner  Corporation  on   August   16,
                  1993)
                  
         4(1)     Indenture dated as of June 25, 1993
                  between Sabreliner Corporation and IBJ
                  Schroder Bank & Trust Company, as Trustee,
                  with respect to Sabreliner Corporation's
                  12 1/2% Senior Notes due 2003,  Series A, and
                  Sabreliner Corporation's 12 1/2% Senior Notes
                  due 2003, Series B (Filed with the
                  Registration Statement on Form S-4,
                  Registration Number 33-67422, by
                  Sabreliner Corporation on  August 16,
                  1993)
                  
         4(2)     Purchase Agreement dated as of June 18,
                  1993 between Sabreliner Corporation and
                  each Purchaser referred to therein
                  relating to the Units referred to therein,
                  in the form executed by each Purchaser
                  (Filed with the Registration Statement on
                  Form S-4, Registration Number 33-67422, by
                  Sabreliner Corporation on  August 16,
                  1993)
                  
         4(3)     Registration Rights Agreement dated as of
                  June 25, 1993 among Sabreliner Corporation
                  and the purchasers of Sabreliner
                  Corporation's 12 1/2% Senior Notes due 2003,
                  Series A (Filed with the Registration
                  Statement on Form S-4, Registration Number
                  33-67422, by Sabreliner Corporation on
                  August 16, 1993)
                  
         4(4)     Warrant Agreement dated as of June 25,
                  1993 between Sabreliner Corporation and
                  IBJ Schroder Bank & Trust Company, as
                  Warrant Agent, with respect to Sabreliner
                  Corporation's Warrants to  purchase 1.1111
                  shares of its Common Stock (Filed with the
                  Registration Statement on Form S-4,
                  Registration Number 33-67422, by
                  Sabreliner Corporation on  August 16,
                  1993)
                  
         4(5)     Amended and Restated Financing Agreement
                  dated as of September 25, 1997 among The
                  Lenders From time to Time Parties to this
                  Agreement, Star Bank, N.A., and Sabreliner
                  Corporation, Midcoast Aviation, Inc.,
                  Midcoast-Little Rock, Inc., SabreTech,
                  Inc., Dimension Aviation, Inc. and
                  Turbotech Repairs, Inc.
                  
         9        Voting Trust Agreement dated March 25,
                  1993, between F. Holmes Lamoreux and
                  Arthur H. Fredston, as voting trustee,
                  relating to 462,458 shares of Sabreliner
                  Corporation's Common Stock held by a trust
                  of which Mr. Lamoreux is the sole
                  beneficiary (Filed with the Registration
                  Statement on Form S-4, Registration Number
                  33-67422, by Sabreliner Corporation on
                  August 16, 1993)
                  
         10(1)    Undergraduate Naval Flight Officers
                  Contract with the United  States Navy
                  awarded to Sabreliner Corporation on March
                  6, 1990 (Filed with the Registration
                  Statement on Form S-4, Registration Number
                  33-67422, by Sabreliner Corporation on
                  August 16, 1993)
                  
         10(2)    C-20 Contractor Logistics Support Contract
                  with the United States Air Force awarded
                  to Sabreliner Corporation July 21, 1995
                  (filed with Form 10-K Registration Number
                  33-67422, by Sabreliner Corporation on
                  September 28, 1995)
                  
         10(3)    Modification Services Agreement Between
                  McDonnell Douglas Corporation and
                  Dimension Aviation, Inc. to perform
                  modifications on certain DC-10 aircraft
                  awarded to Sabreliner on February 14,
                  1997.
                  
         10(4)    Modification Services Agreement Between
                  McDonnell Douglas Corporation and
                  Dimension Aviation, Inc. to perform
                  modifications on certain MDC Tri-Jet
                  aircraft awarded to Sabreliner on February
                  14, 1997.
                  
         10(5)    Sublease Agreement dated June 25, 1990
                  between Pegasus I, L.P., as sublessor,
                  and Sabreliner Corporation as sublessee
                  (Filed with the Registration Statement on
                  Form S-4, Registration Number 33-67422,
                  by Sabreliner Corporation on  August 16,
                  1993)
                  
         10(6)    Lease Agreement dated December 17, 1986,
                  as amended February
                  7, 1990, June 25, 1990 and April 17, 1995
                  between Sabreliner Corporation, as lessee,
                  and the City of Perryville, Missouri, as
                  lessor (filed on Form 10-K, Registration
                  Number 33-67422, by Sabreliner Corporation
                  on September 27, 1996).
                  
         10(7)    Lease Agreement dated July 28, 1992,
                  between Midcoast Aviation, Inc., as
                  lessee, and the Bi-State Development
                  Agency of the Missouri-Illinois
                  Metropolitan District, as lessor, for two
                  parcels east of hangar 9 at St. Louis
                  Downtown-Parks Airport (filed with Form
                  10-K Registration Number 33-67422, by
                  Sabreliner Corporation on September 28,
                  1995)
                  
         10(8)    Lease Agreement dated March 23, 1984, as
                  amended April 20, 1990, and July 2, 1990,
                  between Midcoast Aviation, Inc., as
                  lessee, and the Bi-State Development
                  Agency of the Missouri-Illinois
                  Metropolitan District, as lessor, for
                  8.33 acres of land located at St. Louis
                  Downtown-Parks Airport (filed with Form
                  10-K Registration Number 33-67422, by
                  Sabreliner Corporation on September 28,
                  1995)
                  
         10(9)    Lease Agreement dated June 1, 1984,
                  between Midcoast Aviation, Inc., as
                  lessee, and the Bi-State Development
                  Agency of the Missouri-Illinois
                  Metropolitan District, as lessor, for
                  hangar 12 located at St. Louis Downtown-
                  Parks Airport (filed with Form 10-K
                  Registration Number 33-67422, by
                  Sabreliner Corporation on September 28,
                  1995)
                  
