<PAGE>   1
===============================================================================







                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             ----------------------

                                    FORM 10-Q




             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                     FOR THE PERIOD ENDED SEPTEMBER 30, 2000

                             Commission File 0-20889



                                  AVTEAM, INC.
             (Exact name of Registrant as specified in its charter)

                FLORIDA                             65-0313187
     (State or other jurisdiction of              (IRS Employer
       incorporation or organization)           Identification No.)

            3230 Executive Way                        33025
             Miramar, Florida                      (Zip Code)
 (Address of principal executive offices)


       Registrant's telephone number, including area code: (954) 431-2359

         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 for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No
                                             ---    ---
       Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

       As of November 13, 2000, 11,439,862 shares of Class A Common Stock, par
value $.01 per share, of the Registrant were outstanding and 439,644 shares of
Class B Common Stock, par value $.01 per share, of the Registrant were
outstanding.


================================================================================










<PAGE>   2


                                  AVTEAM, INC.

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                             PAGE
                                                                                                             ----
<S>       <C>                                                                                                <C>
PART I -  FINANCIAL INFORMATION

Item 1.   Condensed Consolidated Financial Statements

          Condensed Consolidated Balance Sheets as of September 30, 2000 (unaudited) and
          December 31, 1999.................................................................................   1

          Condensed Consolidated Statements of Operations for the Three Months and Nine Months
          Ended September 30, 2000 and 1999 (unaudited).....................................................   2

          Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
          September 30, 2000 and 1999 (unaudited)...........................................................   3

          Notes to Condensed Consolidated Financial Statements..............................................   4

Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations...........    10

PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K..................................................................  16

SIGNATURES .................................................................................................  17

</TABLE>







                                        i

<PAGE>   3


                          AVTEAM, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS EXCEPT SHARE DATA)

PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements.
<TABLE>
<CAPTION>
                                                                                             SEPTEMBER 30,         DECEMBER 31,
                                                                                                 2000                  1999
                                                                                           ------------------    -----------------
                                                             ASSETS
                                                                                              (Unaudited)
<S>                                                                                              <C>                 <C>
Current assets:
       Cash and cash equivalents....................................................             $      960          $       382
       Trade accounts receivable, net...............................................                 19,425               21,891
       Inventory....................................................................                 79,423               79,746
       Prepaid expenses and other current assets....................................                  2,581                1,375
       Deposits.....................................................................                    208                  495
       Deferred tax asset...........................................................                  7,156                3,666
                                                                                           ------------------    -----------------

Total current assets................................................................                109,753              107,555

Revenue producing equipment, at cost................................................                  9,467               12,074
       Accumulated depreciation.....................................................                 (1,275)              (1,228)
                                                                                            -----------------    -----------------
                                                                                                      8,192               10,846
Property and equipment, at cost.....................................................                  8,471                6,987
       Accumulated depreciation.....................................................                 (3,349)              (2,404)
                                                                                            -----------------    -----------------
                                                                                                      5,122                4,583
Goodwill, net.......................................................................                 24,985               25,651
Other assets........................................................................                  1,000                1,057
                                                                                            -----------------    -----------------
         Total assets...............................................................            $   149,052           $  149,692
                                                                                            =================    =================

                                              LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
       Accounts payable.............................................................            $    14,107           $   13,917
       Accrued expenses.............................................................                  2,886                2,247
       Customer deposits............................................................                    645                1,398
       Notes payable to bank........................................................                 66,941               62,990
       Current portion of notes payable-lease financing.............................                    375                  350
       Current portion of capital lease obligations.................................                    106                  119
                                                                                            -----------------    -----------------

Total current liabilities...........................................................                 85,060               81,021
                                                                                            -----------------    -----------------
Capital lease obligations, net of current portion...................................                     54                  123
                                                                                            -----------------    -----------------
Notes payable - lease financing, net of current portion.............................                  2,685                2,969
                                                                                            -----------------    -----------------
Deferred income taxes...............................................................                  2,952                1,985
                                                                                            -----------------    -----------------
Commitments and contingencies
Shareholders' equity:
       Preferred stock, $.01 par value, 20,000,000 shares authorized, no shares
             issued or outstanding .................................................                      -                    -
       Class A Common Stock, $.01 par value, 77,000,000 shares authorized,
             11,000,218 and 10,996,176 shares issued and outstanding in 2000 and
             1999, respectively.....................................................                    110                  110
       Class B Common Stock, $.01 par value, 3,000,000 shares authorized, 439,644
             shares issued and outstanding..........................................                      4                    4
       Additional paid-in capital...................................................                 49,104               49,080
       Retained earnings............................................................                  9,083               14,400
                                                                                            -----------------    -----------------

            Total shareholders' equity..............................................                 58,301               63,594
                                                                                            -----------------    -----------------

            Total liabilities and shareholders' equity..............................            $   149,052           $  149,692
                                                                                            =================    =================
</TABLE>

            See notes to condensed consolidated financial statements.



                                        1

<PAGE>   4


                          AVTEAM, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        (IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                         THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                           SEPTEMBER 30,                     SEPTEMBER 30,
                                                                   -------------------------------   -------------------------------
                                                                        2000             1999            2000             1999
                                                                        ----             ----            ----             ----
                                                                             (Unaudited)                      (Unaudited)
<S>                                                                    <C>               <C>             <C>              <C>
Net sales .....................................................        $ 14,237          $ 30,835        $ 64,277         $ 95,615
Cost of sales..................................................          11,804            21,655          52,413           68,507
                                                                   --------------    -------------   --------------   --------------

Gross profit...................................................           2,433             9,180          11,864           27,108
Operating expenses.............................................           4,671             4,358          14,456           12,586
                                                                   --------------    -------------   --------------   --------------

(Loss) income from operations..................................          (2,238)            4,822          (2,592)          14,522
Interest expense, net..........................................           1,813             1,300           5,116            4,226
                                                                   --------------    -------------   --------------   --------------

(Loss) income before provision (credit) for income taxes.......          (4,051)            3,522          (7,708)          10,296

Provision (credit) for income taxes:
         Current...............................................             130               843             132            2,978
         Deferred..............................................          (1,218)              434          (2,523)             796
                                                                   --------------    -------------   --------------   --------------
                                                                         (1,088)            1,277          (2,391)           3,774
                                                                   --------------    -------------   --------------   --------------

Net (loss) income..............................................        $ (2,963)         $  2,245        $ (5,317)        $  6,522
                                                                   ==============    =============   ==============   ==============

Net (loss) income per common share - basic.....................        $  (0.26)         $   0.20        $  (0.46)         $  0.57
                                                                   ==============    =============   ==============   ==============

Weighted average number of common shares outstanding - basic...      11,439,862        11,446,452       11,438,928       11,452,373
                                                                   ==============    =============   ==============   ==============

Net (loss) income per common equivalent share - diluted........        $  (0.26)         $   0.20         $  (0.46)        $   0.57
                                                                   ==============    =============   ==============   ==============

Weighted average number of common equivalent shares
outstanding - diluted..........................................      11,439,862        11,509,730       11,438,928       11,498,727
                                                                   ==============    =============   ==============   ==============
</TABLE>

            See notes to condensed consolidated financial statements.