         10(10)   Lease Agreement dated November 7, 1979,
                  as amended February 9, 1981, April 20,
                  1990, July 1, 1990, and November 22,
                  1994, between Midcoast Aviation, Inc., as
                  lessee, and the Bi-State Development
                  Agency of the Missouri-Illinois
                  Metropolitan District, as lessor, for
                  hangar 7 land and building located at St.
                  Louis Downtown-Parks Airport  (filed with
                  Form 10-K Registration Number 33-67422,
                  by Sabreliner Corporation on September
                  28, 1995)
                  
         10(11)   Contract for Provision of Line Service
                  dated August 1, 1988 as amended May 8,
                  1991, between Midcoast Aviation, Inc., as
                  operator, and the Bi-State Development
                  Agency of the Missouri-Illinois
                  Metropolitan District, as agency, located
                  at St. Louis Downtown-Parks Airport
                  (filed with Form 10-K Registration Number
                  33-67422, by Sabreliner Corporation on
                  September 28, 1995)
                  
         10(12)   Terminal Building Lease Agreement, dated
                  December 4, 1991, between Midcoast
                  Aviation, Inc., as lessee, and the Bi-
                  State Development Agency of the Missouri-
                  Illinois Metropolitan District, as
                  lessor, located at St. Louis Downtown-
                  Parks Airport   (filed with Form 10-K
                  Registration Number 33-67422, by
                  Sabreliner Corporation on September 28,
                  1995)
                  
         10(13)   Lease Agreement dated March 1, 1985, as
                  amended May 16, 1988, June 5, 1989, July
                  15, 1992, September 28, 1992 and November
                  30, 1994, between DynAir Tech, Inc., as
                  lessee, and City of Phoenix, as lessor,
                  located at Phoenix Sky Harbor
                  International Airport  (filed with Form
                  10-K Registration Number 33-67422, by
                  Sabreliner Corporation on September 28,
                  1995)
                  
         10(14)   Stock Purchase Agreement Between
                  Sabreliner Corporation and Trans World
                  Airlines, Inc. dated as of October 31,
                  1994 (filed on Form 10-Q, Registration
                  Number 33-67422, by Sabreliner
                  Corporation on November 14, 1994)
                  
         10(15)   Stock Purchase Agreement Among Sabreliner
                  Corporation, DynCorp and DynCorp Aviation
                  Services, Ind. dated as of June 30, 1995
                  (filed on Form 8-K, Registration Number
                  33-67422, by Sabreliner Corporation on
                  July 14, 1995)
                  
         10(16)   1994 Stock Option Plan of Sabreliner
                  Corporation  (filed with Form 10-K
                  Registration Number 33-67422, by
                  Sabreliner Corporation on September 28,
                  1995)
                  
         21       Subsidiaries of Registrant

(b) Reports on Form 8-K

  No  reports  on  Form 8-K were filed by the Company  during
  the quarter ended June 30, 1997.

(c) Exhibits Filed

  A  listing of exhibits required to be filed is given in the
  Sequential Exhibit Index.

(d) Financial Schedules

  The information regarding Financial Statement Schedules  in
  this item is provided in Item 14 (a) 1 and 2.



               Report of Independent Auditors
                              
The Board of Directors and Stockholders
Sabreliner Corporation

We have audited the accompanying consolidated balance sheets
of  Sabreliner Corporation as of June 30, 1997 and 1996, and
the   related   consolidated   statements   of   operations,
stockholders' equity, and cash flows for each of  the  three
years  in  the period ended June 30, 1997.  These  financial
statements    are   the   responsibility    of    Sabreliner
Corporation's management.  Our responsibility is to  express
an  opinion  on  these  financial statements  based  on  our
audits.

We   conducted  our  audits  in  accordance  with  generally
accepted  auditing standards.  Those standards require  that
we plan and perform the audit to obtain reasonable assurance
about  whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence  supporting  the amounts  and  disclosures  in  the
financial statements.  An audit also includes assessing  the
accounting principles used and significant estimates made by
management,  as  well  as evaluating the  overall  financial
statement presentation.  We believe that our audits  provide
a reasonable basis for our opinion.

In  our opinion, the financial statements referred to  above
present  fairly, in all material respects, the  consolidated
financial  position of Sabreliner Corporation  at  June  30,
1997   and  1996,  and  the  consolidated  results  of   its
operations and its cash flows for each of the three years in
the  period ended June 30, 1997 in conformity with generally
accepted accounting principles.

                              /s/ Ernst & Young LLP


September 5, 1997
St. Louis, Missouri

                 CONSOLIDATED BALANCE SHEETS
                                                   
                                                June 30
                                          1997          1996
                                         (In Thousands Except
                                                 Share
                                          and Per Share Data)
Assets                                               
                                                     
Current assets:                                      
  Cash and cash equivalents             $22,994       $12,254
  Accounts receivable:                               
    Commercial (net of allowances of                  
      $550 in 1997 and $962 in 1996)     17,504        21,619
    Government                           12,448         7,733
  Inventories                            31,542       24,669
  Contracts in process (net of customer                  
    advances and progress payments of                    
    $15,143 in 1997 and $10,940
    in 1996)                             20,192        11,917
  Income taxes receivable                     -         1,927
  Deferred tax asset                      2,958         3,310
  Prepaid expenses                        1,739         1,897
Total current assets                    109,377        85,326                  
Property and equipment (net of                         
  accumulated depreciation of $21,286    37,882        48,311
  in 1997 and $96,235 in 1996)
Goodwill (net of amortization of $590                  
  in 1997 and $239 in 1996)               4,843         4,984
Deferred financing costs and other        4,798         5,997
  assets
Total assets                           $156,900      $144,618
                                                       
                              
                                                  June 30
                                            1997          1996
                                           (In Thousands Except
                                         share and Per Share Data)
Liabilities  and stockholders' equity                  
                                                       
Current liabilities:                                   
  Accounts payable                        $24,997       $20,152
  Accrued compensation                      7,068         6,389
  Customer deposits                         5,588           238
  Other accrued liabilities                 8,662         4,706
  Accrued interest expense                  1,946         1,959
  Royalties payable                           332         2,300
  Current portion of long-term debt           750           916
Total current liabilities                  49,343        36,660
                                                     
Long-term debt and capital leases          94,863        93,999
Other long-term liabilities                 1,990         2,000
Deferred income taxes                         212         1,823
                                                     
Stockholders' equity (shares and par                 
value as stated):

  Common stock, $.01 par value,                          
    2,000,000 shares authorized; 955,750       10            10 
    shares issued
  Additional paid-in capital                2,056         2,056
  Retained earnings                         9,432         9,077
                                           11,498        11,143
                                                       
  Less treasury stock, at cost (84,816                   
    shares in 1997; 84,916 shares in               
    1996)                                  (1,006)      (1,007)
Total stockholders' equity                 10,492       10,136
Total liabilities and stockholders'      $156,900     $144,618
  equity
                                                    
See accompanying notes.
                              
               CONSOLIDATED INCOME STATEMENTS
                              
                                     Year ended June 30
                                 1997        1996       1995
                               (In Thousands Except Share and
                                       Per Share Data)
                                                      
Net revenue                   $260,944    $205,633   $120,908
Cost of revenue                215,476     171,045     91,867
Gross margin                    45,468      34,588     29,041
                                                      
Selling, general and                                  
administrative expense          33,411      22,956     17,251

Operating income                12,057      11,632     11,790
                                                      
Other income (expense):                               
  Interest                     (13,046)    (11,789)   (11,123)
  Other                            978         877        481
                              
                               (12,068)    (10,912)  (10,642)
                                                      
Earnings (loss) before            (11)         720     1,148
income taxes                
                                                      
Income tax (expense) benefit      366         (350)    (350)
                                                                    
Net income                    $   355      $  370     $  798                
Earnings per share data                               
Net income                    $  0.41      $  0.42     $ 0.91
                                                      
Average number of common and                            
common equivalent shares                            
Outstanding                    873,648     872,491    881,084
                              
                              
                   See accompanying notes.
                              
       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        JUNE 30, 1997
                              
                          Number of Shares    
                          Common     Treasur  
                           Stock        y
                                      Stock
                                              
Balances at June 30,      955,750    72,916   
1994
  Treasury stock              -      5,000    
    purchased
  Net income                  -          -    
Balances at June 30,      955,750    77,916   
1995
  Treasury stock              -               
    purchased                         7,000
  Net income                  -          -    
Balances at June 30,      955,750    84,916   
1996
  Treasury stock sold         -       (100)
  Net Income                  -          -    
Balances at June 30,      955,750    84,816   
1997
                              
                                  Amounts (In Thousands)
                          Common     Paid-In    Retained   Treasury
                           Stock     Capital     Earning    Stock
                                                          
Balances at June 30,     $  10       $2,056     $7,909    $ (859)
1994                                          
  Treasury stock             -           -          -        (61)
   purchased
  Net income                 -           -        798          -
Balances at June 30,        10       2,056      8,707       (920)
1995                                             
  Treasury stock             -           -          -        (87)
    purchased                                      
  Net income                 -           -        370          -
Balances at June 30,        10       2,056      9,077     (1,007)
1996                                            
  Treasury stock sold        -           -          -          1
  Net Income                 -           -        355          -
Balances at June 30,     $  10       $2,056     $9,432    $(1,006)
1997                                                                        

See accompanying notes.
                              
            CONSOLIDATED STATEMENTS OF CASH FLOWS
                              
                                     Year ended June 30
                                  1997       1996      1995
                                 (In Thousands Except Share
                                     and Per Share Data)
Operating Activities                                  
Net income                      $   355     $   370     $  798
Adjustments to reconcile                           
  net income to net cash                  
  provided by operating
  activities:
    Depreciation                  6,152      11,078     23,664
    Amortization                  1,233         810        308
  Changes in assets and                               
  liabilities:
    Accounts receivable            (685)     (4,183)     12,089
    Inventories                  (6,888)      1,399      (1,524)
    Contracts in process         (8,250)     (2,041)     (2,704)
    Prepaid expenses and other   16,482         545      (1,033)    
      assets      
    Accounts payabl e             4,875       6,183      (6,110)
    Customer deposits             5,350      (1,248)        (40)
    Deferred contract revenue        -         (904)     (3,806)
      and cost       
    Accrued liabilities           4,484      (1,600)     (1,484)
    Accrued income taxes            902         173        (120)
Total adjustments                23,665      10,212      19,240
Net cash provided by             24,010      10,582      20,038
operating activities
                                                      
Investing activities                                  
Capitalized expenditures        (11,840)     (4,346)    (3,788)
Acquisitions, net of cash        (1,949)     (3,008)   (28,069)     
  acquired  
Net cash used in investing      (13,789)     (7,354)  (31,857)     
  activities              
                                                   
Financing activities                                  
Principal payments on long-       (939)        (600)    (170)     
  term borrowings         
Debt issuance costs                  -         (166)    (347)
Sale of treasury stock               1            -        -
Purchase of treasury stock           -          (87)     (61)
Other long term borrowings       1,457            -        -
Net cash provided (used) by        519         (853)    (578)    
  financing activities
                                                      
Increase (decrease) in cash     10,740        2,375  (12,397)
Cash and cash equivalents at    12,254     9,879      22,276
  beginning of year
Cash and cash equivalents at    $22,994    $12,254   $ 9,879
  end of year  
                                                      
Supplemental cash flow                                
information
 Interest paid                  $12,657    $11,775    $11,794
                                                      
 Taxes paid                     $   266    $    63    $ 1,970
                              
Capitalized expenditures and debt proceeds shown in 1995
exclude capital leases of $1.2 million.
See accompanying notes.
                              