                                        2

<PAGE>   5


                          AVTEAM, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                                   NINE MONTHS ENDED
                                                                                                     SEPTEMBER 30,
                                                                                         --------------------------------------
                                                                                                2000               1999
                                                                                                ----               ----
                                                                                                         (Unaudited)
<S>                                                                                        <C>              <C>
OPERATING ACTIVITIES
Net (loss) income................................................................             $ (5,317)        $  6,522
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
          Depreciation and amortization..........................................                2,288            2,414
          Bad debt expense.......................................................                   58              172
          Deferred tax (credit) expense..........................................               (2,523)             796
          Changes in operating assets and liabilities:
                 Trade accounts receivable.......................................                2,408          (12,691)
                 Inventory.......................................................                5,590            7,234
                 Prepaid expenses and deposits...................................                 (919)            (240)
                 Other assets....................................................                   57             (692)
                 Accounts payable................................................                  190             (691)
                 Accrued expenses/customer deposits..............................                 (114)             660
                                                                                               --------        ---------

                          Net cash provided by operating activities..............                1,718            3,484
                                                                                               --------        ---------

INVESTING ACTIVITIES
Purchases of revenue producing equipment.........................................               (3,290)          (6,396)
Purchases of property and equipment..............................................               (1,484)            (987)
Net proceeds from sale of revenue producing equipment............................                    -            1,143
Other............................................................................                    -               56
                                                                                               --------        ---------
                          Net cash used in investing activities..................               (4,774)          (6,184)
                                                                                               --------        ---------
FINANCING ACTIVITIES
Payments on capital leases.......................................................                  (82)            (102)
Proceeds from exercise of stock options..........................................                   24               --
Proceeds from capital leases.....................................................                    -              193
Net payments on notes payable....................................................                 (259)            (207)
Net proceeds from notes payable to bank..........................................                3,951            2,550
                                                                                               --------        ---------
                         Net cash provided by financing activities...............                3,634            2,434
                                                                                               --------        ---------
                         Net increase in cash and cash equivalents...............                  578             (266)
                         Cash and cash equivalents at beginning of period........                  382            1,745
                                                                                               --------        ---------
                         Cash and cash equivalents at end of period..............              $   960          $ 1,479
                                                                                               ========        =========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid....................................................................              $ 4,241          $ 3,900
                                                                                               ========        =========

Income taxes paid................................................................              $   520          $ 3,214
                                                                                               ========        =========
Transfer to inventory from revenue producing equipment...........................              $ 5,267          $    97
                                                                                               ========        =========
</TABLE>

            See notes to condensed consolidated financial statements.

                                        3

<PAGE>   6


                          AVTEAM, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                               September 30, 2000

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10Q and all
of the requirements of Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
nine-month period ended September 30, 2000, are not necessarily indicative of
the results that may be expected for the year ending December 31, 2000. For
further information, refer to the financial statements and footnotes thereto
included in the Company's 1999 Annual Report on Form 10-K for the year ended
December 31, 1999.

         The Company has in the past and may in the future experience
substantial fluctuations in its results of operations as a result of seasonal
effects. Demand for aircraft engines, engine parts and airframe components
("Engines and Components") has historically been seasonal, with increased demand
during the summer months. This seasonality exists because aircraft engine
performance is directly related to ambient temperature (as temperatures rise it
is more difficult for aircraft engines to perform properly). As a result,
certain aircraft are removed from service during the summer months due to the
failure of those particular aircraft engines to comply with certain exhaust gas
temperature limitations. Aircraft engines of the same type and model can have
different performance capabilities. The summer months also include peak travel
periods during which aircraft utilization levels are high. In addition, the
timing of whole aircraft engine sales, at greater unit purchase prices than the
installed parts and components, may cause significant fluctuations in the
Company's quarterly results of operations. The Company has in the past and may
in the future experience substantial quarterly fluctuations in sales as a result
of these seasonal effects.

2.       BUSINESS

         AVTEAM, Inc. was incorporated in Florida in 1991 and is a global
supplier of aftermarket aircraft engines, engine parts and airframe components.
AVTEAM, Inc. supplies its products to other aftermarket suppliers, independent
repair facilities, aircraft operators and original equipment manufacturers.
Beginning in April 1997, AVTEAM, Inc., through its wholly-owned subsidiary,
AVTEAM Aviation Field Services, Inc. ("AAFS"), began providing certain on-wing
maintenance and repair and borescope services. On December 15, 1998, AVTEAM,
Inc., through its wholly-owned subsidiary, AVTEAM Engine Repair Corp. ("AERC"),
a Florida corporation, completed its acquisition (the "Acquisition") of
substantially all of the assets and the assumption of certain liabilities of M&M
Aircraft Services, Inc., a Florida corporation, an FAA licensed aircraft engine
maintenance, repair and overhaul facility. The accompanying consolidated
financial statements as of September 30, 2000 and December 31, 1999 and for the
nine months ended September 30, 2000 and 1999 include the accounts of AVTEAM,
Inc., AERC and AAFS, (collectively the "Company") after elimination of
intercompany accounts and transactions.

3.       SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

         The Company classifies as cash equivalents all highly liquid
investments with a maturity of three months or less at the time of purchase.

INVENTORY

         Inventory of aircraft engines is stated at the lower of specific cost
(including overhaul costs) or market. Initially, cost of sales of engine parts
from disassembled engines are recognized based on margins realized from recently
sold, similar groups of engine parts. Once the remaining parts have been fully
inspected and their condition has been determined, the cost of subsequent sales
of engine parts from that engine are determined using the relationship of the
remaining costs of that engine to estimated sales. Cost of sales for individual
parts purchased for resale are reflected based on the specific identification
method. Cost of sales of airframe components are recognized using margins based
on the relationship of cost to revenue estimates as determined by the Company
through the analysis of the market price of such airframe components.



                                        4

<PAGE>   7


                          AVTEAM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-- (CONTINUED)


         AERC's inventories are valued at the lower of cost or market, based on
the specific identification method and by the first-in, first-out method. Parts
received as a result of a customer exchange are valued at the lower of cost or
market based on the relationship of the historical cost of similar parts and
estimated sales price.

         Inventory consists of the following:
<TABLE>
<CAPTION>
                                                                               AS OF
                                                            -----------------------------------------------
              In Thousands                                  SEPTEMBER 30, 2000            DECEMBER 31, 1999
                                                            ------------------            -----------------
<S>                                                               <C>                          <C>
              Parts & Whole Engines & Aircraft                    $    73,856                  $    76,987
              Work in Process                                           5,377                        2,570
              Other                                                       190                          189
                                                            ------------------            -----------------
                                                                  $    79,423                  $    79,746
                                                            ==================           ==================
</TABLE>

REVENUE RECOGNITION

         Revenues from the sale of engine parts and airframe components are
recognized when shipped.

         Revenues from the sale of aircraft engines are recognized when title
and risk of ownership are transferred to the customer, which generally is upon
shipment or customer pick-up. In certain instances prior to shipment or customer
pick-up, certain customers request the Company to hold aircraft engines until
the customer determines the most economical means of taking possession. The
Company records revenues under such circumstances only if: (1) payment is
received or is receivable within 30 days; (2) title and risk of ownership is
transferred to the customer; (3) the customer's request that the transaction be
on a bill-and-hold basis is in writing; (4) there is a fixed schedule for
delivery of the engines that is within 30 days of the sale; (5) the Company does
not have any specific performance obligations; (6) the engines are segregated
from other engines and are not subject to being used to meet other customer's
needs and (7) the engines are ready for shipment.

         Revenues from engine overhaul and repair services are recognized at the
time of performance test acceptance of engines and/or completion of services.

WARRANTIES AND PRODUCT RETURNS

         The Company, other than for services performed by AERC, does not
provide service warranties in addition to those provided by overhaul facilities
and as a result does not record accruals for warranties. The Company has
established programs which, under specific conditions, enable its customers to
return inventory. The effect of these returns is estimated based on a percentage
of sales and historical experience and sales are recorded net of a provision for
estimated returns. AERC's warranty costs are accrued based on management's
estimates of such costs and historical sales percentages.

ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE

         The Company buys inventory from certain of its customers and
periodically offsets amounts owed to customers for inventory purchases against
the accounts receivable for sales to such customers. As of September 30, 2000
and December 31, 1999, accounts payable totaling approximately $2,693,000 and
$1,363,000, respectively, were offset against accounts receivable.

         The Company carries accounts receivable at the amount it deems to be
collectible. Accordingly, the Company provides allowances for accounts
receivable it estimates to be uncollectible based on management's best
estimates. Recoveries are recognized in the period in which they are received.





                                        5

<PAGE>   8


                          AVTEAM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


PROPERTY AND EQUIPMENT

         Property and equipment (including assets under capital leases) is
carried at cost and is depreciated using accelerated and straight-line methods
over the lesser of the lease terms, if applicable, or the estimated useful lives
of the assets. The lives used are as follows:
<TABLE>
<S>                                                                                             <C>
         Office furniture and equipment................................................            3-7 years
         Warehouse and transport equipment.............................................            5-7 years
         Leasehold improvements........................................................           3-10 years
</TABLE>

REVENUE PRODUCING EQUIPMENT

         Revenue producing equipment is comprised of engines and aircraft leased
to users on a short-term basis. Such engines and aircraft are carried at cost
and are depreciated using the straight-line method over periods between five and
ten years. Four of such engines are the subject of a sale/leaseback arrangement.
The proceeds under the arrangement are recorded as a financing obligation and
will be reduced by payments under the lease over its five-year term. The lease
agreement provides the Company with an option to terminate the lease and to
repurchase the engines at any time at varying rates based on the original sales
price.

LONG-LIVED ASSETS

         The Company accounts for long-lived assets pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", which
requires impairment losses to be recorded on long-lived assets used in
operations when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Management reviews long-lived assets
and the related intangible assets for impairment whenever events or changes in
circumstances indicate the assets may be impaired.

GOODWILL

         Goodwill represents the excess of the purchase price over the fair
value of assets acquired and is amortized on the straight-line basis over 30
years. The carrying value of goodwill is reviewed if facts and circumstances
suggest that it may be impaired. If this review indicates that goodwill will not
be recoverable, the carrying value will be adjusted accordingly and charged to
earnings. At September 30, 2000 and December 31, 1999, accumulated amortization
of goodwill was approximately $1,589,000 and $923,000, respectively.

CONCENTRATION OF CREDIT RISK

         Accounts receivable are primarily from domestic and foreign passenger
airlines, freight and package carriers, charter airlines, aircraft leasing
companies and service providers to such companies. The Company performs ongoing
evaluations of its trade accounts receivable customers, monitors its exposure
for credit losses and sales returns and does not require collateral.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

         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. Actual results could materially differ from those estimates.


                                        6

<PAGE>   9


                          AVTEAM, INC. AND SUBSIDIARIES


NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 133 was amended by SFAS No. 137 to be effective for
fiscal years beginning after June 15, 2000. The Company has not determined what
effect, if any, adopting SFAS No. 133 will have on its financial statements.

NET INCOME PER COMMON SHARE

         The following table sets forth the computation of basic and diluted net
(loss) income per share:
<TABLE>
<CAPTION>

                                                                   Three Months                          Nine Months
                                                                Ended September 30,                  Ended September 30,
                                                             2000               1999                2000               1999
                                                             ----               ----                ----               ----
                                                                   (Unaudited)                            (Unaudited)
<S>                                                       <C>                  <C>               <C>                 <C>
Numerator:
       Net (loss) income ........................         $(2,963,000)         $2,245,000        $(5,317,000)        $ 6,522,000
                                                        ===============    ===============     ===============    ===============

Denominator:
       Denominator for basic net (loss) income
       per share-weighted average shares.........          11,439,862          11,446,452         11,438,928          11,452,373
                                                        ---------------    ---------------     ---------------    ---------------

Effect of dilutive securities:
       Employee stock options....................                   -              63,278                  -              46,354
                                                        ---------------    ---------------     ---------------    ---------------
Dilutive potential common shares .....                              -              63,278                  -              46,354
                                                        ---------------    ---------------     ---------------    ---------------
Denominator for diluted earnings per share
- adjusted weighted - average shares and
assumed conversions..............................          11,439,862          11,509,730         11,438,928          11,498,727
                                                        ===============    ===============     ===============    ===============

Net (loss) income per common share -
basic............................................            $  (0.26)           $   0.20          $   (0.46)           $   0.57
                                                        ===============    ===============     ===============    ===============

Net (loss) income per common share -
diluted..........................................            $  (0.26)           $   0.20          $   (0.46)           $   0.57
                                                        ===============    ===============     ===============    ===============
</TABLE>

DEPOSITS AND CUSTOMER DEPOSITS

        The Company has entered into various contracts for the purchase and sale
of whole engines. Occasionally, these contracts require a substantial
down-payment to fix the consideration of such engines and to allow the time to
perform due diligence work. These deposits are refundable.

SEGMENT FINANCIAL DATA

       The Company operates in various segments of the aviation services
industry. The Company's operations have been aggregated primarily on the basis
of products or services into three reportable segments:

       AVTEAM sells whole engines, whole aircraft, engine parts and airframe
components. Also, AVTEAM leases whole engines and whole aircraft.


                                        7

<PAGE>   10
                          AVTEAM, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


       AVTEAM Aviation Field Services (AAFS) provides on-wing maintenance and
repairs including hush-kit installation and engine borescoping.

       AVTEAM Engine Repair Corp. (AERC) performs maintenance, repair and
overhaul services for certain aircraft engines and repairs engine components.