         Notes to Consolidated Financial Statements
       (In Thousands Except Share and Per Share Data)
                        June 30,1997
                              
1.   Nature of Business

Sabreliner  is  a  diversified aerospace company,  providing
services  in  airframe  maintenance  and  modification,  gas
turbine   engine  overhaul  and  repair,  aircraft   systems
upgrades  and  refurbishments, fleet logistics  support  and
other   aerospace  products  and  services  for  commercial,
corporate  and  government aviation markets.  During  fiscal
1997,   41%  of  the  Company's  revenue  was  provided   by
government aviation, 33% was provided by corporate  aviation
and  the  remaining  26%  was  provided  by  the  commercial
aviation business.

2.   Summary of Significant Accounting Policies

Basis of Presentation

The  consolidated financial statements include  the  assets,
liabilities and operations of Sabreliner Corporation and its
wholly-owned   subsidiaries,   Midcoast   Aviation,    Inc.,
SabreTech,  Inc.  Dimension  Aviation,  Inc.  and  Turbotech
Repairs, Inc.  Intercompany items and transactions have been
eliminated in the preparation of these statements, including
unrealized intercompany profits and losses.

The  preparation of financial statements in conformity  with
generally accepted accounting principles requires management
to  make  estimates and assumptions that affect the reported
amounts   of  assets  and  liabilities  and  disclosure   of
contingent  assets  and  liabilities  at  the  date  of  the
financial  statements and the reported amounts  of  revenues
and  expenses during the reporting period. Earnings reported
for  certain  major long-term contracts are predicated  upon
estimates of probable outcome by management.  Actual results
could differ from those estimates.

Cash and Cash Equivalents

Cash   equivalents  consist  of  short-term  highly   liquid
investments  purchased with a maturity of  three  months  or
less.

Inventories

Inventories  are  valued at the lower  of  average  cost  or
market.  Inventory costs include the appropriate elements of
material,  labor, and manufacturing overhead.  Provision  is
made  for excess aircraft parts based upon historical  usage
and  known  future  requirements.    Obsolete  and  unusable
materials  are physically removed from inventory  stores  in
accordance  with  FAA  guidelines  and  periodic   condition
inspections.

In  accordance with trade practice, aircraft parts inventory
is   included  in  current  assets.   In  certain   specific
instances,  some portion of the aircraft parts  are  carried
for estimated service requirements that exceed one year.

Revenue Recognition

Revenues on contracts are recognized under the percentage of
completion  method.   Progress is based  on  contract  costs
incurred to date compared to total estimated contract  costs
or  man-hours  incurred to date compared to total  estimated
man-hours.   Earnings expectations are based upon  estimates
of  contract  values and costs.  Contracts  in  process  are
reviewed  on  a periodic basis with adjustments to  revenues
and  earnings  made in the current accounting  period  based
upon  revisions  in  contract value and estimated  costs  at
completion.   Provisions for estimated losses  on  contracts
are recorded when identified.

Contracts in Process

Contracts   in  process  represent  accumulated  costs   and
estimated  earnings  thereon based upon  the  percentage  of
completion of undelivered customer orders.  The contracts in
process balance reflects the actual costs incurred,  net  of
applicable  customer advance payments, and  include:  direct
engineering,  production, tooling, applicable  overhead  and
other  costs  (excluding  general and  administrative  costs
which are charged against income as incurred).  Contracts in
process  do  not include any significant amounts  of  costs,
claims  or  similar items subject to uncertainty  concerning
their  realization.   Title to or  a  security  interest  in
certain items included in contracts in process is vested  in
the U.S. Government by reason of progress payment provisions
of   related   contracts.   In  accordance   with   industry
standards,   contracts  in  process  related  to   long-term
contracts  are  classified as current assets even  though  a
portion may not be realized within one year.

Long-Lived Assets

Property  and  equipment  are stated  at  acquisition  cost.
Significant  additions or improvements  which  extend  asset
lives  are  capitalized; repair and  maintenance  costs  are
expensed  as incurred.  Capital leases are recorded  at  the
lower  of  fair market value or the present value of  future
minimum lease payments. Leasehold improvements are amortized
over  the  term  of  the respective lease or  the  estimated
useful  life  of  the  improvement,  whichever  is  shorter.
Equipment is depreciated over the estimated useful  life  of
each asset, ranging from three to ten years.  Buildings  are
depreciated  over  a  30-year life  span.   All  depreciable
property  and equipment are depreciated using the  straight-
line method.

The  Company  has recorded goodwill arising out of  purchase
cost in excess of fair value of tangible assets acquired  in
the  purchase of Midcoast Aviation, Inc. and SabreTech, Inc.
Goodwill  is  amortized  on a straight-line  basis  over  15
years.

The  Company records impairment losses on long-lived  assets
when events and circumstances indicate that the assets might
be  impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts
of those assets.

Income Taxes

Income  tax  expense  is  based  upon  reported  income  and
expense,  adjusted for permanent differences between  income
reported  for  financial  statement  purposes  and   taxable
income.   Deferred  income  taxes  are  provided  using  the
liability method for items of revenue and expense recognized
in different periods for financial and income tax reporting.

Earnings Per Share

Earnings  per  share  of  common  stock  are  calculated  by
dividing  net  earnings by the weighted  average  number  of
common shares outstanding during each year plus, when  their
effect  is dilutive, common stock equivalents consisting  of
certain shares subject to stock options and warrants.

3.   Acquisitions

On  June  27, 1996, the company paid $1.0 million to acquire
100%  of  the outstanding stock and retire outstanding  debt
owed   investors  of  Turbotech  Repairs,  Inc.,  an  engine
component  repair  and  authorized  maintenance  center  for
certain  engine  manufacturers.   During  fiscal  1997,  the
Company  was  required  to  make  full  payment  on  certain
revolving  term  and  trade credit facilities  initiated  by
Turbotech   prior  to  the  acquisition  of  $1.6   million,
resulting  in  a  total  purchase  price  of  $2.6  million,
exclusive  of  mortgage debt kept in place of $1.4  million.
Total  assets  as  of  the  date of  acquisition  were  $5.1
million.  No goodwill was recorded.