       The Company evaluates performance based on several factors, of which
income before provision for income taxes is the primary financial measure. The
following tables present the Company's operating segment information:

<TABLE>
<CAPTION>

                                      TOTAL REVENUES                                   TOTAL REVENUES
                             THREE MONTHS ENDED SEPTEMBER 30,                 NINE MONTHS ENDED SEPTEMBER 30,
                        ---------------------------------------------    ---------------------------------------------
   In Thousands                 2000                    1999                    2000                     1999
                                ----                    ----                    ----                     ----

<S>                             <C>                     <C>                     <C>                      <C>
   AVTEAM                       $    8,865              $   21,308              $   42,579               $   62,714
   AAFS                                538                   1,141                   2,756                    4,086
   AERC                              7,262                  13,007                  29,181                   38,828
   Eliminations                     (2,428)                 (4,621)                (10,239)                 (10,013)
                        ---------------------    --------------------    --------------------     --------------------
   Consolidated                 $   14,237              $   30,835              $   64,277               $   95,615
                        =====================    ====================    ====================     ====================
</TABLE>

<TABLE>
<CAPTION>
                              INCOME (LOSS) BEFORE PROVISION                   INCOME (LOSS) BEFORE PROVISION
                                 (CREDIT) FOR INCOME TAXES                       (CREDIT) FOR INCOME TAXES
                             THREE MONTHS ENDED SEPTEMBER 30,                 NINE MONTHS ENDED SEPTEMBER 30,
                       ----------------------------------------------   ----------------------------------------------
   In Thousands                 2000                   1999                      2000                    1999
                                ----                   ----                      ----                    ----

<S>                           <C>                      <C>                     <C>                       <C>
   AVTEAM (a)                 $    (3,238)             $    1,229              $    (7,088)              $    3,587
   AAFS                              (120)                     98                      187                      641
   AERC                              (920)                  2,598                      (87)                   7,153
   Eliminations                       227                    (403)                    (720)                  (1,085)
                        ---------------------   --------------------      --------------------    --------------------
   Consolidated               $    (4,051)             $    3,522              $    (7,708)              $   10,296
                        =====================   ====================      ====================    ====================
</TABLE>
[FN]

   (a)  Corporate overhead and interest expense are included in AVTEAM and are
        not allocated.

</FN>
<TABLE>
<CAPTION>
                                                               TOTAL ASSETS
                                               -------------------------------------------
   In Thousands                                SEPTEMBER 30, 2000        DECEMBER 31, 1999
                                               ------------------        -----------------

<S>                                                   <C>                      <C>
   AVTEAM                                             $   134,000              $   137,146
   AAFS                                                     1,253                    1,656
   AERC                                                    35,783                   29,905
   Eliminations                                           (21,984)                 (19,015)
                                              ----------------------     ------------------
   Consolidated                                       $   149,052              $   149,692
                                              ======================     ==================
</TABLE>

4.       NOTES PAYABLE TO BANK AND NOTES PAYABLE - LEASE FINANCING

         On April 30, 1998, the Company, as borrower, and AAFS, as guarantor,
entered into a new Credit Agreement (the "Credit Agreement") with a syndicate of
lenders ("the Lenders") led by Bank of America, N.A., as administrative agent
(the "Agent"), pursuant to which the Lenders agreed to make available to the
Company a revolving credit facility (the "Revolving Credit Facility") in the
maximum aggregate principal amount of up to $70.0 million. The Revolving Credit
Facility consists of (i) a working capital revolving loan facility (the "Working
Capital Revolving Loan Facility") in the aggregate principal amount of up to
$45.0 million and (ii) an acquisition revolving loan facility (the "Acquisition
Revolving Loan Facility") in the aggregate principal amount of up to $25.0
million. The Working Capital Revolving Loan Facility is being used by the
Company to finance working capital, capital expenditures and general corporate
purposes.





                                       8

<PAGE>   11
                          AVTEAM, INC. AND SUBSIDIARIES



         The Acquisition Revolving Loan Facility was used by the Company to
finance the acquisition of M&M Aircraft Services, Inc. Borrowings under the
Credit Agreement are secured by a senior security interest in all of the assets
of the Company. The Company may borrow, repay and re-borrow funds under the
Credit Agreement until April 30, 2001. Borrowings are subject to its
availability calculation based on the eligible borrowing base. The eligible
borrowing base includes certain receivables and inventories of the Company. The
Credit Agreement requires the Company to make certain mandatory prepayments of
principal and interest. The Credit Agreement contains certain restrictions,
including restrictions on (i) incurring debt, (ii) declaring or paying any
dividend or other distribution on account of any class of stock of the Company,
(iii) creating liens on the Company's properties or assets, (iv) entering into a
merger or other business combination or (v) a change in control (as defined in
the Credit Agreement). As of September 30, 2000, the Company had outstanding
loans aggregating $44.2 million under the Working Capital Revolving Loan
Facility and $22.8 million under the Acquisition Revolving Loan Facility. At
September 30, 2000, the Company had additional availability of $109,000 under
the Working Capital Revolving Loan Facility. The weighted average interest rate
under the Company's Credit Agreement was 10.43% at September 30, 2000. Beginning
on January 31, 2000 and every three months thereafter, the Company is required
to make payments of $750,000 in order to reduce the Acquisition Revolving Loan
Facility.

         At December 31, 1999 the Company was not in compliance with certain
financial covenants of the Credit Agreement. On May 25, 2000, the Lenders
informed the Company that it was in default under certain provisions of the
Credit Agreement. These provisions included "Delivery of Annual Financial
Statements for the Fiscal Year ended December 31, 1999," "Delivery of Quarterly
Financial Statements for Fiscal Quarter ended March 31, 2000," "Delivery of the
Borrowing Base Certificate as of January 31, 2000, February 29, 2000 and March
31, 2000" and certain provisions related to economic ratios. As a result of
these defaults, the Lenders informed the Company that beginning May 26, 2000,
the loans and all other obligations outstanding under the Credit Agreement would
be subject to the per annum rate of interest equal to the otherwise applicable
rate plus two (2) percent, while in default. In addition, on May 25, 2000, the
Bank advised that overdrafts would not be honored in the future. On June 7,
2000, the Company obtained waivers of the provisions referred to above and
entered into a second amendment to the Credit Facility (the "Second Amendment")
whereby events of default were waived and certain financial covenants under the
Credit Agreement were amended for the year-ended December 31, 1999 and
subsequent periods. The Second Amendment waives all financial covenants for the
periods ended December 31, 1999, March 31, 2000, and June 30, 2000 and increased
interest rates by 0.25%. The Second Amendment requires the Company to deliver to
the Lenders monthly consolidated balance sheets and consolidated statements of
operations, retained earnings, shareholders' equity and cash flows as well as
periodic reports detailing actual cash expenditures and cash flow projections.
The Second Amendment further gives the Agent the ability to determine, in its
reasonable discretion, which items may be considered "eligible receivables" and
"eligible inventory." In connection with the Second Amendment, the Lenders and
the Company entered in to a Lockbox Agreement whereby all of the Company's
proceeds received by its account debtors are placed in an account held by the
Agent for the benefit of the Lenders. These funds are used to repay the
Company's obligations under the Credit Agreement. Such repayments have the
effect of creating availability under the Working Capital Facility, subject to
satisfaction of all other relevant borrowing conditions. The Lenders charged the
Company approximately $500,000 in connection with the Second Amendment which is
being amortized over the remaining term of the Credit Facility.

         At September 30, 2000, the Company was again not in compliance with
certain financial covenants of the Credit Agreement. In early November, the
Lender entered into a Third Amendment to the Credit Facility (the "Third
Amendment") whereby (i) waivers were given for the financial covenants with
which the Company was not in compliance at September 30, 2000, (ii) all
LIBOR-based borrowings were converted to the base rate plus 2.0% effective
October 1, 2000; and (iii) cumulative minimum net sales requirements for the
three months of the fourth quarter of 2000 were established. In addition, the
Lenders required the retention of a financial advisor to assist the Company in
providing the Lenders with periodic financial information and required the
Company to provide the Lenders, on a weekly basis, certain sales and cash flow
information. The Lenders charged the Company approximately $200,000 in
connection with the Third Amendment which is being amortized over the remaining
term of the Credit Facility.

         The Company is diligently looking for alternatives to the Credit
Facility which expires on April 30, 2001. These alternatives include an equity
infusion, a strategic partnership, replacement financing or a combination of any
of the other alternatives. No assurances can be given as to the extent to which
or when the Company may be successful in its efforts. If the Company is not
successful in these efforts, it could lead to an adverse effect on its
operations and its ability to meet certain of its obligations as they become
due.


                                        9
<PAGE>   12
                          AVTEAM, INC. AND SUBSIDIARIES


                                     PART I

FINANCIAL INFORMATION

Item 2   Management's Discussion and Analysis of Financial Condition and Results
of Operations

OVERVIEW

         AVTEAM is a global supplier of aftermarket commercial aircraft engines,
engine parts and aircraft components ("Engines and Components") serving over 700
customers, including other aftermarket suppliers, independent repair facilities,
aircraft operators and original equipment manufacturers ("OEMs"). The Company
has historically focused on the Pratt & Whitney JT8D series of engines, which
are the most widely used jet aircraft engines in the world and power
approximately 28% of the world's commercial aircraft. In 1997, AVTEAM expanded
its product line to include the CFM56 series of engines manufactured by CFM
International and DC-9 airframe parts. The CFM56 series of engines had the
highest production volume of any engine series in 1998 and power nearly 40% of
all single-aisle, narrow-body aircraft ordered since 1987. In 1998, the Company
acquired its first wide-body DC-10 aircraft which was disassembled and is being
sold as airframe parts and whole CF6 engines. The Company works with its
worldwide network of industry contacts to identify and evaluate Engines and
Components and surplus aircraft for potential acquisition. Engines and
Components are either made available for immediate resale or repaired by
FAA-licensed repair facilities and then resold. Surplus aircraft are purchased
for eventual disassembly and sold as parts by the Company. The Company resells
Engines and Components to other aftermarket suppliers, independent repair
facilities, aircraft operators and OEMs.

         On December 15, 1998, the Company, through its wholly-owned subsidiary,
AVTEAM Engine Repair Corp. ("AERC") completed the acquisition of substantially
all of the assets and the assumption of certain liabilities of M&M Aircraft
Services, Inc. ("M&M"). The Company believes that M&M was one of the largest
privately held independent aircraft engine maintenance, repair and overhaul
("MRO") operations in the world. As a result of this acquisition, the Company
has begun to realize synergies between its Engines and Components business and
its engine MRO business, including the capacity to market on a more timely basis
engines and engine parts held for resale.

         Since its inception, the Company has substantially broadened its range
of products and services offered and taken consistent steps to ensure the
quality of its products and services. From $3.9 million in 1993, the Company's
net sales reached $129.8 million in 1999. From 1998 to 1999, the Company's net
sales grew 72.3%. In the declining market since 1999, the Company's net sales
have declined 32.8%. In April 2000, the Company received FAA certification for
its new CFM56-3 engine repair facility, which the Company believes will begin to
generate revenue in the first half of 2001. In October 2000, the Company was
also certified by the FAA to repair CFM56-2 engines in its new facility.

RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated certain items
contained in the Company's statements of operations expressed as a percentage of
net sales:
<TABLE>
<CAPTION>

                                                                       Three Months                 Nine Months
                                                                   Ended September 30,          Ended September 30,
                                                               --------------------------    --------------------------
                                                                   2000          1999           2000            1999
                                                                   ----          ----           ----            ----

<S>                                                                 <C>           <C>           <C>             <C>
        Net sales....................................               100%          100%          100%            100%
        Cost of sales................................                83            70            82              72
                                                                -----------    ----------    -----------     -----------
        Gross profit.................................                17            30            18              28
        Operating expenses...........................                33            14            22              13
                                                                -----------    ----------    -----------     -----------
        (Loss) income from operations................               (16)           16            (4)             15
        Interest expense, net........................                13             5             8               4
                                                                -----------    ----------    -----------     -----------
        (Loss) income before income taxes............               (29)           11           (12)             11
        Provision (credit) for income taxes..........                (8)            4            (4)              4
                                                                -----------    ----------    -----------     -----------
        Net (loss) income............................               (21%)           7%           (8%)             7%
                                                                ===========    ==========    ============    ===========
</TABLE>


                                       10


<PAGE>   13

                          AVTEAM, INC. AND SUBSIDIARIES

         Three Months and Nine Months Ended September 30, 2000 compared to Three
Months and Nine Months Ended September 30, 1999

         Net Sales. Net sales decreased 53.8% to $14.2 million for the third
quarter of 2000 from $30.8 million for the third quarter of 1999. For the first
nine months of 2000, net sales decreased 32.8% to $64.3 million from $95.6
million for the first nine months of 1999. Each business segment experienced a
decline in its revenue for the three months ended and for the nine months ended
September 30, 2000 versus the same periods ended September 30, 1999. The revenue
decline reflects the continuing soft and deteriorating industry market
conditions. Management is unable to predict the period over which these severe
market conditions may continue. Additionally, at the end of the third quarter of
2000, certain engines were repaired but did not meet the performance standards
established to be labeled as "serviceable". The revenue for these engine repairs
are expected to be reported in the three months ended December 31, 2000.

         Gross Profit. Gross profit decreased 73.5% to $2.4 million for the
third quarter of 2000 from $9.2 million for the third quarter of 1999. For the
first nine months of 2000, gross profit decreased 56.2% to $11.9 million from
$27.1 million for the first nine months of 1999. Gross margin decreased to 17.1%
for the third quarter of 2000 from 29.8% for the third quarter of 1999. Gross
margin decreased to 18.5% for the first nine months of 2000 from 28.4% for the
first nine months of 1999. The changes in gross margin were caused by the
current market decline.

         Operating Expenses. Operating expenses increased 7.2% to $4.7 million
for the third quarter of 2000 from $4.4 million for the third quarter of 1999.
For the first nine months of 2000, operating expenses increased 14.9% to $14.5
million from $12.6 million for the first nine months of 1999. As a percentage of
net sales, such expense increased to 32.8% in the third quarter of 2000 from
14.1% for the third quarter of 1999. As a percentage of net sales such expense
increased to 22.5% in the first nine months of 2000 from 13.2% in the first nine
months of 1999. The expense increase is primarily attributable to start-up
expenses related to the CFM56 repair operations at AERC, increased professional
fees related to the completion of the 1999 year-end audit and the amortization
of fees associated with the amendments to the Credit Facility.

         Net Interest Expense. Net interest expense increased 39.5% to $1.8
million for the third quarter of 2000 from $1.3 million for the third quarter of
1999. For the first nine months of 2000, net interest expense increased 21.1% to
$5.1 million from $4.2 million for the first nine months of 1999. For the third
quarter of 2000, net interest expense as a percentage of net sales increased to
12.7% from 4.2% of net sales for the third quarter of 1999. For the first nine
months of 2000, net interest expense as a percentage of net sales increased to
8.0% from 4.4% of net sales for the first nine months of 1999. The increased
interest expense is a result of higher borrowing levels to finance the start-up
of the Company's CFM56 repair operations and for general working capital
purposes and as a result of rising interest rates.