On   May   23,  1996,  the  Company  acquired  the  tooling,
inventories and license for the AlliedSignal TFE 731  engine
heavy  maintenance  product line from UNC-Airwork  for  $1.2
million.   Payments  for the tooling  and  license  of  $0.5
million were made during fiscal 1996; remaining amounts owed
for inventories of $0.7 million are due in fiscal 1998.   No
goodwill was recorded.

On June 30, 1995, the Company acquired the DynAir Companies,
now known as SabreTech, Inc.  A base purchase price of $12.8
million  was  paid  during  fiscal  1995,  subject   to   an
adjustment  in  working capital asset values and  continuing
purchase  costs  of $1.5 million, paid in fiscal  1996.   In
addition  to  this base purchase price, the  purchase  price
includes  contingent payments of 10% of  SabreTech's  annual
revenues in excess of $60 million reported for the Company's
fiscal  years 1996 and 1997.  Contingent payments,  totaling
$2.2  million, were paid during fiscal year 1997.   Goodwill
recognized  as  a result of the acquisition is  recorded  at
$3.3 million as of June 30, 1997.

On November 2, 1994, the Company acquired Midcoast Aviation,
Inc.  for approximately $20 million.  Assets as of the  date
of acquisition were approximately $25 million, of which $2.0
million represented goodwill.

4.   Significant Customers

The  Company  sells its products and services  to  the  U.S.
Government  and to foreign and domestic private individuals,
corporations and governments.  The Company performs periodic
credit evaluations of its customers' financial condition and
the  results  of these evaluations determine the  amount  of
prepayment,  or other security, such as letters  of  credit,
which may be required.

In  the ordinary course of business, the Company's contracts
with its customers are subject to post-sale adjustments  and
contractual disputes, claims, and revisions.  Although there
can  be  no  assurance  that such actions  will  not  effect
reported  results, it is the opinion of management that  all
outstanding  contractual actions will  be  resolved  without
material  adverse effect on the Company's financial position
or results of operations.

Foreign revenues amounted to approximately $19,189 in  1997,
$14,279 in 1996, and $5,945 in 1995.

Contract revenues from U.S. Government agencies amounted  to
approximately $108,000 in 1997, $55,600 in 1996, and $73,600
in   1995.    The   largest  of  these  contracts   is   the
Undergraduate Naval Flight Officer Training contract (UNFO).
Contract  revenues  for  UNFO  accounted  for  approximately
$52,500 in 1997, $22,800 in 1996, and $44,300 in 1995.

During   fiscal   1997,  McDonnell  Douglas  accounted   for
approximately  $17,800  in  commercial  aviation   revenues.
Fiscal  1996  revenue  provided  by  McDonnell  Douglas  was
$21,300.

5.   Inventories

Inventories consist of the following categories:

                                          June 30
                                     1997         1996
                                                
Aircraft parts                     $28,839      $22,105
Assembly parts in process            1,403        1,419
Aircraft held for resale             1,300        1,145
                                   $31,542      $24,669

6.   Property and Equipment

The  major  categories of property and equipment consist  of
the following:

                                           June 30
                                      1997         1996
Land and buildings                  $ 4,145       $4,053
Leasehold improvements               18,024       17,299
Machinery and equipment              17,140       11,539
Tools, dies and jigs                  4,639        4,243
Furniture and other equipment         9,039        4,797
Service contract assets                   -       99,118
                                     52,987      141,049
Less accumulated depreciation       (21,286)     (96,235)
                            
                                     31,701       44,814
Construction-in-progress              6,181        3,497
                                    $37,882      $48,311

Service  contract assets balances reflect the  sale  of  the
UNFO assets during fiscal 1997.

7.   Long-Term Debt and Capital Leases

Long-term debt and capital leases consist of the following:

                                           June 30
                                      1997         1996
12.5% Senior Notes Due in 2003      $88,920      $88,740
Revolving credit                         -            -
Mortgage notes                       3,829        4,054
Executive insurance policies         1,457            -
Capital leases                       1,011        1,189
Other                                  396          932
                                    95,613       94,915
Less current portion                  (750)        (916)
                        
                                   $94,863      $93,999
Senior Notes

On June 28, 1993, the Company issued $90,000 of 12.5 percent
Senior  Notes  (Notes)  due April 15, 2003,  and  detachable
Warrants  entitling Warrant holders to purchase an aggregate
of  94,444  shares  of Common Stock.  The  net  proceeds  of
$89,900  were  allocated on a fair value basis between  long
term debt and Warrants.

The Warrants have an exercise price of $25.00 per share, and
are  exercisable on or after June 25, 1998, on or after  the
occurrence of a Triggering Event, as defined in the  Warrant
Agreement governing the Warrants, or in connection with  the
voluntary or involuntary dissolution of the Company.

The  Notes,  which  are  publicly  registered,  are  senior,
unsecured  obligations of the Company and rank "pari  passu"
in  right  of  payment  with all other existing  and  future
unsecured senior indebtedness of the Company, and are senior
in  right of payment to all existing and future subordinated
obligations.   Interest  on  the  Notes  is  payable   semi-
annually.

The  Indenture  under which the Notes were  issued  contains
several  covenants,  including  interest  coverage  and  the
incurrence of additional debt.  Should the Company not  meet
the  annually  measured  Earnings  Before  Interest,  Taxes,
Depreciation  and  Amortization (EBITDA) coverage  ratio  as
identified in the Indenture, the Company will be required to
offer  to  repurchase ten percent of the outstanding  Notes.
The  Indenture  also restricts the payment of  dividends  by
limiting  the percentage of consolidated net income eligible
for dividends and requiring the EBITDA coverage ratio to  be
at  least  2.5.   In the event of a Change  of  Control,  as
defined  in the Indenture, the Company is required to  offer
to  purchase all outstanding Notes at a purchase price equal
to  101 percent of the principal amount thereof plus accrued
interest to the Change of Control purchase date.