LIQUIDITY AND CAPITAL RESOURCES

         Historically, the Company's primary sources of liquidity have been from
financing activities and cash flow generated by operations. Operating activities
of the Company provided approximately $334,000 and $1.7 million in cash during
the three months and nine months ended September 30, 2000, respectively. The
increase during the first nine months of 2000 primarily resulted from the $5.6
million decrease in inventory purchased and the $2.4 million decrease in
accounts receivable offset by the net loss net of non-cash expenses and benefits
of approximately $5.5 million. Net cash provided by financing activities,
derived primarily from borrowing on the credit agreement mentioned below, was
$4.0 million during the first nine months of 2000.

         The Company is diligently looking for alternatives to the Credit
Facility which expires on April 30, 2001. These alternatives include an equity
infusion, a strategic partnership, replacement financing or a combination of any
of the other alternatives. No assurances can be given as to the extent to which
or when the Company may be successful in its efforts. If the Company is not
successful in these efforts, it could lead to an adverse effect on its
operations and its ability to meet certain of its obligations as they become
due.

THE COMPANY'S CREDIT AGREEMENT

         On May 25, 2000, the Lenders informed the Company that it was in
default under certain provisions of the Credit Agreement (the "Credit
Agreement"). These provisions included "Delivery of Annual Financial Statements
for the Fiscal Year ended December 31, 1999," "Delivery of Quarterly Financial
Statements for Fiscal Quarter ended March 31, 2000," "Delivery of the Borrowing
Base Certificate as of January 31, 2000, February 29, 2000 and March 31, 2000"
and certain provisions related to economic ratios. As a result of these
defaults, the Lenders informed the Company that beginning May 26, 2000, the
loans and all other obligations outstanding under the Credit Agreement would be
subject to the per annum rate of interest equal to the otherwise applicable rate
plus two (2) percent while in default. In addition, on May 25, 2000, the Bank
advised that overdrafts would not be honored in the future.


                                       11


<PAGE>   14
                          AVTEAM, INC. AND SUBSIDIARIES


         On June 7, 2000, the Company obtained waivers of certain covenants and
entered into a second amendment to the Credit Facility whereby events of default
were waived and certain financial covenants under the Credit Agreement were
amended for the year-ended December 31, 1999 and subsequent periods. The Second
Amendment waived all financial covenants for the periods ended December 31,
1999, March 31, 2000, and June 30, 2000 and increased interest rates by 0.25%.
The Second Amendment requires the Company to deliver to the Lenders monthly
consolidated balance sheets and consolidated statements of income, retained
earnings, shareholders' equity and cash flows as well as periodic reports
detailing actual cash expenditures and cash flow projections. The Second
Amendment further gives the Agent the ability to determine, in its reasonable
discretion, which items may be considered "eligible receivables" and "eligible
inventory." In connection with the Second Amendment, the Lenders and the Company
entered in to a Lockbox Agreement whereby all of the Company's proceeds received
by its account debtors are placed in an account held by the Agent for the
benefit of the Lenders. These funds are used to repay the Company's obligations
under the Credit Agreement. Such repayments have the effect of creating
availability under the Working Capital Facility, subject to satisfaction of all
other relevant borrowing conditions.

         At September 30, 2000, the Company was again not in compliance with
certain financial covenants of the Credit Agreement. In early November, the
Lender entered into a Third Amendment to the Credit Facility (the "Third
Amendment") whereby (i) waivers were given for the financial covenants with
which the Company was not in compliance at September 30, 2000, (ii) all
LIBOR-based borrowings were converted to the base rate plus 2.0% effective
October 1, 2000; and (iii) cumulative minimum net sales requirements for the
three months of the fourth quarter of 2000 were established. In addition, the
Lenders required the retention of a financial advisor to assist the Company in
providing the Lenders with periodic financial information and required the
Company to provide the Lenders, on weekly basis, certain sales and cash flow
information. The Lenders charged the Company approximately $200,000 in
connection with the Third Amendment which is being amortized over the remaining
term of the Credit Facility.

SEASONALITY

         Demand for Engines and Components has historically been seasonal, with
increased demand during the summer months. This seasonality exists because
aircraft engine performance is directly related to ambient temperature (as
temperatures rise it is more difficult for aircraft engines to perform
properly). As a result, certain aircraft engines are removed from service during
the summer months due to the failure of those particular aircraft engines to
comply with exhaust gas temperature limitations. Aircraft engines of the same
type and model can have different performance capabilities. The summer months
also include peak travel periods during which aircraft utilization levels are
high. In addition, the timing of whole aircraft engines sold, which have a
substantially greater purchase price than the installed parts and components,
may cause significant fluctuations in the Company's quarterly operating results.
The Company has in the past and may in the future experience substantial
quarterly fluctuations in sales as a result of these seasonal effects.

RISKS RELATING TO FORWARD-LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q of AVTEAM, Inc. ("AVTEAM" or the
"Company") contains certain "forward-looking statements" within the meaning of
the federal securities laws and are not guarantees of future performance.
"Forward looking statements" include statements that express, or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words or
phrases, such as "will or should result," "are expected to," "will or should
continue," "is anticipated," "plans," "intends," "estimated," "projection" and
"outlook"). For a variety of reasons, the Company's actual results could differ
materially from any forward-looking statements made in this report. Among the
factors that could cause actual results to differ from predicted or expected
results are the following: the effects of increased indebtedness, interest rates
and bank fees, airline industry profitability, reduced availability of funds for
operations and expansion, the inability of the Company to retain highly skilled
employees, the loss of a major customer, the failure to attract in a timely
manner sufficient customers for its CFM56-3 and CFM56-2 repair services,
difficulties in executing the Company's plans to further expand CFM56
capability, the decline in overall usage of the JT8D aircraft engine, increased
fuel prices and interest charges, a decline in the demand for aftermarket
aircraft engines, engine parts and airframe components, seasonal fluctuations,
rescheduling or cancellation of customer orders, which could materially
adversely affect the Company's revenues; the possibility that regulatory changes
and unforeseen events could impact the Company's ability to provide products and
services to its customers; existing competition from national and regional
competitors, which could result in pricing and other pressures on profitability
and




                                       12

<PAGE>   15
                          AVTEAM, INC. AND SUBSIDIARIES


market share; and other risks, investor considerations and uncertainties set
forth in the Company's filings with the Securities and Exchange Commission ("the
Commission"), the Company's Form 10-K for the year-ended December 31, 1999, and
this quarterly report. Consequently, the reader is cautioned to consider all
forward-looking statements in light of the risks to which they are subject.

INVESTOR CONSIDERATIONS

LIQUIDITY

         The Company may experience liquidity difficulties. The Company has a
Credit Agreement with a syndicate of lenders led by Bank of America, N.A., as
administrative agent (the "Lenders"), pursuant to which the Lenders have made
available to the Company a revolving credit facility in the maximum aggregate
amount of up to $70 million. The Credit Facility consists of (i) a working
capital revolving loan facility (the "Working Capital Facility") in the
aggregate principal amount of up to $45 million and (ii) an acquisition
revolving loan facility (the "Acquisition Facility") in the aggregate principal
amount of up to $25 million. At September 30, 2000, the Company had additional
availability of $109,000 under the Working Capital Revolving Loan Facility. As
of November 10, 2000, the Company had $2.6 million of available borrowing
capacity under the Working Capital Facility. Under the Third Amendment to the
credit facility effective as of September 30, 2000, the Company must meet
certain financial covenants including newly established net sales requirements.
Considering the existing market conditions, there is no assurance that the
Company will be able to meet such requirements. See Management's Discussion and
Analysis - "Liquidity and Capital Resources" and "The Company's Credit
Agreement" and the Notes to Condensed Consolidated Financial Statements.

         The Company is diligently looking for alternatives to the Credit
Facility which expires on April 30, 2001. These alternatives include an equity
infusion, a strategic partnership, replacement financing or a combination of any
of the other alternatives. If the Company is not successful in these efforts, it
could lead to an adverse effect on its operations and its ability to meet
certain of its obligations as they become due. No assurances can be given as to
the extent to which or when the Company may be successful in its efforts.

DEPENDENCE ON THE JT8D ENGINE

         The Company's business, financial condition and results of operations
are dependent upon the aftermarket for JT8D Engines and Components. Aircraft
utilizing JT8D engines have been in service since the early 1960s. Aircraft
utilizing older engines are generally more expensive to maintain and to operate,
due primarily to higher fuel usage. Noise and other regulations in many
countries also significantly increase the cost of operating aircraft utilizing
older engines. Specifically, most JT8D engines are required to be hush-kitted or
removed from service in the United States and the European Union by 1999 and
2002, respectively. A decline in passenger confidence in older aircraft could
also lead to a decline in the aftermarket for JT8D Engines and Components. Any
of these factors could cause the unanticipated retirement of aircraft utilizing
JT8D engines. Any significant decline in the aftermarket for JT8D engines would
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company has, however, recently expanded its
product line to include the CFM56 and CF6 series engines and parts and other
series and types of engines and airframe parts but has limited experience with
respect to the purchase and sale of such engines and parts. There can be no
assurance that the Company will have the same level of success with CFM56, CF6
and other series and types of engines and airframe parts that it has had with
JT8D Engines and Components.

IMPACT OF GOVERNMENT REGULATION

       The aviation industry is highly regulated by the Federal Aviation
Administration (the "FAA") and similar regulatory agencies of other countries.
Before Engines and Components are installed on an aircraft, they must meet
certain standards as to their condition and have appropriate documentation, and
aircraft must also meet standards with respect to noise, emissions and
maintenance. While the Company's aftermarket sale operations are not currently
regulated directly by the FAA, AERC, the Company's repair and overhaul facility,
and the aircraft operations that ultimately utilize the Company's products are
subject to extensive regulation. Through AVTEAM Aviation Field Services, Inc., a
subsidiary of the Company ("AAFS"), the Company provides services that also
require AAFS to have an FAA certification.

         In addition, the Company is currently subject to a voluntary FAA
accreditation program which establishes quality standards applicable to
aftermarket suppliers, such as the Company, and designates FAA-approved
organizations to perform quality assurance audits for initial and continued
accreditation of such aftermarket suppliers.



                                       13

<PAGE>   16


                          AVTEAM, INC. AND SUBSIDIARIES

         Standards established by the FAA and other regulatory agencies relating
to the operation and maintenance of aircraft have significant effects on
aircraft operators and the composition of their fleets. Noise and emission
regulations, and additional maintenance requirements for older aircraft, may
increase the cost of operating aircraft utilizing JT8D engines, which could lead
to a decline in the demand for the products and services provided by the
Company.

         The inability of the Company to supply its customers with Engines and
Components on a timely basis, or any occurrence of the Company providing
products subsequently determined unsafe, may adversely affect the Company's
relationships with its customers and have a material adverse effect on its
business, financial condition and results of operations. There can also be no
assurance that new and more stringent government regulations will not be adopted
in the future or that any such new regulations, if enacted, would not have a
direct or indirect adverse impact on the Company.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS; DEPENDENCE ON AVIATION INDUSTRY

           The Company expects to continue to experience significant
fluctuations in its operating results in the future, both on an annual and a
quarterly basis, caused by various factors, many of which are beyond the control
of the Company. These factors include: general economic conditions; specific
economic conditions affecting the commercial aviation industry; higher fuel
costs; labor disputes or strikes; accelerated changes in engine or aircraft
design and usage; the availability, timing and price of Engines and Components;
the size and timing of customer sales; the mix of products sold and services
provided by the Company; and unanticipated engine lease terminations or a
default by a lessee, or parts or repair service customer.

         Demand for aftermarket Engines and Components has historically been
seasonal, with increased demand during the summer months. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Seasonality." In addition, the commercial aviation industry is cyclical and has
been subject to periodic fluctuations in its operating results. The aviation
industry has recently experienced a significant and protracted downturn or a
"soft market". During the current downturn, there has been materially reduced
overall demand for Engines and Components, lower selling prices for the
Company's products, and increased credit risk associated with doing business
with industry participants. An increase in the availability of Engines and
Components coupled with limited demand may also cause a downturn in the
Company's operating results. Factors such as fuel prices have in the past and
are expected to continue in the future to affect the commercial aviation
industry and the aftermarket for older model Engines and Components. Increases
in fuel prices and interest costs have caused airlines to delay discretionary
purchases of maintenance services and related products. In addition, older,
typically less fuel-efficient aircraft (into which the Company's products are
most often placed) have been and may continue in the future to be removed from
service at an increased rate. Each of these factors, individually or in the
aggregate, have also had the effect of depressing airline margins.

         The Company obtains its supply of Engines and Components principally by
purchasing surplus aircraft and parts inventory. There can be no assurance that
Engines and Components required by the Company's customers will be available on
acceptable terms or at the times required by the Company or that current
economic and other factors which affect the aviation industry will not continue
to have a material adverse effect on the Company. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Results of
Operations".

RISKS ASSOCIATED WITH AIRCRAFT ENGINE LEASES

       The Company leases Pratt & Whitney JT8D engines under operating leases to
a limited number of customers. The success of an operating lease depends on the
re-lease of engines on favorable terms on a timely basis and the ability to sell
engines at favorable prices at the end of the lease term. In addition, the
success of an operating lease depends in part upon having aircraft engines
returned to the Company in marketable condition as required by the lease for
such engines. Numerous factors, many of which are beyond the control of the
Company, may have an impact on the Company's ability to re-lease or sell Engines
and Components. These factors include general market conditions, regulatory
changes (particularly those imposing environmental, maintenance and other
requirements on the operation of aircraft engines), changes in the supply or
cost of aircraft engines and technological developments. Consequently, there can
be no assurance that the Company's estimated residual value for aircraft engines
will be realized. If the Company is unable to re-lease or sell its engines on
favorable terms on a timely basis upon expiration of the related lease, its
business, financial condition and results of operations may be adversely
affected. All engines currently leased by the Company are being leased, directly
or indirectly, to domestic passenger airlines which may be affected by numerous
factors, including the factors identified above and factors having an impact on
the airline industry generally. In the event that a lessee defaults in the
performance of its obligations, the Company may be unable to enforce its
remedies under a lease. The Company's inability to collect lease payments when
due or to repossess engines in the event of a default by a lessee could effect
our profitability and our ability to sell leases as well as have an adverse
effect on the Company's business, financial condition and results of operations.