The  Notes  are not redeemable at the option of the  Company
prior to May 1, 1998.  On or after that date, the Notes  are
redeemable at the option of the Company, in whole or in part
any time, at a premium which declines annually.

Revolving Credit

The  Company  has a secured revolving credit and  letter  of
credit   facility.   The  Company  has   available,   on   a
discretionary  basis,  the lesser of $35.0  million  or  the
amount determined under a borrowing base formula, secured by
inventory,  accounts  receivable  and  general  intangibles.
Included  in  this  credit  agreement  are  covenants  which
require  the Company to maintain certain interest  coverage,
equity values, and other performance criteria throughout the
term  of  the  financing agreement.   The  credit  agreement
expires   February,  2001,  and  is  subject   to   interest
determined at the prime rate, plus 1.25%.

Mortgage Notes

The  Company  kept in place a mortgage note as part  of  its
acquisition  of  Midcoast Aviation,  Inc.  The  mortgage  is
secured  by leasehold improvements at the St. Louis Downtown
Parks facility.  The interest rate on this note is fixed for
three  year  periods throughout the note's life, using  one-
half  percent over the bank's prime rate.  The current rate,
until  the next adjusting period, starting January  1998  is
8.75%.   The  monthly payment, fixed for a  term  coinciding
with  interest  rate  redetermination,  is  $34.   The  Note
matures on December 26, 1999.

As  part of its acquisition of Turbotech Repairs, Inc.,  the
Company  kept  in  place two mortgage  notes  totaling  $1.4
million,  secured  by  real  property  and  buildings.   The
largest  of  these notes has a loan balance of  $782.    The
interest  rate  on the note is equal to the bank's  CD  rate
plus  two  percent.  The principal portion  of  the  monthly
payment  is a fixed amount and the Note matures on March  1,
2005.   The remaining mortgage is owed to the Small Business
Administration.  The interest rate on this note is fixed  at
7.7%  per  annum  and  the note matures  on  June  1,  2015.
Combined   monthly  payments  made  under  these  mortgages,
estimated under current interest rates are $13.

Capital Leases

The Company has entered into capital leases for the purchase
of  mainframe  information systems, machinery and  equipment
and  vehicles.  As of June 30, 1997, these assets  (included
in   property   and  equipment)  totaled  $1,274,   net   of
accumulated  depreciation  of $67.   Annual  lease  payments
under  capital  leases for the years  ended  June  30,  1998
through   2002,  are  $438,  $422,  $333,  $150   and   $65,
respectively.

Aggregate  maturities  of long-term borrowings  and  capital
leases are as follows:

                      1998         $   750
                      1999             691
                      2000             549
                      2001             405
                      2002             368
                      Thereafter    92,850
                                   $95,613

8.   Lease Commitments, Rent Expense and Rental Revenues

The  Company has lease commitments (both income and expense)
expiring at various dates, principally for real property and
equipment.  Income leases are primarily subleases and offset
lease commitments.

Future  minimum  lease  payments and rental  revenues  under
noncancellable, operating leases are as follows:

                         Total        Total         Net
                         Lease       Income      Commitmen
                       Payments      Leases         ts
Years Ended June 30                              
1998                   $ 4,326     $(1,575)      $ 2,751
1999                     4,204        (340)        3,864
2000                     3,483        (112)        3,371
2001                     3,284        (112)        3,172
2002 and thereafter     13,137         (58)       13,079
Total                  $28,434     $(2,197)      $26,237

Rent  expense for operating leases totaled $6,543  in  1997,
$6,179  in 1996, and $1,726 in 1995. Rental revenue  totaled
$3,542 in 1997, $3,493 in 1996, and $1,362 in 1995.

9.   Benefit Plans

Pensions

The   Company  has  three  hourly  pension  plans   covering
substantially  all  non-salaried union  employees.   Pension
benefits  are based on the employee's length of service  and
defined  benefit  rates.  Normal service  costs  are  funded
currently using the projected unit credit method.

Net  periodic pension expense for 1997, 1996,  and  1995  is
comprised of the following:

                                 1997        1996       1995
                                                      
Service cost                    $  198     $  192      $ 185
Interest cost on projected         421        387        340
benefit obligation
Return on plan assets           (1,065)      (842)      (860)
Amortization of unrecognized net                        
assets and deferral                509        348        430
Net periodic pension expense     $  63     $   85      $  95

The  following table sets forth the funded status  of  these
three plans:

                                          1997        1996
                                                        
Plan assets at fair value, primarily    $7,248      $6,272
stock and bond funds
Actuarial  present value of  benefit                
obligations:                            5,029       4,570
  Vested                                  724         766
  Nonvested
Projected benefit obligation            5,753       5,336
                                                    
Plan  assets in excess of  projected    1,495         936
benefit obligation
Unrecognized net (gain) or  loss  from                
past  experience different from that                
assumed  and effects of  changes  in    (1,203)      (702)
assumptions                         
Prior  service cost not yet recognized                
in net periodic pension costs             326         374
Unrecognized net asset at June 30, 1987               
being recognized over 12 years            (70)       (129)
Minimum liability adjustment              (11)          -
Prepaid pension cost                    $ 537       $ 479

The  discount rate used to develop net pension  expense  was
8.0 percent in 1997, 8.0 percent in 1996 and 8.0 percent  in
1995.   The  expected long-term rate of return on retirement
plan  assets  for 1997, 1996 and 1995 was 8.7  percent,  8.7
percent and 8.6 percent, respectively.

Postretirement Benefits

A  select  group  of retired employees are provided  medical
insurance  on a continuing basis.  The plan is contributory,
with   retiree  contributions  adjusted  periodically,   and
contains  other  cost-sharing features, such as  deductibles
and  co-insurance.  The Company's policy is to fund the cost
of medical benefits as incurred.  The accrued postretirement
benefit cost as of June 30, 1997 and 1996, was $1.1 million.