                                       14
<PAGE>   17
                          AVTEAM, INC. AND SUBSIDIARIES

MANAGEMENT OF GROWTH AND INDUSTRY CONDITIONS

         The rapid growth experienced by the Company through 1999 and the severe
decline in industry conditions since that date have placed, and are expected to
continue to place, material demands on the Company's administrative, operational
and financial resources. The Company broadened its product line and services,
including entry into the repair and overhaul maintenance business through an
acquisition completed in 1999. This expansion could present further challenges
to and demands upon the Company's resources. To date, the Company has not begun
generating revenue from CFM56-3 and CFM56-2 engine repairs. It is therefore
difficult to predict how these operations will be integrated by the Company and
accepted by the market, especially during the current adverse market conditions.
There can be no assurance that the Company will be able to anticipate business
demand accurately, attract and retain the personnel required, manage or finance
such growth successfully, and the failure to do so could have a material adverse
effect on the Company.

DEPENDENCE ON KEY PERSONNEL

         The Company's success is substantially dependent on the performance,
contributions and expertise of its executive officers and key employees. The
Company's success to date has been significantly dependent on the contributions
of Donald Graw, its President and Chief Executive Officer, and Jaime Levy, its
Executive Vice President, each of whom has entered into an employment agreement
with the Company expiring September 1, 2002. The Company does not carry
substantial key man life insurance on its executive officers. The Company is
also dependent on its ability to attract, retain and motivate additional
personnel, especially in management. The loss of the services of any of its
executive officers or other key employees or the Company's inability to attract,
retain or motivate the necessary personnel could have a material adverse effect
on the Company.

CUSTOMER CONCENTRATION

         The Company sells its products and provides its services primarily to
other aftermarket suppliers of Engines and Components, repair facilities, OEMs,
aircraft operators and others. While the Company sold Engines and Components to
over 700 different customers during 1999, sales of products and services to the
Company's five largest customers accounted for 21%, 31% and 47% of the Company's
net sales during 1999, 1998 and 1997, respectively. While the Company has
recently reduced its reliance upon such customers, there can be no assurance
that a small number of customers in the future will not account for a
significant portion of the Company's net sales and revenues from period to
period due to the substantial cost of acquiring Engines and Components. The loss
of or significant curtailment of purchases by any of the Company's, significant
customers could have a material adverse effect upon the Company.

PRODUCT LIABILITY

         The commercial aviation industry periodically experiences catastrophic
losses which may exceed insurance policy limits. The Company currently has in
force aviation products insurance, with coverage limits for each occurrence and
in the aggregate which it believes to be in amounts and on terms that are
generally consistent with industry practice. To date, the Company has not
experienced any significant aviation-related claims, and has not experienced any
significant product liability claims related to its products or services.
However, an uninsured or partially insured claim, or a claim for which
third-party indemnification is not available, could have a material adverse
effect upon the Company.

COMPETITION

         The aftermarket for Engines and Components is highly fragmented, with a
limited number of well-capitalized companies selling a broad range of products,
and numerous smaller competitors serving distinct market niches, and is
characterized by intense competition. The Company believes that the range and
depth of inventories, full product traceability, product knowledge, quality,
competitive prices and its broad array of products and services are key factors
in distinguishing the Company from other aftermarket suppliers. Certain of the
Company's competitors have substantially greater financial, marketing and other
resources than the Company. In addition, OEMs, aircraft maintenance providers,
leasing companies and FAA-licensed repair facilities may vertically integrate
into the aftermarket supply industry, thereby significantly increasing
competition. There are established competitors that provide many of the services
the Company offers, many of whom have substantially greater financial, marketing
and other resources than the Company. In particular, OEM's have aggressively
entered the distribution and repair aftermarket. OEM's present significant
competitive threats because of their materially greater financial resources and
long-standing relationships with airlines. There can be no assurance that the
Company will continue to compete effectively against present and future
competitors or that competitive pressures, including those intensified by the
current soft and declining market for the Company's services and products, will
not have a material adverse effect on the Company.



                                       15
<PAGE>   18

                          AVTEAM, INC. AND SUBSIDIARIES

         Most recently there have been a number of acquisitions, bankruptcies
and the formation of strategic partnerships within the aftermarket. The effect
of these transactions is to concentrate market share with fewer companies and to
adversely impact sales and profit margins. This contraction may have a
detrimental effect on the Company's ability to attract new customers and to
maintain relationships with existing customers.

FACTORS INHIBITING TAKEOVER

         Certain provisions of the Articles and Bylaws may delay or prevent a
takeover attempt that a shareholder might consider in its best interest. These
provisions establish certain advance notice procedures for shareholder proposals
to be considered at the shareholders' meetings and provide that only the Board
of Directors may call special meetings of the shareholders. In addition, the
Board of Directors can authorize and issue shares of Preferred Stock, par value
$.01 per share (the "Preferred Stock"), issuable in one or more series, with
voting or conversion rights that could adversely affect the voting or other
rights of holders of the Class A Common Stock. The terms of the Preferred Stock
that might be issued could potentially prohibit the Company's consummation of
any merger, reorganization, sale of substantially all of its assets, liquidation
or other extraordinary corporate transaction without the approval of the holders
of the outstanding shares of such stock. Furthermore, certain provisions of the
Florida Business Corporation Act may have the effect of delaying or preventing a
change in control of the Company.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

         Not applicable.

                                     PART II

OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

   (a)  Exhibits

      10.1    Third Amendment to the Credit Agreement dated as of September
              30, 2000 between the Company and Bank of America, N.A. and
              certain lenders identified therein previously filed with the
              Commission as an exhibit to Amendment No. 1 to the Company's
              Annual Report on Form 10-K/A filed on June 8, 2000 and is
              incorporated herein by reference.

     27.1     Financial Data Schedule for the period ended September 30, 2000

     (b) Reports on Form 8-K

         The registrant did not file any reports on Form 8-K for the period
ended September 30, 2000.







                                       16


<PAGE>   19



                                   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.


                                AVTEAM, Inc.

                                By:
                                    /s/   DONALD A GRAW
Date:  November 14, 2000          -----------------------------------
                                   Donald A. Graw
                                   Chairman of the Board, President
                                   and Chief Executive Officer
                                   (Principal Executive Officer)



                                    /s/   MARK S. KOONDEL
Date:  November 14, 2000          ----------------------------------
                                   Mark S. Koondel
                                   Chief Financial Officer, Treasurer,
                                   and Assistant Secretary
                                   (Principal Financial and Accounting Officer)









                                       17

<PAGE>   20




                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit Index  Description
-------------  -------------------------------------------------------------
<S>            <C>
10.1           Third Amendment to the Credit Agreement dated as of September
               30, 2000 between the Company and Bank of America, N.A. and
               certain lenders identified therein previously filed with the
               Commission as an exhibit to Amendment No. 1 to the Company's
               Annual Report on Form 10-K/A filed on June 8, 2000 and is
               incorporated herein by reference.

27.1           Financial Data Schedule for the period ended September 30, 2000

</TABLE>














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