The  continuing  cost  of covered health  care  benefits  is
expected to increase 11 percent each year through 2000, with
decreases expected to gradually reduce to 6 percent  by  the
year  2006 and remain constant thereafter.  The effect of  a
one  percentage  point increase in the assumed  health  care
trend  rate in the projected liability at June 30,  1997  is
$94.   The  discount rate used to determine the  accumulated
postretirement benefit obligations as of June 30,  1997  was
8.25 percent.

Savings Plans

The  Company maintains savings plans for salaried  personnel
and  nonunion hourly employees. Under the provisions of  one
of  the savings plans the Company makes contributions  based
upon   employee   voluntary   contributions   and   eligible
compensation.  The Company's cost was $678 in 1997, $678  in
1996 and $662 in 1995.

Stock Option Plans

The  Company has an incentive stock option plan for officers
and  key  employees.   A  summary of stock  option  activity
follows:

                                     Per Share Data
                               1997       1996       1995
                                                   
  Outstanding at beginning    25,400    10,900      2,400
  of year
     Granted                   6,500    16,000     13,500
     Exercised                  (100)        -          -
     Canceled/expired         (1,400)   (1,500)     (5,000)
  Outstanding at  end  of     30,400    25,400      10,900
  year

As  of  June  30,  1997, 14,025 options are  exercisable  at
prices  ranging  from  $10.46  to  $12.50  per  share.   The
remaining  16,375  options, which were granted  at  exercise
prices  ranging  from $8.77 per share to  $15.00  per  share
become exercisable as follows: 9,250 in 1998;  5,500 in 1999
and  1,625 in fiscal 2000.  The plan is authorized to  grant
up to 169,500 additional options.

In  fiscal  1997,  the  Company adopted the  disclosure-only
alternative   under  FAS  123  "Accounting  for  Stock-Based
Compensation,"  which establishes financial  accounting  and
reporting  standards  for stock-based employee  compensation
plans.   Recognition  of the fair value  of  employee  stock
options  at  the grant date would not result in  a  material
change to reported earnings for fiscal 1997.

10.  Income Taxes

Components of the provision for income taxes attributable to
continuing operations are as follows:
                              1997       1996      1995
                                                  
Current                      $ (893)    $1,098     $(667)
Deferred                      1,259     (1,448)      317
Total (expense) benefit      $  366     $ (350)     (350)

The  reconciliation of income computed at the  U.S.  federal
statutory  tax rates to the effective income tax  for  1997,
1996 and 1995 is as follows:

                              1997       1996       1995
                                                   
Tax at statutory rate        $   4     $(210)     $(390)
State income taxes               1       (29)       (21)
Tax exempt insurance           380         -           -
  proceeds
Foreign sales corporation       93        43         58
Keyman and life insurance       53       (43)        (9)
Non-deductible expenses       (110)      (63)       (48)
Goodwill amortization          (55)       (48)        67
Other                            -         -         (7)
                             $ 366     $(350)     $(350)

Deferred  income  taxes  reflect  the  net  tax  effects  of
temporary differences between the carrying amounts of assets
and  liabilities  for financial reporting purposes  and  the
amounts used for income tax purposes.

Significant components of the Company's deferred tax  assets
and liabilities are as follows:

                                            1997     1996
Deferred Tax Assets:                                
  Vacation accrual                         $  973   $   647
  AMT credits                                 894     2,237
  Accrued expenses                            736        56
  Inventory reserves and UNICAP               581     1,777
  Retirement benefits - FAS 106               409       409
  Deferred contract revenue and cost          345       225
  Other                                       676       197
Total deferred tax assets                  $4,614    $5,548
                                                    
Deferred tax liabilities:                           
  Tax over book depreciation and           $1,275    $4,061
    accelerated contract costs        
  Securities discounts                        194        -
  Other                                       399        -
Total deferred tax liabilities              1,868     4,061
Net deferred tax asset                     $2,746    $1,487
      

No  valuation  allowance  is considered  necessary  for  the
remaining  $2.7 million net deferred tax asset as management
believes  it  is more likely than not that the deferred  tax
asset  will  be  realized through tax  planning  strategies,
through  future  reversals  of  existing  taxable  temporary
differences  against  existing deductible  differences,  and
through projections of income in future periods.

The  Company is subject to the Alternative Minimum Tax (AMT)
system for income tax purposes.  The AMT credit carryforward
balance as of June 30, 1996 was $2,237 which carries forward
indefinitely.  During fiscal 1997, the regular  tax  expense
exceeded the AMT expense, resulting in a utilization of  AMT
credits  of approximately $1,343.  The remaining balance  of
AMT credit carryforwards is $894.

11.  Litigation and Contingencies

ValuJet Related

On May 11, 1996, ValuJet Flight 592 from Miami, carrying 110
passengers  and  crew  crashed into the Florida  Everglades.
Prior to take-off, an employee of SabreTech's Miami facility
returned  to  ValuJet  various company materials,  including
five  boxes containing oxygen generators.  The ValuJet  ramp
agent, after consultation with ValuJet's flight crew, loaded
the  boxes into the cargo bay of Flight 592.  On August  19,
1997,   the  National  Transportation  Safety  Board  (NTSB)
conducted its public meeting and issued an Abstract of Final
Report  on  ValuJet Flight 592 and determined  the  probable
causes of the accident to be (1) the failure of SabreTech to
properly  prepare,  package, identify and  track  unexpended
oxygen  generators  before presenting them  to  ValuJet  for
carriage, (2) the failure of ValuJet to properly oversee its
contract  maintenance  program  to  ensure  compliance  with
maintenance,  maintenance training and  hazardous  materials
requirements  and practices and (3) failure of  the  Federal
Aviation Administration (FAA) to require smoke detection and
fire suspression systems in Class D cargo compartments.  The
NTSB also found that other acts and omissions by ValuJet and
FAA contributed to the accident.

The  FAA  is  also  conducting  an  investigation  into  the
circumstances surrounding the ValuJet crash and  has  sought
information from SabreTech and various of its employees  and
contract  workers  in  connection therewith.   In  addition,
SabreTech  is  one  of several subjects of an  investigation
being conducted by a federal grand jury in conjunction  with
the  United  States  Attorney for the Southern  District  of
Florida.  The Company has cooperated fully throughout  these
investigations and is continuing to do so.

SabreTech,  ValuJet and others have been named as defendants
in  numerous wrongful death actions that have been filed  by
families of victims.  Additional wrongful death actions  are
expected  to  be  filed.   The  Company's  legal  costs   of
defending against these civil actions and any possible claim
settlements are funded by the Company's insurance  policies.
Management believes coverage is adequate to provide for such
legal actions.

SabreTech has filed a Complaint for Declaratory Judgment and
Other Relief against ValuJet in the U.S. District Court  for
the  Southern District of Florida.  Among other things, that
suit seeks indemnification for damages incurred by SabreTech
in  connection  with  the accident.  ValuJet  has  filed  an
Answer  and  Conditional Counterclaim in  the  case  seeking
various  damages.   The Company's legal costs  in  defending
against   the  counterclaim  are  funded  by  the  Company's
insurance  policies.  Management believes that  the  Company
will  be  able  to  successfully  defend  against  ValuJet's
counterclaim.

Costs   associated  with  this  accident,  such   as   media
relations, incremental professional services, legal fees and
other  costs related to the various investigations and other
lawsuits,  of  approximately $5.7 million were  incurred  in
fiscal  year 1997. The ultimate outcome of the legal actions
related  to the ValuJet Flight 592 crash and the  length  of
time  necessary to resolve all the outstanding issues cannot
be  determined  at  this time.  The Company  does  not  know
whether  the  continuing effects of the  investigations  and
related  lawsuits will have a material adverse  effect  upon
the  results  of  operations or financial condition  of  the
Company.

Environmental

The Company has been subject to government inquiry regarding
alleged  environmental wrongdoing that may have occurred  at
the  Perryville  facility.  Several requests  for  documents
concerning  this  matter have been received  since  January,
1994,  most recently July, 1997.  All requests for documents
have been complied with or are in the process of resolution.
In  addition,  various  current and  former  employees  have
received subpoenas or notice letters identifying each  as  a
witness,  subject or target.  The Company  believes  it  has
meritorious defenses to allegations of wrongdoing,  if  any,
that may result from the investigation.

Other

In  addition to the litigation discussed above, the  Company
is  subject to other legal proceedings and claims arising in
the ordinary course of its business.  Although there can  be
no  assurance  as to the outcome of litigation,  it  is  the
opinion  of  management  (based upon  the  advice  of  legal
counsel) that all such actions or proceedings are covered by
insurance or will be resolved without material effect on the
Company's financial position or results of operations.


                         SIGNATURES

Pursuant  to the requirements of the Securities Exchange  Act
of  1934,  the registrant has duly caused this Report  to  be
signed  on  its  behalf  by the undersigned,  thereunto  duly
authorized, as of September 26, 1997.

                         SABRELINER CORPORATION


                         By: /s/ F. Holmes Lamoreux
                             F. Holmes Lamoreux
                             Chairman   of  the   Board   of
                             Directors, President  and  Chief
                             Executive Officer

Pursuant  to the requirements of the Securities Exchange  Act
of  1934,  this Report has been signed below by the following
persons in the capacities and on the dates indicated.

     Signature             Title               Date
                                           
/s/  F. Holmes Lamoreux  Chairman of the       September  26, 1997
                         Board of Directors,  
F. Holmes Lamoreux       President and Chief
                         Executive Officer
                                            
/s/ Jerry L. Leath       Executive Vice        September  26, 1997
Jerry L. Leath           President and        
                         Chief Operating
                         Officer
                                           
/s/ Rodney E. Olson      Senior Vice           September  26, 1997
Rodney E. Olson          President, Finance   
                         and Corporate
                         Development and
                         Chief Financial
                         Officer
                         (principal
                         financial and
                         accounting officer)
                                           
/s/ Susan S. Aselage     Vice President,       September  26, 1997
                         Secretary and  
Susan S. Aselage         Assistant
                         Treasurer,  and
                         Director
                                           
/s/ Arthur H. Fredston    Director              September 26, 1997
Arthur H. Fredston
                                           
/s/ Mary B. Harmon       Director               September  26, 1997
Mary B. Harmon                                                   

                  SEQUENTIAL EXHIBIT INDEX
                              
The following exhibits are filed herewith:

Exhibit Number                  Description

        4(5)    Amended   and   Restated   Financing
                Agreement  dated  as of September  25,  1997
                among  The Lenders From Time to Time Parties
                to  this  Agreement, Star  Bank,  N.A.,  and
                Sabreliner  Corporation, Midcoast  Aviation,
                Inc.,     Midcoast-Little    Rock,     Inc.,
                SabreTech,  Inc., Dimension  Aviation,  Inc.
                and Turbotech Repairs, Inc.

     10(3)      Modification  Services  Agreement
                Between  McDonnell Douglas  Corporation  and
                Dimension   Aviation,   Inc.   to    perform
                modifications  on  certain  DC-10   aircraft
                awarded to Sabreliner on February 14, 1997.

      10(4)     Modification  Services  Agreement
                Between  McDonnell Douglas  Corporation  and
                Dimension   Aviation,   Inc.   to    perform
                modifications   on   certain   MDC   Tri-Jet
                aircraft  awarded to Sabreliner on  February
                14, 1997.

       21       Subsidiaries of Registrant


                              
                         EXHIBIT 21


                   Sabreliner Corporation
                              
                          Form 10-K
                              
           For the Fiscal Year Ended June 30, 1997
                              
                              
               SUBSIDIARIES OF THE REGISTRANT


    Midcoast Aviation, Inc., incorporated under the laws of
    Missouri.

    SabreTech, Inc., a Delaware corporation.

    Turbotech Repairs, Inc., a California corporation.

    Dimension Aviation, Inc., a Delaware Corporation